GENRAL INSURANCE NOTES- IMPORTANT HIGHLITED WORDS FOR LEARNING Chapter-1 Life insurance business was nationalized on 1 sept on 1956 and LIC was formed. First insurance company was formed in Kolkata. General insurance business nationalization act (GIBNA) was passed in 1972 and general insurance corporation (GIC) come in existence.. Insurance regulatory and development authority (IRDA) was established in 2000 by the act of parliament in 1999 and its head office is in Hyderabad. The specific event which might cause loss is called peril. Llyod coffee house Landon is the place where insurance was first started, Insurance companies play an important role in country's economic development. Insurance is risk transfer through risk pooling. Loss prevention measures reduce the chance of occurrence of risk. When one decided to bear the consequences of a risk, in insurance context its Risk retention. Insurance is a method of sharing the losses of a few by the many. Chapter-2 Insurance have four elements- assets, risk, risk pooling and insurance contract. An asset must have economic value. Risk indicates a chance of loss. Risk can be classified as static and dynamic. The condition which increase the probability of loss is known as hazard. Moral Hazard means dishonesty or character defects in an individual.
Stolen good does not represent an insurable risk. The object of the contract must be legal. Subrogation mean transfer of all right and remedies with respect to the subject matter of insurance, from insured to the insurer. Misrepresentation is example of breach of utmost good faith. The insurable interest is an essential ingredient of the insurance contract. Insurance cannot protect an asset from loss or damage and only compensate losses. Chapter-3 Cold calling is where we may approach people and company unannounced. Prospecting in an insurance sale is gathering the names of people who may be interested in insurance. Qualified prospect are those people who can pay for insurance. Sales men are the key architect of modern economy. The objective of negotiation is to arrive at win-win situation. Marketing in insurance is the mean by which insurance company seek to indentified, serve, satisfy and retain the customers. The four P s of marketing are product, prices, promotion and place. Insurance density is premium per capita. Segmentation is known as the classification of customers into various market segments having common features. Insurance is a part of the financial services industry. Chapter-4 Important sections of insurance act 1938. 1) Section 42- one must have a license to work as agent. 2) Section 38 deal with rule of nomination.
3) Section 39- deal with rule of assignment. 4) Section 64UM- need for survey of losses where loss is Rs.20000/- or more. 5) Section 64VB- advance payment of premium. Workmen compensation act passed in 1923. Motor vehicle act passed in 1988. Public liability act passed in 1991. Consumer protection act passed in 1986. The complaint in National commission is filled under section 19 and against National commission complaint is filed under section 23. All professional CA/CS/ICWA/MBA/ composite agent required 25 hrs of practical training. Agent is the closest person to the client. Agent is responsible to his act to insurer. Surveyor access losses and investigation on behalf of insurance company where loss is above 20,000/-. Caveat emptor mean let the buyer be aware If an agent is found guilty of criminal misappropriation the designated person will cancel the license. An insurance broker may deal with more than one life insurance company or general insurance company or both. Chapter-5 Declaration is attached at the end of proposal form and signed by the insured which is the basis of insurance contract. The Company has to process the proposal within 15 days. The process of scrutinizing the proposal and deciding to accept the proposal is called as underwriting. Cover notes are issued for marine and motor classes of business. Validity of cover notes is usually for a period of fortnight and rarely for a period of 60 days.
In motor renewal notice insured intension is to be drawn to revise the sum insured in current requirement. Sum insured is the maximum limit of liability of insurer under the policy. Premium is the consideration or price paid by insured under the policy. A Warranty is a condition expressly stated in a policy and has to be compiled with. A document which provided an evidence of contract of insurance is called policy. Chapter-6 The process of calculating the price to cover the future cost of claim and expenses including the margin for profit is called rate making. The pure rate of premium is arise on past loss experiences. Indifference toward loss is called carelessness. No claim bonus is a powerful strategy to improve underwriting experience and forms an integral part of rating systems. Sum Insured is the maximum amount that an insurance company will indemnify as per policy condition. Underwriter decides weather to accept or not to accept the risk. Installation of sprinkler in the premises decreases the risk of fire. Insured s declared value in motor insurance includes manufacturer s selling price. Chapter-7 Personal accident policy cover death arises out of accident, permanent total disability, partial disability, and temporary total disability. Suicide is not covered in Personal Accident. Health insurance policy covers medical expenses in case of 24 hrs of hospitalization.
