Benefits of insurance to society

Answer 1

• It relieves those insuring from the worry and anxiety they may have about how they would meet the cost of risk. In the case of businesses, this is a positive stimulus to their activities and allows them to get on with their own business in the knowledge that they are financially protected against many forms of risk.
• Business people will be more inclined to risk their money by building factories, making goods, sailing ships, flying planes, with the knowledge that they will not lose everything should they fall victim of some risk. This is an extremely important benefit which insurance brings - not only to the individual insuring but to the whole country - as stimulating businesses makes for a healthy economy.
• Insurance also can help in actually reducing losses. Insurance companies have a great deal of experience in risks of all kinds and, over many years, they have found ways in which certain risks can be reduced. They employ surveyors who go out and look at premises which people may want to insure. They can, from that experience, often suggest ways in which the likelihood of some risk occurring may be reduced. They might see some hazard which could injure employees, or a host of other problems. The advice and the recommendations they make on behalf of insurance companies cannot help but reduce the likelihood of many of the risks occurring.
• One further benefit derived from the transaction of insurance is the use to which the insurance company puts the money it holds in the common pool. It does not use immediately all the money it collects as premiums. It holds it until one of the members of the pool suffers a loss. The money it holds is invested in a wide range of investments which all go towards aiding government, industry, commerce and consequently the whole country. A visible symbol of one of the uses to which insurance funds are directed is the building work being carried out in many of our cities. Look a little closer at the large signs surrounding these building sites and notice how many are being funded by insurance companies.