Compulsory Insurance

Compulsory Insurance Those classes of insurance policies made compulsory by law, to individuals or businesses want to engage in certain financially risky activities. There is reason enough to bring in the aspect of compulsory insurance is critical starting point, which is that a liability system is considered as a system aiming at the deterrence of accidents on efficiency grounds and that moral hazard and adverse selection can be controlled. For example protecting third parties with automobile owners getting a third party motor vehicle insurance, or the general public workers compensation cover for institutions. it is no exaggeration to say that compulsory insurance plays a central role in the operation of tort law in action. Accidents on the roads account for the vast majority of personal injury claims, and accidents at work though recently overtaken by public liability claims are in third position: both of these are covered by compulsory insurance. In a general sense, compulsory liability insurance may be thought to have three main strengths. -First, it goes some way to ensuring that there is a compensation fund for victims against which claims may be made. -Second, it protects assured parties from bankruptcy or insolvency. -Third, if every person carrying on the relevant activity has to take out insurance, the sums paid by insurers are funded by premiums contributed to by all, so that there is no disproportionate premium burden resting on those who choose to insure. Apart from international Conventions, which seek to harmonize through minimum standards, compulsory insurance schemes may protect the vulnerable and operate where insolvencies are particularly likely or where confidence needs to be maintained. It should be noted not all insurance policies are compulsory. The classes consider compulsory are determined by the jurisdiction However, compulsory insurance requirements are not always easy to enforce. #benewinsurance #insurtech #inclusiveinsurance #insurance #reinsurance #takaful