(1) Basic functions of insurance The basic functions of insurance are the original and inherent functions of insurance.

There are two main views on the basic functions of insurance. One view is that the basic functions of insurance are to allocate losses and compensate for losses or pay insurance benefits; the other view is that the basic functions of insurance are economic compensation and insurance payment functions.

This course takes the latter view.

The economic compensation function is to provide compensation according to the actual loss amount of the insured subject matter according to the insurance contract after the insured accident occurs and the loss is caused. This is the basic function of property insurance; the insurance payment function is to compensate both parties according to the insurance when the insured accident occurs.

It is the function of personal insurance to pay the insurance amount agreed in the contract.

Why does life insurance use benefits instead of compensation?

a. The value of human life cannot be measured in currency b. Some types of personal insurance have the ability to return savings (2) Derivative functions of insurance The derived functions of insurance are functions that are generated on the basis of basic functions.

The derived functions of insurance are financing functions and disaster prevention and loss prevention functions.

?1. The financing function of insurance: it is the function of the insurance company to participate in social financing.

Insurers take advantage of the time difference between premium collection and compensation and payment of insurance benefits to use the temporarily idle part of the concentrated insurance funds for financing or investment to maintain or increase the value of the funds to make up for losses in insurance operations.

It is reflected in two aspects: on the one hand, it has a financing function; on the other hand, it reflects its investment function through investment methods such as purchasing securities and real estate.

?2. Disaster prevention and loss prevention function: it is an important part of risk management.

The biggest feature of insurance disaster prevention and loss prevention work is that it actively participates in and cooperates with other disaster prevention and loss prevention authorities to expand disaster prevention and loss prevention work.