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History & Practice of Ins. BIT 87

History & Practice of Ins. BIT 87

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Published by Surinder Bhagat

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Published by: Surinder Bhagat on Dec 15, 2010
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  • Classification of Risks Classification of Risks
  • Insurance Market« Insurance Market«.
  • Insurance Terminology Insurance Terminology
  • Insurance Terminology«« Insurance Terminology««.
  • Documents Documents--Policy«« Policy««.
  • Role of Insurance Role of Insurance

History of insurance and concepts

Insurance: A promise of compensation for specific potential future losses in exchange of a consideration.


Trade across various continents and countries has been prevailing since ancient Times It appears that in 3000 B.C., Chinese merchants shipped their goods by boats on river- ways using the current of riverwater. The goods of various merchants used to be distributed in different boats so that if any of the boats crashed against rocks or capsized in sloping down waters, then the loss is shared by all rather than falling on a single individual.  


About 500 yrs later came the concept of transfer of risk from merchants to Babylonian money lenders who charged higher interest to buyer to purchase the goods for export. Exporters faced loss or damage to cargo/ ships by sinking of ship, weather damage, accidents, attack by pirates in the high seas, etc. adversely affecting the business. The moneylenders gave loan at higher rate of interest against the  Pledging of ship (bottomry contracts)  Pledging the goods (respondentia contracts)  The loan money is to be paid back only if the journey was completed. In case the ship or cargo is lost at sea the moneylender agreed to cancel/waive the loan.  

who came to England issued marine insurance on 20. Lombard merchant of Northern Italy. disability or sickness. appears to have been started in Italy sometime in the 13th century and spread to other parts of the world. the Greek and Roman Burial and Benevolent societies called Collegia provided help in meeting the burial expenses to widows and orphans. Later these Collegia developed into guilds which issued contracts to member for payment in the event of death.HISTORY««     Around 300 B.9.1547 .INSURANCEINSURANCE. Marine Insurance is the oldest of the modern branches of insurance.C.

ShipShip-owners seeking insurance and the individuals who organized themselves into groups of underwriters found the coffee houses of London convenient meeting places. . This is how the term ¶underwriter· came into being.HISTORY««    ShipShip-owner or cargo owner used to write the description of the ship or the cargo as the case may be on a sheet of paper with details of goods/ship. Those who agreed to accept a portion of the risk wrote their names under the description of the risks and put their terms of the agreement.INSURANCEINSURANCE. destination and other related information.

G.INSURANCE HISTORY««  In early 1688 one of the coffee houses owned by Edward Lloyd. the Institute of London Underwriters (ILU) came into existence. it excluded war risk from the coverage In 1894.1982     . soon Lloyd. (ship & Goods) policy forms By 1894 the London Market became dominating the marine insurance. which came into effect from 1. Lloyds were the pioneers having issued S. Underwriters later entered into agreement with Lloyds to create Lloyd·s Exchange. ILU simplified the policy form and revised Institute Cargo Clauses.1. became the leading meeting place as it provided facilities to underwriters. Modern marine insurance had its origin in 1779 AD.

in US was a Mutual insurance Co.HISTORY«.. First successful fire insurance Co. which destroyed the London city for five days. founded in 1752 by Benjamin Franklin and a group of his associates    . provided impetus for modern fire insurance After the fire an English Nicholas Barbon entered in the construction business of rebuilding the London city and also started Insuring the newly built houses against loss by fire.INSURANCEINSURANCE.  Fire Insurance in the modern era can be traced to Germany where a fire association known as the Feuer Casse was orgainsed in 1591 Great Fire of London broke out in 1866.

In 1886 came the liability insurance to employers against the employees prompted by the labour related laws passed by various States.INSURANCEINSURANCE.  First Accident Insurance policy was sold by a chartered Company found by British Parliament in 1848 to sell protection to rail/road travelers In 1866 came boiler explosion cover issued by Hartford Steam Boiler Inspection and Insurance Co..HISTORY«.   .

 In 1889 came the public liability insurance Motor liability insurance came in 1898 and first motor damage insurance came in 1899 A concept developed where the losses of few shall be shared by many contributing small amounts   ..INSURANCE HISTORY««.

Fundamental risks Accident Death Disablement Theft/Robbery Fire. etc.Probability of Loss.RiskRisk. etc Pure risks   ResultResult.Outcome may be Adverse from expected result Probability of financial Loss/ Expenses May be adverse or better in long  ? UNCERTAINTY .Uncertainty LossRisks      Risks Failures Unemployment Price rise Economic changes Political changes.

social. bank robbery RiskFundamental Risk.economic.Change in fashion. dishonesty of a Riskperson . Speculative Risk . income and Riskoutput.Classification of Risks       Pure Risk.no change in economy. loss or no loss).a house on fire. motor acdts. technological changes Static Risk.fire . etc.changes in price level.(no gain. Riskloss)acdts. stock trading. leading to either gain or loss Particular Risk. political changes RiskDynamic Risk.

compensation and legal expenses .Types of Pure Risk  Personal Risks     Risk of premature death Risk of insufficient income during retirement Risk of poor health Risk of unemployment  Property Risk  Direct Loss  Indirect (consequential) Loss  Extra Expenses  Liability Risks.

