Insurance

Defining Insurance Insurance in broad terms may be described as a method of

sharing financial losses of few from a common fund who are equally exposed to the same loss.

Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of a guaranteed small loss to prevent a large, possibly devastating loss.

An insurer is a company selling the insurance. The insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage.

Defining RiskA variation in the possible outcomeThe degree of uncertainty associated with a particular lossGreater the accuracy with which the outcome can be predicted the

lower is the risk. Risk is the possibility of an unfortunate occurrenceRisk is the possibility of lossThe combination of hazardsUncertainty of lossThe tendency that actual results may differ from predicted results

Basic Characteristics of InsurancePooling of losses

Spreading losses incurred by the few over the entire groupRisk reduction based on the Law of Large Numbers

Payment of fortuitous losses Insurance pays for losses that are unforeseen, unexpected,

and occur as a result of chanceRisk transfer

A pure risk is transferred from the insured to the insurer, who typically is in a stronger financial position

IndemnificationThe insured is restored to his or her approximate financial

position prior to the occurrence of the loss

Benefits of Insurance to an IndividualPeace of mindAversion of riskProtects mortgaged propertiesProvides self dependencyTool of savingsTool of investmentSatisfies various needs

Benefits of Insurance to BusinessReduced reserve requirementsCapital freed for investment IndemnificationReduction of uncertaintyReduced cost of capitalReduced credit risk Loss control activitiesBusiness and social stability

Benefits of Insurance to SocietyProtects wealth of the country

Helps in economic growth

Control inflation

Insurance Classification

Insurance

Life Insurance General Insurance

Fire Marine Health Auto

Principles of InsuranceUtmost Good Faith

Insurable Interest

Principle of Indemnity

Principle of Contribution

Principle of Subrogation

Principle of loss Minimization

Principle of ‘CAUSA PROXIMA’

General Rules Mis-description

Reasonable care

Fraud

Basic principles Insurable interest Utmost good faith Subrogation Contribution Indemnity

Risk of loss not covered

Types of General InsuranceMain types of general insurance are:

Fire

Health

Marine

Motor Vehicle

Types of Fire Insurance PoliciesSpecific policy

Comprehensive policy

Valued policy

Floating policy

Replacement or Re-instatement policy:

Fire Insurance Claim Procedure

Individuals/corporate must inform insurer as early as possible , in no case later than 24 hours.

Provide relevant information to the surveyor/claim representative appointed by the insurer.

The surveyor then analyzes the extent/ value of loss or damage.

The claim process takes anywhere between one to three weeks.

Documents Required

True copy of the policy along with schedule

Report of fire brigade

Claim Form

Photographs

Past claims experience

What is Health Insurance?Health insurance, like other forms of insurance, is a form of collectivism by means of which people collectively pool their risk, in this case the risk of incurring medical expenses.

Importance of Health Rising medical costs

Sharing of health related risk

uncertain hospital bills

Expensive/quality health care services

Money value – Sick Vs Healthy

Family health insurance

Tax benefit

Productivity of workforce

Types of Health Insurance Plans Individual health plan

Family floater plan

Senior Citizens’ plan

Critical illness plan

Daily hospital cash and

Unit-linked health plan (ULHP).

Defining Marine InsuranceMarine Insurance covers the loss or damage of ships, cargo, terminals, and any transport or cargo by which property is transferred, acquired, or held between the points of origin and final destination.

Two Broad CategoriesOcean marine insurance

Inland marine insurance

Ocean Marine InsuranceHull

Cargo

Freight

Protection and indemnity insurance

Inland Marine InsuranceExtension of Ocean marine insurance

Domestic goods in transit

Property held by Bailees

Mobile equipment and property

Block Policies- “all-risks” basis

Means of transport and communication

Defining Auto InsuranceAuto insurance (also known as vehicle insurance, car insurance, or motor insurance) is insurance purchased for cars, trucks, and other vehicles. Its primary use is to provide protection against losses incurred as a result of traffic accidents and against liability that could be incurred in an accident.

Auto Insurance CoverageAuto insurance provides property, liability and medical coverage:

Property coverage pays for damage to or theft of the car.

Liability coverage pays for the legal responsibility to others for bodily injury or property damage.

Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses

Coverage LevelsVehicle insurance can cover some or all of the following items:The insured partyThe insured vehicleThird parties (car and people)Third party, fire and theft In some jurisdictions coverage for injuries to persons riding in the

insured vehicle is available without regard to fault in the auto accident (No Fault Auto Insurance)

For More information Visit : http://www.rakshainvestment.com