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 Insurance is supplied by a bank or financial institution to an individual or a business to protect against the risk of a loss. The insurer then charges a fee to the policyholder for the cover that is supplied by the insurance policy. This charge is usually paid as an annual or monthly fee. The insurance company uses a complicated set of variables to calculated risk when issuing an insurance policy, once the risk is calculated a fee, called a premium, is determined to complement that risk factor and charged to the customer.
Insurance first arose hundreds of years ago when traders would insurer their cargo when transporting goods from the Far East to other countries. Quite often pirates would intercept the ships or the boats would encounter bad weather and the cargo would be lost, thus insurance was a necessity. Later, after the great fire of London in the UK, house insurance was introduced to protect individuals from losing their home to fire. Today there are many forms of insurance available to cover a wide area of loss.
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