What is financial risk insurance in brief? Financial risk insurance is the best protection for an enterprise
Insurance can be carried out using various methods and methods, and it applies both to individual regions and to the entire country, for example, financial insurance involves insuring various monetary assets and financial instruments of enterprises and individuals throughout the country and even beyond its borders.
It is necessary to understand that insurance is provided by both public and private insurance companies, as well as other participants in the insurance market.
Financial insurance provides a large number of benefits and various assistance in insuring objects. The insurance industry can, in principle, reduce payments through many aspects, for example, when the policyholder makes insurance payments consistently and on time, he can be given a discount of 15% by reducing the risk of possible non-payment of insurance payments, and in cases where the policyholder has been in a partnership with the insurer for quite a long period of time, he can also be given a 15% discount, and a number of companies provide director’s discounts, with the help of which the policyholder can be given a 50% discount by attracting corporate clients.
It must be said that financial insurance is constantly under the supervision of the federal insurance inspectorate in Russia, and in Ukraine, a similar function is performed by divisions of the commission involved in regulating the financial services market. Authorized bodies constantly monitor the quality of insurance services provided in the insurance market and nip attempts at fraud in the bud. These services may apply the following measures to insurers:
- — Refuse to issue a license necessary to carry out insurance activities.
- — Carrying out certifications of insurance companies and brokers.
- — Maintaining a unified register of insurers.
- — Carrying out audits and checks in insurance companies.
- — Receiving and processing financial reports of insurance companies and so on.
Financial insurance can also guarantee and protect business entities throughout the state, which are an integral part of the functioning of the economy in the country. Thus, this type of insurance provides tangible advantages for economic entities and citizens of the country in obtaining the necessary insurance protection, since in the world there are a large number of conditions in which an enterprise and a person may find themselves in a crisis situation, and, at the same time, not be able to fully pay for all goods and services, as well as work to compensate for the damage caused, as well as maintain full functioning.
Financial and Investment funds that provide for compulsory insurance in the financial field to enable each business entity or person in cases of unforeseen circumstances to receive funds to support the life of their family. Insurance in the field of finance also involves insurance in case of loss of profit, because enterprises and the state lose enormous amounts of money in cases of crisis.
18.2. Forms and types of financial risk insurance
The most complex and dangerous risks in terms of their financial consequences that cannot be neutralized through its internal mechanisms are subject to insurance.
Financial risk insurance is the protection of the property interests of an enterprise upon the occurrence of an insured event by special insurance companies (insurers) at the expense of funds formed by them by receiving insurance premiums (insurance contributions) from policyholders.
In the process of insurance, the enterprise is provided with insurance protection for all main types of its financial risks - both systematic and unsystematic. At the same time, the volume of compensation for the negative consequences of financial risks by insurers is not limited - it is determined by the real value of the insurance object (the size of its insurance assessment), the insured amount and the amount of the insurance premium paid.
When resorting to the services of insurers, an enterprise must first determine the object of insurance - those types of financial risks for which it intends to provide external insurance protection. The composition of such financial risks is determined by a number of conditions, the main of which are (Fig. 16.2.).
Mandatory
financial insurance
risk
Acceptable
price
insurance
protection by
risk
CONDITIONS
Insurance Financial
RISKS OF THE ENTERPRISE
Availability
enterprises
insurance
interest
Unpredictability
and unregulated
risk within
enterprises
High degree
probabilities
emergence
financial
risk
Inability to fully compensate for financial losses due to risk using one’s own financial resources
Figure 16.2. Basic conditions for insuring financial risks by an enterprise.
1. Risk insurability. Despite the fact that the legislation does not prevent the insurance of any types of financial risks of an enterprise, the market for insurance products for these risks is limited to a certain extent. This limitation is caused by the unpredictability of the probability of an insured event occurring for certain financial risks in the conditions of unstable economic development of the country, and the high probability of an insured event occurring for a number of financial risks in the process of transition to market relations. Certain restrictions on the insurability of certain financial risks are also introduced by the implementation of extremely aggressive financial policies by a number of enterprises in certain aspects of financial activity. Therefore, when determining the possibilities of insuring its financial risks, an enterprise must find out the feasibility of such insurance, taking into account the insurance products offered by the market.
2. Mandatory financial risk insurance. A number of financial risks V In accordance with the conditions of state regulation of economic activities of enterprises, they are subject to compulsory insurance. For such financial risks, the enterprise has no alternative management decisions regarding their composition. This primarily relates to the need for compulsory insurance of assets provided for by the relevant regulations.
3. The company has an insurable interest. It is characterized by the financial interest of an enterprise in insuring certain types of its financial risks. This interest is determined by the composition of the enterprise’s financial risks, the possibility of neutralizing them through internal mechanisms, the level of probability of a risk event occurring, the amount of possible damage for individual financial risks and a number of other factors.
There are full and partial insurance interests of enterprises - insurers of financial risks.
Full insurance interest of the enterprise determines his need V compensation by the insurer for the full amount of financial losses incurred upon the occurrence of an insured event. In other words, full insurable interest reflects the need for the insurer to provide full insurance coverage for the type of financial risk in question.
Partial insurable interest of the enterprise determines his need V compensation by the insurer of only a certain share of financial losses incurred upon the occurrence of an insured event. This form of insurable interest is associated with the possibility of the enterprise using internal mechanisms to neutralize certain financial risks, the effect of which does not, however, ensure the full elimination of their negative financial consequences.
The presence of a full or partial insurable interest in an enterprise determines the need to voluntarily seek the services of insurers in search of insurance protection for certain types of financial risks.
4. Inability to fully compensate for financial losses due to risk using one’s own financial resources. This condition is one of the main ones in the formation of the insurable interest of an enterprise. In accordance with this condition, the financial risks of the enterprise, which are classified as catastrophic by the size of possible financial losses, first of all need insurance protection. Taking into account this condition, the enterprise must provide full or partial insurance for all types of insured catastrophic risks inherent in its financial activities. In some cases, this determines the need for insurance and certain financial risks of a critical group if there is a high level of their concentration in the enterprise within the framework of a number of ongoing financial transactions.
5. High degree of probability of financial risk. This condition determines the need for insurance protection for individual financial risks of acceptable and critical groups, if the possibility of neutralizing them is not fully ensured through its internal mechanisms. In this case, the company usually has only a partial insurable interest.
6. Unpredictability and uncontrollability of risk within the enterprise. Lack of experience or a sufficient information base sometimes does not allow an enterprise to determine the degree of probability of a risk event for individual financial risks or to calculate the possible amount of financial damage for them. Even if a financial risk is clearly identified by type, but its level is not assessed, this deprives financial managers of the opportunity to effectively manage it, first of all, to select alternative measures to neutralize it through internal mechanisms. In these cases, the preferred management decision is to transfer the financial risk to the insurer.
