UNIT 8
INTRODUCTION TO INSURANCE LAW
ORIGIN OF INSURANCE AND THE TECHNIQUE OF INSURANCE
- Modern man tries to protect himself and his possessions against the
many perils and risks to which he is exposed every day
- Patrimonial + Non-patrimonial interests (sentimental value, quality
of life)
- These interests may be protected in various ways:
1. Take preventative measures to limit or prevent loss (safety
belt/ fire extinguishers)
2. Save money and with time, build up a private fund which can
be utilized to cover any losses which he may incur
3. Co-operate with other legal subjects to collectively cover the
losses incurred by one of them. The risk is then spread among
various legal subjects
DISADVANTAGES:
- Will become ineffective if the costs of prevention or protection
exceed the loss suffered
- Fund may not be sufficient to cover large amounts of damage
- Damages incurred by one legal subject could be so high that the
group as a whole cannot bear all of it
SOLUTION TO THE PROBLEM:
- Unknown to Roman Law = Modern solution
- With insurance the distribution of the risk is affected between
bearers of the same type of risk
- The contributions to the communal pool made by each legal subject
for the transfer of the risk to the group are relatively small
- The insurers manage the pool and carry out duties of the group,
which then bears the risk on behalf of the individual, with the result
that the financial burden is spread over the whole group
- Insurance is practiced as a trade by certain institutions (insurers)
who (for a profit) are prepared to bear the risks for and on behalf of
individuals, who then in exchange pay the insurer a monetary
premium
, SOURCES OF INSURANCE LAW
- Common law
- Constitution of the Republic of South Africa (all law must be in line
with the C)
- Statutory regulation (Control of the Financial Services Board – FSB)
- Specialized Acts pertaining to insurance (Road Accident Fund – RAF ;
Unemployment Insurance Act – UIF)
- Universal principles of fairness (Treating customers Fairly – TCF))
Policy + contract = mean the same things
INSURANCE CONTRACT DEFINED
- An insurance contract is a reciprocal contract between an insurer
and an insures in terms of which the insurer undertakes to pay the
insured an amount of money or its equivalent in exchange for
payment of a price or premium, should the risk, borne by the insurer
on behalf of the insured, materialize by the happening of a specified
uncertain event in which the insured has an interest
- INDEMNITY insurance = A contract that aims to compensate the
insured for a patrimonial loss proximately caused by the uncertain
event insured against (property or liability insurance)
- NON-INDEMNITY insurance = Satisfy the insured for a non-
patrimonial loss consequent upon the occurrence of the uncertain
event insured against (life insurance)
INTRODUCTION TO INSURANCE LAW
ORIGIN OF INSURANCE AND THE TECHNIQUE OF INSURANCE
- Modern man tries to protect himself and his possessions against the
many perils and risks to which he is exposed every day
- Patrimonial + Non-patrimonial interests (sentimental value, quality
of life)
- These interests may be protected in various ways:
1. Take preventative measures to limit or prevent loss (safety
belt/ fire extinguishers)
2. Save money and with time, build up a private fund which can
be utilized to cover any losses which he may incur
3. Co-operate with other legal subjects to collectively cover the
losses incurred by one of them. The risk is then spread among
various legal subjects
DISADVANTAGES:
- Will become ineffective if the costs of prevention or protection
exceed the loss suffered
- Fund may not be sufficient to cover large amounts of damage
- Damages incurred by one legal subject could be so high that the
group as a whole cannot bear all of it
SOLUTION TO THE PROBLEM:
- Unknown to Roman Law = Modern solution
- With insurance the distribution of the risk is affected between
bearers of the same type of risk
- The contributions to the communal pool made by each legal subject
for the transfer of the risk to the group are relatively small
- The insurers manage the pool and carry out duties of the group,
which then bears the risk on behalf of the individual, with the result
that the financial burden is spread over the whole group
- Insurance is practiced as a trade by certain institutions (insurers)
who (for a profit) are prepared to bear the risks for and on behalf of
individuals, who then in exchange pay the insurer a monetary
premium
, SOURCES OF INSURANCE LAW
- Common law
- Constitution of the Republic of South Africa (all law must be in line
with the C)
- Statutory regulation (Control of the Financial Services Board – FSB)
- Specialized Acts pertaining to insurance (Road Accident Fund – RAF ;
Unemployment Insurance Act – UIF)
- Universal principles of fairness (Treating customers Fairly – TCF))
Policy + contract = mean the same things
INSURANCE CONTRACT DEFINED
- An insurance contract is a reciprocal contract between an insurer
and an insures in terms of which the insurer undertakes to pay the
insured an amount of money or its equivalent in exchange for
payment of a price or premium, should the risk, borne by the insurer
on behalf of the insured, materialize by the happening of a specified
uncertain event in which the insured has an interest
- INDEMNITY insurance = A contract that aims to compensate the
insured for a patrimonial loss proximately caused by the uncertain
event insured against (property or liability insurance)
- NON-INDEMNITY insurance = Satisfy the insured for a non-
patrimonial loss consequent upon the occurrence of the uncertain
event insured against (life insurance)
