Self-insurance means. The essence of self-insurance. b The organization's claims statistics will be based on a limited database, making it difficult to predict future claims costs

Story

Self-insurance is historically the earliest method of insurance. It can be used in both undeveloped and developed commodity-money relations.

In the early phases of the development of human society, various reserve funds intended for use under any unfavorable circumstances by the entity that created them could represent reserves of grain, fresh water, food and other vital products and consumables. Often such reserve funds were created collectively. In this case, such funds were almost always formed on the basis of a simple agreement between members of the community creating the reserve fund (families, communities). The decision to use the funds of this fund was made in accordance with the hierarchy that existed in a particular economic entity. In a family it was the head of the family, in a state it was the supreme ruler (king, czar, etc.).

A striking well-known example of the formation of reserve provisions at the state level is the policy of Joseph, sanctioned by Pharaoh, described in the book of Genesis, aimed at creating during the “seven fat years” a supply of grain sufficient for Egypt to painlessly pass through the “seven lean” - lean - years.

Characteristic signs

Sole ownership by the policyholder of the insurance fund as a property (including the policyholder himself determining the procedure for using the insurance fund and, in particular, determining insured events);
non-use of attracted insurance funds - absence of an insurer;
the insurance fund is created by the policyholder himself;
the responsibility of the policyholder in terms of creating insurance funds and insurance programs is only to himself;
non-commodity nature of insurance.

If individuals or households are policyholders, they contribute a portion of their income. The insured business entity contributes to its own insurance fund a part of its profit or funds included in the cost of the products it produces. The insurer state forms such a fund from budget funds.

The self-insurance method has been used throughout human history. It is also used in modern conditions. For example, the state, at the expense of its budget funds, creates funds intended for use in the event of war, natural disasters, man-made disasters, etc.

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Synonyms:

Independent life
Crossbows

See what “Self-insurance” is in other dictionaries:

self-insurance- self-insurance... Spelling dictionary-reference book

Self-insurance- organization by the insurer of its own insurance (reserve) funds to cover possible damage from unforeseen risks. Dictionary of business terms. Akademik.ru. 2001... Dictionary of business terms

SELF-INSURANCE- creation by the policyholder of his own insurance (reserve) funds through regular contributions and setting aside funds. Raizberg B.A., Lozovsky L.Sh., Starodubtseva E.B.. Modern economic dictionary. 2nd ed., rev. M.: INFRA M. 479 p… Economic dictionary

Insurance is a relationship to protect the property interests of individuals and legal entities upon the occurrence of certain events (insured events) at the expense of monetary funds formed from the insurance contributions (insurance premiums) they pay (Article 2 of the Law).

Self-insurance- creation by the policyholder of his own insurance cash reserve to compensate for possible property damage upon the occurrence of an insured event.

Self-insurance

Direct insurance- protection of the property interests of policyholders, insured persons, beneficiaries and third parties, carried out by law or in accordance with the contract.

27. Coinsurance.

Double insurance– insurance from several insurers of the same interest against the same dangers, when the total insured amount exceeds the insured value. In case of double insurance, insurers bear liability within the limits of the insured value of the insured interest, and each of them is liable in proportion to the insured amount under the insurance contract concluded by them. Double insurance can be used for enrichment purposes, which is why insurance regulations in some countries prohibit it.

Coinsurance- insurance of the same insurance object by several insurers under one insurance contract.

Coinsurance is one of the methods of distributing large property risks, but is rarely used in liability insurance. The implementation of this method is simple and suitable for most cases.

28. Reinsurance.

Under reinsurance is understood as a system of economic relations, according to which the insurer, accepting risks for insurance (primary risk placement), transfers part of the responsibility for them (taking into account its financial capabilities) on agreed terms to other insurers (secondary risk placement) in order to create as balanced a portfolio as possible insurance, ensuring financial stability and profitability of insurance operations. The reinsurer does not have any rights or obligations under the insurance contract concluded by the cedant. The Law of the Russian Federation “On the Organization of Insurance Business in the Russian Federation” states that “an insurer who has entered into a reinsurance agreement with a reinsurer remains liable to the policyholder in full in accordance with the insurance agreement.”

Economic essence reinsurance is the redistribution between insurance organizations of the primary insurance fund. The subject of the reinsurance obligation arising from the reinsurance agreement is the obligation of the reinsurer, upon the occurrence of certain conditions, to make a reinsurance payment to the reinsurer.