7. Acceptable cost of insurance protection for risk. This condition is one of the main ones in ensuring the effectiveness of financial risk insurance. If the cost of insurance protection does not correspond to the level of financial risk or financial capabilities of the enterprise, it should be abandoned, strengthening the appropriate measures to neutralize it through internal mechanisms. In some cases, if it is impossible to carry out external insurance due to its high cost and the ineffectiveness of internal mechanisms for neutralizing financial risks, the enterprise should refuse to carry out the corresponding financial transaction
(first of all, this condition applies to catastrophic financial risks of the enterprise).
Insurance services offered on the market that provide insurance for the financial risks of an enterprise are classified according to a number of criteria (Fig. 16.3.).
CLASSIFICATION OF FINANCIAL RISK INSURANCE OF THE ENTERPRISE
BY FORCH CONDITIONS
BY OBJECTS STRYAKOVRNIYA
BY VOLUMERN
STRVKHOVRNIA
SOFTWARE SYSTEM USED
insurance
seen
insurance
Compulsory insurance Voluntary insurance
Property insurance
Liability Insurance
Personnel insurance
Full insurance Partial insurance
Insurance based on the actual value of property Insurance based on the proportional liability system Insurance based on the first risk system
Insurance using an unconditional franchise Insurance using a conditional franchise
Property (assets) insurance
Credit risk insurance Deposit risk insurance Investment risk insurance
Insurance of indirect financial risks
Financial guarantee insurance
Other types of financial risk insurance
Figure 16.3. Classification of insurance of financial risks of an enterprise according to the main characteristics.
1. According to the forms of insurance, it is divided as follows:
Compulsory insurance. It is a form of insurance based on the legislative obligation of its implementation for both the policyholder and the insurer. The mass nature of this insurance makes it possible to significantly reduce insurance rates and simplify the procedure for its implementation. However, compulsory insurance does not fully take into account the characteristics of the insured assets, the different likelihood of an insured event occurring in different types of enterprises, the financial capabilities of the insured and a number of other factors that individualize insurance protection.
The main object of compulsory insurance at enterprises is its assets (property), which are part of its production fixed assets. From the standpoint of financial management, insurance of these assets is considered as insurance of the financial risks of the enterprise. This is due to the fact that the loss of uninsured assets in the form of production fixed assets, which are formed mainly from equity capital, can cause a significant decrease in the financial stability of the enterprise. In this regard, in a more expanded interpretation, it represents insurance against the risk of a decrease in the level of financial stability of an enterprise, associated with a possible decrease in the share of equity capital.
The assets (property) of an enterprise that are part of its production fixed assets are compulsorily insured within the limits of their book value (if their book value changes, the conditions of compulsory insurance are subject to automatic revision). The maximum insurance rates and minimum insurance amounts for each insurance object are determined taking into account the level of risk and are approved by the government. In this case, the minimum insurance amount is set at the level of the residual value of the insurance objects.
Voluntary insurance. It characterizes a form of insurance based only on a voluntarily concluded agreement between the policyholder and the insurer based on the insurable interest of each of them. The principle of voluntariness, based on the insurable interest of the parties, applies to both the enterprise and the insurer, allowing the latter to avoid insuring dangerous or unprofitable financial risks.
2. By insurance objects The current practice in the country identifies the following groups:
Property insurance. It covers almost all main types of tangible and intangible assets of an enterprise. Insurance relations in property insurance are determined by the following obligations of the parties: the policyholder must ensure timely payment of insurance premiums (insurance premium), and the insurer must provide compensation for financial damage incurred by the enterprise upon the occurrence of an insured event. In the case of property insurance, not only the owners of the relevant assets, but also legal entities interested in their safety (for example, tenants of premises, lessees of equipment, thrift stores, etc.) can act as an insured in property insurance.
Liability Insurance. Its object is the liability of the enterprise and its personnel to third parties who may suffer financial and other types of damage as a result of any action or inaction of the insured. This insurance provides insurance protection for an enterprise against the risks of financial losses that may be imposed on it by law in connection with damage caused to third parties - both physical and legal. The relationship of the parties in liability insurance is determined by the following mutual obligations: the policyholder is obliged to pay the necessary insurance premiums (insurance premium), and the insurer is obliged to compensate the policyholder for the amount of money payable to third parties for the damage caused. Liability insurance provides an enterprise with insurance protection for a significant number of types of its financial risks.
Personnel insurance. It covers the enterprise’s life insurance for its employees, as well as possible cases of their loss of ability to work, the onset of disability, and others. Specific types of this insurance are carried out by the enterprise on a voluntary basis at the expense of its profits in accordance with the collective labor agreement and individual labor contracts.
3. By volume of insurance The following groups are distinguished:
Full insurance. It provides insurance protection for the enterprise against the negative consequences of financial risks in their entirety upon the occurrence of an insured event.
Partial insurance. It limits the insurance protection of an enterprise from the negative consequences of financial risks both to certain insured amounts and to a system of specific conditions for the occurrence of an insured event.
4. By insurance systems used highlight:
Insurance based on the actual value of the property. It is used in property insurance and provides insurance protection in the full amount of financial damage caused to the insured types of assets of the enterprise (in the amount of the insured amount under the contract, corresponding to the size of the insurance assessment of the property). In other words, with this insurance system, insurance compensation can be paid in the full amount of financial damage incurred.
Insurance based on a proportional liability system. It provides only partial insurance protection for certain types of financial risks. In this case, insurance compensation for the amount of financial damage incurred is carried out in proportion to the insurance coefficient (the ratio of the insured amount determined by the insurance contract and the size of the insurance assessment of the insurance object). Taking into account this insurance coefficient, the amount of insurance compensation paid under the proportional liability system is determined by the following formula:
where SV P0 is the maximum amount of insurance compensation paid to an enterprise when insuring under a system of proportional liability;
Y - the amount of financial damage incurred by the enterprise as a result of the occurrence of an insured event; SS D - the insured amount determined by the insurance contract under the system of proportional liability; CC 0 - the amount of the insurance assessment of the insurance object, determined at the conclusion of the contract.
Insurance according to the first risk system. The “first risk” means the financial loss incurred by the policyholder upon the occurrence of an insured event, assessed in advance when drawing up the insurance contract as the amount of the insured amount specified therein. If the actual financial loss exceeded the stipulated insured amount (insured first risk), it is compensated under this insurance system only within the limits of the insured amount previously agreed upon by the parties.
