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Essay / Research Paper Abstract
3 pages in length. The historical progression of insurance has rendered it an ever-changing entity whose sole objective is to protect people from taking tremendous losses on unforeseen catastrophes. As the decades passed and a more technologically advanced global society emerged, the need for more finite limitations with regard to monetary recovery were necessary in order to protect insurance companies from being fleeced by unscrupulous policyholders. Bibliography lists 3 sources.
Page Count:
3 pages (~225 words per page)
File: LM1_TLCIndemnity.rtf
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Unformatted sample text from the term paper:
a more technologically advanced global society emerged, the need for more finite limitations with regard to monetary recovery were necessary in order to protect insurance companies from being fleeced by
unscrupulous policyholders. Contract of indemnity is one such way to prevent insurance companies from paying more for damage than the actual loss is worth at the point in time the
loss occurred. The nature of property and liability insurance contracts is such that they re-establish the insureds situation to the way it was before the loss occurred, such as
in a house fire where tangible commodities are destroyed. Correspondingly, the object of indemnity is typically the restoration of monetary losses to the point where no financial hardship is
experienced. The insurance indemnity is restricted to loss "which is effectively an inevitable result of the peril insured" (Berry, 2002, p. 131). One area where a contract of indemnity
is both common and necessary is the reinsurance industry. Simply put, reinsurance is characterized as "insurance for an insurance company" (Nutter, 1997): While it is the goal of primary
insurance to see to it that policyholders are granted their due claims, a reinsurance company protects the financial interests of the primary insurer in the event that such a large
payoff constitutes significant monetary losses. The basis behind reinsurance is no different than when a primary insurance company issues a policy to insure the policyholder against any number of
fortuitous events. Just as the policyholder is relinquished from having to experience severe financial loss during such an event, the reinsurer prevents the primary company from having to succumb
to the same economic hardship in the event of having to pay a claimant. This shift of risk helps the primary company provide the necessary responsibility while also covering
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