Sub-sector: Insurance corporations and pension funds (S.125)

2.60 Definition:

The sub-sector insurance corporations and pension funds (S.125) consists of all financial corporations and quasi-corporations which are principally engaged in financial intermediation as the consequence of the pooling of risks (see paragraph 2.35).

2.61 The insurance contracts administered might relate to individuals and/or groups, whether or not participation results from a general obligation imposed by government. Furthermore, social insurance contracts (see paragraphs 4.83 – 4.91) are sometimes a considerable part of the contracts administered.

2.62 Sub-sector S.125 includes both captive insurance corporations and reinsurance corporations.

2.63 Sub-sector S.125 does not include:

  1. institutional units which fulfil each of the two criteria listed in paragraph 2.74 They are classified in sub-sector S.1314;
  2. holding corporations which only control and direct a group consisting predominantly of insurance corporations and pension funds, but which are not insurance corporations and pension funds themselves. They are classified in sub-sector S.123 (see paragraph 2.43);
  3. non-profit institutions recognised as independent legal entities serving insurance corporations and pension funds, but not engaged in financial intermediation. They are classified in sub-sector S.124 (see paragraph 2.44).

2.64 The sub-sector insurance corporations and pension funds may be subdivided into:

  1. insurance corporations;
  2. (autonomous) pension funds.
Autonomous pension funds are pension funds which have autonomy of decision and keep a complete set of accounts. They are therefore institutional units. Non-autonomous pension funds are not institutional units and remain part of the institutional unit that sets them up.

2.65 Risks concerning individuals or groups could both be included in the activities of life and non-life insurance corporations. Some insurance corporations might limit their activities to group contracts only. These corporations are allowed to insure every group.

2.66 Pension funds can be described as institutions which insure group risks relating to social risks and needs (see paragraph 4.84.) of the insured persons. The typical groups of participants in such policies include employees of a single enterprise or a group of enterprises, employees of a branch or industry, and persons having the same profession. The benefits included in the insurance contract might encompass benefits which are paid after death of the insured to the widow(er) and children (mainly death in service), benefits which are paid after retirement and benefits which are paid after the insured became disabled.

2.67 In some countries all these types of risks could be insured equally well by life insurance corporations as by pension funds. In other countries some of these classes of risks have to be insured through life insurance corporations. In contrast to life insurance corporations, pension funds are restricted (by law) to specified groups of employees and self-employed.