The role of insurance in social protection

Social protection systems have to cope with large
discrepancies between the financing needed to cover demand
and the resources actually available. For this reason, it is
necessary for any reform proposal to include elements of
cost restraint as well as measures to increase the population
coverage of systems. Efficiency and solidarity must improve
together if progress is to be made towards universality of
benefits. Any reform strategy needs to consider not only the
financial constraints imposed by the macroeconomy, but also
the heavy drain on financial resources and the effects on the
fiscal accounts that may result from whatever scheme is
chosen owing to the amount and volume of benefits, the
limited scope for funding them out of contributions, and the
need for redistributive financing. This article looks at various
approaches to social security finance reform, involving new
and different public-private mixes.