The aims of any economic planning are to produce a competitive environment to promote employment and sustainable long-term growth. This paper demonstrates that the insurance industry plays a vital role in this strategy and provides evidence on how insurers contribute to growth and employment in Europe. Economists have demonstrated that economic growth and insurance development are interdependent and that a world without insurance would be much less developed and much less stable. How Insurance Sector promotes Economic Development
Insurance including insurance brokers promote economic development through various channels: Insurance reduces the waste of country and brings a market confidence. Insurance reduces the capital firms need to operate.
Insurance fosters investment and innovation by creating an environment of greater certainty. Insurers are solid partners for the development of a workable supplementary system of social protection, in particular in the field of retirement and health provision. As institutional investors, insurers contribute to the modernisation of financial markets and facilitate firms’ access to capital. Insurance promotes sensible risk-management measures through the price mechanism and other methods and contributes to responsible and sustainable economic development. Insurance fosters stable consumption throughout the consumer’s life. It will be more worth to describe that there are three (3) important pillars of any economy that provide and facilitate an economy with immense contribution like employment opportunities, major tax contributions and growth in GDP. However there are also other areas which will be worth appreciated by mentioning here but it will deviate us from our prime objective of explaining role of insurance broking sectors. However, the three (3) important pillars are Banks, Joint Stock Companies and Insurance Companies. Moreover, in a global economy characterised by rapid social and demographic change and by the emergence of new risks (e.g. by climate change or technological developments) and new needs (health care, pensions), cooperation between private insurance and public institutions is essential. This cooperation can bring benefits in many fields, for example, health of the working population, accident prevention, compensation for agricultural risks, international trade (export credit insurance), etc. How Insurance sector fosters Economic Growth
The insurance industry promotes economic growth and structural development through the following channels: Providing broader insurance coverage directly to firms, improving their financial soundness. Fostering entrepreneurial attitudes, encouraging investment, innovation, market dynamism and competition. Offering social protection alongside the state, releasing pressure on public sector finance. Enhancing financial intermediation, creating liquidity and mobilizing savings. As major institutional investors, insurers gather dispersed financial resources, and channel them towards investment opportunities, facilitating companies’ access to capital. Promoting sensible risk management by households and firms, contributing to sustainable and responsible development. Fostering stable consumption throughout life.
The role at Macro level:
(1) To secure economic stability.
(2) To safeguard economic and fiscal sustainability.
(3) To promote a growth- and employment-orientated and efficient allocation of resources. (4) To secure economic stability for sustainable growth.
(5) To ensure that wage developments contribute to macroeconomic stability and growth. The role at Micro level:
(6) To increase and improve investment in R & D, in particular by private business. (7) To facilitate all forms of innovation.
(8) To facilitate the spread and effective use of Information and Communication technology (ICT) and build a fully inclusive information society. (9) To strengthen the competitive advantages of its industrial base. (10) To encourage the sustainable use of resources and strengthen the synergies between environmental protection and growth. (11) To extend and deepen the internal market.
(12) To ensure open and competitive markets inside and outside Europe and to reap the benefits of globalization. (13) To create a more competitive business environment and encourage private initiative through better regulation. (14) To promote a more entrepreneurial culture and create a supportive environment for Small and Medium Enterprises (SME).
(15) To expand, improve and link up European infrastructure and complete priority cross-border projects. (Source: http://ec.europa.eu/growthandjobs/pdf/integrated_guidelines_en.pdf)