As was stated until quite recently, there was little government control of the business of insurance. This freedom was abused by some unscrupulous elements that had found their way into the insurance industry.
- The government found it necessary as a matter of policy to introduce in general stringent controls of activities of insurance companies to streamline their operations
- It is therefore, in the public interest for the government to intervene to ensure that the king of person or group of person who sell these promises are men who can be relied upon to honor their obligations when the time to do so comes.
- To maintain the confidence of investors (local and internationally) in the industry.
- Most people take life assurance policies to protect themselves and their families against death and old age. For some of these people it is their only lifesaving.
- As a statutory requirement for a complete insurance industry in particular and financial system in general.