I read this book, Principles of Risk Management and Insurance (by George E. Rejda and Michael J. McNamara) , because my job is related to the insurance industry. Understanding how insurance works can help me perform better in my daily job.

Overview

This book brings me a systematic view of the insurance industry, as well as details real-life problems. It’s a good book for whom are not professionals in this area but need some understanding of the insurance market. The chapters are well organized and summarized. Following the book, you will understand:

  1. How are risk and insurance correlated?
  2. How is insurance classified: life insurance, property and liability insurance, and the others?
  3. How does the legal system (in the US) impact the insurance industry?
  4. What’s the role of government in the insurance market?
  5. How is the premium calculated?
  6. How to shop for life insurance and property insurance?

The only downside of this book is that it only focuses on the US market. You may need additional materials to gain some insights into the local market if you live somewhere else. The legal and commercial systems can be very different worldwide.

small notes

I was curious why people don’t smash to the car which cut in the road. After reading this book, I understand that such intentional crush are excluded in auto insurance, and the car crushing intentionally takes the full responsibility of the crush. I think it’s unfair but this is life. We can do nothing to prevent cars from cutting in the road.