Professional Documents
Culture Documents
CHAPTER NO. 01
INTRODUCTION OF INSURANCE
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INTRODUCTION TO INSURANCE
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CHAPTER NO. 02
INTRODUCTION OF FIRE
INSURANCE
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2.1 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.
2.2 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.”
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It is an indemnity contract.
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.
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in dealing with salvage and also judge the cause and nature of fire, and
the extent of the loss.
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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.
Loss by theft during a fire is covered as a fire risk (In Levy vs.
Bailey, 1831).
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CHAPTER NO. 03
NATURE AND USE OF FIRE
INSURANCE
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3.1 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.
3.2 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.
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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.
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.
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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.
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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.
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few students to train them in fire fighting methods and fire preventive
methods.
General Devices
Apart from the above contribution to prevention protection, the
following devices are utilized for preventing the losses.
i. The insurer compensates loss at a reasonable cost.
ii. Serious hazards are to be cooperatively reinsured.
iii. Loans are provided for better construction and building.
iv. Fire insurers stimulate the installation of protective devices to
reduce losses.
v. Fire fighting methods are organized with public utility concerns.
vi. 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.
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CHAPTER NO. 04
SCOPE FOR FIRE INSURANCE
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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.
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Section 2 of the Indian insurance act, 1938, states the scope of fire
insurance to include:
1. Fire insurance business is different from other insurance
business in operation and covers the risk caused by fire.
2. 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.
3. 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.,
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CHAPTER NO. 05
SIGNIFICANCE OF FIRE
INSURANCE
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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:
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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.
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.
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CHAPTER NO. 06
PROFILE & PROCEDURE OF BAJAJ
ALLIANZ FIRE INSURANCE
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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.
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o Personal Accident
o Hospital Cash Daily Allowance Policy
o Health Guard
o Critical Illness
o Burglary Insurance
o Householders Insurance
o Travel Companion
o Fidelity Guarantee Policy
o Office package
o Money Insurance
o Public Liability
o Plate Glass Insurance
o Consequential Loss (Fire) Insurance Policy
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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 Mn. 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
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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. 105 crores.
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.
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furnished with care and utmost good faith. All the facts about the subject
matter should be clearly disclosed.
VI. 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.
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IX. 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.
X. 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.
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CHAPTER NO. 07
BAJAJ ALLIANZ FIRE INSURANCE
– RATE FIXATION
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i. Ordinary
ii. Hazardous, and
iii. Extra hazardous
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.
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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.
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CHAPTER NO. 08
BAJAJ ALLIANZ FIRE INSURANCE
CONTRACT
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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.
a. 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
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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.
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CHAPTER NO. 09
PRINCIPLE OF FIRE INSURANCE
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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
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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
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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.
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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
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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.
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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.
The right of subrogation is exercisable at common law
after the insurer has paid the claim made against him.
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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.
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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.
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CHAPTER NO. 10
TYPES OSF BAJAJ ALLIANZ FIRE
INSURANCE POLICIES
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Average Policy: -
For example:
against the loss of Rs. 3.00 lakh, by the insurance company is calculated as
under:
6,00,000
Valued Policy: -
Specific Policy: -
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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
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Declaration Policy: -
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The declaration policy is issued for not less than Rs. 20 lakh, in
India.
Adjustable Policy: -
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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.
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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: -
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.
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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.
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Long-Term Policies: -
Fire Others
Net Premium 14,246 54,713
Incurred Claims 9,277 45,731
% Of Net Premium 65.1 83.6
Net Commission 4,780 14,023
% of Net Premium 33.6 25.6
Expenses of 149 438
Management
% Of Net Premium 1.0 0.8
Underwriting (512) (9,821)
Profit/Loss (-)
% Of Net Premium -3.59 -17.95
Inv. Income app to 2,249 10,957
revenue
% Of Net Premium 15.8 20.0
Balance Profit/Loss (-) 1,741 1,152
% Of Net Premium 12.2 2.1
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CHAPTER NO. 11
CLAIM PROCEDURE OF FIRE
INSURANCE
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Presentation of Claim: -
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Settlement of Claim: -
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
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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.
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CHAPTER NO. 12
CASE STUDIES ON FIRE
INSURANCE
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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.
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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.
Client
M/S. Amitech Pipe Systems (India) Pvt. Ltd. is a joint venture between
Amiantit Holdings, Saudi Arabia, a leading manufacturers of Glass Reinforced
Polyester (GRP) tanks worldwide and Mr. Shivanand Salgaonkar, a leading
industrialist from Goa with shareholding in the ratio of 70%: 30%.
