South African insurance law

Insurance in South Africa describes a mechanism in that country for the reduction or minimisation of loss, owing to the constant exposure of people and assets to risks (be they natural or financial or personal). The kinds of loss which arise if such risks eventuate may be either patrimonial or non-patrimonial.A general definition of insurance is supplied in the case of Lake v Reinsurance Corporation Ltd, which describes it as a contract between an insurer and an insured, in terms of which the insurer undertakes to render to the insured a sum of money, or its equivalent, on the occurrence of a specified uncertain event in which the insured has some interest, in return for the payment of a premium.According to LAWSA,Insurance is the result of man’s efforts to create financial security in the face of dangers to his life, person and estate. A typical desire of a man is to form and develop his estate [....] The object of forming and developing an estate may, however, be thwarted by dangers to which his present and future position is exposed: if these materialise they may bring about undesirable consequences which may affect his estate immediately or in the future. Even while a danger is still remote it creates an element of uncertainty, whether in relation to its actual occurrence, the exact time of its occurrence, or the extent of its undesirable consequences. This element of uncertainty creates insecurity. Accordingly, it may be said that man’s need for security arises from the tension between his desire to form and develop his estate, on the one hand, and the dangers threatening to thwart that desire, on the other. The most effective and obvious way of achieving security is to take direct precautionary measures against imminent or potential harm [....] One of the most satisfactory general methods of creating financial security against risks therefore seems to be that of spreading the risk among a number of persons all exposed to the same risk and all prepared to make a relatively negligible contribution towards neutralising the detrimental effects of this risk which may materialise for any one or more of their number. This is known as insurance.The law of insurance in South Africa consists of rules peculiar to insurance (like the rules on insurable interest, subrogation and double insurance); rules applicable to all contracts (like the rules on offer and acceptance, and contracts in favour of third parties); and general contractual rules that have undergone changes in the insurance context (like the rules on insurance warranties).Broadly speaking, the law of insurance in South Africa is concerned with the conclusion and consequences of insurance contracts; general aspects of law of damages; the rules on insurance intermediaries; insurance tax law; and insurance company or supervision law.↑