The insurance industry provides enormous social and economic benefits to society, including the following:
1. indemnification for loss
2. reduction of worry and fear
3. source of investment funds
4. loss prevention
5. enhancement of credit
The major social costs of insurance include
a) cost of doing business,
b) fraudulent claims, and
c) inflated claims.
Think about the social and economic benefits, and the costs, which you have encountered in your personal experiences when dealing with private insurance companies. Describe whether you concur with the authors of your textbook who indicate, “The social costs or insurance can be viewed as the sacrifice that society must make to obtain these benefits.” Explain your answer.