from an individual perspective, insurance means you don't have to worry about unexpected expenses from things beyond your control (ie, peace of mind).

Now, the mechanism by which this is achieved may be described as a pool in that it's a single company with a pool of money that everyone pays into and the input into that pool necessarily must be greater than the output.

But from the "customers" perspective, insurance is peace of mind. ie, it smooths their total risk over time.

You will always have to worry about unexpected expenses, because insurance companies are never going to insure everything that could possibly happen, even if you get a good policy that doesn't dick you around on claims.

If you are expecting insurance to protect you from not knowing the risks, then you are taking a much bigger risk than not having insurance at all, because of the complacency that the belief you're insured engenders.

What I'm looking for is the ELI5 for what insurance really is about (especially from the POV of insurers) given that, if I understand correctly, 'chimeracoder is disputing the insurance-as-everyone-pooling-money model.

people and business purchase insurance to cover unexpected loss, ie, "peace of mind".

Maybe insurance companies are evil scumbags, but that's STILL the reason why people PURCHASE insurance.