Centre where a person do not required more than a stay in a hospital for treatment is called as day care center. Family floater policy usually covers the entire family in a single policy. except in emergency a cashless facility may required preauthorization from insurer for treatment in network hospital. Free look in period is of 15 days and grace period is 30days. Some insurer may require senior citizen medical checkup prior to acceptance of proposal in case of travel insurance. Householder insurance cover the house structure and its contents against fire, riot, bursting of pipes, earthquake, burglary etc. Shopkeeper insurance cover also includes the dishonesty of employee. Under motor vehicle act 1988 it is mandatory for the owner of vehicle playing on public road to take an insurance policy to cover the amount which the owner become legally liable to pay as damages to third party as a result of accident death, bodily injury or damage to property. Travel insurance cover sny delay in baggage,emergency hospitalization and loss of checked baggage. Corporate frequent travel is a annual policy whereby a corporate/employer take an individual policy for his executive to frequently make trips outside India. In shopkeeper s insurance money carried by customer to business premises is usually not covered. Chapter-8 Under reinstatement value policy the insurer would pay cost of replacement of damage property by new property of the same kind. Reinstatement value (RIV) method is allowed only for Fixed assets Money policy covers loss of cash as a result of robbery or theft under transit section.
Under jewelry block policy cover under section 1 is compulsory. Under compulsory public liability policy compensation pay for fatal accident and total permanent disability is Rs 25000/- Public liability policy cover both industrial and nonindustrial risk including, hotels, cinemas, offices, go downs. Non Industrial Risk Is Classified in 9 categories in Liability Insurance. Hull refers to the body of the ship. Consequential Loss (Fire Policy) covers loss of profit due to damage to factory Loss of cash from one s premises due to burglary is covered under Money Insurance Policy. Chapter-9 The settlement of non standard claims is subject to rule and regulation framed by the non life insurance companies. Arbitration is the method of settling the dispute arising out of contract. It can be done by single arbitrator and in case of more than one arbitrator the decision will be given by umpire. In GRA team one person from judiciary is also included as Chairman For personal accident claim report of a Doctor is necessary. Claim assessed outside the country in case of travel insurance policies are assessed by claims settling agents named in the policy. Report from Meteorological Department is most likely to be requested while examining a cyclone damage claim. Chapter-10 Responsiveness referred to as willingness and ability of service personal to help customers. Consumer disputes redressal agencies can be classified under three classes- district, state and national forums.
Insurance ombudsman: is appointed by the central govt under the power vested by Redressal of public grievance rule under the said act of 1988. The ombudsman by mutually agreement between the insured an insurer can be act as mediator and counselor. The decision of the ombudsman whether to accept or reject the claim is final. Any complaint made to the ombudsman should be in writing and signed by the insured. Ombudsman make recommendation within a period of 3months from the date of receipt of complaint and his awards will be binding on the insurer. Communication process involves, Source-encodingchannel-decoding-receiver-feedback. Personal distance is 4 feet in effective communication. Ethical behavior helps in developing trust in the agent and the insurer. Being extremely Judgmental is not an element of active listening. Active Listening involves paying attention to the speaker, giving an occasional nod and smile and providing feedback. A customer having complaint regarding his insurance policy can approach IRDAI through IGMS Chapter-11 IRDA regulation (insurance broker-2002) give detail of broking profession. Banc assurance- selling insurance policy through banks. In insurance the Revenue account, profit and loss account and balance sheet is signed by Auditor. Premium-rate tables and periodical valuation of companies is certified by Actuary. Institute of actuaries act is passed in 2006 applicable on actuary. Insurance agent is a representative of the insurance company and is governed by the principal agent relationship.
Empathy and Ego are the two basic qualities that make a good sales person. Some Important Abbreviations ERP ALOP CPM MCE CAR TPA SEBI III CBDT TAT IRDA IGMS IDV GIBNA RTI RTO PIL ICC SCE NBFC AOG MLP NCB RKBY GIC AIC TPPD IRDAI India RBI RSMD Erection all risk policy Advance Loss of Profits Policy Contractor Plants & Machinery Policy Marine Cum Erection Policy Contractors All Risks Policy Third party administrator Securities and Exchange Board of India Insurance institute of India Central Board of Direct Taxes Turn around time Insurance Regulatory Development Authority Integrated grievances management system Insured declared value General insurance Business nationalization Act Right to information Regional transport office Public Interest Litigation Institutes Cargo Clause Storage cum erection Non Banking Finance Corporation Act of God Machinery Loss of profit Policy No claim Bonus Rashtriya Krishi Bima Yojana General Insurance Corporation Agriculture Insurance Corporation. Third Party Property Destruction Insurance Regulatory Development Authority of Reserve Bank of India Roit,strike and malacious damages