Upload File

insurance insurance is a form of risk management primarily used to hedge against the risk of a...

  • Home
  • Documents
  • INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the
43
INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. • An insurer is a company selling the insurance. • The insured, or policyholder, is the person or entity buying the insurance policy. • The amount to be charged for a certain amount of insurance coverage is called the premium.

Upload: alexandra-brooks

Post on 23-Dec-2015

219 views

Category:

Documents


5 download

Report

Tags:

TRANSCRIPT

Page 1: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

INSURANCE

Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. • An insurer is a company selling the insurance.• The insured, or policyholder, is the person or entity buying the

insurance policy. • The amount to be charged for a certain amount of insurance

coverage is called the premium.

Page 2: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Contract of Insurance

Is a contract whereby the insurer undertakes to make good the loss of another called the insured by payment of some money to him on the happening of a specific event.

Page 3: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Characteristics of insurance

• Risk sharing• Risk assesment• Cooperation• Payment at the time of contingency• Quantum of compensation• Insurance not a charity• Larger the number ,better the care

Page 4: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Insurable Risk

• The law of large number.

• The loss produced by the risk must be definite.

• The loss must be fortuitous or accidental.

• The loss must not be catastrophic.

Page 5: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Criteria of determination of whether a risk can be insured or not

• The risk must arise out of the ordinary course of business and it should not be artificially created by parties.

• The risk must be common enough to justify its spreading at a nominal cost.

• There must be an element of uncertainty as to the occurrence of risk or the time of the occurrence.

• The party must have some real interest in avoiding the risk.

Page 6: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

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’

Page 7: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Utmost Good Faith

• Both the parties i.e. the insured and the insurer should a good faith towards each other.

• The insurer must provide the insured complete ,correct and clear information of subject matter.

• The insurer must provide the insured complete ,correct and clear information regarding terms and conditions of the contract.

• This principle is applicable to all contracts of insurance i.e. life, fire and marine insurance.

Page 8: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Insurable Interest

• The insured must have insurable interest in the subject matter of insurance.

• In life insurance it refers to the life insured.

• In marine insurance it is enough if the insurable interest exits only at the time of occurrence of the loss

• In fire and general insurance it must be present at the time of taking policy and also at the time of the occurrence of loss.

• The owner of the party is said to have insurable interest as long as he is the owner of the it.

• It is applicable to all contracts of insurance.

Page 9: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Principle of Indemnity

• Indemnity means a guarantee or assurance to put the insured in the same position in which he was immediately prior to the happening of the uncertain event. The insurer undertakes to make good the loss.

• It is applicable to fire ,marine and other general insurance.

• Under this the insurer agrees to compensate the insured for the actual loss suffered.

Page 10: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Principle of Contribution

• The principle is a corollary of the principle of indemnity.

• It is applicable to all contracts of indemnity.

• Under this principle the insured can claim the compensation only to the extent of actual loss either from any one insurer or all the insurers.

Page 11: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Example…………………....[7.Contribution]

EXAMPLE: A insures his house against fire for Rs.10,000 with insurer X, and for Rs.20,000 with insurer Y .

A loss of Rs 12,000 occurs. X is liable for Rs.4,000 and Y for Rs.8,000.

If the whole amount of the loss is paid by Y, he can recover Rs.4,000 from X.

Page 12: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Principle of Subrogation

• As per this principle after the insured is compensated for the loss due to damage to property insured , then the right of ownership of such property passes on to the insurer.

• This principle is corollary of the principle of indemnity and is applicable to all contracts of indemnity

Page 13: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Example…………………….[8.Subrogation]

• A insures his goods with B for Rs 1,000. The goods are damaged by fire caused by C , a miscreant . A recovers the loss from B and subsequently he succeeds in recovering this loss from C also. He must hold the amount recovered from C in trust for B.

Page 14: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Principle of Loss of Minimization

Under this principle it is the duty of the insured to take all possible

steps to minimize the loss to the insured property on the happening

of uncertain event.

