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Commerce Paper 2, May/June 2008  
Questions: 1 2 3 4 5 6 7 8 9 10 Main
General Comments
Strength
Weakness/Remedies












Question 3

Explain the following insurance terms:
(a) proximate cause
(b) contribution
(c) utmost good faith
(d) re-insurance;
(e) contract of non-indemnity (compensation)

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OBSERVATION

This was a good question and those performance of candidates were impressive. However, there were some difficulties with the explanation of some of the insurance principle. The explanations expected include:

(I) Proximate Causes: This is an Insurance principle that allows an insured to be compensated only when the event insured against happened as a direct cause and not from other risks not insured against.

(II) Contract of Non-Indemnity: A contract of non-indemnity is a contract of insurance where the insurer can only pay something based on prior agreement because the loss cannot be replaced. It is not possible to give back life, as a result,
money will be paid to the assured family.

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