Insurance is based on the principle of _______.

Insurance is based on the principle of economic co-operation. It is a pooling of risks and spreading over a number of persons. It is the basic principle of insurance. The premium is collected from a number of persons, and an insurance fund is created. From this fund, the compensation is given to the contributors who suffer contingent loss. In modern days, it is now a specialized branch of commerce. Today, insurance covers a wide range of risks. It now closely related to the day-to-day life of individuals as well as of the nation. It also plays a prominent role in the national economy.