LEARNING MATERIAL

2011

NATIONAL CENTRE FOR INSURANCE LEARNING

NARENDRAPUR

Some thoughts
Few preliminary observations: 1. The inspiration for the project came in the chamber of Shri K P Brahma, GM(P) when it was suggested that we print a book & make it available to the aspirants in the Class I Promotion exercise. 2. Our fundamental tenet is the Democracy of knowledge. We believe that in the Age of Informationavailability of information should be just a click away for everyone. The competitive edge of a user group should come from the depth of understanding & utilisation of the available information. (Incidentally , we at NCIL practice what we preach. We are trying to share with all NICians on the Company Intranet- all material - as basic reference or as PPT. Our endeavour is to further enrich & expand this information base.) 3. This is a Team Work. It is a compilation of the work earlier done at Ahmedabad & somewhat updated & re-organised by the team at HO/ NCIL in Kolkata. 4. For us at NCIL- this was our maiden foray in the field of editing. We tried to learn on the run. In retrospect we feel that we were somewhat overambitious to begin with- both in terms of tight time schedule & the content. Our initial target was to create a reference source which will have its utility beyond the current Promotion exercise & to ensure an uniform layout throughout the content. 5. We have partly succeeded in this but at the cost of time overrun. 6. The material is in your hands now. We await your feedback to improve on this in the next edition. 7. With our one edition experience, we have started working on the next one right now. Please mail s.k.pradhan@nic.co.in, a.k.das@nic.co.in, your inputs tos.singh@nic.co.in, u.bhattacharya@nic.co.in We acknowledge with thanks the role of all who have inspired &/or contributed to this project now or in the earlier versions. At the same time, with humility, we regret our editorial shortcomingswhich we hope to overcome with more experience.

Team NCIL

Contents
1. FIRE INSURANCE 2. BUSINESS INTERUPTION (LOP) 3. INDUSTRIAL ALL RISK 4. ENGINEERING INSURANCE TESTS 5. MISCELLANEOUS INSURANCE TESTS 6. MOTOR INSURANCE TESTS 7. MARINE INSURANCE 8. AVIATION INSURANCE TESTS 9. RE-INSURANCE TESTS 10. FINANCE TESTS 11. HUMAN RESOURCE TESTS 496-502 ( * Page numbering error) 338-352 354- 408 * 420 469 299-324 326- 337 206- 218 240- 254 256- 299 138-- 173 173- 206 76 - 118 120- 138 1 - 24 26 - 40 42 - 46 48 - 76

This book is for private circulation amongst NICians only.

STANDARD FIRE POLICY PROVISIONS

BASIC PRINCIPLES OF FIRE INSURANCE CONTRACT: Insurable Interest : Essential Feature The legal right to insure. By ownership, Bailer/ Baillie, Leaser/ Lessee; By Agreed Bank Clause; Goods held in trust; etc. Actual time when the interest should exist both at the time during issuance of policy and also at the time of claim. Assignment of Insurable interest in various situations Utmost Good Faith The contract put the proposer in a superior position- facts material to the risk with example - duty of utmost good faith evolves-reciprocal duty- breach of duty may make the contract void or voidable depending upon the nature of the breachbreach of condition - duration of observance of the duty-before accepting the risk, throughout the policy- following a loss. Indemnity Fire Policy is a strict indemnity policy. THIS INSURANCE IS MEANT FOR: Buildings Plant and machinery Furniture, fixtures and fittings Other contents Electrical installations Stocks of raw materials and finished goods Stocks in process WHO CAN TAKE THE POLICY? Those who are having insurable interest in the property Owners Lessor/lessee Mortgagors/mortgagees Bailees
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FIRE INSURANCE

Trustees Financial institutions that have advanced loans against the property. PERILS COVERED UNDER STANDARD FIRE & SPECIAL PERILS POLICY: Fire- Excl. inherent vice, undergoing heating & drying, burning of property by public authority. Lightning. Explosion/ Implosion excl. to pressure vessels by own explosion/ implosion. Aircraft Damage. Riot, Strike& Malicious Damage Storm including hailstorm, cyclone, typhoon, tempest, hurricane, tornado, flood & inundation. Impact damage- rail/road vehicles or animals not belonging to the insured/ occupier. Subsidence & landslide/ rockslide. Bursting, overflowing of water tanks, apparatus & pipes. Missile testing operations. Leakage from automatic sprinklers. Bush fire- excl. forest fire. The loss/ damage under above perils may be of fire or non-fire in nature. Both types of losses are covered under the policy. In other words the policy is Material Damage policy which covers physical losses to the insured property arising out of all above perils. STFI Storm, tempest, flood and inundation (Flood group of perils) and RSMD Riot, Strike, Malicious Damage can be opted out with reduction in premium rate. A LOSS OR DAMAGE MAY BE SAID TO BE BY FIRE WHEN: There must be ignition (accompanied with heat &/or flame i.e. some kind Chemical reaction - oxidation/addition of oxygen from air). A loss or damage may be said to be by fire when there has been ignition of insured property which was not intended to be ignited. When insured property has been damaged otherwise than by ignition as a direct consequence of the ignition of other property not intended to be ignited. Damage by smoke, sparks, water etc. consequent on ignition of other property. Fire must be accidental and fortuitous.
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All incidental losses like water damage while fighting fire, re-fuelling charges of the Fire Extinguishers used to fight fire, etc. covered. EXCLUSIONS UNDER THE FIRE POLICY: Excess- Applicable to all risks except dwellings with individual owners For policies having S.I.upto Rs. 10 crs, per location: 5% of claim amount subject to a minimum of Rs 10,000 For policies having S.I.more than Rs. 10 crs but upto Rs. 100 crs. per location: 5% of claim amount subject to a minimum of Rs 25,000 For policies having S.I.more than Rs. 100 crs but upto Rs. 1500 crs. per location: 5% of claim amount subject to a minimum of Rs 5,00,000 For policies having S.I.more than Rs. 1500 crs but upto Rs. 2500 crs. per location: 5% of claim amount subject to a minimum of Rs 25,00,000 For policies having S.I.more than Rs. 2500 crs per location: 5% of claim amount subject to a minimum of Rs 50,00,000 N.B. Excess is applicable per event per Insured War perils. Nuclear losses. Pollution, contamination unless caused by insured perils. Curios, documents etc. >10,000Rs., Goods held in trust or on commission unless specifically covered Change of temp. (Stocks in cold storage) Pure electrical fires. Architects etc. fees (beyond 3% of claim amount) & Removal of debris (beyond 1% of claim amount). Consequential losses. Spoilage due to cessation of process. Theft- during/ after loss. Earthquake. Shifting of property to other place But Mechanical items & equipments are covered for 60 days if shifted for repairs/ renovation etc. Terrorism damage.
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Out of the above exclusions certain are covered as ADD-On Covers. e.g. Terrorism, Earthquake, architects fees(beyond 3% of claim amount) & removal of debris(beyond 1% of claim amount), spoilage (due to cessation of process), curios /documents etc. > Rs.10,000/- can be covered for actual value under Misc. Department (subject to declaration). EXTENSIONS OR ADD ON COVERS OF FIRE POLICY: Architects, surveyors and consulting engineers' fees in excess of 3% of claim amount. Removal of Debris in excess of 1% of claim amount. DOS in cold storage due to power failure/ change of temperature due to insured Peril. Forest fire. Impact Damage- Own vehicles. Spontaneous combustion. Omission to insure additions, alterations & extensions. Earthquake (fire & shock). Spoilage (material damage) covers. Leakage & Contamination cover. Temporary removal of stocks. Loss of rent. Additional rent for alternative premises. Start up expenses. Escalation (upto 25%) NEW ADD ON COVERS FILED WITH IRDA 1. 2. 3. 4. 5. 6. 7. Housebreaking Electrical apparatus clause Spontaneous combustion (wording modified) Insurance of jetties, docks and other properties erected in water & damage by water borne bodies clause Boiler explosion damage clause Start up/shut down expenses clause Accidental damage clause

3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

of insured property on expiry of 7 days Cessation of cover on material alteration, if unoccupied for more than 30 days or passage of insurable interest Loss covered under any marine policy is not payable Cancellation Duties of the Insured in the event of an occurrence giving rise to a claim Rights of the Insurer in the event of a claim Fraudulent means by Insured forfeits all benefits under the policy Insurer's rights to reinstate or replace the property in case of a claim Average clause Contribution Subrogation Arbitration All communications by insured to be in writing Reinstatement of Sum Insured after a claim

CLAUSES
OMISSION TO INSURE, ALTERATIONS, EXTENSIONS CLAUSE Buildings, plant & machinery, furniture, fixtures and fittings can be covered up to 5% of the sum insured without specific insurance. 5% additional premium to be paid at inception. Within 30 days of expiry of policy all such additions, etc. to be declared and premium on this account to be adjusted. TEMPORATY REMOVAL OF STOCKS- CLAUSE Up to 10% of stocks in process can be covered whilst lying at un specified locations undergoing process. 10% extra premium to be paid in advance. No adjustment of premium. Stocks in excess of 10% of sum insured to be covered specifically. REINSTATEMENT VALUE CLAUSE For building, plant & machinery, electric installations, F/F/F only. Sum Insured to represent Reinstatement value of the property insured. In the event of loss payment for Reinstatement Value of property of same kind or type, improvements, if any, to be borne by the insured. Depreciation not to be deducted. Average clause is still applicable
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GENERAL CONDITIONS OF FIRE AND SPECIAL PERILS POLICY: 1. 2. Misrepresentation, non-discloser of material facts by the insured makes the policy voidable Cessation of cover on fall or displacement (other than by an insured peril)
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 Reinstatement of property is compulsory. Within 6 months intimation to reinstate to be given to insurer & actual reinstatement to be completed within 12 months- extension possible with prior approval of insurer. Otherwise it will follow normal indemnity without RIV basis. Reinstatement possible at other site provided liability of the insurers is not increased. LOCAL AUTHORITIES CLAUSE Extension for Reinstatement Value policies endorsed by Local Authority Clause. Wherever RIV Clause is attached Local Authority Clause is a must to attach. No additional premium for this extension. Covers additional cost to comply with local regulations in reinstating the property. Liability if reduced under policy- under clause also reduced proportionately. Applies only to the damaged property, prior to extension losses not covered, additional tax, duty etc. not payable. AGREED BANK CLAUSE To be applied when financial institution is interested. Any money payable to be paid to Bank. Notice by Co. to 'Bank' sufficient. Adjustment, settlement, arbitration- if made by 'Bank' binding on the insured. Alteration etc. in risk not to prejudice 'Bank' interest. Co. will be subrogated of 'Bank's rights of recovery from insured on payment. DESIGNATION OF PROPERTY CLAUSE Available without additional premium Whatever designation is given to a particular item of property in Insured's books of accounts is accepted as such by the Insurers. DECLARATION POLICY Applicable for policy covering stocks only. To take care of frequent fluctuations in stocks/stock values, Declaration Policy can be granted
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subject to the following conditions (Standard Declaration Clause J to be inserted). To take care of frequent fluctuations in the SI of stock (i.e. current asset) this policy is issued. The minimum sum insured shall be Rs 1 crore in one or more locations and the sum insured shall not be less than Rs. 25 lakhs in atleast one of these locations. It is necessary that the declared values should approximate to this figure at sometime during the policy year. Reduction in SI not allowed during the currency of policy. Maximum refund on downward adjustment 50% and no upward adjustment is allowed. Basis of valuation- The basis of value for declaration shall be the Market Value only anterior to the loss. If after occurrence of any loss it is found that the amount of last declaration previous to the loss is less than the amount that ought to have been declared, then the amount which would have been recoverable by the insured shall be reduced in such proportion as the amount of said last declaration bears to the amount that ought to have been declared. Basis- Monthly declarations based on either a) The average of the values at risk on each day of the month or b) The highest value at risk during the month shall be submitted by the Insured latest by the last day of the succeeding month. If declarations are not received within the specified period, the full sum insured under the policy shall be deemed to have been declared. It is not permissible to issue declaration policy in respect of: Insurance required for a short period. Stocks undergoing process. Stocks at Railway sidings FLOATER POLICY Floater Policy can be issued for stocks at various locations under one Sum Insured (The Standard Floater Clause I, Annexure A shall be attached to such policies). Unspecified locations are not allowed. Applicable Fire Rate= Highest rate applicable to any of such locations +10% Presence of "Kutcha" construction under any location may be ignored for rating. If stocks are in godown/ process blocks in same compound, no floater extra premium. In case Stocks in a process block are covered under the Floater Policy and
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the rate for the process block is higher than the storage rate, the process rate plus 10% loading shall apply. FLOATER DECLARATION POLICIES Floater Declaration policy (ies) can be issued subject to a minimum sum insured of Rs 2 Crores and compliance with the Rules for Floater and Declaration Policies respectively. The minimum retention shall be 80% of the annual provisional premium. Standard Floater Clause I and Declaration Clause J both shall be attached to Floater Declaration policy. VALUED POLICY When market value cannot be ascertained, agreed value policy can be issued for work of art, curious, etc. LONG TERM POLICY It can be issued only for dwellings issued for minimum period of three years and maximum can be for any number of years but discount is maximum for 10 years Policies for a period exceeding 12 months shall not be issued except for "Dwellings". Mid-term Cover may be granted for the deleted perils of STFI &/or RSMD. Generally, it is not permissible to grant mid-term cover for STFI and/or RSMTD perils. The following provisions shall apply, where such covers are granted midterm: Insurers must receive specific advice from the insured accompanied by payment of the required additional premium in cash or by draft. This additional premium shall not be adjusted against existing Cash deposits or debited to Bank guarantee. Mid-term cover shall be granted for the entire property at one complex /compound/location covering the entire interest of the Insured under one or more policy(ies). Insured shall not have any option for selection. Cover shall commence 15 days after the receipt of the premium. The premium rates as under shall be charged on short period scale (as per Rule 8) on full sum insured at one complex/compound/location covering the entire interest of the insured for the balance period i.e. up to the expiry of the policy. Payment of Premium: Premium shall be paid in full and shall not be accepted in installments or by deferred payments in any form.
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N.B:- It is not permissible to split sum insured of the same property under various policies for different periods of insurance to derive advantage of deferred installments for payment of premium. Notwithstanding the above, different policies may be issued for stocks where circumstances necessitate issuance of such policies. Minimum Premium: Minimum premium shall be Rs.100/- per policy except for risks ratable under Section III and 'Tiny Sector Industries' under Section IV where the minimum premium shall be Rs. 50/ per policy. PARTIAL INSURANCE : It is not permissible to issue a policy covering only certain portions of a building. Notwithstanding this, the plinth and foundations or only the foundation of a building may be excluded. to issue a policy covering only specified machinery (except Boilers), parts of machine or accessories thereof housed in the same block/ building. N.B. Where portions of a building and/or machinery therein are under different ownership, it is permissible for each owner to insure separately but to the full extent of his interest on the building and/or machinery therein. In such cases, the Insured's interest shall be clearly defined in the policy. Rates for Short Period Insurance: Policies for a period of less than 12 months shall be issued at the rates set out hereunder: For a period not exceeding 15 days 10% of the Annual rate do 1 month 15% of the Annual rate do 2 months 30% of the Annual rate do 3 months 40% of the Annual rate do 4 months 50% of the Annual rate do 5 months 60% of the Annual rate do 6 months 70% of the Annual rate do 7 months 75% of the Annual rate do 8 months 80% of the Annual rate do 9 months 85% of the Annual rate For a period exceeding 9 months The full Annual rate N.B.: Extension of short period policy (ies) shall not be permitted.. CANCELLATION OF POLICY: At insured's option Short period scale.
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 At Insurer's option Pro-rata. Replacement of policy by new annual policy with same or higher S.I.Pro-rata

SUM INSURED
FIRE INSURANCE POLICY- SI SHOULD BE ADEQUATE OTHERWISE FOR UNDERINSURANCE WE NEED TO APPLY PRORATA CONDITION OF AVERAGE CLAUSE. S.I. represents the limit of liability under the policy. S.I. is the amount on which the premium is charged. Consequences of insuring for < or > than actual value of property is underinsurance or over insurance. SUM INSURED FOR BUILDINGS: Original cost- Inadequate for insurance purpose except when new. Book value- Not considered in Insurance (Adequate only for the first year and not for succeeding years- considering the depreciation aspect). Market value- Present cost less depreciation for age and/ or usage. Reinstatement value- Present cost of replacement ( No depreciation applied) Formulae: Market Value = Reinstatement Value less (-) Depreciation. Land value not to be included. No fixed rate of depreciation- it depends upon the age and future expected life. Items like electrical installations and fittings to be included in the building value. SUM INSURED FOR PLANT & MACHINERY: SI = Landed cost at site + installation charges. Reasonable depreciation depending upon the age and future life to be deducted. RIV policy has no depreciation. Items like accessories, electrical fittings and other things which are necessary for running of the machinery to be included in the machinery value. SUM INSURED FOR STOCKS Raw materials- Cost price including all the expenses like octroi, freight etc. to bring up to the place.
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Stocks in Process: Cost of raw materials + process cost including labour, etc. Finished goods Manufacturer - Cost of manufacturing. Wholesaler - Purchase price from manufacturer. Retailer- purchase price from wholesaler Profit not to be included - exception Declaration Policy

TARIFF PROVISIONS
General Rules & Regulations Standard Fire and Special Perils Policy Dwellings, Offices, Hotels, Shops Located outside the compounds of Industrial/Manufacturing Risks Industrial Manufacturing Risks Utilities located outside the compound of Industrial/Mfg. Risks Storage Risks (Godown &/or in Open) outside the compound of industrial/mfg. Risks. Tank Farms/Gas Holders outside the compound of Industrial/MFG. Risks Add-on Covers Annexure A : Standard Clauses Annexure B : Proposal Form RATING OF STADARD FIRE & SPECIAL PERIL POLICY RATING UNDER THE POLICY DEPENDS UPON THE FOLLOWING FACTORS: Occupancy Construction Fire Extinguishing Appliances. Option to delete RSMD &/or STFI Add on covers. Voluntary Higher Deductible (Excess) opted by Insureds. Claims experience Principle of 'One Risk One Rate' whichever will be higher of Process (Mfg.) risks, or ii) Storage risk, Entire property in one complex/ compound will attract the same rate irrespective of kind of occupancy (Mfg./ storage/ utilities etc.). Dwelling exempted from the above rule. Two or more factories in the same compound /independent products per se rating if detached, otherwise the highest rate.

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FOR STORAGE RISKS RATING DEPENDS UPON OCCUPANCY- TYPE OF STORAGE Non- hazardous Category I goods Category II goods Category III goods Open storage Tank farms, etc. For simple risk like dwellings, offices, hotels, shops etc. rating Per Se i.e. on its own without considering other occupancies in the building. FOR MULTIPLE OCCUPANCIES: For Entire Building Tariff Rate Rs. 1.80%o less De-Tariff Discount. For Contents of individual owner - Per Se (Partially on-merit). DISCOUNTS APPLICABLE For fire fighting appliances. For deletion of certain perils like STFI & RSMD If sum insured is more than 50 Crores for claim experience. For opting voluntary deductibles. Discount for paid up capital. De-Tariff Discounts for good features/ technical features/ ISO Certification or other Accreditations. RATING OF RISKS IN MULTIPLE OCCUPANCIES One of the principles of rating in fire insurance is that if risks with different degrees of fire hazards are close to one another then the higher hazard risk may cause spread of fire to other risks close by. Hence this factor should be considered while rating a risk. For simplification the tariff has allowed per se rating for contents of each insured as per their occupancy. SILENT RISK: Factories where no manufacturing / storage activities are carried out continuously for 30 days or more. Premium rate is lower than working rate. The silent rates are not applicable if a risk goes silent following a loss under the policy.
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CLAIMS
DUTIES & RESPONSIBILITIES BEFORE LOSS: To intimate insurer In case of any fall / displacement of building or any part without operation of any insured peril within 7 days. Alterations of trade, manufacturing, occupational change immediately. If un-occupancy for more than 30 days. Change of interest by sale etc. DUTIES & RESPONSIBILITIESAFTER LOSS (CLAIM PROCEDURE): Intimation to fire brigade, police, etc. Loss minimization exercise to be taken by the insured. Notice to insurer within 14 days. Co operation with surveyor when appointed. Lodge claim within 15 days with supporting documents. Furnish particulars of other insurances available with the affected properties. Enforce rights against third parties. COST REDUCTION MEASURES Opt for clause like Designation of Property clause- No Extra premium. Insure non-stock items on Reinstatement Value basis. For non-stocks items opt for 'Omission to insure . Clause' and see that at the end of policy within 30 days the insured send the declaration. Go for stocks declaration policy for finished goods and raw materials, send declarations in time to take the maximum advantage. Floater cum declaration policy decision depends upon the fluctuations in the stock levels. When many locations are covered and when it is not possible to keep a track of sum insured at every location, better to go for a floater policy. Opt for suitable voluntary excess. Keep fire fighting system in good working condition, obtain periodical certificates. Intimate to the insurer when in any unit production stops for more than 30 days. Advice decrease in sum insured immediately. As far as possible go for annual cover- avoid short period covers they are costly.
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 Though it is cost saving it is not advisable to go for deletion of flood, etc. unless the unit is situated in area where chances of flood are NILHowever this should be a thoughtful decision. Riot etc. perils not to be deleted. Premium can be saved by deleting from the cover the value of plinths and foundations of the buildings. ISSUES RELATED TO FIRE CLAIMS: The processing and settlement of claims constitute one of the most important functions in an insurance organization. Indeed, the payment of claims may be regarded as the primary service of insurance to the client. The prompt and fair settlement of claims is the hall mark of good service to the insuring public. The proper settlement of claim requires a sound knowledge of the law, principles and practices governing insurance contracts and in particular, a thorough knowledge of the terms and conditions of the standard policies and various extensions and modifications there under. Finally we can conclude that prudent underwriting of the policy ensures prompt settlement of claims which is main stream to satisfy the insured. INTIMATION OF CLAIM: Claim intimation is to be given in time along with estimated amount of loss. In case, claim intimation is delayed, proper clarification is required to be obtained. Further, amount of loss is not ascertainable instantly, then sum insured of the affected property may be the point of consideration for the purpose of appointment of surveyor. On receipt of claim intimation, the first step is to examine the policy from the underwriting point of view to confirm the acceptance of liability under the policy. Claim is registered and claim no. is allotted and surveyor is appointed based on the estimated amount of loss declared. As per present practice, the financial authority for appointment of surveyor is same as the financial authority for settlement of claim. As per IRDA guide line, the surveyors are categorized as'A', 'B' and 'C' to survey and assess the loss under Fire and Engineering Deptt. with the limit of under noted estimated amount of loss. Category 'A' : Above Rs. 20.00 lacs (LOP-above 50.00 lacs) Category 'B' : Above Rs. 5.00 lacs ( do -upto 50.00 lacs)
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Category 'C' : Upto Rs. 5.00 lacs (no provision) In case, Interruption Loss is reported, estimate amount of loss is to be added with estimate amt. of loss under M.D. Policy and then surveyor would be appointed. FINANCIAL AUTHORITY FOR SETTLEMENT OF FIRE CLAIMS. Administrative Officer Assistant Manager Deputy Manager Manager D.C.C. Regional Manager R.C.C. Deputy General Manager General Manager Chairman-cum-Managing Director H.C.C. : : : : : : : : : : : Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. 1,00,000/2,50,000/10,00,000/15,00,000/30,00,000/40,00,000/80,00,000/100,00,000/200,00,000/400,00,000/--- Actuals.---

Under Fire Insurance variety of buildings, machinery, equipments and stocks are involved. In addition to a competent surveyor it is recommended that the Company officials should visit the site of loss as far as possible. If the estimated loss is within Rs.20,000/- and loss of profits claim is not involved, the underwriting office shall have the discretion to waive an independent survey and settle the claim on the basis of the claim form and other supporting documents after being satisfied that it is admissible under the policy and that the amount claimed is reasonable and consistent with the extent of damage. Where necessary, an official in the underwriting office may inspect the damage. PROCESSING OF CLAIMS: The documents generally required for processing fire claims: Copy of the policy complete with term, conditions and warranties Section 64VB compliance confirmation (iii) Claim form duly completed by the insured (iv) Survey report which should include: Occurrence of loss Indication of the cause of loss Establishment of liability Assessment of loss Confirmation of compliance of policy terms, conditions warranties Admissibility of the claim
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 Photographs Police Report* (i) Fire Brigade Report * *these two reports may be waived if the survey report is clear and does not cause and doubt on the occurrence as well as extent of loss. CLAIMS ARISING OUT OF ACT OF GOD PERILS: Documents like newspaper cuttings, photographs and meteorological reports are helpful in substantiating such losses. Where the incident is localized, not reported in the media, the surveyor should enquire about the incident from local government/statutory authorities and is required to be supported by photographs of the damage. LOSSES REPORTED UNDER THE RSDMD & TERRORISM. In case of isolated losses under the above endorsements, copy of the FIR lodged with the police is required to be furnished. Disposal of claims where all records are destroyed in fire &/or allied perils like flood. Settlement in these circumstances would generally be a negotiated one because of non-availability of accounting records and other evidences. Therefore, the surveyor should be advised to assess such losses on a realistic and reasonable basis after discussions with the insured/Bank/Financial Institution (if involved), and if required with suppliers/customers/statutory bodies like tax authorities, excise authorities etc. At present post-loss inspection by LPA is not required. Instead Company Engineer/Officers may carry out such inspection. CLAIMS ASSESSMENT: A. Market Value Basis: Gross Loss Less: Depreciation Less: Salvage Gross Assessed Loss Less: Under Insurance Less: Excess. Net Loss Payable. B. Reinstatement Value Basis: Gross Loss Less: Salvage
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Gross Assessed Loss Less: Under insurance Less: Excess Net Loss Payable C. Market Value Basis (Stock) Gross Loss Less: Salvage Gross Assessed Loss Less: Under insurance Less: Excess Net Loss Payable. Under single loss, if Buildings, Machinery and Stocks are affected, only ONE excess will be applicable. In other words, excess is applicable per event per Insured. DISPOSAL OF SALVAGE: Salvage is deteriorated faster. Therefore, disposal of salvage should be undertaken on priority basis for and on behalf of the concerned parties without waiting for the liability to be established with the help & under supervision of the surveyor. This disposal of salvage guidelines should always be followed. Insured officials also need to visit the site of loss and hasten disposal of salvage. It will also give moral support to the clients at the time of need. When the surveyor is required to undertake reconditioning and sale of salvage on behalf of the Account/interest concerned, he may be paid fees and actual expenses maximum up to 5% of value realized. SETTLEMENT OF CLAIM WHERE ALL RECORDS REQUIRED FOR THE ASSESSMENT OF THE CLAIMS ARE DESTROYED IN FIRE &/OR ALLIED PERILS RISK: In all such cases like what happened in Mumbai during July 2005 flood settlement was generally be a negotiated one because of non-availability of accounting records and other evidences. The surveyors should be advised to assess such losses on a realistic and reasonable basis after the discussions with the insured (even with the
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Bank/ other Financial Institutions whenever involved). If required with suppliers/ customers/ statutory bodies like Tax Authorities etc. and definitely with the Insurers. LOSS OF PROFIT /CONSEQUENTIAL LOSS/ BUSINESS INTERRUPTION LOSSES: Claims need to be monitored regularly by the insurer to ensure that the insured is doing the needful to minimize the period of indemnity as much as possible. If the insured has opted for more indemnity period more is the likely chances of higher liability for the insurers. In case the surveyor for MD loss is different from the LOP policy, coordination between both the surveyors is definitely needed and effective control is to be maintained by the insurer. SURVEYOR APPOINTMENT: Points to be noted The surveyor must be holding a valid license Selection of surveyor should be restricted depending on the type of loss and the nature of the subject matter involved When for assessment of some losses specific technical expertise is required - consultants having such technical expertise normally are associated with the usual surveyors. The consultants' remuneration needs to be negotiated in advance bearing the expertise in mind and the same will be in addition to the survey fee payable to the surveyor. Category of Surveyors (i.e. A,B,C) will be checked and appointment of surveyor must commensurate with this category & quantum of loss Appointment of joint surveyor may be done on the merits of the claim. No second surveyor may be deputed. Wherever the Loss of Profit losses are involved, the surveyors for the material damage and the business interruption losses, if several, should be competent to complement one another. One surveyor can be utilized for both the material damage Guidelines on the financial authority for appointment of surveyor ( i.e. H.O. / R.O./ D.O./ B.O.) will be as per scale followed by each insurer. DOCUMENTS REQUIRED FOR PROCESSING OF CLAIMS: Policy copy complete with terms, conditions and warranties. Claim form duly completed by the insured
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Survey report indicating Cause of loss; Establishment of liability Assessment of loss Confirmation of compliance of policy terms& conditions, warranties and endorsements. Admissibility of the claim Photographs/ Bills & vouchers/ Police report/ Fire brigade report may be submitted along with the survey report Since under Fire Insurance variety of buildings, machineries, equipments and stocks are involved, in addition to a competent surveyor it is recommended that the insurer should visit site of losses reported as far as possible. FOR CLAIMS ARISING OUT OF AOG PERILS: In addition to the documents specified earlier, other documents like newspaper cuttings, photographs of the devastating damage and meteorological reports are normally required in substantiating such losses. When the incident is localized, not reported in the media or not recorded by any Meteorological Department, the surveyor should enquire about the incident from local Government / statutory authorities and support the description of the occurrence and the loss by taking the photographs of the damage. The surveyor should cover in his report the vivid details of the loss, confirm the incident clearly & unambiguously - then only the documents of Meteorological Report may be waived. Attention must be paid for concurrent policies & Agreed Bank (Financial Institute) Clause LOSSES REPORTED UNDER THE RSMTD PERILS: In case of isolated losses under the RSMD Perils, copy of the first information lodged with the police and their Final Investigation Report of police must be furnished. The surveyor needs to give detailed report on the occurrence and confirm that the loss/damage is admissible under the policy. Loss / damage, if any, arising out of omission or commission not involving physical damage must be segregated. FOR ON ACCOUNT PAYMENT TO BE MADE: Pending final assessment of a claim an On Account payment may be considered subject to confirmation of the following:
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 Loss due to occurrence of a peril covered by the policy . The establishment of liability leaves no doubt. The minimum liability based on assessment on market value basis (in case of Building, P&M and accessories) that arises under the policy has been specifically examined & stated by the surveyor. PROCEDURES FOR FINAL PAYMENT: When the Final Survey Report is submitted by the surveyor the Claim Processing Official / Authority will process and recommend the exact claim amount for approval by the Competent Authority (as per the Financial Settlement Authority of various claims laid down by each insurer). The insured / claimant should be advised of the final amount of claim approved, with details thereof. The full & final discharge by the insured (The bank/ financial institution's discharge where required) must be obtained before release of the amount of claim. If the loss or any part thereof is recoverable from a Third Party, a letter of subrogation and/or assignment and Special Power of Attorney, to suit special cases, is to be sent to the insured for completion on requisite stamp paper and return before settlement. In case of Close Proximity Cases detailed investigation should be immediately instituted when a loss occurs in close proximity, i.e. within 5 days for all classes of insurance under Fire & Engg. Dept. of the date of inception of risk. The close proximity mentioned here is in reference to new insurance or where there has been a break in insurance. Close proximity investigation should also be carried out in cases where it is found that insurance has been taken out significantly later than it ought to have been taken, i.e. the risk has remained un-insured or inadequately insured prior to the insurance cover under reference. PROCESS OF CLAIM SETTLEMENT IN CASE OF CO-INSURANCE: The leader will process the claim on behalf of all the co-insurers. A decision by the leader regarding claim settlement, taken at the appropriate level according to the existing tenets of delegation of financial authority, shall be final and binding on all the co-insurers. Claims decided at the appropriate level by the leader will not be processed again by co-insurers, regardless of the amount. The leader will intimate to the co-insurer details of a claim settled by him with copies of all relevant reports and documents. The coinsurer will settle his share of the claim within 15 days from the date of receipt of such intimation from
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the leader without any delay. In case of a claim requiring Board decision the decision taken by the Board of the leader shall be binding on the other co-insurers. There shall be no separate need for the co-insurers to approach their respective Boards for decision in respect of such claims. A suitable note may, however, be placed by the co-insurers before their respective Boards for information in such cases. APPOINTMENT OF INVESTIGATOR: Depending on the circumstances it may be necessary to appoint an investigator to verify the claimed version of a loss. A separate surveyor appointment may be considered if any actual physical survey/ assessment are possible and called for. While referring such matter to R.O. from DO/BO, specific terms of references must be mentioned clearly to justify its necessity. The letter appointing the investigator should mention the terms of reference and make it clear that the report should contain no references or doubts unless these are well documented and substantiated and can stand the scrutiny of a court, if so required. In the absence of any laid down schedule of fees for investigators, it is advisable to negotiate and decide the fees to be paid in addition to expenses actually incurred before formally appointing the investigator and that decided fee to be recorded in the letter of appointment. Investigator's fees are required to be negotiated and are to be paid in addition to the expenses actually incurred. The negotiated fees to be recorded in the letter of appointment to avoid any dispute in future. CLOSE PROXIMITY CLAIM: Detailed investigation should be initiated immediately when a loss close proximity i.e. within 5 days of the date of occurs in inception of the risk. Reference is to be made to R.O. along with underwriting details to verify the close proximity aspect. The Close Proximity aspect is applicable for new business or where there has been a break in insurance. RECTIFICATION OF POLICY AFTER A LOSS: When collection of additional premium is required, the same is to be charged on the affected policy period only in which the claim has arisen.
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Rectification can be done by the authority competent for settlement of the claim. Rectification of a policy after a loss is reported for reasons other than breach of condition/ warranty should be carried out as under: Where rectification involves collection of additional premium, the additional premium may be charged only on the affected policy period in which the claim has arisen. Rectification can be done by the Authority Competent for settlement of the claim. REPUDIATION OF CLAIM: If a claim warrants repudiation, the competent authority would be the authority competent to settle the claim. Letter of repudiation must state the reasons and/or the policy condition under which it is repudiated. RE-OPENING OF CLAIM FILES: Re-opening of the claim file can be done by the authority one step higher than the appropriate claim settlement authority.

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LOSS OF PROFIT POLICY

Whereas, the insured may have to incur the loss of profit, constant expenses irrespective of business interruption brought by the accidental fire and allied perils. The standard fire policy does not offer such benefits. Therefore, there is a need for a separate policy to take care of the consequential loss. This benefit is offered by a separate policy which can be an extension of fire policy , or engineering policy and or project insurance. The extension of LOP to Fire Insurance is known as FLOP (Fire Loss of Profit). The extension of LOP to Engineering Policy is known as MLOP (Machinery Loss of Profit). The extension of LOP to Project Insurance is knows as ALOP ( Advance Loss of Profit). Loss of Profit Policy can also be termed as Consequential Loss Policy or Business Interruption Policy.

LOSS OF PROFIT INSURANCE

NEED FOR BUSINESS INTERRUPTION COVER Business Interruption [also known as consequential loss or loss of profits and hereinafter known as BI) is of recent origin. It was only with the improvement in the standard of accountancy practice that the possibility of covering financial loss following fire could be met with a practical solution. Fire destroys everything that men possess. Fire destroys buildings, Hotels, cinema theatres, factories, and contents therein such as machinery and stock, shops and warehouse leaving only crippled remains of man's labour. The only solution to this ever-present threat is Fire Insurance When a property is destroyed or damaged [whether by fire or any other insured peril] the owner of the property is indemnified by the payment of a sum of money, which will enable them to repair or replace it. This is not, however, the full extent of their loss. If, for instance, they are a manufacturer then, as the owner of the business, they will try to sell their products for more money than the sum spent on buying materials and converting them to completed products. This is their reason for being in business in the first place. If the facility to manufacture is diminished because of the destruction of their property, their earnings will fall off or even cease. The insurers offer standard fire and special perils policy, which can only take care of the victim of fire. As a result, only the damaged buildings can be reconstructed, destroyed plant and machinery can be reinstated and lost stock can be restored with the compensation paid by the insurer towards such material damages.
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WHAT HAPPENS TO BUSINESS DURING THE PERIOD OF RECONSTRUCTION? The destruction caused by fire does not end with the smoldering shell of buildings or the mangled skeleton of expensive machinery or worthless stocks. Destruction goes on, business comes to a standstill. The factory cannot produce goods, in other words, money stops coming on. The earnings of the business dwindle, if not cease totally while business expenses have still to be met. Wages and salaries have to be paid. So also overheads, rent, rates and insurance. The net result - "LOSS". In extreme cases the business may have to be wound up. This is a very real risk. However, just as the Material/Property damage policy comes to the rescue of the insured when he incurs material damage, the profit policy works to protect against the consequent disruption to the business itself. If damages occur to the property owned by the insured causing his business to suffer, the policy would pay the amount of loss resulting from that interruption. SCOPE OF POLICY: Loss of earning (Net Profit) Standing Charges Increased cost of working Standing Charges include all fixed expenses such as rent, salary, electricity exp., audit expenses etc. which have to be incurred by the insured irrespective of whether the business activities interrupted due to material damage or loss or destruction brought by the operation of insured perils. The indemnification under this policy is admissible only when the insurer admits the claim for material loss or damage or destruction. WHAT NEEDS TO BE COVERED UNDER LOP POLICY SUBJECT MATTER OF BEFORE FIRE INSURANCE Capital Building, Machinery and stock Variable expenses Cost of raw materials used. Unskilled Labor. Variable charges Fixed Expenses (Standing charges) Earning AFTER FIRE Fire insurance pays for these These expenses diminish in proportion to the stoppage in production.

NO CONSEQUENTIAL INSURANCE COVERS FOR VARIABLE EXPENSES. An illustration to demonstrate the impact of fire accident on the business activity BEFORE FIRE I Income From Sales II Production costs Raw materials, Unskilled Labor and Other variable charges III Over heads Rent, rates printing and stationery, Wages and salaries etc. AFTER FIRE 50% cut in production Income from sales Less: Production costs Overhead expenses Net Result Additional expenses Purchase of goods elsewhere Premises on hire Overtime NET RESULT - LOSS

Rs.1, 00,00,000 Rs. 60,00,000 Rs. 20,00,000

Rs. 20,00,000

Rs. 50,00,000 Rs. 30,00,000 Rs. 20,00,000 Rs. 50,00,000 Nil Rs. 20,00,000 Rs. 20,00,000

Continuing standing Consequential loss insurance charges such as salaries, is available for these expenses. interest, rent etc. Net profit
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Consequential Loss Insurance pays for this component

THEREFORE, THERE IS A NEED FOR INSURANCE PROTECTION FOR THE RESULTING CONSEQUENCE. If the premises are destroyed the ` cost of maintenance also is affected. So the indemnity under the Policy has the following components: 1) Loss of Income When the factory is unable to function 2) Loss of Income after the repairs and repurchase until the entire activity commences. 3) Additional expense to engage rented building until the damaged building is reinstated 4) The machines are installed. 5) Indemnity period must be long enough to cover the above [i] and [ii] 6) Saving due to the damage are deducted from the settlement.
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THE CONSEQUENTIAL LOSS POLICY COVERS : NET PROFIT : This policy is designed to take care of loss of net profit, which is differently meant by this policy unlike the net profit derived from trading and P & L account. Such loss of profit should result from the cause of insured peril covered under Standard Fire policy and that cause should have brought the interruption of business. STANDING CHARGES/ FIXED CHARGES : In spite of the stoppage of the business, the fixed remuneration and other standardized fixed expenses have to be incurred by the insured. Such expenses have to be incurred irrespective whether the business is carried on or not due to the occurrence of the insured peril. INCREASED ALTERNATE COST OF WORKING : To pay the additional expenditure incurred by the Insured to maintain the normal business activity during the period in which the business is affe TURNOVER : Modern BI policies are based on the turnover of the business. Profit comes out of turnover and is supported by it. Turnover can be conceived of as representing the activity of the business, but is defined as the money paid or payable to the insured for goods sold and delivered and for services rendered in the course of the business at the premises. Turnover actually consists of Variable charges, standing charges and net profit as we have already seen. If the ratio of variable charges of a business to it is turnover is a constant [and this must be so, because the definition of variable charges is simply those charges, which vary directly to the turnover.] Then the remainder [the turnover less such variable charges]. Is also constant to the turnover of the business. Thus, on the basis that turnover does represent the activity of a business. we can measure this fall in activity of a business. we can measure this fall in activity [which we do by calculating the fall in turnover] and then, by applying the remainder constant to the amount of this reduction, we can get at the true indemnity. It is against the background of the definition of 'rate of gross profit ' annual turnover' and standard turnover 'that financial loss will be calculated. GROSS PROFIT : It may be defined that it is the amount by which the sum of the turnover and the values of the closing stock shall exceed the value of the opening stock and specified working expenses. DIFFERENCE BETWEEN ACCOUNTANT'S AND INSURERS'GROSS PROFIT. The basic difference is that accountants will take Turnover and deduct Purchases of raw materials to produce gross profit.Insurers are, however, concerned with identifying that part of gross profit which Relates to the business insured and Can be the subject of an indemnity from insurance The insured pays only for insurance on those elements of gross profit which continue to be payable after an interruption in the business [and on net profit] by using the insurers definition and the premium relates only to the business insured. Additionally, the insured's accountant will need to know on what basis to prepare the declaration of gross profit for the insurance company.
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THERE ARE TWO METHODS IN WHICH THE GROSS PROFIT CAN BE ARRIVED AT: ADDITIONAL METHOD : In this method, insured adds standing charges to the net profit before taxation and excluding capital receipt as per the Profit and Loss Account of the Company. DIFFERENCE BASIS : Under this method, gross profit is arrived at as the "Difference between turnover and variable charges " as detailed below. Turnover Less: Whatever trade discounts allowed 20% Add: Closing Stock as on 31.03.2001 Less: Opening Stock as on 01.04.2001 Specified working expenses Less: Purchases net of discounts Bad debts GROSS PROFIT 10,00,000 2,00,000 8,00,000 50,000 8,50,000

1,00,000 50,000

1,50,000 7 ,00,000

The original definition of gross profit was net profit plus insured standing charges. The insured's accounts were the starting point. All 'non business' items were taken out [such as rent and upkeep of let-out portions, stock market gains and losses etc]. Net trading profit was the surplus left after taking from the turnover of the business insured All the costs of making it, from purchases of raw material to the cost of delivery by the insured's vehicles or by post etc . The 'Difference 'method starts with the accounts but uses them the other way round. Basically, it lists 'specified working expenses' such as purchases these are the previously mentioned variable charges which vary directly in proportion to the turnover. Obviously, if your turnover is down you do not need to buy so much. Once you have deleted the variable charges you are left with the standing charges and net profit or [to put it another way ]the gross profit. STEPS INVOLVED 1) Take out all income and expenditure extraneous to the business insured. E.G rent of tenanted portions and costs of upkeep of that portion profit or loss on share transactions [in other firms]. 2) Identify the specified working expenses and take them off the total of the turnover and the closing stock. The result is gross profit.
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The term 'difference basis' describes the current definition of gross profit which can be phrased as The difference between turnover plus closing stock and opening stock plus specified working expenses. STANDING CHARGES - ILLUSTRATIVE LIST Salaries to permanent staff Contribution to PF, FPF, Superannuation, Perquisites, ESI, etc. Rent, Rates, Taxes, Duties and License fees' Director's fees, remuneration Total audit fees and professional charges Conveyance, Travelling expenses and other office expenses Interest on loan, debentures, bank charges, guarantee, commission Dividend on preference shares Depreciation on various assets Miscellaneous standing charges Not exceeding 5% of the total listed insured standing charges. INCREASED COST OF WORKING Rent for temporary premises Payment of overtime Hire of machinery etc PERIOD OF INSURANCE: Period of insurance of LOP policy is usually in consonance with material damage policy. It runs and expires almost simultaneously.

HOW TO ARRIVE AT THE SUM INSURED The Sum Insured is based on the gross profit of the business. The sum insured is extracted from the previous year's account. If the indemnity period is 18 months, the amount is increased by 50%. This is the basic sum insured. Assuming the business would be interrupted for not more than 12 months, there are adjustments to be made and this is where a little forecasting comes in. Normally business does not standstill, year after year, it generally expands. Then there is another factor to be taken into consideration i.e. Inflation. Even if the business does not expand in terms of goods produced the expense and income levels do expand in terms of money, roughly in conjunction with the general inflation rate. Therefore, a sum to be insured needs to be drawn from the previous years accounts and an upward adjustment is done in such a way that takes care of any future influence of inflationary factors. It is not sufficient if the sum insured is influenced by such factors pertaining to a particular period of insurance as the indemnity period commences only in succession to the date of occurrence of insured peril causing material damages. Supposing, a loss takes place on the last date of a policy i.e. expiry date of the policy, the indemnity period may be twelve months from that date or may be twenty four months from that date or the period agreed between the parties to the contract. This makes it clear that factors pertaining to the period of indemnity chosen is very relevant while deciding the level of sum insured. ADDITIONAL ITEMS THAT WHICH CAN BE INCORPORATED AS PART OF SUM INSURED 1. WAGES: Two methods in which wages can be included. a) PRO-RATA BASIS: It is possible to cover under a separate policy to claim wages for a Standard Period for an amount to represent the wages for the selected period. E g Wages of all employees The wages of a specified category or categories of employees. The wages of all employees who are normally paid on weekly basis. b) DUAL BASIS: 100% cover for a selected initial period and for the remainder of the indemnity period, a selected percentage only. On Dual basis it is necessary to have a minimum indemnity period of 12 months. The sum insured must represent the full annual payroll. If saving in payroll are made during 100% cover period, such saving can be carried over to boost the partial cover period during the indemnity period.
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PERIOD OF INDEMNITY
THE SELECTION OF INDEMNITY PERIOD The indemnity period commences with the date of damage and lasts till such time as the business is restored to its pre-damaged level or the period stipulated in the policy, whichever comes first. A consequential loss insurance policy insures earnings of the business lost during the indemnity period.
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The insured has the option of converting the combination to a straightforward 100% cover for a stipulated period longer than initial period. DUAL BASIS PROVIDES A FLEXIBLE COVER : There are two main advantages to the Dual Basis cover. They are Carry over of saving Option to Consolidate Insurance of lay off and/or retrenchment compensation Auditors fees ASCERTAINMENT OF THE LIABILITY OF INSURANCE What should be identified first before looking at the claim for business interruption? Whether there is a standard fire policy and claim for material damage has been admitted. What would be period of indemnity in case of reinstatement of property damaged. Turnover earned by the insured after the damage but preferably at the different premises of the insured. The insurance is limited to reduction in turnover. Limited to increase in cost of working. The amount payable as indemnity shall be additional cost of working with some standing charges of the business insured. How the premium is adjustable with the gross profit earned by the business differs from the sum insured during the year. EVIDENCE FOR ADMITTED MATERIAL DAMAGE OR DESTRUCTION Basically, it is a precondition that there should be a claim towards material damages under the policy admissible as the terms and conditions of the standard fire policy. The insured peril must have operated and the damages resulted. Inotherwords, the resultant damages that has arisen out of the insured peril should have been admitted by the insured. A point should always remains the minds of the insurers that the policy is designed to cover the effect of a cause, which is falling under the scope of the policy and does not fall under any of the exception specified in policy. This brings two situations

Insured peril The first one is the situation where the peril operates that is termed as insured peril as per the policy. Admit both claims material damages and loss of profit resulting the insured event. Other unknown peril The second situation is where a peril operates but is not found in the listed perils of the policy. Under the new circumstances, what do we do . Reference is made to ensure that it is not found in the exceptions mentioned in the policy and also verify whether this peril is an insured peril under any other product of the insurer . Where property suffers damage by a peril, which might not have been insured under the policy, the course of the damage may lead to a fire starting. If the proximate cause of the fire is not specifically excluded, the policy will respond to the fire damage. However, damage caused by the original peril will not be recoverable. It being so, a suitable adjustment need to be made necessarily in the business interruption period on the ' would have been basis' as if both unknown peril as well as insured peril had happened separately. Of course, the onus is on the insured to establish damages separately towards what is covered and what stands uncovered due to the operation of an other peril unknown to the policy. [ an international author of a book on practice of insurance says that the insured commits fatal to his policy if he fails to establish the distinction between the losses]. It is our view the similar effect would happen in the Business interruption policy too as it operates only on the admission of a claim towards material loss. It will be explained more in the paragraphs to follow WHAT IS TURNOVER? It may be defined as consideration measurable in terms of money received or receivable by the insured for goods sold and delivered and services rendered in the course of the business carried out within his premises. What does not fall under Turnover? o Any sum receivable for the sale of redundant plant and machinery. o Income from any source not insured under the policy. Example rental income from the tenants. o Any other business carried out within the insured's premises or goods sold or services rendered but not insured under the policy. STANDARD TURNOVER The Turnover during that period in the 12 months immediately before the date of incident, which correspond, with the indemnity period. Example -Indemnity period for the restoration of the business disturbed is 01.06.2001 to 30.10.2001 and this period is the period of interruption. The standard turnover for this purpose means the turnover for a period from 1.6.2000 to 30.10.2000.
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RATE OF GROSS PROFIT The rate of gross profit earned on the turnover during the financial year immediately before the incident. This can be expressed by a formula Gross Profit/Turnover x 100 Turnover However, the estimated gross profit for the period of insurance should be based on the previous years audited accounts but not less than that of the nearest financial year. N.B. Standard turnover, annual turnover and rate of gross profit are subject to adjustment to take care of trend of business and special circumstances affecting the business. For example a workers' strike, a big event (like IPL for sports goods manufacturers) providing extraordinary business opportunity. INCREASE IN COST OF WORKING AND SAVING The insured may have to incur any additional expenditure for the sole purpose of averting or minimizing the reduction in Turnover which, but for that expenditure, would have taken place during the indemnity period in consequence of the incident. But such expenditure should not exceed the sum produced by applying the Rate of Gross Profit to the amount of the reduction thereby avoided. EXAMPLE: Incurring expenditure for overtime or hiring alternate machinery or occupying the alternate premises on rent. Basis of Indemnity for IC The insured should remember that his payment would not exceed the amount arrived as under. Rate of Gross Profit x Reduction in T/o avoided. But, if the insured agrees to pay more, then this can be expressed in the policy. The limitations which are usually imposed are largely common sense and are that the increase in cost of working shall be Absolutely necessary and reasonable That increased cost, which is incurred with a purpose to avoid or minimize a reduction in turnover and therefore a loss of gross profit. Such IC is only in consequence of the damage [or incident] Necessarily incurred during the indemnity period and Equitably limited in the amount payable by insurers The effect of this equitable limit is to restrict the maximum recovery as increase in cost in working to the amount that would otherwise have been payable as a loss of gross profit if such expenditure had not been incurred . This is often referred to as 'the economic limit
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This limit is clearly equitable but there are occasions when expenditure is incurred with the agreement of insurers, which proves later to have been uneconomic. Insurers must then stand by their original agreement. SAVINGS Any sum saved during the indemnity period in respect of such of these charges payable out of gross profit insured based on the past records, may be used to set off against the standing charges that are constant in nature. ANNUAL TURNOVER It is the Turnover during the twelve months immediately preceding the incident. It is not the Turnover taken from the Audited accounts, as the figures shown in the Audited Final accounts must have become outdated. The rate of Gross Profit is applied to the Annual T/o and the proportion of the loss to be borne by the insured is Sum Insured = Amount payable Rate of Gross Profit x Annual T/o Those cost which should continue wholly or in part or deducted from the Gross Profit amount. PROVISION FOR UNDERINSURANCE The sum insured by this item is less than the sum produced by applying the Rate of Gross Profit on Annual T/o, the amount payable shall be proportionally reduced. EXCESS CLAUSE Every claim under the Fire Loss of Profits policy is subject to compulsory deduction as under: Other than Petrochemical Risks: 7 days Gross Profit Petrochemical Risks : 14 days Gross Profit ACCUMULATED STOCKS CLAUSE. If stocks of finished goods which is accumulated is used to maintain the turnover when production is affected adversely, during indemnity period, account is to be taken of this use and turnover figures are adjusted accordingly. SUM TO BE INSURED The sum insured should be at least one year's gross profit, even if indemnity period is less that 12 months. If indemnity period is more than 12 months, the sum insured will be a multiple (i.e. proportionate) of the annual G.P.
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Operating profit and insured costs need to be estimated with the help of data on the current and projected business performance. Rating Average (weighted) rate of the contents of the process blocks as per fire tariff. + 25% LOP loading. +25% loading if the plant is having continuous process. For indemnity period of more than 12 months Sum insured is to be increased proportionately. Sum Insured: NP +SC= GP WAGES INSURANCE As standing charges On separate item on annual basis Separate item on period basis (pro- rata). Separate item on Dual basis. Lay off and retrenchment compensation (Add on ). ADD ON Auditors' fees. Earthquake Terrorism Spontaneous combustion Spoilage cover. Premises in the Insured's own occupation. Suppliers & customers' premises. Electricity station, gas works, and water works. CLAIMS o Claims under Lop policies payable only when there is admissible claim under Material damage policy (i.e. as per Material Damage Proviso). If claim under MD policy is rejected, claim under LOP policy also not payable. An only exception is - when claim under MD policy is not paid because it is within Excess. Perils covered under C.L. policy shall be those covered under the material damage only.
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However some of the perils covered under M.D. policy may not be included in C.L. cover. It is not possible to issue a policy with an indemnity period commencing at a date later than the date of the damage. It is not possible to change the indemnity period during policy period. Minimum Deductibles: Other than Petro Chemical Risks Petro chemical risks RATING The basis rate for consequential loss resulting from destruction or of damage to the property by the perils covered under the standard fire & special perils policy shall not be less than 1.25 times the full average of the items covering the contents of the process blocks of the premises occupied by the insured for the purpose of the business to which the consequential loss insurance applies except where otherwise provided. 1) In calculating the basis rate the contents of any storage/ utility blocks (even if they are communicating with the process blocks) should not be taken into consideration. 2) For other business premises where no manufacturing process is carried on, the basis rate shall be 1.25 times the average rate of the contents of the whole premises. 3) The average fire rate(as basis rate) shall be the percentage which is the aggregate net premium in respect of the whole annual rate of the standard fire policy(m.d. policy- i.e. fire & special perils insurance)of contents of the process blocks and/or the whole premises as applicable under the item 1 & 2 above bears to aggregate sum insured on such contents. 4) The basis rate should not be altered when the factory becomes silent during the policy period. 5) Pilot plant and all the laboratories shall be considered as process blocks for rating. 6) Percntage of the basis rate is applicable on the sum to be insured( 100% of annual gross profit or above depending on the indemnity period opted by the insured ) for all the perils normally covered under the material damage cover. FOR ADDITIONAL (EXTENSION) COVERS: 1. Wages (other than those covered as part of gross profit)- on dual basis( whole wages for initial 4 weeks & for a lesser percentage for the remaining period of not less than total 12 months).
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- 3 days of Standard Gross Profit - 7 days of Standard Gross Profit

2. 3.

4.

Wages (prorata basis) for a selected period as multiple of basis rate. Lay-off compensation &/or retrenchment compensation (with /without notice wages liability) - 50% loading on profit rate for each item. Auditors' fees (only for the coverage of the fees required to be paid for preparation of papers relating any claim assessment) separate sum insured to be declared and premium to be charged at 100% of basis rate. RATE FOR VARIOUS SEPARATE EXTENSIONS TO BE COVERED UNDER F.L.O.P. SUPPLIER'S PREMISES. CUSTOMER'S PREMISES. INSURED'S PROPERTY STORED AT OTHER LOCATION FAILURE OF PUBLIC ELECTRICITY, GAS, WATER SUPPLY.

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SALIENT FEATURES OF INDUSTRIAL ALL RISK INSURANCE.

Eligibility - All Industrial risks including petrochemicals risks irrespective of Sum Insured are now eligible subject to compliance of file & use guidelines by insurers. POLICY CONSISTS OF 2 SECTIONS VIZ., Section I Material damage AND Section II Business Interruption (following Fire and allied perils (FLOP). MLOP cover is also available at option of the Insured under Sec II.

SECTION I MATERIAL DAMAGE

INDUSTRIAL ALL RISK INSURANCE

SCOPE OF COVER : ALL RISK POLICY. ALL TYPES OF ACCIDENTAL LOSSES OTHER THAN THE NAMED EXCLUSIONS. SCOPE OF COVER INCLUDES THE FOLLOWING : PERILS COVERED UNDER STANDARD FIRE AND SPECIAL PERILS POLICY. Act of god perils namely STFI, EQ (Fire & Shock), landslide, rockslide and subsidence. OTHER SPECIAL PERILS VIZ., (offered free of cost) Spontaneous combustion. Sprinkler leakage. Spoilage material damage. Leakage and contamination. Missile testing operations. Forest fire. Subterranean fire. Bursting and over flowing of water apparatus and pipes. Theft/Burglary M.B.D. Boiler explosion. EEI. EXCLUSIONS: in two parts 1. Excluded causes 2. Excluded properties Excluded causes:

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 Interruption of the water supply gas electricity or fuel systems or failure of the effluent disposal systems Collapse or cracking of buildings. Faulty or defective design of materials, inherent vice, wear and tear. Corrosion, rust, shrinkage loss of weight, contamination etc. Larceny. Dishonesty, inventory shortage. Coastal or river erosion, normal settlement or bedding down of new structures Wilful negligence, cessation of work, loss of market. War and war group of perils. Nuclear group of perils. Destruction of the property by order of public authority. EXCLUDED PROPERTY : Money, cheques, securities of any description, jewelry, works of art, goods held in trust or on commission, computer system records unless specifically covered. Vehicle licensed for road use. Property in transit outside the premises. Property or structures in the course of construction, demolition or erection. Land, Pavements, roads, runways, railways lines, etc. unless specifically covered. Livestock, growing crops or trees. Property damaged as a result of its undergoing any process Property removed to other location for a period exceeding 60 days. Loss payable to the property covered under marine policies. Property more specifically insured under any other policies. Compulsory or minimum deductibles : All material damage claims are subject to compulsory deductibles as under: Policies having Sum Insured upto Rs. 100 Cr per location for Property Damage (PD) and Business Interruption (BI) : 5% of claim amount subject to a minimum of Rs. 5 lacs Policies having Sum Insured above Rs 100 Cr and upto Rs.1500 cr. per location for Property Damage (PD) and Business Interruption (BI) : 5% of claim amount subject to a minimum of Rs.10 lacs Policies having Sum Insured above Rs 1500 Cr and upto Rs.2500 cr. per location for Property Damage (PD) and Business Interruption (BI) : 5% of claim amount subject to a minimum of Rs. 25 lacs

Policies having Sum Insured above Rs 2500 Cr per location for Property Damage (PD) and Business Interruption (BI) : 5% of claim amount subject to a minimum of Rs. 50 lacs Mega Risks Policies having Sum Insured above Rs 2500 Cr per location for Property Damage (PD) and Business Interruption (BI) : 5% of claim amount subject to a minimum of Rs. 50 lacs SCHEME FOR VOLUNTARY DEDUCTIBLES : Insured may opt for higher deductibles and based upon the various voluntary options, premium is suitably decided. CLAUSES : Agreed Bank clause. Architects, surveyors and consulting engineers fees clause3. Designation of property clause. Escalation clause. Omission to insure additions, alterations or extensions clause. Temporary removal of stocks clause. SUM INSURED : For building, plant and machinery, furniture, fixtures and fittings on reinstatement value basis. For stock on market value basis. FACTORS FOR RATING: The detailed risk assessment report of the company engineer. Compulsory deductibles Deductibles opted by the insured. Claims experience. SECTION II : BUSINESS INTERRUPTION 1. 2. Loss of Gross Profit arising out of interruption of insured's operation. Such an interruption arising out of a loss payable under Material damage section.

SCOPE OF COVER UNDER SECTION II : 1. 2. Loss of Gross profits & Increase in cost of working. Loss of Gross Profits arising out of failure of utility services.

EXCLUSION APPLICABLE UNDER SECTION II : 1. 2. Insured's lack of sufficient capital. Any restrictions imposed by any public authority.
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3. 4.

Loss of business due to causes such as cancellation of a lease license or order etc. Damage to boilers, economizers, machinery, electronic installations and data processing equipment.

NB : Arising out of the above, MLOP may be included. SPECIFICATION : Difference form of specification used. SUM INSURED : Estimated gross profit. Extracted from the previous years profit and loss account. Facility of return of premium clause. EXTENTION UNDER SECTION II : Special perils namely STFI and Earthquake. Business interruption extended to customers and suppliers premises. RATING : As per the procedure adopted in Fire/Engineering portfolio. COMPULSORY DEDUCTIBLES: All loss of profits claims are subject to minimum deductibles as under: Policies having Sum Insured upto Rs. 100 cr and upto Rs. 2500 crs. per location for PD & BI: Business Interruption (FLOP)Other than Petro Chemical Risks 7 days of Standard Gross Profit Petro chemical risks 14 days of Standard Gross Profit Business Interruption (MLOP) 14 days of Standard Gross Profit Policies having Sum Insured above Rs. 2500 crs. per location for PD & BI: Business Interruption (FLOP) 14 days of Standard Gross Profit Business Interruption (MLOP) 21 days of Standard Gross Profit Mega Risks Policies having Sum Insured above Rs. 2500 crs. per location for PD & BI: Business Interruption (FLOP) 14 days of Standard Gross Profit Business Interruption (MLOP) 21 days of Standard Gross Profit Voluntary Deductibles: May be opted by Insured against which premium may be suitably discounted.

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ENGINEERING POLICIES TYPES OF POLICIES

PROJECT INSURANCE POLICIES 1.Marine-Cum-Erection(MCE), 2.Erection All Risk (EAR), 3.Contractor's All Risk(CAR), 4. Contractor's Plant & Machinery(CPM), 5. Advance Loss of Profit (ALOP). INSTALLED MACHINERY POLICIES (ANNUAL POLICIES)

ENFINEERING INSURANCE

1.Machinery insurance (MI), 2.Boiler & pressure plant (BPP), 3.Electronic equipment ins.(EEI), 4.Deterioration of stock(Potatoes)-DOS(P), 5.Deterioration of stock(other than potatoes)-DOS(OTP), 6.Machinery loss of profit (MLOP). 7.Civil Engineering Completed Risks Insurance (CECR) Other ways of grouping All Risk policies : Nos. Of project polices as given below fall under the group Marine-Cum-Erection(MCE), Erection All Risk (EAR), Contractor's All Risk(CAR), Contractor's Plant & Machinery(CPM), No. Installed machinery policy is in this group EEI Electronic equipment ins.(EEI), LIMITED PERIL / NAMED PERIL POLICIES Boiler & pressure plant (BPP). DEPENDENT POLICIES Machinery loss of profit (MLOP). Deterioration of stock(Potatoes)-DOS(P), Deterioration of stock(other than potatoes)-DOS(OTP Advance Loss of Profit (ALOP). Sec.3(Increased Cost of Working i.e. ICOW) of EEI

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 Machinery insurance for M/Cs BPP for boilers COMPOSITE COVER(MARINE CUM ERECTION ALL RISK POLICY) Marine/inland transit & erection both are combined in one pool. All risk policy- exclusions specified Insures both the Marine and EAR coverage. Transportation risk of materials from manufacturer's/suppliers' premises to the erection site comes under Marine coverage. Comprehensive cover from the time of arrival of the first lot of materials(Machinery and equipments etc.) at project site /storage at site/completion of erection/testing/commissioning or taking over, comes under EAR coverage. MCE(Marine and EAR) provides virtually a comprehensive cover from the time of dispatch of the first lot of materials meant for project from manufacturer's/suppliers' premises to the erection site/entire period of transit/storage at site/completion of erection/testing/commissioning or taking over MCE = M/T + EAR OR CAR Marine cum erection cover (MCE) Marine transit & storage-cum-erection (SCE) cover Coverage as per ICC (A) Insurance extended to cover War & SRCC risks Storage at discharge port Loading & unloading Incidental transhipment In case of Marine Inland Transit - Coverage as per Inland Transit(Rail or Road) clause 'A; - Insurance extended to cover Strikes, Riots and Civil Commotions risk when inland transit is not in conjunction with ocean voyage What can be insured ? Plant & machinery (to be erected) Entire factory Expansions Additions Civil engineering works Who Can Insure? Manufacturer
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Supplier Purchaser Contractor Joint names Scope of cover - All Risks Location risks - Fire - Lightning - Theft - Burglary Handling risks Impact from falling objects Collision Unloading/ loading

Operational risks Failure of safety devices Leakage of electricity Insulation failure Short circuit Tearing apart Centrifugal forces Explosion/ implosion Risk of Human Element: Carelessness Negligence Faults in erection Sabotage Riots , strikes, terrorism & malicious damage Acts of god perils Earthquake(fire & shock) Landslide/ Rockslide/ Subsidence Water damage Flood Inundation Storm Tempest Hurricane Tornado
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 Typhoon Cyclone What is not covered Exclusions .Applied internationally Faulty design Defective material/ castings Bad workmanship Rectification of defects Manufacturer's guarantee Wilful act Wilful negligence Consequential loss Penalties Delay Lack of performance Loss of contract Premium rating-basis Premium rates, terms, policy wordings would depend on Project size Special characteristics Comprehensive details of the project Assessment of exposures Period of project Sum insured (i) Marine: CIF value plus 10% plus Customs Duty Amount; (ii) EAR: Estimated value of Contract Works(Materials, wages, construction costs, freight, customs duties ) and items supplied by the Principal Marine (imports) Marine (indigenous) Erection cost Permanent civil engineering works Additional covers: Construction plant & machinery Additional customs duty Express freight (repairs) Overtime (repairs) Clearance & removal of debris
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Surrounding property Escalation(Limited Maxi.50% of the SI) Air freight Maintenance cover - limited contract - extended visits Third party liability - Cross liability Temporary work/structure

ERECTION ALL RISK (EAR)

Covers perils/risks/materials involved in installation of plant & M/cs. Various stages coveredstorage/erection/cold & hot testing of all kinds of machinery/maintenance All risk policy-exclusions specified Indemnifies almost any form of accidental/unforeseen loss occurring to property on erection site during the period of insurance Erection all risk Insures the projects where the erection of plant & machinery and equipments & structures are the major part of the project & project have insignificant civil works. Erection all Risk Risks covered: all risks insurance policy and mainly covers the following named risks: Location risk: fire, lightning, theft and burglary. Operation risks: leakage of electricity, insulation failures, short circuit, explosion, etc. Human risks like carelessness, negligence, faults in erection, riot/strike/malicious damage (RSMD). Natural calamities like storm, cyclone, landslide, subsidence, etc. Accidental external means like accidental falling of objects, impact and thereby the resultant damage of property. Extension of ear policy To cover extra risks at extra premium (along with the basic cover at basic premium). The policy can be extended to cover the following Third party liability risks Surrounding property damage
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 Earthquake risks & terrorism risks. Construction plant and machinery like cranes, dumpers, earth excavators etc. Extra charges for overtime, express freight etc. Increased replacement value ( escalation benefit) PREMIUM COST IN EAR POLICY Depends on the term & period of project and nature of project depending on the hazards associated with it. The rates are in per mille It is a tariff policy & in the tariff all project names are given in alphabetical order Details of EAR underwriting Sum insured is equal to replacement cost of project. Sum insured is the landed cost of items at project site plus freight, cost of erection, etc. Premium installment facility is given in all project policy with period of insurance more than 12 months Frequency of installment is either quarterly of half-yearly but client always prefers qtly. as outgo is less. the first installment premium must be paid, on or before the commencement of cover and this first installment premium will be calculated & collected at being 5 %(of total premium) higher than the all other equal installments . Last installment premium should be paid at-least 6 months prior to the expiry of policy period. Erection All Risk Period of cover Insurance cover under EAR commences after unloading of first consignment at site. The policy period continues the entire period of storage, erection, testing (until testing operations have completed and the project is declared as successfully commissioned) and maintenance(either limited maintenance or extended maintenance) Erection all risk- extra benefits (extensions) By payment of additional premium, following can be covered Increase in policy period. Removal of debris, contractors plant and machinery, third party liability, owners surrounding property, escalation(Limited to a Maxi. of 50% of SI) etc. Risks of earthquake and terrorism. Dismantling cover for second hand machinery.
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Adjustment of sum insured for variable charges like freight, custom duties, cost of erection etc. Are adjustable. Prime cost of plant & equipment is not adjustable and no refund of premium is considered for this. Exclusions under EAR cover following perils are excluded : EXCLUSIONS UNDER EAR COVER Faulty design Defective material/ castings Bad workmanship Rectification of defects Manufacturer's guarantee Wilful act Wilful negligence Consequential loss Penalties Delay Lack of performance Loss of contract Excess: (i)Erection All Risk Insurance (other than combined cycle power plants/ gas based power plants)For Sum Insured up to INR 1500 cr. - All deductible amounts appearing in TAC Tariff would be increased to 5 times of the minimum amount. For Sum Insured above INR 1500 cr. and up to INR 2500 cr - All deductible amounts appearing in TAC Tariff would be increased to 10 times of the minimum amount. For Sum Insured above INR 2500 cr. - All deductible amounts appearing in TAC Tariff would be increased to 15 times of the minimum amount. (ii) Erection All Risk :Combined cycle power plants/ gas based power plants50 MW to 200 MW- 5% of claim amount subject to a minimum of 60 lakhs for testing & 20 lakhs for normal loss. 200 MW to 300 MW- 5% of claim amount subject to a minimum 100 lakhs for testing & 50 lakhs for normal loss. 300 MW and above- 5% of claim amount subject to a minimum 125 lakhs for testing & 75 lakhs for normal loss.
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CONTRACTORS ALL RISKS POLICY (CAR)

This is an all-risks project policy, always issued for civil engineering projects like construction of residential complexes, bridges, etc. The following items can be covered in this policy Civil works as per contract Contractors plant and equipments Cost of clearance &removal of debris Third party liability arising out of third party's injury, property damage or any fatal damage in relation to the project activities. Insured's own surrounding property. Escalation Benefit will be limited to a maximum of 50% of the Sum Insured. PROJECTS COVERED Civil works for residences, factories, warehouses, bridges, roads, canals, dams, hospitals, schools etc. Risks covered: all risks namely fire, lightning, riot, strike, malicious, bad workmanship, burglary/theft accidental external means etc. EXCLUSIONS Nothing is payable for the losses arising out of the following reasons: Loss or damage due to faulty design. due to wear and tear, deterioration due to atmospheric conditions. inventory losses. War, SRCC and allied risks. due to nuclear reaction, nuclear radiation etc. willful act or willful negligence of the insured. Excess: (i) Contractors All Risk Insurance (other than combined cycle power plants/ gas based power plants)For Sum Insured up to INR 1500 cr. - All deductible amounts appearing in TAC Tariff would be increased to 5 times of the minimum amount.
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For Sum Insured above INR 1500 cr. and up to INR 2500 cr - All deductible amounts appearing in TAC Tariff would be increased to 10 times of the minimum amount. For Sum Insured above INR 2500 cr. - All deductible amounts appearing in TAC Tariff would be increased to 15 times of the minimum amount. (ii) Contractors All Risk Insurance: Specialized risks ( The following risks would be termed as specialized risks - All works in water, dams, canals, hydro power projects, tunnels, irrigation systems, caverns.) Deductible for Material damage: 5 % of claim amount subject to a minimum of Rs 50 lakhs for normal loss and Rs1.5 Crs for AOG /Testing/Fire/Explosion/ Collapse/ Major Perils.

CONTRACTORS PLANT AND MACHINERY POLICY (CPM)

Items covered: cranes, bumpers, excavators , tunnel boring machines etc. Which are used for the erection/construction of projects. This CPM policy is issued as an extension of the mother project policy(i.e. MCE/EAR or SCE/CAR policy) if S.I. of CPM items is less than 5% of the S.I. of the mother project policy or up to the value of Rs. 25 lacs for these machines . But if value exceeds limit of 5% of project pol. or Rs 25 lacs in a particular project site then a separate CPM policy has to be issued. This policy is given to contractors who may be using plant and machinery at different projects during the policy period on a separate annual policy with appropriate earthquake loading considering the sites falling in the earthquake zones. This is an all risks policy with specified exclusions printed on the policy. The cover is operative for machines when they are at work or being dismantled or cleaning or overhauling or reassembling thereafter. Rating. Equipments are classified into 5 groups and rates are prescribed for each group as per internal guidelines. Equipment covered under the CPM policy at a location are dismantled and shifted to new/other site and re-erected there at, can be covered on payment of additional premium at the rate of Rs. 0.20 % for that equipment. SUM INSURED On new ( current ) replacement value basis including transportation cost tosite, customs dues and all installation costs.. Escalation maximum to the tune of 25% can be opted by the insured.
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A few important Exclusions Loss or damage due to electrical or mechanical breakdown for internal explosions Loss or damage whilst in transit from one project to another exchangeable parts & tools such as knives, ropes, belts, chains, blades etc. wear and tear Loss of or damage to plant and/or machinery working underground popularly known as exclusion 'K'. Not applicable to machineries used in tunneling work. Loss or damage whilst in transit War and Nuclear perils Compulsory Excess: For all Machinery under Group I,II,III,IV, including cranes above 10 tonne capacity under Group III EXCESSES Value of equipments Individual value upto Rs.1 lakh. For claims arising out of AOG perils For claims arisingout of perils other than AOG

MACHINERY INSURANCE POLICY

Property covered: all electrical and non electrical (mechanical & chemical) items like electric motors, transformers, diesel generator sets, air compressors, boilers, blowers, etc. Scope of cover : against sudden, accidental loss due to vibration, maladjustments, falling, impact, collision and the like, obstruction or entry of foreign bodies, etc. SCOPE OF COVER Losses from unforeseen and sudden damage to machinery from following causes: Faulty material, design, construction, erection; Vibration, malalignment, maladjustment; Defective lubrication, loosening of parts, stress, explosion due to centrifugal force, or internal pressure; Failure of insulation and electrical breakdown. Human failures like lack of skill, lack of knowledge & mere negligence. The cover applies within the insured's premises specified in the policy while the insured plant is covered under the following situations: When it is at work or at rest. While being dismantled for cleaning or overhauling. During cleaning and overhauling operation. When being shifted within the premises. During subsequent erection. Machinery insurance PREMIUM: Premium cost is high due to unfavorable claim experience .rates are in per hundred of sum insured. 4 different sets of rates for M.I. policy: Mechanical items; Electrical items; Machinery in cold storages and ice plants; Fertilizer plants / petrochemical plants/ refineries. POLICY EXCESS 1% of sum insured for each machine subject to a minimum of Rs 2,500/-.

10 % of S.I. Subject to a 2 % of S.I. subject to minimum of Rs. 5,000/- minimum of Rs. 1,500/-

Individual value over Rs. 5 % of S.I. Subject to a 1.5 % of S.I. subject to 1 lakh and upto Rs. 5 lakhs minimum of Rs.10, 000/- minimum of Rs.2, 000/3 % of S.I. subject to a 1.25 % of S.I. subject to Individual value over Rs. 5 lakh and upto Rs.10 lakhs minimum of Rs. 25, 000/- minimum of Rs. 7,500/1.00 % of S.I. subject to Individual value over Rs. 2 % of S.I. subject to a 10 lakhs upto Rs. 25 lakhs minimum of Rs. 30, 000/- minimum of Rs. 12, 500/1 % of S.I. Subject to a Individual value over Rs. 1 % of S.I. Subject to a 25 lakhs upto Rs. 50 lakhs minimum of Rs. 50, 000/- minimum of Rs. 50, 000/Individual value over Rs. 50 lakhs 1 % of S.I. Subject to a 1 % of S.I. Subject to a minimum of Rs. 50, 000/- minimum of Rs. 50, 000/-

Boom Section- 20 % of claim amount subject to minimum of Rs. 25, 000/For Machinery under Group V - Rs.2,500/- Flat. Excess.

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Equipment

Excess against each claim

Excess applicable for Glass Lined 10 % of Sum Insured for each claim Vessels, Glass & Graphite equipments subject to minimum of Rs. 2500/-. a) For other items i) Furnace Transformers ii) Photo Copiers 2% of Sum Insured subject to minimum of Rs. 2500/5% of Sum Insured subject to minimum of Rs. 2500/-.

Exchangeable parts, non metallic parts (except electrical insulation), operating media, coating of metal parts SUM INSURED/ AVERAGE Sum insured The S.I. of each individual item must represent its new replacement value (current replacement value ) including transportation cost to site, custom duty, insurance premium, other erection & installation cost i.e. Sum insured = new value + freight + customs duties + other erection & installation costs. Optional items: Cost of civil foundation & oil in transformer & for Swichgear Condition of average is applicable for underinsurance Minimum premium Rs. 100/ Provision for special rating Short period rates As per short period rates for motor insurance. Escalation to the tune of 25% may be obtained by the insured INDEMNIFICATION Repair basis No deduction for depreciation for parts with unlimited life. Necessary bills and documents for repairs be submitted. The value of salvage, under-insurance and excess is deducted from loss. Total loss basis Actual value of item after applying depreciation from the replacement value of item.

RISKS COVERED Mechanical failures like mal-alignment, nom-adjustment of parts, impact of foreign elements, faulty operation, failure of safety system/failure lubrication system,etc. Human failures like lack of knowledge, lack of skill, mare negligence. Electrical equipments suffer electrical failures or breakdown losses due to "short circuit, excess/surge voltage, voltage fluctuations, defective insulations, .. " etc. EXCLUSIONS -1 Fire and allied perils Internal fire due to electrical faults in electrical equipment is covered. Explosion due to centrifugal force & internal pressure is covered. War & warlike perils Nuclear risks Experiments or overload or similar tests Gradually developing flaws, defects, cracks Normal wear and tear Wilful negligence EXCLUSIONS-2 Consequential loss Defect in existence before insurance Special exclusions Excess Damage due to faults/defects for which manufacturer is responsible
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BOILER AND PRESSURE PLANT INSURANCE(BPP)

Items covered: boilers and other pressure vessels (which generate pressure during their normal operations) Scope of cover: Explosion and collapse damage , other than by fire ,to the boiler &/or
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other pressure plant and to surrounding property of the insured. Legal liability for death, bodily injuries or property of third party. Sum insured Current replacement value of these items( to avoid under insurance)which is inclusive of freight and customs duties, if any and erection cost. No Escalation benefit shall be allowed. EXTENSIONS OF BPP POLICY: By payment of additional premium ,following risks be covered: (i) Surrounding property damage (ii) Damage to third party property, death/bodily injuries. (iii) Express freight(Air freight excluded), holiday and overtime rates of wages (iv) Air freight only (v) Customs duty WARRANTIES: Boiler and pressure plant comes in statutory regulations. Following conditions specifically apply to BPP: The insured boiler should be certified by boiler inspector for use. Otherwise the premium rates to be loaded by 25%. Boilers being operated by persons holding valid certificates of competency. Unqualified permission to operate the boiler from the authority(by the boiler inspector). Rating:-basic rate is as per guidelines. additional premium be charged for extensions like surrounding property damages, third party liability/property damage, etc. EXCLUSIONS:- LOSS OR DAMAGE DUE TO Fire and allied risks of standard fire policy, Damage by chemical explosion except in recovery boilers and waste heat boiler. Wear and tear, wasting of boiler materials. failure of individual tubes
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COMPULSORY EXCESS: 5% of claim amount subject to a minimum of Rs 10,000/-. All the extensions of BPP policy will have similar excess as per the basic policy.

