Explanation of the macroeconomic functions of insurance can be seen from the five main viewpoints which transfer the risk (risk transfer), the risk-based assessment (risk-based pricing), pushing compensation law, the investment function of insurance companies, and advice in risk management functions.
Economic benefits to society of General Insurance
From the macro side, according to the Insurance Council of Australia, the insurance market effectively and efficiently is a fundamental tool for an advanced economy. Through the general insurance industry, the economy and economic agents can transfer and provide price risk, allowing them to better allocate resources to contribute to the growth / higher investment and living standards are also higher. As a driver of economic, general insurance contributes directly to economic growth by: a) assess the risks and risky activities, b) improve resource allocation in the economy, c) reduce transaction costs between the parties when they want to move the risk of sensitive risk (risk-adverse ) to those who are willing to bear it (risk takers), d) supports economic development by facilitating the investment at a higher risk of what can be borne without the presence of market risk, e) invest the funds of insurance premium on deepening (deepening) the range of capital available for investment objectives, f) reduce the burden of government / public sector in the event of damage or a severe natural disaster, thus also strengthening public financial management, g) supporting the realization of the principle of joint liability and personal responsibility in individuals and communities to protect from loss and damage, h) reduces the loss on the wider community through a strategy minimizing risk (risk mitigation).
Explanation of the macroeconomic functions of insurance can be seen from the five main viewpoints which transfer the risk (risk transfer), the risk-based assessment (risk-based pricing), pushing compensation law, the investment function of insurance companies, and advice in risk management functions.
Explanation of the macroeconomic functions of insurance can be seen from the five main viewpoints which transfer the risk (risk transfer), the risk-based assessment (risk-based pricing), pushing compensation law, the investment function of insurance companies, and advice in risk management functions.
Risk Control Mature vs Unexpected Loss
To better understand the benefits of General Insurance to manage risk, we can see an example of what is experienced by a family in their activities. Let's take the example of family and family Anton Louis, both of which are medium-sized family living in two different countries. Anton's family live in developing countries who have not applied the insurance policies so that less aware of the risks while the family lived in the country Louis, which requires the general insurance policies in many aspects and is very aware of the risks and the importance of management.
In the same year, the result of savings from working for four years for each of 800 million rupiah, the two families decided to build their own business with a value of 600 million rupiah. At the beginning of doing business, the family chose not to take Anton's general insurance policy to protect its business because it felt it was "safe" and loss of pay for insurance policies that are considered expensive. While Louis-conscious family decided to take the insurance risk management for business by setting aside $ 20 million each month to pay policyholders.Three years later, when both are enjoying the growing stage in his business occur unexpectedly shorted (short-circuit) that caused a fire at the family's place of business second. All equipment and raw materials sold out eat the red rooster. However, families do not look desperate Louis Anton family after the incident. Two weeks after the insurance claim process done and inspections from inspectors losses (loss adjusters) is completed, Louis Family redress that they need to rebuild their businesses as usual. They can retain the best workers who recruits, maintaining relationships with suppliers and most importantly, continue to maintain the market share of its products to consumers. As for the family of Anton, because they do not have insurance, are forced to work harder and raise more money in future years in order to rebuild their businesses. Because less aware of risk, business and business learning process that has been done by Anton's family over the years seem wasted away in the snap of a finger.
Louis families can protect their business by buying some types of general insurance. If business use of vehicles, he can mengasuransikanya. How much protection that will be enjoyed depending on the insurance agreement is made. If business use of buildings, Louis family can also use the building insurance to cover the cost of repairing or rebuilding if the buildings are damaged by the events that are not predictable. In addition there are also insurance for the contents of the building (Home contents insurance) to cover such items as clothing, cabinets, electrical appliances, carpeting and so forth.
In the same year, the result of savings from working for four years for each of 800 million rupiah, the two families decided to build their own business with a value of 600 million rupiah. At the beginning of doing business, the family chose not to take Anton's general insurance policy to protect its business because it felt it was "safe" and loss of pay for insurance policies that are considered expensive. While Louis-conscious family decided to take the insurance risk management for business by setting aside $ 20 million each month to pay policyholders.Three years later, when both are enjoying the growing stage in his business occur unexpectedly shorted (short-circuit) that caused a fire at the family's place of business second. All equipment and raw materials sold out eat the red rooster. However, families do not look desperate Louis Anton family after the incident. Two weeks after the insurance claim process done and inspections from inspectors losses (loss adjusters) is completed, Louis Family redress that they need to rebuild their businesses as usual. They can retain the best workers who recruits, maintaining relationships with suppliers and most importantly, continue to maintain the market share of its products to consumers. As for the family of Anton, because they do not have insurance, are forced to work harder and raise more money in future years in order to rebuild their businesses. Because less aware of risk, business and business learning process that has been done by Anton's family over the years seem wasted away in the snap of a finger.
Louis families can protect their business by buying some types of general insurance. If business use of vehicles, he can mengasuransikanya. How much protection that will be enjoyed depending on the insurance agreement is made. If business use of buildings, Louis family can also use the building insurance to cover the cost of repairing or rebuilding if the buildings are damaged by the events that are not predictable. In addition there are also insurance for the contents of the building (Home contents insurance) to cover such items as clothing, cabinets, electrical appliances, carpeting and so forth.
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