Function

Insurance companies enter into contracts with individuals and businesses, guaranteeing the payment of a specified lump sum of money in the event a covered loss occurs. In exchange for providing this protection, insurance companies receive fees known as premiums, which they invest and earn interest on in order to have funds available to give pay outs when necessary.

Types of Insurance

Insurance companies provide insurance for a variety of purposes, such as homes and other real estate, automobiles and recreational vehicles like motorcycles and boats. Companies also sell insurance to help cover the cost of health care or debts of a person after they are decreased and also provide coverage for businesses to protect their property, employees and income.

Categories

Domestic insurance companies sell insurance in the state where they are headquartered, while an insurance company is foreign when it also sells insurance states outside of its headquarters' location. An alien insurance company is one that operates outside of the United States.

Regulation

Insurance companies are subject to regulations imposed by state departments of insurance, which are usually led by the State Insurance Commissioner. Insurance companies must receive licenses to sell insurance in each state the company operates in.

Large Insurers

In the United States, some of the largest insurance companies are American International Group (AIG), Met Life, Prudential, State Farm, Allstate, Travelers and the Hartford.

Source:

Insurance Information Institute: Domestic Insurance Company

Realtor.org: Who Regulates Insurance Companies?

Forbes: The World's Biggest Publlic Companies