I am going to talk about:
What is insurance?
The insurance process
Civil Liability
Motor Vehicles

What is insurance?

On this topic I will talk about the following points, here are the points:

Risks and risk management
The principle of insurance
The technology of insurance
The types of insurance and sectors
Social insurance and private insurance
Insurers and the insurance industry

We always run risks. Insurance is therefore there to reduce or eliminate the financial consequences. Insurance costs money. That is why most people do not want to be insured against everything. To know which risks you do or do not want to be insured against, the risks can be mapped out.

You can choose against which risks you want to be insured. Some things are worth so much or valuable that you want to have them insured. Think of your car, jewelry or your house.

Below are risks that you can insure, must insure or cannot insure:

You can insure

Life or death, for example: life insurance, supplementary pension.
Property and assets, for example: buildings and contents insurance, car comprehensive insurance.
Health, for example: supplementary health insurance.
You must insure.
Insurance that is required by the government: third-party liability insurance for motor vehicles or basic coverage for the Health Insurance Act.
Social insurance, for example: AOW, WW
Not insured
Risks that occur very often, such as wear and tear on clothing and the like

Risk management for the determination

Risk= chance * consequence

A risk increases as the likelihood of occurrence and consequences increases.
A risk is generally less important if: The chance is minimal, but the consequence is high
The consequence is minimal, but the chance is high

So a big opportunity does not necessarily have to be a big risk. If the chance of an event is reasonably high, but its adverse effect is reasonably small, then the risk is not too great.

Many risks can be insured, but insuring all risks would entail too many costs. We have also seen that some risks cannot be insured. It is therefore important to manage risks well.

Risk management is identifying and assessing risks and then determining measures to prevent, reduce, outsource or accept the risks.

The way in which a private individual deals with risks can be changed.
Dealing with risks is also called determining risk strategies. There are four ways to deal with a risk or there are four risk strategies; Preventing risks
Reducing risks
Outsourcing risks
Accepting risks

The principle of insurance

For both private individuals and companies, the financial interest in whether or not an event occurs is the reason for concluding an insurance contract. One of the requirements that the law imposes on an insurance contract is that the timing of the payment is uncertain. Examples include benefits after a burglary, a collision or a death. So-called consequential damages are often also insured. This could, for example, be the clean-up costs after a fire or the so-called range of expected benefits.

The technology of insurance

How is it possible that insurers can bear the risks that private individuals do not want or cannot bear?

Insurers can fulfill their role because they can assess the various risks based on, for example, CBS figures or information from CVS.
In recent years, approximately 9,500 traffic accidents with injuries have occurred per year. Compared to the large number of road users in the Netherlands, this is a fairly stable average. Being able to estimate the risks, because they generally have a stable average, is also called the law of large numbers. It is important for an insurer to have a large number of insurance policies in order to calculate the average risk of damage as accurately as possible and to be able to bear the risks.

To calculate a good premium for a specific insurance policy, an insurer takes past statistics into account. In the case of John van de Meer's scooter insurance in the example, an insurer looks at the number of stolen (e.g.) scooters and the number of damages to (e.g.) scooters in recent years. A premium is calculated on this basis. However, it may happen that an insurer does not achieve a result in a particular year based on past statistics. That is why an insurer works with a reservation. The insurer creates a reserve fund in the event that circumstances require an additional fund of money to pay out claims in a particular year.

All people who want to insure the same risk periodically transfer an amount to an insurer. The insurer manages the money and pays out an amount to the person who has suffered damage.

The so-called indemnity principle applies to the damage payment.
This means that a payment from a non-life insurance policy may not put the customer in a more financially favorable position than was the case before the damage. However, this does occur in practice, because insurers are allowed to deviate from this in their policy conditions.

Insurance types

There are two types of insurance for private individuals, social insurance and private insurance:

Social insurances

These insurances have been made mandatory by the government for the entire population or for certain groups.
Social insurance can be subdivided into: Employee insurance
This insurance is only mandatory for salaried employees.
Examples: WIA and the WW National Insurance
National insurance policies are mandatory for all residents of the Netherlands. Examples: AOW, ANW and the AWBZ

Social insurance is mandatory. These are risks that you must insure. The premium is also determined by the government, which is often a percentage of income.

Private insurance

Through private insurance, insurers offer security by taking over the financial consequences of risks. In addition to the government, the private insurance industry also offers many opportunities to transfer risks. Private insurers provide cover for ownership risks, asset risks and income risks. Social insurance is limited to income risks and the coverage of medical costs.

Anti-selection and premium differentiation

People tend not to insure risks if they expect little or no damage from them, while they do want to take out insurance for risks for which they consider the risk of damage to be high.
For example, people in good health are less likely to take out disability insurance than people in poor health. They call this anti-selection or auto-selection. If insurers do nothing about this, the calculations for their premiums based on the general statistics will not be correct. By charging different premiums for different groups of people, an insurer can combat anti-selection.
So not everyone pays the same premium for the same insurance. For example, a 50-year-old man pays less premium for scooter insurance than a 16-year-old boy because the 16-year-old boy poses much more risk. This is called premium differentiation. Insurers not only look at age but also at living environment. Someone who lives in a village pays less premium than someone who lives in a city. There is a greater chance of damage in the city than in a village. Health, age and living environment play no role in social insurance.

Classification into branches

Private insurance is divided into two branches:
Life insurance
Non-life insurance

Industry life

Life insurance deals with human life and death. In the technical classification of insurance, life insurance falls under the life sector. Pensions also belong to the life sector.

The non-life insurance policies are divided into the fire sector, the transport sector and the miscellaneous sector.

Industry fire

The fire insurance sector mainly includes property insurance. With property insurance you own an asset. In insurance terms, this is also called an object or an insured item. This could be, for example, a car or the contents of a house. Home insurance provides cover for damage caused by fire, storm, burglary and some water damage.

Transport sector

The transport sector includes all kinds of insurance policies associated with the risks of transport and travel.
Such as insurance for ships, cargo and liability of the carrier. Private individuals can also take out transport insurance, such as travel insurance and pleasure boat insurance.

Industry miscellaneous

Industry miscellaneous includes all other insurance policies.
The miscellaneous sector can be divided into the following categories: Medical miscellaneous insurance, these are insurance policies that deal with human health, but are not life insurance.
Liability insurance, these are insurance policies that cover damages resulting from errors.
Motor vehicle insurance, these are the third party liability insurance policies that compensate others for damage caused by a motor vehicle and the comprehensive insurance policies that cover damage to your own motor vehicle.
Other miscellaneous insurance, such as travel and cancellation insurance and pleasure boat insurance.