Risk of trade is insurable as it is already assessed. Trade risk is yet to be classified and hence majority of these are not covered. political factors etc.. . A TRADE RISK is a risk of loss inherent in the trade itself.What Risk of a business can be covered ? A RISK OF TRADE is a loss due to a specified event say fire.. Broadly speaking we can say loss of profit as a result of change due to market collapse. These are classified and their frequency in already assessed. storms burglary etc.

ofacdt. collision. Marine Insurance. Risk and Insurance of people It is noted from the history that different groups . Liability. Various methods used in the past until insurance was found to be right choice to get protection from heavy losses Insurance was used as a tool of risk management The insurance was thus classified in different categories.Fire categoriesInsurance. Traders/exporter by sea or water faced similar risks-Sinking of risksboat. Risk: The likelihood of loss in future. etc. etc. No doubt precautions and loss control (Risk Management) were also adopted.Fire.. which may or may not future. piracy Dwellers faced different but similar risks. etc risksMotor owners faced the risks of. Motor Insurance.Motor acdt.. lightning. happen was the cause of concern to public.        facing similar risks came together to contribute for the losses of few of them.

Loss = Rs.60.e. .Concept of Insurance Insurance is based on this conceptconcept transfer of risk from an individual to a group or community  Sharing of loss by all on equitable basis  200 motorbikes in a town valued Rs.. V=total value.60..000/6000000x100 = 1% on value.  Rs.. Rs.300  but is that all ?.  Each member to contribute= 1% of Rs..000 each.30. 02 motor bikes are either stolen or totally damaged every year.000 i.  Rate of contribution= L/Vx100.30.000... L= Loss..

600 per member to meet expenses and deviations So. insurance is an economic device whereby an individual substitutes a small contribution for a large uncertain financial loss It eliminates the risk of financial loss that an individual may suffer by loss/damage to his property   . To avoid such situations.Concept of Insurance««. the contribution can be suitably increased to Rs. the contribution can be taken in advance To organise a system it shall require some expenses as well It is also possible that the estimate of loss of only two m/c may deviate To solve it. from individual point of view.      It is possible that after a loss few members do not pay.

How Insurance Co. use Concept of Insurance  Insurance Companies work on large scale and in an organized manner Collect premium contribution in advance from a large number of members Compensate the few sufferers Collect/maintain statistical data to find the behavior of various categories of insurances or policies and segments of insured members    .

While fixing premium or contribution. provision for future contingencies and profit in the rate of premium Sell the different insurance products in large numbers to spread the risk To invest the idle or surplus funds available with insurer to earn an investment income .How Insurance Co.       Use probability theory to predicts the expected loss and analyse it Fix the premium in a scientific manner based on past data analysis and changes expected for each product. The rate should be near accurate otherwise Insurance Company shall suffer a loss. addition is also done for administrative expenses. use Concept of Insurance«.

how many times the same onkind of event is repeated over a large number of trials The events to be examined are those which are uncertain.Probability theory / Law of Large Numbers  Probability theory is based on. should have large volume of data of a longer period. may happen or may not happen (between 0 to 1) The frequency with which an event happens or repeated reflects the actual probability of an event occurring in future if the cases involved (observed) are larger The larger is the sample under examination. Insurance Co. the more accurate shall be the estimate of probability.    .

Administrative expenses in procuring premium. and profit The rate of contribution is accordingly added/loaded to meet these expenses and profit.Probability theory / Law of Large Numbers«  There should be larger contributors or insurance contracts to which law of probability shall be applied (large no.   . provision for contingencies. other management expenses. of policies should be sold) Expenses incurred by Insurer . taxes.

but the variation of loss per year is different: Loss per year 7.10/1000=.01 probability10/1000=.Probability theory / Law of Large Numbers«« But if we study Two small samples.1000 houses each samples Yr burnt houses (I) burnt houses (II) 1 07 16 2 11 04 3 10 10 4 09 12 5 13 08 Total 50 50 Chance of loss 10 houses/yr/1000 10 houses/yr/1000 Estimate of probability. .01 same in both cases.13 04-16 04 This problem can be reduced by the insurance companies by observing a larger sample over a period of large number of years and adjust the probability with margin of errors or variations.

Actuaries work on the law of probability and the expected deviations to arrive at the price or rate of premium so that the insurance cos. do not suffer the loss by selling its products.  .Probability theory / Law of Large Numbers««   WHAT If things may not happen in the future as they were expected ? Then the estimate of probability used to calculate the price may be inaccurate and contribution (premium) may be insufficient to meet the liabilities and expenses.

counter balance of risk Security Relief from the burden of uncertainty  Freedom from worry of financial loss From the point of view of society: A mechanism which relieves the society: individual citizens.Definition of Insurance  Individual Point of view: An economic device whereby the individual can view: substitute a small relatively definite cost (premium) for a large uncertain financial loss. and the industry from the burden of carrying on themselves the various risks they are likely to face from day to day. Insurance reduces the risk and uncertainty for the society as a whole Spreading of loss to a large number of similar units/policy holders which is affordable Prediction for the price charged is based on scientific predictions based on statistical data to be sufficient to meet losses and expenses in future     . Insurance provides:  Security.

comforts. old age. Insurance is counter balance of risk and provides social security The entrepreneur is in a position to continue the business fearlessly and contribute to growth of the Economy. etc. Life Insurance provides relief and takes care. floods. . disease. breakdowns.Purpose and Need of Insurance      Assets are created with efforts and generate income. acdts. acdts. disability. services etc. Death. cause lot of hardship to individual and society. EQ. Insurance provides protection to economic value of assets in case of an accident( fire. etc) The loss so caused may not be bearable for an individual but the contribution to Insurance fund or price is made far less and affordable Human beings are also assets.

