The insurance industry provides financial protection against potential risks and losses. It operates by collecting premiums from policyholders in exchange for coverage, which can include health, property, life, and auto insurance. When a covered event occurs, the insurer compensates the policyholder, helping them recover from financial setbacks. Insurance companies assess risks using data and statistics to determine premium rates and coverage options. They play a crucial role in the economy by promoting stability and encouraging individuals and businesses to take calculated risks, knowing they have a safety net in place.