Investment banking

adminonMarch 18, 2023April 6, 2023Leave a Comment

Traditionally, it is detached from traditional commercial banking as it has different social objectives, while traditional commercial banking focuses on small savers and those in need of financing, investment banking focuses on large corporations.

Investment banking, also called business banking, is the one whose main purpose is to negotiate with large companies and strategic sectors in search of profitability for their clients and shareholders.

Investment banking functions

Its action lines are in particular:

It is responsible for issuing and marketing securities.
Helps to carry out operations such as capital increases, loans, shares and corporate bonds.
Your main job is to advise and manage the process of stock distribution, which you do for large companies.
Investment banks can also buy stocks or bonds of companies they consider attractive and strategic. Either because of its current situation (profits or dividends) or because of its future increase in value.
You create investment products.

In addition, investment banks have created their own investment products, placing them through the financial markets or traded directly through their own units.

Structure of an investment bank

Investment banks have different departments to carry out their activities:

Front office : Beginning with the front office (the people with whom the customer comes into direct contact and who manage the pre-sales, sales and post-sales services). The front office is in turn supported by the middle office.
Middle Office: The Middle Office is the part responsible for evaluating the risk of the client and the environment, deciding on the possibilities of carrying out the operation and other matters of great importance.
Back office: finally, there is a back office for recording transactions and linking to other areas of the bank.

In general, North American investment banking and, to a lesser extent, U.K. investment banking have been the most recognized and widely used "investment banks," making them major players in commercial banking worldwide.

In this way, national investment banking was eclipsed in various countries and became a multinational like Merrill Lynch, Goldman Sachs, Morgan Stanley and the now defunct Lehman Brothers.

With the step into self-employment also arises the question of insurance against associated risks. The decision for and against certain insurances is anything but easy. After all, each of these costs money, and that is usually scarce at the beginning of a business start-up.

At the same time, the negative consequences can be severe if you fail to provide sufficient security for yourself. But which insurances are necessary from the beginning and which can be postponed until the business is up and running?? In the following article we present the five most important insurances for founders.

1. Health insurance

With the start of self-employment, you have the choice of whether to remain in the statutory health insurance (if you were previously insured there) or opt for private health insurance. In contrast to employees, you do not have to observe an income limit when switching, unless you work as an artist, publicist, farmer or gardener.

Which option is better for you depends on various factors. For many founders, private health insurance has significant advantages. Because in this case you have the possibility to pay only for the services you need most urgently. You can even save money this way.

If you have survived the hot phase of the start-up, you can switch to a more powerful tariff. Depending on age and state of health, the PKV also offers more benefits than the GKV. In the GKV, on the other hand, family members without income are also insured free of charge.

2. Pension insurance

While there are insurances for founders that you can safely postpone when starting your own business, you should consider retirement provision as early as possible. In this case time is money.

Keep the following points in mind:

Members of certain professions are still required to pay pension insurance even if they are self-employed or freelancers. This includes, for example, artists and publicists, teachers, trainers, nurses and midwives.
If this does not apply to you, you can make voluntary contributions to the statutory pension scheme or a private pension plan.

If you pay into the statutory pension scheme, you can take advantage of the Riester pension scheme. The so-called Rurup pension can also be considered as an alternative to private old-age provision. In addition, you have various other options for providing for your old age. Whichever you choose, don't wait too long to do so.

3. Occupational disability insurance

Absolute security does not exist. With an occupational disability insurance, however, you insure against an emergency that occurs more frequently than many people think. In fact, occupational disability arises in most cases from illnesses. With the appropriate insurance, you will receive a monthly pension in the event of an emergency.

Keep in mind when purchasing disability insurance:

The earlier you take out the insurance, the lower the premiums are.
Read the contract conditions carefully. In some cases, insurers may insist on a change of occupation in the event of an emergency.

You do not always get occupational disability insurance without further ado. In the case of serious pre-existing conditions, the search is often difficult. Then you have the possibility to exclude certain illnesses from the insurance coverage in order to be accepted after all.

4. Public liability

Public liability insurance is a useful supplement to private liability insurance for founders. It takes effect in the event of claims for damages from suppliers, customers or employees and is offered in different variants. Which one you choose depends primarily on ..

The industry in which you work and the associated risks.
the value of the equipment and resources you handle.
the size of your business.

Get good advice when choosing a business liability insurance, also regarding the coverage amount. Many founders are not fully aware of the risks and dangers associated with their profession.

Tip: A good supplement to business liability insurance is professional liability in some industries. It takes effect when, for example, financial damage is caused by incorrect advice. Additionally, product or environmental liability may be an option.

5. Legal expenses insurance

Legal proceedings can be expensive. As an entrepreneur, you are quickly confronted with such a situation, for example if an employee wants to take action against his dismissal or if you have to enforce compensation for a loss of earnings. In such a case, legal protection insurance will cover court costs, litigation costs and legal fees.

Here, too, pay attention to the differences between various offers. A legal protection insurance can usually be adapted to one's own needs according to the modular principle.

6. Weigh carefully

There are other insurances for founders, depending on your personal and professional situation resp. can be useful in your line of business. This includes voluntary unemployment insurance in case things suddenly don't work out as they should.

Here, as in many other aspects of setting up a business, the following applies: Seek advice when making your choice.
An expert will not only help you choose the right insurance policies, but also tailor them to your specific needs.

They are looking for support? We can help you choose the right insurance and answer many other questions about setting up a business. Contact us here for a non-binding initial consultation.

