Warranties and service contracts are not issued by insurance companies, and the risk distribution in the transaction is incidental to the purchase of the merchandise. Warranties and service contracts are thus exempt from strict insurance laws and regulations. The business of insurance is sustained by a complex system of risk analysis. Generally, this analysis involves anticipating the likelihood of a particular loss and charging enough in premiums to guarantee that insured losses can be paid. Insurance companies collect the premiums for a certain type of insurance policy and use them to pay the few individuals who suffer losses that are insured by that type of policy.
Most insurance is provided by private corporations, but some is provided by the government.
For example, the Federal Deposit Insurance Corporation was established by Congress to insure bank deposits. The federal government provides life insurance to military service personnel. Congress and the states jointly fund Medicaid and Medicare, which are health insurance programs for persons who are disabled or elderly. Most states offer health insurance to qualified persons who are indigent. Government-issued insurance is regulated like private insurance, but the two are very different.