MACHINERY LOSS OF PROFITS POLICY( MLOP)

This policy covers loss of gross profits (consequential losses) following breakdown of machine/s due to accidental. This may so happen that after breakdown of a critical machine the entire manufacturing process comes to a halt .the actual cost for replacing the damaged part may not be very huge but following losses may follow: No profits as no production. Standing expenses like salary, interest, rent, etc. Are to be paid (even after the loss & stoppage of production). Extra money may be required to start production from an alternate place or with some alternative machines on hire [which is known as increased cost of working (ICOW) ]. All above losses are covered under machinery loss of profit insurance policy. For claim to be paid in this policy, firstly the claim should be admitted in the concurrent machinery insurance policy for breakdown (as per the material damage proviso of MLOP policy) . SUM INSURED:Sum insured is being fixed keeping in view the expected gross profit for year which is equal to net profit plus all insured standing charges calculated on last year's annual a/c figures' basis (i.e. This can be determined from gross profit of the previous year and including the trend for increase or decrease expected in current year of underwriting). PREMIUM RATE This depends onRelative importance (normally expressed in %) of the insured machines in relation to the final product & in comparison to other machines. Stand-by machinery will reduce the relative importance, the interruption period and the loss amount.

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INDEMNITY PERIOD (defined as the maximum period of interruption following breakdown of insured machines for which insurer is liable. This can be equal or less than the policy period) i.e. The liability for payment of loss due to reduction in turnover/output during this period only, is accepted by the insurer. Higher indemnity period means higher liability for the insurers, hence higher premium. Repair facility( in-house/local) will reduce quantum of loss in policy. TIME EXCESS Machinery Breakdown Loss of Profits (Standalone policy with MBD cover)- 14 days of Standard Gross profit EXCLUSIONS Time excess( for all loss of profit policies the stipulated deductible franchise are always expressed in terms of number of days (i.e. The initial stipulated number of days' period, during which period the loss due to reduction in turnover/output has always to be borne by the insureds). Intangible losses such as loss of market/goodwill which are not insurable risks . Alterations, improvements or overhauling made while repairing the insured machines. Willful or gross negligence of insured(s).

SUBJECT MATTER OF INSURANCE Contents of cold storages e.g.- potatoes and other than potatoes (fish, sea foods, cheese, dairy products, fruits, etc.) Risks covered contamination, putrefaction and/or deterioration following a breakdown of refrigerating unit. SCOPE OF COVER OF DOS POLICY Loss to contents of cold storages caused by: Damage to any cold storage machinery by accidental means subject to admissibility of the claim under M.I. policy covering the cold storage machines. Rise or fall in temperature at the cold storage chamber resulting from breakdown of refrigerating machinery. Minimum rate of D.O.S.(p) The minimum period for which the policy shall be issued is 7 months. For any period less than 7 months, the minimum rate to be charged will be as under : (a) in respect of cold storages which have opted for FOES extension Rs. 0.84% ( i.e. Rate with foes is Rs.0.12% per month). in respect of cold storage which have not opted for FOES -Rs.. 0.70% (i.e. Rate w/o foes is Rs. 0.10% per month). SUM INSURED : Maximum value of stocks in the cold storage at any one time. EXTENTION Failure of electrical supply At terminal end due to machinery breakdown At local supply place. (excluding rationing, fuel shortage etc.) EXCLUSION:- FOLLOWING LOSSES ARE NOT COVERED Shrinkage, inherent defects or disease Improper storage, damage to packing material,
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DETERIORATION OF STOCKS INSURANCE

This is also known as stock spoilage insurance policy. This policy is a consequential loss policy and covers the risk of deterioration/contamination following breakdown of refrigeration plant and machinery. Precondition for this DOS insurance is , first there should be machinery insurance cover for refrigeration plant and machinery of the cold storage. There are two kinds of deterioration insurances: Insures stocks of fish, meat ,prawn ,frog-legs, various fruits (like apples/ oranges etc.), cheese, dairy products, pharmaceutical drugs. this is known as DOS(otp) Insures stocks of potatoes in cold storage. This is also called DOS(p) policy. pre-acceptance inspection is a must.
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 Insufficient circulation of air, Willful act on part of insured or his representative. Excess or deductible franchise as stipulated in the policy INDEMNITY: Market value of the stocks at the time of loss. Rates of dos ( potato) Rates for deterioration of stocks insurance for cold storage plants for cold storages which have opted for foes extension the rate will be 0.12% per month or part thereof. for cold storages which have not opted for foes extension the rate will be 0.10% per month or part thereof. note : these rates are to be charged on the sum insured i.e. The value of the goods obtained by multiplying the actual storage capacity SPECIAL CONDITIONS-1 Compulsory excess in two slabs Without F.O.E.S. extension & With F.O.E.S. extention Special conditions: Pre acceptance inspection for the concurrent machinery insurance policy as well as for D.O.S. insurance. Careful underwriting in view of huge loss potential SPECIAL CONDITION-2 Pre acceptance inspection is a must. Detailed inspection report by co. Engineer. Mid- term inspection if dos claim occurs. Owner of cold storage to maintain log book for critical machines at least for compressors with records of temperature & humidity in different floors in prescribed form. Stock register- declaration of stocks levels periodically. EXCESSES APPLICABLE In respect of those cold storages which have not opted for FOES extension 66

10% of the claim amount subject to a minimum of Rs.20,000/-. In respect of those cold storages which have opted for FOES extension - 20% of the claim amount subject to a minimum of Rs.20,000/-. The following deductible franchises are in addition to franchise for lack of spare parts as follows : Compressors:- Rs. 1000/ Diffusers:- Rs. 750/ Diffusermotors:- Rs. 750/ Expansion valves:- Rs. 500/-

ELECTRONIC EQUIPMENT INSURANCE

OBJECTS COVERED: computers, bio-medical equipments, x-ray equipments, audio / video equipments, all movable/portable electronic equipments, various medical / equipments like scanners, E.C.G. etc. This is an All Risks Policy and covers namely the following risks: Damage due to carelessness, negligence of employees Fire, lightning, explosion, flood , storm ,earthquake etc damage due to moisture and humidity. Riot, strike, malicious damage Burglary, housebreaking or theft. Electrical, mechanical breakdown. THIS POLICY COMPRISE OF THREE SECTIONS:Section-1 Cover material damage to equipments only i.e. Physical/tangible part of machines with auxiliaries like CPU,VDU(monitors), printers, keyboard, speakers, external modems even the items which provide the computer environment like room air-conditioners, UPS, voltage stabilizers all such items are insured against above risks. Section-2 Cover material damage to external data media. The sum insured shall be the amount required for replacing lost or damaged data media by new material and for reproducing lost information only for back-up data but not for master data.
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Section-3 Covers increased cost of working following breakdown of equipments as covered under section-1. The additional cost may be for using substitute edp equipment, for personal expenses and cost of transportation of materials. Premium rate is Rs. 1.00 % with annual maintenance contract. Otherwise in the absence of Annual Maintenance Contract(AMC) the premium will be loaded by:- 25% loading for equipments with individual sum insured upto Rs..1 lac & 50% loading for equipments with sum insured above Rs.1 Lac. For personal computers with sum insured upto Rs.1lakh, maintenance agreement warranty is waived. Excess deductible under E.E.I. policy for m/c S.I.<Rs.1 lac: For sum insured of individual machine value upto Rs. 1 lac:-5% of the claim amount subject to minimum of Rs.2,500/- for normal claims. 10% of the claim amount subject to minimum of Rs.2,500/- for winchester drive & hard disk claims. Excess deductible under E.E.I. policy for m/c > Rs. 1 lac: For sum insured of individual machine value above Rs. 1 lac:- 5% of the claim amount subject to minimum of Rs 2,500/- for normal claims. 25% of the claim amount subject to minimum of Rs 10,000/- for winchester drive & hard disk claims. Technical survey : is conducted of all electronic equipments and computer installations. This insurance cover is given only fort those equipments which have completed at least 3 months trouble free operations. Escalation maximum to the tune of 20% can be opted by the insured. EXCLUSIONS Loss /damage due to Wear and tear, Defects for which manufacturer is responsible. Due to willful act of insured. War, invasion and allied risks Loss or damage to bulbs, valves, tubes etc. Consequential loss of any kind in section ii of policy. Any cost arising from false programming, punching or inadvertent canceling of
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information etc For claims under E.E.I. policy:MATERIAL DAMAGE Repairs:-indemnity is cost of repairs plus the cost of dismantling and reerection. no deduction for depreciation for parts with unlimited life in case of repairs (i.e. For partial loss ). The cost of any alterations, improvements or overhauls shall not be recoverable under the policy. For claims under E.E.I. policy: External data media for floppies, discs etc. Indemnity is for all expenses within a period of 12 months from the date of loss. expenses incurred will be for restoring the insured external data media to a pre loss condition. as from the date of loss , the sum insured shall be reduced for balance policy period unless the sum insured is reinstated. Increased cost of working Indemnify the additional expenditure following admissible loss in policy. This may be in terms of hiring additional machines or for using new premises to carry out the work at higher cost. RATING Rate : section i and section ii @ 1.00% If annual maintenance agreement is not executed the premium will be loaded by 100%. If annual maintenance agreement is not executed but the insured has got sufficient in-house facilities for proper maintenance of the equipments of the equipments, the premium will be loaded by 50% only. For p.c. no loading. DISCOUNT FOR FIRE INSURANCE: for equipments covered under E.E.I. policy as also under fire policy with all extensions : a discount of 10% of the applicable E.E.I. rate (for Sec.-I only); without any extension or with some extensions only under fire policy: 5% discount on fire rate (for Sec.-I only) .

ADVANCE LOSS OF PROFITS POLICY (ALOP)

Advance consequential loss insurance or loss of profit policy are issued
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only to the principals/owner of the project, in advance of the actual commencement of business for delay in commencement of the project . This ALOP policy covers financial loss due to delay in start of project (because of loss/damage to the project arising out of the insured peril of the project policy during transit /storage/erection/ commissioning phase of the project). WARRANTY It is warranted that the maintenance agreement in force at the inception of this policy is maintained during the currency of this policy and no variation in the terms of the agreement shall be made without the written consent of the company being obtained. For the purpose of this warranty the word 'maintenance' shall mean the following Safety checks, Preventive maintenance Rectification of loss or faults arising from normal operation as well as ageing. Claims in this policy are paid when material damage losses are admissible in terms of project insurance policies like SCE / MCE or CAR. Other name of this policy is "Delay in Start Up policy". This cover shall indemnify the insured in respect of Loss of standing charges (debt service + fixed cost) & net profit actually sustained due to the actual turnover falling short of the targeted turnover which would have been achieved had the delay in project commissioning not occurred subject to Material Damage proviso. SCOPE OF COVER PRINCIPAL/OWNER Loss of gross profit (also covers any loss minimizing expenses up to the costs thereby avoided) Due to delay in project commissioning Increase in cost of working (subject to limit of savings in profit) SCOPE OF COVER CONTRACTOR In built/operate/transfer ( B.O.T.) contract
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interest on retention money. salary & wages of employees for maintenance of site facilities for extended period. additional higher charges for construction, plant & machinery. extension premium for project policy. loss of revenue (for B.O.T.) projects). DSU TERMINOLOGY Indemnity period and time excess. Standing charges. Turnover. Gross profit. Rate of gross profit (gross profit : turnover). Rating- ALOP(M.D.- EAR/ CAR) _ (100% R.I. Dependent) Depends upon Indemnity period & time excess Project/ plant capacity Specification of major equipments Implementation schedule and buffer time in-built Reliability of technology used - prototype or time tested ? Inventory of spare parts Imported or indigenous equipments Maximum expected project down time period RATING - MARINE (ALOP) (RI dependent) Depends upon : Indemnity period & time excess. Specification of major equipments. Imported or indigenous origin. Maximum expected replacement time of major equipment. Project equipment delivery schedule.
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TIME EXCESS ALOP (RI dependent) Advance Loss of Profits Time excess for Contractors All Risk Insurance/ Erection All Risk Insurance (other than combined cycle power plants/ gas based power plants)- - 30 days for first year+ 1 day for each erection month in addition to 12 months not exceeding 60 days Advance Loss of Profits Time excess Specialized risks ( The following risks would be termed as specialized risks - All works in water, dams, canals, hydro power projects, tunnels, irrigation systems, caverns.) - 45 days for first year+ 1 day for each erection month in addition to 12 months not exceeding 75 days Advance Loss of Profits Time excess-for Combined cycle power plants/ gas based power plants: 45 days for first year+ 1 day for each erection month in addition to 12 months not exceeding 75 days for Combined cycle power plants/ gas based power plantsDSU EXTENSION Supplier's premises. Accidental failure of public electricity supply. Special points to be remembered : INSURED & UN-INSURED DELAY : Reasons for all delay would be ascertained and only the delay caused by an indemnifiable event & indemnifiable in material damage erection policy is covered. EXTENSION OF PERIOD : Any extension of the period of insurance under the EAR section the policy shall not automatically lead to an extension of the period of insurance of the ALOP policy. Basis of loss settlement : Reduction in turnover Rate of gross profit Increased cost of working Advance lop
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Exclusions Deductible stated in the schedule. Any interference in the work directly or indirectly due to the following : Loss or damage covered under material damage policy unless specifically agreed, Loss or damage to surrounding properties, Loss or damage due to e.g. , volcanic eruption, falling of meteor, etc, Loss or damage to the prototype nature of work Loss or damage due to operating media such as fuels, chemicals, catalysts, filter substances, heat transfer media and lubricants etc. EXCLUSIONS Consequential loss of any kind such as penalties, lack of performance, loss of contract, fines for breach of contract etc. Shortage, deterioration or damage to any materials. Any restriction or reconstruction or operations imposed by public authority. Alterations, additions, improvements, rectifications to eliminate the deficiencies Non-availability of funds for repair or replacement of damaged items. Basis of premium rating Amount of sum insured Excess and indemnity period limit The type of project General and special risk involved The loss prevention measures and fire fighting facilities provided during construction. Relative importance. The reserve capacities. The repair facilities. Major spare parts availability What we require from insured Details of contractors when selected Detailed sequence of works
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 of erection/ construction Bar chart Geological reports Ground conditions Soil investigations Seismology reports Nature of piling activities/ foundations Site protection to avoid flooding Nearby seas, rivers, lakes History of flooding Preventive measures Drainage etc. Wet works WHAT WE REQUIRE FROM INSURED Fire fighting facilities provided Full technical details Confirmation that no unproven / prototypical equipment is involved Detailed site location plot plan showing proximity to existing units/ habitations Premium rating Tariffed- upto sum insured of Rs. 1500 cr. Beyond Rs.1500 Cr.- it is re-insurance driven. Instalment facility available for premium payment. ALOP (underwriting suggestions) To include following add-on covers: -third party legal liability including cross liability -extended maintenance cover -design defect cover -escalation clause Policy suggested with voluntary deductibles CLAIM PROCEDURE In the event of loss
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Notify company immediately (within 14 days) Initiate action to minimise the extent of loss Preserve damaged parts for inspection Furnish following information/ documents Completed claim form Repair bill, photographs Replacement invoice, bills Police/fire brigade/met. Report Fir, final/ internal investigation report COVER Max. SI/SI per day= Rate of standing charges to shortfall in production and Increase in cost of working due to insured perils. Perils covered Physical loss/ damage to cargo Loss of mechanical breakdown or damage to the hull & machinery.( as if insured under hull clauses- voyage or aircraft all risks policy) Loss of, mechanical breakdown of , or damage to other conveyance on which property is conveyed. G.A., salvage or life saving operations. Duration Ware house to ware house Including ordinary course of transit, & Incidental storages if agreed EXCLUSIONS Material damage. Un satisfactory repairs, from clients' viewpoint causing delays and consequential losses. provided such repairs are proper as per the surveyors./ classification societies. CLAIMS Supporting papers and evidences to be given by the insured. In case of loss/ damage notice also to be given to lop underwriters. If start up date is delayed due to un insured peril, the next claim(insured peril) will start from the delayed date and not the original date.
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SPECIAL CONDITIONS Compulsory insurance of cargo under customary marine insurance policy.(including war and strikes) The despatch to be made by vessel confirming to the institute classification clause, otherwise insurers consent required. Definitions of terms on 'expected' basis against the actual- expected net profit etc. There are two other policies Some part of the compulsory portion & the only optional portion of the policy involves some cover from various engineering insurance policies and the policy is known as Industrial all Risk Policy. The second policy covers the civil engineering subject matter but the policy is nothing but the wider form of cover of standard fire policy and the policy is known as civil engineering completed risks insurance

If all the conditions are satisfactory the company will issue the endorsement extending the policy after receipt of the premium.

TRADE QUESTIONS
1. Which one of the following is a mega risk? a) A petroleum refinery with sum insured Rs 3000 cr b) An organization having 25 different location with overall SI of Rs 2500 cr c) A power plant with sum insured Rs 2000 cr d) A fertilizer plant with SI of Rs 600 cr 2. Silent risk under fire policy in manufacturing premises are treated as silent risk when? a) The factory is closed for 1 week continuously b) The factory is closed for 15 days continuously c) The factory is closed for 30 days or more continuously d) None of the above 3. Please indicate which of the following statements is true. a) Tsunami is a peril covered in standard fire policy b) Fire policies are agreed value policies c) Stocks can be covered with replacement value clauses 4. Which one of the considerations are not taken into account for processing fire claims: a) Condition of average b) Breach of warranty c) Confirmation of Surveyor about verification of books of accounts d) Distance from fire station 5. Which will be treated as Hazardous goods under Fire and special perils policy? a) Methylated spirits b) Common salt c) Sodium carbonate d) Sugar 6. Long term Fire Policy can be issued for dwellings a) For minimum period of 2 years b) For minimum period of 3 years c) For minimum period of 5 years d) None of the above 7. Following Add on covers are not available in standard fire Special Perils Policy a) Spontaneous combustion b) Loss of rent clause c) Start up expenses d) None of the above
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QUESTIONS
BULLET QUESTIONS
Steps to be taken while extending an expired Project Insurance Policy. To ascertain reasons why the policy was not extended although the project is not completed. To find out whether there was any loss after the expiry of the policy. If there is no loss and the reasons explained by the Insured for not extending the expired policy is satisfactory; the proposal may be considered. The Insurance Company will arrange a pre-acceptance inspection by a qualified engineer to evaluate the project in terms of percentage completion as well as the quality of project work. The sum insured in that case will be reckoned as of incomplete percentage on 100% project cost. If the report of the inspecting engineer is not a qualifying report, the extension of Insurance may be considered. Accordingly, the Insurance premium bill will be raised at the initial project premium rate but the premium amount will have to be paid on the sum insured stated above from the date of expiry of the policy. If there is a loss, the Insurance Company will impose additional deductible with a specific condition that for the earlier loss the company will have no liability.
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8. Which of the following losses is not covered under fire insurance policy? a) Process losses b) Impact Damage c) Missile testing operations d) Aircraft damage 9. In consequential Loss(Fire) Insurance policy, the sum insured is arrived at by a) All standing charges plus net profit b) Specified standing charges plus net profit c) Only net profit d) None of the above 10. Subsidence and landslide loss covers a) Coastal and River Erosion b) Visible physical damage to property c) Defective design d) Demolition by government authority 11. Standard Fire Policy contains the following number of conditions a) 13 b) 14 c) 15 d) 16 12. As per AIFT how many earthquake zones are available? a) 3 b) 4 c) 5 d) 6 13. Loss or damage to property caused by sprinkler leakage is covered under Fire Policy if leakage is caused by a) Heat due to fire b) Leakage due to repair or alteration to the building or premises c) Loss or damage to property caused by sprinkler installation d) Sprinkler installation by either repaired or extended 14. Stock is divided into how many categories for spontaneous combustion cover a) 3 b) 4 c) 5 d) 6 15. Which of the following risks is not considered as add on cover? a) Spontaneous combustion b) Lightning c) Earthquake d) Startup expenses
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16. What is meant by spontaneous combustion? a) Charring due to self heating b) Spread of fire c) Change of color or deterioration in quality due to self heat d) Loss or damage due to fire caused by own fermentation or natural heating 17. Reinstatement value policy can be issued for a) Stock in process b) Building c) Stock in go down d) None of the above 18. Standard Fire policy covers a) Loss due to explosion of boiler b) Loss due to explosion of domestic boiler c) And (b) d) None of the above 19. Terrorism cover under fire policy can be granted on First loss limit up to a) Rs. 200 crore b) Rs. 300 crore c) Rs. 500 crore d) Rs. 600 crore 20. Declaration Policy has minimum SI of a) Rs. 5 Crores b) Rs. 10 Crores c) Rs. 1 crore d) Rs. 0.50 crore 21. Declaration policy can be issued a) For short period b) Stocks undergoing process c) Stocks in Rly Slidings d) Fluctuation in stock 22. Minimum SI for floater declaration policy a) Rs. 5 Crores b) Rs. 10 Crores c) Rs. 15 Crores d) Rs. 2 Crores 23. Co-Insurance in Fire Policies pertain to a) SI distributed over no. of locations b) Policy shared amongst various insurers c) Double insurance d) Insured opting for an higher excess 24. Reinstatement value policy can be given to a) Stocks b) Building, Plant & machinery
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c) Stock in process d) All the above 25. Which of the following statements is incorrect under fire policy subject to agreed bank clause? a) Material change in risk does not affect the interest of the Banker b) Valued policies can be issued whose mkt. value cannot be ascertained c) In multiple occupancy building per se ratings is permitted d) Insurable interest does not automatically pass onto the legal heir 26. Ex-gratia settlement in fire policies are a) Under Insurance b) Loss outside the ambit of the policy c) Contribution d) Subrogation 27. Policy wording after 01/01/2007 cannot be altered earlier than a) 30.06.2007 b) 30.09.2007 c) 01.04.2008 d) 31.12.2007 28. Project Policies are a) All Risk b) Named Perils c) Consequential Loss d) Agreed value 29. Fire Business is U/W on the basis of a) Long tail liability b) Loss Reserve c) Profit Margin d) Probable Maximum Loss 30. Percentage of obligatory cession to GIC is a) 30 b) 20 c) 15 d) 10 31. CPM is a) Coverage all risk policy with inclusion of breakdown b) All risk policy with exclusion of breakdown c) Self propelled machineries on public/Private Road d) None of the above 32. FOES is an extension under: a) CPM b) CAR c) DOS d) MBO
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33. DSU stands for a) Delay in start up insurance b) Derivatives stock units c) Dead stock under insurance d) Diluted stock undertaking 34. A machine worth Rs. 40,000/- insured for Rs. 30,000/- under Fire Policy. It was damaged due to fire and the amount assessed in Rs. 16,000/- . The claim payable is: a) Rs. 30,000/b) Rs. 12,000/c) Rs. 16,000/d) Rs. 40,000/35. Material damage proviso under the consequential loss (Fire Insurance) means: a) Claims admissible under standard Fire and Special Perils Policy b) Occurrence of the loss c) Loss discovered during stock taking d) Loss of goodwill 36. In an LOP policy, Auditor fees is a) An Extension b) A built in cover c) A part of standing charges d) Not to be covered 37. Fire at supplier's premises can be a part of a) a Material Damage Fire policy b) An LOP policy c) Is a stand alone policy d) Has no relevance 38. Common utilities outside the premises can be a) Rated per se b) Rated as per the main risk c) Highest rate to apply d) Insured separately 39. Storage of Hazardous chemical upto 5% of value at risk a) Does not affect a claim b) Renders a claim non-standard c) Renders a claim as no claim d) Can be covered after collection of extra premium 40. Cracks appearing in a building on account of subsidence of land below a) Fire Policy will cover the loss without any extension b) Claim is payable on repair basis c) Claim is not payable d) Fire policy would have covered the claim had an extension been taken.
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41. A dish antenna(Covered under fire policy) breaks as a monkey jumps on it a) The claim is payable b) The claim is not payable c) The claim is payable as non standard d) Some other insurance should have been taken 42. The adjustment of sum insured in EAR policy is not done in respect of a) Freight and Handling charges b) Custom duties c) Cost of erection d) Increase or decrease in cost of contractors' plant and machinery 43. Standby machinery in MBD is a) Not covered b) Covered at a discount of 50% in rate' c) Discount of 75% d) Only covered when it is put to use 44. Preliminary investigation of loss under Fire Policy includes a) Whether the loss caused by an insured peril b) Whether the damaged is covered under the policy c) Whether adjacent property is damaged d) All of the above 45. It is not the duty of the insured in the event of a claim under a fire policy to a) Save as much as possible of the insured property b) Take all reasonable steps to extinguish the fire c) Shift the operations immediately d) Diminish their loss 46. If the insured proposes to get add on cover for STFI during the middle of the policy a) The same cannot be covered b) The same can be covered c) Covered with a waiting period of 15 days d) Covered with a waiting period of 30 days 47. Ultra sound machines can be covered under a) Machinery Breakdown Policy b) Electronic Equipment Policy c) Any of (a) & (b) d) None of (a) & (b) 48. Fire policy covers a) 12 named perils b) Unnamed peril policy c) All risk policy d) None of the above
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49. Basis of settlement in Fire policy can be a) Market value basis only b) Reinstatement value basis only c) Market value or reinstatement value basis d) None of the above 50. For a RIV Policy the insured has to give his concurrence for settlement at market value basis a) On day of loss b) Within 12 months from date of loss c) Within 180 days from date of loss d) Not at all 51. Sum Insured on Reinstatement value policy should show a) Cost or rebuilding the subject matter on date of loss b) Cost of reinstatement of subject matter at time of taking policy c) Cost of rebuilding subject matter less depreciation on age on date of loss d) None of the above 52. Indemnification for stocks in Fire policy is based on a) Invoice value b) Market value or cost whichever is less c) Reinstatement value d) Book value 53. The material damage proviso under FLOP policy states that a) Loss under LOP is admitted only after there is a loss under the fire material damage policy b) The loss of profit policy is independent from the fire material damage policy c) The loss under Fire and LOP policies cannot exceed the S.I. under fire policy d) None of the above 54. The basis rate under Fire LOP policy is based on a) The average rate of the process blocks under the Fire policy b) The average rate of all blocks under Fire policy c) A separate rate for selected block as per FLOP tariff d) None of the above 55. The FLOP policy covers a) Loss of profit due to reduction in turnover during indemnity period b) Loss of profit during the financial year c) Loss of turnover due to fire d) None of the above 56. The gross profit insured under FLOP policy would cover a) Net Profit b) Standing Charges
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c) Both the above d) None of the above 57. For covering marine portion under an MCE policy you would require information a) S.I. for Inland transit b) S.I. for overseas transit c) Both the above d) None of the above 58. Industrial All Risk policy allows under insurance up to a) 15% of Sum Insured b) 20% of Sum Insured c) No allowance for under insurance d) Underinsurance to be computed as per fire tariff 59. The advanced loss of profit policy covers a) Loss of projected profit due to interruption of project by an insured peril b) Loss of turnover after the commencement of project c) Loss of projected profit due to non-completion of project d) Due to insolvency 60. Rating under Petrochemical tariff is based on a) Material factor of the raw materials and hold up capacity b) Pressure and temperatures c) None of the above d) Both 1 & 2 above 61. Facility of installment premium is available for project policies if the project periods exceeds a) 12 months b) 15 months c) 18 months d) 24 months 62. Which one of the following could not be the basis of valuation of Fire insurance a) Market value basis b) RIV basis c) Contract price basis d) Original cost basis 63. Standard Fire Policy doesn't cover a) Fire b) Spontaneous combustion c) Lighting d) Aircraft damage
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64. Fire policies can be issued for a period of more than 12 months in the following case a) Shops b) Factory c) Dwelling d) Godown 65. Issue of Fire declaration policy is not possible for a) Raw material b) Finished goods c) Process stock d) None of the above 66. The maximum possible refund under a fire declaration policy is a) 60% b) 50% c) 40% d) 30% 67. Under Std. Fire & special perils policy debris removal upto 1% of the SI can be covered at an additional premium of a) 15% b) 10% c) 5% d) Nil 68. In a fire floater policy the minimum sum insured at one location should not be less than a) 50% b) 25% c) 10% d) None of the above 69. In which of the following is not applicable in a RIV policy a) Designation of property b) Under insurance c) Depreciation d) Salvage value 70. In Fire LOP policies, indemnity period means a) Specified policy period b) Specified interruption period opted c) Specified reinstatement period d) None of the above 71. Unless specified, Fire insurance policy covers works of Art up to a limit of a) Rs. 10,000 b) Rs. 15,000 c) Rs. 5000 d) None
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72. Loss due to flood on account of Tsunami is covered only when a) STF I cover is not deleted b) Add on cover EQ is opted c) RSMD is not deleted d) a & b above 73. A fire policy on residence attracts an excess of a) Rs. 10,000 b) Rs. 20,000 c) Rs. 5,000 d) Nil 74. A CAR policy can be issued where civil work in a project is more than a) 60% b) 50% c) 40% d) 25% 75. Which one of the following is not underwritten in Engg. Dept. a) CAR b) EAR c) IAR d) CECR 76. Which policy is not issued for a period of more than 12 months a) CAR b) MCE c) SCE d) CPM 77. Which equipment cannot be covered under EEI policy a) Personal Computer b) Laptop c) Sonography d) MRI Scanner Equipments 78. Excess is not applicable is case of a) EAR policy b) EEI policy c) Boiler & Pressure plant policy d) MBD policy 79. Which of the following is not an add on cover under a project policy a) Surrounding property b) Third party liability c) Off site storage and fabrication d) Debris of uninsured property 80. Terrorism pool is managed by a) Head office of companies b) Reinsurance committee
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c) GIC d) IRDA 81. In which of the following testing is an inbuilt cover a) CAR b) CECR c) EAR d) MBD 82. Maximum permissible escalation under an EAR policy is a) 25% b) 50% c) 75% d) None 83. Which of the following is not a standing charge for LOP/ ALOP a) Insurance premium b) Advertisement & publicity c) Rent and Tenants d) Raw material cost 84. Time Excess under MLOP policy is a) Three days b) Fourteen days c) Ten days d) None 85. How many classified group of machineries available under CPM policy? a) Seven b) Five c) Ten d) Three 86. Mobile construction equipments can be covered under a) Motor Policy b) CAR Policy c) CPM Policy d) Both a & c 87. Fire Material damage policy does not cover a) Furniture & Fixtures b) Stock c) Standing Charges d) Stock in process 88. The word CONDITION OF AVERAGE is associated with a) SUBROGATION b) CONTRIBUTION c) UNDER INSURANCE d) REINSURANCE
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89. PML means a) Probable Maximum Loss b) Probable Minimum Loss c) Possible Minimum Loss d) Probable Maximum Loss 90. F.E.A. means a) Fire Eliminating Application b) Fire Extinguishing Appliances c) Fire Electrical Appliance d) Fire Equipments Allowance 91. AOG peril does not include a) Terrorism b) Earthquake c) Flood d) Inundation 92. Fire Policy does not cover a) RSDMD b) Electrical/ Mechanical Breakdown c) Terrorism d) AOG peril 93. In the event of a claim under FIRE Policy a) Sum Insured is reduced by the amount of claim b) Sum Insured is reduced by amount intimated c) Sum Insured is not reduced at all d) None 94. Under EAR policy Cold Testing means a) Plant is situated at cold place b) Checking of parts under cold condition c) Testing of parts under No Load condition d) Testing of parts under full load conditions 95. HOT Testing under EAR policy means a) Plant is situated at hot place b) Checking of parts under hot condition c) Testing of parts under full or partial load d) Testing of parts under full load conditions 96. Annual Gross profit means a) Net profits plus standing charges b) Turnover minus variable cost c) None of the above d) Both of 'a' and 'b' 97. The force which causes the current to flow through circuit is known as a) Electro-magnetic Force (EMF) b) Watt
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c) Horsepower d) None of the above 98. Certain discount may be given in electric equipment policy if the same property covered under Fire Policy a) 5% b) 10% c) 25% d) 50% 99. Selection of sum insured under Fire policy a) Can be allowed b) Can be allowed only after charging short period premium rate c) Cannot be allowed d) None of the above 100. Local Authorities clause under Fire policy is applicable under a) Declaration policy b) Standard Fire policy c) Reinstatement value policy d) Floater Declaration policy 101. Peril is a) A cause of loss b) A degree of loss c) System to reduce the loss d) None of the above 102. Without prejudice mean a) Proof of admission of liability b) Proof of non-admission of liability c) Both a & b above d) None of the above 103. Ejusdem generics rule means a) Of different kind b) Of same kind c) None of the above d) Both of the above 104. Which of the following is operational phase policy and not construction phase policy under engineering insurance a) Contractors All Risk b) Electronic Equipment c) Erection All Risk d) Marine-cum-Erection 105. Machinery Loss of Profits Policy (MLOP) does not provide indemnity against which one of the following a) Loss of net profit b) Insured standing charges
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c) Increased cost of working d) Civil engineering works 106. Which of the following perils form part of the basic package of standard fire and special perils policy a) Earthquake b) STFI c) Spontaneous combustion d) Leakage & Contamination 107. STFI peril can be deleted from Standard Fire Policy a) At inception only b) After 3 months from the issuance of policy c) Can be deleted any time during the currency of policy d) Cannot be deleted at all 108. If a policy is cancelled at the option of insured a) Premium adjustment is made on pro-rata basis b) Premium cannot be refunded c) Premium adjustment is made on short period basis d) Policy cannot be cancelled by the insured 109. Which of the following peril is not wind related a) Storm b) Inundation c) Cyclone d) Hurricane 110. Rates for 5 months short period insurance a) 40% b) 50% c) 60% d) 70% 111. Cancellation at the option of insured the premium retained by one of the following method a) Short period scale b) Pro-rata basis c) 50% of premium should be retained d) No refund of premium 112. Silent rates allowed for the one of the Fire Tariff Section a) Section I b) Section II c) Section IV d) Section VIII 113. Fire declaration policy cannot be issued for the one of the following items a) Stock b) Stock in process
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c) Raw materials d) Finished goods 114. FEA discount can be granted by one of the following methods. Choose the correct one a) Mere installation of FEA b) Inspection of company engineers/accredited engineers/ agencies by IRDA c) Insurer can grant at their wishes d) None of the above 115. The sum insured at any one location for issuing Mega risk policy is: a) Rs. 5000 crores b) Rs. 10000 crores c) Rs. 12000 crores d) None of the above amount 116. The Fire Policy covers the following perils except one on payment of additional premium a) Landslide b) Architects etc. feels c) Debris removal d) Forest fire 117. The one of the peril not covered under the basic fire policy a) Damage by smoke and heat of the fire b) Damage caused deliberately or accidentally by fire-brigades in the discharge of their duties c) Damage to property removed from a burning building caused by exposure to weather d) Destruction or damage to property insured by its own fermentation or spontaneous combustion 118. Exgratia settlements are made by a) Claim settlement authority b) One step above c) Regional claims committee d) Board of Directors 119. Compulsory excess and A.O.G. excess are not applicable to fire policy issued to following properties a) Power Plant b) Cloth Shop c) Textile Factor d) Dwellings 120. Excess in Fire policy is a) Same amount of excess for fire peril & AOG peril b) Different amount of excess for fire perils & AOG peril
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c) Different percentage of excess for the peril & AOG peril d) None of the above 121. Which of the following policy normally cover lift cranes, Material handling plant and equipment in the construction and project sites a) Contractor Plant & Machinery b) Contractor All Risk c) Marine cum erection policy d) Erection All Risk 122. Long term Fire policy can be issued for dwellings for a maximum period of: a) 5 years b) 2 years c) 4 years d) None of above 123. Standard fire policy covers which one of the following perils: a) Forest fire b) Earthquake c) Hailstorm d) Tsunami 124. Standard fire and special perils policy does not cover: a) Lightning b) Forest fire c) Impact damage d) Subsidence and landslide 125. An IAR Policy can be issued to an Industrial Risk: a) With sum insured > Rs. 100 crs. b) With sum insured < Rs. 75 crs. c) Housing petrochemical risks d) All of the above 126. Compulsory excess for a Standard Fire Policy having sum insured Rs. 15 crs. under a non- AOG peril claim is: a) 5% of claim amount, minimum Rs. 25,000 b) 5% of claim amount, minimum Rs. 10,000 c) 10% of claim amount, minimum Rs. 10,000 d) None of above 127. An Engineering Policy can be issued to cover: a) Moveable equipment b) Portable equipment c) a) & b) d) None of above 128. Boiler and Pressure Plant (BPP) policy has minimum deductible: a) Rs. 10,000 b) 5% of claim amount
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c) 5% of claim amount, minimum Rs. 10,000 d) No deductible is applicable 129. IAR Policy is subject to maximum deductible of: a) Rs. 50,00,000 b) Rs. 25,00,000 c) No upper limit d) None of above 130. CECR (policy) stands for: a) Civil Engineering contractors' risk insurance b) Civil Engineering completed risks insurance c) Civil Engineering construction risks insurance d) None of the above 131. IRDA has not permitted General Insurers to effect: a) Variations in deductibles b) Issuance of IAR policy for S.I. less than Rs.100 crs. c) Changes in basic Policy wordings of erstwhile Fire Tariff d) Issuance of IAR policy for petrochemical risks 132. Complete pricing decontrol was made effective from: a) 01st Sept. 2007 b) 01st Nov. 2007 c) 01st Jan. 2008 d) 01st Apr. 2008 133. Insurers are permitted to delete Impact damage cover from SFSP Policy: a) By allowing additional discount in premium b) Without allowing a discount in premium c) Even without the consent of the Insured d) None of the above 134. Machinery Breakdown loss of profits (MLOP) policy has compulsory time excess of: a) 14 days b) 21 days c) 7 days d) No time excess is applicable 135. Material damage section of IAR Policy having S.I. more than Rs.100 cr. but up to Rs. 1500 cr. is subject to deductible of: a) 5% of claim amount minimum Rs. 10 lacs b) 5% of claim amount maximum Rs. 10 lacs c) 5% of claim amount minimum Rs. 10 lacs, maximum Rs. 50 lacs d) 5% of claim amount minimum Rs. 5 lacs, maximum Rs. 50 lacs 136. Designation of property clause relates to: a) Machinery Insurance b) Fire Insurance
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c) CPM Insurance d) BPP Insurance 137. IAR Policy does not cover: a) Plant and Machinery in open b) Vehicles registered for general road use c) Stocks in open d) Movement of materials within the premises 138. Name of the policy under which operation of several occurrences will also constitute a single claim: a) FLOP b) ALOP c) ELOP d) MLOP 139. A D.G. set covered under SFSP Policy removed to repairer's workshop for repairs caught fire on 73rd day of such removal. The loss under the said SFSP policy will be: a) Payable b) Payable as a 'non-standard' claim c) Not payable d) Either of a) & b) 140. The term 'Time Excess' is applicable to: a) LOP b) MBD c) EEI d) CPM 141. While assessing a LOP claim, Annual Turnover is used to determine: a) Reduction in Turnover b) Increase in cost of working c) Adequacy of Sum Insured d) Saving in insured standing charges 142. A claim towards Architects, Surveyors and Consulting Engineers Fees as an Add on cover under SFSP policy can be paid up to maximum of: a) 5% of adjusted loss b) 5% of Sum Insured c) 10% of Sum Insured d) 7.5% of adjusted loss 143. Sum Insured under Escalation clause in Fire policies is automatically increased: a) Instantly b) On daily basis c) Monthly d) Quarterly
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144. A claim is reported under an IAR Policy. It is found that the property was under insured to the extent of 17.5%. Payable amount will be: a) Assessed loss less 2.5% b) Assessed loss less 17.5% c) Assessed loss less 15% d) Assessed loss 145. Which one of the following statement is incorrect? a) IAR policy is an All risks policy with named exclusions b) IAR policy provides for compulsory FLOP cover c) IAR policy provides for compulsory MLOP cover d) IAR policy provides for compulsory MI cover 146. Which one of the following statement is incorrect? a) Fire declaration policy is not permissible on short period basis b) Earthquake is a peril not covered in Standard fire policy c) Fire policies are not agreed value policies d) Stocks can be covered with replacement value clause 147. Midterm cover against Terrorism can be granted: a) At short period scale of rates effective from date of request b) At pro-rata premium from date of request c) At short period scale of rates with 15 days waiting period d) Can not be granted at all 148. Add on covers under SFSP policy can be included midterm: a) At applicable annual premium b) At pro-rata premium c) At short period scale of rates d) Can not be included midterm 149. An Engineering policy which is not an annual policy: a) Contractors' Plant & Machinery policy b) Contractors' All Risks Policy c) Civil Engineering Completed Risks Policy d) BPP Insurance Policy 150. Machinery Insurance does not cover: a) Internal fires b) Breakage of parts due to entry of foreign object c) Gross negligence d) All of the above 151. Exclusion K of CPM policy relates to: a) Machinery working under ground b) War Perils c) Nuclear perils d) Transit risks between sites 152. Machinery Breakdown Insurance policy can now be issued to cover a) moveable/portable equipments like portable DG sets, etc. cannot be covered under MI policy
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b) moveable/portable equipments like portable DG sets, etc. can be covered under MI policy without any loading on the basic policy rate c) moveable/portable equipments like portable DG sets, etc. can be covered under MI policy with 20% loading on the basic policy rate d) moveable/portable equipments like portable DG sets, etc. can be covered under MI policy with 10% loading on the basic policy None of the above 153. Which of the following policy normally cover lift cranes, Material handling plant and equipment in the construction and project sites e) Contractor Plant & Machinery f) Contractor All Risk g) Marine cum erection policy h) Erection All Risk 154. Explosion though a general exception under the policy, but certain occurrences 'which fall within the term explosion are covered under a) Marine cum erection policy b) Contractor Plant & Machinery c) Contractor All Risk d) Machinery Insurance Policy 155. In MI policy, basis of indemnification for total loss/constructive total loss is a) New replacement value plus cost of removing the damaged machinery less value of salvage b) New replacement value c) Market value plus cost of removing the damaged machinery less value of salvage d) Market value 156. In MI policy, Sum Insured represents a) Current market value b) New Replacement value c) Current market value including transportation cost to site, customs dues and all installation costs. d) New Replacement value including transportation cost to site, customs dues and all installation costs. 157. All movable/portable electronic equipments can now be covered under standard EEI policy a) with 30% loading b) with 20% loading c) without loading d) with 10% loading 158. General Information required for framing construction phase insurance for a project (i) Wind, flood and rainfall statistics at site as well as geological, hydrological& meteorological reports
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KEY MODEL QUESTIONS

(ii) Copies of contracts giving insurance requirements (iii)Detailed description of the project including any civil works. a) only (i) is only b) (i) &(ii) only c) (i) & (iii) only d) All the above 159. In EAR policy a) Prime Cost of materials is subject to premium adjustment b) Freight and handling charges, customs dues and construction cost is not subject to premium adjustment c) Prime Cost of materials is not subject to premium adjustment d) None of the above is correct 1. A 2. C 3. A 4. D 5. A 6. B 7. D 8. A 9. B 10. B 11. D 12. B 13. C 14. B 15. B 16. D 17. B 18. B 19. C 20. C 21. D 22. D 23. B 24. B 25. A 26. B 27. C 28. A 29. D 30. C 31. B 32. C 33. A 34. B 35. A 36. A 37. B 38. A 39. A 40. C 41. A 42. D 43. B 44. D 45. C 46. C 47. B 48. A 49. C 50. B 51. A 52. B 53. A 54. A 55. A 56. C 57. C 58. A 59. A 60. D 61. A 62. D 63. B 64. C 65. C 66. B 67. D 68. C 69. C 70. B 71. A 72. B 73. D 74. B 75. C 76. D 77. B 78. C 79. D 80. C 81. C 82. B 83. D 84. B 85. B 86. D 87. C 88. C 89. A 90. B 91. A 92. B 93. A 94. C 95. D 96. A
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97. A 98. A 99. C 100.C 101.A 102.D 103.B 104.B 105.D 106.B 107.A 108.C 109.B 110.C 111.A 112.C 113.B 114.B 115.B 116.D 117.D 118.D 119.D 120.A 121.A 122.D 123.C 124.B 125.D 126.A 127.C 128.C

129.C 130.B 131.C 132.C 133.D 134.A 135.A 136.B 137.B 138.B 139.C 140.A 141.C 142.D 143.B 144.B 145.C 146.D 147.C 148.A 149.B 150.C 151.A 152.C 153.A 154.D 155.C 156.D 157.D 158.D 159.C

CASE STUDY (1): A fire claim was settled by the Competent Authority for Rs.80.00 lacs under Agreed Bank Clause and loss voucher was ready but not issued. In the meantime a third party who supplied some materials to the insured, was not paid their dues, filed a suit in the High Court against the insured with a prayer that their dues may be please be paid to them direct from the amount of insurance claim and balance to be paid to the insured. The Hon'ble High court issued an injunction served to the insured baring the taking of claim amount from insurance company before the dues paid to the supplier. This copy of injunction under such case came to the Insurance Co. as well as concerned Bank for their necessary action. What would be your stand point? CASE STUDY (2) : A fire policy was issued to M/s. ABC & Co. covering stock for Rs. 10.00 lacs which was gutted by fire. While assessing the loss, it was found that value at risk was Rs.14.00 lacs and no salvage was realized. Claim was settled accordingly. Surveyor charged his professional fees on Rs.14.00 lacs. Survey fees would be paid on what amount ? CASE STUDY (3): A fire policy and fire LOP policy was issued to a Fertilizer Factory with add-on cover of 'Start up' expenses. This add-on cover was taken by the insured with a view to be indemnified for the expenses incurred by them in consequent upon a loss/damage to resume their normal production at the earliest. While studying the fire LOP policy, the insured thought that this additional expenses may be automatically covered under the head of the 'Increase in cost of working' under LOP which covers the additional expenditure which is necessarily and reasonably incurred for the sole purpose of avoiding or diminishing the reduction in output during the indemnity period in consequence of damage. Therefore, 'Start-up' cover is not required to be taken separately under both the policy & premium outgo would be less. Insured invited underwriter to discuss in the matter. What would be your reply?

CASE STUDY(4): A fire policy was issued to Textiles Mills for Rs.50.00 Crs. on R.V. Basis. On intimation of a fire claim, the surveyor initially assessed the loss on R.V. basis for Rs.40.00 lacs and recommended for 'on a/c' payment of Rs.25.00 lacs based on indemnity basis and paid accordingly. In the meantime the insured informed to the underwriter that one of the machinery would not be available (as per supplier's letter) and they would not wait for indefinite period and request to settle the claim on Indemnity basis and claim was settled accordingly & loss voucher for balance amount was forwarded to the insured. Without discharging the voucher, the same was sent back to the underwriter with a request to treat the earlier letter as cancelled and claim may please be settled on R.V. basis as the machinery would be available as informed by the supplier. Is there any scope to settle this claim again on R.V. basis? CASE STUDY (5): Floater Declaration Policy of various specified jute godowns of JCI (150 locations). Period: 01.04.2005/31.03.2006. S.I.- Rs.110/- Crs. From time to time S.I. is increased when jute is purchased from the farmers and stored in the godowns at remote village. Purchase and storing of jute is informed to JCI's Town Office by the village centre and from town office, Registered Letter is issued to Insurance Co. with a copy to their City Office. Jute purchased on 10.05.2005 and informed to Town Office on 11.05.2005. Town Office issued regd. letter to Insc. Co. on same date which was received by them on 20.05.2005 and premium was booked on the same date from their C.D. A/c. with them. There was a fire on 15.05.2005 & estimated loss was Rs.30.00 lacs. Whether the claim is tenable or not? CASE STUDY (6): Fire BMC Policy with Sum Insured of Rs. 80.00 Crs. and voluntary deductible was 5% of Claim amount subject to minimum Rs. 20.00 lacs. under AOG perils and Rs.10.00 lacs under other perils. A flood loss was reported for amount of Rs.24.00 lacs and surveyor was appointed and based on the claim form submitted by the insured, the loss was assessed at Rs.18.00 lacs and as per norms of excess, claim was not paid. Surveyor submitted his bill charging the professional fees on Rs. 18.00 lacs.
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Whether survey fees would be paid on Rs.18.00 lacs or not? TRADE QUESTIONSFIRE AND ENGINEERING 1) A factory is covered under Standard Fire and Allied Perils Policy covering Fire, Explosion, flood group of perils & earthquake as add-on with deletion of RSMD. The insured proposes to take Fire Loss of Profits Policy to the same factory. What perils do you cover under Fire LOP Policy? a) Fire, Explosion, RSMD Perils. b) Fire, Explosion, RSMD, Terrorism perils. c) Fire, Explosion, RSMD, Terrorism and Flood group of perils. d) Fire, Explosion, Flood group of perils & Earthquake as add-on. 2) An Insured proposed to take Fire LOP Policy for his manufacturing unit for an indemnity period of 24 months. As insurer you should a) Offer installment facility by offering 8 quarterly installments. b) Collect the full premium in advance before risk commencement along with Fire MD Premium. c) Offer 7 quarterly installments with first installment being 5% more than other installments. d) None of the above. 3) Mega Risk' means a risk having e) PML of Rs.1,024/- crore and above. f) PML of Rs.1,054/- crore and above. g) PML of Rs.1,084/- crore and above. h) PML of Rs.1,094/- crore and above.

6) Please indicate which of the following statements is true. a) Fire declaration policy is not permissible on short period basis b) Tsunami is a peril covered in Standard fire policy c) Fire policies are agreed value policies d) Stocks can be covered with replacement value clause 7) Which one of the considerations are not taken into account for processing fire claims a) Condition of average b) Breach of warranty c) Confirmation of surveyor about verification of books of accounts d) Distance from fire station

8) Which will be treated as Hazardous goods under Fire and special perils policy a) Methylated spirits b) Common salt c) Sodium carbonate d) Sugar 9) Long term Fire policy can be issued for dwellings a) For minimum period of 2 years b) For minimum period of 3 years c) For minimum period of 5 years d) None of the above 10) Following add on covers are not available in standard Fire Special Perils Policy: a) Spontaneous combustion b) Loss of rent clause c) Start up expenses d) None of the above 11) Which of the following losses is not covered under fire insurance policy? a) Process losses b) Impact Damage c) Missile testing operations d) Aircraft damage 12) In Consequential Loss (Fire) Insurance Policy, the sum insured is arrived at by a) All standing charges plus net profit
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4). Which one of the following is a mega risk. a) A petroleum refinery with sum insured Rs 3000 crs b) An organisation having 25 different location with overall SI of Rs 2500 crs c) A power plant with sum insured Rs 2000 crs d) A fertilizer plant with SI of Rs 600 crs 5) Silent risk under fire policy in manufacturing premises are treated as silent risk when a) The factory is closed for 1 week continuously b) The factory is closed for 15 days continuously c) The factory is closed for 30 days or more continuously d) None of the above
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b) Specified standing charges plus net profit c) Only net profit d) None of the above 13) Automatic reinstatement clause deals with a) Insurance of stocks b) Insurance of plant and machinery c) Insurance of hazardous goods d) Claim under fire policy 14) Which of the following is NOT an Add on cover under Standard Fire & Special Perils Policy: a) Earthquake. b) Loss of rent. c) Spontaneous combustion. d) STFI Group of perils. 15) The basis of fixing Sum-insured under a Fire Policy for building, Plant & Machinery and Furniture, Fixtures & Fittings is: a) Reinstatement value or Book value. b) Book value or Market value. c) Market value or Reinstatement value. d) Reinstatement value or Written Down Value. 16) Under a Fire Floater Declaration Policy minimum premium to be retained after expiry of the policy is: a) 35% of the Provisional Premium Charged. b) 50% of the Provisional Premium Charged. c) 80% of the Provisional Premium Charged. d) None of the above. 17) Cold Storage Stock Damage cover due to Failure of Public Electricity Supply a) Is an add-on cover under fire Policy b) Is not an add-on cover under Fire policy c) Both are incorrect d) Both are correct 18) Who can take the extension cover of Loss of Rent under Fire Policy a) Tenant b) b Owner of the Building c) Both d) Cover not available to anyone
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19)

Material Damage proviso of the Business Interruption policy states There should be in existence a material damage policy covering the physical damage to the property for issuance of a business interruption policy b) The basic policy should cover loss or damage to raw materials c) The policy can be issued only for industrial and manufacturing risks d) A claim for loss or damage to the property should be admissible under the material damage policy for a claim to be admissible under a business interruption policy. 1) Statements a and b are correct 2) Statements a and c are correct 3) Statements band d are correct 4) Statements a and d are correct a)

20) The excess under Standard Fire and Special perils policy is a) 5% of the Claim amount for perils other than Act of God perils b) 5% of the claim amount subject to a minimum of Rs.10000/- for claims of Act of God Perils c) 5% of the claim amount subject to a maximum of Rs.10000/-for claims other than Act Of God Perils. d) Rs.10000/- in respect of Act of God Perils 21) An insured takes a fire insurance for building and contents and a machinery breakdown insurance policy for machineries. A short circuit in one of the switch boards results in a spark in the air conditioner which results in a fire damaging furniture in the room apart from the air conditioner. There is a valid claim under a) Fire policy only b) Machinery breakdown policy only c) Both the policies d) None of the policies 22) Which of the following is not required to be followed while canceling a fire policy by the insurer a) Notice Period to be given b) Pro rata premium to be refunded c) Reason of canceling the policy d) Formal communication to be sent to the insured 23) Breach of condition precedent to insurance and the claim occurs. It is a) Payable
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b) c) d)

Not Payable Partially payable Non of the above

24) Breach of condition subsequent to insurance, Policy from 19.12.06 to 18.12.07. Breach of condition on 6.05.07, claim on 16.06.07. Claim is a) Payable b) Not-payable c) Only a is correct d) Only b is correct 25) Property belonging to the company is insured by one of its director in his name. In case of a claim will it be a) Payable b) Partially payable depending on the number of directors c) Not Payable d) None of the above 26) 'A' has purchased a house but the possession and payment is deferred for some time. Will you insure this house under fire policy ? a) No b) Yes c) Can be in the name of original owner d) None of the above 27) The principle of indemnity is applied in practice through a) Extra premium b) Excess clause deduction c) Franchise clause deduction d) Deduction for depreciation 28) Which of the following statements is true? a) Statement A: b) As per IRDA Regulations, there is a legal obligation on the part of insurers to issue a renewal notice to the insured c) Statement B: d) Issue of a renewal notice means that the policy is automatically renewed, if the premium is paid. i) Neither of the statements ii) Only Statement A iii) Only Statement B iv) Both Statements
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29) The duty of disclosure of material facts arises a) Only during the proposal stage b) Only during the policy period if there is a change of risk c) Only at the time of renewal d) All of the above 30) Loss or Damage due to Tsunami is a) Under Flood, Storm, Tempest and Hurricane Perils b) Payable only under Earthquake Extension c) Payable even without Flood d) None of the above. 31) Risk covered under IAR policy is a) Fire material damage, Business interruption b) Business interruption for Fire MD & MI/BPP/EEI items, Burglary c) Machinery breakdown & MLOP d) All the above 32) Sum Insured under C L (Fire) Policy is a) Turnover basis b) Average of earlier 3 years T.O. c) Gross Profit d) Current Financial year's Turnover 33) Gross Profit meansi) Net profit plus variable expenses ii) Net Profit plus Standing Charges iii) Sales less variable cost iv) Sales plus standing expenses a) (i) b) (iv) c) (i) and ( ii) d) (ii) and (iii) 34) Annual turnover under Fire (C L) policy is Last financial year's turnover Average three years T.O. T.O. from the date of interruption to twelve months of the preceding year Current year's T.O. 35) Which of the following is taken into consideration for arriving at the adequacy
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of sum insured under Fire Consequential loss insurance policy : a) Gross profit of the current policy b) Previous financial year Turnover c) Standard Turnover d) Annual Turnover 36) Which of the following statement(s) is/are not relevant to Industrial all risk Policy I IAR policy can be issued for a petrochemical risk having sum insured more than Rs.100 crores II No depreciation applied on partial and total losses arising out of Machinery Breakdown claims III Selection of machinery is permitted under Machinery breakdown sum Insured IV Fire Loss of profit cover is compulsory and Machinery Loss of profit cover is Optional (i) and (iii) only (ii) (ii) and (iv) only (i). 37) Which of the following statement is incorrect in case of Reinstatement value policies. a) Reinstatement of the affected property should be completed with in 12 month from the date of loss b) In case reinstatement not effected, then the claim can be settled on Market value policy basis c) Value at the risk at the time loss will be taken to arrive the adequacy of sum insured d) It permits to settle the Claim on market value basis. 38) Under Standard Fire consequential loss insurance the Time Excess applicable is a) 5% of the claim amount or first 3 days of gross profit which ever is higher b) 5% of the claim amount or first 7 days of gross profit which ever is less c) As applicable Material Damage policy d) Nil 39) The sequence to be followed in the fire claim settlement isa) Assessed loss less Depreciation, pro-rata average, salvage and Excess b) Assessed loss less salvage, depreciation, pro-rata average and excess
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c) Assessed loss less depreciation, salvage, pro-rata average and excess d) Assessed loss less pro-rate average, depreciation and excess 40) An Insured has taken Standard Fire and Special Perils Policy covering his fixed assets and stocks. He has opted for Rs.5,00,000 as voluntary deductible for other than AOG perils. His property got damaged due to Fire. While settling this fire claim the excess applicable is -a) Rs. 10,000/- as compulsory Excess b) 5% of claim amount or subject to minimum of Rs 10,000/c) Rs.5,00,000/- only d) Both compulsory excess of Rs.10,000/- and Voluntary excess of Rs 10,00,000/-. 41) An insured has taken fire policy covering plant and machinery under Standard Fire and special peril policy. Due to direct impact of Lightning strike on out door Transformer No.1 and got exploded and got fire. Due to this the out door transformer No 2 and other surrounding properties are also got damaged. The liability under the fire policy is -a) Entire claim is payable b) Entire claim is not payable c) Only Transformer No. 1 is payable d) Other than transformer No.1 is payable 42) The identification. Analysis and Economic control which can threaten the assets and earning capacity of an enterprise is a definition for a) Risk Management b) Cost Control Management c) Financial Crisis management d) Public Relation Management 43) The three ways in which an insured can control exposure to risk a) Eliminate, maximize or retention b) Eliminate, minimize or transfer c) Eliminate, minimize or investment d) None of the above 44) Negligence, nuisance and defamation are the subject matter under a) Public Liability b) Tort Liability c) Employers Liability d) All the above
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45) Which of the following is not so important in Property insurance ? a) Risk Inspection b) Cover Note c) Consideration d) Insurance Policy 46) Statement A: An aggrieved claimant whose petition is pending before The State Consumer redressal Commission can also approach The Insurance Ombudsman for speedy redressal of his grievance. Statement B: A citizen of India whose claim for Rs.15 Lacs was denied by a Insurer can approach either Insurance Ombudsman or State Consumer Grievance Redressal Commission for remedy. a) Only statement A is correct b) Only statement B is correct c) Both A and B are correct d) Both A and B are incorrect 47) Following is not true of an Arbitrator appointed under Arbitration Act 1996: a) Quantum disputes are referred to him b) Admissibility disputes are referred to him c) Act provides for appointment of sole Arbitrator d) None of the above 48) In dealing with any major fire claim in respect of machineries one of the following is not unimportant. a) Fire brigade report. . b) Attendance register of the worker. c) Metrological report. d) Acknowledged copy of the audited financial statement filed before IT department. 49) In Consequential Loss (Fire) insurance Gross profit is defined as: a) A stated percentage of sales/turnover b) Net profit plus insured standing charges c) Gross trading profit minus all standing charges d) Trading profit exclusive of all capital receipts 50) M/s. Khaitan Machine Mfg Co. has taken Consequential Loss fire policy for a period of 12 months with an indemnity period of 18 months. The average clause with standard turnover wording of the fire (CL) policy will read as provided that if the S.I. by this item is less than the sum produced108

a) b) c) d)

By applying the rate of gross profit to the annual turnover By applying the rate of gross profit to the standard turnover By applying the rate of gross profit to 1.5 times the standard turnover. By applying the rate of gross profit to 1.5 times the annual turnover

51) M/s. John & Co. takes Business Interruption Insurance (Fire)) policy with an Indemnity period of 9 months. The S.I. of the policy will be: a) A.G.P. b) 50% of A.G.P. c) 2 times of A.G.P. d) 75% of A.G.P. 52) In dealing with any major fire claim in respect of machineries one of the following is not unimportant. a) Fire brigade report. . b) Attendance register of the worker. c) Metrological report. d) Acknowledged copy of the audited financial statement filed before IT department. 53) What is the difference between 1 & 4 in the Richter scale? a) 3; b) 100; c) 9990; d) 9900 54) What is the maximum value per location may be covered under Terrorism Cover under Fire Policy? a) 200 crores; b) 500 crores; c) 600 crores; d) 750 crores. 55) The rate for terrorism cover for non-industrial risk when the value is within Rs.500 Crores a) Re. 0.13 %o b) Re. 0.22%o c) Re. 0.25%o d) Re. O.23%o 56) Rate for terrorism cover for the balance portion over Rs. 500 Crores up to
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Rs.2000Crores for Industrial risk is a) Re. 0.17 %o b) Re. 0.22%o c) Re. 0.13%o d) Re. O.7%o 57) Rate for terrorism cover for dwelling for any value is a) Re. 0.08 %o b) Re. 0.23%o c) Re. 0.25%o d) Re. O.17%o 58) Preliminary investigation of loss under Fire Policy includes a) whether the loss caused by an insured peril b) whether the damage property is in fact covered under the policy c) whether adjacent property is damaged d) All of the above 59) It is not the duty of the insured in the event of a claim under a fire policy to a) Save as much as possible of the insured property b) Take all reasonable steps to extinguish the fire c) shift the operations immediately d) diminish their loss 60) A fire policy taken for one year is extended for one month by charging a) Short period note for one month b) Pro rata premium for one month c) 50% of the short period note d) 50% of the pro rata taken for one month 61) If the insured proposes to cover his building for fire and earthquake from division 1 of the insurance company and his machinery for fire from division 2 of the same insurance company he will be a) Permitted to insure as per his request b) Will not be permitted c) Permitted by owing him to have both the policy in division 1 d) Permitted by owing him to have both the policy in division 2 62) If the insured proposes to get add on are cover for STFI during the middle of the policy a) The same can not be covered b) The same can be covered
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c) Covered with a waiting period of 15 days d) Covered with a waiting period of 30 days 63) If computers are covered under a fire policy and in case breakdown of the computers due to short circuit a) The claim is payable in full b) The claim is payable as not standard c) The claim is not payable d) The claim is payable at value of the computers at 40% depreciation p.a. 64) If a building is occupied in the ground floor as an Engineering workshop and first floor as a dwelling by different owners a) First floor are rated at the higher rate for the two b) Rated at lower rate for the two c) rated per se d) Engineering Workshop is rated at the rate of dwindling 65) Which of the following is true under a Reinstalment value policies a) The replacement / Reinstalment need not be carried out b) The replacement / Reinstalment shall be completed within 12 months c) The insured need not intimate his intension to do the replacement / Reinstalment d) All the above 66) Can fire policies be issued for more than 12 months a) Yes can be issued to all types of premiums b) Can be issued only for dwellings c) Can be issued for godown covering non-hazardous goods d) Can be issued only for godown covering hazardous goods 67) Valued policies can be issued for a) Properties of a VIP b) Properties exceeding value of 5 years c) Properties whose market value can not be ascertained d) None of the above 68) Which of the following is not applicable for Mid-term cover? a) Insurers must receive specific advice from the insured accompanied by payment of the required additional prem. in cash or draft. This additional premium can not be adjusted against existing case deposit or debited bank guarantee
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b) Mid-term cover shall be granted for the entire property at one complex / compound / location covering the entire interest of the insured under one or more policies insured. Shall not have any option for selection c) Cover shall commence 15 days after receipt of the premium d) The premium shall be charged on pro-rata basis 69) A silent risk denotes a) Factories where no manufacturing / storage activities are carried out continuously for 30 days or more b) Factories in which machine do not make a noise c) Factories where trade unions does not exist d) None of the above 70) Average clause becomes applicable when a) Sum insured is lower than the value of risk at the time of loss b) Properties insured situated at more than one location c) Insured is a partnership firm and they prefer to accept claim in the proportion of value of amount invested by each one of them d) None of the above 71) Flood claim on account of operation of an earthquake a) is payable under a SFSPI policy where the flood perils are deleted. b) is payable under a SFSPI policy having flood perils covered c) is payable under a SFSPI policy without the special perils discount and an extension for EQ d) is not payable at all 72) Value of foundation and plinth if not included in Sum Insured will render a building claim due to fire a) payable in full b) payable after application of average c) payable in full after collection of extra premium d) payable as non-standard 73) In an LOP policy, Auditor fees is a) an extension b) a built-in cover c) a part of Standing charges d) not to be covered
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74) Fire at Supplier's Premises can be a part of a) A Material Damage Fire Policy b) An LOP policy c) Is a stand alone policy d) Has no relevance 75) Common utilities outside the premises can be a) Rated per se b) Rated as per the main risk c) Highest rate to apply d) insured separately 76) Storage of hazardous chemical upto 5% of value at risk a) does not affect a claim b) renders a claim non-standard c) renders a claim as no claim d) can be covered after collection of extra premium 77) Cracks appearing in a building on account of subsidence of land below a) Fire policy will cover the loss without any extension b) Claim is payable on repair basis c) Claim is not payable d) Fire policy would have covered the claim had an extension been taken. 78) A dish antenna (covered under fire policy) breaks as a monkey jumps on it a) The claim is payable b) The claim is not payable c) The claim is payable as non standard d) Some other insurance should have been taken 79) The adjustment of sum insured in EAR policy is not done in respect of a) freight and handling charges b) custom duties c) cost of erection d) increase or decrease in cost of plant and machinery 80) Standby machinery or Spare Parts of any machine under MI is a) not covered b) covered at a discount of 50% in rate c) discount of 75% d) only covered when it is put to use
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Trade Test Questions Engg. 1. Following Peril is not covered under Machinery Breakdown Insurance policy a) Loss or Damage due to Electrical Short Circuit b) Loss or Damage due to Defective Lubricant or Coolant c) Loss or Damage due to Terrorism Act d) Loss or Damage due to Human Error 2. Under Engineering Project Insurance, the maximum percentage of escalation that can be chosen by the insured is a) 25% of the Sum insured b) 25% of the reinstatement value c) 50% of the replacement value d) 50% of the sum insured 3. Material Damage proviso of the Business Interruption policy states There should be in existence a material damage policy covering the physical damage to the property for issuance of a business interruption policy b) The basic policy should cover loss or damage to raw materials c) The policy can be issued only for industrial and manufacturing risks d) A claim for loss or damage to the property should be admissible under the material damage policy for a claim to be admissible under a business interruption policy. 1) Statements a and b are correct 2) Statements a and c are correct 3) Statements band d are correct 4) Statements a and d are correct 4. An insured takes a fire insurance for building and contents and a machinery breakdown insurance policy for machineries. A short circuit in one of the switch boards results in a spark in the air conditioner which results in a fire damaging furniture in the room apart from the air conditioner. There is a valid claim under a) Fire policy only b) Machinery breakdown policy only c) Both the policies d) None of the policies 5. Machinery Insurance Policy provides insurance protection of against
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mechanical & electrical breakdown and also human errors & negligence a) Electrical & Electrical Machines while at work b) All machines & tools except electronic machines while at work c) All machines except electrical machines while not at work d) All rotating and static equipment while at work or at rest including human error and negligence 6. Insurance period for Storage cum Erection policy is a) 1 Year b) 6 months prior to the final erection c) 1 month prior to the final erection d) Period of contract 7. Which of the following is excluded under Electronic Equipment policy? a) Theft b) Consequential Loss c) Riots d) Fire 8. Sum insured of Contractors All Risk policy is complete estimated erected value inclusive of a) Custom duties b) Wages c) Freight d) All of the above 9. Which insurance policy protects contractors, projects, bridges etc a) Engineering b) Fire c) Liability d) Marine 10. Machinery used for handling materials or constructions are covered under a) Fire Policy b) Contractors all Risk Policy c) CPM Policy d) Machinery Breakdown Policy 11. Under Electronic equipment policy there is no coverage available for a) System software b) Application software
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a)

c) Punched tapes d) Increased cost of working 12. An Advanced Loss of Profit policy indemnifies the Principal or the project owner for a) The loss of revenue arising out of delay in the completion of the project due to other contractor's delay which is not in the scope of the policy holder. b) The loss of revenue arising out of delay in receipt of project consignment due to accident during transit period c) The loss of revenue arising out of delay in completion of project due to operation of an insured peril covered under SCE/CAR policies d) The loss of revenue arising out of delay in completion of project due to Speculative or trade risks which relates to political, social or economic reasons or shortcomings in the management 13. Mark the most unlikely answer below. a) In Contractor All Risk Policy fragile items are not covered automatically b) Contractor All Risk Policies are issued where the scope of project is only Civil construction c) Storage Cum erection policies are issued for erection and commissioning of Electro Mechanical machineries. d) Storage Cum erection policies are issued where the scope of project involves civil construction, testing and commissioning of ElectroMechanical machineries. 14. Which of the statement given below is most relevant in case of engineering operational policies and Business Interruption policies. a) In case mid term increase in sum insured, the premium chargeable is on pro-rata basis for the un expired policy period. b) In case mid term increase in sum insured, the premium chargeable is on short period basis for the un expired policy period c) In case mid term increase in sum insured and renewed with the same or enhanced sum insured with same insured then refund on premium arising out of difference between short period and pro-rata premium is made. d) In case mid term increase in sum insured and renewed with the same insurer then refund on premium arising out of difference between short period and pro-rata premium is made 15. In Erection All Risk insurance liability of the insurers commence from a) The time of loading the machinery at the port of loading
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b) The time of unloading the machinery at the port of discharge c) The time after unloading the machinery at the site of erection d) The time of machinery leaves the warehouse of the supplier 16. Sum Insured under Erection All risk policy can adjusted on completion of project either by collection or refund of premium except a) Freight & handling Charges of plant and Machinery b) Prime cost of Machinery c) Cost of erection of plant & machinery d) Customs dues 17. M/s. John & Co. takes Business Interruption Insurance (Fire)) policy with an Indemnity period of 24 months. Normally premium is collected a) In 6 equal installments b) In installments, first installment should be more than 5%, next of the installments and last installment to be paid six months prior to 24 months period. c) In full at the inception of the policy d) In 12 equal instalments 18. In a EAR policy an indigenous made compressor covered under the policy got damaged while being shifted from storage yard to site of erection within the campus. New value of the compressor is Rs.1crore. Repair/replacement cost of parts Rs 50 Lacs. Salvage value of damaged parts Rs 2 lacs. Policy excess Rs 1 lac during storage erection. Rs 5 lacs during testing. Rs 10 lacs for act of god perils. No under insurance. Insurance company will settle the loss for a) b) c) d) Rs 48 Lacs Rs 47 Lacs Rs 45 lacs Rs 43 Lacs

19. Which of the following is not an exclusion under Contractors All Risk Insurance Policy a) The first amount of the loss arising out of each and every occurrence shown as Excess the Schedule; b) Loss/damage during erection of plant and machinery; c) Normal wear and tear, gradual deterioration due to atmospheric conditions or lack of use or obsolescence or otherwise, rust, scratching of painted or polished surfaces or breakage of glass; d) Loss or damage due to faulty design;
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20. M/s. Rahul & Co has taken EAR policy and Advance Loss of Profits policy. EAR policy period is from 1/8/2006 to 30/6/2007. ALOP indemnity period is for 12 months. Erection and testing could not be completed on 30/6/2007 because late arrival of machinery. Insurer will be liable for ALOP claim on account any accident on 1/7/2007 a) If EAR policy alone is extended for further period beyond 30/6/2007 b) If ALOP policy alone is extended for further period beyond 30/6/2007 c) If both EAR & ALOP are extended for further period beyond 30/6/2007 d) As the EAR policy is for 11 months and ALOP indemnity is for 12 months no need to extend any policy as ALOP indemnity commences from 1/7/2007 which is on 12th month from commencement of EAR policy 21. ALOP can be issued in the name of a) Principal, contractors, subcontractors and third parties b) Principal, contractors and subcontractors c) Principal & contractors d) Principal only 22. Which of the policies cannot be issued for a project under construction a) Contractors' all risk policy b) Marine -cum-erection policy c) Machinery breakdown policy d) Election all risk policy

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A. ALL RISK INSURANCE

All risks policies are issued on Named exclusion basis.

SUBJECT MATTER FOR INSURANCE:

Gold and silver ornaments, cameras, watches, cell phones, laptops, calculators and such other valuables.

COVERAGE:
1. 2. 3. 4. 5. The policy covers loss or damage to subject matter insured by whatever cause except those specifically excluded. It covers any locations within the geographical limit specified in the policy (normally within India and it can be worldwide also in exceptional cases) The policy is subject to the usual condition of average. Unless specified indemnity for individual items is limited to 5% of sum insured. Pair and set clause is applicable.

MISCELLANEOUS INSURANCE

EXCLUSIONS: Ware and nuclear perils Cracking, scratching or breakage of glasses unless caused by carrying vehicles. Depreciation, wear and tear, moth, vermin etc. Loss occasioned while cleaning, dying, repairing or restoration process. Electrical short circuit to electrical machines. Derangement or over winding of watches. Loss of money, securities, manuscripts or books of accounts and articles of consumable nature. Theft from unattended vehicles Articles carried under contract of afrieghtment Consequential losses are legal liabilities. UNDERWRITING CONSIDERATIONS: Proposal from known and reputed clients with sound tract record can only be entertained. Care of property custody in safe deposit lockers and other safety features. Items covered and their susceptibility to loss. Trade of proposer proposals from dealers, money lenders and pawn brokers

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may attract special conditions and higher rate of premium. Therefore prior approval is required. Availability of list of articles and their approved valuation. Moral hazard of the proposer Geographical extensions. Past claims history.

EXTENTIONS AVIALABLE AT ADDITIONAL PREMIUM:

Infidelity of employees carrying cash. Strike and riot. Over night keeping of cash Occasional large carrying.

B. MONEY INSURANCE
SUBJECT MATTER FOR INSURANCE:
Cash, Demand draft, cheques, postal orders, money orders and current postal stamps.

UNDERWRITING CONSIDERATION:
Single carrying limit Total estimated annual carrying Character of the locality, neighborhood etc. Distances and routes Mode of transit Claims history All other as applicable to burglary policy.

COVERAGE:
SECTION I: TRANSIT RISK

C. BURGLARY INSURANCE
a. b. c. Money drawn for payment wages, salary petty cash etc. from bank to premises until the same are paid out. Money describe above under custody from premises to bank or post office. Money collected and in the custody whilst in transit to premises, bank or post office for a period upto to 48 hours from the time of collection.

SUBJECT MATTER FOR INSURANCE :

Cash, Stock, FFF, Machinery and other contents of a business or residential premises

SECTION II: AT THE PREMISES. Money not described in Sec. I whilst in the locked safe or strong room in premises against burglary house breaking and hold up. Risk covered: Sec I Accident and misfortune Sec II Burglary and house breaking

COVERAGE:
1. 2. 3. Loss or damage by burglary or attempted burglary. Damage caused to the premises by burglar is also covered. Can be extended to cover theft at an additional premium with approval of RO/HO.

EXCLUSIONS:
Shortage due to error or mission Loss of money entrusted to any other person other than the insured or his authorized employee Infidelity of employees carrying cash. Over night keeping unless in a locked safe or strong room. Loss occasioned by RSMTD. Money carried under contract of afrieghtment All exclusions applicable to burglary policy.
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DEFINITION OF BURGLARY: A theft following a house breaking or a theft followed by a house breaking. House breaking means a criminal house trespass effected by forcible means to gain entry to into or exit from the premises section 442 & 445 IPC may be referred.

TYPES OF BURGLARY POLICIES:

Specific policy Declaration policy
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 Floater declaration policy First loss policy.

VARIANT FORM OF FG INSURANCE:

Court bonds : a) Administrative Bond b) Receivership Bond c) Liquidators Bond Customs Bond Excise Bond.

EXCLUSIONS:
War perils & nuclear perils By using authorized keys unless obtained by threat or assault. Caused or aggravated or assisted by the insured, his family, and his employees. Consequential loss Goods held in trust unless specifically declared. Recoverable under other policies. Loss after material alterations.

EXCLUSIONS:
Arising anywhere outside India. Arising after change of employment conditions without consent of insurers. Repeat losses involving same person Deviations from accepted internal check system.

UNDERWRITING CONSIDERATIONS:
Security measures Moral hazard Attractiveness, susceptibility and criticality and exposure Previous claims history Accounting system Place of storage. Terms of cover.

UNDERWRITING CONSIDERATIONS:
The relationship between annual emoluments and amount of guarantee sought. Financial status of the insured Method of accounting and well established internal check and control system. Recruitment policy references obtained while offering employment. Amount of counter guarantee available.

D. FIDELITY GUARANTEE INSURANCE E. LIABILITY INSURANCE (GENERAL)

COVERAGE:
MEANING OF THE TERM LIABILITY: Intended to provide indemnity against pecuniary loss caused by infidelity of the employees. The fraud and dishonesty should have been in course of discharging specified duties and also in respect of money or goods of the employers. Policy ceases the moment the claim is settled for individual policies. The name of the employee stands deleted the moment any claim involving his infidelity is reported and settled. Legal Obligation of the wrong doer to pay damages to the aggrieved person. HOW LIABILITY ARISES? Common Law passed legal decisions and legally recognized customs, conventions and usages. Law of Tort : part of common law Tort is a civil wrong Tort arises out of a breach of a duty Such a breach can be the basis of a civil cause of action. Statute law Those enacted by legislature e.g., M.V. Act, PLI Act, WC Act etc. Law of contracts.
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TYPES OF POLICIES:
1. 2. 3. 4. 5. Individual policy Collective policy. Floating Policy Positions policy Blanket Policy.
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Law relating to Liability: Evolution of law Survival of the fittest and the strongest Code of conduct evolved by the civil society Principle of Equity. Individual has the right to : Liberty Enjoy and be secure in his property and reputation Privacy He also has a duty to Respect others right and Refrain from harming others by invading their rights. If, by his wrongful act, he causes harm to others, he is held responsible (compensation or punishment). TORT: Civil Wrong Arises out of a breach of legal duty Leads to a civil cause of action Entails payment of damages or compensation TORT vs. CRIME TORT Breach of private rights of individual as individual. Action initiated by aggrieved party. Remedy is in the form compensation. Adjudicated by civil court. Civil Liability is insurable CRIME Breach of public rights which affects the entire society as a society. State prosecutes the culprit. Punishment in the form of imprisonment or fine. Conviction by criminal court. Criminal liability is not insurable as it is against public policy civil consequences of a criminal act can be covered. Require privities between parties. Duty arises out of agreement. Opposing parties are parties to the contract.
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MEANING OF NEGLIGENCE Unintended wrong involving breach of legal duty of care. Blyth V. Birmingham waters company. (1856) Breach of duty may occur due to either. 1. Act of commission (negligent act) : Doing something a reasonably prudent man would not do under given circumstances or 2. Act of omission (Negligent omission): Failure to do something a reasonably prudent man would do under given circumstances. Breach of duty of care means failure to exercise reasonable degree of care. Court should decide whether the standard of care required under the circumstances was observed. The complainant has to prove that such duty of care was owed by the other. INSTANCES OF TORT: Libel Slander Assault Negligence Nuisance Liability Insurance deals with only two of the instances of tort viz., Negligence and Nuisance. WHEN LIABILITY EMERGES UNDER LAW OF TORT? It emerges when it is established that : 1. The defendant owed a legal duty of care. 2. The defendant breached that duty of care. 3. The plaintiff suffered injury or damage and. 4. There was a causal connection between (2) & (3). Mere carelessness where there is no duty to take care existed is not negligence. Party complaining has to establish the facts from (1) to (4) to sustain an action for negligence. Sometimes negligence may be presumed as per rule res ipsa loquitur. DEGREE OF CARE: Degree of care or skill may vary according to particular circumstances Owner of a property to use it in such a way as not to cause injury or damage to other persons or their property. Persons using dangerous things such as explosives, gases etc. are to exercise more than ordinary care in the control over such properties.
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Privity between parties not needed Duty imposed by law applicable to the entire society. Opposing parties may not be connected.

