What is the role of the insurer in an insurance contract?

The role of the insurer in an insurance contract primarily involves the responsibility to pay claims that arise from covered events. When an insurance policy is issued, the insurer agrees to provide financial protection to the policyholder in exchange for the payment of premiums. When a loss occurs that is covered by the policy, the insurer assesses the claim and, if valid, disburses the agreed-upon compensation to the policyholder or a third party.

While collecting premiums, managing risks, and potentially other functions are essential aspects of the insurer's operations, the core commitment of the insurer is to fulfill its obligation to pay claims as delineated in the insurance policy. This payment of claims embodies the primary purpose of insurance as a financial safety net against unforeseen events. Therefore, it is fundamental to recognize that the payment of claims is the key role that directly impacts the policyholder's experience and trust in the insurer.