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business insurance and bond



The purpose of insurance in any business organisation is therefore primarily to compensate or indemnify those victims of losses. It should be noted however that by taking over all possible elements of misfortune. The insurance and business organisations companies can by no means elimate misfortunes from happening but what it dose is to lower the impact of effects of such minsfutune in a purely business financial terms. Insurance thus pays financial compensation to the victims of businsee loss. Hence managing the risk in the business organisation such as the victim will be placed in the same and similar financial position as he was before the loss in the business.

Purpose of insurance in business

1. loss reduction;
Insurance policy holders eliminate or prevent the risk of "crippling" loss "by substituting a small definite cost for variability of losses under a mechanism called the unfortunate few suffererion the deduction who where misfortuned are compensated by the fortunate many who escapes loss" . Some of this loss activities include fire prevention, reduction of automobile theft, prevention and detection of arson loss, prevention of defective products that could injure the customers etc. 

2. Creation of less worried and fear; 

The need to keep raw cash tied up to meet unforeseen circumstances are eliminated there by providing for less worries and fears for the business organisations.

3. Source of investment of funds; 

The accumulated funds from the operations of insurance companies can be invested in other viable sector of the business organisations in the economy. Therefore out of the premium collected in advance of the loss, funds not needed immediately to pay for losses and expenses con be loaned to business organisations and firms.

4. Indemnify for loss; 

Indemnification allows families, individuals and business organisations to be restored to the former financial position there by permitting firms to remain in businesses and employees to keep there jobs. 

Insurance being a contract, where by the insurer agrees in consideration of a premium paid by the insured and to indemnify the insured against loss resulting to him on happening of the event, must conform to the general rules of the law governing all contract. 
Functions of insurance to business organisations 



Insurance have primary and secondary fictions.  The primary function of every insurance is to ensure that the financial losses of individuals and business organisations  are fairly and adequately distributed over the particular community. 
While the secondary functions of insurance however include the following;
a. Offerring of financial securities to busineses and industrialist. Insurance promote and encourage businesses through good assurance that an industrialist will be indemnified in the of loss.  Hence, the success of most industrialist and Enterprenuers.
b.  Insurance undertaking provide loans scheme on the security of insurance policy especially life policy where most often insurance companies invest their accumulated money in government approved securities which helps provides steady flow of funds in the economy.  Insurance thus improve revenue generation and employment opportunities in the economy  .
C.  Insurance industry has catalyzed the discipline by institutionalizing the profession in schools and institutions of insurance. Also evident is the expansion of insurance business organisations, brokers and agents. 

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