A Closer Look at the Defnition of Insurance in Different Perspectives

A Closer Look at the Defnition of Insurance in Different Perspectives

  • Submitted By: ondoro
  • Date Submitted: 03/11/2009 8:38 AM
  • Category: Business
  • Words: 1849
  • Page: 8
  • Views: 708

A) Of late most government has taken a lot of interest in the transactions of insurance .Explain reason to justify this move.

Definitions of Insurance
This is an agreement between a business and individuals to protect against the loss suffered as a result of a specified risk.
Financial Definition of Insurance
According to this insurance is the financial arrangement that redistributes the cost of an expected loss. This involves a transfer of potential losses to an insurance pool. The pool combines all potential losses and transfers the costs of predicted losses to those exposed.

Legal definition of insurance
Insurance is the contractual agreement whereby one part agrees to compensate the other for losses. The party agreeing to pay for losses is called the insurer. The party to be paid when losses occurs is called the insured. The contract itself is called a policy. The insured is guarded against an exposure whereby an exposure refers to the insured’s possibility of loss.
The following reasons
• To provide efficient market and maintain competition which will generally produce the greatest benefits to society.

• To prevent abuse of consumers and should impose regulation wherever there is a market failure.

• Focusing on preventing collusion, opposing mergers that leads to exercise concentration and abating market power.

• In order to facilitate training within the insurance industry on emerging issues.

• To develop appropriate enforcement mechanism that deters all malpractices in insurance industry.

• To create public education, create awareness and increase penetration since many people do not have sufficient knowledge on insurance.

• .To ensure adherence to good corporate government principles in the insurance industry.

• To ensure proper pricing of insurance products such as PSV licenses and any other existing insurance products.

• To support insurance training institutions...

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