This document provides information about Islamic banking and insurance. It discusses key concepts like the characteristics of insurance including risk sharing, utmost good faith, and functions of insurance. It also covers topics like distinguishing between life insurance and other types, factors affecting insurance risk, and principles of marine insurance including different types of policies and warranties. The document appears to be from a class presentation covering the basics of Islamic banking and various types of insurance.

2. Md. Mahbubur Rahman ID-1541BBA03260
Md. Hamidullah ID-1541BBA03268
Md. Dider ID-1541BBA03288
Md. Mahmud Khan ID-1541BBA03306
Md. Imran Hossain ID-1541BBA03352
Shariful Islam ID- 1233BBA02231

3. Presentation On:
ISLAMIC BANKING &
INSURANCE

4. Chapter 1
Introduction

5. Characteristics Of Insurance
Characteristics of insurance: - we know that there are have
some common characteristic of insurance given below.
A. Sharing of Risk
B. Co- operative Device
C. value of Risk
D. payment at contingency
E. Amount of payment
F. large number of insured persons
G. Insurance is not a gambling
H. Insurance is not charity
I. personal contract
J. utmost good faith

6. The functions of insurance
Two part of functions.
A. Primary functions:-
• Insurance provides certainty
• Insurance provides protection
• Risk sharing
B. Secondary functions:-
• Prevention of loss
• It provides capital
• It improves efficiency
• It helps economic progress.

7. InsurancebeconsiderasGamblingandconsider
asCharity!
We know that insurance as gambling and charity that is why it is
increasing initiative and it provide security and safety. In
addition, other thinks it is a gambling and charity why not.
The reasons of some time they fail the proved security and
safety and others matter.
A. Insurance is not a Gambling: - The insurance serves indirectly
to increase the productivity of the community worry and
increasing initiative.
B. Insurance is not Charity: - Charity is give without
consideration but insurance is not possible without premium.
It provides security and safety an individual.

8. Features of Development
Common features of development: - we know that there are have
some come features of insurance.
A. Insurance developed in response at a demand created by insuring
community.
B. Industrial revolution of the 19th century was largely responsible for
rapid growth of insurance business.
C. In the early days there were absence of reliable statically data and
theoretical soundness.
D. In the earliest days insurance started as specialist offices, but
gradually with multifarious demands they turned into composite
offices.
E. The idea as to maintenance of reserve for with stating catastrophe
losses gradually developed and now a day’s hardly there is a
company, which does not provide for such a reserve.
F. The necessity of reinsurance gradually developed with the increase
in the insurer’s commitment on a particular risk.

9. Objectivesof theBangladeshInsuranceAcademy
A. To promote, organize and impart professional education in
insurance leading to degrees / certificates.
B. To organize, conduct and promote research on problems of
insurance industry.
C. To organize and conduct in service training for the officers and
employees of JBC and SBC and employees of the organizations
dealing in insurance.
D. To facilitate, promote, encourage and foster publication of research
work and literature on matters of insurance interest.
E. To establish and maintain close contact with experts and similar
institutions at home and abroad.
F. To prove coaching facilities for the standard examinations like
ACII,CLU etc.
G. To award prizes and reward to persons who have contributed to the
case of insurance and industry.

10. Chapter-2
PRINCIPLE OF INSURANCE

11. Principlesofutmost good faith,Recallthe Fact
The following facts are require to be disclosed :
• Facts, which would render a risk greater than normal.
• Facts, which would suggest some special motive behind insurance.
• Facts which suggest the abnormality of the proposer himself .
• Facts explaining the exceptional nature of the risk.
The following facts need not be disclosed unless specially asked for by
the insurers
• Facts which lessen the risk,
• Facts of public knowledge or facts .
• Facts pertaining to matters of law
• Facts possible of discovery through enquiry
• Facts which should be reasonably inferred
• Facts to which the insurers do not attach much importance
• Facts which are superfluous to disclose because of the application of

