An insurance policy: a case study of legal and economic interactions in a transforming economy

Abstract

This article is a case study of an individual insurance policy issued under the centrally planned economy which matured after the beginning of economic transformation. The analysis is useful in understanding the much wider issue of problems arising with continuation of contractual relations in the changing economic and political environment in the post‐socialist countries. The article illustrates the burden of systemic risk with which every investment in transition economies (except perhaps Eastern Germany) is associated through the example of the individual case and solutions which could be applied to it. In the new economic conditions there was no place for unbalanced relations between firms and their customers. Together with the changes in the legal environment of business, this was the beginning of a game of interests between the beneficiary and the insurance entity, neither of which would accept responsibility for the burden of economic changes.