INDEMNITY – WHAT YOU NEED TO KNOW 1
RIFAN offers financial compensations amongst others to it’s registered members after a loss has occurred. However, one may not really understand what the insurance term ‘indemnity’ stands for. Below is a detailed intro to what indemnity is all about detailed from the book ‘Insurance Agency Certification Training Manual’ established by the Chartered Institute of Nigeria (CIIN). Later on, in future blog posts, we will discuss further indemnity from the perspective of top leads in the RIFAN team.
The author defines indemnity as the financial compensation sufficient to place the insured in the same financial position after a loss as they enjoyed immediately before the loss occurred.
It is also stated by the author that when an insured peril causes a loss, the insured submits a claim to their insurer for the loss. The insurer checks the validity of the claim and then, if valid, accepts it, agreeing to meet their obligation under the terms of the insurance contract. The actual settlement or the amount payable by the insurer depends on a number of factors, including the nature of the cover, the extent of the cover, and any conditions limiting the amount payable. Most short-term (non-life insurance) contracts are contracts to indemnify the insured in the event of loss; to produce indemnity.
The insured must however be informed of the fact that not all contracts of insurance are policies of indemnity. Now one wonders what these policies are. Well, the policies in question are those that provide fixed benefits, mainly for accidents and sickness. Accidents and sickness is said to not be policies of indemnity because they are short term policies. This is because the insurer has the option of inviting renewal at the end of each period of insurance.
Subsequent blog posts will enlighten us better on these policies of indemnity. However, in the meantime, you can reach out to the College of Insurance and Financial Management for a copy of the book ‘Insurance Agency Certification’ an amazing Training Manual fit to sharpen the minds of readers.