Insurance for today is calledrelations to protect the interests of legal entities and individuals in relation to property in cases of occurrence of insured events. The economic essence and functions of insurance are due to the fact that this is a kind of activity that is directly related to the distribution of the risk of damage to insurers and insurers.
Insurers are specialized organizations,which ensure the accumulation of insurance premiums and the implementation of payments in the event of causing certain damage to property interests. Insurers are, respectively, persons who insure their property interests.
Like any other activity, insurance plays a role in the economy, it has its own insurance functions and is based on certain principles.
Its role lies in the fact that it ensures the continuity and continuity of social reproduction. This is manifested in the results of activities, which in turn are expressed in:
- ensuring economic and social stability through timely and full recovery of losses;
- participation of the free funds of the insurance company's fund in the investment activities of various insurance organizations;
- indicators of the effectiveness of ongoing insurance operations.
Insurance is characterized by specific characteristics that characterize it as a category of economy. Such principles include the following:
- redistribution of material damage in time;
- availability of insurance risk (see insurance functions - risk function);
- recoverability of insurance payments in the form of insurance payments;
- satisfaction of the citizens' need to cover possible material damage.
The economic essence of insurance activitiescorrespond to the functions of insurance, which express its public purpose. Among the main functions - risky, precautionary, savings and control.
The main function performed by insurance,is rightly considered risky, since this activity is impossible without the risk. It is he who determines the existence and further development of insurance. Thus, it is within the scope of the risk function that there is a redistribution of value among all participants of insurance due to the occurrence of accidental insurance events. It is important that it is the diversity of risks that determines the development of insurance in general, the emergence of its new industries and subspecies.
The insurance functions are also presentedpreventive, which is financed by a certain amount of funds from the local insurance fund to reduce or exclude the extent of insurance risks, and, as a result, damage from these risks. In insurance, such activities are called preventive.
The next function is saving. It means saving money by means of life insurance. This kind of activity is connected with the need of people to insure the social status achieved and the level of prosperity.
Finally, the control function istimely provision of target formation and application of money from the insurance fund, which, in turn, is based on legislation regulating insurance activities in general. This function is carried out through control over the legality of specific insurance operations by insurance companies.
In addition to the above, there are other functions that depend on each specific type of insurance activity. For example, the functions of social insurance.