PROJECT REPORT ON FIRE INSURANCE

Bachelor of Commerce (Banking & Insurance)

Semester (V)
(2019-2020)

Submitted By
ANIKET HELE (13)

Project Guide
PROF. VINAY JADHAV

Mithibai College of Arts, Chauhan Institute of Science &

Amruthben Jivanlal College of Commerce and Economics

Bhaktivedanta Swami Marg, Gulmohar Road, Suvarna Nagar,

Vile Parle (W), Mumbai, Maharashtra 400056
 “FIRE INSURANCE”

Bachelor of Commerce (Banking & Insurance)

Semester (VI)

Submitted
In Partial Fulfillment of the requirements
For the Award of Degree of
Bachelor of Commerce (Banking & Insurance)

By:
ANIKET HELE
ROLL NO : 13

Mithibai College of Arts, Chauhan Institute of Science &

Amruthben Jivanlal College of Commerce and Economics

Bhaktivedanta Swami Marg, Gulmohar Road, Suvarna Nagar,

Vile Parle (W), Mumbai, Maharashtra 400056
 ACKNOWLEDGEMENT
To list who all have helped me is difficult because they are so numerous,
and the depth is so enormous.

I would like to acknowledge the following as being idealistic channels

and fresh dimensions in the completion of this project.

I take this opportunity to thank Mithibai College for giving me chance to

do this project.

I would like to thank my Principal, Dr. Rajpal Shripat Hande for

providing the necessary facilities required for completion of this project.

I take this opportunity to thank our Head of Department Mr. Mandar

Thakur, for his moral support and guidance.

I would also like to express my sincere gratitude towards my project

guide Asst. Prof. VINAY JADAV whose guidance and care made the
project successful

Lastly, I would like to thank every person who directly or indirectly

helped me in the completion of the project especially my Parents and
Peers who supported me throughout my project.
 DECLARATION

I, ANIKET HELE the student of T.Y.B.B.I. Semester VI (2019-2020)

hereby declare that I have completed the project on FIRE
INSURANCE.

The information submitted is true and original to the best of my

knowledge.

_____________________
ANIKET HELE
Roll No.: (13)

Mithibai College of Arts, Chauhan Institute of Science & Amruthben

Jivanlal College of Commerce and Economics

Bhaktivedanta Swami Marg, Gulmohar Road, Suvarna Nagar, Vile Parle

(W), Mumbai, Maharashtra 400056
 CERTIFICATE

This is to certify that Mr. ANIKET HELE Roll No: 13 of Third Year
B.B.I., Semester V (2019-2020) has successfully completed the project
on
FIRE INSURANCE
under the guidance of Asst. Prof. Mr. VINAY JADAV

Project Guide/ Internal Examiner Principal

(Asst. Prof. Mr. (VINAY JADAV))

External Examiner
 INDEX

SR NO. CONTENTS PAGE NO.

1 OVERVIEW OF THE TOPIC 07
2 RESEARCH METHODOLOGY 08
3 INTRODUCTION 09-15
4 DEFINITION OF DEVELOPMENT BANKS 16
5 FEATURES OF DEVELOPMENT BANKS 17
6 GROWTH AND EVOLUTION OF DEVELOPMENT BANKS 18-20
7 OBJECTIVES AND FUNCTION OF DEVELOPMENT BANKS 21-24
8 LENDING PROCEDURE OF DEVELOPMENT BANKS 25-28
9 PROMOTION OF DEVELOPMENT BANKS IN INDIA 29-31
10 ROLE OF DEVELOPMENTAL BANKS 32-35
11 IDBI BANK 36-44
12 NABARD 45-53
13 NATIONAL HOUSING BANK 54-56
14 ICICI BANK 57-59
15 EXIM BANK 60-61
16 BIBLIOGRAPHY 62
 EXECUTIVE SUMMARY

Insurance is not the sale of products, but servicing customers. It is a system, by which the losses
suffered by a few are spread over many, Exposed to similar risks. Insurance is a protection
against financial loss arising: on the happening of an unexpected event. Insurance companies
collect premiums to provide for this protection.

A loss is paid out of the premiums collected from the insuring public and the Insurance
Companies act as trustees to the amount collected. The very fundamental principle of spreading
of the risk is actually practiced by the insurance companies by reinsuring the risks that they have
insured.

The opening up of the Insurance Sector to Private Companies, has made available more products
and world class service to Indian Customer. This project has been made with an objective to give
an insight into various facts of General Insurance sector in India. An attempt has been made to
explain the apex body of General Insurance. i.e. General Insurance Corporation of India, its
structure, products and subsidiaries.

Also the review of latest entrants into insurance sector viz private players like TATA AIG
General Insurance Company, Reliance General Insurance Company limited, Bajaj Allianz
General Insurance Company, IFFCO Tokio General Insurance Company, Royal Sundaram
General Insurance Company limited and ICICI Lombard General Insurance Company have been
described in brief, Due to the growth in the technological sector of the country, the insurance
companies have started utilizing these technologies to it’s optimum level.

.
 RESEARCH METHEDOLOGY

OBJECTIVES OF THE STUDY

 To find out the role of insurance sector in indian economy

 To find out what is fire insurance and which are the companies involved in it.
 To know what are the trends in General Insurance.
 To find out the developments in the General Insurance.
 To find out the Procedure of Claims.

METHODOLOGY

 The study was carried out in Mumbai.

 Extensive Library Research was carried out.
 Various Websites were referred.
 Secondary data has been used
 Various books, magazines and newspapers have been referred.

LIMITATIONS OF STUDY

Although lots of care and efforts are made to ensure the fault free study but still there remains
certain limitations which possibly may occur such as

 Lack of time acted as constraint in study

 Lack of development banks in nearby areas also acts as constraint as it's not possible
to get the real exposure.
 Researcher limitations in knowledge are also the limitations of study.
 The study is based on secondary data so any kind of discrepancy in that will cause same
in the study.
 INTRODUCTION TO INSURANCE

Insurance is a tool by which fatalities of a small number are compensated out of funds (premium
payment) collected from plenteous. Insurance companies pay back for financial losses arising out
of occurrence of insured events, e.g. in personal accident policy death due to accident, in fire
policy the insured events are fire and other allied perils like riot and strike, explosion, etc.
Hence, insurance is safeguard against uncertainties.

It provides financial recompense for losses suffered due to incident of unanticipated events,
insured within policy of insurance. Moreover, through a number of Acts of parliaments, specific
types of insurance are legally enforced in our country, e.g. third party insurance under Motor
vehicles Act, public liability insurance for handlers of hazardous substances under Environment
Protection Act, etc.

Insurance, essentially, is an arrangement where the losses experienced by a few are extended
over several who are exposed to similar risks. Insurance is a protection against financial loss
arising on the happening of an unexpected event. Insurance companies collect premium to
provide security for the purpose. As loss is paid out of the premium collected from the insuring
public and the insurance companies act as trustees to the amount so collected.

Insurance companies have standard proposal forms, which are to be filed up giving the details of
insurance company. Depending upon the answers given in proposal form insurance companies
assess the risk and quote the premium. On payment of premium and acceptance thereof by
insurance company the insurance is affected. Nonetheless, there is no insurance cover if
premium is not paid
 LIST OF INSURANCE COMPANIES IN INDIA

LIFE INSURERS Websites

Public Sector

Life Insurance Corporation of India www.licindia.com

Private Sector

Allianz Bajaj Life Insurance Company Limited www.allianzbajaj.co.in

Birla Sun-Life Insurance Company Limited www.birlasunlife.com

HDFC Standard Life Insurance Co. Limited www.hdfcinsurance.com

ICICI Prudential Life Insurance Co. Limited www.iciciprulife.com

ING Vysya Life Insurance Company Limited www.ingvysayalife.com

Max New York Life Insurance Co. Limited www.maxnewyorklife.com

MetLife Insurance Company Limited www.metlife.com

Om Kotak Mahindra Life Insurance Co. Ltd. www.omkotakmahnidra.com

SBI Life Insurance Company Limited www.sbilife.co.in

TATA AIG Life Insurance Company Limited www.tata-aig.com

AMP Sanmar Assurance Company Limited www.ampsanmar.com

Dabur CGU Life Insurance Co. Pvt. Limited www.avivaindia.com

GENERAL INSURERS

Public Sector

National Insurance Company Limited www.nationalinsuranceindia.com

New India Assurance Company Limited www.niacl.com

Oriental Insurance Company Limited www.orientalinsurance.nic.in

United India Insurance Company Limited www.uiic.co.in

Private Sector

Bajaj Allianz General Insurance Co. Limited www.bajajallianz.co.in

ICICI Lombard General Insurance Co. Ltd. www.icicilombard.com

IFFCO-Tokio General Insurance Co. Ltd. www.itgi.co.in

Reliance General Insurance Co. Limited www.ril.com

Royal Sundaram Alliance Insurance Co. Ltd. www.royalsun.com

TATA AIG General Insurance Co. Limited www.tata-aig.com

Cholamandalam General Insurance Co. Ltd. www.cholainsurance.com

Export Credit Guarantee Corporation www.ecgcindia.com

HDFC Chubb General Insurance Co. Ltd.

REINSURER

General Insurance Corporation of India www.gicindia.com

 CONCEPT AND FUNCTIONS OF INSURANCE

Insured, are you? The functions of Insurance will give you an idea on how to go ahead with the
approach of insurance and what type of insurance to choose. In a layman's words, insurance
means, ‘a guard against pecuniary loss arising on the happening of an unforeseen event’. In
developing economies, the insurance sector still holds a lot of potential which can be tapped.
Majority of the people in the developing countries remains unaware of the functions and benefits
of insurance and it is for this reason that the insurance sector is still to grow.

