In this article, a New York insurance attorney looks at what insurance companies do and how they function.
It’s All About Risk
You take risks almost every day. They may be financial, physical, emotional, major or minor, but the common denominator is that many of the things you do involve some type of risk. To sum up what insurance companies do at the most basic level, they share and manage risk. Essentially, the function of an insurance company is to spread various types of risks over extremely large numbers of people so that when an emergency occurs, the losses sustained are shared, and the harm is minimized accordingly.
How Insurers Make Their Money
Whether it’s a health, life, property, business, casualty, disability or other type of insurance company, insurers make their money in two primary ways. They sell policies and charge an annual, quarterly, or monthly premium from the policyholder, and they invest part of what they collect. By selling large numbers of policies and collecting premiums from vast numbers of people, they amass the resources needed to pay claims when it becomes necessary. The money earned by the funds they invest helps keep the premiums to a fairly reasonable level.
How It Began
Insurance is not a new concept. In fact, it’s several hundred years old. As far back as the 14th century, merchants trading in spices and other goods knew the dangers of the open sea. A ship pillaged by pirates or sunk by storms or shipwreck represented a loss that could be ruinous. To protect themselves and each other from such disasters, they banded together and shared the risk amongst them. This way, when ships were pirated or sunk, the losses were distributed among the participating merchants, and everyone could stay in business.
The Role of Your New York Insurance Lawyers
When an insurer fails to live up to the terms of a policy, refuses or denies claims improperly, or wrongs a policyholder in some other way, it becomes necessary for legal counsel to become involved. Your insurance attorney will evaluate your situation and the insurer’s behavior and determine what actions can and should be taken according to the laws currently in effect.
Call Your NY Insurance Attorney Today
By engaging an experienced NY insurance attorney, you will secure an advocate that will work tirelessly to protect your rights as a policyholder. Call Hiller, PC – Attorneys at Law at 212-319-4000 today.