Page 15: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Principle of ‘Causa Proxima’

• The loss of insured property can be caused by more than one cause in succession to another.

• The property may be insured against some causes and not against all causes.

• In such an instance, the proximate cause or nearest cause of loss is to be found out.

• If the proximate cause is the one which is insured against ,the insurance company is bound to pay the compensation and vice versa.

Page 16: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Example… [4.Causa Proxima: ]

– The cargo of rice in a ship was destroyed by sea-water flowing in the ship through a hole made by rats in bathroom lead pipe.Held, the underwriter was liable as the damage was due to a peril of the sea.The proximae causa of the damage in this case is sea water.If however ,the loss is caused directly by rats or vermin, the underwriter will not be liable. [Hamilton Fraser & Co. vs.Pandroff(1887)]

Page 17: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Significance of insurance

• Protection against risk of loss• Distribution of risk• Capability to face competition• Optimum utilization of capital• Aid to foreign trade

Page 18: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

PRACTICAL PROBLEMS: CASE.1

• A ship insured against marine losses is sunk.The insurer pays the value in full.The ship is subsequently salvaged.

Who is entitled to the sale proceeds of the salvaged ship.?

Page 19: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Solution to Case.1

• The insurer is entitled to the sale proceeds of the salvaged ship.[Subrogation]

Page 20: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

PRACTICAL PROBLEMS: CASE.2

• A house is insured against fire for Rs.50,000.It is burnt down but it is estimated that Rs.30,000 will restore it to the original condition. How much is the insurer is liable to pay ?

Page 21: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Solution to Case.2

• Insurer is liable to pay Rs.30,000 only.(Indemnity)

Page 22: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

PRACTICAL PROBLEMS: CASE.3

• A insures his house against fire for Rs.40,000 with B and for Rs.60,000 with C.A fire occurs and a loss is estimated at Rs. 14,000.A recovers Rs.14,000 from B.

What are the rights of B against C ?

Page 23: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Solution to Case.3

• B can claim Rs. 8,400 from C as the loss of Rs.14,000 will be borne by B and C in the ratio of 40,000: 60,000 [Contribution].

Page 24: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

PRACTICAL PROBLEMS: CASE.5

• A contracted to build a house for B for which he was to be paid Rs.2,00,000.All the materials were to be supplied by B.

Can A insure the materials for the period during which the building is being constructed.?

Page 25: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Solution to Case.5

• A can insure the materials .(Insurable interest).

Page 26: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

PRACTICAL PROBLEMS: CASE.6

• A’s goods in a warehouse are insured.B is the insurer.The goods are burnt.A recovers their full value of Rs.1,000 from B.Then A sues the warehouse keeper and recovers Rs.1,000 from him.B claims this amount from A but A refuses to make over the amount to B. How would you decide the dispute between A and B ?

Page 27: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Solution to Case.6

• A is bound to pay Rs.1,000 to B.(Castellain vs.Preston)

Page 28: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

PRACTICAL PROBLEMS: CASE.7

• A firm of contractors assured a lorry against fire.In reply to a question in the proposal form, “ state the address at which the lorry will be usually garaged” a wrong address was given.The policy contained a clause that answers to the queries in the proposal form were the basis of the contract.The risk of fire was the same as the address given and at the correct address.

If the lorry is damaged by fire, are the insurers liable ?

