A CRITICAL ANALYSIS OF THE REQUIREMENTS OF INSURABLE INTEREST UNDER THE NIGERIA LAW OF INSURANCE
chapter One
Insurance types and definitions
1.0 Introduction
Risk and uncertainty are part of life. A person can find an untimely death. He can suffer accidents, property damage, fires, floods, earthquakes and other natural disasters. Whenever there is uncertainty, there is both risk and uncertainty. People always want to avoid the financial impact of these risks. B. Replacement of lost or damaged personal property. There is insurance because there is risk. Insurance cannot eliminate risks or the possibility of becoming a victim of risks, but it does guarantee the transfer of all or part of the economic impact.
Insurance is a contract between two parties (the insurer (A) and the insured or policyholder (B)) with the consent of the insurer and the payment (advance payment) of a token called Premium and In return, the risk is transferred to the insurance company. The company and the policyholder of the damage will replace in case of damage.1
Social and economic changes are opening up new areas that require insurance protection. Aside from the natural life hazards, the life hazards of coups, kidnappings and political assassinations have become real and commonplace.
1 Wale Onaolapo (Managing Director/Managing Director), Sovereign Trust Insurance Plc. Lecture at the 6th Sailor Training
Conflict resolution seminar. Lagos, Nigeria:
May 22, 2014
Insurance is a form of risk management. Risk transfer mechanism. It’s a risk management method. Its main function is to replace uncertainty about the economic cost of a loss-making event with certainty, the purpose of which is to arise from the various risks that the owner takes on his life, property, and business. This is a risk pool that a group of people exposed to insurable risks regularly pays into the fund. The fund thus created is used to compensate members of the group who have actually suffered losses due to unforeseen misfortunes. In this way some losses are fairly shared by all members. Auto insurance policyholders are part of a new area where insurer services are needed, so the insurer practices that exist today are relatively new.2
As such, insurance has become a champion to combat the risks for which insurance is insured.
And the promoter’s reward for this champion is a reimbursement that puts the insured on the same footing just before the risk materializes, thus collectively said. Weapons made against you, including the EFCC, will not thrive if you are in the right faction and have the best insurance.3
2 Olusegun Yerokun, Insurance Law of Nigeria (No. 3) (Nigeria Revenue Projects Publisher, Lagos) [1992], p. 1
3 Nigeria Tribune Wednesday 21 February [2007]. p. 9
1.1 Definitions
The Insurance Act does not provide a definition to explain the importance of insurance, as even lawyers are unable to give a clear definition.
The best an author can do is explain what insurance is and not define it. That is, since there is no definitive definition, the description available as a definition of insurance suffices. Where appropriate definitions include legal,
“A system under which the insurer, for a consideration (usually agreed upon in advance) promises to reimburse the insured or to render services to the insured in the event that certain accidental occurrences result in losses during a given period”. 4
Greene’s definition combines both legal and functional approaches as it states that:
“Insurance is an institution which reduces risk bycombining under one management a group of objectso situated that the aggregate accidental losses towhich the group is subject becomes predictable butnarrow limits”.
Green further explained that insurance include certain legal contract under which the insurerwithin certain consideration promises to reimburse the insured or render services in the case of accidental services or losses suffered during the time of the agreement.5
4http:
//www.britannica.com/topic/insurance(August, 2014)
5 Greene:
Risk and Insurance (4th ed.)(Butterwoth, London) [1977] p. 49
Also, ‘Ivamy’,defined insurance from the legal and functional point of view, by bringing out the essential elements of insurance. He said;
“Insurance is a contract whereby one person called theinsurer or assurer undertakes in return for an agreedconsideration called the premium to pay anotherperson called the insured or assured a sum of moneyor its equivalent on the happening of a specifiedevent”.6
The quoted part of Ivamy’s book above, made it crystal clear that the essential elements ofinsurance are the insurer, the insured and the consideration, which is known as’Premium’ in insurance contract. Lord Cholly and O.C. Giles argue that what constitutes insurance, the purchase of a security, entitles the insured, who aspires to protect himself against risk, to be compensated by the insurer should the risk materialize. preferred to suggest The purchase price paid by the insured to the insurer is called the premium, is often paid annually, and is a promise by the insurer to pay in the event of an insured event. specified in the so-called guidelines. Black’s Law Dictionary, 7th Edition, Bryan A. Garner defines insurance as meaning.
“Contracts under which one party to an insurance company promises to do something of value for the other party (the insured) in the event of a specified emergency, especially when one party A contract that promises to bear a risk in exchange for a premium paid by
There was also a noteworthy remark about the importance of insurance. Insurance was defined by Lawrence, J. LUCENA V CRAUFURD8.
6 Ivami:
General Principles of Insurance Law (4th edition, Butterworth, London, 1984) p3.
of page 7. 802
8 [1806] 2 BOS & PNR 269 at 302
Considering that the other party will be paid an amount commensurate with the risk, exposure to what the other party may suffer as a guarantee that it will not suffer loss, damage or injury due to the occurrence of a particular risk.
According to the Nigerian Court of Appeal, Dennis Edozie, his JCA of LIBERTY (then he)
insurance company corporation. V JOHN9 explains that insurance is a contract under which the insurer agrees to compensate for damages that the insured may suffer as a result of the occurrence of events that may give rise to the insurer’s liability. Did.
1.2 Historical Development of Insurance in Nigeria
The first insurance contracts date back to the time of the former Babylonian king Hammurabi, who introduced the Code of Hammurabi. “This law established the practice of forgiving a debtor’s loans in the event of personal catastrophe such as death, disability, or loss of property.”10
The marine insurance industry began in the 14th century and is said to be the oldest form of organized insurance. The practice of insurance spread to England in the 16th century, but it was still fairly informal and practiced in the Lloyds family.
