Asigurări internaționale

Theme 1. Economic Essence, Functions and Classification of Insurance.

1.1. Economic essence and functions of insurance.

1.2. Classification of insurance.

1.3. Types of insurance funds.

1.1. Economic essence and functions of insurance.

Insurance is a complex of economic relations associated with forming the insurance fund at the expense of the insurers with the purpose of covering the loses caused by some unfavourable events, stipulated in the contract.

Characteristic features of insurance:

1) Premiums are paid by policyholders up to the definite rates and the funds are formed for the account of premiums.

2) The funds are accumulated in special organisations – insurance companies.

3) The funds are only distributed to the fund investors.

4) The funds are used only for particular purposes.

5) The funds are used according to the rates, stipulated beforehand, that is, when joining the insurance relations the insurer knows what compensation he might get for an incident.

6) The funds are distributed only within stated periods of time.

7) Insurance is necessary only when somebody is interested in it, i.e., when some unforeseen circumstances can really occur.

8) The events must have features of probability or fortuity, when the occurrence of the event is not obvious or doesn’t depend on the will of the insurer.

9) Insurance is based on mutual and solidary distribution of losses among all participants of insurance.

Functions of insurance:

1) The core of risk and redistributing function is that the insurance funds are redistributed among the participants due to concluding the insurance agreement and consequence of insurance events.

2) The core of preventive function is that insurance companies carry out financing of unfavourable events. For this the insurance company forms a set of preventive actions for the account of allocations.

3) The core of saving function is that a sum of money is saved by means of life insurance and is connected with the defence of the achieved income.

4) The core of controlling function is that the insurance companies control the activities of their clients concerning their observing of safety measures.

1.2. Classification of insurance.

A classification of insurance is the distribution of insurance services according to the groups defined by some common signs. There exist classifications based on forms and on branches of insurance.

Classification based on forms of insurance.

Insurance is carried out in two forms: obligatory and voluntary.

Obligatory forms are defined by the following principles:

1) The obligatory insurance is defined by the law, according to which the underwriter must insure the corresponding objects, and the insurer must take necessary insurance payments. The law usually stipulates all necessary terms and the order of carrying out the given kind of insurance.

2) For the overall obligatory insurance indicated by the law, the insurance agencies carry out annual registration of the insured objects, make payments and charge premiums in the stipulated terms.

3) Automatic insurance covering of the objects is indicated by the law. The insurer mustn’t announce the appearance of the insured objects to the insurance company. The given property is automatically included in the field of insurance. It will be automatically registered and the insurer will be charged to pay the fee.

4) The effect of the obligatory insurance does not depend on the premiums. In cases when the insurer didn’t pay the insurance premiums, they are charged by the order of the court. In case of loss of or damage to the insured property not covered by insurance premiums the insurance compensation is due to payment out of the insurance debts. The undue premiums are imposed with a fine.