BUSINESS LAW NAME : KARTIK RAITHATHA STANDARD : F.Y.B.M.S. DIVISION : B ROLL NO. : 14 TOPIC : GENERAL INSURANCE ACADEMIC YEAR : 2003-2004 COLLEGE : MITHIBAI COLLEGE, Vile-Parle, Mumbai Undertaking I , Mr. KARTIK RAITHATHA a student of FYBMS , Roll No. 14 do hereby state that:- 1. This project is my original work. 2. I have not copied the project , or any part , or portion thereof , from any student. 3. If in the opinion of the college authorities , it is found that I have copied the project , in that event , I shall be debarred from appearing in the semester-1 examination of the current year. 4. I shall be bound by the decisions taken by the college authorities. Place : Mumbai, ---------------------------- Date : 15th September,2003 Signature Kartik S Raithatha GENERAL INSURANCE With the opening up of the insurance industry to the private sector, the need for a strong, independent and autonomous Insurance Regulatory Authority was felt. As the enacting of legislation would have taken time, the then Government constituted through a Government resolution an Interim Insurance Regulatory Authority pending the enactment of a comprehensive legislation. The Insurance Regulatory and Development Authority Act, 1999 is an act to provide for the establishment of an Authority to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto and further to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the General insurance Business (Nationalisation) Act, 1972 to end the monopoly of the Life Insurance Corporation of India (for life insurance business) and General Insurance Corporation and its subsidiaries (for general insurance business). Definition and meaning : 1. INSURANCE: Insurance is the means of managing risk and protection against financial loss arising as a result of contingencies, which may or may not occur. In other words, insurance is the act of providing assurance, against a possible loss, by entering into a contract, with one who is willing to give assurance. Through this contract the person willing to give assurance binds himself to make good such loss, if it occurs. 2. GENERAL INSURANCE: General insurance means managing risk against financial loss arising due to fire, marine or miscellaneous events as a result of contingencies, which may or may not occur. General Insurance means to “ Cover the risk of the financial loss from any natural calamities viz. Flood, Fire, Earthquake, Burglary, etc.. i.e. the events which are beyond the control of the owner of the goods for the things having insurable interest with the utmost good faith by declaring the facts about the circumstances and the products by paying the stipulated sum , a premium and not having a motive of making profit from the insurance contract.” Some of the General Rules : 1. Mis-description : the insurance policy shall be void and all the premiums paid by insured may be forfeited by the insurance company in the event of mis-presentation or mis- declaration and/or non-disclosure of any material facts. 2. Reasonable care : The insured shall take all reasonable steps to safeguard the property insured against any loss or damage. Insured shall exercise reasonable care that only competent employees are employed and shall take all reasonable precautions to prevent all accidents and shall comply with all statuary or other regulations 3. Fraud : If any claim under the policy may be in any respect fraudulent or if any fraudulent means or device are used by the insured or any one acting on the insured’s behalf to obtain any benefit under the insurance policy, all the benefits under the insurance policy may be forfeited. 4. Few basic principles of general insurance are : 1. insurable interest 2. utmost good faith 3. subrogation 4. contribution 5. indemnity 5 Risks of loss not covered under general insurance are: The loss or damage or liability or expenses whether direct or indirect occasion by happening through or arising from any consequences of war, invasion, act of foreign enemy, hostilities(whether war be declared or not), civil war, rebellion revolution, civil commotion or loot or pillage in connection therewith and loss or damage caused by depreciation or wear and tear. However the risk of loss or damage by war can be insured by payment of additional premium in some cases only. INDUSTRIAL VISIT COMPANY VISITED : THE NEW INDIA ASSURANCE COMPANY LIMITED, VILE-PARLE. MUMBAI INTRODUCTION OF THE COMPANY: THE NEW INDIA ASSURANCE COMPANY was initially formed by MR. J.R.D. TATA , when it was registered as a private limited company. It was only after nationalization act passed in 1952 , it was named as the New India Assurance Company Limited. After nationalization all the 104 private insurance companies functioning under various names were merged and four subsidiary companies based on region under the GENERAL INSURANCE CORPORATION OF INDIA were formed viz, 1) THE NEW INDIA ASSSURANCE COMPANY LIMITED 2) NATIONAL INSURANCE COMPANY LIMITED 3) THE ORIENTAL INSURANCE COMPANY LIMITED AND 4) UNITED INDIA INSURANCE COMPANY LIMITED based on the region. THE NEW INDIA ASSURANCE COMPANY LIMITED is the largest non- life insurance company operated in India. It has approximately 2200 offices widely spread throughout India and 22 branches in foreign countries. General information: 1. Who can be the insured person ? Any person who has insurable interest in the subject matter to be insured can be insured person. For example, in case of motor insurance person have the ownership of the vehicle can insure his car. In case of Mediclaim farther can take our Mediclaim policy for his son. 2. Types of policies available ? There are a number of policies available under general insurance. Since the company deals in non-life business has various types of policies which vary from small needle to as large as big plane or ship according to the need of the society, for example, motor insurance, personal accident, Mediclaim insurance, householders insurance, shopkeepers insurance, marine cargo insurance, hull insurance, boiler insurance, electronic equipment insurance, burglary insurance, fire insurance, etc. 3. Terms of policies ? Generally all non life insurance policies are annual policies. However, it is permissible to issue short term policies as well as long term policies only in few cases, for example, long term policies are available only in the case of housing premises. 4. Documents required for taking a policy ? The concept of general insurance is based on the principle of utmost good faith in most of the cases only proposal form which acts as a declaration is required. In few cases like in Mediclaim doctor’s report is required according to the age of the proposer. Risk coverage : 1. Types of risks covered ? In different kinds of policies different types of risks are covered. In case of motor insurance policy the risk covered is loss or damage to insured vehicle by any accidental external means in addition to legal liability for third party property damage, injury and death. in case of fire insurance the risk covered is fire and allied perils like explosion, lightning, bush fire, storm, tempest, etc. In case of burglary insurance the risk covered is loss or damage to insured property by burglary. House breaking, larceny and theft. 