Tangible or intangible – an individual can insure anything! Be it a house, car, factory, or the
voice of a singer, leg of a footballer, and the hand of an author.....etc. It is possible to insure all
these as they have the possibility of becoming non functional by any disaster or an accident.

BASIC FUNCTIONS OF INSURANCE:

1. Primary Functions
2. Secondary Functions
3. Other Functions

Primary functions of insurance

 Providing protection – The elementary purpose of insurance is to allow security against

future risk, accidents and uncertainty. Insurance cannot arrest the risk from taking place,
but can for sure allow for the losses arising with the risk. Insurance is in reality a
protective cover against economic loss, by apportioning the risk with others.
 Collective risk bearing – Insurance is an instrument to share the financial loss. It is a
medium through which few losses are divided among larger number of people. All the
insured add the premiums towards a fund and out of which the persons facing a specific
risk is paid.
 Evaluating risk – Insurance fixes the likely volume of risk by assessing diverse factors
that give rise to risk. Risk is the basis for ascertaining the premium rate as well.
 Provide Certainty – Insurance is a device, which assists in changing uncertainty to
certainty.
Secondary functions of insurance

 Preventing losses – Insurance warns individuals and businessmen to embrace

appropriate device to prevent unfortunate aftermaths of risk by observing safety
instructions; installation of automatic sparkler or alarm systems, etc.
 Covering larger risks with small capital – Insurance assuages the businessmen from
security investments. This is done by paying small amount of premium against larger
risks and dubiety.
 Helps in the development of larger industries – Insurance provides an opportunity to
develop to those larger industries which have more risks in their setting up.

Other functions of insurance

 Is a savings and investment tool – Insurance is the best savings and investment option,
restricting unnecessary expenses by the insured. Also to take the benefit of income tax
exemptions, people take up insurance as a good investment option.
 Medium of earning foreign exchange – Being an international business, any country
can earn foreign exchange by way of issue of marine insurance policies and a different
other ways.
 Risk Free trade – Insurance boosts exports insurance, making foreign trade risk free
with the help of different types of policies under marine insurance cover.

Insurance provides indemnity, or reimbursement, in the event of an unanticipated loss or disaster.

There are different types of insurance policies under the sun cover almost anything that one
might think of. There are loads of companies who are providing such customized insurance
policies.
 CHALLENGES FACING INSURANCE INDUSTRY

 Threat of New Entrants: The insurance industry has been budding with new entrants
every other day. Therefore the companies should carve out niche areas such that the
threat of new entrants might not be a hindrance. There is also a chance that the big
players might squeeze the small new entrants.

 Power of Suppliers: Those who are supplying the capital are not that big a threat. For
instance, if someone as a very talented insurance underwriter is presently working for a
small insurance company, there exists a chance that any big player willing to enter the
insurance industry might entice that person off.

 Power of Buyers: No individual is a big threat to the insurance industry and big
corporate houses have a lot more negotiating capability with the insurance companies.
Big corporate clients like airlines and pharmaceutical companies pay millions of dollars
every year in premiums.

 Availability of Substitutes: There exist a lot of substitutes in the insurance industry.

Majorly, the large insurance companies provide similar kinds of services – be it auto,
home, commercial, health or life insurance.
 TOP INSURANCE COMPANIES IN INDIA:

Life Insurance Corporation of India

The Life Insurance Corporation of India (LIC) is undoubtedly India's largest life insurance
company. Fully owned by government, LIC is also the largest investor of the country. LIC has an
estimated asset of Rs. 8 Trillion. It also funds almost 24.6% of the expenses of Government of
India.

Established in 1956 and headquartered in Mumbai, Life Insurance Corporation of India has 8
zonal offices, 100 divisional offices, 2,048 branch offices and a vast network of 10,02,149 agents
spread across the country.

Tata AIG Insurance Solutions

Tata AIG Insurance Solutions, one of the leading insurance providers in India, started its
operation on April 1, 2001. A joint venture between Tata Group (74% stake) and American
International Group, Inc. (AIG) (26% stake), Tata AIG Insurance Solutions has two different
units for life insurance and general insurance. The life insurance unit is known as Tata AIG Life
Insurance Company Limited, whereas the general insurance unit is known as Tata AIG General
Insurance Company Limited.

AVIVA Life Insurance

AVIVA Life Insurance, one of the popular insurance companies in India, is a joint venture
between the renowned business group, Dabur and the largest insurance group in the UK, Aviva
plc. AVIVA Life Insurance has an extensive network of 208 branches and about 40
Bancassurance partnerships, spread across 3,000 cities and towns across the country. There are
more than 30,000 Financial Planning Advisers (FPAs) working for AVIAV Life Insurance. It
offers various plans like Child, Retirement, Health, Savings, Protection and Rural.
MetLife Insurance

MetLife India Insurance Company Limited is another popular player in Indian insurance sector.
A joint venture between the Jammu and Kashmir Bank, M. Pallonji and Co. Private Limited and
other private investors and MetLife International Holdings, Inc., MetLife Insurance offers a wide
range of financial solutions to its customers including Met Suraksha, Met Suraksha TROP, Met
Mortgage Protector and Met Suraksha Plus etc. It has its branches situated over 600 locations
across the country. More than 50,000 Financial Advisors work for MetLife.

ING Vysya Life Insurance

ING Vysya Life Insurance entered into the Indian insurance industry in September 2001. A joint
venture between ING Group, Ambuja Cements, Exide Industries and Enam Group, ING Vysya
Life Insurance uses its two channels, viz. the Alternate Channel and the Tied Agency Force to
distribute its products. The first channel has branches in 234 cities across the country and has got
366 sales teams. On the other hand, the later one has more than 60,000 advisors. Currently, ING
Vysya Life Insurance has tie ups with more than 200 cooperative banks.

Birla Sun Life Financial Services

Birla Sun Life Financial Services is a joint venture between Aditya Birla Group and Sun Life
Financial Inc, Canada. It has got an extensive network of more than 600 branches. More than
1,75,000 empanelled advisors work for Birla Sun Life, which currently covers over 2 million
lives
MAX New York Life

Max New York Life Insurance Company Ltd. is one of the top insurance companies in India. A
joint venture between Max India Limited and New York Life International (a part of the Fortune
100 company - New York Life), Max New York Life Insurance Company Ltd. started its
operation in April 2001. It currently has around 715 offices located in 389 cities across the
country. It also has around 75,832 agent advisors. Max New York Life offers 39 products, which
cover both, life and health insurance.

Bajaj Allianz

Bajaj Allianz is a joint venture between Bajaj Finserv Limited and Allianz SE, where Bajaj
Finserv Limited holds 74% of the stake, whereas Allianz SE holds the rest 26% stake. Bajaj
Allianz has been rated iAAA by ICRA for its ability to pay claims. The company also achieved a
growth of 11% with a premium income of Rs. 2866 crore as on March 31, 2009.

Bharti AXA Life Insurance

Bharti AXA Life Insurance, one of the top insurance companies in India, is a joint venture
between Bharti group and world leader AXA. Bharti holds 74% stakes, whereas AXA holds the
rest of 26%. Bharti AXA has its branches located in 12 states across the country. It offers a range
of individual, group and health plans for its customers. Currently more than 8000 employees
work for Bharti AXA Life Insurance.
BRIEF HISTORY OF INSURANCE SECTOR IN INDIA

The business of life insurance in India in its existing form started in India in the year 1818 with
the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important
milestones in the life insurance business in India are:

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life
insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of
protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies taken over by the central
government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a
capital contribution of Rs 5 crore from the Government of India. The General insurance business
in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first
general insurance company established in the year 1850 in Calcutta by the British.

Some of the important milestones in the general insurance business in India are:

1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of
general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of
conduct for ensuring fair conduct and sound business practices.

1968: The Insurance Act amended to regulate investments and set minimum solvency margins
and the Tariff Advisory Committee set up.
1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general
insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and
grouped into four companies’ viz. the National Insurance Company Ltd., the New India
Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance
Company Ltd. GIC incorporated as a company.

INSURANCE SECTOR

The opening up of Insurance sector was a part of the on going liberalization in the financial
sector of India. The changing face of the financial sector and the entry of several companies in
the field of life and non life Insurance segment are one of the key results of these liberalization
efforts.

Insurance business by way of generating premium income adds significantly to be the GDP.
Over the past three years, more than thirty companies have expressed interest in doing business
in India. The IRDA (Insurance Regulatory Development Authority) is the regulatory authority,
which looks over all related aspects of the insurance business. The provisions of the IRDA bill
acknowledge many issues related to insurance sector.

The IRDA bill provides guidance for three levels of players - Insurance Company, Insurance
brokers and Insurance agent. Life Insurance sector is one of the key areas where enormous
business potential exists. In India currently the life insurance premium as a percentage of GDP is
1.3 % against, 5.2 per cent in the US.

General Insurance is another segment, which has been growing at a faster pace. But as per the
current comparative statistics, the general insurance premium has been lower than life insurance.
General Insurance premium as a percentage of GDP was a mere 0.5 'per cent in 1996. In the
General Insurance Business, General Insurance Corporation (GIC) and its four subsidiaries viz.
New India Insurance, Oriental Insurance, National Insurance and United India Insurance, are
doing major business. The General Insurance Industry has been growing at a rate of 19 percent
per year.
 INTRODUCTION TO FIRE INSURANCE

MEANING

Fire insurance is a contract to indemnity, to the insured for destruction of or damage to property
caused by fire. The insurer undertakes to indemnify the insured against loss due to fire caused to
the property insured against, not in excess of the maximum amount stated in policy. A contract
of indemnity, and not against accident, but against loss caused by fire.

