The administration of an insurance company is like that of any other company. Some idea of how it grows in complexity can be gained by considering how a new insurance company, if one is set up today, will develop.
First the company has to be formed and registered with a constitution known as its memorandum and articles of association. Capital is provided by shareholders whose names, addresses and shareholdings must be registered. A board of directors and a secretary are appointed. The secretary is responsible for seeing that the company is conducted according to law. Shareholders are sent certificates of their holdings and a procedure is established for registering changes if they transfer their shares.
Board meetings have to be summoned, minutes kept and circulated of their decisions and there must be a definition of responsibilities for ensuring that these decisions are carried out.
Every year the directors are required by law to report to the shareholders and to submit accounts certified as correct by the auditors, a firm of professional accountants. These documents are submitted to the annual general meeting of shareholders. Arrangements for meetings are made and the requisite notices given by the company secretary. If profits are earned and dividends declared a remittance has to be sent to each shareholder. Copies of the report and accounts and of other statutory returns must be sent to the Department of Trade.
Investment in land and buildings is subject to the drawback that any property has to be managed, rents collected and arrangements made to see that buildings are kept in good repair. Big insurance companies have estate departments, managed by qualified surveyors, for this purpose. Companies with such departments are well placed to undertake large-scale property developments such as the rebuilding of a town's shopping centre.
Other constraints on investment policy are tax considerations. For example, sums gained by capital appreciation if an investment is sold may be... see: Property 2012
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