Presentation on General Insurance

7PRESENTATION ON

GENERALINSURANCE

and Learning From Same

Prepared By :

Nishita Shah

(3rd Semester)

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Insurance is a device by means of which the risks of two or more persons or fi rms are combined through actual or promised contributions to a fund out of which claimants are paid.

In other words, a group of people having similar fi nancial interests pool together a specifi ed amount of money from which certain specifi ed fi nancial losses of any of the pool members are met. The custodian of the pool is the INSURER, the members of the pool are the INSURED and the money paid is PREMIUM. Insurance works as a contract of two parties.

Risk : An uncertain out comes which gives loss.

Objective Risk : Exists in nature & applicable to all. Ex. Natural calamities.

Subjective Risk : Depends on individual perception.

Pure Risk : Chance of a loss without chances of a gain. Ex. Accident

Speculative Risk : Possibility of a gain ensuring from the losses.

Peril : Specifi c kinds of risk that may give rise to claims.(fi re, theft, hail, earthquake etc)

Hazard : Create the chance of a loss from a given peril.

Physical Hazard , Moral Hazard - Dishonesty, Fraud

Morale Hazard - Carelessness ,

UNIT-1,ORIGIN OF GENERAL INSURANCE AND ITS CONCEPTS…

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UNIT-1,ORIGIN OF GENERAL INSURANCE AND ITS CONCEPTS…

Evolution Of Insurance :

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Phase Period Industry

Phase I

General Insurance 1850 to 1972 (about 122 yrs)

Many (107) private sector companies only, competitive market.

Phase II

General Insurance1972 to 2000

(about 28 yrs)

Nationalization, public sector monopoly, only one company with its four

subsidiaries.

Phase III

General Insurance After 2000

Opened to the entry of private domestic and foreign companies, mixed sector of

public and private sector units, oligopoly of public sector companies (14 life insurance and 12 general insurance

companies)

UNIT-2, BASIC PRINCIPLES OF INSURANCE…

PRINCIPLES OF INSURANCE :

The Principle Of Utmost Good Faith

The Principle Of Insurable Interest

The Principle Of Indemnity

The Principle Of Subrogation ( passing the rights )

The Principle Of Proximate Cause

Excess / Deductible

Franchise

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IRDA’S MISSION To protect the interests of the policyholders, to regulate,

promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.

Composition of Authority under IRDA Act, 1999 As per the section 4 of IRDA Act' 1999, Insurance Regulatory

and Development Authority (IRDA, which was constituted by an act of parliament) specify the composition of Authority.

The Authority Is A Ten Member Team Consisting Of A Chairman- up to age of 65 years

Five Whole-time Members- up to age of 62 years

Four Part-time Members- not more than 5 years

(All Appointed By The Government Of India)

UNIT-3,GENERAL INSURANCE MARKET…

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Duties, Powers And Functions Of IRDA :

Section 14 of IRDA act, 1999 lays down the duties, powers and functions of IRDA.

1. Subject to the provisions of this act and any other law for the time being in force, the authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business.

2. Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the authority shall include:

Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration.

Protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance.

UNIT-3,GENERAL INSURANCE MARKET…

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Duties, Powers And Functions Of IRDA : Specifying requisite qualifications, code of conduct

and practical training for intermediary or insurance intermediaries and agents.

Specifying the code of conduct for surveyors and loss assessors.

Promoting effi ciency in the conduct of insurance business.

Specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries.

Regulating investment of funds by insurance companies.

Regulating maintenance of margin of solvency. Adjudication of disputes between insurers and

intermediaries or insurance intermediaries. Supervising the functioning of the tariff advisory

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UNIT-3,GENERAL INSURANCE MARKET…

FORMS RELATING TO THE INSURANCE CONTRACT :

Proposal Form – Basic Document

Cover Note – Documents Issued By Insurer In Advance Of Policy

Certificate of Insurance

Policy Form

FORMS RELATING TO THE PROVIDERS’ ESTABLISHMENT :

Insurers’ Licensing

Intermediaries Licensing

Product Approval

Statistical Data Submission- Tariff Advisory Committee (TAC)

Other Forms/ Documents ( Accounts and disclosure of financial statement etc.)

