Assignment: Insurance Accounting
1) Insurance companies invest in many areas, but most of all they invest in bonds. This makes sense because bonds are perhaps the safest of all investment categories. Insurance companies - being in the business of risk assessment - would logically find the low risk that bonds represent appealing, but there are other reasons as well.
Questions:
o How Insurance Companies Make Money?
o Why Insurance Companies Invest?
o What Insurance Companies Invest In?
2) "Reinsurance is considered as a significant process which provides necessary securities to insurer which safeguards them from financial problems that arises from any future unexpected events." Comment on the statement and explain the meaning and benefits of the term "Reinsurance." Also read the following statements and identify the relevant reinsurance type/contract for each case.
o This type of reinsurance is based on the features such as ceding of percentage of risk to the reinsurer and recover of same ceded percentage from reinsurer related with all losses on those risks. Such kinds of contracts are generally used by new companies.
o Under this contract, the pro rata basis is being used to share the premium and losses by the reinsurer and insurer.
o This type of reinsurance is based on the determination of loss ratio as an expression of predetermined limit in which insurer is required to retain all claims during a specified period.
o This refers to retention of insurer on all losses arising from a single occurrence.
3) What is State Guaranty Fund? What kind of support and tasks it implies? How it accumulates fund?
Format your assignment according to the following formatting requirements:
(1) The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
(2) The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
(3) Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.