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Principle of Uberrimae fidei (Utmost Good Faith) Principle of Uberrimae fidei (a Latin phrase), or in simple english words, the Principle of Utmost Good Faith, is a very basic and first primary principle of insurance. According to this principle, the insurance contract must be signed by both parties (i.e insurer and insured) in an absolute good faith or belief or trust. The person getting insured must willingly disclose and surrender to the insurer his complete true information regarding the subject matter of insurance. The insurer's liability gets void (i.e legally revoked or cancelled) if any facts, about the subject matter of insurance are either omitted, hidden, falsified or presented in a wrong manner by the insured. The principle of Uberrimae fidei applies to all types of insurance contracts. 2. Principle of Insurable Interest The principle of insurable interest states that the person getting insured must have insurable interest in the object of insurance. A person has an insurable interest when the physical existence of the insured object gives him some gain but its non-existence will give him a loss. In simple words, the insured person must suffer some financial loss by the damage of the insured object. For example :- The owner of a taxicab has insurable interest in the taxicab because he is getting income from it. But, if he sells it, he will not have an insurable interest left in that taxicab. 3. Principle of Indemnity indemnity means security, protection and compensation given against damage, loss or injury. According to the principle of indemnity, an insurance contract is signed only for getting protection against unpredicted financial losses arising due to future uncertainties. Insurance contract is not made for making profit else its sole purpose is to give compensation in case of any damage or loss. In an insurance contract, the amount of compensations paid is in proportion to the incurred losses. The amount of compensations is limited to the amount assured or the actual losses, whichever is less. The compensation must not be less or more than the actual damage. Compensation is not paid if the specified loss does not happen due to a particular reason during a specific time period. Thus, insurance is only for giving protection against losses and not for making profit. However, in case of life insurance, the principle of indemnity does not apply

The balance amount. Principle of Subrogation is an extension and another corollary of the principle of indemnity. If insurance company wins the case and collects $ 1. So. then the insurance company will retain $ 1 million (which it has already paid to Mr. the market value of the house. Principle of Contribution Principle of Contribution is a corollary of the principle of indemnity. Secondly.Tom. John insures his house for $ 1 million.Tom for $ 1. 5. This principle is applicable only when the damaged property has any value after the event causing the damage. According to the principle of subrogation. etc. At the same time. It applies to all contracts of indemnity. in case of uncertain events like a fire outbreak or blast. Tom. the insured. the insured can claim the compensation only to the extent of actual loss either from all insurers or from any one insurer. 4. John for $ 1 million. John) plus other expenses such as court fees. Principle of Subrogation Subrogation means substituting one creditor for another. when the insured is compensated for the losses due to damage to his insured property. Principle of Loss Minimization According to the Principle of Loss Minimization.2 million. then the ownership right of such property shifts to the insurer. if any will be given to Mr. if the insured claims full amount of compensation from one insurer then he cannot claim the same compensation from other insurer and make a profit. it can file a law suit against Mr. The insurer can benefit out of subrogation rights only to the extent of the amount he has paid to the insured as compensation.Mr. The insurance company shall settle the claim of Mr. John. The insured must take all possible .2 million from Mr. if the insured has taken out more than one policy on the same subject matter. if one insurance company pays the full compensation then it can recover the proportionate contribution from the other insurance company. For example :. The house is totally destroyed by the negligence of his neighbour Mr. If one insurer pays full compensation then that insurer can claim proportionate claim from the other insurers. It also applies to all contracts of indemnity.because the value of human life cannot be measured in terms of money. 6. According to this principle. insured must always try his level best to minimize the loss of his insured property.

Assume. Principle of Causa Proxima (Nearest Cause Principle of Causa Proxima (a Latin phrase). and (ii) The sea water entering ship through puncture.A cargo ship's base was punctured due to rats and so sea water entered and cargo was damaged. For example :. like first calling nearest fire department office.measures and necessary steps to control and reduce the losses in such a scenario. "Why should I worry? I've insured my house. the Principle of Proximate (i. in case of life insurance. For example :. the institution provided more than US$17 billion in loans to its client countries. However. Hence it is a responsibility of the insured to protect his insured property and avoid further losses. John must try his level best to stop fire by all possible means. asking neighbours for emergency fire extinguishers.September 10th. The risk of sea water is insured but the first cause is not.(i) The cargo ship getting punctured beacuse of rats. In fiscal year 2001.e Nearest) Cause. IDA. etc. Whatever may be the reason of death (whether a natural death or an unnatural death) the insurer is liable to pay the amount of insurance. Mr. 2010 The World Bank Group is one of the world's largest sources of development assistance. or in simple english words. MIGA and the International Centre for Settlement of Investment Disputes (ICSID). John's house is set on fire due to an electric shortcircuit." 7. Mr. the proximate or the nearest or the closest cause should be taken into consideration to decide the liability of the insurer. the principle of Causa Proxima does not apply. The nearest cause of damage is sea water which is insured and therefore the insurer must pay the compensation. Here there are two causes for the damage of the cargo ship . It works in more than . He must not remain inactive and watch his house burning hoping. means when a loss is caused by more than one causes. The World Bank consists of the IBRD. Importance of World Bank . The insured must not neglect and behave irresponsibly during such events just because the property is insured. the proximate (closest) and not the remote (farest) must be looked into. In this tragic scenario. IFC. The principle states that to find out whether the insurer is liable for the loss or not.

