Insurance- Introduction


Human life is open to many risks and uncertainties. For instance, accidents, death, loss of health, destruction of property by fire, floods, etc. may take place at any time. Insurance is a device, or rather a means, to minimise the evil effects of these risks and uncertainties on man. It does not eliminate risks, but it gives man protection against risks. There are countless risks in every sphere of life. The chances of occurrences of the events causing losses are quite uncertain because these may or may not take place. For e.g. a biker is always subject to the risk of head injury. But it is not certain that the accident causing him head injury would definitely occur. Still he covers his head with a helmet. Insurance is like the helmet that protects the biker from contingent accident and ultimate danger While it may not be possible to tell in advance, which person will suffer the loss, it is possible to work out the probability (based on past experience) as to how many may suffer the loss. Therefore people facing similar risks come together and contribute towards a common fund. When risk occurs, the loss is made good out of the common fund.

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