Homework

Cirstea Ioana,1503, seria A

In the days of sail and rudimentary navigation, the news was often bad: ships
would shipwreck and merchants would be ruined. Although ship and cargo
insurance can be traced back to the Phoenicians, it was at Lloyd's coffee house
that modern marine insurance was born. A ship owner would write on a slip of
paper the particulars of a proposed voyage - the name, route and ports of call
of a vessel, the value of its hull and cargo, and the amount he was willing to
pay for
"Insurance".
In the late 17th century, seafarers flocked to Edward Lloyd's coffeehouse in
Tower Street, near the Thames waterfront in London, to gossip, play cards, and
conduct business. Coffee, valued for its therapeutic powers, was a penny a
cup. Pens, ink, and paper were free, as was news, provided by Lloyd's runners
who scurried back and forth between the coffeehouse and the docks, gathering
the latest information on the comings and goings of ships and their cargos.
By 1771, although Edward Lloyd was long dead, his name stuck as did the
tradition of doing business from wooden benches clustered in rectangular
boxes around a large room. The coffee drinkers arrayed in booths and benches
around the room, many of them ship owners themselves, would then decide,
how much if any, of the risk they were willing to accept in exchange for the
premium. An "insurer" would write his name on the ship owner's slip under the
shipping information (hence the term underwriter)
While still insuring much of world shipping, Lloyd's by then, also offered
coverage for property and casualty, fire and theft, and product liability. It was
known for accepting large and complex risks that no one else would touch. By
granting or withholding insurance, Lloyd's could make or break a risky new
business venture.
By the 19th century, its runners had become a worldwide network of
intelligence agents, utilized not only by Lloyd's for ship monitoring, but by the
British government for a range of economic and military intelligence - a
phenomenon that fed Lloyd's reputation for mystery and secrecy.
Lloyd's earned for the British balance of payments nearly as much as the entire
British banking system. It was the largest private investor in the U.S.
government, holding billions of dollars in Treasury bonds. It also was a cultural
and social force. Lloyd's chairmen were celebrities. People stood up when they
entered a room. The art of collection of one Lloyd's officials became the nucleus
of the National Gallery in London. Lloyd's name was so potent in America - a
household word - that in 1936 it was celebrated in a full-length Hollywood
movie starring Tyrone Power. In 1906, a signal event came to Lloyd's - the San
Francisco earthquake. Herbert Evan Heath, a leading broker and underwriter,
telegraphed instructions to his California representatives to immediately pay all
claims to Lloyd's customers in full, whatever the terms of their policies. Heath's
dramatic gesture emblazoned Lloyd's in a pantheon of world finance as an
emblem of trust.

Fill in the blanks the following missing words: risk-management, financial

protection, policy component, financial losses, financial plan, insurance
policy, out of pocket cost, monthly cost

Whether it is auto, medical, liability, disability or life, insurance serves as an

excellent risk management and wealth-preservation tool. Having the right
kind of insurance is a critical component of any good financial plan. Insurance
is a contract, represented by a policy, in which an individual or entity receives
financial protection or reimbursement against losses from an insurance
company. The company pools clients' risks to make payments more affordable
for the insured. Insurance policies are used to hedge against the risk of
financial losses that may result from damage to the insured or her property,
or from liability for damage or injury caused to a third party. Business requires
special types of insurance policy that insure against specific types of risks
faced by it. Two of the most important components of all insurance policies are
the premium and the deductible. A policy premium is simply its price, typically
expressed as a monthly cost. The premium is determined by the insurance
company based on the business' risk profile. The second important policy
component is the deductible. Whenever you make a claim, you are required to
meet a minimum out-of-pocket expense, or deductible, before the insurance
company pays for your losses. Deductibles can apply per-policy or per-claim
depending on the insurer and the type of policy. Policies with very high
deductibles are typically cheaper because the high out of pocket cost means
insureds are less likely to make small claims.

Pick the True or False statements:

1. Any person going into business is automatically faced with certain risks.
………………True
2. Proper extension of credit development of new products, economical
purchasing of materials represent risks faced by any business.
……………………………………………………False
3. Indemnification for losses is not stood individually.
…………………………………….False
4. Business people pay for the losses through premiums.
…………………………………….True
5. In the operation of any large companies, certain types of losses are to be
avoided. ……….True
6. An effective property insurance program means to ensure damage by a boiler
explosion. -True
7. Determination of the ability to absorb loss by damage is based on the
evaluation of the business operation.
……………………………………………………………………………True
8. Careful evaluation is usually done by the insurer.
…………………………………………True
9. A total insurance program should be designed to fit the particular
requirements of any business.
………………………………………………………………………………………True
10. Changing conditions avoid over insurance or underinsurance.
………………………….False