Insurance companies

The primary purpose of insurance companies is to protect individuals and firms known as policy-holders from adverse events. Insurance companies receive premiums from policy-holders, and promise to pay compensation to policy-holders if particular events occur. There are two major segments in the industry life insurance on the one hand as well as property and causality insurance on the other.

Life insurance protects against illness, death and retirement. Companies acquire premiums from the policy-holders, and use them mainly to buy corporate bonds, mortgages, and stocks (amount limited by legislation). In 2006 in the US, life insurance companies were the largest group among the contractual savings institutions with aggregate assets of $4.71 trillion since reported by the Insurance Information Institute. Note that usual life insurance is no longer the primary business of many companies in the life/health insurance industry. Today the importance has shifted to the underwriting of annuities. Annuities are contracts that gather funds and/or pay out a fixed or variable income stream, which can be for a fixed period of time or over the lifetimes of the contract holder and his or her beneficiaries.

Property as well as causality insurance provides protection against personal injury and liabilities such as accidents or theft and fire. In comparison to life insurance companies they embrace more liquid assets because of a higher probability of loss of funds in case of major disasters. In the USA this section is fairly concentrated the top 10 firms have a 51 percent share of the market.