Which type of company provides financial coverage against adverse events?

Insurance companies are specifically designed to provide financial coverage against adverse events, such as accidents, illnesses, property damage, and other unforeseen circumstances. This coverage helps individuals and businesses manage risk by transferring the financial burden of potential losses to the insurer in exchange for premium payments.

Insurance works by pooling the resources of many policyholders, which allows the company to pay for the losses of the few who experience adverse events. This concept of risk management is fundamental to the operation of insurance companies, making them essential for protecting against uncertainties in life and business.

In contrast, investment firms focus on managing assets and investment portfolios, credit unions provide banking services and loans to their members, and brokerage houses facilitate the buying and selling of securities. While all these types of companies play important roles in the financial sector, only insurance companies are dedicated to providing protection against financial losses due to adverse events.