Insurance is a system in which payments of participants (individuals, businesses or others) are made in exchange for a commitment to reimburse for specific type of losses and under certain conditions. The organization or entity that facilitates the pooling of funds and the payments of benefits is called an insurer.
The principal function of an insurer is the acceptance of risks transferred to it by others. This task is divided into insurer functional areas consisting of marketing, loss control, underwriting, premium auditing, claims and reinsurance. Because of their complexity, insurer functions are segmented into specialty departments who must work together to be successful in performing the task of risk transfer.