Insurance as prediction and prevention
One way of understanding insurance is to view it as a safety net – a way to limit the damage and/or losses caused by unexpected, tragic events – a burst geyser, a vehicle breakdown, a debilitating disease, or a natural disaster. In line with this view, the job of insurance companies is to calculate and pool risk. If insurers do their job well, people have a way to sustain their current quality of life, even when the unforeseen happens.
