What is the basic principle of insurance?

The basic principle of general insurance is that small amounts of money are collected by a financial intermediary from a large number of clients. Their size is calculated on the basis of statistical data about certain “undesirable” (insurable) events. These contributions form the insurance fund.

Significant amounts of funds are paid out of this fund only to those individuals who, during the validity of the contract, experienced this “undesirable” (insurable) event, which is called an “insured event” in the documents. That is, we all pay, and only some of us receive reimbursement.

So, insurance recreates the idea of ​​caution, protection and safety, and from the point of view of the relationship of individual entities with insurance companies, this is a payment for peace.