The insurance industry comprises companies and people who develop insurance policies, and sell, administrate, and regulate them. Some insurance companies offer investment products and employ people who develop, sell, administrate, or service these products. Insurance is about managing risk, for both the insurance company and its customers. The company must make sure it collects enough money in premiums to offset customers’ claims while still maintaining a profit. Customers use insurance to minimize risk to their finances in the case of lost or damaged property, lawsuits, illness or accident, business interruption, or premature death.
Today, there are few items of value that can’t be insured. The most common insurance policies are business insurance, car/vehicle insurance, health insurance, home/rental insurance, life insurance, and other property/casualty insurance policies. Some celebrities have insured their body parts or musical instruments. For example, Keith Richards, guitarist with the Rolling Stones, insured his fingers. If his fingers were to be injured to the point that he could never play the guitar again, he would file a claim with his insurance company, in this case, Lloyd’s of London, to receive a check equal in value to that placed on his fingers.
Insurance companies identify a need, for example, the need for car insurance. They conduct research to identify car insurance policies that would be beneficial to customers, and the risk that customers will file claims. Of course, several additional factors play into the calculations, but after these have been considered, the policy is developed, along with its pricing plan.
Insurance is sold in four primary ways, whether to individuals or businesses.
For individuals, families, and small businesses, insurance is sold either through captive or exclusive agents, or through independent agents. Captive or exclusive agents sell only one company's products, e.g., they are captive or e...