   For society it helps in reducing the uncertainty of risk Reduce financial burden on the society by providing financial help to dependents on death of earning member and lumsum amount on maturity or pension to surviving old citizens By predicting the future losses more accurately and making necessary rating/premium structure which is affordable   The accuracy of insurers· prediction of future losses is based on Law of large numbers. the risk could be wisely spread to have less adverse impact on the price of Insurance . the probability of loss can be predicted near accuracy. By analysing the past experience of a large number of homogenous exposure units over a long period.  By selling their products over different segments and wide geographical area.Purpose and Need of Insurance««.

housing and other infrastructures of the country and contribute to economic development of the country. builds huge funds for long term savings (Policies) of public and channelise into investing in different projects meant for economic growth Insurance Cos. and immediate payments/compensations are made available to policy holders on loss/damage so as to enable them to carry on their economic activity. also invest in Govt. Insurance provides security/protection to individuals as well as to Industries. Investments are made into Insurance policies by public Insurance Cos. Ins. Premium is held in trust by Ins. Cos. securities . thus protecting their capital and help development .Role of Insurance in Economic Development      For economic development Investments are necessary.

Insurance removes the fear. Industrial safety organizations for risk management advices Insurers arrange pre-insurance risk inspections and suggest preimprovement in the risk to control/reduce the risk Invisible export ***************     .Role of Insurance in Economic Development«.  Risks create uncertainty in future and is severe handicap in economic activity.. worry and anxiety of uncertainty and encourages entrepreneurship Lending of money by banks and financial institutions is made easy and Insurance provides them collateral security Insurers participate with several loss prevention.

life and non-life. surveyors. other distribution channels. TPAs.brokers.. Insurance Councils. companiesnonReinsures. Ombudsmen. Educational Institutions . Medical Examiners. Buyers of Insurance.Insurance Market            Insurance companies. Corporate Agent. IntermediariesIntermediaries. IRDA.

   . were established to make general insurance business operationalise in India. both Indian and Foreign Govt.1973 a single holding co. employing large number of employees and huge no.Insurance Market««  World over there are thousands of Insurers with large volumes of capitalisation and funds. before nationalization of general insurance Cos. there were 107 companies operating in the market. In 1971 and brought General Insurance Business (Nationalization) Act.General Insurance co. took over all the Cos.1. of people and business organisations as buyers of insurance products In India.. 1972 to regulate the general insurance business in India.Corporation of India with 4 subsidiary Cos. From 1.

.HO at Kolkata  The New India Assurance Co.    GICGIC.OperationsOperations. had similar structure with 4 tiers  Branch office Divisional Office Regional Office Head Office at top. Aviation business.general insurance business. The four subsidiaries operated under the overall direction of GIC  The National Insurance Co. Ltd.each subsidiary co. Underwriting limits and financial powers were well defined so that proposal and expenses are taken care of at the appropriate levels smoothly and expeditiously.-Policy matters relating to entire Mumbai.HO at Mumbai.Ltd.HO at New Delhi  The United India Insurance Co.HO at Chennai Ltd. Ltd..HO at Mumbai Ltd The Oriental Insurance Co. .Insurance Market««. Ltd. LtdLtd. crop insurance.

to settle or scrutinize the claim for final settlement. A cap on the capital investment by foreign insurers up to 26% was fixed to participate with any Indian Ins. officers at different grads were provided with financial authority on behalf of Co.Insurance Market««   Previously for claims. Direct business could brought directly by Tied Business officers. Insurance business/premium was procured from the market through insurance agents and development officers of the Company. IRDA allowed private sector to open & register insurance companies and conduct the insurance business. In India Insurance business is regulated under The Insurance Act. In 1999 vide IRD Act this Act was amended and an Insurance Regulatory and Development Authority was established to regulate the Insurance business. Co. 1938.   .

23 InsurerECGC 01 Reinsurer. motor owners. commercial establishments. etc. or the entire population in a way or the other. traders. factory owners.Insurance Market««  At Present:     Life Insurer 23 NonNon-life Insurer. .property policiesowners.GICReinsurer.GIC.01  Buyers of general insurance policies. professionals.

training. 1956  A bank. Coop. Licensing of Agent with fee. Society  Panchayat/Local authority Panchayat/Local  NGO or as approved by the IRDA   . Renewals. Regional rural bank.their educational qualification. disqualifications. pre-recruitment examination and code of preconduct. validity period of the license.  Intermediaries were introduced by IRDA Act through various regulationsregulationsAgentsAgents. Corporate AgentsAgents A firm  A company formed under Companies Act.Insurance Market«. Bank. Coop.

