Insurance positively influences the country’s balance of payments. It contributes to the expansion of international economic relations when insurance companies. In addition to direct insurance, it also performs reinsurance operations.
Insurance: The creative branch of jobs
Insurance is important in a country’s economy. It participates in the process of creating added value. Furthermore, it provides jobs for a not inconsiderable number of people.
Simultaneously with the numerical increase of the persons employed in insurance, you can witness the increase in the productivity of their work. It is expressed as an added value that returns on average to a person employed in this branch. Enlightening examples would be the insurance companies in the USA and France.
Trident insurance – the branch participating in the capital supply on the financial market
In order to meet the obligations towards the insured, the insurance companies like trident insurance have the duty to constitute technical reserves for life insurance. It also has reserves of premiums and damages for property and civil liability insurance. The technical reserves for life insurance have the following characteristics:
- It is set up gradually, as the premiums are collected
- Payments for which reserves are set up are due on long-term terms, over several years
- During the time available to the insurer, the respective reserves reach important dimensions and are used with their own resources.
The use of reserves of premiums and damages made available to insurance companies is done by placing them in shares, bonds or participation of companies. You can also place them in treasury bills, bonds or other documents of state loans, term deposits with banks and others.
Through the activity carried out, the insurance companies sometimes influence, positively or negatively, the balance of payments of the country. This happens when insurance companies, in addition to direct insurance, also carry out reinsurance operations. They transfer to other companies a part of the risks subscribed by them and receive in return, risks subscribed by other companies.
Insurance came naturally from the need to protect man against the calamities of nature and against the consequences of accidents. In addition, it protects the needs for means of subsistence in case of limitation or loss of work capacity due to illness or old age.