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Marginal Utility, Price And Paradox Of Value In Economics

 Marginal Utility: Marginal utility is the additional utility derived by an individual from the consumption of one or more unit of a commodity. Marginal utility denotes the change in the total utility due to the change in quantity consumed of commodity. Marginal utility influences and regulates the price determination of a commodity. This may be explained by the following table. How Does Marginal Utility Determine Price: Number of Mangoes Margial Utility (in utils) Total Utility of Money In Dollars 1 20 $1 2 15 $0-75 cents 3 12 $0-50 cents …

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Examples Of Moral Hazards In Insurance

There may be an example of first class moral hazard where the insured gives maximum cooperation to the insurers by materializing their suggestions aimed at risk improvement, or where the insured himself is very strict and particular in maintaining the property or premises with such care that the possibility of the happening of the insured event is reduced. Examples of bad moral hazards are also there where the insured fraudulently and intentionally brings about an insured event with the sole motive or making money out of insurance at the cost …

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Different Types Of Hazards In Insurance

Insurance always deals in risks. Risk is the probability of happening of an unforeseen event or contingency which is never desired. This probability of happening of the undesired event may become more certain or prominent if the subject-matter of insurance presents some peculiar characteristics facilitating the causation of the event. The cause of such event is termed as Peril. Sometimes the causation of the event may not be due to some peculiar characteristics of the subject-matter itself but may be due to the peculiar character of the insured. Hazard in …

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Examples Of Physical Hazards In Insurance

Hazards indicate the bad elements in a risk proposed. So, a detailed knowledge thereof can only influence the decision of a prudent underwriter in deciding whether to accept or reject a risk and if to accept, at what rates, terms, premiums and conditions etc. The hazards are visible from the very nature, construction and situation of the subject-matter. Some Examples Of Physical Hazards In various branches of insurance will make the position of hazards further clear. Examples Of Physical Hazard In Insurance: Physical Hazard In Marine Insurance: The nature of …

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11 Legal Aspects Of Reinsurance Contracts

We have completed the various technical and operational aspects of the insurance in previous articles. Now,  attempts will be made to highlight some essential Legal Aspects Of Reinsurance Contracts around the business of reinsurance. It should be appreciated by the students that the business of reinsurance is very much within the four walls of insurance business . Therefore, most of the legal considerations applicable to the business of insurance will also equally hold good in so far as reinsurance business is concerned. The readers should also appreciate that it is …

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Application Of Reinsurance To Various Branches Of Insurance

We have written many articles on reinsurance. So we think, you have already known various kinds of reinsurance. Indications will now be made as to the proper applicability of various types of reinsurance in different branches of insurance. OK, let us have a look on the Application Of Reinsurance To Various Branches Of Insurance. Application Of Reinsurance To Various Branches Of Insurance. FIRE : Surplus treaty is most widely used. Quota share treaties are used by the newly established companies or with regard to new business of established companies. The …

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What Are The Different Forms Of Reinsurance

We have already discussed on Different Types Of Reinsurance Arrangements prevailing in Insurance World. The discussions will now be made as to the Different Forms Of Reinsurance that usually take place. Basically there are two forms of reinsurance irrespective of the type of reinsurance we have discussed so far. These are Participating and Non-participative reinsurance. They are discussed shortly in the below section of this article. Different Forms Of Reinsurance 1) Participating Or Prorata Reinsurance : Where the proportion of amounts payable by the insurer and the reinsurers in respect …

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Excess Of Loss Ratio Reinsurance With Examples

 This type of arrangement is also known as STOP LOSS Reinsurance (SLR) and is a bit different from the Excess of Loss arrangement, even though both basically base on loss rather than sum-insured. Here, a relationship is usually drawn in between the gross premium and the gross claim over a year in a particular class of business. The ceding company decides a gross loss ratio up to which it can sustain. The arrangement with the reinsurers is such that if at the year-end it is found that the total of …

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Excess Of Loss Treaty Reinsurance Example

The approach of Excess Of Loss Treaty Reinsurance arrangement is quite different here from other methods. Under this system, unlike facultative, quota or surplus, the sum-insured does not form any basis and it is not expressed in terms of proportion or percentage of the sum-insured. Here, the insurer first decides as to how much amount of loss he can bear on each and every loss under a particular class of business. The Excess Of Loss Treaty Reinsurance arrangement is such that if a loss exceeds this predetermined amount then only …

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Advantages And Disadvantages Of Surplus Treaty Reinsurance

Arising out of example 3 of Surplus Treaty Reinsurance, if no facultative arrangement can be made, then sometimes an attempt may be made by the ceding company to get the entire money absolved within the treaty arrangement, particularly where there is no upper limit stipulated. The ceding company may raise retention to CAD. 15,00,000 instead of CAD. 10,00,000 permissible by its own fund & resources. Then the arrangement may be as follows: ABC’s Retention                          : CAD.   15,00,000 Treaty consumes (9 x 15 lac): CAD.1,35,00,000 CAD. 1,50,00,000 The visitors …

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