The Essence of the Insurance Market and its Participants

Insurance market. This concept can be used to designate a meeting of demand for insurance services in commodity form and their supply organized in a certain way in time and space; This is the sphere of monetary relations, in which the object of sale and purchase is insurance protection.

The capacity of the insurance market is an indicator that characterizes the possible volume of sales of insurance services in a given territory.

The insurance market has a specific system of organizing economic relations for the exchange of insurance goods (services) for money. Firstly, the product of an insurance company cannot be bought in the same way as, for example, people buy products in stores, services in banks. Secondly, unlike shops, banks, insurers work mainly through intermediaries, and after the sale of their product - insurance services - they do not terminate relations with customers. A specific product offered on the insurance market is an insurance service. Like any commodity, an insurance service has a use value and value.

The use value of an insurance service consists in providing insurance coverage. In the event of an insured event, this insurance protection materializes in the form of insurance compensation.

The cost of an insurance service (or its price) is expressed in the insurance premium, or tariff, which the policyholder pays to the insurer. The insurance premium is determined at the conclusion of the insurance contract and remains, as a rule, unchanged during the entire period of insurance. An insurance service may be provided on the basis of a voluntary insurance contract or the Compulsory Insurance Law. The purchase and sale of insurance services is formalized by an insurance contract, in confirmation of which the policyholder is issued an insurance policy.

The policyholder must pay the premium on time, i.e. buy the service, and fulfill all their obligations set out in the contract.

The insurer must competently and in accordance with the law dispose of the received premium, primarily in relation to the formation of insurance reserves, and in the event of an insured event recorded in the insurance contract, timely and accurately make an insurance payment to compensate for damage caused by the insured person to the interests of the insured.

The structure of the insurance market can be characterized in institutional and territorial contexts.

In the institutional context, the structure of the insurance market is a combination of insurance companies of various organizational and legal forms.

In the territorial context, the local (regional) insurance market, the national (internal) and the world (external) insurance market are distinguished.

On the basis of industry, the personal insurance market, the property insurance market, the liability insurance market, etc. are distinguished.

Economic entities, or subjects of the insurance market in the Russian Federation, can be:
1) buyers of services for the insurance protection of their interests;
2) sellers (and producers) of these services;
3) intermediaries between these persons;
4) insured persons;
5) beneficiaries;
6) third parties.

According to the economic nature of insurance and insurance legislation, buyers of insurance services can be capable individuals and other persons who have a realized and financially secured need for insurance protection of something, for example, property, personal interests of their own or third parties, their civil liability. Such persons (subjects) at the conclusion of an insurance transaction acquire the status of an insured.

According to the law, sellers of insurance services in the Russian Federation can only be legal entities that have passed state registration and are engaged in insurance or reinsurance business under a special license issued by the Federal Insurance Supervision Service. These are insurers and reinsurers.

The insured is a person whose life, health, ability to work, personal income, pensions are insured by someone. Such a person, the subject of the insurance market, may be the insured himself or the one in whose favor the insured has concluded an insurance contract, for example, a child insured by his parents, employees of an enterprise insured by this enterprise.

Beneficiary - any person (individual, legal) who is indicated by the policyholder in the policy as the recipient of insurance payment in the event of the death of the policyholder.

Third person. It refers to two types of subjects of the insurance market.

Firstly, such a person is a subject (natural or legal person), whose property, property and material interests, personality, physical or moral interests have been damaged or harmed by a subject that is insured against civil liability. So, if the driver of the car, the insured

from civil liability as the owner of the car, in the event that his car collided with another car and caused damage to the latter, the damage to the owner of the affected car will be paid by the insurance company in which the person responsible for the accident is insured. The owner of the affected car in this case is a third party.

Secondly, a third party may be an entity that is not insured, but guilty of causing property damage or personal harm to the client of the insurance company - the insured or the insured. In this situation, after indemnifying its client, the insurer, according to the law, has the right to go to court with a claim against the culprit, i.e. to a third party. So, by virtue of the right of recourse, a person who did not participate in the transaction between the insurer and the insured, nevertheless turned out to be a subject of the insurance market, bearing economic responsibility to the insurance company.