UNIT-4, INSURANCE FORMS…

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TYPES OF INSURANCE :

UNIT- 5, TYPES OF INSURANCE…

7. Specialized Insurances

- Agriculture Insurance - Specialty Insurance ( Hybrid Cover )

1. Property Insurances

- Fire Insurance - Engineering Insurance

2. Transit Insurances

- Marine Cargo Policy - Inland Transit Policy

3. Accident Insurances

- Motor vehicle Insurance - Marine Hull Insurance - Aviation Hull Insurance44

4. In come Insurances - Business Loss Of Profit Insurance - Advance Loss of Profit Insurance(delay in project) - Credit Guarantee Insurance - Financial Guarantee Insurance(employee)

5. Liability Insurances

- Motor TP Insurance - Public Liability Insurance - Product Liability Insurance - Professional Liability Insurance - Workmen’s Composition Insurance

6. Personal Insurances

- Health Insurance - Personal Accident Insurance - Life Insurance

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UNIT- 5, TYPES OF INSURANCE…

TYPES OF LOSSES :

Property Losses

Liability Losses

Income Losses

Personal Losses

Silent features of Insurance Policies : Cover

Sum Insured

Basis Of Premium

Condition Of Excess

Signifi cant Exclusions

Main Extension

General Condition

Policy Covered Fire and Burglary

Calamities Covered

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UNDERWRITING PRACTICES : It involves

Evaluating the Risk

Measuring the Risk

To check whether the contract is legal, capacity to insure the risk

Underwriting Guidelines :

UNIT- 6, UNDERWRITING AND RATING PRACTICES…

1. Acceptance of New Business

- Internal guidelines- Rejection- Limits on Sum Insured- Limits by Types of Insurance- Accommodation Risk- Control By Inspection- Restrictive Wordings

2. Renewal of Business

- Bonus

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RATING PRACTICES :

To achieve a specified rate of capita

To maximize profits

To maintain or extend market share

Pricing Method :

- Manual rate

- Experience rating

- Modification rating

UNIT- 6, UNDERWRITING AND RATING PRACTICES…

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• CLAIMS CONCEPTS AND PRACTICE, TYPES OF LOSSES :

- Defi nite Loss

- Accidental Loss

- Large Loss

- Calculable Loss

• CLAIMS PROCEDURE :

UNIT- 7, CLAIMS PRACTICE AND PROCEDURE…

Preliminary Procedure- Notice of Loss- Minimizing Losses

- Procedural Formalities

Settlement Procedure - Establishing Admissibility - Disputed Claims

Investigation Procedure- Investigation and Assessment- Survey Report- Re- survey- Documentary Proof

• Motor Insurance Claims Procedure• Industrial Insurance Claims Procedure• Fire Insurance Claims Procedure• Agriculture Insurance Claims Procedure• Travel Insurance Claims Procedure

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UNIT- 7, CLAIMS PRACTICE AND PROCEDURE…

CLAIMS DOCUMENTS :

1. Claims Forms

2. Survey Report

3. Legal Opinion

4. Specialists’ Opinion (Fire, Burglary, Motor, Marine Cargo,Fatal Claims )

5. Other Evidences

6. Other Documents and Original Policy

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* Organizational Structure of an Insurance Company :

Head Offi ce Zonal/Regional Offi ce Divisional/Area Offi ce Branch offi ce

* Departmental Structure of an Insurance Company

• 1. Non-technical Areas

• -Accounts Department

• -Administration Department

• -Estate and Establishment Department

• -HR and Personnel Department

• -IT Department

2. Technical Areas

-Risk Management and Inspection Department

-Portfolio-wise Departments

UNIT- 8,ORGANIZATIONAL STRUCTURE OF AN INSURANCE

COMPANY…

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*Functional Structure of an Insurance Company:

- Sales and Marketing Department

- Strategy, Underwriting and Reinsurance Department

- Business Systems and IT Application Department

- Operations and Customer Services Department

- Finance Department

- Claims Department

- Motor Claims Coordinator (At the Regional Level )

- Claims Offi cer

- In-house Motor Surveyor at the Region Level

-Motor technical Offi cer

-Claims Manager

UNIT- 8, ORGANIZATIONAL STRUCTURE OF AN INSURANCE

COMPANY…

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Thank You !!!

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