The economic content of the concepts of insurance portfolio balance
The essence and functions of the insurance portfolio
The essence and necessity of the financial stability of the insurance portfolio are necessary,
in the opinion of the author of the dissertation research, to begin with, the study of the insurance market.
To study this problem, it is necessary to create a classification of the insurance market,
and to do this, initially introduce the concept of the insurance market.
In general,
the insurance market can be defined as a set of economic relations arising from the protection
of the property interests of individuals and legal entities in the event of certain insured events
at the expense of monetary funds; formed from the insurance premiums they pay.
In this sense, the concept of the insurance market is no different from the market for any other product.
The difference appears only when comparing the objects of the studied market. If we take, for example,
the market for raw materials, such as gas, then the difference is that the assortment or list of the insurance services market does not correspond to the market for a specific product (gas),
but to the product market as a whole.
Further, if goods are produced in factories and factories and are the object of purchase and sale,
then in the insurance market, the object of purchase and sale is the insurance product
as a result of the conclusion of an insurance transaction.
An insurance transaction is a basic element of the conceptual model of the concept of insurance,
which, from an economic point of view,
is the result of the coordination of the economic interests of the subjects –
participants in the transaction.
The object of insurance is the property interests of legal entities and individuals related to the possession,
use, and distribution of property;
with indemnification of insurance for the harm caused by him to the person or property of an individual or legal entity;
as well as those related to the life, health, ability to work and pensions of the insured or the insured person.
Further, in order for the goods to reach the consumer,
it is necessary to organize the distribution of goods, and for the insurance product, the organization of its sale.
A product (in our example, gas) is sold one or more times,
and an insurance product can be sold only once since an agreement (insurance policy) is concluded.
Insurance within the framework of the concept must be considered as a system of social relations;
Kind of activity; type of business entities; a way to protect the economic interests of the subject.
The difference between the above definitions of insurance allows us to conclude
that the insurance market is an integral part of the market in general.
The role of insurance in the modern economy is due to the performance of the functions of a financial stabilizer of economic development, which, on the one hand,
allows economic entities, when concluding an insurance transaction, to compensate for damages resulting from random events, on the other hand,
to accumulate financial resources for investing in the national economy.
From this point of view,
the insurance market is a developing industry that is undergoing reform in our country and has a great future.
The reason for such optimism is that in many developed countries of the world,
insurance companies are on par with banks in terms of their capacity and the amount of
capital concentrated in them and are an important branch of the financial sector of the economy.
The insurance market has a number of features that distinguish it from other markets.
Firstly, this is the creation of insurance funds, which are created on the basis of the redistribution of monetary
funds and savings formed in the process of the primary distribution of national income –
all this makes the insurance market particularly susceptible to changes in the country’s economy.
The slowdown in economic growth and the increase in inflationary processes affect the collection of insurance premiums to insurance funds.
Secondly,
the insurance market is characterized by a closed distribution of damage within the framework of the insurance fund being created,
that is, the fund’s funds are spent only to compensate for the damage to its participants in the event of an insured event.
This means that the policyholder cannot claim back his money if the insured event does not occur.
Thirdly, the insurance market is based on the principle of balancing the interests of insurers and policyholders.
To fulfill this principle, insurers are forced to pay great attention to the reasonable amount of payments,
the amount of which is determined on the basis of the Law of Large Numbers and the Theory of Probability.
Fourthly, the insurance market is a necessary component of the investment activity of the country’s economy,
in which industries, such as the construction industry, are generally unthinkable without investments that are made through flow loans; loans, and borrowings –
all these financial transactions are guaranteed by the insurance of the borrower in favor of the lender.
Today, Russia has the most modest volumes of insurance premiums per capita.
The basis of the insurance market is:
- 1. Money capital owned by insurance companies acting as manufacturers of an insurance product;
- 2. High solvency of individuals and legal entities acting as consumers of the insurance product;
- 3. High insurance culture of the population and the insurance companies themselves;
- 4. General economic stability of the country.
- 5. The general stable financial position of most enterprises in the context of the country’s economic growth.
In the presence of all these conditions, the insurance market will grow along with the growth of economic activity.
The classification of types of insurance markets is similar, in the author’s opinion,
to the classification of portfolios of insurance services.
So distinguish insurance markets – international and national; insurance markets –
territorial, national and regional; insurance markets –
branch specialized and classical, insurance markets – state and non-state.