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.