Insurance Market«. Remittance of premium collected from the client should be deposited by the agent with the concerned Insurer within stipulated time. The agent shall get a remuneration as specified by IRDA for the class of business    .  Practical training and examination for the corporate insurance executive and the staff meant to procure the insurance business Code of Conduct is laid down for the Agents in conducting insurance business.

00.         BrokerBroker.25. Minimum amount of capital: Direct Broker Rs.Insurance Market«.000 Composite Broker Rs. 50.000 Reinsurance Broker Rs.250.000 Foreign participation can be up to 26% only Remuneration shall be specified by the IRDA from time to time .00.Direct Brokers and Reinsurance Brokers A broker can be an individual or a firm whose fulltime occupation is to place insurance business to various Insurers.00.

Insurance Market«. .A risk surveyor or loss Surveyorassessor is very helpful in prepre-acceptance risk inspection to advise Insurer about various features of the risk to help insurers to underwrite a proposal. and also assess the amount loss payable at the time of loss/damage occurred by an insured peril.    Insurance Surveyor.

TPAs. promote and ensure orderly growth of Insurance Industry in the country. IRDA to regulate.insurers.  Medical Examiners: For life insurance. Doctors for insurance and claim settlement. It has authority of issuing license to. etc.Insurance Market«. Health insurance they are called to examine the insured persons and certify their health and insurability. brokers. In General insurance cattles are examined by Vet.   .. agents..

Now the role of TAC is to collect statistics of the Industry .Insurance Market«. It has also standardized the wordings of different policies. terms and conditions of different insurance policies. etc. All Life insurers are member of Life Insurance Council and similarly all Non-life insurers are member of General Insurance Council. 1938 to regulate premium rates. However with detariffing every insurer has its own rating system.Formed under Insurance Act.IRDA is advised by insurance councils in insurance Industry matters. advantages. TAC.   Insurance Councils.

then the ombudsman shall pass an award in 3 months to which the complainant shall give his acceptance The award of ombudsman is not binding on complainant .cases upto financial limit of Rs.Insurance Market«. 20 lacs Its a redressal system of public grievance ² to resolve grievances of policy holders against Insurer.        Ombudsman.. Brokers efficiently with least expenses Ombudsman is a counsel and mediator and decides on the basis of facts of the case submitted by both parties to dispute Lawyers are not allowed to argue the case on their behalf The insurer has to comply with the recommendations of ombudsman within 15 days If recommendation of Ombudsman is not accepted by the complainant.

.Associate & Fellowship The Institute of Actuaries of India Chartered Insurance Institute London Chartered Property Casualty Underwriters Society-USA Indian Institute of Insurance & Risk Management Indian Institute of Surveyors & Adjusters .        Educational Institutions Insurance Institute of India.Insurance Market«.

The object of contract must be legal. Minors and persons of unsound mind cannot enter a contract. ConsiderationConsideration. etc) Insurer is the accepter of proposal to perform certain services or provide the financial cover on happening of an event causing loss.Both parties should be competent to enter into a contract.Insurance Transaction   Insurance contract is a legal contract Offer & Acceptance.Insurance contract/(policy) shall reflect the agreement consentand free consent of both parties. liability. Legal object.proposal form to offer Acceptanceproposercoverage to the risk affecting his interest (property.Insured is the proposer.Both parties must understand the partiessubject matter of insurance and coverage provided including dos and don'ts CapacityCapacity.Premium is the consideration paid by Insured and promise to indemnify/(compensate) on happening of an event is the consideration from Insurer Free consent.stolen goods cannot objectlegalbe insured      .

Insurance Transaction«« Risk/subject matter Intermediaries(help) u He alone knows about s/m b Describe the risk properly I n Ask for the cover required s Look for the insurer who can offer better service and price Insured Insurer Rely/trust on what is told about s/m Can make enquiries/inspection Decide about cover to be offered Decide the price to be charged .

etc. survey or medical examn.Insurance Contract        Only Insured (proposer) knows about the risk or s/m of insurance He must tell everything about the risk and not withhold anything.. Type of coverage to be granted to insured suiting him. . The price at which the cover to be granted to insured. to Insurer Insured must know what coverage is required so that agreement and free consent could be developed Selection of Insurer shall depend upon price. service and security Insurer should understand the risk or s/m and in case of confusion may make enquiries and physical inspection .

Insurance Contract  Insurance Contracts are further subject to certain principles Utmost good faith Insurable interest Indemnity Proximate cause     .

Insurance Terminology Insurance Insurer Proposal Premium Consideration Underwriter Policy Endorsement Subject matter of Insurance Risk Peril Sum Insured Term/Period Conditions Assignment Liability Claim Premium Reserve Gross Direct Premium Premium Ceded Net Premium (Business) Expense Ratio Loss Ratios Mortality Lloyd·s ( Institution in London) Mortality (Death Rates) Morbidity (other than death loss rates) Protection & Indemnity Associations Actuary Warranties Representation Ex-gratia .

