WHY SHOULD PREMIUM BE SUFFICIENT
Insurers must see that they have sufficient resources to be able to meet their liabilities
To make sure they have enough capital and that their risks are not heavy.
They must also see that their premiums are set at the correct rate so as to comfortably cover any potential losses. -compensation
Provide safety and security – insurance provide financial support and reduce uncertainties in business and human life of sufficient premiums
Generate financial resources –insurance generate funds by collecting premium. These funds are used in industrial development in generating more fund. This fund are invested in government securities and stock
To promote economic growth - when the insurance premium are sufficient, the insurance generate significant on economy through domestic savings domestication. The premium are used in accumulation of capital into productive investments.
Enable the spread of risks – insurance facilitates spreading of risks by use of premiums from the insured to the insurer. The risks are spread to a large number of people who pay premium to the insurer
Enhances compensation out of the funds of the insurer for the individuals whose loss has occurred
Source of the collecting funds are collected by the way the premium that are used for industrial development which accelerate the economic growth
