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Equitable transfer of the risk of a loss, from one entity to another in exchange for payment

Insurance is a system under which the insurer, for a consideration usually agreed upon in advance, promises to reimburse the insured or to render services to the insured in the event that certain accidental occurrences result in losses during a given period. It thus is a method of coping with risk. Its primary function is to substitute certainty for uncertainty as regards the economic cost of loss-producing events.

NAICS definition

This industry group comprises establishments primarily engaged in underwriting (assuming the risk, assigning premiums, and so forth) annuities and insurance policies and investing premiums to build up a portfolio of financial assets to be used against future claims. Direct insurance carriers are establishments that are primarily engaged in initially underwriting and assuming the risk of annuities and insurance policies. Reinsurance carriers are establishments that are primarily engaged in assuming all or part of the risk associated with an existing insurance policy (or set of policies) originally underwritten by another insurance carrier.

Industries are defined in terms of the type of risk being insured against, such as death, loss of employment because of age or disability, and/or property damage. Contributions and premiums are set on the basis of actuarial calculations of probable payouts based on risk factors from experience tables and expected investment returns on reserves.


Further Resources


How did insurances develop? - A short history of the insurance industry

September 2013


Ingrid Lunden
September 29, 2021
Millennial consumers are emerging as a key demographic in the insurance market, and today a Swedish startup that's building a business catering specifically to their needs and priorities is announcing a round of funding to fuel its growth. Hedvig, a neo-insurer that provides property, travel, contents, and accident insurance geared to the lifestyles of younger [...]
George Maliha
July 13, 2021
Harvard Business Review
New technologies require new frameworks to handle risk.
Martin Coulter
June 5, 2021
Business Insider
Wrisk recently launched a first-of-its-kind flexible car insurance product, allowing people to pay for the miles they drive.
Nikunj Ohri
May 28, 2021
Currently, India follows the old solvency standards where insurers have to hold a percentage of reserve as capital.
Zee News
May 27, 2021
Zee News
On Thursday (May 27), the Delhi High Court has directed the Insurance Regulatory and Development Authority of India (IRDAI) to understand if people, who weren't able to get hospitalisation due to lack of beds, can avail an insurance cover or not. Amid the second wave of coronavirus in the country,


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