Insurance is a very important factor to attaining financial viability in an economy. It is a very

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Insurance is a very important factor to attaining financial viability in an economy. It is a very difficult concept that requires a profound augmentative erudition of insurable interests, viable policy holders, risk assessment and management. This essay seeks to provide an overview of insurance; specifically on assessment, measurement and management of both man-made risks and natural disaster risks. The essay further highlights the re-known formulas adopted in measuring man-made risks. In addition to this, it would provide a concise development and challenges arising out of the use of the risk assessment formulas. Finally, the essay will highlight the difficulty, previously arising, out of assessing, measuring and managing natural disaster…show more content…
This aspect increased maritime trade thus increasing the Gross Domestic Product of nations. Since its inception, the concept of insurance has been revolutionized and is comprehensive enough to cater for a wide array of risks: man-made or natural risks (Westall 2002 p 95). Every insurance company must as a prerequisite employ financial risk advisors. The financial risk advisors’ herein are referred to as actuaries. They serve the function of assessing the risk of a particular policy and prescribing the amount of premium payable as well as determining the financial viability of any policy. In doing so, the financial risk advisors base their opinions on the historical information available. There are two types of risks; manmade and natural disaster. Man-made risks as is ostensible, is derivative of man’s actions. They include, though not limited to, automobile or fire risks. Such risks are highly frequent and less severe; in respect to the insurer. Consequent to this, a proliferation of information is readily available to estimate the likelihood of prospective loss. On the other hand, natural risks are derivative of nature. They are less frequent and very severe. Subsequently, information on the likelihood of loss and occurrence is minimal. This aspect makes it very difficult to cover natural disasters. Be that as it may, as will be elaborated, the advent of science and technology has generated a
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