in its simplest form insurance is nothing more than risk management. You, want to protect yourself from a bad event. You seek out an insurance company and offer to pay them a small amount of money so that IF the bad event happens they will pay you a larger amount and minimize your downside.
The insurance company takes your money and more from others looking to insuranc against the same or similiar risk in the hope that the risk never happens.
A contractual relationship that exists when one party (the insurer) for a consideration (the premium) agrees to reimburse another party (the insured) for loss to a specified subject (the risk) caused by designated contingencies (hazards or perils). The term "assurance," commonly used in England, is considered synonymous with "insurance."
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