The Insurance Undertaking

This chapter aims to explain how insurance works. The insurance undertaking offers insurance cover to an insured and receives a premium by way of counter performance. Differently from other productive sectors, the insurance sector also plays a delicate social role. The basic function of an insurer consists in fact of increasing the security of persons and undertakings by protecting individuals and society against risks. This applies both in respect of events or situations that are unknown and unforeseeable, that relate to old-age pensions and healthcare insurance given the tension there is a number of state public accounts. The equilibrium of an insurance undertaking is based on the economic and financial issues of management. This equilibrium changes over time as the make-up and trends of a portfolio of risks that an undertaking has built up over years is subject to variation. Finally, an insurance undertaking is subjected to several risks as it carries on its business: technical actuarial risks, financial risks and business risks.