What\'s Insurance to a Modern Economy? Patrick M. Liedtke The Geneva Association

Question

What's Insurance to a Modern Economy? Patrick M. Liedtke The Geneva Association, 53, rte de Malagnou, 1208 Geneva, Switzerland. E-mail: patrick_liedtke@ genevaassociation.org Insuring risks in a modern economy is a multi-dimen sional undertaking. It is a complex business that interacts with many aspects of our lives. The importance of the insurance industry for an economy can only in part be measured by the sheer size of its business, the number of its employees in a given country, the assets under management, or its contribution to the national GDP. It actually plays a more fundamental role in the workings of a modern society, being a necessary precondition for many activities that would not take place were it not for insurance. Insurance is a key component of economic development and this article is concerned with the contributions that insurance makes to the development of a modern economy The Geneva Papers (2007) 32, 211-221. doi:10.1057/palgrave.gpp.2510128 Keywords: insurance; economic development; risk management The size of the insurance industry It is important to remember just how large the insurance sector is. According to Swiss Re,2 worldwide insurance premia in 2005 amounted to USD 3,426 billion, of which USD 1,452 billion were in non-life insurance. Insured losses from natural catastrophes and man-made disasters alone reached a record USD 80 billion in 2005 (see Graph 1), mainly due to the very heavy losses from hurricanes in the U.S. and the Caribbean. As the graph clearly shows, this figure varies from year to year, but there seems to be a clear upward trend, above and beyond the growth of world GDP, which some experts put at 5 per cent per annum in real terms If 2005 was heavily influenced by the hurricane season in North America, the previous year, 2004, pointed to another phenomenon. Owing to the Asian tsunami of December 2004, the difference in distribution between financial losses and human fatalities became especially apparent. Graph 2, based on figures taken from This article is based on the research carried out at The Geneva Association under the Insurance Economics Research Programme. The author would like to thank the commentators and reviewers for their helpftul input, especially at an early stage for a speech given at the seminar on “Assurance, reassurance, une autre contribution au développement" held on 14 June 2005 at the French Federation of Insurance Companies (FFSA) in Paris, and then to the subsequent publication of an intemediate version in the French insurance journal Revue Risque. Secretary General and Managing Director, The Geneva Association. The Geneva Association is the world's leading insurance research centre supported by the private insurance industry. It is a non-profit organization and its members are the 80 (statutory maximum) Chief Executive Officers from the most prominent insurance companies worldwide. For further information, visit www.genevaa ssociation.org Swiss Re (2006)

Explanation / Answer

Positive Externalities associated with Insurance benefit the economy and society

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.