Implementation of the Idea of a Welfare State in Mutual Insurance

Abstract

One of the problems of the insurance market of the Russian Federation is lack of trust of the population towards commercial insurance companies and low level of financial literacy of the population. With poor financial literacy, citizens often cannot get the level of insurance they wanted. In addition, high cost of policies and low incomes of the population and small businesses scare away potential insurers. Mutual insurance could be the method of creating an insurance product that will ensure that population have financial capabilities to purchase the insurance. By developing mutual insurance as a type of social entrepreneurship, the state can achieve certain results in terms of level of protection of the population from risks, development of the financial market, and financial literacy of the population. The purpose of the study was to determine the possibility of developing mutual insurance in the Russian insurance market based on the active implementation of the idea of social economy, which ultimately can lead to increased efficiency and social justice in the market with maximum consideration of the interests of consumers. The specific nature of the business model of mutual insurance meets the psychological needs of citizens: protection, solidarity, mutual assistance and equal democratic participation in governance. However, the state has to recognize the importance of this direction and pay sufficient attention to ensure the financial sustainability of mutual insurance societies. The development of mutual insurance as a type of social entrepreneurship will reverse citizens mistrust of insurance. In addition, it will provide citizens with insurance services at a fair price and according to their needs.