Role of Insurance In Economic Development

In addition to contributing to the economy by preserving human life values and assets and protecting loss, Insurance also aids in economic development. To grow economy, the Govt. needs capital to finance infrastructure i.e. Roads, bridges, industrial farm communication and Railways lines which requires the huge investment.

Individual or Govt. is unable to provide such funds. As the life Insurance contracts are long term contacts. Therefore, insurer by investing funds that flow to them from their many policyholders have become the principal source of capital for the economy.

Investments are essential ingredients for economic development of any nation. Investments by Insurance companies are in social sector, infrastructure development and government security, papers and bonds.

Life insurance plays a major role in mobilization of pubic savings.(Rs. 75,000 crores/ year)

Savings out of life insurance fund are utilized in investments for growth. (infrastructure bonds, Housing, Railway, equity market etc.)

Looking to non-life side business, industry and trade would be seriously handicapped in the absence of insurance cover relating to losses due to fire, earthquake, flood, storm - natural calamities, act of God etc.)

Wide-spread of Insurance brings in indirectly the following advantag

• Better living standards
• Higher productivity
• Improved Law and Order
• Higher GDP
• Healthy Generation
• Discourages bad habits and practices causing damage to human life
• Higher mortality
• Happy society
• Enhanced self-esteem
• Creative Minds
• Entrepreneurship qualities
• Social upliftment of the society as a whole

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