The Role of Insurance in the Economy. A Boost to – and a Drag on – Economic Activities

Insurance is often perceived as a drag on the development of economic activity. Being obligatory in a number of sectors, it imposes very high — and hence deterrent — charges in certain situations, while at times requiring entrepreneurs to put in place restrictive preventive measures.
Though it seems at first sight an obstacle to free enterprise, insurance actually turns out to be a key element in economic activity, explains Jean-Pierre Daniel. First, since insurance companies manage a considerable quantity of funds, they invest part of these in the economy (stocks and shares). Second, they are crucial because they provide support and “reassurance” for entrepreneurs, by offering to “compensate them for the unfortunate consequences of a random event”.
Without insurance, many activities “quite simply could not exist”, points out Daniel, before going on to speak of the future of the profession, a future which he sees as “set fair”, particularly in view of the ageing of the population of the rich countries and “the general sense of risk aversion”.