Basic principles of insurance

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Insurance is seen as an integral part of any developed society. The size of this sphere in this case is a significant part of the country's GDP. In order to understand this topic well, you need to know what its basic concepts are, the principles of insurance, as well as have an idea about their implementation and application. And this is all we will study in this article.

General information

Before studying the principles of insurance, we need to understand the essence of this very field of activity. What does she mean? Insurance is understood as a certain set of relations of a redistributive nature, thanks to which special trust funds are formed. Their use under certain conditions allows participants to count on compensation for the consequences in the event of insurance risks. To understand the peculiarities of this sphere on the territory of the Russian Federation, it is necessary to familiarize yourself with the law "On the organization of insurance business in the Russian Federation". For ease of operation, separate areas were identified, the work of which has its own characteristics. So, there are principles of compulsory insurance, voluntary, social, medical, and so on. They often depend on the scope. But notall.

General principles of insurance

They were bred during the formation and development of this area. So, there are basic principles of insurance:

1. Equivalence. It implies maintaining a balance between the expected assistance of the victim and the insurer.
2. Solidarity. It implies the use of the funds of a part of the participants in order to compensate for the damage received by other people who took part in the formation of the insurance fund and need payments. Thus, all negative consequences are distributed to the maximum possible number of people.
3. Returnability. All funds that were sent to the insurance fund will be used only for payments to its members. The best comparison here is with taxes that are distributed among all citizens of the state, and in some cases are spent on part of foreign ones.
4. Reimbursement. Insurance protection of a person is provided, which provides that compensation will not be larger than the actual damage caused. In other words, if a house was damaged, which was estimated at two million rubles, it is almost impossible to receive more than this amount.
5. Prevention. Insurers take all measures in their power that can lead to a reduction in the likelihood of undesirable situations. This minimizes the amount of damage that can be done to a person's property interests.

As an example, the principles of medicalinsurance fully comply with the information given in this part of the article. But not everything is so easy.

The role of insurance

Before delving into theoretical nuances and aspects, let's look at the functions that this area performs in the economic segment of our society:

1. Compensation. In other words, there is a leveling of damage due to the fact that financial resources are created that can allow affected entities to quickly resume their activities, while reducing harm to human he alth and life.
2. Savings. Protects and improves the standard of living of people through the use of capitalization mechanisms in life insurance.
3. Warning. They receive funding for activities that help reduce the likelihood of an insured event, which allows everyone to benefit: the fund, thanks to a decrease in the level of payments, and the population, thanks to saved he alth and life.
4. Investment. The insurance sector contributes to the activation of short- and long-term investments of funds that are in a position of temporarily free. Thanks to this, the funds act as a significant accumulator of idle money and channel it into the economy.

Of course, the features presented here can take on different levels of detail, depending on the tasks being solved, the organization and much more.

Insurance relations

They canhave the same essence and different content at the same time. Also, different implementation is possible for them due to the variety of organizational forms. This is what was meant when we talked about distinct principles of insurance earlier. Let's look at what forms of relationships can be:

1. Mutual insurance. In this case, it is understood that within a certain group, participants on a non-commercial and mutual basis unite in special societies that exist at the expense of their members.
2. Commercial insurance. It provides for compensation in the event of a certain risk for a particular legal or natural person. Moreover, it will be received from a professional insurance organization. The condition for participation in this program is the payment of a certain fee.
3. Social insurance. It is formed from the contributions of employers and employees. The principles of social insurance provide for its universality in terms of social risks. State legislation is used to regulate its main provisions.

Interesting Features

For us, the principles of compulsory social insurance are of the greatest interest. But in other countries this is often not the case. This is largely due to their lower initial focus on the person. Thanks to this, such a phenomenon as self-insurance has become widespread. If we talk about a person, then this means consciously setting aside part of the money as savings or for their investment. In some way thisthe term, like self-insurance, can also be applied to the state or various organizations. In the first case, the government decides to create strategic reserves. They can be filled with money, food, and other valuables. In the case of enterprises, this is also understood as reserves, but much smaller in size.

Commercial and mutual insurance

What is their basis? They use the principles of voluntary insurance. We can confidently say that their implementation is possible only if there is a desire on the part of the person who acts as a client. In addition to the above provisions, insurance contracts are also used, which contain all other features of the relationship, if they do not contradict the current legislation. There is a separate market where this specific product is sold. At the moment, we can safely say that these areas of insurance are an integral part of the economies of countries that account for approximately 7% of the world's gross domestic product.

And what about Russia?

The Russian Federation cannot yet boast of a significant development of the insurance market. So, it still makes up about 3% of the country's total GDP. This state of affairs is observed due to the absence of long-term traditions of the insurance market and regular crisis situations. The most significant impact on the development of this sphere was the crisis of 2008, the consequences of which are felt to this day. Negatively affects the development of trendsand a fairly low-trust situation where people think the safest place to put money is under the mattress. Of course, such a statement, although it has the right to exist, is still erroneous. Given the presence of ever-increasing inflation, it is impossible not to pay attention to the fact that savings are very quickly "eaten up" by it. Therefore, care must be taken to minimize or even eliminate such a negative effect. And various economic instruments will be able to provide all possible assistance in this.

Peculiarities of market development

To understand the processes taking place in the insurance business, one should be able to deal with the criteria on which the basic rules depend, understand the methods and financial specifics of providing a certain service. There are basically two concepts used here:

1. Indemnification. In this case, the insured person receives a certain percentage of the value of the property. As an example, consider the following case. A factory was built. It was insured against fire for 100% of its value. In this case, in the event of a fire, all damage will be compensated. Of course, this will be preceded by an investigation into whether safety precautions were followed.
2. Compensation of a certain amount. In this case, the victim is paid a certain amount of money, previously agreed. An example is a situation where a person broke his arm, and he was paid 20 thousand rubles in compensation.

Conclusion

So, after reading the article, a clear understanding should be formed that the number of principles that are mandatory in any direction is quite small. But already in specific areas, their own, special mechanisms can work. So, with regard to social insurance, it can be noted that it is mandatory. It is one of the founding principles of a social contract whereby all those who can work now provide for those who previously worked. This topic is very interesting for further study.