How the insurance industry helps stimulate the economy
When most people think of insurance, it’s individual auto or homeowner’s policies that first come to mind. Some might even think about the insurance payments they must make each month to keep their businesses open.
It’s not often that people immediately reflect on the important role insurance companies play in stimulating our economy, but that fact is true. Insurance companies help keep our economy strong, and more vibrant in various ways.
How, you ask?
Insurance companies offer financial protection for consumers.
Consumers have become so accustomed to routine that they often don’t realize the barrage of risk and uncertainty they face every day. Whether it’s a vehicle accident, an accidental house fire, a flooded basement from a big storm, or an injury at work, unexpected hardships can come up at any moment.
Insurance can help manage this uncertainty and potential loss by providing vital financial protection. When disaster strikes, an insurance plan can provide consumers with the financial assistance they need. Without it, many individuals in these situations would be financially strained and could even face bankruptcy.
Insurance companies help businesses mitigate risk and protect their employees.
As with consumers, helping businesses mitigate risk can have a lasting, positive impact on the economy. A stronger Main Street leads to stronger communities and overall improved economic health of individual states and the country as a whole. Similar to consumers, businesses also can face financial duress due to disasters and unforeseen challenges. When disaster does strike, insurance is one of the best financial tools businesses can call upon to help tackle these challenges.
Business insurance also helps drive growth. At its core, the protective safety net of insurance enables businesses to undertake higher-risk, higher-return activities than they would in the absence of insurance. These actions help businesses run successfully, which translate to more jobs and an increase in economic activity.
Additionally, when an employee gets injured on the job, it is business insurance that helps cover the costs of that employee’s treatment, and any potential wage interruption.
Insurance companies help keep our farms operating.
During every planting and harvest season, farmers face a unique set of challenges. Insurance products for farmers are uniquely tailored to their needs, including coverage for the financial risks that come with floods, droughts, and equipment failures. Keeping this important industry operating is another way insurance positively contributes to the economy.
Insurance companies help finance economic development projects.
According to the American Insurance Association, property-casualty insurers operating in the U.S. have more than $1.4 trillion invested in the economy. Insurance companies typically invest premiums, or dollars, that are not used to pay claims and other operating expenses. Through stock, corporate and government bonds, and real estate mortgages, these investments often finance building construction and provide other crucial support to economic development projects around the nation.
Insurance is much more than monthly premium payments consumers and businesses must make. As a whole, the insurance industry is a vital thread in the fabric of a strong American economy. Insurance makes our economy possible and dreams like homeownership, a reality. To learn more about the Iowa Insurance Institute members that help stimulate the Iowa economy, please visit our Members page.