Page 38 - M1_Insurance Introduction Notes

We know future is totally uncertain. Any

misfortune happening may occur at any stage of

life. The amount of loss and time of losses both

are uncertain. No doubt better planning and

administration can reduce the chances of

happening these types of accidents but it

requires lots of attention towards strengths and

weaknesses, special knowledge of the field after

all these precautions, the uncertainty remains

steady. Insurance provides certainty towards the

losses. The policy holders pay the premium to

buy certainty.

c) Distribution of risk

It is a co-operative effort where the risk is

distributed among the group of people. Thus, no

one have to bear the losses occurred due to

uncertainty.

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