In the long-term insurance practice, the insurance industry has explored many business skills and methods, and on this basis, combined with the laws and characteristics of the insurance industry's operations, a complete set of business principles has been summarized.
These principles regulate and guide all aspects of insurance operation, ensuring the healthy and orderly development of the insurance industry. Many countries also include these principles in the Insurance Law or National Administrative Regulations and Regulations, and use legal and administrative means to ensure the strict implementation of these principles.
Starting from this micro-class, we have entered the topic of insurance principle , which will help us understand insurance from the underlying logic.
During the business development process, are customers often asked by them, “Can grandpa insure your grandson?” How did you reply? Yes, what is the reason? No, why? This involves the insurance interest principle in the insurance principle.
1. Why establish the principle of insurance interests
In the early days of the insurance industry, some people bet on the property or life of others who have nothing to do with them as insurance objects, such as Napoleon death or being captured alive in the UK for the insurance incident.
This kind of gambling insurance is seriously contrary to social interests, affects social stability, and arouses public anger and government attention.
Therefore, British Parliament passed the Life Insurance Act in 1774, which clearly stipulates that life insurance contract with no insurance benefits is invalid. This fundamentally eliminates this kind of gambling insurance behavior, so the law is called the Gambling ban Act.
In 1906, the United Kingdom promulgated the Marine Insurance Act of 1960, which stipulates that maritime insurance contract with no insurance benefits is a gambling contract. Later, the principle of insurance interests was expanded to other types of insurance, becoming one of the principles that insurance operations must strictly follow. my country's "Insurance Law" also clearly stipulates the principle of insurance interests.
establishes the principle of insurance interests, so you can:
1. Specify the maximum limit of insurance coverage
Insurance as an economic compensation system, and its purpose is to compensate the insured for the economic losses suffered by the insured subject in the insurance subject , but the insured is not allowed to obtain additional economic benefits through insurance.
If insurance compensation is not restricted by insurance benefits, the insured person can obtain benefits that exceed insurance benefits due to an insurance accident, which will also cause moral risks.
Therefore, insurance benefits become the basis for whether the insurer compensates or not and how much compensation the insured can obtain. At the same time, the insured can also choose and determine the insurance amount based on insurance interest .
2. Prevent the occurrence of moral hazard
If there is no requirement for insurance benefits, in personal insurance, the insured may harm the insured to defraud insurance, thus making the actual mortality rate much higher than the normal mortality rate. Although the provisions of the insurance interest principle cannot completely eliminate the above moral risks, the damages obtained are only the original insurance benefits, making it unprofitable for intentional insurance accidents, thereby maximizing the occurrence of moral risks.
3. Avoid gambling behavior
From a formal point of view, insurance and gambling have many similarities, both of which depend on the occurrence of accidental events, and the price paid by both parties and the compensation paid by both parties are non-equivalent exchanges. However, insurance and gambling are essentially different, and the two are fundamentally different in terms of purpose, means and results. Insurance is based on insurance interests, which is to eliminate the imprint of gambling on insurance and maintain the scientificity and seriousness of insurance operations.
2. What is insurance interest?
Insurance interests, also known as insurable interests, refer to the legally recognized economic interests that the insured has for the subject matter of the insurance. That is, the policyholder or insured loses or suffers economic losses due to damage to the insured subject matter.For example, if the main salary earner of a certain family is healthy and able to go to work normally, he can bring a certain economic income to the family; however, if he is unfortunately disabled or dies due to an accident, it will not only reduce his family's income, but also likely increase family expenditure due to treatment. Therefore, his wife has an insurance interest in him and can insure the insurer with his body or lifespan as the subject of insurance.
However, not any interest can constitute an insurance interest. It must meet three requirements for the consolidation of an insurance interest:
1. It must be an economic benefit that can be measured in currency
If the loss cannot be measured in currency, it will be difficult to determine the standard of compensation even if an insurance accident occurs, and the insurance contract cannot take effect.
