GENRAL INSURANCE NOTES- IMPORTANT HIGHLITED WORDS
FOR LEARNING
Chapter-1
Life insurance business was nationalized on 1 sept on 1956
and LIC was formed.
First insurance company was formed in Kolkata.
General insurance business nationalization act (GIBNA)
was passed in 1972 and general insurance corporation
(GIC) come in existence..
Insurance regulatory and development authority (IRDA)
was established in 2000 by the act of parliament in 1999
and its head office is in Hyderabad.
The specific event which might cause loss is called peril.
Llyod coffee house Landon is the place where insurance
was first started ,
Insurance companies play an important role in country's
economic development.
Insurance is risk transfer through risk pooling.
Loss prevention measures reduce the chance of
occurrence of risk.
When one decided to bear the consequences of a risk, in
insurance context its Risk retention.
Insurance is a method of sharing the losses of a few by
the many.
Chapter-2
Insurance have four elements- assets, risk , risk pooling
and insurance contract.
An asset must have economic value.
Risk indicates a chance of loss.
Risk can be classified as static and dynamic .
The condition which increase the probability of loss is known
as hazard.
Moral Hazard means dishonesty or character defects in an
individual.
Stolen good does not represent an insurable risk.
The object of the contract must be legal.
Subrogation mean transfer of all right and remedies with
respect to the subject matter of insurance , from insured to
the insurer.
Misrepresentation is example of breach of utmost good
faith.
The insurable interest is an essential ingredient of the
insurance contract.
Insurance cannot protect an asset from loss or damage and
only compensate losses.
Chapter-3
Cold calling is where we may approach people and
company unannounced.
Prospecting in an insurance sale is gathering the names of
people who may be interested in insurance.
Qualified prospect are those people who can pay for
insurance.
Sales men are the key architect of modern economy.
The objective of negotiation is to arrive at win-win
situation.
Marketing in insurance is the mean by which insurance
company seek to indentified, serve , satisfy and retain the
customers.
The four P’s of marketing are product, prices, promotion
and place.
Insurance density is premium per capita.
Segmentation is known as the classification of customers
into various market segments having common features.
Insurance is a part of the financial services industry.
Chapter-4
Important sections of insurance act 1938.
1) Section 42- one must have a license to work as agent.
2) Section 38 – deal with rule of nomination.
3) Section 39- deal with rule of assignment.
4) Section 64UM- need for survey of losses where loss is
Rs.20000/- or more.
5) Section 64VB- advance payment of premium.
Workmen compensation act passed in 1923.
Motor vehicle act passed in 1988.
Public liability act passed in 1991.
Consumer protection act passed in 1986.
The complaint in National commission is filled under
section 19 and against National commission complaint is
filed under section 23.
All professional CA/CS/ICWA/MBA/ composite agent
required 25 hrs of practical training.
Agent is the closest person to the client.
Agent is responsible to his act to insurer.
Surveyor access losses and investigation on behalf of
insurance company where loss is above 20,000/-.
Caveat emptor mean let the buyer be aware
If an agent is found guilty of criminal misappropriation the
designated person will cancel the license.
An insurance broker may deal with more than one life
insurance company or general insurance company or both.
Chapter-5
Declaration is attached at the end of proposal form and
signed by the insured which is the basis of insurance
contract.
The Company has to process the proposal within 15 days.
The process of scrutinizing the proposal and deciding to
accept the proposal is called as underwriting.
Cover notes are issued for marine and motor classes of
business.
Validity of cover notes is usually for a period of fortnight and
rarely for a period of 60 days.
In motor renewal notice insured intension is to be drawn to
revise the sum insured in current requirement.
Sum insured is the maximum limit of liability of insurer
under the policy.
Premium is the consideration or price paid by insured
under the policy.
A Warranty is a condition expressly stated in a policy and
has to be compiled with.
A document which provided an evidence of contract of
insurance is called policy.
Chapter-6
The process of calculating the price to cover the future cost
of claim and expenses including the margin for profit is
called rate making.
The pure rate of premium is arise on past loss
experiences.
Indifference toward loss is called carelessness.
No claim bonus is a powerful strategy to improve
underwriting experience and forms an integral part of rating
systems.
Sum Insured is the maximum amount that an insurance
company will indemnify as per policy condition.
Underwriter decides weather to accept or not to accept the
risk.
Installation of sprinkler in the premises decreases the risk
of fire.
Insured’s declared value in motor insurance includes
manufacturer’s selling price.
Chapter-7
Personal accident policy cover death arises out of
accident, permanent total disability, partial disability, and
temporary total disability.
Suicide is not covered in Personal Accident.
Health insurance policy covers medical expenses in case
of 24 hrs of hospitalization.
Centre where a person do not required more than a stay in
a hospital for treatment is called as day care center.
Family floater policy usually covers the entire family in a
single policy.
except in emergency a cashless facility may required pre-
authorization from insurer for treatment in network
hospital.