12. Essentials of Insurable Interest
The following are the essentials of insurable interest –
1. There must be property , rights, interest, life , limb
2. Such property , right, life , limb, interest or liability
3. The insured must bear such relationship , recognized by law
Examples of insurable interest :
• Insurable interest exists in the following cases
• Owners
• Part owners or joint owners
• Mortgagor / Mortgagee
• Bile’s
• Carriers
• Administrators , Executors & Trustees
• Life
• Debtor and creditor
• Insurers
• Liability

13. Insurable interest must exist
The question as to when insurable interest must exist varies
depending on the type of insurable. The position is as follows
• Marine
• Fire
• Life
• Accident

14. Principles of Indemnity
The principle of indemnity asserts that on the happening of a
loss the insured shall put back into the same financial
position as he used to occupy immediately before the loss.
In has already explained that indemnity is provide subject to
certain terms and conditions of the policy.
1.Excess
2.Franchise
3.Average
There are three types of average in practice. These are
Pro-rata condition of average
Special condition of average
Two-condition of average

15. Four Methods of ProvidingIndemnity
There are various ways through which indemnity may be
provided. These are
1. Cash Payment
2. Repair
3. Replacement
4. Reinstatement

16. Different Factors or Conditions
“Contribution is a right that an insurer has, who has paid under a
policy , of calling other interested insurers in the loss to pay or
contribute ratably to the payment ”
• Contribution as Applied to claims
• When contribution Operates
Before contribution can operate the following contributions be fulfilled
1.There must be more than one policy involved and all the
policies covering the loss must be in force
2.All the policies must cover the same subject-matter
3.All the policies must cover the same peril causing the loss.
4. All the policies must cover the same interest of the same
insured
The reason being that the interests are different
and also the insured.

17. Principles Of Proximate Cause
“Proximate cause means the active, efficient cause that sets in
motion a train of events which brings about a result, without
the intervention of any force started and working activity from
a new and independent source”.
• Rule of proximate cause
Certain rules of proximate cause should be noted carefully.
These are
1.Single cause
2.Concurrent causes
3.Unbroken Sequence
4.Broken Sequence

18. Chapter-3
LIFE INSURANCE CONTRACT

19. Distinctionbetweenlifeinsuranceandfireinsurance
Basis Life insurance Fire insurance
1. Subject matter The subject matter if insurance is human
life
The subject matter is any physical property
2. Element Life insurance has the elements of
protection and investment
Fire insurance has only the element of protection
and not the element of investment
3. Insurable interest Insurable interest must be present at the
time of effecting the policy but need not
be necessary at the time when the claim
falls due
Insurable interest on the subject matter must be
present both at the time of effecting policy as well
as when the claim falls due
4. Duration 5 to 30 years or whole life Fire insurance policy usually does not exceed a
year
5. Indemnity Life insurance is not based on the
principle of indemnity
Fire insurance is a contract of indemnity
6. Loss measurement Loss is not measurable Loss is measurable
7. Surrender value Life insurance policy has a surrender
value
Fire insurance does not have any surrender value
8. Policy amount One can insure for any amount in life
insurance
In fire insurance the amount of the policy cannot
be more than the value of the subject matter
9. Contingency of
Risk
There is an element of certainty There event destruction by fire may not happen
10. Premium Installment basis Lump sum basis

20. ProofisnotrequiredandProofisrequired
Proof not required
1.Wife has insurable interest in the life of her
husband
2.Husband has insurable interest in the life of his
wife
Proof is required
1.Business Relationship
2.Family Relationship

21. Five Endowment Policies
The endowment policies can be several, of which important
endowment policies are discussed below:
• Pure Endowment policy
• Ordinary Endowment policy
• Joint life endowment policy
• Double endowment policy
• Fixed term endowment policy

22. Distinguishbetweenannuitycontractandlifeinsurance
policy.
SL No. Basis for comparison Annuity Contract Life insurance policy
1. Purpose It is mainly for securing an income
after you have retired.
It is plan for the future, to cater for what
is not known.
2. Payment of benefits Matured annuity is paid only when
the policy holder is alive.
A matured life insurance can only the
paid once the policy holder is dead.
3. Mode of payment Benefits are paid in regular
allotments for deferred annuity.
Whether tern or whole life insurance, the
benefits are paid out by the insurance
company as a lump sum.
4. Main reason for buying it To accumulate money in a tax
deferred product.
Provide income for dependents.
5. Pays out when You make withdrawals. You die, borrow the cash value or
surrender the policy.
6. Typical form of payment Lifetime income. Single sum.
7. Buyers age when it is
typically bought
40-65 25-50
8. Accumulates money tax
deferred
Yes No
9. Pays a death benefits Yes Yes
10. Are benefits taxable
income when received
Yes No

