Introduction: Insurance and Its Economic Role

Abstract

Uncertaintyis at the heart of insurance. This is already manifested in our limited knowledge about (observable) past events. In the “real” world all our activities depend on uncertain and unknown circumstances beyond the control of a single individual. Unambiguous, deterministic cause-effect relationships are replaced by ambiguity in the perception of the economic environment. With respect to the future, uncertainty looms still larger. However, it is possible to make forecasts about future events even with incomplete knowledge of past events.