Spotlight on Insurance
OPINION: Insurance, in one form or another, can be traced as far back as 1750 BC, through medieval times and to modern insurance as we know it evolving from 17th century traders and the advent of mortality tables … it’s been around a long time.
By Brian Coogan - Infinance
Fast forward to today and we see it’s everywhere and available for everything but what really is it?
If we think of it as membership to a club, with benefits available to members that are not available to non-members. We pay a modest fee then when something untoward happens we are compensated, essentially replacing what we lost in full out of a pool of funds otherwise unavailable to us.
Further to that, insurance funds make up the big institutional investors that are the big players in industry, commerce and technology, essentially the engine room of the world economy, made up of each of our small contributions.
Then there are the re-insurers, insurance companies for insurance companies, where a local insurer will sell off a major stake of its book to a much larger re-insurer, retaining enough funds to cover smaller everyday claims then when major events happen that would take out a local insurer in a single day, along come the cavalry in the form of re-insurers to step in and sort it out, providing us with guarantees that when things get real, our policies are honoured.
So, it’s a great big global machine that drives the world economy and looks after us in our time of need … all for a small contribution, not bad.
Insurance comes in many forms from general insurance to cover things that don’t have a heartbeat like your house, car and business insurances, to life insurance for things that do have a heartbeat like us, our lives, income and health.
We’ll be taking a closer look at different aspects of insurance in the coming weeks.
For more on the above go to www.Infinance.co.nz/insights
Commentary is general in nature and not to be considered financial advice. Written by Brian Coogan, Licensed Financial Adviser and Director at Infinance – Taupo.
Insurance – it’s cheaper to buy ten years early than one minute too late