Question

Explain the major costs of insurance to society

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Abdul-Rahim Taysir

Answer 1

Major cost of insurance who this society as follows-

A. Major cost are utilisation of assets- insurance companies will be using their resources out of society like they will be using land as well as labour as well as human capital in order to establish their business from society

B. They will be trying to earn from premium in relation to the risk of various investors so so they will be trying to earn through the premium which will be charged from the customers of society

C. Insurance companies are also sometimes engaging into bad practices like we have seen in case of AIG which was on the verge of bankruptcy

D. Insurance companies are also trying to exploit the opportunity of making higher profits by utilisation of the social resources and they are also charging higher rates of premium from them

E. Insurance companies are also not providing for complete risk protection and there will be only providing protection against those contracts which can be measurable, like they will not be protecting from the risk of the war .