Insurance intermediaries - persons engaged in the promotion of insurance services from the insurer to the insured. Insurance intermediaries include insurance agents and insurance brokers.

Insurance agents are individuals or legal entities acting on behalf of the insurer and on his behalf in accordance with the powers granted. The main function of an insurance agent is to sell insurance products. In addition, he collects the insurance premium - draws up insurance documentation, can also pay insurance compensation within the established limits.

The relationship between the insurance agent and the insurance company is formalized by an agency agreement, which stipulates the rights and obligations of the parties. Insurance agents are not employed by insurance companies and form their external service, or agent network. Unlike employees of an insurance company, the activities of an insurance agent are paid in the form of commissions, i.e. at fixed rates from the volume of concluded contracts or insurance premiums on them.

Insurance brokers are legal entities or individuals registered in the prescribed manner as entrepreneurs, carrying out intermediary insurance activities on their own behalf on the basis of instructions from the insured or insurer. In the Russian insurance market, about 5% of insurance premiums are provided through brokers, in contrast to Europe, where 85% of premiums are paid through insurance brokers. In developed countries, they generally do not allow the very possibility of the uninterrupted operation of insurance mechanisms without the participation of brokers. The peculiarity of brokerage activity, in contrast to agency activity, is that the broker most often represents the interests of the insured, and not the insurer.

The task of the broker is to choose the best option for insuring his risks and a suitable insurer for the insured. An insurance broker acts as a catalyst for the insurance market, its presence is beneficial to all participants in the insurance market. The insurer, working through a broker who is a wholesale buyer of its services, significantly reduces the cost of maintaining its own sales network and contract support services, focusing its activity on the management of accumulated financial assets. At the same time, the client receives high-level service and, in most cases, lower rates than in the insurance company itself.

Brokerage activity is subject to licensing. There are certain qualification requirements: the head and chief accountant of a brokerage firm must have the citizenship of the Russian Federation, higher economic or financial education and work experience in the field of financial or insurance activities for at least two years.

There are other participants in the insurance market - emergency commissioners - legal or natural persons involved in establishing the causes, circumstances and amount of loss on insured cargo and ships. The accident commissioner draws up and signs an accident certificate, on the basis of which the insurer makes a decision to pay or to reject the claims of the insured. Insurance companies usually indicate in the policy which emergency commissioner in the respective country should be contacted if necessary.

For a more accurate risk assessment, insurers can use the services of surveyors - experts who examine, at the request of the insured or the insurer, insured or insured ships and cargo. The surveyor gives an opinion on the condition of the property being inspected - a report. A specialist in the field of maritime law, an official expert in maritime insurance is called an average adjuster, he draws up a document certifying the general average of the ship and the distribution of losses between the cargo owner, charterer - an average adjuster.

Associations of insurers are created on a voluntary basis to coordinate their activities, protect interests and implement joint programs.

Associations of insurers exist in the form of unions and associations. They are non-profit organizations and do not have the right to directly engage in insurance activities.

Associations of insurers can be of four types:
1) international;
2) national;
3) regional;
4) industry.

Each country has regional and national associations of insurers, including associations within certain branches of insurance activity. Within the framework of the EU, the European Insurance Committee operates, which is engaged in the harmonization of insurance legislation and the integration of the insurance market. One of the most famous international industry unions is the International Marine Insurance Union.

An insurance pool is a voluntary association of insurers created on the basis of an agreement between them in order to ensure the financial stability of insurance operations. Pool participants are jointly and severally liable for the performance of obligations under insurance contracts concluded on their behalf. The insurance pool is not a legal entity.

Insurance pools are created to insure major risks, the sole bearing of which is beyond the power of the largest insurance companies. These are aviation risks, risks of environmental pollution, nuclear energy, civil liability of drug manufacturers, etc.