Insurance

The main objective of every insurance

contract is to give financial security and
protection to the insured from any
future uncertainties
Principles of Insurance
Principle of Uberrimae fidei (Utmost Good
Faith),
Principle of Insurable Interest,
Principle of Indemnity,
Principle of Contribution,
Principle of Subrogation,
Principle of Loss Minimization, and
Principle of Causa Proxima (Nearest Cause
life insurance policies
Whole life Policy
Limited payment life policy
Endowment policy
Double endowment policy
Joint Life Policy
With or without profit policy
Convertible whole life policy
Convertible term assurance policy
Fixed term (marriage) Endowment policy &
education annuity policy
Annuities

Insurance Agents
Insurance agents are insurance professionals
that serve as an intermediary between the
insurance company and the insured. As a
broad statement of law, an agents liability to
their customers is administrative. That is,
agents are only responsible for the timely and
accurate processing of forms, premiums, and
paperwork. Agents have no duty to conduct a
thorough examination of your business or to
make sure you have appropriate coverage.
Rather, it is your obligation to make sure you
have purchased needed coverage
Insurance Brokers
Insurance brokers can be best described as a kind of super-
independent agent. Brokers can offer a whole host of
insurance products for you to consider. Brokers are
required to have a brokers license which typically means
the broker will have more education or experience than an
agent.
Brokers also have a higher duty, in most states, to their
clients. Brokers have the duty to analyze a business and
secure correct and adequate coverage for the business.
This is a higher duty than the pure administrative duty of
the agent. However, this expertise comes at a price. Brokers
typically charge an administrative fee or premium
payments are higher when purchased through a broker
Reinsurance
The practice of insurers transferring portions of risk
portfolios to other parties by some form of agreement in
order to reduce the likelihood of having to pay a large
obligation resulting from an insurance claim. The intent of
reinsurance is for an insurance company to reduce the risks
associated with underwritten policies by spreading risks
across alternative institutions. Overall, the reinsurance
company receives pieces of a larger potential obligation in
exchange for some of the money the original insurer
received to accept the obligation.

The party that diversifies its insurance portfolio is known as
the ceding party. The party that accepts a portion of the
potential obligation in exchange for a share of the
insurance premium is known as the reinsurer
Types of reinsurance
Facultative Coverage

This type of policy protects an insurance
provider only for an individual, or a specified
risk, or contract. If there are several risks or
contracts that needed to be reinsured, each
one must be negotiated separately. The
reinsurer has all the right to accept or deny a
facultative reinsurance proposal.

Cont.
Reinsurance Treaty
Unlike a facultative policy, a treaty type of coverage is in effect for a
specified period of time, rather than on a per risk, or contract basis. For
the duration of the contract, the reinsurer agrees to cover all or a portion
of the risks that may be incurred by the insurance company being
covered.
Proportional Reinsurance

Under this type of coverage, the reinsurer will receive a prorated share of
the premiums of all the policies sold by the insurance company being
covered. Consequently, when claims are made, the reinsurer will also bear
a portion of the losses. The proportion of the premiums and losses that
will be shared by the reinsurer will be based on an agreed percentage. In a
proportional coverage, the reinsurance company will also reimburse the
insurance company for all processing, business acquisition and writing
costs. Also known as ceding commission, such costs may be paid to the
insurance company upfront.

Cont.
Non-proportional Reinsurance

In a non-proportional type of coverage, the reinsurer will only get involved
if the insurance companys losses exceed a specified amount, which is
referred to as priority or retention limit. Hence, the reinsurer does not
have a proportional share in the premiums and losses of the insurance
provider. The priority or retention limit may be based on a single type of
risk or an entire business category.

5. Excess-of-Loss Reinsurance

This is actually a form of non-proportional coverage. The reinsurer will
only cover the losses that exceed the insurance companys retained limit.
However, what makes this type of contract unique is that it is typically
applied to catastrophic events. It can cover the insurance company either
on a per occurrence basis or for all the cumulative losses within a
specified period.
REINSURANCE IN INDIA
Until GIC was notified as a National
Reinsurer,it was operating as a holding /
parentcompany of the 4 public sector
companies,controlling their reinsurance
programmes.GIC would receive 20%
obligatory cession of each policy written in
India. Each company is free to arrange its own
reinsurance program, which has to be submitted
to the IRDA 45 days before commencement.
Bancassurance
Bancassurance symbolises the convergence of
banking and insuranThe Insurance Act allows
only those companies registered under the
Companies Act to become corporate agents.
This gives the new generation and old private
sector banks a head start over Public sector
banks , which are technically not eligible to
sell risk productsce.