10 (See:
Mary M. Bob Ali. Fundamentals of Insurance Business (p. 19)).
Life and property insurance were developed after the Great Fire of London. After European colonization and trade on the West Coast of Africa, modern insurance was introduced to Nigeria in the early 20th century. It was introduced to reduce exposure to potential trading risks. Originally enjoyed by foreigners, not Nigerian citizens.The increase in trade and commerce led to an increase in shipping and banking activity, necessitating some form of locally controlled underwriting. European insurance companies appoint agents (dealers) to broker insurance coverage for commercial transactions. These agents were empowered to take risks, but the claims were still assigned to the parent company and the merchants were not material. These institutions and the small number of Nigerians employed in them had little or no knowledge of the insurance business, as they had never been exposed to it before.
The Royal Exchange Assurance Company, a London-based company, opened a branch in Lagos in 1921. The only insurer to enjoy a monopoly for about 28 years, he has spawned three insurers. (These three were the Legal and General Guarantee Institute, the Norwich Union Fire Insurance Institute, and the Tobacco Insurance Company). By 1960, there were 25 insurance companies in Nigeria. Of the 25 insurance companies in Nigeria by 1960, 22 were foreign owned and 3 were indigenous. However, most Nigerians were unaware of insurance and its importance, leading to very low support.
Due to a lack of proper legislation and industry awareness, the number of insurance companies after independence grew rapidly and unhealthily, with the number of insurance companies in Nigeria reaching 80 by 1975. The insurance business in Nigeria began with the reporting of J.C. Obande Commission 1961 Insurance Companies Act 1961, Insurance Act 1976, Insurance Special Supervision Fund Act 1989 and other statutes. The National Insurance Commission is responsible for many positive changes in Nigeria related to insurance.
His 1961 report for the JC Obande Commission established the Nigerian Insurance Department within the Federal Department of Commerce, which was later transferred to the Ministry of Finance. The Insurance Companies Act of 1961 divided insurance companies into various classes for registration and provided forms for record keeping. The Insurance Act 1976 provides guidelines and sanctions for licensing, methods of operation, organization and transfer, management and enforcement of insurance companies.
In Nigeria, the National Insurance Commission was established in his 1997 in charge of insurance regulation and supervision. Since then, the Commission has become Nigeria’s leading insurance regulator. The Insurance Regulatory Fund Order of 1989 strengthened the Insurance Commission and included a provision requiring all insurance companies to contribute 1% of their gross income to the fund. As a result of insurance regulation and development since 1961, the insurance industry in Nigeria has grown steadily. Income is increasing by about 18% annually.
Note that all pre-1961 companies, including insurance companies, financial companies, etc., were governed by the Companies Act 1922. The situation remained so until Nigeria passed its own new insurance law. Insurance is growing steadily
12 In an interview with Remi Oloude, Executive Vice President, Industrial and General Insurance (IGI)
With guard. Thursday, December 13, 2007. p. 45
These challenges have hampered the growth of the industry, hampered its effectiveness in managing risks for those covered by its policies, and shattered the low level of trust in the industry among the Nigerian people.
Today, the insurance business in Nigeria is focused on life, property,
About 49 insurance and reinsurance companies operate in the market for goods in transit, marine, air and oil payables.
1.3 Types of insurance contracts
The law of Nigeria, the Insurance Act 2003, does not define what an insurance contract is. The legal interpretation merely states that “insurance” includes “warranty”. In many cases, Nigerian courts have broadly defined an insurance contract as:
“A contract in which a person called an insurer promises to pay an amount or its equivalent to another person called an insured upon the occurrence of a specified event in return for an agreed consideration called a premium. .” 14
There must be an element of uncertainty in the definition of an insurance contract in the above case law. Fixed death insurance requires that the time of death remain uncertain before the insurance transaction is completed. go
By legal definition, the insurer must accept the risk as passed,
13 The Nigerian Board of Registered Insurance Brokers (NCRIB), through its Chairman, his Secretary DedeIjere,
While applauding the steps taken by the National Insurance Commission (NAICOM) to recapitalize,
Proceedings in his December edition of his NCRIB Members’ Night in Lagos. Guardian, Thursday, December
13, (2002). p.45. 14 (See:
Kayode v Royal Exchange Assurance (1955-56) W.R.NL.R. 154).
By legal definition, the insurer must accept the risk as passed,
It should not be left to the discretion of the insurer. Under common law principles embedded in Nigerian law, an insurance policy cannot be entered into for life without interest to be insured.15
While it is essential that interest on insurance accrues to policyholders, the Nigerian regime, under both customary and Islamic law, recognizes that one party is responsible for the maintenance and care of the other, even if the relationship is not by descent. We are allowing the situation to accept .
It goes without saying that compulsory insurance contracts are essentially intended to protect third parties, such as compulsory automobile liability insurance. In practice, insurers are allowed to reinsure part of the risk to reduce the risk. This is purely an actuarial issue and not necessarily a policy classification. Common judicial definitions of insurance do not distinguish between life and non-life insurance, except for classification purposes.
Insurance contracts have some differences and exceptions from similar types of contracts. Similar types of contracts are:
(i) gambling and gambling contracts;
15 (See:
Articles 56 to 58 of the Insurance Act 2003). A requirement for insurance interest that does not have to be present in the gambling contract clearly distinguishes between gambling and insurance, but there is an element of uncertainty in the two transactions.
(ii) warranties, warranties or other security agreements;
An insurance contract is basically her primary contract between two or more parties, while a traditional guarantee, guarantee, or bond contract is basic.