Insurance involves sharing financial losses from common risks and transferring risks from individuals to insurers. It provides protection from potential large losses through a small regular premium payment. There are various types of insurance including life, fire, marine, health and auto. Insurance benefits individuals through peace of mind, businesses through stability, and society through economic growth. The principles of insurance include good faith, insurable interest, indemnity and loss minimization.
2. 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.
3. Defining Risk
A variation in the possible outcome
The degree of uncertainty associated with a particular loss
Greater the accuracy with which the outcome can be predicted the
lower is the risk.
Risk is the possibility of an unfortunate occurrence
Risk is the possibility of loss
The combination of hazards
Uncertainty of loss
The tendency that actual results may differ from predicted results
4. Basic Characteristics of Insurance
Pooling of losses
Spreading losses incurred by the few over the entire group
Risk 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 chance
Risk transfer
A pure risk is transferred from the insured to the insurer, who
typically is in a stronger financial position
Indemnification
The insured is restored to his or her approximate financial
position prior to the occurrence of the loss
5. Benefits of Insurance to an Individual
Peace of mind
Aversion of risk
Protects mortgaged properties
Provides self dependency
Tool of savings
Tool of investment
Satisfies various needs
6. Benefits of Insurance to Business
Reduced reserve requirements
Capital freed for investment
Indemnification
Reduction of uncertainty
Reduced cost of capital
Reduced credit risk
Loss control activities
Business and social stability
7. Benefits of Insurance to Society
Protects wealth of the country
Helps in economic growth
Control inflation
9. Principles of Insurance
Utmost Good Faith
Insurable Interest
Principle of Indemnity
Principle of Contribution
Principle of Subrogation
Principle of loss Minimization
Principle of ‘CAUSA PROXIMA’
10. General Rules
Mis-description
Reasonable care
Fraud
Basic principles
Insurable interest
Utmost good faith
Subrogation
Contribution
Indemnity
Risk of loss not covered
11. Types of General Insurance
Main types of general insurance are:
Fire
Health
Marine
Motor Vehicle
12. Types of Fire Insurance Policies
Specific policy
Comprehensive policy
Valued policy
Floating policy
Replacement or Re-instatement policy:
13. 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.
14. Documents Required
True copy of the policy along with schedule
Report of fire brigade
Claim Form
Photographs
Past claims experience
15. 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.
16. 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
17. 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).
18. Defining Marine Insurance
Marine 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.
21. Inland Marine Insurance
Extension 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
22. Defining Auto Insurance
Auto 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.
23. Auto Insurance Coverage
Auto 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
24. Coverage Levels
Vehicle insurance can cover some or all of the following items:
The insured party
The insured vehicle
Third 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)