insurance is a form of risk management primarily used to hedge against the risk of an uncertain loss. An insurance company pools funds from many insured entities to pay for the losses that some may incur. The insurance company usesits knowledge of past payouts to calculate how much it needs to charge each entity.
The most complicated aspect of the insurance business is the actuarial science of ratemakingof policies, which uses statistics and probability to approximate the rate of future claims based on a given risk.
Types of insurance
Any risk that can be quantified can potentially be insured. The rate of gettingthat insurance policy is based on what the insurance company thinks itsclaims might be (actuarial science). Lloyds Of London
isone of the world's leading insurance market providing specialist insurance services to businesses in over 200 countries and territories. Lloyds is known forinsuring the "oddest" things in the world. Some are:
World-famous food critic Egon Ronay who had his taste buds insured for $400,000
Actress Betty Grable's legs were insured for $1 million each by the executives at 20th Century Fox in the 1940s
Australian cricket player Merv Hughes took out an estimated $370,000 policy on his trademark walrus mustache