What Is Insurance Premium Financing?

Insurance financing is the activity of an insurance company to channel its funds outward through a certain method. An important part of insurance business under the conditions of commodity economy. It has the obvious characteristics that financing activities are directly restricted by the risk mechanism due to the essential requirements of the insurance company's active adjustment of the relationship between risk and capital. It consists of two parts: (1) purely financial financing, insurance companies can use financial instruments to participate in financial financing activities in financial markets, called financial financing; (2) financial financing accompanying risk adjustment, mainly through insurance companies The realization of mutual reinsurance is called risk financing. Insurance financing is an organic unity of financial financing and risk financing. The conditions it should have are: a certain amount of long-term and stable accumulation of funds; the reasonable structure of the insurance mechanism, even if the insurance business is diversified, each professional company can bear the risks and have independent use of funds; Good competitive environment; Open economic model; Sound insurance market and financial market. ^[1]

Insurance financing

Right!

Insurance financing is the activity of an insurance company to channel its funds outward through a certain method. An important part of insurance business under the conditions of commodity economy. It has the obvious characteristics that financing activities are directly restricted by the risk mechanism due to the essential requirements of the insurance company's active adjustment of the relationship between risk and capital. It consists of two parts: (1) purely financial financing, insurance companies can use financial instruments to participate in financial financing activities in financial markets, called financial financing; (2) financial financing accompanying risk adjustment, mainly through insurance companies The realization of mutual reinsurance is called risk financing. Insurance financing is an organic unity of financial financing and risk financing. The conditions it should have are: a certain amount of long-term and stable accumulation of funds; the reasonable structure of the insurance mechanism, even if the insurance business is diversified, each professional company can bear the risks and have independent use of funds; Good competitive environment; Open economic model; Sound insurance market and financial market. ^[1]

Chinese name

Insurance financing

Foreign name

insurance financing

Category

Financial financing and risk financing

Concept

Activities that channel their funds outwards

Financial financing refers to insurance financing in the narrow sense, which refers to the financial financing activities in which an insurer invests its balance of funds through a certain channel and expects to return to the value added. This financing activity is a necessary means for insurance companies to operate and an inherent requirement for the value-added properties of insurance funds. It can enhance the ability of insurance operations, expand the ability to underwrite insurance, and provide conditions for improving the market competitiveness of insurance companies. According to its financing methods, it is divided into two types: direct financing and indirect financing. The former is the infiltration of the insurer directly into the financial market, and the latter is the deposit of funds into financial institutions, which will invest on their behalf.

Risk financing is an activity in which an insurer realizes financing through diversification of risks to coordinate the relationship between capital and risk. It mainly refers to the mutual reinsurance between insurers, which aims to maintain business stability, not for economic benefits.

Insurance financing is an organic unity of financial financing and risk financing, which should have the following conditions: a certain amount of long-term and stable accumulation of funds; a sound insurance market and financial market; a good competitive environment; an open economy Model; the rational structure of the insurance mechanism, the insurance company can bear its own profits and losses, bear its own risks, and have independent use of funds.