Saturday, July 5, 2008

Insurance
Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium. An insurer is a company selling the insurance. The insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.

Principles of insurance
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Commercially insurable risks typically share seven common characteristics.[1]
A large number of homogeneous exposure units. The vast majority of insurance policies are provided for individual members of very large classes. Automobile insurance, for example, covered about 175 million automobiles in the United States in 2004.[2] The existence of a large number of homogeneous exposure units allows insurers to benefit from the so-called “law of large numbers,” which in effect states that as the number of exposure units increases, the actual results are increasingly likely to become close to expected results. There are exceptions to this criterion. Lloyd's of London is famous for insuring the life or health of actors, actresses and sports figures. Satellite Launch insurance covers events that are infrequent. Large commercial property policies may insure exceptional properties for which there are no ‘homogeneous’ exposure units. Despite failing on this criterion, many exposures like these are generally considered to be insurable.
Definite Loss. The event that gives rise to the loss that is subject to insurance should, at least in principle, take place at a known time, in a known place, and from a known cause. The classic example is death of an insured on a life insurance policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory. Occupational disease, for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable. Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information, could objectively verify all three elements.
Accidental Loss. The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be ‘pure,’ in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks, are generally not considered insurable.
Large Loss. The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonably assure that the insurer will be able to pay claims. For small losses these latter costs may be several times the size of the expected cost of losses. There is little point in paying such costs unless the protection offered has real value to a buyer.
Affordable Premium. If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the accounting profession formally recognizes in financial accounting standards, the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, the transaction may have the form of insurance, but not the substance. (See the U.S.
Financial Accounting Standards Board standard number 113)
Calculable Loss. There are two elements that must be at least estimable, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim.
Limited risk of catastrophically large losses. The essential risk is often aggregation. If the same event can cause losses to numerous policyholders of the same insurer, the ability of that insurer to issue policies becomes constrained, not by factors surrounding the individual characteristics of a given policyholder, but by the factors surrounding the sum of all policyholders so exposed. Typically, insurers prefer to limit their exposure to a loss from a single event to some small portion of their capital base, on the order of 5
percent. Where the loss can be aggregated, or an individual policy could produce exceptionally large claims, the capital constraint will restrict an insurers appetite for additional policyholders. The classic example is earthquake insurance, where the ability of an underwriter to issue a new policy depends on the number and size of the policies that it has already underwritten. Wind insurance in hurricane zones, particularly along coast lines, is another example of this phenomenon. In extreme cases, the aggregation can affect the entire industry, since the combined capital of insurers and reinsurers can be small compared to the needs of potential policyholders in areas exposed to aggregation risk. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any individual insurer’s capital constraint. Such properties are generally shared among several insurers, or are insured by a single insurer who syndicates the risk into the reinsurance market.


Rapti Zone


Districts of Rapti
Rapti (राप्ती) is a mid-western anchal (first-order administrative district, usually translated as 'region') of Nepal. It is divided into 5 jilla (districts):
Dang Deokhuri District
Pyuthan District
Rolpa District
Rukum District
Salyan District
The headquarters of Rapti is Tulsipur (Dang), and the largest city is Tribhuvannagar (Ghorahi),Other main cities and towns of Rapti zoon are Tulsipur, Bijuwar, Liwang, Lamahi, Musikot and Chaurajhari etc.
Dang district comprises the inner Terai valleys Deukhuri and Dang plus parts of adjacent mountain ranges. Here the Siwalak range rising to about 600 meters splits into two sub-ranges. The southern Dundwa Range begins a few kilometers north of Nepal-India border and separates the Deukhuri Valley from the Gangeatic Plains. The northern Dang Range then separates the Deukhuri and Dang Valleys. The 2,000 meter Mahabharat Range borders the Dang Valley on the north. Nepal's densely populated "Middle Hills" begin along the crest of the Mahabharat Range.
The (West)Rapti River flows the length of Deukhuri Valley after emerging from a gorge through the Mahabharat Range, eventually joining the Karnali River near Gorakhpur, India. Dang Valley is drained by the Babai river, another Karnali tributary.
Until a few decades ago the Dang and Deukhuri Valleys were malarial and virtually uninhabitable except to the Tharu ethnic group who seem to have evolved a degree of resistance. The government began using DDT to suppress the mosquito vectors, thus this relatively level, fertile and well-watered land became useful to settlers from the hills.
Pyuthan, Rolpa and Salyan districts are situated in and north of the Mahabharat Range, in the so-called middle hills. Pyuthan district has extensive irrigated rice growing areas inhabited by Brahman-Chetri and Newar castes along Jimruk Khola, a major upper tributary of the (West) Rapti River. Rolpa district mainly lies along Madi Khola, the other major upper Rapti tributary that is more eroded into an inner gorge and less useful for irrigation.
Pyuthan and Rolpa districts extend north to rugged 3-4,000 meter ranges where Madi Khola and Jimruk Khola rise. Kham Magars live in small villages throughout these highlands up to about 2,500 meters. Since agriculture is difficult away from lowland streams, they also herd sheep, goats and cattle and sell butter, grow subtropical and temperate fruit such as citrus and asian pear, and migrate in search of employment. They also made hashish from hemp that grows wild in cloud forests at about 3,000 meters until the government got out of this business in the 1970s.
Salyan district is similar to Pyuthan in having a mix of rice-growing lowlands inhabited by caste hindus, and uplands inhabited by Kham peoples.
Rukum is the northernmost district of Rapti Zone. It lies north of the Rapti basin, from the easternmost tributaries of the Bheri up to the southern slopes of Dhaulagiri Himal. It is sparsely populated but used by Kham herdsmen in summer. There is a settlement of Tibetan Refugees at Dhorpatan in the valley of the so-called Uttar Ganga, a Bheri tributary.
Rapti Zone has a history of radical politics since the mid-20th century and in the 1990s became a center of the Maoist (maobadi) rebellion against the royal government and the fragile democracy that the late King Birendra eventually supported
Dang Deokhuri District
A part of Rapti Zone, is one of the seventy-five districts of Nepal, a landlocked country of South Asia. The district, with Tribhuvannagar as its district headquarters, covers an area of 2,955 km² and has a population (2001) of 462,380.
There are many Tharu people living here. Since the early 1990s, activist groups have been attempting to eradicate the practice of child indentured servitude among the Tharu, many of whom sold their young daughters to wealthy families in urban areas.
Dang is the largest valley of asia