Insurance pooling is a method used by insurance companies to spread risk among a large group of policyholders. By collecting premiums from many individuals, insurers create a fund that can be used to pay for claims made by those who experience losses. This way, the financial burden of unexpected events is shared, making it more manageable for everyone involved. In an insurance pool, not every member will file a claim at the same time, which helps maintain the stability of the fund. This collective approach allows insurers to offer coverage at lower costs, benefiting both the company and its policyholders.