For example, if a person has insured his house of Rs. 1.00 lakh against loss by fire, the insurer is
not liable to pay the sum, unless the house is destroyed by fire, but actual loss subject to the
maximum limit of Rs. 1.00 lakh.

DEFINITION

Section 2(6) of the Fire Insurance Act, defines, “Fire insurance business means the business of
affecting, otherwise than in evidently, to some other class of business, contacts of insurance
against loss by or incidental to fire or other assurance customarily included among the risks
insured against in fire insurance policies.”
 CHARACTERSTICS OF FIRE INSURANCE

 It is a means of security against risk of fire on any material or property.

 It is an indemnity contract

 The insurer undertakes to indemnity the insured against actual loss subject to the
maximum limit of sum insured.

 It is contract of utmost good faith; the insurer and the insured must disclose all material
facts relating to the subject matter of insurance.

 A fire insurance policy is usually issued for one year only with option to the parties to
renew it for a further period on payment of stipulated premium.

 If the property is insured with more than one insurer, and on loss by fire, all the insurers
are called upon to contribute towards the claim.

 The insurer is not liable for payment of any claim if the fire is caused deliberately.

 In British Law, the fire insurance policies can be assigned only with prior permission of
the insurer, but under Indian Law the consent of the insurer is not necessary to make
valid assignment of policy, only a notice of information is sufficient.

 On occurrence of fire, a notice of fire should be given to the insurer so that the insurer
may take prompt steps forthwith to safeguard his interests, in dealing with salvage and
also judge the cause and nature of fire, and the extent of the loss.

 It is the duty of the insured to act as a man of ordinary produce to take necessary steps to
save the property from loss of fire, as in the absence of any insurance against the
property.
MEANING OF FIRE

The word fire means “loss by fire” and in literal sense means a fire has broken bounds. Therefore
fire, which is used for ordinary domestic purposes or even for manufacturing, is not fire. ‘Fire’ in
fire insurance must have the following two features:

 Production of ignition, light and heat.

 by accident.

DEFINITION OF FIRE

According to Justice Boyles (in Everett vs. London Association Company 1885)

“Fire means the production of light and heat by combustion and unless there is actual ignition
there is no fire within the mean sing of term in ordinary policy.”

THE VARIOUS LOSS CAUSE BY FIRE

The losses by the following instances or losses subsidiary to fire are as follows:

 Damage, which occurs as a result of smoke or of putting out the fire, would be covered
by the fire risks.
 Any loss resulting from apparently necessary and bona fide efforts to put out a fire,
whether it be by spoiling goods by water, or throwing articles of furniture out of the
window, are covered by the fire risks.
 Even by damages to a neighboring house by explosion done for the purpose of arresting
fire, would be covered by the fire risks.
 Every loss directly, or if not directly at least consequently resulting from the fire is within
the policy (In Stanley vs. Western ins. Co., 1968).
 Loss by theft during a fire is covered as a fire risk (In Levy vs. Bailey, 1831).
 Even loss by fire caused by the insured’s negligence is covered by the policy (In Harris
vs. Poland, 1941).
 NATURE AND USE OF FIRE INSURANCE

NATURE

Fire insurance is a device to compensate for the loss consequent upon destruction by fire. Thus
the fire insurer shifts the burden of fire losses from their actual victims over to all the members
of the society. It is a cooperative device to share the loss. It relieves the insured from the horror
of the fire losses to which he is exposed.

FUNCTIONS

It is a well-known fact that the fire causes huge losses every year. The individual owner by
taking fire insurance can prevent the fire waste to some extent. The insurer acts as a middleman
between all the members of the society who are exposed to the fire risk on the one hand and the
members who will be the actual victims of the fire losses on the other. The insurer changes the
premium from all the insured members and makes good the losses when they occur to any of
them.

The system of fire insurance cannot save the society from the economic loss to the community to
the extent of the property lost by fire, but it compensates someone and this saves him from a
ruinous loss, at the cost of group of some others.
 CAUSES OF FIRE

Fire waste is the result of two types of hazard viz., ‘physical’ and ‘moral’.

A. PHYSICAL HAZARD

It refers to the inherent risk of fire in the property, which may occur due to inflammable nature,
construction, artificial lighting and heating, lack of extinguishing apparatus use of the property
etc.

B. MORAL HAZARD

The moral hazard depends upon the man as physical hazard depends on the property. The
property may be set on fire by the owner or by any person with his willingness, carelessness and
lack of sense of duty may also increase the fire waste. Sometimes, when market price is going
down the owner can willingly set fire on the property and gain from the payment of insurance
money. Thus, where the property was destroyed with the willingness of the property owner,
moral hazard exists.

C. PREVENTION OF LOSS

Insurance is meant for indemnification of loss and not for prevention of loss although every
reasonable step can be taken to eliminate it or minimize it through the agencies engaged in
prevention of loss. Thus, insurance may help in two ways:

I. Indemnification and

II. Preventive Efforts.

I. Indemnification or Curative Efforts: - According to doctrine of indemnification, the

financial loss suffered by the perils insured against will compensated in full, not more than this
and not less than this. The insurance provides protection by indemnifying the financial loss
suffered by insured person, which occurred beyond the control of insured and insurer.
II. Preventive Efforts: - The loss cannot be prevented by insurance. But, the insurers help those
who are engaged in the preventive efforts by granting financial and other assistances. This will
benefit insurers as well because if the loss of society is reduced, they can charge lesser premium,
which will stimulate the public of insurance. Fire insurers stimulate the installation of protective
devices and better types of construction through granting credit. They help in installation of fire-
fighting apparatus, water supply and engineering services.

Preventive efforts are divided into two parts:

 Private activities and

 Public activities

 PRIVATE ACTIVITIES

Private Activities are those which include those activities which the property owner may engage
in for the purpose of preventing fire loss. Insurers give sincere advice of financial help to
property owner on the following factors.

 Construction

In construction of building, fire resistive materials, fireproof construction, greatest care in

exercising selection of the type and planning of the construction, availability of fire extinguisher,
water supply, etc.

 Fire Services

The important thing is to extinguish fire before it reaches large proportions. The owner should
consider equipping his building with an automatic sprinkler system. Similar fire fighting
equipment may be established. Insurers with the help of fighting associations can provide such
services.
  Occupation

There are considerable hazard in certain occupation e.g. in oil or coke or chemical industry.
Insurance in these concerns is available at higher rate. Insurance help by stimulation and
charging lesser premium in fire fencing occupation.

 Management

Good management of property may reduce the chances of fire. Carelessness and indifference
cannot be over emphasized because these increase the chance of fire.

 Exposure

Fire insurance rates are determined on the basis of possibility of exposure. Fireproof services
may reduce the chances of exposure to a greater extent.

 PUBLIC FIRE PREVENTION ACTIVITIES

Fire insurers have performed numerous important services to reduce the fire waste with the help
of public institutions, which are engaged in fire fighting activities.

 Community Surveys - Engineering survey of the cities and localities is made. As a result
of its investigation many have improved their fire departments, water supplies and other
facilities involved in the protection against fire.
 Standard Schedule For Grading Cities - Under this schedule a number of cities, town,
or Mohall as are divided, according to fire preventive devices. The deficiencies in each
party sorted out and attempts are made to remove them.
 Underwriter’s Laboratories - The laboratories are to find out the possible causes of fire
losses. Every time research or investigation is made to find out the possible attempts to
prevent fire losses.
  Equipment - Fire can be properly checked only through the possession and maintenance
of adequate equipment, personnel fire alarm system and water supply. The Fire
Protection Association can determine fire fighting apparatus and equipment for any city
or town.
 Salvage Corps and Salvage Works By Fire Departments - The chief aim of the corps
is to protect property from unnecessary smoke and water damage. The protective benefits
are extended to all those who suffer fire damages regardless of whether they are insured
or not. Training school and colleges are, sometimes, engaged in giving general education
to all and particular education to few students to train them in fire fighting methods and
fire preventive methods.
 Legislation and Regulation - National Board of fire underwriter’s fire brigade and other
such associations are engaged in fire preventive and protective efforts under a certain
law. The property owner and the fire protection engineer must keep in mind the
numerous legal requirements relating to the various phases of fire prevention.
 General Devices - Apart from the above contribution to prevention protection, the
following devices are utilized for preventing the losses.
• The insurer compensates loss at a reasonable cost.
• Serious hazards are to be cooperatively reinsured.
• Loans are provided for better construction and building.
• Fire insurers stimulate the installation of protective devices to reduce losses.
• Fire fighting methods are organized with public utility concerns.
• Insurers investigate the causes of loss and attempts ate made to reduce the causes.

Insurers study various devices for fire proof, protection and problems of special processes.
Periodical examination of insured property is made and instructions are issued for the purpose of
investigation.
 SCOPE FOR FIRE INSURANCE

A contract of fire insurance is a contract whereby the insurer agrees, in consideration of a sum of
money called premium, to compensate another person known as the insured for any loss or
damage to the insured property. The contract specifies the period during which the indemnity is
to last and also the maximum amount to which the insurer can be held liable.

The need for fire insurance arises out of the following facts: There exists material property
susceptible to damage or destruction by fire or other peril.

1) That such material property has intrinsic value measurable in terms of money.

