Most people view insurance as just that – a way to “make sure” they have protection against accident and injury. While that is certainly an accurate and true description, insurance actually serves a larger purpose in supporting and driving the larger economy.
A study published by the Insurance Information Institute in June 2018 offers 10 major reasons why insurance is such an economic asset. Here is that rundown:
- Financial first responders – Often arriving the same time as emergency officials, insurers make every effort to restore claimants and beneficiaries quickly and reliably. This lessens the costs of unexpected losses and benefits even among those not directly affected by a loss.
- Risk mitigators – Insurers sponsor and promote knowledge and activities that save lives and protect and preserve property.
- Capital protectors – Insurers are not as susceptible to short-term liquidity crunches as are other financial services firms. Reinsurers further stabilize insurer exposure to loss by spreading or diversifying transferred risk.
- Partners in social policy – By providing significant social benefits, such as compensation for injuries at work and rebuilding property after catastrophes, insurance contributes to the rebuilding of people’s livelihoods, as well as to the economy as a whole.
- Sustainers of the supply chain – Insurance protects economic interdependence among businesses by insuring vital supply chains.
- Capital infusers – Insurance reduces the need for “rainy day funds.” Consumers and businesses can buy insurance for a relatively small premium, thereby putting more working capital into the economy, producing and consuming more goods and services to create a higher standard of living.
- Community builders – Insurers are among the largest investors in the world, with more than $8 trillion in assets under management. Since these investments need to be available to pay long-term claims, investments often include private and municipal bonds that help communities grow and thrive.
- Infrastructure enablers – Insurance enables economy-boosting construction projects and events to take place.
- Innovation catalysts – Insurance allows innovators to take the risk that’s needed to spur modernization. For more than 300 years—including every industrial revolution—insurance has been a critical driving force, and thus is central to a developing economy.
- Credit facilitators – With insurance, lenders are more likely to provide funding for large purchases, consumer durables and to businesses, and charge lower interest rates for these loans.
We at the Reschini Group understand the vital role we play in spurring economic activity and growth in our region and among our clients. It’s a role we take very seriously, and with great appreciation for the relationships we are privileged to maintain.
Copyright 2018 The Reschini Group
The Reschini Group provides these updates for information only, and does not provide legal advice. To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.
Source: https://www.iii.org/sites/default/files/docs/pdf/insurance-driver-econ-growth-053018.pdf