 Towards children. Much higher degree of care and skill to be exercised by the professionals in their professional work A professional need not possess the highest expert skill, it is sufficient to exercise the ordinary skill of an ordinary competent professional.

(a) cost of repair/replacement of damaged property (b) loss of use of damaged property The onus of proving the amount of damages rests on the claimant. DEFENCES TO NEGLIGENCE ACTION: 1. Volenti Non fit injuria (to him who is willing there can be no injury) 2. Inevitable accident. 3. Act of god or Vis. Major 4. Emergency 5. contributory negligence 6. limitation 7. Accord and satisfaction. TYPES OF LIABILITY POLICIES: Public liability (Industrial risk) Insurance. Public Liability (Non Industrial Risk) Insurance. Product liability insurance. Professional indemnity insurance. Public liability insurance act policy (Government by PLI Act, 1991) Workmen's Compensation Policy. Directors & Officers Liability Insurance (No. market agreement) Comprehensive General Liability/Contingent liability & various other reinsurance driven cover (no market agreement) NEED FOR LIABILITY INSURANCE: Growing awareness among people about their rights Consumer protection law Evolution of strict & absolute liability Enactment of special laws. Huge cost of defense and large amounts of award. Inclination of judiciary to promote public cause. Public interest suits and class action. LIABILITY INSURANCE POLICIES: Cover liability under law of tort and Statute law Cover legal liability of the insured. Pay to third party damages & legal costs and expenses. Provide compensation for Death, bodily injury, illness or disease Actual physical damage to tangible property Negligence is to be proved in court of law
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STRICT AND ABSOLUTE LIABILITY:

Shriram foods & fertilizers (1986) Escape of Oleum Gas. An enterprise engaged in hazardous and inherently dangerous activity should ensure highest standard of safety. If any harm results on account of such activity, the enterprise must be strictly and absolutely liable to compensate all those who are affected by the accident. Exercise of reasonable care or absence of negligence no excuse. Rylands V. Fletcher exceptions too would not be available. The larger and more prosperous the enterprise, the greater must be the amount of the compensation payable. The MD and Chairman of the company are personally responsible for what goes wrong in the company. DEFENCES TO ACTION UNDER THE RULE OF STRICT LIABILITY: Act of god Consent/default of the plaintiff Act of stranger Statutory authority.

DAMAGES:
Damages means pecuniary compensation recoverable by action for; breach of contract & tort. Damages for personal injury claims (a) Special damages : (i) actual loss of earning due to injury (j) medical, nursing or other expenses (k) Funeral expenses. (b) General Damages : (a) pain & suffering (b) Loss of enjoyment of life and loss of amenities. (c) Loss of recreational ability and/or (d) Loss of expectation of life. Damages for property damage claims
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 Claims made within jurisdiction of India as per Indian law except for liability arising out of exports in Product Liability. Claims first made in writing against insured during period of insurance are considered for payment. COMMON FEATURES OF LIABILITY POLICIES: Indemnity Limits Any one Accident AND Any One Year. AOA: AOY Ratios 1:1, 1:2, 1:3 and maximum upto 1:4 (No unlimited liability) Notification Extension clause Extended claims reporting clause Indemnity to others (except professional indemnity) Cross liability Claims series clause (No coverage for claim from the same cause which are made later than 3 years after first claim of the series. Compulsory and voluntary excess (applicable to both injury and damage). CONDITIONS: Notice of claim. No admission, offer, promise, payment without consent of insurer. Right to defend. Give information and assistance Notification of material alteration in risk. Payment upto limit of indemnity Interpretation condition. Keeping accurate records and declaration of turnover at the time of renewal Contribution Cancellation Reduction of Limit of Indemnity (AOY) on payment of claim. Excluding losses in case of Fraud Policy disputes clause. COMMON RATING FACTORS: Risk group Limit of Indemnity (Ratio) Limit of Indemnity (AOA) opted Output or Turnover Receipts Attendance/seating capacity (e.g. : no. of visitors to the premises) Wages.
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F. PUBLIC LIABILITY (INDUSTRIAL RISK) COVERAGE:

Cover for industrial and manufacturing risks. Cover depots, warehouses, go downs or any premises connected with insured business, addl. Premium depending on no. of premises covered. Claims arising out of accidents occurring in insured premises. Excludes claims arising out of Pollution (unless specifically covered) and Product Liability. Risk inspection to be done for new policy and at every fourth renewal where AOY exceeds Rs. 2.5 crores for Risk Group 1 and 2 and Rs. 1 crore and above for Risk Group 3 and 4.

EXCLUSIONS:
Contractual liability. Act of God perils (can be covered as extension) Deliberate/willful/intentional non compliance of statutory requirements. Loss of pure financial nature like loss of goodwill/market etc. Personal injuries like libel, slander etc. Infringement of plans, copy right etc. Fines, penalties, punitive and exemplary damages. War and nuclear perils Ownership, possession, use of Motor vehicles. Liability arising out of transportation of hazardous substance (can be covered as extension) Use of aircraft, watercraft or hovercraft Damage to property owned, leased or hired or in custody of insured. Injury or damage prior to retroactive date. Deliberate, conscious or intentional disregard of insured's technical or administrative management to take reasonable steps to prevent claims Liability which may be specifically covered elsewhere e.g. PLI Act or No Fault Liability (Non IR only).

EXTENTION POLLUTION:
Cover legal liability towards injury and damage to property due to accidental (occurred at specific time and place) seepage, pollution or contamination. Also covers cost for removing, nullifying or cleaning up, seeping, polluting and contaminating substance.
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 Excludes fines, penalties, punitive and exemplary damage. Subject to additional questionnaire certificate/consent letter from Pollution Control Board and additional premium. Extension of Act of god perils (AOG) with additional premium as per Earthquake zones stated in AIFT. EXTENSION TECHNICAL COLLABORATORS Covers legal liability of collaborator (named in schedule) in respect of technical collaboration agreement between insured and collaborator. No claim payable unless cause of action arises in India and liability to pay claim is established against the insured in an Indian contract. Only Indian Law shall be applicable to actions brought in India. Subject o additional premium Need to scrutinize collaboration agreement and any other information depending on need of each case. EXTENSIONS: TRANSPORTATION COVER Covers legal liability towards injury and damage to property due to accident caused by material/hazardous or dangerous substance whilst in transit by rail/road or pipelines (Pollution control Board Certificate). Pollution risk excluded unless specifically covered. Subject to compliance of statutory provisions Separate limit of indemnity i.e. AOA/AOY. Additional premium on indemnity, turnover, pollution and AOG perils (Pollution and AOG perils if requested). 50% premium charged if taken with premises cover. Separate policy may be issued with 100% premium and joint name of insured and transporter (if AOG perils taken, zone should be 1). EXTENTION - CARRIAGE OF TREATED EFFLUENTS: Covers legal liability towards injury and damage to property due to accident whilst treated effluents are carried by pipelines outside insured premises to discharge point. Pollution risk excluded unless specifically covered. Excludes fines, penalties, punitive and exemplary damages Subject to compliance of statutory provisions Additional premium (on indemnity premium) if distance exceeds 1 km. If distance exceeds 20 KM to be referred to Market Agreement commit.

PUBLIC LIABILITY INSURANCE ACT, 1991

COVERAGE:
Applicable for those handling hazardous goods and defined in the act. Limit of indemnity to be not less than paid up capital but within a maximum of Rs. 15 crore AOY and Rs. 5 Crore AOA BASIS OF RATING : Limit of Indemnity and turnover Equal amount of premium to be collected towards environment relief fund (no discount in lieu of commission & no service tax on ERF). CLAIMS (Deciding authority Dist. Collector) Reimbursement of medical expenses upto maximum Rs. 12,500 Fatal accident: Rs. 25,000 per person. PTD;/PPD medical expenses upto Rs. 12,500 plus disablement compensation upto Rs. 25,000 Loss of wages due to TTD: Fixed monthly relief not exceeding Rs. 1,000 per month upto maximum of three months for hospitalization exceeding 3 days & age > 16. Private property : Upto Rs. 6,000

G. PRODUCT LIABILITY
COVERAGE:
Legal Liability for injury, damage or pollution arising out of use of the product except any liability under PLI Act or no fault liability. For claims arising out of accidents due to defects in products specified in schedule. Except for any liability arising out of awards, judgments made under laws of USA or Canada or any orders for enforcing such awards/judgments (unless policy includes North American jurisdiction clause). Risk Assessment at every fourth renewal. For all policies covering exports to USA & Canada; for policies involving exports to other than USA & Canada with AOY over Rs. 50 lacs and for policies not involving exports with AOY over Rs. 2.5 crores.
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 Excess of % of AOA with minimum of Rs. 2,000 but for USA & Canada 1% of AOA subject to minimum of Rs. 4,000 Policy to be issued in Indian Currency and claim settled in Indian currency. If exports are involved and insured requests, policy can be expressed or claim can be settled in foreign currency, as per blanket approval by RBI. Claim series means claims arising out of one specific common cause eg. Same fault in design, manufacture, instructions for use or labeling of products or supply of same products and/or services or products and/or service showing same defect.

H. DIRECTORS & OFFICERS LIABILITY INSURANCE COVERAGE :

Indemnifies Directors & officers in respect of their legal liability to third party claimants for a wrongful act whilst managing the business

DEFINITIONS :
Insured: Directors and Officers

PRODUCT LIABILITY COVER - EXCLUSIONS:

Contractual Liability Deliberate non compliance of any statutory provision. Pure financial loss i.e. loss of market. Fines, penalties etc. War and Nuclear perils Injury/damage occurred before retroactive date. Deliberate disregard of insured's technical and administrative management to take reasonable steps to prevent claims. Injury to employees. Costs incurred for repair, reconditioning, modification replacement of any part or product alleged to be defective. Cost of recall of product or part thereof. Arising out of products which with insured's knowledge in intended for incorporation into structure, machinery or control of any aircraft. Damage to property belonging to insured or held in trust or in custody or control of insured or a person in service of insured. Products failure to fulfill purpose for which they are intended. Arising out of products that left the custody or control of insured prior to retroactive date stated in schedule.

INSURED EVENT :
Legal Liability to Third party claimants for a wrongful act.

DIRECTOR :
Member of the Board of directors.

OFFICER :
Not defined usually but typically a person with authority to commit the company.

WRONGFUL ACT :
Breach of duty. Breach of trust. Neglect, Error. Misstatement, misleading statement. Omission. Other similar acts.

LEGAL LIABILITY TO THIRD PARTIES :

Employees. Former employees (DIRECTORS). Shareholders. Competitors. Government Bodies. POLICY: (1) Is on claims made basis (2) continuity if important. A. TWO INSURING CLAUSES: CLAUSE A: Covers D& O where they cannot be reimbursed. CLAUSE B: Covers D & O where their company can reimburse.
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EXTENTIONS :
Vendor's Clause For products not manufactured by insured but by contractors, sub-contractors etc. In their brand name may be covered subject to additional information on contract between insured and such manufacturers. TECHNICAL COLLABORATORS INCLUSION CLAUSE.
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B.

OUTSIDE DIRECTORSHIP Associated companies Not for profit trusts. Non related companies Nominee companies, trusts etc.

List of holding/subsidiary companies. Copies of circulars sent to members/debenture holders.

I. JEWELLERS BLOCK INSURANCE

Section Property cover Perils covered Fire, lightning, Explosion. Burglary/Housing Breaking/ Holdup/theft. Riot and strike On all risk basis whilst carried or conveyed outside the specified premise with named exclusions.

OUTSIDE DIRECTORSHIPS - TWO CATEGORIES: 1. Appointed by the company. 2. Elected not at the request of the company. THREE DIFFERENT STRUCTURES - Single excess, Double excess & Treble excess. i. Single Excess cover Applies after any D & O Liability insurance arranged. By the outside company Doubled excess cover applies after. Any D & O liability insurance Arranged by the outside company And any indemnification provided by the outside company.

I 1. Stock in trade and cash in the Premises premises in safe risk 2. Stock displayed on premises. 3. Property in bank lockers.

ii.

II 1. Stock in trade whilst in Custody custody of directors partners risk /employees of the insured. outside 2. Stock whilst in custody of premises person not in regular employment. III Transit risks Stock in trade whilst being only carried by : 1.Insured Post Parcel 2.Air Freight 3.Angadia FFF and Safes

iii. TREBLE EXCESS cover applies after any D & O liability insurance arranged by the outside company and any indemnification provided by the outside company and any indemnification provided by the employing company.

All risk basis within India with named exclusion.

PRINCIPAL EXCLUSIONS:
Dishonesty, fraud, criminal or malicious acts. Personal guarantees or warranties (unless specifically covered). Libel, slander and damage to property. Seepage & Pollution (unless specifically covered). Liability of D & O on remuneration to which they are not entitled. Insured Vs. Insured.

IV

Fire, lightning, Explosion Burglary/House Breaking /holdup/theft Riot & Strike.

REQUIREMENT FROM INSUREDS:

Completed proposal form. Copies of memorandum & articles. Copies of last three years audited accounts. Coy latest half yearly audited/UN audited accounts adopted by board. Pattern of shareholdings. List of shareholders with more than 5% of total paid capital. Name & addresses of directors with % of shares held.
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LIMIT OF SUM INSURED AND SPECIAL CONDITIONS Stock under custody in excess of Rs. 2 lac should be secured in locked safe after business hours Section II. Sum insured for Sec II should not exceed Sec I sum insured. Valuation for Sec. I, II, III shall be cost plus 10%. Pair set clause is applicable. Condition of average is applicable for Sec I & IV Reinstatement facility is available for Sec. I Loss should be reported within 60 days from the occurrence date.
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EXCLUSIONS: Inventory losses, losses occurring cleaning and repairing process. Articles under use by the insured, his employees and family members Articles whilst on public exhibition. Theft from unattended vehicles Infidelity of all persons involved in the trade. Loss occurred outside specified locations Theft by use of authorized keys Window display after business hours. AOG perils Transit risk for export/import. Loss after passage ownership unless by operation of law Confiscation by local authority. UNDERWRITING CONSIDERATIONS: Extend watch and ward facility, round the clock armed guard closes circuit TV. Special security built vaults, strong room Moral Hazards Past claims.

In India, the MI product should have simplicity affordability and proximity of services. Our option in PSUs is to link our Bancassurance partners and the like and gather experience and data to evolve the best product. The Ideal package product should be savings oriented (No Claim Bonus), protective of credit, life, disability and properties including livestock. 2. Role of intermediaries in procuring general insurance business. Fast developing distribution channel. Corporate agents, bancassurance and brokers are Strong intermediaries Intermediaries are bound by the code of conduct as per IRDA They have to adhere to the functions stated by IRDA Link between the insured and insurer Have to be fair to the interest of insured and insurer Provides services to the policy holder Should be updated with the latest covers available in the market and happenings in the international market Should have sound knowledge regarding the underwriting philosophy, risk retention capacity and solvency margin of various insurers Should play a role in claims administration and management of insured Concept of input cost in Rural Insurance It is used in those classes of insurance where the value of the subject matter is increasing frequently due to change of status/growth. In plantation insurance the Sum Insured shall be based on the cost of cultivation i.e. input cost or cost of raising /development of the insured plant. Where the insurers do not have up to date information / expertise in change of value of the subject matter. Insurers collect the relevant information from the experts in that field like State/Central Agricultural Department, NABARD, and Agricultural Universities. For input cost the items generally they consider 1) Cost of Land Preparation including Pit making. 2) Cost of Seeds/Seedlings. 3) Cost of manures/fertilizers. 4) Cost of pesticides etc. For subsequent years of operation for plantation crops additional costs such as cost of fertilisers, manures, irrigation, cost of pesticide,
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BULLET QUESTIONS
1. Relevance of Micro Insurance in today's, scenario. The MI comes from the need for inclusive economic growth i.e. the poor also getting a fair deal when the Indian Economy grows rapidly The Micro Finance in increasing in Rural India through Banks NGOs and SHGs. The vast credit off-take can be protected by micro insurance only in rural India. The large population of the rural India rural finance and technology can be seamlessly integrated for viable business and distribution models for MI MI is widely popular in other developing countries all over the world due to inability of large insurers to tackle the small needs of rural poor. Public sector Insurance can fit existing policies for filing newer ones without damaging their existing financial well being Understanding the exact needs of various states/ regions by market research can help us evolve the correct MI product
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3.

insecticide, other plant protection chemicals, labour charges will be added to the first year cost and thus the sum insured for subsequent years will be the applied. Stage wise valuation table of the plantation is to be prepared for future assessment of loss. The Input cost may be derived for each proposal by the experts as stated herein above/from any reputed experts OF the relevant field. Feasibility Report from the State/Central Government Agricultural Institutions/Universities to be obtained. The premium charging as well as claim payment both made purely based on the concept of input cost. 4. Steps for minimization of losses in Health Sector? There is robust growth of business in Health Sector and this trend is expected to continue in future also. Unfortunately, ratio of loss in this sector has increased with the business growth. Hence, there exists urgency of minimizing losses. Aggressive marketing of Health Policies to the people of younger age by introducing new products, training to the agents and greater incentives for procuring this business. Loading of premium on group policies based on their past claim experiences. Careful selection TPAs having professionals favorable past records. Monitoring the working of TPAs on regular basis as the loss ratio in the health sector increases considerable after introduction of TPA. The benefits under various heads like Room rent, Doctors fees and Diagnostic materials etc should have individual limits instead of overall SI without any sub limits. Maximum limits of compensation may be fixed for treatment of common diseases like cataract, kidney stone, and heart ailments etc. While empanelling Hospitals for cashless service, we may negotiate for discounts. Prompt investigation of doubtful cases to detect fraud. Blacklisting of Hospitals and TPA found resorting to fraudulent means. 5. Scope of cover in Credit Risk Insurance Two types of risks are covered Commercial and Political Commercial risk refers to the payment risk related to the buyer including nonpayment due to insolvency default etc.
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Political risk refers to the payment related to the country of the buyer Political risk refers also to transfer difficulties due to economic events like export license cancellation and war Policy excludes Inter company sales Policy excludes also transactions with Government Institutions Excludes private individuals If the defaulter is a subsidiary or other department of the same company, these are excluded from the scope of the policy 6. S.I. under the EAR policy Cost of erected value of property including freight, custom duty, erection cost Adj. clause in respect of material damage section towards freight and handling charges, custom duty, cost of erection but not towards increase/ decrease in the cost of plant & equipment Extensions like civil works Debris removal CPM Surrounding property Expediting cost/ overtime, express rates Air freight for equipment Additional custom duty Escalation in cost upto 50% MULTIPLE CHOICE QUESTIONS ON HEALTH INSURANCE 1. Mediclaim policy is basically a: Benefit policy Indemnity policy Neither benefit nor indemnity policy Both indemnity and benefit policy Group mediclaim policies are of: High volume & high margin Low volume & high margin Low volume & low margin High volume & low margin

2.

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3.

The penetration of health insurance in India is around: 5% of the total population 2% of the total population 4 % of the total population 10% of the total population The coverage of pre-existing diseases was a major bone of contention in case of mediclaim policies over the years. Who has defined the pre-existing diseases recently for use by all Indian non-life Insurance Companies? Insurance Regulatory & Development Authority General Insurance Council Health Insurance Council GIPSA Mediclaim policy was introduced by PSU Insurers in the year: 1986 1973 1976 1996 Medical underwriting is practiced in case of: Group health policies Community based health policies Individual mediclaim policies All the above The new definition of pre existing disease is being implemented by Insurers with effect from: 1.4.08 1.6.08 1.4.07 1.6.07 The TAC collects health Insurance data from TPAs and Insurers in respect of: Policy, members and claims Policy and claims only Policies and members only Claims only
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9.

Critical Illness policy is a: Indemnity policy Benefit policy Both indemnity and benefit policy Neither of the two

4.

10. Insurers, TPAs and Broking Companies cannot raise capital except through: Preference Shares Equity capital Hybrid Instruments Transfer of shares 11. IRDA grievance redressal department deals with only: Cases of delay & non response Claims dispute Policy contract dispute Complaints written on behalf of policy holders by Advocates, agents or any third party 12. A takes a mediclaim policy with coverage of Rs 5 lacs for a year from 1.1.09. In May 2009, he prefers a claim for Rs 1.5 lacs. The coverage available to A for the balance period is: Rs 1.5 lacs Rs 3.5 lacs NIL Rs 5 lacs. 13. All factors other than one stated below does not determine the premium payable under a health policy: Age Occupation Sum insured TPA option 14. Mediclaim policy generally has a post and pre hospitalization benefits for: 30 days and 60 days 60 days and 30 days 30 days and 15 days 15 days and 30 days
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5.

6.

7.

8.

15. Under the Rashtriya Swasthya Bima Scheme the Central and State Government share the premium in the ratio of: 50:50 75:25 25:75 80:20 16. Under the UHIS policy, a portion of the premium is borne by: State Government Central Government Both Central & State Government Neither the Central and State Government 17. World Health Day is celebrated on: April 7 August 15 December 7 December 15 18. A health insurance policy may be cancelled for all reasons except one. Which one: Misrepresentation Fraud Non-disclosure or non co-operation Claims history 19. The World Health Organization is headquartered at: Geneva Berne New York Tokyo 20. All but one statement is not correct in respect of Jana Arogya policy: The coverage is for poorer sections of the society between the age of 5 to 70 years. The sum insured per person is restricted to Rs 5000/ Tax benefit under Section 80 D is available for premium paid The policy can be taken for parents as well.
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21. What is common to Jana Arogya Policy and group mediclaim policy? Cumulative and health check up are not payable under both. Maternity benefit extension is available Renewal is subject to Bonus/ Malus clause Both are group policies 22. Group Discount is generally not offered under a Group Mediclaim Policy if the group size is: < than 51 < than 101 > than 101 > than 51 23. The underwriting practices of a health insurance company provides for loading of a tailor-made group policy if loss ratio is > than 70 % to keep it at 70% as if basis. In a particular tailor-made group policy, the loss ratio is 150%. What would be the loading on renewal to maintain the loss ratio at 70%? 120% 114% 70% 100% 24. Group Discount under a group mediclaim policy is allowed on the group size: At the end of the policy period On anticipated group size Actual size at the commencement of policy To be adjusted on average group size 25. The basic premium under a group mediclaim policy is: The total premium computed before applying Group Discount, High Claims Ratio Loading/ Low Claims Discount and Special Discount, if any The total premium computed after applying Group Discount The total premium computed after applying all discounts None of the above 26. All except one statement is correct in respect of Cancer Medical Expenses Policy of the Indian Cancer Society. Which one is incorrect? The policy is available for members of the society maximum upto the age of 70 years.
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 The policy is available to individual ordinary, Well Wisher Ordinary, Well Wisher Corporate and Well Wisher Life Member The policy covers the member and spouse for Rs 50,000/- and in case of claim by one the partner is not entitled for any benefit under the policy. The sum insured of Rs 50,000/- is paid as a benefit in case of detection of cancer. 27. Mr A has enrolled himself along with his spouse as members of Cancer Society from 1.1.09. The insurance will commence from: 1.1.09 1.2.09 15.1.09 None of the above. 28. Which statement is correct in case of Overseas Mediclaim policy? Premium is payable in foreign currency and claim is payable in foreign currency. Premium is payable in rupees and claim is payable in foreign currency. Premium and claim is paid only in US dollars None of the above. 29. The premium under OM policy depends on all except: Age band Trip band and country of visit Coverage Income 30. Which is not a government supported health policy? UHIS (BPL) Varishtha/ Sr Citizens policy RSBY Rajiv Arogyashree 31. ABC Company has a tailor-made group mediclaim policy with an Insurer. The Insurer has 4 TPAs in panel and the policy will be serviced by a TPA. What is the best way to select the TPA? Any TPA Leave it to the option of Insurer Arrange for a presentation from TPAs and then select Accept as it comes
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32. There could be many ways to reduce health insurance premium. Which one of the below listed does not help in reducing premium: Reduction of benefit Curtailment of coverage by imposing co-payment By getting subsidy TPA option 33. A Company needs to have a license from IRDA to act as TPA. The amount of non-refundable processing fees and license fees payable are: Rs 20,000/- and Rs 30,000/ Rs 30,000/- and Rs 20,000/ Rs 25,000/- and Rs 50,000/ No fees payable 34. A TPA whose application for license has been rejected may apply afresh after: 2 years 1 year 5 years 3 years 35. The license issued to a TPA is valid for a period of: 3 years 2 years 5 years 1 year 36. What is the threshold limit of transfer of shares of a TPA to be informed to IRDA? 5% 1% 10% 26% 37. One of the conditions is not relevant to act as TPA in India. Which one: A company with share capital and registered under the Companies Act 1956 The minimum paid up capital shall be in equity shares of Rs one crore and should have working capital not less than Rs one crore any time of its functioning
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 The TPA to carry on only health services Aggregate holding of equity shares by a foreign company may be upto 50%. 38. The look back period for pre-existing disease from first commencement date of mediclaim policy is: 48 months 36 months No limits 12 months 39. The look back period for pre-existing disease from the policy commencement date under Overseas Mediclaim policy: One year Six months No limits 48 months 40. The any one-trip limit and total duration of stay under CFT are restricted to: 60 days and 180 days 30 days and 60 days 14 days and 180 days 15 days and 30 days 41. The mediclaim policy if claim free earns a cumulative bonus. However in case of a claim the earned benefit is reduced by: 5% of the accrued benefit 10% of the accrued benefit 10% of the sum insured 10% of the claim amount 42. A disease is said to be acute when: It has an abrupt beginning and quick ending Gradual beginning and long persistence Left alone can be fatal Disease without complication 43. The minimum hospitalization period for accrual of benefit under mediclaim policy is: 24 hours
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48 hours No time limit 12 hours 44. According to recent regulation of IRDA all health insurance policies should have a mechanism to condone delay up to a specified time for continuity of benefit in respect of waiting period and pre-existing disease. What is that period? 15 days 7 days 1 month 3 months 45. Any change in the premium structure and terms of health insurance policy can be implemented only after the approval of IRDA. However Insurer has to intimate the changes/ revisions to all policyholders at least: 3 months prior to the date of renewal of policy 1 month prior to renewal Not necessary to inform before renewal 6 months prior to renewal 46. The fees payable to TPA for rendering health services in the eastern and western India is: 6% of premium 5.4% of premium 5.5% of premium None of the above 47. The Sr citizens are entitled for tax benefit under Section 80 D of the Income Tax Act up to: Rs 20,000/ Rs 15,000/ Rs 50,000/ Rs 25,000/48. The co-branded health insurance policy with Banks has become very popular in India. It is an example of: B2B business model B2B2C business model B2C business model None of the above
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49. Which one of the following policy is a deferred mediclaim policy? Jana Arogya Arogyashri Bhavishya Arogya Sampoorna Arogya 50. The beneficiary under CGHS and Central Services (Medical Attendance) Rules 1944 can opt for mediclaim policy. State which statement is incorrect? They can claim reimbursement from both the sources subject to the total reimbursement not exceeding the total expenditure incurred for treatment The beneficiaries first have to claim on original documents with Insurer and secondly claim with CGHS on photocopy and certification from Insurer The reimbursement from CGHS or other department source will be restricted to admissible amount as per approved package subject to the amount not exceeding total expenditure on treatment. The amount of treatment will be shared under contribution clause. 51. The Rashtriya Swasthya Bima is a smart card based health scheme for BPL families in states across the country. What is the sum insured under the policy? Rs 30,000/ Rs 25,000/ Rs 50,000/ Rs 20,000/52. The Rashtriya Swasthya Bima Scheme provides for pre and post hospitalization beneft up to: 1 day and 5 days 7 days and 15 days Does not provide for it at all Total 10 days 53. The BPL families can enroll themselves under Rashtriya Swasthya Bima Scheme by payment of registration fees of: Rs 10/ Rs 30/ Rs 50/ Free of cost
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54. Under Rashtriya Swasthya Bima a fixed transport allowance per visit is allowed subject to an annual limit of Rs 1000/-, what amount? Rs 100/ Rs 50/ Rs 60/ Rs 30/55. The Rashtriya Swasthya Bima entails only: Cashless hospitalization Re-imbursement Both cashless and re-imbursement Pre-paid system 56. The age for calculation of premium under mediclaim policy is: Completed age Running age Either of the two 57. The riders in a health insurance policy give additional benefits to a policy holder but it does not have any investment or saving element. As per IRDA regulation the benefit arising out of an individual rider cannot exceed the basic sum insured and the premium paid for the rider is capped at : 30 % of the basic policy cost 40% of the basic policy cost 20% of the basic policy cost 10% of the basic policy cost 58. The DTC will be implemented in the country from effect from 01.04.2012. The premium paid for health policies for an individual assessee will be eligible for tax benefit under Income Tax Act for : ` 50,000 / ` 1,00,000/ ` 35,000/ ` 15,000/59. The health insurance portability in Indian health insurance market will be implemented with effect from : 1.7.2011 1.1. 2012
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 1.4.2011 1.9.2011 60. As per IRDA guidelines on portability on health insurance policies ,which one of the following is not correct : Provide credit for the period of cover for PED in terms of waiting period with previous insurer. Provide credit of the sum insured under previous insurer including bonus. Provide credit to the sum insured only & not bonus. Provide credit to both PED & existing sum insured including bonus. 61. As per portability rules, the existing insurer has to share the entire data base including the claim details of the policies with their counterparts in: 7 days 10 days 3 days 15 days 62. The application for portability has to be acknowledged by insurer within : 3 working days 7 working days 15 working days 10 working days 63. For online filing of health insurance products the IRDA has provided for submission for : Data base sheet Self administered checklist Customer information sheet Hospital & TPA list 64. As per Section 64 VB of the Insurance Act, 1938 no risk to be assumed by an Insurer unless premium is received in advance. Rule 58 & 59 of Insurance Rules 1939 provide relaxation in the payment of premium in all policies except: Group Hospitalization Insurance Scheme & Sickness Insurance Medical Benefit Insurance Group Personal Accident Policies Individual health policies
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65. The Insurance Rules provide that the group Health Premium may be accepted in installments covering a particular period: Before the due date Before the policy commencement date Within 15 days of commencement of the period Within 7 days of the date of commencement of the period 66. The standardization of billing procedures in hospitals, contents of discharge summary & standardization of TPA/insurer & TPA/hospital contract have been done by: FICCI Health Insurance Group IRDA Health Self General Insurance Council Health Insurance Council 67. When a Insurer knows more about consumers expected costs than the consumer themselves and uses marketing or plan design to enroll healthier people than usual population, it is called: Cream skimming Adverse Selection Lemon dropping Information Asymmetry 68. It is estimated that health insurers' loss due to fraud is around 10% of the claim outgo. When normally honest people pad legitimate claims to get higher amount of claim or to cover excluded items under policy, it is known as : Soft fraud Hard fraud Application fraud Eligibility fraud 69. The PSGICs shortlisted providers with package rates for identified procedures in four cities of Mumbai, Delhi, Chennai & Bengaluru for implementation from 1.7.2010. This exercise by PSGICs is called the: PPN PPP Select Networking Neworking
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70. Health insurance market has many imperfections and informational asymmetry is common. Health insurance underwriting is successful when: If both insured and insurer are informed If both the insured and insurer are under-informed If insured is un-informed and insurer is informed If insured keeps insurer uninformed 71. The number of standalone health insurance companies in the country is: Three Two Four One

c) PA policy d) Burglary Insurance 6. Floating cover is not allowed in a) PA insurance b) Fidelity Guarantee insurance c) Burglary insurance d) Health insurance Standard Burglary Insurance (business premises) covers a) Loss occurring without any forcible entry b) Loss detected while taking inventory c) Loss arising out of snatching of goods d) Loss occurring as a result of forcible violent entry Householder's insurance policy does not cover a) WC of servants b) Money in transit c) All risk of valuables d) PA insurance Which one is not an insurance policy of indemnity? a) Health b) Personal accident c) Burglary insurance d) Cash in transit

7.

HEALTH & LIABILITY INSURANCE

1. First loss cover is available under a) House Holders Insurance b) Shopkeepers insurance c) Bankers Indemnity d) Burglary Insurance 2. Bankers Indemnity Insurance Policy covers a) Burglary from vault b) Wrongful and dishonest acts on the part of employees c) Fire of Bank Building d) Cash in transit 3. Which insurance policy has worldwide geographical scope? a) Overseas health insurance b) Cash in transit c) Personal accident insurance d) Fidelity guarantee insurance cover 4. PA insurance Policy doesn't cover a) Death b) Permanent total disability c) Permanent partial disability d) Temporary partial disability 5. Contribution clause is not applicable for a) All risk insurance for valuables b) Fidelity Guarantee Insurance
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8.

9.

10. Which of the following rules is not applicable to air travel insurance? a) Duration of coverage is limited to period from embarking to disembarking of the passenger b) Flight coupons are normally purchased by the policy holder at the airport c) Maximum limit of compensation in case of Death / PTD is Rs. 12 lacs if Individual is of 12 years of age and above d) Maximum limit of compensation in case of Death / PTD is Rs. 7.50 lacs if Individual is of 12 years of age and above 11. Retroactive period clause is relevant to a) Personal accident policy b) Bankers indemnity insurance c) Workmen compensation insurance d) Health insurance 12. Pair and Set clause is not a special condition under a) Fire Insurance
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b) Burglary insurance c) All Risk Insurance d) Baggage insurance 13. Agreed value condition is applicable to a) Valuable and curios under fire insurance b) Marine cargo insurance c) Vintage car motor insurance policy d) All of the above 14. Under Sec.I of shopkeeper policy which risk is not covered a) Lightning b) Flood c) Aircraft falling d) Loss of money 15. Environmental Relief Fund is compulsory along with premium of insurance of a)Public liability (Act) insurance b) Workmen's compensation insurance policy c) Erection insurance policy d) Cancer insurance policy 16. Which of the following policies has compensation fixed exactly as per statute? a) Workmen's compensation insurance b) Public liability Act insurance c) Motor third party insurance d) (a) and (b) above 17. Service tax is not chargeable along with premium under a) Burglary insurance b) Personal accident insurance c) Health insurance d) Janata Personal Accident Insurance 18. Stamp duty is to be paid by insured under a) W.C. Policy b) Marine cargo transit policy c) Short period insurance policy d) Personal accident insurance 19. Aviation Hull Insurance policy can be purchased by a) Manufacturer of aircraft b) Operator of aircraft
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c) Lessor of the aircraft d) All the above 20. Age group of girl child in Bhagyashree policy is revised to a) Upto 10 years b) 10 to 25 years c) Upto 18 years d) Upto 21 years 21. Workmen's compensation policy is not guided by a) WC Act b) Fatal Accident Act c) Indian Contract Act d) Trade Union Act 22. Under which policy insured's residence and its contents are covered a) Transit insurance b) Mobile insurance c) Aviation insurance d) Householder's insurance 23. What is the regulatory requirement of capital for setting up a stand alone health insurance company in India? a) 100 crores b) 50 crores c) 35 crores d) 200 crores 24. Meaning of 'legally liable' in a liability policy is a) Breach of legal duty to take care b) Contractual liability c) Statutory liability d) (a) and (c) 25. The Policy and the Schedule shall be read together as one contract and any wording or expression to which a specific meaning has been attached in any part of this Policy or Schedule, shall bear specific meaning wherever it may appear. a) This applies to Public Liability policy b) This applies to Professional Indemnity policy c) This applies to Workmen's Compensation policy d) Only (a) and (b) 26. Which of the following is exclusion under the Workmen's Compensation policy? a) Insured's liability to employees of contractors
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b) Liability in respect of employees of insured c) Liability in respect of workmen contracting any disease whilst discharging duties d) (b) and (c) 27. Reinsurance of Public Liability is generally done on which basis a) Facultative b) Excess of loss treaty c) Quota Share d) Stop loss 28. Under Bhavishya Arogya Policy, premium is not based on a) Age at entry b) Retirement age chosen c) Sum assured opted d) Sex of the insured 29. Which of the following is not a health insurance product a) Kisan Package policy b) Cancer Insurance policy c) Critical Illness policy d) Bhavishya Arogya policy 30. Which of the following diseases is not covered in the first year after inception of a health policy a) Cataract, Piles and Hernia b) Diabetes, Jaundice and Stroke c) Kidney Failure, Cataract and Piles d) Hypertension, Stroke and Piles 31. Reinsurance of a health portfolio is normally done on a) Facultative basis b) Excess of loss basis c) Quota Share basis d) Stop loss basis 32. Income tax benefit under Section 80(D) of IT Act is admissible a) If premium is paid in cash b) If premium is paid by cheque c) (a) and (b) d) None of the above 33. The tax relief for annual premium for a health policy for senior citizens is a) Rs. 10,000/b) Rs. 15,000/c) Rs. 20,000/d) Rs 25,000/158

34. Which of the following is covered under mediclaim insurance policy a) Dental treatment b) Cost of Spectacles c) Cost of Pacemaker d) Cosmetic Surgery 35. Claim Series Clause in Liability insurance means a) Single Accident may result in only one claim b) Single Accident may result in several claims c) Single Accident may result in a series of claims which has to be clubbed d) (a) and (b) 36. In liability insurance premium is based on AOA and AOY ratio. Under which ratio limit of liability may get exhausted after one accident. a) 1 : 1 b) 1 : 2 c) 1 : 3 d) 1 : 4 37. Under which mediclaim policy , the benefit reimbursed a) Universal Health Insurance b) Jan Arogya c) Critical Illness d) None of the above is paid in cash but not

38. Products Liability policies are normally issued on which of the following basis a) Risk Attaching basis b) Losses occurring basis c) Turnover basis d) None of the above 39. Find the correct answer: The premium under Mediclaim policy is based on a) Age b) Job c) History of previous surgery d) Sex 40. Under which of the following liability policies, compulsory excess does not apply? a) Industrial risks b) Non-Industrial risks c) Products d) Compulsory Public liability policy.
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41. Which of the following risks fall under Industrial Risks Liability policy? a) Exhibitions b) Permanent Amusement Parks c) Film Studios d) None of the above 42. In the limits of indemnity under Industrial Risks Public Liability, which combination of any one Accident and Any one year cannot be generally allowed under the Market Agreement?* a) Rs.10 lakh and Rs.40 lakh b) Rs.10 lakh and Rs.50 lakh c) Rs.10 lakh and Rs.20 lakh d) Rs.10 lakh and Rs.30 lakh 43. Which of the following statements is true in relation to Standard group Mediclaim policy? Statement A: Cumulative Bonus is not available. Statement B: Health checkup expenses are not payable. a) Neither of the Statements b) Statement a only c) Statement B only d) Both statements 44. Under Public Liability Insurance Act 1991 the owner is not liable to pay relief in the event of: a) Damage of property of any person b) Death of workman as defined in the Workmen's Compensation Act c) Death of any person d) Injury of any person 45. Under Hospitalization claim in Standard Mediclaim policy, relevant medical expenses incurred during the period of how many days after hospitalization are treated as part of the claim: a) 15 b) 45 c) 30 d) 60 46. The Standard Mediclaim policy excludes any disease (other than diseases excluded during the first year of operation) for how many days from commencement of policy. a) 30 b) 45 c) 15 d) 60
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47. Under Standard group Mediclaim policy, which of the discounts are not granted? a) Long term discount b) Group discount c) Low claims discount d) None of the above 48. Which of the following expenses are 'not' payable under Maternity Benefit*? a) Cesarean b) Abdominal operation for extra-uterine pregnancy c) Miscarriages due to accident d) Pre-natal expenses prior to hospitalization 49. Under Public Liability Insurance Act, a company has to insure for an amount not less than the amount of the insured's. a) Good will b) Paid up capital c) Turnover d) Value of assets 50. The maximum amount of premium paid by other than Senior Citizens under Mediclaim policy that qualifies for income tax benefit is*: a) Rs. 10,000 b) Rs. 20,000 c) Rs. 7,500 d) Rs. 15,000 51. Which of the following factor does not affect premium for Overseas Mediclaim Policy? a) Age b) Country/Countries to Visit c) Nationality of the Insured. d) Duration of cover. 52. Daily compensation benefit is available under which of the following: a) Individual mediclaim b) Group mediclaim c) Cancer insurance d) Universal Health insurance 53. Accidental death is covered only under: a) Group mediclaim b) Ind. mediclaim c) Cancer insurance d) Universal Health Insurance.
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54. Pricing of Mediclaim policy is made based on a) The pure risk cost method b) Experience rating cost A) a only B) b only C) Both a & b D) None of the above 55. No fault liability concept is applicable to which of the following: a) Public liability (industrial risk) b) Public liability (non industrial) c) Compulsory public liability under PLI act 1991 d) Product liability 56. Family discount of 10% in the total premium cannot be allowed to a family comprising the insured and any or more of the following: a) Spouse b) Dependent Children c) Dependent Parents. d) Dependent Sisters/Brothers. 57. What is the maximum Cumulative Bonus, which can be earned in a Group Mediclaim Policy? a) 10% b) 15% c) 50% d) None of the above. 58. Under which of the following situations, one month waiting period under Mediclaim Policy claim is not required: a) Sudden Heart Attack. b) Child birth. c) Accidental injuries. d) Tooth ache. 59. TPAs are not involved in which of the following policies a) Group Mediclaim policies b) Individual Mediclaim policies c) Universal Health policies d) Bhavishya Arogya policies 60. The Mediclaim policy was first introduced in India in a) 1986 b) 1985
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c) 1987 d) 1990 61. What is the minimum number of persons to be covered for the eligibility of Family Discount under the Mediclaim Policy? a) 1 b) 2 c) 4 d) 5 62. Post Hospitalization and Pre Hospitalization expenses are covered for the following number of days under the Mediclaim policy a) 45/45 b) 60/30 c) 30/30 d) 75/15 63. Which of the following statement is TRUE in respect of a claim under a new mediclaim policy? a) The coverage starts after 15 days from inception of the policy b) There is a waiting period of 30 days except for accidents c) There is a waiting period of 60 days d) None of the above 64. Which of the following is excluded in the Standard Mediclaim Policy? a) Simple Tooth Extraction b) Cataract Operations c) Hysterectomy d) All the above 65. In respect of Mediclaim Policy, TPA denote a) Third Party Availability for claims b) Third Party Administrator c) To Pay Afterwards d) None of the above 66. Which of the following is / are exclusion/s in the Overseas Mediclaim policy a) All pre existing disease b) Travel against Medical Advice c) First USD 100 on every claim d) All of the above. 67. Following is not an ADD ON COVER under OMP a) Personal Accident
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b) Loss of Check in Baggage c) Delay of checked in Baggage d) Loss of Spectacles 68. Premium rate under the Overseas Mediclaim policy does not depend on a) Country of Visit b) Trip band c) Age band of the insured d) Family status of the proposer 69. Universal Health Insurance Policy for BPL families is issued by a) Private and PSU Insurers b) PSU Insurers only c) Central Government d) State Government 70. UHIS will not cover a) Earning Member b) Earning Member spouse and 3 Dependent Children c) Earning Member Spouse, 3 Dependent Children and Parents d) Only dependent children 71. Medical Benefit under UHIS is restricted to a) Rs. 30000/- per family b) Rs. 30000/- per member c) Rs.50000/- per family d) Rs.12500/- per member 72. Claim are settled under the Overseas Mediclaim Policy a) By the Policy Issuing Office b) Overseas Claim Settlement Agent c) Insured pays to the Hospital and seek reimbursement d) Lloyds of London 73. Under the Mediclaim Policy a Hospital in an urban area is one which has facility at least a) 20 Beds b) 15 Beds c) 10 Beds d) 25 beds 74. Which of the following conditions is not necessary to be fulfilled to consider a claim under Domiciliary Hospitalization of Mediclaim Policy? a) There is no availability of beds in the Hospital b) The condition of the patient is such that he cannot be taken to Hospital c) The disease is such that necessitates hospitalization
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d) Admission into a Government hospital 75. Limit of liability in respect of Death under an ACT only public liability policy a) Rs.25000/b) Rs.50000/c) Rs.12500/d) Rs100000/76. Environment Relief Fund is collected by a) A Public Sector Banker b) State Treasury c) Wild Life Society d) Insurance Company 77. Rate of Commission Payable under Act only Public Liability Policy a) Nil b) 5 % c) 10% d) 12.5% 78. In group health insurance covers, the least important underwriting aspect is a) Financial resources of the client firm b) Male to female ratio among employees c) Age group profile of employees d) Past claims experience 79. In individual health insurance, normally which contingency is not automatically covered? a) Cancer b) Maternity c) Minor surgery d) Accidental fall 80. In underwriting group health insurance, the underwriting factors that we do not consider are a) Occupation of employees b) Age of employees c) Previous claims experience d) Longevity of life of average Indian 81. Cost of health check-up is available to the insured after an interval of: a) ONCE IN THREE CLAIM FREE YEARS OF POLICY b) ONCE IN FOUR CLAIM FREE YEARS OF POLICY c) ONCE IN TWO CLAIM FREE YEARS OF POLICY d) Once in every five years
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82. What is the cost of Health check-up under Individual Mediclaim? a) 1% OF Average SI b) 2% OF SI c) 5% OF SI d) MAXIMUM Rs.2500. 83. Domiciliary Hospitalization Benefit is available a) MEDICAL TREATMENT EXCEEDING 7 DAYS b) MEDICAL TREATMENT EXCEEDING 3 DAYS c) MEDICAL TREATMENT EXCEEDING 10 DAYS d) MEDICAL TREATMENT EXCEEDING 5 DAYS 84. Family discount is available under individual Mediclaim Policy if taken for the family a) @ THE RATE 5% b) @ THE RATE 15% c) @ THE RATE 10% d) @ THE RATE 33 1/2% 85. When Insured opts for Mediclaim cover with cashless facility the Premium amount is loaded by a) 10% b) 6% c) 5% d) 7.5% 86. When Maternity Benefit is extended to Group Mediclaim Policy the additional Premium is a) 10% b) 12.5% c) 15% d) 17.5% 87. What is the waiting period in respect to Maternity Benefit extension under Group Medical Policy? a) 10 MONTHS b) 12 MONTHS c) 7 MONTHS d) 9 MONTHS 88. Which one of the following diseases do not form part of first year exclusion a) CATARACT b) HYSTERECTOMY c) FISTULA
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d) APENDICITIS 89. Contribution to Environmental Relief Fund is under the PLI Act a) Rs.50000/b) Rs.100000/c) AN EQUIVALENT AMOUNT OF PREMIUM d) AN EQUIVALENT AMOUNT OF PREMIUM WITH SERVICE TAX 90. Retroactive date means a) INCEPTION DATE OF FIRST POLICY without break b) DATE OF RENEWAL PREMIUM without break c) EXPIRY DATE OF LAST POLICY d) EXPIRY DATE OF FIRST POLICY 91. Which is not a NON-INDUSTRIAL RISK under Public Liability Policy? a) HOTEL b) LIBRARY c) PAINT FACTORY d) SHOP 92. For claims made Basis Liability insurance policies a) Policy period and period of insurance are always different b) Policy period and period of insurance are always same c) Policy period and period of insurance may or may not be same d) There is no difference between the two 93. Which policy is mandatory if your client is in hazardous industry dealing in hazardous substance? a) Product liability b) Professional liability c) Public Liability (Non-Industrial) d) Public Liability Act Policy 94. For claiming compensation under W C policy, accident should a) Always be within factory premises b) Always be outside factory premises c) May be within or outside factory premises d) Always be at workers residence only 95. Bhagyashree Child Welfare Policy is applicable to:a) Girl Child in the age group of0 to 18 years. b) Whose Parents age does not exceed 60 years? c) This Scheme is for one Girl Child in a family. d) All above.
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96. Generally Blood Stock Insurance relates to a) Blood Stock in Blood Bank. b) Testing of Blood. c) Indemnity in respect of death of a horse occurring from accident, illness of disease etc. d) No such Insurance cover is available. 97. Under Mediclaim Policy the term Medical Practitioner means:a) A person who holds a degree/ diploma from recognized institution. b) Person who is registered by Medical Council of respective State of India. c) Both of above. d) None of above. 98. Under Liability Insurance the terms AOA relates to:a) Assessment of Assets. b) Against one Accident. c) Any one Accident. d) Any other Accident. 99. Under Legal background Trespassers means: a) A man found guilty of cutting trees. b) A man who enters in forest and passes through. c) A man who enter property without any right or permission. d) All of above. 100.The time limit for appeal for National Consumer Forum to Supreme Court is:a) 30 days from the Order of National Commission. b) 60 days from the Order of National Commission. c) 90 days from the Order of National Commission. d) No time limit. 101.In W.C. cases we can go for appeal only on the ground of: a) On guan m b) Finding of facts c) Substantial Question of Law is involved. d) None of above. 102.In Employers Liability Insurance one of the following not covered:a) Personal negligence of the Employer. b) Negligence of Employees in the performance of their employment duties. c) The willful disobedience of the Workman. d) Personnel negligence of fellow employee.
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103.In relation to Standard Mediclaim Policy which of the following statement is correcta) Condition with respect to number of beds must be observed in all the cases b) Condition with respect to number of beds is applicable only if the Hospital is not registered with local authority c) Condition with respect of number of beds has been waived by IRDA d) None of the above is correct 104.The benefit of section 80D of Income Tax Act in 2007 Budget has beena) Scrapped b) Increased c) Decreased d) Kept unchanged 105.Which of the following expenses are not covered under Standard Mediclaim Policy-? a) Expenses related to Psychological disorders b) Expenses related to Cancer c) Expenses related to MTP d) Expenses incurred towards pace-maker in case of hear disease 106.Which one of the following expenses is not covered under Standard Mediclaim Policy-? a) Expenses towards HIV Test of patient before operation which is covered under this policy b) Registration Charges of Hospital c) Dialysis Charges in case of renal failure d) Angioplasty expenses 107.As per the Public liability act policy the compensation in case of an accident is a) Structured compensation b) Unlimited liability c) As per sum insured d) None of the above 108.Equal amount of premium collected under the PLI Act Policy goes to a) Prime Minister's Relief fund b) Environment relief fund c) Disaster management fund d) None of the above 109.Claim settling authority incase of claims under PLI Act Policy is a) Divisional Manager/ Sr. Divisional Manager
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b) Regional Manager/ Chief regional Manager c) General Manager d) District Magistrate/ Collector 110.Claims under Public Liability Policy are in the nature of Legal liability a) Agreed liability b) Vicarious liability c) None of the above 111. Under Public Liability Industrial risks Policy pollution risk is a) automatically covered b) can be taken as an add on cover c) cannot be covered d) any of the above 112.Premium rating for Public liability policy depends on a) Turnover, Limit of indemnity, No. of Units covered, Risk group b) Sum insured selected, location of the Risk, Surrounding Property, Past claims experience c) Both of the above d) None of the above 113.Which of the following parties can bring an action against a director of a company giving rise to a claim under the D&O POLICY? a) Customers b) Employees c) Regulator d) All above 114.What costs cannot be usually covered under a Product Recall cover a) Product Guarantee b) Cost of recovering defectives products sent out in the market c) Cost of advertising to the public d) None of the above 115.Claims under Product Liability policy can be paid in a) Foreign currency b) Indian rupees only c) In Foreign currency with RBI permission d) None of the above
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116.The retroactive clause under a liability policy defines that a) Under a claims made policy the loss should occur within policy period in case of renewal without break b) The date of inception of cover and the time within which the legal proceedings should be completed c) The period of keeping provisions for claim made under the policy d) None of the above 117.Liability policies are called long tailed policies because a) Actual liability may arise a long period after expiry of the policy for claims arising during the policy period b) Provisions for claims have to be maintained on the insurers books for a long period c) Both of the above d) None of the above 118.Which one of the following statement is not correct in respect of Liability Insurances-? a) Implied principle of Good faith is not applicable. b) Claims are paid to persons other than the insured c) The insurer provides indemnity to the insured in respect of his potential legal liability. d) Legal costs of the insured incurred with the consent of the insurers are reimbursed. 119.Which one of the following statements is not correct in respect of the liability Insurance covers ? a) It covers Civil Liability arising under Common Law b) It covers Civil liability arising under Statutory Law c) It covers both (a) and (b) d) It cover neither of (a) and (b) 120.In Liability insurance policies a) Policy period and period of insurance are always different b) Policy period and period of insurance are always same c) Policy period and period of insurance may or may not be same d) There is no difference between the two 121.If your client is in hazardous industry dealing in hazardous substance, which policy would you suggest a) Public liability (Non industrial risk) b) Product liability
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c) Professional liability d) Compulsory public liability act policy 122.Under Personal Accident Policy Payment of Compensation in respect of death, injury or disablement of the insured Directly or indirectly caused by Venereal diseases or insanity is: a) Cover. Subject to 2% pf capital Sum insured. b) Cover subject to2% of Sum insured or 2,500/- whichever is less c) Full amount is payable. d) Not covered. 123.Anatomy is a science, which deals with: a) Matter pertaining to TV Antenna. b) Matters pertaining to Aviation. c) Deals with structure and position of body. d) None of above. 124.Under Pedal Cycle Policy Legal Liability for Bodily injury, property damage is:a) Rs.5, 000/b) Rs. 10,000/c) Rs. 15,000/d) Rs. 20,000/125.Which of the following criteria may not be complied with in the definition of hospital/nursing home, if it is not registered? a) Fully equipped OT b) At least 10/15 in-patients beds c) Tie up with TPA d) Fully qualified nursing staff 126.For admissibility of expenses on hospitalization, the period of hospitalization should be a) Minimum 24 hours in all the cases b) Minimum 24 hours except in some cases of specific treatment c) Minimum 3 days d) No such condition 127.Which of the following does not fall under the definition of Family under the Mediclaim policy for family discount? a) Spouse
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b) Dependent children c) Dependent sister d) Dependent parents 128.In which of the following aspects, Mediclaim and Jan Arogya differs a) Definition of hospital b) Cumulative bonus c) Tax benefit under sec 80D d) None of the above 129.Which of the following is a deferred mediclaim policy? a) Bhavishya Arogya b) Jan Arogya c) Cancer medical policy d) Overseas mediclaim

Key Multiple Choice Questions on Health Insurance

1. 2. 3. 4. 5. 6. 7. 8. 9. B D B B A C B A B 19. A 20. D 21. A 22. B 23. B 24. C 25. A 26. D 27. B 28. B 29. D 30. B 31. C 32. D 33. A 34. A 35. A 36. A
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37. D 38. A 39. A 40. A 41. C 42. A 43. A 44. A 45. A 46. B 47. A 48. B 49. C 50. D 51. A 52. A 53. B 54. A

55. A 56. A 57. A 58. A 59. A 60. C 61. A 62. A 63. A 64. D 65. C 66. A 67. A 68. A 69. A 70. A 71. A

10. B 11. A 12. B 13. B 14. B 15. B 16. D 17. A 18. D

Key Health & Liability

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. D B C D C A D B B D B A D D A D D B D C D D A D D A B D A A D B 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. C C C A C B A D D B D B D A A D B D C D D C C D D C D A B B B A 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96. B D D D B D A B B D A D A A B D B A B C B A D D C A C A D C D C 97. 98. 99. 100. 101. 102. 103. 104. 105. 106. 107. 108. 109. 110. 111. 112. 113. 114. 115. 116. 117. 118. 119. 120. 121. 122. 123. 124. 125. 126. 127. 128. 129. C C C A C C B B C B A B D A B A D A C A C A C C D D C B C B C B A

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MOTOR INSURANCE
The Automobile Industry in India occupied a backseat in the overall economic setup for almost 40 years of independence. The production of all types of Vehicles was limited, unlike today. After 1980 the government started allowing foreign collaboration and importing latest technology to produce more efficient vehicles. The easing of capacity constraints and the broad banding of production licenses greatly accelerated the expansion and modernization of the Automobile Industry. As a result of the policy changes the stagnant Automobile Industry got transformed. With new liberalization policies encouraging FII (Foreign Institutional Investment), Automobile giants all over the world started establishing their base in the Indian Market with companies like Hyundai, Ford etc. flooding the market with technologically advanced new models of vehicles. This boom in the automobile industry and the growing consumerism saw a fourfold increase in the premium income from the motor insurance for all the insurers in India. Though, motor insurance business contributes almost 40% of the aggregate premium income all the types of insurance, the claim ratio both for accidental damages and third party liability prove to be disastrous while comparing with that of premium. The recent statistics shows that accidental damage of vehicles is ranging between 115% to 125% and that for liability to third parties in ranging up to and alarming 300%. With the flourishing of Automobile Industry, Motor Insurance has become a lucrative business but requires careful underwriting as the number of accidents has increased due to explosion of vehicle population, bad roads, rash, negligent driving and poor maintenance of vehicles. ROLE OF UNDERWRITER The underwriter is one who accepts Insurance Business by giving a promise that he would indemnify the insured in the event of a claim for a property for which the insurance is being sought on the payment of sum called premium. He has a significant role to play in order to offer a suitable product to the customers, vehicle dealers, and financiers and even for the manufacturers. He enters into a binding contract to honor his commitments to the prospective policy holder. Unless the underwriters properly price their product and offer the best cover to the customer keeping in view the changing scenario, other environmental factors and changed legislations etc. the commitment of underwriter to the customer may become difficult. A prudent underwriter should offer the best product mix and ensure that he remains stable, viable and solvent so that he attains his sustenance under any situation. The judicious combination of the following factors only would ensure this:
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MOTOR INSURANCE

1. 2. 3. 4. 5. 6. 7. 8. 9.

10.

11. 12. 13. 14.

Identification of the risk relating to the type of vehicle for which Insurance is sought. Recording of all relevant data of past experience with regard to type of vehicles and gathering information from the market. Analysis the data and designing the suitable product Educating the customer with regard to the design of the product and seeking suggestions from the customer to offer the product that would aptly suit them. Assisting the customer to choose the correct value for Insurances and revise the market value of Insurance appropriately at the time of renewal Keeping track of claim records Identifying the perils causing accidents very often and also extent of losses produced by each peril. Advising the customer the risk prevention measures. Conducting frequent customer seminars and educational programs with regard to changed traffic rules and regulations, change of legislation and other code of conduct. Periodical interactions with other insurers so that aggregate exposure in the market, their claim experience in respect of each category of vehicle, cause of accident, etc. can be discussed and known. The insurers should pre-inspect the vehicle before accepting the risk where there is no continuity of Insurance in case of used vehicles. Enforcing underwriting controls like fair and reasonable excess provisions, pre risk acceptance and other safeguards Maximizing the resources and minimising the cost to remain solvent Faster claims settlement to achieve maximum customer service.

Manufacturing cost Profit margin of the manufacturer Transportation charges Tax and Duties Cost of Insurance Intermediary Commission Suitable loading with regard to increase in value due to market fluctuations Cost of accessories and other value addition Any other extra cost, which may be material for valuation of property, offered for Insurance. The selection of value is usually the option of the insured and such value so fixed will be the maximum limit of liability in the event of loss. It is also on the basis on which premium is collected. This value is called sum insured which can increase or reduced during the currency of the policy. Sum insured is name of Insured Estimated Value (I.E.V) in Motor Insurance, which is now being proposed to be called as Insured's Declared Value Cover Note: A cover note is an unstamped document issued based on the details given in the proposal form confirming the acceptance of the risk from the date and time of receiving the consideration (premium). This document is issued immediately only under circumstances where the issuance of the policy is not feasible. This cover note is a replica of the policy to be issued. The validity of the cover note is 60 days, which can be further extended at the option of the insurer, if necessary. Policy Form: After a contract has been concluded between the proposer and the insurer, it is recorded in a document called a policy. The policy is not the contract but only the evidence of it. In the event of a dispute, it is the policy to which the attention of the court will be drawn unless the insured brings the evidence to prove that there is a discrepancy between the policy and the fact. Endorsement: From time to time, it is necessary to make alterations in the wordings of a policy to take note of changes in the material facts submitted earlier in substitution for one
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Besides, underwriter's personnel are given periodical training and keep them abreast of the updated environment changes. The focus should be on IT development to cope up with the demanding expectations of the customers. Motor Vehicle Insurance Type of cover required Comprehensive, Third party, Fire only, Theft only, Fire/Theft and Third party only. i. Type of use of vehicle ii. Details of the vehicle iii. Age, experience, past claims experience, previous insurance, if any iv. Value of the vehicle including accessories fitted thereon. Sum Insured Insurable value The value of the property being insured is determined based on various factors such as
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item to another. It would be costly and time consuming to issue a new policy for every alteration. Therefore, any changes to the original policy are noted by way of issuing an Endorsement. Period of Insurance Usually, the insurance is offered only for 12 months, as most of the insurance contracts including accident and liability insurance are annual policies. When the liability of the insurer commences under the contract of the policy, the policy is said to attach or in other words the risk is said to attach or it begins to run from that time. DUTIES OF THE INSRUED AT THE TIME OF TAKING INSURANCE 1. The Insured should declare all the materials facts relevant to the risk for which insurance is sought such a type of vehicle, purpose of usage, model of the vehicle, age of the vehicle etc., History of past claims Name of the previous insurers if any who have declined accepting the risk offered for Insurance or cancelled the policy. Maintenance of the vehicle in the most efficient manner as though he is uninsured The Insured should bring to the notice of the Insurer about any alterations subsequent to the issuance of the policy, e.g.; accessories insured should remain in the vehicle during the entire period of insurance. It is obligation on the part of the insured to declare any accidents that have taken place whether material or not to this Insurance.

use of vehicle for hire or reward, pace making reliability trial and speed testing and used for any purpose in connection with motor trade. Two Wheeler : Motorcycle is a mechanically self-propelled two-wheeler with gear or without gear but a kick starter vehicle is treated as Geared vehicle for Insurance Rating. Scooter: It is a mechanically propelled two-wheeler with variable gears. Auto cycles: Pedal cycle mechanically assisted by a motor engine upto 75 cc. Capacity. COMMERCIAL VEHICLES Good carrying vehicle (private carriers) : The owner of the transport vehicle who uses the vehicles only for carriage of goods, which are his properties, or carriage of goods, which are necessary for the purpose of his business. Good carrying vehicle (public carriers) : The owner of the transport vehicle who uses the vehicles only for carriage of goods, which are not his properties, or carriage of goods, which are necessary for the purpose of his business. Public service vehicle : A motor vehicle used for carrying passenger and includes motor cab, contract carriage and stage carriage. 1. 2. Motor cab: Motor vehicle used to carry not more than 6 persons excluding driver for hire or reward. Contract carriage: Motor vehicle which carry passengers for hire or reward under a contract and the vehicle used as whole for an agreed sum either on time basis or point to point basis. Stage carriage: A motor vehicle which can carry more than 6 passengers excluding driver for hire or reward with fares paid by individual passenger for the whole journey or for stages of the journey.

2. 3.

4.

5.

6.

3.

TYPES OF VEHICLE There are different categories of vehicles plying on the road in accordance with the provisions of the Motor Vehicle Act. Motor vehicles : Any mechanically propelled vehicle used upon roads and includes a chassis to which body is not attached and trailer but does not include vehicle run or fixed rails or specially adopted for use within the factory premises. Private car : Private car is a type of a vehicle used for social, domestic, pleasure and professional purpose and not for carriage of goods (other than samples) excluding
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MISCELLANEOUS TYPE OF VEHICLE All other vehicles, which do not fall under any of the categories enlisted above, are classified under this category. Examples are: Ambulance, Tractor and Trailer, Road Rollers, Excavators etc. TYPES OF INSURANCE 1. 2. Act Only Policy (Third party liability towards death and/or bodily injury and/or property damage) Comprehensive Policy (Accidental damages to the vehicle insured or loss of the vehicle and liabilities to third party towards death and/or bodily injury and/or property damage)
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3. 4. 5. 6.

Act only with Fire and/or Theft Fire and/or theft only Motor Trade Policies Internal Road Risk Policy

to another. Usually the vehicles involved are un-registered and uninsured under Normal Motor policy. SCOPE OF MOTOR INSURANCE Underwriters and insured mutually agree to the scope of the contract and other terms and conditions such as A. Insured perils B. Conditions to the contract to be observed by the insured and the insurer during the currency of the policy. C. The value for which insurance is done. D. Period of the contract of Insurance. E. Period of the contract of insurance F. Procedure to be followed in case of material alterations. G. Rate of premium compatible with the risk covered. H. Right of the insurers I. Duties of the insured J. General exclusions (These exclusions cannot be deleted the breach of which will render the contract void ab-initio) K. Specific exceptions, which are outside the scope of the contract L. Procedures to be followed in the event of claim M. Termination of Contract. INSURED PERILS a) b) c) d) e) f) g) h) i) Fire/Explosion/Self Ignition or Lightning Burglary, housebreaking or theft Riot and Strike Malicious Act and terrorism Earthquake (Fire and shock damage) Flood Accidental external means Whilst in transit by rail/road/inland water way/Lift or elevator or air and slide/Rock slide

TYPES OF INSURANCE POLICIES ACT ONLY POLICY: It is the minimum cover required under the motor vehicles act and provides compensation for death and/or bodily injury and/or property damage to third parties out of use of motor vehicle in the public place for which the Insured is liable to pay. The extent of liability is as per the Motor vehicle Act. COMPREHENSIVE POLICY: An Insurance policy which covers Accidental Damage to the vehicle involved in an accident along with or in addition to the third party liability. ACT ONLY AND FIRE AND/OR THEFT: A restricted cover under comprehensive policy by which the insurer accepts to insure the risk of Fire and/or theft only of the vehicle to be insured in addition to third party liability. This decision is taken by the underwriter after considering the various factors such as make, model of the vehicle, declinature of Insurance by previous insurers, past claims experience etc. FIRE AND/OR THEFT RISK: This cover is given if the vehicle to be insured is laid up in the garage of if it remains unused. Laid up Vehicles: Laid up vehicle is one, which is laid up in the garage and not in use for a period of 2 consecutive months or more and not left for repairs due to an accident. Concession is provided for such vehicles provided the period of suspension should not extend beyond 12 months from the original expiry date of the policy. The lay up period will be counted from the date of surrender of Certificate of Insurance. MOTOR TRADE POLICIES: Motor Trade policies are designed to extend the facility of Insurance to Motor vehicle Manufacturer, dealer and repairer who deal with Motor vehicles that remain in their custody as part of their trade. Trade policies are given to those who are authorized to have own trade plates by Registered Transport Authority. This policy takes care of damage to the vehicle, bodily injury to Third Party and third party death. This insurance is unlike to the normal motor insurance policy given to the registered owner of the vehicle. TRANSIT RISK INSURANCE: This policy is issued to manufacturer or dealers. This policy takes care of transport risk during the period of transit from one place
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The expression whilst thereon means like the accessories insured must have been on the vehicle at the time of Insurance as well as at the time of claim. Accidental external means the happening of something unexpected or unforeseen and it excludes loss arising from natural causes within. The word external refers to outwardly visible. It means that what is not internal Example: Loss or damage to the car due to overheating is not covered.
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Self-Ignition: It appears to include the damage or loss caused by the internal defect of the care, which is the direct cause for fire. The term malicious damage is intended to include loss arising to the malicious act of a third party and not the act of he insured. If it results from the insured, the act becomes willful. Accessories Accessories are those items, which are not necessary for running of the vehicle, but which the vehicle is required to carry with it under motor vehicles Act. This will depend upon the class of vehicle and its use. Example: Rear view mirror, crash guard Electrical/Electronic Items Electrical/Electronic Items refers for insurance purpose items that are fitted to the vehicle in addition to those that is provided by the manufacturer of the vehicle including accessories. With regard to the details of perils for different type of vehicles, the student may refer to the annexure and comparative charts. Cancellation of policy A. At the option of the insurer 7 days notice by registered letter to the insured at his last mentioned address. The insured is entitled to refund of premium for unexpired period and the insurer retains the premium for expired period proportionately. B. At the option of the insured 7 days notice and the insured is entitled or refund of premium on the number of days unexpired and the insurer will retain the premium for the period in which the risk was in force more than proportionately on short period basis provided no claim has been preferred by the insured. No cancellation is allowed if the ownership of the vehicle is transferred to the new owner unless the evidence of from policy for the vehicle is produced. Transfer of policy in the event of the death of the Insured The policy will lapse after 3 months from the date of death of the insured or until the expiry of the policy whichever is earlier. a. Otherwise, the legal heirs can get the policy transferred subject to their application with i. Death certificate of the insured and legal heir ship certificate ii. Proof of title to the motor vehicle iii. Copy of the policy
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c. Insurance company reserves its rights to abide by any order of the court, with regard to declaration about the legal heirs and ownership of the vehicle and the nominee will not have any right to the order of the court. Transfer of Policy in case of change of Ownership The policy benefits stand to accrue to the buyer of the vehicle once sale consideration is paid and suitable endorsements made in the certificate or registration provided the transfer of insurance from the original owner to the new owner ought to be done within 15 days of sale, as per Motor Vehicle Act, if not done the accidental benefit to the damage or loss of the vehicle is forfeited on the 16th day itself but the Act is generous towards third party liability. Premium : The contract of insurance comes into force only when the consideration is paid by the insured to insurer who promises to indemnify the insured in the event of claim. It is a precondition that premium ought to be collected prior to the commencement of risk upon which the promise of the insurer rests. The insurers can turn down the liability if consideration is not paid prior to the occurrence of loss. The consideration so paid by the insured is known as premium. The insurance act is very specific and emphatic the collection of premium in advance to the commencement of insurance contract is an absolute necessity and any breach in this regard will be termed as violation of act provision under section 64 VB, in turn, the insurers can reject the claim if loss arises. FACTORS THAT DETERMINE THE QUANTUM OF PREMIUM The amount of premium to be paid by the insured is depending upon various factors. a. Value of the vehicle b. Additional accessories c. Extra fittings like electronic and non electronic item d. Type of vehicle e. Age of vehicle/model of vehicle f. Zone where the vehicle is plying g. Cubic capacity/seating capacity/gross vehicle weight h. Perils covered i. Combination of risks like comprehensive cover, third party and fire or theft or fire and theft. j. Past claims experience The premium must be calculated in accordance with the premium computation tables appearing in the tariff separately for different types of vehicles.
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Rate of premium is different for accidental damages to the insured's own vehicle and liability risk to third party. The insured cannot choose to pay premium only for accidental damages and he has to necessarily take third party liability with accidental damage to vehicle; whereas, the risk of third party liability can be separately taken and premium paid. Premium payable on a policy is based on the value for which insurance is sought and must be calculated in accordance with premium computation tables appearing in the tariff. ANNUAL PREMIUM : As motor policies are annual policies, the premium consideration is collected for 365 days. It is not permissible to insure for more than one year under motor insurance. PRO RATA PREMIUM : Under some circumstances, depending on provisions made available in the tariff, premium is charged in proportion to the number of days for which the risk has been in fore. Such premium is known as Pro rata Premium. Situations where pro rata premium is charged i. Due to the change of ownership of the vehicle, the insurance gets transferred to the new owner. This may happen during the currency of the policy period and the new owner may like to have the extension of policy period so that he gets an insurance policy for note more than complete 12 months. The insured can get such extension of policy with a suitable premium for additional period of insurance without letting the insured to have a revised policy for a period more than 12 months. ii. Some insured desire to revise their policy period to coincide with the financial year or assessment year iii. When the insured desires to enhance the value of vehicle during the currency of the policy in order to cope with the market value. iv. Any additional extra items like electronic or non electronic items subsequently fitted in the vehicle can be added to the value of the vehicle insured during the currency of the policy with suitable additional premium v. Sometimes insured may desire to reopt the extraneous perils like earthquake, flood, riot & strike during the currency of the policy which he had originally opted out by enjoying reduced premium. SHORT PERIOD PREMIUM : There are occasions where the insured needs insurance for a period less than 365 days. Such facility is allowed but the insured has to pay the premium on short period basis. The premium for short period is slightly higher than the regular premium-rating factor. It means policy for short period is more expensive than normal annual policies.
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Situations under which short period premium is collected i. When the policy is issued for a period less than 12 months ii. When the policy is cancelled at the request of the insured. PREMIUM REBATES : The insurer recognizes the merit of claim free clients and the premium for renewal period is reduced by way of bonus. The bonus is rewarded on premium for the value of the vehicle and not on premium for third party liability. Tables of no claim bonus are provided in the tariff for different category of vehicles. This discount goes with the insured and not with the vehicle i.e., if the vehicle is sold, the new owner is not eligible for the no-claim bonus. However, the previous owner can substitute the discount for any new vehicle, which he may purchase during three years from the date of transfer. In case if the vehicle is sold to spouse or children or parents, the discount passes on to such persons. Similarly, if a vehicle is used or operated by an employee for an institution and the same is transferred to him at a later date, he can avail and no claim discount. For persons coming abroad, discount can be allowed provided he produces a letter to that effect that he is eligible for the discount, within three years from the expiry of the overseas policy. In case of renewals, the no-claim discount can be granted to the insured only if he renews his policy within 90 days. VEHICLES USED IN OWN PREMISES AND CONFINED SITES :A reduction in premium is allowed if the vehicle is not licensed for road use and used in own premises where public have no access to. Similar discount is allowed for goods carrying vehicle, which need not be registered, and which are used in confined sites where public has no access. VEHICLES SPECIALLY DESIGNED FOR HANDICAPPED PERSONS : A Discount in premium for vehicles, which are specially designed for and used, by handicapped persons and institutions engaged exclusively in the service for handicapped and mentally retarded, of course, as per the provision of the MV act. AUTOMOBILE ASSOCIATON MEMBERSHIP : If the insured is member of a recognized automobile association, a discount of 5% shall be granted subject to a maximum of Rs.50/- for Two-wheelers and Rs.100/- for Private cars. VOLUNTARY EXCESS DISCOUNT : Some insured desire to avoid preferring insurance claims to the extent, which can be borne by them within their financial limits. This is called Insured bearing first portion of each and every claim arising out of accident. The premium is reduced based on the quantum chosen by the insured as per tariff.
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Personal Accident Insurance : Insured choose to take personal accident policies for the occupants of the vehicle including owner and driver. The additional premium is being charged based on PA table selection. It can be given for unnamed occupants too. Premium for Increased liability against third party property or unlimited insurance for legal liability. COMMENCEMENT OF RISK : The risk commences immediately on the issuance of insurance policy. The details of policy and what it contains are given as under. Policy: Policy is a stamped document, which forms the evidence of contract of Insurance. In the event of dispute, the terms and conditions embodied in the policy are referred to in the court of law. Policy issued by Insurance companies has the following sections: The Preamble clause: This clause introduces the parties to the contract namely the Insurer and the Insured. The Recital clause: Recital clause expresses what is agreed between both parties and narrates the period of Insurance and about the consideration. The Operative clause: The operative clause speaks about the perils covered, exclusions and General exceptions. The Schedule: This clause talks about the subject matter of Insurance covered along with terms and conditions applicable to the policy. The Attestation clause: This specifies the duly constituted authority to issue policies, namely the authorized signatory. The above are the various sections that are common to Insurance Policies. In line with the above, Motor Insurance policy deals with the following sections: The parties to the contract namely the Insurer and the Insured. The perils covered under the policy Specific exclusions General Exceptions Conditions The perils covered, exclusions, exceptions and conditions for different type of vehicles of a Motor Insurance policy is shown below in the form of comparative chart and the policy forms are available in the form of Annexure for ready reference. Termination of contract A contract of insurance can be terminated on the following circumstances a. At the option of the insurer b. At the option of the insured c. Double insurance If it comes to the knowledge of the insurer or the insured finds that there are two co existing policies for the same vehicle for the same period, the one which was taken
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first remains and the next policy gets cancelled and the premium is refunded by retaining a nominal amount towards administrative and document expenses. Retention of minimum premium is necessary in the event of cancellation to take care of administrative expenses. CONCESSION FOR VEHICLES LAID UP If a vehicle is laid up in garage and is not put to use for a continuous period of more than 2 months, the liability of the insurers under the liability risk section of the policy is suspended for such period and a concession is given to the insured. The concession is given in two forms and the insured can chose whichever he wants. a. Prorate refund of premium for such period. This refund is granted in the form of credit and not as cash i.e., such refund can be adjusted against the premium for subsequent renewal. b. The policy period can be extended after the expiry of the policy for a period equal to the period of such lay up. Under Accidental Damage section The cover is suspended for the period during which the vehicle is laid up in garage and not in use and a. Restricted cover for fire and/or theft is granted for the period of lay up and a refund of premium on pro rata basis is made after charging a premium for the restricted cover. Again the refund is on credit basis and not cash. b. As an alternative, the insured can extend the policy period after the expiry of the policy for a period equal to the period of lay up. A notice in writing must be given to the insurers regarding the lay up and the certificate of insurance must be surrendered. Such lay up of vehicle must not be meant for repairing the vehicle. The period of suspension of cover shall not extend beyond 12 months from the expiry date of the policy. FORMS OF LOSSES Direct loss and/or damage to the Insured vehicle resulting from accidental means caused by insured peril proximately. Indirect loss and/or damage (Third party Liability) Indirect loss and/or damage to the insured by legal liability. 1. Direct Losses and or Damage: It refers to physical loss of the property i.e. vehicle by way of theft or visible physical damage to the vehicle due to accident. Indirect Loss and or Damage: As a result of accident, the owner of the vehicle may be made legally liable to compensate the third parties for their death and/or bodily injury and/or property damage. Such compensation is called Liability arising out of use of vehicle in public place. It means the insurers meet the legal liability payable by the insured to a third party due to accident.
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2.

