Insurance = Collective bearing of Risk
Insurance is nothing but a system of spreading the risk of
one onto the shoulders of many. While it becomes somewhat impossible for a man
to bear by himself 100% loss to his own property or interest arising out of an
unforeseen contingency, insurance is a method or process which distributes the
burden of the loss on a number of persons within the group formed for this
particular purpose.
Basic Human trait is to be averse to the idea of risk
taking. Insurance, whether life or non-life, provides people with a reasonable
degree of security and assurance that they will be protected in the event of a
calamity or failure of any sort.
Insurance may be described as a social device to reduce or
eliminate risk of loss to life and property. Under the plan of insurance, a
large number of people associate themselves by sharing risks attached to
individuals. The risks, which can be insured against, include fire, the perils
of sea, death and accidents and burglary. Any risk contingent upon these, may
be insured against at a premium commensurate with the risk involved. Thus
collective bearing of risk is insurance.
