Category: Insurance

Introduction

The Employment Insurance (EI) program is extremely important with regard to the Canadian workers (Canadian Labour Congress, 2009), and more so during this period of global recession, in which jobs are hard to come by, and employers have been left with no choice but to lay off some of their employees. In this regard, those workers that have been laid-off are in a dire need of sufficient benefits for their sustenance and that of their families, as they seek to look for other forms of employment.

With recession comes not just a loos of jobs, but getting new employment becomes quite hard. Following the previous two recession of the early 80s and later, in the early 90s, the employment levels in Canada, on a national scale, increased tremendously to 11 percent, up from 7.5 percent (Canadian Labour Congress, 2009). The sad thing is that Canada as a country is ill-prepared in the face of the looming recession. Already, it has been projected that the current EI program is not in a position to support those who lose their jobs, in terms of providing benefits.

The benefits that EI beneficiaries used to enjoy in 1996 was $ 604, based on the currency value of the dollar today. This has now dropped to $ 435. In the 2006/07 financial year, just about four out of ten employed workers were considers by the EI program (Canadian Labour Congress, 2009). Still, the number of women who qualified was dismal, compared to that of men. The reason behind this is that a majority of the young people, temporary, part-time, immigrants and seasonal workers, and more so those who are located in the larger cities, fails to put in adequate hours that who necessitate their qualifying for the EI program (Canadian Labour Congress, 2009).

Qualifying requirements for EI

Persons that are considered to qualify for the EI Program only get to be eligible for benefit consideration for a maximum of 32 weeks, or seven months at most. This is a figure that is way below the theoretical 50 weeks maximum, in several regions that experience extremely high levels of unemployment (Canadian Labour Congress, 2009). There are even several workers that only qualify for 14 weeks maximum, of the EI benefits. At a time when the levels of unemployment have exceedingly been low, EI claimants have oftentimes sought to look for new employment. In the 2006/07 financial year, one out of every four claimants reported having exhausted their EI benefits (Kuhn, 2002).

For an individual to qualify for the EI benefit, some criteria are usually followed. First, in case a person is insured, and is neither a new entrant nor is trying to re-enter into the labor force, then such a person is considered to be eligible on two conditions. First, such a person should have had their employment earnings interrupted. Second, they should have put in the specified hours in terms of insurable employment (Service Canada, 2009). These hours tend to vary in terms of the unemployment levels of a given region. For instance, if a region has an unemployment level of 6 percent and below, then for a candidate from this region to qualify, they should have put in 700 hours in the qualifying period (Service Canada, 2009).

At the end, a region whose rate of employment is at or greater than 13 percent requires the individuals from such a region to have put in 420 hours. In case an insured individual happens to be either a re-entrant or a new entrant, then they ought to have their employment earnings interrupted, in addition to having put in 910 insurable employment hours or more, during their period of qualification. A few exceptions to these requirements occur, in case an individual that is insured is neither a re-entrant, nor a new entrant, and has received payment benefits amounting to over one week.

Training programs offered by EI

As a result of harsh economic conditions such as recession periods, In that may be accompanied by the loss of jobs, those individual; that finds themselves without employment could decide on enrolling into various training programs, as opposed to just remaining in an inactive state. The cardinal rule that ensures individual benefits from employment insurance is being in a state of unemployment (Canadian Labour Congress, 2009). In addition, such persons must not only be able but also willing to aggressively engage in the activity of looking for a suitable job. In line with this, enrolling in a training program goes a long way into ensuring that such individuals without a job can enhance their skills, thus becoming more marketable in the job market.

The EI Act (section 25) gives power to the staff of the Social and Human Resource Development Canada (HRSDC) to direct various persons to training programs or courses, so that they may gain valuable skills that shall, in the long run, ensure that they are more competitive as they seek to make a come-back to the labor market (HRSDC, 1993).

In return, HRSDC has ensured that it has entered into various agreements with several public, private as well as provincial organizations, so that these may take the role of designated authorities to the beneficiaries of EI, in terms of the training programs that such individuals may be willing to enroll in, as well as additional activities of employment, that translates into such individual acquiring financial assistance (Canadian Labour Congress, 2009). Once a designated authority has referred an individual to either a certain training program on a course, such individuals are then considered as being unemployed and as such, they are not free to take part in any form of employment within the period for which they are under training.

Various training programs

A wide range of training programs gets offered by HRSDC to those persons that require assistance to enable them to surmount potential or real impediments within the labor market. The kinds of training programs that HRSDC offers often tend to be tailored within the context of the job market so that these usually get reviewed based on the job-market demand. The alterations within the economy of Canada thus play a crucial role in determining how these programs may be revised. Some of these training programs include:

Skill development

Skill development is one of the training programs that the EI offers to its beneficiaries. This happens to be an employment program that seeks to avail financial help to individuals that qualify for the program to assist them in acquiring on necessary training skills to enable them to obtain employment. The social and human resource development of Canada (HRSDC, 1993) has been credited with the inception of this program. By allocating funds to qualified persons in need of training skills, this skill development program, therefore, has the objective of ensuring that such individuals are in a position to improve their chances of obtaining employment, and thus become dependable. The HRSDC has entered into a development agreement for the labor market with the various territories and provinces. This agreement describes the means of delivering their employment programs for each of the various territories and provinces. Only the ‘insured participant’ of unemployed persons may be eligible for this program, in line with the stipulations of the Act of Employment Insurance, section 58 (Service Canada, 2009).

Many organizations are charged with the responsibility of delivering skill development to unemployed Canadians. One of them is HRSDC, albeit in an indirect manner. These organizations usually enter into development agreements with the labor market with the various territories and provinces in Canada; intending to define how they are to avail the employment programs to their members. Another organization, Service Canada, usually offers skills development in addition to extra support and benefits employment measures in regions such as Nova Scotia, New Foundland, Yukon, and Prince Edward Island (Service Canada, 2007).

Apprenticeship training

This is a kind of ‘on-the-job training for those individuals that wish to work within the skilled trade sector. The job also entails the acquiring of novel skills from experts in a particular trade, and this goes a long way into increasing the chances of the persons without a job to secure one in the future, after having learned the necessary skills of trade (Service Canada, 2009).

Often, the apprentices get paid as they obtain skills. The apprenticeship programs are mainly confined to the manufacturing/industrial, construction, service, and manpower sector.

Toronto statistics

According to the projection by Statistics Canada (2007), the city of Toronto has a population of 2,503,281. In addition to this, available survey data by the labor force of Statistic Canada also indicates that in 2008, more than 1.35 million residences of Toronto city had one form of employment or another. More than 80 percent of the residents in Toronto city have been employed by the service industries.

Nevertheless, manufacturing is still considered the largest sector, in terms of grouping, and which offers employment to 12 percent of the residents of Toronto city. Scientific, professional as well as technical services provide an additional source of employment to about 11 percent of city residents. Other sectors which are conside5tered to be growing and therefore offer substantial employment services include health care, financial services, retail trade, and education (Statistic Canada 2009).

