insurance economics

Insurance economics refers to the financial principles and mechanisms that underpin the insurance industry. It involves risk assessment, where insurers evaluate the likelihood of certain events occurring (like accidents or natural disasters) and set premiums accordingly. By pooling resources from many policyholders, insurers can spread the financial risk of losses. This enables individuals and businesses to protect themselves against unpredictable events, ensuring that when a loss occurs, funds are available to cover the costs, thus providing peace of mind and financial stability. Essentially, it balances risk and cost for both insurers and insured parties.