Text 21. Insurance

Insurance is vital to a free enterprise economy. Insurance is the process of spreading risk of economic loss among as many people or entities as possible who are subject to the same kind of risk; it is based on the laws of probability (chance of a given outcome happening) and large numbers (which enables the laws of probability to work). Society faces many perils (causes of loss)—some natural (e.g., earthquakes, hurricanes, tornados, flood, drought), some human (e.g., arson, theft, fraud, vandalism, contamination, pollution, terrorism), and some economic (e.g. expropriation, inflation, obsolescence, depressions/recessions).

Availability of insurance allows individuals and businesses to purchase policies that provide protection from financial loss attributable to death, accidents, sicknesses, damage to property, and injury caused to others. The person or organization seeking to transfer risk—the insured (policyholder) pays a relatively small amount (the premium) to an insurance company (the insurer), which issues an insurance policy in which the insurer agrees to reimburse the insured for any losses covered by the policy. Insurers are able to provide coverage for virtually any predictable loss.

Exercise 144. Number the following words with their underlined equivalents in the text.

affluent	catastrophes	claims
commission	gilts	huge
indemnify	insurance brokers	policy
retires	sums	underwritten

Insurance is designed to provide a sum of money to compensate for any damage suffered as the result of a risk that has been insured against in a specific insurance (1) contract, such as fire, accident, theft, loss, damage, injury or death. Thousands of people pay premiums to insurance companies, which use the money to (2) compensate people who suffer loss or damage, etc. Some people also use insurance policies as a way of saving. Life assurance policies, for example, usually pay a certain sum on a specific date - for example, when a person (3) stops working at the age of 60 or 65 or whenever, or earlier if the person dies.

Insurance companies, like pension funds, are large institutional investors that place great (4) amounts of money in various securities: shares, bonds, (5) British government bonds, etc.

Insurance companies generally employ their own agents who sell insurance to customers, but there are also (6) other middlemen who work with several companies, selling insurance in return for a (7) percentage of the premium.

If a particular insurance company considers that the risk it has (8) assumed responsibility for is too big, it might share the business with other companies, by way of reinsurance. Lloyds of London underwrites a great many risks which are spread among lots of syndicates, made up of groups of (9) wealthy people known as "names." In return for earning a percentage of the insurance premiums, the names have unlimited liability for losses. After a series of (10) demands for payment following lots of (11) natural disasters (shipwrecks, earthquakes, hurricanes, and so on) in the late 1980s, many Lloyds syndicates had to make (12) enormous pay-outs, and many names were bankrupted.

Exercise 145. Discuss the questions.

1. How many insurance policies do you or your family have?

2. Are there any risks you cannot insure yourself against?

3. What insurance does your company/ university/ employer have?

Exercise 146. Change the words in brackets to complete the sentences.

Traveller’s cheques

If you are planning a holiday, remember the (safe) way to carry money is to take traveller’s cheques. If you lose them or they are stolen, (replace) cheques are provided by the bank. Such cheques are (validity) all over the world. Take traveller’s cheques and you can be (certainty) you will not be left without funds. Sterling and dollar cheques are (availability) at most banks. You should be prepared for the worst: take out (insure) to cover any (lose) of luggage, travel delays and medical (expensive). Not all insurance policies cover injuries caused by sporting (active), so check your policy. Some companies have a helpline to provide (assist) and advice, which could be very (value).

Exercise 147. Learn the following words and word combinations.

fleet	флот
operating leasing	оперативний лізинг, прокат
sale/leaseback	зворотна оренда (взяття продавцем в оренду проданого ним же майна)
finance lease	капіталізована оренда; оренда фондів; фінансова оренда
export credit loan	державний експортний кредит, кредит від експортно-кредитного агентства
tax lease	податковий лізинг
equipment trust certificate	трастовий сертифікат на обладнання
Islamic finance	ісламська фінансова справа (особливість: забороняється стягувати проценти, що пояснюється релігійними нормами)
downturn	спад; зменшення попиту; скорочення обороту
lessor	той, хто здає в оренду, орендодавець
lease	здавати (брати) в оренду
lessee	наймач, орендар
Haj	Хадж (паломництво до святинь ісламу в Мецці та Медині)
wet lease	мокрий лізинг (довгострокова оренда повітряного судна з екіпажем, технічним обслуговуванням і страхуванням)
cargo aircraft	вантажний літак
syndicate a loan	створювати синдикат для надання позики
equity	власний капітал
tax breaks	податкові пільги
depreciation allowance	податкова знижка на амортизацію
eligible	який має право
leverage lease	кредит під заставу зданого в оренду майна і орендних платежів
residual value	ліквідаційна вартість; залишкова вартість; вартість майна після закінчення строку оренди
special purpose company	цільова компанія
bond interest	відсотки по облігаціях
Shariah	шаріат (сукупність норм, що регулюють поведінку мусульман)
Ijara	іджара ( в ісламській фінансовій справі: контракт, за яким за дорученням клієнта купує і здає йому в оренду будь-який об’єкт за певну плату, аналог лізингу)

Exercise 148. Read, translate and give the gist of text 22.