The essentials of the insurance business
S j Tubrazy
The idea of insurance is the creation of trade and commerce and has continued in its growth to remain ahead of the power of crystallizing ideas that is exercisable by legislative draftsmen. The meaning of insurance, as such, therefore, cannot be gathered and made into a complete whole without taking a general view of the essentials of insurance, and without pressing into use in a disproportionate manner the fragments of the essentials that may be round scattered in the statutes. If the draftsmen could cryptically capture the whole concept without the fear of omitting some of its important exteriorities and lagging behind its development, they would have done so long ago. The essence of insurance business can be said to be the undertaking, for consideration, by a person to compensate another in respect of the loss which the latter apprehends that he may sustain.
The essentials of the insurance business can thus be said to be four:
(a) An undertaking to compensate,
(b) in lieu of consideration,
(c) the loss which the insured contemplates in respect of some of his interest,
(d) that he is liable to sustain.
The above essentials do not effectively distinguish insurance from wagering, guarantee and surety ship, therefore, they are not enough to constitute a good definition, but it is necessary to dilate on such aspects. Essentials are present in one form or another in life insurance, accident insurance fire insurance, liability insurance, guarantee insurance, marine insurance and the insurance of carriage by land and air. They are also present in re‑insurance, double insurance, co‑insurance and pool or syndicate re‑insurance. They are equally present in the insurance of the re‑insurer or, using technical language, in retrocession. Re‑insurance is, therefore, a type of insurance. The expression `insurer’ includes the original insurer, the re‑insurer and the insurer of the re‑insurer.