A. M. The Asociación Salvadoreña de Empresas de Seguros (ASES) held a keynote workshop entitled “Insurance: A Unique Sector” to highlight the specificities of the insurance sector.
The presentation focused on the fundamental distinction that distinguishes insurance from other financial products, such as loans or stocks.
The workshop emphasized that insurers operate with a model based on anticipation and stability. Unlike banks, which manage daily deposits and liquidity risks, insurance companies receive premiums paid in advance. This model allows them to build solid reserves, invest responsibly for the long term, and meet their future obligations predictably, without facing the risk of bank runs.
In addition, the concept of reinsurance was addressed, defining it as “insurance for insurers.” This mechanism allows an insurance company (cedant) to transfer a portion of its risks to a specialized company (reinsurer) in exchange for a premium. This practice is essential for insurers to protect themselves from significant financial losses, such as those caused by natural disasters, thus ensuring their ability to meet their obligations and pay policyholders.
The workshop also highlighted the social function of insurance, based on the principle that “the premiums of many pay the claims of a few”, which allows the industry to provide coverage and stability to the community in the face of the unexpected, said Roberto Roldán, an insurance expert.
ASES emphasized the crucial role of insurance as a structural stabilizer in the economy. Its main function is to transform catastrophic losses into manageable payments, fostering resilience in individuals and businesses.
The workshop concluded that, although the insurance sector is part of the financial system, its unique logic, and objectives, along with robust regulation, give it a unique resilience that allows it to withstand crises without amplifying systemic risks.
This event highlighted the importance of strengthening the insurance industry in countries like El Salvador to foster a more robust and secure economy.
