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INSUkANCL
JA1 IS INSUkANCL ?
W lnsurance lndemnlfles AsseLs lncome Lvery
AsseL has a value and generaLes lncome Lo lLs
Cwner 1here ls a normally expecLed LlfeLlme for
Lhe AsseL durlng whlch Llme lL ls expecLed Lo
perform lf Lhe AsseL geLs losL earller belng
desLroyed or made nonfuncLlonal Lhrough an
AccldenL or oLher unforLunaLe evenL Lhe Cwner ls
re[udlced lnsurance helps Lo reduce
CCnSLCuLnCLS of such Adverse ClrcumsLances
whlch are called 8lsks
JA1 IS INSUkANCL (Contd)
W lnsurance ls Lhe SClLnCL Cl S8LAulnC Cl
1PL 8lSk lL ls Lhe sysLem of spreadlng Lhe
losses of an lndlvldual over a group of
lndlvlduals
W lnsurance ls a MeLhod of sharlng of
flnanclal losses of a lLW from a CCMMCn
lunu formed ouL of ConLrlbuLlon of Lhe
MAn? who are equally exposed Lo Lhe
same loss
JA1 IS INSUkANCL Contd
W WhaL ls unCL81Aln for an lndlvldual becomes
a CL81Aln1? for a Croup 1hls ls Lhe basls of
All lnsurance CperaLlons 1hus lnSu8AnCL
CCnvL81S unCL81Aln1? 1C CL81Aln1?
1L CCNCL1 CI kISk
W 1he ob[ecL of lnsurance ls Lo provlde
proLecLlon agalnsL llnanclal Losses caused by
lorLulLous LvenLs 1hus lnsurance ls a
proLecLlon agalnsL Lhe Consequences of 8lSk
W 8lSk ls deflned for lnsurance urpose as Lhe
unCL81Aln1? Cl A llnAnClAL LCSS
1L CCNCL1 CI kISk
W LlemenL of 8lSk ls lnherenL ln Llfe 8lsk
Means LhaL Lhere ls a posslblllLy of loss or
damage
W 1o Lhe common Man 8lsk means Lxposure
Lo uanger
W ln lnsurance Lhe word 8lsk may be used
lnLerchangeably wlLh erllwhlch means Lhe
LvenL or Cccurrence whlch CAuSLS Lhe
Loss
1L CCNCL1 CI kISk
W ln lnsurance Lhe word 8lsk may also refer Lo
Lhe roperLy or Sub[ecL MaLLer of lnsurance
W 1he Sub[ecL MaLLer of lnsurance can be Llfe
Llmb roperLy lnLeresL LlablllLy
UkCSL AND NLLD CI INSUkANCL
W 1he roblem of 8lsk ln Lconomlc and
Commerclal AcLlvlLles can be dealL wlLh ln
lCu8 WA?S
1 8lsk Avoldance
2 8lsk 8eLenLlon
3 8lsk 1ransfer
4 8lsk MlnlmlsaLlon
lnsurance ls CnL of Lhe mosL lmporL meLhod
of 8lsk 1ransfer
UkCSL AND NLLD CI INSUkANCL
W lnsurance spreads Lhe 8lsk among Lhe
CommunlLy and Lhe llkely 8lg lmpacL on CnL ls
reduced Lo Smaller Manageable lmpacLs on
ALL 1hus lnsurance acLs as a SPCCk
A8SC88L8
W A 8lSk Cl 18AuL ls lnsurable buL a 1rade 8lsk
ls noL lnsurable ln a 8lsk of 1rade Lhere can
only be a LCSS whereas ln a 1rade 8lsk Lhere
