Sciencelovers - Financial institutions and insurance companies are two types of companies or business entities that are engaged in finance,...
Sciencelovers - Financial institutions and insurance companies are two types of companies or business entities that are engaged in finance, but have different goals and forms of company.
Both help the livelihood of many people with different ways of working. Broadly speaking, financial institutions and insurance companies have many differences in various ways. Further discussion as follows.
Definition of Financing Institutions and Insurance Companies
1. Financing Institution
A financial institution is a company or business entity that serves the community to solve financial problems.
A financing institution is a business entity that carries out financing or credit activities in the form of providing funds or capital without withdrawing funds directly from the public.
According to Presidential Regulation Number 9 of 2009, a Financing Institution is a business entity that carries out financing activities in the form of providing funds or capital goods. Some of the elements contained in this definition are as follows.
- Financing activities are carrying out activities or activities by financing parties or business sectors in need.
- The provision of funds is to offer and provide funds for the needs of other parties (customers).
- Capital goods are goods that are used to produce something.
- Cannot take the funds needed directly (must be gradual).
2. Insurance Company
An insurance company is a company or business entity that offers guarantee services for something that may happen in the future by collecting premiums every month to customers.
Insurance companies provide all kinds of insurance policies that can protect someone who is a customer from various risks.
Insurance controls financial risk through a risk transfer mechanism from the public/customers in an agreement that enforces the legal aspects of the agreement and insurance principles.
The Role of Financing Institutions and Insurance Companies
1. Financing Institution
- As a potential alternative source of financing to support national economic growth.
- As a reservoir and channel for the aspirations and interests of the community.
- As a provider of capital to the community, especially small and medium enterprises.
2. Insurance Company
- As a means of insurable risk transfer or financial and efficient risk control by the community.
- As a collector of risk burdens and insurance premiums that are distributed proportionally to participants (customers) of the pool according to previous commitments (common pool).
- As a fair balance of risk and insurance premiums (equitable premium) according to the needs of each customer.
Types of Companies
1. Financing Institution
Several types of financial institutions are described as follows.
Leasing Company
Leasing Company is a business entity that provides financing or capital loans in the form of providing goods under Finance Lease and Operating Lease which can be selected by the lessee for a certain period of time without buying or actually buying the goods with periodic refunds.
Venture Capital Company
Venture Capital Company is a business entity that provides financing in the form of equity participation in a business partner company (Investee Company) within a certain period of time. Business Partner Company is a model of equity participation from a Venture Capital Company which is temporary in nature and does not exceed a period of 10 (ten) years.
Securities Trading Company
Securities Trading Company is a business entity that carries out securities trading activities as an intermediary.
Factoring Company
A Factoring Company is a business entity that carries out financing activities in the form of buying and or transferring and managing short-term receivables or bills of a company originating from domestic or foreign trade transactions.
Credit Card Company
Credit Card Company is a business entity that provides financing to customers to purchase goods and services using a credit card.
Consumer Finance Company
Consumer Finance Company (Consumers Finance Company) is a business entity that provides financing for the procurement of goods based on consumer needs with regular installment payments.
2. Insurance Company
Some types of insurance companies are described as follows.
Life insurance
Life insurance is the protection of human life because no one knows the risks or problems that will occur in the future. Insurance companies will give money to customers at the time of death or at the expiration of a certain period. Not only death, life insurance also provides sufficient money in old age when the amount of income decreases in old age.
General insurance
General insurance consists of Property Insurance, Liability Insurance, and other insurances. The strictest form of liability insurance is loyalty insurance, which is a company that compensates for losses to the insured when it becomes the responsibility of payments to third parties.
Property Insurance
Property insurance is insurance given to people against certain risks. The risks that may occur are fire, danger at sea, theft of property or items that damage property at the time of the accident.
Fire insurance
Fire Insurance is provided to customers who suffer losses due to fire. This insurance is followed by people who are vulnerable to the risk of fire, fire waste, and others. Customers or objects of insurance include individuals who are preferred from such losses and certain properties or businesses or industries.
That's the difference between financing institutions and insurance companies that are not widely known by the public, so they think they are the same.
By knowing the difference, you will not misunderstand and not be confused if you need the services of these institutions and companies.
