Group members name Roll noKusum Parmar 65Madhushree Rangrej 77Thrapti Sheety 91Kajal Singh Yadav 110Sanjoli Bhageria 115
ACKNOWLEDGEMENTI would like to express my gratitude to all those who gave us thepossibility to complete this project. I want to thank prof. Seema. S forher suggestions and encouragement in all the time research of theproject. I would here by like to thank my parents and group memberswho helped me throughout the project.
INDEX TOPIC PAGE NOINTRODUCTION 5-8TYPES OF INSURANCE 8FIRE INSURANCE 9-14MARINE INSURANCE 15-19MOTOR INSURANCE 20-22PERSONAL ACCIDENT 23-25INSURANCEINSURANCEREGULATORY AND 26-28DEVELPOMENTAUTHORITY (IRDA)ACT, 1999
INTRODUCTIONInsurance is a means of protection of the economic valueof assets. It is method of spreading over a large number ofpersons, a possible financial loss, which cannot be borneby an individual. The occurrences which cause anydamage to the assets are called perils. The damage thatthese perils may cause to the assets is called risk that theasset is exposed to. The concept of risk is integral to theconcept of insurance. The risk means, that there is aprobability of loss of an asset. Whether the loss willactually occur is not certain. It is the uncertainty thatgives rise to the risk. If there is no risk, there is no needfor insurance.
Some assets have a value because of their income-generating capacity. Some assets may not generate anincome but they have a value because of certain needs,which they fulfill. Loss of any assets could result in theloss of income or loss in value of assets. When the assetsperforms as expected, the owner could manage his affairseasily and his income or value is not lost. However, whenthe asset is lost, damaged, or destroyed or made non-functional, the owner will suffer losses because hisincome will be reduced or lost. Insurance is a mechanismthrough which assets are protected against the risk ofdamage or destruction. Thus, the owner of the assets cancope with the economic consequences of such events.Human being is considered as an income generatingassets.Risk is a pervasive condition of human existence. It has asimple meaning in everyday usage but sometimes it has aspecialized connotation, when used in a particular field. Acar accident, fire, theft, natural calamities like earthquake,flood, etc. cause harm to some people which we call as arisk. Losses like these happen to some people, whileothers go along happily free from misfortune. Therefore,such losses are uncertain. Insurance is still in its infancyin India. The term „risk‟ is used by the people in the
business of insurance to mean-either a peril insuredagainst a person or property protected by insurance.Insurance is a social device to reduce or eliminate risk ofloss to life and property. A group of individuals transferrisk to another party in order to combine loss incurred. Itincludes statistical prediction of losses and provides forpayment of losses from funds contributed by all memberswho transferred risks. Thus collective bearing of risks isimmense.With India‟s growing exposure to global markets is nowbeing appreciated that the business of insurance with itsunique feature has a special place in economy of ourcountry. Insurance is essentially an arrangement forpaying if losses they occur and thus is a risk – whichprovides a much needed cover to industry therebyeconomizing its growth. Society cannot ignore risks ornegative surprises, which are ever, present but can learnto live with them.According to D. S. Hansell, “Insurance may be defined asa social device providing financial compensation for theeffects of misfortune, the payments being made from theaccumulated contributions of all parties participating inthe schemes.”
According to Riegel and Miller, “Insurance is a socialdevice whereby the uncertain risks of individual may tocombined in a group and thus made certain small periodiccontribution by the individuals, providing fund out ofwhich those who sufex losses may be reimbursed”.Insurance are of following types: 1. Life insurance 2. General insurance 3. Fire insurance 4. Marine insurance 5. Motor insurance 6. Crop/ agriculture insurance 7. Wedding insurance
FIRE INSURANCE“Fire insurance is a contract between the insurer and theinsured whereby the insurer undertakes to indemnitythe insured for destruction of or damage to the properlycaused by fire or other specified perils during an agreedperiod of time, in return for payment of a premium inlumpsum or by instalments”.Fire insurance is the oldest form of insurance. In theearly development of industrial society, fire was themain source of energy. The industrial or commercialactivities were not possible without fire. However, therewas a need to insure the risk of uncontrolled oruncertain fire. Fire insurance is designed to provide forfinancial loss to property due to fire and a few otherrelated hazards. Fire insurance is governed by a tariff
under the tariff advisory committee (TAC). Theproperty that can be covered under fire insuranceincludes Building, Machinery, Equipments,Accessories, Goods, Raw Materials, ElectricalInstallation of building, Residential houses, Furnitureand fittings, Pipelines located outside and inside thebuilding.The standard fire policy covers the followinghazards: 1. Fire i.e. burning of any property. 2. Explosion/implosion as may happen to boilers. 3. Aircraft damage caused by pressure waves. 4. Lightning. 5. Riot, strike, malicious and terrorism damage. 6. Impact damage by rail, road, vehicle or any animal by direct contact not belonging to, or owned by the insured or his employees. 7. Storm, cyclone, typhoons, tempest hurricane, tornado, flood. 8. Subsidence and landside including rockslides. 9. Missile testing operations. 10. Leakage from automatic sprinkler insatallation
General conditions in the fire policy:The following are the general conditions in the firepolicy: a) The policy will become void in case of non- disclosure of material facts or misrepresentation. b) Cancellation of the policy is possible by either party. c) Notice of loss or damage should be given to the insurer immediately and the claims should be submitted within 15 days. d) The insurer has a right to enter and take possession of the building or premises where the loss has incurred, remove or salvage the insured property. e) If the claim is fraudulent or false, the insured will lose all the benefits under the policy. f) The insurer has the right to replace, re-instate the property lost or damaged instead of paying for the loss or damage. g) An insured is expected to insure his property to the fullest extent of its value, otherwise average clause is made applicate and then insured will get proportionate amount of loss or damage.
