1.1 INSURANCE- AN INTRODUCTION
Insurance may be described as a social device to ensure protection of economicvalue of life and other assets. Under the plan of insurance, a large number of peopleassociate themselves by sharing risks attached to individuals. The risks, which can beinsured 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.Insurance is a contract whereby, in return for the payment of premium by theinsured, the insurers pay the financial losses suffered by the insured as a result of theoccurrence of unforeseen events. The term "risk" is used to describe the possibility of adverse results flowing from any occurrence or the accidental happenings, which producea monetary loss.Insurance is a pool in which a large number of people exposed to a similar risk makecontributions to a common fund out of which the losses suffered by the unfortunate few,due to accidental events, are made good. The sharing of risk among large groups of people is the basis of insurance. The losses of an individual are distributed over a groupof individuals.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 tohis own property or interest arising out of an unforeseen contingency, Insurance is amethod or process which distributes the burden of the loss on a number of persons withinthe group formed for this particular purpose.
Insurance = Collective Bearing of Risks