大学周记

　　BusinessofInsuranceCompanies

　　Insurancecompaniesdotwotypesofbusiness。Oneisgeneralinsuranceagainstvariousformsofrisk，andtheotherislong—terminsurancewhichismainlylifeinsurance。

　　Generalinsurerswillagreetopayapersonorcompanyasumofmoneyintheeventofsomethinghappeningornothappening。It’sabigbusinesstoday。Iftheprojectsucceeds，shareholdersinyourcompanywillexpecttobepaidadividend。Ifyouaskaninsurerto

　　underwriteyourproject，thenhewillrequireapaymentinadvance，apremium。Iftheprojectsucceeds，hekeepsthepremium，butyoudon’tpayhimanythingelse。Payingapremiumtoaninsurerorunderwriterisoftencheaperthanpayingadividendtoshareholders。Iffewerdividendsarepaidtoshareholders，thenmoremoneycanbekeptasretentiontofinancethecompany’snextproject。

　　Anothertypeofinsurancebusinessisthelifeinsurance。Itdiffersbasicallyfromgeneralinsuranceinthatitisbasednotonriskbutoncertainty—thecertaintythateachofuswillonedaydie。Lifeinsuranceisthebasisofpensionfundswhichprovideforretirementandguardagainstothercontingenciessuchasill—health，butisbestseenbythefinancialeconomistasameansofcollectingmanysmallsavingstoputtogetherintolargeinvestments，inshort，asaformofintermediation。