Mataracy
VIP Contributor
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?
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?