EI coverage in Toronto

In terms of coverage by the employment insurance, the cities of Ottawa and Toronto have both been shown to have the least amount of coverage, concerning the benefits of employment insurance. As such, the service is not in a position to still offer its primary responsibility of ensuring that those individuals that are without a job still get some financial assistance for their sustenance as well as that of their families (Human Resource Development Canada, 1993). In addition to the offering of training prop grams to such individuals so that in the future, they are better equipped to handle a job opening within the labor market.

Statistics now show that the EI program only manages to cater for one out of five persons that are without any form of employment in such larger cities as Toronto. Claims have also abounded to the effect that EI benefits have witnessed a reduced rate of coverage in Toronto when compared to such regions as Stratford, as well as with the national average figures for Canada as a nation. In 1990, the EI coverage was estimated to have been at 80 percent, a figure that fell tremendously to a dismal 40 percent by 2004, on a national scale. This massive decline so witnessed was dues to the fact that the EI programs underwent various changes, coupled with the alterations in terms of the labor market composition.

Another reason behind this sharp decline in Toronto is as a result of an increased presence of ineligible groups such as those workers in possession of jobs that are out of standard. There is also the issue of those persons that have fallen victim to EI program changes, such as the various immigrants. As a result of these multitudes of problems that have led to changes within the EI programs, some eligible Canadians find themselves without enjoying the benefits of EI (Service Canada, 2009), meaning that they cannot also be in a position to cover for their medical bills in the event of falling sick. Not only can they not get the financial assistance, but they are also losing in terms of the valuable training programs that would have ensured that in the future, they can acquire better jobs in the years to come.

Stratford statistics

With a population of 29, 700, Stratford is characterized by a diversified economic base that includes tourism and manufacturing (these have been recognized as the fastest-growing economic sectors in Stratford), financial, commercial, and the service industry. The unemployment rate of Stratford bears a reflection of its thriving and vibrant economy. For example, in 2000, Stratford witnessed a rate of unemployment that was lower than both the provincial and national levels, at 6 percent (Stratford Direct, 2009). This is seen as a healthy unemployment rate since it ensures that industries are constantly supplied with a group of employees that are qualified, and at the same time also not having a greater labor force proportion without employment.

While it would be expected that Stratford with its lower unemployment rate of 6 percent would not be a source of the problem to the labor market, nevertheless we have to appreciate that unlike some of the major cities that have a higher population, but their unemployment levels are also high, there have to be sufficient industries to absorbed the manpower within a given region. In the case of Stratford, the numbers of companies that have invested there, and so act as potential employers, are nowhere near those that have invested in such bigger cities as Toronto (Bojas, 2002). Even within its higher levels of population, its residents have a wide choice of companies to which they could turn to for possible job openings.

One of the criteria that enables one to be considered as a beneficiary of the EI program is being unemployed. Still, there is also the issue of the number of hours one should have put in while employed, although this number often decreases with an increase in the level of unemployment. As such, an individual who is from Toronto, a city that has a higher level of unemployment than say, Stratford, would need to have put in a few hours for eligibility as a potential beneficiary of the EI program (Human Resource Development Canada, 1993).

What this implies then is that there is a higher likelihood for those unemployed persons that reside in the remote regions of Canada to be denied their benefits under the number of hours that they have put in. without a source of income, one is not able to finance their medical expenses, and so the diseased burden may hypothetically be anticipated to be more in such isolated regions, as opposed to the bigger cities like Toronto (Kuhn, 2002).

Employment insurance and health issues

While the main objective of the employment insurance is to provide a temporary source of finances for the Canadians that are without a job, in the process of them either looking for other forms of employment or even the chances to improve on their skills, it is worthy of note here that this scheme could as well be to he disadvantage of those Canadian located in regions that are either endowed with limited companies that may offer employment. What this means also is that the rate of employment would be high in such a region (Marmot & Richard, 2009).

Even though the minimum number of hours for one to get considered for employment insurance benefits tends to reduce with an increase in the rate of unemployment, nevertheless there are thousands of individuals located in such isolated regions who suffer from ill-health primarily because of this (Marmot & Richard, 2009). In a case whereby an individual; may wish to leave their employment, and they have also made their share of contribution towards the benefits of the employment insurance, one is often encouraged to make an application for the employment insurance.

If one can access employment insurance, what this means, therefore, is that such individuals are also not able to benefit from the training programs that are often conducted by such organizations as Canada service. These training programs aim to improve the skills of unemployed Canadians so that in the future, they stand a better chance of obtaining gainful employment (Canada Service, 2007). However, this form of training may only take place if one is eligible for the scheme, in terms of qualifications.

Again, this places the small town at a disadvantage, mainly because the available industries and companies that may offer employment to the unemployed are few and far between. In addition, the rate of employment shall also be higher, in comparison to bigger cities that also have many companies that may offer employment positions to the unemployed residents. Without any form of employment, one is not in a position to enjoy the medical cover.

Conclusion

Employment insurance (EI) is a program that runs in Canada, and which seeks to assist Canadians that are without a job financially so that they can take care of themselves, and also their members of their families. This includes the health care of these unemployed individuals as well. In addition, EI runs various training programs in conjunction with the cities are provincial authorities under an agreement with HRSDC to offer such courses as apprenticeship and skill development to unemployed Canadians, to increase their chances of obtaining gainful employment in the future.

One of the criteria for one to become eligible for the EI benefits is that one should have done a minimum number of hours of gainful employment when they had a job. This number of hours varies from region to region, based on the employment levels at such a region. The population of a region will play a significant role in this, because as populations increase, so does the demand for jobs, and hence a rise in the levels of unemployment.

Still, the numbers of industries of companies to offer employment in a region matter, so that regions that have been isolated development-wise tend to have lesser job openings. In line with this, a lack of access to EI benefits impacts the health of the residents as they are not in a position to cater for this vital service, and so their health status takes a toll.

References

Black, J, & Shillington, R. (2005) “Employment insurance: research summary for the task force for modernising income security for working age adults”. Web.

Benjamin, D., Gunderrson, M & Riddel, W. C. (1998). Labour market economics. (4^th edition). Toronto: McGraw-Hill Ryerson.

Bojas, G. J. (2002). Labour Economics, (2^nd edition). New York: McGraw-Hill.

Canadian Labor Congress (2009). “Employment insurance and training”. Web.

HRSDC (2009). “Employment Insurance”. Web.

Human Resource development Canada (1993). Labour program: employment standards legislation in Canada.

Kuhn, P. J. (2002). Losing work, moving on: international perspective on worker displacement. Michigan: W. E. UpJohn Institute.

Marmot, M & Richard, G. Social determinants of health Oxford: Oxford University Press

Service Canada (2009). “Employment Insurance Act – Part I – Unemployment Benefits” Web.

Statistics Canada (2007). “Population estimates”. Web.

Stratford Direct (2009). Overview of Stratford, Ontario, Canada.” Web.

Available literature demonstrates that many employees and courts in the United States have attempted to use the implied contract doctrine to redress and deter unfair employee terminations from the workplace by imposing norms of fairness on employers (Fineman, 2008). This paper aims to illuminate the implied contract doctrine by identifying three criteria that relate to the doctrine and describing how the criteria apply to McLain versus Great American Insurance case, which was tried in California in the mid-1980s.

