insurance is a form of risk management primarily used to hedge against the risk of an uncertain loss.
An insurance company pools funds from many insured entities to pay for the losses that some may incur. The insurance company uses
its knowledge of past payouts to calculate how much it needs to charge each entity.
The most complicated aspect of the insurance business is the actuarial science of ratemakingof policies,
which uses statistics and probability to approximate the rate of future claims based on a given risk.
Types of insurance
Any risk that can be quantified can potentially be insured. The rate of getting
that insurance policy is based on what the insurance company thinks its
claims might be (actuarial science). Lloyds Of London
one of the world's leading insurance market providing specialist insurance services to businesses in over 200 countries and territories. Lloyds is known for
insuring the "oddest" things in the world. Some of these are:
World-famous food critic Egon Ronay who had his taste buds insured for $400,000
Actress Betty Grable's legs were insured for $1 million each by the
executives at 20th Century Fox in the 1940s
Australian cricket player Merv Hughes took out an estimated $370,000 policy on his trademark walrus mustache