hi) Contents Chapter 4 Copier y | Neer Twe Naber Risk-Management 1 |scmnapenene 1 2 | econo of zane a Btn | ee 7 [Peterman « movers ae tres mare piece oo | SSNS Gtr aS Se riches nace ; [rence Casters * coat 6 The Insurance Contract 109 ‘ . Hees a — : 8 Life Assurance Products 161 pehrataers 2 | err maraner Prac 7 | : Annexure 1 | History of Insurance 192 | Framer? [Hin of samc nnd =)a ct be sate 5 ae pected Event, at Any Point of Teme. AiS2s are also Whey Sr Ute tine. ‘peo, ach eden ge Rae toes The ny nay ee pec Ea) Fett 15 Se cee ne oe Ue ere te Seecaion’ hac ton tras 200 ae soe ae we Sselrcen da ee Maruti ote et roaremes cep ot pe ae Lae Mee Sse C La Aythng tat cases te eee arta, uring, Land Se, ee ‘do rent or nen, that may ease a Ls, salle, a Fei to be managed ere tat, dy Lass does ot nerly tect Boos, Sn et na 1 oh peo! "aya: itn peo Pct 8 grller ae eds pave 8 WW los \udteee echees Insurance Does Not Protect the Asott Does Not Prevent its Loss ue othe Pert, an ‘the Peni arma be voided through surance. auance Only Taes to Reduce the npat of he Financial Lass to the Owner or Benen of the sel s 2 a a 7 aeo __________ A Peso thes Fi are es nace fo Hs Ofc, so hat He cn protect Hint apa tek fhe Og ts Cane the ee a oe he ate) Cale ee, by tang Sa Detects sa ee Eg EY eg Prem, tothe Event af fie (Eee te, Haiance Canty Serpe th Own apt im toes ater ue oP: aoa eh ol Bete Se Poston that He or Se won efre te Pe ccced te ees ae ees sae sEE RES Tekaree can compensate Only Eonenico¢ Fanci Loses, tcanot compensate {er ion wh ant be mere say Tao Sy hiysmnani Loses, wh cant be eared Ranta Trey ste as eee Sai of Nona Lat cn be Sac Aa Et ae ae se Lm So Se ie ta a a ERLE ee ante ani = bers ter scone ad. such Pecan ae Daan ton we aye at ed eR ne eS ae Rik i, Uncertainty of Otcome If there Diferent from Expectations, there Risk eee, But How People staying fo Buln othe His, are Not Exposed to the Rik of Tl Water. ‘They ace expsed to the Rsk of Landis Sima, People staying neat the Sen Shove, may nat be that mach expoed tothe Rk of Landes Say they fe Cereiniy mare exposed tothe Rsk of Tidal Woes Perils are the Events, tke, Landes or Tidl Waves, whch can ead to Lass or Damage. Rie are the Ueland of Las or Damage eating fom the Occurrences fof Pens. The Rsk tothe Owner ofa Bldg, cue to the Occurrence ofa Per the, rey can be a Faw Lakhs orn Few Caves of Rupees; depending onthe Extent othe Damage it also possible that, tere may be No Damage, at al Insurance fs not {aten to prevent the Parl orto pay Compensation, 1 he Peril apps. Insane taken aginst the Likely Damage orth Ls, that the Perit may cae. ‘Chance that the Outcome wl be awe SEV USS ESCeSGCoGCGdPd Saas ‘A. penon takes Fe Irace for Hs Oi. Het, the Fre the Pei Isuance a aot preset te Fe ram occuring, Now ae ypotetea uation, WER {he ee pert cers, a there Ho Corse No Los. The ee ha occa, but there No Duage of a Lon therefore, thee Wl be Mo Crpensain al bythe Irurance Compary. Te urance Company wil pay Compensation, ony wen, hee ‘Ehescental freer nthe Otic, ana Fanci Los ates da to the Fe. ‘Tis Example makes i cer, tat, Insane ifr the i (os oF Damage) sing eet he Pet ‘ering Some Aets Moe Ry than thes. Fr Example nrg & Very OK bukang ce Ray tan nsring New Gung the Conte of re, Eat uae fr Flot Smarty,osarog 3 Taner caygPetlean routs soe Ry than (tevang Tarr, cy Wate, (rc oniy means tnt, thre in Rossy of aso Damage, The Damage ay \Farpesgr may nt happens race obtaed seknt te Posy, that re as ‘Gunga may happen, The Wor-Ponby pls be-Certaty thre hs tobe Upcertcny abet ve Rk: lnrance cove ony tore