Functions Of Insurance

Ask most people what insurance does and they will say it pays out when something goes wrong. True, but that is only the surface. Underneath sits a quiet machine that turns thousands of small, uncertain premiums into a fund large enough to rebuild a burnt shop, and then puts the waiting money to work building roads, factories and homes. Insurance both protects the individual and grows the whole economy, and the syllabus asks you to see both halves at once.

This lesson separates what insurance is built to do, its primary functions, from the wider benefits it happens to deliver, its secondary functions. You will see how the common pool works, why a single premium can stand in for a huge loss, how insurers become one of the largest investors in the country, and how the trade earns foreign exchange that counts among a nation's invisible earnings. By the end you will be able to place any function in the right family and back it with a Nigerian example.