how does the concept of risk differ for an insurance company

how does the concept of risk differ for an insurance company as compared to another type of corporation or individual? make sure to include the impact of the law of large numbers.

Solution

this is a different condtion and complete reverse conditon. if all other firms are doing good and people are best at their health aspects as well as financial aspects also, then the business of insurace company will be in profits. there are people who only pays premiums, but the claims will be very less. and this condition is good to the insurance firm and gains good profits.

on the other way if the other firms are not doing good and loosing business with different causes, then the claims from insurance company will be higher. the individual also applies for many claims because of the poor health and bad economic and financial aspects.

in simple terms, if all the industries and companies are doing in a nation, and people are good then the claims will be less to the insurace complany. and they will get profits. if any thing happen reversely, the insurance companies will get losses.