Ic 01 Principles Of Insurance Objectives Contents Site

Disaster struck. The Golden Breeze hit a reef and sank. Mr. Elian rushed back, distraught. “My silk was worth 10,000 gold coins! Pay me!”

“Because of ,” Kael explained to Mira, “he must tell us everything. If he hides the stains, the contract is void.” They adjusted the policy to cover only the sound silk. This was the Objective : to promote fairness and transparency.

“Good,” Kael said. Then he asked Mr. Elian, “Is the silk already damp? Have the rats chewed it?”

Kael shook his head. “Does Lady Sephra own the silk? Does she owe money on the ship?” Ic 01 Principles Of Insurance Objectives Contents

She was ready. The principles weren’t a puzzle to solve. They were a promise to keep.

Mira nodded. “The ship might sink, or pirates might strike.”

“Zero,” Mira whispered.

A week later, a rival merchant, Lady Sephra, tried to insure The Golden Breeze as well. Mira was confused. “Why not?” she asked. “More premiums for us?”

“No,” Mira realized.

“Proximate Cause,” Kael declared. “Not the nearest in time, but the nearest in efficiency .” They learned that the fire caused a panic, a horse kicked the rowboat, and it shattered before the flames reached it. The was the panic (uninsured), not the fire (insured). The Objective : to find the true, dominant cause of the loss, not just the last event. Disaster struck

“Exactly. The principle of ,” Kael said. “Insurance should put you back in the exact financial position you were in before the loss – no better, no worse.” He paid Mr. Elian the actual value of the lost silk (minus the stained bolts they excluded). The Objective : to prevent the insured from profiting from a tragedy.

“Forget the glittering towers of finance,” Kael grumbled. “If you don’t master this, you’ll build a house on sand.”