– Sectors of Insurance Industry

The insurance industry classifies the different products it offers by sector. The insurance industry is made up of companies that offer risk management in the form of insurance contracts. There are four main insurance sectors: the life and health insurance industry, the general insurance industry, the specialty insurance industry and the reinsurance industry. This article describes the current sectors of the insurance industry and their associated activities, products and services.

The insurance industry classifies the different products it offers by sector. A universally accepted classification of sectors does not exist, so a non-exhaustive but inclusive and simplified classification of three major sectors will be used in this exploration. The four areas of insurance coverage are

  1. Life and health insurance industry
  2. General insurance industry
  3. Specialty insurance industry
  4. Reinsurance industry

Life and health insurance industry:

Life and health insurance covers life and annuities, as well as health and disability. In general, life insurance provides a death benefit, health insurance provides income coverage for illness and injury, disability insurance covers the financial needs of people who cannot work due to illness or injury, and annuities provide. Term life insurance policies provide protection for a specific period of time and do not accumulate equity. Whole life insurance policies provide long-term financial protection. They typically accumulate equity that pays cash benefits and therefore typically have higher premiums than term life insurance policies.

Health insurance policies can be divided into fee-for-service, managed care, and long-term care. The three types of policies cover a wide range of medical, surgical and hospital expenses. Many policies also cover prescription drugs and offer dental coverage.

Often referred to as disability income insurance, this insurance protects a beneficiary’s income against the risk that a disability will make work and earnings impossible. It includes paid sick leave, short-term disability benefits and long-term disability benefits.

Annuities, another type of life insurance product, provide income. An annuity pays periodic income benefits – usually monthly – for a specified period or during the life of the annuitant (annuitant). Annuity income benefits can also be transferred to a beneficiary on the death of the annuitant.

General insurance sector:

Insurance other than life and health insurance falls under the category of general insurance. General insurance includes property insurance against fire, burglary, etc., personal insurance such as accident and insurance that covers legal liabilities. Non-life insurance companies offer products that cover property against fire and related risks, storms and floods, earthquakes, accidents, etc. Most general insurance coverages are annual contracts. However, there are a few products that are long term. P&C insurance providers perform an essential function in today’s economy. By covering losses resulting from disasters, accidents and lawsuits, P&C insurers protect policyholders against property damage and liability, providing victims with the means to resume their lives and businesses and continue contributing to the economy.

Specialty insurance is more narrowly aimed at helping policyholders safeguard their financial interests and provides coverage for any risk the insurer is willing to take. Specialty policy types include surety bonds to ensure the reliability of contractors. The insurer providing the bond guarantees the reliability of the contractors by putting its money on the line. If a client’s contractor fails or causes loss to the client, the insurer is obligated to complete the work pay the loss up to the “penalty” deposit. It also included financial guarantee insurance to assure lenders of the creditworthiness of borrowers by guaranteeing payment of principal and interest on bond obligations.

Reinsurance protects insurers from catastrophic losses; reinsurance is the insurance of insurance companies. Reinsurance policies provide benefits that allow insurers to recover capital quickly, limit losses and stabilize cash flow after a catastrophe. Thus, the risk is shared by both the insurer and the reinsurer, which reduces the probability of bankruptcy of the insurer in the event of a catastrophe.