Easily explained: This is how insurance works

Imagine you are late for your lecture. You quickly turn the corner into the lecture hall with coffee in hand – you stumble and the contents land on your fellow student’s notebook. Gone stupid! Damage has occurred – who pays? It’s good that you have private liability insurance that will settle the damage, that is, take over for you after an inspection.

All for one

Insurance works according to the principle of solidarity: many insured people pay small, manageable amounts monthly, quarterly or annually. The insurance company uses these premiums to pay for any damage that happens to an insurance customer. Since such a case occurs less often than a premium is due, the insurance company has sufficient financial reserves to cover even larger damages. In the past, friends and relatives might have taken on this role and contributed financially. In an individualistic society, this is no longer appropriate. This makes appropriate insurance coverage even more important.

How expensive will it be?

But how big is the risk that you will get sick in your late 20s, have an accident with your new car or flood your neighbor’s apartment with your new washing machine? To determine this, insurance companies work with mathematicians and statisticians who calculate exactly how high your personal risk is in different life situations. They use probability calculations.

The result of these calculations ultimately determines how high the contributions will be. When it comes to car insurance, this means that the premiums decrease for every year that you go through traffic without an accident. Anyone who has behaved prudently, foresightedly, carefully and according to the rules for five years will probably continue to do so next year. So it will be cheaper for him. Statutory health insurance is an exception: Here the legislature determines what percentage of your gross income you have to pay and what share your employer pays.

Mutual Reliability;

Anyone who takes out insurance enters into a contract that is binding for both parties and includes rights and obligations. The insurance customer has the right to financial help if he needs it and the obligation to assist in the clarification. He must therefore not provide false information and must behave in such a way that he does not provoke or even intentionally cause harm. Conversely, the insurance company has the right to regularly collect premiums and the obligation to step in when the so-called insured event occurs.

What exactly the insurance covers, how much it covers and under what conditions is regulated in detail in the contract. It is therefore necessary to read carefully what you are signing and to clarify any questions before signing the contract. This creates a pact that promises both parties the greatest possible security. Even in the event of bankruptcies, bad luck and breakdowns.

Top Insurance Companies Working in The world:

Publicly Traded Non-health Insurance Companies

Company NameMarket Capitalization
Berkshire Hathaway (U.S.)$714 billion
Ping An Insurance (China)$141 billion
AIA Group (Hong Kong)$123 billion
China Life Insurance (China)$106 billion
Allianz (Germany)$89 billion
Cigna (US)$76 billion
Zurich Insurance (Switzerland)$67 billion
AXA (France)$65 billion
Humana (U.S.)$55 billion
Munich (Germany)$39 billion
Publicly Traded Health Insurance and Managed Health Care Companies

Company Name                                
  Market Capitalization
United Healthcare (UNH)
$448 billion
$136 billion
Anthem (ANTM)
$109 billion
Cigna (CI)
$76 billion
Humana (HUM)
$55 billion
Centene Corporation (CNC)
$48 billion
Molina Healthcare (MOH)
$18 billion
Bright Health Group (BHG)
$2 billion
MultiPlan Corporation (MPLN)
$2 billion
Alignment Healthcare (ALHC)
$1.6 billion

Ref: Market cap data as of March 1, 2022. Source: Yahoo! Finance (taken from Investopedia)

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