Student Notes 20160414 Ch15docx.pdf - Insurance They fund...

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Insurance They fund themselves by collecting premiums from customers Has a lot of similarities to banking Source of funds: premiums collected from policy-holders People are paying money into it Like a deposit, in the sense that they do not have a specific time to maturity Use of funds: insurers make long-term loans or buy bonds Insurers are big investors in the bond market Actuarial Science: science of predicting life expectancy and insurance claims. Really effective; really long-term Types of insurance 1. Life insurance more of a one-time thing; if something happens, money is paid to your beneficiary pay in a certain amount of money over time, then you are able to cash it out later biggest category of insurance market; twice the size of P&C insurance MetLife or Prudential 2. Property & casualty P&C auto (70%), home, etc. more familiar to most people because car damage and house damage State Farm, Allstate, or Geico 3. Health more on the political spectrum Medicare, Medicaid, BlueCross BlueShield, UHG, Kaiser AIG does a mix of insurance of all insurances Balance Sheet Assets Investments may be called fixed income => bonds, loans => policy loans, equities => stocks Separate accounts Liabilities
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