Third party means any person other than the Insured and the Insurer: Liability means The amount of financial compensation legally payable by the insured to the third party. Public place means According to Section 2(24) of MV Act, it is a road, street, way or other place, whether thoroughfare or not, to which the public have a right of access and includes any place or stand at which passengers are picked up or set down by a stage carriage Example: A. Motor car sustains damages by hitting against a compound wall of another person and in the process resulted in the death of a pedestrian. Before arrival of police on the scene, the stereo was also stolen. In the above case: a. Direct loss and/or damage : (i) Damage to vehicle (ii) Loss of stereo b. Indirect loss and/or damage of Third Party liability : (i) Death of the pedestrian (ii) Damage to compound wall From the past experience, a few instances of proximate causes are given as under A. Damages to vehicle whilst attempting to save a cyclist or pedestrian B. Damages resulting from bursting of tyres C. Damages resulting from mechanical breakdown D. Damages to vehicle due to skidding in the heavy rain E. Small vehicles hit by over speeding heavy vehicles F. Vehicles damaged whilst in the parking place G. Accidents due to animals H. Damages due to poor visibility due to fog and bad roads. I. Overturning by hitting trees or parapet or road dividers and other stationery objects J. Accident to vehicles due to pits on sides of the road by public Authorities. DUTIES OF THE INSURED i. Duty of the assured to do his best to avert/avoid or minimize loss. This duty arises from the duty of good faith he owes to the insurers and more usually from the express conditions of the policy. ii. If accident caused by fire or collision or any external means, he must take such measures as are reasonable to extinguish fire or to prevent further loss by removing the vehicle to nearby safer place. iii. He is not to interfere with the efforts of other persons engaging in helping to reduce or minimize loss. iv. For that purpose he should take steps to remove the vehicle insured to a place of safety unless he finds that all hope to save it useless. If his failure to perform these duties is willful, it may be an evidence of fraud disentitling him to recover anything on the policy.
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It has become an absolute necessity that the insured complies with the conditions imposed by the insurer, which are embodied in the policy form. The Duties of the Insured prior to the occurrence of loss a. He should take reasonable steps to safeguard the vehicle from any loss or damage and act as if uninsured b. The Insured should maintain the vehicle in the most efficient and roadworthy condition. c. The company as at all times, shall be at liberty to inspect and examine the vehicle or any part of the vehicle and also any driver or employee of the insured. After the occurrence of accident a. It is the duty of the Insured to exercise care and concern in the event of accident and also at the time of break down of the motor vehicle. b. The Insured should exercise due diligence and precautions to ensure that the damaged vehicle is immediately attended to so that the aggravation of further loss and deterioration to the damaged vehicle is prevented and avoided. c. Any aggravation of damages due to non-attendance, non repairing the damaged vehicle or driving the vehicle without repairing the damages amounts to failing from the duties of the insured. The insured is solely responsible for such lapses and will be made to bear the loss or damage. d. Notice of loss to be given immediately to the insurance company. e. The insured should extend all the assistance and necessary information with regard to the claim f. All legal documents such as letters, writs or claims, summons received should be immediately forwarded to the insurance company g. Notice shall be given with regard to any prosecution, inquest or fatal inquiry to the insurance company h. Insured should lodge FIR with police authorities with regard to theft or criminal acts, which may lead to claim. i. Insured should also co-operate with the insurance company in securing the conviction of the offender. Legal Proceedings a. In case there is any contributory negligence with regard to third party claims, insured should not make any admission, offer or promise for payment of indemnify to any third party without the consent of the insurance company. b. If necessary, the insurance company will conduct the defense in settlement of claim/legal proceedings/prosecution on behalf of the insured. The insured should extend all assistance and co operation to the insurance company. Settlement of the claim at the option of the insurer a. Insurance has the option to either allow the insured to repair the damaged
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b. c.

vehicle or reinstate the damaged parts or replace the motor vehicle or its accessories. The payment may be made by cash. The insurance company will pay for the loss or damages and also the reasonable cost of fitting such damaged parts (labour charges) Such payments shall not exceed the sum insured (which is estimated value of the vehicle chosen by the insured at the time of taking policy or renewal provided the market value of the vehicle including accessories is not less than the estimated value of the Insured.

d.

e.

Application of principle of contribution due to Double Insurance in the event of claim In case of double insurance, the insurance company will only pay its ratable proportion of the loss or damage or any compensation or cost or expenses. In case the insured is having more than one policy for the same vehicle with two different insurers each insurer will pay only in proportion to their Sum Insured. Reference to Arbitration in respect of Dispute admissible claims with regard to quantum difference In case of dispute regarding quantum of loss or damage where the insurers admit liability, such disputes shall be referred to Arbitration. Arbitration proceedings are discussed in details in the next chapter. Time Limit for filing Suit in the Court of Law If the Insured fails to prefer any claim within twelve calendar months from rejection of liability in the Court of Law, the insured loses the rights of remedy. Observance and fulfillment of terms and conditions of the terms and conditions of the policy a. Since the policy terms and conditions are given in the policy based on the true information and details given by the insured to the best of their knowledge the insured is bound to comply with the same; and such compliance shall be the condition precedent to any admissible liability under the policy. The contract of insurance of insurance is subject to implied and express conditions, which expects the insured to observe the conditions precedent and conditions subsequent. Common Exclusions that are applicable to all types of vehicle in the event of claim a. Geographical Area: If the vehicle sustains damages or the vehicle is lost and if any liability is incurred, that should have been only due to an accident that takes place within India. b. Contractual liability is excluded c. No insurance claim is payable if i. The insured violates the condition of limitations as to use
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f. g. h.

ii. If the vehicle is driven by any person other than the driver whose name if any is specified in the policy The insurers will pay only for the resultant damages or less in consequent to the accident and not for consequential loss that may arise due to the non usage of the vehicle, like i. Rent for alternate care ii. Loss of earning whilst the vehicle is in the garage for accidental repairs. No liability arising directly and indirectly or contributed by ionizing radiations, or contamination by radioactivity from any nuclear fuel or nuclear waste from the combustion of nuclear fuel. Damage caused by nuclear weapons material is not admissible No claim due to war, warlike operations The act of terrorism is excluded.

Role of a Surveyor Surveyors are being authorized and placed in different categories depending on their professional qualifications and their special competence gained by experience. Once they are empanelled, their services are being utilized by insurance companies operating in India in different fields of working. They play a very vital role in the insurance field not only prior to the acceptance of risk but also after the occurrence of loss. Insurance companies are utilizing the services of surveyors for pre inspection of major risks and on the assessment of insurance liabilities. The remuneration depends on the quantum of assessed admissible liabilities of insurers. Any Association or group or a firm or an individual can become surveyors provided they have competence in the field like Chemical Engineering, Automobile Engineering and Chartered Accountancy etc. What is expected of surveyors? 1. They should develop their product knowledge or insurance based on their specialization and keep on updating the changes. 2. They should be highly competent in handling the assignments given by insurers and be helpful both to their insurer and the insured. 3. They should be neutral, unbiased and free from prejudice in their approach towards the customers while handling the claims 4. Their attitude should be polite and the decision should be firm in respect of the assessments and should avoid the style of rudeness towards the customers. 5. He should exercise due diligence, care while assessing the Quantum of liability and in the process the concern towards the interest of the policy holders should not be lost. 6. THE DUTIES OF THE SURVEYOR SHOULD BE DISCHARGED SCRUPLOUSLY and the honesty and integrity should be maintained at the highest degree. 7. THE SURVEYOR SHOULD REMEMBER THAT HE IS INDEPENDENT
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and his role is indispensable to ensure that the promises of both parties are fulfilled. FUNCTIONS OF SURVEYORS IN MOTOR INSURANCE 1. The job of the surveyor begins as soon as the allotment of survey is done by Insurance companies. He should collect the necessary work allotment for each job along with claim papers such as claim intimation letter of the insured, Estimate of the repairers submitted by the insured and relevant policy copy. 2. The surveyors should immediately reach the spot of accident and advise the insured to remove the damaged vehicle to the safe place or reputed repairers workshop. 3. He should assist the insured, if necessary to lodge the FIR and produce the vehicle to the RTO authorities. 4. He should take necessary photographs of the damaged vehicle 5. He should ascertain the actual cause of accident and the extent to which parts are damaged. 6. His primary duty is to estimate on his own the likely expenditure towards the cost of Labour (Removing the dent, painting etc.) and cost of parts to be replaced, if required. 7. The surveyor should negotiate with the repairers and accurately decide the quantum of liability without letting the repairers to manipulate the cost of repairs by inflating the bills and also estimating the parts for replacement, which are repairable at a minimum cost. 8. The surveyors should justify that the cause of the loss is due to insured peril and the extent of damage is in conformity with the nature of accident that took place. 9. The Surveyor should conduct the survey at the repairers' workshop immediately and permit the repairers to dismantle the vehicle in the presence very carefully to find out the external and internal damages, if any. 10. There should not be any communication gap between the surveyor and the repairer as well as surveyor and the insurer. 11. The surveyor should keep the insurers informed about the developments of the claim periodically and keep the insured posted about what he has discussed with the repairers with regard the accidental repair works to be carried out. 12. He may have to verify the bills of the parts to ensure the avoidance of inflated bills by the repairers. 13. The surveyor should finalize his report with regard to the admissible liability in respect of cost of repairs, Labour charges, replacement of parts and the value of salvage. He should ensure that the report is concluded after re inspecting the repaired vehicle so as to confirm that the repairers have actually carried out replacement of new parts and other repair works as agreed by repairers.
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14. The report should be submitted with his due recommendations confirming the genuineness of the claim, the authenticity of proximate cause (cause of loss), and verification of vehicular records. 15. His report should be submitted at the earliest so that the insured does not suffer under any circumstances for want of financial assistance. DUTIES OF THE INSURER Verification and Recording of claim: It is the foremost duty of the insurer immediately when a claim is reported to verify a. Whether the vehicle is insured or not b. Whether the premium is paid in advance before date and time of accident Whether the policy is in force or not c. This is to ensure that the loss falls within the policy period. d. Whether the loss and/or damage is caused by an Internal Peril as described in the policy. Once he is satisfied on the above aspects, the insurer will proceed to register the claim and issue a claim form to be insured. Appointment of Surveyor On obtaining the completed claim form from the insured along with the Estimate of repairs the insurer appoints the surveyor to assess the nature, cause and extent of loss and/or damage. The surveyor is appointed based on competence, expertise and experience in the field in which he is to undertake the survey preferably an Automobile Engineer. Collection of Documents The insurer then collects vehicular records depending upon the type of vehicle lost and/or damaged due to an accident. It is mandatory on the part of the insurers to fill the Supplementary to the claim form statement the particulars extracted after verifying the original vehicular records such as Registration Certificate, Driving License, Permit, Trip sheet etc. depending upon the type of vehicle for which claim is lodged. He collects reports from external agencies such First Information Report and Fire Brigade Report depending upon the circumstances of the accident and/or loss Liaison The insurer should liaison with the insured informing him to cooperate with the surveyor to submit the documents required by the surveyor in order to release his survey report and at the same time keep in touch with the surveyor to submit his report after satisfying himself with all aspects of the claim. The position of the claim their requirements and developments are clearly communicated to both the insured and the surveyor.
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Compliance The insurer will ensure that the insured has complied with all the conditions under the policy and fulfilled his duties prudently as if he is uninsured. Valuation The insurer obtains the survey report and evaluates his liability taking into account the survey report and bills submitted by the insured. He will see all aspects of the claim with regard to depreciation applied by the surveyor, excess and more importantly the Salvage value of the damaged parts/vehicle. After fully satisfying himself about the genuiness reasonableness and compliance with terms and conditions of the policy the claim is processed and recommended for settlement. Updating of Records Once the claim is approved for payment by the competent authority, the claim is settled and proper entries are made in appropriate registers. Methods of claim settlement Types of losses a. Partial loss b. Total loss Partial loss i. Accidental damage to the vehicle ii. Theft/loss of accessories or parts of the vehicle iii. Additional expenses like towing and spot repairs. When vehicle sustains damages in an accident and the insured incurs the expenditure in order to repair the damaged parts of the vehicle in addition to the towing charges to the repairer shop which is less than the insured value of the vehicle under the policy, the loss or damages fall under the partial loss. Example: Cost of repairs a. cost of parts replaced b. Labour charges towards painting and replacing the damaged parts c. Cost of removal from the Accident spot to the repairers workshop Total Loss There is a total loss when the insured vehicle is stolen by somebody or the vehicle is so damaged that it cannot be repaired without incurring expenditure more than the sum insured or the vehicle is so damaged that the damaged value of the vehicle be as of no value, such losses fall under Total loss. The insurance company practices different modes of claims settlement depending upon the nature of claim, extent of repairs and the market value of the vehicle on the date of accident.
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MODES OF SETTLEMENT a. Repair basis b. Total loss basis c. Cash loss/salvage less loss basis A. Repair basis The surveyor ascertains the total internal and external physical damages to the vehicle and identifies the nature of damages, cause of accident and then determines the extent of damages. Once the surveyor is satisfied with the geniuness of the claim taking into account the cause of accident, the perils insured, he arrives at the cost of repairs, cost of replacement of parts and the salvage value. He then discusses and negotiates with the repairer to arrive at a consensus and authorizes the repairers to carry out the repair work relevant to the accident. Under this repair basis, the insured should bear a portion of the repair cost for depreciation which is based on the age of the vehicle finding place in the policy. The surveyor suggests the settlement of claim on repair basis only when he is satisfied that the quantum involved in economical in comparison with that of market value and sum insured whichever is less. The insured is required to submit the relevant bills for cost of labour, the cost of parts and the cost of removal from the spot of accident to the repairer's workshop. On submission of bills and surrendering of salvages to the insurer the claim will be processed and settled. The settlement of claim under repair basis fall under partial loss as the repair liability of the insurer less than the value insured. Total loss basis Under many circumstances, the insurance company may opt to make over the damaged vehicle if the claim on repair liability found to be on the higher side, uneconomical as compared to the market value under this basis. The insurer may have to incur additional expenditure like garage charges; cost of disposal in the form of advertisement, auction charges and/or sales charges and total insured value may be paid, if it is less than the market value just prior to the loss. In case the vehicle is lost by theft, the market value of similar vehicle, same type and model or sum insured, whichever is less.
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Cash loss or salvage less loss basis This is a kind of settlement when the insured chooses to retain the damaged vehicle and insists for immediate payment based on the cost of repairs. The insurance company ascertains the resale value of the damaged vehicle (on as in where in condition) and pays the difference between the market value of similar undamaged vehicle as on date of accident and the market value of the damaged vehicle. Such repair cost is restricted to 75% of the admissible claim on repair basis in respect of cash loss basis. The insurance company chooses one of the above three modes of settlement which ever is more economical Example Maruti Esteem model 2002 met with an accident Sum insured of the vehicle is The market value on the date of accident is The cost of repairs a. Cost of labour is b. Replacement of parts Less salvage: Rs. Rs. Rs. Rs. 4, 00,000/50,000/375,000/25,000/2, 00,000/Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. 3, 75,000/4, 50,000/2, 00,000/5, 000/10,000/2, 65,000/4, 50,000/2, 00,000/2, 50,000/-

the damaged vehicle for disposal, the resale value of the damaged vehicle may not be the same as on date of damage to that of resale value on the date of settlement, because the damaged vehicle may further deteriorate in kind and value. It is noteworthy to mention that there is a special clause known as Excess clause, it means that the amount that will be specified in the policy and any claim in excess of that amount will be the liability of the insurers, which may be voluntarily chosen by the insured or imposed by the insurers compulsorily. In respected of the above referred claim, if the excess is Rs. 10,000/- net liability will be reduced to the extent as though Rs. 10,000/- is the insured's first bearing portion. VEHICULAR RECORDS Requirements of documents in the event of claim Two Wheeler (motor cycle/scooter/mopeds)/private cars Registration certificate: It is a certificate issued by the computer authority confirming ownership of the vehicle in whose name the vehicle stands registered. The ownership of the vehicle lies with the person whose name has been mentioned in the RC book. The vehicle should bear the registration number in both front and back and the Regional Transport Authority is the competent body to issue the Registration certificate. The Registration certificate will carry in it the name of the Registered owner and vehicle particulars such as Registration Number, Engine Number, Chassis Number, Make, Model, Color of the vehicle, Cubic Capacity, carrying capacity etc. Any financial interest in the form of Hire purchase or Hypothecation will be included in the R C book. Driving license: Driving License means License issued by the Competent Authority namely Regional Transport Authority authorizing the person specified therein otherwise than as a learner to drive a specified class of motor vehicle. The Drivers License contain particulars such as Name of the Driver and his address, age, validity period of license and the class of vehicle he is entitled to drive. A Driver should hold a valid Driving License at the time of accident. A valid license means Any person holding a permanent Driving License Other than Learners License) in force and is not disqualified from holding such license. Driving License is required in all claims involved in accident except for the following circumstances, 1. 2. For parked vehicles Theft or Burglary of the vehicle

Rs. Rs.

5, 00,000/4, 50,000/-

The resale value of the damage vehicle is Rs. SETTLEMENT OF CLAIM ON REPAIR BASIS 1. Repair basis: 2. Total loss basis: Market value Less Resale value of the Damaged vehicle AddAdvertisement expenses Add Garage expenses Net Liability 3. Cash Loss basis Market value Less: Resale value of The damaged vehicle Net Liability

Cash loss settlement is more essential than the other two modes of settlement which is Rs.3, 75,000/- and Rs. 2, 65,000/-. Whereas under cash loss settlement the amount is Rs. 2,50,000/- which is almost less than 75% of the repair liability (i.e. 75% of 3,75,000/- = Rs. 2,81,250/-) In case if the insurance company settles the claim on total loss basis and takes over
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Taxation book: It is mandatory for all vehicles plying on the public place to pay the prescribed Road tax to State Government. The Road tax can be paid on quarterly, half years or Annual of life time which is entered in the RC book of the respective motor vehicle. A claim is admissible only if Road tax is paid in full as on the date of accident. Certificate of Insurance in force is a must for RTO
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authorities to accept tax. In case of stolen vehicle the payment of road tax may be waived. Documents required in the event of claim for Commercial vehicles 1. 2. 3. 4. 5. 6. 7. 8. Registration Certificate Driving license Taxation book Fitness certificate Permit Trip sheet Weigh slip/load challan First information report (FIR)

involved in the accident, witness and also whether the accident was reported to Police. The details required in the claim form are vital in deciding whether there is liability for the insurers and hence it has to be filled in, clear legible and descriptive manner to the extent possible Estimate: The insured should provide a detailed quotation as to the number of parts to be replaced or repaired, along with the cost and Labour charges from the repairer to whom the vehicle is to be entrusted for repair. This forms the basis for arranging survey. Documents required for theft claim 1. First Information Report: First Information Report is report given by the Police Authorities based on the statement given by the Insured or his representative immediately after the occurrence of the theft. The case is registered in CR Diary under Indian Penal code and the report given is the FIR which is one of the proofs of the occurrence of the theft. Non-Traceable Certificate: When the vehicle is not traced after a reasonable period of reporting the theft, the Police Authorities issue Non-Traceable certificate in their prescribed format stating that the vehicle is undetectable. Final Investigation Report : The police authorities will finally prepare a Final Investigation Report stating that the vehicle is un-detectable obtaining a certified copy of the order passed by the Court accepting the report. The Insured should produce a copy of the Final Investigation Report to the insurer during the settlement of the claim. Letter of Subrogation: The insurer established his right by getting the rights of the insured transferred to him by executing a bond in non-judicial stamp paper called Letter of Subrogation. The letter has to be executed by the insured immediately on acceptance of liability by the insurer. This Letter of Subrogation is normally executed for theft claims after payment of the claim to the Insured where the Insurer has right over the vehicle stolen when recovered at a later date.

Fitness certificate: Fitness certificate is a certificate issued by Regional Transport Authority confirming that the Vehicle is in Road worthy condition to ply on the public place. CFX form cancellation of fitness: When a commercial vehicle meets with an accident, the Motor Vehicle Inspector inspects the vehicle on the spot and issues a CFX (Cancellation of Fitness) report which means the fitness of the vehicle is suspended temporarily till the repairs to the vehicle is carried out by the owner of the vehicle. Once the vehicle is repaired the vehicle is to be shown to the RTO Authorities and Fitness Certificate will be revalidated. Permit: Permit is a document issued by a Competent Authority specifying the boundaries or limits upto which the vehicle is authorized to ply in a public place and also the nature of goods it can carry. The permit contains details such as Name and address of the holder of the permit, Area of operation, goods permitted to be carried, and validity period of permit. Example : The area of operation can be limited by the type of permit whether National permit or State permit, public carrier permit or private carrier permit, or stage carrier permit or contact carriage etc. Separate permit is issued for vehicle carrying inflammable materials. Trip sheet: It is a document to be prepared for every trip undertaken by the vehicle whether it is Goods Carrying or Passenger Carrying Vehicle. It is a Log book stating the particulars of goods carried or passengers travelled according to the type of vehicle. Trip sheet has to be closed on daily basis and also on trip to trip basis. Claim form: Claim form is issued by the insurer to the Insured immediately when a claim is reported. Issuance of claim form does not mean acceptance of Liability. The claim form should be duly filled in by the insured in all respects. The claim form contains details such as Insured particulars, vehicle particulars, Details of the driver', Place, time, cause, nature and extent of damages, Details of third parties
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2.

3.

4.

Though for accidental damage claims the insurer has a Subrogation Right to sue and get reimbursement from the negligent party it is not enforced due to the presence of Knock for Knock Agreement. Original Vehicular documents along with all the keys pertaining to the vehicle have to be surrendered. ARBITRATION : Arbitration shall be conducted under and in accordance with the provision of the Amended Arbitration Conciliation Act, 1996.
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Only when a claim is admitted : In case any dispute or difference of opinion between the insured and the insurers as to the quantum of claim to be paid under the policy, the matter can be referred to Arbitration. Such facility is available only in case of admissible liability. Rejected claim cannot be referred to Arbitration :In case insurance company has disputed or not admitted the liability in respect of any policy issued due to technical reasons, the matter of dispute shall not be referable to arbitration. Arbitration Proceedings :The difference as to the quantum of admissible claim shall be referred to the sole arbitrator who will be appointed in writing by both the parties. If they cannot agree upon a single arbitrator within 30 days, any party invoking arbitration, the matter will be referred to a panel of three arbitrators comprising of two arbitrators, one appointed by each party to the dispute or difference. The third arbitrator has to be appointed by such two arbitrators and arbitration shall be conducted under the Act. Award by Arbitrators : The right of action or suit upon the Insurance policy can be taken only when the award by such arbitrators with regard to the quantum of loss or damage is obtained, it means it is a condition precedent that the award should be obtained first and then only right of action or suit upon the Insurance policy shall lie. IN CASE OF REPUDIATED CLAIM :When a suit in the court of law is not filed within twelve calendar months from date of insurance company disclaiming the liability to the insured, It is considered for all purposes that the claim is deemed to have been abandoned or given up by the Insured, In which case no amount is recoverable by the insured from the Insurance company there after. RELEVANCE OF MATERIAL FACTS IN THE EVENT OF CLAIMS :It has become an absolute necessity that the insured declare all information that is needed by the insurer in the proposal form and that only influence the admissibility of claim. We have already seen the relevance of material facts. It is open to the Insurance Company to allege and prove that the policy give rise to a claim which was obtained by non-disclosure of relevant material facts or by representation of a fact which was false in some material and contract of Insurance becomes consequently void ab-initio. The policy was obtained by fraud; the policy becomes void from the inception. A plea under this clause cannot be disallowed on the ground that in spite of the alleged misrepresentation, the policy was not cancelled by the insurers. The following are considered to be material facts which warrant special attention:
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Avoid the misstatement of age of the vehicle Warranty that the vehicle would be driven by a person who has been convicted of motoring offences. Previous refusals of other insurers to insure the vehicle Allegation that the policy was obtained after the accident in collusion with other persons. KNOCK FOR KNOCK AGREEMENT : The Knock-for Knock agreement is in agreement entered into among the Insurers writing motor insurance. The agreement provides that in the event of damages caused by collision or attempt to avoid collision between two vehicles, the Insurer of each vehicle will bear his own loss within the limits of his policy, irrespective of legal liability and will not enforce his subrogation rights, if any against the other insurer. Points for Mental revision Accident Legal liability to third parties Third party claims KNOCK FOR KNOCK AGREEMENT We have seen how Tort gives rise to Liability towards Third parties. Tort modified in India in the form of Workmen's Compensation Act: According to the Act, if any Employee dies or is injured during the Course of Employment, the Employer is liable to pay compensation. Employees liability Act Fatal Accidents Act Motor Vehicles Act What is Third party liability? The insured becomes legally liable to any third party for bodily injured or death that has arisen due to the use of his motor vehicle in the public place. What is that, that can be claimed from the Insurance Company is the financial liability payable to a third person other than the insured and the Insurer. MACT : Third Party claims are usually adjudicated by the Motor Accident Claims Tribunal (MACT). The MACT is a statutory body set up under SECTION 110 of the Motor vehicles Act, The claimant has to move the Tribunal within a period of 6 months from the accident. Summons received from the Tribunal should be accepted and defense has to be entered on time. It is not necessary that the Third Party claim should be settled only after the MACT gives its award. A compromise may be a solution for settlement. As a matter of fact, many claims of litigation expenses of the Insured.
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To defend a claim in MACT or to negotiate a claim for a compromise settlement we have to collect a large number of facts. In getting information in the actual negotiation the Investigator can play a very useful role as a part of his duties. MACT Tribunals are not conferred any extraordinary power than what is vested with the courts under law of torts. The job of the MACT is only to expedite speedy settlement of third party claims. Of course, the settlement of claim under MACT is subject to the terms and conditions of the Insurance contract and M.V. Act Provisions. LOK ADALAT: Lok means People and Adalat means Court. So Lok Adalat is formed for quick justice and speedy disposal of claims for Road accident victims whose cases are pending in MACT and other property and civil suit. With relevance to Motor Insurance Lok adalat plays a significant role in dealing with cases pertaining victims of road accidents before Motor Accidents Claims tribunal. Cases are taken up at Lok Adalat only if at least one hearings is over in MACT are Court. The Insurance Company before taking up the cases before LOK ADALAT will ensure negligence of the Motorist is evident and all documents in support of the claim are in order because the claim placed before the Lok Adalat cannot be withdrawn. The decision of the Lok Adalat does no have a legal binding on both the parties and need not be accepted by either of the parties. But in principle it is accepted as effective system to negotiate and arrive at a Amicable settlement acceptable to both the parties. Once the settlement is effected it is binding on both the parties and is generally acceptable by the Tribunal. Thus Lok Adalat has helped in clearing a lot of cases pending before MACT thereby helping the petitioner in getting a reasonable compensation and also helps Insurance Company to uphold their image as a provider of social security. LIABILITY TO THIRD PARTIES 1. The Liability should arise, due to an accident caused by the use of Insured vehicle anywhere in India. 2. The Insurance company will indemnify the Insured for all sums including claimants cost and expenses for which the Insured should become legally liable to pay a. In respect of death of a person or bodily injury to any person and b. Damage to any property of only third party 3. When the Insured incurs any cost and expenses with the consent of the Insurers the same will be paid by them. 4. The Insurance Company will indemnify any liability that may arise due to the driver, provided the driver observes and fulfils the terms and condition of the policy and also the exception as though he is uninsured.
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5.

The company may at its option. a. Arrange for representation any inquest or take inquiry in respect of any death for which the insurance company will indemnify the insured. b. Insurance company will take any proceeding to any court of law for any alleged offence relating to any event that falls under the subject of indemnity under the policy.

Types of Compensation 1. General Damages 2. Special Damages General Damages: General Damages are damages awarded by the court of Tribunal for pain, suffering reduced earning capacity, inconvenience and loss of life. The General damages will depend upon the state of injury, the Medical examination, the X-ray test Medical evidence, pain in leg, leg gets swollen when the injured walks, unable to do heavy work, slight deformity in the legs for the whole life. SPECIAL DAMAGES : Special Damages is awarded to the Insured who is hospitalized and medical expenses that are incurred and for financial loss of income because of absence of someone to replace the injured to carry on business or loss of income due to absence from duty this kind of damages will not prevent much difficulty in assessing damages. Remaining without salary amount to special damages, Loss of maintenance expenses if injured, earning at the time of accident will also fall under the head special damages. In the case of death: In order to ascertain the quantum of damages in case of death the following criteria should be considered by the Tribunal a. Age and the health of the deceased when the accident was caused b. The status of the deceased, his earning capacity and his contribution to the family c. The loss caused to the family by his death d. The damage he suffers from pain and suffering and duration of the same of the same, e. Whether he died immediately or after the expiry of some days f. Loss of expectancy of life COMPONENTS OF AN AWARD 1. The award contains the just compensation made by the tribunal 2. Specifies the person to whom the compensation to be paid 3. It specifies the amount, which shall be paid by the driver of the vehicle or owner, insurer, involved in the accident or by all or any of them as the case may be.
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OMBUDSMAN The hardships and expensive legal recourse available to individuals in the event of delay in or dispute of quantum of settlement of a claim prompted IRDA to establish an Independent Arbitrator known as OMBUDSMAN Ombudsman was established in November 1999 by IRDA to arbitrate insurance related disputes for quick, low cost and prompt settlement of claims at the cost of Insurance companies. Earlier to this the only options available to people were to go to the Consumer Forum or Civil Court to settle their differences. The Ombudsman now has representation in 12 different notified jurisdictions throughout the country. Here the process is very simple. Any Insurance related complaint can be filed in the notified jurisdiction. Ombudsman entertain complaints only on individual life or non life policies, as long it is non commercial in nature up to an extent of Rs. 20 lacs. As an arbitrator, the Ombudsman has to take unbiased and independent decision to ensure that the common man receives fair and just compensation from the insurance company. How to file a compliant with Ombudsman: 1. A letter in writing stating the facts of the case along with documentary proof. 2. Complaint to Ombudsman should be filed within 1 year from the date of repudiation of claim by the insurer 3. Ombudsman will not interfere if the insured has already approached the consumer forum or filed suit in Court of Law 4. Complaint should be filed with in the jurisdiction of the insured. Role of Ombudsman: 1. On receiving the complaint, if Ombudsman finds a prima facie case, response is sought from the insurer within 14 days. 2. If on receiving the petitioner's claim, the circumstances of the case, documentary evidence and cross examination reveal that the claim of the petitioner is fraudulent in nature, the claim is immediately dismissed. 3. Settlement is done in 3 ways. a. Settlement on reference b. Settlement following mediation c. Settlement through mediation and award Settlement through mediation, when the insurer contests the complainant's claim Ombudsman investigate the complaint and gives suitable guidelines for settlement within a month After acceptance a copy is sent to both the parties. The parties must confirm acceptance within 15 days. The Ombudsman directs the insurer to settle the claim within 15 days. If the directive is not accepted by the insurer, Ombudsmen can declare an award.
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If company has credible alternative arbitration mechanism the IRDA can exempt the insurance companies from the authority of Ombudsman, so far no insurance has sought for such exemption. Motor Third Party Insurance Pools Public sector general insurance companies arbitrarily loading premium for commercial vehicle act Insurance due to heavy incurred loss ratio Even most of the companies denied the act insurance for commercial vehicle. Private insurance companies showed total avoidance towards underwriting commercial vehicles act only policies. The federation of transport operators represented the matter to IRDA to intervene and regulate the pricing structure. Also, to issue direction to companies not to deny act only policies. Therefore IRDA has come out with an idea of Third Party Insurance Premium pool. Whereby all TP Premium of Commercial Vehicle (Both Act and Package policies) pooled together and the management of pool vested with General Insurance Corporation GIC after retaining its statuary cession of 20% cedes the balance to all the companies in the ratio of their gross direct premium. Claims also shared on the same pattern. The underwriting offices also get 10% procurement cost. This pool arrangement encouraged all the companies including public and private sector to accept commercial vehicles act only policies. Indian Motor Third Party Insurance Pool [IMTPIP] which came into effect from 01.04.2007 GIC (Re) is the Pool Administrator All registered General Insurance Companies in India dealing in Motor will be members of the pool. They shall collectively, mandatory and automatically participate in pooling arrangement. All operating offices of the pool members will underwrite pool business and they receive 10% reinsurance commission on premium booked. The pool U/w liability policy only & liability portion of package policy of all commercial vehicle segment. Business u/w by members w.e.f. 01.04.2007. Pooling mechanism is multi lateral reinsurance mechanism between u/w insurer and all registered General Insurance Companies. 20% ceded to GIC-Re as statutory session Balance 80% shall be shared by all members in the same proportion of
205

TGDP bears to Total Market GDP in respect of all classes of business for that financial year. Underwriting business and claims settlement will be as per General Insurance Council directives. All Insurers as leaders meet claims and other expenses, make provisioning for claims, share the same with Co-insurers in pre agreed ratio. Conciliation process in Motor TP Claims Identify cases suitable Admissions of liability sec 64 VB/DL/Permit/FIR/Investigation confirming accident/ Income/ Dependency / Factor PM Report Medical Certificate for disability Age Proof Advocate's recommendation Moving court for conciliation Offer to the claimant Jaldh Rawat only in injury cases Underwriting considerations for u/w passenger carrying commercial vehicles Model Carrying capacity Permit route Fleet Past claim experience Terrain(Geographical area) where plying Age/ experience of drivers/ conductors Private/ Public Road worthiness of vehicle/ Inspection PA for passengers Other Insurance from the same insured Voluntary excess Own workshops/ access to quality workshops Member of association/ safety equipments. Owner & driver same. 2.

Motor Bullet Questions

1. Discuss Motor Third Party Insurance Pools. Public sector general insurance companies arbitrarily loading premium
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for commercial vehicle act Insurance due to heavy incurred loss ratio Even most of the companies denied the act insurance for commercial vehicle. Private insurance companies showed total avoidance towards underwriting commercial vehicles act only policies. The federation of transport operators represented the matter to IRDA to intervene and regulate the pricing structure. Also, to issue direction to companies not to deny act only policies. Therefore IRDA has come out with an idea of Third Party Insurance Premium pool. Whereby all TP Premium of Commercial Vehicle (Both Act and Package policies) pooled together and the management of pool vested with General Insurance Corporation GIC after retaining its statuary cession of 20% cedes the balance to all the companies in the ratio of their gross direct premium. Claims also shared on the same pattern. The underwriting offices also get 10% procurement cost. This pool arrangement encouraged all the companies including public and private sector to accept commercial vehicles act only policies. Describe briefly Indian Motor Third Party Insurance Pool [IMTPIP] which came into effect from 01.04.2007. GIC (Re) is the Pool Administrator All registered General Insurance Companies in India dealing in Motor will be members of the pool. They shall collectively, mandatory and automatically participate in pooling arrangement. All operating offices of the pool members will underwrite pool business and they receive 10% reinsurance commission on premium booked. The pool U/w liability policy only & liability portion of package policy of all commercial vehicle segment. Business u/w by members w.e.f. 01.04.2007. Pooling mechanism is multi lateral reinsurance mechanism between u/w insurer and all registered General Insurance Companies. 20% ceded to GIC-Re as statutory session Balance 80% shall be shared by all members in the same proportion of TGDP bears to Total Market GDP in respect of all classes of business for that financial year. Underwriting business and claims settlement will be as per General Insurance Council directives. All Insurers as leaders meet claims and other expenses, make provisioning for claims, share the same with Co-insurers in pre agreed
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ratio. 3. Describe the conciliation process in Motor TP Claims. Identify cases suitable Admissions of liability sec 64 VB/DL/Permit/FIR/Investigation confirming accident/ Income/ Dependency / Factor PM Report Medical Certificate for disability Age Proof Advocate's recommendation Moving court for conciliation Offer to the claimant Jaldh Rawat only in injury cases What are the underwriting considerations for u/w passenger carrying commercial vehicles? Model Carrying capacity Permit route Fleet Past claim experience Terrain(Geographical area) where plying Age/ experience of drivers/ conductors Private/ Public Road worthiness of vehicle/ Inspection PA for passengers Other Insurance from the same insured Voluntary excess Own workshops/ access to quality workshops Member of association/ safety equipments. Owner & driver same.

2.

TP pool is formed to share the profit or loss of Motor TP business of all general Insurers in the following classes of business. a. Motor TP Claims and premium of Private Cars. b. Motor TP Claims and premium of 2 wheelers. c. Motor TP Claims and premium of Commercial Vehicles. d. Motor TP Claims and Premium of All Class Motor Business. In Motor TP claims even if we did not take place under sec 170 of Motor Vehicle act in lower courts, we can go on appeal on quantum. a. True b. False c. Joint appeal with insured d. We can appeal directly to Supreme Court. The risk of overturning as a tool trade is covered in respect of a dumpers under a. A standard commercial Goods carrying vehicle B policy. b. A standard miscellaneous type of vehicles B policy. c. A standard miscellaneous type of vehicles A policy at an additional premium. d. None of the above. The concept of No fault liability as envisaged in MV Act 1939 is reflected in a. Section 163 of MV Act b. Section 149 of MV Act c. Section 140 of MV Act d. None of the above. Constitution of Motor Vehicle Claims tribunal falls in the jurisdiction of a. Central Government b. State Government c. Supreme Court d. District Courts Compensation payable in case of death under the relevant section of 'No Fault Liability' is a. Rs. 25,000 b. Rs. 12,500 c. Rs. 30,000 d. None of the above Solatium Fund established under M.V. Act 1939, deals with a. Accident cases b. Death cases
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3.

4.

4.

5.

6.

7.

QUESTIONS
1. Under the Motor Vehicles Act, a public place is a. A place owned by a public limited company. b. A place where public meetings are held. c. A place where any member of public has a general right of access. d. A place where the public grievances are heard.
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8.

c. d. 9.

Injury Hit and run cases

As per M.V. Act, following injuries are treated as simple injuries a. Fracture of wrists b. Dislocation of bone c. Scar on the face d. Loss of vision

option available is a. Go on appeal on normal course b. File a writ I high court c. File a SLP in the Supreme Court d. Company has to satisfy the award 16. Owner resides at Kanpur had taken a Motor TP Policy from Delhi. The vehicle meets with an accident at Kolkata injuring a person, who had retired from services and resides at Guahati. He had very simple injuries. Find out from the list the places where he can file MACT case. a. Anywhere in India b. Kolkata/Gauhati c. Gauhati/Kanpur/Kolkata d. Gauhati/Kanpur/Kolkata/Delhi 17. A married person dies in road a accident. His wife files a case in MACT Pune, whereas his parents file the case at Mumbai. What is the correct step to be taken to handle the situation from the list of option below? a. Wait till the Court decides in one case and then go for appeal. b. Go the high court for stay in both the cases in the initial stages itself. c. Wait till one case is decided and bring this fact to another court for dismissal of the pending case. d. Take affective steps in both the courts by filling certified petition copies FIR sets to transfer the case to either of the courts for clubbing together. 18. Sec 163A of MV Act 1988 related to a. No fault Liability b. Hit and run case c. Structured Compensation d. Insurer's defense 19. Insurers' defense available under following sections under MV Act a. Sec 140 and 147 b. Sec 149(2) and 170 c. Sec 165 and 166 d. None of the above. 20. Motor Vehicle's Act 1939 was amended in a. 1960 and 1999 b. 1988 and 1994 c. 1995 and 2002 d. None of the above
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10. Which of the following about multimodal transporter is not true a. MTO is to be registered b. He is responsible for the transportation of the consignment c. Liability of MTO is unlimited d. He is not responsible for arranging insurance of the consignment 11. The concept of Lok Adalat was mooted by a. Dr. S.N. Bhagwati b. Mr. P.N. Bhagwati c. Mr. Lok Naik d. Mr. P.N. Adlakha 12. Which of the following documents is not relevant to bodily injury claims for processing third party claims under motor policies? a. Coroner's report b. Driving Licence c. Police Report d. Medical Certificate 13. Application for compensation under Solatium scheme has to be made to: a. Corporate office of an insurance company b. Claims enquiry officer nominated by State Government c. Nominated divisional office of the insurance company d. Claims settlement commissioner nominated by the State Government. 14. A MACT award for Rs. 40000/- for a petitioner for simple injuries. Insurance Company wants to go on appeal to High Court. The minimum deposit under Sec 173 is to be made at the MACT for appealing in this case is a. Rs 10000/b. Rs 25000/c. Rs 20000/d. Rs 40000/15. A MACT awards Rs 9000 for a pedestrian who meets with an accident. Insurance Company wants to go on appeal as the injury was very minor. The
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21. Motor Vehicle's Act 1994 was promulgated mainly for the purpose of a. Doing away with the provisions of previous acts b. Protecting the loss arising out of the use/carrying of hazardous goods c. Improving upon the provisions of previous acts. d. All of the above 22. For registration of vehicles, the RTO's requirement as per the provisions of MV Act is submission of a. Policy schedule b. Policy schedule and certificate of insurance c. Original certificate of insurance d. Proof of sale 23. Grace period for filing of an appeal before High Court in MACT cases is a. 180 days b. 90 days c. 120 days d. No grace period at all 24. Under which section of MV Act, an insurer can defend the liability before MACT a. Section 163 b. Section 170 c. Section 149 (2) d. Section 166 25. A brand new vehicle meets with an accident on the first day of insurance cover and what percentage of depreciation the vehicle's fibre part attracts a. 50% b. As per percentage table c. 30% d. Nil 26. Can CNG/LPG fuel attachment to a vehicle be insured provided the insured submits: a. Invoice copy b. Proof of endorsement in the RC c. Declaration in proposal form d. Physical verification of unit 27. The most essential document required for filing of an appeal before high court in MACT cases a. Award deposit receipt
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b. c. d.

Petition filed before the lower court Lower court order obtained under Section 170 of MV Act Insurer's Vakalat

28. Under which section of MV Act 1988, no person shall allow any other person to use a vehicle in a public place unless the vehicle is covered by an insurance policy complying with the requirements of the ACT a. 146 b. 147 c. 148 d. 149 29. Section 161 (3) of MV Act pertains to a. Structured compensation b. No fault liability c. Hit and run compensation d. None of the above 30. Of the following exclusions under the Motor Policy, which one does not appear under general exclusions of the policy? a. Driving without a valid driving license b. Driving under the influence of intoxication c. Geographical area d. Breach of limitations as to use clause 31. Under the motor comprehensive policy, towing charges in respect of a damaged vehicle include the cost of a. Protecting the vehicle b. Removing it to the nearest repairers c. Re-delivery to the insured d. All of the above 32. A motorcar with manufacturing date as 12/04/1939 is a. An obsolete car b. Is a vehicle not insurable c. Is a car classified as classic d. None of the above 33. A vehicle not road worthy can be ideally offered the following covers a. Burglary policy b. Motor policy covering fire c. Motor policy covering theft d. Motor policy covering fire/theft as per GR 45 34. One passenger bus was covered under Motor package policy while parked in the garage at night extra horn, tyres and decorative fittings were stolen. The
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claim is payable: a. In full b. Only 50% is payable c. Payable on Non-standard basis d. Not payable 35. Premium from the following classes of vehicles goes to the Motor insurance pool: a. Total premium collected on private car & 2 wheelers b. OD premium and liability premium collected on commercial vehicles. c. Liability and PA premium collected on Commercial vehicles. d. Total premium collected from Goods carrying vehicles. 36. Important documents required to process the Motor Third Party claim include: a. Copy of FIR charge sheet b. Name and address of the person injured and killed in accident. c. Certified copies of injury/post mortem report. d. All of the above 37. What is the trump card for the success of the TP Pool a. 10% commission on the Premium b. Distribution of Premium and liabilities amongst insurer. c. Commitment of insurers to serve insuring public d. All of the above 38. In a MACT Claim, in case of a death of a married male with dependent Father and Brother, the applicable multiplier is as per the Schedule of M.V. Act, will be a. Multiplier applicable to the deceased as per his age b. Multiplier applicable to the father of the deceased as per his age c. Multiplier applicable to the brother of the deceased as per his age. d. None of the above. 39. Under the motor tariff, Miscellaneous Vehicles do not include a. Motorised rickshaws b. Mobile dispensaries c. Ambulance d. Hearses vehicles to carry coffins to funeral 40. The liability of the owner of the motor vehicle to pay compensation for death claims on no fault of him under the Motor Vehicles Act, 1988 is a. Rs. 50000
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b. c. d.

Rs. 10000 Rs. 25000 Unlimited

MOTOR MODEL QUESTIONS 1. In which year MV Act was first enacted a. 1929 b. 1939 c. 1959 d. 1988 What is meant by the term IDV a. Insenes Declared Value b. Insured's Depreciated Value c. Insured Declared Value d. Insurance determining value Motor cover note is generally issued for a. In all cases b. For renewal only c. For new vehicles d. Only for third party & theft The maximum validity period of a motor cover note is a. 15 days b. 30 days c. 60 days d. 365 days Motor insurance is statutory in respect of a. Comprehensive risks b. Act only cover c. Act only fire and theft extension d. Trade Risk In case of break in insurance a. Pre-inspection of vehicle is mandatory b. Insurance is not available at all c. Mere declaration from insured only will suffice d. None is required Which is the single largest portfolio in PSU non life insurance companies a. Fire b. Health
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2.

3.

4.

5.

6.

7.

c. d. 8.

Motor Marine

Under what circumstances the concept of total loss settlement is considered a. Repairing cost exceeds more than 75% of IDV b. Insured's refuses to get it repaired c. Repairing cost exceeds more than 50% d. None

15. Which document is not required in settling motor TP injury claim a. Policy copy b. Coroner's Report c. Road challan d. Driving License 16. Mr. A sold his vehicle to B who was enjoying 50% NCB what % of NCB would be enjoyed by 'B' a. 50% b. 25% c. 15% d. Nil 17. Maximum liability under TPPD without payment of premium under 2 wheeler is a. Rs. 2000 b. Rs. 3000 c. Rs. 5000 d. Rs. 6000 18. Vehicle enjoying 50% NCB lodged an OD claim. What would be NCB allowable in its next renewal? a. 15% b. 25% c. Nil d. 30% 19. Maximum amount of discount available under Motor OD premium in case where owner is having Automobile Association membership a. 10% b. 20% c. Rs. 200 d. Rs. 500 20. Under hit and run case what amount is payable in case of death? a. Rs. 20,000 b. Rs. 30,000 c. Rs. 25,000 d. Rs. 40,000 21. In case of partial loss settlement, % depreciation applicable to rubber items is a. 30% b. 40%
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Articulated vehicle means a. Two wheeler attached with the side car b. Ambulance with oxygen cylinder c. A motor vehicle to which a semi trailer is attached d. None 10. Third party means employees a. Insured and its employees b. Insurer c. Any other person other than a & b d. None 11. Motor Insurance Amendment Act 1989 came into effect a. 1st April 1989 b. 1st June 1989 c. 1st July 1989 d. 1st Sept. 1989 12. Which section of the Motor Vehicle Act deals with Act liability cases? a. Section 140 & 166 b. 140 & 161 c. 140 d. 166 13. What is the maximum NCB allowed under Motor OD Premium a. 30% b. 50% c. 45% d. 65% 14. Which of the following vehicles is recognized as Vintage Car a. Vehicle manufactured before 31.12.1960 b. Vehicle manufactured before 1940 c. Vehicle manufactured before 1959 d. Vehicle manufactured before 1939
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9.

c. d.

50% 60%

22. Which of the following type of the vehicles do not generally carry overturning risk as a tool of trade? a. Auto rickshaw b. Dumper c. Mobile drilling rigs d. Both b & c 23. IDV of a vehicle is 2.5 Lakhs, assessed loss is 2.05 lakhs. What would be insurer's liability? a. Rs. 2.05 Lakhs b. Rs. 2.05 Lakhs less excess c. Rs. 2.50 lakhs d. None of the above 24. While underwriting a commercial vehicle which of the following is not considered? a. Past OD claim history b. Break in insurance c. Vehicle type d. Past TP claim history 25. For an investigator's report in a TP claim, following is not true: a. Investigator's report brings out the location/time of accident b. Report should provide number of passengers being carried at time accident c. The report is an accepted legal document in court d. The report should verify the authenticity of the RC book 26. Motor Policy does not cover a. Property damage b. Liability c. Health d. Personal Accident 27. The IDV is based on a. The market value b. Invoice value c. Book value d. Commercial value

28. Motor Trade Policy can be given to a. Motor Dealers b. Motor vehicle financiers c. Individuals d. Motor vehicle inspector 29. Lok Adalat settlement for MACT cases are a. Compromise settlement b. Award given by court c. Award given by a special tribunal d. None of the above 30. Sec 140 of MV Act deals with following a. Appeal to High Court b. Structural Compensation c. No fault liability d. Defenses available to insurer 31. Depreciation is applicable on the basis of the following a. Age of the party b. Driving license c. Age of the vehicle d. Route permit 32. Which one of the following loss is not payable under Motor Package Policy? a. Cost of motor parts b. Cost of Glass pats c. Labour charges d. Consequential loss 33. In case of Total loss which one is considered for settlement of claim a. Market value of the vehicle b. Depreciated value of the vehicle c. Cost of parts and labour charges d. Insured declared value 34. Which type of cases are placed before Lok Adalat a. Hit and run cases b. Workmen's compensation cases c. Consumer forum cases d. Cases pending before motor acct. claims 35. The amount of compensation payable in case of death u/s 140 of MV Act is a. Rs. 15000 b. Rs. 7500

218

219

c. d.

Rs. 25000 Rs. 50,000

36. The amount of compensation payable in case of Grievous injury in Hit and Run case is a. Rs. 40000 b. Rs. 15000 c. Rs. 2500 d. Rs. 25000 37. Long term Motor Insurance Policy is now available for the following classes of vehicles a. Private Car b. Two wheeler c. Commercial vehicle d. None of the above 38. Agreed value policy in Motor Insurance can be issued for a. Classic cases b. Commercial vehicle c. Vintage car d. Private cars 39. Maximum towing & spot repair charges payable in event of claims under commercial vehicle a. Rs. 1500 b. Rs. 1000 c. Rs. 500 d. Rs. 2500 40. Maximum towing & spot repair charges payable under Pvt. Cars vehicle a. Rs. 1000 b. Rs. 1500 c. Rs. 1200 d. Rs. 2000 41. Which of the following statement is correct? a. Motor policy issued for a short period can be extended b. Motor policy can be extended by collecting difference of premium on short period basis. c. Motor policy can be extended by collecting difference of premium on pro-rata basis. d. Motor policy issued on short period rating cannot be extended.
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42. Rating of goods commercial vehicle is based on a. Carrying capacity of vehicle b. Unloaded weight of the vehicle c. Gross vehicle weight of vehicle d. Age of the vehicle 43. Which of the following does not have policy excess? a. 2 wheeler b. Commercial vehicle c. Private car vehicle d. None of the above 44. Which of the following statements is true for NCB? a. Policy is renewed after 12 months of expiry b. NCB earned can be substituted c. Vehicle stands transferred to spouse following death of insured d. All the above 45. Which section of the MV Act deals with the defense available to the insurers under Motor Policy in respect of MACT Claims? a. Section 140 b. Section 143 c. Section 170 d. Section 163 (A) 46. A motor accident claim victim can file a case in MACT for compensation a. At the place of accident b. At the place where he resides c. At the place of issuance of policy d. All of the above 47. 'Dealer' means a person who is engaged in a. Building bodies for attachment to chassis b. In repair of motor vehicle c. In the business of hypothecation, leaving etc. d. Authorized entity for sales and service of new vehicles 48. Which of the following statement is correct? a. Transfer of ownership shall not affect admissibility of liability in respect of Act only policy b. Transfer shall apply within 10 days to the insurer c. Fresh proposal form is required for transfer d. Transfer of own damage portion is automatic
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49. Which of the following is not relevant in Motor Vehicle Insurance? a. Sec 146 of the Motor Vehicle Act 1988 b. WC covers for workmen in charge of operation & maintenance of vehicle. c. IDV d. Reinstatement 50. By which section of Motor Vehicle Act Motor Vehicle Insurance is made obligatory for plying in public places a. See 146 b. See 170 c. See 176 d. See 420 51. Which of the following is not relevant for determination of TP compensation under motor policy? a. Age b. Income c. Sex d. Dependency 52. No Fault liability means No fault on the part of a. Public b. Insured Vehicle c. Third Party d. Insurers 53. Which of the following is relevant for hit and run cases? a. Prime Ministers relief fund b. Environment relief fund c. Solatium fund d. Public Provident Fund 54. The transferee is entitled for a OD claim only when a. RC is transferred in his names b. Sale consideration is paid c. Insurance policy is transferred in this name d. He holds a valid driving license 55. The categorization of surveyor is done by a. Head office of the company b. GIPSA c. IRDA d. Institute of Surveyors
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56. Which one of the following is relevant for calculating repair liability under Motor OD? a. New for old b. Depreciation c. Survey fees d. Garage rent 57. Compulsory Excess for two wheelers is a. Nil b. Rs. 50 c. Rs. 100 d. Rs. 150 58. The Cover note issued for a motor vehicle does not contain a. Name of insurer b. Engine and chases No. or registration no. c. Name of the driver d. Validity Period 59. Non disclosure of a material fact shall make the policy a. Valid b. Void c. Voidable d. Enforceable 60. Which is not a factor for rating a two wheeler policy? a. Side car b. Membership Automobile Association c. Make d. Age of the owner 61. Geographical extension is not allowed to which one of the following countries a. Nepal b. Bhutan c. Afghanistan d. Maldives 62. Under Total loss claim settlement basis: a. Wreck need not be surrendered to the insurer b. Partial salvage can be surrendered and partly can be retained by the insured. c. Full wreck has to be surrendered before claim settlement d. Full salvage/wreck can be surrendered after settlement
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63. In case of Motor accident involving TP injury as well as own damage: a. FIR is a must b. Only police certificate is sufficient c. Intimation to the insurer alone is sufficient d. Driver statement 64. In a goods carrying vehicle: a. Six persons can be carried as passengers b. Any number of persons as passenger can be carried c. Only six persons as coolies for the purpose of loading/unloading can be carried d. Strictly neither coolies nor any other persons can be carried 65. In a 2 wheeler motor cycle policy, where owner/rider, who died in a road accident whilst on drunken driving. Identify the correct statement a. As there is no prohibition in the State, 100% PA claim can be settled to his wife who is the claimant. b. As it is a death due to drunken driving, considering contributory negligence 75% can be settled on non-standard basis, on compassionate ground. c. Claim has to be totally rejected as it is a drunken driving d. 25% of the SI can be settled not more than that. 66. In case of sale of motor vehicle: a. Transfer of motor insurance policy is automatic to the purchaser b. Transfer of name in the motor policy can be effected at the time of next renewal c. Transfer of insurance policy to the purchaser can be effected any time between name transfer in the RC to the expiry date of the policy d. The transferee should apply within 14 days from the date of transfer of ownership of the vehicle 67. Which of the following is not an accessory in motor vehicle? a. Fog light Assy b. Steering wheel cover c. Driver seat assy d. Sun visor 68. Cash less settlement can only be done when: a. Total loss is not possible b. Salvage cannot be evaluated c. When the vehicle/claimant owner had died in the accident d. Repairing of vehicle is economically not viable
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69. In case of motor vehicle accident, report of motor vehicle inspector is called for to know a. The quantum of loss b. The model of the vehicle c. Whether the accident was caused due to any mechanical breakdown d. Third party loss 70. IDV principle brought peace in motor claim settlement because: a. It liability at minimum b. It guides total loss settlement c. It reduces disputes over total loss valuation d. Both (b) and (c) 71. Breach of trust occurs when: a. Theft takes place from guarded parking lot b. Theft takes place from owners' friend's house c. Theft takes place due to negligently forgotten of key with the vehicle d. Theft takes place with disappearance of driver with the vehicle 72. Percentage of depreciation in airbag is: a. Depending on the age of the vehicle b. Like depreciation of plastic parts c. Like fibre glass components d. None of the above 73. Which feature is not a u/w consideration for Motor Dept? a. Color of car b. Cubic capacity c. Age of vehicle d. Hire & reward 74. IDV of new vehicle represents a. Invoice price b. Invoice price less 5% c. Ex factory price d. Cost on road less 5% 75. IMT 23 deals with a. Compulsory excess b. Exclusion of special perils like flood, storm, typhoon c. Exclusion of riot, strike and terrorism d. Replacement of lamps, tyres etc.
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76. Which of the following is Miscellaneous and special type of vehicle? a. Scooter b. Trailer c. Agricultural tractors d. Taxi 77. IDV of a vehicle of 7 years old is a. Current invoice price less 50% b. Market price of 7 years old vehicle c. Invoice less 70% d. Not to insure at any value 78. Which of the following countries is not covered under extension of geographical areas? a. Bangladesh b. Bhutan c. China d. Nepal 79. Concession for laid up vehicle can be given in which of the following cases a. Vehicle can not be used due to accident b. Vehicle laid up in garage and not in use for more than one month c. Vehicle laid up in garage and not in use for more than 2 months d. Vehicle under police custody 80. Motor pool takes care of the following business a. Obligatory cession b. Declined insurers c. Third party commercial vehicles d. Third party all vehicles 81. Motor reinsurance is normally done on the following basis a. Quota share b. Facultative c. Surplus treaty d. Excess of loss 82. Motor trade road risk policy can be underwritten on the basis of a. Type of vehicle b. Trade certificate c. Dealership d. Vehicle in transit
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83. Motor third party insurance is not required for two wheelers only when the cubic capacity is less than a. 100 cc b. 35 cc c. 50 cc d. None 84. Section 173 of MV Act relates to a. TP property damage b. Appeal cases c. Fault liability d. None of the above 85. No appeal lies in High Court if the MACT compensation amount is less than a. Rs. 1 Lakhs b. Rs. 50,000 c. Rs. 10,000 d. Rs. 25,000 86. Non Motor Policy can be issued in the following case a. Mobile crane b. Private car c. Commercial vehicle d. Motor cycle with 50cc 87. Under section 170 of MV Act insurer can get the right to contest the TP claim on all grounds as of the owner in which of the following cases a. Collusion between driver and conductor b. Collusion between insured and claimant c. Collusion between driver and claimant d. Collusion between insurance co. and claimant 88. Which of the following losses are not excluded under OD section of package policy? a. Consequential loss b. Depreciation of wear and tear c. Mechanical and electrical failure d. Fire damage 89. The Insurer can cancel the policy by sending notice of a. 10 days b. 15 days c. 7 days d. 30 days
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90. No claim discount can be allowed provided a fresh policy is obtained within a. 30 days b. 180 days c. 90 days d. 15 days of the expiry of the previous policy 91. In case of a private car package policy, the insured may authorize repairs necessitated by damage caused under policy provided estimated cost of such repairs does not exceed: a. Rs. 1000 b. Rs. 500 c. Rs. 250 d. Rs. 1200 92. As regards risk of 'explosion' to be covered, it means: a. Only internal b. Both internal and external c. Only external explosion d. Covered only by additional premium 93. Sum insured of a vehicle is based on: a. Insured Market value b. Insured Declared value c. Insured Draft value d. Insured Estimated value 94. TP premium on a private car a. Ceded entirely of GIC b. Ceded entirely of India Motor Pool c. Retained by U/W Company d. Shared by all PSUs 95. TP Provision in a claim is kept a. Present trend of local courts b. Age factor of deceased c. Rate of interest prevalent d. All above factors 96. What is not required in a Theft Case? a. DL b. Subrogation Bond c. FIR d. FR
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97. TP insurance was first made mandatory in: a. India b. England c. USA d. Soviet Union 98. An MACT case can be filed: a. In the area of accident b. Anywhere in India c. Any place near to U/W office d. At the place where the victim belonged to 99. Which of the following is incorrect? a. Insurance of a Motor Vehicle is compulsory b. Policy can be insured for TP cover only c. Educational qualification of the proposer d. Anti theft devices fitted in the vehicle 100.Which of the following doesn't have a bearing while accepting a motor proposal? a. Moral hazard of the insured b. Roadworthiness of the vehicle c. Educational qualification of the proposer d. Anti theft devices fitted in the vehicle 101.Owner of goods traveling along in a goods vehicle will be treated for the purpose of claims as: a. Insured b. Third party c. Gratuitous passenger d. Employee 102.Claim Enq. Officer and Claim Settlement Commissions are part of: a. MACT b. EST Act c. Soratium Fund d. WC Act 103.OD Claim under Comml. Vehicle chemical tanker will be considered if the driver has: a. Valid DL to drive any vehicle b. Valid DL to drive a tanker c. Valid DL endorsed with handling of hazardous chemicals d. Valid DL with 5 years experience in driving a tanker
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104.Application for compensation to be made at MV Act a. Place of accident b. Place of insurance c. Place of residence of the claimant d. Any of the above 105.The time limit normally allowed for presenting claim petition u/s 166 is a. 3 months b. 6 months c. 9 months d. 1 year 106.In respect of TP Claims, the insurance company can repudiate liability a. Only if it proves that the DL was not valid and the driver was disqualified from having a license on the date of accident b. If the driver was in possession of the learning license c. If the DL had expired d. None of the above 107.On the date of accident, the Insured had sold the vehicle and the policy was not transferred under the circumstances a. The Insured Co. can deny TP Liability b. The Insured Co. cannot deny TP liability c. The insured Co. can pay OD claim and deny TP claim d. None of the above 108.OD claims arising out of collision of vehicles are processed on the basis of: a. Normal claims handling procedure b. Knock for knock agreement c. Market agreement d. Memorandum of understanding 109.Red lining in Motor Insurance means a. Scope of the policy b. Compliance of notice period c. Timing requirements d. Geographical limits 110. A third party liability is often awarded against more than one insurer in case of a. Dispute on admissibility of claim b. Absence of insurance policies c. Unenforceable policies produced d. Contributory negligence
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111. By collecting additional premium Rs. 25 to cover the workmen in-charge of the vehicle, the policy provides an option for preferring a claim under: a. MV Act only b. WC Act only c. Either MV Act or WC Act d. Common law 112. Refund of premium on account of double insurance of motor vehicles can be allowed on pro-rata basis only for the period during which a. The policy proposed for cancellation is in force b. The policy not proposed for cancellation is in force c. Both the policies are in force on the date of cancellation d. Both the policies are concurrently in force 113. WC Claims under Motor Policies can be appealed only after a. Conditional satisfaction of the order of the labor commissioner b. Compliance of notice period c. Approval of competent authority d. Satisfaction of the award 114. Which of the following statement is correct? a. Misc. type of vehicles warranting registration as per MC Act can not be covered under CPM policy b. Excess applicable to miscellaneous type of vehicle is 0.5% of IDV subject to a minimum of Rs. 2500. c. An ambulance can be insured as a private car d. Claims arising out of accident due to overturning of vehicle whilst in operation as a tool of trade is payable under a standard motor policy 115. Which document is not required for OD claim processing? a. Registration book of vehicle b. Assessed loss statement c. Driving license of driver while accident d. Driving license of the insured 116. Following documents are not required for TP claim processing: a) Summon from Court b) Purchase receipt of vehicle c) Police report d) Insurance Policy 117. For which type of vehicles India is divided into three zones: a) Private Car
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b) Commercial Vehicle Passenger carriers c) Two Wheelers d) Motor trade 118. What are the other countries, which cannot be covered under motor vehicle insurance issued in India? a) Nepal b) Bangladesh c) Myanmar d) Pakistan 119. Sunset clause refers to a) Vintage vehicles b) Constructive total loss c) No claim bonus d) Expiry of the policy 120.Public place is defined under MV Act as: a) Factory premises b) Public needs c) All places where public can access d) Public sector companies premises 121.For constructive total loss under motor vehicle policy payable loss has to constitute more than what percentage of IDV a) 50% b) 60% c) 75% d) 90% 122.Which one is an add-on cover under motor vehicle insurance? a) Volcanic outburst b) Mechanical Break Down c) Meteorite strike d) Personal Accident coverage to employees 123.Which is not a factor for structured compensation under Motor Third Party liability? a) Age of the deceased b) Dependency of the complaint c) Income of the deceased d) Income of the insured

124.Insurance Agency Commission is not allowed under a) Commercial vehicles b) Two wheelers c) All Third party insurances d) Only third party private car insurance 125.Insurer's liability towards third party ceases a) When owner is not the insured b) When new owner shows another insurance policy c) After motor total loss claim is paid d) On the death of the insured 126.Motor vehicle insurance is not compulsory if: a) Engine is below 35 cc without gear b) If it is registered as per MV Act c) If it is being used within a premises all the time 127.What is not a factor for making provision for Motor TP claim? a) Applicant's amount claim b) Legal expenses c) Interest on delayed settlement d) Interest already gained on incurred claim not yet paid KEY MOTOR INSURANCE TRADE QUESTION PAPER 1 2 3 4 5 6 7 8 9 C C B D C C D D C 11 B 12 A 13 D 14 C 15 D 16 C 17 D 18 C 19 B 20 B 21 B 22 C 23 B 24 C 25 A 26 B 27 C 28 A 29 C 30 A 31 D 32 D 33 D 34 D 35 C 36 D 37 A 38 A 39 A 40 A

10 D

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KEY MOTOR MODEL QUESTION PAPER 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. B C C C B A C A C C C A B B B D D C C C C B B D C C B A A C C D 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. D D D C B C D B D C D D C D D A D A C B C C C B B C B D C C A C
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1. 97. 98. 99. B B D

65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96.

C D C D C D D B A B D C A C C C D B B B C A B D C C B B B C D A

100. C 101. B 102. C 103. C 104. D 105. B 106. A 107. B 108. A 109. B 110. D 111. C 112. D 113. D 114. B 115. D 116. B 117. B 118. C 119. C 120. C 121. C 122. D 123. D 124. C 125. B 126. A 127. A 4. 3. 2.

As per sec. 158 (6) a) It is mandatory for police to forward a copy of accident report within 30 days to insurance company b) The owner of the vehicle has to produce within 30 days the certificate of insurance to the police c) The owner of the involved vehicle is required to give any information as required by the police officer to determine whether the vehicle was or wasn't being driven in contravention of sec. 146 d) It is mandatory for the officer in charge of the police station to forward a copy of accident report within 30 days to Claims tribunal as well as the concerned insurance company. The loaded truck was going from Chandigarh to Delhi. A vendor with the permission of the driver undertook a journey in between in the cabin of a truck with a bag of vegetables meant for sale. He died in accident when the truck hit a road side tree. As per which section of the MV Act, the insurance company can say that the vendor with head load of goods is not covered? a) Sec. 147 b) Sec. 149 (2) c) Sec. 170 d) No defence is available to the insurance company since owner of the goods are covered under the amended act. As per sec. 170 a) Appeal on negligence issue in High Court cannot be filed unless petition u/s 170 has been filed in the trial court b) Appeal in High Court challenging the quantum can be filed only if the petition u/s 170 has been filed in the trial court. c) The defence by insurance company is available to establish the fraud case at the trial court d) Insurance company can contest the case on breach of policy conditions. The insured of a private car has lodged a claim under third party section of the package policy claiming compensation of Rs. 30,000/- which he had given at the spot of the accident to the injured victim to get away from the furious mob. He has produced a valid stamped and notarized receipt from the injured. Which section allows payment of compensation to the insured under the said
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circumstances? a) Sec. 151 b) Sec. 157 c) Sec. 158 d) None of the above 5. An unskilled & bachelor labourer aged 23 years dies in an road accident. Which of the following documents is vital for determining the compensation payable? a) Age proof of the deceased b) Income proof of the deceased c) Occupation of the father d) Age of the mother of the deceased. The Branch Manager of an Insurance company is travelling in the company pool car and insured under a package policy with legal liability to driver. The accident resulted in the death of the Branch Manger and injury to the driver. As per the terms and conditions of the package policy, compensation is payable to a) Driver only b) Branch Manager only c) Both to the driver and Branch Manager d) None of the above Which document is the most essential for settlement of injury claims before Lok Adalat? a) income certificate of the injured b) age proof c) injury certificate d) medical bills What is the limitation period for filing appeal in the High Court? a) 90 days from the date of the award b) 30 days from the date of the award c) 90 days from the date of the award plus the time taken by court to supply certified copy. d) 30 days from the date of receipt of certified copy of award from the advocate
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9.

Who is competent witness to depose on behalf of company to deny negligence in an accident involving two vehicles insured by two different companies? a) Driver of our insured vehicle b) Driver of other vehicle c) Our investigator d) Police officer

6.

10. As per the landmark judgment of Apex Court in Sarala Varma Vs. DTC casea) Prospective income is to be taken into account while calculating compensation for the deceased person engaged in permanent job prior to his death. b) The loss of dependency for death cases is to be calculated on the basis of number of dependents c) Income tax and professional tax is to be deducted before calculating the loss of income d) All of the above. 11. Compensation in motor accident cases on the principle of no fault liability is payable under a) Sec. 166 of M V Act b) Sec. 140 of M V Act c) Sec. 163A & Sec. 140 of M V Act d) Sec. 163 A of MV Act 12. The land mark judgment in NIC Vs. Challa Bharatramma relates to the following documents a) Permit b) DL c) Fitness certificate d) Cheque dishonour 13. What defence is available to insurer to deny liability in a claim of motor accident involving a bus against death/injury to the passengers? a) The drunkenness of driver b) No Fitness of the bus c) Overloading of passenger carrying capacity

7.

8.

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d) All of the above e) None of the above 14. What is the time limit for filing WS in MACT Case as per the CPC ammendment? a) 30 days b) 60 days c) 90 days d) No time limit

ANSWER KEYS
Question No. Answer 1 D 2 A 3 B 4 D 5 D 6 A 7 C 8 C 9 A 10 D 11 C 12 A 13 B 14 A

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MARINE CARGO PECULIARITIES OF MARINE INSURANCE

Governed by a special Act called Marine Insurance Act 1963 Cargo policies are freely assignable Insurable interest is a must at the time of loss-ppi makes all the difference Inco Terms is only an indication who can insure Utmost Good Faith is a statutory obligation on the insured as per the Act Indemnity Under Marine Insurance In the manner and to the extent agreed Normally CIF plus 10% which is intended to include the general overheads and perhaps a margin of profit Provides a commercial or modified form of indemnity Value agreed in case of total loss and a percentage depreciation in case of partial loss

MARINE INSURANCE

STANDARD FORM OF MARINE POLICY

The current policy form contains no insuring conditions The terms and conditions are setout in the appropriate Institute Cargo Clauses and other Clauses. Policy is issued for covering individual consignment from named starting point to final destination point. It should be stamped as required by the Indian Stamp Act. A contract of marine insurance shall not be admitted as evidence unless it is embodied in a marine policy in accordance with the Marine Insurance Act 1963 (Sec. 24)

SCHEDULE OF MARINE POLICY

BESIDES NAME OF THE INSURED AND ITS POLICY ISSUING OFFICE DETAILS THE SCHEDULE 1. Policy Number 2. Name and address of the assured with bank interest if any 3. Name of the vessel carrying the cargo 4. Description of the voyage/transit 5. Subject matter insured with description of packing description of the marks and numbers 6. B/L; R/R; L/R with dates
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The sum Insured Basis of Valuation The premium Marine and War & SRCC Name and address of the surveyor/claim settling agent to be approached in case of claim. 10. Terms of Insurance cover granted clauses, special conditions and warranties.

7. 8. 9.

CARGO POLICIES COVERAGES

Policy form does not contain insuring clauses Terms of cover are specified by means of various Institute Cargo Clauses and endorsements attached. The prominent clauses are : a) Institute Cargo Clauses A, B & C b) Institute Ware Clauses (Cargo) c) Institute strikes Clause (Cargo) d) Institute Ware Clauses (Air Cargo) e) Institute strikes Clause (Air Cargo) f) Institute Rail/Road Clause g) Strike Riots and Civil Commitions clause h) Institute Trade Clauses INSTITUTE CARGO CLAUSES A, B & C COVERAGE INSTITUTE CARGO CLAUSES 'C' COVER 1) Fire or explosion 2) Vessel/Craft being stranded, grounded, sunk or capsized 3) Overturning/derailment of land conveyance 4) Collision or contact of vessel, craft or conveyance with any external object other than water 5) Discharge of cargo at a port of distress 6) General Average sacrifice 7) Jettison 8) General Average and Salvage charges incurred to avoid loss from any clause(s) except those excluded. 9) Liability under Both to blame collision clause of the bill of lading. 10) Charges reasonable and properly incurred to avert/minimize an insured loss and to preserve and pursue recovery rights. 11) In the event of termination of transit at a port or place other than destination port or place resulting from a risk covered, EXTRA CHARGES incurred in unloading, storing and forwarding insured cargo to destination.
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INSTITUTE CARGO CLAUSES 'B COVER Besides all coverage under ICC 'C', the ICC 'B' Covers the following addl. Perils. Earthquake, volcanic eruption or lightning Washing overboard Entry of sea, lake or river water into the vessel, craft, hold, conveyance, container, lift van or place of storage Total loss of any package lost overboard or dropped whilst loading or unloading from vessel or craft. Extraneous Perils that can be covered ICC 'C' & 'B' at appropriate addl. premium Theft, pilferage and/or non-delivery Fresh water and rain water damage Damage by hooks, oils, mud, acid and other extraneous substances Heating and sweating Damage by other cargo The above perils are automatically covered under ICC 'A' GENERAL EXCLUSIONS UNDER INSTITUTE CARGO CLAUSES 1. Willful misconduct of the Assured 2. Ordinary leakage, ordinary loss in weight/volume, or ordinary wear and tear of the subject matter insured 3. Insufficient and unsuitability of packing 4. Inherent wise or nature of the subject matter 5. Delay even though caused by insured perils 6. Insolvency or financial default of the ship owners 7. Nuclear perils 8. Unseaworthiness and unfitness of the vessel/conveyance (if the Assured is not aware of) 9. War and warlike perils and strike perils. War perils and strike perils can be covered concurrently by attaching Institute War and Strike Clauses. DURATION OF COVER UNDER INSTITUTE CARGO CLAUSES 1. The risk attaches from the time the goods leave the warehouse or place of storage at the place named herein for the commencement of the transit, continues during the ordinary course of transit and terminates either. 2. On delivery to the consignees or other final warehouse or place of storage at the destination named herein.
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3.

4.

On delivery to any other warehouse of place of storage whether prior to or at the destination named herein which the Assured elect to use either, a) For storage other than in the ordinary course o transit or b) For allocation or distribution or On the expiry of 60 days after completion of discharge over side of the goods hereby insured from the oversea vessel at the final port of discharge, whichever shall first occur.

Delay Inherent vice or nature of subject matter War perils Strike perils (Strike perils can be covered at an additional premium by attaching SRCC clauses) TIME LIMITS AS PER TRANSIT CLAUSES OF VARIOUS CARGO CLAUSES ICC A, B AND C 60 DAYS ICC AIR CARGO 30 DAYS INLAND TRANSIT 7 DAYS WAR CLAUSES (SEA) WATERBORNE WAR CLAUSES (AIR) ON DISCHARGE STRIKE CLUASE (SEA) 60 DAYS STRIKE CLAUSE (AIR) 30 DAYS SRCC 7 DAYS COMMODITY TRADE 60 DAYS COAL 60 DAYS JUTE 15 DAYS NATURAL RUBBER 30 DAYS TIMBER 60 DAYS BULK OIL 60 DAYS INCIDENTAL CLAUSES COMPREHENSIVE CLAUSE INSTITUTE REPLACEMENT CLAUSE PAIR AND SET CLAUSE CUTTING CLAUSE LABLE CLAUSE PICKING CLAUSE CARBLING CLAUSE FACTORS INFLUENCING THE RATING 1. VESSEL Overage Tonnage
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INSTITUTE TRADE CLAUSES 1) Institute Commodity Trade Clause A, B & C 2) Institute Coal Clauses 3) Institute Jute Clauses 4) Institute Natural Rubber Clauses 5) Institute Timber Trade Federation Clauses 6) Institute Bulk Oil Clauses 7) Institute Frozen Food Clauses Exclg. Meat 8) Institute Frozen Meat Clauses 'A' & 'C INLAND TRANSIT RAIL/ROAD CLAUSES 'C' RISK COVERED UNDER CLAUSE - C 1. Fire 1. Lightning RISK COVERED UNDER CLAUSE - B Besides coverage under 'C' the clauses 'B' additionally covers : 1. Breakage of bridges 2. Coalition with or by the carrying vehicle 3. Overturning of the carrying vehicle 4. Derailment of accident of like nature to the carrying rail wagon/vehicle RISK COVERED UNDER CLAUSE - A All risks except those specifically excluded INLAND TRANSIT RAIL/ROAD CLAUSES - EXCLUSIONS Willful misconduct Ordinary/inevitable loss or damage Insufficient or unsuitable or preparation
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Flag Type Classification 2. SUBJECT MATTER Nature of packing Bulk or bagged cargo Inherent vise or Nature of cargo 3. PROPOSER Status Moral Hazard 4. Terms of Cover Restricted All Risk Cover 5. VOYAGE Route Distance and Destinations GENERAL AVERAGE A loss caused by or directly consequential on a general average act. The act include a GA sacrifice as well as a GA expenditure Voluntarily and intentionally but reasonably made or incurred in time of peril for the common safety of the property imperiled in a maritime adventure GA Sacrifices Damages to ship's anchors and/or cables whilst attempting to refloat a stranded vessel Bulkhead broken to reach the seat of fire in the lower holds Sails and spares lost while forcing the vessel off the ground Burning of ships materials as fuel to reach nearest port of refuge in time of peril Jettisoning of cargo and freight lost on the same Damage to other cargo by water used for fire fighting

GA Expenditure Cost of entering and leaving the port of refuge and the cost of loading and reloading of cargo at a port of refuge and incidental storage charges Hire charges for craft for lightening the vessel or hire charges for tugs used to tow the vessel to a port of refuge Wages and maintenance of crew members for the extra time Sue and Labour Charges Incurred in terms of duty of the assured clause Expenses reasonably incurred for averting or minimising the loss Payable irrespective of percentage even in addition to total loss Incurred short of destination Reconditioning cost to prevent aggravation of damage-hides damaged by sea water extra fader for live cattle on board Incurred when loss is eminent/threatened not short of destination is particular charge as well as sue and labour Salvage Charges Remuneration charged on no-cure-no-pay basis by the salvors who voluntarily and independently of any contract render services to rescue or save the property endangered at sea The charges are substantial. The admiralty Court and other courts recognise and encourage such charges The salvors are having the lean over the property saved till their charges are paid

TYPE OF CARGO POLICIES

Specific Policy Open Policy Special Declaration Policy Annual Policy Open Cover Sellers' Contingency Policy Duty and Increased Value Policy SPECIFIC POLICY Isolated shipments covered by issue of individual policies for a specific voyage/transit
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OPEN POLICY A type of floating policy and it is a stamped documents To take care of frequent transit with considerable turnover Issued for covering inland transit Sum insured normally representing annual turnover can be enhanced from time to time to suit the requirement Unstamped certificate can be issued for each dispatch/declaration Sec 31 of the Act declaration should be in the order of dispatch Sum insured stands reduced gradually to the extent of dispatches declared Policy ceases on expiry date or on exhaustion of the total sum insured whichever shall first occur Limit per bottom and limit per location clearly specified Basis of valuation specified Rate of premium and terms of cover agreed in advance and remained unchanged throughout the policy period Provide for inspection of insured's records Subject to cancellation with 30 days notice SPCIAL DECLARATION POLICY SDP is form of floating policy to clients having large turnover and frequent inland dispatches minimum turnover stipulated is Rs. 2 crores accepted on the basis of completed proposal Can not be assignable or transferable but claim can be settled in favour of consignee with consent of the insured Sum insured shall be on the basis of previous year's turnover or estimated annual turnover Entire premium charged on the total turnover/sum insured is collected in advance discount in premium up to a maximum of 50% is allowed on slab system based on turnover ANNUAL POLICY Issued for 12 months period Only to cover transport of goods belonging to or held in trust by the insured amongst depots owned or hired by the insured within the country The sum insured should represent estimated annual turnover premium depends on distance and single carrying limit e.g. < 80 km twice SCL or 1% of T/o; > 8- km and < 500 km 4 times SC or 2% of T/o >500 km 6
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times SCL or 3% of T/o the rate of premium is charged on these limits only and not on the total turnover Policy is subject to condition of average Policy is not assignable or transferable no contract of afrieghtment is necessary Accepted on the basis of completed proposal Reinstatement of sum insured upon payment of claim is permitted Basis of valuation should be prime cost plus expenses incidental to transit OPEN COVER To provide continuous, automatic and guaranteed coverage to a regular importer or exporter issued for a period of 12 months with out specifying the sum insured only limit per bottom and limit per location are specified Unstamped document only an agreement in writing Individual stamped certificate/policy is issued on receipt of shipment details Rate of premium terms and conditions are setout in the open cover and remain unchanged throught the period Unintentional genuine omissions is held covered Subject matter is broadly defined Basis of valuation is specified Cancellation 30 days for marine & 7/2 days for War & SRCC SELLER'S INTEREST CONTIGENCY To cover physical loss or damage to consignment sold on FOB and C&F contracts in case the buyer repudiates the sale or fall to honour the shipping documents by reason of total loss of consignment during voyage. Normally combined with the seller's cargo insurance covering the goods from his warehouse until it is loaded onto the ship. When it is done so, the cover attaches during transit from warehouse to ship and gets suspended after loading on to the ship. The cover reattaches with retrospective effect when the above contingencies takes place. Consequent expenses on storage and transshipment are not covered. Claim recoverable under ECGC of India is also not payable Existence of such policies should be made more secretive to avoid possible misuse.
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The insured's status and the moral hazard are the prime factors for the acceptance of the proposal. DUTY & INCREASED VALUE POLICY Insurance is on increased value of the cargo by reason of payment of custom duty at destination. Insurance is on increased value by reason of market value of goods at destination on the date of landing Not on agreed value policy and pays for only pure indemnity. Can be issued only when there is a basic CIF Insurance Issued in favour of persons holding import license or any other persons in whose favour the import license is officially endorsed. The scope and duration are identical to the CIF Insurance. In case of duty insurance a fraction of rate of premium of CIF insurance is charged and in case of increased value 100% rate of premium is charged. Claim is admissible only when claims under CIF policies admitted. Cannot be issued after arrival of the vessel at destination.

