ABSTRACT
Chapter 1 focuses on the characteristics of insurance. The aim is to show that a market institution arises thanks to the possibility of applying the probability theory, among other things, and that estimating the risk and potential costs consequently becomes possible. Importantly, also the theoretical achievements of the Austrian School regarding these issues are compared to the concept of risk by F. H. Knight. However, insurance itself has some limitations. Although it is not possible to estimate risk everywhere – in other words, not all events are insurable and insured – a number of benefits offered by health insurance (e.g. the possibility of covering significant costs as a result of an accident or disease) are pointed out. Thanks to these benefits, insurance can be considered the focal point of the entire market health system. Finally, market health insurance is also compared to universal (public) insurance and a few important differences between them are highlighted.
