Insurance in social financing cost

Insurance financing Insurance financing refers to the activities that insurance companies finance their funds in order to increase their balance capital and spread risks. Insurance financing is divided into financial financing and risk financing. Financial management is insurance financial management in a narrow sense, that is, the insurer puts its remaining funds into the well according to certain channels, expecting returns and appreciation. This kind of financing activity can enhance the insurance management ability, expand the underwriting solvency and improve the market competitiveness of insurance companies. Financial financing can be divided into direct financing and indirect financing according to its financing methods. The former is that the insurer directly penetrates into the financial market, and the latter is to deposit funds in financial institutions and invest on their behalf. Risk financing is an activity that insurers achieve financing through risk diversification to coordinate the relationship between funds and risks, which mainly refers to mutual reinsurance between insurers, with the aim of maintaining operational stability rather than economic benefits. [1] Four elements of insurance financing [2] Insurance is a risk financing method. The premise of insurance as a risk financing method is to sign an insurance contract, which is a risk management agreement signed between the insurer and the applicant. Generally speaking, insurance financing mainly includes the following four elements: 1. Contract agreement. An insurance contract is a legally binding agreement reached between the two parties to the insurance relationship. According to the agreement, the insured can transfer the risk and obtain economic security to make up for the loss by paying a certain amount of insurance premium; When collecting insurance premiums, insurance companies must fulfill their insurance obligations in accordance with the provisions of the contract; Commitment to bear the economic burden caused by the loss, and provide compensation funds for the risk accident losses. 2. Pay the insurance premium (or promise to pay the insurance premium). After the insurance contract is signed, the applicant has the obligation to pay the insurance premium according to the contract, and the insurance premium paid by the applicant to the insurer is the price paid by the applicant for the insurance. 3. Conditions for payment of insurance compensation. The payment conditions of insurance compensation agreed in the contract are the basis for the insurance company to fulfill its insurance responsibility for the subject matter insured. According to the different contents of insurance contracts, insurance clauses can be divided into basic clauses and additional clauses. The basic clauses are the provisions on the rights and obligations of the parties to the insurance contract and related parties, as well as other matters that must be recorded by laws; Additional clauses refer to the clauses that the insurer increases the underwriting risk according to the requirements of the insured. Adding additional clauses means expanding the coverage of standard contracts. According to the contract, the insurer shall be liable for the risk accidents agreed in the contract and the property losses caused by them; Or when the insured dies, is disabled, falls ill or reaches the age and time limit agreed in the contract, he shall bear the responsibility of paying the insurance money. 4. Resources owned by insurance companies to compensate for losses. From the insured's point of view, the insured can get corresponding economic compensation from the insurer after the risk accident agreed in the contract occurs. The process that the insured obtains the necessary economic compensation to make up the economic burden caused by the loss is also the process of insurance financing for the risk management unit. However, from the insurer's point of view, the insurer's compensation for losses mainly comes from insurance premiums, and whether the insurer has solvency depends on whether the total premium it collects can compensate the insurer for all the compensation liabilities. Principles of insurance financing [2] In the process of choosing insurance financing, the insured transfers the risk of loss to the insurer by choosing to buy a policy, and the insurer bears the financial loss. There is a cost for the insured to transfer risks. Enterprises need to consider the following factors when deciding whether to buy insurance: 1. The ability of enterprises to bear risks. The ability of enterprises to take risks is an important condition for enterprises to choose insurance companies to transfer risks. To determine the risk-taking ability of an enterprise, it is necessary to determine the maximum cost of the enterprise's own risk. If the management cost of enterprises at their own risk is too high, they can choose insurance companies to transfer risks. If the management cost of a risk-bearing enterprise is relatively low, you can choose the management mode of risk retention. 2. Cost of insurance products and additional costs. The price of insurance products and their additional costs are important factors that enterprises need to consider when transferring risks. If the price of insurance products is too high and the enterprise evaluates that insurance financing is not economical, it will not choose the way of insurance financing. If the rate is too high, enterprises will adopt other risk management methods instead of insurance to transfer risks. If the insurance premium rate is too low, enterprises will use insurance financing instead of other risk management methods, which will increase the operating risk of insurance companies. Determining the appropriate insurance product rate and additional rate is not only related to the risk financing mode of enterprises, but also related to the stable and sustainable development of insurance companies. 3. Restrictions and legal constraints on risk transfer. When one party to an insurance contract fails to perform its obligations, the other party may apply for mediation or arbitration to the contract management authority stipulated by the state, or directly bring a lawsuit to the people's court. Insurance contracts can only be protected by law if they are legal. The risk transfer of enterprises is restricted by the relevant national laws and policies, and the risks of production and business activities that are not allowed by national laws and regulations cannot be transferred to insurance companies. 4. The degree of enterprise risk control. The degree of risk control of an enterprise is not only the basis for determining whether an enterprise transfers risks, but also the basis for an insurance company to decide whether to underwrite enterprise risks.

Further reading: How to buy insurance, which is good, and teach you how to avoid these "pits" of insurance.