Implied contracts are mutual obligations arising from relationships between parties (e.g., employer and employee), with available labor scholarship showing that these obligations are often triggered by a multiplicity of issues, including duration of a relationship and patterns of interaction over time (Carrigan, 2009). This paper uses three criteria of the implied contract doctrine, namely

1. making a specific promise to the employee,
2. the employer’s entire course of conduct, and
3. exhaustive listing of dischargeable offenses in a handbook (Walsh, 2013).

The author further notes that an implied contract case may be valid if a specific promise was made to the employee, if the employer’s entire course of conduct (e.g., policies, practices, statements, industry practices, employment tenure) is consistent with the promise made to the employee, and if the offense for termination is not listed in a handbook containing comprehensive listing of dischargeable offenses. In justifying the selected criteria, it is evident that the issues listed above are often present when both the employer and employee engage in mutual obligations that give rise to unstated and highly subjective understandings between the parties (Carrigan, 2009).

In the McLain versus Great American Insurance case, comprehensively cited in Fineman (2008), Robert McLain sued his employer (Great American Insurance) “for wrongful termination in violation of an implied contract” (p. 346). The employee had been terminated from employment in 1985 due to distributing a confidential memo to colleagues in what the company labeled as insubordination. The employee went to court and accused the company of breaching an implied contract that he had previously signed with the company insinuating that he could only be terminated from service due to a just cause (Justia US Law, n.d.).

Using the three criteria mentioned above, it can be argued that the employment of McLain was contractually binding, and hence, the employee was not terminated due to a good cause. First, a promise had been made to the employee that he would transition from temporary basis to permanent employment upon completion of his initial probation period, not mentioning that the company had promised the employee long-term career advancement opportunities (Fineman, 2008).

Second, the employer’s human resource practices and policies demonstrated that people were employed on permanent terms after completing their probation period and that the company provided room for long-term career advancement opportunities. Consequently, it can be argued that the course of conduct demonstrated by Great American Insurance Company was consistent with the promise made to McLain. Finally, the company’s “manual provided for progressive discipline before employees could be terminated for minor offenses, and specifically listed the more serious offenses for which termination was an appropriate initial response” (Fineman, 2008, p. 347). The offense for which the company decided to terminate the services of McLain was considered minor and was not listed in the company’s personnel manual.

Overall, based on the at-will rule, the discussed case could likely have been thrown out due to the rule’s presumption that “the employment relationship is at the independent will of both the employer and employee, and is therefore terminable by either at any time for any reason” (Fineman, 2008, pp. 346-347). However, although an employment application form presented in court by the company demonstrated the employee’s agreement that his employment and benefits could be terminated at any time for any reason or no reason at all, both the jury and Court of Appeal relied on the implied doctrine contract and the criteria discussed in this paper to rule (and affirm) that the employee was terminated without a just cause.

References

Carrigan, F. (2009). The implications of implied terms in law in the common law contract of employment. Oxford University Commonwealth Law Journal, 9(1), 73-100.

Fineman, J. (2008). The inevitable demise of the implied employment contract. Berkeley Journal of Employment & Labor Law, 29(2), 345-404.

Justia US Law. (n.d.). McLain v. Great American Ins. Companies (1989). 208 Cal. App. 3d 1476 [256 Cal. Rptr. 863]. Web.

Walsh, D.J. Employment law for human resource practice (4th ed.). Stamford, CT: Thomson Learning.

Term Life Insurance

Term life insurance (also commonly known as term assurance) is a term used to describe all the various types of life insurance policies that provide coverage for a specified period of time and at a fixed premium rate. The beneficiary is compensated if the policy holder dies during the period in which he/she is insured. At the expiry of the period, the policy holder can choose to obtain further coverage (which usually comes with new terms and conditions) or can decide to do away with the coverage. The various types of term insurance policies include: level term life insurance, renewable term life insurance and convertible term insurance.

Level term Life Insurance

Term Insurance is a pure death benefit policy and comes in two different varieties, i.e. Decreasing Term Insurance and Level Term Insurance. Level Term insurance policy is the most common type of term life insurance and is preferred by many clients. The policy is popular because it compensates the beneficiary with the same amount of benefits if death occurs at any point during the insured term. The only major disadvantage of level term policy is the relatively higher rates of premium and lack of flexibility which makes it rather costly.

Renewable Term Life Insurance

Renewable term life insurance is a temporary form of life insurance which comes with either level or increasing premiums, lasting anywhere from 1-30 years. The main benefit of renewable term insurance is the low cost of premiums and the affordable assets protection. Another unique advantage is that the insured can extend the duration of the contract after it expires without incurring any extra charges or without no further terms and conditions (Grannis 112).

The fact that changes in health and age can result in paying more premiums for the same amount of coverage is a major con of this type of insurance. There is also a set age limit beyond which one can no longer renew the term.

Convertible Term Insurance

Convertible term insurance allows one to convert the policy to permanent life insurance of equal value should the policy holder decide to change. Usually such conversion doesn’t require underwriting or medical examination. The main advantage of this type of policy is the flexibility and annual option to renew or convert to permanent policy, while the amount of coverage remains the same.

On the other hand, the higher annual premiums and astronomically high costs in case of change in health add to the cons of this type of insurance policy.

Permanent Life Insurance

Unlike Term Life Insurance which provides cover over a period of insured term, Permanent insurance provide coverage throughout the lifetime of the policy holder. For this type of policy, one is secured as long as the premium payments are made as required and as long as the coverage is not terminated by the insured. The various types of permanent insurance include whole life, universal life and variable universal life.

Whole life insurance

Whole life insurance (also referred to as straight life insurance) is a fixed premium insurance policy which covers the lifetime of the insured, as long as the premiums are paid. The key benefit of a simple straight life insurance policy is consistency. The insured pays a fixed premium from day one throughout the entire lifetime and the cash value portion remains intact, and earns interest at the same time.

The major problem with whole life insurance policy is the low interest earnings resulting from conservative investment decisions which are usually done without involving the policy holder.

Variable life insurance

Variable Life Insurance is a type of permanent life insurance that builds cash value by making investments which are similar to mutual funds. The beneficiary is compensated at any time of death as long as there is sufficient cash to cover the costs of the insurance. The key advantage of VUL is the absence of a fixed endowment age, which means that there is no limit on the amount of benefits paid. As the policy holder accumulates cash value the death benefit also increases continually, eventually resulting in higher value for the beneficiary.

However, unlike many other types of insurance, VUL is more expensive and has potentially higher costs and policy administrative expenses. VUL is also relatively complex and thus it can be sold inappropriately to a client (Stephanie 78).

Universal life insurance

Universal life insurance (UL) is a type of permanent insurance (in the US) similar to and derived from whole life insurance. UL offers flexible means of premium payment and adjustable ways of receiving benefits. What this simply means is that the insured can pay premiums as he/she desires as long as there are sufficient cash values to pay for the cost of insurance (Oviatt 45).