Companies that insure large risks (space, shipping) may not have sufficient funds to pay. Therefore, when taking on a risk, a company often takes on only part of the risk, and gives the other part to other companies, i.e. reinsures the risk.

Liability standards for one risk for insurers – 10% of the insurer’s own funds.

Meaning. Reinsurance of risks achieves not only the protection of the insurance portfolio from the influence of a series of large insured events or even one catastrophic event, but also the fact that payment of insurance compensation for such cases does not place a heavy burden on one insurance company, but is carried out jointly by all participants participating in the reinsurance of the corresponding risk.

29. Outbound, inbound and domestic tourism.

Tourism- temporary departures (travels) of people to another country or locality other than their place of permanent residence for a period of 24 hours to 6 months within one calendar year or with at least one overnight stay in entertainment, recreational, sports, guest, educational, religious and other purposes without engaging in activities paid for from a local source.

A person making such a journey is called tourist.

There are quite a lot of classifications of tourism. First of all, outbound, inbound and domestic tourism are distinguished.

Outbound tourism- associated with the movement of citizens of one country across its borders. Domestic tourism- movement of tourists within one country. Inbound tourism- entry of foreigners into the territory of the state. Depending on the criterion by which travel is assessed, many classifications can be distinguished.

30. Gradation of risks in tourism.

Having combined all the risks in tourism that are not related to the quality of service to travel agencies and tour operators, based on similar characteristics, we distinguish three categories:

1. Health risks. A tourist on an exotic trip who is not familiar with sanitary and epidemiological standards may contract some kind of tropical disease that manifests itself after a few months. An insect bite can cause inflammatory reactions or infection. All kinds of poisoning from local food and water are also possible. Therefore, when planning a trip to an unfamiliar country, read the list of required vaccinations and the list of foods not recommended for consumption by tourists.

2. Risks of loss of property. During the tourist's trip, his apartment was robbed. During a flight or transfer, a tourist's luggage was partially or completely lost. The tourist did not get along with one of the vacationers or the local population, and while sleeping he was robbed. In order not to grieve over lost property, it is better to take care of its safety in advance.

3. Emotional risks. The tourist was tired and overexerted as a result of long flights. An unfamiliar country and its local residents caused stress. Having lost but regained his luggage, the tourist became nervous. No one and nothing can protect you from emotional irritation. Consider your own sensitivity to current events and choose rest so as not to injure your own nervous system.

These are only the main categories of risks that do not affect the economic component of tourism. When choosing your vacation, try to foresee as much as possible all possible threatening dangers and protect your life from them.

31. The most risky countries.
32. Characteristic features of risk insurance in tourism.

33. Main types of risk insurance in tourism.

Insurance in the tourism system is classified into the following types:
1. insurance of the tourist and his property;
Health insurance.

Insurance in case of sudden illness, bodily injury received by citizens as a result of an accident, or death that occurs during their stay abroad on a tourist trip.
No compensation is provided if illness
- occurred due to the fault of the policyholder (for example, due to alcohol intoxication)
- occurred before the start of the trip (all types of chronic diseases).
Insurance payments apply to
- provision of emergency medical care;
- purchase of medicines;
- transportation of the patient;
- repatriation of the body.
The cost of the insurance policy depends on
- sum insured;
- host country;
- duration of the trip;
On average it is 1-2 dollars per day.
The amount of insurance coverage is determined by agreement of the parties. The cost is also affected by the number of additional services - insurance companies offer a variety of medical insurance programs for tourists. The contract must specify a non-compensated amount - it can reach up to $50.
If an insured event occurs, you must notify the insurance company operator at the phone number specified in the policy. He can call doctors or recommend a medical facility. If the policyholder pays for medical services himself, he must keep documents confirming payment.

Baggage insurance.
will cover the tourist's expenses in case of damage, theft or loss of all or part of the luggage.
Each baggage insurance contract is valid for the entire duration of your visit abroad, and you can conclude a contract for several trips at once.

The following risks are subject to insurance:
- deliberate damage to things by third parties;
- damage to luggage as a result of an accident, traffic accident or natural disaster;
- theft, robbery or blackmail.
Insurance events do not include loss of property due to negligence.

The cost of the policy depends on the duration of the trip and the sum insured. The latter is chosen by the traveler when concluding the contract, but cannot exceed the cost of the luggage.
Some companies limit the maximum amount of insurance benefits to a few thousand dollars.
The insured will not be compensated for minor damage; the average “deductible” is 15% of the cost of the insured items.