Free look in period is of 15 days and grace period is
30days.
Some insurer may require senior citizen medical checkup
prior to acceptance of proposal in case of travel
insurance.
Householder insurance cover the house structure and its
contents against fire, riot, bursting of pipes, earthquake,
burglary etc.
Shopkeeper insurance cover also includes the dishonesty
of employee.
Under motor vehicle act 1988 it is mandatory for the
owner of vehicle playing on public road to take an insurance
policy to cover the amount which the owner become legally
liable to pay as damages to third party as a result of
accident death, bodily injury or damage to property.
Travel insurance cover sny delay in baggage ,emergency
hospitalization and loss of checked baggage.
Corporate frequent travel is a annual policy whereby a
corporate/employer take an individual policy for his
executive to frequently make trips outside India.
In shopkeeper’s insurance money carried by customer to
business premises is usually not covered.
Chapter-8
Under reinstatement value policy the insurer would pay
cost of replacement of damage property by new property
of the same kind.
Reinstatement value (RIV) method is allowed only for Fixed
assets
Money policy covers loss of cash as a result of robbery or
theft under transit section.
Under jewelry block policy cover under section 1 is
compulsory.
Under compulsory public liability policy compensation pay
for fatal accident and total permanent disability is Rs
25000/-
Public liability policy cover both industrial and non-
industrial risk including, hotels, cinemas, offices, go downs.
Non Industrial Risk Is Classified in 9 categories in Liability
Insurance.
Hull refers to the body of the ship.
Consequential Loss (Fire Policy) covers loss of profit due
to damage to factory
Loss of cash from one’s premises due to burglary is
covered under Money Insurance Policy.
Chapter-9
The settlement of non standard claims is subject to rule
and regulation framed by the non life insurance companies.
Arbitration is the method of settling the dispute arising out
of contract . It can be done by single arbitrator and in case
of more than one arbitrator the decision will be given by
umpire.
In GRA team one person from judiciary is also included as
Chairman
For personal accident claim report of a Doctor is
necessary.
Claim assessed outside the country in case of travel
insurance policies are assessed by claims settling agents
named in the policy.
Report from Meteorological Department is most likely to
be requested while examining a cyclone damage claim.
Chapter-10
Responsiveness referred to as willingness and ability of
service personal to help customers.
Consumer disputes redressal agencies can be classified
under three classes- district, state and national forums.
Insurance ombudsman: is appointed by the central govt
under the power vested by Redressal of public
grievance rule under the said act of 1988.
The ombudsman by mutually agreement between the
insured an insurer can be act as mediator and counselor.
The decision of the ombudsman whether to accept or
reject the claim is final.
Any complaint made to the ombudsman should be in
writing and signed by the insured.
Ombudsman make recommendation within a period of
3months from the date of receipt of complaint and his
awards will be binding on the insurer.
Communication process involves, Source-encoding-
channel-decoding-receiver-feedback.
Personal distance is 4 feet in effective communication.
Ethical behavior helps in developing trust in the agent and
the insurer.
Being extremely Judgmental is not an element of active
listening.
Active Listening involves paying attention to the speaker,
giving an occasional nod and smile and providing feedback.
A customer having complaint regarding his insurance policy
can approach IRDAI through IGMS
Chapter-11
IRDA regulation (insurance broker-2002) give detail of
broking profession.
Banc assurance- selling insurance policy through banks.
In insurance the Revenue account, profit and loss account
and balance sheet is signed by Auditor.
Premium-rate tables and periodical valuation of companies
is certified by Actuary.
Institute of actuaries act is passed in 2006 applicable on
actuary.
Insurance agent is a representative of the insurance
company and is governed by the principal agent
relationship.
Empathy and Ego are the two basic qualities that make a
good sales person.
Some Important Abbreviations
ERP Erection all risk policy
ALOP Advance Loss of Profits Policy
CPM Contractor Plants & Machinery Policy
MCE Marine Cum Erection Policy
CAR Contractors All Risks Policy
TPA Third party administrator
SEBI Securities and Exchange Board of India
III Insurance institute of India
CBDT Central Board of Direct Taxes
TAT Turn around time
IRDA Insurance Regulatory Development Authority
IGMS Integrated grievances management system
IDV Insured declared value
GIBNA General insurance Business nationalization Act
RTI Right to information
RTO Regional transport office
PIL Public Interest Litigation
ICC Institutes Cargo Clause
SCE Storage cum erection
NBFC Non Banking Finance Corporation
AOG Act of God
MLP Machinery Loss of profit Policy
NCB No claim Bonus
RKBY Rashtriya Krishi Bima Yojana
GIC General Insurance Corporation
AIC Agriculture Insurance Corporation.
TPPD Third Party Property Destruction
IRDAI Insurance Regulatory Development Authority of
India
RBI Reserve Bank of India
RSMD Roit ,strike and malacious damages