Insurance using an unconditional franchise, The deductible is the minimum portion of the damage incurred by the insured that is not compensated by the insurer. When insuring using an unconditional franchise, the insurer in all insurance cases pays the policyholder the amount of insurance compensation minus the amount of the franchise, keeping it for itself. With this insurance system, the amount of insurance compensation is determined by the following formula:
The amount of insurance compensation paid to an enterprise under an insurance system using an unconditional franchise:
Y - the amount of financial damage incurred by the enterprise as a result of the occurrence of an insured event; FR - the size of the franchise agreed upon by the parties.
Insurance using a conditional franchise. Under this insurance system, the insurer is not responsible for financial damage incurred by the enterprise as a result of the occurrence of an insured event, if the amount of this damage does not exceed the amount of the agreed deductible. If the amount of financial damage exceeds the amount of the deductible, then it is reimbursed to the company in full as part of the insurance compensation paid to it (i.e., without deducting the amount of the deductible in this case).
5. By type of insurance in the process of its classification, the following are distinguished:
Property (assets) insurance. The basics of such insurance are considered when characterizing its mandatory form. At the same time, its capabilities can be significantly expanded through voluntary insurance of tangible and intangible (intellectual property) assets of the enterprise. Unlike compulsory, this type of voluntary insurance has the following features:
a) insurance can cover the entire complex of tangible and intangible assets of an enterprise, and not just its production fixed assets;
b) insurance of these assets can be carried out in the amount of their real market value (i.e., according to their restoration, and not balance sheet value) if there is an appropriate expert assessment;
c) insurance of various types of these assets can be carried out with several (rather than one) insurers, which guarantees a stronger degree of reliability of insurance protection, in particular, in the event of bankruptcy of the insurers themselves (such insurance is one of the ways for an enterprise to diversify financial risks);
d) in the process of insuring these assets, the inflation risk of the future period can be taken into account as its component.
Credit risk (or settlement risk) insurance. The object of such insurance is the risk of non-payment (late payment) on the part of product buyers when providing them with a commodity (commercial) loan or when supplying them with products on terms of subsequent payment. This insurance is carried out, as a rule, by the enterprise itself, attributing the costs of it to the debtor. The credit risk of an enterprise can be insured by the buyer of the product himself (in the form of his financial liability) with the transfer of the insurance policy to the selling enterprise. This type of insurance can also be extended to financial risks on consumer loans in long-term forms and high cost of goods.
Deposit risk insurance. It is produced in the process of the enterprise making both short-term and long-term financial investments using various deposit instruments. The object of such insurance is the financial risk of non-repayment by the bank of the principal amount and interest on deposits and certificates of deposit in the event of its bankruptcy.
Insurance of investment risks. The object of this type of insurance is, as a rule, numerous simple risks of real investment, primarily, the risks of untimely completion of design work on an investment project, untimely completion of construction and installation work on it, failure to reach the planned design production capacity, and others. In foreign practice, it is common to insure the receipt of the intended income on financial investments, but in our country this type of financial risk is still considered uninsurable due to the high probability of an insured event occurring (under such conditions, the amount of the insurance premium may exceed the amount of the projected investment income).
Insurance of indirect financial risks. Such insurance covers many types of financial risks of an enterprise if the insurer has sufficient insurable interest. This type of insurance covers such varieties as insurance of estimated profits, insurance of lost profits, insurance of exceeding the established budget of capital or current costs, insurance of leasing payments and others.
Insurance of financial guarantees. An enterprise resorts to this type of insurance in the process of attracting borrowed funds (in the form of bank, commercial and other types of loans) at the request of creditors. The object of such insurance is the financial risk of non-repayment (untimely return) of the principal amount and non-payment (late payment) of the established amount of interest. Insurance of financial guarantees assumes that certain financial obligations of an enterprise related to the attraction of borrowed capital will be fulfilled in full accordance with the terms of the loan agreement.
Other types of financial risk insurance. Its object is other types of financial risks that are not included in the traditional types of insurance discussed above. With mutual satisfaction of the insurance interests of the parties, the composition of other types of insurance can have a wide range (due to the inclusion of previously uninsurable risks, innovative insurance products, etc.).
The relationship between an enterprise and an insurance company is based on an insurance contract - an agreement between the policyholder and the insurer regulating their mutual rights and obligations under the terms of insurance of certain types of financial risks. The basis of this contract, which determines the reliability of insurance protection and its effectiveness, is the insurance conditions. The most important of these conditions are (Fig. 16.4.):
Volume of insurance
responsibility
insurer
Insurance amount
property valuation
policyholder
Size
insurance
amounts
BASIC CONDITIONS
insurance
Amount of insurance tariff (tariff rate)
The procedure for determining the amount of insurance damage
The size and nature of the insurance deductible
Payment procedure
insurance
awards
Insurance amount
bonus (payment,
contribution)
Figure 16.4. Composition of the basic conditions for insuring the financial risks of an enterprise.
1. The scope of the insurer's insurance liability. This element characterizes the list of risks accepted by the insurer for this insurance object. This list of risks specifies possible options for the occurrence of an insured event, as a result of which the insurer undertakes to pay the insured the amount of insurance compensation. The scope of the insurer's insurance liability determines the full or partial level of insurance protection it provides to the enterprise for specific types of its financial risks.
2. The amount of insurance assessment of the insured's property. This element is included in the terms and conditions of property insurance. It characterizes the method of assessing the relevant assets (at book value, at real market value, etc.) And its results. In carrying out such an assessment, in necessary cases, third-party experts are involved - “property appraisers.” The size of the insurance assessment of the insured’s property is the basis for establishing the insured amount when using insurance systems based on actual value, proportional liability and others.
3. Sum insured. The insured amount characterizes the amount of funds V within which the insurer bears liability under the insurance contract. Whatever the actual amount of damage suffered by the enterprise upon the occurrence of an insured event, it cannot be compensated by the insured in amounts exceeding the insured amount. In terms of its economic content, the insurance amount represents the maximum amount of insurance protection of an enterprise for specific types of financial risks insured by it.
4. The amount of the insurance tariff (tariff rate). It characterizes the unit cost of an insurance service in relation to the insured amount or the unit price of insurance for the corresponding type of risk. Current methods for calculating tariff rates (actuarial calculations) provide for variability in approaches to establishing their level - based on a mathematical determination of the probability of an insured event, expert assessments, the use of the method of analogies, and others. The tariff rate (or gross rate) is calculated by the insurer as the sum of the net rate for a specific type of insurance and the size of the load:
ST = NS + N page, where ST is the insurance rate (gross rate) for a specific type
insurance;
NS - net rate for this type of risk; Peter is the insurer’s load for this type of risk.
