Why is insurance so important for the economy?
For everything there is an insurance, you want to practice your medicine then you need medical malpractice insurance, if your event management firm then you will end up taking public liability insurance. Further if you want to secure your life from the critical conditions then you have medical insurance. Apart from all these, there are property insurance, credit insurance , marine insurance, life insurance, motor insurance, and so on. Insurance is really important for the economy as it not only protects your investment from any loss but takes the risk in event of any loss.
Insurance in itself is very vast field where the risk is transferred from the insured to the insurer. How does insurance make profit? The risk transferred from the millions insured through a premium that can be used to deliver to the few insured in the event of the loss. It all works out, jus like an equilibrium is attained when there is no loss and profit. But here in insurance, you earn more from the premium and deliver less in case of loss. Further it again reinsured through another company in event of loss then cannot be delivered by the insurance company.