A contract to pay a premium in return for which the insurer will pay compensation in certain eventualities, e.g. fire, theft, motor accident. In effect insurance spreads risk, so that loss by an individual is compensated for at the expense of all those who insure against it, and as such it has an important economic function. The traditional forms of insurance are general insurance , i.e. marine and other property insurance against theft, fire and accident, and life insurance , the last-named strictly being assurance , because the cover is given against the occurrence of an event which is inevitable. There are also many other kinds of insurance, including public or professional liability, sickness and unemployment insurance, some of which, like National Insurance and the BUPA insurance for private medical treatment, are not carried out by the traditional insurance companies.
Traditional insurance is carried out in Britain by several hundred companies.
The UK is an important centre for the world insurance industry and about half of the premium income of British insurance companies is derived from their overseas operations. Life insurance is a popular way of providing for old age and purchasing a house or even equity shares, as well as protecting the financial position of dependants. The Penguin Dictionary of Economics 3. underwriting The Penguin Dictionary of Economics 4. The Penguin Dictionary of Economics 5. All rights reserved.