1. 2.

Institute Time Clauses-Hulls-Total Loss, General Average and three-fourths (3/4ths) Collision Liability (01.10.1983) Institute Time Clauses-Hulls-Total Loss only (including Salvage, Salvage charges and sue and Labour), 01.10.1983

Institute Time Clauses-Hulls-Disbursements and Increased Value (Total Loss only, including Excess Liabilities), 01.10.1983 ITC-HULLS, 01.10.1983 Indemnity provided for : 1. Total loss of vessel including actual and constructive total loss. 2. Cost of repairing damages it includes particular Average and General Average sacrifices. 3. Unrepaired damage allowance for depreciation in the value on expiry provided the ship has not become a total loss during the policy period. 4. Sue and Labour expenses 5. Salvage charges 6. General Average Contribution 7. 3/4th collision liability PERILS COVERED Uncontrollable: Perils of the seas, rivers, lakes or other navigable waters; Fire, explosion; Violent theft by persons outside the vessel; Jettison; Piracy; Breakdown of or accident to nuclear installations or reactors; Contact with aircraft or similar object, or objects falling there from land conveyance, dock or harbour equipment or installation; Earthquake, volcanic eruption or lightning. Controllable: Accidents in loading, discharging or shifting cargo or fuel; Bursting or boilers, breakage of shafts or any latent defect in the machinery or hull; Negligence of master, officers, crew or pilots; Negligence of repairers or charterers, provided such repairers or charterers are not the assured under the policy;
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MARIN HULL
Intend to provide insurance cover to ship owners' for their various insurable interest

SUBJECT MATTER FOR INSURANCE

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Hull & Machinery Freight at risk Disbursement and Increased value Premium reducing Return of Premium Loss of hire Loss of Profit Ship repairs Builder's Risk Charter's Liability

COVERAGE
Terms of cover for the marine hull policies are set out in the form of Institute Time Clauses Hulls The variation limiting the hull cover is provided as follows :
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Barratry of master, officers or crew provided such loss/damage has not resulted from want of due diligence by the assured, owners or managers. Other Perils: Pollution Hazards provides cover if the vessel is damaged by deliberate action by govt. authorities following casualty covered under the policy to avoid pollution. 3/4th Collision liability 1. 2. 3. Loss/Damage to any other vessel or property on any other vessel; Delay to or loss of use of any such other vessel or property thereon; General Average of, salvage of, or salvage under contract of, any such other vessel or property thereon;

TERMINATION CLAUSE On change of classification Change, suspension, discontinuance, withdrawal or expiry of class of the vessel. Change of ownership or flag Transfer of management Change of charter on bareboat basis Requisition for title or use of the vessel 15 days cover provided for regularisation

Prevailing repair cost Collision bulk head Propulsion Engine particulars Capacity of fuel tank FEA Valuation Classification Registration Pre Insurance Survey Trading Warranty Claims experience Cover Required Moral Hazard

PROTECTION & INDEMNITY COVER

Association of ship owners for mutual benefit with separate legal entity managed by board of directors and full time employees. Financed by initial premium paid by members. Additional requirements are paid by members on calls. Provide protection to its members towards 1. Statutory obligation towards master and crew members as provided by mercantile shipping Act. 2. Contractual liabilities towards cargo owners as per provided in the bill of lading. 3. 1/4th Collision liability 4. Cost incurred towards removal of wreck from the harbour/port 5. Damage towards Jetties, wharves etc and other properties of the port authorities.

UNDERWRITING CONSIDERATIONS
Type of vessel Construction Name of the builder Year of make Age of the vessel Tonnage (GRT & DWT) Single/Double bottom Single/Twin engine Flag Trade Singleton/Fleet Management of Vessel
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TYPES OF LOSSES
1. TOTAL LOSS ACTUAL Where the subject matter is destroyed, or so damaged as to cease to be thing of the kind insured, or when the assured is irretrievably deprived off. 2. CONSTRUCTIVE TOTAL LOSS When the subject matter is reasonably abandoned because either the actual total loss appears unavoidable or to prevent the actual total loss the required
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expenditure is more than the saved value. When the insured is deprived of the subject matter and it is unlikely that he can recover it or the cost of recovery would exceed its value when recovered. 3. PARTICULAR AVERAGE Partial loss of the subject matter which does not include a general average loss. 4. GENERAL AVERAGE GA sacrifices as well as a GA expenditure voluntarily and intentionally but reasonable made or incurred in time of peril for the common safety of the property imperiled in a maritime adventure. 5. SUE & LABOUR CHARGES These are incurred in terms of duty of the assured clause. These expenses reasonably incurred for averting or minimising the loss. It is payable irrespective of percentage even in addition to total loss. It should Incurred short of destination. Reconditioning cost to prevent aggravation of damage hides damaged by sea water extra fader for live cattle on board. 6. PARTICULAR CHARGES Reconditioning cost incurred when loss is eminent/threatened not short of destination is particular charge as well as sues & labour. 7. SALVAGE CHARGES Remuneration charged on no-cure-no-pay basis by the salvers who voluntarily and independently of any contract render services to rescue or save the property endangered at sea. 8. EXTRA CHARGES Survey fees and sale charges etc.

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AVIATION INSURANCE
HISTORY
WRIGHT Brothers - The real pioneers 1903 Initial Flight Records: 1903 duration12 seconds height 120 ft 1918/19 duration one hour speed 125 miles per hour for 33 hrs (nonstop) By Charles Lindborgh Translantic Flight from America to Europe Highest recorded number of single type of aircraft ever manufactured DC - 3 - DAKOTA by Douglas USA. 1st commercial flight - London - Paris in 1919. British and French Industry produced 'CONCORDE' that used to fly faster than the speed of sound. BOEING X AIRBUS Industries presently dominate the Market. Research and development is proactive in prevention of accidents eg. ANTI -COLLISION System, Smoke Detection System. 1910 First Accident Damage Cover offered Only Passenger and Third Party Liability Covers issued initially. Post 1st World war First Policy under Aviation business was issued in Marine Hull Section to cover the aircraft. Aviation Insurance influenced by Marine and Accident Insurance 1934 British & European Underwriters formed International Union of Aviation Insurers Post World War II British Aviation Insurance Group developed a comprehensive policy with Hull and Liability Sections 1960 LAD was set up 1993 AVN 67B 09/11 incidents had given huge impact on Aviation Insurance.

AVAITION INSURANCE

AVIATION INSURANCE CUSTOMERS:

Airlines Private Operators Pilots / Crew Aircraft Manufacturers / Repairers / Service Providers at the airport Airport Owners Re-fuellers

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IMPORTANT AVIATION COVERS:

Aircraft Policy covering Aircraft Hull and Liabilities Spares All Risks Cover Hull War Risks Cover Pilot / Crew Personal Accident Pilot Loss of License Airports Owners / Operators' Liability Aircraft Refueling Liability Hull Deductible Insurance Unearned Premium Insurance

law, military or usurped power or attempts at usurpation of power. b) Any hostile detonation of any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter. c) Strikes, riots, civil commotions or labour disturbances.

d) Any act of one or more persons, whether or not agents of a sovereign power, for political or terrorist purposes and whether the loss or damage resulting there from is accidental or intentional. e) Any malicious act or act of sabotage. Confiscation, nationalisation, seizure, restraint, detention, appropriation, requisition for title or use by or under the order of any Government (whether civil military or de facto) or public or local authority.

DEFINITIONS
f) AIRCRAFT : The word aircraft would mean the aircraft described herein and in addition to the airframe shall include power plants, propellers, rotors and appliances forming part of the aircraft at the inception of coverage hereunder, including parts detached and not replaced by other similar parts. FLIGHT: Flight means from the time the Aircraft moves forward in taking off or attempting to take off, whilst in the air, and until the Aircraft completes its landing run. A rotor wing aircraft shall be deemed to be in Flight when the rotors are in motion as a result of engine power, the momentum generated there from, or autorotation. GROUND: Ground means whilst the Aircraft is not in Flight or Taxiing or Moored as defined above. TAXIING: Taxiing means movement of the aircraft under its own power (other than in flight as defined above). Taxiing shall not be deemed to cease merely by reason of a temporary halting of the Aircraft. MOORED: Moored means, in the case of aircraft designed to land on water, whilst the aircraft is afloat and is not in Flight or Taxiing (as defined above), and it includes the risks of launching and hauling up.

g) Hi-jacking or any unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) made by any person or persons on board the Aircraft acting without the consent of the Insured. Furthermore this Policy does not cover claims arising whilst the Aircraft is outside the control of the Insured by reason of any of the above perils. The Aircraft shall be deemed to have been restored to the control of the Insured on the safe return of the Aircraft to the Insured at an airfield not excluded by the geographical limits of this Policy, and entirely suitable for the operation of the Aircraft (such safe return shall require that the Aircraft be parked with engines shut down and under no duress).

EXTENDED COVERAGE ENDORSEMENT (AVIATION LIABILITIES): AVN52D

1. WHEREAS the Policy of which this Endorsement forms part includes the War, Hi-Jacking and Other Perils Exclusion Clause (Clause AVN48B), IN CONSIDERATION of an Additional Premium of ....................., it is hereby understood and agreed that with effect from ....................., all sub-paragraphs other than ............ of Clause AVN48B forming part of this Policy are deleted SUBJECT TO all terms and conditions of this Endorsement. EXCLUSION applicable only to any cover extended in respect of the deletion of sub-paragraph (a) of Clause AVN48B
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WAR, HI-JACKING AND OTHER PERILS EXCLUSION CLAUSE (AVIATION) AVN48B

This Policy does not cover claims caused by a) War, invasion, acts of foreign enemies, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, martial
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2.

Cover shall not include liability for damage to any form of property on the ground situated outside Canada and the United States of America unless caused by or arising out of the use of aircraft. 3. LIMITATION OF LIABILITY The limit of Insurers' liability in respect of the coverage provided by this Endorsement shall be a sub-limit of US$ 50,000,000 or the applicable Policy Limit whichever the less any one occurrence and in the annual aggregate except with respect to passengers to whom the full Policy limit(s) shall apply. This sub-limit shall apply within the full policy limit and not in addition thereto. AUTOMATIC TERMINATION To the extent provided below, cover extended by this Endorsement shall TERMINATE AUTOMATICALLY in the following circumstances: (i) All cover -upon the outbreak of war (whether there be a declaration of war or not) between any two or more of the following States, namely, France, the People's Republic of China, the Russian Federation, the United Kingdom, the United States of America (ii) Any cover extended in respect of the deletion of sub-paragraph (a) of Clause AVN48B - upon the hostile detonation of any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter whosesoever or whomsoever such detonation may occur and whether or not the Insured Aircraft may be involved (iii) All cover in respect of any of the Insured Aircraft requisitioned for either title or use -upon such requisition PROVIDED THAT if an Insured Aircraft is in the air when (i), (ii) or (iii) occurs, then the cover provided by this Endorsement (unless otherwise cancelled, terminated or suspended) shall continue in respect of such an Aircraft until completion of its first landing thereafter and any passengers have disembarked. 5. REVIEW AND CANCELLATION a) Review of Premium and/or Geographical Limits (7 days) Insurers may give notice to review premium and/or geographical limits such notice to become effective on the expiry of seven days from 23.59 hours GMT on the day on which notice is given.
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b) Limited Cancellation (48 hours) Following a hostile detonation as specified in 4 (ii) above, Insurers may give notice of cancellation of one or more parts of the cover provided by paragraph 1. of this Endorsement by reference to sub-paragraphs (c), (d), (e), (f) and/or (g) of Clause AVN48B - such notice to become effective on the expiry of forty-eight hours from 23.59 hours GMT on the day on which notice is given. c) Cancellation (7 days) The cover provided by this Endorsement may be cancelled by either Insurers or the Insured giving notice to become effective on the expiry of seven days from 23.59 hours GMT on the day on which such notice is given.

4.

d) Notices All notices referred to herein shall be in writing.

AIRCRAFT INSURANCE POLICY:

The Insurers will pay for: (Agreed Value / Insured Value) Accidental loss of or damage to the Aircraft Accident means any one accident or series of accidents arising out of one event. Disappearance - aircraft is unreported for sixty days after the commencement of Flight Expenses necessarily incurred for the immediate safety of the aircraft consequent upon damage or forced landing. (up to 10 % of the Amount Insured) Exclusions under this Section (Loss of or Damage to Aircraft): wear and tear, deterioration, breakdown, defect or failure But Accidental loss of or damage to the Aircraft consequent upon wear and tear etc. is covered. Damage to any Unit by anything which has a progressive or cumulative effect. IMPORTANT DEFINITIONS: Flight means Fixed Wing: from the time of the aircraft moves forward in taking off or attempting to take off, whilst in the air and until the aircraft completes its landing run.
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Rotor Wing: when the rotors are in motion as a result of engine power, the momentum generated there from. Taxiing means movement of the aircraft under its own power other than in flight. Taxiing shall not be deemed to cease merely by reason of a temporary halting of the aircraft. Moored means in the case of aircraft designed to land on water, whilst the aircraft is afloat and is not in flight or taxiing. Ground means whilst the aircraft is not in flight or taxiing or moored. SECTION II LEGAL LIABILITY TO THIRD PARTIES: Sums which the Insured is legally liable to pay in respect of Accidental bodily injury Accidental damage to property caused by the Aircraft or by any person or object falling there from. What is not covered: - Injury or loss sustained by Director / Partner flight, cabin or other crew passenger - Loss or damage to any property belonging to or in the care, custody or control of the Insured. SECTION III LEGAL LIABILITY TO PASSENGERS Legal liability towards accidental bodily injury (fatal or otherwise) to passengers whilst entering, on board, or alighting from the Aircraft and Loss of or damage to baggage and personal articles of passengers arising out of an Accident to the Aircraft. GENERAL EXCLUSIONS (APPLICABLE TO ALL SECTIONS): Illegal Uses Outside the Geographical Limits Piloted by any person other than the pilot Transportation by Other Conveyance Landing and Take-off from a place not complying with the recommendations laid down by the manufacturer Contractual Liability
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Number of passengers exceeds the declared maximum number of passengers. Claims payable under any other policy or policies. Nuclear Risks Exclusion. War, invasion, acts of foreign enemies, hostilities, civil war etc. Hostile detonation of any weapon of war employing atomic or nuclear fission and/or fusion or radioactive force or matter Strikes, riots, civil commotions or labour disturbances. Terrorist act Malicious Act or Act of Sabotage Confiscation, nationalization seizure, restraint, detention, appropriation, requisition for title or use by or under the order of any Government Hi-jacking or any unlawful seizure or wrongful exercise of control of the aircraft. CONDITIONS (APPLICABLE TO ALL SECTIONS): Due Diligence Compliance with air navigation and airworthiness orders and requirements issued by any competent authority. Immediate notice of any event likely to give rise to a claim. Right to Insurers to take control of all negotiations and proceedings to settle, defend or pursue any claim. Right of Subrogation. Notice of Variation in Risk. Notice of Cancellation. Law and Jurisdiction The terms of the policy to apply separately of each aircraft covered under the policy in the event of two or more aircraft being covered. Limit of Indemnity not to exceed the Limits specified in the Policy. False and Fraudulent claims will result in Policy becoming void. IMPORTANT CLAUSES: AVN 23A Unlicensed Landing Ground Suitability Clause AVN 26A Aircraft Laying up Returns Clause AVN 34 Passenger Voluntary Settlement Endorsement AVN 38B Nuclear Risks Exclusion Clause AVN 46B Noise and Pollution and Other Perils Exclusion Clause AVN 48B War, Hi-jacking and Other Perils Exclusion Clause (Aviation)
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AVN 52E AVN 62 AVN 67B AVN 72 AVN 76

Extended Coverage Endorsement (Aviation Liabilities) Search and Rescue Extension Clause Airline Finance / Lease Contract Endorsement Clause Contract (Rights of Third Parties) Act 1999 Exclusion Clause Supplementary Payments Clause

Confiscation, nationalization, seizure, restraint, detention by any Government Hi-jacking or any unlawful seizure or wrongful exercise of control of the aircraft (made by any person or persons on board the aircraft). SECTION II EXTORTION AND HI-JACK EXPENSES Indemnification up to 90% of the limit stated in the Schedule for: threats against aircraft / its passengers / crew extra expenses necessarily incurred following confiscation EXCLUSIONS The Policy will not cover Loss or damage caused by: a) War between any of the following States: UK USA France The Russian Federation China b) Confiscation by any Government named in the schedule Use of any chemical, biological or biochemical materials unless used in the Hijack or for extortion purpose. This exclusion also does not apply to use of such materials on board the aircraft. If the material is outside the aircraft the policy would provide coverage only when there is resultant physical damage to the aircraft only when the wheels of the aircraft are not in contact with the ground. Any emission, discharge, release or escape originating external to the Aircraft that causes damage to the Aircraft as a result of contamination without other physical damage to the Aircraft exterior is not covered by the Policy. d) Any debt, failure to provide bond or security or any other financial cause under court order e) Repossession by Title Holder f) Delay, loss of use and consequential losses. g) Any use of radioactive contamination or matter. This Exclusion not to apply to loss of or damage to an Aircraft if such use originates (i)on board the Aircraft or (ii)external to the Aircraft and causes physical damage to the Aircraft whilst the Aircraft's wheels are not in contact with the ground h) Any use of an electromagnetic pulse. This exclusion not to apply to loss of or damage to an Aircraft if such use originates on board such Aircraft, whether it is on the ground or in the air. i) Atomic or nuclear fission and/or fusion or other like reaction. Any
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SPARES ALL RISKS COVER: Physical Loss of or Damage to the Spares Engines Equipment -owned or operated by insured -whilst on the ground or being carried as cargo in transit, or -whilst on the ground or other premises for storage. Information Required: Value of the Spares Where the spares are stored Limit any one Location Limit any one sending / transit War and Allied Perils: Both Hull and Liability Sections of the Aircraft Policy exclude war perils War, Hijacking and Other Perils Exclusion Clause (Aviation) - AVN 48B Many of the risk Excluded under AVN 48B can be covered, but the method of achieving the coverage varies. Hull: Aviation Hull War and Allied Perils Policy-LSW 555C/D Liability: Extended Coverage Endorsement (Aviation Liabilities)AVN52D/E/F/G

AVIATION HULLWAR AND ALLIED PERILS POLICY:

SECTION I LOSS OF OR DAMAGE TO AIRCRAFT War, invasion Strikes, riots, civil commotions or labour disturbances Any act for political or terrorist purposes Any malicious act or act of sabotage
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radioactive contamination and electromagnetic pulse resulting directly from such detonation is also excluded. POLICY FEATURES: The Hull War Risk Policy is subject to the same warranties, terms and conditions as are contained in the Assureds Hull ''All Risks'' Policy except as regards: i) The premium, ii) The obligations to investigate and defend, iii) The renewal agreement (if any), iv) The amount of deductible v) Aggregate Limit Aggregate Limit First introduced after the events at Dawson's Field in Jordan in September, 1970. This is a specified maximum sum that will be payable in respect of any or all claims made in respect of events occurring during the Policy period. This limit will usually be around the sum of the top three valued aircraft. Notice of Cancellation 7 Days notice for review of premium rates and geographical limits. Notice of Cancellation: 7 days prior to the end of each quarter from inception. Automatic Cancellation: Within 7 days from the time of any hostile detonation of any weapon of war employing atomic or nuclear fission and / or fusion upon outbreak of war between the five countries. EXTENDED COVERAGE ENDORSEMENT (AIRCRAFT HULLS) AVN 51 Provides Limited Hull Write back Cover When attached to the HAR Policy, the perils excluded under paragraphs (c), (e) and (g) of the AVN 48B are written back. WAR AND ALLIED PERILS Cover for Spares If the spare parts and equipment are insured for all risks under the Hull Policy, the war risks coverage will be afforded under the Hull War and Allied Perils Policy. If there is a separate Policy for Spares, coverage against war perils will be provided by that policy by addition of : Institute War Clauses CL 258 and Institute Strike Clauses CL 260.
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LSW 555C The exclusion relating to the use of chemical, biological or biochemical materials does not apply when the material is used in i) The Hijacking provided there is a loss of or damage to the aircraft ii) Any threat against the Aircraft / passengers / crew only in respect of payments toward extortion and hi-jack expenses. The Policy also excludes loss of or damage to the aircraft due to the use of radioactive contamination or matter LSW 555D The exclusion relating to the use of chemical, biological or biochemical materials not to apply to hijack and extortion as in LSW 555C. The exclusions if the use of such materials is on board such Aircraft OR if use of such material is external to the Aircraft causing physical damage whilst the Aircraft's wheels are not in contact with the ground. Damage due to contamination without any external damage is not covered. The above conditions will also apply to the exclusion relating to use of radioactive contamination or matter. War write-back on Liability Cover: Prior to 9/11 war write-back on Liability cover was by way of attachment of AVN 52C cover. The write-back was available to the full extent of the liability limit. Post 9/11, underwriters began restricting their liability in respect of war exposures by introducing AVN 52D/E. EXTENDED COVERAGE ENDORSEMENT (AVIATION LIABILITIES) AVN 52E: Coverage The perils excluded under AVN 48B are written back to the Liability Cover subject to additional premium. In respect sub-para a of Clause AVN 48B (War, invasion, acts of foreign enemies, hostilities, civil war, rebellion, revolution, insurrection, martial law, military or usurped power or attempts at usurpation of power), the policy does not cover liability for damage to property on the ground situated outside Canada and USA unless caused by or arising out of the use of aircraft. Limitation of Liability The Limit of Insurers' Liability is limited to the extent specified. Unlike the liability limit this limit is an aggregate limit. Automatic Cancellation Upon outbreak of war between France, China, the Russian Federation, UK and USA
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Hostile detonation of any weapon employing atomic or nuclear fission and / or fission. Repossession of the aircraft for either title or use. Review and Cancellation 7 days notice to review premium and / or geographical limits. 48 hours notice following a hostile detonation of atomic or nuclear weapon 7 days notice for cancellation

AIRPORT OWNERS' AND OPERATORS' LIABILITY SECTION 1 Bodily injury or property damage: a) In or about the premises specified in the Schedule, as a direct result of the services granted by the Insured. b) Elsewhere in the course of any work or of the performance of any duties carried out by the Insured or his employees in connection with the business or operations specified in the schedule. SECTION 2 Loss of or damage to Aircraft or Aircraft Equipment: not belonging to the Insured whilst on ground in the care, custody or control or whilst being serviced, handled or maintained by the Insured SECTION 3 Bodily Injury or Property damage arising out of Products / goods Manufactured / repaired / serviced / supplied / distributed by the insured Provided the products / goods which form part of or are used in conjunction with aircraft and only after such goods / products have ceased to be in the possession or under the control of the insured. AIRPORT OWNERS' AND OPERATORS' LIABILITY EXCLUSION Liability arising out of the operation of an airfield control tower (unless previously agreed by the Insurers) AVIATION INSURANCE RATING: Experience Rating Premium reflects the loss experience of the Individual Risk. Class Rating Risks are allocated by classification. Aviation Insurance is a mixture of Class Rating and Experience Rating. AVIATION INSURANCE - UNDERWRITING ASPECTS: Aviation Business can be categorized into: Airline Business - Operating with a fleet of large aircraft. General Aviation Business - All other business will come under General Aviation Business.
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PILOT / CREW PERSONAL ACCIDENT INSURANCE:

Covers the Insured, their employees TYPES: Named Personnel on 24 hour basis Un-named personnel whilst they are boarding / alighting from / flying in one of insured's aircraft. EXCLUSIONS: Death and Disablement from War, invasion etc. Radioactive contamination Dangerous activities Suicide or Attempted Suicide AIDS Deliberate exposure to danger Pregnancy or childbirth LOSS OF LICENSE INSURANCE: Operating crew of the aircraft are required by law to have a valid professional license from the Competent Authority for carrying out their professional duties. The issuance and renewal of the license is subject to certain terms and conditions. The License is liable to be suspended either temporarily or permanently. This insurance covers consequential loss arising out of suspension of the license on medical grounds.
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Underwriting Considerations:

Lease Agreements Government Regulations Geographical scope of operation including nature of terrain Concentration of Population Extent of Exposure vis--vis limit Law in the countries where aircraft operates Claims Experience For Passenger Liability Number of Passenger seats, Type of Passengers, Liability Limit on Admitted basis, Regulations applicable.

Aviation Insurance Business

General Aviation Business

Airline Business

Fixed Wing Large Aircraft

For PA to Pilots and Crew Whether 24 hours cover required or flight only cover required, experience of the pilot, nature of aircraft operated, Accident History, Limit required vis--vis earnings. For Loss of License Cover Age of the Pilot, Limit required vis--vis earnings.

Fixed Wing Small Aircraft

Rotor Wing Aircraft

For Airport Owners' and Operators' Liability Cover: Aircraft Movement, Number of passengers, Revenue Earnings, Number of Airports to be covered. Aviation Insurance Airlines in India: National Carriers : Air India, Indian Airlines Established Private Carriers : Jet Airways, Air Sahara, Air Deccan, Kingfisher, Spice Jet, Paramount Airways, Go Air, Indus Cargo/Courier Services: Blue Dart Aviation Reinsurance Retention is an amount an insurance company is willing to risk for its own account from a single loss. Factors Influencing Retention: 1. Capital & Free Reserves. 2. Estimated Premium Income. 3. Profitability of Portfolio.
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For Hull All Risk Cover: 1. Type of Business (Airline / General Avn.) 2. Type of aircraft (FW / RW) 3. Model 4. Age of the aircraft 5. Size of the Aircraft 6. Value of the aircraft 7. Use 8. Maintenance of the Aircraft 9. Pilots 10. Area of Operations 11. Claims Experience 12. Fleet size 13. Aircraft Utilization 14. Market conditions 15. Client - Operator, Reputation, Capability For Liability Cover: Aircraft Size
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4. 5. 6. 7.

Type and Spread of Risks. Reinsurance Type and Cost. Corporate Strategy. Market Conditions.

Size of the Portfolio may not be suitable for Treaty Protections. Time Consuming. Higher Administrative Costs. Suitable for: - HAR, HWR covers of GA Business. - Standalone Liability covers like Refueling Liability, Airport Owners' & Operators' Liability etc. - Airline Fleet Policies. Current Scenario: Aviation Insurance constitutes a miniscule percentage of the Indian insurance market accounting for 1.7% of the premium underwritten by all the non life insurance companies. Globally the premiums have been falling since 2001 due to reduction in the number of accidents. But major losses incurred by airlines globally in 2007, around $1.8 billion have been a setback to the aviation insurance sector. The crash of a TAM Airbus A320 in Sao Paulo, Brazil in July and a Kenya Airways B737 near 'Douala', in Cameroon in May, alone are expected to cost airline insurers almost $700million. With the cost of claims soaring, the capacity reducing, the market becoming hard, the rates of premium are expected to rise. The Indian aviation industry is moving at a fast pace growing at a rate of 18 per cent annually and this growth is expected to continue. IATA reckons India to be a driving force behind the world's civil aviation business that is globally expected to grow from US$ 5.1 billion to US$ 5.6 billion this year. Government estimates are that India's fleet will be around 500-550 aircrafts by the end of 2010, which was only 130 a few years ago. International budget carriers, especially low-cost carriers are making a beeline for India. India continues to grow steadily with a 7 per cent increase in the number of flights. The number of air travelers increased by 38.5 per cent in 2006-07 and are anticipated to double over the next decade. Handling of such traffic will require more airports, aircrafts, pilots, and ground handling person. To sustain this growth several improvements are envisaged, including government's airport modernization plan involving investments of US$ 9 billion by 2010. With the entry of low cost airlines along with fleet expansions and increasing corporate aircraft ownership, and projected growth in various spheres of aviation industry there will be demand for various aviation insurance products and the market is all set to expand in a major way. Aviation insurance is a specialized branch of insurance. The risks are evaluated based on information such as(i)name, address, age, business of the aircraft owner
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Factors Affecting Aviation Reinsurance Program: Large losses affecting individual risks Territorial scope Aircraft Manufacturing, Repair and Maintenance Activities Liability Covers long tailed Expertise of the Insured Proportional Treaties: Insurer can react more quickly Independence in Operation for the Insurers Lower Administrative Costs Are not very popular as: - They do not produce Adequate Capacities - An Insurer does not get the advantage of the worldwide results and is insulated from worldwide trends. - International Expertise Unavailable Suitable for: General Aviation Business Excess of Loss: Specific Excess of Loss Suitable for Liability Covers, AVN 52E covers, Hull Deductible Covers. Facultative: Each risk needs to be negotiated on its own merits. Re-insurers like to have more control over underwriting of the risk. Better cash flow. Expertise of the facultative reinsurer is available. World rates may differ from regional experience.
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(ii)aircraft make, model, year of manufacture and value (iii)purpose for which aircraft will be used (iv)name, age, ratings and experience of the pilots,(v)type of hull and liability coverage (vi) past loss experience. Aviation market is different from other non life insurances and in terms of size is much smaller than that of other non life branch of insurance .Though the limits of acceptance for offices are low or nil, the marketing officials and underwriters of operating and Regional Offices must have sufficient knowledge of aviation insurance products to understand the requirement of the clients and explain the coverage, terms and conditions to the customers. To equip the personnel dealing with aviation insurance this Manual includes at length profiles of nine aviation policies catering to different proposers of aviation Insurance.

Section II Provides cover for insured's legal liability to third party for compensation against accidental bodily injury (fatal or non fatal) to persons and accidental damage to property caused in direct connection with the aircraft. Section III Provides cover for insured's legal liability for compensation for accidental bodily injury (fatal or non fatal) to passengers while entering into, being carried in or alighting from the aircraft. Legal Expenses The Company also pays (within the agreed limits of liability), legal expenses incurred with its written consent in connection with claims for death or injury to passengers or third parties, or loss of or damage to property of third parties. Exclusions Illegal purpose or any purpose other than stated; Outside the Geographical limits stated; Piloted by any person other than stated; Total number of passengers carried exceeds the declared number stated; War, hijacking and allied perils; Nuclear risks. Conditions Insured shall use due diligence to avoid accidents; Compliance with all air navigation and air worthiness orders and requirements; Immediate notice of any event likely to give rise to a claim. Policy may be cancelled by insurers or insured by giving 10 days notice. If cancelled by the insurer they will return prorate portion of premium. If cancelled by the Insured, return of premium shall be at the discretion of the Insurer. Extensions On the written request of the Insured and on payment of additional premium, the Policy can be extended to cover passenger liability on an Admitted Liability basis instead of Legal Liability (AVN 34A). The Policy can be extended to indemnify the Insured in respect of his legal liability for compensation for damage to or loss of passengers' personal baggage while being loaded into, carried in or unloaded from the aircraft but only when arising out of an accident to the Aircraft. 3. Underwriting Guidelines Duly completed proposals forms are to be referred to HO, Technical for approval of rates/ terms.
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Different Policies in Details:

Aircraft Hull/Liability
Class Type: TB. Policy code: 71; Class code: Various; Dept. code: 43. Rate of Commission (%): 5% Acceptance Limit (Rs): BO- Nil, DO- Nil, RO- Nil, HO- All. Minimum Premium (Rs): 100/1. Introduction Product The Policy is a comprehensive cover comprising three sections. While section I provides cover for accidental loss or damage to aircraft, section II indemnifies the insured against legal liability for compensation to third party. Under section III insured is indemnified in respect of legal liability for compensation for accidental death / bodily injury to passengers, damage to baggage and personal articles of passengers. Customer Owners/ Operators of airlines, Owner of aircraft, Helicopters Manufacturer of aircraft, helicopters Flying Club, Training School, Agricultural application Government Civil Aviation Department 2. The Insurance Cover Section I Provides cover for accidental loss or damage to the aircraft against accidental loss or damage from whatsoever cause arising while in flight or taxiing or on the ground or moored.
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The proposal form should be duly completed and should be checked for the following: - Make/Type of the Aircraft; - Engine Number and Type; - Year of Construction of Aircraft; - Maximum Take off weight; - Seating Capacity; - Use of Aircraft; - Area of Operation; - Details of Insurance required (viz, Hull All Risks, Hull War Risks, Third Party, Legal Liability, Passenger Legal Liability, PA to Pilot/Crew, Baggage Liability); - Period of Insurance; - Details of Pilot (Whether Named Pilots or any pilot with valid license, Total Flying hour's experience); - Maintenance; - Claims experience of client, craft, and pilot. Determination of sum insured/values to be insured: Section I - Sum insured is determined on Agreed Value basis Section II Limit of Indemnity to be fixed for AOA/AOP Section III- Separate limits of Indemnity for Passenger Legal Liability & Baggage Liability Rating: The factors determining the rate are the types of aircraft (Fixed Wing/Rotor Wing), Year of manufacture, use, area of operation, take of weight, maintenance Pilots, Annual utilization Claims experience, limits of Indemnity. Hull All risk rated as a percentage of aircraft value. Duly completed proposals forms are to be referred to HO, Technical for approval of rates / terms. Excess/Deductibles: Mainly depends upon the value of the Aircraft. 4. Documents for Claims Settlement: Documents in respect of aircraft details, flight details, accident report, Certificate of Airworthiness/registration, Crew details, Maintenance & engineering information, Passenger Manifest.
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Aviation Hull war and Allied Risks

Class Type: TB. Policy code: 71, Class code: Various, Dept. code: 43. Rate of Commission (%): 5% Acceptance Limit (Rs): BO- Nil, DO- Nil, RO-Nil, HO- All. Minimum Premium (Rs): 100/1. Introduction Product: The Policy covers loss of or damage to aircraft due to war, hijacking and allied perils which is excluded from Hull all risk policy (by attaching clause AVN 48B). After the Israeli raid on Beirut airport of 28 December 1968, the London Market introduced a war and hijacking exclusion clause, (clause AVN 48B) which after undergoing certain amendments is forms part of every Hull and Liability policy. Customer: Owners/ operators of airlines, Owner of aircraft, Manufacturer of aircraft Flying Club, Training School, Agricultural application Government Civil Aviation Department Owners of Helicopters 2. The Insurance Cover: Basic Coverage (loss or damage to Aircraft): War, invasion, civil war, rebellion, revolution, military coup; Strikes, riots, civil commotion; Acts for political or terrorist purpose; Malicious acts; Confiscation/requisition of aircraft by Government, etc; Hi-jacking. Exclusion War between UK, USA, France, Russian Federation, China Confiscation by government of registration Confiscation for financial default/repossession by title holder Delay, loss of use, consequential loss

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Use of chemical or biological materials Hostile use of radioactive contamination Hostile use of an electromagnetic pulse Hostile detonation of nuclear weapons Conditions: Insurers may issue seven days notice to review premium and/or geography limits at any time; Automatic review of premium and/or geographical limits on expiry of seven days from hostile detonation of nuclear weapons; Insurers may cancel policy by giving seven days notice; Automatic cancellation of policy in the event of war between UK, USA, France, Russian Federation, China; Material change in operations provision. Extensions: Legal Liability of the Insured towards Passenger and Third Party due to war and allied perils can be covered by charging additional premium written back into the Hull/Liability Policy. 3. Underwriting Guidelines: Duly completed proposals forms are to be referred to HO, Technical for approval of rates / terms. Details of Pilots (whether named pilots or any pilot with valid license/ total flying hours experience). Determination of sum insured/values to be insured: Limits: Each aircraft covered for the same Agreed Value as under Hull all risk Policy subject to a Policy aggregate sum insured per annum. Rating: Hull war risks rated as a percentage of aircraft value on similar basis to Hull All Risks. Excess/Deductibles: Suitable excess is to be imposed. 4. Documents for claim settlement: Documents in respect of aircraft details, flight details, accident report, Certificate of Airworthiness/registration, Crew details, Maintenance &engineering information, Passenger Manifest.
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Aviation Personal Accident (for crew members)

Class Type: TB. Policy code: 71, Class code: 42, Dept. code: 43. Rate of Commission (%): 5% Acceptance Limit (Rs): BO- Nil, DO- Nil, RO-Nil, HO- All. Minimum Premium (Rs): 100/1. Introduction: Product: A Policy designed to provide compensation to pilots and members of the crew against injury, disablement or death arising out of an accident caused by accidental, external, violent and visible means while entering into alighting from or being as pilot member of the crew or passenger in any licensed standard type of aircraft anywhere in the world. Such risks are excluded under PA policy and hence a separate PA policy has been introduced to cover crew members. Customer: Pilots, Co Pilots, members of crew, Engineers, Technicians, Navigators 2. The Insurance Cover: Basic Coverage: The Policy covers crew against injury, disablement or death arising out of an accident caused by accidental, external and visible means while entering into alighting from or being as pilot member of the crew or passenger in any licensed standard type of aircraft anywhere in the world. The compensation payable is as per table below provided the injury sustained results in death / disablement within twelve months of the occurrence of the accident Sr. No. 1. 2. Cover (Within twelve Table - A Table - B Table - C months of date of accident) Death. 100% of CSI 100% of CSI 100% of CSI Loss of sight of two eyes Nil 100% of CSI 100% of CSI /two limbs/one eye, one limb) . Loss of one limb or sight Nil 50% of CSI 50% of CSI of one eye, Loss of one limb or loss of sight of one eye. Temporary total disablement. Nil 1% of CSI 1% of CSI for maximum for maximum 52 weeks 52 weeks
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3.

4.

Sr. Cover (Within twelve No. months of date of accident) 5. Permanent total disablement caused otherwise than by loss of limbs or sight. 6. Permanent partial disablement i. Loss of toes all ii. Great Both phalanges iii. Great one phalanx iv. Other than Great, if more than one toe lost. v. Loss of Hearing: a. Both ears b. One ear vi. Loss of four fingers and thumb of one hand. vii. Loss of four fingers viii. Loss of thumb: a. Both phalanges b. One phalange ix. Loss of middle finger a. Three phalanges b. Two phalanges c. One phalange x. Loss of ring finger a. Three phalanges b. Two phalanges c. One phalange xi. Loss of little finger a. Three phalanges b. Two phalanges c. One phalange xii. Loss of meta corpuses First or Second Third, Fourth or Fifth xiii. Any other permanent partial disablement

Table - A Nil

Table - B

Table - C

100% of CSI 100% of CSI

Insanity, Insured being under the influence of drugs/intoxicating liquor; Test flights; Insured taking part in any military, naval or air force operations; Insured engaged in Aerobatics, Experimental flying, racing, record attempt, speed trial, abnormal flying. Conditions: Accidental death shall not be presumed by reason only of the disappearance of the insured person. Policy may be cancelled on the following ground and accordingly Prorata premium can be refunded: - Change of employer - Request for cancellation and subject to no claim reported under the policy - Absence of valid license. Extension: Nil. 3. Underwriting Guidelines: All proposals should be referred to HO for approval or rates and terms. Determination of sum insured/values to be insured: Sum Insured is the Capital Sum Insured and is generally 3 to 5 times the annual income of the Insured Person. Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. Age of Pilot 18 to 55 yrs 18 to 55 yrs 18 to 55 yrs 56 to 60 yrs 56 to 60 yrs 56 to 60 yrs 60 and above 60 and above 60 and above Table of Benefits A B C A B C A B C Capital Sum Insured 5 times of annual Income 4 times of annual Income 3 times of annual Income 4 times of annual Income 3 times of annual Income 2.5 times of annual Income 2 times of annual Income 2 times of annual Income 2 times of annual Income

Nil Nil Nil Nil

Nil Nil Nil Nil

As per the % of CSI below: 20% 5% 2% 1%

Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

50% 25% 40% 35% 25% 19% 6% 4% 2% 5% 4% 2% 4% 3% 2% 3% 2% As assessed by Doctors

Exclusions: Suicide, self injury; Any breach of law by Insured; Any breach by the insured of any air navigation/air worthiness orders;
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It is not desirable to increase the CSI mid-term of the Policy. In the case of substantial increase in salary the CSI can be increased subject to - Declaration by insured that he does not have any knowledge of illness - Enhanced CSI should not be more than 25% of the existing Policy

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Rating: Rate is to be charged on the Capital Sum Insured and ranges from 0.40% to 1.00% and depends on the profession and the type of cover (on duty/off duty). Rate for 24 hours basis inclusive of on-duty cover: Table of Benefits Pilots Engineers/Technicians Excess: Nil. 4. Documents for Claims Settlement: Medical Report, Discharge Certificate from the Hospital/Nursing Home Police Report, DGCA Report Death Certificate, Post Mortem Report, Death Certificate Certificate from Employer as to last use of License Medical Certificate/Doctors Certificate on PPD/PTD Any other document required to deal with PA Claim A 0.50% 0.40% B 0.75% 0.60% C 1.00% 0.80%

Exclusions: Loss of property of the insured other than aircraft of others while being fuelled or re-fuelled by the insured. Bodily injury, property damage caused by any mechanically propelled vehicle on road traffic/any public highway and aircraft, used or operated by or on account of insured. Liability for bodily injury to any person who at the time of sustaining such injury is engaged in the service of the insured or acting on his behalf. Liability assumed by the insured by agreement under any contract unless such liability would have attached in absence of the agreement. Condition: No liability shall be admitted without the consent of the insurer, who shall be entitled to take over and conduct the defense of any claim. Extension: None 3. Underwriting Guidelines: All proposals are to be referred to HO for approval of rates and terms along with relevant details. Determination of sum insured/values to be insured: The Sum Insured is the limits of indemnity to be selected by insured for any one occurrence and any one period limit separately for bodily injury and property damage. Rating: Rates are reinsurance driven and hence reference has to be made to HO Technical / RI Dept. Rates for cancellation: Policy period in force Refund % ( percentage) of annual premium 80 70 60 50 40 30 25 20 15 No refund

Aviation Fuelling & Re-fuelling Liability

Class Type: TB. Policy code: 71, Class code: 73, Dept. code: 43. Rate of Commission (%): 5% Acceptance Limit (Rs): BO- Nil, DO- Nil, RO-Nil, HO- All. Minimum Premium (Rs): 100/1. Introduction: Product: The policy covers bodily injury including death to third party, or damage to property caused by accident arising out of insured's business as suppliers of aviation fuel including the fuelling and or re-fuelling of aircraft at the locations mentioned in the schedule. 2. The Insurance Cover Basic Coverage The Policy covers bodily injury including death, or damage to property caused by accident arising out of insured's business as suppliers of aviation fuel including the fuelling and or re-fuelling of aircraft at the locations mentioned in the schedule.
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Up to 1 month More than 1 month & up to 2 months More than 2 month & up to 3 months More than 3 month & up to 4 months More than 4 month & up to 5 months More than 5 month & up to 6 months More than 6 month & up to 7 months More than 7 month & up to 8 months More than 8 month & up to 9 months More than 9 months
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Excess/Deductibles: Amount of deductibles are based on limit of Indemnity and hovers in the region of 2 % of Sum Insured (SI), subject to minimum of USD 50,000. 4. Documents for Claims Settlement Claim form Medical Report, Discharge Certificate from the Hospital/Nursing Home Police Report, DGCA Report Death Certificate, Post Mortem Report, Death Certificate Medical Certificate/Doctors Certificate on PPD/PTD Court award Legal opinion

Exclusions: Loss of damage to turbine engine or accessory unless such damage is crossed by fire, explosion, ingestion, external forces. Use of the aircraft for any illegal purpose or any purpose other than stated Aircraft is outside the Geographical limits stated Aircraft is being piloted by any person other than stated Total number of passengers carried exceeds the declared number stated War, hijacking and allied perils Conditions: It is a condition precedent to the liability of the insurer that the insured should affect an aircraft hull and space all risk insurance. Policy is subject to same warranties, terms and conditions provided the Aircraft Hull and Spares all risks insurance prior to happening of the loss. Extensions: None.

Aviation Hull Deductible

Class Type: TB. Policy code: 71, Class code: 10, Dept. code: 43. Rate of Commission (%): 5% Acceptance Limit (Rs): BO-Nil, DO-Nil, RO-Nil, HO-All. Minimum Premium (Rs): 100/1. Introduction: Product: Airlines at times have to bear a percentage of the loss in view of the deductibles imposed in the Hull All risk Policy thus facing financial difficulty by purchasing this policy the airline operators/owners can get relief from bearing the deductibles which are substantially high and cause financial constraints for the owner/operator. Customer: Airline owners/airline operators 2. The Insurance Cover: Basic Coverage: The Policy provides indemnity against the amount of deductible applied on the Hull/ and spares all risk policy.
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3. Underwriting Guidelines: Duly completed proposals forms are to be referred to HO, Technical for approval of rates / terms. The proposal form should be duly completed and should be checked for the following: - Make/Type of the Aircraft; - Engine Number and Type; - Year of Construction of Aircraft; - Maximum Take off weight; - Seating Capacity; - Use of Aircraft; - Area of Operation; - Details of Insurance required ( Viz Hull All Risks, Hull War Risks, Third Party Legal Liability, Passenger Legal Liability, PA to Pilot/Crew, Baggage Liability); - Period of Insurance; - Details of Pilot (Whether Named Pilots or any pilot with valid license, Total Flying hour's experience).

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All proposals are to be referred to HO for approval of rates and terms along with relevant details. Determination of sum insured/values to be insured: Sum insured is the difference between the HAR deductible and the insured amount under the hull all risk policy. Aggregate limit during the policy period applicable. Rating: A flat amount charged in respect of a specific Aircraft Profit Commission After expiry of the policy and subject to renewal with the insurer, insurer may agree to return to the insured a profit commission Excess: Nil. 4. Documents for Claims Settlement: Documents in respect of aircraft details, flight details, accident report, Certificate of Airworthiness/registration, Crew details, Maintenance &engineering information, Passenger Manifest.

2. The Insurance Cover: Basic Coverage: In the event of the persons insured suffering bodily injury or illness resulting at any time whether during or after the period of insurance (but not beyond a period of five years after the expiry of this insurance) in their incapacity then the compensation as detailed below is payable: Item Number Type of Disablement
Compensation

Incapacity causing Permanent Total Disablement (otherwise Item 1 than due to psychosis or psychoneurosis or epilepsy) Incapacity causing Permanent Total Disablement due to psychosis or psychoneurosis or epilepsy Incapacity causing Temporary Total Disablement (otherwise than due to psychosis or sychoneurosis or epilepsy)

After deduction of any payments made under other items 3 or 4 the balance of one hundred per centum of the Capital Sum Insured After deduction of any payments made under other items 3 or 4 the balance of eighteen per centum of the Capital Sum Insured At the rate per calender month for not more than twelve months or up to the prior Death or Permanent Total Disablement of the Insured Person . **In the case of Total Disablement of the Person Insured of two per centum of the CSI At the rate per calendar month for not more than twelve months or up to the prior Death or Permanent Total Disablement of the Insured Person.**In case of Total Disablement of the Person Insured of one and half per centum of the CSI

Item 2

Aviation loss of License (Group)

Class Type: TB. Policy code: 71; Class code: 35; Dept. code: 43. Rate of Commission (%): 5% Acceptance Limit (Rs): BO-Nil, DO-Nil, RO-Nil, HO-All. Minimum Premium (Rs): 100/1. Introduction: Product: Operating pilots of aircraft are required to have valid license. In the event of the License being suspended on medical grounds such as illness, disease contracted or injury sustained during the policy period, either temporarily or permanently, the Loss of License policy provides for payment of compensation in case of disability. The policy is not a general health insurance and does not cover expenses incurred for medical treatment and loss of revenue. Customer: Pilots Association, Airlines

Item 3

Item 4

Incapacity causing Temporary Total Disablement due to psychosis or psychoneurosis or epilepsy

Item 5

Legal and /or other costs incurred Up to Rs. 2000/- per life insured. with consent of the Company

*Liability of the Company will not exceed 100 per centum of the CSI *No compensation is payable in respect of the first 90 days of the incapacity consecutively or in the aggregate in any one year of insurance ** Company is entitled to withhold payment of the balance of the CSI for twelve calendar months after expiry of said 90 days but paying to the person insured compensation at the rates mentioned above.
287

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Definition: Incapacity means any incapacity causing the permanent total disablement or temporary total disablement of the life assured. Permanent Total disablement means any disablement due to bodily injury or to illness, disease or disability including natural deterioration of the life assured which is of a permanent nature and prevents him/her from attending to the occupation. Temporary Total disablement means any disablement due to personal injury or illness, disease or disability including natural deterioration of the life assured which is a temporary nature and entirely prevents him from attending to the occupation. Exclusions: Death of the Insured Person Any personal injury, illness, disease or disability existing prior to the inception of the Policy Insured Person taking part in riots or civil commotion Intentional self injury, suicide, provoked assault, dueling, fighting or venereal diseases Deliberate exposure of the Insured Person to exceptional danger Any personal injury, illness, disease or disability giving rise to a claim under any previous Permanent Total Disability Riding or driving in any kind of race Chronic alcoholism Conditions: Disputes to be referred to Medical Referee Insured to authorize Company to seek opinion of the principal medical officer of the competent civil authority to ascertain whether or not an incapacity is presumed to prevent him to follow his occupation Insured Person may, if required have to submit to an independent medical or surgical examination Policy will cease automatically if the Insured Person loses or terminates his membership of anyone of the Aircrew Association Extensions. Insured if required shall submit to an independent medical or surgical examination. Policy to cease if insured losses or terminates his membership of any aircrew
288

Associations if the same has been obtained through the offices of any such association. This insurance shall apply while the insured is anywhere in the world. Insurer has the liberty to appeal against suspension, restriction or loss of license in the name of the insured and the insured shall provide information and assistance for defense. Extensions: Nil. 2. Underwriting Guidelines: Proposals should be accepted only from in the age group of 18-65 years having valid license issued by DGCA and medically fit to hold the same. Types of License issued to pilots are: ALTP: Airlines Transport Pilots License; CPL: Commercial Pilots License The Policy should not be issued as a Stand alone product and should be issued to clients who place their aviation business i.e. Hull All Risk and Personal Accident (Aviation) insurance. At the time of acceptance of proposal, proof of satisfactory electrocardiogram within the past 24 months must be provided. All proposals should be referred to HO for approval of rates and terms. Determination of sum insured/values to be insured: Sum Insured is linked to the income of the insured and age of the insured: Sr. No. 1 2 3 4 5 Age of Pilot Up to 45 years 46 to 50 years 51 to 55 years 56 to 57 years 58 years and above Capital Sum Insured 3.5 times of annual Income 3 times of annual Income 2.5 times of annual Income 1 time of annual Income

Mid term enhancement of Sum Insured: It is not desirable to increase the CSI mid term of the policy. However in the case of substantial increase in salary the CSI can be increased subject to submission of: - Medical Certificate issued by DGCA - Medical assessment report of DGCA

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- TMT& Blood Sugar (PP) - Declaration by insured that he does not have any knowledge of illness - Enhanced CSI should not be more than 25% of the CSI in existing Policy Rating: The rate is charged on the Capital Sum Insured as per following details: Age Pilots 18 to 40 yrs 1.00% 41 to 45 yrs 46 to 50 yrs 1.00% 1.50% 51 to 56 yrs 1.75% 57 to 60 yrs 2.00%

2. The Insurance Cover: Basic Coverage: In the event of the person insured suffering bodily injury or illness resulting at any time whether during or after the period of insurance (but not beyond a period of five years after the expiry of this insurance) in his incapacity then the compensation as detailed below is payable: Item Number Type of Disablement
Compensation

All proposals should be referred to HO for approval of rates and terms. Excess: First 90 day as time excess from the date of commencement of incapacity.

Incapacity causing Permanent Total Disablement (otherwise Item 1 than due to psychosis or psychoneurosis or epilepsy) Incapacity causing Permanent Total Disablement due to psychosis or psychoneurosis or epilepsy Incapacity causing Temporary Total Disablement (otherwise than due to psychosis or sychoneurosis or epilepsy)

After deduction of any payments made under other items 3 or 4 the balance of one hundred per centum of the Capital Sum Insured After deduction of any payments made under other items 3 or 4 the balance of eighteen per centum of the Capital Sum Insured At the rate per calender month for not more than twelve months or up to the prior Death or Permanent Total Disablement of the Insured Person . **In the case of Total Disablement of the Person Insured of two per centum of the CSI At the rate per calendar month for not more than twelve months or up to the prior Death or Permanent Total Disablement of the Insured Person.**In case of Total Disablement of the Person Insured of one and half per centum of the CSI

Item 2 4. Documents for Claims Settlement: Claim form, Medical Reports, Discharge Certificate, DGCA Certificate on incapacity to hold License, certificate from the employer on the last use of the License. Item 3

Aviation loss of License (Individual)

Class Type: TB. Policy code: 71; Class code: 38; Dept. code: 43. Rate of Commission (%): 5% Acceptance Limit (Rs): BO-Nil, DO-Nil, RO-Nil, HO-All. Minimum Premium (Rs): 100/1. Introduction: Product: Operating pilots of aircraft are required to have valid license. In the event of the License being suspended on medical grounds such as illness, disease contracted or injury sustained during the policy period, either temporarily or permanently, the Loss of License provides for payment of compensation in case of disability. The policy is not a general health insurance and does not cover expenses incurred for medical treatment and loss of revenue. Customer: Pilots
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Item 4

Incapacity causing Temporary Total Disablement due to psychosis or psychoneurosis or epilepsy

Item 5

Legal and /or other costs incurred Up to Rs. 2000/- per life insured. with consent of the Company

*Liability of the Company will not exceed 100 per centum of the CSI *No compensation is payable in respect of the first 90 days of the incapacity consecutively or in the aggregate in any one year of insurance ** Company is entitled to withhold payment of the balance of the CSI for twelve calendar months after expiry of said 90 days but paying to the person insured compensation at the rates mentioned above.
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Types of License: ALTP: Airlines Transport Pilots License CPL: Commercial Pilots License Exclusions: Death of the Insured Person Any personal injury, illness, disease or disability existing prior to the inception of the Policy Insured Person taking part in riots or civil commotion Intentional self injury, suicide, provoked assault, dueling, fighting or venereal diseases Deliberate exposure of the Insured Person to exceptional danger Any personal injury, illness, disease or disability giving rise to a claim under any previous Permanent Total Disability Riding or driving in any kind of race Chronic alcoholism Conditions: Disputes to be referred to Medical Referee Insured to authorize Company to seek medical to ascertain whether or not incapacity is presumed to prevent him to follow his occupation Insured Person may, if required have to submit to an independent medical or surgical examination Policy to cease if insured losses or terminates his membership of any aircrew Associations if the same has been obtained through the offices of any such association. This insurance shall apply while the insured is anywhere in the world. Insurer has the liberty to appeal against suspension, restriction or loss of license in the name of the insured and the insured shall provide information and assistance for defense.
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Extensions: Nil. 2. Underwriting Guidelines: Proposals should be accepted only from pilots in the age group of 18-65 years having valid license issued by DGCA and medically fit to hold the license. The Policy should not be issued as a Stand alone product and should be issued to clients who place their aviation business ie Hull All Risk and PA(Aviation) insurance. All proposals should be referred to HO for approval of rates and terms. Determination of sum insured/values to be insured: Sum Insured is linked to the income of the insured and age of the insured: Sr. No. 1 2 3 4 5 Age of Pilot Up to 45 years 46 to 50 years 51 to 55 years 56 to 57 years 58 years and above Capital Sum Insured 3.5 times of annual Income 3 times of annual Income 2.5 times of annual Income 2 times of annual Income 1 time of annual Income

Mid term enhancement of Sum Insured: It is not desirable to increase the CSI mid term of the policy. However in the case of substantial increase in salary the CSI can be increased subject to submission of: - Medical Certificate issued by DGCA - Medical assessment report of DGCA - TMT& Blood Sugar (PP) - Declaration by insured that he does not have any knowledge of illness - Enhanced CSI should not be more than 25% of the CSI in existing Policy Rating: The rate is charged on the Capital Sum Insured Age Pilots Engineers/ Technicians 18 to 40 yrs 41 to 45 yrs 46 to 50 yrs 51 to 56 yrs 57 to 60 yrs 1.00% 0.80% 1.00% 0.80% 1.50% 1.20% 1.75% 1.40% 2.00% 1.60%

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All proposals should be referred to HO for approval of rates and terms. Excess: First 90 day as time excess from the date of commencement of incapacity 4. Documents for Claims Settlement: Claim form, Medical Reports, Discharge Certificate, DGCA Certificate on incapacity to hold License, Certificate from the employer on the last use of the License.

Table

Type of Disablement

Compensation

Death (Within twelve months of Table A date of accident) Table B Death (Within twelve months of date of accident) 1 Loss of sight of two eyes/two limbs/one eye, one limb/ (Within twelve months of date of accident) Loss of sight of two eyes/two 3 limbs/one eye, one limb/ (Within twelve months of date of accident) Loss of sight of two eyes/two 4 limbs/one eye, one limb/ (Within twelve months of date of accident) Loss of sight of two eyes/two 5 limbs/one eye, one limb/ (Within twelve months of date of accident) Table C Benefits as per Table B & Permanent Partial Disablement 2

100% of CSI 100% of CSI

100% of CSI

100% of CSI

Aviation Personal Accident (crew member)

Class Type: TB. Policy code: 71; Class code: 38; Dept. code: 43. Rate of Commission (%): 5% Acceptance Limit (Rs): BO-Nil, DO-Nil, RO-Nil, HO-All. Minimum Premium (Rs): 100/1. Introduction: Product: A Policy designed to provide compensation to pilots and members of the crew against injury, disablement or death arising out of an accident caused by accidental, external and visible means while entering into alighting from or being as pilot member of the crew or passenger in any licensed standard type of aircraft anywhere in the world. Such risks are excluded under PA Policies. Customer: Pilots, Co Pilots, members of crew 2. The Insurance Cover: Basic Coverage: The Policy covers crew against injury, disablement or death arising out of an accident caused by accidental, external and visible means while entering into alighting from or being as pilot member of the crew or passenger in any licensed standard type of aircraft anywhere in the world.

100% of CSI

100% of CSI

% of the CSI

Additional E x p e n s e s i n c u r r e d f o r 2.5% of the CSI or Rs. 2500/Benefits transportation of insureds dead whichever is lower body Exclusions: Death/Bodily injury arising out of/traceable Suicide, self injury; Any breach of law by Insured; Any breach by the insured of any air navigation/air worthiness orders; Insanity, Insured being under the influence of drugs/intoxicating liquor; Test flights; Insured taking part in any military, naval or air force operations; Death /Bodily injury or any illness. Conditions: Accidental death shall not be presumed by reason only of the disappearance of the Insured Person.
295

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3. Underwriting Guidelines: Duly completed proposals forms are to be referred to HO, Technical for approval of rates / terms. The proposal form should be duly completed and should be checked for the following: - Make/Type of the Aircraft - Engine Number and Type - Year of Construction of Aircraft - Maximum Take off weight - Seating Capacity - Use of Aircraft - Area of Operation - Details of Insurance required ( Viz Hull All Risks, Hull War Risks, Third Party Legal Liability, Passenger Legal Liability, PA to Pilot/Crew, Baggage Liability) - Period of Insurance - Details of Pilot (whether Named Pilots or any pilot with valid license, Total Flying hour's experience). All proposals referred to HO for approval of rates and terms. Determination of sum insured/values to be insured: Sum Insured is the Capital Sum Insured and is generally 3 to 5 times the annual income of the Insured Person. Rating: Rate for 24 hours basis inclusive of on-duty cover: Table of Benefits Pilots A 0.50% B 0.75% C 1.00%

Aviation Product &Grounding And other Aviation Liabilities Insurance

Class Type: TB. Policy code: 71; Class code: 72; Dept. code: 43. Rate of Commission (%): 5% Acceptance Limit (Rs): BO-Nil, DO-Nil, RO-Nil, HO-All. Minimum Premium (Rs): 100/1. Introduction: Product: The policy provides cover for Insured's legal liability to pay compensation to third parties for bodily injury or property damages caused by an occurrence arising out of the product hazard. The insurer will indemnify the insured for their legal liability to pay as damages for the loss of use of completed aircraft, occurring after delivery to and acceptance by a purchaser or operator of such aircraft for flight operations and caused by a grounding arising out of the product hazard. Customers: Manufacturers, Distributors, Importers and Exporters of aviation products. 2. The Insurance Cover: Coverage A Personal injury and property damage liability. The company will indemnify the insured for their legal liability to pay compensation including defense cost for death / bodily injury or damage to property including use of loss of property caused by an occurrence arising out of the product hazard Coverage B: Grounding Liability: The company will indemnify the insured for their legal liability to pay as damages including defense cost for the loss of use of completed aircraft, occurring after delivery to and acceptance by a purchaser or operator of such aircraft for flight operations and caused by a grounding arising out of the product hazard. Definitions: Product Hazard means the handling or use of or the existence of any condition in an aircraft product provided such aircraft product has ceased to be in the
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6. Documents for Claims Settlement: Medical Report, Discharge Certificate from the Hospital/Nursing Home Police Report, DGCA Report Death Certificate, Post Mortem Report, Death Certificate Certificate from Employer as to last use of License Medical Certificate/Doctors Certificate on PPD/PTD Any other document required to deal with PA Claim
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possession or under the control of the insured. Grounding means a complete and continues withdrawal from all flight operations or use of aircraft in the interest of safety by the authorities of the country where aircraft products will be used or by mutual agreement of the insured and manufacturer /operator of the aircraft. Aircraft product means completed aircraft, airship, missile, helicopters, launch vehicles, gliders. Coverage: Coverage A: Any liability for death, bodily injury/sickness of an employee of insured Loss of use of any aircraft which has not been destroyed except with respect to an aircraft which has made an emergency landing. Legal liability arising from any restriction on or withdrawal from the use of aircraft product not involved in an occurrence. Coverage B: Loss of use of aircraft during maintenance overall or alterations while being used for purpose other than relating to ground. Exclusion: Noise and pollution and other perils War, hijacking, strike, riot, civil commotion, hostile detonation of any weapon of war, employing atomic and nuclear fission. Conditions: Notice of occurrence or grounding When an occurrence or grounding takes place, written notice shall be given by or on behalf of the insured to the policy issuing office. Extensions: Nil. 3. Underwriting Guidelines: All proposals should be referred to HO for approval of rates and terms. Determination of sum insured/values to be insured: Limits of indemnity to be selected by proposer for any one occurrence and any one period.
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Grounding liability limited to 20% of the above limits. Rating: All proposals should be referred to HO for approval of rates and terms. Excess: Suitable excess to be imposed 4. Documents for Claims Settlement: Claim form Police Report, DGCA Report Death Certificate, Post Mortem Report, Death Certificate Court award Legal opinion. BULLET QUESTIONS 1. How a marine cargo policy differs from other conventional policies like fire or motor? It is enough that the insured is having insurable interest at the time of loss it is not required at the time of taking the policy. Either a consignor or consignee can take a policy and the same depends upon the terms and contract of sale viz., CIF, C & F or FOB. A marine cargo policy is an agreed policy whereas most other policies are strict indemnity policy. The SUM insured in Marine policy can be CIF + 10% for indigenous items or CIF + 15% for import/exports. Subrogation rights are more used in marine cargo insurance than any other insurance policies in the form of recovery from carriers. Marine cargo policies in general are voyage policies whereas; most other policies are time policies. In general there is no period of insurance other than for open policies, open covers or special declaration policies etc. There are three parties involved in marine cargo insurance viz., insured, insurer and carrier. arine cargo policies are easily transferable and the benefits of the policies cans be transferred to the person who has insurable interest at the time of loss.
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Marine cargo policy is one where the stamp duty is recoverable from the insured. Normal Terms and conditions forming part of Marine Open Cover. Basis of valuation: CIF plus 10% or more. Declaration: The assured is bound to declare each and every shipment individually or in batches and obtain a certificate of insurance for individual or group of shipments as per arrangement. Certificate of Insurance: The certificate issued against declarations will bear stamp duty and show premium, both of which will be collected from the assured or be adjusted against the cash deposit. Loss prior to declaration: In the event of loss prior to declaration and/or shipment on board the vessel, the basis of valuation shall be the prime cost of the goods. Limit per bottom: Limit of aggregate value of shipments/consignments per vessel or other conveyance at any one time. Limit per location: The location clause seeks to limit the value of pre shipment accumulation, which may take place due to some unexpected causes such as strikes, labor disturbances in the sport. Such accumulation of cargo in a particular location may create catastrophic exposures in the even of occurrence of some perils like storm, riot etc. Inspection of records: The insurer has the privilege at any time during business hours to inspect the records of the assured in respect of the shipments coming within the terms of the opens cover. Under Deck: Subject to warranty as to under-deck or on-deck shipment. Generally arrangement is made for shipment under deck while on deck shipment on special rates and terms to be separately agreed upon. Cancellation: either party giving 30 days notice in writing may cancel open cover, provided the risk has not already attached. However War & SRCC risk for shipments other than to or from USA are subject to cancellation by 7 days notice and War & SRCC risk for shipments to USA are subject to cancellation by 48 hours notice. Insuring clauses: Subject to Institute Cargo Clause (A), Institute War Clauses (Cargo) and Institute Strikes Clauses (Cargo) attached with the open cover. 1. Certificate of Insurance is issued against open covers or open policies, as applicable and is subject to the terms and conditions of such open cover or open policies. What are the major contents of certificate of insurance.
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Certificate number, place and date of issue. Open cover/Open policy number. Name and address of the insured. Description of goods, number of packages & nature of packing. Voyage details along with Bill of Lading no. & date, transshipments, if any. Consignment Value. Remaining value of sum insured in case of open policy. Premium and stamps duty. Certificate issued against open cover to be stamped. Terms and conditions of insurance as per the open cover or policy. The changing Aviation policy in India, the basic considerations for granting Aviation Insurance are: No of Air lines/ Operators have grown Consolidation and merger of various air carriers Fleet size have grown up New types of air crafts have come up India has become a hub for corporate Jet / Helicopter travels Boeings / Air buses have established their maintenance hubs in India Modernization, expansion and development of new Green Field Airports are taking place Safety norms have been adopted and due to excellent record of pilots, no. of accidents have come down resulting into reduction in Reinsurance premium as these policies are highly RI driven The coverage given under this segment is for Hull All Risks [HAR], War Risks, Liability for passengers Crew insurance now even fog insurance, Delayed Baggage Liability, Delayed Flight landing due to traffic congestion are in great demand While rating a Flying Club Aircraft what are the under writing considerations that to be looked into Type of Aircraft and the value The experience of regular pilot
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 The number of members of the club The geographical area in which the club operates The facilities at the airfield used regularly by the club The frequency of usage of the aircraft The experience of the chief flying instructor Whether there is any maintenance contract with outsider and their credibility 7. 6.

d) None of the above The wages of individual masters and workers are insurable in a) W C Policy b) Marine Cargo policy c) Marine Hull Policy d) Aviation Policy As per Marine Inland Transit Policy the Risk commences from the time a) The goods leave consignor's warehouse b) The goods are being loaded on the vehicle c) The goods reach the buyers warehouse d) All the above are correct TPND is the common abbreviation used to denote a) Transit, piracy and non delivery b) Theft, piracy and non delivery c) Theft, pilferage and non delivery d) Transit, pilferage and non delivery Marine cargo insurance policies are a) Strict indemnity policies b) Pure indemnity policies c) Commercial Indemnity policies d) Benefit policies

MARINE MODEL QUESTIONS 1. Time Charter hire is

a) b) c) d) 2. To charter a vehicle for a specified period To take a loan on vessel for a specified period To take a vessel on hire for a specified period To hire a vessel and pay after a specified time

8.

Which of the following is not true for COGSA,1971 (Carriage of goods by sea Act) a) It brings uniformity in condition of carriage by sea b) It is compulsory for ship owners to issue a B/L c) It is compulsory for shippers to mention particulars & conditions of the goods d) The liability of the carrier is limited to 666.7 SDRs per package per unit A carrier under COGSA, 1971 is liable if a) Open or uncovered vehicle is used b) There is defective packing c) Marks or numbers are used d) Livestock is carried What is a 'slip' a) A mistake in the policy b) A kind of dress c) A correction in the policy d) Evidence of contract of marine insurance In marine insurance, the insurable interest should be there a) At the time of issuance of policy b) At the time of payment of claim c) At the time of occurrence of loss
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9.

3.

4.