2)The occurrence of fire will result in not only loss or damage to material property, but also
other consequential loss such as loss of production, etc. in order to make the insurer liable for the
loss under the fire policy the following two conditions must be satisfied:

I. There must be fire in actual sense or ignition, and

II. The fire must be accidental.

IGNITION

There must be actual ignition. This means that loss or damage must be by fire. The cause of fire
is not important but it should be proved that loss was caused by fire. Ignition means burning and
therefore the presence of flame is a precedent condition.
Fire Must Be Accidental

Any loss caused by willful consent does no come under the term ‘fire’. There must be an
accidental fire and not intentional. This applies only to the insured.

Section 2 of the Indian insurance act, 1938, states the scope of fire insurance to include:

Fire insurance business is different from other insurance business in operation and covers the risk
caused by fire.

In addition to the risk caused by fire, it also includes other risk and occurrences, which can be
customarily, be included among risks insured under fire insurance contracts.

Thus we can divide the total scope of fire insurance into two parts, or the scope of fire
insurance may be studied from two angles, viz.,
 Ordinary scope of fire insurance
 Comprehensive scope of fire insurance

1. Ordinary Scope Of Fire InsuranceOrdinary fire insurance products includes those

risks, which define the narrower scope of fire insurance viz., the losses caused by fire
only. As such, under the fire insurance contracts the claims for losses by fire must fulfill
two basic conditions.

a. There must be actual fire or ignition

b. The fire must be incidental, not intentional
c. Risks covered under fire insurance - The risks causing losses must be mentioned under
fire insurance policy and only those risks are indemnified by the insurer in case of loss.
Usually, the following risks caused by fire are covered under fire insurance.

 Fire or ignition.

 Blasting of boiler used for household purposes.

 Blast of gas cylinder used for household cooking.

 Blast of gas etc. used for the purposes of lightening and heating in any
building.
d. Risks not covered under fire insurance policies - These are the risks for which insurance
company do not indemnify the insured in the case of loss.

i. Some goods and properties are not eligible for insurance under fire
insurance policies such as: precious stones and metals, articles, maps,
stamps, cheques, goods or properties kept under trust, account books and
records, archives, and rare documents and writings, etc.

ii. Losses caused by certain uncertain events such as riots, civil disturbances,
revolutions, wars, aggression, internal emergencies, marital law etc.,
natural calamities like earthquakes, storms, cyclones, floods, drought,
excessive heat or cold eave.

iii. Spontaneous fire in jungles or bushes.

iv. Spontaneous combustion caused by chemicals.

v. Theft during fire or after the breakout of fire.

2. Comprehensive Scope of Fire Insurance: Various types of policies are available in the
form of fire insurance policies, which cover various types of risks allied to the risk of fire.
Coverage of such risks under the purview of fire insurance has widened the scope of fire
insurance. Some special policies have helped in a great way in broadening the scope of
fire insurance in the following manner:

(i) By including the excluded perils and risks.

(ii) By including consequential losses and other indirect fire risks.

In the first category, such excluded risks, which cannot be insured under general
insurance schemes or policies, have been included under the cover of fire insurance. Such
policies are called special perils insurance relating to spontaneous combustion, earthquakes,
blasts etc.
 SIGNIFICANCE OF FIRE INSURANCE

The industry, trade and commercial articles have been developing and diversifying at faster rate
in India. Along with the growth of industrial and commercial articles the infrastructure fields like
transport, communication, finance, advertising, stock marketing, etc., have also been developing
continuously so as to cope with the pace of economic development.

The importance of foreign trade also has been very much for a developing country like India. All
these developments in various fields brought in much risks and uncertainties in business
activities. Insurance is the only field that provides security, against business risks. The role of
fire insurance has been increasing day-by-day as a means against destruction or damage of
business property caused by fire.

The significance of fire insurance can be discussed under the following points:

 As A Source For Minimizing Losses:

Fire can destroy property in goods and fixed assets of crore of rupees or can create damages to
the business property. Fire insurance indemnifies losses or damages done to fire and resources
the mental worries of businessmen.

 Decreases In Probabilities of Fire Losses:

The increasing uses of energy petrol like electricity, gas and other such items have increased the
probability of losses or damages to goods and property. In order to minimize this calamity,
various types of fire extinguishing devices have been destroyed throughout the world. Moreover,
the fire insurance is another device to indemnity the losses thus removes mental worries by
extending financial support.
  Increase In Production of Fireproof Materials:

Fire insurance cannot prevent occurrence of fire, but can reduce the losses. Today various
devices are produced in the country like fire extinguisher. Fire brigades are set up at every cities
and towns to extinguish fire by the government and local bodies.

 Decrease In Social Loss of Fire:

Social awareness has been created in the country to put out fire and to reduce the effect of fire.
The social organizations provide training to the people in the use of such items given below.

i. Assets Valuation:

Assets are valued for obtaining a fire insurance policy. It requires the insured to be more cautious
in protecting his property or goods.

ii. Loss Preventing Efforts and Advice By The Insurer:

An insurer not only indemnity against fire losses, but also advices the insured to reduce the
incidence of fire. Fire insurance companies establishes, ‘salvage corps,’ to extinguish fire so that
the extent of loss can be minimized.

iii. In Business Progress:

Due to the facilities provide by the insurance companies, the business enterprises undertake
large-scale production, and invest in business and marketing activities without any botheration.
This lead to continuous progress in industrial and commercial activities, leading to extinguish
fire so that the extent of loss can be minimized.
iv. Beneficial For New Industries:

The new industrial units usually face complex problems of production, finance, competition and
sales etc. In such a situation, they cannot afford the losses/damages due to fire. The fire
insurance relives such entrepreneurs from worries, by indemnifying the loss/damages, if any,
from the occurrence fire.

v. Credit Facility:

Where the assets are secured by fire insurance, it becomes easier for such enterprises to get credit
from banks and other financial institutions. This will increase the credit worthiness of the
enterprise.

vi. Distribution of Risks:

Fire insurance is effective device to distribute the risks in a group, enabling the individual or the
institution to maintain its efficiency.
Bajaj Allianz General Insurance Company:

Allianz AG:

Allianz group was founded in 1890 and is one of the world's leading insurance companies with
over 100 year's experience in insurance and related services. It is also the largest insurer in
Europe. Allianz group has multi-local structure and presence in over 70 countries. The key
business areas of Allianz group include General Insurance (property, engineering, marine, motor,
casualty and miscellaneous), Reinsurance, Risk Management, Life & health insurance, Asset
Management and Pension Funds Management.

Bajaj Auto Ltd.

Bajaj Auto Ltd the flagship company of Bajaj Group was incorporated in 1945 as Bachraj
Trading Corporation. Initially it started by assembling two and three wheelers in collaboration
with Piaggio of Italy. After the expiry of the Agreement in 1971 the two and three wheelers
acquired the brand name of Bajaj. The strength of the company lies in its strong brand image and
ability to offer value for money products leveraging on its large-scale operations.

The Joint Venture

Bajaj Allianz General Insurance a joint venture non-life company promoted jointly by Bajaj
Auto and German insurer- Allianz. Indian auto major holds 74% while Allianz holds 26% in the
Joint Venture, and has an authorized and paid up capital of Rs. ll0 crores. Mr. Graham Norris is
the CEO of the company. Bajaj Allianz General Insurance will leverage the customer base and
expertise of Bajaj Auto Ltd and Allianz.
Bajaj Allianz General Insurance Products

 Personal Accident
 Hospital Cash Daily Allowance Policy
 Health Guard
 Critical Illness
 Burglary Insurance
 Householders Insurance
 Travel Companion
 Fidelity Guarantee Policy
 Office package
 Money Insurance
 Public Liability
 Plate Glass Insurance
 Consequential Loss (Fire) Insurance Policy

Performance of the company over the last few years

Despite conditions which were not conducive for growth of gross premium, the company
managed to maintain a growth rate which was more than twice that of the market. The
company’s gross written premium (excluding share of premium from the IMTPIP), grew by
33.3% during 2007-08 and, despite intense price competition, company maintained its second
position among the private sector companies in terms of gross written premium.

The market share of company (excluding premium of specialized insurers) increased from 7.2%
in 2006-07 to 8.5% in 2007-08. Including the share of inward reinsurance business from the
IMTPIP, the growth rate would have been 43.0%.

During 2007-08, company clocked gross written premium of Rs. 24,045 Mn excluding share of
business from the IMTPIP as compared to Rs 18,033 Mn in 2006-07. Including share of inward
business from the IMTPIP, the gross written premium amounted to Rs. 25,780 Mn. On account
of company’s policy of steadily increasing it’s retention in line with it’s capital base, the net
earned premium for the year (excluding net premium from inward business of the IMTPIP), rose
to Rs. 13,266 Mn, an increase of 58.6% over the previous year of Rs. 8,366 Mn. Including the
net premium arising out of the share of business from the IMTPIP, the net premium for the year
2007-08 was Rs. 14,134 Million.

Although de-tariffication had an adverse effect on the price per policy, the number of policies
sold continued to grow. In the year under review, company sold 6.61 Mn. policies as against
4.90 Mn. policies sold in the previous year.

This growth indicates that despite severe price competition, more customers preferred
company’s service offerings, drawn by it’s strong brand image, convenience of buying and
satisfaction with its service levels. The total incurred claims for the current year including
actuarial provisions but excluding share of claims of the IMTPIP, were Rs. 8,375 Mn. as against
Rs. 5555 Mn. in the previous year. The number of claims reported during the year was 413,281
as compared to 309,160 in the previous year.

As on 31st March 2008, Bajaj Allianz General Insurance maintained its premier position in the
industry by garnering a premium income of Rs. 2578 crore, achieving a growth of 43 % over the
last year.Bajaj Allianz has made a profit before taxes of Rs. 167 crore and is the first company to
cross the Rs.100 crores mark in profit after tax by generating Rs 105cr.