If things are found, the insurance company is obliged to pay for their storage and delivery.

The approximate price of a standard policy is from 5 to 15 dollars.

If an insured event occurs, you must contact representatives of the carrier company within 24 hours to prepare documents regarding the loss. Otherwise, the insurance company will refuse to pay compensation. Upon returning home, the received documents must be presented to the insurer. At the same time, the victim will have to write a statement indicating the circumstances of the loss and a list of lost items.

2. risk insurance for travel companies; insurance for tourists on foreign trips;
Risk insurance for travel companies includes financial risks, liability for claims of tourists, their relatives, and third parties. Financial risks include:
1. commercial risks (non-payment or delay in payment, penalties from the counterparty if it does not recognize the circumstances of the violation of the contract as force majeure);
2. bankruptcy of the company;
3. changes in customs legislation, currency regulation, passport control and other customs formalities;
4. occurrence of force majeure circumstances;
5. political risks, etc.
Insurance for tourists on foreign tourist trips usually includes:
1. providing a tourist with emergency medical care during a trip abroad in case of a sudden illness or accident;
2. transportation to the nearest hospital capable of providing quality treatment under appropriate medical supervision;
3. evacuation to the country of permanent residence under appropriate medical supervision;
4. in-hospital control and informing the family and the patient;
5. provision of medical supplies if they cannot be obtained locally;
6. consulting services of a medical specialist (if necessary);
7. payment of transportation costs for the delivery of a sick tourist or his body to the country of permanent residence;
8. repatriation of the remains of a tourist;
9. providing legal assistance to tourists in the investigation of civil and criminal cases abroad.

3. insurance of foreign tourists;
According to the general rule established by Article 24 of the Law on Entry and Exit, foreign citizens can enter the Russian Federation only with a visa. At the same time, Russian legislation and international treaties of the Russian Federation provide for a number of exceptions, allowing visa-free entry of foreigners and stateless persons into the country. No visa required to enter Russia:
He must have a foreign passport, photographs, a health insurance policy and, in some cases, a certificate of absence of HIV infection.
4. civil liability insurance;
Third party liability insurance.

The insurer compensates for damage caused by the Insured to the health or property of third parties during the trip (according to the legislation of the host country).
The fact of causing harm to the life, health and property of Third Parties must be confirmed by a court decision officially presented to the Policyholder/Insured in accordance with the legislation of the Russian Federation.
The Insurer's obligations arising in connection with the occurrence of an insured event include obligations to satisfy the following requirements on the basis of a court decision on compensation for damage:
a) caused to the life and health of Third parties (“physical damage”);
b) caused to the property of Third Parties (“property damage”);
The Insurer reimburses the Insured for reasonable expenses for conducting cases in court regarding alleged cases of harm within the limit of liability.
The Insurer shall compensate, within the limit of liability, the Insured for necessary and reasonable expenses to reduce damage and to save the lives and property of persons who suffered harm as a result of the insured event.

5. civil liability insurance for vehicle owners;
If you are traveling in your own car, then when crossing the border of countries that participate in the Green Card agreement, you will be required to have a civil liability insurance policy for vehicle owners for damage caused to third parties. This policy is also called a "green card". Moreover, the “green card” is valid in all countries participating in the agreement, which eliminates the need for additional civil liability insurance when moving from one country to another.

Russia is not yet a member of the Green Card. Therefore, Russian insurance companies cannot issue their own “green cards” and sell policies of foreign insurance companies. Most often, Russian insurers offer “green cards” to the Bulgarian insurance company BULSTRAD, the German SOVAG, the Austrian Garant and a number of others.

One card is issued per vehicle. Thus, if you are traveling by car with a trailer, you must have two green cards. Only persons included in the “green card” are allowed to drive a car abroad.

Countries participating in the Green Card agreement:
Austria, Albania, Andorra, Belgium, Bulgaria, Bosnia - Herzegovina, Great Britain, Hungary, Germany, Greece, Denmark, Israel, Iran, Ireland, Iceland, Spain, Italy, Cyprus, Latvia, Luxembourg, Macedonia, Malta, Morocco, Moldova, The Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Tunisia, Turkey, Ukraine, Finland, France, Croatia, Czech Republic, Switzerland, Sweden, Estonia.

6. accident insurance with coverage of medical expenses.
Tourist accident insurance provides insurance compensation in case of deterioration of health, injury or death during a trip abroad.