Net rate provides the insurer with the formation of an insurance compensation payment fund, taking into account the likelihood of an insured event for a given type of risk. includes the insurer’s specific costs for carrying out insurance operations, forming a reserve fund, the standard level of its profitability and some other elements. The insurance rate (or gross rate) for a specific type of insurance is set in two options - as a percentage of the insured amount or in absolute terms per hundred currency units of the insured amount.
5. Amount of insurance premium (payment, contribution). The insurance premium (payment, contribution) characterizes the full amount of money that the policyholder must pay to the insurer under the terms of the insurance contract. According to its economic content, the size of the insurance premium determines the full price of insurance by the enterprise of the corresponding financial risk or a certain complex of them. The calculation of the amount of the insurance premium is based on the insurance amount provided for in the contract, the insurance period and the amount of the insurance tariff (tariff rate).
6. Procedure for payment of insurance premium. In accordance with current practice, two principal approaches to the payment of insurance premiums are used:
one-time payment (one-time bonus). It is, as a rule, of an advance nature, i.e. paid to the insurer immediately after signing the insurance contract. This form of payment is used for short-term types of insurance of financial risks or for long-term insurance with a low insurance premium;
current payment (current premium). It is distributed over specific time intervals of the total validity period of the insurance contract - years (if the contract term is set at several years), half-years, quarters, months. The amount of each current payment in this case is determined by dividing the full insurance premium by the number of time intervals (or in other amounts as agreed by the parties).
From the point of view of the enterprise, it is more profitable to pay the insurance premium in the order of current payments.
7. The size and nature of the insurance deductible. This element is included in the terms of insurance when it is carried out using an unconditional or conditional franchise. In order to strengthen external insurance protection, an enterprise should strive to minimize the size of the franchise and give preference to its conditional type (of the two alternative financial risk insurance systems under consideration).
8. The procedure for determining the amount of insurance damage. Insurance damage characterizes the value of destroyed or partially lost assets of the enterprise, as well as the monetary value of the financial losses of the insured or third parties in whose favor the insurance contract was concluded. Insurance damage may be determined by the terms of insurance in an indisputable manner (if it is possible to clearly establish its amount) or by agreement of the parties. The terms of insurance may provide for the involvement of special experts in assessing the amount of the insured's financial losses - “accident commissioners”, called upon to find out the reasons for the occurrence of the insured event and determine the amount of damage.
9. Procedure for payment of insurance compensation. Insurance compensation is the amount paid by the insurer to cover the financial loss of the policyholder upon the occurrence of an insured event. The procedure for its payment establishes the deadline for settlements, their form (type of payment), and the possibility of deducting the unpaid amount of the insurance premium from it. This element also determines the conditions under which insurance compensation is not paid (in the event of an intentional crime, etc.).
Taking into account the terms of insurance of certain types of financial risks proposed for approval, the enterprise determines its effectiveness. The main parameters for assessing the effectiveness of financial risk insurance are:
The probability of an insured event occurring for the given type of financial risk;
The degree of insurance protection for risk, determined by the insurance coefficient (the ratio of the insured amount to the amount of the insurance valuation of the property);
The size of the insurance tariff in comparison with its average size in the insurance market for this type of insurance;
The amount of the insurance premium and the procedure for its payment during the insurance period;
The amount of the franchise is conditional or unconditional (when using appropriate insurance systems).
The effectiveness of insurance of certain types of financial risks of an enterprise, determined taking into account these parameters, is the basis for making management decisions on this issue.
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Insurance, on the one hand, acts as a stabilizer of the economic and social situation in the country; on the other hand, it is a sphere of economics and business.
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At the same time, it refers to methods that allow you to manage risk. The specificity of insurance protection is to compensate for damage when an insured event occurs.
What it is
In the Russian Federation, financial risk insurance is regulated by the Federal Law under number, which was adopted at the end of November 1992.
Amendments and additions have been made to it several times, the latest of which include innovations dated September 1, 2014.
The concept of “financial risk” refers to the risk that arises from various financial transactions and commercial activities. In them, goods act as currency, securities, and cash.
In a market economy, financial risk insurance is an industry that ensures economic freedom and individual rights. It is important in investment activities with capital of financial and industrial groups and holdings.
Financial insurance is directly related to compensation for probable losses if the insured agreements do not bring the expected return over time.
The amount of insurance compensation is determined by the difference between the insured amount and the acquired income from the insured business activity.
Rules
For financial risk, in accordance with the insurance rules, any individual or legal entity with legal and legal capacity can act as an insured or beneficiary.
He has the right to conclude an insurance contract in his own favor, but the possibility of concluding it in favor of a third party is not excluded.
According to the rules, financial risks include:
- loss of expected income associated with untimely sales of products, downtime of the enterprise's production facilities, and a decrease in profitability;
- establishment, financing of a newly created company;
- leasing, fluctuations in the exchange rate of the selling price of securities;
- violation by the counterparty of obligations under the transaction, its insolvency that appeared during the execution of the terms of the transaction.
Forms and types
According to the provisions of the insurance rules, the types of risks determine the forms of insurance for financial risks. For example, price risks are often insured using derivatives, that is, options, futures, and forward contracts used in exchange trading of securities.
Financial risk is divided into main types:
On commodity and stock exchanges, insurance of financial risks is called hedging. With it, insurance is carried out by concluding a reverse transaction, using reverse commodity and currency flows.
It is also accomplished by a counter sale or purchase of the same underlying asset. To replace one financial instrument with another, the correlation coefficient must have a negative sign, that is, the value indicators of the securities must be directly opposite.
Internal and external financial risk insurance
In the financial risk insurance market, its main types are identified, which are represented by external and internal risks.
External types of insurance include insuring enterprises by concluding an insurance contract and transferring the insurance risk to their counterparties.
With external insurance, specific financial risks of the enterprise arising in the course of the economic activity of the enterprise are insured in full.
It comes in two forms:
When implementing internal insurance, an enterprise insures its risks arising directly within it.
The internal insurance system includes providing compensation for possible financial losses in commercial transactions and introducing a system of penalties.
It allows the company to reserve financial resources. In addition, he can create a reserve to cover losses, unforeseen expenses, and future payments.
Features of the agreement
The financial risk insurance contract is drawn up individually, taking into account the specifics and objectives of commercial activity, financial capabilities in strict accordance with the instructions of the Civil Code.
It is concluded on the basis of a written application, the content of which is information about the subject of the contract, the list of insured events, the amount of the insured amount, the obligations assumed by the parties, the introduction of changes and additions.
