Insurance forms
In insurance, two forms of realization of insurance relations are known: compulsory and voluntary. The criterion for such a division is the will of the parties. The will of the state through a special law stipulates the obligatory form of insurance, and the will of the policyholders through an application for insurance – voluntary. Consider these two forms in more detail.
The initiator of compulsory insurance is the state. The state establishes a mandatory form of insurance, as a rule, in cases where:
- insurance protection of certain subjects is connected with the interests of not only individual policyholders, but also society as a whole;
- a certain group of risks is not accepted by insurers for insurance within its voluntary form due to the unprofitability of their insurance;
- the cost of voluntary insurance is too high for the policyholder;
- the policyholder underestimates the degree of danger and possible consequences of the insured event, and the public need for insurance protection of such risks exists.
Compulsory insurance
For the purpose of compulsory insurance, the Cabinet of Ministers of Ukraine, unless otherwise specified by law, establishes the procedure and rules for conducting it, the form of a standard contract, the special conditions of licensing of compulsory insurance, the size of insurance amounts and the maximum amounts of insurance tariffs or the method of actuarial settlements.
In the world and domestic practice there were several types of compulsory insurance, including those that occupy an intermediate position between compulsory and voluntary forms. Allocate compulsory state insurance, financed by the state budget and compulsory non-state insurance, paid by policyholders.
Compulsory non-state insurance is carried out by insurers on the basis of the relevant law on compulsory insurance or a resolution of the Cabinet of Ministers of Ukraine in accordance with the license issued for the corresponding type of compulsory insurance.
Voluntary insurance
Voluntary insurance is carried out on the basis of an agreement between the policyholder and the insurer, which is concluded after the application for insurance (written or oral) is submitted by a natural or legal person. The rules of voluntary insurance, which determine its terms and procedure, are set by the insurer on their own and coincide with the state body supervising the insurance activity.
Voluntary insurance also has a number of features. It is carried out on the principle of goodwill (however, the will of the parties must not go against the regulatory legal acts regulating insurance activities). The policyholder chooses an insurance company, guided solely by their own will.
Voluntary insurance contracts are not covered by all legal entities and individuals. This is due to the fact that, on the one hand, not everyone has a desire or a solvent need for the conclusion of an insurance contract, but on the other – civil law, as well as the rules of insurance, certain restrictions on the conclusion of insurance contracts are established. For example, the Civil Code of Ukraine explicitly refers to the inadmissibility of the insurance of unlawful interests.
A characteristic feature of voluntary insurance is its limited time. The agreement is concluded for a certain period, its validity is terminated when the policyholder pays the insurance indemnity in the amount of 100% of the sum insured, if the payment was made before the expiration of the contract. Continuity of voluntary insurance is possible only with the timely extension of insurance for a new term.
At voluntary insurance, the policyholder must observe the terms and the procedure for paying insurance premiums. The liability of the insurer under the contract of voluntary insurance comes only after payment of the insurance premium or its first part to the settlement account or the insurer's cashier.
The contract of voluntary insurance provides for the choice of the policyholder level of insurance compensation, depending on its solvency. In case of property insurance, the policyholder has the right to determine the amount of the insured amount only within the limits of insurance (actual) value of the property. In case of personal insurance, he can choose any insurance sum, determined by the financial capabilities of the policyholder and the insurer's consent.
Proceeding from the above we can conclude that the main function of compulsory insurance is to ensure the safety and preservation of the interests of society as a whole, and voluntary insurance – protection of property interests of legal entities and individuals.
Compulsory insurance exists in many or even possible in all countries, and it contributes in many ways to the positive development of the voluntary insurance market.
What is insurance? In simple words, insurance is a monetary compensation that is paid by an insurance company to a person or enterprise, organization or institution of losses from a certain event that is incidental, subject to the conclusion of an agreement with the insurance company.If to speak officially, then - in accordance with Article 1 of the Law of Ukraine "On Insurance" of March 7, 1996, № 85/96-ВР, insurance – a type of civil law relations to protect the property interests of individuals and legal entities in case of occurrence of certain events (insurance cases), determined insurance contract or current legislation, at the expense of money funds, which are formed by payment of insurance payments (insurance premiums) by individuals and legal entities and income from the placement of funds of these funds; - in accordance with Article 979 of the Civil Code of Ukraine (through the definition of an insurance contract), one party (the insurer) under the insurance contract…