The insured also has options to choose how he/she wants the death benefits to be paid to the beneficiary. However, UL is more expensive than many other insurance policies in terms of costs of premium fees, allocation fees and the cost of insurance and has conservative interest rates (Bhatia 80).

Term Policy of choice

Renewable term insurance is the most appropriate policy of choice that suits my financial status, since it comes at relatively low cost of premiums. The flexibility to renew the policy with little or no cost makes it worthwhile. The policy also provides a near perfect temporary coverage for my family, considering my critical role as the bread winner of the family (Barry 67).

Renewable term is worth the cost in light of my plans for family growth and the fact that I am not 100 percent certain how long the term should be. The policy also provides affordable and budget friendly asset protection for mortgages and other asset loans.

Permanent policy of choice

Whole life insurance is my permanent policy of choice because it provides consistent coverage for an indeterminate length of time. Whole life insurance also offers permanent insurance needs and packages that are quite irresistible. Some of the benefits of whole life insurance include supplemental retirement income. The policy also offers income for surviving spouse and also covers funeral expenses. These permanent insurance needs are, needless to say, very important considering my family responsibilities and plan for future family growth (Zack 91).

Whole life insurance also provides cash value accumulation which is not dependent on the rise or fall of the market and which can be used to obtain loans. Other benefits of whole life insurance which are consistent to my plan for future family growth are tax benefits and potential dividend payments for investment of accumulated cash value.

Conclusion

Life insurance is a good place to start as it provides a wide variety of policies that could provide financial security to one’s family and those who matter most. Term life insurance is suitable for individuals seeking secure income replacement. Permanent insurance on the other hand is suitable for estate planning needs and long-term investment strategies. Some life insurance policies not only provide death benefit, but also build cash value that can be used as asset security or for obtaining loans when needed. There are also multiple policies to match one’s financial state or budget needs. The choice of policy depends on the individual’s special needs, financial status, future plans and investment strategies.

Works Cited

Barry, James. The New Life Insurance Investment Advisor. Boston: Foundation Press Publishers, 2014. Print.

Bhatia, Sethi. The Fundamental elements of Banking and Insurance. New York: Lord& Bhatia Publishers, 2013. Print.

Grannis, Alexander. A Comprehensive Guide to Life Insurance. Chicago: University of Chicago Publishers, 2013. Print.

Oviatt, Simon. The Economic Place of Insurance and its Relation to Society. Cambridge: Simon& Oviatt Publishers, 2014. Print.

Stephanie, Nishwan. Importance of Equitable life Insurance. Washington DC: Nishwan Social and Economics Publishers, 2012. Print.

Zack, Hawkins. The History of Life Insurance in the United States. New York: Oxford University Publishers, 2014. Print.

‘An insured’s duty of disclosure under the Common Law and the Insurance Contracts Act 1984’

Under section twenty one of the 1984 Insurance Contacts Act, all customers (insured) are required to make a disclosure to the insurer of any matters that are in relation to the risk. This is supposed to be done before an insurance contract is signed by both parties (Levin, 2000). The insured is supposed to disclose all issues related to the risk’s acceptance including subjective and objective disclosures. In subjective disclosure, the insured is expected to disclose all matters he/she perceives as relevant. Objective disclosure functions with an assumption that any reasonable person under the same situation will act in the manner expected (Rourke, 2007).

According to the act, the disclosure’s duty does not need any disclosures on matters of risk diminishing, common knowledge and any issue that the insurer may be aware of or ought to know. “When the compliance by the duty of disclosure is waived by the insurer, a disclosure becomes irrelevant” (Levin, 2000, p.23). In a case where a person gives an incomplete or irrelevant answer to any question that is part of the proposal form, the insurer is deemed to have given up compliance with disclosure’s duty relevant to the matter.

The insured’s duty of disclosure (during an insurance contract negotiation) under the common law states that there exists a duty to voluntarily make a disclosure of any facts that are material or known to the involved risk. Incase the above orders are not obeyed; the contract is taken as null and void. This coincides with the principle of utmost good faith (Garner, 2003). For instance, Mayne Nickless v Pegler (1974) case was purely a discussion concerning prudent insurer test. This case was used to shed more light on the meaning of material fact requiring disclosure. It was concluded that a fact would have only been a material if it would have reasonably affected the mind of a prudent insurer in determining the premiums and conditions behind acceptance or rejection of the insurance. The test actually worked against the consumer and was seen as a heavy burden to the insured. Other examples of cases that involved application of material test include: Joel v Law Union and Crown Insurance (1908) as well as Khoury v GIO (NSW) (1984) (Trudy, 1997).

Considering the case of Dalgety & Co Ltd v Australian Mutual Provident Society (1908), it was concluded that any circumstances that exhibits lack of confidence by one party to the other will lead to the former party being forced to disclose all the material facts known to it. (Trudy, 1997, p.69)

This is a condition that must be imposed unless the latter is very much aware of these facts, is presumed to be aware of them, takes on own knowledge or waives information concerning them. Incase the disclosure fails take place (may be due to accident, invalid contract or mistake); a material fact will be considered as one which is mostly likely to have an effect on minds of other reasonable insurers. Under the common law, any failure to make a disclosure of material fact relating to the insurance may lead to avoidance of the contract by the insurer. The common law does not take any necessity of reliance by the insurer and thus can avoid the contract in a situation where the insured breaches the duty to disclose any relevant information relating to the risk involved (Levin, 2000).

The common law also has provisions for timing of the duty of disclosure. The law allows the disclosure of the duty to be a continuous process that can only be concluded after the contract is over. The law recognizes the conclusion of the contract at the time when all the premiums have been paid. Since some contracts are renewable, the law requires that such contracts be signed by both parties at the time of renewal. Considering the materiality test, the law clearly stated that consumers were obliged to advise insurers of matters deemed to be material even when the consumers had no idea that a duty to disclose existed. In basic consideration, there was actually no obligation on the part of insurers to send a warning to the consumers about the nature as well as the existence of the duty of disclosure at any particular time (Brady, 2005).

The common law also has provisions for remedies available in a situation where there is breach of duty to disclose. Under this provision, any party that breaches the contract or makes false statements concerning the contract gives a lot of chances to the other party to avoid the contract and its terms. However, there is totally no provision in the law to make a distinction of a non disclosure that is fraudulent or innocent. Examples of matters which can be considered as ‘material’ under the new test include: Applicant’s name, health, occupation, insurance history, criminal record, financial status and type of property being insured. The cases that demonstrate the type of matters that need to be disclosed are: Lindsay v CIC Insurance Ltd (1989) 16 NSWLR 673 – ‘constructive knowledge’ as well as Naomi Marble and Granite Pty Ltd v FAI (Trudy, 1997).

