Insurance

http://www.quatloos.com/basic_insurance.htm

Collect premiums, reject claims.

In return for a fee, insurance covers some or all of the cost of financial loss should such loss occur. The insurance company uses a complicated data set to determine the odds that the loss will occur--or in other words, what risk the insurance company is accepting-- and fees (premiums) are established accordingly. The insurance company gambles that they will collect more in fees than they will pay out in the event of your death or an illness/accident, if you are sued, if you rack up the car, or your house is hit by a tornado or severe hailstorm.

If the gamble goes against the insurance company, it sustains a loss. If the gamble goes the insurance company's way, meaning that more premiums are taken in than claims paid out, the insurance company makes a profit which is necessary for the insurance company to stay in business and offer the service. To lower the odds for losing their profit, the insurance company generally accepts 'good' risks--those less likely to sustain a loss--and spreads the risk over numerous policy holders on the theory there will be more who do not have losses than there are those who do.