General insurance Reason for Government Control of Insurance.

[Mataracy]

Generally, the main purpose of insurance regulation is to protect policy holders ( and indeed the public) against insolvency or unfair dealings by insurers.

From this broad purpose, other motives of regulation could be sub-summed.
One of the reasons which prompts insurance regulation arose from the special, or peculiar nature of insurance transaction.

Insurance is a business based on trust and the principles of the utmost good faith.
At he inception of the contractual relationship, the insured is made to part with a sum of money called premium in return for the insurer's promise to indemnify or compensate him at a further date, if he should suffer a loss within the meaning of the insurance contract.

The nature of the business therefore makes it imperative that only persons with integrity, probity and sound financial base should be allowed to transact insurance business.

Moreso, the funds provided to the insurer in form of the premium by the policyholders (especially in life insurance), in most Cases , represent their life savings of which if not protected by government could be circumvented(to avoid something illegally) unscrupulous insurance operators.

In this situation the policyholders could be subjected to untold financial hardship, distress and anguish, hence their interest need be protected.

What did you think about these; is it compustry that government should also have any control on insurance company?

 

[Good luck]

All the reasons stated above are very good and important strategies for government control of insurance because if this is not done there will be a lot of issues in the society and it may cause Chaos.there should be rules and regulations that insurance company must follow in order not to go against government policy when it comes to insurance plan.

 

[sincerem]

Every insurance company that is popular today operate under license, they are given license by the government. Remember, if they go contrary to what is agreed with any insured, you have the right as an insurance policy holder to report them to government. And surely your interest will be protected, cos government will penalize them and charge them huge amount of money for acting fraudulently.

 

[Lens1000]

The government should govern the affairs of one insurance company for the utmost protection of the insured. The apex insurance commission is a government owned institution that oversees the business of insurance in the country. The government intervention in terms of rescue mission will forestall confidence.

 

[btaliat]

There are many reasons why government intervention in insurance company activites. Firstly, it is a legal entity which means it can be sued and also sues. And all these can be done according to the purview of the law. Besides, there is need to protect the citizens who will be partnering with them.

 

[Jamoflondon]

You are actually right about this analysis you wrote in your thread, but there is one thing I do not understand, you said something about faith and when I read the part, it makes me feel like the assurance from insurance is not hundred percent, this is business and I don’t think faith is enough when it comes to business

 

[Mandy96]

The last time I checked, insurance companies are usually run by a private sector, although we all know this kinds of business are not done without a permit from the government. But I am not sure if it is normally controlled by the government. I wouldn’t agree to that totally