Market Agreement Renewal Cover-note Certificate of Insurance Declarations Open Policy Specific policy Floater Excess/Deductible IBNR Salvage Coinsurance Reinsurance Total Loss Constructive Total Loss (CTL) Abandonment Average Actual Total Loss Particular Average No claim bonus Malus Replacement Valued Policy/Agreed Value Policy Unvalued Policy Full Value First Loss Increased Value Insurance Time Policy Voyage policy Institute Cargo Clauses Inland Transit Clause Solatium fund Arbitration Copayment .Insurance Terminology««.

is an offer to purchase an insurance formProposal form contains questions designed to elicit all material information about the particular risk ( s/m of insurance) Common questions in different types of proposal forms: Name & address of the Proposer. .DocumentsDocuments. occupation. etc.Proposal form               Proposal form. age Address of Business location Description of trade business or profession carried Details of Subject matter of insurance Sum insured Past claims Past insurance history and if any insurer refused cover Period for which insurance cover is required Prohibition of rebate (payment of commission) Declaration about correctness of the answers Signature of the insured. date.

product stored/manufactured. yr of manufacture.  voyage or mode of transit..  past claim experience. layout plan of various blocks/buildings. etc. . MarineMarine. age height and weight. etc. geographical area of operation.Proposal is not essential but the following details are given by insured to effect marine insuranceinsurance Name of shipper or client.  cover required and conditions of insurance  name of vessel. Personal Acdt. MotorMotor. full description of the goods to be insured.Occupation of insured person.Proposal form««. physical defect/disability.Cubic capacity (power). occupancy and situation of premises.  sum to be insured.  Method of packing. carrying capacity of the vehicle.  Other questions will depend upon class of insurance:     FireFire-Construction./ Mediclaim . etc. etc. past claim experience.

Policy        Insurance Policy.The Insurer promises to indemnify clauseon occurrence of an event insured against in the schedule ExceptionsExceptions.Exclusions applicable to the contract  . Insurer and Insured. Proposal made by insured and is a basis of contract Premium having been paid or agreed to pay in advance Insurer shall provide cover detailed in the policy Operative clause.DocumentsDocuments.an evidence of Insurance Policycontract HeadingHeading.name & address of Company and its logo Preamble or Recital Clause ² Introduction of the parties to the contract.

 Policy Schedule.policy is signed clauseby authorised signatory Policy Conditions . conditions or aspects of cover    Attestation or signature clause.Name & address of the Scheduleinsured Nature of business/profession  Period of insurance  Premium amount sum insured/ limit of liability  Policy number  Date of issue of policy  Description of property insured  Reference to any special exclusion.Policy««.DocumentsDocuments.

schedule and policy wording. The Operative Clause will not appear in every policy.  The operative clause This will outline the circumstances under which the insurance is active.Policy««  The recital clause The recital clause is designed to introduce and identify the parties and to bring the various elements of the policy together such as proposal. and may contain information pertaining to the policy exclusions and any excesses/deductibles applicable to the policy. The Operative Clause will outline the perils of the policy (exactly what is covered under the insurance). This clause is often today incorporated within the operative clause (see below). This section is sometimes referred to as the Insuring Clause.DocumentsDocuments.  . but will always be recognizable due to the information that it contains. especially those that are formatted as a scheduled policy.

 Renewals. The endorsement is part of the policy. In motor Insurance coverage is important as vehicle cannot ply without insurance cover It states the insurance is in force and brief details of cover    CertificateCertificate- In motor a certificate of insurance is required giving details of policy. etc. etc. .    Change in sum insured.Documents«««  Cover note. period of insurance  In marine insurance again a certificate can be issued to certify coverage granted to insured.An informative notice from insurer to insured nearer to Renewalsexpiry of the policy. a document is issued specifying the changes applicable to the policy during the policy period. Cancellation of insurance.For any modification in terms and conditions of the Endorsementpolicy. motor vehicles.A document issued to acknowledge the coverage granted noteand in force to the insured pending issuance of policy. change of address Change of insurable interest on sale or death. with details of property and renewal premium  Endorsement.

hurry worry and curry ! momentsThe Japanese eat very little fat and suffer fewer heart attacks than the British or Americans. . ³ It's English that kills you ´. The Chinese drink very little red wine and suffer fewer heart attacks than the British or Americans.Lighter moments. On the other hand. The Italians drink excessive amounts of red wine and also suffer fewer heart attacks than the British or Americans. Conclusion: Eat & drink what you like. the French eat a lot of fat and also suffer fewer heart attacks than the British or Americans.

When the encroached drains could not contain rains for 2 days. Human life and material possessions are constantly exposed to loss or damage due to the mechanizations of fortuitous circumstances . why should I go for insurance? An example of impossibility can be quoted say the 9/11 incident where insurance companies were washed out. Hyderabadis never in their dreams thought of taking cover for flood. the resultant floods had washed away score of vehicles. Risk is inherent in human existence.. So.It has not happened for years together. property etc.

