Why are insurance companies referred to as risk bearers?

Insurance companies are referred to as risk bearers because they assume the financial risk associated with potential losses faced by policyholders. By pooling premiums from many clients, they create a fund to cover claims, thereby spreading the risk across a large group. This allows individuals to mitigate the financial impact of unforeseen events, as the insurance company takes on the burden of those risks in exchange for the premiums paid. Ultimately, their role is to provide financial security and peace of mind to their clients.