UNIT-2

Functions of the Agent

Insurance Agent: Insurance agents are insurance professional that serve as an intermediary between
the insurance company and the insured. An insurance agent’s role is primarily that of a
communicator, counselor and facilitator. The prospective customers can buy the best insurance
product and services for his/her varied requirements such as life, property, health, burglary
insurance from the insurance agent. The agent possesses multi-faceted roles to play as enlisted
below:
1. The insurance agent helps in promoting and selling of insurance products and services to its
customers.
2. They provide sound financial advisory services and customer support the clients.
3. They delay with not only individuals but with their families and corporate businesses too.
4. They keep good relationship including good rapport with his/her existing and prospective
clients.
5. They keep general awareness about the markets.
6. They help in framing roadmap for the promotion of insurance brands.
7. They draw and re-draw well planned market strategies from time to time, keeping in mind
the customer preferences.
8. They help significantly in building Public-Relation(PR)
9. They help aggressively in pursuing Business-Development tactics.

Proposal Form: Proposal form is the most important and basic document required for insurance
company. It includes the insured’s fundamental information like address, age, name, education,
occupation etc. It also includes the person’s medical history.
Proposal form helps the insurance company to calculate all the potential risk in relation to the
insurance policy and hence deciding the premium amount, proposal form can be divided into-
1. Application form: The application includes question pertaining the name, address, term of
insurance, sum to be assured, mode of premium payment, date of birth, objective of
insurance, name of the nominee, previous insurance history acceptance or rejection on the
proposal, engagement in Navy, Air-force and Military Services or the intention to engage in
their service. There are some additional questions to be answered by the formal proposer
which are about education, their income, occupation. There is declaration in the end of the
form which form the basis of contract between the insured and insurer.
2. Personal statement: Part-II of the proposal form is called personal statement which is filled
by-
a) Either the life to be assured or
b) The agent or development officer, writing at the dictation of the life to be assured.
This statement mentions name of the life to be assured, family history of father, mother,
brother and sister in connecting with their health and illnesses and cause of death. Questions
about the bodily impairment, serious diseases, habits, accidents or injury are the important
source of information.
Underwriter: Insurance underwriters evaluate the risk and exposure of potential clients. They
decided how much coverage the client should receive, how much they should pay for it or whether
even to accept the risk and insure them.
It is the process by which the insurance companies determine the type of risk that a potential
client(insured) possess before a company when you apply for an insurance policy. The insurers do a
thorough check based on the information you provide. They also do their own evaluation and allow
your coverage after they found you favourable enough.

Types of underwriting-
1. Medical underwriting: It is the process of assessing your medical history. For example- if
you disclose that you had a history of high blood pressure, the underwriter at the insurance
company might request a report from your doctor. Requesting information from the proposer
doctor or any relevant medical professional cannot be done without the permission of the
proposer. All medical information gathered is strictly confidential and this is only viewed by
those who have a direct role in assessing the client’s applications. Medical examination is not
always necessary but when they are requested, it is only to help the insurer.
2. Financial underwriting: It is primarily used to make sure that the person who is being
insured qualifies for an amount of insurance that does not exceed their insurable interest. The
insurable interest means that there is firm reason behind the amount of life insurance that is
being applied for. Typically, this means that the amount of insurance that is available to any
applicant is capped at a certain point, over which they have no real justification coverage.