An accident is an unforeseen event that is accompanied by injuries, bruises, burns, hypothermia and other damage that causes loss of health or death of the insured.

Sums insured cover costs
-for treatment;
-purchase of medicines;
-transportation of the patient;
- repatriation of the body.
For accidents that occurred due to the fault of the policyholder (for example, while intoxicated or due to neglect of safety precautions), compensation is not provided.

34. Specific types of risk insurance in tourism.

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Makeevka Institute of Economics and Humanities

Department of "Enterprise Economics"

INDIVIDUAL CONTROL TASK

in the discipline: "Riscology"

on the topic: “Self-insurance”

3rd year students (O/S)

Faculty of Economics

Specialties "F"

Groups "17A"

Antonova Ekaterina Alexandrovna

Makeevka, 2011

1. Self-insurance

Literature

1. Self-insurance

self-insurance reservethfund

Creation by the policyholder of his own insurance (reserve) funds through regular contributions and setting aside funds. Self-insurance (English: self-insurance) is an organizational and legal form of insurance for the purpose of creating an insurance reserve by a business entity or individual at the expense of its own funds and using it to compensate for damage caused by unforeseen adverse events.

In self-insurance, the spatial distribution of damage is absent or limited, as a result of which, in order to provide real insurance protection, the formed insurance reserves must reach a value comparable to the expected damage. With self-insurance, the insurance reserve can be formed both in kind and in cash. In kind, reserves (seeds, fodder, raw materials) are created in case of crop failure, fire and other unfavorable events in agriculture and some industries. In market conditions, the monetary form of insurance reserves is more relevant, which is widely used by both business entities and the population.

Self-insurance is a decentralized method of forming an insurance fund, and is part of a single interconnected system of providing insurance protection along with the state centralized insurance reserve and insurance.

In the process of economic development of society, the objective need for self-insurance remains due to the following circumstances:

1) scientific and technological progress and the increasing complexity of economic relations increase the need for insurance protection, which insurance companies cannot always provide at an affordable price;

2) self-insurance allows the subject to control the placement of temporarily free reserve funds.

In this regard, captive insurance companies have emerged, formed within a financial industrial group or industry to manage the risk of the founders. The insurance fund receives institutional design and acquires the features of both self-insurance and insurance.

Self-insurance means that an entrepreneur prefers to insure himself rather than buy insurance from an insurance company. Thus, he saves on capital costs for insurance. Self-insurance is a decentralized form of creating natural and insurance (reserve) funds directly in an economic entity, especially in those whose activities are at risk.

The creation by an entrepreneur of a separate fund for compensation of possible losses in the production and trading process expresses the essence of self-insurance. The main task of self-insurance is to quickly overcome temporary difficulties in financial and commercial activities. In the process of self-insurance, various reserve and insurance funds are created. These funds, depending on the purpose of their purpose, can be created in kind or in cash.

Thus, farmers and other agricultural entities create primarily natural insurance funds: seed, fodder, etc. Their creation is caused by the likelihood of unfavorable climatic and natural conditions.

Reserve funds are created primarily in case of covering unforeseen expenses, accounts payable, and expenses for liquidation of a business entity. Their creation is mandatory for joint stock companies.

The joint stock company also credits the share premium to the reserve fund, i.e. the amount of the difference between the sale and par value of the shares, the proceeds from their sale at a price exceeding the par value. This amount is not subject to any use or distribution, except in cases of sale of shares at a price below par value.

The reserve fund of a joint stock company is used to finance unforeseen expenses, including the payment of interest on bonds and dividends on preferred shares in the event of insufficient profits for these purposes.

Business entities and citizens can create mutual insurance companies to provide insurance protection for their property interests.

The most important and most common technique for reducing risk is risk insurance.

The essence of insurance is that the investor is willing to give up part of his income in order to avoid risk, that is, he is willing to pay to reduce the degree of risk to zero. Currently, new types of insurance have appeared, for example, title insurance, business risk insurance, etc.

As an alternative to purchasing an insurance policy on the market or as an addition to it, when a certain part of the risk is not insured on the market, some government agencies and industrial concerns create funds to compensate losses for insured risks. Since the risk is insured within the organization, market purchase and sale transactions are not carried out. But such measures affect the movement of insurance funds in the market in general and the level of contributions of the organization that is responsible for compensating the damage on first demand (this is called excess or deductible. In relation to a very large amount, the term deductible is usually used).

