In simple terms, insurance allows a number of people to share risk by “pooling.” These people pay money to a common source (the insurance company) that, in turn, takes the risk for the pool to help pay claims at a later date. This can allow people to possibly avoid paying the full cost or damage on their own, often helping them avoid financial hardship.
Insurance companies generally fall into two categories: stock companies or mutual companies. A stock company is normally a corporation owned by people who have purchased shares of the company’s stock (the shareholders). A mutual company has no shareholders. It holds the company’s assets, and the company is owned by people who have an insurance policy with the company (the policyowners).
The insurance industry is divided into three main sections: health, life and property/casualty.
Learn more about the insurance industry:
