In insurance terminology, what is the party that assumes the risk and pays the claims?

The term that refers to the party assuming the risk and responsible for paying claims in an insurance context is the insurer. The insurer is the company or entity that provides the insurance coverage to policyholders, allowing them to transfer some of the financial risks associated with unforeseen events, such as accidents or disasters.

When an event occurs that is covered under an insurance policy, the insurer evaluates the claim submitted by the policyholder and, if justified, disburses the appropriate compensation as specified in the policy. This relationship is fundamental to the concept of insurance, wherein individuals or businesses can protect themselves against potential financial losses.

In contrast, the policyholder is the individual or entity that holds the insurance policy but does not assume the risk themselves; rather, they pay premiums to the insurer for the coverage. The beneficiary is the person or entity that benefits from the policy in case of a claim, typically in life insurance contexts. The underwriter evaluates the risk associated with insuring a particular individual or asset and helps set the terms and pricing of the insurance policy, but does not pay the claims directly. Thus, the role of the insurer as the risk bearer and claim payer is clear and central to the structure of insurance.