Public Insurance

Archive for June, 2010

Parson (2003) emphasized the strong relationship between liability insurance and indemnity law by contending that the pattern of legal obligation, as the court’s decision, determined by local practices liability insurance market and the availability of payment. More specifically, he states that “no doubt that the general availability of insurance has a role in building a legal (liability). And sometimes the legal liability is limited to the value indicating the payment of insurance liabilities ”

To carry out the functions of investment, insurance companies build the assets after receiving the premium paid in advance. By investing in a productive, insurers can generate income level that allows them to pay a lower premium rate. The insurance company can even improve efficiency in the financial system with a financial liaison party, where they reduce transaction costs that unite storage and borrowers. The insurance company also generates liquidity by using premium income to provide long-term capital. The insurance company also facilitates economies of scale in investment. By collecting large numbers of thousands of policyholders, insurers can achieve the financing needs of large projects, thereby increasing the set of possible investment projects and encouraging economic efficiency.

Finally, the role of insurers in improving the economy emerged from its ability to provide risk management advice. Read the rest of this entry »