There are two main statutory obligations of the insurer to disclose: The duty to notify and the duty to make further enquiries. Under the duty to notify, the twenty second section of the Insurance Contracts Act places the requirements of disclosure on insurers. Under this legislation, all the insurers are expected to adequately contact the insured and give them full and adequate information concerning the nature as well as the consequences of the duty of disclosure in the law (Brady, 2005). All the insurers are required to do this before the contract is officially signed by both parties to allow the consumers to make informed decisions concerning the contract. This law also requires that the insurers perform and enact the above orders in written form. For instance, the case of Lumley General Insurance v Delphin explores the consequences that may befall an insurance company if it does not comply with the provisions of duty disclosure under section twenty two of the Insurance Contracts Act. For information concerning the type of notice that is sufficient, Suncorp v Cheihk sheds more light. Considering the duty to make further enquiries, the common law states that failure by the consumer to complete an answer or give relevant information on the contract proposal form is deemed as failure to follow the rules and regulations of the duty of disclosure. Under section twenty one (subsection three) of the Insurance Contracts Act, this position is altered by giving the insurance companies an onus to make enquiries on whether the proposal forms have any errors, alterations or incomplete responses from the consumers (Siegal & Connolly, 2002).

Section twenty one (A) explores certain circumstances that may lead to waiver of the duty of disclosure. Under this section, misinterpretation and eligible contracts of insurance apply. In misinterpretation, Dawsons v Bonnin (1922) case under the common law shed more light on the ICA. In section twenty six, misinterpretation of statutory test of material occurs under the following circumstances:

In a situation where a person makes a statement that connects with the proposed insurance contract with the fact that such a statement (though untrue) was made on his own personal belief and such a belief can be presumed by another person given the same circumstances. If so, then such a statement will not be taken (under any condition) as a misinterpretation.

A statement that was made by a person in connection with a proposed contract of insurance shall not be taken to be a misrepresentation unless the person who made the statement knew, or a reasonable person in the circumstances could be expected to have known, that the statement would have been relevant to the decision of the insurer whether to accept the risk and, if so, on what terms. (Siegal & Connolly, 2002, p.53)

The case of Plasteel Windows Australia and ors v CE Heath Underwriting Agencies (1990) shed more light on misinterpretation (Trudy, 1997).

IRAC Format

Issue

The main issue concerns the following question that was asked by the professional indemnity policy:

“Are any of the partners, after enquiry, aware of any circumstances that are/is likely to give rise to a claim against the Firm or their predecessor in business or any of the present and former partners?”

Let us consider this declaration:

“I/We hereby declare that the above statements and particulars are true and that I/We have not suppressed any material facts and I/We agree that this Proposal Form shall be the basis of the contract with the Underwriters.”

Given that one of the partners was aware of a possible claim against the firm but the signing partner innocently and in ignorance answered “No”, we are required to analyze whether an insurer can deny liability on basis of misinterpretation and non disclosure.

Rules/facts

A misinterpretation is actually a statement placed by one of the parties to the contract. Such a statement is normally untrue as far as the legislation is concerned. Once the statement is made by one party, the other party has all the rights to deny any liability by the other party on basis of misinterpretation. Such a statement may be made out of ignorance (unknowingly), carelessly or innocently but this does not guarantee any defense whatsoever. Under such circumstances, the insurer can comfortably avoid the contract since the legislation does not have provisions to differentiate whether the misinterpretation was innocent or fraudulent (Rourke, 2007).

The court considers a statement related to proposed insurance contract as a misinterpretation if it was made under the following circumstances:

If the statement made was out of one’s personal belief which can be presumed by another person given the same circumstances.

“If the person who made the statement knew that the statement would have been relevant to the decision of the insurer on whether to accept the risk and associated terms” (Rourke, 2007, p.147).

Misinterpretation and non disclosure are both closely related terms and very few legislatures have been able to differentiate them. In most cases, the two terms have been considered to be similar.

Analysis and application

In this case, the two consumers had already signed a statement of material facts accepting that all the particulars were okay and that they were in agreement with the conditions of the contract. Further more, one of the partners gave incorrect response to the question asked by the professional indemnity policy. Although the response was made innocently, the law does not provide for such kinds of mistakes. Considering the above facts, the two partners actually made a statement which qualifies as a misinterpretation under section twenty six of the act of insurance contracts. This means that the insurer (insurance company) is allowed by the law to deny any liability on basis of misinterpretation. However, the partners would have had the opportunity to make claims against the firm if such a statement was not made (Rourke, 2007).

Conclusion

Under the insurance contracts act, the parties are required to be keen and not to make any statements without prior knowledge of the implications of such statements. This is because ignorance has never been recognized as a defense in any court of law. Furthermore, the law does not give any provisions that distinguish an innocently made statement from as statement made purposely for fraudulent (Siegal & Connolly, 2002). Therefore, the insurer holds an upper hand to deny any claims against it by the two consumers by arguing such a case on basis of misinterpretation or non-disclosure.

References

Brady, S. (2005). LLP: Protection of the insured. Law review journal, 3(5), 397-403.

Garner, A. (2003). Good Faith and Insurance Contracts. Philadelphia: Temple University Press.

Levin, M. (2000). The Modern Law of Insurance. Cambridge: MIT Press.

Rourke, M. (2007). Insurance law: Doctrines and Principles. Research journal, 5(3), 145-147.

Siegal, M., & Connolly, G. (2002). The law of insurance contracts. New York: Oxford University.

Trudy, D. (1997). Insurance law: Cases and Materials. Law Analysis Journal, 88(4), 53- 73.

Home insurance market in Florida is influenced by a numerous economic and social factors, weather conditions and even media bias. According to statistical results, “1.3 million Floridians are with property insurance”. The lines of insurance available depend on demand and, thus, largely on perceptions of risk and need. There is an opinion that because of natural disasters and hurricanes more and more people try to protect their property and take insurance. Speaking about an increase in home insurance, it is important to note that the general population of Florida is 1.8 million, and 1.3 million of them have home insurance. Thesis Recent years, home insurance increases greatly in Florida and leads to a home insurance crisis caused by unfair and fraudulent actions of private insurers.

Florida is one of the states affected by natural disasters (hurricanes). One of the ways in which people seek to regain control of their lives, to reduce stress, and to move towards some kind of peace of mind is by taking out insurance. Most Floridians prefer home insurance which gives them the clear prospect of indemnity without altercation with neighbors and without having to spend time and money going to court to get it. One of the main purposes of insurance is to achieve a rational and reasonable spread of risk, and to help people to do things which, otherwise, they would hesitate to do (Martinez, 2004).

As a general predictor of risk aversion, the personality of the insured is not helpful, because individuals who take high risks of certain kinds also avoid other risks at all costs. Cultural and social factors are thought to be more significant. People in Florida are willing to spend more than twice as much as people in other states to mitigate the risk of loss due to natural disasters. A particular anxiety for people in Florida, who have become more aware of their world, lies in the potential hazards over which they, as individuals, have no control. That kind of anxiety is not eased by the knowledge that they cannot live in society without trusting the skill, knowledge, and care of others (Martinez, 2004). All this fosters a general sense of insecurity, not least because sections of the public now feel that in times past trust in experts and in public institutions has been misplaced. Once again we see a sense of helplessness (lack of control) that feeds stress. In Florida, the home insurance rates have been always higher than in other states. One of the citizens comments: “we’ve recently received our homeowner insurance quote for the coming year, a rate increase of 40%” (Florida Homeowner Insurance, 2007). To the ordinary actual insured, who is not a model of behavior or rationality, something is risky if loss is relatively likely to happen or, although it is not likely to happen, if the effect will be disastrous if it does (Maddel, 2000).

