Insurance
is a great tool to manage or share individual loss(es).
By accepting individual losses, obviously insurers
are at a great risk. Proper loss management and risk
mitigation strategy is important not only for survival
of insurer, but also essential for the entire sector.
This article discusses various traditional loss management
techniques that are being followed by insurers.
Insurance
basically safeguards the insured from the expected
but unplanned risks. Insured will be supported in
the form of financial assistance, repair or replacement
of lost or damaged goods etc. It is obvious that insurance
companies are at great risk if loss occurs spontaneously
covering more and more insured parties or insurable
interests. In such occasions insurance companies will
incur huge losses severely affecting the financial
stability of the company. In the aftermath of September
2001 attacks on WTC, group loss or compound loss due
to a single peril or attacks by terrorist groups has
become a matter of great concern for Insurance companies
in USA. Apart from the traditional risk management
or loss mitigation techniques, insurance companies
are now gearing up to develop various strategies to
handle high-risk or loss events.
This
paper discusses the various options that are available
to insurance companies for mitigating the loss.
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