Insurance Risk Securilization Thesis Example | Topics and Well Written Essays - 2500 words

Insurance Risk Securilization - Thesis Example The insured part of the contract is to promise to pay an amount of money, known as the premium, either once or regular intervals." "Insurance is a device to share the financial losses which might befall on an individual or his family on the happening of special event" (Kaur n.d. p.4). The event can be death of a bread-winner to the family in the case of life insurance, marine-perils in marine insurance, fire in fire insurance and other certain events in general insurance, e.g, theft in burglary insurance, accident in motor insurance, etc. These events may occur any time within the insured period. The insurer has to provide a fixed amount or indemnify the amount of occurred due to the insured perils. Hence, insurers bear a great risk of paying huge amount of fund at any time if the insured peril is occurred. As large as the insured amount and the probability of happening insured peril, the Insurance Risk for insurers is large. Reinsurance is an arrangement whereby an original insurer who has insured a risk insures a part of that risk again with another insurer, that is to say, reinsures a part of the risk in order to diminish his own liability. ... The policyholder is usually not aware that reinsurance has been arranged as no mention is made of it on the policy." Advantages of Reinsurance 1. The original insurer can accept the risk to the extent of his limit. In absence of reinsurance, a person desiring a large amount of insurance will have to take a number of policies from several insurers. The reinsurance contract makes it possible to purchase only one policy from an insurer. 2. Reinsurance makes it possible to accept each risk for the very amount desired by the proposer and to transfer the excess above the 'retention limit' to another insurer. 3. The reinsurance gives the benefit of the greater stability resulting from a widespread of business. By accepting many risks and scaling down, by reinsurance, all those that are larger than the normal carrying capacity of the insurer justifies, certainly in business is substituted for uncertainty through the better application of the law of average. 4. The insurance makes stability in underwriting and consistency in underwriting results over a period. 5. It provides a safeguard against serious effects of conflagration. 6. The reinsurance has the effect of stabilizing income and losses over a period of years. Capital Market The capital markets consist of the markets in which the intermediate and long-term securities of individuals, business firms, and governmental units are issued and traded. Capital markets are frequently subdivided into three parts-the bond market, the mortgage market, and the stock market. On the other word, capital market is the market where "long-term capital is raised by industry and commerce, the government, and local authorities" (Barclays Capital-Campus Recruitment, n.d.). The Glossary of Capital Market states that

Term paper Example | Topics and Well Written Essays - 1500 words - 1

Term Paper Example These two distinctive and great philosophers of their time has critically analyzed the sources of morality and the way it affects humans in conducting various actions or making different decisions. Introduction Ethics covers wide areas of human life similarly it has great significance in the overall societal boundaries and social welfare. Morality and ethics are often used interchangeably because on the communal level they both represent the difference between right and wrong, good and bad. Morals actually directs minor to major human actions, motives and desires. It often happens that you want to do something really crazy; however, you stop yourself from committing any offense just because of social morals or ethical conduct. This happens with almost everyone in the world and therefore we must pay tribute to ethics and moral principles which actually alleviate evil human desires and taught us the just way of living a life. Morals are not only limited to the difference and recognitio n of good and bad deeds rather they have a very broad spectrum which widens through the social justice to the animal rights. Obligations towards the poor, declination of suicidal activities, preservation of natural environment, protection of government assets and above all paying respect to every individual comes under the ethical and moral principles (Singer). In the contemporary world people often believe that morality and ethics have gone out of date and that these vague ideas actually stop humans from effusively enjoying life or fulfilling the human desires in whatever way they like. However, reality is far different from the common perception. Ethics are required by humans in order to live a peaceful and contented life. They are responsible to limit the evil desires and also to confront common societal issues. Though humans have made great advancements in last few centuries still their evil side needs to be limited by some effective and efficient moral principles so as to safeg uard the human civilization. Furthermore, morals are wrongly considered as the list of prohibitions rather they should be better understood as a set of considerations regarding our natural environment, social set up and overall human development (Singer). Peter Singer has presented a substantial form of moral sphere which is commonly associated with the theory of Utilitarianism. This moral sphere has primarily two distinctive parts which provides a better understanding of the overall concept of ethics and morals. Peter Singer has made a greater emphasis over the application of morals in human lives since people especially philosophers frequently talk about the importance of ethics but they hardly emphasize upon its application in personal and collective lives. In broader terms Utilitarianism is a complex combination of two doctrines namely; theory of what is good and the theory of what is right. Things which appear correct are often regarded as unethical due to the bad aspects attac hed to them similarly things which seem good are again rejected by the morality principles because of their association to some wrong actions (Singer). However, the moral sphere of Singer is closely related to the consequences of deeds and actions. For instance, things which are categorized as right would always bring good or positive consequences. As mentioned previously that Singer’