Insurer

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Definition:

Insurer also called ‘insurance company’ is the entity that accepts the risk and promises to pay for the losses that arise within the policy term. The insurer commits to pay for loss in exchange of the premiums, paid regularly.

Description:

In an insurance contract, the insurer is one of the parties involved that promises to pay for the financial losses that may arise after an unfortunate event. The insurance company has the capacity to absorb the losses suffered by the insured.

Insurer is an entity that sets the conditions for the coverage under the insurance agreement. Apart from it, an insurer is responsible to issue a policy and pay for the claims.

Before accepting a risk proposal, an insurer evaluates the probability of risk occurrence. If underwriting the proposal or accepting the risk is favourable, only then the insurer provides financial compensation when an unexpected or bad event takes place.

Example:

Rahul bought a term plan from ANC Insurance Company Limited. The company here is the insurer that promises to reimburse Rahul (insured) under the term plan if he dies within the policy term.