Home insurance increases in Florida, and more and more people have to sell their homes because of high insurance rates and fraudulent actions of insurers. It is important to note that home insurance s separated into insurance on tangible property, including specific items of money, and insurance on intangible wealth, known as pecuniary-loss insurance. Insurance of tangible property is divided according to the kind of property (livestock, cargo, house, etc.) and also according to the peril (fire, theft, etc.). Whether or not fraud is really widespread, what is clear and what really counts is that insurers believe that fraud is widespread, and often approach claims in a spirit of suspicion. The legal framework for claims assumes good faith and trust -on both sides. Society is reluctant to believe that claimants are fraudulent, and the law makes it hard for the insurer to prove that they are, but it also assumes the good faith of the insurer, with the result that, if he wants to, it is easy for him to drag his feet over payment (Martinez, 2004). The duty of good faith between insurer and insured is sometimes specified as the foundation, although not the only foundation, of the rule that a fraudulent claim by the insured defeats the claim and terminates the contract o insurance surprise nobody; on the contrary, the point of claim is where one might expect the law to make the greatest demands of the honesty and good faith of the insured (Maddel, 2000).

It is possible to refute these arguments stating that home insurance does not increase in Florida, but shifts from privately owned companies to the states owned. “Abandoned by insurers with cold feet and empty pockets, homeowners are increasingly turning to the Citizens Property Insurance Corporation, the state-created insurer of last resort, which by law must charge more than private insurers to be noncompetitive” (Maddel, 2006). Thus, the statistical results prove that people have to sell their homes and move to other regions. Also, there is an increase demand for home insurance cased by natural disasters and floods. The insured is less concerned with the precise probability than with whether the risk seems probable or bad enough to justify paying (premium) to soften its effects; that depend on his view of things – his risk aversion.

In sum, home insurance market and home insurance increase greatly in Florida. More and more people prefer to use the state created insurer, and terminate contracts with private insurers. Floridians are aware of their ignorance and turn for advice. They are under pressure of competition from alternative outlets that purport to provide the public with cheaper insurance products. They are under pressure of time, not only to save money, but also to meet the expectations of the client; but they lack both the time to learn about new products and the time fully to explain them to the client.

References

1. Florida Homeowner Insurance: Rapidly Rising Rates. (2007). Web.
2. H.A.C. FLORIDA, INC. (2007).
3. Maddel, L. (2000). Rising Insurance Rates Push Florida Homeowners to Brink. The New York Times, 2006. [Online].
4. Martinez, R.A. (2004). Mold, Fire, Flood & Other Topics: Homeowners Insurance Explained.. R. A. Martinez.

The chapter that should be currently addressed in the Chapter Nine “Things Fall Apart: Product Liability and Consumers” of the second edition of the book by Joanne B. Ciulla, Clancy Martin, and Robert C. Solomon called Honest Work. So, the main story to be enlarged on is the one called “How We Got into This Mess” by Stanley J. Modic.

The story focuses on the principles of cooperation and mutual relations that have occurred during recent years between the tort law and the liability insurance system being one of the main reasons for public criticism. The author analyzes the reasons for changes in the liability insurance system and the shift that took place in this system year over year.

Liability insurance system has certain cycles and can face some crises as any other sector of human activity. So, the author claims that crises that took place in the liability insurance system and the tort law including their mutual operation were predictable. These crises brought changes in these systems and shifted the role of a person who is in fault and the injured one.

These changes made both people eligible for getting an insurance payment. Thus, the author gives an example of the industrial objects that are not likely to bear their responsibility for producing something not in accordance with established standards that should be punished in accordance with the criminal law.

Moreover, it is necessary to highlight the problem that appeared in the car-building sector being the main concern for people and creating a nice ground for mass-production of low-quality cars that could be easily damaged resulting in insurance paid to parties concerned.

The cost of the insurance is another important problem that arises from the combination of tort law and liability insurance system. As only people with high income rate could afford purchasing insurance at the beginning, it was impossible for poorer people to buy insurance.

Moreover, the costs that were paid out to the injured party were very low at the beginning which is also the reason for poorer people to have not bought insurances. The changes in the insurance system made it more accessible and enabled poorer people to buy insurances and get costs in case of insured accident.

However, the automobile industry seemed to cooperate with insurance system because cars become less reliable and the bumpers could be easily damaged in an accident. In other words, car manufacturers did not try to make cars more reliable and solid; instead the insurance system made insurances more available. So, people had to buy insurances to avoid expensive repairs after an accident.

People that wanted neither to buy insurance nor to pay costs to the injured party in the case of accident were numerous. To avoid different problems and guarantee the payment of compensation authorities made all people pay insurance premiums.

The premiums were paid in small parts to avoid public criticism. One of the most criticised aspects of the insurance system change is its organisation in accordance with human values, beliefs, and expectations.

Thus, the system that is aimed at ensuring that injured are provided with treatment and the guilty are punished underwent great changes but is expected to decrease its negative influence over the tort system related to accidents and damages that has to guarantee a corresponding punishment for people and corporations in fault.

Restaurants, hotels and other hospitality organizations have to take various precautions in order to safeguard themselves against possible risks. In this case, close attention should be paid to possible legal action. In particular, these should have workers’ compensation and dram shop insurance since they can reduce the likelihood of legal problems. First, one should mention dram shop insurance that covers the liabilities of businesses selling alcoholic beverages. The potential difficulties can occur provided that a restaurant sells alcohol to underage people or those clients who are already intoxicated. This tort can be the cause of legal action on behalf of third parties.

For instance, these organizations can face a lawsuit provided that their intoxicated clients cause injury or death of other people. Moreover, restaurants or hotels can be held accountable for the damage of property. In other words, hospitality institutions may have to reimburse numerous third parties.

Under such circumstances, the sustainability of a restaurant or hotel can be threatened. Therefore, the dram shop insurance is important because it helps a hospitality institution to minimize the risk of employees’ negligence, especially when they do not ask customers for identification before giving them alcoholic beverages. This is why dram show insurance is essential for such businesses which have a right to sell alcohol to the customers. This is one of the main aspects that can be identified.

Apart from that, one should remember about the role of workers’ compensation insurance which is also obligatory for various hospitality institutions. It should be mentioned that the employees of restaurants and hotels can also sustain their injuries in the workplace, even if this risk is lower in comparison with other industries. For instance, the managers of hospitality organizations should remember that people, working in kitchens or even bathrooms, can be exposed to potential dangers such as burn injuries which are very frequent. Overall, the risks of various injuries cannot be completely eliminated even if strict security rules are adopted.

This is why workers’ compensation insurance should cover the medical costs of an employee as well as wages that he/she did not receive because of illness or injury. These are the main requirements that should be met.

