Insurance

The concept of pooling risk began in ancient civilisations. Various practices of risk pooling and sharing took shape in Greece, Rome and other trading nations by the Middle Ages. Centuries ago Chinese merchants, split cargo between several ships during treacherous voyages, that way no single merchant would face a total loss if disaster struck. Fast forward centuries later these early methods have evolved into modern-day insurance and risk management practices, which began to take root in Canada by the 1800s, parish and municipal fire insurance initially, followed by the first Canadian life-insurance in 1847. Prompted by the Canadian insurance law of 1868 major insurance companies formed by the 1870s. Today insurance impacts every part of daily life and commerce. The world literally doesn't function without insurance and risk management practices.

The basics of insurance

Insurance, at its core, is an agreement between the person or company (the insured) who pays a premium to an insurer and the insurer (insurance company), who contractually agrees to reimburse the insured for financial loss resulting from specified risks.

Insurance is about the law of large numbers, or in insurance context, the idea that with an increased number of risk exposures the actual losses approach their expected value quite closely. The projected collective loss is then shared proportionally by all the insureds in the form of premiums. With insurance, individuals, or organizations (insured) exchange their risk of uncertain but potential losses for a known certain payment (premium) to an insurance company. In paying a premium the insured trades their own financial resources for those of an insurer.

How insurance now impacts Canada

Insurance services touch every area of today's Canadian economy: individuals, homes, cars, businesses, communities, healthcare, investments, and employment. In 2020, Canadian Property and Casualty insurers wrote $71 billion CAD in direct written premiums for insurance on consumers' homes, cars and businesses according to Mordor Intelligence.

Important Links

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