Classification of General Insurance Business     Broad classification: Fire Insurance Marine insurance ( Cargo and Hull) Miscellaneous Insurance              Motor insurance Theft/Burglary insurance All Risks insurance Money Insurance Personal Accident insurance Health insurance Glass insurance Liability insurance Professional Indemnity Insurance Fidelity Guarantee insurance Business Interruption insurance Package insurances.House. shop insurancesEngineering Insurance  Standard insurance policies to cover the financial losses caused by various perils were devised over a period of time: . office.

Fire Insurance Insurance- .Fire insurance policy.to cover loss to assets policyand stock caused by fire and allied perils Factory Insurance.

Loss of profit insurance This policy offers a solution by covering profit lost due to reduction in turnover arising from interruption of business following damage to the property insured. due to fire or machinery breakdown . This policy can be taken only in conjunction with Fire Policy or Machinery Breakdown policy.

Marine/Transit insurance policy.Loss/damage to policygoods dispatched whilst in the transit from one place to another place .

Hull InsuranceInsuranceCovers any loss or damage to ships. fishing boats and sailing vessels. smaller vessels. bulk carriers. tankers. .

Hull insurance for coverage to vessels/ships Gas Tanker/Vessel .

Theft by use of force policyto contents in the business premises or stores .Burglary insurance policy.

. etc.House. Specially designed to meet the insurance requirements of a householder. office.Package insurances .

It is a single policy combining the various insurance requirements of shopkeepers. .Shop Insurance.This is a package policy Insurancespecially designed for small shopkeepers.

Insurance policy.Personal Acdt.Accidental policydeath. disablement to individuals and in group due to accidents .

Flight Insurance.PA cover Insurance- .

Private Car InsuranceInsurancecovers Legal liability as per MV Act and also covers loss or damage to the insured vehicle and its accessories .

Expenses incurred insurance/Mediclaimfor hospitalization due to accident or disease .Health insurance/Mediclaim.

.Travel InsuranceInsurance- Covers Medical Expenses whilst traveling abroad for business / holiday / employment / studies.

Money whilst taken from office to bank and vice versa and money kept in safe after office hours Cash in transit and cash in safesafe- .

Machinery Breakdown Insurance.loss/damage to Insurancemachineries due to breakdown .

Electronic Equipment Insurance This is a specially designed policy which covers accidental loss or damage to electronic equipment. .

Contractors Plant and Machinery Insurance . .y covers all different types of machinery used for handing material or construction.

specially Insurancedesigned to give financial protection to the Civil Engineering Contractors in the event of an accident to the civil engineering works under construction. .Contractors All Risks Insurance.

Storage cum erection insurance.Coverage insuranceagainst loss/damage whilst the plant and machinery is being erected or installed .

Marine Cum Erection InsuranceInsurance- .Project insurance including transit of Plant and Machinery and other equipment or materials. Covers all physical risks which a project is exposed to during storage and erection.

.Employer·s Insurancelegal liability towards employees due to accident whilst on duty The policy covers statutory liability of an employer for the death of or bodily injuries or occupational diseases sustained by the workmen arising out of and in course of employment.Workman compensation Insurance.

Fidelity Insurance.to cover the losses to Insuranceemployer by dishonesty of the employees .

This policy Insuranceis meant for professionals to cover liability falling on them as a result of errors and omissions committed by them whilst rendering professional service. .Professional Indemnity Insurance.

public liability Policy covers insurancethe amount which the insured becomes legally liable to pay as damages to third parties as a result of accidental death. loss or damage to the property belonging to a third party. bodily injury.Liability insurance. .

Product Liability InsuranceInsuranceconsequence covers all sums (inclusive of defence costs) which the insured becomes legally liable to pay as damages as a .

Directors and Officers Liability Insurance. These directors and officers in pursuance of their duties may take some actions which may be in violation of certain statutes or Indian Laws.This Insurancecover is suitable for those Directors & key officers who are in a decision -making position. .

disappearance. Aviation InsuranceInsurance- .The policy covers all physical loss or damage sustained by the insured aircraft including total loss. All losses are paid subject to deductibles.

covers all kinds of Insuranceaccidental breakages of the plate glass fixed to display windows or show cases of commercial establishments. .Plate Glass Insurance.

Indemnity under the policy Insurancewill be the sum insured or market value prior to illness whichever is less. .Cattle Insurance. The indemnity is limited to 75% of Sum Insured in case of a PTD claim.

Precaution is better than cure.I have a curemediclaim insurance policy to get the best treatment .

& don'ts. Come into action .Is the claim payable ? All the dos.

Quick disposal of a claim ! .

Is there any insurance ?

Role of Insurance

Fire Insurance  


Standard Fire and Special perils Policy
Provides coverage against specified perils namely: Fire Lightning Explosion/Implosion Aircraft damage Riot & Strike Malicious damage Bush fire Storm, tempest, flood, inundation, etc. Impact damage by others· vehicle Subsidence, landslide, rock slide Bursting & Overflowing of water tanks, apparatus, pipes Missile testing operations Leakage from automatic sprinklers RSMD cover, Flood etc. can be excluded Terrorism cover can be granted on payment of addl. Premium with RSMD Excess of 5% of each claim or Rs.10000 in case of Act of God; Rs.10000 in other cases 

Temporary removal of stock. along with following Deterioration of Stock in cold storage due to supply failure or change in temperature caused by the insured peril Forest fire. start up expenses . Earthquake. Addition expenses of rent for alternative accommodation. Omission to insure. addition. Loss of Rent. coverage can be granted by charging additional premium. surveyor·s consulting engineers fee upto 3% of claim amount Removal of debris up to 1% of claim amount In excess of the above limits. Impact damage. Spontaneous combustion. spoilage material damage cover.Fire Insurance««       Free coverscoversArchitect·s. alteration.