Organizations have decided to self-insure because they understand that they have large financial resources and do not want to lose them, and also because the amount of contributions to the reserve fund is lower than the level of commercial premiums, since they save on administrative costs and profits of the insurer.

Let me give you an example. Owners of a state fleet of trucks who generate significant financial resources for the maintenance and repair of vehicles in operationally located workshops may decide that it is more cost-effective for them to resort to self-insurance of the risk of damage to vehicles and place on the insurance market only risks in relation to a third party, from fire and theft.

There are clear differences between self-insurance and opt-out insurance. In case of refusal of insurance, the organization, regardless of the presence or absence of risk, does not take any measures to protect itself from possible damage. It may happen that in a very large concern (for example, a nationalized enterprise or a local government) the compensation for many damages may be included in the general operating costs.

2. Advantages and disadvantages of self-insurance

The benefits of self-insurance are:

b Contributions should be lower, so how there are no costs for paying commissions to brokers, for maintaining the administration of insurers and their gross profit is not provided for;

The income from investing the fund's assets belongs to the policyholders. It can be used to increase the fund or reduce future contribution receipts;

b the amount of insurance premiums does not increase due to the absence of claims for compensation of losses from other companies;

b there is a direct incentive to reduce and control the risk of losses;

There are no disputes with insurers regarding claims for damages;

b Since the decision to self-insure is limited to large organizations, they will have a qualified staff of insurance workers who will manage this fund;

b profit from the operation of the fund increases in favor of the policyholder.

The disadvantages of self-insurance are as follows:

b catastrophic losses, no matter how remote they may be, may still occur, which will entail the liquidation of the insurance fund and even force the organization to cease its activities;

b Although the organization is able to pay for any individual damage, the cumulative effect of several damages occurring within one year can have the same consequences as a single catastrophic loss, especially in the first years after the formation of the fund;

b capital should be invested as quickly as possible, however, and the realized investment may not provide the same high return as would be possible with the best placement of investments available to the insurance company;

There may be a need to increase the number of insurance workers for an additional fee;

The opportunity to attract technical specialists for consultations on issues of risk avoidance has been lost. Insurers' experts will have a lot of experience compared to many firms, and this knowledge can benefit policyholders;

b the organization's claims statistics will be based on a limited database, which will make it difficult to predict future claims costs;

b there may be criticism from shareholders and other structural units: regarding the transfer of large amounts of capital to create a fund and regarding the amount of dividends for the year; regarding the low profit from investing funds compared to the profit that can be obtained by investing the same amount of capital in the production sector of the organization;

b in times of financial difficulty, it may be tempting to borrow from this fund, thereby undermining the certainty it provided; these difficulties may be transferred to the managers of the fund for compensation of losses that are outside the insurance, which will lead to a decrease in the fund created to finance certain purposes and thereby complicate the analysis of the movement of the insurance fund;

b the basic principle of insurance, that is, risk dispersion will not be realized;

b Contributions made to the fund are not subject to corporation tax, while bonus payments are.

The insurer, having finally decided that he is ready to incur losses in the event of major damage, is faced with a choice. He may refuse to insure the risk, agree to accept part of it (co-insurance) or accept it for the purpose of reinsurance.

3. Problem

Umovi. This means that through the order of urahuvannya the stage of rizik flows into the change of the critical obligation of generation based on the following data:

The total production volume of the enterprise is 700 thousand. units of products per river;

The cost of selling all products amounts to 8,020 thousand. UAH;

Continuous expenses for production amount to 3,000 thousand. UAH;

The monthly expenses add up to 3,200 thousand. UAH;

Stage of virobnichy riziku - 6%.

Decision. It is obvious that in order to develop the norms of the virus-free production of this form, it is necessary to reduce all the indicators that characterize its activity to the stage of the virus production.

Thus, the overall intensity of business, as well as the burden of selling products, must change to the stage of risk and add up:

700000 (100%-6)=658000 units of production.

The cost of sales of all products must also be adjusted to the value of the production cost in addition to their changes:

8020000 (100%-6)=7538800 $.

The same sales price for one product at the warehouse level:

7538800/658000=11,5 $.

