Dallas/Fort Worth Map on For simplicity, assume there are only two possible outcomes: a good state of the world (e.g., no auto accident, healthy, or alive), and a bad state of the world (e.g., crash, illness, or death). After the risk is resolved and the state of the world is known, the insurer will pay the insured if the bad state of the world occurred, and will pay nothing if the good state of the world occurred. Thus, insurance is a way that individuals can transfer their risk to an insurance company in exchange for a fee and allows individuals to smooth their wealth over possible future states of the world. Dallas/Fort Worth Map 2016.
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