Most of the property can be measured by currency. For some so-called "priceless treasures" such as antiques, calligraphy and paintings, property insurance is usually underwritten at an agreed price. In addition, although the value of a person is not as easy to determine as property, we can use the financial protection needs of the insured or beneficiary as the insurance benefits of personal insurance. However, the emotional grief caused by the loss of relatives cannot be measured in currency, and therefore cannot be required to be compensated as an insurance benefit.
2. Must be a definite interest
Here "definite interest" includes both existing and expected interests. Existing interests refer to existing interests in reality, such as the ownership or use rights of property that have been acquired. For example, the insurance interest of the insured in an office building that has been completed and put into use is the existing interests. Expected benefits, also known as "expected benefits", refer to the benefits that will be obtained, legal and achievable, such as the expected rent of the office building. Generally speaking, the benefits that may be obtained based on subjective prediction alone cannot be an insurance benefit.
3. Must be a legally recognized interest
Insurance interests must be a benefit recognized by law, protected by social public order, and are a benefit recognized by law and protected by law. The benefits arising from illegal acts cannot be insurance benefits.
3. Application of insurance interest principles
Let’s take a look at how to apply insurance interest principles during the conclusion and performance of personal insurance contract .
1. Source of insurance benefits
The insurance benefits of personal insurance come from various interests between the insured and the insured:
(1) Personal relationship, that is, the insured takes his own life or body as the subject;
(2) Relative relationship, that is, the insured takes the life or body of the spouse, children, parents and other family members as the subject;
(3) Employment relationship, that is, the enterprise or employer takes the life or body of the employee as the subject;
(4) Credit-debtor relationship, that is, the creditor takes the life or body of the debtor as the subject.
The sources of insurance benefits for personal insurance are different from the legislative system. For example, the British and American legal system adopts the "interest-ism principle", that is, whether there is a monetary interest relationship between the insured and the insured. my country's insurance legislation implements the "principle of combining interests and consent".
Article 31 of the Insurance Law stipulates that "the insured has an insurance interest to the following persons: (1) himself; (2) spouse, children, parents; (3) other members and close relatives of the family who have a raising, supporting or supporting relationship with the insured outside the preceding paragraph; (4) workers who have a labor relationship with the insured. Except for the provisions of the preceding paragraph, if the insured agrees to the insured to enter into a contract for him, it shall be deemed that the insured has an insurance interest to the insured."
2. The time limit of insurance interests
Personal insurance emphasizes that the insured must have an insurance interest to the insured when concluding the insurance contract. After the insurance contract takes effect, the insured will no longer be pursued. The law allows the insurance interests to change, and the effectiveness of the contract remains. Therefore, as long as there is an insurance interest when taking out the insurance, even if the insured loses the insurance interest to the insured due to divorce, termination of the employment contract or other reasons, it will not affect the validity of the insurance contract, and there is generally no problem of transfer of insurance benefits.The insured person dies due to the reasons specified in the personal insurance contract excluding liability , such as suicide, execution of criminal offenses, etc., which constitute the extermination of insurance benefits.
3. The basis for determining the value of insurance benefits
Personal insurance, since the subject matter of the insurance is a person's life or body, it cannot be estimated, so the insurance amount is based on the needs of the insured and the ability to pay the insurance premium.
is written at the end
Let’s go back to the question at the beginning, “Can grandpa insure grandson?”
is based on the "insurance interest principle" of insurance. Grandpa cannot buy insurance for grandsons, except for certain special circumstances.
If the child’s parents do not have full civil capacity or are no longer there, the child is raised by the grandfather. In this case, the grandfather, as the child’s guardian, can buy insurance for the grandson.
If the grandfather wants to buy products like annuity insurance for his grandson, some insurance companies also allow for intergenerational insurance.
If the child is a minor, then the child’s guardian, that is, the child’s parents, sign and agree, the grandfather can also buy some insurance types for his grandson.
If the child is an adult and has civil capacity, it is OK for the child to sign and agree to the grandfather to insure him.
Thank you for paying attention to the [Micro Class is Coming] every Wednesday. We will use the most neutral and simple language to take you through the underlying logic to see insurance.
