FINANCIAL MANAGEMENT IN INSURANCE

Abstract

Insurance companies represent a very important part of the financial system and play a significant role in the economic development of any country. The specific characteristics of these institutions is that they collect revenue, in advance, on the basis of collected premiums but also on the basis of funds that they have invested in the financial market. The article "Financial Management in Insurance" discusses the role of the financial manager in an insurance company functioning. Financial management as a field of science is important part of every business organization, and, considering the influence of the insurance companies on the development of the financial market, the role of financial management should not be ignored. In this regard, emphasis was placed on three basic decisions that every financial manager has to deal with: investment, financing, and management of assets and liabilities. With the development and deepening of financial markets, insurance companies have considerably bigger investment opportunities of deposited funds, but also a higher degree of risk exposure. The financial manager also takes care of financial business indicators to adequately manage the operations of the insurance company. In this context, investment policy and portfolio structure are becoming increasingly important in the business of an insurance company, which is indicated by the fact that in the 2012 European insurers have invested over € 8.4 billion into the world economy which is equal to 58% of the GDP of the European Union. It is also important to note that the financial manager in making decisions in particular must take account about alignment of currency, time, and inflation. Insurance companies are very essential element of development in countries in transition. In line with this, the article deals with the position of financial manager in insurance companies in Central Europe, as well as the general position of the insurance market in Serbia and Bosnia and Herzegovina, the two countries in transition aiming to be the EU members.