Insurance in the economy
With the insurance model, you can distribute the consequences of a certain risk across all population. General access to insurance products is one of the social and economic development indicators. It is a myth that insurance is useful only for the rich and only the rich should be interested in it. Research shows that none but low and moderate income earners can reap maximum benefits from being insured.
Insurance is a major financial asset for both individual households and the whole economy. Life products increase savings, especially long-term ones.
The purpose of such savings can be multiple. The most important aims include educational needs of children and old age protection. With level of social security and healthcare benefits becoming lower, the significance of insurance products will be growing.
Insurance also serves as ‘a macroeconomic stabiliser’, as it helps mitigate risk-induced shocks and as such promote GNP growth. The insurance industry is also a major employer. Thirty-three national insurance associations which are CEA (European Insurance and Reinsurance Federation) members employ nearly one million people. In Poland, more than 30,000 people work directly for insurance companies, and the total employment of the insurance industry is estimated at more than 100,000.
Why is insurance so important to the economy?
- mobilisation of private savings and assistance to or even replacement of the public sector in relation to social security
- insurance companies are a major employer
- mitigation of economic cycles and a crucial factor for GNP growth
- more competitive economy due to freed reserves and improved risk management (including risk prevention)