If there are constant and constant expenses for the production of products, then they are also to blame for being scaled down to the stage of the production riziku. However, the correction must take place in spite of their increase. Based on the significant fixed costs, the amount of which does not change when the obligations of the production are changed, we can say:

Changeable expenses - these are expenses, the amount of which changes when the obligations of production of products change, so they are responsible for one product according to the level of the production economy:

Based on this data, you can calculate the rate of profit-free production in order to find the level of production at the level of production risk, at which the company can cover all its expenses.

The critical obligation of product development (Nkr) can be recognized from the current situation:

Nkr Tsskor = Zpost + Nkr Zzmin,

de Tsskor - the price of a unit of product, adjusted to the level of the production market;

Zpost - the amount of fixed expenses for the production of products, set aside for the stage of the production rizik;

Zzmin - the amount of variable expenses for the production of a unit of products (pitominary expenses), adjusted to the stage of the production rizik.

Substituting into the equation the numerical results obtained earlier, we can see:

Ncr 11.5 = 3180000 + Ncr 4.8

Stars Nkr = 474627 units of product.

In order for the company to cover its expenses at the highest level, it needs to produce 474,627 units of products.

If the same rozrahunok buv bi conducts without urahuvannya stage of the virobnichego rizik, then the critical obsyag slav bi 412600 units of production. In this way, it is important that the urahuvannya stage of the rizik flows into the change of the critical obligation of production in order to increase it.

Literature

1. Crisis management: theory, practice, infrastructure: Educational and practical manual / Rep. ed. G.A. Alexandrov. - M.: Publishing House BEK, 2000.

2. Balabanov I.T. Risk management. - M.: Finance and Statistics, 1998.

3. Utkin E.A. Risk management: Textbook. - M.: “Tandem”, 1998.

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More on the topic of Self-Insurance:

Forms of regulation of relations in the field of social insurance
§ 1. The concept of an insurance fund. Insurance fund and insurance under capitalism. Insurance fund under socialism. Economic importance of insurance in the USSR

Insurance protection and insurance fund

Unfavorable random events are constant companions of human society. Their sources are natural and climatic conditions, production and technological processes, changes in economic conditions, politics and legal relations, socio-demographic processes, etc.

If the occurrence of unfavorable events is known in advance, society as a whole and an individual business entity can provide the necessary protection from these phenomena or their consequences, but a significant number of phenomena are of a random nature and can only be predicted with varying degrees of reliability. Adverse events that occur cause damage (to property) or harm (to a person), which prompts society to develop an appropriate method of protection (Fig. 1.1).

Rice. 1.1.

Awareness of the need for protection and methods of protection from unfavorable random events are closely related to the evolution of society. In the early stages of its economic development, the main activities were agriculture and trade, and the main source of adverse events was nature. The impact of natural forces (natural disasters, epidemics, crop failure) at the initial stage of society's development was impossible to prevent, but it was possible to minimize their consequences.

As history shows, one of the earliest ways to protect against the consequences of adverse events is self-defense (self-insurance), which is based on covering the damage caused by an adverse event using one’s own resources accumulated in advance in a trust fund. For example, in good years a farmer creates a reserve of grain, which he intends to use in case of crop failure. In this case, the farmer protects himself by “evening out” the yield over time or, in other words, by “spreading out” possible damage (harvest failure) over a number of years in advance. This allocation of damage is carried out through the formation of a special target fund and its use in the event of an unfavorable event.

Self-defense (self-insurance) allows you to minimize the consequences of unfavorable events with a small or average amount of damage for the household, but it is impossible to protect yourself from major damage in this way - this may not be within the capabilities of one household or it will take too long to accumulate resources (it is known that in merchant families a self-insurance fund accumulated from generation to generation). In addition, self-defense (self-insurance) does not reduce damage and does not reduce the overall need for funds - it allows this need to be more evenly distributed over time. In this regard, there is an understanding of the need to combine the resources of several entities for joint protection against adverse events. In this case, several participants in the defense jointly create a trust fund to compensate for the damage to the victim, which makes it possible to divide the damage between the insurance participants.

Over time, methods of protection from the consequences of unfavorable events, based on leveling out damage through the formation and use of a trust fund, are used more and more widely, while a stable system of economic relations between participants is formed - insurance protection.

Insurance protection- these are economic relations determined by the possibility of the occurrence of random unfavorable events and covering the damage caused by them by leveling it out at the expense of a specialized fund.

The essential features of this relationship are:

- random nature of the manifestation of an adverse event;
- the objective need to cover the consequences of adverse events;
- “implementation of the layout” of the consequences of adverse events over time and between insurance participants;
- the presence of a specialized fund as a source of covering damage.

