What is Insurance ?
Insurance is a means by which the risk of loss can be passed on to the other party (insurer or insurer) by paying a fixed fee (called premium). The party whose risk is given to the insurance company is called the ‘insured’. An insurer is usually a company that is willing and able to cover the loss or damage of the insured.
Insurance is a type of contract. An agreement between two or more persons is said to be legally enforceable. An insurance contract broadly means that the insurer pays a certain amount to the insured on the occurrence of the event described in the policy. The periodic premium (insurance, premium) that the insured pays to the insured may be redeemed in this agreement. The word ‘insurance’ comes from Persian which means ‘to take responsibility’.
Insurance is actually an agreement between the insured and the insured in which the insurer pays a certain amount (premium) to the insured in lieu of certain event (such as end of certain age or death) or actual loss in risk. ,
If we think about the basis of insurance, we know that insurance is a type of organization in which all the insured at risk pay premiums, while only a few (very few) of them actually suffer losses, they are compensated. In fact, risk appetite is high, but only a few people suffer from it in a given period of time. The insurer (company) distributes the losses of the insured parties to the remaining insured parties.