But in any case, it is necessary to provide for the duration of its action and the conditions of imprisonment. Amendments to it are formalized in a separate agreement.
The contract may be terminated upon expiration, liquidation of the insurance company, if the insured provides knowingly false information, or the insured fails to fulfill obligations to the insurer, it is terminated by the insurance company unilaterally.
Also, at the request of the policyholder, it can be terminated at any time. it is signed by the parties.
What is an object
In financial risk insurance, its object includes the property interests of the policyholder regarding losses.
As a rule, they arise when the counterparty fails to fulfill or improperly fulfills its obligations to the policyholder.
Insurance of financial risks of legal entities
A legal entity has the opportunity to insure its systematic and unsystematic financial risks in order to obtain financial guarantees to ensure the protection of its interests if necessary.
There are no restrictions on the volume of compensation; they are determined depending on the value of the insurance object. It also sets the amount of insurance premiums.
Moreover, a legal entity can insure the enterprise in whole or in part, limiting itself to individual objects within a certain insured amount, in accordance with the list of insured events.
Where can I apply?
Many insurance companies have started their activities in this area of insurance, despite the fact that it appeared not so long ago.
They offer various programs for insuring financial risks of individuals and legal entities, regardless of their form of ownership, organizational and legal status.
The programs offered by companies provide reliable coverage for damages incurred by the insured due to the fact that the counterparty was unable to fulfill its obligations on time.
At the same time, they serve their clients at a high level, provide consultations on issues that interest them, explain the provisions and rules of financial risk insurance, their concepts and where they are applied. Below are the conditions for their insurance in two well-known Russian companies.
Rosgosstrakh
The insurance company, within the framework of the financial risk insurance program, covers a fairly wide range of industries in which insurance is provided:
- transported goods from damage received, for example, damage, theft, robbery;
- sea and river vessels, it provides comprehensive protection of property interests, allows you to conclude large international contracts, obtain loans secured by the vessel on favorable terms;
- risks of space activities with provision of insurance coverage at all stages of production and operation of space technology;
- agricultural risks, including voluntary crop insurance, providing insurance protection;
- construction and installation risks and civil liability in relation to third parties during construction and installation work;
- electronic equipment, within which the risks associated with its operation are covered;
- yachts and boats under a comprehensive program that provides insurance protection against all risks arising during the operation of the vessel.
The company provides its services to individuals and legal entities, providing effective insurance protection to its clients.
Lloyd City
There are frequent cases when the counterparty violates the procedure and deadlines for fulfilling the obligations with the insured specified in the transaction agreement or performs them improperly, as a result of which the insured suffers losses.
The financial risk insurance program offered by Loyle City can provide financial protection to the policyholder in the current situation.
The insurance company assumes responsibility under the contract concluded with the insured in the event of non-fulfillment or improper fulfillment of contractual obligations by the counterparty under certain conditions.
These include:
- recognition of the counterparty as bankrupt, liability begins from the moment of official publication of the decision of the arbitration court;
- the impossibility of the counterparty fulfilling its obligations to the insured on time, in the required form due to the suspension of production activities, reduction in production volumes due to the impact of fire, explosion, emergency situations, natural disasters.
The insurance company guarantees its clients to pay insurance compensation upon the occurrence of an insured event immediately and in full, if the policyholder promptly notifies the company about the incident.
Rates
When determining tariff rates for insurance of financial risks, the level of stability of market relations, the forecast for the future, that is, growth dynamics, the duration of the insurance period, and the type of commercial activity are taken into account.
What is financial risk insurance for individuals and legal entities? How to insure financial business risks? What are the features of business risk insurance?
Good day, dear readers! The HeatherBeaver magazine team welcomes you!
Today we are exploring in detail a new topic - financial risk insurance. The information obtained will help citizens and legal entities protect their monetary assets from unforeseen situations.
So let's get started!
1. What is financial risk insurance?
First, let's define what financial risks are. In a broad sense, these are any risks associated with monetary transactions. If you borrow 100 rubles from your neighbor Ivan, this is also a financial risk. It is unknown whether your money will be returned or whether your neighbor will happily forget about the debt.
From an insurance perspective, financial risk is the risk associated with the monetary and commercial activities of individuals and commercial organizations. Of course, we are talking about transactions in which amounts appear that are more significant than the “keep” employed by Uncle Vanya.
Any manipulations with amounts of money, shares, or currency are potentially dangerous for the budget. For this reason, it is advisable to insure such operations.
This is a procedure by which the insurance company protects the property and financial interests of the policyholder from losses when certain events occur.
In Russia, this type of insurance is regulated by Federal Law 4015-1, adopted in November 1992. The main instrument of protection is money from a special fund formed from insurance premiums (contributions).
At the same time, insurance of financial risks of legal entities involves protection against most types of potential threats, both systematic and force majeure in nature.
The amount of compensation depends on several factors: the estimated value of the insurance object, insurance premiums, and the insured amount specified in the contract. Both legal entities and ordinary citizens can insure potential financial losses.
Financial risk insurance for individuals is a relatively new service. It provides protection against lost profits or damage caused by the occurrence of an insured event fixed by the contract, as well as compensation for the costs of legal proceedings.
Example
As a result of a five-day equipment downtime, the Moscow Pelmeni Factory company lost 80% of its possible profit. Fortunately, the company insured against such a risk in time, so the lost funds were returned by the insurer.
The current type of procedure is insurance of financial risks of shareholders. Investments in unbuilt facilities in conditions of economic instability are always associated with monetary risks. This could be changes in market conditions or refinancing rates, rising prices for building materials, or contractor defaults.
Despite the fact that insuring financial risks by the developer is a mandatory procedure, and shareholders have the right not only to return money, but also to pay a penalty, 70% of problem properties are not delivered precisely because of financial problems, so it will be necessary to have guarantees of strict compliance with the terms of the contract not superfluous.
Type 3. Insurance of investment risks
Investment risks are the risks of investing money in various projects. This can be portfolio investment in fixed assets and other tangible assets of the enterprise, portfolio investment in participation rights (including in international activities) and securities, lending to other economic entities.
An entity can insure itself against loss or shortfall in profit, a decrease in the level of profitability fixed by the contract, founders, currency and currency risks.
Type 4. Asset (property) insurance
Property insurance protects both tangible and intangible assets. The insured can be the owner or a legal entity responsible for safety (lessee, tenant, etc.).
The insurance relationship is based on the actual cost, consisting of the difference between the original price and calculated depreciation.
Type 5. Deposit risk insurance
The deposit insurance system is a set of measures that protect depositors from losses in the event of bankruptcy or cancellation of a bank’s license, or the introduction of a moratorium on satisfying creditor claims.