23. Factorsaffecting the risk
Age: The age of the life to be assured is the most important factor to affect mortality.
Build: Build refers to physique of the proposed life and includes height, weight, and the
distribution of weight and chest expansion.
Physical condition: The physical condition of the age life proposed has a direct bearing
on the mortality of the life.
Personal History: The personal history of the life proposed would reveal the possibility
of death to him.
Family History: Like the personal history, family history also requires information of
habit, health, occupation and insurance of other family members, particularly of the
parents, brother and sisters.
Occupation: Occupation is an important factor to affect the risk. It affects the
occupation in various ways.
Residence: The residence also affects the risk.
Present Habits: The general mode of living of the proposer affects the risk.
Morals: It has been observed that the departure from the commonly accepted
standards of ethical and moral conduct involve extra mortality.
Race and Nationality: The morality rate differs from race to race and nation to nation.

24. The sources of risk information
The proposal form: The first and the important source of risk information in
application form.
Medical Examiners Report: The medical examiner has to identify the applicant to
avoid the case of impersonation.
Agents Report: Although agents has to pursue or canvass a lot for getting proposal,
yet he is required to state when the life to be assured, is insurable or not.
The Inspection Report: The insurers generally verify the information obtained by an
independent agency.
Private Friends Report: The information from private friends is not generally
required.
Attending Physicians: The attending or family physicians can give better records of
health, history of the proposed life and his family.
Medical information Bureau: The organization commonly known as MIB is an
effective bureau for furnishing confidential medical reports.
Neighbors and Business associates: Confidential reports about the applicant can
easily obtained from the neighbors and business associates although it may be
prejudice to the extent of friendship or enmity with the proposer.
Commercial credit investigation bureau: The bureau assembles financial and social
information of businesspersons.

25. Mortalitytablewith itsfeatures
Mortality table is such data, which records the past mortality and put in such from as
can use in estimating the course of future data. Thus, the mortality table is to predict
future mortality.
Features:
• Observation of Generation: In preparation of mortality table persons of a
generation
• Start from a point: The mortality table starts from a point, which depends on the
requirement of the insurer, and will contribute up to the point all of them has been
dead.
• Yearly Estimation: The mortality table records the yearly death or survival rate.
• Mortality and Survival rate: The mortality and survival rates of the generation who
are selected at a particular age are considered each and every year.
Sources of mortality information:
1.Population statistics: The insurer gets number of living at each age from the
census records and the number of deaths from municipal and other death records.
2.Records of Insurers: The records of insurer give a correct figure because the
death rates can be correctly recorded. No death will go unrecorded, correct number
of persons living and dead for each age can be known.

26. Chapter 04
MARINE INSURANCE CONTRACT

27. THEFOURSUBJECTMATTERSOFMARININSURANCE
• Marine insurance has been defined as a contract between insured
and insurer whereby the insurer undertakes to identify the insured
against marine losses incident to marine adventure.
• The subject matter of marine insurance covers
I. Hull Insurance: The goods or cargoes shipped to a foreign country
are exposed to the perils of the seas. The pirates and the men of war
may loot away the goods. The marine insurance, which safeguards
cargoes from perils, is known as cargo insurance.
Subdivision of Hull Insurance
The Hull Insurance is further Subdivision into -
(a) General Cargo vessels
(b) Dry Bulk Carriers
(c) Liquid Bulk Carriers
(d) Passenger Vessels
(e) Other Vessels.

