A. Prof. Willer defines Insurance as "a social device for making accumulations to meet uncertain losses of capital, which is carried out through the transfer of risks of many individuals to one person or to a group of persons".

Insurance is defined as, "a cooperative device to spread the loss caused by a particular risk over a number of persons, who are exposed to it and who agree to insure themselves against that risk."

1) Risk sharing device: The basic function of insurance is to provide protection against certain or uncertain losses, The financial loss on the happening of certain events like death, fire, theft, accident etc.

ii) Co-operative device: It would be a stupendous task for an insurer to compensate all financial losses suffered by the insured from his own capital.

iii) Protective device: Insurance provides protection against all risks of loss. In absence of insurance. all losses have to be borne by the insured himself which is humanly impossible. Thus, insurance serves as a tool of protection.

SUPER JET-'Q' Book

TS Sr. Commerce & Accountancy