INSURANCE COMPANIES are also financial institution charged with the responsibility of providing safeguards against risks. Insurance is the pooling of risks. It is a contract under which an insurer promises to indemnify the insured against any justifiable loss, which he (the insured) may suffer upon the payment of premium. The first insurance company in Nigeria is the “Loyal Exchange” Assurance Company” in 1921.
FUNDAMENTAL CONCEPTS OF INSURANCE
- INDEMNITY – Compensation given/paid to the insured by the insurer in the event of loss.
- INSURANCE INTEREST -This is the direct interest of property that must be shown in it by any person wishing to insure such property. For instance, a landlord can insure his house against fire, but he cannot insure the property of the tenants living in the house against theft because he has no direct, interest, and if stolen, he would not suffer any loss.
- UTMOST GOOD FAITH – This is the answering of insurance company questions in good faith by the person who wishes to take out insurance policy. This enables the insurance company have a good assess and accurate calculation of their premium.
- INSURANCE POLICY – This is the document that contains the terms of the insurance agreement. It is a document that stipulates the conditions of insurance transactions i.e. the type of risk covered, the period and all exceptions that might exist.
- INSURANCE UNDERWRITER – This is the person or corporate organization that bears the risk of insurance policy,
- INSURANCE BROKER – An independent agent who brings clients (those seeking insurance in contact with the insurers.
- PREMIUM Payments made by insured person to the insurance company.
- PROPOSAL FORM This is a fore for contains the questionnaire of the insurance company. The information supplied in this form enables the insurance company to decide whether or not to accept the risk.
- COVER NOTE – this is a notes issued out to the insured on payment of part of the insurance company on risk for a specific period.
- SURRENDER VALUE This is peculiar to the assurance, it is the amount the insurance company will pay to the assured in event of the life policy being discounted.