Question

In: Finance

Provide some important examples of how a privately operated insurance system contributes to a market-based economy.

Provide some important examples of how a privately operated insurance system contributes to a market-based economy.

Solutions

Expert Solution

A privately operated insurance system contributes to a market-based economy in following ways :

1) Fund mobilisation : The insurance system provide risk insurance and coverage to the people and the business community and move the premium so collected to the market.

2) Safety and Risk-free market environment : The market works in the risk-free environment and develop the economy.

3) Rehabitation in the case of eventualities : Whenever a business losses its face due to some uneventualities, the insurance system comes up to re-habitation of the business community.

4) Growth of the economy : The economy use to have growth from the risk-free business environment.

5) Stability of the Assets : As the Insurance use to insure the all equipment or machineries and other assets of the factories and business, which results in higher productivity due to risk- free environment.

Thus, the privately operated insurance system contributes a lot towards the market-based economy.

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