Short answers, pulled from the story.
Insurance is a means of protection from financial loss, where one party pays a fee called a premium and another party agrees to compensate it for a covered loss, damage, or injury. It works by pooling funds from many insured entities to pay for the losses that only some will incur, a process known as a risk pool. The insured receives a contract called the insurance policy that details when the insurer will pay.
The first known insurance contract dates from Genoa in 1347. Separate insurance contracts, not bundled with loans, were invented in Genoa in the 14th century. The earliest known life insurance policy was made in the Royal Exchange, London, on the 18th of June 1583, for 383 pounds, 6 shillings and 8 pence on the life of William Gibbons.
The Great Fire of London in 1666 devoured more than 13,000 houses and turned the development of property insurance from a matter of convenience into one of urgency. Sir Christopher Wren reserved a site for the Insurance Office in his 1667 plan for London. In 1681 Nicholas Barbon and eleven associates founded the first fire insurance company, the Insurance Office for Houses.
An insurable risk typically shares seven characteristics: a large number of similar exposure units, a definite loss, an accidental loss, a large loss, an affordable premium, a calculable loss, and a limited risk of catastrophically large losses. These traits let insurers benefit from the law of large numbers and ensure losses are independent and non-catastrophic.
Insurance companies make money in two ways: through underwriting, by selecting risks and charging premiums above expected losses, and by investing the premiums they collect, earning returns on what is called float. In 2007, U.S. industry profits from float totaled 58 billion dollars, and a company with a combined ratio over 100% can still be profitable through investment earnings.
According to Swiss Re, the global insurance market wrote 7.186 trillion dollars in direct premiums in 2023. The United States had the largest market at 3.226 trillion dollars, or 44.9%, followed by the People's Republic of China at 723 billion dollars, the United Kingdom at 374 billion dollars, and Japan at 362 billion dollars.