100 developing economies with the primary focus of helping the poorest people and the poorest countries. health. By some . and focus on specific development topics. The Advisory Services draw on the work of Thematic Groups. and the worst conditions of privation still affect as many as 1. inclusion. and about one-half the entire human population has no access to even the most basic medicines. the financial sector. Social and Structural Reviews. About one-third of the world's children suffer symptoms of malnutrition. governance. conducive to investment and long-term planning. particularly through basic health and education Focusing on social development. such as environmentally and socially sustainable development. the world has actually witnessed a proliferation in regional conflicts. Country Economic Memoranda. efficiently and transparently • • Protecting the environment Supporting and encouraging private business development Promoting reforms to create a stable macroeconomic environment. Public expenditure Reviews. legal. For all its clients the Bank emphasizes the need for: • Investing in people. The state of geopolitical flux that has followed in the wake of the Cold War. nutrition and population.3 billion people onefifth the entire global population. gender. financial. management and monitoring. Topics have included project design. food and nutrition. and procurement requirements. and law and justice. which are organized and coordinated by Bank staff. and resettlement safeguards. Sector Reports. and institutionbuilding as key elements of poverty reduction • Strengthening the ability of the governments to deliver quality services. • The bank also carries out economic and other reports such as Poverty Assessments. Several groups have prepared toolkits for development practitioners. Development of Poor Countries The reason why the development of poor countries is yet to take place is the fact that gaps in income with the wealthier countries are still widening. Knowledge sharing etc The Bank has established Advisory Services to provide information and knowledge on numerous facets of the Bank's work. Thematic Groups share lessons learned in order to improve the quality of Bank activities.

These pressures now threaten ecosystems and human populations worldwide. It is clear that the governance structure at the Bank must be addressed. despite being the very reason for its existence. they pose a major threat to humankind and the rest of the living world. need of world bank there is no doubt that we need the World Bank. the world is also confronted by the urbanization-based deterioration of our living environment. if the countries that it serves feel true ownership of the institution. It has a strong future. In addition to the issue of industrial waste. global warming. from global environmental degradation. Humanity faces an array of other formidable problems as well. In a world that has become increasingly interdependent. The World Bank has so far worked extensively in the interest of the international society but because of the above-mentioned problems the complete development of poor countries has not been possible. at least 26 million people worldwide were displaced by civil war in 1996. no longer can the national interests of any single country be contemplated in isolation from the interests of international society at large. and the depletion of global forest resources and biodiversity. and it has a mandate that it must fulfill in helping the two billion people still living on less than $2 a day. these problems demand a concerted and far-reaching approach by the world community. It can only do so. terrorism. which includes human rights atrocities Poverty and warfare are not the only threats to human dignity and civilization. cross-border acid rain. that developing . and as such.estimates. the food and energy crises. the population explosion. and now financial turmoil. crimes against international society. developing regions included. the weaker members of society. environmental problems of global scale have a serious impact at the ecosystem level. however. Furthermore. For instance. have most frequently been the victims of the carnage. in many conflicts. particularly women and children. AIDS and other infectious diseases. In terms of ensuring peace and security for the human race and the world at large. to drug abuse. Why were there no voices raised from the developing world during the recent crisis against the damage being done to an institution with such a noble and critically important mission? Perhaps it is because developing countries feel they have so little voice at the bank.

The excruciating experience it is going through can be turned to good if it is seen as an opportunity for true change and reform. and the Bank will have to ensure it is competitive. Many emerging economies with access to capital markets still turn to the bank for help because its staff has tremendous experience in addressing problems that have no regard for national borders. that is common sense. what is not as widely available is the knowledge and experience the Bank bundles with its finance. it is too easy to overlook how much we need the World Bank. is important to many countries. The World Bank has so much to offer the world. However. it needs to be flexible in a changing world.countries must feel they have a stake in its policies and its work. . In these days. Developing countries are diversifying their sources of finance and aid. Knowing that expertise is there. I can say from experience. But it needs to adapt.