Res, where, the Psy bf Occurence fe Uncertain I the Posty of te Ocurnce othe Event tay ten, at Mkt Nat be covered byte sence Company. IRN sees eesaec eee aee area ‘Peron wants othe Inurance for Hs oc, age the Rbk of Lass due to Fe. “he Occurence of Fe, nts see Uncartte The e ay ocr oF ay ak (eeu So the iran Company wi se «fly, to eave the ko as eto five atta Foret Piet alendy stated rary, and seating to bre down the oe, its ert tha, the Pre wl ox tnd dstoy the Ofc Laing to [ses then, he nuance Campa wil Nt cover he Rk tn the case ot aan Be, Dest arn ut he ef Det Un catn ‘nic Race Gaon eee Rok Loe best ve tah De ‘Peat tate Tn of bah uncoratenthe e of Fona, ees fron le Danae, cn lm Scene GV earns | cen Sane (By, he Ting bath hx Uae eam Na Sy ee ch ode, we oars Runt er | ‘ante nue,12, Chasse of Rak: ss canbe cae inte 5 Broad categories Fisk an portant Rik: terejresen ins can 8S clad the Sant of Eee of Damage, ely to be cae reat hs o atrophic Rss wet Ris, where, ise Even of KS} te Sty ig tn at Rene al A ils on an buscar Re re ig rough io ease ie Onner, oF even the neve. — Senta napeyaeht ——sxanpes ante, Natural Disasters, the, Earth duke, Roos, Taam, whee este co fgg We Orr Pean ad ng Usb he, Hore aan Ca ann, Cee CONE ‘Recodo Ipprant ke, wich may a famine, ‘espesencs, ta, rang» Ltt Tne 1 eee Buh ay BF egal CSU ramps canbe, ral Crd Ove and Perna Lars, taken for cjoing the acaon. These dort ad much Val, huts have tobe pid fx. Adee Efecto an conan Rceson, the, Tempera Jobat & Hoge Uses de © Fallinthe Stok aretsareImpirant Re. ts, that ore Less Damaging, te, Temporary ses ot be that inputant To here, tub ey maybe Important Tr the Acted Peon, fr Sone Pered ef Tne > Financial and Non Fane Risk: Ris can aio be clasfied at nancial Rs and Non Fanci Ris. Fanci Rts ae these fis, tat lend to Loses that ean Re uae or messed 0 ‘Moneta ferns. xample:Fnacial Riss are related to Changes in the Yue of Aes, the, Shares cochropety. Se on-nanca Ris ee those, that can't be measured er quantified in Noetany Teens. — ample of Non-Financial isk canbe Heath butt cn eae aa Loss, irouphTedtnet and Temposy Car oT Tezme duet neapacty 9 Weck. Bad sss Decisane may eave bly to pay Debs. Non-rancl Rss ae Nat saan such, but ar, serene, pot vouth isrance, Though Heath ‘Soran Loe of Earns de to Healt or Teatent Costs, can be ‘uanifed and mee. Smal, Cau noose Damages for Nena gon o Lass Be Ceram any mate warmer TG A Are, Ra akres he vein pact corm Be esti, cam trowee — ae > Dynamic Ris and tale ish cei Lea bent cet es Nombre ing es Seas ne oes, ee eee CE sit ic oe are eA Beyer Hoe Ta, a, al a ea ‘Ran oe a oe cies ms, Te ee tease Ome RG Tom oh mg tone Sec ees me gt, he Recana Ar rans aee eT AE E Boer pectin trac rye reon ata tne sane corre Sa a a a See haa See tee fomce mnee a SE, eo i Fost eon sce an forecast i > Pure Rss and Speculative Rh i’ speculative Ris te ur the Conta ofthe Reson Conceme ee tae Sunsets ous ene oe oor c1 49 aes or Bape Peon ets etry Hare AE, may wi He ener face Biss re Wet det the Cote the Cesena Person Pe RAS. ee 7 ‘Es Chino of Lot No Chaar etn Trarnce covers Ry Pare RON, and et Spoclatve RAS. Some Eales t PB, 6, Fue Ey ie, to eat Fee. ames ot Paes a pate: Te re = vee ads Se we eq ~ Fepdamenta aks and Parca Risks: ‘ ena Risks are those Ris, that ect aot of Pope ots mee: Aen Acide sa Fundarenta ik, as, Kalle Loto eae » , Watfects a Lot of Pept, Porcular Boks ftect Only Specie Pers, ia Same: Theft apactcvnc Hose, affects Only the Owner Life Assurance Business dea Wises ans ses wh ate ot mth ae of ae Stier he Cathay» Le of iat Pep, ge