Insurance is a promise. When someone buys an industrial product, such as a car, they receive something tangible in return for their money; you can see its quality. However, when you buy insurance, you buy a promise. In addition, as you pay in advance, it becomes a mechanism prone to economic adventure, so it is necessary for the policyholders to have a guarantee that the premiums will be used correctly and that a fund will be set up to ensure that the contracted service will be provided in the future.
Insurance is a service whose price is determined on the basis of elements that may undergo significant variations; there is, therefore, a risk that it may be insufficient and jeopardize the possibility of the company providing the service.
For this reason, it is necessary to regulate the functioning of the insurance sector through both general and specific laws. As a result, insurance is a highly regulated activity throughout the world, with agencies in place to ensure that insurance companies act in accordance with the legislation in force.