Generally insurance combines first and third party contracts. Most non-indemnity contracts are 1st party whereas third party contracts are statutory. The insurer undertakes to compensate third parties when risk attaches. However in all circumstances, parties to an insurance contract are the insurer and the insured.

Insured- is the person who takes out the policy and may be natural or juristic. A proposer for insurance must have an insurance interest in the subject matter. Section 5 [1] of the Marine Insurance Act, Cap 390 of the Laws of Kenya provides inter alia

   “Every person has an insurable interest who is interest in marine adventure”
Section 94 of the Insurance Act Cap 487 of the Laws of Kenya is emphatic that,
“No policy of insurance shall be issued on the life or lives of any person[s] or any other event or events whatsoever wherein the person or persons for whose use, benefit or on whose account such policy or policies shall be made shall have no insurable interest.”
All persons with an insurance interest may take out insurance policies. The question of unsoundness of mind in insurance was considered in Joel Vs Law Union and Crown Insurance Co [1908] 2 kb 863.

Insurer – Is the person who undertakes to indemnify the insured or undertakes to pay the sum assured. Generally there are three classes of insurance.
  1. Insurance Companies
  2. Underwriting Associations and Brokers.
  3. Insurance Agents   
The history of insurance practice lays more emphasis in the company as a central undertaking in Insurance.

Section 22 of the Insurance Act,
“ No person shall be registered as an insurer under the Act, unless that person is a body corporate incorporated under the companies Act and at least 1/3 of the controlling interest, whether in terms of shares paid up capital or voting rights as the case may be as held by citizens of Kenya”

Section 23 of the Insurance Act prescribes the minimum capital requirements and shareholding by Kenyan Citizens. Section 23 restricts the management of insurance companies by persons owning more than 25% shares. Persons who own more than 20% cannot be Executive Directors, Managing Directors, Principal officers or senior managers.


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