Insurance is a way to distribute potential losses from current income. It is used to protect the property interests of legal entities and individuals in cases of the occurrence of certain events thanks to cash funds that are formed from the paid contributions.
Introductory information
Where and how are the legal foundations of insurance in the Russian Federation laid? This issue is regulated at the highest level. It is enshrined in Law No. 4015-I of November 27, 1992 on the Organization of Insurance in the Russian Federation, with numerous amendments, as well as a number of other regulatory documents. A number of concepts of interest are also considered there. Consider them - it's not superfluous:
- Insurance is a system (method) of protecting the property (material) interests of market entities (individuals and legal entities), for which there is always a certain threat, but it is not mandatory. Note: this will not allow to avoid problems, but you can count on compensation.
- An insurance product is an action from which protection is acquired.
On the system of ensuring material interests and affirmation of rights
The fact that protection is required is associated with a threat to the existence of rights. If we consider individual owners, then the risk to material interests is small. But according to the law of large numbers is quite real. Hence the need for insurance of existing risks. This is expressed as specific products. Each of them is aimed at a specific insurance object, reasons, cost, settlement conditions. The documentary form is the policy. The legal basis of insurance requires that it always be. After all, it confirms the fact of having a contract, which is always a subject, is addressed to the participants in the transaction and contains the main parameters. Moreover, it is also a full-fledged legal document. It should be noted that contributions are always less than compensation. This is the specifics of insurance products. This situation makes them attractive in the supply markets and increases the demand for them.
How then earn on it?
Although at first glance it seems that this relationship is unprofitable for sellers, this does not mean that he is losing money. Why? The fact is that the number of policies (product buyers) is usually an order of magnitude greater than the number of insured events. This situation is maintained almost always (except for force majeure). Initially, the financial obligations of the participants in the process are equal. But since the law of large numbers is in effect, the obligations of insurers are lower than the volume of policies sold. This is solved by establishing a certain ratio between payments and payments (the larger the contributions, the larger the compensation can be expected). It should be noted that the dynamics of insurance events is uneven. Because of this, it is difficult to establish balance sheet equity. In addition, the situation is complicated by the fact that it is necessary that the price level is low enough to sell and at the same time high to cover costs and ensure profit.
Legal basis of insurance: what is included in this concept?
In general, the information was reviewed. But there is still pension, social, medical insurance. How to get around their attention? There are also separate regulatory documents for them. For example, the legal basis of compulsory social insurance is laid down by law No. 165-FZ of 06.16.1999. In addition, we should also remember about civil law. It is he who is entrusted with the regulation of property obligations that arise between project participants. Chapter 48, “Insurance,” of the Civil Code discusses the procedure for concluding a contract and subsequent relationships. At the same time, the activities of legal entities offering products are regulated by the bodies for supervision and licensing of insurance activities. To comply, they need to form and place certain reserves, control the validity of tariffs, and also ensure solvency. All this is regulated by administrative law. Financial issues are dealt with by the Tax Code.
How does the state regulate and supervise?
Speaking about what constitutes the organizational and legal basis of insurance, it should be noted here:
- Direct participation of the state in the formation and development of a system aimed at protecting property interests.
- Legislative support of the base and protection of the national market.
- State supervision of insurance activities.
- Protection of fair competition, as well as the prevention and suppression of the emergence of monopolies.
Why is government participation necessary?
Is it impossible to do with the fact that it lays the legal foundations of insurance? His active participation is due to such factors:
- It is necessary to provide social insurance. The legal basis is good, but the protection of certain groups of the population requires the use of budgetary funds.
- Definitions of the basis and order of participation for the insurance of non-commercial risks. For example, protection of investments, provision of export loans.
- Providing additional guarantees for those insurers that place the collected funds in the form of special non-marketable securities with guaranteed income issued by the state.
- The state creates targeted reserves, which are used to compensate for the insolvency of individual organizations, and helps them fulfill their obligations.
