The existence of a common pool, operated by insurance companies, brings with it many advantages including the following:
It relieves those insuring from the worry and anxiety they may have about how they would meet the cost of risk. In the case of businesses, this is a positive stimulus to their activities and allows them to get on with their own business in the knowledge that they are financially protected against many forms of risk.
Business people will be more inclined to risk their money by building factories, making goods, sailing ships, flying planes, with the knowledge that they will not lose everything should they fall victim of some risk. This is an extremely important benefit which insurance brings – not only to the individual insuring but to the whole country – as stimulating businesses makes for a healthy economy.
Insurance also can help in actually reducing losses. Insurance companies have a great deal of experience in risks of all kinds and, over many years, they have found ways in which certain risks can be reduced. They employ surveyors who go out and look at premises which people may want to insure. They can, from that experience, often suggest ways in which the likelihood of some risk occurring may be reduced. They might see some hazard which could injure employees, or a host of other problems. The advice and the recommendations they make on behalf of insurance companies cannot help but reduce the likelihood of many of the risks occurring.
One further benefit derived from the transaction of insurance is the use to which the insurance company puts the money it holds in the common pool. It does not use immediately all the money it collects as premiums. It holds it until one of the members of the pool suffers a loss. The money it holds is invested in a wide range of investments which all go towards aiding government, industry, commerce and consequently the whole country. A visible symbol of one of the uses to which insurance funds are directed is the building work being carried out in many of our cities. Look a little closer at the large signs surrounding these building sites and notice how many are being funded by insurance companies.
Think for a moment of what would happen in the absence of insurance. Certainly the benefits we have already listed would be lost and there might be considerably less industrial and commercial activity. Life would still continue on a personal basis and there would also be a considerable volume of business activity. Presumably, also, risks would still occur and losses would be suffered.
Who would provide compensation? Who would pay compensation to the injured motor accident victim, who would pay for the repair of damaged property? In short, who would provide the money which the current insurance market provides? At the moment, insurance companies pay out many millions of pounds every single day of the year and it seems likely that if it was not for insurance, this burden, or at least part of it, would be met by society at large. That would mean each one of us would have to contribute much more than we do now in taxation.
In relieving the state of this burden, the insurance industry performs a considerable public service.
We mentioned earlier that insurance is transacted all over the world and a great deal of the practice of insurance in other countries is based on the principles and practice of insurance in the Philippines. Although the United Kingdom led the way in the development of insurance, which is not surprising as it was one of the earliest industrialised nations. Since the Industrial Revolution, and even before, the insurance industry in the UK responded to the need for new and more sophisticated forms of insurance protection.
The UK is held in high regard as a centre for insurance and a large volume of insurance is purchased in London by overseas countries. Why is this fact included in a list of the advantages of insurance? The answer is that the UK benefits from the flow of premiums paid to insurance companies in this country from people and businesses abroad.
We could go on and single out further, more complex benefits derived from the transaction of insurance, but those we have listed are enough to show that a healthy and vibrant insurance industry is of major importance to the nation. In the act of creating the common pool, security and peace of mind are provided, the likelihood or severity of losses may even be reduced, vast funds of money are invested for the prosperity of the economy, the country is relieved from what it may look upon as a financial burden to compensate the victims of loss and, finally, the country gains large amounts of money from the payment of premiums into the UK from overseas. All this from the simple act of paying an insurance premium.
It relieves those insuring from the worry and anxiety they may have about how they would meet the cost of risk. In the case of businesses, this is a positive stimulus to their activities and allows them to get on with their own business in the knowledge that they are financially protected against many forms of risk.
Business people will be more inclined to risk their money by building factories, making goods, sailing ships, flying planes, with the knowledge that they will not lose everything should they fall victim of some risk. This is an extremely important benefit which insurance brings – not only to the individual insuring but to the whole country – as stimulating businesses makes for a healthy economy.
Insurance also can help in actually reducing losses. Insurance companies have a great deal of experience in risks of all kinds and, over many years, they have found ways in which certain risks can be reduced. They employ surveyors who go out and look at premises which people may want to insure. They can, from that experience, often suggest ways in which the likelihood of some risk occurring may be reduced. They might see some hazard which could injure employees, or a host of other problems. The advice and the recommendations they make on behalf of insurance companies cannot help but reduce the likelihood of many of the risks occurring.
One further benefit derived from the transaction of insurance is the use to which the insurance company puts the money it holds in the common pool. It does not use immediately all the money it collects as premiums. It holds it until one of the members of the pool suffers a loss. The money it holds is invested in a wide range of investments which all go towards aiding government, industry, commerce and consequently the whole country. A visible symbol of one of the uses to which insurance funds are directed is the building work being carried out in many of our cities. Look a little closer at the large signs surrounding these building sites and notice how many are being funded by insurance companies.
Think for a moment of what would happen in the absence of insurance. Certainly the benefits we have already listed would be lost and there might be considerably less industrial and commercial activity. Life would still continue on a personal basis and there would also be a considerable volume of business activity. Presumably, also, risks would still occur and losses would be suffered.
Who would provide compensation? Who would pay compensation to the injured motor accident victim, who would pay for the repair of damaged property? In short, who would provide the money which the current insurance market provides? At the moment, insurance companies pay out many millions of pounds every single day of the year and it seems likely that if it was not for insurance, this burden, or at least part of it, would be met by society at large. That would mean each one of us would have to contribute much more than we do now in taxation.
In relieving the state of this burden, the insurance industry performs a considerable public service.
We mentioned earlier that insurance is transacted all over the world and a great deal of the practice of insurance in other countries is based on the principles and practice of insurance in the Philippines. Although the United Kingdom led the way in the development of insurance, which is not surprising as it was one of the earliest industrialised nations. Since the Industrial Revolution, and even before, the insurance industry in the UK responded to the need for new and more sophisticated forms of insurance protection.
The UK is held in high regard as a centre for insurance and a large volume of insurance is purchased in London by overseas countries. Why is this fact included in a list of the advantages of insurance? The answer is that the UK benefits from the flow of premiums paid to insurance companies in this country from people and businesses abroad.
We could go on and single out further, more complex benefits derived from the transaction of insurance, but those we have listed are enough to show that a healthy and vibrant insurance industry is of major importance to the nation. In the act of creating the common pool, security and peace of mind are provided, the likelihood or severity of losses may even be reduced, vast funds of money are invested for the prosperity of the economy, the country is relieved from what it may look upon as a financial burden to compensate the victims of loss and, finally, the country gains large amounts of money from the payment of premiums into the UK from overseas. All this from the simple act of paying an insurance premium.
