Insurance and Gambling Compared

Some people sometimes like to compare insurance with gambling. It is because there are some similarities between insurance and gambling. In both cases there are uncertainties, uncertainties of what will happen. Payments are made when events occur, for example, when accidents occurs in case of insurance, and when the player wins in case of gambling. If the event occurs, the insured like the gambler gains. If the event occurs the insured like the gambler gains. However, the insurance ad gambling though look alike, is not same thing. There are some difference between insurance and gambling between them.

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Growth of Modern Insurance

Many modern forms of insurance developed in England between the 16^th to 18^th centuries. The first known life insurance policy was written in London during the late 1500s. They also provided insurance to society members. Due to this, new risks also emerged. New forms of insurance were developed to manage these risks. The idea became so popular that it developed into England’s first fire insurance business. These companies became one of the most widely offered forms of property insurance. During this time, many companies were established to sell life insurance. Several mutual insurance companies were also developed.

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Meaning of Risk

We live in a risky world. Our society is full of risks. People lose their homes and personal property because of fire, flood, earthquake, hurricane and other natural disasters. There is no single unanimous definition of risk. Risk refers to the possibility that some unfavorable event will occur. Risk is traditionally defined as uncertainty. For example, the risk of cancer for smokers is present because uncertainty is present. Hence, the uncertainty surrounding potential losses is known as risk. The concept of chance of loss is related to risk. Various types of risks exist in the society. These risks have undesirable social and economic effects on the society.

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