Page 29: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Solution to Case.7

• The insurers are not liable. [ Dawsons Ltd. Vs.Bonnin (1922) ]

Page 30: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Insurance Classification

Insurance

Life Insurance General Insurance

Fire Marine Health Auto

Page 31: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Life insurance

• It is contract where insurance company agrees to pay a particular sum of money to the insured on expiry of certain time or on death of the person whose life is insured

Page 32: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Types of life insurance

• Term policy• Whole life policy• Endowment policy• ULIP

Page 33: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Defining General Insurance

• It is a contract of indemnity whereby the insurer undertakes to pay compensation to the insured for actual loss only. If loss does not occur, the payment need not be made

Page 34: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Types of General Insurance

Main types of general insurance are:

• Fire• Health• Marine• Motor Vehicle• Unemployment insurance• Credit insurance• Workmen compensation insurance• Cash transit insurance

Page 35: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Insurance organisation

• LIC• GIC

Page 36: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

LIC (life insurance corporation

Set up in 1956LIC was formed by nationalizing 245 life

insurance companies.The main aim was to spread insurance Mobilize savings Investing funds Act as trustees

Page 37: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Continue…..

promoting a sense of pride and job satisfaction among agents and employees

Diversification by LICLIC HOUSING FINANCELIC MUTUAL FUNDSJeevan bima sahyog assets mgt co(JBSAMC)LIC International EC

Page 38: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

vision & Mission

Mission "Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns, and by rendering resources for economic development." 

Vision"A trans-nationally competitive financial conglomerate of significance to societies and Pride of India."

Page 39: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

g.i.c. (GENERAL INSURANCE CORPORATION)

It was incorporated on 22 November 1972.The Government of India (GOI), through Nationalisation

took over the shares of 55 Indian insurance companies and the undertakings of 52 insurers carrying on general insurance business.

Main objective:-GIC was formed for the purpose of superintending,

controlling and carrying on the business of general insurance.

Page 40: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

vision & Mission

Vision

“To be a leading global reinsurance and risk solution provider”

Mission:- Building long-term mutually beneficial relationship with business

partners Practicing fair business ethics and values Applying “state-of-art” technology, processes including enterprise

risk management and innovative solutions. Developing and retaining highly motivated professional team of

employees Enhancing profitability and financial strength befitting the global

position

Page 41: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Difference between life and general insurance

• Contract of indemnity• Insured event• Purpose of insurance• Calculation of premium• Doctrine of subrogation

Page 42: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Players in the IndustryLife Insurance General Insurance Life Insurance Corporation of India. General Insurance Corporation of India.

1. Oriental Insurance Company Ltd. 2. New India Assurance Company Ltd. 3. National Insurance Company Ltd. 4. United India Insurance Company Ltd.

New Entrants

ICICI Prudential Life Insurance Ltd. Bajaj Alliaz General Insurance Company Ltd.

Tata AIG Life Insurance Corporation Ltd. Reliance General Insurance Company Ltd.

ING Vysya Life Insurance Corporation Ltd. Tata AIG General Insurance Company Ltd.

Kotak Mahindra Life Insurance Corporation Ltd.

Royal Sundaram Alliance Insurance Company Ltd.

Page 43: INSURANCE Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the

Strategies for commercial viability

• develop efficient distribution system• Direct marketing• Development of customer specific products• Entry in rural market• Cooperative promotion• Launching crop insurance for farmers• Lean office infrastructure for rural areas.


Contingent Workforce Risk Workshop€¦ · Contingent Workforce Risk Workshop ... Diana Gabriel, VP, Strategy & Solutions, Staffing Industry Analysts Bryan Peña ... −Prioritise

Mitigating the Risk Associated with Contingent Liabilities

ATC - Contingent Contracts- Top Tips to Limit Contingent Workforce Risk

Choosing the type of income-contingent loan: risk-sharing ... Rey.pdf · Choosing the type of income-contingent loan: risk-sharing versus risk-pooling Elena Del Rey and Mar a Racioneroy

Contingent Deferred Annuities - National Association of ...€¦ · Contingent Deferred Annuities Solvency & Risk Management Issues ... Risk Management – Third Party Issues Insurance

Risk Analysis- Insurance Risk Management of CDIC … Analysis-Insurance Risk Management of CDIC Taiwan William Su Risk Management Dept. CDIC Insurance Risk Management of CDIC 2 Insurance