10. Sue and Labour clause is a) The amount and labour incurred in filing a suit b) Payable even after total loss is paid c) GA losses can be recovered under this clause d) The cost incurred in averting or minimizing any loss 11. Air transport operators do not have a legal liability towards a) The general public (Third Parties) b) The passengers c) Consigners or Consignees d) Crew and staff 12. In Aviation Insurance, what is not true of Warsaw Convention, 1929 a) It was the 1st convention to deal with the problem of conflict between legal system of different countries
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5.

b) It is in force in many of the countries c) It laid down the fundamental principles in so many legal aspects of international travel by air d) None of the above 13. Which of the following is not true of the International Air Transport Association (IATA) a) It was founded in 1945 b) It seeks to promote safe, regular air travel c) It promotes economical air travel d) It is an association of governments 14. In Marine insurance, the term Paint Brush Piracy is used to denote a) A kind of piracy of the goods from the vessel b) Piracy of paintings and brushes c) Change of the color of the ship to conceal its identity and escaping with the goods on board d) Entry of pirates into the vessel with paints and brushes 15. Which of the following is not relevant for General Average a) Insured perils b) York Antwrep rules c) General average Act d) None of the above 16. As per Marine Insurance Act 1963, which of the following is not an Implied Warranty a) Lawful adventure b) Seaworthiness of the vessel c) Seaworthiness of the cargo d) Lost or not lost 17. Subject to any express provision in the policy is a standard phrase in Marine Insurance Act 1963 to denote that a) The Act is supreme b) The Assured is supreme c) The policy is supreme d) The underwriter is supreme 18. Who can declare general average and who can appoint the average adjusters? a) The ship owner and the master of the vessel respectively
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b) The ship owner and the underwriters of the vessel respectively c) The master of the vessel and the ship owner respectively d) The ship owner in consultation with the underwriters and the master of the vessel 19. In marine insurance a p.p.i. policy is a) An honor policy b) A no subrogation policy c) An illegal policy d) All the above 20. For an export marine consignment which one of the clauses will be applicable a) ITC (A) b) ITC (B) c) ITC (C) d) None of the above 21. Duty and increased value insurance can be granted for the following consignments a) Export consignments b) Road risks in India c) Rail risks d) None of the above 22. As per ICC (C) following loss or damage is not covered a) Fire b) Earthquake c) General average sacrifice d) Washing overboard 23. Under marine insurance, cover may be granted for shipments which have commenced transit but may have been actually lost under the following provisions /clauses a) Sue and Labour clause b) Not to inure clause c) Lost or not lost clause d) Losses not known clause 24. INCOTERMS are internationally accepted commercial terms defining respective roles of buyer and seller which of the following is odd term out a) CIF
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b) CFR c) FAS d) WTO 25. Which of the following is not an important document for a Marine Cargo claim in respect of an export consignments a) Invoice and pacing list b) Duly filled claim form c) Bill of lading/ airways bill d) Bankers certificate confirming export proceed 26. Which of the following risk is/are covered under aircraft hull/ liability policy a) Accidental physical loss or damage to the aircraft b) Bodily injury / death to the passenger/s c) Loss of passenger's baggage and bodily injury/ death and property damage to the third parties d) All the above 27. Which of the following is to be taken into account while underwriting Marine Cargo Business a) Nature of Cargo b) Details of Convergence c) Packing details d) All of the above 28. Which of the following insurance policies does not require a formal proposal form a) Marine Hull b) Fire c) Marine Cargo d) Aviation 29. Under the Institute Cargo Clauses, the risk commence a) When invoice is received b) From the Time the Lorry receipt is issued c) When the Cargo leaves the warehouse of the consignor d) None of the above 30. Which of the following represents the widest form of coverage? a) ICC(A)
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b) ICC(B) c) ICC(C) d) None of the above 31. For which of the following extra premium is charged? a) Vessel's Overage b) Vessel's under tonnage c) Non classification d) All the above 32. For which of the following term of sale, the buyer/ importer normally arranges the cargo insurance cover for the overseas transit a) CIF basis b) FOB basis c) Both the above d) None of the above 33. For Inland Transit, 'Duration Clause' limits the coverage to a) 7 days of arrival of consignment at destination town b) 7 days of arrival of consignment to the warehouse of consignee c) 60 days of arrival of consignment at destination town d) 60 days of arrival of consignment to the warehouse of consignee 34. What is not true for a Marine Open Cover a) Open cover is proof of an insurance cover b) Open cover gives the term of cover during policy period c) Open cover is a stamped document d) All of the above 35. After issuance of Marine Open cover which document gives the particulars of insurance for individual voyages? a) Marine certificate b) Marine Policy c) Cover note d) Any of the above 36. If a Marine consignment is being sent to an appreciating market, what clause can be attached to ensure that the appreciation of value of consignment is covered in case of loss? a) Duty clause b) Increased value clause
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c) Protection and Indemnity clause d) None of the above 37. In case of various consigners are affected due to operation of a common peril, for saving a marine adventure; the loss would be apportioned by declaration of a) General average b) Particular average c) Average clause d) None of the above 38. In case additional expenses are incurred to complete the voyage the charges incurred would be recovered under a) General average clause b) Sue and labor clause c) Increased value clause d) Limitation Clause 39. What is the full form of sale term 'FAS' a) Free Alongside Ship b) Free Alongside Steamer c) Free Alongside Steerage d) None of the above 40. A Marine cargo underwriter is expected to know a) Port facilities b) Shipping practices c) Labour disturbances at ports d) All the above 41. Under a marine Hull cover a loss can be declared as a CTL if a) The vessel is abandoned to discretion of the underwriters b) If more than one interest is involved in the salvage c) If there is excessive third party liability d) None of the above 42. In case of liquid cargo, the term ullage refers to a) Quantity that cannot be discharged b) Quantity that were destroyed c) Quantity that disappeared d) Non standard packing
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43. Sue and labor charges are usually paid a) In addition to damage to goods but limited by the sum insured b) In addition to damage to goods and can exceed the sum insured c) As a fixed percentage of sum insured d) None of the above 44. Particular charges means a) Loss or damage caused by a sea peril insured against b) It is a general sacrifice to save the marine adventure c) It is an expense in addition to sue and labour charges incurred for preservation of a subject matter d) None of the above 45. For covering various risks associated with port operation the following cover is an internationally accepted cover a) Property all risk policy b) Mega project policy c) Port package policy d) Special contingency policy 46. One of the purpose of Draft survey is to a) Find out the weight of commodity on board the ship b) Find out the extent of damage to commodity while being unloaded from slip c) Find out the weight of personnel on board the ship d) None of the above 47. What does the term Phantom vessel in maritime frauds denotes a) Nonexistent vessels said to be transporting goods b) Poor quality vessels transporting high value cargo c) Vessel belonging to flags of convenience d) None of the above 48. In a marine cargo policy, the insurable interest should exist a) At the time of commencement of transit b) At the time of acceptance of proposal c) At the time of loss d) At the time of proposal 49. Which of the following marine cargo policy is not assignable a) Marine cargo specific policy
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b) Certificate issued under open cover c) Certificate issued under open policy d) Annual policy 50. CIF Contract means a) Co-insurance form b) Cost input freight c) Cost insurance freight d) Cost incidental freight 51. The maximum indemnity available under a marine open policy in respect of a consignment awaiting shipment at the port is a) Total sum insured under open policy b) Limit per bottom c) Total value of particular declaration d) Limit per Location 52. Which of the following is not a stamped document a) Open cover b) Open policy c) Specific policy d) Special declaration policy 53. Running down clause in a marine policy relates to a) Age of the vessel b) Collision c) Termination of insurance d) Age of the consignment 54. Liability under Both to blame collision clause of ICC (A) has a reference to a) Shipping Bills b) Lloyd's firm c) Proforma Invoice d) Bill of Lading 55. Which one of the following is an extra charge under a marine cargo policy a) Auction fee for disposal of salvages b) Salvage charges

c) Sue and labour charges d) Port charges 56. Which one of the following differentiates the salvage charge from the sue and labour charge a) Food expenses for crew members b) Incurred independent of any contract c) Incurred short of destination to complete the voyage d) Expenses for extra fodder for animals on board 57. Which of the following is not a Trade Clauses a) Institute Replacement Clause b) Institute Bulk Oil Clauses c) Institute natural rubber Clause d) Institute Coal Clauses 58. Overseas Transit Policy Institute Cargo Clauses 'C' the duration of cover comes to an end a) 30 days after landing at the port b) 45 days after landing at the port c) 60 days after landing at the port d) 90 days after landing at the port 59. The Institute clauses have been drafted by a) TAC b) Institute of London Underwriters c) Lloyd's d) GIC 60. In marine insurance parlance, 'average' means a) Premium b) Cost c) Freight d) Loss 61. Shut out Cargo means a cargo which is a) Not loaded onto the ship due to late arrival b) Thrown out of the ship c) Shut in the bonded warehouse d) Rejected by the buyer
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62. PPI in marine cargo policy means a) Pre & Post Inspections b) Policy Proof of Interest c) Post parcel Identification d) None of the above 63. Subrogation in marine insurance refers to transfer of a) Right of recovery b) Right of possession c) Right of ownership d) None of the above 64. Proof of shipment is evidenced by a) Bill of Lading b) Bill of Exchange c) Bill of Treasury d) None of the above 65. Marine Policy offers a) Pure indemnity b) Strict Indemnity c) Adequate indemnity d) Modified form of Indemnity 66. Survey fees reimbursable to the insured in a marine policy to the extent of a) 25% b) 50% c) 75% d) 100% 67. Find odd one out a) Flag of convenience b) Polish Register of Shipping c) Lloyd's Register d) Bureau veritas 68. In which of the following the loss assessed is not ratably reduced in the proportion of sum insured bears to the value at risk a) Particular Risk b) Partial Loss c) Total Loss
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d) Sue and Labour charges 69. Which one of the following is an exclusion under th collision clause of ITC-Hulls a) Loss of life in other vessel b) Loss of life in insured vessel c) Loss of property of other vessel d) Both a & b above 70. In Marine hull policy the subject matter for insurance shall be a) Hull & Machinery b) Freight and Disbursement c) Premium reducing d) All the above 71. 1/ 4 collision liability is covered by a) P& I club b) Hull Underwriters c) Lloyd's d) Reinsurance 72. For issuing a marine cargo policy, a) LR or R/R is a precondition b) LR or R/R reference number above is sufficient c) LR or R/R is not at all necessary d) Undertaking from the consignor is sufficient 73. After settlement of a cargo claim a) Proceeding against the carrier by the insurer is simultaneous b) Only the insured has to proceed against carrier and to recover and remit to the insurer c) Anytime, at leisure recovery proceeding can be initiated d) Recovery proceeding is not at all necessary 74. After issue of marine cargo policy shipment could not be effected due to expiry of the L.C. Insured seeks repayment of premium of Rs. 100000/-. In this case which of the following is appropriate a) Insurer decline refund of premium, saying policy has been issued already b) Retaining Min. Premium and effect refund for the balance amount is in order c) Retain 50% of the premium and to refund the balance
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d) Substitute the premium for any subsequent transit 75. In an export policy, goods are sold in mid sea and the buyer changed the destination. Insured was getting refund from insurance company stating that the goods have not reached the destination stated in the policy. In such case which of the following could be appropriate. a) Refund is very well in order b) Refund should not be granted, as the shipment and transit had commenced c) As transit, as per policy deviated in the mid sea pro rata refund of premium according to the distance covered can be effected d) None of the above 76. General average means a) Age of the ship and its year of built b) It is the average age of the ship in a fleet c) It is a sacrifice in terms of cargo and freight incurred in times of the peril of the sea to save the adventure. d) None of the above 77. In a Hull policy Freight is to be covered by the ship owner in any of the following manner a) Has to be insured separately b) To be included in the Hull policy itself c) Both a & b d) Freight cannot be insured at all 78. Particular charge in a hull policy means a) Loss or damage caused by a sea peril insured against b) It is a general sacrifice made in times of peril c) It is an expense in addition to sue and labour for the prevention of the subject matter d) None of the above 79. Which branch of insurance is codified by way of an Act in India a) Marine Hull b) Marine Cargo c) Both (a) and (b) d) None of (a) and (b) 80. In case of which of the following insurances, the stamp duty is borne by
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the insured a) Fire Insurance b) Personal Accident Insurance c) Marine Cargo Insurance d) Health Insurance 81. Insurance cover note cannot be issued in case of a) Marine Insurance b) Fire Insurance c) Health Insurance d) None of the above 82. Which of the following information is not reflected on the schedule of Marine Insurance Policy (Cargo) a) Identification of vessel or conveyance b) Type of contract between seller and buyer c) Invoice details issued by seller d) Description of voyage or transit 83. Seller's Contingency Policy cover can be issued in case of a) CIF contract b) FOB contract c) Either of the above (a) and (b) d) None of the above (a) and (b) 84. In case of CIF contract the Insurable Interest of the seller ceases a) Once the goods leave the factory gate b) Once the goods are discharged at the port of discharge c) Once the goods are put on board d) None of the above 85. For an exporter having frequent exports which one of the following will be more useful a) Open policy b) Open cover c) Open Declaration policy d) Annual Marine Policy 86. In which of the following, war risk can be covered by paying extra premium a) Personal Accident Policy
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b) Health Insurance Policy c) Marine Inland Transit Policy d) Marine Overseas Transit Policy 87. In India Marine Cargo Insurance was detariffed in the year a) 1992 b) 1993 c) 1994 d) 1998 88. Which of the following perils is not covered under ICC C Clause a) Washing Overboard b) General Average Sacrifice c) Both a & d d) Entry of sea, lake or river water into vessel 89. In case of Marine Insurance, which one of the statement is correct with respect to GRT of the ship a) Risk increases with the increase in GRT b) Risk decreases with the decrease in GRT c) Risk decreases with the increase in GRT d) The GRT does not play any role on risk 90. In case of Marine Insurance vessel approval is done by a) GIC b) GIPSA c) Individual Companies d) IRDA 91. Which one of the exclusion gets deleted in case where the full shipload cargo is transported through duly 'approved' vessel a) Loss/ damage/ expense caused by inherent vice or nature of the subject matter insured b) Ordinary leakage, ordinary loss in weight or volume or ordinary wear and tear c) Loss/damage/expense arising from insolvency or financial default of the owner, managers, charterers or operators of the vessel d) None of the above 92. Which one of the following cannot be termed as the valued policy a) Fire Standard policy
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b) Marine cargo policy c) Marine hull policy d) Jeweler section under householder's policy 93. if the repair expenditure required to prevent actual total loss exceeds the value, it would be known as a) Actual total loss b) Particular Average c) Constructive total loss d) General Average 94. In marine insurance, even a voluntary and deliberate loss can be paid under a) Total loss b) Particular Average c) No policy can cover voluntary and deliberate loss d) General Average 95. With regard to stamp duty in marine cargo policy, which one of the following statement is correct? a) Different for sea voyages and for other than sea voyages b) Rate is same for all types of voyages c) Rate for air voyage is different from road/rail d) Rate is different for rail and road voyages. 96. For damage claim of CARGO monetary claim notice with the SHIPOWNERS should be lodged within a) One month from the date of bill of lading b) Fifteen days from the date of arrival of cargo c) Seven days from the date of arrival of cargo d) Five days from the date of arrival of cargo 97. Theft peril is covered under a) ICC C b) ICC A c) ICC B d) ICC I 98. Proximate Cause is a) Remote cause b) Indirect cause
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c) Active and Efficient cause d) Other 99. General Average arises when property involved in common Maritime adventure a) The cost of vessel removal from one port to another b) Temporary repair of accidental damage effected during the course of voyage c) Cargo is discharged and or jettisoned to save the ship d) None 100.Recoveries from Third Parties under Marine Policy is based on the principles of a) Contribution b) Subrogation c) Assignment d) Contribution & Subrogation 101.What is not a Shipping document a) Bill of Lading b) Bill of Entry c) Mate Receipt d) Invoice 102.Bill of Entry is prepared for a) Excise duty b) Custom duty c) Sales Tax d) OCTROI 103.What is not a Marine Insurance Clause? a) Inchmaree Clause b) Sue and Labour Clause c) Continuation Clause d) Cross Liability Clause 104.Which is not a General Average Claim? a) When Fire Breaks out on board the ship and in order to extinguish it water is poured on and chemicals are applied. b) When there is a collision with another vessel or other casualty and the cargo is discharged to enable the vessel to be repaired c) There is theft and missing of packages
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d) None of the above 105.Which of the following peril does not appear under ICC C a) Earthquake, Volcanic eruption or lightning b) Fire or explosion c) Overturning or derailment of Land conveyance d) Discharge of cargo at a port of distress 106.The Marine Insurance Cover is available in the following forms a) Specific Policy b) Cover Note c) Open Policies/ Open Covers d) All of the above 107.Which document in the absence of specific policy helps the bank to authenticate the existence of insurance cover and relate it to the documentary bill? a) Certificate of Incorporation b) Certificate of Insurance c) Certificate of college d) None 108.Which of the following statement is not correct a) A valued policy is one, which specifies the agreed value of the subject matter insured. b) The insured value is the amount specified in the policy as the value of the insured property c) Sum insured is the total amount of the subscriptions of the insurers in the policy d) None of the above 109.Which of the following does not form part of a marine adventure a) Ship b) Freight c) Ship owner's liability to cargo owner d) None of the above 110. Which of the principal factors affect the rating of every cargo insurance a) Vessel b) Nature of cargo c) Conditions of insurance
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d) All the above 111. Which loss or damage is not covered under institute cargo clause 'C' a) Fire & Explosion b) Overturning & Derailment of Land conveyance c) Vessel or craft being stranded, grounded, sunk or capsized d) Washing overboard 112. Which peril is covered under marine hull policy a) Jettison b) Fire & Explosion c) Piracy d) All the above 113. GRT means a) Gross Rare Tonnage b) Gross Report Tonnage c) Gross Register Tonnage d) None of these 114. To whom marine policy cannot be issued a) Purchaser of goods b) Seller of the goods c) Transporter of goods d) Bankers having financial interest 115. Identify incorrect statement a) All marine policies are not freely assignable b) Special declaration policy (SDP) is not assignable c) Marine policy is not assignable when goods are on high seas d) Marine policy is not assignable when goods are in bonded warehouse 116. Which of the following is not a term of sale in marine a) C & F b) CIF c) FOB d) CFP 117. Identify correct statement a) Duty insurance cannot be granted
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b) Duty insurance can be granted to overseas seller c) Duty insurance can be granted to bankers d) Duty insurance can only be granted to the holder of import license 118. Identify incorrect statement a) All marine policies are valued policies b) Special declaration policies are valued policies c) Duty insurance policy in marine is a valued policy d) None of the above 119. Which of the following statements are relevant to underwriting of fishing vessels a) Geographical features of area of operation b) Classification by one of the major classification society c) Proposal form d) All the above 120.State the correct statement among the following a) Marine cargo policy is transferred by way of payment of additional premium b) Marine policy is transferred only after obtaining fresh proposal form c) Marine policies are freely assignable d) None of the above 121.Which of the following statement is correct a) Insurable interest should exist at the time of effecting marine insurance b) Insurable interest need to exist only at the time of loss c) Insurable interest should be present throughout the currency of the policy d) None of the above 122.Identify the wrong statement a) Constructive total loss is a total loss claim b) Constructive total loss is a loss occurred during the course of construction c) Notice of abandonment is necessary for a constructive total loss claim d) Constructive total loss is affected midway between actual total loss & partial loss 123.Which of the following is false in relation to marine cargo insurance a) Claim survey fees are payable by insurers only if the claim is payable

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b) Under every marine policy for export shipments, a certificate of insurance is issued c) General average losses are covered only under Institute cargo clause (A) All risks d) None of the above 124.Which of the following policies are freely assignable without the consent of insurers a) Marine cargo b) Burglary c) Marine Hull d) Fire 125.Which of the following risks are automatically covered without extra premium under Institute Cargo Clause 'A' a) Breakage only b) Leakage only c) Strikes riots and civil commotion d) Breakage & Leakage 126.If loss or damage is not apparent at the time of taking delivery from ocean carriers written must be given to the carrier's representative within ___________ days of delivery a) 7 b) 30 c) 10 d) 3 127.Which of the following General Exclusions under Institute cargo clauses can be covered at extra premium under ICC (B) & (C) clauses a) Malicious damage b) Inherent vice c) Ordinary leakage d) Ordinary loss in weight 128.Which of the following statements is true? Statement A: Marine cargo policies are valued policies. Statement B: Marine Hull policies are valued policies. a) Both b) A only c) Neither
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d) B only 129.Which of the following statements is false in relation to marine cargo insurance? Statement A: The entire marine cargo tariff is governed by tariff or market agreement. Statement B: Special storage insurance is granted in conjunction with inland transit policy. a) A only b) B only c) Both d) Neither 130.Which of the following covers is suitable for regular export/import shipment? a) Open cover b) Special Declaration policy c) Annual policy d) Duty insurance 131.Which of the following insurances is not relevant to inland transit? a) 'Increased value' insurance b) Special storage risks insurance c) Special declaration policy d) Annual policy 132.Which of the following document is common to claims processing under marine import policies and inland transit (Rail/Road) policies? a) Invoice b) Copy of protest c) Bill of lading d) Lost Overboard certificate 133.Which of the following statement(s) is true? Statement A: Certificates of insurance are issued under both open covers and open policies. Statement B: Certificates need not be stamped when the original policy is stamped. a) Neither of the statements b) Only statement A c) Only statement B
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d) Both statements 134.Which of the following documents provide evidence of loss of cargo during loading operations? a) Bill of entry b) L.O.B. Certificate c) Copy of protest by the master of the vessel D) Ship Survey Report

Key Marine
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. C D C D C C A C C B D D D C D D C C D D D D C D B D D 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. C C A D B A C A B A B A D A A B C C A A C D C D A B D 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. A B A C B D A B A A D D A C D D A B A B B C C C C C D 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. 100. 101. 102. 103. 104. 105. 106. 107. 108. C B A B D C C C C C A C D A D B C C D D B D C A D B C 109. 110. 111. 112. 113. 114. 115. 116. 117. 118. 119. 120. 121. 122. 123. 124. 125. 126. 127. 128. 129. 130. 131. 132. 133. 134. C D D D C C C D D C D C B C C A D D A A A A A A D C

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REINSURANCE
The direct underwriters seek insurance covers for their insurance Portfolio with another insurer. This arrangement is known as Reinsurance. The direct insurer becomes the reassured and the other insurer is known as Reinsurer. There are various reasons, which prompt the insurers to go in for reinsurance arrangement. Such reasons are given under:

NEED / BENEFITS OF REINSURANCE

ACCEPTANCE OF LARGE RISK IS POSSIBLE: To acquire increased capacity of the insurer with a view to accept large risks which may not be possible within his financial limits, he may go in for reinsurance protection. Example: Insurers may wish to insure high valued risk like Madras Refineries LTD or Bharath Petroleum or Bharath Heavy Electrical or Oil and Natural Gas Corporation worth of more than 1000 crores and it may not be possible for an individual company to undertake entire risk within his own financial limits. Therefore, he chooses to depend on reinsurance protection. ACCEPTANCE OF VARIETY OF RISKS IS MADE EASIER They may underwrite more business of various natures than what could be underwritten within their financial resource. Example: The insurers may like to insure Aviation and also liability towards passengers in addition to the cargo sent by air and also the storage of cargo in air port areas or in Harbor areas. This could be possible only when they depend on the reinsurance arrangements. EXPOSURE CAN BE LIMITED The original insurers may like to limit their insurance exposure to any one loss or occurrence, which he can bear within his financial limits. Say for Example, Private Insurers in India are with an Authorized capital of just Rs.100 Crores and they may not able to pay the claim more than the net earned premium in one loss or one occurrence Nor they would desire to retain the claim payment solely on their shoulders, which might destabilize their financial position, and it would only affect their capital base. Maintaining the solvency ratio within the prescribed by the IRDA is a condition precedent to sustain in the insurance industry, otherwise, the insurer would be ruining their financial base/networth, therefore, even established and experienced insurance companies need to make such protection so that their financial position is stronger and have
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REINSURANCE

the highest claim paying ability to fulfill the promise made. Therefore, they will have to depend on rensurance arrangement. Stability and Viability can be further strengthened The Original Insurer may like to stabilize their underwriting operating surplus. Keeping the above purposes in view insurers desire to acquire reinsurance products and try to position them in the market. The underwriters issue thousands of policies covering property "Risks against wide range of perils for varying sum insured". The concern of the underwriter is in the first place to take the possibility of any one Risk being greater than it is prepared to withstand and that amount which he fixed prudently is known as "Retention". Certain terms used in reinsurance Reinsured: He is the original insurer who seeks reinsurance from other insurers. Even the reinsurer can become the reinsured when he selects to reinsure his own portfolio of what he has reinsured. Reinsured is also known as cedant. Reinsurer: The one who accepts the risk offered by the original insurers from their portfolios insurance. Treaty: Treaty means an agreement, which may be automatic with details or without details to be submitted to the reinsurer. It can be sometimes blind treaty. Net Retention: It is a level of sum chosen by the original insurer, which he thinks can be limit of his own liability that can be borne from any one loss within his financial limit. Gross retention: The retention of the original insurer and share of the quota share treaty reinsurer is known as gross retention. Line: The retention limit may be net or gross that is "One line" in accordance with the provision of the reinsurance treaty. Deductible: Deductible is the sum selected by the insurer as a maximum monitory amount that he is capable of retaining himself within his financial limit. This is often known as excess point or deducible. Cover Limit: It is sum, which is the maximum limit or reinsurer that he will bear from any loss. This can be reinstated in the event of any loss in accordance with the provisions of reinsurance contract. Ultimate net loss: This is the net liability of the reinsurer after deduction towards the salvage and recoveries. Retrocession: this is an arrangement of reinsurance made by the reinsurer for their reinsurance portfolios. It means a reinsurance arrangement for reinsurance. Layers: Reinsurance arrangement can be made in layering. Mainly for catastrophe risks
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Commission: The Proportional reinsurer pays off the commission to the reinsured slightly more than what they have incurred towards acquisition cost. Profit commission: The reinsurers recognize the prudent underwriting capacity of the reinsured and motivate them by giving them a fixed and agreed percentage of profit made out of reinsurance contract. Sliding Commission: The reinsurer may increase the percentage of profit depending upon reduction in claim cost ration. A percentage of decrease in claim ratio will have a corresponding and progressive increase in the percentage of commission payable. Say Example: 10% reduction in claim ratio may increase the percentage of commission by 5% or so.

RETENTION
The insurer should identify a limit of his own liability, which he can conveniently bear on his own without ruining his capital base. In other words, he should choose a level of sum and fix it as a maximum monetary amount that he is capable of retaining himself within his financial limits. This is very often called as Excess point or amounts deductible in case of claim. The Retention is determined based on risk classification - Dwellings, offices, hotels, restaurants, etc. - Light Engineering workshops where leather or plastic is not used - Electronic goods manufactures and textile factories - Furniture manufacturers. - Chemical Factories and Para medical - Petrochemicals The insurer is aware that the some types of risk are more likely to have a fire hazard than other because of the physical hazard associated with them and account of the trade process, feature of construction and nature of goods utilized. Example: Saw Mills use different type of machinery, wood, wood shaving and other inflammable materials which are susceptible to fire than most of the building used for residence, office, restaurant and even for hotel purpose. It goes without saying that likelihood of loss is dissimilar for both the risks. The insurers will always shown lots of interest to retain a higher amount for his account for simpler risks than more hazardous risk. The retention amount selected by the insurers based on the sum insured for the property would depend on classification of the risk underwritten, normally it is at
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variance according to the perception of the hazards. Mostly the risks are classified according to the features like Proximity to fire brigades. Presence of fire extinguishing appliance etc. The concept of the retention is very important from the point of view of underwriters as it is only helps the underwriters to determine the amount of reinsurance products required. In property insurance, the concept of EML and PML is felt more relevant with regard to Reinsurance arrangements.

ESTIMATED MAXIMUM LOSS (EML)

EML means Estimated Maximum Loss. According to International Reinsurance Market, It is "An Estimated of Monetary Loss which could be sustained under a single risk as a result of a single fire or explosion considered by the insurer within the realm of a probability. It is fell by the insurers that the occurrence of an event will not endanger the entire value of the property insured under fire insurance. Say for Example, the insurers have underwritten a Building and the machinery worth or Rs.50, 00,000/- and the possibility of this value getting affected in total in an event of fire may not be to the extent of Rs.50, 00,000/- It may be to the extent of 50 to 60% of the value ranging from Rs.25 lacs to 30 lacs. They may assume that seeking reinsurance for full sum insured is not necessary and therefore they may depend on the Maximum Estimated Liability of Rs.30 Lac and seeks the reinsurance only for such sum. In other words the maximum liability of the insurers would be Rs.30 Lac which is less than the sum insured.

The physical and moral hazard involved Location and surrounding areas where insured property is situated The geographical area involved The class of risk and its past experience Classification and discrimination of risk The probability of out brake of fire The susceptibility to damages The extent of damages likely to be sustained The possibility of extinguishment The financial strength of the company in terms of the capital and Investments The liquidity and the immediate realizable value of assets Financial Soundness and favorable solvency position of insurers The willingness of the insurers to part with their capitals to individuals and series The nature of market in which the particular insurer is operating The insurers' growth potentiality and the pattern of loss settlement The size of the risk that is being selected for reinsurance arrangements Thus, the reinsurance depends on how much of the liability the insured can retain for his account. The concept of retention is very significant and it depends on the extent and type of reinsurance required.

TREATIES
The Forms of reinsurance those are applicable to property insurance The insurers normally select the treaties to be used for property insurance from the following options. Proportional Treaties Quota share treaty Surplus treaty Facultative treaty Non-proportional treaties Excess of loss treaty of any one risk Excess of loss of any one event Stop loss ratio of any one event TYPES OF PROPORTIONAL TREATIES Quota share treaty: This is kind of reinsurance arrangement where the original insurer known as
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PROBABLE MAXIMUM LOSS (PML)

This insurers are under the compulsion to select the aggregation of the retention that may be arising out of the losses to a variety of insured property such as houses, office, manufacturing plant, petrol stations lots of other types of high value property spread over the wide geographical area that may be affected by catastrophe like STFI, earthquake, hurricane, cyclone etc. The need arises to consider the Maximum Probable loss that may be likely due to such a disaster by catastrophe and conflagrated risk. The insurer need to select the maximum Probable loss that the insurer could suffer in the event of such a natural calamity and decide a level of sum it could retain for its won account without endangering its very solvency. Factors that determine the retention limit: The value of the property insured
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Cedant agrees to cede each and every risk that he underwrites at a certain fixed pre determined percentage subject to terms and conditions and upper limit embodied in the contract of reinsurance. Example if an insurer decides upon a 25% Quota share, then he would cede 25% of all his business within his retention pattern and reinsurer would receive 25% of all premiums on such business but pay 25% of all commission and 25% of all the claims arising on such business subject tot he maximum limit. Quota share treaty may incorporate an event or cession limit in the contract of insurance to contain the losses arising from a single event. Supposing the upper limit of the QTS is Rs.50 laces, when 25% of risk underwritten reaches the amount of Rs.50 Lac, the original insurer needs to either bear it on his own or seek additional reinsurance for the surplus amount. Surplus treaty: This is a kind of arrangement where the original insurer seeks reinsurance arrangement for such risks which exceeds his retention limit or gross retention limits of both his and his quota share treaty reinsurer. Since this arrangement is for surplus of what is borne by him and met by the quota share treaty Reinsurance is known as surplus treaty. The capacity of the surplus treaty is always a multiple of ceding companies retention. Further, multiples of the retention on lines can be added beyond the first surplus treaty and second surplus treaty and so on. The premium and the claim will be paid accordingly. Facultative Obligatory treaty: Under this arrangement the choice of ceding the risks is resting with the original insurer and reinsurer cannot reject what is ceded to him subject to the parameters of contract of reinsurance and similarly he cannot question in case reinsurer does not cede any risk underwritten by him. Facultative Reinsurance Treaty: This is one of the oldest systems of reinsurance arrangements. Under these methods, the reinsured needs to submit all the details of the risk to. Reinsurer for their perusal and decide either to accept or reject. The option of such decision is purely of reinsurer. Therefore, this system proves to be unfavorable, cumbersome and administratively theme consuming and uneconomic. But, reinsured seeks reinsurance under this system where there is automatic reinsurance, for such risks, or such risk fall outside the scope of the treaty arrangements or sometimes limits under treaties are exhausted. It is also possible that some of the high valued risk necessarily be covered under facultative reinsurance.
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REINSURANCE - PROGRAM
The reinsurance program of the insurer will depend upon the following factors Types of portfolios to be reinsured The portfolios consisting of various sum insured: Quota Share Treaty or Surplus Treaty or Excess of loss Treaty per risk is the most suitable proportional reinsurance. Where accumulation of risk is involved the program of reinsurance depends on PML or EML, usually Excess of loss per occurrence is preferable. Portfolios with unlimited liability Quota Share Treaty / Excess of loss Treaty per occurrence is preferable Portfolios subject to wide fluctuation Quota Share Treaty is preferable. OBJECTIVES OF REINSURANCE PROGRAMS IN PROPERTY INSURANCE There should be an automatic reinsurance cover for the risk underwritten by the insurer. The treaty should have adequate capacity to cope up with the insurers underwriting large risk and risk varying sum insured. The reinsures offer sufficient scope of cover that can take care of the risk undertaken by the original insurers. The type of reinsurance taken would have its own economic advantage over other type of reinsurance arrangement. The reinsurance selected would extend the security and continuity of reinsurance arrangements. Proportional treaties like Quota Share Treaty, surplus treaty and obligatory treaty are suitable to property insurance. Facultative method of reinsurance arrangement is made when the treaty limited is exhausted and risk underwritten is not falling under scope of treaties. Commission Normal Commission is paid under proportional treaties reinsurance arrangement ranging between 2.5% to 20%. Usually this is being paid to take care of direct insurers commission and administrative expenses and a small percentage of over riders. Supposing the direct insurer in case 17% of Gross premium income and resume 20% of commission from reinsurer, 3% will become over rider Sliding Scale Commission Sometimes reinsurer may offer a percentage of commission more than what is given in particular year at the time of renewal to exhibit a kind of recognition by
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way of incentive in order to reward the good claim experience during the currency of the contract of reinsurance. For example % increase in commission for 10% reduction in the claim ratio. 1% increase for 20% reduction in the claim ratio. 2% increase in commission for 30% reduction in the claim ratio The upward revision in commission for reduction in claim ratio and downward revision in case of increase in claim ratio. This kind of system is known as sliding scale commission. Profit Commission Usually the surplus treaty reinsurers offer to reward the good underwriting experience of direct insurer at the end of the year by sharing the percentage at a certain agreed percentage which forms part of the terms of the RI contract. There are three types of profit commission usually in practice. 1. Pro-rata basis 2. Three years average system 3. Loss extinction basis Example 1 Three years average system Profit during the first year, say

Non-proportional reinsurance treaties: Unlike proportional treaties, non-proportional treaties are made based on loss experience. Sum insured is not the basis of reinsurance as done in proportional treaties. The premium is based on loss experience only. It may be a flat premium or fixed percentage of premium r based on incurred claim ratio known as burning cost ratio. Non-proportional reinsurance treaties are usually arranged in order to take care of Catastrophes and conflagrates risks. Catastrophe treaties are only useful to take care of perils of windstorm, hurricane etc, which usually endanger and ruin wider area. These arrangements are done in layers. Types of Non-proportional treaties 1. Excess of loss treaty: Under this reinsurance arrangement, the reinsures pre determines a level of sum that he can retain from any loss without ruining his capital base. Say for example: he decides that he can bear only unto Rs.10 laces per risk, he will make reinsurance arrangement for any loss in excess of his limit of Rs.10 laces. Supposing a loss occurs and 10 numbers of shops are damaged by the insured peril and claim reported in Rs.25 lacs by each insured. The original insurer will retain Rs.10 lacs for each insured and claim Rs.15 lacs for each insured from the reinsurer and in which case he will be bearing a total amount of Rs.1 crore and receive Rs.1.5 crores from the reinsurance. The amount retained by the reinsured is known as deductible. And the amount borne by the reinsurer is known as the cover limit. In this arrangement the reinsured bears the loss of Rs.10 lacs per risk, as his deductible and the Cover Limit of the reinsurer is Rs. 15 Lacs per risk. Therefore this excess of loss treaty arrangement is known as "Per risk cover" or "Working covers". The insurer knows well based on his past records and form the experience of others as to how many claims will be more than his own account of deductible. The insurer will seek reinsurance for all losses exceeding his deductible of whatever sum he had mentioned in the scope of cover. Excess of Loss Treaty "Per Event Cover" Under this system, the reinsured will bear only one deductible irrespective of the number of risks in the loss occasioned by an event. Say for example, if the reinsurance has been on per event basis, in the above example the reinsured would have borne only Rs.10 lacs and claimed from the reinsurer a sum of Rs.2.5 crores
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2004 and 2005 2005-06 2006-07

= Rs. 300,000 = Rs. 600,000 = Rs. 1,200,000 = Rs.700, 000 = Rs. 105,000

Agreed Profit Commission @ 15% Three years average profit = (3+6+12)/3 Profit Commission Payable @ 15% = 700000X15% Example 2 Loss Extinction basis Profit during the first year, say

2004 and 2005 2005-06 2006-07

= Rs. Minus 300,000 = Rs. Minus 600,000 =Rs. 1,200,000

Agreed Profit Commission @ 15% The losses of previous two years set off against the third year profit and the balance profit works out to Rs. 300000 and 15% of profit commission works out to Rs. 45,000/-. This kind of commissions can be allowed only in case of professional reinsurance agreements.

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minus his deductible of Rs.10 lacs, i.e. Rs.2.4 Crores. Arrangement of reinsurance for catastrophe risks in layering Example: Reinsured deductible Rs.50 lacs Layering: Rs.1, 00, 00,000/- Xs Rs.50, 00,000/- Reinstatement 2 at 50% of premium Rs.2, 00, 00,000/- Xs Rs.1, 50,000/- Reinstatement 1 at prorate as to time Rs.4, 50, 00,000/- Xs Rs.3, 50, 00,000/Rs.10, 00, 00,000/-Xs Rs.8, 00, 00,000/ Hours Clause Hour's clause is being incorporated in the contract of reinsurance mainly to take care of certain perils, which occur again and again. This clause is incorporated into property treaties where weather perils are insured and which can affect property over 1000 of square miles and last for several days as in the case flood, hurricane, tornado and cyclone. The number of hours varies from peril to peril. 72 hours is appropriate for earthquake and weather perils.

percentage say 15% but such reinsurance arrangement will stop operating when the loss exceeds a percentage of net retained income say 110 cores. Therefore this reinsurance arrangement is known as STOP LOSS EXCESS RATIO Sharing of premium and claims account amount non proportional treaty Insurers Premium is paid based on loss experience. Therefore there is a formula for calculating the premium wherever there is a past record. Say, Incurred claims x 100 Gross Net Premium The premium arrive on this formula is known as "Burning Cost Ratio". In addition the Insurers increase the premium by a loading factor towards acquisition and management cost. Usually, it may be 100/70 or 100/80 or 100/85 Where the records of past experience are not available, the insurers may select the payment or premium on a Flat Basis or a Fixed Percentage of the Gross net premium income. With regard to premium payment based on loss experience, the minimum and maximum limit it agreed in the contract of reinsurance. No. Commissions are payable under Non-proportional treaties Reinstatement of sum insured Based on the claim experience, the limit chosen by the reinsurer is reduced to the extent of incurred claims and that sum can be reinstated by additional premium. Claim Payment The reinsurer will pay the claim upto his maximum limit once the loss reported to exceed the deductible limit of the insurer. For major claims, then and there settlement will be carried out that is called "Cash Loss Settlement" or otherwise the net retained account will be submitted at the end of the year after adjusting the deposits, if any. Under non-proportional system, irrespective of the - claim, minimum premium has to be paid. CONCLUSIONS For property Insurance, both proportional and non-proportional are favorable. But it is ideal if the insurer chooses non-proportional reinsurance for catastrophe risks and quota share treaty if he is a new insurer. Besides, the payment of premium is very less in Loss as compared to other Proportional treaties.
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STOP LOSS RATIO:

This insurance cover is taken when annual result of the insurance company is subject to volatile loss ratio. This reinsurance is taken against hailstorm and crop insurance. This reinsurance operates only after all other reinsurance recoveries are made. Under this system reinsured usually shares with the reinsurer may be 10% or by a monetary limit. The purpose of this reinsurance is to restrict the annual aggregate losses to a pre determined percentage of the annual net premium income of the original insurer from his fire portfolio: Example: M/s. Botham Companies underwrites a fire portfolio of Rs.100 crores. They desire to make reinsurance arrangements with the Reinsures for losses that exceed 60% of the net retained premium. This arrangement is to be done in addition to all the other reinsurance arrangement made by them. Supposing they make a quota share of 25% inclusive of commission, the net retained premium of the insurer is 75 crores. Since the 60% of net retained premium income is 45 crores, any loss exceeding 45 crores will be a heavy burden on the premium account as well as assets. Therefore, they have to make reinsurance arrangement for losses in excess of 45 crores. It is practice that the insurers will share as a coinsurer with reinsurer at certain
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QUESTIONS
1. Write 10 points on basis and functions of RI. Reinsurance is insurance of insurance. Transfer of risk from insurance company to Reinsurance Company. Sharing of risk of insurance company. Spread of risk internationally. It provides capacity to underwrite more business by proportional reinsurance. It provides protection to net retention by XOL and Cat. XOL. It stabilizes the results of insurance company by paying claim in bad years. Provides guidance and technical expertise to insurance companies. Helps in maintaining solvency margin by providing capital indirectly. Helps in getting global exposure. Take care of aggregate loses with smaller policies. What is facultative RI and describe advantages and disadvantages of facultative. Re Insurance of single risk. Optional for insurance com. And reinsurance co. to offer the risk or not and to accept the risk or reject. The reinsurance may suggest modification in terms and conditions and insurance company may accept or reject the modification. The risks which are outside the treaty or exceeding treaty limit are covered as facultative. Hazardous and higher exposure risks are offered facultative. Expertise and capacity of big reinsurance company is available. Useful for hazardous risk. Useful for very large risk. Time taking process and high administrative cost. Full disclosure of information of the risk to be made. Negotiation at renewal. No profit commission and very less re insurance commission. List out contents of a facultative slip. Name of the Insurance Co. Name of the Insured. Location. Nature of business Age of the company
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Occupancy Neighborhood Type of construction Period of cover Perils covered Sum Insured (Block wise) Rate deductibles Commission Retention Brokerage Past claim experience Other Insurance Inspection reports. 4. Write characteristics of surplus treaty It is reinsurance treaty. Proportional method of re insurance. Premium and claims are shared in the same proportion. It is obligatory and automatic capacity whenever there is surplus sum insured it is compulsory to cede and accepted by re insurer. Surplus treaty helpful growing business and accepting risks beyond retention. Maintain solvency margin. Share catastrophe losses. Can be arranged portfolio wise i.e. fire surplus treaty, marine hull treaty etc. High re insurance commission. Provision for profit commission. List same clauses (treaty wording) of proportional treaties : Scope of contract Follow the fortune Loss portfolio Commission Accounts Cash losses Inspection of records Error and omission. Commencement and termination Disposal of balance Arbitration.
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2.

5.

3.

6.

7.

What is retention? Retention is an amount company would like to keep to its own account. Two types of retention Risk retention Loss retention Factors to decide retention Share capital Reserve Net worth Portfolio premium Portfolio profitability Management policy Re insurance programme. Describe the nature of reinsurance contract It is a separate contract between insurance company and Reinsurance Company. Insurance contract must precede reinsurance contract. It is contract of indemnity. The requirement of contract such as offer, accept, consideration, legality are also applicable. Consideration is premium package by insurance company to Reinsurance Company. Utmost good faith as insurable interest is also equally applicable. The contract may include clauses like follow the fortune error and omission etc. If cut through clause is included the primary insured may claim from Reinsurance Company. Characteristics of excess of loss treaties. These are non proportional method of reinsurance. Profits retention Types of XOL treaties. Risk XOL Event XOL Cat. XOL Stop Loss The insurance companies have to decide loss retention for each risk and arrange risk XOL. Similarly under event XOL the insurance company has to decide loss retention under any event. Catastrophic loss retention under cat. XOL.
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If losses exceeds the loss retention claim are payable by reinsurance company subject to upper limit. Premium rating is also done on non proportional basis. Claims recovery under proportional method of reinsurance. Under facultative reinsurance a certain percentage of sum insured and premium is transferred and claims are also recovered in the some proportion. Under quote share arrangement a fixed and pre determined percentage of each and every policy is ceded and claims are recovered in the same proportion. Under surplus treaty the sum insured exceeding gross retention is ceded and claims are recovered in the same proportion. Claim notice has to be given. Brokers may also be informed. In case of big losses cash call may be made. Cat. Loss also can be first recovered from the reinsurance company. Records may be kept systematically for reinsurance companies' inspection.

REINSURANCE TRADE QUESTIONS

1. What percentage of Sum Insured of any Policy underwritten in India will be Re- insured with the Indian Re-Insurer (GIC) compulsorily in the name of Obligatory Cession? a. 20% b. 15% c. 25% d. 10% As per IRDA regulations, the objective of Re--insurance is not to a. Maximize retention within the Country b. Develop adequate capacity c. Secure protection of catastrophic Losses d. Earn more profit. Which is not an objective under Re- insurance programme as per IRDA (General Insurance Re-insurance) regulations 2000? a. Simplify the administration of business b. Maximize retention within the Country c. Enhance Re-insurance on facultative basis d. Secure the best possible protection for the Re-insurance costs incurred.
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8.

2.

3.

4.

Which of the following terms does not relate to Reinsurance? a. Treaty. b. First Loss. c. Facultative d. Stop Loss. Self Insurance may NOT be advantageous in: a. Predicting accurately. b. Minimization of disputes. c. Grouping of risks. d. Saving transaction costs. In Sliding scale of commission arrangement a. Commission payable varies in proportion to the loss ratio b. Commission payable varies inversely to the loss ratio c. Commission payable is not related to the loss ratio d. None of the above In the Reinsurance market, a Re-insurance contract is evidenced by a. Policy b. Stamped Slip c. Endorsement d. Cover note All General insurers in India --------- to GIC towards Re-insurance a. Have to necessarily cede 15% of their business b. Have to necessarily cede 25 of their business c. Have an option to cede between 10 25% of their business d. Are not bound to cede any business In India, the minimum entry capital for a reinsurance company is a. Rs. 50 crore b. Rs. 100 crore c. Rs. 200 crore d. Rs. 300 crore

11. As pr IRDA regulation on reinsurance the percentage of commission payable to ceding company for various classes of business is uniform a. True b. False 12. Each Indian insurer should obtain the approval of their Re-insurance programme from IRDA a. True b. False 13. Reserve for unexpired risk is calculated on a. premium received including reinsurance ceded but excluding reinsurance received. b. including reinsurance ceded and reinsurance received c. excluding reinsurance ceded and including reinsurance received. d. excluding reinsurance ceded and excluding reinsurance received. 14. Without approval of IRDA insurer independently cannot place Re-insurance with Single Re-insurer more than a.1% Re-insurance ceded outside India b. 5% c.10% d. 25% 15. The statutory cession on each and every policy (subject to certain limits), received by GIC is a. 66.66% b. 15% c. 33.33% d. 10% 16. Absence of direct relationship between Re- insurer and insured is an essence of the Re-insurance concept. Which of the following clause is against this concept? a. Premium adjustment clause b. Claims cooperation clause c. Cut through clause d. Follow the fortune clause 17. Which of the following is not relevant in facultative re insurance? a. Sessions b. Retrocession c. Portfolio entry d. Reinstatement
343

5.

6.

7.

8.

9.

10. Indian regulations prescribe a minimum credit rating of ________ in respect of Re-insurers outside India. a. AAA b. AA c. BBB d. BB
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18. In an XL form of Re-insurance the top and drop method is not relevant in which of the following case? a. When there is more than one layer b. When the number & amount of reinstatement is restricted c. When there is a single Re-insurer d. None of the above 19. Facultative Re-insurance is a. A kind of obligatory Re-insurance b. A Re-insurance arrangement administered by a faculty of insurance experts c. A method of Re-insuring risks on individual basis without any obligation for compulsory cession. d. A method of Re-insuring risks where insurer is obliged to cede a fixed percentage of premium for all risks written by him. 20. In reinsurance terminology a cession is the a. Amount of insurance a reinsurer cedes to another Re-insurer b. Amount of insurance an insurer keeps for its own account c. Amount of insurance an insurer transfers to a Re-insurer d. Maximum amount of insurance an insurer can write 21. The most common way of using reinsurance to minimize the effects of large or catastrophic losses is by means of a. Facultative Re-insurance b. Quota Share Treaties c. Surplus Treaties d. Excess of Loss Treaties 22. An arrangement in which insurer and reinsurer agree that cessions will always be a single fixed percentage of each reinsured risk can be referred to as a. per event excess of loss Re-insurance. b. per risk excess of loss Re-insurance. c. quota share Re-insurance. d. surplus Re-insurance. 23. In reinsurance parlance which of the following is only found in nonproportional treaty agreements? a. Accounts and Statistics Clause b. Attachment of Cessions Clause c. Follow the Fortunes Clause d. Ultimate Net Loss Clause
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24. When a reinsurer wishes to reduce its own liability on a particular risk, it does so by arranging a a. Cession. b. Concession. c. Retrocession. d. Treaty. 25. What amount would the reinsurer pay if the insurer has an excess of loss treaty for Rs.10,000,000 excess of Rs.5,000,000 and as a result of a storm insurer suffers a loss totaling Rs.7,000,000? a. 2,000,000 b. 7,000,000 c. 5,000,000 d. No payment would be made 26. In Re-insurance, a treaty designed to limit the loss of an insurer to a specified percentage of its annual premium income for all business or a class of business is called a a. Catastrophe Excess of Loss Treaty. b. Excess of Loss Treaty. c. Stop loss Treaty. d. Surplus Treaty. 27. Surplus Re-insurance is a form of a. Proportional Re-insurance b. Non-Proportional Re-insurance c. May be either d. All the above 28. A Re-insurance contract is a. An extension of the original insurance contact b. A guarantee for the original insurance contract c. A separate and independent contract d. None of the above 29. The retention limit of the direct insurance is based upon a. Capital b. Risk profile of the portfolio c. Regulatory considerations d. All the above
345

30. What is the amount of claim is payable under facultative Re-insurance arrangement if the total sum insured is 20,000,00 and the cover is for Rs. 5,000,00 and claim is Rs. 4,000,00. a. 4,000,00 b. 3,000,00 c. 2,000,00 d. 1,000,00 31. Under excess of loss if the cover is 10 crores in excess of 6 crores, then the 6 crores is known as a. Cover limit b. Deductible c. Franchises d. Ultimate net loss 32. Under excess of loss if the cover is for 20 crores in excess of 10 crores then the cover limit is a. 10 crores b. 20 crores c. 30 crores d. None of the above 33. The total sum insured of a property risk is Rs. 10 crores and retention is Rs. One crore the treaty limit is Rs. 5 crores. If there is a claim of Rs. 50 lakhs the Re-insurers will pay under surplus treaty a. Rs.50 lakhs b. Rs.40 lakhs c. Rs.25 lakhs d. Rs.10 lakhs 34. Insurance of an insured risk is called a. Pooling of the risks b. Co-insurnace c. Re-insurance d. Over-insurance 35. Which of the following contracts is not a contract of indemnity in the strict sense? a. Re-insurance b. Property insurance c. Life insurance 1) Only (a) above 2) Only (b) above
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3) Only (c) above 4) Both (a) and (b) above 5)Both (b) and c) above 36. In reinsurance parlance, a single event that causes multiple losses is called a. Accumulation of losses b. Catastrophe c. Accident d. Cyclone 37. Which of the following is not a function of Re-insurance ? a. Increasing the capacity of a Re-Insurer. b. Minimizing the effects of catastrophes c. Stabilizing the performance d. None of the above 38. The contract where the distribution of the loss is based on the loss and not on the amount insured is called a. Proportional reinsurance b. Non-proportional Re-insurance c. Treaty Re-insurance d. Facultative Re-insurance 39. Which of the following is / are not true with proportional facultative reinsurance? a. The Re-insurer shares a proportional part of the ceded insurance liability b. All the losses are to be transferred to the Re-insurer by the cedent c. The Re-insurer pays directly to the original insured d. Both (b) and (c) above 40. Which of the following statement is /are true? a. A cedent chooses facultative Re-insurance when it does not want to be loaded with poor risk b. Cedents normally choose facultative Re-insurance when there is not automatic Treaty at their disposal c. Under facultative Re-insurance both cedent and the Re-insurer have an option to accept or reject. d. All of the above. 41. What does the word treaty mean? a. Single insurance policy b. Bulk of insurance policies c. An agreement between two parties d. Reinsurance
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42. The contract under which a reinsured is obliged to cede a fixed percentage of the risks falling within the scope of the policy is called a. Quota Share Treaty b. Surplus Share Treaty c. Excess of Loss Treaty d. Stop Loss Treaty 43. The kind of treaty where the cedent company retains the risks till a certain limit and reinsures only the part that is above its net retention is a. Quota share treaty b. Surplus Treaty c. Excess of Loss Treaty d. Stop Loss Treaty 44. Which of the following is based on principles of both facultative and treaty? a. Facultative cover b. Quota share cover c. Facultative obligatory cover d. Partial cover 45. What does a 'premium bordereau' contain? a. Detailed list of policies b. Address of the original insured. c. Termination date d. all the above 46. Why is the concept of retention important to the underwriter? a. Because it helps the underwriter to determine the amount of reinsurance cover required. b. It helps the underwriter to know about the accumulation of risks. c. To ensure that the insurance company is not exposed to unacceptable level of losses. d. All the above 47. Why is it important for an underwriter to know about the risk environment prevailing in other parts of the world ? a. Because reinsurance is a business that goes beyond the boundaries b. Because reinsurance companies have to balance the possible adverse impact of one region by the better experience of another. c. To thwart competition. 1) Only (a) above 2) Only (c) above 3) Both (a) and (b) above
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4) Both (b) and (c) above 5) All of the above. 48. Which of the following statements is / re not true? a. Large claims normally are repetitive and frequent b. In most of the cases, the risks undertaken generate a great number of small risks, a few medium sized risks and very small number of large risks which can be very severe. c. The higher layers come into picture only in case of very large claims. 1) Only (a) above 2) Only (b) above 3) Only (c) above 4) Both (a) and (b) above 5) Both (b) and (c) above. 49. A computerized report that lists information for each and every claim is called in reinsurance a. Case reporting b. Summary reporting c. Bordereau reporting d. Bulk reporting 50. Probable Maximum loss is an assessment by a. The Cedent b. The Reinsurer c. The Surveyor d. The Broker 51. Which of the following is not an advantage of the excess loss per occurrence treaty? a. It allows the companies to write some limits above the comfort level b. It creates an extra capacity c. It covers the entire loss 1) Only (a) above 2) Only (b) above 3) Only (c) above 4) Both (a) and (b) above 52. Which of the following is / are true with regard to reinsurance underwriting? a. It involves selecting the accounts b. It involves defining conditions and rates c, Only (a) above
349

d. Only (b)above e. (a) and (b) above 53. As per IRDA regulation on reinsurance, each insurance company has to cede 20% (now 15%) of each and every policy as obligatory cession. These are: a. Quota share basis b. Facultative basis c. Surplus basis d. Excess of Loss basis 54. Quota share basis can be : a. Reciprocal b. Non-reciprocal c. NM reciprocal d. Both the above 55. The Manager of Motor Insurance Third Party pool is from: a. IRDA b. GIC c. New India d. United India 56. The Manager of Re-insurance pool for terrorism risk is from a. GIC b. IRDA c. General Insurance Council d. None of the above 57. The retention of an insurance company is protected by Reinsurance Treaty such as: a. Quota share b. Surplus c. Excess of loss d. Facultative 58. One of the following is -proportional method of reinsurance : a. Stop Loss b. Excess of Loss c. Catastrophic excess of Loss d. Surplus
350

59. One of the following is non proportional method :of reinsurance a. Stop loss b. Quota Share c. Surplus d. Facultative 60. The automatic capacity of underwrite business beyond retention is arranged through a. Excess of Loss b. Surplus Treaty c. Stop loss d. Facultative 61. A line is a. Sum Insured under the policy b. Risk retention to co's account c. Cession to quota share 62. As per IRDA regulations, the obligatory cession on quota share basis to GIC by all General Insurance Co. isa.10% b.15% c.20% d.25% 63. Facultative Re-insurance is the a. Portfolio risk b. Single risk c. Both the above d. None of the above 64. Profit commission is normally paid ina. Facultative RI b. Excess of Loss c. Stop Loss d. Surplus Treaty 65. A major portion of mega risk, after ceding to surplus treaty is reinsured through a. Excess of Loss b. Stop Loss c. Facultative d. Catastrophic Excess of Loss
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66. Stop loss is suitable for a. Aviation risk b. Mega risk c. Hailstorm risk d. Petrochemical risk 67. Following reinsurance companies are underwriting business in India: a. Munich Re b. Swiss Re c. Axa Re d. GIC Re 68. As per IRDA Regulations the share capital for Reinsurance Company is a. 100 Cr b. 200 Cr c. 300 Cr. d. None of the above 69. As per IRDA regulations while placing the Re-insurance programme, not more than ____ percentage of cover should not be placed with one insurance reinsurance company. a. 5% b. 10% c. 15% d. 25% KEY REINSURANCE TRADE QUESTIONS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. B D C B C B B A C C B A A C 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. B D D C C C D C D C A C A C 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. D D B B C C C B D B D D C A 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. B C D D C A C C C E A C B A 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. C D A D B B B D C C D B B

352

353

FINANCE
ACCOUNTS, INVESTMENT, AUDIT & RELATED REGULATIONS TRADE QUESTIONS 1. Compulsory investment by an insurer of its total assets, in Infrastructure and social sector is a. Not less than 10% b. Not less than 7.5% c. Not less than 5% d. No such limit Mark the most unlikely for calculation of solvency margin. Asset of Insurance Company includes a. Agent's balance amount b. Realizable sundry debtors c. Realizable advance d. Furniture, Fixture, Dead stock and stationery No risk to be assumed unless the Prem. Is received in advance the same has been provided in a. Section 41 of Insurance Act b. Section 40 C of Insurance Act c. Section 64 VB of Insurance Act d. Section 64 UM of Insurance Act State which of the following may not be a liability of Insurance Company a. Provision for dividend declared or recommended b. Reserve for unexpired risk c. Estimated liability in respect of outstanding claim d. Reserve for bad and doubtful debts Solvency Ratio means a. Available Solvency Margin Less required Solvency Margin b. RSM less ASM c. RSM/ASM d. ASM/RSM Who of the following can be members of Investment Committee of an insurer constituted under IRDA Regulation? a. The principal officer of the Company b. The appointed actuaries c. The IRDA chief
355

2.

FINANACE

3.

4.

5.

6.

354

d.

The CVO i. a, b, c, d ii. a, b and c iii. a and c iv. a and b

b. c. d.

The requirements of the IRDA Act, 1999 The requirements of the Companies Act, 1956 All above

7.

Incurred Claim Ratio for direct insurance business means a. Paid Claim/Prem. during any policy period b. 3 years avg. claim/3 years avg. prem. c. Incurred claim/3 years avg. prem. d. Incurred claim/ prem. during any policy period After formation of IRDA, Statutory Auditors of PSU Insurance Companies are appointed by a. IRDA b. CVC c. CAG d. Board of Directors of respective Company. Which is correct pair? a. Statutory Audit-Continuous Audit b. Internal Audit-Periodical Audit c. Government Audit-Continuous Audit d. None of the above

13. The Auditors shall verify that the investments in the Balance Sheet have been valued in accordance with a. The provisions of the IRDA Act, 1999 b. The provisions of the IRDA Act, 1999 and IRDA Reg. on Accounts and Audit c. The provisions of the Companies Act, 1956 and Accounting Standard (AS) 13 d. Market Value 14. The auditors express opinion on the accounting policies to the effect that a. The Accounting policies are appropriate and in compliance with applicable Accounting Standards b. The Accounting Policies are appropriate and in compliance with applicable Accounting Standards and IRDA Regulations c. The Accounting Policies are appropriate and in compliance with IRDA regulations d. The Accounting Policies are appropriate 15. The auditor shall express their opinion that the Revenue Account gives a. A true and fair view of the surplus or the deficit for the financial period b. A true and correct view of the surplus or deficit for the financial period c. A fair view of the surplus or the deficit for the financial period d. None of the above 16. As per IRDA (Accounts and Audit) Regulation the auditors are required a. To review the management report b. To certify that they reviewed the management report c. To certify that they have reviewed the management report and there is no apparent mistake or material inconsistency with F S. d. Not to certify or review the management report 17. As per IRDA (Accounts and Audit) Regulation, the auditor's report shall specify that a. The actuarial valuation of liabilities is duly certified by the appointed actuary b. The valuation of liabilities is based on the assumptions for such valuations c. Valuation in accordance with the guidelines and norms issued by ASI d. Valuation is made in accordance with above all provisions
357

8.

9.

10. As per the Statutory Requirement the following may not be prepared for Annual Financial Results by Insurance Company a. Revenue Account b. Trading Account c. Profit and Loss account d. Balance sheet 11. The auditors who are required to express their opinion on whether the balance sheet gives a true and fair view of the insurers' affairs as at the end of the financial year are a. Internal Auditors b. Statutory Auditors c. Govt. Auditors d. Auditor for Tax Audit 12. The auditors will verify that the financial statements are prepared in accordance a. The requirements of the Insurance Act, 1938
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18. For claim audit the auditor should look into the following aspect(s) a. Legal aspects b. Technical aspects c. Financial aspects d. All Above 19. For corporate underwriting audit, the internal auditor shall examine a. Underwriting Policy and practice b. Risk Management Policy and Reinsurance Policy c. Underwriting results d. All above 20. For investment audit, the Auditors look into the following aspects a. Verification and valuation of investments b. Verification of Exposure Risks c. Verification of performing and non-performing status of investments d. All above 21. Accounts audit covers the following aspects a. Verification of Financial Statements b. Recognition of Premium Income c. Valuation of Assets and Liabilities and Solvency Margins d. All above 22. For motor TP claims audit, the auditors need not consider the following aspects a. The investigation Report and Income Statement b. Charge Sheet, Post-mortem Report and Police report c. Policy particulars and 64 VB compliance d. Premium charged and claim ratio 23. To verify the admissibility of FLOP claims, auditor shall first look into: a. The admissibility of Material damage claim in Fire Policy b. Whether the claim under Fire policy is payable c. The admissibility of FLOP policy claim with reference to its coverage, exclusions, terms, conditions, clauses irrespective of the admissibility of claim d. None of the above 24. The auditor will examine the receipts and payments accounts (cash flow statement) to verify mainly: a. Liquidity of the company b. Solvency of the company
358

c. d.

Profitability of the company All above

25. As per IRDA regulation each Indian insurer shall render its accounts in respect of obligatory cessions to Indian reinsure on a. Monthly basis b. Quarterly basis c. Half-yearly basis d. Annual basis 26. IBNR stands for a. Insured before now reported b. Insured before not reported c. Incurred but now reported d. Incurred but not reported 27. Reserve for unexpired risk is calculated at 100% of the net premium in the following class of business a. Finance b. Marine Hull c. Misc. d. Marine Cargo 28. Reserve for unexpired risk is calculated on a. Premium received including reinsurance ceded but excluding reinsurance received b. Including reinsurance ceded and reinsurance received c. Excluding reinsurance ceded and including reinsurance received d. Excluding reinsurance ceded and excluding reinsurance received 29. Unearned premium refers to the following a. 10% of the gross premium b. 20% of the gross premium c. 15% of the gross premium d. None of the above 30. The IRDA Regulation that deal with Audit Requirements is called: a. IRDA (Preparation of Financial Statements and Auditor's Report of Insurance Companies) regulation, 2000. b. IRDA (Preparation of Financial Statements and Auditor's Report of General Insurance Companies) regulation, 2000. c. IRDA (Preparation of Auditor's Report of Insurance Companies) regulation, 2000.
359

d.

IRDA (Preparation of Auditor's Report of General Insurance Companies) regulation, 2000.

31. The report of the Auditors on the Financial Statements of every insurance company shall be inconformity with the requirements specified in schedule(s) to the particular regulation thereof a. Schedule A b. Schedule B c. Schedule C d. All above 32. The Audit Committee in Insurance Company is constituted by one of the following ways: a. The specified provisions in the companies Act 1956 (As Amended) b. The specified provisions in the Insurance Act, 1938 (As Amended) c. The specified provisions in the IRDA Act, 1999 (As Amended) d. The specified provisions in the specified IRDA Regulations 33. The Financial Statements of a general insurance company to be audited are: a. The revenue account (Policyholder's Account) b. The balance sheet and profit & loss account (Shareholders' Account) c. The Receipts and Payments account (Cash Flow Statement) d. All above 34. C & AG Audit of Government companies is carried out as per the provisions a. The provisions Sec. 617 of the Companies Act 1956 (As Amended) b. The provisions Sec. 618 of the Companies Act 1956 (As Amended) c. The provisions Sec. 619 of the Companies Act 1956 (As Amended) d. All above 35. For the purpose of PSU Audit Laws and regulations applicable are a. The provisions of the Companies Act and the insurance act b. The IRDA regulations and the Insurance principles c. The Accounting Standards and the Auditing and Assurance Standards issued by the Insurance Chartered Accountants of India d. All above 36. The Audit Committee that oversees, reviews and evaluates the financial results and their disclosures is constituted a. Under the directives of the Controller & Auditor General of India b. Under the provisions of the IRDA Act, 1999 c. Under the provisions of the Insurance Act d. Under the provisions of Sec. 292A of the Companies Act, 1956 (As amended)
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37. The audit committee legally constituted is required to a. Oversee, review and evaluate the financial results of the company b. Examine the reporting process and disclosures of performance of the company c. Review the audit of all the offices of the company, discuss with the statutory auditor and recommend the same to the Board. d. All above 38. The Statutory Auditor of PSU Insurance Company is appointed by a. The C&AG b. Shareholders in AGM c. The Board of Directors d. The regulatory authority 39. The audited annual accounts of PSU Insurance Company is submitted to a. The Lok Sabha of the Parliament U/S 619A & 619B of the Co's Act b. The Rajya Sabha of the Parliament U/S 619A & 619B of the Co's Act c. Both the Sabhas of the Parliament U/S 619A & 619B of the Co's Act d. None of the above 40. In the audit report the auditor is required to comment on valuation of liabilities to the effect that; a. The actuarial valuation is true and correct b. The actuarial valuation is true and fair c. The actuarial valuation is proper and justified d. The actuarial valuation has been certified by the appointed actuary and the said certificate has been relied upon for their opinion 41. In the audit report the auditor is required to comment on Management Report to the effect that a. There is no apparent mistake or material inconsistency with the financial statements b. There is no mistake or inconsistency with the financial statements c. Management is true and correct d. None of the above 42. In the audit report the auditor is required to comment on Investment with: a. Investments have been valued in accordance with the provisions of the Insurance Act b. Investments have been valued in accordance with the provisions of the Insurance Act and the prescribed IRDA regulations c. Investments have been valued in accordance with the prescribed IRDA regulations
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d.

None of the above

c. d.

25% of total assets 50% of total assets

43. The Statutory Audit Report of PSU Company is required to address to: a. The Members b. The Government c. The IRDA d. The Board 44. The certification on company's compliance of Sec. 40 (c) of the Insurance Act, 1938 in regard to debit of all management expenses to Revenue Account is required to be done by: a. The C&AG Auditor b. The Internal Auditor c. Statutory Auditor d. Special Auditor 45. The Statutory Auditor comments on amortization of expenses on account of Pension, Gratuity and Leave Encashment in accordance with the requirements of; a. Accounting Standard 15 b. Accounting Standard 22 c. Accounting Standard 18 d. None of the above 46. Certificate to the effect that no part of the assets of Policyholders Funds has been directly applied in the contravention of the Insurance Act, 1938 is given by a. The C&AG Auditor b. The internal auditor c. The Statutory auditor d. The Special Auditor 47. The general insurers are required to invest and keep invested the following minimum percentage of total assets in Govt. Securities and Guaranteed Securities a. 10% b. 20% c. 30% d. 40% 48. For general insurer, investment in other than approved investment cannot exceed a. 10% of total assets b. 15% of total assets
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49. The minimum rating for investment in social sector and debt instrument should be a. AAA b. AA c. +A d. A 50. When a listed equity instrument is traded in volume not below ten thousand units in any session or trading value exceeds 10 lac in any session in past 12 months it is termed as a. Actively traded instrument b. Liquid traded instrument c. Actively traded and liquid instrument d. None 51. One of the exposure norms of IRDA sets the limit on investment as under a. Limit per investor company b. Limit per investee company c. Limit per investor company & per investee company d. None 52. In which of the following General insurance Companies in India invests insurance funds: a. Indian Central Govt. securities b. Govt. securities issued by foreign countries c. Shares issued by Private companies d. Shares issued by public companies 53. General insurance companies are allowed to invest in Growth schemes of mutual funds a. True b. False 54. Approved securities/investments for non-life insurance companies are prescribed in a. Section 27A of Insurance Act b. Section 27B of Insurance Act c. Section 27A & B of Insurance Act d. None of the above
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55. Exposure norms for investment suggested for IRDA Regulations relating to a. Investee company b. Group Company c. Sector d. All of the above 56. The investment committee that reviews investment policy and supervises and controls all investments activities is constituted by a. Sec. 292A of the Companies Act, 1956 (As Amended) b. The Insurance Act, 1938 (As Amended) c. Sec. 9 of the IRDA (Investment) Regulation, 2000 d. None of the above 57. The figure in financial statements are rounded off to the nearest a. Rupee b. Hundred rupees c. Thousand rupees d. Lac rupees 58. Accounting of claim costs does not include a. Survey expenses on claim b. Legal expenses on claim c. Investigation expenses on claim d. Management expenses on claim 59. For accounting 'Investment Property' means land or building held a. For capital appreciation b. For use in services c. For administration purpose d. All of the above 60. Short term Loan means loan repayable within a. 1 month b. 3 months c. 6 months d. 12 months 61. In which of the following, the General Insurance companies in India invests finds in: A. Indian Central Govt. securities B. Govt. securities issued by foreign countries C. Shares issued by private companies

D. Shares issued by public companies a. Only A b. Only A & B c. Only A & D d. All of the above 62. General Insurance companies are allowed to invest in Growth schemes of mutual funds a. True b. False 63. Approved securities/investments for non-life insurance companies are prescribed in a. Section 27A of Insurance Act b. Section 27B of Insurance Act c. Section 27A & B of Insurance Act d. None of the above 64. Exposure norms for investment suggested by IRDA Regulations relating to a. Investee company b. Group company c. Sector All of the above

ACCOUNTS MODEL QUESTIONS

1. Accounting entry for Depreciation of Assets will be: a. debiting depreciation crediting asset b. debiting depreciation crediting P/L A/c c. debiting depreciation crediting Accumulated depreciation d. debiting depreciation crediting loss on asset Service Tax on Reinsurance Premium sent to foreign reinsurer will be paid by: a. foreign reinsurer b. domestic cedent c. both d. none Expenses of management other than those charged to P/L A/C are apportioned to revenue A/C on the basis of GDP plus Reinsurance accepted Premium a. 75% marine business 100% fire and misc. b. 50% marine 50% fire and misc.
357

2.

3.

356

c. d. 4.

25% marine 75% fire and misc 100% marine 75% fire and misc.

Rate of service tax has been changed from 12% to 10% from a. 1st February, 2009 b. 24th February, 2009 c. 20th February 2009 d. 1st April, 2009 Depreciation on fixed asset is charged on WDV at the rate prescribed laid down in: a. companies Act, 1956 b. IT Rules 1952 c. Both d. Higher of the two Terminal benefits paid are amortised over a period: a. five years b. three years c. seven years d. eight years For Assessment Year 2009-10 no income tax is to be levied for senior citizen upto income of: a. Rs. 3,50,000 b. Rs. 2,25,000 c. Rs. 1,25,000 d. Rs. 2,50,000 Provision for gratuity, pension, leave encashment is made on actuarial valuation 1n accordance with Accounting Standard: a. AS 15 b. AS 3 c. AS 26 d. AS 10 Statutory Auditor appointed by the C &AG under: a. 619 ( 1 ) b. 619 ( 2 ) c. 619 (3) d. 619 (4)
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10. Gross Profit Ratio denotes: a. Sales X 100 / GP b. Net Profit X 100 /GP c. Gross Profit X 100/ Sales d. Gross profit X100 / Purchase 11. An Insurer shall prepare separate Revenue Account for: a. Fire, Cargo, Hull and Misc. b. Fire, Marine, Motor and Misc c. Fire, Marine, Motor and Misc. d. Fire, Marine and Misc. 12. Separate schedules shall not be prepared for: a. Aviation b. Personal Accident c. Health d. Rural 13. Premium for rent shall include only a. Realized Rent b. Notional Ret c. Outstanding Rent d. Prepaid Rent 14. Claims Paid shall not include: a. IBNR b. Survey Fees c. Legal And Other expenses d. Claims settlement cost 15. Short term loans shall include those, which are repayable within: a. 12 months b. 24 months c. 6 months d. 3 months 16. Earned Premium is: a. Direct Premium b. Direct Premium + Reinsurance Accepted c. Direct Premium + Reinsurance Accepted Reinsurance Ceded d. Direct Premium + Reinsurance Accepted Reinsurance Ceded + Adjustment for change in reserve for unexpired risk
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5.

6.

7.

8.

9.

17. Cash flow statement shall be prepared according to: a) AS 3 b) Company Act c) IT act d) Insurance Act 18. The term of office of CMD shall be for a period: a. not exceeding five years from the date of appointment b. not exceeding three years from the date of appointment c. Until his retirement d. None of the above 19. Auditors in PSUs are appointed by: a) CAG b) Company Board c) Head Office d) Internal Audit Dept. 20. Combined Ratio is: a) (Gross claims paid + expenses) *100/ Gross Premium b) (Gross claims paid + expenses) *100/ Net Premium c) (Net claims paid + expenses) *100/ Gross Premium d) (Gross claims paid *100)/ Gross Premium

INVESTMENT

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INVESTMENT MODEL QUESTIONS

Q.1. Insurance Regulatory and Development Authority (Investment) Regulation came into force and became applicable in the year 1998 2000 2002 2004 Q. 2. Insurance Regulatory and Development Authority came into force in the year 1997 1999 2000 2005 Q. 3. Which of the following is the last amendment to IRDA (Investment) Regulation, 2000? Fourth Amendment Third Amendment Second Amendment First Amendment Q. 4. When was IRDA (Investment) Regulation, 2000 last amended - 2000 2005 2007 2008 Q. 5. Regulation 4 of IRDA (Investment) Regulation, 2000 specifies --- Pattern of Investment Assets of General Insurance Business Pattern of Investment assets of Life Insurance Business Pattern of Investment Assets of Pension and General Annuity Business None Q. 6. What minimum percentage of Investment Assets has to be maintained in Mandated / Statutory Investment category prescribed by IRDA for General Insurance Companies-? 60%
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55% 45% 30% Q.7. Regulation 5 of IRDA (Investment) Regulation, 2000 specifies Exposure / Prudential Norms of Investment Approved Investment Other Investment Returns of Investment Q.8. What percentage of Investment Assets is subject to Exposure / Prudential norms of Investment as prescribed by IRDA? 50% 60% 70% 55% Q. 9. What minimum percentage of Investment Assets has to be maintained in Infrastructure category as prescribed by IRDA for General Insurance Companies? 5% 10% 30% 15% Q.10. What minimum percentage of Investment Assets has to be maintained in Housing category as prescribed by IRDA for General Insurance Companies? 10% 15% 5% 20% Q.11. What percentage of Investment Assets has to be maintained in Central Government Securities as prescribed by IRDA for General Insurance Companies? 20% 30% 10%
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40% Q.12. What percentage of Investment Assets has to be maintained in Government Securities including State Government Securities as prescribed by IRDA for General Insurance Companies? 20% 30% 40% 15% Q.13. What is the maximum percentage allowed for Investment in Other Investment category by IRDA for General Insurance Companies-- 10% 20% 25% 30% Q.14. What is the minimum Credit Rating required for Instruments for investment to qualify for Approved Investment category AA AA A+ AQ.15. What is the minimum Credit Rating required to consider an Instrument for Investment by Insurance Companies? AA AA+ A+ AQ.16. Fair Value valuation applicable to -- Equity Debenture Preference All of the above Q.17. General Insurance Company's Exposure in equity, preference and convertible debentures of a company allowed by IRDA is restricted to--- Lower of 10% of outstanding equity shares ( face value) or 10% of
364

Investment assets Lower of 15% of outstanding equity shares ( face value) or 10% of Investment assets Lower of 20% of outstanding equity shares ( face value) or 10% of Investment assets Lower of 15% of outstanding equity shares ( face value) or 15% of Investment assets Q.18. General Insurance Company's Exposure in Debt and Loans of a company allowed by IRDA is restricted to--- Lower of 10% of Paid-up share capital, free reserves and debenture / Bonds of the Investee company or 10% of Investment Assets Lower of 15% of Paid-up share capital, free reserves and debenture / Bonds of the Investee company or 10% of Investment Assets Lower of 20% of Paid-up share capital, free reserves and debenture / Bonds of the Investee company or 10% of Investment Assets Lower of 15% of Paid-up share capital, free reserves and debenture / Bonds of the Investee company or 15% of Investment Assets Q.19. General Insurance Company's GROUP Exposure in equity, preference and convertible debentures of a company allowed by IRDA is subject to--- Maximum up to 15% of Investment Assets Maximum up to 10% of Investment Assets Maximum up to 20% of Investment Assets Maximum up to 25% of Investment Assets Q.20. General Insurance Company's INDUSTRY Exposure in equity, preference and convertible debentures of a company allowed by IRDA is subject to--- Shall not exceed 15% of its total investment exposure to the industry sector as a whole Shall not exceed 25% of its total investment exposure to the industry sector as a whole Shall not exceed 10% of its total investment exposure to the industry sector as a whole Shall not exceed 5% of its total investment exposure to the industry sector as a whole Q.21. Regulation 6 of IRDA (Investment) Regulation, 2000 specifies Investment Returns to be submitted by the Insurer Pattern of Investment

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Exposure Norms Valuation of Investment Q.22. Investment Returns to be filed with IRDA on -- Annual Basis Half Yearly Basis Quarterly Basis Monthly Basis Q.23. What is period within which the returns need to be submitted to IRDA Within 55 days of the end of quarter Within 70 days of the end of quarter Within 30days of the end of quarter Within 45 days of the end of quarter Q.24. How many Investment Forms need to be filed with IRDA by General Insurers-- 12 11 10 13 Q.25. Every Insurer shall review the Investment Policy on Yearly basis Half Yearly basis Monthly basis Quarterly Basis Q.26. Investment Policy of an Insurer needs to be approved by its-- Board of Directors Investment Committee Audit Committee Management Q.27. Schedule II of IRDA (Investment) Regulations, 2000 specifies-- List of Other Investments List of Approved Investments List of Money Market Instruments All of the above
366

Q.28. The Classification of Industrial sectors has to be done in line with-- National Industry Classification (NIC) CMMIE Capital Market CRISIL Q.29. Regulation 2(cc) of IRDA (Investment) Regulations, 2008 specifies List of Approved Investments List of other Investments List Money Market Investments List of Infrastructure Investments Q.30. Section 27B of Insurance Act, 1938 deals in-- Provisions regarding approved investments Provisions regarding Other Investments Provisions regarding Dividend Provisions regarding pattern of investment Q.31. Section 27C of Insurance Act, 1938 specifies Provisions regarding Approved Investments Prohibition for Investment of funds outside India Prohibition of Investment in Pvt. Limited companies All of the above Q.32. 'Accretion of funds' means-- Investment Income, Gains on sale / redemption of the existing investment and operating surplus Investment assets at the end of the period Investment income for the period All of the above Q.33. Investment Assets in the case of a General Insurer means-- Total Assets of the company Total Operating surplus Shareholders funds representing solvency margin and Policy holders' funds at their carrying value as shown in its balance sheet as per IRDA. Total Accretion during the period
367

INSURANCE LAW & REGULATORY FRAME WORK MODEL QUESTIONS

1. The Maximum number of whole time Members IRDA can have is a. 4 b. 5 c. 7 d. None of the above

7.

Section 64 VC of insurance act provides a. No risk can be assumed without collection of Premium in advance b. No insurer can open office at a new place without permission from the authority c. The controlling office has authority to waive advance collection of premium d. Insurers need not seek permission from any authority. Insurance Ombudsman has come into existence due to a. IRDA Act b. Redresses of Public Grievances rules 1998 under Insurance Act c. Public Liability Insurance Act 1991 d. Consumer Protection Act Under Sec 64 UM, of Insurance act 1938 the controller of Insurance reserves the rights to 1) To appoint a second surveyor to reassess the loss 2) Directs insurers to settle a claim at a figure less than or higher than that of at which it was assessed originally a. Both 1 & 2 are correct b. Only 1 is correct c. Only 2 is correct d. Both are incorrect The minimum credit rating permitted of a re-insurer chosen by an Indian insurance company should be a. IAAA of Crisil b. BBB of S & P c. Any Registered Reinsurance company of repute d. A+ of AM Best The powers of ombudsman 1) Non issuance of any insurance document to the customer after receipt of premium 2) Any partial or total repudiation of claim by the insurer 3) Any dispute in regard to premium paid or payable in terms of policy 4) Only delay in settlement of claim a. All are correct b. Only 1 & 2 are correct c. Only 4 is correct d. Only 3 is correct
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8. 2. IRDA can have following part times members in addition to whole time members: a. 4 b. 8 c. 6 d. None of the above Tenure of the Chairman IRDA is a. 3 years b. 5 years c. 4 years d. None of the above Sec 40 C of Insurance Act stipulates about limits of expenses of management. In case of violation: a. IRDA can cancel the license of the insurer b. Govt can cancel the license, c. Govt can relax the provisions d. None of the above Social Sector business includes all except a. Unorganized sector b. Informal sector c. Economically vulnerable & backward classes d. Rural sector The penalty for non-compliance of Social sector obligations, for the insurers is a. Rs 5 lac per defaulting year and continuous failures, cancellation of license b. Every year fine of Rs 5 Lacs c. Warning letters to be issued d. None of the above
368

9.

3.

4.

10.

5.

11.

6.

12.

Ombudsman can take up the disputes between a. Insurer and Corporate clients b. Insurer and co-operative societies c. Insurer and individual clients d. All of the above A TPA has been licensed to perform its functions from 1.1 2006. It has to renew its license on a. On or before 1st January 2009 b. On or before 30th November 2008 c. On or before 1st January 2010 d. On or before 1st January 2011 While sending the policy to the insured, the insurer is obliged to send the following a. Claim Form b. Name & Address of surveyor c. Name and Address of Regional Office d. Address of the Insurance Ombudsman

18.

13.

To which of the following entities can not be issued Corporate Agency License? a. Private Limited Company the Memorandum /articles of Association is silent about insurance business b. A Municipal Corporation c. A scheduled Commercial Bank d. Primary Co operative Bank Which of the following relating limit of indemnity under Brokers Professional indemnity Policy is incorrect? a. 3 Times remuneration received at the end of every financial year subject to a minimum limit of Rs.50 lacs for Direct Broker b. 3 Times remuneration received at the end of every financial year subject to a minimum limit of Rs.2.50 Crores for a Reinsurance Broker c. 3 Times remuneration received at the end of every financial year subject to a minimum limit of Rs.5 Crores for a Composite Broker d. 3 Times remuneration received at the end of every financial year subject to a minimum limit of Rs.10 Crores for Composite Broker As per the Insurance act the General Insurance Business has been classified into a. Fire, Motor, Miscellaneous, Marine b. Fire, Marine, Motor, Engineering c. Fire, Marine, Health, Miscellaneous d. Fire, Marine, Miscellaneous As per the Insurance Act 1938 under Sec 40-C Companies have to operate at Management Expenses ratio of a. under 30% b. under 25% c. under 15% d. under 20% GIBNA was introduced for making a. General Insurance affordable to people b. To help insurance grow in rural sector c. To help Policy holders d. To Nationalize the General Insurance sector to make it meaning full to the masses Which one of the following is not correct for general insurance companies to undertake in respect of social sector business, of the total gross premium? a. 2% of the total gross premium in the first financial year.
371

19.

14.

20.

15. For calculation of solvency Ratio of a non life insurance Company, The formula applied is a. ASM is multiplied with RSM b. ASM is divided by RSM c. RSM is divided by ASM d. RSM over net premium/ Net Claims which ever is higher 16. No General Insurer can open a new place of business or change the existing place of business in India without the permission of a. GIPSA b. GIC c. Govt. of India d. IRDA Which of the following relating to Direct Brokers License Fee is incorrect? a. At the time of being Licensed shall pay a License fee of Rs.25, 000/b. 0.5% of the remuneration earned in the preceding financial year subject to minimum of Rs.25, 000/- and a maximum of Rs.1, 00,000/- on every renewal. c. 0.5% of the remuneration received subject to a minimum of Rs.75,000/and Maximum of Rs.3,00,000/d. The prescribed License fee shall be paid within 15 days from the date of receipt of intimation of acceptance of the application.
370

21.

22.

17.

23.

b. 3% of the total gross premium in the 2nd financial year. c. 5% of the total gross premium thereafter d. 10% of the total gross premium every year. 30. 24. Which one of the following is not incorrect minimum qualification for any person to become an agent, where the population is less than 5000? a 12th pass b Degree from any recognized university c 10th standard d None of the above. 31. 25. Which one of the following is not incorrect in case of approval for appointment of Actuary in case of general insurance? a. IRDA shall within 30 days approve or reject b. IRDA shall within 60 days approve or reject. c. IRDA shall within 15 days approve or reject. d. None of the above Which of the following is correct in respect of reserve for unexpired risk? a. Fire 50%, Misc 50% b. Marine cargo 50 %, Hull 100% c. a & b are correct d. Only a is correct 33. 27. Which one of the following is correct in respect of solvency margin? a. Excess of value of liabilities over excess of value of assets. b. excess of value of asset over liabilities; c. Both the above are correct d. None of the above. 34. 28. Which one of the following is correct in case of cancellation of registration of general insurance company which defaults repeatedly to adhere to the code of conduct? a. No cancellation of registration is permitted as per IRDA. b. Penalty of suspension for a stated period, imposed by the IRDA. c. Impose penalty of cancellation of certificate of Registration. d. Penalty coupled with cancellation of certificate of registration, by the IRDA WHAT IS THE COMPOSITION OF IRDA? a. A Chairperson b. Not more that five Whole-time Members
372

c. Not more than four part-time members d. All the above. What are the reasons by which the central government can remove any Member of IRDA? a. Physically or mentally incapable b. Has been convicted any offence which involves moral turpitude c. Any time adjudged as insolvent d. All the above What is the full form IRDA? a. INSURANCE REGISTRATION & DEVELOPMENT ACT b. INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY. c. INSURANCE RURAL AND DEVELOPMENT AGENCY d. NONE OF THE ABOVE. CHAIRPERSON OF THE AUTHORITY CAN HOLD OFFICE UPTO THE AGE? a. 62 YEARS b. 65 YEARS c. 60 YEARS d. NO AGE LIMIT. WHERE IS THE REGISTERED OFFICE OF IRDA LOCATED? a. KOLKATA b. BANGALORE c. MUMBAI d. HYDERABAD WHAT IS THE REQUIRED PAID-UP CAPITAL TO QUALIFY TO ACT AS NON-LIFE INSURER IN INDIA? a. Rs. 40 crore b. Rs, 100 crore c. Rs. 35 crore d. Rs. 75 crore ACCORDING TO 'IRDA ACT' RURAL INSURANCE BUSINESS IN NON-LIFE IS a.2 % in first financial year b.3 % in 2nd financial year c.5% thereafter d. all the above
373

32.

