Insurance companies are businesses that provide financial protection to individuals and organizations against potential losses. They collect premiums from policyholders in exchange for coverage, which can include health, auto, home, and life insurance. When a covered event occurs, such as an accident or illness, the insurance company pays out claims to help cover the costs. These companies assess risks and determine premium rates based on various factors, including age, health, and driving history. By pooling resources from many policyholders, insurance companies can manage risks and ensure that they have enough funds to pay claims when needed.