introduction to insurance unit7

THE UGANDA INSTITUTE OF BANKING & FINANCIAL SERVICES

UIBFS

ISO 9001:2008 CERTIFIED

Module 7: Introduction to Insurance


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LEARNING OBJECTIVES This course aims at helping you the student to,• Gain a broader understanding of risk and insurance as a

means to manage it.• Appreciate the role of insurance to our economy and

how it operates• Have a balanced, systems – oriented view of how the

insurance industry players work together to protect and meet the needs of consumers.


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LEARNING OUTCOMESAfter completion of this study you should be able to:• Describe the role insurance plays in our economy• Explain how insurance is used to manage or diversify risk• Understand the fundamental principles of insurance• Recognize the various categories of insurance and the

underwriting procedure• Define the key insurance terms• Explain the roles of the insurance players in the industry• Explain how insurance claims are administered


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What is Insurance?

Risk Management and Responding to Risk

The Purpose of insurance

How does Insurance work?

Players in the Insurance Industry

Insurance Underwriting and Categories of Insurance

Fundamental Principles of Insurance

Some commonly used Insurance terminologies

Settlement of Insurance Claims


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Players in the Insurance IndustryThe insurance industry is composed of sellers of insurance, regulators, intermediaries

and other service providers. All these insurance players must be licensed by the Insurance Regulatory Authority, for them to operate legally. They are indicated here below;

1. Insurance companiesInsurance companies are financial institutions that sell insurance. They carry the risk

and are responsible for compensating in case of losses. Insurance companies can sell insurance direct, through Brokers and Insurance Agents. They sell both life and non – life insurance.

2. Insurance BrokersThese are insurance intermediaries incorporated and licensed to transact business on

behalf of insurance companies. They are independent and deal with all insurance companies. The insurers pay commissions to insurance brokers. These should more professional in insurance than the insurance agents


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3. Insurance Regulatory AuthorityThe Authority’s functions include:• Establishing standards for the conduct of insurance and reinsurance business; • Licensing all persons involved in or connected with insurance business

including insurance and reinsurance companies, insurance and reinsurance intermediaries, loss adjusters and assessors;

• Safeguarding the rights of policyholders and insurance beneficiaries to any insurance contract;

• Providing a bureau to which complaints may be submitted by members of the public;

• Promoting a sound and efficient insurance market in the country; • Supervising and controlling transactions between insurers and reinsurers; • Ensuring strict compliance with the provisions of the Insurance Act and

regulations made under it and any other law relating to insurance; etc.


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4. Insurance Institute of UgandaThe Insurance Institute of Uganda is the training arm of the insurance industry in

Uganda whose articles and memorandum of association mainly mandates it to provide and maintain a central organization for the promotion of efficiency, progress, welfare, knowledge and general development among persons engaged or employed in the insurance business.

The institute has the following objectives:– To promote and assist the study of subjects and conduct trainings bearing on any

branch of insurance– To advise on academic standards, qualifications and skills development of members in

the insurance industry– To offer prizes and awards on the results of examinations for essays or research in any

subject bearing insurance– To promote excellence, enterprise and integrity in the insurance profession and to

provide members with access to relevant high quality information research and knowledge including library for use by members of the institute and other interested individuals


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5. Uganda Insurers’ AssociationThe Uganda Insurers Association is an umbrella trade organization

founded in 1965 by Insurance Companies to meet the challenges of an emerging competitive and growing industry its membership is composed of corporate insurance and reinsurance companies incorporated and licensed to operate in Uganda. Membership to the Association is mandatory for all licensed insurance companies.

6. Uganda Brokers’ AssociationThe Uganda Association of Insurance Brokers is a body of all insuring

broking persons, firms, companies, corporations or cooperative societies carrying on business of insurance broking in Uganda. The main objective of the Association is to protect and promote the general welfare and interests of the insurance brokers who are members of the Association.


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7. Loss AdjustersThese are qualified to assess, investigate, negotiate and settle losses of big

magnitude on behalf of the insurer. Before they can be licensed by the Insurance Regulatory Authority, they should be qualified professionals in loss assessment.

8. Loss AssessorsThese are appointed by insurance companies after a loss has taken place to

quantify the magnitude of the loss and advise on the method of compensation. They are used mostly in general classes of insurance.

9. Insurance SurveyorsThese survey risks and advise on rates, terms and conditions of premiums and

make suggestions for improvement of risks. 10. Insurance AgentsThese are insurance intermediaries just like brokers, but unlike brokers, they

represent one business

introduction to insurance unit7

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