Important Functions of Insurance
The insurance company performs many functions, Important Functions of Insurance we have classified these functions into primary and secondary functions. Insurance provides protection and certainty to the assured persons and property.
- Primary Functions of Insurance
- Secondary Functions of Insurance
Primary Functions of Insurance
- Insurance provides certainty
There is always the uncertainty of happening of time and amount of loss and risks. The Insurance removes and protects insured/customer from all these uncertainties and the assured is given the certainty of payment of the losses which he ever faces in the future. The insurer charges the premium (Installment) for providing the said certainty.
- Insurance provides protection
The basic and main function of insurance is to protect the customer and insured from probable chances of loss. The insurance guarantees that the company/insurer will do payment of those losses and thus protects the assured customer from sufferings . The insurance company/insurer cannot check the happening of risk but can provide for losses when it happened to insured.
The risk is uncertain and can happen any time , therefore, the loss arising from the risk and accidents is also uncertain. When risk takes place to insured property or any insured thing , the loss is shared by all the persons, mean as we know insurance is a pool of money created by many people, they are all exposed to someone’s risk in this sense.
Secondary Functions of Insurance
- Prevention of loss
The insurance create links and joins hands with those institutions and companies which are engaged in preventing and protecting the losses of the society because the reduction and minimization in loss causes the lesser payment to the assured arid so the more saving is possible which can assist in reducing the premium.
- It Provides Capital
The insurance provides capital to society. It is because when the assets and property of the people remain insured and protected in society . The accumulated funds are invested in the productive channel. The death and removal of the capital from the society are minimized to a greater extent with the help of investment in the insurance sector . The industry, the business, and the individual are benefited and protected by the investment and loans of the insurers.
- It Improves Efficiency
Insurance eliminates and finishes the worries and miseries of losses at death of insured life and destruction of property due to any accident. A carefree person can devote his body and soul together for the better achievement , it improves not only his own efficiency but also the efficiencies of the masses become advanced.
- It helps Economic Progress
When insurance protects the assets of people ,It is actually protecting the society from huge losses of damage , death , destruction, fire or accidents, The insurance provides an initiative to work hard for the betterment of the masses and assets . The next factor of economic progress and growth, the capital is also immensely provided by the masses and assets . The property, the valuable assets, capital , the man, the machine and the society cannot lose much at the disaster.