Insurance aids economic development in at least seven ways.

First, insurance promotes financial stability and reduces anxiety. In doing so, it permits businesses to operate with less volatility and risk of failure, thus providing greater financial and social stability within national economies. Simultaneously, it reduces anxiety for individuals and business owners.

Second, private insurance can substitute for government security programs. This fact reduces the strain on taxpayers and can make for a more efficient allocation of societal resources.

Third, insurance facilitates trade and commerce. Modern economies are built on specialization and its inherent productivity improvements. Greater trade and commercial specialization demand, in turn, greater financial specialization and flexibility. Without a wide insurance product choice and without constant service and pricing innovations, insurance inadequacies can stifle both trade and commerce. International insurers often enjoy a reputation as market innovators.

Fourth, insurance mobilizes national savings. Countries that save more tend to grow faster. Of the world’s 20 fastest growing economies over the preceding 10 years, 14 had savings rates greater than 25 percent of GDP, and none had a saving rate of less than 18 percent.

Insurers offer the same advantages as other financial intermediaries in channeling domestic savings into domestic investment.

Fifth, insurers enable risk to be managed more efficiently. They do this by risk pricing, risk transformation and risk pooling and reduction.

Sixth, insurers and reinsures have economic incentives to help insureds reduce losses. Foreign insurers sometimes can bring state-of-the-art loss mitigation services to markets.

The seventh benefit of insurance to economic development is that insurers foster a more efficient allocation of a country’s capital.

22. Features of corporate insurance products. Commercial insurance.

Corporate Insurance: Insurance designed for legal entity ,is a security for corporate businesses in order to handle risks which are not avoidable in life, it safeguards the company against business risks like damage of properties such as factories, machinery and other company assets ,takes care of the employees of the company -sickness, personal accidents which occur in the company

A company encounters a great amount of risks. In addition to property, liability and personnel risks, it also faces operational, financial and strategic risks. Before choosing a right corporate insurance program, the company’s management has to perform a great preliminary work in order to insure the company against possible risks in the most efficient manner.

Key Principles of Corporate Insurance: Complex approach – the complex of all risks is evaluated: Reciprocity - correlation and interdependency of risks is considered to avoid “overinsurance”; Long-term – insured and insurer are interested in cooperation for a long time.

Complex approach to corporate insurance:

Factors of external environment - Insurance “Against named perils (All risks)”

Losses due to transportation - Cargo insurance

Renters actions - Liability insurance

Export operations - Insurance of export operations

Financial results - Business interruption insurance coverage

Losses to the third parties - Insurance against losses to the third parties

Constructing works - Insurance of constructing operations

Internal defects and losses of equipment - Insurance of production equipment

Types of commercial insurance

Property insurance, Liability insurance, Entrepreneurial risk insurance, Financial risk insurance, Trade risk insurance, Employees insurance, Shipments insurance;

1. Commercial property: Property direct loss coverages - fire, plate glass, property, auto.

Coverage for indirect loss- business interruption, leasehold interest insurance Boiler and machinery

2. Liability insurance; Risks to insure: Damage to life, health, property of affected, as a result of: low-quality goods, inappropriate product documentation, unreliable information.

3. Entrepreneurial risks insurance: Insurer obliges to pay in case of additional charges (extra expenses or costs) or missed profit of an entrepreneur because of default on another party obligations or improper execution of a contract by another party.

If delivery: out-of-time, poor quality, different quantity,.. (Compensation:-direct real damages, -direct financial losses, -profit losses, legal costs of the insured (within limit: No benefit is paid if)

If Force Majeure -breach of the contract by insured, -

If legally wrong contract between 2 parties,

Intentional bankruptcy of contractor

4. Trade risks insurance: Non-payment, Prepayments, Accounts receivables, Protects sales revenues to ensure sales are paid, even if customer can't/or won't pay. (Not a factoring! ARI is new to Russian market, very expensive compared to Europe), Order rejected / фабрикационный

5. Marine insurance: Ocean Marine Insurance- destruction of a ship’s hull, destruction of a ship’s cargo (freight), ship owner’s liability

Inland Marine Insurance (transportation insurance)- property damage or destruction of an insured property, liability exposure of an insured for damage or property.

6. Trade credit insurance . An insurance policy and a risk management product offered by private insurance companies and governmental export credit agencies to business entities wishing to protect their accounts receivable from loss due to credit risks such as protracted default, insolvency or bankruptcy.

International Commercial Terms (Incoterms 2010): clarify who has responsibility for freight, insurance and other costs. They also determine when ownership of the goods passes from buyer to seller.