28. II. Cargo Insurance: The word Hull refers to the body of the ship or vessel.
The ship is exposed to a number of risks like cyclone, collision and arrest
by foreign naval power. The insurance which protects the ship owner
against the loss of ship is known as hull insurance.
III. Freight Insurance: The ship owner losses the freight when cargo pays
freight at the time of shipment of goods and goods do not reach the
port of destination. The ship owner guards against possible loss of
freight by freight insurance.
IV. Liability Insurance: Liability Insurance is one in which the insurer
undertakes to indemnify against the loss which the insured may suffer
on account of liability to a third party caused by collision.

29. PPP Policy
• PPI Policy: Payment protection insurance (PPI) is insurance
that will pay out a sum of money to help you cover your
monthly repayments on mortgages, loans, credit/store cards
or catalogue payments if you are unable to work. This may be
as a result of illness, accident, death or unemployment and
will be covered on your policy.

30. DIFFERENTTYPESOFWARRANTIESOFMARIN
INSURANCE
• Marine insurance consist of several warranties. A warranty means a stipulation
upon which the fulfillment of the very contract depends. It is an undertaking
by the insured to the insurer that something shall or shall not be done or some
conditions are to be fulfilled.
• Warranties are of two types like express warranties and implied warranties.
Express Warranty
Express warranty denotes to those undertakings which are explicitly expressed
on the face of the insurance policy. The following are some of the general
examples of express warranty.
1.The ship will sail on the scheduled date.
2.The time of sailing of the ship should be strictly followed.
3.The subject matter insured is safe on a particular date.
4.The navigation is prohibited during certain period or during certain regions.
5.Both the ship and the cargo should remain in a neutral state.
5.The sailing of ship will be conducted with the help of an armed guard.

31. Implied Warranties
Implied warranty denotes a type of warranty which is not explicitly expressed in
the policy but is understood by the implication of the law.
Like express warranties, implied warranties are binding to both the parties. The
following are some of the common examples of implied warranties:
I. Seaworthiness: The ship under voyage should be seaworthy at the
commencement of the voyage. Seaworthiness denotes all-rightness of the ship
in all respect. The ship must be all right, it must not be overloaded, it must be
well equipped by experienced officers and crew and the sailing will be
conducted with adequate provision for fuel and water.
II. Legality of the voyage: The venture or the voyage should be a legal one. The
voyage should not be engaged in smuggling arms and ammunitions or illicit
liquors. So the voyage on sail should take lawful goods and commodities.
III. Non-Deviation: There is an implied warranty that the ship should not
deviate from its normal course. The ship must follow the specified course
effected in the policy.

32. SOMEIMPORTANTMARINEINSURANCPOLICY
The availability of a wide array of marine insurance policies gives a client a
wide arena to choose from, thus enabling him to get the best deal for
his ship and cargo. The different types of marine insurance policies are
detailed below:
Voyage Policy: A voyage policy is that kind of marine insurance policy
which is valid for a particular voyage.
Time Policy: A marine insurance policy which is valid for a specified period
generally valid for a year – is classified as a time policy.
Mixed Policy: A marine insurance policy which offers a client the benefit of
both time and voyage policy is recognized as a mixed policy.
Valued Policy: A valued marine insurance policy is the opposite of an open
marine insurance policy. In this type of policy, the value of the cargo and
consignment is ascertained and is mentioned in the policy document
beforehand thus making clear about the value of the reimbursements in
case of any loss to the cargo and consignment.
Port Risk Policy: This kind of marine insurance policy is taken out in order
to ensure the safety of the ship while it is stationed in a port.

33. Wager Policy: A wager policy is one where there are no fixed terms for
reimbursements mentioned. If the insurance company finds the damages
worth the claim then the reimbursements are provided else, there is no
compensation offered. Also, it has to be noted that a wager policy is not a
written insurance policy and as such is not valid in a court of law.
Floating Policy: A marine insurance policy where only the amount of claim is
specified and all other details are omitted until the time the ship embarks on
its journey, is known as floating policy. For clients who undertake frequent trips
of cargo transportation through waters, this is the most ideal and feasible
marine insurance policy.
Single Vessel Policy: This policy is suitable for small ship owner having only one
ship or having one ship in different fleets. It covers the risk of one vessel of the
insured.
Fleet Policy: In this policy, several ships belonging to one owner are insured
under the same policy.
Block Policy: This policy also comes under maritime insurance to protect the
cargo owner against damage or loss of cargo in all modes of transport through
which his/her cargo is carried i.e. covering all the risks of rail, road, and sea
transport.