What Happened
The Tank Ribbing Machines had been imported from Flowtite, Norway. All
process parts, components, electrical and control systems were imported. After
the reportedly successful test of the dry ribbing, a full scale appliance of ribs
was also done in the morning of November 6, 2003. Suddenly there were two
explosions in quick succession at about 11:20 hours on November 6, 2003. A
Norwegian engineer, Mr. Arvid Sundboe, was doing commissioning of the
Ribbing Machine. The activities on the day of the incident are not precisely
known as the two persons who were present in the area and/or involved in the
commissioning activity, died as a consequence of injuries sustained in the
accident. A fire followed the explosions, which was on account of splashed out
resin and / or catalyst. The Fire Brigade was alerted and tenders came from
Bicholim, Mapusa and Valpoi. The fire was localised around the machine. The
fire brigade came reportedly within 30 minutes and doused the fire. The
estimated loss was Rs. 1 crore approx.
the evening, a joint meeting of the representatives of the insured, insurer and the
surveyor was convened and the entire claim process and documentary
requirements were explained to the client. After a series of discussions and
constant follow-up with the insured, all the documents were received on 19 th
December 2003 and the final report was released on 23rd. December 2003. The
claim was processed and was approved for payment for Rs. 81,89,055/- on 26th
December 2003.
Lessons Learnt
Deliver In Moments Of Truth
This was the moment of truth for us. Our entire team at Goa office realized that
they needed to deliver when it mattered most and they did exactly what was
expected of them. We at Bajaj Allianz have been working to fulfill the vision of
being the first choice insurer for customers and this is only a small step towards
that. We can perform still better. Initially when the project insurance was being
discussed with various public sector companies, Amitech also decided to invite
some private companies. The Techno Marketing team of Bajaj Allianz made a
presentation on Project Insurance. The Directors of the company was so
impressed with the professional approach of Bajaj Allianz that they decided to
place 100% business with BAGIC.
Client's reaction
When asked how he felt about handling the claim, Mr. Shivanand Salgaocar,
MD, who is a stakeholder in the company said, '' It is simply amazing.” The
manner in which the claim has been dealt with has only strengthened our trust in
them and the least we can do is tell other Corporate about our experience.''
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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/-.]
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 .
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CHAPTER NO. 13
DATA ANALYSIS
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DATA ANALYSIS
40%
35%
30%
25%
20%
15%
10%
5%
0%
Display Door to Door Exhibition Catalogue Price Off
Demo
In
terpretation:
According to the study 40% insurance care consultants prefer display
technique,20% insurance care consultants prefer catalogues, 16% to the
exhibition, 14% to the door to door demo and 10% insurance care consultants
prefer price off technique.
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40%
35%
30%
25%
20%
15%
10%
5%
0%
Display Door to Door Exhibition Catalogue Price Off
Demo
Interpretation:
According to the study 36% insurance care consultants say door to door demo
techniques giving good response, 18% insurance care consultants say to the
display & exhibition, 16% to the catalogues & 12% say to the price off
technique.
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50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Display Door to Door Exhibition Catalogue Price Off
Demo
Interpretation:
According to the 46% insurance care consultants, catalogue technique is
economically beneficial. 22% to the door-to-door demo and 12% insurance care
consultants prefer price off technique.10% to the exhibition & display
technique.
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40%
35%
30%
25%
20%
15%
10%
5%
0%
Display Door to Door Exhibition Catalogue Price Off
Demo
Interpretation:
According to the study 38% insurance care consultants say display technique
requires less time in sales promotion. 22% to the display technique, 16%
insurance care consultants vote to the catalogues, 14% insurance care
consultants vote to the 10% to the exhibition.
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35%
30%
25%
20%
15%
10%
5%
0%
Display Door to Door Exhibition Catalogue Price Off
Demo
Interpretation:
According to the study 34% insurance care consultants say that the catalogues is
easily manageable, 30% to the door to door demo,18% insurance care
consultants prefer display technique 10% to the exhibition, and 8% insurance
care consultants say to the price off technique.
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40%
35%
30%
25%
20%
15%
10%
5%
0%
Display Door to Door Exhibition Catalogue Price Off
Demo
Interpretation:
According to the study 40% insurance care consultants vote to the price off
technique is require less knowledge to execute.22% insurance care consultants
prefer catalogues, 14% to the display and 12% to the exhibition & door to door.
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Display 20%
Door to Door Demo 42%
Exhibition 24%
Catalogue 10%
Price Off 4%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Display Door to Door Exhibition Catalogue Price Off
Demo
Interpretation:
According to the study 42% insurance care consultants vote to the door-to-door
technique that it requires more knowledge to execute than others. 24% to the
exhibition, 20% to the display technique, 10% insurance care consultants give
vote to the catalogues and 4% insurance care consultants prefer price off
technique.
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50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Yes No Can’t say
Interpretation:
According to the study 46% insurance care consultants say yes that the price off
are necessary for sales promotion. 40% say no and 14% say can’t say.
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50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Yes No Can’t say
Interpretation :
According to the study 46% insurance care consultants say No that the sales
promotion program that is presently undertaken by Bajaj Allianz are
satisfactorily 36% say Yes and 20% say can’t say.
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80%
70%
60%
50%
40%
30%
20%
10%
0%
Yes No Can’t say
Interpretation :
According to the study 72% insurance care consultants say yes installment
offers are 22% say no and 6% say can’t say.
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CHAPTER NO. 15
CONCLUSION
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CONCLUSION
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CHAPTER NO. 16
BIBLIOGRAPHY &
WEBLIOGRAPHY
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Bibliography
WEBLIOGRAPHY
www.bajajallianz.com
www.indiainfoline.com
www.irdaindia.org
www.thehindubusinessline.com
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