What is the greatest value of Insurance?
Insurance is a socio-economic institution that reduces risk both to society and to individuals. This is done by combining under one management, a large group of objectives so that the aggregate loss to which society is subject becomes predictable. Insurance has scientific basis and is effected by legal contracts, under which the insurer for consideration promises to reimburse the insured for any loss suffered during the tenure of the contract.
There are many social and economic values of insurance, but the greatest value lies in the benefits following from the reduction of risk in society. Insurance has the advantage as a device to handle risk and, therefore, it is necessary that its services be extended in order to bring about the greatest economic advantage to a given society. Insurance brings many benefits to an individual and to society as a whole. It enables the risks of financial losses to be transferred from the insured to the insurer. The knowledge that insurance exists to meet the financial consequences of certain risks, provides peace of mind and anxiety is reduced. The indemnity and or financial aid is the most important social and economic benefit of insurance. It helps to restore the insureds who have had a loss to the same financial position as before the loss occurred. This helps to maintain their economic positions and to ease the burden on others or on society as a whole.