One crore and at any one place Rs. 25 lacs  Declaration of stock lying in godown to be submitted to Insurer in the next month  Declarations to be averaged out and premium adjusted accordingly  Premium retention 50% of the provisional premium  .Different Fire policies  Reinstatement Value Policy  Sum insured should represent the reinstatement or replacement value  No depreciation or wear and tear shall apply Declaration Policy for stocks/stores  Minimum S I Rs.

With 10% discount on the premium Business interruption policy.Gross profit (Net profit+ policyStanding charges) is insured against business interruption caused by insured peril   .Different Fire policies««.  10% extra shall be charged on total premium as floater extra Long term policy -for Dwelling/Home insurance for 3 yrs.  Floating policy  One sum insured floated over more than one godown  Highest rate applicable to any godown shall be charged on S I.

Inland Transit  Inland Transit Clauses.Air Clause Duty Insurance     DomesticDomestic. C ClausesInstitute Time Clause (Hulls) Hull Insurance. etc.Vessels. B. Barges. C Clauses Institute Cargo Clause. Insurance Postal Consignments .A.Marine Insurance   Cargo Insurance: OverseasOverseas.A. B.Import or Export Institute Cargo Clauses.

Washing overboard Sling loss Entry of sea. grounding.Marine Insurance. Volcanic eruption or lightning.Import/Export Insurance         ICCICC-C: Covers providedprovidedFire or explosion Stranding.B: In addition to the above Earthquake. sinking of the vessel or craft Overturning or derailment of vehicle Collision or contact of vessel or conveyance with an external object Discharge of cargo at port of distress General Average Salvage charges Jettisoning      ICCICC. lake or river water into vessel or craft  ICCICC-A: All Risks except exclusions specified in the clause .

fragile item/precious item Packing in detail. liquid. drums or barrels.Material Information for Rating & Underwriting       Proposal form is not necessary. etc. loose packing. insurednonnon-hazardous. in container. cardboard cartons or in bulk.in bales or bags. crates. Standard packing combat every level of rough handling. solid. cases or detailbundles. climatic and environmental hazard . a letter proposing for insurance policy or a declaration form is submitted with following information: Name of proposer/consignor/Insured Full description of goods to be insured Nature of commodity to be insured.Hazardous.

Rail/Road. Postal receipt If transshipment required Is it entire transit or a tail end risk ² details of ocean coverage  Cover Required: The risks required to be insured against . consignment Note. via.. etc. B/L.RATING & UNDERWRITING«. Voyage and Mode of Transit:      Journey from« and to . or it may be a combination of two or more Name of vessel. Mode of conveyance to be used.by rail/road/sea or usedby air.   Value of the interest (s/m) to be insured with breakup ² CIF+10% plus duty. Airlines... AWB.

Collision or contact of vessel. (B) & (C) Type of risks Covered (D) not covered (U) (D (U Loss / damage reasonably attributable to: 1. (B) & (C) A comparative analysis of the institute Cargo Clauses (A). 4. Vessel/Craft being stranded. craft or conveyance With any external object other then water. Fire or explosion 2. sunk or capsized. Overturning/derailment of land conveyance.Comparison between the institute cargo clauses (A). Discharge of cargo at a port of distress 6. D 5. General average and salvage charges incurred to avoid loss from any cause except those excluded 8. General average sacrifice A B C D D D D D D D D D D D D D D D D D D D D U D D . 3. volcanic eruption. Earthquake. grounded. lightning 7.

11. storage. In the event of frustration of the voyage resulting from a risk covered. 15. lake or river water into the vessel. Entry of sea. (Can be covered by malicious Damage Clause for I. 12. 16.C (B) and (C) upon payment or extra premium) 16. Deliberate damage or destruction by wrongful act of any person or persons. 13.C. craft. container. hold. 12. conveyance. Piracy. craft. Washing overboard 11.e. lift van or place of storage. Total loss of any package lost overboard or dropped whilst loading or unloading from vessel or craft. extra charges incurred in unloading. Piracy. 10. 15. by malicious acts) (i. Rainwater damage 13. storing and forwarding to destination D D B D D C D U D D D U U U D D D D U U U U U D D D .A 9. Jettison 10. 14. (i. 14.

oils and acids. leakage.  crumpling. rust. for example: example:  Damage as a result of shifting in heavy weather  Improper stowage  Rough handling  Breakage. mould. crushing. Reasonable charges for averting or minimizing loss recoverable under this insurance and also those incurred.A 17. denting. Other or extraneous perils all involving a fourtuity and from external causes(s). chipping. to pursue recovery rights against carriers. 18. parties. mildew. 18. damage by  other cargo B C D D D D D D D D D D D U U U U U U U U U U U U U U U U . bailees or third parties. county damage  Hook and sling damage  Contact with mud. chafage  Heating sweating  Infestation. scratching.

