The successful conduct of an insurance-pool system depends for success on three main points.
(a) The contributions to the pool must be adequate to pay the claims made by those who suffer a loss.
(b) The pool itself must be looked after carefully and wisely invested, so that it grows bigger year by year.
(c) The just claims must be paid promptly and in full.
(a) The contributions to the pool must be adequate to pay the claims made by those who suffer a loss.
(b) The pool itself must be looked after carefully and wisely invested, so that it grows bigger year by year.
(c) The just claims must be paid promptly and in full.
Each of these three points is easy to say, but difficult to achieve, and a full understanding of what is involved in each point is important. Before looking at the detailed arrangements made by insurance companies to put these points into effect, we must first consider the principles which control all insurance activities.
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