Such cases can be extremely widespread in various hospitality organizations. Again, this type of insurance can minimize the impact of negligence and help the company avoid lawsuits from employees. It should be taken into consideration that workers, who accept this type of insurance, have fewer opportunities for suing a restaurant or hotel in the future. This legal safeguard is a significant element of risk management strategies in many hospitality organizations that can hire a great number of employees who have different skills.

On the whole, these two types of insurance are important for complying with the legal norms adopted in various counties. Moreover, these legal safeguards can help restaurants or hotels minimize their potential losses which can occur as a result of negligence. This is why this issue should be overlooked by the owners of these enterprises. Certainly, one should not assume that these forms of insurance are the only ones that hospitality organizations should have. Yet, they are vital for their sustainability and ability to protect its interests in the court. These are the main issues that the owners of these companies should take into account.

What is negligence

According to insurance policy, negligence is defined as any instance that on the part of the policy holder’s that could be blamed for the incidence that occurred, when there is negligent, then the incident was not merely from an accident, but some reluctance, ignorance or anything or such manner can be proved on the part of the policy holder’s.

Depending with the insurance contact engaged, the insurer could cover the loss resulting from a negligence of the policyholder to a certain percentage or alternatively refuse to cater for any loss therein. To prove that a policyholder was negligent, there are four main elements to a negligent, they are:

Existence of a legal duty to use reasonable care

The insurer must prove that the policyholder by the terms and conditions of the contract was under legal obligation to take good care of the situation or the subject matter to avoid any case of damage. When signing an insurance policy, there are some conditions that are special to a particular case, in the case that they offer some duty of care to the policyholder, then in case of an incidence that occurred from the bleach of the duty of care, then the case can be said to be a case of negligence.

Failure to perform that duty

An insurance policy has some preset conditions that calls for some actions, certain behavior or certain way of handing situation on the side of the policyholder to enforce the contract. In the case that the policyholder has ignored or not performed the duty, then it can be concluded as a case of negligence and the contact can have issues in enforceability. failure to perform that duty can result to negligence and non-compensation of the policyholder.

Damages or injury to the claimant

To prove a case of negligence, there must have some damages that have been suffered because of the negligence, in the case of an insurance policy, the subject matter that had been issued must have been damaged or the peril that was insured against must have occurred.

When the damage has occurred, the policyholder will be seeking to enforce the contract and get compensation that is the challenging part of the story; he suffered the damage, but the complainant (the insurance at this level) is claiming that there have been some negligence, thus the damage not enforceable. The insurer assumes that if the policyholder had taken such enough care, then the damage would not have occurred.

Proximate cause relationship between the negligent act and the infliction of damages

Under this heading, the law assumes that some acts on the side of the policyholder that might have triggered another thing that is responsible for the damage. In this case, there is the inclusion of third parties or other activities to functions that might be blamed for the damage. When proving this point, the insurance body must show the cause of events and the relationship that occurred in the entire situation to have the damage occur.

The assumption of this element is that a damage can occur but there is not direct influence of the policyholder if the matters of the case are analyzed, then it can be seen that the policy holder was involved in the situation indirectly; the indirect involvement is the prove of negligence.

Abstract

In the given paper, the threats that one is likely to encounter in the profession of an insurance agent are discussed. Because of the great responsibility that one takes when insuring something, the understanding of the liability in the given sphere is quite different from everything that one might experience in the other spheres. It cannot be doubted that only taking a specific approach to the peculiarities of the profession and the extraordinary cases when one has to take specific care of the problems in question.

Therefore, the aspect of being an insurance agent demands serious considerations. Because of the liability issues that the profession presupposes to tackle with, one can face considerable difficulties. Therefore, the aspects of insurance are to be considered carefully.

Introduction: To Start from the Scratch

Being an insurance agent involves considerable responsibility and the need to take account of every plausible effect that the given action might have on the customer and on his/her state of affairs. Considering both the profit of the client and the well-being of the company often leads to certain conflicts that must be solved, otherwise both parties are highly likely to loose. Therefore, the liability of an insurance agent is the prior thing to consider when it comes to speaking of the specifics of the profession.

Identifying the Problem: Where the Shoe Pinches

It is reasonable to mark that the profession of an insurance agent requires the skills to sell insurance and promote the services of the company for the probable clients to apply. However, historically, these were banks that owed the prerogative to sell insurance. This is where the constant struggle between the banks and the insurance agents in selling insurance stems from.

It is highly important to mark that the concern for the right to sell insurance is mainly the concern for the client and his/her further profit. Therefore, the problem has been brewing for quite long until it finally began to resolve: “Thus, for example, U.S. banks complained for decades about being prohibited from selling insurance, because agents opposed to banks selling insurance influenced legislators and regulators” (Skipper 180).

Fig. 1. Aflac.

However, it can seem rather doubtful that banks are not able to provide the clients with the same amount of safety as the insurance agencies can. Indeed, banks with their settled and long-established system of work and the well-developed infrastructure might seem reliable enough to be trusted in.

Yet it proves that the insurance agencies can provide a greater degree of safety for their clients, which means that insurance agencies have all reasons to be trusted in. Thus, the struggle between the two opponents has been long and painstaking, yet nothing has been resolved so far, which means that each time selling insurance agents have to face one and the same complicacy.

Going into Details: On the Aspects of Liability

It is beyond any possible doubt that the threat of losing the proper level of liability is rather topical for an insurance agent who is engaged in selling insurance. There is enough evidence that the banks did not cease their attempts to gain greater authority in the given sphere and are still eager to deprive insurance agencies of their business.

Thus, the struggle between the two opponents is currently growing increasingly threatening. Therefore, the problem must be tackled; otherwise, sooner or later, the opponents will suffer great losses. At present, it is quite obvious that the opponents have to stop their debates. As Gustavson marked, “Insurance agents and most insurers (to a lesser extent), however, are opposed to further bank expansion into the insurance business.

The result has been much debate and small gains by the banks.” (94) Thus, it cannot be doubted that the presented problem requires thorough considerations. It is evident that, once forgotten, this issue might drag serious consequences and even crises of the financial state of banks and insurance agencies. Like any other sphere of business, insurance requires certain allocation of responsibilities to keep in pace with the progress.

It is also worth noticing that the state acts on behalf of banks when it comes to the allocation of the responsibilities between banks and agencies. Thus, Fitch emphasizes: “In insurance sales, the law also preserves the authority of states to regulate insurance, but requires state insurance departments to treat bank-affiliated firms selling insurance on the same basis as other insurance agencies” (10).

In other words, this means that the state is not supposed to support even those insurance-selling agencies that are intertwined with the corresponding banks. Since the selling agent ahs to deal with five aspects of selling insurance, i.e. the prospect, the proposition, convictions, impulses and appeal (Strong 264), it is obvious that the system is rather well-established and any changes are highly undesirable.

Fig. 2. Managing the conflict of interests. Risk Management.

