basic concept of insurance

1. University of Somalia (Uniso)
Lecturer : MASLAH AHMED ABDULLE
(Master of Science Bank Management )
Basic concept of insurance
Course: Principles of insurance
Sep, 2018

2. Qualifications
2015- 2017 Master of banking management (MBM)
Islamic international university Chittagong (IIUC), Bangladesh
March 2016- March2017 post-grated diploma in banking and finance
HRD foundation Bangladesh
Sep 2011- Aug 2015 Bachelor of Accounting and Finance (BAF)
University of Somali, Mogadishu Somalia
2010-July-2011 Secondary Leaving Certificate
AL Imam ALshafi’ Primary and Secondary School

3. Learning objectives
• Define insurance
• Types of insurance
• Risk and risk management tool
• Define contract and types of contract
• Subject matter of insurance and subject matter
of insurance policy
• Assignment of policy and assignment of policy
proceeds
• Principles of insurance

4. Definition Of Insurance
 Insurance is risk transferring technique where insurance will be
compensated by insured if any loss as per insurance agreement
 Types of insurance
 Life insurance
 Non life insurance
 Fire
 Marine
 Accident

5. Fire insurance
an agreement, whereby one party in return for a consideration
undertakes to indemnify the other party against financial loss
which the latter may sustain by reason of certainly defined
subject-matter being damaged or destroyed by fire or other
defined perils up to an agreed amount.

6. Marine insurance
A simple definition of the word insurance would be
“Protection against future loss.
Marine insurance is very important, Because through
marine insurance, ship owners and transporters can be
sure of claiming damages especially considering the
mode of transportation used. Of the four modes of
transport – road, rail, air and water

7. Accident Insurance
Accident insurance is an insurance against bodily injury or
death because of an accident, It is a form of insurance
that undertakes to indemnify the assured against
expense, loss of time and suffering resulting from
accidents causing him/her physical injury, usually by
payment at a fixed rate per month while the consequent
disability lasts

8. Events of Insurance
Types of events, there are two types of events.
Expected (result of all positive outcome )
Unexpected (result of all negative outcome )
 Monetary value( loss of the property by the fire)
 Non monetary value (death of the parent )

9. Risk and Risk management Tools
Risk: are the Un-expected events we can measure in term of
monetary value.
Risk management/ tool/ techniques /approach
 Risk avoidance ( Selection of less risk insurance for doing business)
 Risk assumption (Forecast risk factor rank them take corrective action to
reduce risk by the business it self.)

10. Cont…
Risk prevention: placement of human and non human
resource to reduce risk. save product property at the time of
happing loss.
Risk distribution: Minimize risk by increasing more partner in
a business ie. Partnership, private limed co, public limed co,
cooperative business

11. cont.........
Elimination of risk: Development establishment of plant
equipment in such a way that reduce risk automatically .
Risk transfer: Transferring risk factors or
couses of a risk to third party under
agreement. ex insurance

12. Define contract
Contract: is an agreement between two parties
which is enforceable by low.

13. Types of conrtact
 Simple contact general contact: may be written oral which we use
for our day to day activities and transaction
 Special contract: are the contact which must written sealed signed
agreed party must abide by implement the contract.
 Contract of records: This is written records of judgment given by
the court

14. Essential Element of simple contract
Essential element of simple contract
Unrevoked offer: offerer can give reoffer to offeree
on withdraw his offer .
Un qualified acceptance: offeree can reofferer to
offerer.

15. Cont……..
Consideration:both party must have benefit
Consensus ad idem: person of same mentality
Capacity to contract: offeree must have financial
capacity and positive mentality to execute
contract.
Legality of the object property: (subject matter of
contract ) must be legal

17. Subject matter of insurance
Property, life or limb for which a person will
make contract
Subject matter of insurance contract
Legal financial benefit for insured which is
receivable after happening loss.
Assignment of policy: Transferring whole
Policy and policy proceeds in the name of third
party.

18. Assignment of policy proceeds
Transferring policy proceeds (financial benefit)
in the name of third party

19. Principles of Insurance
Principle of utmost good faith
Principle of indemnity
Principle of insurable interest
Principle contribution
Principle of subrogation
Principle of proximate cause

20. End!