The Importance Of Insurance Sector For The Economic Development

The insurance industries are developing financial institutions in the market. Insurance sector play a vital role in the social and economic development. It will be reducing the uncertainties and improving the financial resources. There are two important channels which are helping the insurance sector for the economic and social development. Those channels are reducing uncertainties and pooling the long term financial resources.

Reducing Uncertainties: Insurance sector is provides the financial support in unexpected and sudden situations (Such as floods, fire accidents, and earthquakes.) in businesses and human life.

Generating long term financial resources: Generating financial long term resources play an important role in economic role. In insurance industry, funds are generated by premiums. These funds are invested in financial instruments (government securities and stock). And the financial instruments generate the long term financial resources.

Insurance industries affect economic growth by the channels of marginal productivity of capital, technological innovations and saving rate.

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