Insurance in the Philippines: Forerunners and Law of Large Numbers
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Questions and Answers

What is the primary purpose of insurance?

  • To make profits for the insurer
  • To provide financial protection and reimbursement of damages (correct)
  • To increase the risk of loss
  • To invest in the stock market

    • What is the name of the first domestic life insurance company organized in 1910?

  • Union Insurance Society of Canton
  • YTL Fire & MIC
  • Lloyd’s of London
  • Insular Life Assurance Company, Ltd. (correct)

    • What is the term for combining the risks of individuals into a group to pay for losses?

  • Insurance policy
  • Social device (correct)
  • Risk management
  • Financial investment

    • What is the name of the first domestic non-life insurance company?

    <p>Yek Tong Lin Fire &amp; Marine Insurance Company</p> Signup and view all the answers

    What is the definition of an insurer?

    <p>A company that promises to reimburse losses</p> Signup and view all the answers

    What is the term for a possibility of a huge unexpected loss?

    <p>Risk</p> Signup and view all the answers

    What is the main concept of insurance?

    <p>Pooling of risks</p> Signup and view all the answers

    What is the purpose of having a large number of exposure units in insurance?

    <p>To make individual losses collectively predictable</p> Signup and view all the answers

    What is the 'Bayanihan' system considered to be in the Philippines?

    <p>A forerunner of modern insurance</p> Signup and view all the answers

    What is the Law of Large Numbers also referred to as?

    <p>The Law of Probability</p> Signup and view all the answers

    What system is also practiced in the Philippines where friends and relatives of a deceased member give cash donations to the grieving family?

    <p>Abuloy</p> Signup and view all the answers

    When was life insurance introduced in the Philippines?

    <p>1898</p> Signup and view all the answers

    What is the mathematical law that states that when the number of similar independent exposure units is increased, the relative accuracy of predictions about future outcomes is also increased?

    <p>The Law of Large Numbers</p> Signup and view all the answers

    What is the Paluwagan system?

    <p>A system where people give their contributions, which will be accumulated and used when someone needs help</p> Signup and view all the answers

    What is the first insurance company established in the Philippines?

    <p>Philippines First Insurance Company</p> Signup and view all the answers

    In what year was the first insurance company established in the Philippines?

    <p>1906</p> Signup and view all the answers

    Study Notes

    Forerunners of Insurance in the Philippines

    • The "Bayanihan" system, where members of a community contribute their time and resources to help each other, is a forerunner of modern insurance in the Philippines.
    • The "Paluwagan" system, where people contribute to a fund to be used when someone needs help, is another forerunner of modern insurance in the Philippines.
    • The "Abuloy" system, where friends and relatives of a deceased member give cash donations to the grieving family for burial expenses, is also a forerunner of modern insurance in the Philippines.

    Law of Large Numbers

    • The Law of Large Numbers is also referred to as the "Law of Average" or the "Law of Probability".
    • The law states that when the number of similar (homogenous) independent exposure units is increased, the relative accuracy of predictions about future outcomes (losses) is also increased.
    • The Law of Large Numbers is the theoretical basis of the business of insurance, as it allows insurers to predict collective losses with a high degree of accuracy.

    Insurance in the Philippines

    • Insurance was first introduced in the Philippines in March 1829.
    • The first insurance company to operate in the Philippines was Lloyd's of London, which appointed Stracham, Murray & Co., Inc. as its local representative.
    • The first domestic non-life insurance company was established on June 8, 1906, and was known as the Philippines First Insurance Company (PFIC).
    • The first domestic life insurance company, Insular Life Assurance Company, Ltd., was organized in 1910.
    • The Sun Life Assurance Company of Canada was the first life insurance company to operate in the Philippines, starting in 1898.

    Important Words and Phrases

    • Insurance: a social device that combines the risks of individuals into a group, using funds contributed by members to pay for losses.
    • Insurer: a company or person that promises to reimburse for losses.
    • Risk: a possibility of a huge unexpected loss.
    • Policy: a contract between the insured and the insurer, which provides financial protection and reimbursement of damages.
    • Policyholder: an individual or organization that receives financial protection and reimbursement of damages from the insurer.

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    Description

    Learn about the traditional practices that preceded the insurance industry in the Philippines, including mutual aid and cash donations for burial expenses. Understand the concept of the Law of Large Numbers in insurance.

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