19. pilferage. D D D . Lading.A ‡ ‡ Shortage. theft. liability under ³Both to blame collision´ Clause of Bill of Lading. non-delivery nonOther loss/damage caused fortuitously and from external cause or causes D U B U C D U U  19.

Inland Transit Domestic Inland Transit Clause C.Provides physical loss or damage to Bthe insured·s goods caused bybyFire. collision with or by the carrying vehicle. overturning of the vehicle or derailment or accidents of like nature to the carrying railway wagon/vehicle Inland Transit Clause A. breakage of bridges.Marine Insurance Domestic.Provides cover for the risks of fire Cand lightning only Inland Transit Clause B. lightning.Provides cover for all risks except Athose specifically excluded       .

Charterers or operators Nuclear Perils Malicious Damage War and SRCC . breakage. wear and tear.Exclusions          Loss or damage to willful misconduct of the assured Ordinary leakage. ordinary loss or weight/volume Insufficiency in packing Inherent vice Delays Loss due to financial default or insolvency of the vessel owner.


Features of Package Policies. Risks Covered: Fire. AC. accessories and extra fittings are covered against the risks specified. They are covered only when they are on the vehicle at the time of an event.Pvt. etc.are those parts which are directly supplied by the manufacturer along with vehicle but are not essential for running of the vehicle. explosion Self ignition or lightning. Car PoliciesSection I . guards. (Steppny.) Extra fittings. other electric or electronic items. like Music system. housebreaking or theft    . too kit. Burglary.Risks Covered    The vehicle. AccessoriesAccessories.Over and above what manufacturer had fittingsprovided. AC.

hurricane. inundation. typhoon.Risks Covered«««         Riot and Strike Earthquake (fire and shock damage) Flood. rockslide . tempest.Section I. . inlandelevator or air Landslide. frost Accidental external means Malicious act Terrorist act Whilst in transit by road. inland-waterway. rail. hailstorm. storm. lift. cyclone.

50% tyres and tubes.Deduction for Depreciation in respect of parts replaced             For all rubber/nylon/plastic parts. batteries and air bags For fiber glass components 30% For all parts made of glass Nil For other parts including wooden: As per Age of the vehicle Not exceeding 6 months Nil > 6 months but not > 1 yr 5% > 1 yr but not > 2 yrs 10% > 2 yr but not > 3 yrs 15% > 3 yr but not > 4 yrs 25% > 4 yr but not > 5 yrs 35% > 5 yr but not > 10 yrs 40% Exceeding 10 yrs 50% .

failures or breakages Damage to tyres and tubes unless vehicle is damaged at the same time. loss or damage to accessories by burglary.Exclusions under OD Section I      Consequential loss. In Comm.there is no liability for damage caused Vehicleby overloading or strain of the motor vehicle-( by vehiclepassengers or load) . mechanical or electrical breakdown. wear and tear. Vehicle. liability is 50% of the replacement cost The driving the vehicle is under the influence of intoxicating liquor or drugs In case of Two wheelers and Commercial Vehicles. depreciation. housebreaking or theft is not covered unless the vehicle is stolen at the same time. In car it is covered.

IIdamagelimit can be increased on payment of Prem.Rs.T P Liability II     Section II.1(ii) Property damage. in respect of  For two wheeler Rs. 01 lac  For Pvt.5 lacs For Comm.1(i) Death or Bodily injury. 7. 7. will indemnify any driver who is driving the vehicle with insured·s permission ( with effective D/L)  .As per MV ActIIinjuryActUnlimited Liability In Pvt. Vehicles Rs.Section II.5 lacs  For Comm. Vehicles the death or bodily injury to third party and property of third party is also covered whilst loading and unloading within the limits of carriage way or thorough fare as described Co. Car the occupants are also covered provided they are not carried for hire or reward II. 6000. Car Rs.

Features of Package Policies.Pvt.  For a limit of liability of    Pvt. III.IV)  Deductibles: Section I.. Two wheeler Rs. Car. Comm. Car Rs.(Private Car & Two wheeler) Compulsory PA IIIcover for owner-driver owner   Who is registered owner of the vehicle OwnerOwner-driver is the insured named in policy holding an effective DL as per MV Act.  Sec. 2 lacs. Vehicles . 01 lac. 02 lacs (Sec. Vehicle Rs.as stated in the schedule separately Ifor Pvt. Two wheeler and Comm. Car and Two PoliciesWheelers««.

Two Wheelers««.Pvt. Car. and The insurer shall not be liable in respect of damage to such towed vehicle nor in respect of property being conveyed thereby Section IV. provided thatthatSuch towed vehicle is not towed for reward. TP liability as per sec II shall be extended to such towed vehicle. Policies   Commercial VehiclesVehiclesSection III..Features of Package Policies.Towing Disabled Vehicles: IIIA commercial vehicle if used for the purpose of towing of any disabled mechanically propelled vehicle.Personal Accident Cover to owner Driver: IVSame as in Private Car Package policy    .

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