2. What is loss of profit coverage ? This policy in given in conjunction with basic fire policy. This policy covers the loss of income suffered due to business interruption which has taken place due to occurrence of insured perils like fire. In addition this policy also covers standing charges like salary to the permanent employees and increased cost of working like addition expenditure incurred for putting back the production on line. 3. What is third party risk ? As per the motor vehicle act this is the minimum insurance coverage for any vehicle plying on the road. This risk is covered under motor policy. Third party means loss or damage to the third party property damage or third party injury or death. Proposal & acceptance : 1. What is a proposal form of a policy ? It is an important document which is required for taking the policy. It acts as a declaration. On the basis of the questions required to be filled in the proposal form the insurer arrives at risk evaluation and then decides upon whether to accept the proposal or not. 2. Are there any conditions for the acceptance of the proposal ? If yes what ? Yes there are conditions for acceptance which insurer may impose depending upon risk perception. For example, in burglary if the jewellery shop has no arm guards company may charge higher premium with a condition that all goods will be secured in sage locked after the closure of the shop. If the motor vehicle to be insured is old than the company may put compulsory excess of say rs.10,000 , which means that the company will not settle any claim up to rs.10,000. 3. When can company withdraw the proposal form ? Company may not even accept the proposal in case the risk involved very high. For example, in burglary insurance of industry which has been locked and left unoccupied without any security. 4. Procedure for renewal of the policy ? If there are any changes to be made in the policy renewal will require a specific request for the same or else all renewal are invited on the same expiring terms unless there has been any adverse features. 5. Is renewal required once or periodically ? Almost maximum of general insurance contract are annual contracts. It is mandatory on part of the insured to renew the policy periodically to keep the policy valid. 6. Are there any maximum or minimum limits of the sum assured ? There are minimum as well as maximum limits prescribed under various types of policies. The limits differ for different policies. 7. Is single proposal form used for all types of policies ? For separate types of policies separate proposal forms are required. The reason is that the coverage offered are different policies are different. 8. What happens if policies are faulty or documents are improper ? If the policies are obtained fraudently by providing wrong or incorrect information company has the right to cancel the policy at any time. Premium: 1. How are the premiums calculated ? For calculation of premium various factors considered. In motor insurance the premium is calculated on the basis of cubic capacity of the vehicle, age of the vehicle, manufacturer’s price and zone under which is being used. In case of fire insurance premium rates are based on nature of occupancy, storage risk, i.e., whether industrial unit or dwelling, office, shop, etc. Claims : 1. What is the clam procedure ? Steps to be taken while claiming the amount : 1. in the event of theft the insured shall lodge a complaint with the police and take all practicable steps to apprehend the guilty person or persons and to recover the property lost 2. give immediate notice thereof to the company and shall within 14 days thereafter furnish to the company at his own expenses detail particulars of the amount of the loss or the damage together with such explanations and evidence to substantiate the claim as the company may reasonably require. 2. How much time is taken for settlement of claims ? Claims are settled on the basis of documents supplied by the customers. In case of motor insurance average time taken for settlement of claim after submission of all documents is 7 days. It further depends upon the time taken but settling authority. 3. How much is the claim ratio of the assured amount ? New India assurance company has adverse claim ratio in case of motor insurance and Mediclaim insurance. In other insurances the claim ratio is within profit margin. 4. How does the company calculate the amount to be paid in when claimed ? Quantum of amount payable to insured as indemnity is assessed by independent surveyor. In case of motor insurance assessment of loss or damage is made by motor surveyor who arrives at the insurance company’s liability after taking into consideration the cost of parts damaged less depreciation depending upon the age of the vehicle plus the labour. All general insurance contracts follow the strict principle of indemnity. That is to say that if insurer has under insured the subject matter than he will be penalized by applying the condition of average at the time of the settlement of the claim. 5. Does insured get any amount after specific period without having any affect to the goods ? No insured doesn’t get any amount after specific period. General Insurance policy comes into rescue after the happening of misfortunate event only. 6. Does the company take away the goods assured after happening of the misfortunate event ? Yes as per the subrogation principle, insurance company has the right to take away the salvage. It means when the claim are settled on total loss basis. The Insurer Company has the right to take the possession of the salvage. 7. Is nomination facility available under general insurance as in life insurance ? Yes, nomination facility is available in some policies like Mediclaim, personal accident policy, etc. Re-insurance : 1. What is re-insurance ? Many times it may happen that the risk proposed for insurance is to large for one to accept in such case, one insurer insures the risk and then in turn insures part of that risk with other insurer. Such decision or retention of part and re-insuring balance of the risk is termed as re-insurance. 2. What is procedure of settlement of re-insurance claim ? When a claim arises where re-insurance arrangement has been made the parent insurer first settles the claim in full and subsequently recovers the proportionate share of the claim from the re-insurer. CONCLUSION The reason to opt to visit “The New India Assurance Company Ltd.” As the said Company is the largest Non-life Insurance Company which very popular among the public. I hereby take the opportunity to sincerely thank the concerned officer and the Company for extending their whole hearted support to provide me the information during my visit. The Genaral Insurance is a basic facilities to extend the business without any tension and risk which are beyond the control of the human beings. The insurance is a device or mechanism to spread the loss by contributing sum in term of premium.
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