From the perspective of economics, insurance is a financial arrangement to share the loss of accidents; From the legal point of view, insurance is a contractual act, a contractual arrangement in which one party agrees to compensate the other party for losses; From a social point of view, insurance is an important part of the social and economic security system and a "subtle stabilizer" for social production and social life; From the perspective of risk management, insurance is a method of risk management.

function

First, there must be risks in insurance. The purpose of establishing insurance system is to deal with the occurrence of specific dangerous accidents. Without risk, there is no insurance. In order to apply the principle of large number, commercial insurance institutions generally do not underwrite such risks.

Two, insurance must give economic compensation for the losses caused by dangerous accidents. The so-called economic compensation means that this kind of compensation is not to restore the destroyed original things, nor to compensate the real things, but to make monetary compensation.

Therefore, the losses caused by accidents must be economically calculable. In life insurance, people's own value cannot be calculated, but people's labor can create value. Death and disability will lead to the loss of labor force, which will reduce the income and increase the expenditure of individuals or families. Therefore, life insurance is to make up for this economic increase in the form of economic compensation or payment, rather than ensuring people to recover their lost labor or lives.

Third, insurance must have a mutual assistance relationship. The insurance system is to allocate losses to many units to reduce the losses of the affected units. Through insurance, the insured * * * jointly pays the insurance premium, establishes an insurance compensation fund, and * * * is jointly guaranteed.

Four, the insurance payment must be reasonable. The insurance compensation fund shall be shared by the insured. In order to make everyone's burden fair and reasonable, it is necessary to calculate the contribution scientifically.

Extended data source

From the beginning, human society has been confronted with natural disasters and accidents. In the process of struggling with nature, ancient people came up with insurance ideas and original insurance methods to deal with disasters and accidents.

Around 2500 BC, the king of Babylon ordered monks, judges and village heads to collect taxes as fire fighting funds. Masons in ancient Egypt set up funeral mutual aid organizations to solve the problem of raising funeral funds by paying membership fees. Soldiers' organizations in the Roman Empire provided living expenses for the survivors of fallen soldiers in the form of fund-raising and gradually formed an insurance system.

With the development of trade, around 1792 BC, it was the era of Hammurabi, the sixth king of Babylon, and the business was prosperous. In order to help commerce and protect the goods of mules, horses and caravans that compensate for losses, in code of hammurabi, it is stipulated that * * * should share the compensation for losses.

References:

Baidu encyclopedia insurance