eo gy sy brs ee en at @ i i Different casisetons of Risk: 7 Drs sand Se ks Puehsaed Spctane Rs Te ee ee ee Git ewe i Fe an xpos Manufacturing Unt the Exes wl eu ina Rap peat of Fe, destroying eveything na Wry Scr Time. se =I Ec Hazards ane csi into Tw Caters, a, Py Hazards and Hora Hazards. Diagram: Types of Hara: Prylat azar Tis refers to the Charteris and Quits of the Soc: tories prposed to be ware. See OES: Tarp: etal Mare Hararas tan Eable Ofer aie feck. ‘Pel Hats conat of tate Ps tutes Pil Coeos, tht tec Some Examples Psat Haare, ae: , 2 ‘Sevahng isa Physical Hazard, that can increase the Liknibood ofa Fie. _/> ese, lected ear te Sear, ee, TA Waves ac freuen, are ‘Nurchowre, string EGR” hate, the, OM and Preachers, have Daystar, elaing Fe tence — > lait, fav sty of Teron, nave Ppl Nass, retain te ‘Te Probab of Damages Greater in these Cases Moral Hazard: Ths refers 16 the wo sporascing the ‘once Company, anes ‘Tah mentee Si hang Tsufers oF Mang Proft eo of Iswance. eh the ara Harré ME. BrP= away we Loos, tht rout Hwy Botany he Hone Roane a Ue aatones tinal antmtsMauy, tame Aumtage of the Avaatue Fite ob Aerase. kavane tenis ity tomes, Beane OF faba, ovat {asegMavat Harand san aon swans, Pvaine oh CAFTA A the at faba Tha mien ta Ava Naan 1 Same Canta, the fevae aga ane ts ial Mi the KE {2 he foeum whan sara the aan fae eens tga ee se ‘Semueal ant bes nt tte Atehate Cate the Ment Aste, Howe ek Wee Nato dhe Pega Ava Has var he Mwy Lan a ely trom the ured Pea NOL Tals Qe Cae aw Lines, asl Ta ee recastens ‘rycat Nasa «a9 Be asses By exaining the SAbjoE Aas pap fr Suurane, Hewever) Auenmont of aQwal Nason! at Male Nasa ave NS kul: ana Caen aint ant as Pt MA of ape e338 Cxanpie of Akal Nasa can te, 4 Peso, akg Life ASLAN, hy Hasty ‘peg the act tht eo She ug ama real Teva es. Advances Fevhsiogy fs revtt 4 ete Asesteut Maza an RUA Iurance congan. Th fas Ret! race Companies vg the Fes fetter acy Warm Systems and Now Cestrtion Mates habe Fine THe rbubleEnteot of Damages the Event of Nata CaM, =v OHO hessiaon ot Soke Detectors, Water Spektor, Are Aan Sats, Energy Tans, Feeatingusters i OMe Premises, ete ep revi. the Extent Dag te Case of Fre Increased Ava of Better Medal Facts tra Areas has comieray exh the Mortality Rate of New Bar Babies an the MNS x= ‘azar can te dees onto Staton, tat rests tenes Cae ates Sees os) nacacoud eo 2 Row) cal asad whee, he Sicutalecnnet ait moreno een he Pew Ser ot a estates) srs Nac veto he atin and EKA Cont he Premum Rates) Mol 8 Insured Ths cont be managed, bu can be avoid, by ecting to wre the Rk ee eee pei rs set ‘Me i tng ci Qoestiont Fettea teu Goerment sy arg ve of Cntr we asa Wh Type ow TA yaa Bk. « {State Ra. Fatt os 1 fiat ‘ EE 4 4 f ( ;Rf | nan er ees wt ep y Du "onsets tn ns Serre atacmnee 9 ales, te ee Nope pi. Nt Cerin, ae ave menue the La, tht sy Mart ke The stn on oR Tatts aa nk (0 the Subject Matter of imurance. 7 tl ose wl cade he at: 2 ena Repicemert tees, 1) Te Come Une tt Ropar att Revattenet. * etal ony wate ves "Capea tr Cea tb ant Renna tS Lesot Ren, tan, Sovran, an et wtl Mens et. > Pomsie sy tamer Tne Pay ees Diagram 4 toner: | i } 7 LUC U Cur ceo ee eens i Sete fac. tat Aine nat cuca he Cay Oe Oe me oe ae Meer tyrone Cesta 2.2 Rndanageneot Tete are 4 Weys te manque Rs ‘Duara 5: Ways ot Manage Ras | __| = Uy ' | ay ens thet hinged that, Co So te rage wl be me Internal Regrcey Opaator can meek thew Sato Tee Wee 3 Cnes Snes nea tome taGe paramos of Creating Special Fund at, te Cosa sread.ut between the Goud Yes ard the Sa Yous oe Saco tbe bomage nA Sees aL et rks, Rs