VATINS2205 - What is insurance for the Purpose of the Exemption: General

The ruling made during a court case involving the Department of Trade in 1978 givesuseful criteria for establishing what is insurance. We have adopted this as a workingdefinition:

Medical Defence Union

The case involved the Medical Defence Union (MDU) against the Department of Trade, andsought to establish whether the MDU were carrying on an insurance business. To resolvethis it was necessary to determine if the contract between the MDU and its members was oneof insurance. The judge decided that if there was to be a contract of insurance there hadto be, on the occurrence of some event, a right to receive money or money’sworth (VATINS2210). This was expanded to includethree specific points:

• the contract must provide that the insured will become entitled to something on the occurrence of some event;
• the event must be one which involves some element of uncertainty (VATINS2220); and
• the insured must have an insurable interest in the subject matter of the contract (VATINS2230).