EDN: DYFFWD
Authors:
SHNEIDER Viktor Viktorovich, FROLOVA Veronika Alexandrovna
Abstract.
In the modern world, when determining the financial condition and ability for sustainable development for any economic entity, regardless of the size, form and type of activity, the concept of solvency is one of the key ones. To a greater extent, researchers define solvency as the ability of a business entity to fulfill its payment obligations, while the entity must have sufficient liquid funds necessary to cover obligations. The definition of solvency is actively used by insurance organizations. However, one should take into account the possible deviation from the standard representation of this concept when used in insurance organizations and pay attention to the features of insurance activities, the specifics of financial relations arising in the insurance sector, etc. We also note that the specifics of the activities of insurance organizations are based on the features of the formation and implementation of the insurance mechanism and the properties of the insurance product. The main specific factors are: the inversion of the economic cycle, which is an integral part of the insurance business; consumer value of the insurance product, which consists in the guarantee of insurance protection; the calculation of the insurance premium is carried out on the basis of the predicted indicators of losses of the insurance company and, lastly, due to the inversion of the economic cycle of the insurance activity, the received insurance premiums are directed to the formation of insurance reserves necessary to ensure the insurance process in the future. As a result, the formed insurance reserves make it possible to ensure only such obligations that were included in the assessment of the insurance premium based on the principle of equivalence of obligations.
Keywords:
analysis, inversion, liquid funds, liabilities, organization, solvency, reserves, insurance premium, economic cycle
