Q.State any four functions of insurance.

Insurance does far more than pay claims — it also serves individuals, businesses and the wider economy in several ways.

Insurance performs several functions, of which any four fully answer this question:

Primary functions

1. Providing certainty — it replaces the uncertainty of a large, unpredictable loss with the certainty of a small, known premium.
2. Providing protection — it protects the insured against the financial consequences of a loss by making it good when it occurs.
3. Risk-sharing — it shares the loss of the few among the many exposed to the same risk.

Secondary / indirect functions

4. Prevention of loss (loss control) — insurers encourage safety measures that reduce losses.

5. Provision of capital and mobilisation of savings — premium funds are invested productively in the economy. …