In the absence of insurance, three possible individuals bear the burden of an economic loss; the individual suffering the loss; the individual causing the loss via  or unlawful conduct; or lastly, a particular party who has been allocated the burden by the legislature, such as employers under  statutes.

While types of insurance vary widely, their primary goal is to allocate the risks of a loss from the individual to a great number of people. Each individual pays a "premium" into a pool, from which losses are paid out. Regardless of whether the particular individual suffers the loss or not the premium is not returnable. Thus, when a building burns down, the loss is spread to the people contributing to the pool. In general, insurance companies are the safekeepers of the premiums. Because of its importance in maintaining economic stability, the government and the courts use a heavy hand in ensuring these companies are regulated and fair to the consumer.

Up until 1944, insurance was not considered "commerce" and not subject to federal regulation. But in United States v. South-Eastern Underwriters Association, the Supreme Court held that Congress could regulate insurance transactions that were truly interstate. Congress then enacted the  which provided that the laws of the several states should control the insurance business, but that the , the [[USC:15:12|Clayton Act], and the  were applicable to the insurance business to the extent that it wasunregulated by state law.