h) In case of one more policies covering the same property for the same hazard, all policies will contribute the claim in the proportion of sum assured. i) If the loss or damage is caused by a third party, the insured is required to help and assist the insurer to enable it to recover the loss from the third party responsible for the loss or damage. j) Any dispute regarding the amount of claim should be referred to arbitration. k) The amount of premium payable under this policy is deducted from net claim payable under the policy. l) All notices under this policy should be given in writing.Fire insurance procedure and documentation: a) Proposal Form: A typical proposal form of fire policy seeks information from the insured, which covers the important aspects of risk assessment such as description of this property, duration of the insurance, history of previous losses, proposed sum assured, history of insurance and risk inspection report of insurer‟s engineer
b) Cover note: The cover note is an unstamped documents of the evidence of insurance cover until the issuance of the policy. The cover note provides insurance against specific perils on the usual terms and conditions of the insurer. It is issued after the insurer receives the duly completed proposal with the inspection reports and another information sought by insurance company.c) Policy: The policy document is the final contract between the insurer and the insured. It is a stamped document. It contains the details of the contract with relevant schedules and rates.d) Claims: The claim is a form prescribed by the insurer which contains the name and address of the insured, policy number, date, time, place, and cause of fire, the details of property damaged, etc.e) Survey report: A survey report is a report submitted by the survey to the insurance company giving the details of cause of the fire, event of loss, value of salvage, expenses, etc. the surveyor is appointed by the insurance company to assess the loss of the
policy. The surveyor has to give the amount of extentof loss incurred of the policy. On the basis of thesurvey report the insurance claim is to be settled withthe insured.
MARINE INSURANCE“Marine insurance is a contract of insurance under whichthe insurer undertakes to indemnity the insured againstlosses incidental to marine adventure which may coverloss or damages to the ship, cargo, freight, vessels or anyother subject of marine adventure”.Insurance was introduced to the world by the concept ofmarine insurance. The object of marine insurance is tomake good losses exposed to the seafarers due to seacondition, war, pirates, weather, diseases, spoilage, etc.the legal framework of marine insurance is provided bythe marine insurance Act, 1963. All the related subjectslike the basis principles, basis of valuation under thepolicies, basis of settlements of losses are laid down inthis act
Marine insurance has two important and broadcomponents. The first one is cargo insurance and thesecond one is hull insurance. Cargo insurance providescover from losses or damages that could occur to goods intransit on sea, rail, road or air. This insurance is purchasedby the owners of cargo/ships. Cargo insurance coversshipments by inland ships, steamers, boats and crafts,costal shipments by steamers, sailing vessel, mechanizedboats etc., export and import shipments and consignmentsshipped by rail, road or air and articles send by post ofcouriers.Hull insurance covers the insurance of the carrier of thegoods. This type of insurance is purchased by the ownersof the transportation vehicle. In case of import- exporttrade, the responsibility for purchase of insurance lieswith the seller if the price quoted is cost, Insurance andFreight (CIF). Then the seller or exporter includes thepremium charges as part of the cost of goods sold.Moreover, the bank gets the goods as the security againstthe amount paid out to the exporter and hence it requiresthen the goods are insured against loss or damage intransit.
The important risks covered by the institute cargoclauses are as follows: a) Fire b) Vessel or craft being stranded, grounded sunk or capsized. c) Overturning or derailment of land conveyance. d) Collision or contract of vessels, craft or any conveyance with any external object other than water. e) Discharge of cargo to a port of districts. f) Jettison.The following extraneous risks are also covered: a) Theft, pilferage or non-delivery.
b) Fresh water and rain water damage. c) Hook of oil damage. d) Damage by mud, acid and other extraneous substances. e) Heating and sweating. f) Breakage. g) Leakage. h) Country damage. i) Bursting or tearing of bags.However the marine insurance does not cover thefollowing cases: a) Loss caused by wilful misconduct of the insured. b) Ordinary leakage loss, in weight or volume or wear and tear.
c) Loss caused by the inherent vice or nature of the subject matter such as perishable commodities.d) Loss caused by delay.e) Loss arising from insolvency or financial default of the owners/operators.f) Loss or damage due to inadequate packing.g) War and kindred perils.h) Strikes, riots, lock-out, civil commotions and terrorism.
