What is the primary function of an insurer?

The primary function of an insurer is to provide insurance coverage. Insurers create products that allow individuals and businesses to transfer the financial risks associated with certain perils, such as accidents or natural disasters, to the insurer in exchange for a premium. By offering various types of insurance policies, insurers fulfill their role of protecting policyholders from financial loss.

While underwriting risks is a critical process within the insurance industry—assessing and pricing the risk involved in insuring a policyholder—it is a part of the broader functionality of providing insurance coverage. Marketing insurance products, although essential for reaching potential customers and explaining the value of coverage, does not encapsulate the core duty of the insurer. Paying out claims is a consequence of providing insurance coverage and fulfilling the insurer's obligation when a covered event occurs, but it is not the fundamental function itself. Thus, providing insurance coverage is the primary role of an insurer, enabling risk management for individuals and businesses.