Insurance companies' financial intermediation

Due to the transformation of the social-economic system and the affirmation of the capital market in countries that are currently in transition, including those countries in the Balkan region, the issues of the concept, role, importance, method of functioning, efficient portfolio management, and efficient management of institutional investors are gaining significance and increased attention. Insurance companies are contributing to the process of privatization and development of the market economy, as well as to efficient capital allocation, and this is especially important for countries lacking money and capital, which is precisely the case with the economies of the countries in the region. The goal of this research is to examine the role of the insurance companies as mobilizers of savings and of investors, as well as to explore the function of these saving methods in achieving economic development. The paper shall describe the structure of the financial system, the role played by insurance companies, the process of institutionalized financial saving, the importance of insurance companies in financial intermediation, the measuring of returns and risks of investments of insurance companies, and the costs of the investment risk of the insurer, as well as comment on the importance and characteristics of institutional investing.