In the first quarter of 2008-09, the company garnered a gross premium of Rs.733.53 crores
against Rs.573.73 core last year for the same period registering a growth of 28%.

Bajaj Allianz today has a countrywide network connected through the latest technology for quick
communication and response in over 200 towns spread across the length and breadth of the
country. From Surat to Siliguri and Jammu to Thiruvananthapuram, all the offices are
interconnected with the Head Office at Pune.
 PROCEDURE OF BAJAJ ALLIANZ FIRE INSURANCE

The steps to be followed in connection with affecting fire insurance are as under:

Selection of Insurer: The selection of the insurance company is the first step. The insured is
required to select a suitable company for this purpose amongst a large number of companies
engaged in this business.

The proposer can select any of these companies according to his convenience, rationality,
goodwill of the company, its financial soundness, premium rates, policies and service provided
etc.

PROCEDURE OF BAJAJ ALLIANZ FIRE INSURANCE

I. Presentation of Proposal In The Prescribed Form: After the selection of the insurance
company a proposal form is obtained and furnished with the insurer or his agent. The
particulars about the name, address, occupation of the proposer, value and nature of the
subject matter of insurance, type of policy required, amount of sum insured, etc. are to be
furnished with care and utmost good faith. All the facts about the subject matter should
be clearly disclosed.
 II. Evidence of Goodwill: The proposer is required to furnish a certificate as evidence of his
goodwill along with the proposal. The formal of this certificate is given with the proposal
form itself. Usually, the insurance agent certifies that he knows the proposer for a period
time and his reputation is good in the society. In case the proposer will be asked to
furnish such evidence from any reputed person in the society.

III. Recommendations By Agent: The agent also gives his recommendations in the proposal
form at the place provided for this purpose. The insurer takes the decision to accept a
proposal keeping in view of the recommendations given by the agent.

IV. Survey of The Subject Matter: When a proposal for fire insurance is received in the
office of the company, it makes a thorough study of the proposal and if necessary, a
survey of the subject matter of insurance is conducted. Such a survey is conducted by
expert surveyors, who will go into enquire about the conditions of the subject matter,
surrounding situations of the subject matter, risks involved etc. The surveyors also verify
the accuracy of the details furnished in the proposal.

V. Report by Surveyors: After the survey, the surveyors present a report to the insurance
company. This report will state the physical and moral hazards involved in the proposal.
This report serves as an important base for determining premium.

VI. Acceptance of Proposal: After determination of premium on the basis of risk involved,
the proposal is accepted and intimation is sent to the proposer asking him to pay the
premium within a specified period of time. If the surveyors present an adverse report, the
proposal is rejected and a regret letter is sent to proposer.
VII. Depositing of Premium Money: A lawful contract between the insured and the insurer
is entered into, when the premium money is deposited by the insured. The risk
commences as soon as the premium is remitted.

VIII. Issue of Cover Note: As soon as the premium money is deposited, the insurer issues a
cover note (a provisional policy) indicating there is that the insured has deposited the
premium and the insurer has accepted the proposal. On issue of absolute policy the
legality of the cover note ends. A cover note can also be insured pending the process of
survey of the subject matter and the premium has not been determined.

IX. Issue of Insurance Policy: When all the requirements under the risks have been
complied with, the insurer issues the policy duly stamped and containing all terms and
conditions. These terms and conditions define the mutual rights and liabilities between
the insurer and the insured's.
 BAJAJ ALLIANZ FIRE INSURANCE – RATE FIXATION

Rate fixation on scientific basis in fire insurance is still not fully developed as in the case of life
insurance. Under fire insurance, after the inspection of risk, physical hazards can be assessed but
moral hazards cannot be assessed properly. Therefore, rate fixation is different. The past
experience can only be used as a guideline for the estimation of risk. While fixing the rates of
premium for different risks in fir insurance, the insurer must ensure that the calculation work is
carried out as accurately as possible.

Thus, the rate so determined should cover the probable claims and the premiums must be
equitable, stable and consistent.

System of Rate Fixation

Actual process of rating consists of two steps:

1. Classification,
2. Discrimination, and
3. Scheduled rating.

 Classification:

The classification rating method is based upon the experience of several years and of several
persons and therefore can be considered as superior over the personal judgment method. Under
this method, risks are classified according to their loss experience. Properties have been
classified into three categories.

i. Ordinary

ii. Hazardous, and

iii. Extra hazardous

Therefore different premium rates are to be fixed for each class. While fixing the rate the
following points are to be taken into consideration:

 Construction:

The construction of the building has a great impact in the fixation of the rate. Buildings
made of bricks are sound than wooden buildings. A fireproof building is considered better than a
without fireproof building.

 Occupancy:

Occupancy means the use of the building. The building may be used for various
purposes, as for example, general shop, hardware store, and go down and for residential
purposes.

 Flooring:

The wooden floor in the building its an accidental hazard and is worst than stone flooring.
In case of fire, wooden floor prove a bad risk.

 Height:

The height is an extra physical hazard for rating. The sky scrapper buildings have proved
a very bad risk in case of fire.

 Lighting, heating and power:

Short circuits may lead to fire and faulty installation may result in combustion.

 Situation:

The location, the adjoining premises, the distance from the fire brigade station or water
supply point and congestion are all-important sources for considering the fire risk rating.
  Discrimination

Discrimination rate system is very old system of rate fixation in fire insurance. Under this
method, premium rates are dependent upon the judgment of a person skilled in the fire field. All
the bad factors and good factors are put together and the rate is to be calculated. The method has
many shortcomings because personal judgment may differ and different rates may be determined
to the same risk by the different companies.

Under this method the most important factor, which influences the rate fixation in fire insurance,
is the discrimination, i.e. differentiation. Every risk is considered individually.

 Schedule rating :

Under this system of rating a normal property is considered as ‘standard’ and for each standard
risk a standard premium is charged. For any defect, addition is made in standard premium and
for good feature deduction is made. The main advantage of the schedule rating is that it provides
equitable treatment for all risks.

A scheduled rate means a standard rate of premium or an average premium. The average
premium rate for a particular class of risk is determined taking into the account the total loss and
the sum insured during a period of years.

For finding out the average rate percent, the following formula is applied: the average rate
percent (R) = L/V x 100 where, R = average rate percent, L represents ‘Loss’, V represents the
total sum insured of the subject matter.

The gross or office premium is called the ‘Normal rate’ or ‘average rate’ of premium. As
discussed above, each class of risk may differ from one another and therefore the principle of
discrimination may also be applied.
 BAJAJ ALLIANZ FIRE INSURANCE CONTRACT

Fire insurance contract may be defined as “an agreement whereby one party in return for a
consideration undertakes to indemnify the other party of certain defined subject-matter being
damaged or destroyed by fire or other defined perils up to an agreed amount.” The party
responsible to indemnify the loss is called the insurer, the party who is to be indemnified is
called the insured, the consideration for the contract is termed ‘the premium’, the defined subject
matter is termed ‘the property insured’ the sum set forth in the contract is called the assured sum,
and the document containing the terms and conditions of the contract is known as ‘the policy’.

ELEMENTS OF FIRE INSURANCE CONTRACT

Features of General Contract:

All the features of general contract are also applicable to the fire insurance contract.

A. Proposal: The proposal for fire insurance can be made either verbally or in writing. The
proposer gives the necessary description of the property to be insured. In practice the printed
proposal form is used for the purpose. Introduction, type of properties, value of properties,
construction, occupation, etc., are the various information, which are required by the insurer. The
answers to these questions must be completely correct. The assured must disclose all the material
facts and should observe utmost good faith. The description of the subject matter of insurance is
the basis of the contract for assessing the risk and fixing the premium.

B. Acceptance:

On receipt of the proposal form, the insurer will assess the risk. Sometimes, when the contents
and subject matters are not of very high amount, the insurer may accept on the basis of proposal
forms only. When the subject-matters is of larger magnitude and where the hazard involved is of
a variable or unknown nature, the insurer may send his surveyor to survey the property. The
surveyors being expert in the field of insurance evaluation will consider the proposal in the light
of this report. The unknown proposes are required to submit an evidence of respectability. The
insured is required to submit a certificate from some known and respectable person about
honesty and integrity. As soon as the proposal is accepted, the assured is informed about the
decision.
C. Commencement of Risk:

The risk commences as soon as the contract is completed provided there is no specific time for
the purposes. As soon as the proposal is accepted, risk will commence irrespective of the fact
that no policy was issued and no premium was paid. Where risks are unknown and tremendous,
the payment of premium will be the basis of the completion of the contract. The risk will be
commence only when the premium has been paid and not before that; when the policy has been
issued, payment of premium will not be the basis of commencement of risk.

 Cover Note:

The insurer issues a ‘Cover Note’ or ‘Interim Protection Note’ when the risk was accepted
provisionally or subject to the condition of payment of premium. This note will cover the
property so far the final policy has not been issued. If loss occurs before issue of policy cover
note will be sufficient to prove insurance. The cover note, however, is not taken at par to the
policy.

 Policy:

The insurer issues a duly stamped policy which will bear all the terms and condition of the
contract. Any contract of fire insurance comes within the meaning of the word ‘policy’. It is a
different statutory and formal document of insurance contract. There are a standard form is also
used. The policy contains the name and address of the insured, the subject matter of insurance,
the sum insured, the term and the premium. There are various clauses governing the conditions
of insurance contract. The terms and conditions of the policy can be changed.