Recommendations: Solving the Puzzle

However, it must be marked that, like any other problem concerning the sphere of insurance and financing, this issue can be tackled with help of diplomatic approach and reasonable compromises. With help of these steps, one can expect positive results. Indeed, according to the calculations of the most prominent economists and political scientists, if the banks and the insurance agencies consider the aspect of selling insurance as the issue that needs solution and work out the decision that would satisfy both parties, the financial and economical profit will become possible.

However, it must be admitted that the steps that must be undertaken to solve this complicacy demand that the opponents would finally reconcile, which is important at present.

One of the most obvious decisions that could be undertaken would be comple3te prohibition to sell insurance for one of the parties. It must be mentioned though that the attempts to deprive one of the opponents of the right to sell insurance have already occurred, yet the experience obtained during these crusades against the banks’ expansion did not end in the most desirable way.

According to Skipper, the results of such actions ended up in an economical decay and further confusions. Based on reciprocity, which is a political, not an economical term, this would have no effect on the situation:

Outcomes from reciprocity-based liberalization are uncertain, largely because reciprocity is a negotiation, not an economic, concept. Reciprocity-based liberalization potentially requires industry-specific and country-specific analyses. Such analyses call for a substantial bureaucratic structure and a great potential for conflict with an accompanying need for dispute resolution mechanisms. (70)

This means that the solution of the conflict will involve the change in the state structure, which is quite complicated at the moment. Therefore, it would be more reasonable to resort to such means as the compromise between the opponents. With help of the reasonable steps taken, it would be possible to coordinate the actions of both the banks and the insurance agencies, thus helping both parties to benefit and not allowing them to create conflicting atmosphere.

Fig. 3. Federal Reserve Bank of St. Lotus. Lotus Financial Stress Index. 2011.

Conclusion: Avoiding the Pitfalls

Thus, it can be considered that the problem of liability in the sphere of insurance takes one of the first places. It is peculiar that with several incautious steps one can destroy the impeccably working mechanism and turn the existing system of insurance liability into complete mess. Because of the constant struggle between banks and insurance selling agents, the entire system of insuring is under risk, which must be tackled.

Therefore, the idea that some economists have already come up with seems the only possible and reasonable means to save the insurance system. With help of certain compromises and careful steps made to create the system of shared responsibility for the well-being of the client and selling insurance to the probable clients, one can restore the system and help it work efficiently.

It cannot be doubted that such approach will inevitably lead to a lesser degree of competitiveness between banks and insurance agencies and decrease the strain between these opponents.

Executive Summary

One of the greatest concerns of the modern world of banking and insurance business, the aspect of selling insurance and the liability of the issue is on the agenda of the modern world. Since the problem involves both economical and political aspects, it becomes rather complicated issue to solve.

It must be mentioned that the core problem underlying the issue is the unceasing struggle between banks and insurance agencies for the right to perform the function of selling insurance to the clients.

It is essential that certain solutions have already been introduced to make the problem vanish. Yet, unfortunately, what has been suggested already does not meet the goals of each of the opponents. It can be alleged that, once the recommended ideas are out into practice, the world could face another crisis, which is rather undesirable. In addition, it is required that both opponents could benefit from the solution.

In addition, the situation has become ever more heated as the state started supporting only banks, leaving the separate agencies and even the affiliated agencies that are a part of banks, alone. Such attitude might result in considerable change for worse. At the moment, it is necessary that some ways to solve the situation could be found.

One of the most effective easy to get rid of the complicacies is to achieve a reasonable compromise between the parties. However, it must be admitted that none of the opponents wishes to retreat. Therefore, it is necessary to convince both the banks and the insurance agencies that they should come to terms in the given aspect. Once the compromise has been achieved, it would be easier to allocate the responsibilities of each of the parties and achieve peaceful coexistence of the two systems.

Reference List

Aflac. “Aflac”. 2010. JPG file. Web.

Federal Reserve Bank of St. Lotus. “Lotus Financial Stress Index”. 2011. JPG file. Web.

Fitch, T. P. Career Opportunities in Banking, Finance, and Insurance. New York, NY: Infobase Publishing, 2007. Print.

Gustavson, S. G., & Harrington, S. E. Insurance, Risk Management, and Public Policy: Essays in Memory of Robert I. Mehr. Berlin, DE: Springer, 1994. Print.

Risk Management. “Managing the Conflict of Interests.” GIF file. Web.

Skipper, H. D., & Know, J. W. Risk Management and Insurance: Perspectives in a Global Economy. Hoboken, NJ: Wiley-Blackwell, 2007. Print.

Strong, E. K. The Psychology of Selling Insurance. New York, NY: Harper. 1992. Print.

Introduction

There has been no mathematical formula that has been invented that can be used to put a value on a personal injury case and hence anyone who suffers from such an incident usually relies on the services of a qualified lawyer. An experience lawyer gathers all the relevant information about a case and presents the argument to the insurance adjuster, a judge or a jury. But it is not always that the first person to arrive to your case will be a lawyer but most of the time it is an insurance adjuster who arrives first in a bid to take charge of the case. Hence the role played by an insurance adjuster is very important in any personal injury case.

Thesis statement

Due to the nature of importance of a personal injury, the role played by an insurance adjuster is very important in determining how an individual gets compensation. Therefore an insurance adjuster must hand the case following the code of ethics.

Who is an insurance adjuster?

An insurance adjuster is a professional negotiator who usually has extensive experience in dealing with claimant who sometimes is not represented by the attorney. They play a crucial role in representing the claimant in the criminal justice system. In their work they use an array of methods including intimidations, befriending and some psychological methods that will convince the clamant to accept the leas amount of money for the claim. Apparently they are paid for that work. (Fernadez, 2008)

Why should adjusters use ethics in their work?

There are many reasons why adjusters must practice ethics in their work. First they should realize that they are representing someone who is not very well conversant with the law or who is not in a position to represents themselves of be represented by the attorney and hence they must handle the case with utmost care. Ethics dictate them to help the client achieve what can help them recover from their injury rather than being to intimidate them. (Demayo, 2008)

Adjusters should also realize that the aim of the insurance is to pay the least amount to the claimant. This means that even if they are worksite for the insurance, there is a reasonable amount that the insurance can feel at ease paying the claimant. Hence they should not go for the least amount the will not benefit the claimant

They should also recognize that like the claimants, they can also get into the same situation and moral ethics dictate that don’t do to others what you would not like to be done unto you.

Adjusters should also realize that their role can be played in contrast by a lawyer and the level of professional shown by the lawyer results to bad name for the adjuster professionals. Though working for the insurance company, they should uphold their morals.

In case a person has been involved in a car accident, the insurance adjuster will rush to the scene even before other government officials have arrived. They will try to convince the victim to accept a certain payment with an aim of saving the insurance company from paying the legal amount they are supposed to pay. Hence this person will be at the mercy of the adjuster since they will be compensated less than they are supposed to be compensated. (Lanier Law Group, 2008)

Reference

Demayo, M. (2008). Insurance Adjusters. Law Offices of Michael A. DeMayo.

Fernandez, J. (2008). Insurance Adjusters. Personal Injury articles and resources.

Lanier Law Group, (2008). Beware: insurance companies are not looking out for you! Hire A Heavy Weight 1-888 Consult.