Nomination: According to Sec 39 of the Insurance Act 1938, the holder of a policy of Life
Insurance on his own life may, when effecting the policy or at any time before the policy matures
for payment, nominate the person or persons to whom the money secured by the policy shall be paid
in the event of his death. Nominee is the person named by the policy holder to whom the policy
amount may be paid, if the policy amount is payable on death and the nominee is alive when the life
assured expires. In the absence of any of these, the nominee does not acquire a right in the policy. If
the policy matures by expire of time, the policy amount is payable to the insured himself and not the
nominee.
Notice of Nomination: When nomination is made for the first time, the corporation will register it
even if no notice is served, provided the nomination is in order. But for all cancellation, changes,
subsequent to the first(earlier nominee), the corporation insists on a notice of nomination in the light
of section 39 of the Insurance Act 1938 otherwise it will not be liable for any payment.
Provisions of Nomination as per Sec 39- These are:
1. The insured can make nomination at any time before the maturity of policy or death claim. In
case of minor nominee, he has to appoint a guardian to receive the benefits on behalf of
nominee.
2. The nominee can be appointed at the time of proposal. The insured will make endorsement
on the policy document and the insurer will register the same in his records.
3. The insurer must be informed if the nomination is cancelled or changed by an endorsement
or a further endorsement or by a will.
4. The insurer shall furnish a written acknowledgement of registration of nomination or
cancellation of nomination. The insurer can charge a fee not exceeding rupee one for that.
 5. The nomination is automatically cancelled in case of transfer or assignment of policy.
6. In case the nominee or nominees die before the death of the insured, then the amount will be
paid to legal heirs or legal representatives or to the holder of succession certificate.
7. If nominee or nominees survive, then the amount shall be payable to such survivor or
survivors.
8. The provisions of Section 39 shall not apply to any policy of life insurance to which Section
6 of the Married Women’s Property Act, 1874.
Assignment: Assignment means transfer of a policy to another person. A transfer or an assignment
of a policy of life insurance, whether with or without consideration, may be made only by an
endorsement upon the policy itself or by a separate instrument signed in either case by the transferer
or by the assignor or his duly authorized agent and attested by atleast one witness, specifically
setting forth the fact of transfer or assignment.
The transfer or assignment shall be complete and effective upon the execution of
endorsement or instrument only attested until a notice in writing of the transfer and either the said
endorsement or instrument itself have been delivered to the insurer.
The priority of claims will go by the date on which the notice of assignment is served on the
corporation. The insurer has to record the fact of the transfer and has to give a written
acknowledgement of receipts of such notice. As a result of the assignment, all the rights and
liabilities under the policy will be transferred to the assignee subject to any condition contained in
the assignment. The assignment can be of two types-
1. Absolute assignment: It is that type of assignment in which the assignee hold the complete
rights against the policy till he re-assigns the policy in favour of policyholder. In case, the
assignee dies before the maturity, then the maturity amount shall be paid to legal heirs of
assignee.
2. Conditional assignment: Conditional assignment is that assignment in which the title, rights
and interest in the policy is automatically revert back to the assignor on the occurrence of
certain specified conditions, such as death of assignee before the death of assignor, on the
repayment of loan and on the survival of assignor on the date of maturity.
Features/Conditions of Assignment
These are as follows:
1. Assignor must be major.
2. Assignor must be competent to make assignment, i.e, he must not be insane or insolvent, etc.
3. Assignor should have complete ownership of the policy.
4. Assignment should be in writing and must be very clear.
5. Assignment may be made with or without consideration.
6. Assignment is allowed for all types of insurance plans.
7. Once assignment is done, it cannot be cancelled. Only the re-assignment can be done.
8. The assignment can be done in favour of any person or institution.
9. Assignment can be done in favour of more than one person.
10. On receipt of assignment request, insurer has to record the fact of assignment in their records.
11. The assignee gets the complete ownership and rights over the insurance policy.
12. Section 38 of the Insurance Act, 1938 deals with the assignment.
Procedure regarding settlement of claims
The policy amount become payable either on the assured’s death during the term of
insurance or on his surviving till the end of the term, i.e. on maturity. In case of death claims, proof
of death, proof of title and age proof are essential. In case of maturity, proof of age and title are
required. The procedure for settlement of claims are as under-
1. Notice of death: The beneficiary of the policy must send a notice of death of the insured to
the company. The date of death, the cause of death and the policy number must be
mentioned.
2. Death certificate: On receiving the notice of death, the insurance company will send a claim
form. The claimant should fill the form carefully and submit it. The following document
should be attached with the form-
a) Death certificate
b) Original policy
c) Identity certificate
d) Police report in case of unnatural death.
3. Proof of life: In case the policy is not nominated in the name of the claimant, he will have to
obtain a certificate of title property of the deceased from a court of law.
4. Payment: When all the legal formalities are completed, the insurance company will send a
discharge form to the claimant. The form shall be duly filled in, duly stamped and returned to
the insurance company. After their scrutiny of the discharge form, the insurance company
will send the cheque to the claimant through registered post.

Assignment:
1. Explain the rights of a nominee(6marks)
2. Describe the various processes regarding underwriting.(12marks)