Insurance generally compensates for the losses that some of the insured incur by pooling the funds from many of the other insured entities.
The other insured entities are protected from potential losses for a fee, with the fee depending on the estimated frequency and severity of the potential loss.
In order for a risk to be considered insurable, it must meet a set of characteristics and standards.
Insurance being a financial intermediary has become a huge commercial enterprise and is now a major player in the financial services industry. Individual entities can also engage in their own personal insurance fund by saving money for possible future losses.
Insurance companies may offer any combination of insurance types, but are usually classified into three main groups: life insurance companies, non-life or property/casualty insurance companies, and health insurers.