Final answer:
The Investment or Asset Management department of an insurance company is responsible for managing the company's investments. Their primary goal is to generate investment income while ensuring that assets remain liquid and safe enough to cover the company's obligations in case of major claims.
Step-by-step explanation:
In an insurance company, the department typically responsible for investments is called the Investment or Asset Management department. This department has the essential task of managing insurance funds that have been accumulated from insurance premiums which have not yet been paid out in claims. Their goal is to generate investment income through a rate of return on these funds, helping to strengthen the company's financial base.
These investment activities are a crucial aspect of an insurance company's operations, as detailed in Figure 16.2, which outlines how money flows in from premiums and investments and out through the payment of claims and operating expenses. The investments are strategically placed in safe, liquid assets to ensure that funds can be readily accessed in the event of major claims, such as those following a large-scale disaster.
Overall, investment management within an insurance company is a balance of pursuing adequate returns while maintaining liquidity and safety, as this income supports the company's ability to fulfill its insurance obligations.