The procedure is carried out by the state Deposit Insurance Agency, established in 2003. The insurance coverage is the percentage transferred by banks from each open deposit. If an insured event occurs, the depositor receives 100% compensation of the deposit amount, but not more than 700 thousand rubles.
It is worth noting that business risk insurance can be either voluntary or mandatory. In compulsory insurance, the object is the operating fixed assets of the enterprise, formed from its own capital.
Their protection is aimed at preventing a decrease in the level of financial stability of a legal entity. A voluntary form of insurance protects the insurance interests of each party.
3. How to insure financial risks - 5 simple steps
Concluding a financial risk insurance agreement includes the following steps.
Stage 1. Select an insurance company
This is a very important step. You should not prioritize the low amount of insurance payments: sometimes this is an ordinary marketing ploy associated with restrictions that reduce the effectiveness of insurance.
First of all, you need to focus on the reliability of the organization. What should be taken into account is not so much fame and the presence of positive reviews (they may be biased), but rather specific parameters (reliability ratings, financial stability indicators, principles for calculating tariffs).
Give preference to companies that have been operating for more than 10 years. You should also check whether the company is licensed to carry out a specific type of insurance activity. A complete register of insurers and the necessary information is available on the portal of the Bank of Russia Service for Financial Markets.
Stage 2. Select an insurance program
When choosing an insurance program, you need to study the list of insured events and determine the risks that most need protection. It is necessary to determine the object of insurance, its cost, the validity period of the contract, and the presence of possible specific conditions.
Some insurance companies (IC) offer ready-made programs, while others allow you to create a list of risks yourself. Comprehensive insurance has the most favorable rates. The difference in cost between the full and basic package is small, and the policyholder receives comprehensive protection of property and financial interests.
Stage 3. Collect documents and submit an application
This is a very labor-intensive stage. Before submitting, you must make sure that the documents comply with the requirements of the Legislation and the insurer. Often, one incorrectly executed or unsubmitted document can lead to a future denial of insurance compensation.
Stage 4. Determine financial risks and tariff rate
The field of monetary risk insurance is relatively new to the Russian market, so insurance rates are not always reasonable and range over a fairly wide range. This gives policyholders ample bargaining power.
Calculating tariffs yourself is a troublesome task, so it is better to entrust this stage to a specialized organization. The capital's Soyuz-Insurance company enjoys the trust of its clients - a reliable insurance partner open to individuals and legal entities.
Insurance company for legal customers "Soyuz-Strakhovanie" provides the following range of services:
- consulting on possible insurance coverage options;
- assistance in choosing insurance conditions and collecting information necessary for cost calculations;
- representing the client’s interests in dialogue with the insurance company;
- organizing competitions between insurance companies in order to develop an optimal program for the policyholder;
- supporting the client in the event of an insured event and effectively resolving disputes.
Advantages of contacting Soyuz-Strakhovanie:
- extensive experience in the insurance market;
- understanding the basic needs of the company depending on the field of activity;
- knowledge of market tariffs;
- fair and transparent terms of interaction;
- operational timing of service provision;
- competent and responsible approach.
The company has offices in St. Petersburg, Nizhny Novgorod, Novosibirsk.
Stage 5. We conclude an agreement
The agreement should not contain ambiguously interpreted concepts. It is desirable that it indicate all the rules of the State Financial Services Commission used in the development, and these licenses confirming the right to carry out specific types of insurance.
It is worth paying special attention to the section “Reasons for refusal of insurance payment”. For example, the insurer may require “prompt notice” of the occurrence of an insured event. This gives the company ample opportunity for unilateral interpretation for the purpose of making a decision to refuse. Therefore, it is advisable to replace the term with an indication of a specific period.
You can conclude an insurance contract yourself or with the help of a professional broker. The second option takes much less time and protects the policyholder from incorrect actions on the part of a certain insurance company.
Let's present step-by-step instructions for the policyholder in the form of a table:
№ Stages Practical recommendations 1 Selecting an insurer What matters is the experience, reliability and solvency of the company 2 Program selection A comprehensive program will cost less 3 Collection of documents To avoid errors, check the data several times 4 Tariff determination It is better to entrust this stage to a professional company 5 Conclusion of an agreement Read all clauses carefully before signing 4. Where to insure financial risks on favorable terms - review of the TOP 5 companies
Not all insurance companies are actively developing such an area as insurance of financial risks of individuals and legal entities. The statistics of these risks are approximate, and the object itself is difficult to accurately calculate and requires analysis of a large number of factors.
Therefore, tariffs are often inflated and increase the financial burden of the policyholder. Among the reliable and profitable offers, it is worth highlighting the insurance packages of the following companies.
The company has been successfully operating in the domestic and international insurance markets since 1947 and offers a wide range of programs covering the area of financial risks. CIJSC has high financial stability, has a significant share of its own funds in its capital and is one of the leaders in the domestic insurance market.
This insurance company has 65 points of presence in various regions and has more than once won various nominations in the Golden Salamander competition for the best insurer. The insurer has an A+ rating assigned by Expert RA, confirming its stable solvency.
The year the organization was founded is 1994. It is among the top twenty Russian insurers in terms of the size of the authorized capital and the total amount of insurance premiums. The priority area of activity is the protection of financial and property interests of legal entities.
The company is an experienced participant in the insurance market and has an A++ reliability level assigned by RAEX, indicating the flawless fulfillment of responsibilities and obligations.
The insurer offers corporate clients insurance against insolvency of counterparties, fraud with salary cards, and loss of ownership rights to real estate used to generate income. The insurance company also works with cyber risks that are relatively new on the Russian market.
4) Renaissance
The largest insurer in the Russian Federation. Belongs to the category of systemically important companies in the Russian insurance market. The company has a RAEX rating of A++, and its authorized capital is more than 2 billion rubles. This allows the insurer to quickly and fully fulfill its obligations.
Clients include more than a million individuals and large Russian and Western companies. The main direction of insuring the financial risks of an organization is asset insurance. The client can also receive protection against financial losses due to downtime of commercial or production activities.
The company conducts successful insurance activities in the Russian and international markets, fully fulfilling its obligations and annually generating high levels of financial efficiency and stability.
It has the highest reliability rating for Russian insurance companies, “B++”, from the international analytical agency Standard & Poors. The current comprehensive commercial risk insurance program for legal entities includes insurance of fixed and current assets, insurance of losses from downtime and insurance of various types of liability.
5. How to save on financial risk insurance: useful tips
Commercial risk insurance is a fairly large expense item for any business. There are several ways to save on this type of insurance.
This technique can significantly reduce the cost of an insurance contract.
