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A Short Guide to the Different Types of Insurance Companies



Financial and insurance companies must be constantly aware of all the possible risks that can arise while doing business in today’s 21st century. The best strategy would be to always purchase insurance policies that will secure against a variety of potential claims. The current economic climate has led many companies to become extremely cautious about the type of insurance cover they offer and the kind of risk that may be involved in not providing adequate protection. This article briefly covers some of the ways in which financial and insurance companies can minimize their exposure to risk in this uncertain and often unstable financial environment.

The first thing that needs to be addressed is professional liability. Professional liability covers a wide range of different types of cases, including Product misuse, professional negligence and professional misconduct. It is usually the case that most insurance policies will provide coverage for a limited period which will include any out-of-pocket expenses for legal advice. However, professional liability is often one of the most overlooked aspects of an insurance policy and it is vital that all insurance companies take into account the potential for litigation when compiling their policies. Insurance companies may also need to consider the various different types of professional liability insurance available and ensure that they provide appropriate cover levels for their clients.



Another element that needs to be considered within an overall insurance policy is commercial property insurance. A good commercial property insurance policy should ensure protection against liability claims from injury or damage to the commercial property of the client. As commercial property insurance is typically a complex policy, it is often advisable to take advice from an independent broker to ensure that the general liability protection provided is adequate for your business needs.

Insurance companies will also need to consider their exposure to financial risk in relation to other companies and will need to consider the different ways in which they can incur such risk. There are two main elements to consider within insurance policies: risk retention and liability premium. Risk retention is the ability of an insurance policy to retain its initial premium payments if a claim for compensation is made against the company. Liability premium is the amount that an insurance company charges for the provision of medical expenses in the event of a claim. Whilst most professional liability insurance policies will come with a minimum level of liability coverage, there are some that do not. For this reason you will want to ensure that you check the terms and conditions of your policy to ensure that you know what you are covered for.



As mentioned above, professional liability insurance is one of the more specialized areas of cover that insurance companies will offer. This means that it is usually purchased by insurance companies with a specific area of expertise. Some of these insurers specialize in professional indemnity insurance and others in industrial liabilities, while many specialize in a particular type of professional liability claim. It is important for potential customers to become well informed about the coverages and policies of any insurance company that they wish to do business with. It is also important for potential clients to ensure that their chosen insurance company has a reputation for fair and reasonable practices.

When it comes to life insurance companies, the different types will generally fall into three categories: property insurance, risk retention and loss of profits. Property insurance is available to homeowners and renters. This provides protection against a range of losses such as fire, theft, floods, vandalism, malicious mischief and earthquake. The property insurance industry is one that is very highly competitive, as it is necessary for life insurance companies to keep premiums low and provide a high level of service.



Risk retention pays out to replace a potential loss should it occur. Many life insurance companies include guaranteed loss retention in all of their insurance policies and these are generally provided through joint ventures or acquisitions. Other types of loss retention include indemnity insurance and asset-based insurance. An example of an asset-based policy is the ‘all risk’ policy which protects against the loss of cache and other depreciated assets.

Finally there are the stock insurance companies. As the name would suggest, most of these companies are based on the concept of holding a particular number of shares, either through owning the company outright or through a managed limited partnership. Some stock insurance companies are members of different exchanges, such as the New York Stock Exchange (NYSE). These allow the company to trade more easily on stock markets, providing investors with a greater choice of shares and a greater degree of security.