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An overview of the insurance sector
The insurance sector is one of the most important pillars in building a cohesive economy because of its role in reducing and distributing material damages and losses, thus sparing companies, individuals, and countries from huge financial losses.
Talking about insurance requires first defining the concept of “risk” because it is the basic element around which the insurance industry revolves. Opinions varied regarding the definition of “risk” among researchers and academics. Some saw that risk is the possibility of an event occurring other than what is expected, or risk is defined as the amount of doubt that it will occur. Loss, while others see the risk in the loss that may occur due to the lack of knowledge of future events. We note that most of the concepts share several elements such as doubt, the unexpected, and loss, which indicates that the extent of the risk is unknown, its extent, its causes, or the consequences resulting from it. It will happen in the future, so it may be important to explain why individuals and companies need to calculate the amount of risk and its relationship to insurance?
Insurance is a means of protection against financial loss, and is one of the forms of risk management. Insurance is mainly used to protect against the risks of emergency or uncertain loss. The entity that provides these services is known as insurance companies. The importance of insurance for individuals lies in reducing financial loss when medical crises or disasters occur. Accidents and other risks, as it provides specific amounts of money agreed upon between the insurance company and its clients. As for companies, its importance lies in reducing the financial risks related to damage to the company’s property and assets.
Measuring degrees of risk becomes important based on their variation from one individual to another depending on the resulting financial losses and their type. The average insurance price is calculated based on that in addition to other criteria. In the same way, risk degrees are measured for companies. It is not possible to apply a uniform average price to all the assets owned by the company because Some of them have higher levels of risk compared to other assets, and therefore the insurance price changes on this basis.
Insurance market size
The insurance sector is divided into three sections: health insurance, protection and savings insurance, and general insurance, which in turn includes 7 activities including automobile, marine, aviation, energy, engineering, accident, property, and fire insurance.
The size of the insurance market is estimated at about $15 billion according to 2020 statistics, and the “non-life” insurance sector in the world is expected to grow to about $19 billion by 2026, according to statistics issued by the Statista platform.
An overview of the insurance sector’s performance
The suitability margin for insurance companies decreased by 0.4% according to the European Central Bank’s report on the insurance sector’s performance in the third quarter of 2021 compared to the same quarter last year. Insurance operations income also declined by 541% to record a loss of $273 million compared to $62 million compared to the same period. During the period last year, it was noted that total investment income increased by 21.3% over last year, recording $283 million, compared to $233 million during the same period in 2020.
The most prominent challenges facing the insurance sector
Insurance companies face many challenges in light of the great development witnessed by the financial services market and the great spread of financial technology services, the annual growth rate of which is estimated at about 30% according to 2022 statistics. The challenges are represented in the fact that insurance companies are still in the first stages of providing their insurance services properly. Completely electronic for its customers, in addition to an increase in the rate of customers’ reluctance to use electronic insurance services for fear of the risks associated with it, according to what was mentioned in a study entitled “Digital Insurance: An Applied Study on the Insurance Sector,” which recommended the necessity of insurance companies seeking to improve their electronic services and manage the dimensions related to quality. Electronic services, in addition to studying the various aspects that would affect customer satisfaction and maintain the market share of those companies.
Talking about insurance requires first defining the concept of “risk” because it is the basic element around which the insurance industry revolves. Opinions varied regarding the definition of “risk” among researchers and academics. Some saw that risk is the possibility of an event occurring other than what is expected, or risk is defined as the amount of doubt that it will occur. Loss, while others see the risk in the loss that may occur due to the lack of knowledge of future events. We note that most of the concepts share several elements such as doubt, the unexpected, and loss, which indicates that the extent of the risk is unknown, its extent, its causes, or the consequences resulting from it. It will happen in the future, so it may be important to explain why individuals and companies need to calculate the amount of risk and its relationship to insurance?
Insurance is a means of protection against financial loss, and is one of the forms of risk management. Insurance is mainly used to protect against the risks of emergency or uncertain loss. The entity that provides these services is known as insurance companies. The importance of insurance for individuals lies in reducing financial loss when medical crises or disasters occur. Accidents and other risks, as it provides specific amounts of money agreed upon between the insurance company and its clients. As for companies, its importance lies in reducing the financial risks related to damage to the company’s property and assets.
Measuring degrees of risk becomes important based on their variation from one individual to another depending on the resulting financial losses and their type. The average insurance price is calculated based on that in addition to other criteria. In the same way, risk degrees are measured for companies. It is not possible to apply a uniform average price to all the assets owned by the company because Some of them have higher levels of risk compared to other assets, and therefore the insurance price changes on this basis.
Insurance market size
The insurance sector is divided into three sections: health insurance, protection and savings insurance, and general insurance, which in turn includes 7 activities including automobile, marine, aviation, energy, engineering, accident, property, and fire insurance.
The size of the insurance market is estimated at about $15 billion according to 2020 statistics, and the “non-life” insurance sector in the world is expected to grow to about $19 billion by 2026, according to statistics issued by the Statista platform.
An overview of the insurance sector’s performance
The suitability margin for insurance companies decreased by 0.4% according to the European Central Bank’s report on the insurance sector’s performance in the third quarter of 2021 compared to the same quarter last year. Insurance operations income also declined by 541% to record a loss of $273 million compared to $62 million compared to the same period. During the period last year, it was noted that total investment income increased by 21.3% over last year, recording $283 million, compared to $233 million during the same period in 2020.
The most prominent challenges facing the insurance sector
Insurance companies face many challenges in light of the great development witnessed by the financial services market and the great spread of financial technology services, the annual growth rate of which is estimated at about 30% according to 2022 statistics. The challenges are represented in the fact that insurance companies are still in the first stages of providing their insurance services properly. Completely electronic for its customers, in addition to an increase in the rate of customers’ reluctance to use electronic insurance services for fear of the risks associated with it, according to what was mentioned in a study entitled “Digital Insurance: An Applied Study on the Insurance Sector,” which recommended the necessity of insurance companies seeking to improve their electronic services and manage the dimensions related to quality. Electronic services, in addition to studying the various aspects that would affect customer satisfaction and maintain the market share of those companies.
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