It should be noted that insurance protection as such does not guarantee protection either from the occurrence of a random adverse event or from its consequences - damage or injury, although it helps to minimize these consequences. The purpose of insurance protection is to protect against failures in the reproduction process and against a sharp deterioration in the financial condition of individual entities (legal entities or individuals) due to the occurrence of these events.

The breakdown of damage during the insurance protection process can be carried out:

- in time, when in favorable years a trust fund is created, which is used in unfavorable years;
- between persons interested in receiving compensation, when several entities take part in the formation of a trust fund and the damage of one of them is shared by all. Accordingly, there are two methods of insurance protection (Fig. 1.2).

Rice. 1.2.

A method of providing insurance protection based on the subject’s allocation of damage only in time is called self-insurance (self-defense).

Self-insurance means that the subject covers (compensates) for damage arising as a result of an accidental event at the expense of a trust fund created in advance independently, from its own sources - it protects itself. A self-insured entity or individual creates a reserve in case resources are needed when a random event occurs: for example, a homeowner may save money in case of fire; employee - in case of dismissal, illness or simply “for a rainy day”. Industrial and commercial enterprises and firms also create trust funds to ensure continuity of operations in the event of adverse events. The reserve can be created both in kind and in monetary terms.

Self-defense presupposes the subject's awareness of the possibility of an unfavorable event and preparation for it by forming appropriate reserves. However, the subject can neglect this and, in case of sudden losses, cover them at the expense of current income, bank loans, and sponsors. In this case, there is no insurance protection and other risk management methods are used.

The main advantage of self-defense (self-insurance) is the ability of a legal entity or individual to independently manage the formed fund and use it immediately, as soon as the need arises.

Self-insurance as a method of protection against accidents has certain disadvantages. The main disadvantage from the point of view of providing protection from unfavorable events is the acceptance by a legal entity or individual of all the consequences of these cases, i.e. lack of distribution of damage to other entities interested in protection.

Other disadvantages: an entity in need of insurance protection does not always have the opportunity to independently form an insurance fund in the required volume, accordingly, the damage will not be covered (financed); in addition, an adverse event may occur before the fund reaches the required amount.

When creating an insurance fund in kind: a) funds are withdrawn from circulation and do not bring profit; b) if an adverse event has not occurred, and material assets have a limited shelf life, they must be sold (possibly at a loss) or used for other purposes (for example, seed grain as fodder); c) costs are required for storing material assets.

Due to the noted disadvantages, self-insurance is not always effective.

Example

The historical fact of the creation in 1913 by the state of Michigan of a self-insurance fund for its property is widely known. By 1951, the insurance reserve amounted to $1.75 million, but there was a fire, which required $5.27 million to cover losses. In 1965, self-insurance was discontinued. 20 US states tried to protect their property through self-insurance, but over time, all abandoned it.

The evolution of protection against accidents, awareness of the shortcomings of self-defense (self-insurance) and the need for a more effective method of protection against adverse accidental events in the conditions of the emergence and development of commodity-money relations led to the emergence insurance. Risk equalization by insurance is carried out by jointly and severally allocating damage on a paid basis, i.e. the damage of one entity is compensated from the funds of the fund created from monetary contributions of other entities - participants in the insurance. The idea of solidarity is that contributions are paid by all entities in need of protection, and payments from the fund are received only by those whose insured objects suffered from pre-agreed adverse events. Those insurance participants whose interests were not affected by the incident jointly (solidarily) finance compensation for damage to the victims. The essence of the joint arrangement of damages is well illustrated by the Russian proverb: “A piece of the world is a shirtless shirt.” In the socio-psychological aspect, the purpose of insurance is to provide mutual assistance.

Insurance can be considered as a way of distributing a single loss to the entire set of subjects - insurance participants, which gives individual participants confidence in compensation for damage in the event of a pre-agreed unfavorable event, therefore:

- to implement a joint assessment of damage, subjects exposed to the risk of the same random events are united;
- these entities must form a target fund of sufficient volume to ensure payment of compensation;
- in the general target monetary fund, contributions are alienated from the entity in need of insurance protection, and the need arises to manage this fund, i.e. at the insurer.

