Insurance company

A company of insurance or insurer is the company specialized in insurance, whose economic activity is to produce the security service, covering certain economic risks (insurable risks) to economic units of production and consumption.

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Its activity is an operation to accumulate wealth, through the contributions of many individuals exposed to unfavorable economic events, to allocate what accumulated, to the few to whom the need arises. It follows the principle of mutuality, seeking solidarity between a group subject to risks.
This mutuality is organized by business, creating a heritage that faces the risks. The unfavorable effect of these risks, considered as a whole, is substantially reduced, because, for the insurer, the individual risks are offset: only a few insured suffer them, compared to many who contribute to the payment of the coverage.

 This allows the statistical management of risk, from an economic point of view, although it is preserved individually from the legal point of view.
Financial activity

Insurance activity is one of the three pillars of financial markets, along with the credit or banking market and securities or financial instruments markets. Their strategic, social and economic importance leads them to be subject to strict administrative supervision with their own rules of operation, control and inspection.

Characteristics of insurance companies

Insurance companies, in order to be able to face the risks arising from their activity, must have sufficient financial resources and, consequently, the legislation imposes certain restrictions on them.
Given the desirability of permanence and stability in this sector, the legal norms usually prohibit that this activity can be developed by natural persons.

To ensure the solvency of insurance companies, the law rejects that these companies may engage in any type of activity other than the insurer.

The exercise of a financial intermediation activity that has to inspire the maximum trust between the insured and investors means that these entities are subject to the tutelage of the State that controls them, both for the beginning of their activity and for development.