Other countries, other customs. If you travel by car, you need to be aware of the limits of your insurance coverage. Not all countries have the best payment practices, and the performance of insurance companies is not comparable to that in Germany.

Foreign damage protection insurance can help you out here. It ensures that vehicle drivers don't get the big end of the stick in the event of an accident abroad that wasn't their fault.

Minimum coverage amounts not at German level

Liability insurance for motor vehicles is mandatory in EU countries, but there is no such thing as a uniform minimum coverage. There is still a lot of water flowing down the mountain before the harmonization of coverage levels takes effect. Transitional periods ensure that countries such as Croatia, Romania and Poland, as well as Portugal, Spain and Greece, have no interest in immediately adopting German practices. Until the final performance adjustment in the sense of the 5. Therefore, according to the European Union's Motor Insurance Directive, foreign damage protection insurance is just as essential as the Mallorca policy.

Benefits in case of damage

With a foreign damage protection insurance, the motorist is compensated by his insurer as if the insurer had contracted the foreign accident perpetrator with a liability insurance policy. The claims for damages are thus based on German law and German standards.

The additional insurance takes effect if:

a) the driver is involved in an accident abroad with his own vehicle through no fault of his own and

b) the costs are not taken over by the insurance of the accident causer or the liability of the accident opponent is not sufficient to the settlement of the damage.

Provided that these two conditions are met, the foreign damage protection insurance covers the damage incurred up to the agreed coverage limit or the difference in the event of insufficient coverage.

As a rule, the additional protection applies to the European Union, but other countries are certainly included and purely a matter of contract. It should be borne in mind that, especially outside the EU, compulsory insurance is often a foreign concept. Therefore, the foreign damage protection insurance is strongly recommended to all who are on vacation much with the car beyond the borders of the country on the road. Namely because the foreign damage protection insurance covers not only the accident costs but also the lawyer's fees and costs of proceedings. Since the settlement of claims abroad can often take months, foreign damage protection insurance is not only sensible, but downright necessary.

The difference between foreign damage protection and Mallorca policy!

To put it bluntly, the foreign damage protection insurance takes care of the private car, while the Mallorca policy takes care of the rental car abroad. However, the Mallorca policy also guarantees protection against undercoverage of the other party in the event of an accident for which the other party is not at fault.

As the name erroneously suggests, it is not only effective on the Balearic island. Rather, the countless accidents of German vacationers with rental cars on Mallorca have made the introduction of this insurance product inevitable. The designation for it was thus quasi obvious.

Often the Mallorca policy is already a component of the motor vehicle liability insurance. Only in the cheaper basic tariffs of the providers it is either missing completely or does not offer the full amount of the German minimum coverage sum. The exact view in the contract is therefore indicated.

This problem does not arise for German vacationers if they rent a car in their own country from a provider with German insurance coverage.

Conclusion of a foreign damage protection

The foreign damage protection insurance supplements the motor vehicle liability insurance. If the motor vehicle protection for abroad is part of the motor vehicle liability insurance, no separate costs are incurred. If the foreign damage protection insurance is offered as a separate product, a corresponding cost surcharge is to be expected.

It is important to check the validity of the policy for the vacation country in question before taking out the policy. The cover usually includes the EU countries as well as Andorra, Iceland, Liechtenstein, Monaco, Norway and Switzerland. The protection is regularly limited in time, but the rates can be determined online in no time with a motor vehicle rate calculator.

Comparison of relevant providers

HDI
In the test of the German Customer Institute, the motor vehicle insurance is ranked 1st. WirtschaftsWoche is no less impressed, rating the insurer as very good. In any case, motorists have the option of beefing up their Motor-Plus motor liability insurance with foreign damage cover. According to German law, this policy regulates personal injury and property damage caused by a vehicle registered abroad. The same applies to damage caused to the driver of a vehicle in Germany by a car registered abroad.

HUK-COBURG
Customer service is a top priority at HUK-COBURG. Data and contracts can be easily viewed online at any time via the "My HUK" service area. More than 11 million customers seem to be convinced of the insurer's performance. And even some of them may have opted for Classic motor liability insurance with foreign damage cover. It allows them to secure compensation in the event of a road accident that was not their fault in the European Union, Albania, Macedonia, Kosovo, Andorra, Bosnia and Herzegovina, Iceland, Liechtenstein, Montenegro, Monaco, Norway, Serbia, Switzerland and the European part of Turkey.

ADAC
The Automobile Club's KomfortVario automobile liability insurance includes the Mallorca policy in addition to the foreign comfort package. The foreign comfort package is nothing more than a foreign damage protection insurance, which guarantees that the automobile club quickly and easily takes over the settlement of claims in the event of accidents abroad through no fault of your own.

Allianz
Equal to the basis of the motor vehicle liability insurance is its extension with the foreign damage protection with up to 100 million euros compensation for property damage and personal injury useful. If the basic package is valid in Germany, the extension for abroad is indispensable.

The most important at a glance

Foreign damage protection is used to settle accidental damage abroad through no fault of your own. Especially outside the EU, liability insurance is in short supply, which is why car protection for abroad is indispensable.
Unlike the Mallorca policy, the foreign damage protection insurance does not apply to rental cars, but to private cars.
The costs for protection vary from provider to provider and are either included in the motor vehicle liability insurance or can be quickly determined online with the help of the rate calculator.

Investment banking functions

Structure of an investment bank

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