 Period of Fire Insurance Policies:

Usually fire policies are issued for one year and are called ‘Annual Insurance.’ Policies issued
for a period shorter than one year are known as ‘Short-Term Policies’ and those issued for a
period more than one year are called ‘Long-Term Policies.’ But in practice only annual policies
are common. ‘Short-term’ and ‘Long-term’ policies are rarely used. Long-term policies are
generally issued in case of building. Alteration in the policy will be made according to the
change in building and terms of insurance. The premium rate is determined according to the
nature, location, and construction of the property.
  More Than One Fire During A Period:

When there is more than one fire in respect of the same subject matter insured, the insurer is not
bound to pay more than the sum assured. During the policy-life, payment of each loss,
automatically, reduces the amount of the policy by the amount so paid. When, after payment of
certain losses, the property insured is totally destroyed, the insurer will pay loss not more than
the balance of insured amount remaining after compensation of the previous losses.

However, if the insured is willing to get payment of full loss, he can reinstate the assured sum to
the original amount by paying a fresh premium on a pro-rata basis to the date of expiry.

 More Than One Policy:

If the same subject matter is insured with more than one insurer, he cannot realize more
than the actual loss from all the insurers. Each insurer will pay his ratable proportion of loss to
the property insured against fire. If there is average clause, then the insurers will pay
accordingly.
 PRICIPLE OF FIRE INSURANCE

A. Insurable Interest:

Insurable interest is the general principle of insurance without which insurance cannot lawfully
be enforced for an insurance unsupported by an insurable interest would be a gambling
transaction. Insurable interest will be there where the subject matter should be in such a position
that the insured may suffer loss at the time of damage and may gain by its protection.

The insurable interest in fire insurance must be present at the time of contract and at the time of
loss. Insurance contract will be invalid if the property is sold to another party. Similarly if there
is no insurable interest at the time of insurance, the contract will be invalid.

The following conditions must be fulfilled to constitute an insurable interest.

 There should be a physical object capable of being damaged or destroyed by fire.

 The object must be the subject matter of insurance.
 The insured must stand in such relationship as recognized by law where the insured is
benefited by the safety of the subject matter or be prejudiced by its loss.

The insurable interest is the ‘pecuniary interest’. The fire insurance is a personal contract
between the insured and the insurer. So, the transfer of interest would invalidate the contract.

The following persons have insurable interest in the subject matter concerned.

The owner of the property or asset whether fixed or current has as insurable interest whether he
is the legal owner or the equitable owner. The owner may be a single or joint holder. Partial
owner can take policy for full value as trustee of all the property. A life tenant entitled to the use
of the property during his lifetime only has an insurable interest.
  An agent has insurable interest in the property of his principal.
 A creditor has an insurable interest in the firm’s property.
 A creditor has an insurable interest in property on which he has a lien for the debt.
 An insurer has it in respect of risks underwritten by him for the purpose of reinsurance.
 Where the subject matter is mortgaged, the mortgagor has an insurable interest in the full
value thereof and the mortgage has an insurable interest in respect of any sum due to
become due under the mortgage.
 A bailee can insure any article or property bailed. He may be a gratuitous bailer or bailee
for reward.
 A trustee has insurable interest in the property put on trusteeship.

B. Principle of Good Faith:

The contract of fire insurance is one in which the observance of the utmost good faith –
uberrima fides – by both the parties are of vital significant. The utmost good faith in fix
insurance has two aspects – first, disclosure of material facts and second, preservation of the
property insured.

The insurer and the insured must furnish detailed information regarding the subject –matter to be
insured. The insured, since he has more information about the subject matter, must disclose all
the information asked truly and fully. The assured is also required to disclose all the material
information which are known to him although it was not asked by the insurer; material fact is
one which influences the decisions of the insurance. The decision may be pertaining to the
acceptance or declination or determination of the premium. In case of fire insurance the
examples of material facts are construction of buildings. If the assured has not observed good
faith, other party can avoid the contract. It was immaterial to plead that the insured was unaware
of the fact and could not disclose. In a given circumstance, it is expected from the insured to
know all the material facts. The insurer has also to disclose such material facts as are within his
knowledge.
The second phase of good faith is preservation of property. Thus, the observance of good faith is
necessary not only during the negotiations of the contract but throughout the term of the policy
and in making claims. Any change after commencement of risk must be communicated to the
insurer. The insured or his agents as well as the insurer must take all such steps as may be
reasonable for averting or minimizing loss. Since the insured is near to the property, he must act
to prevent the fire and if fire occurred, he must do his utmost to extinguish it. In such cases he
must act as if he was not insured.

C. Exceptions:

In the following circumstances, the insured is not required to disclose information.

 All those circumstances which diminish the risk.

 All those facts, which are known or reasonably presumed to be known to the
insurer.

 Information, which are of common knowledge.

 Those facts, which the insurer in the ordinary course of his business ought to
know, or which the insurer ought reasonably to have inferred from the details
given.

 Those facts, which are superfluous to disclose by reason of a condition or

warranty.

D. Principle of Indemnity:

The doctrine of indemnity aims to compensate the insured for a loss sustained, and the
compensation should be such as to place him as he occupied immediately before the occurrence.
The insured cannot claim anything in excess of the amount required to recoup the actual loss
sustained. The insurers undertake to make good the insured's loss by monetary payment or by
reinstatement or replacement so that the insured shall be fully indemnified, but this is subject to
the sum insured.
The law does not sanction any insurance, which would enable the insured to profit by the
destruction of the thing destroyed. It will check the temptation to destroy the property insured
thereby to secure the money.

The assured amount is not the measure of indemnity but it sets an upper limit up to which the
loss can be indemnified. The actual amount of indemnity will be the market value of the subject
matter destroyed or damaged by fire at the time and place of the occurrence of fire. It will never
exceed the assured amount.

When the actual loss is more than the assured amount then only the insured sum will be paid and
nothing more is paid. But, this principle does not hold good when the policy is valued policy.
Here, the basis of indemnity will not be the actual cash value of the property at the time of loss
but the insured value, which is named in the policy when it was taken. In a valued policy, no
consideration is given to the actual loss. Thus, the amount of claim may be greater or less than
the actual loss at the time of fire in case of valued policies.

E. Interpretation of Indemnity:

The insured is entitled to perfect indemnity subject to the sum assured being sufficient. But, in
practice such perfection may be difficult to attain. Previously, the meaning of the word
‘indemnity’ was understood in the sense of material indemnity only, i.e., tangible and material
property only. The intangible loss, i.e., loss of profit, rent, etc., was not compensated. It worked
as a great hardship to the honest insured persons.

Now, the insurance is extended to cover not only the material loss of property insured but also to
cover the ‘consequential loss’. When a business property is burnt not only the material loss on
account of the destruction of building, plant and stock are covered but the consequential loss of
profits on account of cessation of sales, salaries, taxes, rent, rates, etc., are also indemnified.
Now-a-days tangible and intangible losses are insured and the consequential loss is also within
the meaning of indemnity.
F. Consequences of Indemnity:

The consequences of the doctrine of indemnity are as below:

 The insured may claim only the amount of the loss sustained.

 In case of partial damage, the insured may claim compensation only for the amount of
damage done.

 The insured must transfer to the insurer may rights which he may possess against a third
party in respect of the loss.

 If the insured have affected more than one policy, he is precluded from obtaining more
than one complete indemnity.

Measure of indemnity varies with the type of properly. For damaged buildings, the measure of
indemnity is the cost of repairing or reinstating the buildings to their pre-loss condition.
Similarly, for machinery, the measure of indemnity is the market value, which is arrived at after
taking into account wear and tear and depreciation. For stock in trade, the measure is the net cost
to the insured. For stock in trade, the measure is the net cost to the insured. The indemnification
may be in the form of cash, repair, replacement and reinstatement.

G. Doctrine of Subrogation:

Subrogation means the right of one person to stand in the place of another and to avail him of the
latter’s rights and remedies. The principle of subrogation is just a corollary to the principle of
indemnity. The insured can realize only the actual value of the loss or damage to the property
according to the principle of indemnity and it follows that if the damaged property has any right
against a third party regarding that property. These must pass on to the insurer. If the assured is
allowed to retain them, he shall have realized more than the actual loss, which is contrary to the
indemnity principle.

The assured can proceed against the third party, if he so desires, and if he recovers damages the
insurer is relived of liability. If the insured has received the full amount of loss any sums
obtained from the third party belong to the insurer up to the amount of their disbursement. .
H. Warranties:

The contents of proposal form are expressly incorporated in the policy, which form warranty.
Warranty is that by which the assured undertakes that some particular thing shall or shall not be
done, or that some conditions shall be fulfilled or whereby he affirms or negatives the existence
of a particular state of facts. Warranties, which mentioned in the policy, are called express
warranties and those warranties, which are not mentioned in the policy, are called implied
warranties. Warranties must be complied with literally and the effect of a breach of warranty is
to render void the relevant item of the policy, even if no increase in risk is involved. Every
warranty to which the property insured or any item thereof is, or may be, made subject, shall
from the time the whole currency of the policies, and non-compliance with any such warranty,
whether it increases the risk or not, shall be a bar to any claim in respect of such property or
item.

