The Relationship between Health Insurance and Risk

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RRisk and Insurance Abstract This article discuses the relationship between health insurance and risk. It also puts light on the factors affecting the demand side and demand side barriers of insurance. It also discusses the approaches that can reduce the effect of demand side barriers and it put lights on how management can handle such barriers. The relevance of lemon's principle has also been discussed in this article. Risk and Insurance 1. Discuss the relationship between risk and insurance Risk and insurance are very vital components of a person's life nowadays. Risk is the probability that an event will occur. The term risk specifically tells the likelihood of any occurrence following a set of events. Insurance is an agreement between two parties, the insurer and the policy holder. In this agreement, the insurer gives the policy holder a certain amount to claim in case of any specific loss and in exchange, he charges the policy holder with premium which is enough to cover the claim amount. (Burt, 2001; Anderson & Brown, 2005) Risk and insurance have a fundamental relationship. Firstly, insurance is used to transfer risk or losses from risk from one party to the other. This makes risk the basis for insurance. All of the businesses, families and individuals take risks and in any case risk can result in a profit or a loss. The resulting profit may not need any preparations but in case of a loss, the person has to be ready. For instant, a fruit seller has
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