MOTOR INSURANCEThe motor vehicle insurance act of 1939, introducedcompulsory general insurance to protect those who mayget injured in an accident. However, the insurance to thedamage of vehicle is not compulsory. The tariff‟sadvisory committee regulates motor insurance business inIndia. Motor insurance is one of the largest non-lifeinsurance business in the world. All motor vehicle arerequired to be registered with the Road TransportAuthorities. They are also insured for third part liability.This is based on the premises that the motor vehiclescould either cause injury or be a subject of damage orinjury. The motor vehicles require compulsory insurancebecause any motor vehicles can parked or drived in publicplaces.
The liability that requires to be covered under thisAct, includes the following: a) Any liability arising in respect of death or bodily injury to any person including the owner of the vehicle or his authorized person in the carriage. b) Any liability incurred in respect of damage to any person or property of a third party. c) Any liability incurred in respect of death or bodily injury of any passenger of a public service vehicle. d) Liability arising under workmen‟s compensation Act, in respect of injury or death of a paid driver of the vehicle, conductor or workers carried in goods vehicle. e) Liability for bodily injury or death of passenger who are carried for hire by reason of contract of employment. f) The policy should carry a „no fault‟ liability limited to a sum of Rs. 50,000 in case of death, Rs. 25,000 in case of permanent disability and Rs. 6,000 in case of
damage to the property. No fault liability is based on the premises that the injured party does not have to prove any fault in order to claim this amount under the policy.Motor vehicle are classified into three categories forthe purpose of insurance: a) Private cars. b) Motor cycles and Scooters. c) Commercial vehicle carrying goods.Passengers and other miscellaneous items, which includesAuto Rickshaws, Taxis, Buses, Ambulances and Mobileutilities.
PERSONAL ACCIDENTINSURANCEThe purpose of this insurance is to pay fixedcompensation for death or disablement resulting fromaccidental bodily injury. It is known fact that despite allpossible precautions, accidents do occur. Accidents mayoccur while walking, driving or even in house due to fallfrom stairs or in toilet/bathroom. This may result intodisablement or loss of limbs or even death. Personalinsurance has divided into two categories of persons viz,normal risks and heavy risks as per their nature of jobdone, for heavy risks, the premium are loaded with extraamount.Such normal risks/heavy risks:Normal Risks: Persons engaged in occupation ofaccounts doctors/lawyers/architects/consulting
engineers/teachers/bankers engaged inadministrative/secretarial and managerialfunctions/shopkeepers/shop assistants not usingmachinery/commercial travelers/builders/contractors/engineers in superintending functions only/veterinarydoctors, drivers to private motor cars and light vans andpersons engaged in similar occupation. All persons engaged in manual labour/cash carryingemployees garage and motor mechanics, machineoperators/drivers of trucks or lorries and other heavyvehicles/professional athletes and sports persons/woodworking machinists etc.Heavy Risks: Persons working in underground mines,explosives, magazines, electrical installation with highvoltage supply/Jockeys Circus personnel/Mountaineeringwinter sports/ice hockey/and other similar hazards.Percentage of compensation Death 100% permanent total Loss „of Two limb. 100% disablement i.e. 2 years of 2 Limbs 100% 100%Additional benefits at no extra premium:
i. Expenses incurred for carriage of dead body, (death due to accident) to place of residence are reimbursed @ 2% of sum assured or Rs. 2500, whichever is less.ii. Funds to dependent children of the decreased 10% of sum assured or maximum Rs.5000 per childiii. 5% for every year the policy being in force subject to maximum 50% of capital sum insured. The sum insured is compared with the average monthly income of the insured. A policy for Rs. 1 lakh may not be granted to a person earnings. Rs. 1000 per month, because in the event of temporary disablement, his benefit per week is Rs. 1000 (Rs. 4000 per month) which is disproportionate to his monthly salary. The above benefits are allowed to capital sum policy holders.
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (IRDA) ACT, 1999:This Act was passed by parliament in December, 1999and came into forces from 2000. This provides for theestablishment of the: 1. Authority to protect the interest of holders of policies.
2. To regulate, promote and ensure orderly growth of insurance. 3. Matters connected there with or incidental thereto with the establishment of new authority IRDA, the UC Act and GIC Act stands amended, taking away their monopoly right to transact, life insurance and general insurance business respectively.Some of the important functions of IRDA are as below: 1. Licensing to transact insurance business. It fixes the financial and legal requirements for starting insurance business. It also gives licence to the intermediaries like agents and brokers and regulate their profession. 2. Providing security to the policy holders by supervising the functioning of the insurance companies. It shall insist on a periodical valuation and other financial requirements so that they have adequate assets to pay the claims of the policy holders.
3. Examine the quality of insurance products to ensure that they are fairly priced and honestly illustrated. The quality of sales literature is important. To maintain transparency in the product.4. Monitor the functioning of the companies by spot inspection, whenever felt necessary and by maintaining close liaison with the various consumers forums and the other stake holds of the economy.5. The paid up capital of companies wanting to transact life or general insurance business, should not be less than Rs.100 crores and in case of companies wanting to transact reinsurance business, the paid up capital will have to be not less than Rs. 200 crores.6. Every insurance company will have to appoint an actuary, to be approved by the IRDA. And he/she would work till the 70 years of age.