Answer:
Yes the statement is True. Insurance companies create a pool of funds to handle Risk.
Step-by-step explanation:
People insure themselves or their belonging with the insurance companies, so that they can get advantage of the insurance in case of need. They pay some amount yearly to maintain their insurance. Insurance companies create a pool of this money or funds and invest it in some other options like Bonds, Stocks, Commodities, Treasury Bills, etc. Insurance companies do such practice of investing the money in different areas because of the risk factor. They cannot afford to take high risk by investing the whole funds in one specific investment opportunity. So to minimize the risk factory, they invest in different areas.