Why do we need insurance?

What do we mean by insurance?

Individual economic and social life is constantly threatened by unforeseen accidents.

Some of these accidents cannot be absolutely prevented, such as earthquakes and wind and water damage.

Some things cannot be prevented relatively, such as traffic accidents and fires.


The insurance system is not intended to actively prevent such accidents, but to passively meet the economic demands of accidents.

In order to achieve this goal, many people who are at risk of the same accidental accidents form an insurance organization and

make a preparatory property by paying in advance in the form of premiums,

When an accident occurs among the members of a group, it is a system that can receive relief from economic insecurity by receiving benefits from it.


In order to rationalize the insurance system, the amount of premium is usually measured by measuring the ‘probability’ of the occurrence of an accident by applying the ‘big rule’.

In other words, in the light of past experience, only a fraction of many people who are at the same risk within a given period of time are realistically damaged and face economic unrest,

An almost constant ratio can be found between the total number of people affected and the total number of unharmed people.

The discovery of this ratio can be used to calculate how much money the total number of people would have to pay to save a person who was actually harmed.


The insurance system here has its technical basis.

Thus, insurance is on a reasonable basis, unlike gambling for the sake of merit.

The existence of Gefahrengemeinschaft, which consists of a large number of people, must be premised on applying the power of statistics and mathematics to the actual proportion of the number of victims found.

In forming this group, many people who are under the same risk are mutually insured.

Forming a legal group directly (mutual insurance company) and the insurer, the insurance company signed an insurance contract with many people for profit

Indirectly, policyholders form a group (for-profit insurance company).

Therefore, it is not a risk countermeasure by a group of many people, but a system that seeks to prepare for unforeseen disasters by accumulating reserves alone.

Self insurance is not insurance.