Insurance

Risks are inevitable and cannot be avoided. There is an element of uncertainty in every human activity, which cannot be bypassed. However, they can be minimized and the process by which such risks are controlled is termed as ‘Insurance’
An insurance policy is designed to protect the financial well being of an individual, company or other entity in the case of an unexpected loss. It is a form of agreement wherein in exchange for payments from the insured, the insurer agrees to pay the policyholder a sum of money upon the occurrence of a specific event. Such payments are known as premiums.
The modern concept of insurance is broadly of two kinds:

a. Voluntary or Commercial Insurance

b. Compulsory or Social Insurance

Commercial Insurance consists of:
• Life Insurance
• Fire Insurance
• Marine Insurance
• Accident Insurance
Social Insurance includes:
• Sickness/Health insurance
• Compensation for industrial injuries
• Old Age insurance
• Unemployment insurance
• Insurance for the blind

Requisites of Insurance Law
Contract of Insurance is an essential part of Insurance Law and is governed by the general Law of Contract. In a contract of insurance there is an agreement between two parties where one party agrees to indemnify loss sustained by the other party. There must be good faith on the part of the parties to the Contract of Insurance. Every Insurance covers an imagined risk. The risk must take place during the period of Insurance. The government Insurance companies have been the duty to ensure that general insurance business is ‘developed to the best advantage of the community’. Such interpretation of the contract of insurance should be adopted which is beneficial to the policyholder. Any determination of class or group entitled to avail contract of insurance with the Life Insurance Corporation must conform to the constitutional requirement of equality and fairness. No person can make a double insurance of the same thing.
Reinsurance
When an insurance company insures its commitments with another insurance company, it is called Reinsurance. By means of Reinsurance, an insurance company can protect itself and share its risk of losses with other insurance companies. Reinsurance provides insurance to insurance companies. ‘Reinsurance transaction is an agreement made between two parties, called ceding company and re-insurer, whereby ceding company agrees to cede and the re-insurer agrees to accept a certain share of risks upon terms as set out in the agreement. The ceding company is the original insurance company which has accepted the risk and which cedes part of that risk to a re-insurer, which is either another insurance company or a reinsurance company, which accepts that part of the risk, which is ceded’. The role of National Re-insurer for the Indian market has been acquired by the General Insurance Corporation of India. The General Insurance Corporation of India arranges excess of loss protection from the International market. Reinsurance business in India is regulated by the Insurance Regulatory and Development Authority (General Insurance- Reinsurance) Regulation, 2000.