Unlike banks and other financial institutions, insurance companies have broader organizational forms, which currently has four.
The first form of organization of insurance companies coincides with the organizational forms of other financial institutions that is built on the basis of equity. In this case, insurance companies issue shares and are joint stock companies. This form of organization is characteristic of both life insurance companies and insurance companies for property and casualty.
The second form of the organization of insurance companies is called for “reciprocity” (mutual): each policyholder is co-owner, ie shareholder of the company, but not on the basis of the shares, and insurance. The company in this case does not issue shares. This form of organization is most typical for a life insurance company and is widely accepted in the U.S. (2/3 of the award and more than 70% of assets), Canada, England, Australia.
A third form of organization of insurance companies is a mutual exchange (reciprocal). The company, formed essentially on a cooperative basis, acting on behalf of an individual or company. Through the central office of the company, its members exchange risk insurance, insuring themselves, and do not sell insurance on the side. These companies are called internal security companies, or mutual exchange. They occupy a small place in the insurance operations and operate mainly in auto insurance and fire.
And finally, a fourth form of organization – Lloyd system consisting of syndicates in which, as a rule, enter on equal footing insurance companies and brokerage insurance company. Responsibility for insurance risk is distributed among the members of the syndicate or between all participants Lloyd. Cases take brokers and receive for mediation brokerage (commission). System Lloyd headed a special committee responsible for supervising the activities of syndicates and accepting new members. This form is characteristic of England and Germany.
Feature of the accumulation of capital of insurance companies is the receipt of premiums from businesses and individuals, the size of which is calculated on the basis of insurance rates, or rates, as well as investment income.
Specificity of the accumulation of capital from insurance companies basically boils down to the calculation of premiums. However, it differs significantly for life insurance and property insurance. The most difficult is the calculation of life insurance premiums. Company when calculating insurance rate should take into account three main elements: the payment of insurance compensation fund (to cover losses), expenses of insurance operations (Staff represented employees and insurance agents), investment income. But the most important in determining insurance rates has a reserve contributions, which will be created by the net rate for the payment of insurance premiums (credit) and allowances to cover the costs of insurance operations.
The magnitude of net-rate depends on the mortality of the insured population and the rate of return of the reserve. Using mortality tables containing indicators of mortality in certain age groups and survival during the transition from one age to the subsequent determined net rate, ie the amount payable to the insured after a certain time.
As of 1 000 people. the age of 35 account for 4.59 deaths. When insurance for one year in the amount of $ 1 000 wall separating the kitchen and living room in tile Keraminum result. the company will receive from each person or $ 4.59 1 000. – 4590 dollars, but in fact the rate is overestimated, as the practice has found that of 1,000 people aged 35yo dies not 4,59 people., And 2.9 people. Therefore, the company will charge each of 1 000 people. 1.69 USD (4.59 – 2.9 = 1.69 USD). Size revenues generated per unit of a sum of money is the interest rate, or rate of return, which is determined at the rate of 2.5%. Therefore, to establish a fund that should be at the conclusion of the insurance contract, the company makes allowances for income generated a certain amount of money over a period of investment (4.59 dollars at the rate of 2.5% per year = 0.11 cents). Consequently, with each will be charged 4.48 dollars (U.S. $ 4.59 – 0.11 cents).
But as a rule, investment is carried out at higher rates. So, invest U.S. $ 4.59 at the rate of 4% per year, which gives $ 0.18 However, given a discount of 2.5%, we get 0.18 – 0.11 = $ 0.07, which remains in reserve company. Thus, the company assigns to $ 1.69 due to the mortality tables and $ 0.07 as the difference rate of return (4% – 2.5% = 1.5%) and as a result has benefited from insurance operations and investment .
In property insurance, the principle of formation of insurance rates (rates) is based on an arbitrarily-psychological factors. The base rate for property insurance is determined on the basis of statistical data on the passage of insurance (number of accidents, dead airplanes, cars, ships, fire, and the cost of losses, costs, profit margins). For example, the base rate tanker hull is 2% of its value in operation for 15-20 years. Rate increases with longer service life, and if a tanker sailing area is dangerous (military action).
When insuring the equipment, production facilities on rate affects fire protection and availability of funds. The higher the level, the lower the rate, and vice versa.
Features of property insurance lies in the fact that the formation of insurance rates greatly influence state regulatory agencies, the Ministry of Finance, local authorities, for example in the United States.
Formation savings insurance companies depends on the expansion of the insurance market, the introduction of new security and improving its existing species.
Currently, in industrialized countries, the following types of life insurance: ordinary (private), group (policy a few people), credit insurance (guarantees to banks and financial companies in the event of death of the borrower), industrial (insurance for workers by profession), insurance pensions (annuities).
Types of insurance are divided on the basis of the period of insurance: life (until death) and fixed-term (one year or more).
Accident insurance includes two types: Accident workers and employees from accidents and disease population.
Property insurance divided into the following types: fire, automotive, aerospace, marine (hull insurance, cargo and liability to third parties) which are usually collectively called transport insurance. Among these are widely used types of insurance, in addition to direct insurance methods: coinsurance (risk-sharing between the companies at the conclusion of the insurance contract) and reinsurance (insurance after subsequent transfer of the risk to other companies in order to reduce the liability to pay insurance claims).
Financial performance of insurance companies are profit and reserves of insurance premiums as the difference between the insurance premium and the payment of insurance compensation plus expenses on conducting operations. Profit forever settles in the company, and reserves contributions as future obligations to policyholders are sent to the investment.
Passive and active operations of insurance companies also are specific and differ greatly from similar operations of banks and other financial institutions, as evidenced by the following data.
Passive operations of insurance companies are formed mainly by insurance premiums, which are paid by legal entities and individuals. The share of other liabilities is insignificant articles that confirm the data table. This usually consists of equity (if the company is joint-stock) capital reserve, accumulated out of profits, as well as other articles, which may include the company’s property and some other income.
Active operations consist of investments in government bonds, central and local governments, bonds and shares of private corporations, mortgage and real estate, as well as borrowings under the policies. Feature of these investments of insurance companies is a large proportion of corporate securities (45-50%) and mortgage loans (36%). Important place in the assets life insurance companies also cover loans policies and investments in real estate. Loans policies – is essentially lending persons who purchased insurance in the company.
Feature active operations of life insurance companies is that it is mainly long-term investments for 5, 10 or more years. Insurance companies have have sufficient long-term insurance reserves and are the main providers of long-term capital in the national markets of the leading western countries.
With regard to property insurance companies and accident, the structure of their active and passive operations similar operations carried out by life insurance companies. However, in active operations property insurance companies dominate investments in bonds of the central and local governments, as well as shares in corporations, but not in bonds, a smaller proportion of owned investments in mortgages and real estate. garbage bags of 30 liters This is because the insurance company property and casualty cases do not have long-term funds as insurance contracts are for a short time, and the cost of the property is high. As a result, they are forced to hold large liquid funds. Therefore, the increase of income from investment company data obtained mainly from government securities, which make up 50% of assets. Nevertheless, the insurance contracts concluded for several years, allow them to invest heavily in shares of private corporations and financial institutions. In the assets of these companies, the proportion of such shares is 16-17%, and investments in bonds – only 7-8%. Insurance companies and property from accidents also are suppliers of long-term capital, together with life insurance companies. However, the first feature is that they maintain their profitability is not at the expense of insurance, and through investments and income from them. This is due to the fact that many types of property insurance (fire, automobile, sea) for many companies are unprofitable. In some cases, the losses are covered by insurance not through insurance, reserve, and thanks to income from investments.