Popular techniques for reducing commercial risks include:
- risk aversion;
- acceptance, transfer and pooling of risks;
- diversification (sharing) of risks;
- hedging.
Avoidance avoids potential losses, but reduces the possibility of making a profit.
The principle of taking on oneself is to find one's own resources to cover losses, and to unite - to find partners. When transferring risk, factoring or guarantee agreements are used. These methods are developed by the company's financial service and relate to internal activities.
Almost any business activity involves the possibility of generating significant financial losses that arise due to the specifics, as well as due to the characteristics of competition. There are also many external factors that can also lead to critical situations. The danger of financial losses is very significant, therefore, you need to competently approach the process of risk assessment, as well as the possibility of obtaining a policy.
Financial risk in this case is a kind of probability of damage that may arise as a result of certain operations, credit or exchange activities, when performing various transactions with valuables, etc. That is, the entire structure of business is based on the fact that you have to fight with certain risks, and some risks are not justified, but are necessary for active development. And if the wrong decisions are made, the entrepreneur can suffer a serious loss. Moreover, practice shows that such losses often become the reason for the closure of business activities as a whole. Today you can avoid such negative factors through insurance.
A fairly significant number of insurance companies have appeared today. But you need to take into account that not all of them have a license to carry out activities in the field of insurance of risks of financial losses. Therefore, it is necessary to initially evaluate all proposals in the field of insurance, as well as evaluate the priorities of this or that cooperation. Also keep in mind that you should correctly and correctly identify the risks that can actually happen in your business activities. Many entrepreneurial factors have a highly specialized focus. You must understand that there is no need to purchase a comprehensive policy, which will contain a description of all possible risks. You can use a constructive form of insurance, which involves selecting clearly defined risks and paying rates for them.
The issue of obtaining financial risk insurance today increasingly arises when receiving large amounts of credit. Many financial people understand that life is very multifaceted and unstable, and it is for this reason that when taking out a loan for a significant amount and for a significant period, you cannot always be sure that the funds will be repaid on time. Therefore, today the service of insurance companies to provide policies for insurance of financial risks is increasingly relevant and in demand.
The basis of any insurance is the drawing up of a specialized contract. This document must reflect all the risks you have chosen, which must be described in sufficient detail. The cost of the policy and the amount that you can receive as insurance payments upon the occurrence of the event specified in this document will also be indicated.
What is financial risk insurance?
To fully understand the concept, you must first determine what financial risks are. At their core, these are risks associated with conducting monetary transactions. For example, if you are in the process of purchasing a product for sale, then a financial risk is created, since the product may not be sold, there may be losses due to the expiration date, the price may be reduced, and there is a risk of loss of profit. That is, in this situation it is unknown whether the invested funds will be returned in principle, and also whether this operation will generate a certain profit.
If we consider this risk from the position of an insurance company, then an explanation of the risks that arise in connection with a certain activity is formed, taking into account the use of funds. But let’s immediately say that today there is an insurance service for both entrepreneurs and individuals. After all, individuals also carry out certain financial transactions, which may involve certain risks. And in this case, using the services of an insurance company eliminates the possibility of financial losses.
It can be said with considerable confidence that any manipulations that are initially associated with funds or certain values may carry potential risks for the budget. If operations involve serious financial investments, then it is rational to insure them. Since if certain damage occurs, it will be compensated by payments from the insurance company.
Financial risk insurance is a fairly relevant service at the moment, through which entrepreneurs and individuals have the opportunity to competently protect their financial and property interests. The basis for such protection is an insurance policy, which is issued on the basis of signing a contract. The contract clearly states all the data that relates to the issue of insurance risks. If the situation that generates the loss corresponds to the risks described, a payment is made. At the same time, the insurance company reserves the right to conduct a specialized investigation and study of the situation in order to obtain objective information about the occurrence of a risk.
We will definitely say that in our country this type of insurance is clearly defined by legal norms. Here all the important nuances for determining the main instruments are indicated, an indication is formed of exactly how the contract should be drawn up, and it is also indicated which insurance companies have the right to provide services for this type of insurance.
Insurance risks are also defined by law in a general description; as for policies, these risks are clearly defined in them depending on the wishes of the client. When signing a cooperation agreement with an insurance company, you must ensure that all insurance risks are described in great detail, because the rationality of purchasing the policy as a whole depends on this.
A few words must be said that the amount of compensation is based on a number of factors. This may be the value of the estimated value of the object that is insured, or it may be a clearly defined amount that is named by the client during the process of drawing up the contract. Both legal entities and individuals can obtain a policy to protect financial risks.
If insurance of such risks for legal entities has existed for quite a long time, then offering such protection options for individuals is a relatively new service, which has become very relevant and in demand today. After all, many citizens, through such insurance, actually receive undeniably significant parameters for the reliability of financial transactions and operations.
The service of risk insurance for shareholders is quite relevant today. The thing is that investing funds in various projects is an opportunity to achieve a rapid process of financial growth. However, investment activity is associated with a fairly significant number of different risks. Often, investors lose their funds without receiving anything in return. To avoid such a situation, you definitely need to pay attention to risk insurance. Of course, insurance will not be cheap, but it will still become a certain guarantor of the reliability of the future.
Instructions for obtaining insurance for financial risks
Step 1: Selecting a company for insurance
Today it is obvious that this aspect will be the most important. You should not assume that it is possible to obtain insurance in this area everywhere. Not all existing companies are licensed to provide such services. Among other things, you must understand that insurance is aimed specifically at eliminating possible negative consequences, and if you are not sure that payments will be made by one or another company, then it is better to refuse cooperation services.
Be sure to evaluate the duration of the work. Companies that have worked in this area for more than ten years inspire serious trust. After all, if over such a significant period of time the company was able to correctly balance payments and profits, this indicates serious experience.
Step 2: Selecting the direction of insurance
When choosing a policy program, you need to take into account all the nuances of assessing insurance risks. It will also be necessary to determine the object of insurance itself and the validity period of the contract. Please review all specific terms and conditions. As a rule, modern companies assume the implementation of ready-made programs. They are based on the most common risks. On the other hand, it is possible to compile a list of the same risks yourself. Naturally, the second option is more preferable, since it is the one that contributes to the formation of incredibly luxurious opportunities. The cost difference between the basic package and the structural package is small. It is for this reason that many experts recommend giving preference to a full-fledged program.
Step 3: Providing documents
Immediately ask the company agent what documents you will need for full insurance. Most often, the list is set to a minimum in order to provide clients with maximum comfort. But the issue of financial risk insurance is very multifaceted. Therefore, many modern companies may require a more significant amount of documents in order to minimize their risks. Indeed, fraud on the part of clients is actively flourishing in this area today.