The condition states that every warranty is attached during the whole currency of the policy and
if during this period a warranty has not been complied with, the insured will not entertain any
claim in respect of the property or item affected. However, if the policy is renewed and there was
breach of a warranty before the renewal is affected, in such a case the claim can be made. Non-
compliance with a warranty prior to the current renewal period of a policy is not a bar to a claim.
The non-compliance with a warranty avoids a cover only during the period of insurance in which
the breach occurred

I. Proximate Cause:

The rule is that the immediate and not the remote cause is to be regarded – cause proximate non-
remote spectators. Proximate cause is very important in fire insurance. The principle of
proximate cause has already been discussed in detail. The insurer always takes the proximate
cause while paying the claim. If the property insured is burned but the fire was preceded and
brought into operation by an excepted peril, the legal position depends upon whether the
expected peril was the proximate. The remote cause is when an incendiary bomb damaged the
property; the proximate cause is enemy action.
 TYPES OF BAJAJ ALLIANZ FIRE INSURANCE POLICIES

There are different types of fire insurance policies keeping in view of the various needs of
business enterprise. The important types of policies are described below: -

 Average Policy: -

It is policy containing ‘Average Clause’ Average policy refers that if a person insures his
property for an amount lesser than its value, the insurer is not bound to indemnify for the total
loss of the property, even if the claim is not more than the sum insured by the policy. This way,
the insurer shall be liable to pay in proportion to the actual loss, in which proportion the policy
amount and the real value of the subject matter exists.

The formula is an under:

Amount of indemnity = Policy money * actual amount of loss

Market value of the subject matter at the time of fire.

For example:

‘A’ has insured his property in a fire insurance policy containing ‘Average clause’ for Rs. 5.00
lakh. After some time, the property partially burned by fire causing a loss of Rs. 6.00 lakh. The
claim payable to him against the loss of Rs. 3.00 lakh, by the insurance company is calculated as
under:

Amount of indemnity = Policy money * Actual amount of loss

Market value of the property insured.

= 5,00,000* 3,00,000 = Rs. 2,50,000.

6,00,000
  Valued Policy: -

In an ordinary fire insurance policy, the insurer simply indemnifies the insured. In the case of
valued policy, the property is valued at the time of affecting the policy and the insurer agrees to
pay the insured sum on occurrence of fire irrespective of the loss. Here in this case, the contract
is not an indemnity. Under the valued policy the insured can recover a fixed amount, agreed at
the issue of policy without the necessity for any further proof of value at the time of fire. This is
because that the valuation was done at the time of affecting the policy. The valued policy also is
known as ‘insured policy’.

 Specific Policy: -

It is a policy under which the property is insured for a fixed or a specified sum without taking
into account the actual value of the property. The sum assured shall be usually less than the
actual value of the insured property. The insurer’s liability under this policy arises only when the
losses reach to the extent of certain specified sum. However, the insurer shall not be liable for
indemnity more than the policy money.

 Reinstatement or Replacement Policy: -

This a policy in which a clause is inserted in the policy under which the insured can recover not
the value of the buildings or the plant as depreciated, but the cost of replacement of the property
destroyed by new property of the same kind or the insurer may reinstate the property instead of
paying in cash. In both the cases we have the example of “New lamps for old”.

Reinstatement or replacement policy is issued for new plant and machinery of buildings, of
reputed companies.

 Floating Policy: -

This type of policy is useful for the goods kept at different places and for floating goods. For
example, some of the goods of other trader are kept in one go down, and few kept in another go
down, some are kept in the railways go down or some at the sea port. This way, for the goods
kept at different places, such a trader to cover the risk of goods lying at different places can
obtain a floating fire insurance policy under one policy.
The major advantage of this policy is that the insured need not obtain different policies for the
goods kept at different places. The insured needs to declare all his goods for which the floating
policy is issued. The disadvantage for the insurer is that his risk increases. Sometimes one can
make under insurance, by which the loss will be higher for the insurer.

The policy is suitable for those traders whose goods are lying at different go downs, railway
station or seaport for a long period, and the possibility of risk of fire is much. The touring
companies like Circus Company, Theatre Company, and Auctioneers etc. this floating policy is
beneficial.

 Declaration Policy: -

This policy is specifically aimed for wholesalers and distributions of goods whose stocks usually
fluctuate. However, this policy is not issued for the goods lying in go downs or which are used in
manufacturing process.

At the time of effecting the policy, it is estimated that how much of the goods are to be covered
by risk during the tenure of policy. On the basis of this estimate insurance is affected on
maximum value of goods. The insurer shall be liable up to this limit only.

At the beginning, the insurer charges three-fourth of the premium fixed on the basis of maximum
values of stocks. Thereafter, insured declares after certain time interval (monthly or quarterly
according to the duration of premium become, due) the value of his actual stock. In the case of
loss by fire, indemnity is calculated on the basis of value of goods declared by insured, in the
above manner. On maturity of this policy, the average value of stock is ascertained and on the
basis of this average the premium is more than the initial premium charged, the excess is claimed
from the insured. On the other hand, the initial premium charged is more than the average
premium determined at the maturity of the policy, excess amount be returned to the insured.
However, the insurance company retains 50 per cent of the initially paid premium. This way, the
insure is effected on the maximum value of the stock and the payment of premium is made on
the average stock.

The declaration policy is issued for not less than Rs. 20 lakh, in India.
  Adjustable Policy: -

This policy is issued for existing stock. A condition a attached with this policy that the premium
rate shall adjusted according to increases or decrease in the value of stock. At the beginning this
policy is issued like an ordinary policy and the premium is paid in full at the rate prescribed. It is
a contract limited to merchandise or stock-in-trade, other than farming stock. When there is
variation in the value of stock, this change is notified to the insurer by the insured. On basis of
this information, a suitable endorsement is made on the policy and the premium is adjusted on a
pro-rata basis. On the basis of endorsement made on the policy, it is assured that the policy is
affected on such an amount. In the case of loss by fire, the amount notified by the insured at the
maturity of the policy is taken as final and indemnified up to that limit.

In this kind of policy insured can reduce or increase the policy amount according to his
convenience and the premium is adjusted on the basis of this increase or decrease.

This policy resembles like a declaration policy, but there are certain differences between the two:

 In declaration policy, the stock value declared at the time of affecting the policy remains
as insured sum, whereas in adjustable policy, the stock value declared at the last time is
accepted as sum insured.
 In declaration policy, it is essential to declare the stock at certain fixed interval, whereas
in adjustable policy, this declaration is depends on the convenience of the insured.
 In declaration policy, the money to be indemnified shall be the same that declared at the
beginning whereas in adjustable policy, the value declared at the last time shall be the
amount to be indemnified.
 Although in both the policies, the premium is calculated at the end of every year, the
maximum limit of insured sum differs.

 Maximum Value With Discount Policy: -

Under this policy, the insurance is affected on the maximum value of stock remains throughout
the year, and accordingly premium is charged. There requires neither any declaration of stock
value nor any adjustment.
The insurance is affected on the maximum stock value throughout the year and in the case of no
indemnity, one-third of the premium paid is returned to the insured at the end of the year. The
advantages of this policy is that there requires no declaration by the insured nor requires
calculation of premium at the closing of every year. The one-third premium refunded by the
insurer can be treated as a discount in consideration of variations in value of goods. Otherwise
there is no justification for refund.

 Excess Loss Policy: -

This policy is obtained where the stock fluctuate indefinitely. The trader has to obtain two
policies at a time, one for the minimum stock of the merchandise always remain in stock and the
other for such value the stock may increase. The first policy is known as “First Loss Policy.”

Under the cover of first policy, the loss is indemnified up to the sum insured. If the loss exceeds
this limit, that can be met out from the Excess Loss Policy.

This policy has the advantages that with a small amount of premium, larger risk can be covered.
The premium rate for the excess loss policy is very low in comparison to the other polices.

In the case of excess loss policy, the insured is required to declare the actual stock every month
as was needed in declaration policy.

 Ordinary or Standard Policy: -

This policy provided security against some fundamental risks. The premium is kept at lower rate
because this policy is obtained by almost all the insured. This policy has two types:-

 For household goods and

 For all other purposes such as for factories, shops, go down, furniture’s etc.

Usually this type of policies overlooks the risk factors and the insurer is not liable for the losses.
The risks, which are overlooked, include loss due to natural calamities, like earthquake,
explosion of lava from the earth, civil wars, strikes, explosion, etc.
  Special Peril Policy: -

In addition to ordinary risks, this policy provides for coverage of risks involving explosion,
violence, etc. strikes, civil war, earth-quake, etc. and loss due to floods, explosion of water tanks,
explosion in the air by collision between two air. Crafts, loss to the insured properties by
transport vehicles etc. Additional rate premium is charged for undertaking special kinds of perils.

 Comprehensive Policy: -

This policy not only undertakes full protection against risk of fire, but also combined with risk of
burglary, riot, theft, pest, damage, lightning etc. This policy is also known as “All in policies”.
The major advantage of this policy to the insurer is the higher rate premium, while the assured is
protected against losses from other kind of perils.

 Sprinkler Policy: -

This policy insures destruction of or damage due to accidently leaking water from automatic
sprinkler installation, used in the insured premises to put out fire.

The policy contains various conditions relating to maintenance of sprinkler, up keeping and
operation.

 Rent Policy: -

This policy protects the building owners from the loss of rent. If a tenant does not pay rent
because of fire in the rented portion, the insurance company will pay for such loss.

This may constitute a separate policy, or can be included within other forms of cover and may be
affected either by the owner, or by the tenant or by an owner-occupier. If the tenant is not paying
rent because of fire, the owner can claim rent from the insurer. If a tenancy agreement requires
for such insurance, the tenant should insure under this policy. In the event of fire, the owner-
occupies would be required to pay for alternative accommodation during the period of repairs
and reinstatement.
  Transit Policy: -

A transit policy covers goods in the course transit from one place to another by rail, road, air or
sea transport. The policy protects the loss due to damage or loss in transit. But reaching the
goods to the destination place.

