Role of the Insurance Industry in Economic Development

2015 WordsNov 13, 20129 Pages
What Role has the Insurance industry In Economic development? The insurance industry has come a long way from ship owners, merchants and underwriters gathering in Edward Lloyd’s coffee house in London to discuss their marine voyages to new colonies of the British Empire. Over the years, Insurance has become essential in our everyday lives. Something we just can’t live without. Our Economics and Societies are growing phenomenal rates and have become more and more interconnected on the rest of the world, the risks exposed to us become more unpredictable and hazardous. The need to protect against unfortunate events has been around as long as human beings existed. Individuals have always recognised their need to alleviate risks that have…show more content…
Due to improvements in healthcare and quality of life population’s structures in industrialised countries are changing where people are living a lot longer and at the same time the birth rate has also decreased. People are also expecting to receive a high level of healthcare, pensions, unemployment allowance and other social benefits. This raises great concern as public expenditure will be put under huge pressure and will lead to significant decreases in economic growth. The role of the insurance industry is vital to provide an additional pillar alongside the protection supplied by the state. Insurance products like payment protection insurance play a vital role in protecting household in times of unemployment in an economic downturn. Many industrialised countries such as the United Kingdom provide free healthcare to its citizens. In the future what we are going to see is the health system in these countries being privatised and individuals buying private health insurance. Currently 47% of the Irish population have health insurance (Nolan 2006). Similar systems will have to be introduced to the pension systems. These measures will help reduce government expenditure on these areas and in the long run help with the development of the economy in the countries. Enhancing financial intermediation, creating liquidity and mobilizing savings: Insurers
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