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Role and significance of insurance

arising out of industrial accidents. Financial Security Protection from loss of profits Protection from debts •        . Protection Against statutory liabilities ( Fulfilling statutory liabilities towards the workers. theft and dacoits. • ROLE OF INSURANCE IN THE DEVELOPMENT OF INDUSTRY AND COMMERCE: Insurance is the creator. Protective Role Settlement of claims Protection from risks arising out of natural calamities. Protection from the risks caused by human beings: Such as strikes of workers . The employer is bound to compensate such workers under the provision of Workers Compensation Act. evil disturbances and many other such acts.ROLE AND SIGNIFICANCE OF INSURANCE 1. their negligence in carrying out work. planner and protector of industries and commerce.

 Facilitates industrialization and commercialization  Increases business and industrial efficiency ( insurance provides protection from various risks and thus it increases the business efficiency  Investment in Shares and debentures.  Subscription of shares and debentures in new companies  Promotes setting up of industrial estates  Contribution Towards the development of basic industries . PROMOTIONAL ROLE OF INSURANCE:  Extension of credit facilities.Continued…  Protection to the business institution due to sudden death of the key man ( insuring the life of key man in the business so that future can be protected safely from uncertainties)  Provides stability in commercial and industrial activities 2.

workers compensation plans.)  Extension of proper credit  Increase competing ability among small and medium scale . payment of gratuity etc.Continued…  Underwriting of shares and debentures ( Undertake underwriting of new issue of shares and debentures of newly formed companies public limited companies)  Investment in securities  Contribution towards the development of infrastructure  Contribution towards fulfillment of social and statutory obligations ( contributing well in social welfare schemes operated by industrial establishments. social security schemes.)  Contribution towards development of international trade ( various policies issued by marine insurance companies help for the development of insurance trade by protecting the exporters /importers from marine losses and risks.

           SIGNIFICANCE FOR THE INDIVIDUALS/ FAMILY Security and stability Investment Preservation of health Increase efficiency Security of the property mortgaged Mental peace Planning for future Safeguard against statutory liabilities Capitalization of earning capacity Create awareness among insured's Availability of credit against insurance policy .UTILITY OF INSURANCE TO DIFFERENT CATEGORIES 1.

SIGNIFICANCE TO THE BUSINESS:  Insurance is inseparable part of the business and no business can survive without insurance.  Because business is the name for risk and uncertainty and it is insurance that gives protection against various risk..  Safety against risks  Source of credit  Safety against perils  Protection against the loss of key man  In determining the cost of accidents .CONTINUED.  Exemption from tax liability  Safety to investment made 2.

wide channel of distribution system.Continued…  Loss prevention measures  Protection to employees ( paying pension. bearing various industrial and commercial risks and the major means of contributions towards the business from the insurance business.  Significance to small business  Significance to partnership business  Business Stability  Promotes employee welfare . larger production and marketing plans. larger buildings. gratuity and other economic benefits)  Promotes foreign trade ( imports and exports trade are usually involved by marine perils and losses)  Contribution towards the growth of larger business houses ( larger credit facilities.

underwriting of shares and extension of credit facilities. SOCIAL SIGNIFICANCE:  Economic Security  Encourages for education ( extends scholarship for poor students.Continued……. in addition to extension of loan facility for education) . medical and housing etc)  Promotes Industrialization: ( one side it protects the business from various kinds of risks and on the other the insurance companies make involvement in business activities by way of direct investment. gratuity and accidental benefit. benefit like pension. Retirement benefit. provident fund.  Human Resource Development 3.  Promotes employee welfare: ( make provisions for old age.

. employment and protection against risk of life and property.Continued….  Provides employment  Distribution of risks  Removes social evils ( the root cause of any evil in the society is lack of education. decoity etc. The lack of opportunity to the people makes the way for committing social evils like theft. poverty and unemployment.  Awareness towards health  Prevention of losses  Contribution towards the development of utility services  Increases standard of living of the people  Security to private and public property  Provides social security . insurance helps a person to become self sufficient economically by providing for education.

NATIONAL SIGNIFICANCE  It increased the national savings by way of small contributions of the people towards insurance premium. . construction of dams and bridges.  Insurance provides additional employment opportunities to the people.  The premium collected by the insurance companies by small savings from the insured's are invested in such national schemes like electricity generation and irrigation. railway lines.4.  Insurance contributes towards the national income of the nation.  Insurance contributes towards the social security measures. different types of commercial and industrial units are set up every year with the financial assistance extended by insurance companies in addition to providing for employment to good number of people in insurance companies. scientific research etc.