The finance and insurance industry has undeniably seen a turbulent few years, yet given the underlying conditions many are surprised at how resilient these institutions have been. With many countries’ economies being periodically shut down by governments across the world due to the coronavirus (COVID-19) pandemic, the financial sector saw both money and investment opportunities dried up. Yet, largely owing to the fiscal policies of many governments, many of the core elements of the industry have been able to recover. For example, government programs intended make sure people have enough income to live off helped keep bank accounts and insurance policies open, while financial support to corporations has limited the extent of stock price falls, and ensured at least some investment opportunities remain. The core logic is that, for there to be any form of rapid economic recovery once the pandemic is over, the existence of a functioning financial system is a necessary condition.
At its broadest level, the financial sector includes a wide range of firms and institutions who provide financial services to commercial and retail customers. These can range from companies who provide specific services such as insurance and banking, to the general trading of financial assets and currencies, to regulatory institutions designed to structure financial transactions. Often the providers of financial services are involved with many aspects of the sector – for example, with how insurance companies and banks derive revenue from investing customers’ money. Ultimately, the aim of the financial services sector is to ensure people with excess money can invest it in a way that efficiently allocates it to businesses and individuals in need of resources. Necessary for this to occur is a degree of transparency over the risk associated with these investments, hence the need for insurance products and regulatory frameworks.
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