can be LCSS C8 CAln 8lsks of 1rade are called
u8L 8lSkS
UkCSL AND NLLD CI INSUkANCL
W Cnly Lconomlc or llnanclal Losses can be
compensaLed by lnsurance
W 1he 8uslness of lnsurance ls Lhe oollng of
8lSk and 8LSCu8CLS lL ls a Lechnlque
whlch provldes for collecLlon of small
amounLs of 8LMluM from many
lndlvlduals and llrms ouL of whlch losses
suffered by Lhe lLW are pald lnsurers acL
as 18uS1LLS of Lhe Common ool
INSUkANCL AC1S AS A SCCIAL SLCUkI1
W Soclal Shock Absorber
W Solarlum lund for PlL 8un vlcLlms of 8oad
AccldenLs
W ASS (ersonal AccldenL Soclal SecurlLy)
scheme launched by Lhe CovL of lndla
W Crop lnsurance Schemes and oLher 8ural
lnsurance covers for Lhe 8ural Masses
PURPOSE AND NEED OF INSURANCE
INSUkANCL CCN1kI8U1LS 1C
NA1ICNAL JLAL1
W lL conLrlbuLes Lo a vlgorous Lconomy and
naLlonal roducLlvlLy LlC ClC funds
formed ouL of Lhe savlngs of eople are
channelled lnLo lnvesLmenLs for Lconomlc
CrowLh PuuCC lu8l llCl use funds
slphoned from lnsurance Money for lendlng
Lo LnLrepreneurs
PURPOSE AND NEED OF INSURANCE
W lnSu8AnCL 8C1LC1S 1PL CAl1AL ln
lnuuS18? lL helps release Lhe same for
furLher Lxpanslon
W lnsurance ls Lhe PAnu MAuL Lo Commerce
and 1rade
PURPOSE AND NEED OF INSURANCE
1PLC8? Anu 8AC1lCL Cl 8A1lnC
W 8A1L Cl 8LMluM WlLL 8L ul8LC1L?
8CC81lCnAL 1C 1PL uLC8LL Cl PAZA8u
W 1C ASSLSS vA8lA1lCnS ln 1PL uLC8LL Cl
PAZA8u8lSkS MuS1 8L CLASSlllLu ln1C
PCMCCLnLCuS CA1LCC8lLS Wl1P SlMlLA8l1? Cl
LxCSu8L
W ln LACP Su8CLASSAS1 LCSS LxL8lLnCL WlLL 8L
1PL C8l1L8lA ALlLu 1C uLCluL 1PL 8LMluM
8A1L
uLC8LL Cl PAZA8u
W C8LA1L8 1PL 8lSkPlCPL8 WlLL 8L 1PL 8LMluM
8A1L
W 1PL MC8L 8C8A8LL 1PL LCSS Anu 1PL MC8L
SLvL8L l1 lS LlkLL? 1C 8L1PL PlCPL8 WlLL 8L 1PL
8LMluM 8A1L
W LgPAZA8uCuS CCCuS Anu PAZA8uCuS
8ClLSSlCnS WlLL A118AC1 A PlCPL8 8LMluM AS
CCMA8Lu 1C nCnPAZA8uCuS CCCuS C8
8ClLSSlCnS
CLASSlllCA1lCn Cl 8lSkS
W 8A1LS Cl 8LMluM SPCuLu 8L LCul1A8LL Anu
lAl8 AS 8L1WLLn ulllL8Ln1 lnulvluuAL lnSu8LuS
W PLnCLA S?S1LM Cl CLASSlllCA1lCn Cl 8lSkS ln1C
88CAu CA1LCC8lLS lS AuC1Lu
W 1PLSL MA? 8L lu81PL8 CLASSllLu ln1C C8CuS
Anu Su8C8CuS uLLnulnC uCn 1PL PAZA8uS
lnvCLvLu Anu 1PLl8 SlMlLA8l1?
W LgCLASSlllCA1lCn ln MC1C8/ll8L/WC
AS1 LCSS LxL8lLnCL
W ln LACP Su8C8Cu1PL AS1 LCSS LxL8lLnCL lS WC8kLu
Cu1 Anu lu1u8L lC8LCAS1S A8L MAuL Cn 1PlS 8ASlS
W lC8MuLA lC8 u8L 8LMluM
L x100 LSuM 1C1AL Cl LCSSLS