Insurance is defined as a form of risk management primary insurance has been defined to be that in which a sum of money as a premium is paid in consideration of the insurance incurring the risk of paying a large sum upon a given contingency.
The most important function of insurance is to spread the risk over a number of persons who are insured against the risk, share the loss of each member of the society on the basis of the probability of loss to their risk and provide security against losses to the insured.
By usage both the terms provides indiscriminate meaning all over the world and it is needless to be very particular about their use.
8 types of insurance organizations are (1) self-insurance, (2) individual insurer, (3) partnership, (4) joint stock companies, (5) mutual companies, (6) co-operative insurance organization, (7) Lloyd’s association, and (8) state insurance.
Insurance is very important for a business as it allows the reduce the potential financial loss by transferring the risks via insurance.
Insurance and gambling was considered alike because there are uncertainty of events and payment is made when the event occurs. Like gambles the insured is unaware of the time and amount of loss.
History of Insurance Industry starts very ancient times. Marine Insurance is the oldest form of insurance and probably began in Northern Italy sometime during the 12th & 13th Century. The Great Fire of London in 1666 practically demonstrated the necessity and urgency of fire insurance.