Social Insurance Benefits to society

From the social side, the benefits of insurance to the insurance are also very large. By helping communities to cope and effectively manage risk, insurance provides a huge contribution to our lives. Insurance improving existing standards with emphasis on factors which may cause insecurity. According to the Association of British Insurers, Insurance provides five strategic advantage indirectly (indirectly) to the community, namely: a) freedom from things that can damage the structure of assets and liabilities of an individual or business; b) security in the home and workplace from the threat of accident , robbery, fire and natural hazards; c) Better health from additional investment in medical costs and an emphasis on rehabilitation; d) wealth by supporting the spirit of entrepreneurs, innovation and risk-taking; e) flexibility in the presence of compliance with individual conditions and produce economic and social life that is not too dependent on government action.

Insurance is free does not mean that we can do anything even violates the contract agreement with the insurance though. We still have to comply with the contract of insurance premium payments, provisions and restrictions that apply. Giving freedom in this context means that the insurance helps us to realize our goal to transform the chaos that might occur into the risks can be managed.

Without insurance for example, a rider will have to gamble all of its assets each time they leave the garage because the accident will make them open to claims of damage. One fruit of crime to give a big damage on a business. Insurance will run the new technologies and products to be tested without fear, where before the failure can be bankrupted people trying to promote them. Of course some people will still take big chances, but millions of us will follow a more cautious, not too challenging and less productive because of the fear of liability that can destroy us we already have.

Even something that looks like a normal housing market depends on the availability of insurance; if home insurance does not exist, it would be difficult to imagine the families wish to invest all his wealth in a single property. Therefore, the modern economy, creating wealth on a scale that has never existed before, relying solely on insurance.

In creating the security, the insurance industry working closely with police investigations. However, the main contribution comes from the work of insurance every day it does with the policyholder through research on crime prevention. This encourages better handling of criminal acts from time to time. Unfortunately, some of the most vulnerable to crime is the least able to obtain additional security because of financial difficulties. In developed countries which require vehicle insurance, group insurance industry assess the car based on its security features and encourage suppliers to improve the safety car so that their model will encourage lower insurance premium. In addition, the insurance also guarantees security against fire, safety and driving insurance.

Impact of insurance against increasing prosperity is done by pulling down the limits of the business, product innovation and technology by providing a safety net for entrepreneurs. This bypasses the tendency of investors to put their money in the "safer" than the field of transforming. Oil and gas industry is a good example of the industry with a potential high risk that its construction is supported by insurance. Insurance helps to guide and encourage increased business investment, by showing the real costs of risk to individual companies and industries. Insurance cover almost all the costs of business obligations. Without insurance, many good companies to close due to a very temporary problem. Having insurance means that individuals and businesses do not need to maintain excess cash reserves to protect themselves against risk. Insurance freeing them to spend and invest.

Strong insurance industry makes life more flexible and not dependent on government funding. In this case the insurance industry to make life easier for taxpayers by reducing the demands that may have accrued on the welfare system and regulations. Private insurance often can provide a benefit that is more directed towards the needs of users, and can be done in lower cost, than can sometimes be provided by the government. It also allows for an injured party to sue for damages rather than seek help from the government. Public insurance to pay perawatanrumah described the pain of driving accidents and even accidents at work.

Economic Benefits of Public Insurance against society

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, enabling them to better allocate resources thereby contributing to the growth / higher investment and living standards are also higher. As the driver of the economy, general insurance contributes directly to economic growth by:

1. Assess the risks and risky activities
2. Improve resource allocation in the economy
3. Reduce transaction costs between the parties when they want to move the risk from risk-sensitive to those who are willing to bear
4. Support economic development by facilitating the investment at a higher risk than what can be borne without the presence of market risk
5. Invest the funds of insurance premium to deepen the reach of capital available for investment purposes
6. Reducing the burden of government / public sector in the event of damage or a severe natural disaster, thus also strengthening public financial management
7. Supporting the realization of the principle of mutual obligations and personal responsibility in individuals and communities to protect from loss and damage
8. Reducing losses in the wider community through a strategy of minimizing risk

Explanation of the macroeconomic functions of insurance can be seen from the five main viewpoints which transfer risk, a risk-based assessment, to encourage legal redress, the investment function of insurance companies, and advice on risk management functions.

In terms of risk transfer, insurance providers to provide security for individuals and companies and allow them to take risky activity. In general insurance, a person does not need to keep their funds in current savings to guard against risk.

In an effort to risk assessment, insurance companies determine premium rates that reflect possible losses, which is calculated by performing a direct calculation based on the collection of similar risks or by linking premiums to claims experience that never happened before. If the premium reflects the risk faced by the company correctly, then there is an incentive to reduce the risk as this will reduce the premium payable. When insurance prices increase, individuals and firms face strong incentives to improve its behavior. For example: Smokers and the affected street racer vehicle insurance are required to have to improve its behavior so as not exposed to a larger premium. This would also provide a beneficial impact on the overall economy.