Profits Lie in the Safety of Policyholders

Insurance companies are not profit-making companies alone. Can, for example, the police department exist for making profit? Can the Department of Agriculture think of making a profit? They are service-oriented industries, not profit-oriented industries.

- Dr K. Rajagopal Reddy

The climax of human culture and the zenith of civilization that we humans are supposed to have reached in all the fields, including insurance, cannot be regarded as important as long as death and disability, accidents and arson continue to haunt society and the souls of the people. When you look at the above statement dispassionately, what has insurance achieved? It is simply nothing. Paying premiums, issuing policies, settling claims, while insurance companies make handsome profits - this is all we have achieved! If this is the insane world of insurance, then I regret having spent my entire life in the field of insurance. I pray to God, the Almighty, that this should not be the achievement of insurance.

Insurance has few principles and one of them is the principle of indemnity. Allow me to go back to the definition of indemnity. The concept of indemnity has developed over the centuries. It is not a development of one day. There are many decided case laws are there which helped the concept of indemnity evolve. Indemnity is an essential pillar principle of insurance. Without indemnity, there is no difference between insurance and gambling; insurance and horse racing. What then is indemnity? Indemnity is keeping the insured approximately in the same financial position as he was before the loss. In other words, if my car were to meet with an accident, then it is the responsibility of the insurer to keep me in the same financial position so that I can buy a similar car of the same value.