He need, aes of A he Alama None of the ‘teiatvs ae uty Exe. Foe Caml, Ate to Reale a eevee ‘wl contin to tea fer Troe his be tfrged The een, ‘rye a it eee an he re onpen Rett Sd arte may copes Mutual Excuse, but they arent Freuth Ses of Eee, Retention are Posse fom what hes been transfered Wo tures The Reena (Gnsderations are Cats ane Fesity. Gat inelade No Only the Aout of Raps requ tobe spent to plement he ‘tera, Bat A he Peer Lax of Reese an Cased ih Neate Pitty fr the Pods. Prevention of Rss may be parceled eco eo Inch, homever, when coared tothe Over Al Sent the Cortef Peventen Never "Too chs The Objectives wa tae the Decne ow hk es wc ees Scenarios: Moers of Pasenges AlcCratsatamot to make se, None of the Pats ofthe Ae ea hype Se keane dae lato by Op a ar fait Posibe for a Foun ine, ty wth Ore Ege iy, anf the Last Engine fal the Aecrafe ea st Kp yng, for's Cera Dinners carry Enough Fut to reac the Dstt, aro ray tak Destination to Another arr, if needed A thswe Coss re cass Sacred to prevents rsh These Bational Corts ae incre, bec, apt fey {eral bation he Cat ssocsted wth a rat, ahs, Fever Ove fo A ‘ats and Cstomas fer he Ai) se peteved oS hue aver Ficenarion: res maintain uses of ssl Spee, to aed Uresk Down of Crt ine. Tht fede Dela Reps, and thereto, rece Consett ‘ss of Producto, Rovene and Pratt sna Erte fermation ie tocked thr SoCs {oF ated, as 1 Too mpartant tobe tat 2.3. LespRedueton Techniques: ‘There ave Financial iss, elated to Fnac Resources, Same ofthe Resa fr th, Exchange fate Faction, Canesten nneginnt dace aeequle Ie oan ted that, while these Valuale Detection Sats ce ntl they are Not per manana Ren they do ak Work pope, en they are Te em, drs, fort ‘ra, Sse icy alates Soe wy, te Se Cae. tet is nr tse oie Pcl RS eae: 4 7 Brn ete: ea gues sans oh armen 2 5 Reade os Sane he Resse Pepe ad Sates, meet Loss Reduction Techniques, alu! > Sepifin: Tis voles ating the Subjects, exposed to the Same Rsk eile of Sepraton, els A) Keeping the mentary Diteren Places, 4 = 1) The teap any Frowinsracins, that are found on Gar ytnders, Fammabie ater, and Dandus Mesienes ite ee 1) Carers of Gon separting the Cargo, which may ite & eon, if Placed within Certain ony something ee, > Pept: hs seeing Cones, otha ay Los wi ater > Diversification: Tis nvtes reading the Rs, aro Area, which may not be sifected eqily, oat the Some Tine Dnertestion & Rosie anes, “sig te Prods, wich are n Demand at fret Times or the Products for Diente), and In vexemente (Not Investing A the Func One = ; :Retention and 1 ASIN gn Trae wo ete to nacig Tctagurs ty sek to ‘he aes: ther arcs Wats Tee fe Tea Thi, le {ngemnityAtreements:vinee, One Paty ages compere Anos Paty, ae ae se they may cr ndemetes re Coro, wh the Rk Ae y the bhavera he ndrmyng ay. “> Medning mere, a Franc Transaction is made, to lf et the Los nA > Ths done, when, the sk nthe? Transact, ae craved Recor ‘mannan Opeste Direction, ® pleat nd Hr of kag Te xe, i ‘rive mat hn th Wat weno ed See he Sperm weg Sth a What the Proposed Actions are tying To aleve, a5 well, the sy Comeaiences of elec. 7 SA Watch an at an Oi sores Depo, caused 3 alr Fe, when He was smoking the Depot. The Watchtan was Anae tht, smoking was bated nthe Dept, ado, S25 Car, btoe ting Hs Cini Cane vas,Not Gling Cau, 3 Tis Expte shows tat, even hough the Pewentel are Avare ofthe Rules, they also eases ty ee es i ei tg ~D The Choice of alternatives for Rik-Management should focus ons Consequences or Impact on Others. tis Wrens ta dschorgeEluets nto RAR, nee to avd Rsk 3 in Ores Proms. When Proscar end tbe nective, Producer aly et 10 One f the Fllowing SB -“wanacam tne Ente Product from the Markt, util itis tested for Salety and aay Stance. 