Obstacles to International Trade in Insurance

Abstract

Insurance provides a means whereby a person or organisation exposed to possible financial losses arising from the occurrence of uncertain events may, in return for the payment of a premium, transfer that risk to an insurer. It satisfies a demand for financial security, and life insurance is also an important form of long-term personal saving. All private insurances operate by:

• 1. spreading the risk of loss over time, and between persons and organisations,1 and, unlike social security schemes

• 2. pooling the premiums collected from policyholders to create a fund from which claims can be paid at a later date.