Step 4: Compose an application and questionnaire
The company will give you the opportunity to draw up an application or questionnaire. Essentially, you provide personal data that is entered into a specialized form. If you are completing an application remotely, you will need to enter all the data yourself. Therefore, you should carefully check all the specified data. After all, typos and mistakes can lead to disastrous results in the future.
Step 5: Risk identification and tariff calculation
Almost all modern companies have their own representative resource, through which it will be possible to carry out the procedure for preliminary calculation of the rate based on the data entered into a specialized form. When calculating the rate, the list of insurance risks is very important. Here you need to be extremely careful. Many people try not to bother with this process at all, preferring the full set of risks. Others analyze their activities and realistically possible risks, after which they make a list of them, and based on this they calculate the rate.
Step 6: Conclusion of the contract
The main insurance document, which determines all the important nuances and points, features of payments, etc., is the contract. It is there that all the main and important points are indicated that must be carefully studied by the client. The tariff schedule and the final cost of services must be determined immediately. A detailed description of the payment structure is formed.
Step 7: Payment for services
After you study the document, you will be able to pay for services. Immediately check with the company how you can do this. Large companies offer all kinds of payment options, including payment via electronic systems.
Step 8: Receive all documents
A copy of the contract, as well as the policy itself, is provided to the company after signing the contract and paying for services. Immediately check the policy for compliance with the established requirements for the sample document.
Types of financial risks under insurance
In our country, there are two main types of financial risk insurance:
- Required;
- Voluntary.
In the first case, it is determined that some companies are required to insure the risks of their clients, taking into account the fact that clients invest financial resources in the company's activities. We are talking in particular about shared construction. Here, insurance is mandatory and without issuing a policy, the company simply cannot carry out activities to attract financial flows from the client.
As for the voluntary form, here a person decides everything for himself independently. No one forces him to carry out insurance; however, the awareness of possible negative losses motivates the potential client, who chooses the opportunity to prevent risks by purchasing a policy. In this case, modern insurance companies are able to provide a wide range of different policies with different risks and price parameters.
- Insurance of financial guarantees. At its core, this is a specialized type of guarantee. The company that provides insurance acts as a certain guarantor of the transaction and determines the fulfillment of financial obligations that are clearly defined in the transaction agreement. Such agreements are signed between the borrower and the investor. The policy can be purchased for payments on rental, leasing transactions, various types of payments for delivered goods, machinery, equipment, for the provision of a loan, etc.;
- Protection of credit-type risks. Very current policies. The thing is that when applying for a loan for a very large amount, a person understands that there is a possibility of no payments due to some life situations. But the loan will not disappear anywhere; it will still need to be repaid. And in order to prevent the negative consequences of lack of payments, a person purchases a policy. If for some reason the borrower is unable to fulfill his loan obligations, the policy will be triggered and the insurance company will make payments;
- Investment risks and their protection. Investments can help a person obtain incredibly significant profit margins with a minimal investment of time and effort. Today, this activity has become incredibly relevant and in demand, since investors can earn more in a minimum amount of time than entrepreneurs do in a year. At the same time, such activities are associated with serious risks. It is for this reason that investment risk insurance policies today have acquired fairly high relevance ratings;
- Protection of assets in the form of property. Today it is possible to protect tangible and intangible assets. Any person can become an insured. Such programs are based on determining the actual cost, on the basis of which the tariff is calculated;
- Deposit risks and their insurance. Deposits have become a relevant banking product today. Their insurance system is based on a comprehensive measure of protection against various risks. For example, a description of the risk is formed in the form of losses from the bankruptcy of a bank or the revocation of its license. Also, payments can be received even if a moratorium on satisfying customer requirements has been introduced. The insurance procedure is carried out by a specialized agency, which was founded back in 2003. From each open account, the bank makes certain deductions from a percentage of the profit received. Upon the occurrence of clearly established insured events, the client receives payments of the full amount of the deposit.
Business Risk Insurance- this is a very important stage in protecting the interests of modern businessmen. In certain cases, the legislation provides for mandatory insurance measures; in others, the purchase of a policy is carried out on a voluntary basis.
The most important thing is that purchasing a policy helps prevent a decrease in the level of financial stability. Therefore, voluntary insurance is becoming more and more popular every day.
How is the cost of the policy determined?
Insurance companies can provide standard policy options that provide comprehensive protection in a clearly defined area. For example, when insuring a deposit, a comprehensive policy involves obtaining protection from risks associated with any termination of the bank’s activities, with certain nuances that relate to the ban on issuing financial resources to clients, etc. But, a person can use the option of taking out insurance based on his own risk preferences.
This means that, first of all, the cost of the policy will be influenced by the number of risks that will be indicated in it. Essentially, the more risks there are, the more significant the final cost will be.
The timing of the policy is also of no small importance. The thing is that short-term policies carry minimal risks for the insurance company. It is for this reason that it is possible to count on minimum tariffs. If the policy term is more significant, this increases the risk of an insured situation and the cost increases. But, if a client always uses the services of a particular insurance company, he will be considered permanent, and he will be offered interesting programs with discounts and promotions.
There are a lot of nuances that are important for the final formation of the cost of insurance. They are all taken into account when working with a client, after which the agent calculates the basic cost. You can calculate this cost yourself. Almost all leading companies have a representative website that hosts a specialized tariff calculator. Based on the use of such a calculator, it is possible to find out in advance how much your specific insurance will cost.
Important points and nuances of financial risk insurance
We invite you to study the list of tips that will allow you to prioritize profitable cooperation with the insurance company in the future:
- You can reduce the number of risks specified in the policy, which, in fact, will become the basis for a serious reduction in price. However, do not forget that if some risks are not defined by the policy, then you will not be able to receive payments, since it will be considered that the situation described by the terms of the contract has not occurred;
- Try to refuse cooperation with those companies that have just started their professional activities. It is not a fact that they will be able to withstand difficult competitive and economic conditions, which means they are not worth the risk;
- If you have already used such services, then it is best not to change the company, since constant cooperation can guarantee you significant discounts. In fact, almost all companies have a developed structure for interaction with regular customers. As a result, your savings can be up to thirty percent of the original cost of the policy;
- Remember that having a positive insurance history will be the basis for using minimum rates. If, when studying your history, it turns out that insurance situations occur systematically, then in this case the maximum rate for calculating the cost of the policy will be used. Since there is a significant probability that the company will still have to make payments;
- Keep track of all the promotions that the company you work with offers. For example, such companies often offer the opportunity to receive a fifty percent discount if the client brings his friend for insurance. Through such a promotion, you can get the prospect of truly significant savings.