For any modern society, insurance plays a significant role in maintaining the standard of living of the population and the functioning of the economy. Insurance is one of the institutions that allows society to develop economically, despite its political structure.
Insurance market structure
The insurance market is a kind of part of the financial market, where insurance products act as goods.
The insurance market is a rather complex integrated system, which is formed, in addition to insurance products, also from insurance organizations and intermediaries, professional assessors of possible losses and risks, as well as the system of regulation of the insurance market by the state.
Insurance organizations are the backbone of the insurance market, since it is they who conclude and maintain insurance contracts. They can be classified according to their affiliation, service area or the nature of their operations. All insurance organizations are divided into four types:
- joint stock - are a non-state organizational form where the private capital of a joint stock company acts as an insurer;
- private - the owner of such companies is one person or his family;
- public law - the state may act as an insurer. These organizations specialize in job loss compensation and unemployment insurance services;
- mutual insurance organizations - their activity is expressed in an agreement between a group of persons to compensate each other for possible losses.
Insurance intermediaries include insurance agents who act on behalf of and on behalf of the insurer, and insurance brokers. Brokers are licensed to conduct transactions on their own behalf, and charge a certain percentage for their services.
Among the professional appraisers, there are surveyors who inspect the property, and adjusters who establish the causes and amounts of losses.
Organization and functions of the insurance market
The main goal of organizing the insurance market is the ability to streamline and combine all insurance risks, classify them according to certain criteria. This organization is expressed in the licensing of the work of insurance organizations.
In the system of the insurance market, three main functions can be distinguished:
- preventive - is to prevent an insured event and reduce damage;
- distribution - based on the formation of the insurance fund and its further targeted use;
- compensatory - provides protection in the form of compensation for the damage received.
The insurance market is successfully functioning thanks to the insurance participants who create demand for various services of insurance companies, due to which this field of activity is becoming more and more necessary and in demand.