Risk & insurance

SwissQuant Pricing Structuring and Risk Measurement of Contingent Convertible Bonds

Provisions, Contingent Liabilities and Contingent …...Insurance Contracts, AASB 1023 General Insurance Contracts, and AASB 1038 Life Insurance Contracts). However, this Standard

Short-term Insurance Strategic Risk Forum Short-term Insurance Strategic Risk Forum Short-term Insurance Strategic Risk Forum Short-term Insurance Strategic

Contingent Convertible Bonds and its Impact on …Contingent Convertible Bonds, can decrease the attractiveness of risk for shareholders. Contingent Convertible Bonds (CCB), also known

GMB CONTINGENT INDEMNITY INSURANCE

Disaster Risk Financing and Contingent Credit · 2016. 7. 19. · DISASTER RISK FINANCING AND CONTINGENT CREDIT: A DYNAMIC ANALYSIS DANIEL CLARKE1 OLIVIER MAHUL2 JEL codes: G22, G32,

The Insurance Binder Contingent Excess Liability Insurance Your Customers Primary Insurance

Provisions, Contingent Liabilities and Contingent Assets · 2015-02-24 · under insurance contracts within the scope of Ind AS 104; (f) contingent consideration of an acquirer in

AppenDIx Risk Management and Insurance D - Cengage€¦ · Risk Management and Insurance ... Most people think of risk management as simply buying insurance. However, insurance, although

Contingent Liabilities and Risk Assessment - World …siteresources.worldbank.org/INTDEBTDEPT/Resources/468980...Contingent Liabilities and Risk Assessment ... – Relative pricing:

Mea sur ing and Analyzing Sovereign Risk with Contingent ... · 360 Mea suring and Analyzing Sovereign Risk with Contingent Claims Th ese indicators are closely related because they

Contingent Capital: Valuation and Risk Implications Under

Risk Management & Insurance March 25, 2015. Risk Management & Insurance Discussion Topics Section 1. Risk Section 2. Risk Management Section 3. Insurance

Cyber risk insurance: What’s the big deal? · – Less availability of Business Interruption coverage (especially contingent) • Target breach impacting carrier appetites for large

Insurance Risk

Auctions with Contingent Payments - an Overview.skrz/Auctions_Contingent_Survey.pdf · the importance of contingent payments for risk sharing. 1.1 Auctions with Contingent Payments

Risk Management in Colombia: Contingent liabilities

Model risk of contingent claims...Model risk of contingent claims Nils Detering and Natalie Packham November 30, 2014 Abstract Paralleling regulatory developments, we devise value-at-risk

RISK ASSESSMENT PLAN FOR JOHOR PORT CONTINGENT …

b821 Block4unit8 Foreign Exchange and Contingent Risk

Dynamic Risk Management of Electricity Contracts with Contingent Portfolio Programming

Automobile and Home Insurance Chapter 14. Insurance Basics How Insurance Works How Insurance Works Risk Management Risk Management Risk Management means

Risk Management of Contingent Liabilities Within a ...documents.worldbank.org/curated/pt/473121468314986347/pdf/452… · contingent liabilities. Additional insights can be gained

Insurances. Insurance Insurance, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the

Life Insurance in a Contingent Claim Framework: Pricing ... · PDF fileLife Insurance in a Contingent Claim Framework: Pricing and Regulatory Implications ERIC BRIYS ... Groupe HEC,

Provisions, Contingent Liabilities and Contingent Assets Contents · 2018. 7. 3. · 4. This Standard applies to provisions, contingent liabilities and contingent assets of insurance

Access to Unemployment Insurance Benefits for Contingent … · 2007-11-08 · Access to Unemployment Insurance Benefits for Contingent Faculty: ... No other group was required to

TERRORISM RISK INSURANCE PROGRAM - III · Insurance Information Institute 2 TERRORISM RISK INSURANCE PROGRAM REAUTHORIZED Since its initial enactment in 2002 the terrorism risk insurance