Insurance is a critical part of the economy. It protects against the risk of untimely death and covers often expensive medical expenses. Insurance companies receive a large amount of money from premium payments, which are then invested into productive channels to benefit the economy. Insurance companies are also major investors and suppliers of capital. They play a similar role in capital formation as banks. Insurance helps business enterprises mobilize domestic savings, mitigate losses and promote trade.
Insurance premiums vary depending on who buys the insurance policy. Those with higher risk factors will pay higher premiums. However, this is a necessary by-product of underwriting. However, insurers should try to avoid discrimination in their pricing. For example, they should not insure people who are HIV positive.
The concept of insurance originated in the 18th century. In London, the Amicable Society for a Perpetual Assurance Office was formed in 1706. In 1762, Edward Rowe Mores founded the Society for Equitable Assurances on Lives and Survivorship. In the late nineteenth century, accident insurance became an important part of insurance. In 1848, the Railway Passengers Assurance Company was formed to insure against increasing accidents on the nascent railway network.
Insurance is a great way to protect yourself against financial losses. When an accident occurs, insurance will reimburse the policyholder for the cost of medical care and repairs. It also offers peace of mind during difficult times. A policyholder pays a small amount of their income towards an insurance premium.