Functions of Insurance Company

• Provides Reliability


  The main function of insurance is that eliminates the uncertainty of an unexpected and sudden financial loss. This is one of the biggest worries of a business. Instead of this uncertainty, it provides the certainty of regular payment i.e. the premium to be paid.
• Protection 


  Insurance does not reduce the risk of loss or damage that a company may suffer. But it provides a protection against such loss that a company may suffer. So at least the organization does not suffer financial losses that debilitate their daily functioning.
• Pooling of Risk


  In insurance, all the policyholders pool their risks together. They all pay their premiums and if one of them suffers financial losses, then the payout comes from this fund. So, the risk is shared between all of them.
• Legal Requirements


  In a lot of cases getting some form of insurance is actually required by the law of the land. Like for example when goods are in freight, or when you open a public space getting fire insurance may be a mandatory requirement. So, an insurance company will help us fulfill these requirements.
• Capital Formation


  The pooled premiums of the policy holders help create a capital for the insurance company. This capital can then be invested in productive purposes that generate income for the company