 Builder’s Risk Insurance: -

This policy is insured for loss by fire against buildings, including machinery and equipment
during the process of construction, as well as such materials incidental to the construction work.
This policy is also known as contractors’ risk or contract works risks policy. At the beginning
this policy is issued for a minimum sum and accordingly to progress of construction work, the
sum insured is increased.

 Long-Term Policies: -

Policies for a period exceeding 12 months shall not be issued except for “Dwellings.”
 CLAIM PROCEDURE OF FIRE INSURANCE

A set procedure is followed for the settlement of claim under fire insurance. The procedure is as
follows:

 Notice of Fire: -

As per conditions of fire insurance policy, immediately after the occurrence of fire, the notice of
fire is given to the insurance company, in writing. This is necessary for the insurance company to
make preliminary investigation that deem expedient. Delay in giving notice of fire may severely
prejudice the interest of the policyholder.

 Presentation of Claim: -

After giving necessary notice of information of fire, the insured must present the claim to the
insurer in the prescribed claim form. The claim in the prescribed form should be submitted
within 15days from the date of fire. This period of 15days can be increased by the permission of
the insurer. All the facts should be correctly be furnished in the claim. Usually, the following
types of information are given in the claim: -

 Complete details of the losses giving the date, time and place where the incident took
place.
 Causes of loss.
 Details of damaged property, value of the property at the time of fire, value of salvage
and the claim amount.
 Subject matter of insurance and loss to every component.
 Full details of the other policies insured against the same subject matter.
  Presentation of Necessary Documents:-

The following documents and evidence are enclosed with the claim: -

 A declaration about the claim and about related facts and figures.
 The evidence of all details, books, records, statutory books, plans, vouchers, document,
certificate and other information that give the proof of loss by fire and that create the
liability on the insurer.
 Any other necessary document, witness, certificate etc. that is required under the
conditions of fire insurance policy.

In case these documents could not be presented together with the claim, they may be sent within
6months, failing which the insurer can reject the claim.

 Action By The Insurance Company: -

On receipt of claim, the office of the insurance company. It may issue the receipt of the claim.
After that, the claim department undertakes thorough scrutiny of the claim on the basis of
documents and witnesses presented by the insured with the claim. After that a ‘Claim Ticket’ is
prepared and entered it in the ‘Claim intimation Register’. This way the claim file is prepared
with claim number.

 Survey and Loss Assessment: -

On receipt of notice of information and claim from the insured, the insurer arranges to undertake
survey of the lost properly with help of expert surveyors and loss assessors.

As per provision of insurance Act, 1938, no insurance company accepts the claim exceeding Rs.
20,000/- or more unless it receive the reports of the surveyors about the actual loss of the subject
matter. Such a survey is necessary to find out under what conditions and causes the fire occurred,
and what would be limit of company’s liability in this behalf. This survey is calculated by
visiting the spot where the fire took place. Under the conditions of fire insurance, it is the duty of
the insured to extend all necessary assistance and cooperation to the surveyors and assessors.
The surveyor’s reports usually contain the following information: -

 Causes of loss occurred.

 Proximate cause of fire.
 Assessment of loss.
 Indirect loss or expenses to insured.
 Details of expenses made towards assessment of loss.

Mention about the policies obtained by insured from other fire insurance companies on the same
subject matter and the amount of contribution on the part of the insurer.

 Settlement of Claim: -

When the report is received from the surveyors and assessors of loss, the insurance company
takes further steps to settle the claim. The company studies the reports and the claim received
from the insured thoroughly. In case the claim money charged by the insured and that calculated
by the assessors do not make any difference, the company takes the decision immediately to
make any difference;

the company takes the decision immediately to make the payment of claims. On the other hand,
if there is difference in the claim amounts, the insurance company takes the decision to pay the
claim money calculated by the assessors. In case there is any provision in the policy for
reinstatement, the company assesses the reinstatement value and reinstates the property instead
of payment of claim by cash.

In connection with the settlement of claim, an insurance company should take into consideration
the following matters.

a.Double Insurance: - Where the insured has obtained policies for the same risk from different
companies; the claim is not covered by one policy, but under all the policies. Every insurer in
such a situation, liable to contribute towards the total loss in proportion to the sum assured when
each.
b. Under Insurance: -Where the insured gets his property insured with under the value of his
property, a situation of under insurance arises. In such a situation, the insured is deemed to be the
insurer for the difference of value between the value of the property and sum assured. For this
amount, the insured is liable proportionately to the loss and the insurance company is liable to
pay average proportionate loss. As such, the insurer should keep this fact in mind where the
insured takes under insurance policy.

c. Losses At Different Times During The Tenure of Policy: -The loss to the insured property
at various times is possible during the tenure of the policy. The general rule in this case is that
whenever the claim is paid, that paid claim money is reduced from the total sum insured. This
way the sum insured gradually reduces. By paying additional premium, the sum assured can be
increased again.

d. Arbitration: - Where the insured is not satisfied with the claim paid by the insurer, the
dispute can be referred to arbitration as per conditions of insurance policy. The decision given by
arbitrator shall be binding on both the parties. But the matter can be taken to court if any of the
parties is not satisfied by the decision of arbitration.
 CASE STUDIES ON FIRE INSURANCE

CASE STUDY NO.1

CLIENT

Chemfab Alkalies Limited, manufacturers of Caustic Soda, liquid chlorine & Hydrogen has their
manufacturing plant at Pondicherry. Chennai Regional Office services the client.

COVER

The cover was Industrial All Risk (IAR) with sum insured of Rs. 102.73 crore for material
damage and Rs. 25 crore for Business Interruption.

What happened?

There was an explosion in the Cell house of Electrolysis House due to which there was a
material damage and plant production has to be stopped. The key material – membranes had to
be imported.

Role of Bajaj Allianz

On receipt of the intimation of the accident on 16.10.02, immediately a surveyor from M/s Mehta
& Padamsey Surveyors Pvt. Ltd. was rushed to the site. The basic documents to support the
claim were given on 18.11.02and the Surveyors submitted their preliminary report on 19.11.02.
Bajaj Allianz team had analyzed the incident and liability was established under the policy. An
On-account claim amount of Rs.50 lakh was paid on 23.11.02. Within 4 days of the report.
Meanwhile we smoothly had drawn up a proper flow chart and used alternate resources such as
using spare membranes to repair the damaged cell and also advised some re-engineering at the
plant and ensured that the shutdown of the plant was limited to the minimum. As a result loss
due to business interruption was reduced to substutially.Our team also analyzed the cause of the
incident and suggested preventive measures and the Insured has incorporated the same in their
manufacturing process before the startup following the above accident. Meanwhile the client
sought a further on A/c payment for facilitating the import and the 2 nd installment of Rs 50 lakh
was paid in the intervening period on 14.3.03 The final bills were given to the Bajaj allianz on
25.3.03 and the balance payment of more than 150 lakhs was paid on 28.3.03.
Lessons learnt

It was the joint effort of the client, the insurer & surveyor, which reduced the period of Business
Interruption following the major breakdown in a plant. The grace and speed with which Bajaj
Allianz handled the claim was well appreciated by the client.

CASE STUDY NO. 2

CLIENT

Cadila Pharmaceuticals Ltd., Ahmedabad

COVER

Standard Fire & Special Perils Insurance for Stock of Raw material which was sent for
processing and lying at Pharma Chem Industries Pvt. Ltd., who is Cadila Pharma's outsourced
manufacturing partner at Vapi, Gujarat.

What Happened?

Fire broke out in the above factory at around 7.30 p.m. on July 10, 2004 and engulfed the entire
factory. The fire was extinguished by around 7 a.m. on July 11, 2004, but not before the entire
factory and its contents were gutted. The fire was believed to have been caused by ignition of
stock of solvent by sparks generated by electric short circuit. The factory building, plant and
machinery and the stocks contained therein were almost completely damaged. Loss suffered by
the insured: Stocks worth Rs.21,40,800/- lying in the custody of Pharma Chem Industries Ltd.
for processing. The assessed Loss was Rs.18,33,816/-.

Role of Bajaj Allianz

Bajaj Allianz, Ahmedabad received a mail intimating the loss from their insurance department on
July 12, 2004 and immediately a surveyor - M/s Mehta & Padamsey Pvt.Ltd was deputed to
carry out the survey. They carried out the survey on July 13, 2004 in the presence of a person
from the insured's side. The Surveyor also visited their Ankleshwar factory on the same day, for
verifiying all records pertaining to the stock sent to Pharma Chem at Vapi. An on-account
payment of Rs.5 lacs was released on July 17, 2004 after confirming all the facts and verification
of records based on the interim survey report on July 17, 2004. Meanwhile the process of
finalizing the claim was initiated and meetings were held to sort out the queries. On receipt of all
relevant documents and clarifications from the client vide their letter dated August 1, 2004, the
claim was immediately settled and the balance amount of Rs.13,28,916/- was released on August
5, 2004 .
 CONCLUSION

Indian Insurance Companies have come a long way since independence & more after
Liberalization, Privatization, and Globalization (LPG) era, however they have to cover some
distance so as to be benchmarked with the for sure that the reforms process is on & the insurance
companies are in right directions

In the project study of “FIRE INSURANCE” we can see that the scope & significance of it to
such an extent that every insurance company is handling it with due care, as the scope insurance
business has widen to from national boundaries to global or international boundaries.

From the topic of “FIRE INSURANCE” a more reformed & deep study of the same is made.
This project study not only covers various aspects of the same & is a very good example through
which we can measure the growing need, scope & significance of the same.

This project report has not only given an opportunity to me to prepare a project on the subject
above topic but it has also given me a chance to understand this topic more effectively but has
also increased my own knowledge of the topic.