About Pension Insurance
The social consequences of activities are of great importance. Therefore, the legal framework for pension insurance requires careful state supervision. And this state of affairs is not without reason. After all, this is a tool for forming sources of receiving a pension in the future. It distinguishes between compulsory and voluntary insurance. The first covers all categories of the population. Each citizen has his own individual personal account, to which contributions transferred by the employer are credited. A pension is formed from them. It should be noted that a citizen has the right to transfer the funded part under the management of various non-state structures. Voluntary pension insurance is a system of savings, which is based on the same principles as mandatory. Only the size of contributions, conditions, and indeed participation depend on the citizens themselves. You can safely choose an organization that will deal with assets, a support program and many other points. At the same time, the state does not affect them in terms of the choice of strategy, but carries out careful and very multifaceted supervision of their activities.
Separate nuances
The legal framework for compulsory insurance should also be addressed. It is regulated by articles 927, 935-937, 969 of the Civil Code. Their essence can be reduced to:
- To ensure social interests for public servants of certain categories, compulsory state insurance of life, health and property is established. This is carried out at the expense of funds allocated from the federal budget.
- All actions should be based on existing laws, as well as other legal acts affecting the topic of insurance. This applies to the procedures, the process itself and the calculations for these services. Payment is in the amount established by law.
As you can see, the legal framework for compulsory insurance does not apply only to pension savings.
About the medical aspect
It should be noted that insurance in this area has the minimum necessary legal framework. The changes are caused by the catastrophic situation in healthcare. The legal foundations of compulsory health insurance were laid back in the early 90s, since then not much has changed. Private sector activities are more common. Although the legal framework for health insurance provides for the participation of state organizations.
About essence
Almost any activity has a risky character. This is due to the fact that it is always possible to incur certain financial losses that are caused by adverse events or, as an option, their consequences. The reason for such a development of events can be either completely dependent on the will of a person, or be associated with natural factors. Throughout our lives, we face many dangers that threaten our lives, health, and property. Realizing this, a person expresses them in the concept of “risk”. And here the essence has its influence. A company built on commodity-money relations transfers risk from household to the economic category. In this role, the concept of probability is used to characterize it, as well as the uncertainty of the development of the situation. In fact, any event has three development options, depending on the result:
- Favorable. Getting a win.
- It does not entail changes. There is a zero result.
- Is negative. It turns into losses.
About features
What can be said based on the economic nature of insurance? Just this:
- Risk function. It consists in the fact that the essence of insurance allows you to create a risk transfer mechanism. And to be more precise, their financial consequences.
- Warning function. It allows you to provide measures to prevent an insured event, as well as minimize damage. It is realized thanks to precautionary decisions - requirements to the object, which allow to reduce the occurrence of risks and the consequences following them.
- Control function. They consist exclusively in the targeted formation and use of the insurance fund.
- Savings function. It is implemented using certain products aimed at ensuring life. The insurance organization at the same time provides protection and performs the functions of a savings institution.
About forms
There is a wide variety of them. So, depending on the legal form:
- State insurance. Present in cases where the government can directly influence the decisions made by the organization.
- Private insurance. Also known as stock or mutual. In this case, the role of insurers is legal entities with any legal form that is only provided for by law, not subordinate to the government.
Depending on the form of exercise:
- Voluntary
- Mandatory.
There is also an industry classification, which was introduced by the law “On the organization of insurance business in the Russian Federation”:
- Personal.
- Property.
A number of forms can be distinguished, depending on a number of points. For example, what property rights are protected and the like.
Conclusion
This is what the legal basis of insurance is, their essence, forms and types. It should be noted that this topic is extremely broad, and the attempt to cover it all can be exclusively generalizing. And this is not surprising, because a qualitative analysis of the topic will require a detailed examination of not only definitions, but also examples, special cases, comparisons with other approaches to implementation, and much more.