26.

35.

29.

36.

ACCORDING TO IRDA REGULATION, SOCIAL SECTOR BUSINESS MINIMUM REQUIREMENT TO NON-LIFE IS AS UNDER EXCEPT a. 5000 lives in the first year b. 7500 lives in 2nd financial year c. 10000 lives in 3rd financial year d. 12000 lives in 4th financial year Who regulates Re-Insurance business in India? a. IRDA b. GIC c. Reinsurance Corpn of India d. Govt. of India. Which one is not the criterion for appointment of Actuaries under IRDA ACT? a. A fellow member of the Actuarial Society of India b. Not over the age of 65 years c. An appointed Actuary of another Insurer d. A person who has not committed any breach of professional conduct The required minimum Solvency Ratio as per IRDA Act is a.1.00 b.1.20 c.1.50 d. none of the above Function of Actuaries is a. Certification of pricing b. ensuring of solvency margin c. ensuring the accuracy & completeness of data d. all the above Rural sector shall mean any place having population of a. not more than 5000 b. Density not more than 400 per sq. km. c. At least 75% of the main working population is engaged in agriculture d. All the above Social Sector excludes a. un-organized sector b. informal sector c. economically vulnerable d. formal sector
374

43.

Un-organized sector excludes a. bidi workers b. handloom and khadi workers c. gents tailor d. rickshaw puller Which one shall be considered as an advertisement as per IRDA a. materials used by an insurance company within its own organization b. communications with the policy holders other than materials urging them to purchase, increase modify a policy c. General announcement sent by a group policy holder to a member of the eligible group d. Materials used by an insurance company to distribute to the public. If any insurer fails to maintain the required Solvency Margin, then he shall be liable to a penalty by IRDA a. not exceeding Rs. 5 lac b. not exceeding Rs.10 lacs c. not exceeding Rs. 4 lacs d. no such penalty An important regulation by IRDA that was made in 2005 in the area of a. Macro insurance b. Micro insurance c. Motor insurance d. Re-insurance Which is an un-approved investment as per IRDA a. investment in secured loans b. investment in secured debt instruments c. investment in secured bonds d. investment in short or long term loans with pvt. Ltd. companies. Which one of these is not under the powers of Ombudsman to consider: a. Delay in settlement of claims. b. Non-issuance of any insurance document to customers after receipt of premium. c. Any dispute with regard to premium paid in terms of the policy. d. Repudiation of a claim of a commercial firm. Which of the following is not a disqualification for an individual to become an insurance agent (Sec.42): a. He is a minor.
375

44. 37.

38.

45.

39.

46.

40.

47.

41.

48.

42.

49.

b. He is of sound mind. c. He is a known criminal. d. His connivance in a fraud is proved 50. As per the IRDA guidelines one of the following is not mentioned as the duty of an agent: a. To sell the insurance policy to the public. b. To pay the premium collected from the insured to the insurer. c. To claim the remuneration from the insurer for the business procured from the insured. d. To disclose the material information about the insured to the insurer. To work as a Fresh Individual General Insurance Agent, number of hours training required is: a. 150 hours. b. 100 hours. c. 50 hours. d. 25 hours. Who can cancel an agency license? a. Branch Manager. b. Divisional Manager. c. Designated Person. d. Authorized Person. The insurance agent shall be obliged NOT to reveal the following: a. Disclose his license fee to the prospect on demand. b. Disclose the scale of commission. c. Disclose his commission income. d. Requisite information on insurance products. Which of the following is correct as per IRDA regulations about minimum capital requirement with reference to insurance brokers: a. i. Direct Broker: Rs50 lakhs; ii.Reinsurance Broker: Rs.100 lakhs; iii.Composite Broker: Rs.200 lakhs. b. i. Direct Broker: Rs100 lakhs; ii.Reinsurance Broker: Rs.200 lakhs; iii.Composite Broker: Rs.250 lakhs. c. i. Direct Broker: Rs50 lakhs; ii.Reinsurance Broker: Rs.200 lakhs; iii.Composite Broker: Rs.250 lakhs. d. None of the above. An Insurance Company can be wound up in the following ways as per the
376

Insurance Act.1938: i.Voluntary; ii.By Court; iii.By Central Government; iv.By Shareholders and Policyholders. a. i., ii, and iii. only. b. ii., iii., and iv. only. c. All of the above. d. None of the above. 56. A Corporation can be granted license to act as a Broker if it has in it's employment minimum: a. One qualified person. b. Two qualified persons. c. 50% qualified persons. d. 100% qualified persons. Unlike an agent the duty of the Broker includes: a. Advising the insured on products. b. Advising the insured on rates. c. Assisting in negotiation of claims. d. Assisting in filling the proposal. hich is relevant out of the following in connection with the Objective of IRDA a. to protect the interests of holders of insurance policies b. ensure orderly growth of the insurance industry to regulate, promote and for matters connected therewith or incidental thereto 1) Both a and b 2) Only a As per IRDA Act 1999 Internmediary or Insurance Intermediary means a. Insurance and Re-insurance brokers, insurance consultants, surveyors and loss assessors b. Agents c. Development Officers 4.Third Party Administrators. The composition of IRDA shall include a. Finance Secretary b. Chairman of GIPSA c. Minimum of five whole-time members and a minimum of four part-time members d. Chairman of GIC
377

51.

57.

52.

58.

53.

59.

54.

60.

55.

61.

As per IRDA ACT out of five whole time members at least ____ members from Life and General Insurance or Actuarial Science a. 2 b. 3 c. 4 d. 5 Maximum percentage of paid up equity capital by a foreign company in Indian Insurance Company is a. 51 b. 49 c. 26 d. 74 Minimum paid up equity capital for a Reinsurance Company in India is a. Rs.100 crores b. Rs.200 Crores c. 20 Crores d. None of the above Every insurer shall, in respect of the General Insurance business carried on by him in India should deposit a. Rs. ten crores with GIPSA b. Rs.20 Crores with GIC c. Rs.10 Crores with Reserve Bank d. Rs.20 crores with IRDA Which one of the following bodies are covered / governed by IRDA ( Insurance Advertisement and disclosures) Regulations 2000. a. Insurer's b. Intermediaries c. a & b d. None of a & b Which of the following statements is/are correct. Statement A :All communications made to policy holders are covered under IRDA (Insurance Advertisement and disclosures) Regulations 2000. Statement B:Communications urging public to purchase Insurance policies only are covered under IRDA (Insurance Advertisement and disclosures) Regulations 2000. a. A Only
378

b. B Only c. Both A & B d. None of A & B 67. Composite Insurance Agent can sell a. Health Insurance Products and Micro Insurance Products only. b. Micro Insurance Products only c. Heath Insurance Products only d. Any Life and General Insurance Product Recently IRDA ( Licensing of Insurance Agents) Regulations 2000 has been amended, the amendments is with respect to a. Qualifications for Agents. b. Practical Training for Agents. c. Code of conduct of Agents d. All of the above. Which one of the following statements is/are correct Statement A Available solvency margin means the excess of value of assets over the value of liabilities Statement B Solvency Ratio means the ratio of the amount of available solvency margin to the amount of required solvency margin a. Statement A only b. Statement B only c. Statement A & B both d. None of the A & B Which one of the following statement is/are correct Statement A A cooperative Society registered under relevant Law can promote an insurance company in India Statement B A Company formed under the Company's Act 1956 can promote an insurance company in India a. Statement A only b. Statement B only c. Statement A & B both d. None of the A & B Under IRDA regulation act 2000 Rural Sector shall not be any place a. Population of not more than 5000
379

62.

68.

63.

69.

64.

65.

70.

66.

71.

b. Density of Population is not more than 400 per sq km c. At least 75% of the male working population is engaged to agriculture d. Place which is Hilly areas. 72. Social Sector does not include a. Economically vulnerable or backward classes b. Un organized and informal sector c. Persons with disabilities d. Senior citizens Under IRDA ( Assets, Liabilities and Solvency Margin of insurers) regulations ,2000, the value of Computer equipment including its Software, is computed as under :a. 75% of its cost in the year of purchase. b. 50 % of its cost in the 2nd year. c. 25% of its cost in the3rd year d. All the above. On receipt of any notice of loss arising under contract of insurance, the General Insurer shall appoint a Surveyor a. Within 7 days from the receipt of intimation b. Within 7 hours from the receipt of intimation c. Within 24 hours from the receipt of intimation d. Within 72 hours from the receipt of intimation A general insurance policy need not state a. Policy terms, conditions and warranties b. Full description of the property or interest insured c. Any franchise or deductible applicable d. None of the above Which is the most unlikely answer a. Under special circumstances the Surveyor can seek an extension of time from the Insurer for submission of his Report. b. The Insurer may request the Surveyor to submit an additional Report. c. There is a fixed time limit for an Insurer to offer settlement of claim to the Insured. d. IRDA has recently relaxed the norms for payment of Interest by an Insurer in the event of delay beyond the stipulated period. Statement I: At least two Directors of TPA shall be qualified Medical Doctors registered with the Medical Council of India. Statement II: The minimum paid up capital of a Company in equity shares
380

should be Rs. 1 crore , for the purpose of TPA license. a. Both the statements are correct. b. Only Statement I is correct. c. Only Statement II is correct. d. Both the statements are incorrect. 78. As per IRDA (Appointed Actuary) Regulations 2000 of IRDA Act 1999, a person shall not be eligible to be appointed as an appointed actuary for an insurer if he/she is a. Not a fellow member of the Actuarial Society of India b. An appointed actuary of another Insurer c. Over the age of 70 years d. Not an employee of the insurer or a consulting actuary in case of general insurance business. I - An appointed actuary shall have access to all the information or documents in possession, or under control, of the insurer if such access is necessary for the proper and effective performance of the functions and duties of the appointed actuary. II- An appointed actuary is entitled to attend all the meetings of the management except the Board meetings of the insurers. As per IRDA (Appointed Actuary) Regulations 2000 which of the above statement/s is/are correct a. Statement I is correct b. Statement II is correct c. Both statements are correct d. Both statements are incorrect What is/are not the duties and obligations of an appointed actuary in accordance to the IRDA (Appointed Actuary) Regulations 2000 of IRDA Act 1999. a. Rendering actuarial advice to the management of the insurer, in particular in the areas of product design and pricing, insurance contract wording, investment and reinsurance. b. Complying with the provisions of the section 64VA of the act in regard to maintenance of required solvency margin in the manner required under the said sections c. Informing the authority in writing of his or her opinion, within a reasonable time whether the insurer has contravened the act or any other act. d. None of the above. What is not in code of conduct of an insurance agent appointed as per IRDA (Licensing of Insurance Agents)Regulations 2000 of IRDA Act 1999. a. Indicate the premium to be charged by the insurer for the insurance
381

73.

79.

74.

75.

80.

76.

77.

81.

product offered for sale b. Render necessary assistance to the policyholders or claimants or beneficiaries in complying with the requirements for settlement of claims by the insurer. c. Disclose the scales of commission in respect of the insurance product offered for sale, if asked by the prospect. d. None of the above. 82. The provision that any Insurance Co-operative Society registered under Cooperative Societies Act can carry on General Insurance Business was incorporated in the Insurance Act in the year a. 1938 b. 2002 c. 1950 d. None of the above Any Insurance Co-operative Society can transact Insurance Business if its paid-up capital is minimum of a. Rs.50 crs b. Rs.100 crs c. Rs.150 crs d. Rs.200 crs The Paid-up Share Capital required for an Indian Insurer carrying on RI Business is a. Rs.100 crs. b. Rs.10 crs c. Rs.200 crs d. Rs.50 crs Which is condition precedent to filing a product for approval with IRDA under File and Use Procedure a. Approval of the product by appointed actuary b. Certification of the product by lawyer of the company c. Approval of the underwriting policy of the company by the Board of the company and its filing with IRDA d. Filing copy of Policy and Endorsement wordings

87.

A compliance officer under file and use requirement should be a. General Manager Technical b. Chief Underwriter of the company c. Appointed Actuary of the company d. A person who is not responsible for the underwriting function of the company A moderator of the rates under file and use procedure of the IRDA can be a. General Manager Technical b. Chief Underwriter c. CEO of the Company d. The Financial Advisor of the Company No Insurer shall accept the business at a premium rate below the rates indicated without the approval of moderator of rates a. 1.0 %0 b. 0.1%0 c. 0.5%0 d. 1.5%0 What is not permissible under File and Use procedure of IRDA a. Underwriting business at a loss b. Experience rated pricing c. Exposure Rated pricing d. Chief Underwriting Officer acting as Compliance Officer Statement A: An aggrieved claimant whose petition is pending before The State Consumer redressal Commission can also approach The Insurance Ombudsman for speedy redressal of his grievance. Statement B: A citizen of India whose claim for Rs.15 Lacs was denied by a Insurer can approach either Insurance Ombudsman or State Consumer Grievance Redressal Commission for remedy a. Only statement A is correct b. Only statement B is correct c. Both A and B are correct d. Both A and B are incorrect While sending the policy to the insured, the insurer is obliged to send the following a. Claim Form b. Name & Address of surveyor c. Name and Address of Regional Office d. Address of the Insurance Ombudsman
383

88.

89.

83.

90.

84.

91.

85.

92. 86. A product is required to be filed with IRDA under the signature of a. General Manager Technical b. Appointed Actuary c. CEO or Designated authority d. By any one of the above
382

93.

For calculation of solvency Ratio of a non life insurance Company, The formula applied is a. ASM is Multiplied with RSM b. ASM is divided by RSM c. RSM is divided by ASM d. RSM over net premium/ Net Claims which ever is higher Which of the following statements is true? Statement A: As per IRDA Regulations, there is a legal obligation on the part of insurers to issue a renewal notice to the insured Statement B: Issue of a renewal notice means that the policy is automatically renewed, if the premium is paid. a. Neither of the statements b. Only Statement A c. Only Statement B d. Both Statements While submitting a tender, a company insists for payment of Earnest Money Deposited along with quotation a. You will pay according to the terms of tender b. You will have to seek permission from you corporate office before depositing c. You will not deposit as it is against the norms d. Before depositing, you seek the permission of IRDA Whose certificate is not mandatory while filing a general insurance product with IRDA as per the file and use guidelines? a. Certificate by the CEO of the company b. Certificate by the CVO of the company c. Certificate by the appointed actuary d. Certificate by the company's lawyer What is the minimum share capital for a company to be a corporate agent of an insurance company? a. Rs.1 Lakh b. Rs.5 Lakhs c. Rs.10 Lakhs d. Rs.15 Lakhs A dissatisfied customer will lodge his/her grievance through the company's website by browsing a. Company's own Grievance Redressal cell b. Ombudsman
384

c. IRDA's site d. GIPSA's site 99. Till 1971 in total number of insurance companies operating in the insurance market were; a. 307 b. 207 c. 107 d. None of the above

94.

100. Govt. took over the undertaking of all the companies in 1971 and brought them under the Act called; a. The Insurance Act, 1938 (as amended) b. The General Insurance Business (Nationalization) Act, 1972 c. The General Insurance Business (Nationalization) Act, 1971 d. None of the above 101. The Act or IRDA regulation which removed the prohibition existing in the GIBNA Act 1972 relating to formation of insurance companies other than four PSU companies under GIC. a. The IRDA Act, 1999 b. The Insurance (Amendment) Act,2002 c. The IRDA (insurance and reinsurance) Regulations,2000 d. None of the above 102. The players in the market are required to maintain required solvency margin (RSM) based on a. Gross Direct Premium b. Gross Direct Claims c. Net Premium and Net Claims d. All above 103. The Corporate Agents as per the IRDA (Licensing of insurance Agents) Regulations could be; a. Firms, Companies, Co-op. Society b. Banks, Regl. Rural Banks, Co-op. banks, c. Local authorities, NGOs d. All above 104. As per code of conduct prescribed in the IRDA regulation an insurance agent shall not to (Tick the right statement) a. interfere with any proposal introduced by any other insurance agent b. disclose his licence to the prospect on demand
385

95.

96

97.

98.

c. disclose the scales of commission in respect of the insurance products offered for sales d. indicate the premium to be charged by the insurer for the insurance product offered for sale 105. Regarding advertisement by Insurance intermediaries IRDA regulations provide that a. Only duly licensed intermediaries may advertise or solicit insurance through advertisement b. Agents or Intermediaries cannot advertise or solicit insurance through advertisement c. Only duly licensed intermediaries may advertise or solicit insurance through advertisement if the insurer in writing approves it. d. None of the above. 106. For the purpose of audit of financial statements, the auditor shall ensure that a. Premium has been recognized as income over the contract period b. Premium has been recognized as income over the period of risk c. Premium has been recognized as income over the contract period or the period of risk, whichever is applicable d. Premium has been recognized as and when collected 107. The Auditor shall verify that real estate-investment property has been measured a. At historical cost b. At historical cost less accumulated depreciation c. At historical cost less accumulated depreciation and impairment loss d. At market value 108. In General Insurance business the Actuarial advice is to ensure the following a. the rate is fair b. the wage is fair. c. the tariff is fair d. the tax is fair 109. For the purpose of determination of solvency the following asset is placed with zero value except a. Sundry debt not realizable b. Advances not realizable. c. Pre paid expenses. d. Furniture, fixtures, stationery.
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110. The following is not considered as asset for solvency except a. Agents balance not realized in thirty days. b. Agents balance not realized in sixty days c. Agents balance not realized in ninety days d. Agents premium not realized in fifteen days. 111. Which of the following persons cannot be appointed as an actuary a. Fellow of Actuarial Society of India b. A person against whom no disciplinary action is pending by Acturial Society. c. An employee of the insurer d. A person aged 75 years. 112. The value of computer equipments and software in the year of purchase after depreciation would be a.100% b.75% c. 50% d. 25% 113. Solvency Ratio means the ratio of a. available solvency margin to premium base b. required solvency margin to premium base c. Available solvency margin to required solvency margin d. required solvency margin to available solvency margin 114. Under protection of policy holder's interest on receipt of a claim intimation the General Insurer will respond within a. 24 hours b. 48 hours c. 72 hours d. 100 hours 115. Under 'PPI' regulation the Surveyor has to submit his report ordinarily within a. 15 days b. 30 days c. 45 days d. 60 days 116. The Laws which specifically regulate insurance business in India are : a. The LIC Act 1956 b. The Insurance Act 1938 c. The GIB (Nationalistaion) Act 1972
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d. The IRDA Act 1999 e. All of the above 117. The Indian Marine Insurance Act 1963 is based on a. The Fatal Accidents Act 1885 b. The Workmens' Compensation Act 1923 c. The UK Marine Insurance Act 1906 d. None of these 118. Which of the following is not a stipulation in the IRDA Guidelines about advertisement by Insurers? a. Advertisement should disclose full particulars of the insurer b. The name and address of the Chief Marketing Officer of the company should be published in the advertisement. c. Display the registration / licence numbers on their websites. d. A copy of the advertisement should be filed with the IRDA 119. Which of the following is not a parameter specified by IRDA in defining Rural Area ? a. AT least 75% of the male working population is engaged in agriculture b. Population of the area not to exceed 5000, according to the last census c. Each household must own at least two heads of cattle. d. The density of population must not exceed 400 per square km. 120. The institution of Insurance Ombudsmen came in to effect in the year a. 1988 b. 1999 c. 1997 d. 2001 121. Insurance Ombudsman are appointed and administered directly by: a. The Union Finance Ministry b. The IRDA c. The GIC and LIC of India together d. The General Body of Insurance Councils e. None of the above 122. Institutions have accountability and responsibility to : a. Its shareholders only b. Its shareholders and stakeholders only c. The Govt. Authorities only d. Entire society
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123. Insurance companies are registered under : a. Insurance Act 1938 b. Marine Insurance Act 1963 c. Companies Act 1956 d. IRDA Act 1999 124. The 'Date of Notification' of General Insurance Business Amendment act is a. 01.07.2001 b. 07.08.2002 c. 01.04.2002 d. 03.10.2001 125. Right to Information Act 2005 come in to force on a. 01.04.2005 b. 15.11.2005 c. 02.10.2005 d. 12.10.2005 126. The first fully Indian Owned Insurance Company of India is a. United India Insurance Company Ltd b. The Oriental Insurance Company Ltd c. National Insurance Co. Ltd d. New India Assurance Co. Ltd 127. The R.T.I Act, 2005 does not extend to the following state a. Nagaland b. Arunachal Pradesh c. Jammu & Kashmir d. Uttaranchal 128. As per IRDA regulations (without prejudice to section 27 % 27 (b) of the Act), every insurer carrying General Insurance Business shall in must and at all times keep invested his total assets in Central Govt. securities. a. upto 5% b. upto 12.50% c. not less than 20% d. upto 13.66 % 129. A person can apply for and be granted licence to act as an agent for a. One general insurer only b. One life insurer only c. Either 1 or 2 above d. Both 1 & 2 above
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130. The minimum qualification to act as an agent residing in urban area is a. 8th pass b. 10th pass c. 12th pass d. Graduate 131. For renewal of Agency Licence the agent has to complete practical training for a minimum of a. 25 hours b. 50 hours c. 100 hours d. 150 hours 132. As per IRDA norms a Corporate Agents portfolio should not have premium from one person/organization/group of organization exceeding a.10% b.25% c. 50% d.75% 133. An Agent, whose licence has been cancelled, cannot apply for fresh licence for a. 1 year b. 2 years c. 3 years d. 5 years 134. Required solvency margin in respect of premium income is _____ % of gross adjusted premium or net premium whichever is higher. a. 10% b. 20% c. 25% d. 50% 135. Required solvency margin in respect of claim is _____ % adjusted gross incurred claim or net incurred claim whichever is higher. a. 10% b. 20% c. 30% d. 40%
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IFORMATION TECHNOLOGY TRADE QUESTIONS

1. In computer hardware specification, we see a term like 1 GB RAM or 512 MB RAM or something like this. What does RAM mean? a. Read and manage b. Randomly Arranged Memory c. Random Access Memory d. Read and Memorise You want to write a letter to be sent to your valued customers. What software will you use for creating and editing the letter? a. A word processor b. A spreadsheet software c. An internet browser d. A COBOL compiler Which of the following device is an input device that can be used for inputting data or instruction to the computer a. Monitor b. Keyboard c. Printer d. Speaker For preventing unauthorized usage of computing facilities, authorized users are given unique user-id and password. A password should be a. Simple and easy to remember b. Complex and be made known to as many persons as possible to minimize loss of time in case one forgets his password c. Complex and be changed time to time d. Same password should be given to all the users Which is the odd man out? a. 80 GB b. 512 MB c. 1 GHz d. 2 KB A computer with 160 GB HDD will be about two times faster than a computer with 80 GB HDD in doing same set of operations, remaining configuration remains same. a. The statement is wrong b. The statement is right
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2.

3.

4.

5.

6.

c. It depends on set of operations d. It depends on volume of data being used 7. Which of the following is the most common way of spreading a computer virus a. By installing a hardware in the network b. Through attachments in e-mails containing malicious codes c. Through application software having malicious codes d. Through data files containing malicious data A spreadsheet software like Ms. Excel is normally used for a. Editing photographs b. Preparing presentations c. Doing data analysis d. Sending e-mail Bits per second (bps) is a common unit of a. bandwidth b. resolution of monitor c. typing speed d. none of the above

b. Can not do anything c. Rename the file d. Delete it and create it with the preferred name. 14. In data structure, stack is a list of data following a. First in first out (FIFO) b. Last in first out (LIFO) c. In from one end and out from other end d. None of these. 15. If n devices are to be connected in network using ring topology, what is the number of cable links required? a. n b. n-1 c. n(n-1) d. 2n 16. A file with the extension pps is used for a. Creating an e-mail b. Making presentations c. Preparing graph d. Storing large volume of data 17. Out of the following, which statement is correct a. Same user-id can be used by different users by assigning different passwords b. Primary key value can be same for more than one record in a table c. Arithmetic operations can be done with alphanumeric data d. Data can be stored in ascending as well as descending order 18. If the premium collection in a branch in month 2 decreases by 20% compared to month 1, and again goes up by 20% in the month 2, then a. Month 1 premium collection is same as month 3 collection b. Month 1 premium collection is less than month 3 collection c. Month 1 premium collection is greater than month 3 collection d. it depends on the premium amount 19. User acceptance testing should be done by a. Those who are involved in programming b. Likely users of the new systems c. Software vendor d. Third Party
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8.

9.

10. Open source software is one which a. doesn't require installation of source code b. can work without any hardware c. has no licensing policy d. source codes are available to all for use and modifications. 11. When a file is saved a. it is stored in RAM of the computer b. it is stored in ROM of the computer c. it is stored in the secondary storage device of the computer d. it gets printed 12. Out of the following, which is an advantage of using a database management system? a. controlling redundancy b. data isolation c. data manipulation d. none of this 13. If you don't like the name of the file what would you do? a. Save it with different name
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20. For using an application software effectively a person should be trained on a. Programming language in which software is developed b. Features of the hardware on which the software is to be used c. Functional features of the software d. Soft skills 21. Business Intelligence Software are such software a. That make human being intelligent b. That enables the transactions to happen in faster way c. That uses statistical techniques to show useful patterns in the data d. That integrates various functional systems 22. Oracle is commonly understood as a a. Database system b. Programming language c. ERP d. Operating Sytem 23. Malware are software a. Used by stock exchange b. Developed to do harm to the computer or network c. Used by cyberforensic experts to identify the cybercriminals d. None of the above 24. Firewall is a. An antivirus software b. is an internet browser c. Both of the above d. None of the above 25. 1 KB is equal to a. 1024 bytes b. 1000 bytes c. 100 bytes d. None of the above 26. You have data related to premium collection in various regions of your organization in different months. You want to get relative idea about the rate of increase/decrease in premium collection. What kind of report should be preferred? a. Tabular report
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b. Bar chart c. Pie chart d. Line Graph 27. What is the importance of phone number 1551 in India? a. It's a toll free number dedicated to farmers in India b. It's a toll free number for getting medical assistance c. It's a toll free number for getting Insurance related information d. It has no significance 28. Data related to a variable having high level of uncertainty will have a. High average b. High variance c. Low average d. low variance 29. An Insurance company targets to double its premium collection in next two years. But in the first year it could increase by only 25%. What is the % increase required in the 2nd year to meet the initial target? a. 25% b. 75% c. 100% d. 60% 30. Out of following, which is not necessary for starting a corporate website? a. Domain name b. Web Space c. Internet Connection d. Web Pages 31. As per the Information Technology Act 2000 in India, Network Service Providers are fully liable for the data made available through that service a. The above statement is wrong b. The above statement is right c. The IT Act 2000 doesn't have any section for network service providers d. There is no Information Technology Act in India 32. Any electronic record can be legally authenticated by a. Putting the company logo in the document b. Including the name of the directors in the document c. Affixing digital signature d. None of the above
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33. A data warehouse in an Insurance company should not be used for a. Data analysis b. Insurance Policy Administration c. Data mining d. None of these 34. The Disaster Recovery site for information system should be located a. In the same premises to minimize time of recovery from disaster b. In a nearby premises c. In the DR manager's house d. None of these 35. Data mining is not used for a. Updating transaction records b. Finding patterns in existing data c. Associating new data with existing group d. Clustering the existing data 36. In managing an IT implementation project, the project completion time is mostly a. Equal to the sum of all the activity times b. Less than the sum of all the activity times c. Greater than the sum of all the activity times d. They are not related 37. While allocating resources in any project, we should give priority to activity having a. Highest activity time b. Lowest activity time c. Highest delayed time d. Lowest float time 38. Which is more harmful to the information security in an organization a. Giving multiple user-id to same person b. Giving same user-id to many persons c. Both are equally harmful d. They have nothing to do with info security 39. In a System Development Life Cycle, end users have least role to play during a. System requirement determination b. System development
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c. System testing d. System implementation 40. For best results in information processing from a tabular report, the number of columns should be a. As many as can be accommodated in the report b. About ten c. About 5 d. At least 15 41. Out of the following, which biometric template will have largest size in terms of computer memory required a. Fingerprint b. Retina c. Signature d. Voice 42. Out of following, which has lowest cost per storage unit a. RAM b. ROM c. Hard disk d. Magnetic tape cartridge 43. A branch collected half of its annual premium target at a rate of Rs. 1 crore per month and remaining half at the rate of Rs. 50 Lakhs per month. What was the annual target? a. Rs. 9 crores b. Rs. 8 crores c. None of the above d. Require more information to get it. 44. A branch collected half of its annual premium target at a rate of Rs. 1 crore per month and remaining half at the rate of Rs. 50 Lakhs per month. What is the average premium collected per month? a. Rs. 2/3 crores per month b. Rs. 75 lakhsper month c. None of the above d. Require more information to get it 45. Let h1, h2.h20 be heights of 20 persons and d1, d2....d15 be depth of water at 15 points across the river bed. They have to cross the river by walking. The decision maker computes the average of heights and water depth. He finds
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that the average height of persons is more than the average depth of water. He decides that group should cross the river. Did he use correct analysis for decision-making? Choose the most appropriate answer from following a. Yes b. No c. He should have collected depth of water data at more number of points d. Flow of current is also important 46. While sending an e-mail if you write address of a person in Bcc (blind carbon copy) a. The person will not receive the mail b. He will receive the mail but wouldn't get the attachment if any c. He will not know about other recipients of the mail d. Other recipients of the mail will not know about him 47. If you are sending a document file to your colleagues and want that they should not be allowed to make changes in that, you will in normal circumstances a. Make it a read-only file b. Make a PDF and send that c. Both the above options will serve the purpose d. None of the above options will serve the purpose 48. You have a file of about 5MB size which is requiring by many of your colleagues. What option from following will be the best a. Sending the file as attachment to all who need that b. Storing in a folder and share that with all who need that c. Storing in some free web space and inform them about the URL d. Copying the file on machine of all who need that 49. Most significant advantage of OLAP implementation is that a. IT department can generate the standard reports with greater convenience b. Users can do analysis of data online c. Business transaction becomes faster d. Need of taking back up gets eliminated 50. Why should large files be compressed before attaching in an e-mail? a. It makes the file secured b. It will get automatically deleted after some pre-decided time c. Compression makes the file virus free d. It creates lesser load on communication infrastructure
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51. What are the links generally available, in a company's website: a. Our office, our people, our work b. About us, FAQ, home c. First page, address, details d. none of the above 52. What do we understand by the term 'http' a. Hypo test transmission programme b. Hyper text transfer protocol c. Higher text transfer provision d. Hard text transport promotion 53. What stands for 'www' generally prefixed before a website address: a. World wide workgroup b. World wide web c. World wide wan d. World wide wall 54. Which programming language is used while designing a website: a. Cobol b. Fortran c. Html d. Http 55. In the Web Site of an Insurance Company which of the following normally is not displayed? a. Company profile b. Annual reports c. Product Profiles d. Employee profile 56. The common language used in Web site architecture is: a. XML b. HTML c. SQL d. None of the above 57. During business negotiation with a corporate client, the financial performance of your company is requested by their finance director to be presented authentically. The most impressive way to do it is a. To take the relevant portion of your lap-top presentation b. To ask for the office to show the last year's balance sheets c. To show Brochures d. To open company's web site
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58. The ID of all the websites starts with 'www', what is the full form a. World wide workgroup b. World wide web c. World wide wan d. World wide wall 59. PSU Insurance company websites do not have the following details for the public a. Right to information Act b. Various Insurance policies c. Registration number allocated by the IRDA d. The promotion policy for the employees of the company 60. An employee of Public Sector Insurance company can view the promotion results a. By logging on to his Co's website using his/her ID and Password b. By going to company's web site c. By going to GIPSA's website d. By going to NIA website 61. Which of the following areas does not come under obligation in the formation of Company's website a. Downloading system b. Hindi Version of Contents c. Contents of RTI Act d. Contact Address 62. From the customer point of view which one is not the most inappropriate information one should have in the Company's website a. Product information b. Financial health of a company c. Number of hyperlinks provided in the Home page d. Bilingual presentation 63. Which should be the most important feature for any Company's website a. Scrolled information b. Number of links c. Time taken to access d. Visitor's status
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BULLET QUESTIONS
1. Enumerate various functions covered by the Estate Department - Bullets Lease or Purchase of Immovable property for Office Lease or purchase of property for Residence of Employees Renewal / Negotiation for Lease of premises Maintenance and Repair of the properties Renovation and Structural changes in the properties Empanelling of Architects / Civil Contractors after following CVC guidelines Budgetary Control and maintenance of documents related to property Dealing with Litigation matters / overstay / illegal occupation of Company's properties Appointment of Estate Officers / liaison with them for eviction of unauthorized occupants INTERNAL AUDITING, ITS NEED AND ESSENTIALS DESIRED FOR EFFICIENT AUDITING A continuous, critical review of financial and operational activities, conducted by a staff of auditors functioning as fulltime salaried employees An extension of internal check & control introduced by the management to supervise the effectiveness of such int. control Auditors to be conversant with rules and practices To refrain from creating any fear psychosis in the mind of auditee To report a constructive appraisal of operation and on protection of business To appraise and review the existing internal check & control system To render specialist service especially when any operational Office is concealing any unhealthy situation for fear of exposure Critical examination of functions and activities within particular department or any individual or a responsibility centre To bring out effectiveness / success or shortcoming in the system and operation in vogue To report on remedial measures or on improvement of the system and operation To report without any fear or favour Discuss the technical aspects of Reinsurance Audits Check RB/NRB Classification of some depts. of some D.O./R.O Check sample cession derivations for Outward Treaties Tally Dept. wise premium and claim figures from Tech Dept. to R/I with TB figs.
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3.

 Check accounting of Outstanding Claims Provisions See whether TP/OD claims out of one accident advised for XL recovery and not accounted as NRB. Check if 10% limit prescribed by IRDA exceeded Check whether Net Retention schedule has yielded expected results Check if documentation of all arrangements esp. facultative is available Check balance of treaties net outgo or income? Check declined / cancelled treaties if accepted later, reasons for same 4. Mention major kinds of Audits conducted in an insurance company. Statutory Audit which is conducted by Chartered Accountants as per the provisions Sec.224 to Sec. 233 of the Companies Act'1956 (as amended) has to be carried out annually for reporting the maters specified in the schedule C of the IRDA (Preparation of Financial Statements and Auditor's Report of Insurance Companies) Regulation, 2000. C&AG Audit is conducted by an auditor appointed by or reappointed by the Controller and Auditor General of India under Sec.619 of the Companies Act for the Govt. Company as defined by Sec.617 of the Companies Act,1956 Regulatory Audit is an audit, checking, examination and verification of books of accounts, investments of funds, margin of solvency, efficiency in the conduct of business of insurance companies by the Regulatory for the purpose of promoting, regulating and ensuring orderly growth of insurance business as per provisions of sec.14 of the IRDA Act, 1999 Special Audit is an audit conducted by a Chartered accountant or Company's Auditor under the directives of the Central Govt. as per provisions of Sec.233A of the Companies(Amendment) Act 1960 in certain cases where the affairs of any company are not being managed in accordance with sound business principles. Technical Audits are sometimes conducted by the company under directives of the Regulator, who examine the technical audit reports Internal Audit/ Management Audit is conduced by the company's internal auditor or others in the following forms s Underwriting Audit s Claims Audit s Accounts Audit s System Audit s IT Audit s Investment Audit Specify the major roles of Internal Audit; Detective Role. Detection of errors, frauds and irregularities is the first and foremost objective of internal audit and check system of an entity. Preventive Role is the most important one which makes an internal auditor to suggest ways and measures to improve the systems so that errors and frauds don't recur.
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Corrective Role enables the auditor to provide the measures to rectify the already committed Directive Role Boundary Role Recovery Role 6. Discuss the major areas of Directive Roles of the internal auditor To suggest the risk management methods and techniques of new and critical risks To suggest the measures for prompt and proper settlement of pending claims To suggest the methods and techniques of rating the risks right To suggest the major considerations for adding a new line of business in underwriting policy To suggest the methods and techniques of analysis of risk exposure in investment functions Suggest the internal control and check system to avoid financial irregularities. Suggest the methods or techniques for the effective reinsurance programming in view of the performance or result of last reinsurance programme Suggest the techniques in loss prevention measures in case of high probability and high severity of risks. Discuss the principal steps in analysis of Solvency margins Determination of Available Solvency margin I,e excess of value of assets over the value of liabilities. For this purpose total value of assets and the total value of liabilities are to be ascertained as per guidelines prescribed by the Regulator. Every insurer shall prepare a statement of the value of assets in the prescribed form IRDA Assets AA specified in schedule 1. The insurer shall prepare a statement of liabilities in accordance with the schedule 11-B. to determine the required solvency margin in view of the nature and volume of business and the respective incurred claim as RSM-1 and RSM-2 RSM = Higher of RSM-1 and RSM-2 RSM-1 = Based on Net Premium RSM-2 = Based on Incurred Claims Solvency Margin = ASM / RSM Discuss the major steps in Corporate underwriting audit: Underwriting Audits are generally classified into two types- Audits for
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7.

5.

8.

Corporate Underwriting and Line Underwriting\ Line Underwriting audits are carried out at operational level while Corporate Underwriting audit is carried out to review the performance of Underwriting policy of the corporate management. Corporate Underwriting also covers Solvency Margin Analysis and Corporate Governance aspects as specified by IRDA To Review the Underwriting Policy on acceptance of Small, Large and Complicated risks To review of risk management policy for acceptance of large and complicated risks To Review of Corporate Management decision on adding a new line of business or deleting loss-oriented business. To review the Reinsurance Programming and Methods To review of Underwriting Results in respect of growth, profitability and solvency To review the risk-based fund management To Regulatory Compliance 9. Highlight the major Considerations of claim audit: Claim Audit broadly covers Legal, Technical and Administrative Aspects Legal Aspects include considerations of the fundamental legal principles of insurance such as Principle of Indemnity, Principle of Insurable Interest, Principle of subrogation and Contribution. The legal aspects in liability claims also include the provisions of the Motor Vehicles Act 1988 for Motor TP Claims, PLI Act1991 for Public Liability claims under Act policy, Companies Act. 1956 (as amended) for D&O Claims and so on. Legal aspects in liability claims further include careful considerations of proper defenses in the court of law to avoid or reduce the third party legal liability of the insured. Technical Aspects include considerations of deductibles, warranties, SI limit or Indemnity limits, Warranties, Proof for admissibility of claims and supporting for assessment of claims such photographs, valuation report, invoice etc Technical aspects in legal liability include determination of the liability of the insurer as per the terms, conditions and indemnity limits in the liability policy Liabilities in Liability policy are of two types- Liability of the Insured and that of the insurer. The liability of the insured is decided by the court of law where proper legal defences are required to be taken as per terms of the policy Duty to defend or Right to defend with reference to Common Law or the Specific Statutes as the case may be.
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The administrative aspects include proper authorization or approval as per financial limits. Consideration of internal control and check system in regard to registration, processing and settlement of claims 10. Discuss the major provisions in the Companies Act in regard to C&AG Audit Article 148 to Article 151 of the Constitution of India lays down the Authority of the CAG of India to function as the Supreme Audit Institution of the Country. The Govt. Companies are audited by the C&AG under the provisions of Sec 619 and 619 (a) of the Companies Act. The Government Companies are defined under section 617 of the Companies Act. The nature of audit of the CAG may be classified as .Regularity Audit (Financial), Regularity Audit (Compliance), The regularity audit (Compliance) may be further sub-classified as Transaction Audit and Performance Audit, Information Technology/Systems Audit In Regulatory audit auditors should analyze the financial statements to establish whether acceptable accounting standards for financial reporting and disclosure are complied with. Performance audit to see that Government programmes have achieved the desired objectives at lowest cost and given the intended benefits. The Information Technology Audit is the audit of the Information System under operation in the Entity. The scrutiny of the Annual Accounts and the Audit Reports thereon is done by the Parliament Thus the audit Reports and Annual Accounts are referred to the Public Accounts Committee of the parliament and the Committee on Public Undertakings (COPU) The reports of the CAG are deliberated upon by the Public Accounts Committee and commercial reports are examined by the Committee on Public Undertakings 11. Specify the matters that the report of the auditor in a general insurance company shall deal with as per IRDA Regulation The report of the auditors on the financial statements of every insurer shall deal with the matters specified herein: That they have obtained all the information and explanations, which, to the best of their knowledge and belief were necessary for the purposes of their audit. Whether proper books of account have been maintained by the insurer so far as it appears from an examination of those books; Whether proper returns, audited or un-audited, from branches and other offices have been received and whether they were adequate for the purpose of audit;
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 Whether Balance Sheet, Revenue Account, Profit& Loss Account and the Receipts & Payments Account are in agreement with the books of account. Whether the actuarial valuation of liabilities is duly certified by the appointed actuary. Whether the balance sheet gives a true and fair view of the insurer's affairs as at the end of the financial year/ period; Whether the revenue account gives a true and fair view of the surplus or the deficit for the financial year/ period; Whether the profit and loss account gives a true and fair view of the profit and loss or the financial year/ period; Whether the receipts and payments account gives a true and fair view of the receipts and payments for the financial year/ period; Whether financial statements rae prepared in accordance with the requirements of the Insurance Act, 1938, the Insurance Regulatory and development Act, 1999 and the Companies Act, 1956. Investments have been valued in accordance with the provisions of the Act and these Regulations. 12. INTERNAL AUDITING, ITS NEED AND ESSENTIALS DESIRED FOR EFFICIENT AUDITING A continuous, critical review of financial and operational activities, conducted by a staff of auditors functioning as fulltime salaried employees An extension of internal check & control introduced by the management to supervise the effectiveness of such int. control Auditors to be conversant with rules and practices To refrain from creating any fear psychosis in the mind of auditee To report a constructive appraisal of operation and on protection of business To appraise and review the existing internal check & control system To render specialist service especially when any operational Office is concealing any unhealthy situation for fear of exposure Critical examination of functions and activities within particular department or any individual or a responsibility centre To bring out effectiveness / success or shortcoming in the system and operation in vogue To report on remedial measures or on improvement of the system and operation To report without any fear or favour 13. The following forms are required to be filed with IRDA by General Insurers: FORM 1 - Statement of investment assets
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FORM 2 Statement of Downgraded Investments FORM 3B Statement of Investment FORM 4 Exposure and other norms quarterly compliance certificate FOR 4A (Part A,B,C) Statement of Investment subject to Exposure Norms - Investee company, Group and Industry FORM 5 Statement of Investment Reconciliation FORM 5 A Statement of Mutual Fund FORM 6 Certificate under sections 28(2A), 28(2B) and 28B(3) of Insurance Act, 1938 FORM 7 Confirmation of Investment Portfolio FORM 7A Statement of Non-Performing Assets KEY- ACCOUNTS TRADE QUESTIONS 14 B 27 B 40 D 15 A 28 A 41 A 16 C 29 D 42 B 17 D 30 A 43 A 18 D 31 C 44 C 19 D 32 A 45 A 20 D 33 D 46 C 21 D 34 C 47 C 22 D 35 D 48 C 23 A 36 D 49 C 24 A 37 D 50 C 25 B 38 A 51 C 26 D 39 C 52 C KEY- ACCOUNTS MODEL QUESTIONS 1. 2. 3. 4. C B A B 5. 6. 7. 8. D A B A 9. 10. 11. 12. B C D D 13. 14. 15. 16. A A A B 17. 18. 19. 20. A A A A

1 2 3 4 5 6 7 8 9 10 11 12 13

A D C D D D D C D B B D B

53 54 55 56 57 58 59 60 61 62 63 64

B B D C C D A D C B B D

KEY- INVESTMENT MODEL QUESTIONS 1. 2. 3. 4. 5. 6. 7. B B A D A C A 8. 9. 10. 11. 12. 13. 14. C B C A B C A 15. 16. 17. 18. 19. 20. 21. C A A A B C A 22. 23. 24. 25. 26. 27. 28. C B C B A B A 29. 30. 31. 32. 33. C A B A C

407

KEY INSURANCE LAW AND REGUALTORY FRAMEWORK MODEL QUESTION 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 1 2 3 4 5 6 7 8 9 10 11 12 13 B A B C D A B B A B A C B D B D C A D D D D D C A C B c a b c c a b c a a c a c 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 14 15 16 17 18 19 20 21 22 23 24 25 26 C D D B B D B D D A B C D D D C D D B D D B C C C C C d a b d c b c c a b d a d 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 27 28 29 30 31 32 33 34 35 36 37 38 39 C B C C A C A C B C C B D B C C D D D D D D C B A D D a b d c a c b d a b d b b 82. 83. 84. 85. 86. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. 100. 101. 102. 103. 104. 105. 106. 107. 108. 40 41 42 43 44 45 46 47 48 49 50 51 52 B B C C C D D B D X D B C C B D A C B A D D A C C C A c d d b a b d c b b d b b 109. 110. 111. 112. 113. 114. 115. 116. 117. 118. 119. 120. 121. 122. 123. 124. 125. 126. 127. 128. 129. 130. 131. 132. 133. 134. 135. 53 54 55 56 57 58 59 60 61 62 63 D D D B C C B E C B C A D D C B D D C C D C A C D B C b c d b d b d a a a a

KEY INFORMATION TECHNOLOGY TRADE QUESTION

408

409

CORE BENEFITS AS PER SCHEME/S NOTIFIED BY THE CENTRAL GOVERNMENT

PAY SCALES AND STAGNATION INCREMENTS OF CLASS I EMPLOYEES
PAY SCALES (BASIC PAY) Scale VII Rs.52210-1400(2)-55010-1500(1)-56510-1640(1)-58150-1700(1)59850 Scale VI Rs.46610-1400(5)-53610 Scale V Rs.41660-1200(3)-45260-1350(2)-47960 Scale IV Rs.34460-1200(7)-42860 Scale III Rs.28160-840(1)-29000-910(6)-34460-1200(4)-39260 Scale II Rs.23120-840(7)-29000-910(6)-34460 Scale I Rs.17240-840(14)-29000-910(4)-32640 STAGNATION INCREMENTS: AN ADDL. INCREMENT PAYABLE TO AN OFFICER who has reached the max. of his scale of pay for every 3 completed years of service after reaching such maximum equal to the last increment drawn by him For scale IMaximum of 3 such increments For scale II- Maximum of 5 such increments For scale III- Maximum of 2 such increments For scale IV- Maximum of 1 such increment Stagnation increment is to be released subject to satisfactory performance and vigilance clearance.

HR--PERSONNEL & VIGILANCE

PAY SCALES AND STAGNATION INCREMENTS OF CLASS II EMPLOYEES

PAY SCALES (BASIC PAY) Development Officer Grade I: Development Officer Grade II:

Rs.12175-755(8)-18,215-780(9)-25,235820(2)-26,875-840(4)-30,235 Rs.8,280-540(3)-9,900-615(4)-12,360

420

421

STAGNATION INCREMENT: AN ADDL. INCREMENT IS PAYABLE ONLY TO A DEVELOPMENT OFFICER GRADE I - who has reached the maximum of his scale of pay, - an amount equal to the last increment drawn by the employee - Maximum three such increments can be paid every three years Stagnation increment is to be released subject to satisfactory performance and vigilance clearance.

HOUSE RENT ALLOWANCE: (FOR ALL CLASSES OF EMPLOYEES)

Sl. Place of posting (1) Rate per month (Cl I) Rate per month (Cl II) Rate per month (Cl III/IV) (2) (3) (4) 10% of pay subject to maximum of Rs.3,200/per month 10% of pay subject to maximum of Rs.3,200/per month 10% of pay subject to minimum of Rs.700/- & maximum of Rs.3,200/per month

PAY SCALES & STAGNATION INCREMENTS OF CLASS III/IV EMPLOYEES

PAY SCALES (BASIC PAY) Sr.Asstt./Steno: Rs. 10,670-755(4)-13,690-840(15)-26290 Assistant: Rs.7640-440(1)-8,080-480(2)-9,040-540(5)-11,740-625(2)12,990-760(3)-15,270-790(2)- 16,850-840(5)-21,050 Record Clerk: Rs.7085-305(2)-7695-325(5)-9320-350(1)-9670-390(2)10450- 430(3)-11740-480(5)-14140-530(9)-18910 Driver: Rs.7085-305(2)-7695-315(14)-12105-350(2)-12805-390(9)16315 Sub-staff: Rs.6180-250(5)-7430-265(8)-9550-315(1)-9865-325(2)10515-390(9)-14025 STAGNATION INCREMENT: AN ADDL. INCREMENT PAYABLE TO AN EMPLOYEE - who has reached the maximum of his scale of pay, - an amount equal to the last increment drawn by the employee For Sr.Asstt/Steno - Maximum of 6 such increments, every 3 years For Asstts- Maximum of 7 such increments, every 2 years Stagnation increment is to be released subject to satisfactory performance and vigilance clearance.

1. Cities of Mumbai, Navi Mumbai, Kolkata, New Delhi, Faridabad, Ghaziabad, N O I D A , G u r g a o n , C h e n n a i , Ahmedabad, Hyderabad, Bengalaru, Pune 2. C i t i e s w i t h population exceeding 12 lacs except the cities mentioned at serial number 1, Gandhinagar and all cities in the State of Goa

8% of pay subject to maximum of Rs.2,700/- Per month

8% of pay subject to maximum of Rs.2,700/- Per month

8% of pay subject to minimum of Rs.600/-& maximum of Rs.2,700/- Per month

3. All other places

7% of pay subject to maximum of Rs.2,600/- per month

7% of pay subject to maximum of Rs.2,600/- per month

7% of pay subject to minimum of Rs.570/- & maximum of Rs.2,600/- per month

DEARNESS ALLOWANCE
Based on the All India Average Consumer Price Index for Industrial Workers (In the series 1960 = 100 ) as published in the Indian Labor Journal or the Gazette of India Revision on quarterly basis for every four points rise or fall. For every four points in the quarterly average over 2944 points- 0.15 % of Basic Pay.
422 423

Increment portion of pre-revised FPA (in Rs.)

Sl. Place of posting (1) No. 1. Cities of Mumbai, Navi Mumbai, Calcutta, New Delhi, Faridabad, Ghaziabad, N O I D A , Gurgaon, and C h e n n a i , Ahmedabad, Hyderabad, Bengaluru & Pune 2. C i t i e s w i t h population exceeding 12 lacs, except cities mentioned in serial number 1, Gandhinagar and all cities in the State of Goa4

10.08

18.68

12.74

18.68

12.74

7.56

6.30

6.30

5.80

3% of pay subject to a maximum of Rs.800/- per month

3% of pay subject to a maximum of Rs.675/- per month

3% of pay subject to minimum of Rs.205/- & maximum of Rs.635/- per month

400

300

250

250

230

230

130

230

130

Rs.800/- per month for Class I & Rs.275/- per month for Class III/IV employees Fixed Personal Allowance for various classes and cadres of employees:

Transport Allowance (For Class I and Class III/IV):

Revised F.P.A. (in Rs.)

2.5% of pay subject to maximum of Rs.760/- Per month

2.5% of pay subject to maximum of Rs.625/- Per month

1700

1400

1350

1200

2.5% of pay subject to minimum of Rs.170/-& maximum of Rs.595/- Per month

910

840

615

840

530

Sr. Assistant/Steno/Assistant etc.

Sl. No.

424

425

10.

(1)

1.

2.

3.

4.

5.

6.

7.

8.

9.

Driver/Other Subordinate Staff

Development Officer Gr. II

Development Officer Gr. I

Employee in the scale of pay as on 1.11.1993

Record Clerk

Scale IV/III

Scale VII

Scale II/I

Scale VI

Scale V

(2)

3. C i t i e s w i t h population of 5 lacs and above but not exceeding 12 lacs, State capitals with population not exceeding 12 lacs, Chandigarh, M o h a l i , Panchkula, Pondicherry, Port Blair

2% of pay subject to maximum of Rs.590/- per month

2% of pay subject to maximum of Rs.545/- per month

2% of pay subject to minimum of Rs.125/- & maximum of Rs.510/- per month

390

(3)

100

(4)

9.80

(5)

Rate per month (Cl I) Rate per month (Cl II) Rate per month (Cl III/IV) (3.1) (3.2) (3.3)

Note : The revised FPA as shown in Column 3 above, shall not qualify for any allowance or any benefit or terminal benefits. However, increment portion of FPA as shown in column 4 above, shall rank for P.F and Pension. The said increment portion along with the DA as on 1.11.1993, as shown in column 5 shall rank for calculation of Gratuity and Encashment of Earned Leave.

DA Portion of FPA pre-revised (in Rs.)

CITY COMPENSATORY ALLOWANCE : (FOR ALL CLASSES OF EMPLOYEES)

HILL STATION ALLOWANCE: FOR CLASS I. II AND III/IV EMPLOYEES

Sl. No. (1) Height of place of posting Rate for Class I (Above Mean (3) Sea Level) (2) Rate for Class II (4) Rate for Class III/IV (5)

ALLOWANCE FOR TECHNICAL QUALIFICATIONS FOR CLASS II & III/IV EMPLOYEES:

Sl. No. (1) 1. i) LIII or LCII ii) AIII or ACII iii) FIII or FCII Institute of Actuaries: On passing each subject Institute of Chartered Accountants or Institute of Cost and Works Accountant: on completion of i) Intermediate Examination ii) Final Group A or Group B iii) Final Group A & Group B On completion of MBA from a recognized (by UGC) University or Institution (AICTE Approved course) Examination (2) Allowance for Technical Qualification per month (in Rs.) (3) 180 490 820 180

1. 1500 meters and 2.5% of pay 2.5% of pay 2.5% of pay to a over. subject to a subject to a subject of maximum of maximum of maximum per Rs.460/per Rs.370/per Rs.370/month month month 2. 1000 meters and over but less than 1500 meters. Mercara and places which are specifically declared as Hill Stations by the Central and State Governments for their employees 3. Not less than 750 meters and surrounded and accessible only through hills with a height of 1000 meters and over 2% of pay subject to a maximum of Rs.370/- per month 2% of pay subject to a maximum of Rs.290/- per month 2% of pay subject to a maximum of Rs.290/- per month

2. 3.

350 600 820 820 (this is applicable only to Class III & IV employees)

4.

2% of pay subject to a maximum of Rs.370/- per month

2% of pay subject to a maximum of Rs.290/- per month

2% of pay subject to a maximum of Rs.290/- per month

FUNCTIONAL ALLOWANCE PAYABLE TO CLASS III/IV EMPLOYEES:

Sl. No. Cadre-Functions Amount (in Rs.) Payable as Functional Allowance per month 375

KIT ALLOWANCE:
Payable to Class I and III/IV employees if they are transferred to a hill station where HSA is paid. Rs 4,000/- (One time) for officers and Rs.1000/- for Class III/IV employees. The Kit Allowance shall not payable for transfer from one hill station to another, to Class III/IV employees, if the same was drawn any time during the preceding three years.

1.

2.

Subordinate Staff engaged in either as Key Holder or for carrying cash to or from Bank, as his regular and main function, where the amount of cash carried during a calendar month is ordinarily Rs.25,000/- or more Other Subordinate Staff working as Liftmen, Machine Operators, Head Peons, Jamadars, Daftaries, AC Plant Operators and Heavy Vehicle Drivers, who were assigned these functions before 1.1.2006 Assistant (Sr. Assistant in the event of non-availability of Assistant) engaged in handling cash in an office, as his regular and main function, where the amount of cash transaction during a calendar month is ordinarily Rs.25,000/- or more
427

165

PARADEEP PORT ALLOWANCE:

Rs 110/- per month shall be paid to confirmed employees of all classes and cadres, as long as he/she is posted in the company's office in Paradeep port. This allowance shall not be treated as Basic salary for any purpose.
426

3.

800

Sl. No.

Cadre-Functions

Amount (in Rs.) Payable as Functional Allowance per month 60

LEAVE ENCASHMENT (DURING SERVICE) :

Current block 2010-11(for all classes of employees) Class I & II Class III & IV

4.

Telex Operators, Punch Card Operators, Unit Record Machine Operators and comptists, who were assigned these functions before 1.1.2006 Stenographers to CMDs, Scale VII & VI and equivalent positions Employees performing the functions of Audit Assistants

Basic Pay, Pre-revised Basic part of Basic Pay, Pre-revised Basic part of FPA & all other allowances drawn by FPA, DA, HRA & CCA. All other allowances are EXCLUDED the employee EXCLUDING officiating allowance, transport allowance & entertainment allowance Encashment of EL maximum 15 days may be availed of in a block of two calendar years. No carry forward of block Following components of salary are considered for this purpose

5. 6.

75 460

NON-CORE BENEFITS LEAVES:

12 days (can avail 5 full days of CL at a stretch & Half day CL {1st half or 2nd half} can be availed max. 6 times in a Casual Leave (CL) year). Further intervening holiday{s} & Saturdays/ Sundays falling between two CLs would not be counted as CL. 2 days this can be selected by each employee from a list of Restricted Holiday Restricted Holidays provided at the beginning of each year. 33.2/11 days (on every 11 working days 1 day accrued) Max. accumulation 240 days. It cannot be clubbed with Casual Leave (CL) Casual Leave. It can be sanctioned for minimum 6 days and maximum 120 days. Earned Leave (EL) 30 days on half pay basis are accumulated at the end of every year Maximum accumulation 240 days (h/p) Sick Leave (SL) 180 days for each confinement On maximum 2 occasions during entire service period may be allowed to female employees, having less than 3 living children. It is granted for the day of the examination irrespective of the examination is in the forenoon or afternoon.

TA/DA ON TOUR :
a) AC II tier train fare, to & fro, for Scale I, II & III. b) Scale IV & Above by Economy class Air fare c) Actual Conveyance expenses residence to Airport, Railway/Bus Station & back, both at Headquarters & place of tour. d) Incidental charges If tour exceeds 12 hr., @ of Halting Allowance applicable to 'C' Class cities for each journey i.e. outward & inward. Hotel Charges Major cities Area I Other Cities Scale I 1000 750 500 Scale II & III 1500 1000 800 Scale IV & V 2500 1500 1300 Scale VI & VII 4000 2000 1750

Maternity Leave

Examination Leave Cities of Mumbai, Navi Mumbai, Kolkata, New Delhi, Faridabad, Ghaziabad, NOIDA, Gurgaon, Chennai, (For I.I.I. exams) Ahmedabad, Hyderabad, Bengalaru, Pune Special Sick Leave 180 days (half pay basis) on major diseases Adoption Leave Maximum two months leave or till the adopted child reaches the age of one year, whichever is earlier, may be granted for adoption of a child through legal process, only once during service career and for one child only
428

HOTEL CHARGES:
(Standard Breakfast charges along with taxes thereon can be allowed during stay in the same hotel. Taxes on hotel charges are allowed on actual basis over & above such charges)
429

DAILY HALTING ALLOWANCE (W.E.F. 1.12.2010)

Sl. Category of the employee No. 1 2 3 4 5 Class I (Scale IV, V, VI & VII) Class I (Scale I, II & III) DO Gr. I/ Sr. Asstt./ Stenographer DO Gr. II/ Asstt./Record Clerk All Class IV employees A Class City(Rs.) 1000* 800** 500 375 325 B Class City(Rs.) 800 700 375 275 225 C Class City(Rs.) 700 600 300 225 175

CLARIFICATIONS
Officers who are entitled to travel by air shall be entitled for reimbursement of full air fare for 3000 kms.(economy class) of surface distance each way for one block subject to the ceiling of twice the eligible class standard air fare of Air India for Delhi-Trivandrum route. The benchmark fare would stand revised as & when Air India revises its fare for the said sector. ii. For employees posted in North East: When an officer eligible to travel by air undertakes journey by air in full or part LTS journey, the distance covered by air journey shall be the aerial distance of the journey undertaken by him. If he undertakes the balance journey by any other mode, that part of journey shall be calculated as per the surface rail distance and in such cases the actual amount incurred by him on fare will be reimbursed provided such amount does not exceed this fare of the entitled class by train. iii. However, where the surface distance between the place of origin of journey and the destination is within 3000 kms. but no direct flight is available, the officer shall be allowed travel by the shortest air connectivity available in that sector if in such cases aerial distance does not exceed 3000 kms. This relaxation would apply only to officers who are eligible for LTS by air. (b) If an officer does not travel by air at all but travels by other modes viz, train, bus, taxi, etc. then the reimbursement would be limited to train fare of eligible class for 3000 kms. of surface distance or actual amount spent whichever is less. (c) Where an officer travel partly by other entitled modes of travel i.e. railway/roadways, the reimbursement shall be made as under (i) Full air fare for distance traveled within the permissible limit of 3000 kms. by air either onward and / or return journeys plus (ii) Actual expenses limited to the fare for the entitled class by train for the balance distance traveled. (d) When travel by air is combined with travel in train by the entitled class, the order of reimbursement would be first for the distance traveled by air irrespective of the order of air travel i.e. whether it precedes or follows rail travel. The reimbursement for the balance, if any, admissible is to be calculated as per (c) above.
431

(a) i.

* Rs.1200 for Kolkata, Delhi, Chennai & Mumbai **Rs.1000 for Kolkata, Delhi, Chennai & Mumbai

LTS (LEAVE TRAVEL SUBSIDY):

Current Block (Two calendar years) For Class-I 2011-12 For Class -II & III/IV 2010-11 If not availed during one particular block, the same may be carried forward to the immediate next block e.g. LTS for Block 2009-10 may be availed during 2011 12. Subsidy for two blocks together may also be availed of. Individual employee, spouse & dependent children/parents are eligible to avail LTS. Train fare by AC II tier or by Rajdhani or Duronto Express up to 3000 km (wef 8th Dec., 2010) each way per individual for each block may be reimbursed. Officers in the cadre of Scale IV & above are entitled to Air travel up to 3000 km (wef 8th Dec., 2010) each way. Scale V & above are entitled to AC 1st Class if they travel by train. A newly promoted AO who did not avail LTS in pre-promoted cadre can avail of the same for un-availed block(s) up to the end of the block period as per his/her previous entitlement. For example, a Cl. III employee who has been promoted to Scale I in 2010 and has not availed LTS for 2008-09 and 2010-11, in the earlier cadre may avail such Blocks till 31.12.11, as per previous entitlement. Thereafter, the promotee would be eligible to avail LTS in AO cadre for 2011-12 and onwards. (HO Pers. Dept. Circular dt. 8.6.2009)
430

FOREIGN TRAVEL
For class III / IV, Development Officers, and Officers not entitled to travel by Air: All confirmed employees will be allowed Foreign LTS. For one block, the entitlement per eligible person shall be two times the entitled class fare for 3000 kms or actual expenses incurred, whichever is less. The journey can be made by any mode of travel. When the blocks are clubbed they will be entitled for twice the permissible amount mentioned above. For Officers entitled to Air travel : The officials are allowed to undertake Foreign LTS. For one block, the entitlement per eligible person shall be two times the economy class air fare for 3000 kms. (on the basis of surface distance) by Air India on domestic route i.e. Delhi-Trivandrum route. The journey can be made by any mode of travel. When the blocks are clubbed they will be entitled for twice the permissible amount mentioned above. General Clarifications: i. Foreign tour under LTS, as per prevalent Income Tax rules, may attract Income Tax and in such cases, the tax liability shall be borne by the employees themselves. Travel to foreign destination should be by shortest route from the place of posting and the fare will be limited to his eligibility in India as per this rules or the actual fare whichever is lower. In case of employees / officers availing themselves of either Single Block or two blocks for Foreign LTS, only one trip to foreign country will be allowed and the balance unexhausted amount of the rail fare / air fare, if any, will lapse. Foreign journeys performed by Ship are admissible within the overall entitlement. Passport / Visa charges are not payable. Air port tax is payable within the overall ceiling on production of ticket / receipt.

reckoned for this purpose; irrespective of the season in which the journey is undertaken. The increased limits will also be effective for LTS for un-availed previous block years as well as for combining thereof with current block years' LTS for journey undertaken on or after 8th December 2010.

TRANSFER BENEFITS FOR OFFICERS :

i) ii) iii) iv) v) vi) vii) One month's basic pay, as on date of taking charge on transfer plus pre-revised basic part of monthly FPA, as transfer grant Train/ Air Fare As per Tour entitlement (If transferred on promotion, this would be as per entitlement in promoted cadre) Baggage allowance charges for transporting up to 60 (for scale I, II & III)/90(for scale IV & Above) quintals by Rail (Revised) Packing charges Rs.1500/- for scale I to III Rs. 1800/- for Scale IV & V and Rs.2500/-for Scale VI & VII Forwarding chargesRs.500/-(at each end) Joining Leave 6 days (can be taken in one or two installments) Halting allowance during journey period as per tour rules

ii.

viii)2nd trip for shifting family/household effects within 6 months or start of next academic session of children, whichever is later. GM(P) may further allow extension for another 6 months on receiving such request. ix) Maximum 30 days halting allowance as per tour rules at the new headquarters, if residential accommodation is sought but could not be provided there within 30 days.

iii.

COMPANY ACCOMMODATION:
a) If Company flat is available, the same may be provided according to the existing allotment procedure. b) If Company flat is not available, the accommodation on Company lease or Personal Lease (in rare cases) may be considered as per the officer's entitlement shown in one of the following slides. c) 6 months adjustable rent advance may be allowed in favor of the Landlord d) Deduction from salary : 1.20% of the Basic Pay at the minimum of the scale of pay. HRA will not be paid
433

iv. v. vi.

To counter the problem arising from the phenomena of Seasonal Fares (Peak Season Fare and Lean Season Fare) by the Railways, the Peak Season Fare may be
432

TELEPHONE FACILITY (AT RESIDENCE):

Revised Limit 3300 3500 4200 4750 4750 NA NA C Class Cities Category 1 2 Existing Limit 2500 2500 3305 3305 3400 NA NA CMD, GM & DGM/CRM All other Entitled Officers (CM/MGR/SDM/DM/ SBM/BM ETC.) Limits Actual Fixed annual limit to be quarterly reimbursed on declaration basis as per HO circular dt. 3.6.09.

REVISED RENT LIMITS FOR ELIGIBLE/ENTITLED OFFICERS W.E.F. 1.1.2009

B Class Cities

In addition, non-entitled Officers in HO, ROs & DOs may be allowed residential telephone facility for which quotas are as under: HO-10, RO-4 each, DO 1 each. Such non-entitled Officers, if extended the facility are reimbursed expenses on declaration basis subject to stipulated limits (as provided in HO Personnel Dept. circular dt. 3.6.2009 appended below:)

Revised Limit

4500

4750

5300

5750

5750

Existing Limit

2950

2950

3575

3575

4025

4825

NA

NA

REVISION OF REIMBURSEMENT IN TELEPHONE EXPENSES

The existing system of reimbursement of telephone expenses (land line) which is linked with number of permissible calls, is replaced by a system of reimbursement on declaration basis. In order to adopt to the new system, the existing system linked with the number of permissible calls has been suitably amended to monetary limits as approved by the Competent Authority as detailed under: TELEPHONE FACILITY BROAD MOBILE (LAND LINE) BAND PHONE TOTAL (per ( per Amount(Rs) Rs No. of per annum annum) annum) calls Rs. Rs. (Including Per annum Rental )

Revised Limit

7500

8000

9000

9500

9500

A Class Cities

Existing Limit

3490

3490

4470

4470

5365

6040

NA

NA

Revised Limit

CATEGORY OF OFFICERS 10000 10500 12000 13000 13000 * *

Metros

Scale-I & II AOs(D) & AMs(D). *Applicable only in cases where telephone facility has been provided in terms of Para 6 page no. 181 of Part II, Personnel Manual. Officer-In-Charge of BO/DO (Scale, II, III & IV)

Existing Limit

3965

3965

5080

5080

6095

6855

6855

*2750

*6600.00 3000.00 + S.T. +S.T.

6000.00 15600.00 + S.T. +S.T

Scale III & IV (other than SDM)

Scale I & II (other than Branch I/C)

Scale VII

Branch Manager

Scale VI

Scale V

Cadre

SDM

2750

6600.00 + S.T.
435

3000.00 + S.T.

7200.00 16800.00 + S.T +S.T

434

Scale III & IV officers with marketing assignment at RO/HO *Applicable only in cases where telephone facility has been provided in terms of Para 6 page no. 181 of Part II, Personnel Manual. Scale IV (Admn.) Scale-V excluding CRM Regional underwriters posted at Regional Office below the rank of Scale V Other Officers performing special duties (Non-entitled officers) *Applicable only in cases where telephone facility has been provided in terms of Para 6 page no. 181 of Part II, Personnel Manual.

REIMBURSEMENT FOR PURCHASE OF BRIEFCASE/LEATHER BAG TO

*2750 *6600.00 3000.00 + S.T. +S.T 7200.00 16800.00 + S.T +S.T OFFICERS & DEVELOPMENT OFFICERS (OTHER THAN ADMINISTRATION) The limit of reimbursement and other conditions would be as under: Sl.No. 1. 2750 3150 Nil 6600.00 +S.T 7500.00 + S.T. Nil 3000.00 9600.00 Nil + S.T. +S.T 3000.00 12000.00 22500.00 + S.T. + S.T. +S.T 3000.00 + S.T 7200.00 10200.00 + S.T. +S.T 1. 2. 3. 4. 5. Cadre Scale VI & Above Scale IV & V Scale II & III Scale I Development Officers (other than Administration) Limit (in Rs.) 2500 2150 1850 1500 1500

2. *2750 *6600.00 + S.T. Nil Nil 6600.00 +S.T 3. 4.

Reimbursement may be allowed to all Class Iofficers, including promotees and probationers and all confirmed Development Officers (other than Administration) The frequency of reimbursement will be once in three years from the date of last reimbursement. The limit of reimbursement shown above shall be inclusive of sales tax and other Supplementary taxes, if any. The above limits for Class I officers are effective from 1.11.2006 and that for the Development officers (other than Administration) is w.e.f. 1.4.2009.

The new scheme shall be effective from 1st January 2009 and the reimbursement shall be on quarterly basis i.e. on 1st July, 1st October, 1st January and 1st April in respect of 1st quarter, 2nd quarter, 3rd quarter and 4th quarter of every financial year.

VEHICLE LOAN:
Two wheeler: i) Rs. 50,000/- for Cl-I & Rs.25,000/- for CL-III & IV (maximum) ii) No. of installments 60 iii) Minimum eligibility 3 yrs. & can be taken 3 time in Class-III cadre & 3 times in Class-I cadre iv) Reimbursement of Ins. premium by the Company during loan recovery period. v) Rate of interest 5% p.a. on reducing balance Four wheeler: I) Non-entitled Scale III & IV are entitled to this facility up to Rs. 2.5 lacs II) No. of repayment installment 120 III) Rate of interest 5% p.a. on reducing balance
437

REIMBURSEMENT OF EXPENDITURE ON NEWSPAPER & PERIODICALS FOR CLASS-I OFFICERS

The above expenses shall also be reimbursed on declaration basis for Class-I officers (half yearly basis i.e. on 1st July and 1st January in respect of 1st and 2nd half respectively of the calendar year) i) For officers up to Scale III : Rs. 200/- per month ii) For officers in Scale IV &V : Rs. 400/- per month and iii) For officers in Scale VI and VII : Rs. 500/- per month iv) The new scheme shall be effective from 1st January 2009 on half yearly basis i.e. on 1st July and 1st January in respect of 1st and 2nd half respectively of the calendar year. The necessary implementation of the above revision be effected against submission of requisite declaration as per prescribed formats.
436

IV) Reimbursement of Insurance premium by the Company during loan recovery period.

Basic Pay Less than Rs. 22,730/Rs. 22,730/- to Rs. 29,000/Rs. 29,001/- & above

Eligible Sum Insured Rs.70,000/Rs.1,00,000/Rs.1,55,000/-

DOMICILIARY MEDICAL BENEFIT:

Class III & IV: Rs.4,000/- paid in July every year for the period July of that year to June of following year. Class I: Basic Salary as on 1 January
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Service Tax to be charged on each share of premium as per prescribed rate. d) Coverage available to self, spouse, dependent children, parents & parents-in-law. e) Additional coverage beyond the entitled sum insured up to Rs.5,00,000/- per member/ individual may be opted but at own cost. Benefit under the Scheme: A ) Domiciliary Hospitalisation Minimum period exceeding 3 days Maximum period 60 days Maximum payable amount 20% of the total Sum Insured B) Maternity Benefit Cover is automatic. Admissible for normal delivery & caesarian cases Admissible for first 2 children only Maximum Sum Insured Rs.50,000/C) Hospitalisation Benefits Minimum Period 24 Hrs. Pre-hospitalization benefits 30 days. Post hospitalization benefits 60 days or till declared fit, whichever is earlier (This period is unlimited in respect of specified major diseases.)

Entitlement (Amount in Rupees) Rs.8,000/Rs.12,000/-

Up to Rs. 31,725/Above Rs. 31725/Class II Basic Salary as on 1 January

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Entitlement (Amount in Rupees) Rs.8,000/Rs.5,000/-

Rs. 25,235/- and above Below Rs.25,235/-

Officers promoted from Class-III would be entitled to lump sum amount applicable to Officers on a pro rata basis from the 1st day of the month following their date of promotion. Similarly, recovery on pro rata basis from the lump sum amount if already paid in Class-III cadre. Lump sum domiciliary medical benefit, in a nut shell For Officers : Basic Up to Rs. 31,725/Rs. 8,000/Payable in December Basic > Rs. 31,725/Rs. 12,000/Payable in December For Dev. Officers: Basic Rs. 25,235/- & above Rs. 8,000/- Payable in December Basic < Rs. 25,235/- Rs. 5,000/Payable in December For Clerical & Subordinate Staff : MEDICLAIM a) Coverage starts next month after confirmation, in case of new recruits. b) Enrolment form for members to be covered is to be submitted to concerned RO/HO, Personnel Departments. Company contributes a part of premium (66.67% for Class-I & 75% for Class III & IV) up to the under mentioned eligible sum insured as per following Basic Pay slabs:438

GROUP PERSONAL ACCIDENT (GPA):

If any employee sustains injury causing death/disablement, the Company will reimburse the following:a) Death b) Loss of two limbs, two eyes or one limb and one eye c) Loss of one limb or one eye d) Permanent total Disablement from injuries other than those named above e) Permanent Partial Disablement Capital Sum Insured Capital Sum Insured 50% of the capital Sum Insured Capital Sum Insured

Rs. 4,000/-

Payable in July

Specified percentage of the Capital Sum Insured depending on the extent of Disablement.
439

Note: Capital Sum Insured is 36 times of the monthly basic salary of the employee or Rs.3,00,000/- whichever is lower. HOUSING LOAN Scheme Loan & Supplementary Loan are available are as under: Cadre Scale I & II scale III Scale IV/V Scale VI Scale VII & Above Scheme Loan (Int. @ 5% per annum) 3.25 lacs 3.65 lacs 4.00 lacs 4.00 lacs 4.00 lacs Supplementary Loan (Int. @ 7.5% per annum) 3.75 lacs 4.35 lacs 4.50 lacs 5.00 lacs 6.00 lacs

CONVEYANCE SCHEME FOR ELIGIBLE CLASS I OFFICERS (CONVEYANCE SCHEME 2002)

The office will book the vehicle under this scheme The vehicle will be purchased, owned and registered in the name of the company The User Officer will enter into an agreement as per prescribed standard draft for the use of the vehicle The limit of the cost of the vehicle would be as underL Cadre of the Officer Scale VII & VI Scale V & IV Scale III, II & I Limit in Rs. 5 lacs 4 lacs 3 lacs

REFUNDABLE/NON-REFUNDABLE LOANS FROM PROVIDENT FUND:

1) Refundable Loan : Maximum 6 times of Basic Pay + DA + FPA (basic) + Special F.A.@ interest 1% more than the interest paid by Trust per annum on reducing balance. Repayable in 48 installments (maximum) for marriage purpose. For other purpose maximum 24 installments. 2) Non-refundable Loan : i) ii) iii) iv) After 10 yrs. of service Max. 2 times in service career Up to 90% of own contribution Only for housing purpose & not for 2nd property

Running expenses (Fuel limit) would be as under: Category CMD Scale VII Scale VI/CRM Scale V other than CRM Officers-in-charge of DOs/BOs, Scale IV In-charge of RNTB & Marketing Department at RO, Officers-in-charge of DTC Metro A Class City B Class City C Class City Quarterly Limit No limit 375 Lts. 300 Lts. 250 Lts. 250 Lts 225 Lts. 180 Lts. 150 Lts.

Other Loans & Advances: Festival-Interest free advance Class I -1 month's Gross Salary Or Rs.13,000, whichever is less Class II/ III/ IV 1 month's Gross Salary Or Rs.11,000, whichever is less Regular PTS - 1 month's Basic+ D A (on pro rata basis) Or Rs.5,500, whichever is less Flood etc.-Interest free advance Rs. 15,000 for affected areas
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The period of usage of car under this scheme will be 8 years. After the car shall be transferred in the name of the Officer concerned by recovering an amount equal to the written down (Depreciated) value of the car determined as per rules in force from time to time Cost of Tyres and tubes shall be borne by the company in full after 32,000 Kms. run of the vehicle. Reimbursement will be made subject to production of bills/receipts. If retreading of tyres is required, the cost of such retreading shall be borne by the company after the car has run 16,000 Kms. The cost of batteries shall be borne by the company in full after 18 months of date of purchase of the vehicle and after every 18 months thereafter subject to production of bills/receipts.
441

TERMINAL BENEFITS
Gratuity Provident Fund Pension Group Term Insurance Scheme (GTIS) Group Savings Linked Ins. Policy (GSLIP) Encashment of Earned Leave G RAT U I TY Retirement Gratuity as per Act/Scheme Under Act: (Basic+DA+Prerevised FPA+DA on FPA ) x 15/26 x No. of yrs. of continuous qualifying service, subject to maximum of Rs.10 lacs (enhanced w.e.f. 24.05.2010) As per scheme: For Class I For 15 years and above: Last drawn basic pay (including Pre-revised FPA) X 15 + (50% of last drawn basic pay X no. of yrs. Of service beyond 30 years) Death Vol. Retirement Resignation

Retirement As per scheme: For Class III & IV For 15 years and above: Last drawn basic pay (including Prerevised FPA) X 15 up to 15 years of service. Additional 1 month basic pay for each year of service beyond 15 yrs. subject to max of total 20 months)

Death

Vol. Retirement

Resignation

Same as Retirement. Same as C a l c u l a t i o n i s (Death certificate Retirement S a m e a s along with Gratuity Retirement. Nomination Form, However, Gratuity is reqd. to be sent. In is payable after absence of Gratuity minimum of 5 nomination form, years of service s u c c e s s i o n certificate would be necessary for settlement of Gratuity.) As per scheme: 1 to 11 yr. 50% of last drawn basic pay X no. of yrs. Of service. 12 yrs. 60% of last drawn basic pay, 13 yrs. 70% of last drawn basic pay and 14 yrs. 80% of basic pay. For service of 15 yrs. and above, same as retirement
442

P E N S I O N Retirement Pension Formula 50% of last 10 month's average basic pay + Prerevised FPA (Basic Part only) X No. of yrs. of service /33 (full pension is admissible on completion of 33 yrs. of service) Death Same as retirement. GTIS death claims form, last six month's pay slip (Xerox), death certificate, GTIS original option form to be sent to pension cell and all other relevant papers as reqd. for retirement cases. Vol. Retirement Resignation

Same as S a m e a s Retirement r e t i r e m e n t . However, gratuity is payable only on completion of minimum of 5 yrs. service

S a m e a s Not eligible for Pension. Retirement (Notional benefit of service up to five years (Maximum) can be given to those who had total 33 or more years of full service)

GROUP TERM INSURANCE SCHEME In case of death whilst in service, of an employee who had opted for pension, the commutation of pension is not payable to the legal heirs. The above Scheme was introduced to protect the commutation value of pension to some extent, in case of death of a pension optee, by LIC. In the event of death of the pension optee, a fixed amount, as per the basic pay of the employee, is paid by LIC to the legal heirs, for which a monthly premium is deducted from the employee's salary and deposited with LIC. The following chart would show the basic paywise rate of monthly premium as well as the amount of sum assured for individual employee:
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CAT E G O RY I (Basic Pay Rs.49,411/- and above) II (Basic Pay Rs.35,661/- to Rs.49,410-) III (Basic Pay Rs.25,45/1- to Rs.35,660/-) IV (Basic Pay Rs.13,691/- to Rs.25,450/-) V (Basic Pay Rs.7,391/- to Rs.13,690/-) VI (Basic Pay up to Rs.7,390/-) GSLIP 7.0 lacs 5.6 lacs 4.2 lacs 2.8 lacs 2.0 lacs 1.1 lacs

(in Rs.) Sum Assured Monthly Premium 164 131 98 65 47 26

GI (CDA) RULES, 1975

Short title, Commencement and Application These rules are called General Insurance (Conduct, Discipline and Appeal) Rules 1975. These are applicable to every person appointed to any post by the Company including Part-timers on Company's roll. General Rules Every employee shall at all times i) maintain absolute integrity ii) maintain devotion to duty iii) do nothing unbecoming of a public servant iv) conform to all rules of the Company & obey all orders of superiors in course of official duty. Every employee shall ensure integrity & devotion to duty of all employees under his control. No employee shall in the performance of his official duties, act otherwise than in his best judgement & when acting under superior's direction shall obtain the direction in writing wherever practicable.