34. WHENTHEUNDERWRITTENSHALLBELIABLE
FORDAMAGECAUSEBYTHEINSUREPERILS
• Following marine perils for which the underwriter shall be liable:
1. Perils of Sea:
Under perils of sea, ordinary action of the winds and waves, ordinary wear and tear to the
vessel, inherent risk of the cargo is not included.
2. Fire
In olden times fire was the biggest maritime perils, but recently it has been under control to
a greater extent. Damage resulting from fire and smoke is included under fire-peril.
3. Man-of-War
This is die vessel which is authorized by nations for the purpose of defense or attack in the
event of hostilities. Any damage to the goods or ships arising out of collision against a man-
of-war is insurable.
4. Enemies
Tile ships belonging to the foe (enemy) may cause loss to the insured and is re-underwritten
by the marine policy. This policy extends to all the persons of the enemy country and to their
hostile acts provided such acts form part of the enemy actions.
5. Pirates, Rovers, Thieves
The perils on account of pirates, rovers and thieves were common in olden times, but it has
been reduced considerably these days. These, acts are generally committed for the pursuit of
individual gain by the persons beyond the jurisdiction of a state.

35. 6. Jettison
Jettison means voluntary throwing away of the cargo or part of a vessel’s
equipment for the lightening or relieving the ship for common safety.
7. Barratry
Barratry includes every wrongful act willfully committed by the master or crew the
prejudice of the owner. The act of barratry must be committed without the
knowledge of the owner.
8. Restraints and Detainments
The preventions free use of a port by the government of the country is called
restraints. It may cause interruption and possible loss of voyages involving such
ports and sacrifice of cargo.
9. The Free of Capture and Seizure Clause (F.C. & S. Clause)
The policy generally covers war perils. But, to include perils of sudden declaration
of war, the war clause or free of capture and seizure clause is added to relieve war
perils.
10. Explosion
The risk of explosion has greatly increased. The explosion on board of a vessel-
damaging hull or cargo or both could be constructed as a peril on the sea. An
explosion on shore might damage a ship or its cargo.

36. DifferentCategoriesofTotalMarineLosses
Total Loss: Total loss is divided into two categories:
1. Actual Total Loss:
Actual total loss occurs under these following situations:
(a) The subject-matter is completely destroyed.
(b) The goods are so damaged that they cease to be a thing of the kind which were insured.
(c) The insured is deprived of the subject-matter.
When a ship is sunk or is completely destroyed by fire, it will be a case of actual total loss. There may be a
case when the goods are so damaged that they do not look like goods which were insured e.g. if crockery
is reduced to pieces, it is a case of actual total loss.
In another case if the insured is not able to get the things back i.e., if the ship is missing and there is no
trace of it, it is also a case of actual total loss.
2. Constructive Total Loss:
This occurs when the ship is abandoned for certain reasons. It is not commercially viable to retrieve the
ship or cargo. The ship or the cargo is not wholly destroyed but it is not practicable to get it repaired and
restore it to its original position. When a ship is badly damaged, and the cost of repairs is expected to be
more than the value of the ship, it will be advisable to abandon the ship.
In the same way if the cargo is safe in the abandoned ship but the cost of bringing the cargo to the coast
is more than the cost of cargo, then it will be proper to leave the cargo. In the case of constructive total
loss, the insured gives a notice of abandonment and surrenders its interest in the subject-matter to the
insurer. The insured can claim damage for total loss.