3 toner > Blame Others: Some blame Bailes, Reales, or Dstibutes, for Im Paper <3 0e- Ober le Cones rang Pre, Excl Considerations areas portant asthe Financial Consiertions and Technical “9 Consideration, vw ww Diagram: Cea Considerations an Financ Consiserations: Financial and Techical teal Condens Consieraions Stes have ten cated out of the Characters of Vanows Kinds of sks. These ‘Sis help to make Appropriate Decor, reeotdg Management of ented Fae: The Tecniqucs oes to mage Fond Rested Ross would be Deven from the ‘Tecmiqucs wed to manage fire, brary ot Machine Break Down Ps ‘ven after the isk as ben tanfeted to an rare, thee ae stl trmatives to be contered, These reat tothe Cate of Deduetes, Layers (ihe Expression {sed hen iurance Programmes afe arranged Layers Each Layer representing Treresed Libis), tes Eash of thee hae Difleret Cost lations. and alo ‘Sopend an the Anal of Probable Mane Loss (PL) 09 Nanmurs Posie Less weep. vey Ise has a Limit tot Rik Bearing Capac, and thereove, anna wsure 35 uct Rsk, as offered by the Market. The Capac! the mae sree to ee Capital and Reserves, Buness, tats beyard We iuure”s Capacty, manages ‘Grou Re-isrance rangement ka & °° ‘Question? Mow are the Risks messes? 1 the cos of fetal Los B, The Cos of Consoquantal Las. 1, The Likely Los, hat may occ, a Per sts. 1, The Ukehood ofa Pen tring,‘ee Waser to an fare. the Seta Dscsows taw See Fa the ss of cae. Te fh fas hen elec been buenas Soe Cae Now woud the tviduets Decsion t Ret te Rak Sus we Se > Nae eu mates en mar RRS sen bes Inport he meee cao = > REGS ateamic eso mye Sencaen > ihe lutte pgnmrsmnny oonsce Secctoemsecienetee ee > Setar cee EE meses, ‘Yhout surance, Business may nocd tbe coaetown, # the Pore ie suddenly, the Shop burs, or here 2 Majer esy. The Ermeasin eke woul be Repaying the Debio and Faunce, nto wade wee t ce utstanding Debts. When Hoss elapse tbr cto Pur Carson oan Sa uate, Fries tave Been town ents the Suet, watt No Ser ReScore S| Howse or a Business, agin, © Netbor Easy Nor Gack en wh Ge Sarees Insurance rey. Withet icurance Seney, 6 Even Nore Derese = Qvestions How did the Risk Management, femaliy eve? Aisa fonction of Satoeseteree 3 ta Function af be Cllrs : fea Function of Fanci Lenin 1, Asa Function of Investment rzeiztonwon wy 2 Ye Gatevs Opten sc MK eset the iota ht won el es Arner WHY 4 Ue Coes Ogthin A, yok angen orl on nth Herne, ay |S itn ueston 1 ‘Mv Tao Act Ls ad Canepa vn th A. Marin raat / 1 Ptah Maso one DG: Mount nse tens é ©. no Poae Loss > nein? + J separation and Duptention ae Examples a JA comequetiat tases 1, Hea ©, Lone Tete: DD: Financial sks J uestions + gobs ina Lao PAA. tern ig te ri ee Ls (Whit) and Which Other Factor? {As The Probab ofthe Pert ting BB The Cent of npeenting Ls: eduction Teche. gy) © Met ot the cit 1, The Cont of Comnequentlal Loves, > Question s the Cost of Darage ts beng met ing neal Resources or nd, being managed? } A. Avoidance oF Prevention 8. Transer He te Ri » iL ears 1 Pome Onesions 7 rent Weer he Hae, ih any WA tale ea Se thera A. theratentin fh oan Biwier (ie Cio Oi 3 feo ‘Ihe Cet Opto The Wal oe etl ae he Caraga arte Mamie te fennwe Pe cntet kg 20 olen seh eatin ate rnb une tnt Teese sewers Te Contes kt ‘he Wr Morin is BML) fe otic by tye te Ms te Penny ot te Po srg Ine cree kez. Ie Cote beg eg ty wg teal Fat, te bg rer. somes The Coe bret Diratetian tte Tr, wd te Sprentng te Re, ares tm Bes, ch iy fone alected ely, 8 wane te