Many definitions have been given to the term insurance, where incidentally there is no similarity between the definitions of each other. This is understandable, because they are in defining adjusted angles they use in looking at insurance, which according to the description above that insurance can be viewed from several angles.
Definsi-definition include:
1.Definisi insurance according to Article 246 The Book of the Law of Commercial Law (to businesses), the Republic of Indonesia:
"Insurance or coverage is an agreement by which an insurer committed themselves to the insured by receiving a premium, to provide reimbursement to him for any loss, damage or loss of expected profit, which may be suffered because of an incident that was not certain." Under that definition, then the insurance is contained four elements, namely:
a.Pihak insured (insured) who promised to pay a premium to the insurer, at once or gradually.
b.Pihak insurer (insure) that promised to pay some money (compensation) to the insured person, at once or gradually if something happened that did not contain certain elements.
c.Suatu event (accident) is not terntentu (previously unknown).
d.Kepentingan (interest) that may experience losses due to certain events that do not.
2. Definitions according to Prof. insurance. Mehr and Cammack:
"Insurance is a tool to reduce financial risk, by way of collecting exposure units in sufficient quantity, to make the individual losses can be estimated. Then the losses that can be predicted equally borne by those who are members. "
3. Definitions according to Prof. insurance. Mark R. Green:
"Insurance is an economic institution which aims to reduce risk, by combining in a number of management objects large enough amount, so that the overall losses can be predicted within certain limits."
4.Definisi insurance by C. Arthur Williams Jr. and Richard M. Heins, which defines the insurance on the basis of two viewpoints, namely:
a. "Insurance is a protection against financial loss by an insurer."
b. "Insurance is an agreement by which two or more persons or entities to raise money to overcome financial losses."
Based on these definitions above presumably on the definition of insurance which can cover all angles of view:
"Insurance is a means to reduce the inherent risks in the economy, by manggabungkan number of units affected by the risk of the same or nearly the same, in large enough quantities, so that the probability of loss is predictable and if the predicted loss occurs will be divided proportionately by all parties to the joint. "
Insurance function:
1. Risk Transfer
By paying a relatively small premium, a person or company can move the uncertainty of life and property (risk) to the insurance company
2. Collection Fund
Premiums earned and collected by the insurance company as a fund to pay for the risk incurred.