How do Insurance companies work?

Simply put, insurance companies help consumers manage their risk. In exchange for a constant stream of premiums, insurance companies offer to pay consumers a sum of money upon the occurrence of a predetermined event, such as a natural catastrophe, a car crash, or a doctor's visit

Thank you.

             By obtaining insurance policy after paying the corresponding insurance premium the holders of the insurance policies ( the insureds )are eventually transfers their risks to the insurance company , doing so they are collectively as a group of participants indirectly agree to compensate those who may actually incurs and suffers losses or deterioration of their insured objects . The insurance company work is to manage this process by collections of the premiums from all insureds and create pool of money and invests it , therefor the insurance company is becoming capable to pay losses and claims that may be raised by some of the participants / or

( some of the insureds ) and reimburses them for their losses.

  The insurance company must arrange REINSURANCE protection which is very important and facilitate the insurance company's works to a larger extent.

Thanking you. 

Insurance works by pooling risk.

It simply means that a large group of people who want to insure against a particular loss pay their premiums into what we will call the insurance bucket, or pool. Because the number of insured individuals is so large.

This allows the insurance companies to operate profitably and at the same time pay for claims that may arise.

Today there are many forms of insurance -- life, health, home and auto -- are just a few.  When you buy insurance, you join many others who pay money to an insurance company.  The insurance company uses the money collected to pay claims that are submitted by those who have purchased insurance.  The money is "pooled" and losses and expenses are shared.  An important aspect is the members of a pool share similar risk characteristics.

 When you buy insurance, you get a policy.  That policy is a legal contract.  It spells out exactly what you are buying; it lists what is covered and what is not.  It lets you know how much you must pay (the premium) and when it must be paid.  You need to read your policy and try to understand it -- even if it seems complicated.  You should contact your agent or your insurance company representative and ask questions about anything you do not understand.  Insurance agents sell policies for an insurance company.  Some agents work exclusively for one company, sometimes referred to as captive agents.  Others sell for many different insurance companies (these are called independent agents).

Insurance can protect you for almost anything that might happen unexpectedly or accidentally.  You buy protection against the chance of losses that can burden you financially.

 There are many types of insurance available.  You can buy insurance to provide income to your dependents in the event of your untimely death.  It can also protect you in the event your car is damaged or you are injured in a crash.  You need protection for your home and your personal property.  Renters need protection for their personal belongings.  Insurance can assist if you have a serious illness and costly medical bills.  Workers' compensation is insurance purchased by employers to help pay the expenses of employees who are injured on the job.

Insurance company is a risk transfer cooperative that handle the risk of  individuals and transfer it to a number of persons who are expose to it and who agree to insure themselves against the risk. They handle the risk of individuals by issuing cover to them for a given period of time, which a payment (premium) is received in return.