In case of untimely death of employee, family members are protected by this Scheme up to sum insured PLUS savings portion (75% of deposited amount) with interest. 75% of the deposit along with interest is payable after Retirement / Vol. Retirement & Resignation. Basic Pay-wise category vis--vis sum insured and monthly deduction of premium are shown in the following chart:
Category I (Basic Pay Rs.49411 & above II (Basic III (Basic IV (Basic V (Basic VI (Basic Pay Pay Pay Pay Pay Rs.35,661 Rs. 25,451 Rs.13.691 Rs.7,391 Below to 49410) to 35,660 to 25,450) to 13,690) Rs.7,390)

SUM Rs.7 lacs INSURED Monthly deductions Savings Premium Total. Rs. 492 Rs. 164 Rs. 656

5.6 lacs

4.2 lacs

2.8 lacs

2 lacs

1.1 lac

393 131 524

294 98 392

195 65 260

141 47 188

78 26 104

ENCASHMENT OF EARNED LEAVE AT THE TIME OF EXIT Retirement Death Vol. Retirement Same as Retirement Resignation Not eligible for Encashment

Basic+DA+PreSame+HRA+CCA revised FPA (Basic (excluding portion only and Transport & DA payable on that Washing allowance) basic part)
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Misconducts (List is not exhaustive) Theft, fraud, dishonesty in official matters Bribery Disproportionate assets Furnishing false information about self which are germane to employment. Acting prejudicial to the interest of the Company. Willful insubordination. Absence without leave/overstayal of sanctioned leave beyond 4days Habitual late attendance. Neglect of work Damage to Company's property. Drunkenness/riotous behavior/gambling in Company's premises. Sleeping at work place. Criminal offence including moral turpitude.
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 Absence from work place without permission. Attempt at any act which amounts to misconduct. Prohibitions Rule-5: The whole time of an employee shall be at the disposal of the Company unless it is otherwise distinctly provided. Rule-6: No employee to seek, solicit or accept any outside employment even on honorary basis without Company's permission. Rule-7: No employee shall undertake any outside part time work or accept fees therefor without sanction of the Competent Authority. Rule-8: Every employee during service or after resignation/ retirement is obliged to maintain official secrecy. Rule-9: No employee to give evidence in any enquiry without permission of the Company. This is not applicable to any enquiry ordered by Govt./Parliament/State legislature or any judicial/ Departmental enquiry. Rule-10: No employee can take part in election to any legislature or local authority. Rule-11: No employee to engage in any demonstration that involves incitement to an offence nor abet any sort of strike. Rule-12: No employee can conduct or participate in any activities pertaining to press/radio/TV/newspaper without permission from the Company. Rule-13: No employee should accept or permit any member of his family to accept any gift from any other person having official dealings with him. Rule-14: No employee shall without sanction of the Company engage directly or indirectly in any trade, business or profession nor allow any dependent member of the family to undertake any agency/ profession having links with Company's business. Rule-15: Speculation in any stock, share or investment is prohibited. Rule-16: No employee save in ordinary course of business with a bank or with a Public Limited Company shall himself or through any family member lend or borrow money as a principal or as an agent. Rule-18: No employee can absent from duties without having permission of the Competent Authority. Rule-19: No employee shall absent from his station overnight without prior sanction of the Competent Authority. Rule-16A: Submission of property returns in prescribed formats by all employees on annual basis by 30th April each year for the period ending 31st March immediately preceding.
446

Suspension (Rule-20) The appropriate authority may place an employee under suspension a) where a disciplinary proceeding is contemplated or is pending. b) where a criminal offence against him is under investigation or trial. c) where he is detained in custody, whether on a criminal charge or otherwise, for a period exceeding 48 hours. Subsistence Allowance during suspension a) at the rate of 50% of gross salary (basic, DA, CCA, HRA, Hill Station Allowance, qualification pay, special pay, personal pay etc.) during first 6 months. b) at the rate of 75% after 6 months if delay in proceedings is not attributed to him. c) at the rate of 25% after 6 month if period of suspension is prolonged due to reasons attributed to him. Treatment of period of suspension a) if honorably acquitted, full pay which he was entitled to during period of suspension less amount of subsistence allowance will be released to him. b) otherwise, such proportion of pay & allowances during the period of suspension as may be allowed by the Competent Authority, will be admissible with adjustment of subsistence allowance received. c) if a case falls under (a) above, period of suspension will be treated as spent on duty. Otherwise it will be treated as not spent on duty.

Penalties Minor Penalties a) Censure b) withholding of one or more increment for a specified period. c) Recovery towards pecuniary loss caused to the Company. d) withholding of one or more increments permanently. e) Reduction to a lower service or post or to a lower time-scale or to a lower stage in the time-scale. f) Compulsory retirement. g) Removal from service which shall not be a disqualification for future employment. h) Dismissal.
447

SCHEDULE OF AUTHORITIES UNDER GI(CDA) RULES 1975

CHAIRMAN-CUM -MANAGING DIRECTOR

ASST. MANAGER (SCALE-II)

G.M (SCALE-VII)

DISCIPLINARY AUTHORITY

Procedure for imposing Major Penalties (Rule-25) No order imposing any major penalty shall be made without holding formal enquiry proceedings into allegations/charges. Steps in holding major penalty proceedings a) framing of charge sheet by the disciplinary authority & its service on the delinquent employee. b) on receipt of written statement from the employee, appointment of IO/PO by the disciplinary authority. On total admission of charges in the written statement, no formal enquiry through IO/PO will be necessary. c) holding of preliminary proceedings, inspection of documents by the employee, submission of a list of defense assistant, defense witnesses, additional documents if any to be submitted by the employee. d) holding of enquiry proceedings by way of examination/crossexamination of management/defense witnesses, recording of oral/documentary evidences. e) submission of brief by PO to IO on conclusion of enquiry. Finalization of Enquiry Report by IO & its submission to Disciplinary Authority, containing the following a) gist of charges. b) gist of defense taken by the employee. c) assessment of evidence. d) findings on each charge with specific conclusions. A copy of the enquiry report is forwarded to the employee by the disciplinary Authority inviting his representation, if any, before taking action on the enquiry report. Action on Enquiry Report a) if not satisfied, the disciplinary authority may remit the case for further enquiry recording reasons therefor. b) if convinced with the enquiry report, disciplinary authority may pass an order imposing penalty commensurate with gravity of the charges established. If charges are not established, the disciplinary authority may pass an order exonerating the employee. Procedure for imposing Minor Penalty (Rule-27) The employee shall be informed in writing of the alleged misconduct & given an opportunity to submit written statement within 15 days. The defense statement vis--vis alleged misconduct shall be taken into consideration before passing of any order by the disciplinary authority.
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PERSONNEL & ADMINISTRATION COMMITTEE OF THE BOARD

PERSONNEL & ADMINISTRATION COMMITTEE OF THE BOARD

D.G.M. (SCALE-VI)

MANAGER (SCALE-IV)

CHAIRMAN-CUM -MANAGING DIRECTOR

G.M (SCALE-VII)

APPOINTING AUTHORITY

CHIEF MANAGER (SCALE V)

D.G.M. (SCALE-VI)

MANAGER (SCALE-IV) ASSISTANT & EQUIV. CADRES/ RECORD CLERK

DEPUTY MANAGER (SCALE-III)

CHIEF MANAGER (SCALE-V) MANAGER (SCALE-IV)

DY. MANAGER (SCALE-III) / ASST.MANAGER (SCALE-II)/ ADMN. OFFICER (SCALE-I)

DEV. OFFICER / SUPERINTENDENT / SR. ASSISTANT & EQUIV. CADRES

GM (SCALE-VII) / DGM (SCALE-VI)

CATEGORY OF EMPLOYEES/ OFFICERS

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SUB-STAFF

MANAGER (SCALE-IV)

CHIEF MANAGER (SCALE-V)

APPELLATE AUTHORITY

G.M. (SCALE-VII)

D.G.M. (SCALE-VI)

CHIEF MANAGER (SCALE-V)

C.M.D.

CHAIRMAN-CUMMANAGING DIRECTOR

CHAIRMAN-CUM -MANAGING DIRECTOR

CHAIRMAN-CUM -MANAGING DIRECTOR

CHAIRMAN-CUM -MANAGING DIRECTOR

MEMORIAL AUTHORITY UNDER RULE 40

BOARD

Communication of orders (Rule-28) to be served personally on the employee if he is attending Office otherwise by registered post with A/D & under Certificate of Posting in his last known residential address in the office record. otherwise to be affixed on the notice Board of the Office where the employee is posted. Appeal (Rule-31 to 37) Every delinquent employee has a right to appeal against any penalty order served on him within a period of 3 months from the date of receipt of the order by him. Every person submitting an appeal shall do so separately & in his own name. Appeal should be addressed to whom it lies & shall contain material statement & arguments. Appeal is to be submitted through the authority who made the order appealed against. A copy of the appeal may be directly submitted to the appellate authority. In case of an appeal against any penalty order the appellate authority considers a) whether the procedures of enquiry have been complied with b) whether findings of IO are justified c) whether penalty imposed is excessive, adequate or inadequate & may pass orders confirming, reducing or enhancing the p e n a l t y . Enhancement of penalty can only be made after giving an opportunity to the employee. Memorial (Rule-40) An employee whose appeal has been rejected by an appellate authority who is subordinate to CMD, may address a memorial to CMD in respect of the relevant matter within a period of 6 months from the date of receipt of the order of the appellate authority by him. Canvassing or outside influence (Rule-41) No employee shall bring any political or outside influence for any matter pertaining to his service. Interpretation (Rule-42) Any question relating to interpretation of these rules shall be referred to the Board whose decision shall be final.

PROMOTION POLICY FOR OFFICERS- 2006 Promotion Policy for Officers was first introduced in 1990 The 1990 Policy was in place till 2006 Promotion Exercise 2006 Policy replaced the 1990 Policy The Policy is applicable for promotion to all cadres up to and including Scale VII (GM) Promotions from Scale V to VI and from Scale VI to VII are held within 4 GIPSA member cos. And GIC taken together, based on a common seniority list for Scale V & VI officers for all the five companies Other promotions within the company up to Scale V are based on all India Seniority lists of officers in Scale I, II, III & IV cadres. Vacancies are determined on the basis of norms/guidelines adopted by the companies from time to time based on organizational needs. While promotion to Scale VI & VII is based on the sole criterion of Merit, the other promotions are held based on the various criteria for measuring merits and seniority. To become eligible for promotion to Scale VI & VII minimum 2 years service is required. However, the committee of CMDs may decide the actual zone of consideration for promotion by restricting the No. of eligible officers to certain multiple of vacancies and/or up to a particular batch to which they belong. To become eligible for promotion to other cadres, minimum 3 years service is required However, the zone of consideration for promotion would be as follows : 5 times the No. of Vac. For prom to Scale V 4 times the No. of Vac. For prom to Scale IV & 3 times the No. of Vac. For prom to Scale II & III

Provided all eligible officers belonging to same batch have to be included in the zone consideration, even if the total No. exceeds the above proportion The officers included for promotion to Scale VI & VII are required to appear before a screening committee of 4/5 outside experts in different fields, which would submit their assessment/ recommendation to the Promotion Committee for final consideration. The other officers empanelled for promotion to various cadres up to scale V, have to write a test conducted by a professional examining authority (like NIA) and pass such test (qualifying marks 50) before being included in the further process of selection.
451

450

AMENDMENTS IN PROMOTION POLICY FOR OFFICERS

14A. Fast Track Promotions:Notwithstanding anything contained in this policy, starting from the Promotional Exercise for the year 2011-12, for promotion of Officers upto Scale IV in the Company, there shall be, in addition to the already existing channel (to be referred to as the Normal Channel) of promotions under this policy, another channel of promotions, to be known as Fast Track Channel, with the following provisions:(a) 20% (fraction of 0.5 and above being taken as 1) of vacancies as determined under para 6 of the Policy for a financial year for promotion to Scale II, Scale III and Scale IV in the Company shall be earmarked for being filled up through Fast Track Channel, the remaining vacancies being available for the Normal Channel. (b) Taking out 20% of the total vacancies for Fast Track Channel shall, however, not affect the constitution of the zone of consideration for Normal Channel under para 8.2 of the Policy and the same shall continue to be related to the total vacancies (i.e. including these 20% taken out for Fast Track Channel). (c) To be eligible to participate in the Fast Track Channel, an Officer should have completed minimum three years of continuous service from the date of selection to the existing cadre, as on 31 March of the year prescribed for the purpose of para 8.2 from time to time, besides possessing the qualification of, (i) Associate of Insurance Institute of India or equivalent for promotion to Scale II or Scale III, and (ii) Fellow of Insurance Institute of India or equivalent for promotion to Scale IV: Provided however, for the Promotional Exercises for the years 2011-12 and 201213, to be eligible to participate in the Fast Track Channel, an Officer should have completed minimum four years of continuous service from the date of selection to the existing cadre, as on 31st March of the year prescribed for the purpose of para 8.2 from time to time, irrespective of his possessing the qualifications specified in (i) and (ii) above.
452
st

(d) An Officer eligible to participate in the Fast Track Channel of Promotions and desirous of the same shall have to apply for it against a Notice to be published by the Company for this purpose. (e) An Officer applying for the Fast Track Channel of Promotions shall be required to appear in the Written Test held under the provisions of para 9.2.1 of this Policy and secure a minimum of 60 (54 for SC/ST Officers) or more marks before being included in further process of selection under this paragraph. (f) In case the number of officers qualifying the Written Test for promotion to any cadre under this Channel is less than 02 times the number of vacancies available for that cadre, the number of vacancies so available shall be suitably reduced so as to ensure that the officers available after qualifying the written test are not less than 02 times the number of such reduced vacancies and the vacancies so released, as also any vacancy remaining unfilled under this Channel, shall be added to the vacancies available under Normal Channel for that particular cadre. (g) Officers qualifying the Written Test under the Fast Track Channel as per (e) above, shall be subjected to assessment under the parameters of Qualification, Work Record, Score in the Written Test and Interview carrying the following scheme of weightage:Parameters Written Test Qualification Work Record Interview Total Scale I to II 40 5 40 15 100 Scale II to III 40 5 40 15 100 Scale III to IV 40 Nil 40 20 100

(h) Within the Scheme of Weightage as indicated in (g) above, allocation of marks under various parameters shall be as follows:(i) Written Test:- For every mark scored in the Written Test, a score of 0.40 in the scheme of weightage shall be allotted. For example, for a score of 60
453

in the Written Test, the Officer shall be allotted 24 marks out of 40 in the above scheme of weightage. (ii) Qualification:- Scale I & Scale II Officers possessing the qualification of Fellow of Insurance Institute of India or equivalent shall be allotted 5 marks for the same while no other marks shall be allotted in the scheme of weightage. Work Record:- The work record shall be assessed through the annual confidential reports as per the annual performance appraisal system in force, after applying an appropriate factor so as to translate the score from the Normal Channel level of weightage to the Fast Track level of weightage. (For example, for promotion to Scale II, the weightage for Work Record under Normal Channel is 30 and under Fast Track Channel 40. In such a case, the score of Work Record assessed under Normal Channel as per the annual performance appraisal system in force shall be multiplied by a factor of 40/30 to arrive at the score of Work Record under Fast Track Channel.) (iii) Interview:- Interview Committee(s) each comprising of one GM as Chairman, 2 DGMs and one SC/ST representative, to be constituted by the Chairman-cum-Managing Director of the Company, shall interview candidates and allot appropriate marks, the maximum being 20 for promotion to Scale IV and 15 for promotion to Scale II / III. (I) The Promotion Committee and Appointing Authority for promotions under Fast Track Channel shall be the same as that for promotions under the Normal Channel for the respective cadre indicated in para 12 & para 16 respectively. (j) The Chairman of the Interview Committee shall submit the details of the marks allotted to various candidates in the Interview to the Promotion Committee (herein after called 'the Committee'), which shall thereafter examine the information about the officers who have qualified the Written Test under the reckoning parameters contained in the summary sheets and also give suitable weightage either plus or minus for the inconsistencies and /

or exaggerated remarks, as may be observed from the confidential reports / work records of the officers concerned. Thereafter, the total marks shall be suitably moderated and recorded by the Committee, taking into account the marks secured in interviews. (k) The Committee shall thereafter rank the Officers in descending order of total marks obtained under the reckoning parameters and from the top of the said list a number equivalent to the number of vacancies available under the Fast Track Channel shall be taken out to constitute the Promotion List under this Channel. (l) The Committee shall then forward the Promotion List so prepared under this Channel to the Appointing Authority. Such selection of officers for promotion by the Committee shall be final. (m) The Appointing Authority for promotion shall cause simultaneous publication of the Promotion Lists both under the Normal Channel and the Fast Track Channel so as to ensure maintenance of inter-se seniority of the Promotees under the 02 Channels in the promoted cadre. (n) Only 2 attempts shall be allowed for promotion to a particular cadre under the Fast Track channel, which shall be counted within the overall 03 attempts (including those availed under the Normal Channel) for the purpose of determining supercession within the meaning of the paragraph 17 of the Promotion Policy. (o) Instance of an Officer refusing promotion under Fast Track Channel shall result in counting of his participation in the Fast Track Channel of promotions as an attempt within the limits of 03 attempts for the purpose of determining supercession within the meaning of para 17, notwithstanding his having qualified in the Written Test. (p) Officers eligible under the Normal Channel of promotion and applying for the Fast Track Channel of promotions, if selected for promotion under both the Channels, shall be retained only in the Promotion List for the Normal Channel of promotions.
455

454

Criteria for promotion up to Scale V and scheme of weightage to various parameters Sl. No. 1. 2. 3. 4. 5. 6. Parameter Written Test Insurance Qualification Work Record Seniority Interview Total Scale I to II 30 5 30 35 100 Scale II Scale III Scale IV to III to IV to V 30 5 35 30 100 30 45 25 100 25 45 15 15 100

Inter-se seniority : 0.01 mark is added in the ascending order starting with 0.00 for the last officer in the list of a particular batch, if there is more than one batch in the zone of consideration. This is to ensure weightage on seniority within the batch Interview : For promotion to Scale V, the Promotion Committee compulsorily interviews all the candidates. Maximum marks for interview is 15. Promotion Committee :Promotion committees for various promotion would be as under : Promotion Committee :Promotion committees for various promotion would be as under : Promotion to Scale VI & VII V Committee Members CMDs of GIPSA Companies and GIC, besides one Govt. of India Nominee CMD of the company, one Director on the Board of the Company, General Manager (Pers.), one SC/ST Representative & one outside expert. CMD of the co., two GMs of the co. {including GM(Pers.)}and one SC/ST Representative

Written Test: weightage given for promotion up to Scale IV - 30% & to Scale V - 25% of total marks scored in the test Insurance Qualifications: Marks are allotted only for promotion to Scale II & III, as under:

II, III & IV AIII or ACII 2 & FIII or FCII 5 No marks are allotted for LIII Work Record: Marks are allotted on the three parts of Annual CR as under, for different cadres and mean of total marks allotted for last three years' CRs are taken as marks on work record.III. Part of CR Trait Performance Growth Potential Total Scale I to II 10 12.5 7.5 30 Scale II to III Scale III to IV Scale IV to V 10 12.5 12.5 35 10 17.5 17.5 45 10 17.5 17.5 45

Seniority: For the first three completed years of service, no marks are allotted For each completed year of service in the existing scale, beyond first three years, the marks on seniority are allotted as per following table: Scale I to II II to III III to IV Iv to V Marks for each completed yr. of service beyond first 3 years 5 3 3 2
456

Promotion to Scale VI & VII : Empanelled officers after being screened by the Screening Committee appear before the Promotion Committee for a personal interview. The committee, after taking into account i) the assessment/recommendations of the Screening Committee, ii) overall merit, suitability, Growth Potential, length of service, qualifications, service experience in various functional areas as may be assessed from appraisal records and iii) performance in the personal interview, would draw a list of officers selected for promotion, equal to the no. of vacancies Such list is published in order of inter-se seniority in the existing cadre and this list would be final. Promotion to Scale II, III, IV & V Promotion committee takes into consideration the marks secured in various criteria (including the weightage on marks of Written Test) by the empanelled officers, who succeed in the Written Examination and draw a list in descending order of aggregate marks to the extent of 75% of the total no. of vacancies for selection for promotion.
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Maximum Marks 35 30 25 15

Thereafter, the remaining officers are re-ranked in descending order of total marks, excluding the marks obtained in Written Test and from the top of the list, no of officers equal to the balance 25% of the vacancies are taken to constitute the 2nd part of the promotion list. Both the lists are then amalgamated and the final select list against 100% vacancies is published in order of inter-se seniority in the existing cadre. Special Provision for SC/ST In accordance with the instructions received from time to time from OPT, Govt. of India regarding this matter, the provisions are implemented. No reservation is as yet made for Class I Promotion. Appointing Authority for Promotion: Cadre Scale VI & VII Scale IV & V Scale II & III Effect of CDA/Vigilance cases on promotion In case any action under CDA Rules is pending against any employee at the time of considering his promotion, his case would be dealt with in terms Sealed Cover Guidelines, which are issued by DOPT from time to time. Where, however, any case is concluded and any penalty has been imposed, the promoting authority would examine various aspects of the case, such as gravity of the offence, penalty imposed, period elapsed etc. and would take a decision, as to whether the employee should be considered for promotion. Effect of Supersession : Officers superseded in three consecutive promotional exercises, shall not be included in the zone of consideration in in two immediately succeeding promotional exercises. Effect of Non-acceptance : When an officer declines to accept promotion, such refusal shall be recorded and taken into account while considering his/her case for subsequent 2 yrs.
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Probation on Promotion : Officers promoted to the cadre of Scale V and above shall be on probation for a period of one year. Seniority in promoted cadre : Seniority in the promoted cadre is reckoned from the date of selection maintaining the inter-se seniority in the prepromoted cadre, regardless of the date of taking charge, provided, however, the officer joins the higher post before 31st March of the promotion year.

Promotion, however, takes effect from the actual date of taking charge in the higher cadre at the stipulated place of posting. PROMOTION POLICY FOR SUPERVISORY, CLERICAL AND SUBORDINATE STAFF, 2008 The Promotion Policy for SCS Staff was first introduced in 1978 and then it was revised in 1990-91 Thereafter, a few amendments were made in the policy. However, the previous policy appeared to fall short of the expectations of the organization and in the changing scenario, it was felt that a new policy should be introduced which would be able to take care of the career prospects of the employees and would also address the changing requirements of the company. Against the above backdrop the new policy has been introduced in 2008 replacing the previous one. From the date of introduction of this new policy, there has been promotion to only 3 cadres i.e. AO (Scale I), Sr. Assistant & Assistant. While AO and Assistant, are considered as entry-cum-promotional cadre, Sr. Assistant is exclusively a promotional cadre. For promotion to various cadres, the country has been divided into various geographical zones, as under: Name of Prom Zone for Sr. Asstt. Northern Zone I Northern Zone II Northern Zone III Northern Zone IV Eastern Zone I Eastern Zone II
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Appointing Authority CMD GM DGM

State(s)/UT covered J&K, HP, Punjab and Chandigarh Haryana and Delhi UP & Uttarakhand Rajasthan Bihar & Jharkhand W.B & Sikkim

Name of Prom Zone for Sr. Asstt. Eastern Zone III Eastern Zone IV Southern Zone I Southern Zone II Southern Zone III Southern Zone IV Western Zone I & II Western Zone III Western Zone IV

State(s)/UT covered Orissa Assam, Tripura, Nagaland, Mizoram, Manipur, Meghalaya, Arunachal Pradesh Andhra Pradesh Tamilnadu & Puducherry Karnataka Kerala To be carved out by CMD comprising offices in Maharashtra and Goa MP & Chattisgarh Gujarat, Dadra & Nagar Haveli , Daman & Diu Assistant Sr. Assistant For promotion to AO (Scale I)

PROMOTING AUTHORITIES AND PROMOTION COMMITTEES

Promoting Authority Promotion Committee

An Officer not below the An officer not below the rank of rank of Scale VI (DGM), Scale V to act as Chairman and two to be nominated by CMD other officers not below the rank of Scale IV An officer not below the rank of Scale V to be nominated by the O-I-C of the HO Pers. Dept. An officer not below the rank of Scale IV to be nominated by the Regional In-charge An officer not below the rank of scale IV to act as Chairman and two other officers not below the rank of Scale III, as members. An officer not below the rank of scale III to act as Chairman and two other officers not below the rank of Scale II, as members.

Name of the Prom. Zone for AO Northern Zone

States & Uts covered J&K, HP, UP, Punjab, Haryana, Uttarakhand, Rajasthan, Chandigarh and Delhi Bihar, Jharkhand, WB. Sikkim, Orissa, Assam, Tripura, Manipur, Mizoram, Nagaland, Meghalaya & Arunachal Pradesh Andhra Pradesh, Tamilnadu, Karnataka, Kerala and Puducherry Maharastra, Gujarat, Goa, Madhya Pradesh, Chattisgarh, Dadra & Nagar Haveli and Daman & Diu

N o t e: One member of the Promotion Committee shall be from Personnel Department and one member shall be an officer from SC/ST Community Promotion Committee shall be the Interview Committee, wherever interview is prescribed. Declaration of Vacancies: Norms shall be adopted from time to time for determination of vacancies for promotion to different cadres, based on organizational needs. Preparation of Panels: 5 times the no. of vacancies, based on the total marks on seniority and qualifications, as allotted in terms of promotion policy, provided all employees are included in the panel who secure identical total marks at the cut off point, regardless of increase in the size of the panel beyond five times. Impact of Below Average Rating in CR If any applicant for promotion is found to have received Below Average Rating in any of the last three years' CRs, the promoting authority would examine overall aspect of the report and arrive at a decision whether the employee would be considered for promotion or not in that particular year. Impact of Actions under CDA Rules/Vigilance Cases: In case any action under CDA Rules is pending against any employee at the time of considering his promotion, his case would be dealt with in terms Sealed Cover Guidelines, which are issued by DOPT from time to time.
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Eastern Zone

Southern Zone Western Zone

For promotion to Assistant : 1) Prom. Zone will be RO Area 2) If any RO covers more than one state, Promotion zone will be State; and 3) If there is more than one RO situated in one centre, all such ROs would be clubbed to form a Promotion Zone.

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Where, however, any case is concluded and any penalty has been imposed, the promoting authority would examine various aspects of the case, such as gravity of the offence, penalty imposed, period elapsed etc. and would take a decision, as to whether the employee should be considered for promotion. PROMOTION TO AO (SCALE I): Departmental Channel: Only Sr. Assistants & Stenos are eligible to apply. Eligibility criteria are based on period of service rendered in the present cadre & the Insurance &/or professional qualifications acquired. Selection is based on seniority, qualification (academic and insurance/professional), work record and interview. Competitive Channel: All employees with 50% marks in Graduation/Post-graduation (40% for SC/ST) or FIII (AIII for SC/ST) ACA, ACWA, MCA, MBA etc. are eligible to write the competitive examination not more than four occasions in the entire service career. Qualifying marks in the competitive examination is 60 % (50% for SC/ST) for being considered in the further process of selection. Selection under this channel is based on seniority, qualification (academic and insurance/ professional), work record, interview and the marks in the competitive examination. Promotion to Senior Assistant: All employees in the scale of Assistant who are FIII or who have completed at least 7 years in the cadre or who have reached the ceiling of the scale are eligible for this promotion. Employees with LIII or AIII qualifications, are considered only after putting in at least 5 years and 3 years service in the cadre, respectively. Selection is based on seniority, qualifications (academic and insurance) and work record Promotion to Assistant: Record Clerks and Class IV full time employees are eligible for this promotion, provided they have requisite academic qualifications for direct recruitment of Assistant in the company or they pass the departmental test with 50% marks (40% for SC/ST) and also pass the computer literacy test Record clerks with at least 5 years service and Subordinate Staff with 10 years service and who have qualified at least VIII std. examination are eligible to write the departmental examination
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SCHEME OF WEIGHTAGE FOR VARIOUS CRITERIA: Criteria Seniority Qualifications Work Record Interview Total For Prom to AO(Scale I) 30 30 25 15 100 For prom to Sr. Assistant 40 30 30 100 For Prom to Assistant 50 30 20 100

Marks on seniority: Two marks for each completed year of service (in the cadre, for prom. to AO under para 13.1 and Sr. Asstt. & in the company for promotion to AO under para 13.2. and Assistant) as on 31st December of the year preceding the year of promotion are allotted. Period of 6 months and more is considered as one year and less than 6 months period is ignored. MARKS ON QUALIFICATIONS: ACADEMIC QUALIFICATIONS: Below SSCE SSCE HSC/Intermediate Graduate Post/double Graduate TECHNICAL QUALIFICATIONS: LIII or one subject of Institute of Actuaries or PG Diploma (one yr. duration) in Computer Applications or Business Administration AIII or ACII or three subjects of Ins. of Actuaries 0 5 7 12 15

10

FIII or FCII or 5 subjects of Ins. of Actuaries or MBA or MCA or PGDBM (two yr. duration)

15

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Marks on work record: Past three years CRs are to be rated by the Promotion Committee as per the scheme of rating and 3 years average shall be taken as marks on work record. Marks in Interview: Promotion Committee shall give marks to the candidates for promotion to AO on the basis of their performance in the personal interview before the committee. None shall be included in the Ranking list without appearing in the Interview. Selection and Ranking: Ranking of the candidates shall be made in the descending order of total marks secured on various criteria as per the scheme of weightage and selection of No. of candidates for promotion, shall be equal to the no. of vacancies, from top of the list, so ranked. To be included in the ranking list a candidate has to secure at least 40 marks in the aggregate of all criteria (30 marks for SC/ST). This proviso would, however, not apply to promotion to AO under paragraph 13.2 Special provision for SC/ST and persons with disability: 15% and 7-1/2% vacancies are reserved for SCs and STs for various promotions under this policy. Rosters for reservation of vacancies are maintained promotion zone-wise for each promotion. 3% reservation is also made for persons with disability. In addition, under paragraph 13.2 and 15, certain relaxations are provided to the SC/ST employees in eligibility criteria, No. of chances to appear in the Competitive Examination (Under paragraph 13.2 )and qualifying marks in the written tests. Publication of Ranking List: On receipt of the recommendation of the Promotion Committee, the Promoting Authority would cause the publication of the Ranking List showing the No. of vacancies declared and the names of those candidates with other details necessary for proper identification, who have been selected for promotion against such declared vacancies.
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Posting from the Ranking List: The employees who are included in the Ranking List are offered promotion by the Promoting Authority by means of a promotion letter. Posting of the employee can be made at any office of the company commensurate with his designation and the organizational requirement, irrespective of the period of stay of the employee at his/her present place of posting. However, such posting shall always be within the boundary of the respective promotion zone. Effect of non-acceptance of Promotion: No employee has a right to reject the offer of a promotion involving transfer. If an employee is unable to accept the offer due to involvement of transfer, he/she has to make a representation in writing within 7 days from the date of receipt of the offer. Promoting Authority may allow the employee to forego the promotion and his name would be deleted from the Ranking list. Further he would not be considered for promotion in the next two promotional exercises. Against this decision the employee may appeal before GM(P), which may be considered by him depending on the merit of the case and dispose it of in appropriate manner. Seniority in the Promoted Cadre: Promotion shall take effect from the date of taking charge in the promoted cadre at the place of posting stated in the offer letter, from which date all benefits in the higher cadre, including fixation of pay would be admissible to the employee. However, such date will not affect his seniority, which shall be counted from the date of publication of the ranking list. Fixation of Pay on promotion: On promotion, basic pay shall be initially fixed at one stage above the stage in the higher scale, which is next above his basic pay in the lower scale. Provided, however, where his basic pay is a stage in the higher scale, the fixation shall be made in the next higher stage in higher scale. Provided further that basic pay shall be fixed at the bottom of the higher scale, where such fixation results in an increase in the basic pay equal to at least one grade increment at the minimum of the higher scale.
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Note: The employee can opt any date for fixation ranging between the dates of his taking charge in the higher cadre and the date of his next annual increment in the lower scale. Assured career progression scheme (ACPS) Record Clerks, Drivers & Sub-staff who fail to qualify for promotion, would be placed in the respective higher scale of pay, on completion of continuous 12 months service from the date of their reaching the maximum (ceiling) of their present scale, subject to vigilance clearance. While the employee would continue in the existing cadre, he/she would draw salary in the higher scale, till superannuation. Except monthly salary, no other facility/benefits which may be applicable to the higher cadre, would be admissible to such employees on placement in the higher scale under ACPS. This facility is available to an employee only once in entire service career, One promotion in life time for Assistants Assistants not below the age of 55 yrs. and who have completed at least 25 yrs. Of service in the company without receiving any promotion are eligible for promotion to Sr. Assistant, under this clause. The promotion is subject to vigilance clearance and would be based on the marks on the criteria of Seniority, qualifications and Work Record, provided the employee not found unfit for promotion. Weightage on seniority is given @ 3 marks per year, over and above 25 years. Past service of the ex-servicemen, before joining the Co. is counted up to maximum of 5 years, for determining the eligibility for promotion which is minimum of 25 years of service as Assistant Power to clarify, modify and relax any provision of the policy CMD is the competent authority to modify or relax any provision of the policy in any individual cases, by recording the reasons therefor and to issue any clarifications, in case of any doubt in any matter under this policy.

TRANSFER AND MOBILITY POLICY - CLASS I Objectives To ensure balanced manpower distribution for Client servicing To groom up Officers To provide opportunity for self-development & improvement in competency. To attain overall Organizational goals. Applicability It came into existence since 17/10/2002. Applicable to all officials up to the rank of Scale IV Not applicable to officials on deputation to other Organizations & to local transfers. NORMAL PERIOD OF POSTING (NPP) AT A CENTRE IS 5 YRS. ON COMPLETION OF NPP, TRANSFER FROM THE EXISTING PLACE FOR SCALE I & II, WITHIN TAC ZONES/ADJOINING STATES. FOR OTHERS, ANYWHERE IN INDIA . TRANSFER EVEN BEFORE COMPLETION OF NPP BY THE MANAGEMENT ON OFFICE EXIGENCIES. POWER OF CMD TO PHASE OUT SUCH SHIFTINGS FROM A CENTRE ON LENGTH OF POSTING BASIS WHERE NO. IS HIGH. REVOLVING PLAN ONCE TRANSFERRED TO A PLACE, OTHER THAN ON REQUEST MAY BE ELIGIBLE FOR TRANSFER TO ONE OF THE 3 PLACES OF CHOICE AFTER 4 YRS., SUBJECT TO AVAILABILITY OF VACANCY & REPLACEMENT SENSITIVE ASSIGNMENT ROTATION FROM SUCH ASSIGNMENT AFTER 3 YRS. SHIFTING TO ADMN. SIDE ON COMPLETION OF CONTINUOUS 10 YRS. AS DO/BO INCHARGES. ONCE SHIFTED, AGAIN ELIGIBLE FOR POSTING AS INCHARGES AFTER 3 YRS. ON ADMN. SIDE REQUEST TRANSFER NO REQUEST ORDINARILY CONSIDERED BEFORE COMPLETING 3 YRS. IN ONE CENTRE. HOWEVER, BOARD/PERSONNEL. & ADMN.COMMITTEE OF THE BOARD MAY CONSIDER EXTREME HARDSHIP CASES BEFORE 3 YRS. MAX. NO. OF REQUEST TRANSFERS = 3 ( TO BE COUNTED FROM 01.03.1990 )
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REQUEST CONSIDERED AFTER 5 YRS. IN ONE PLACE TREATED AS COMPANY TRANSFER. CASES OF SPOUSE JOINING, PHYSICALLY HANDICAPPED & DIFFICULT AREAS MAY BE GIVEN PREFERENTIAL/SYMPATHETIC CONSIDERATION OFFICERS DUE FOR RETIREMENT WITHIN 2 YRS. CONSIDERATION OF REQUESTS FOR TRANSFER TO THEIR DECLARED HOMETOWNS/PLACE OF CHOICE TRANSFER BENEFITS FOR OUTSATION TRANSFER, AS PER GUIDELINES TIME TO TIME. FOR LOCAL TRANSFERS, NO BENEFIT FOR REQUEST TRANSFERS under TMP BEFORE 3 YRS., NO BENEFIT JOINING TIME FOR TRANSFER 1) NORMALLY 30 DAYS OR THE DATE SPECIFIED 2) FURTHER MAX. EXTENSION FOR 30 DAYS MAY BE ALLOWED O N M E R I T O F T H E G R O U N D S TAT E D I N T H E REPRESENTATION. POWER TO MODIFY/RELAX THE PROVISIONS WITH BOARD OR PERS. & ADMN. COMMITTEE OF THE BOARD COMPETENT AUTHORITIES FOR TRANSFER 1) FOR CHIEF MANAGERS & ABOVE CMD 2) UPTO SCALE IV LEVEL WITH DEV. FUNCTION 3) UPTO SCALE IV LEVEL ON ADMN.SIDE WITHIN HO 4) UPTO SCALE IV INTER REGION, ON ADMN.SIDE UPTO SCALE IV WITHIN RO, TRANSFER DUE TO CDA/VIG. CASES NOT RESTRICTED BY ANY OF THE ABOVE PROVISIONS REMOVAL OF DOUBTS & CLARIFICATIONS BY CMD
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TRANSFER AND JOB ROTATION POLICY SUPERVISORY, CLERICAL AND SUBORDINATE STAFF Employees retiring in 3 years / Physically handicapped / suffering from major diseases (including family members) not to be transferred but liable for job rotation All employees on promotion to be transferred (within promotion zone) from one office / station to another irrespective of period of stay. JOB ROTATION After three years of continuous working in a particular Department, an employee is liable to undergo job rotation and he/she can be posted in another department within the same office After five years of continuous working in one office, an employee is liable to undergo job rotation and in this situation he can be posted in another office within the same station. Number of job rotation cases shall not exceed 25% of the strength of employees in that office Minimum one transfer from each office on account of job rotation is to be made TRANSFER AND MOBILITY CMD is empowered to determine requirement in offices at various stations Requirement to be fulfilled through judicious deployment of work-force by making necessary transfers After 10 years of continuous stay in one station, an employee is liable for transfer to another station. Discretion to limit transfers to 25% of total class-wise strength Distance shall be ordinarily restricted to a radius of 150 kms. from present place of posting. However, such distance may be increased up to 250 Kms. also, with the approval of CMD May be transferred to earlier or choice station after stay of at least three years Entitled to all transfer benefits as per rules, on such transfer PROCEDURE Department-wise, Office-wise & Center-wise lists in descending order of period of posting for each Department / Office / Station. Transfers from top of such lists Allowances linked to functions to be withdrawn on rotation No special provision for Office Bearers of Unions / Associations
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GM(P) + GM(MKTG) + OVERSEEING EXEC. GM(P)+CONCERNED GM/DGM OF THE HO DEPTT. GM(P) + CONCERNED OVERSEEING EXEC. GM(P) + O/S Executives concern

BULLET QUESTIONS 1. The misconduct of an Employee was investigated by Company's Vigilance Dept. and misconduct is established. What are the subsequent procedures to be followed/ steps to be taken A charge-sheet will be framed leveling the charges and the same will be issued by the Competent Authority to the Delinquent Employee along with memorandum, Article of charges, Imputation of Charges, List of Management Witnesses and List of Documents. In the same charge sheet, the charged Employee will be advised to send his representation within 30 days of receipt of the charge-memo. Not being satisfied with the representation of the Charged Employee, the CA will, thereafter decide to initiate Inquiry proceedings and accordingly will appoint Inquiring Authority and the Presenting Officer. After fixing the date of the Preliminary Hearing, the Inquiring Authority will issue summon to the Charged Employee and the Presenting Officer. In the Preliminary hearing, the CE will be allowed to go for inspection of the listed documents. If the CE wants copies of all listed documents, the same will have to be provided to the Charged Employee by the Presenting Officer. The IO will ask the PO as well as the Charged Employee to introduce/bring any additional document/defense documents/witnesses respectively, if yes, the name of the Document to be spelt out specifying therein how the documents are related with the Specific Charges as well as the other names and details. If IO satisfies about relevancy of additional document/defense documents, he will allow the same. The IO will put question to CE whether he admits the charges or deny. The IO will advise CE to give name and other details of the Defense Assistant who will defend the defense case. If the CE denies the charges, the regular hearings would be commenced and the IO will issue summon to PO, CE with an advise to appear in the RH's with Management Witness/es as well as Defense Witness/Defense Assistant. In the regular hearing, listed documents exhibited by the PO will be marked. Similarly, the defense documents submitted by the defense side will also be marked. Management Witnesses will be examined by the PO and cross- examined by the DA of the CE. IO may allow the PO to reexamine the MWs. After re-examination, the DA will cross examine the
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MWs on the questions put by the PO. Management side will thereafter, will be over. Defense case will commence when the DWs will be examined by the DA and cross -examined by the PO. DWs can also be re-examined by the DA/cross examined (on re-examination) by the PO. Finally, Inquiry proceedings will be concluded and the I O will advise P O to submit his Written brief within 30 days time. On receipt of P O's Written Brief, a copy of the same will be sent to the CE with an advise to submit the Defense Brief within 30 days time. IO, thereafter, will submit his report to the CA on the strength of the depositions of the witnesses/documents. Stating therein whether the Charges have been proved or not. The CA will finally will issue order to the CE imposing Penalty what he will think appropriate. 2. Suggest Measures To Minimise Workplace Negativity Every organization has some negative Neds and Nellies who do not like their jobs, bosses, company and even think customers as worthless. The best way to combat negativity is to keep it from occurring in the first place by providing opportunities to people to make decisions about and /or influence their own job Make opportunities available for people to express their opinion about work place policies and procedures. Treat people as adults with fairness and consistency by developing and publishing workplace policies and procedures that organize work effectively Do not create rules for all employees when just a few people are violating norms. Help people feel like members of the in crowd with quick effective and constant communication and providing the context for decisions. Afford people the opportunity to grow and develop through training. Lateral moves, promotion etc. Provide appropriate leadership and strategic framework including mission, vision, values and goals. Provide appropriate rewards and recognition to make people feel that their contribution is valued. Hardcore. Persistent, baseless and unwarranted negativity may be dealt with by disciplinary actions
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3.

Employees performance depends upon how well they are motivated. Explain. Let us always think they are good people Their opinions and views are welcomed and properly accommodated They are publicly praised for every good work done They are conveyed that they are the cause and source of ,in achieving the Organizational goals and objectives They are made to feel that they form part of the important decisions in the Organization They are encouraged for their free and candid suggestions They are conveyed every policy and strategic decisions taken at Corporate level The Organization has a feeling for care and concern for them Employees are encouraged in their career development and advancement Superiors periodically should coach and counsel for their overall development 5.

Training and retraining be promoted and recognized as an intervention for overall development Honesty is never a bad policy You have been transferred and posted as the in charge of an office where office staff are not inclined to accept any changes in the existing system and are difficult to work with. How will you tackle the situation? First focus on reasons which lead to opposition to any change There is no gainsaying the fact that every individual has his own way of looking at an issue The moment any body comes out with any new idea or procedure it is, more often than not, met with a degree of confrontation Out right criticism of an existing system or mind set of people will definitely hurt the sentiments of the officials concerned and will only aggravate the situation At the initial stage there should be appreciation of the positives of the existing system and the efforts put in by the officials We can then tell them that considering their competence and efficiency, new systems can be taken up as a challenge and thereby motivate them Training should be imparted to some officials, wherever felt necessary, so that confidence level goes up We, as In-charge, have also to work diligently with the officials so that the spirit of team-work and camaraderie becomes discernible We, as In-charge, should not only have a participative approach but should also be considerate vis--vis colleagues and sub ordinates Finally when objectives start getting met due credit ought to be given to the entire team so that they continue their concerted efforts in the direction of change with renewed vigor. 6. Abuses of Job Rotation Policy Before 2000 the GIPSA companies allowed individuals to retire in one line and one location The individuals developed vested interests overriding organizational interest In order to prevent this Job rotation policy was introduced However, without succession planning the individuals continue to be indispensable
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4.

HR interventions are needed for a dynamic and vibrant organization An organization is judged and rated by the index of the quality of people it has An Organization becomes vibrant and dynamic through prudent and well defined HR policies A comprehensive HR policy fulfilling their basic needs to self actualization Motivate the people to a stage what they can do for the organization An objective performance appraisal system with open assessment be brought in A proud feeling of association with the organization be promoted amongst the employees Career development appreciated opportunities are made available and

Continuous succession planning be periodically reviewed Right person at a right place Philosophy should be the buzz word and belief A transparent job description and profile is need of the hour
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 Moreover, the present policy defines only stationed tenure and not Region or Zone tenure Thus the favored were accommodated within 30 kilometers and others shunted 300 Kms. In the absence of rotation in line Management exposure and experience is limited stunting individual and organizational growth. Job rotation pre supposes identification of talent, Job profiling and succession planning It should also be based on station, regional and zonal tenure This would help right distribution of Manpower and its optimal utilization 7. MANY SOURCES OF AUTHORITY FOR MASTERING OTHER PEOPLE AT YOUR WORKPLACE. HIERARCHICAL: Power derived from position in management or organization structure. INFORMATION: Information or Knowledge other does not posses. EXPERTISE: possessing a particular skill set or range of experience. REPUTATION: The power you acquire from your track record and past performance. CHARISMA: The so called magic ingredients personality, voice, appearance, energy, warmth, presence etc. POSITIONAL: Unique nature of role. Key position in a critical communication network. COERCIVE: Power to punish and impose sanctions on others. 8. Different Levels of Management & Functions Top Level, Middle Level & Lower Management Top-level managers require an extensive knowledge of management roles & skills They have to be aware of external factors such as markets They are responsible for strategic decisions Their decisions are generally of long-term nature Mid-level mangers have a specialized understanding of certain managerial tasks They are responsible for and carrying out the decisions made by top-level
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Mgt. They are responsible for tactical decisions Lower level management ensures that the decisions and plans taken by other two levels are carried out Lower level manager's decisions are generally short term ones. 9. Key functions of Human Resource Management Recruitment Strategy Planning Hiring processes Performance Evaluation and Management Promotions Redundancy Industrial & Employees Relations Record Keeping of all personal data Compensations, pensions etc in liaison with payroll Confidential advise to internal customers in relation to problem at work Employees organizations relationship 10. Influencing factors on Employee engagement in productivity Employee perceptions of job importance. Employee clarity of job expectations Career advancement/improvement opportunities Regular feedback and dialogue with superiors. Quality of working relationships with peers Quality of working relationships with superiors Quality of working relationships with subordinates. Perceptions of the ethos and values of the organization. Effective Internal Employee Communications 11. Areas of Workforce Management Payroll & Benefits H R Administration
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 Time & Attendance Career & Succession Planning Talent Management Applicant Tracking Learning Management Training Management Performance Management Forecasting & Scheduling 12 Job rotation in Senior Management & Lower Management Levels An individual is moved through a schedule of assignments Designed to give him or her breadth of exposure to the entire operation. Senior management levels, job rotation - frequently referred to as management rotation Tightly linked with Succession Planning Developing a pool of people capable of stepping into an existing job Goal is to provide learning experiences Facilitate changes in thinking Perspective equivalent to the "horizon" of the level of the succession planning. Lower management levels job rotation has normally promotability Otherwise for skill enhancement 13. Sexual Harassment Types of Harassment Power-player Mother/Father Figure One-of-the-Gang Serial Harasser Opportunist Pest Bully Great Gallant Confidante
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Situational Harasser 14. Bureaucratic Organisation is governed by the following principles Official business is conducted on a continuous basis Official business is conducted with strict accordance to the rules The duty of each official to do certain types of work is delimited in terms of impersonal criteria The official is given the authority necessary to carry out his assigned functions The means of coercion at his disposal are strictly limited and conditions of their use strictly defined Every official's responsibilities and authority are part of a vertical hierarchy of authority, with respective rights of supervision and appeal Officials do not own the resources necessary for the performance of their assigned functions but are accountable for their use of these resources Official and private business and income are strictly separated Offices cannot be appropriated by their incumbents (inherited, sold, etc.) Official business is conducted on the basis of written documents 15. Consciences Decision Making Process - Structure a. Discussion of the item b. Formation of a proposal c. Call for consensus d. Identification of concerns e. Addressing of concerns f. Modification of the proposal g. Arrive at consensus 16. All the PSU insurers have specific H R policies and these are brought to the notice of the employees in the form of circulars/manuals. Some of the areas covered in these manuals are Formation of the organization Acts governing the Organization Organization Structure and functions Recruitment procedures for various classes of employees Pay & allowances of employees Working Hours and leave rules
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 Employees Benefits Employees welfare provisions Employees career planning policies Performance Appraisal System 17. Performance Appraisal Methods & Uses Performance Appraisal is inevitable , universal & structured system is used to judge the work performance Modern Appraisal System helps to determine reward outcomes and also poor performers Ideal system may not be possible, near perfection possible Setting up key performance areas and proposed achievement at the beginning of the period Review of the areas of Key performance at the end of the period Reasons for achievement /short fall analyzed Motivation & Satisfaction ,if the system is transparent Training and Development system improves Recognition of skills and redeployment of employees 18. Cordial work environment, if appraiser and appraisee have common goals and target achievements. Employee's performance depends upon how well they are motivated-Explain? Let us always think they are good people Their opinions and views are welcomed and properly accommodated They are publicly praised for every good work done They are conveyed that they are the cause and source of ,in achieving the Organizational goals and objectives They are made to feel that they form part of the important decisions in the Organization They are encouraged for their free and candid suggestions They are conveyed every policy and strategic decisions taken at Corporate level The Organization has a feeling for care and concern for them Employees are encouraged in their career development and advancement 19. HR interventions are needed for a dynamic and vibrant organization.
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Explain An organization is judged and rated by the index of the quality of people it has An Organization becomes vibrant and dynamic through prudent and well defined HR policies A comprehensive HR policy fulfilling their basic needs to self actualization Motivate the people to a stage what they can do for the organization An objective performance appraisal system with open assessment be brought in A proud feeling of association with the organization be promoted amongst the employees Career development opportunities are made available and appreciated Continuous succession planning be periodically reviewed Right person at a right place Philosophy should be the buzz word and belief A transparent job description and profile is need of the hour Training and retraining be promoted and recognized as an intervention for overall development Honesty is never a bad policy Superiors periodically should coach and counsel for their overall development BULLET UNANSWERED QUESTIONS 1. If the Unions of a company join hands and give notice of Work to Rule on various issues pending for management's attention, discuss the best possible solution for this crisis and the immediate steps to be taken to diffuse the crisis. What steps would you suggest to improve the working atmosphere at office? Why is it necessary for public sector general insurance companies to be subjected to the following audits CAG Audit Statutory Audit Internal Audit Discuss the role of the vigilance in Public sector general insurance companies If the unions of a company join hands and give notice of work of rule on
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2. 3.

4. 5.

6. 7.

various issues pending for management's attention , discuss the best possible solution for this crisis and the immediate steps to be taken to diffuse the crisis. What steps would you suggest to improve the working atmosphere at office What steps should the company take to adopt a contemporary HRM framework to mange its workforce more efficiently What are the areas for skill mapping or creating a resourceful skill inventory Elucidate the key parameters for performance measuring

HRD / VIGILANCE MODEL QUESTIONS SET A 1. As per Leave Rules, two types of leave from amongst the following cannot be availed in conjunction a. Earned leave with Casual leave b. Earned leave with Sick leave c. Casual leave with Sick leave d. Quarantine leave with Sick leave As per LTS rules for officers in Scale IV, where the entitlement is by air and the employee has traveled partly by air and partly by rail in AC Ist class total travel not exceeding 1900 kms, what will be the basis of reimbursement a. Full reimbursement by air for 1900 Kms b. Full reimbursement by rail AC II tier fare for 1900 Kms c. Full reimbursement by rail AC Ist Class fare for 1900 Kms d. Prorata reimbursement by air on actuals and balance on AC II tier basis for rail journey. If the services of a person who has opted for pension, is terminated by way of imposing a major penalty, which of the following benefits are not payable? a. Provident Fund b. Voluntary Provident Fund c. Pension d. None of the above Qualification pay is granted for the following qualifications in case of supervisory and clerical staff a. A.I.I.I. b. F.I.I.I. c. M.B.A d. All of the above Hill Station Allowance is payable for the cities having mean sea level above a. 1000 mts b. 1200 mts c. 1500 mts d. 2000 mts In Encashment of earned leave, which of the following allowance is not paid a. Basic Pay b. Dearness Allowance c. HRA d. Conveyance Allowance
481

8. 9.

2.

10. Detail the necessary steps for collaboration, team work and relationship building in the working environment 11. Elucidate how to enhance verbal and non-verbal communication at work 12. Define steps for a middle level line manager for internal crisis management 3. 13. Types of skill enhancement training that could be given to junior and senior managers for role development in our industry 14. Give salient points on workforce planning for a general insurance company 15. How do we map the workforce for effective succession and career planning 16. Mention strategic importance of rewards and incentives to achieve corporate goals 17. Ideal leadership qualities of a senior manager in the present work environment 5. 18. Give 10 types of authorized absence of duty ( special causes) 19. Name at least 10 types of allowances payable to employees ( all classes) 20. Give exclusions to the Medical Benefit Scheme for employees 21. List the payable benefits under the different tables of the Group Mediclaim policy 6. 4.

480

7.

Which of the following does not constitute misconduct under CDA rules? a. Sleeping in office during office hours b. Taking bribes c. Accepting gifts valued Rs. 250/- at a time. d. Accepting a watch valued at Rs. 1000/Which of the following does not constitute a major penalty under CDA rules? a. Termination from service b. Withholding of one increment permanently c. Withholding of one increment for 2 years d. Compulsory Retirement Which one of the following is not a minor penalty under CDA rules? a. Censure b. Withholding one increment for 6 months c. Reduction in time scale d. Recovery of pecuniary loss caused to company from salary

14. Uniform is provided to a. Sweeper and sub staff b. Clerical employees c. Part-time sweepers d. Casual Labourers 15. Which of the following does not constitute misconduct under CDA rules? a. Habitual late or irregular attendance b. Absence from employee's appointed place of work without permission or sufficient cause. c. Commission of any act amounting to criminal offence involving moral turpitude d. Absence from duty for one day without permission. 16. General Insurance (conduct, discipline & appeal) rules were frame in which year. a. 1973 b. 1975 c. 1976 d. 1978 17. CDA Rules are not applicable to a. Class I officers b. Class III & IV Employees c. Class I Officers on deputation from Govt. Sector d. P.T.S. 18. Which of the following Act of Omission & Commission shall not be treated as misconduct? a. Taking/ Giving bribes b. Sleeping on duty c. Gambling within office d. Occasional late attendance 19. An employee may be suspended under the following circumstances except a. Contemplating Disciplinary Proceeding b. Criminal offence under investigation/ ___ c. Detained in custody for more than 48 hours d. Smoking in office premises
483

8.

9.

10. Dismissal from services order can be issued by a. Officer in charge b. Competent Authority for imposing major penalty c. Appellate Authority d. The Appointing Authority 11. Leased Accommodation for a Scale III officer in Metro cities is allowed upto a. 2000 b. 3000 c. 4000 d. (Answer to be filled) 12. An employee under suspension is entitled to a. Living allowance b. Subsistence Allowance c. Dearness Allowance d. Family Allowance 13. Briefcase allowance is made for officers once after a period of a. 2 years b. 3 years c. 4 years d. 5 years
482

20. The following are treated as Minor Penalties except a. Suspension from duty b. Censure c. Withholding one or more increments for a specified period d. Recovery from pay the pecuniary loss to the company 21. Leave rules permit leave on following grounds, except one a. C.L. b. E.L. c. S.L. d. Paternity leave 22. Special leave is a. Home Guard duties b. Appearing in Ins. Institute Exams c. Trade Union Activities d. All three above 23. Casual Leave admissibility per Annum is a. 15 days b. 22 days c. 12 days d. 10 days 24. Accrual of one day Earned Leave is based on duties spent on a. 10 days b. 15 days c. 11 days d. 14 days 25. Types of leave which can't be given in conjunction with a. C.L. & Exam b. E.L. & S.L. c. E.L. & Quarantine d. C.L. & S.L. 26. Leave Travel Subsidy can be availed for a block of a. One year b. Three years c. Four year d. Two years
484

27. LTS for Class I Officers can be granted for a block of two years on a. Even to odd years b. Odd to even years c. Both are correct d. Both are incorrect 28. LTS for Class III & IV employees can be granted for a block of two years on a. Even to odd years b. Odd to even years c. Both are correct d. Both are incorrect 29. Encashment of E.L. for officers can be granted for 15 days once in a block of two years a. Even to add years b. Odd to even years c. Both are correct d. Both are incorrect 30. D.H.A. permissible under T.E. rules for a period less than six hours is a. 30% b. 40% c. 60% d. 20% 31. C.V.C. guidelines stipulate Bids for acquiring office premises on lease/ purchase as under: a. Technical Bid b. Financial Bid c. Preliminary Scrutiny d. Both (a) & (b) 32. Carpet area prescribed for Divisional office is a. 3000 sq. ft. + 10% b. 2500 sq. ft. + 10% c. 3500 sq. ft. + 10% d. 2000 sq. ft. + 10% 33. Carpet area prescribed for Branch office is a. 1000 sq. ft. + 10% Addl b. 1500 sq. ft. + 10% c. 850 sq. ft. + 10% d. 1200 sq. ft. + 10%
485

34. Regional office premises committee constitution requires the following minimum members to complete the quorum a. Officer from Estate Dept., officer from A/cs Dept., officer from Technical Dept. b. Officer from Estate Dept., officer from IA & ID Dept., officer from Technical Dept. c. Officer from A/cs Dept., officer from Technical Dept., officer from Personnel Dept. d. All the above three options 35. For a work/ purchase valued at more Rs. 2 lacs can be done by calling a. 5 quotations b. 3 quotations c. Sealed tenders d. Open tenders 36. Officers on transfer are permitted to have residential accommodation except a. Company owned accommodation b. Company leased accommodation c. Self leased accommodation d. Employee's own property on self leasing 37. Purchase of briefcase to officers is reimbursed on the expiry of a. 2 years b. 3 years c. 4 years d. 5 years 38. In the following sequence for acquiring company property, tick the odd choice a. Agreement for sale b. Sale deed c. Mutation d. Registration of property 39. Domestic enquiry under vigilance comprises of all except one a. Preliminary learning b. Regular learning c. Defense proceedings d. Enquiry by C
486

SELF ASSESMENT QUESTIONS 1. Source and Designation of CVOS in PSU Insurance Companies are a) From Ministry and equivalent to DGM b) From LIC and equivalent to GM c) From other PSU Insurance Companies and equivalent to DGM d) From the same company 2. Vigilance department works in close * with a) Institute of Chartered Accountants of India b) Central Vigilance Commission c) Central Bureau of Investigation d) Ministry of Finance and Economic Affairs 3. CDA Rules of General Insurance stands for a) Central Department of Appraisal Rules b) Character Discipline * Rules c) Conduct Discipline Approval Rules d) Confidential Departmental * Rules 4. Officer depending on behalf of the company in department enquiry is a) Presiding officer b) Enquiry officer c) Defending officer d) Defaulting officer 5. In departmental enquiry and after major penalty is imposed, the defaulting officer may go for memorial to a) TG overseeing GM b) CVO c) CMD of the company d) President of India 6. A suspended employee is eligible for * allow maximum up to what percentage of his salary a) 25% b) 50%
487

c) d)

75% 100%

b) c) d)

Misappropriation Wrongful loss to All of the above

7. Casual leaves cannot be tagged up with a) Holidays b) Privileged Leaves c) Sick Leaves d) Examination Leaves 8. Maximum how may days CLs can be taken at a time. a) 4 b) 5 c) 6 d) 7 9. Who is not free from CDA rules in our company a) CMD b) GM c) Non Executive Director d) 10. For which benefit it is * to take leave a) Leave travel subsidy b) Leave encashment c) Transfer benefit d) Hospitalization Expenses Reimbursement 11. If one employee is having only 25 days of PL in his account. Maximum how many days leave encashment he can avail a) 20 b) 15 c) 10 d) Nil 12. Under Preventing Corruption Act, a servant can be prosecuted for a) Wrongful gain
488

13. Perquisite Tax is not applicable in a) Reimbursement of fuel for the use of vehicle on company's loan b) on a leased accommodation c) Subsidized housing loans d) Leave travel subsidy 14. If one employee received a gift item, above what price of the gift he is required to intimate company a) Rs. 500/b) Rs. 1500/c) Rs. 2500/d) Rs. 5000/15. On promotion to which cadre one officer will be on probation a) AM b) Dy. Manager c) Manager d) CMD 16. In which cadre delegation of formal authority is not required a) Manager b) Dy. Manager c) AM d) Vigilance Officer 17. For suspending an employee which condition is to be fulfilled a) He is charge sheeted by company b) He is arrested by police c) He is under * for more than 48 hours d) He is convicted by a Court 18. Which cadre is outside the purview of Transfer of Morbidity Policy a) AM b) Dy. Manager
489

c) d)

Manager CM

19. For entitlement to avail retirement pension minimum how many years service has to be completed a) 10 years b) 15 years c) 20 years d) 25 years 20. For entitlement of benefit of Gratuity minimum how many years of service has to be completed a) 10 years b) 15 years c) 20 years d) 30 years 21. Maximum how many days PL can be encashed at the time of retirement a) 6 months b) 8 months c) 10 months d) No limit 22. Notional extension of service for compensation of pension for VRS optees under Pension Schemes a) 5 years b) Maximum 5 years c) Maximum 7 years d) 10 years 23. Which of there is not a minor penalty a) Sensor b) With holding one or more increment for a specified period c) With holding one or more increment permanently d) Recovering from pay or the amount as may be due to him of the while or part of precautionary loss caused.
490

24. Which one of the following cities, does not fall under the category A for travel rules a) Mumbai b) New Delhi c) Bangalore d) Patna 25. Which * is not a dependent on the employee for the consideration of Leave Travel Subsidy a) Son below 18 years b) Father above 60 years earns below Rs. 1000/c) Daughter unmarried d) Widowed sister HR PERSONNEL AND VIGILANCE TRADE QUESTIONS SET B 1. Which is correct sequence as per CDA Rules? a. Investigation-Domestic Enquiry-Charge Sheet-Office order b. Investigation- Charge Sheet-Domestic Enquiry-order c. Domestic Enquiry- Investigation- order-Charge Sheet d. Domestic Enquiry-Charge Sheet- Investigation-order Penalties for leakage of confidential electronic data of clients without the knowledge of the insured (by employees or otherwise) can be made a subject matter of insurance under a. Electronic Equipments policy b. Errors and omissions policy c. Cyber liability insurance policy d. Directors and officers liability policy What action is appropriate in respect of an employee going abroad with sanctioned EL for 90 days, thereafter staying there itself, and not returned? a. To wait till his arrival, take leave application and ratify the leave b. To recall him by issuing letters, telegram to his last known address. c. To issue him show cause notice to his last known address and wait for reply d. Issue show cause notice, initiate enquiry proceeding as per CDA rules and terminate him from the services.
491

2.

3.

4.

What procedure is to be followed for acquiring office premises on rent as per CVC Guidelines? a. Advertisement in the news paper b. Placing the advertisement on the website of the company c. Putting the advertisement on the notice board of the company d. All the above An employee placed under suspension will not get subsistence allowance as mentioned below, under any circumstances a. 25% b. 50% c. 75% d. None of the above What is not taken into consideration while calculating the subsistence allowance? a. CCA b. HRA c. Hill Station Allowance d. None of the above Statement I Major penalty may be imposed on an employee against whom a major penalty charge sheet has been issued. Statement II Minor penalty may be imposed on an employee against whom a minor penalty charge sheet has been issued. Statement III Minor penalty may be imposed on an employee against whom a major penalty charge sheet has been issued Statement IV Major penalty may be imposed on an employee against whom a minor penalty charge sheet has been issued Encircle the most appropriate option a. Only statements I,II,III are correct b. Only statements I & II are correct c. Only statements II, III, IV are correct d. All statements are correct An assistant can be placed under suspension by a. Head of the department b. Disciplinary Authority
492

c. d. 9.

Appointing Authority All the above

The authority competent to impose the penalty of reduction to a lower service a. b. c. d. Will always be competent to impose the penalty of removal from service Will always be competent to impose the penalty of Dismissal Both a & b Neither A nor B

5.

10. Statement I In case a domestic enquiry is instituted against an employee, the competent authority may himself conduct the inquiry proceedings Statement II In case a domestic enquiry is instituted against an employee, the Inquiry officer may conduct the enquiry proceedings a. b. c. d. Only statement I is correct Only statement II is correct Both the statements are correct Both the statements are incorrect

6.

7.

11. Which is the most appropriate in respect of cases pertaining to public sector general insurance companies? a. b. c. d. Only an officer of the insurance company can conduct domestic enquiry proceedings A public servant may conduct domestic enquiry proceedings Only a Central Government Officer can conduct domestic enquiry proceedings None of the above

12. As per general insurance employees' pension scheme, no departmental proceedings, if not initiated while the employee was in service, shall be instituted in respect of a cause of action which arose or in respect of an event which took place more than ___________ before such institution a. b. c. d. One year Two years Three years Four years
493

8.

13. In case CBI seeks sanction for prosecution of an employee of a public sector general insurance company and the competent authority does not intend to accord sanction, which would be the most appropriate option a. CBI would initiate action against the Competent Authority b. The CVO of the company will resolve the dispute between the CBI and the Competent Authority by taking final decision regarding the course of action c. The matter will be reported to CVC and the competent authority will take further action after considering CVC's advice d. None of the above 14. Chief Technical Examiner's Organization functions under the administrative control of a. CPWD b. GIPSA c. IRDA d. CVC 15. Human Resource Management does not include a. Job analysis b. Planning labor needs and recruiting suitable candidates c. orienting and training new employees d. managing wages and salaries 16. HR Management practices are followed by managers because they don't want 1. To hire the wrong person for the job 2. To experience high turnover on costing 3. To find employees not doing their best 4. To allow lack of training to undermine the Organization's effectiveness a. Only 1 & 2 b. Only 3&4 c. All are wrong d. All are correct 17. Many successful organizations do use HR practices to help employees become more productive. These practices include: 1. leadership training 2. technical training
494

3. 4.

mentoring programs career workshops a. only 1 & 2 b. Only 3&4 c. All are wrong d. All are correct

18. Pick out the right statement 1. HR Manager are generally staff managers 2. The managers for production and sales are generally line managers 3. HR managers have no authority and responsibility for advising the production managers in areas such as recruiting, hiring and compensation 4. Managers may move from line to staff positions and back over the course of their careers a. All are correct b. Only 3 are incorrect c. All are incorrect d. Only 1 & 4 are correct 19. Which one of the following is inappropriate for any big, progressive, growing HR proactive organization? a. People and product oriented systems b. Organization creating value for shareholders c. Organization creating wealth for Board of Directors d. Designations/Job title based on Hierarchy rather than function of position 20. Which of the following is not a characteristic feature of an effective manager in a MNC a. Courage, Solid nerves and capacity to handle stress b. Ability to learn, open mindedness c. National experience and understanding of markets d. The way the organization treats its employees 21. Which of the following is appropriate response for secret of success of a business organization? a. The profit made by the organization b. Efficiency and Effectiveness with which business is being run
495

c. d.

The way recruitment is carried out in an organization The way the organization treats its employees

SAMPLE BULLET QUESTIONS Q1. Suggest ways to change Conflict into Collaboration. Try hard to understand the other persons points of view Listen reflectively to what they are saying Look for common ground or vision Acknowledge their expertise Focus on interests rather than positions Separate the people from the problem Look for solutions that take into account needs of all parties Appreciate that there will be differences Make Regulatory and Institutional frameworks transparent for all to acknowledge how these support or hinder collaboration. Identify and propogate the skills necessary for collaborative environment, eg.negotiation/ interpersonal skills. Be patient, since it takes time to develop trust and relationships. Q 2. Identify 5 advantages and 5 Pitfalls in Auto-Tieups. ADVANTAGES ; One point purchase and single window service for the customer Huge premiums available for Insurers from a single source Opportunity for cross-selling of other products Cashless service at dealerpoints throughout the Country A B C D B C D Standardisation of various processes of delivery of Insurance services, and maintainance of Quality. PITFALLS : Sometimes the greater payouts to dealers at the cost of policyholders is seen as a bane. Tieups appear to be more beneficial to dealer than customer Repair costs are fixed and often on higher sideless room for negotiation Conflicts in interpretation of policy conditions may create dispute affecting customer Cover is often seen as a maintenance cover by customer. Q 3. What is Multitasking and how is it relevant to our Industry ? Multitasking refers to doing more than one thing at a time. It is a word coined to denote various functions that a system/computer can perform.
497

22. Executive turn over is increasing at a higher rate than the sales turn over. Which one of the following is not a relevant reasons a. Better prospects b. Bad Boss c. Organization Climate d. Health grounds 23. Choose the type of leave not available to PSU General Insurance employees a. Restricted Holiday b. Half day casual leave c. Trekking leave d. Study leave 24. Which one of the following is correct in respect of special sick leave due to major sickness a. 90 days in the entire period of service b. 120 days in the entire period of service c. 240 days in the entire period of service d. None of the above KEY HR & VIGILANCE MODEL QUESTIONS SET A 1. 2. 3. 4. 5. 6. 7. 8. A D C D A D C C 9. 10. 11. 12. 13. 14. 15. 16. C D D B B A D B 17. 18. 19. 20. 21. 22. 23. 24. C D D A D D C C 25. 26. 27. 28. 29. 30. 31. 32. D D B A A A D D 33. 34. 35. 36. 37. 38. 39.

KEY - HR PERSONNEL AND VIGILANCE TRADE QUESTIONS SET B 1 2 3 4 5 B C D D D 6 7 8 9 10 D A D D C 11 12 13 14 15 B D C D C 16 17 18 19 20 D D B C D 21 D 22 D 23 B 24 D

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Multitasking has become necessary in view of costly manpower and system driven packages In insurance, too, recruitment is limited and existing personnel are called upon to do different tasks Multitasking helps to reduce dependence on specific personnel, specialy in our Public Sectors where leaves are abundant. An officer who can do underwriting, claims as well as customer relations is an asset Multitasking skills allow an organization to downsize manpower requirements. In our industry, cadres like Dev Officer and RCs are run-off cadres and requires existing personnel to fill the gaps of their roles. It is necessary to impart regular training as well as motivation for persons to be adept at various functions. Insurers are aware of the compulsions and are providing thrust to training requirements of it's employees Overall objective is to bring seamless delivery services available to customers Business Process Reengineering includes establishment of Central Claim Processing Hubs. State some positive and negative points for such an initiative. Better and more optimum utilization of Human resources Focussed responsibilities and specialization Single window service for customers Uniformity in approach, as opposed to different systems in different operating offices More effective utilization of surveyors Elimination of multiple hierarchy in claim settlement Greater perceived objectivity in claim settlement Hubs are hampered if proper Infrastructure is not provided Systems need to be upgraded so that time lag in transactions between Operating Offices and Hub is minimized. Though there is uniformity, sometimes the extra emphasis required for very important clients is not forthcoming, as would be in operating offices. Q 5. Role and types of Communication within an Organisation.
498

Communication is the sharing of information for a variety of purposes including informing, persuading, motivating or influencing. Communication can be 'Formal' and 'Informal' Formal communication is organized and managed information that is shared with relevant individuals to secure coordinated action. Formal Communication channels are dependent on individuals role in the organization. Typically formal communication flows downward in the form of 'instuctions or directives' and Upward in the form of feedback and reports, usually in set formats. Formal Communication is well established and planned, and needs to clear for them to be actionable by the implementers. Informal Communication, on the other hand, caters to satisfy social and emotional needs within the Work environment These are not necessarily based on one's 'position ' in the Organisation. Informal communication often helps to spread information quickly and may help in reducing stress and anxiety. But such 'grapevine' should be effectively managed to ensure that the wrong message is not spread. Discuss the types of Insurance frauds and suggest some measures to tackle them. Any deliberate deception perpetrated against or by Insurances Cos to make unwarranted financial gain, can be termed as an Insurance fraud. Deliberate attempt to 'stage' or invent an accident ,injury, theft, arson etc, to claim under policies is termed a Hard Fraud, whereas Soft Frauds , often called Opportunity Fraud, is where genuine claims are exaggerated, or even when false declarations are given whilst taking the cover. We can take measures like : Improving underwriting processes by online record keeping of proposals Improving claim settlement procedures to make it system based Strict laws to tackle Insurance Frauds Recording all crimes with NCRB Sharing of information amongst all insurers about incidence and claim ratios Maintaining detailed customer profiles viz KYCs, their businesses, products etc. Implementing policies of disclosure and transparency Encouraging proper Audit and internal checks and controls
499

Q 4.

Q 6.

Assume that your organization is considering Lateral Entry of personnel. How will this impact the Co, and what precautions should Management take for smooth implementation ? All organizations go through the phases of life cycle such as infancy, growth, maturity and decay. In order to keep he organization vibrant the Management needs to constantly innovate, reinvent and reposition itself to remain relevant to changing environment Similarly, the organization needs to develop new ideas with talent within the industry and also from collateral industries Lateral entry will enable infusion of new blood into the organization, which could lead to 'Out of the Box' thoughts and ideas. New entrants can supplement the in-house talent of professionals within, by bringing in their experience from respective fields. It could also result in planning and implementing new strategies without carrying the biased insurance perspective Existing employees will be disgruntled and thus have to be nurtured, and the need for lateral entry has to be communicated properly, since it is a very delicate issue. Promotions within the existing ranks should be more rapid , so that the sense of alienation is not felt. Lateral entry should be strictly need-based and restricted to very specific professionals with wide experience, and whose skills can be employed in specialized areas of Insurance. Lateral entrants should be assigned to tasks that are not being currently done by existing personnel, more as a support structure in the day to-day working. Discuss the RTI Act as one of the means of improving Insurance Services. Give some examples The RTI Act is designed to promote transparency in governance and administration and to keep discretion in check Over the years Insurers have taken unilateral decisions of various sub processes of insurance delivery, viz claim amount, proposals, requirements for claim etc. Through RTI, policyholders are empowered to seek information for processes, which can lead to standardization and uniformity in delivery. The fear also induces insurers to maintain records of deviations and
500

Q 7.

discretion, and exercise caution for decisions Perception of customer rather than actual value of services delivered is important, and the Act serves to reinforce this. Insurers have to be wary, however that immaterial information which is often sought for by the complainant is tactfully or through Act provisions, declined to them Some examples of using RTI to get desired services : Duty to provide proposal as part of policy document Duty to settle claims within a specified period of receipt of documents Identifying common set of papers required for processing claims, in one go. Buden of paying interest above market rate for delayed claim settlements Q9. It is often said that, for the customer, the Insurance Ombudsman is a better platform to handle grievances than a Consumer Court. Discuss. All Public service organizations now have the Ombudsman as a system of grievance redressal. The Ombudsman negates the necessity of going to Court There is no requirement of advocates or Court fees It is not necessary to follow the strict law of evidence or legal procedure Only one hearing can be sufficient to adjudicate the case, so the time lag is not there. Decision of Ombudsman is binding on Insurer, It is not binding on the Claimant who has recourse to other Forums The Ombudsman is usually one who is acquainted with the Industry Practices and therefore has a better understanding of both points of view. It is seen to be a more acceptable forum to the insurers, who are then likely to take a more sympathetic view of the issue in dispute Ombudsman often gives both the insurer and claimant reasonable time to sort out the issue, leading to a more amicable settlement of the dispute. Q 10. You are designing a Feedback-cum-Performance Appraisal Form for Motor surveyors. List out 5 points you wish the insured to complete, and 5 for the Dept. Insureds questions : Did the surveyor inform you before proceeding to the workshop ? :Yes/No Are you aware of the settlement discussions held with the repairer? : Yes/No Was the surveyor courteous in his behaviour ? : Very/ Moderately so/ Not
501

Q 8.

curteous Did the surveyor bring to your notice all the formalities required for assessment at one go? : Yes/No Any other information you would like to place for improvement Deptt observations : Was survey carried out in time after information by the Co : Yes, within ___(hours). / No, after ___ (days) Did the surveyor give his preliminary assessment within 24 hours?: Yes / No No of days taken for submission of report : ____ days Quality of assessment : Excellent / Good /Fair / Poor Whether all relevant documents were attached with report : Yes / No, but reasons provided / No. Q 11. Utilisation of In-House surveyors for losses below 20000/- has yielded mixed responses and experience for the Organisation. Discuss some of them. In house surveys were mostly done for small motor losses and property claims eg Householders Policy By and large, the concept was based on the premise that greater care would be taken for keeping Cos interest in mind Also the large pool of Human resources was being put to alternative use Experience shows that claims assessments were curtailed and amicably so. Expense on Survey fees was a major saving for the Organisation However, not all In-House surveyors are technically qualifiedselection issues remain Sometimes personal interest clashes were evident Absence from office during working hours created a problem Adjusting time for surveys often created delays, much to the insured's dissatisfaction Conveyance paid to In-House surveyors created heartburn amongst other colleagues , in view of quantum of work given to In-house personnel

502