37. Theproceduresofsettlementofclaimundermarine
insurancecontract
• Let us discuss procedures and formalities to claim Marine Insurance from Insurance Company:
Notice to Insurer
Intimating insurance company about the loss or damage of goods is the first step to be taken by the
insured under claim of Marine Insurance.
Reasonable Care
Ina marine Insurance, it is a condition of the policy that the insured and his agents should act as if the
goods are uninsured and should take all such measures and actions as may be reasonable and necessary
to minimize the loss or damage.
Survey and Claim.
In a Marine Insurance, at the time of taking delivery, if any package shows signs of outward damage,
insured or his agents must call for a detailed survey by the ship surveyors and lodge the monetary claim
with the shipping company for the loss or damage to the packages
Outward Condition
When the outward condition of the packages is apparent, the insured takes delivery unsuspectingly. After
reaching warehouse, one opening the packages, they find damages to goods. ..
Missing Packages
In case any package is found missing, the insured must lodge the monetary claim with the insurance
company and its baileys (shipping company) and obtain a proper acknowledgement from them.
Time Limit
In a Marine Insurance, the time limit for filing suit against the shipping companies is one year from the
date of discharge of goods, which may change as per the rules and regulations of insurer.

38. DocumentsRequired
The following documents are to be submitted by the insured to enable
the insurance company to settle the claims expeditiously:
1. Original insurance Policy or Certificate.
2. Copy of Billing Lading.
3. Survey report / Missing certificate.
4. Original Invoice and Packing List together with shipping specification
or weight notes.
5. Copies of Correspondence exchanged with the carriers or baileys.
6. Claim Bill.

39. Chapter-5
FIRE INSURANCE CONTRACT

40. Causes of the Fire Insurance
1.Physical hazard
It refers to the inherent risk of the property which may occur due to
inflammable nature, construction etc.
2.Moral hazard
The moral hazard depends upon the man as physical hazard
depends on the property.
Prevention of less
1.Curative effort
According to doctrine of indemnification, the financial loss suffered
by the peril insured against will be compensated in full.
2.Preventive report
The loss cannot be preventing by the insurance. However, the
insurers help those who are engaged in the preventive efforts by
granting financial and other assistance.

41. Listthenameofsomefireinsurancepolicies
• Fire insurance policies are classified into 15 types based on the insurance hazards, insured risk, business
type, policy rules. Insurance companies provide 15 different fire insurance policies to cover the losses
caused by fire for businesses.
There are different forms of policies for different types of policies. For meeting various needs of the
businesses and individuals, there are various types of fire policies, which are issued.
Types of Fire Insurance Policies;
1.Valued Policy
2.Valuable Policy
3.Specific Policy
4.Floating Policy
5.Average Policy
6.Excess Policy
7.Declaration Policy
8.Adjustable Policy
9.Maximum Value of Discount Policy
10.Reinstatement Policy
11.Comprehensive Policy
12.Consequential Loss Policy
13.Sprinkler Leakage Policies
14.Add on Covers Policy
15.Escalation Policy

42. Variouspolicyconditions
There are fifteen conditions in the policy. They are:
• Voidable Condition
• Policy Ceasing Condition
• The Material alteration
• Termination Condition
• The right of entry condition
• The ‘reinstatement’ condition
• Pro-rata average condition
• The contribution condition
• The subrogation condition

43. StepsofTheactualprocessofrating
The actual process of rating consists of three steps: 1. Classification, 2. Discrimination and
3.Fixing rates or schedule rating.
1. Classification:
Properties to be insured are of various nature and risk. Since the premium is fixed in relation
tithe class of risk, the properties are classified accordingly. Properties are generally divided
into three main classes, viz., (i) common or ordinary, (ii) hazardous and (iii) doubly hazardous.
Different premium rates are fixed for each class. These classifications do not hold good for
along time because of varied nature of risk. Now the risks are classified into various classes
according to factors affecting fire risk.
(i) Construction or Structure:
The construction of the building has always been of great importance in rating. Building
made of brick will be sounder than the building made of wood.
(ii) Occupancy:
The risk considerably varies according to the nature of occupancy, i.e., the use to which
the building is devoted.
2.Discrimination
3.Fixing rates or schedule rating

44. Theprocedureofsettlementoffireinsuranceclaims.
The insurer expects that the insured should follow the following steps
to get the insurance claim whether it is payable or not.
1.Notice of Loss
2.Evidence of Loss
3.Formal Claim Form
4. Inspection of Loss
5. Ascertainment in Loss
6. Average Clause
7. Estimation of Claim
8. Payment of Claim
9.Rejection of Claim