The concept of an insurance fund is used in the broad and narrow sense of the word. In the broadest sense of the word, an insurance fund is a set of material reserves and financial reserves of a society intended to prevent, localize and compensate for damage caused by natural disasters and other emergency events. In the narrow sense of the word, the insurance fund refers to funds accumulated through insurance. From these positions, the trust fund created during self-insurance (self-defense) is insurance in the broad sense of the word, but not in the narrow sense.

The source of the insurance fund is the contributions of individual insurance participants, which are combined to protect against potential damage (or the need for additional funds) in the event of a random event. The cash fund has a specific purpose, i.e. Fund funds are used, if necessary, to pay compensation to insurance participants (Fig. 1.3).

Rice. 1.3.

A - entities in need of insurance protection; R - contribution; Q - compensation for damage

A comparative description of the methods for creating an insurance fund is presented in Table. 1.1.

Table 1.1. Comparative characteristics of methods for creating an insurance fund

Signs	Self-insurance	Insurance
Insurance fund form	In kind or cash	Monetary
Source of formation of the insurance fund	Own funds of legal entities or individuals	Cash contributions from legal entities or individuals interested in insurance protection
Damage breakdown	In time (formation in favorable years, use in unfavorable years)	Between insurance participants
Subjects participating in the formation of the fund	An entity that needs protection from accidents creates a trust fund itself	The entity transferring the risk (the policyholder) and the entity accepting the risk, forming the insurance fund and managing it (the insurer)
Compensation characteristics	Covering damage using your own resources	Compensation for damage suffered by the injured participant from the insurance fund

The advantages of forming a fund using insurance include:

- the possibility of compensation for large losses by distributing them to a wide range of insurance participants;
- receipt of insurance protection by an individual policyholder from the moment of joining the insurance group, since the insurance fund has already been formed;
- the insurance fund is managed by the insurer - a specialized insurance company that is a professional in insurance.

At the same time, insurance does not solve all problems:

- the range of unfavorable random events that can be accepted for insurance is limited to those the consequences of which can be leveled by jointly apportioning the damage;
- the alienation of the insurance fund from the insurance participants and the transfer of its management to the insurer may result in ineffective management of the insurance fund, as well as an increase in the cost of insurance protection, which takes the form of a product, and its price includes elements that are a source of financing the activities of the insurer.

The experience of economic development shows that to ensure insurance protection it is necessary to use both methods of risk equalization: self-protection and insurance. Self-insurance (self-defense) funds are currently formed by both individuals and legal entities. Funds are created on a voluntary basis, with the exception of joint-stock companies, which, on the basis of the Federal Law of December 26, 1995 No. 208-FZ “On Joint-Stock Companies,” are required to create reserve funds in an amount of at least 5% of the authorized capital.

An important role in the organization of insurance protection is played by state insurance reserves, which are created in kind and cash and are intended to eliminate the consequences of such random adverse events as natural disasters, accidents, catastrophes, epidemics, etc. Thus, to eliminate emergency situations, the following are created and used:

- reserve fund of the Government of the Russian Federation for the prevention and liquidation of emergency situations and the consequences of natural disasters;
- reserves of material assets to ensure urgent work to eliminate the consequences of emergency situations, which are part of the state material reserve;
- reserves of financial and material resources of federal executive authorities (for example, the reserve of medical equipment of the Ministry of Health and Social Development of the Russian Federation);
- reserves of financial and material resources of the constituent entity of the Russian Federation, local governments and organizations.

The procedure for creating, using and fulfilling reserves of financial and material resources is determined by the legislation of the Russian Federation, the legislation of the constituent entities of the Russian Federation and regulatory legal acts of local governments and organizations.

State insurance reserves, by the method of formation, are self-protective, since they are created at the state level as an instrument of self-defense of the state in case of unfavorable events. There are no contributions from participants and no breakdown of losses between insurance participants. The advantage of state insurance reserves is their volume, which allows them to provide real assistance in the event of serious adverse events.

The insurance method is more appropriate for the current stage of economic development. Efficiency and accessibility for entrepreneurs and individuals have led to its widespread use. The insurance method creates such important funds from a social and economic point of view as the social insurance fund, pension fund, compulsory health insurance funds and some others. They are intended for social support of the population through obligatory payments of legal entities and individuals.

Commercial insurance plays a major role in ensuring insurance protection for society and individual legal entities and individuals, which involves the creation of insurance funds and their management by a specialized organization (insurer) on a paid basis. Compensation for damage to individuals and legal entities in the event of an unfavorable event allows us to protect both individuals and legal entities and ensure the uninterruption of social reproduction.

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