Insurance and Reducing the Effects of High Inflation

 

Insurance and Reducing the Effects of High Inflation

The world is currently experiencing political and military events and rising inflation rates in many countries, especially developing countries. High inflation rates may lead to labor strikes and demonstrations demanding higher wages. Consequently, governments find themselves with weak revenues that cannot cover any increase in wage levels. Consequently, the entire world, especially developing countries, needs more investments to increase the number of permanent workers. These new investments push other sectors, such as construction and contracting, which are suffering from stagnation, to move forward. Continued high inflation rates may change consumer trends and desires, as consumers' monthly salaries are not sufficient to cover their basic monthly expenses. Consequently, the savings rate will significantly decrease, and the savings rate at the individual level, which is deposited in banks, will decrease. 

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Despite the small size of the deposit per person, the deposit figure, at the level of 15 million bank depositors, for example, on a monthly basis, is a large number, and banks pool this money in front of businessmen and investors and lend them to start new projects and investments. Consequently, the labor force in any society increases as a result of these investments. However, a significant increase in the inflation rate affects the savings rate, subsequently killing the rate of new investments. Therefore, how do we mitigate the effects of this deadly rate that kills the poor, afflicts the rich, and destroys the green before the dry. Changing consumer behavior by focusing on their basic needs, such as clothing, food, and education expenses, while neglecting vacation time, will also impact the tourism and aviation sectors worldwide. This is a large, labor-intensive sector that stimulates other sectors within any society in a state of recovery, such as the furniture and furnishings sector and the museums and exhibitions sector, for example.

Let's move on to insurance, insurance funds, and pensions. The insurance system is a means of mitigating a disaster or calamity that befalls any insured person during their lifetime. The cooperation achieved by the participation of a group of people who pay monthly premiums in a specific insurance system... in mitigating the calamity of one person from this group... What concerns us here is health insurance funds and pension funds... Health insurance around the world varies in its methods and implementation methods... However, there is an age group from 30 to 40 years old... which is the youngest and least susceptible to disease... and therefore, an amount is deducted from this group... Of their salaries for health insurance, only 20% of their health insurance for two years is a significant amount. Add to this the amount of insurance and pensions, which is the amount deducted from the monthly salary for the same age group, and let's say 50% of this amount. Agreements are made with banks, tourism companies, and airlines to finance trips in installments.

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..Thus, we protect a segment of companies operating in this field from exiting the market. As a result, individuals, faced with rising inflation, suffer from a deficit, not a surplus. The employee will benefit from taking a vacation using his idle funds, which await his retirement at the age of sixty or sixty-five, until he receives his end-of-service gratuity. Governments can channel these funds, using the banking sector, into investments in other sectors. However, the banking sector should be the guarantor, monitoring and investigating the lending process and guaranteeing the return of these funds, after calculating the interest due. Consequently, the entire world will benefit from mitigating the effects of inflation, increasing capital ratios, and preventing the bankruptcy of existing companies and their exit from the market as a result of the already existing stagflation caused by the rising prices of existing goods and services without the purchasing power to make the purchase decision for these goods or services.