What is an insurance company?

An insurance company is an insurer in the form of company organization, which deals in insurance business. Insurance companies have the right to collect insurance premiums and establish insurance premium funds. At the same time, in the event of an insured accident, it is obliged to compensate the insured for economic losses. The main types of insurance companies are stock insurance companies, mutual insurance companies and exclusive insurance companies. Similar to joint-stock companies in other industries, joint-stock insurance companies are established by sponsors according to the company law, which stipulates the number of sponsors, the company's debt limit, the types of shares to be issued, taxes, business scope, company power, application procedures, company license, etc. Company organizations in western developed countries are composed of three power groups, namely shareholders, board of directors and senior managers.

Mutual insurance company Mutual insurance company is also a form of company organization, but it is a non-profit company with no shareholders, and the company is owned by the insured. Therefore, the insured has a dual identity, both as the owner and the customer of the company. Shareholders of joint-stock insurance companies are not necessarily customers of the company. As the owner, the insured of the mutual company can participate in the election of the board of directors, and the board of directors appoints the senior management personnel of the company to specialize in the business operation and management of the company. The insured can share the operating results in the form of "dividends".

Exclusive insurance company

Insurance companies established by industrial and commercial enterprises to provide risk insurance or reinsurance for their own enterprises, affiliated enterprises and other affiliated enterprises. A customer pays the insurance premium one or more times in a certain period of time, and the insurance company collects the insurance premium paid by a large number of customers. In the event of an insurance accident, the insurance company will pay the agreed compensation. If the indemnity expenditure of the insurance company is always less than the premium income, the difference will become the "underwriting profit" of the insurance company.

For example, a large number of scattered homeowners bought insurance and paid insurance premiums to insurance companies. In the event of an insurance accident, the insurer will perform the insurance liability according to the insurance clauses.

For some policyholders, the insurance premium they get because of the insurance accident is much higher than the insurance premium they pay, while others may not get compensation at all because there is no insurance accident during the whole insurance period. In a word, the total amount paid by insurance companies is less than the premium income they get. The difference between these two forms is cost and profit.

Investment profit