INTRODUCTION

Insurance as a concept is predicated upon the law of large numbers—the prediction of losses through accurate statistical analysis of many similar risks, and their transfer from one entity to many others. In essence it is the spreading of risk by one party who may not wish or be unable to bear it all himself over the financial ability of many others to do so, each of whom will pay a small proportion of any loss. The spreading of risk is not only economic; a geographical spread of risk of, say, flood damage in different countries will also avoid an accumulation of exposure by any one insurer to any one source or type of risk.