Insurance is a form of risk management. It is a promise of compensation from the insurer to the policy holder for specific future losses in exchange for a regular payment. It is designed to protect the individual, business or organization from an unexpected loss and secure their financial well-being.
Some of the most extreme cases of financial loss to individuals, businesses and whole regions result from natural catastrophes. In 2016, the insured losses worldwide reached approximately 53.75 billion U.S. dollars. Weather related losses cost the insurance industry 36.9 billion U.S. dollars, man-made disasters cost 7.8 billion U.S. dollars and earthquakes cost 9.05 billion U.S. dollars.
Man-made insured losses are those caused by fires and explosions, mining accidents, aviation, maritime or rail disasters. In 2016, major fires and explosions worldwide cost the insurance industry approximately 4.64 billion U.S. dollars and were the most significant insured loss among the mentioned categories.
The most costly terrorist attack took place in United States in 2011. The insured property loss resulting from the crash of hijacked airplanes into World Trade Center and Pentagon amounted to 25.67 billion U.S. dollars.
A large part of the above-mentioned costs is incurred by the insurance companies. There are many companies worldwide operating in the insurance sector. The largest insurers in terms of revenue in 2015 were Berkshire Hathaway (210.82 billion U.S. dollars), AXA (129.25 billion U.S. dollars) and Allianz (122.95 billion U.S. dollars).
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