General Insurance

What is insurance?

We face a lot of risks in our daily lives. Some of these lead to financial losses. Insurance is a way of
protecting against these financial losses. For a payment (premium), an insurance company will take the
responsibility of compensating your financial losses.

What is general insurance?

Insuring anything other than human life is called general insurance. Examples are insuring property
like house and belongings against fire and theft or vehicles against accidental damage or theft. Injury
due to accident or hospitalisation for illness and surgery can also be insured. Your liabilities to others
arising out of the law can also be insured and is compulsory in some cases like motor third party
insurance.

What kinds of policies are there?

Most general insurance policies are annual – that is, they last for one year. Some policies are given for
longer periods – like fire insurance for residences – and some for shorter periods – like insurance for
goods transportation or for emergency medical treatment during foreign travel.

What kinds of policies are there?

Most general insurance policies are annual – that is, they last for one year. Some policies are given for
longer periods – like fire insurance for residences – and some for shorter periods – like insurance for
goods transportation or for emergency medical treatment during foreign travel.
A dedication to
Filipino
entrepreneurs...
Servicing
WORLDWIDE.
Romina Credit Collection and Documentation Services: Contact No. 632-4806926/ Telefax 632-
8370132 CP No. 63-9195720251

Office Address: 3rd Flr., Romina Business Center, Bonifacio Ave., B54 L33, UB. Taguig City.

LICENSE NO. Insurance Commission 125227- non-life

DTI No.00089190

EMAIL US: rominainsuranceagency@gmail.com

SKYPE : frederick.deldacan
YM Accnt: rominainsuranceagency

CHARACTERISTICS OF INSURANCE
September 17, 2008
CHARACTERISTICS OF INSURANCE:
 1. AS A RISK DISTRIBUTING DEVICE: The device of insurance serves to distribute the risk of
economic loss among as many as possible of those who are subject to the same kind of risk. By paying
a pre-determined amount into a general fund out of which payment will be made or economic loss of a
defined type, each member constributes to a small degree toward compensation for losses suffered by
any member of the group. This broad sharing of economic risk is the principle of risk-distribution.
2. CONTRACT OF ADHESION OR FINE PRINT RULE: Insurance is contract of adhesion
considering that most of the terms of the contract do not result from mutual negotiations between the
parties as they are prescribed by the insurer in printed form to which the insured may “adhere” if he
chooses but he cannot change. In case of doubt, the contract shall be interpreted strictly against the
insurer znd liberally in favor of the insured.
3. ALEATORY: The of the insurer to pay the proceeds of the insurance arises only upon the happening
of an event which is uncertain, or which is to occur at an indeterminate time.
4. CONTRACT OF INDEMNITY: The contract of insurance is a contract of indemnity. It is the basis
of all the property insurance. It means that the insured who has insurable interest over a property is
only entitle to recover the amount of actual loss sustained and the burden is upon him to establish the
amount of actual loss
a. Applicable only to property insurance except creditor insuring the life of his debtor.
b. Life insurance is not a contract of indemnity.
c. Insurance contract is not a wagering contracts.
5. UBERRIMAE FIDES CONTRACT: A contract requiring perfect good faith. It requires the parties
to the contract of insurance to disclose any material fact, which the applicant knows, or which he ought
to know.
6. PERSONAL CONTRACT: The law presumes that the insurer considered the personal
qualifications of the insured in approving th insurance application.
7. PRINCIPLE OF SUBROGATION: The principle of subrogation is a normal incident of indemnity
property insurance as a legal effect of payment. To inures to the insurer without formal assignment or
any express stipulation to that effect in the policy. Said right is not dependent nor grows out of any
privity of contract. Payment to the insured makes the insurer an assignee in equity.

needs:-

Buying the right policy is a crucial aspect of your insurance purchase. The most important question you must ask yourself is “Why
do I need general insurance?”

Purchasing an insurance policy involves premium payments on an annual or other periodic basis. It also involves efforts like
contacting insurance agents and studying the policies. It is necessary, therefore, that you decide beforehand if you need general
insurance. If the answer is yes, then the area for which you need a cover and the amount of insurance needs to be decided. Make
sure that the risk of loss involved is greater than the cost of insurance. If the premium payments are high compared to the risk of
loss involved, it may be advisable to just bear the risk! On the other hand, if the occurrence of any contingency would lead to a
heavy financial burden, it is wise to insure yourself against such contingency!
Whether you need insurance or not is unique to your circumstances. For example, for a homeowner living in a flood risk area,
purchasing a cover against floods would prove to be helpful. On the other hand, if you own a home where the risk of floods is
negligent, then it may not be necessary to obtain a cover. In such case you can just save your money on the premium!

In some countries like USA, auto insurance is compulsory under the law. In that case, the debate if you need insurance or not is
irrelevant. You must purchase auto insurance if you own a vehicle.

Do you think there is a foolproof method in which one can decide if he/she needs insurance? How do you decide if you need
general insurance and what is the amount of coverage you need? Do share your views with us.
SOME PLAYERS IN THE INDUSTRY:
Life Insurance
General Insurance
Life Insurance Corporation of India.
General Insurance Corporation of India.
1.
Oriental Insurance Company Ltd.
2.
New India Assurance Company Ltd.
3.
National Insurance Company Ltd.
4.

United India Insurance Company Ltd.

New Entrants
ICICI Prudential Life Insurance Ltd.
Bajaj Alliaz General Insurance Company Ltd.
Tata AIG Life Insurance Corporation Ltd.
Reliance General Insurance Company Ltd. ING Vysya Life Insurance Corporation Ltd. Tata AIG
General Insurance Company Ltd. Om Kotak Mahindra Life Insurance
Corporation Ltd.
Royal Sundaram Alliance Insurance Company
Ltd.
9
 4 I’s of Insurance Service

The 4 I’s refers to the different dimensions/ characteristics of any service. Unlike pure product, services
have its own characteristics and its related problems. So the service provider needs to deal with these
problems accordingly. The service provider has to design different strategies according the varying
feature of the service. These 4 I’s not only represent the characteristics of different services but also the
problems and advantages attached to it.
These 4 I’s can be broadly classified as:
•
Intangibility
•
Inconsistency
•
Inseparability
•
Inventory
•
Intangibility:
Insurance is a guarantee against risk and neither the risk nor the guarantee is tangible. Hence, insurance
rightly come under services, which are intangible. Efforts have been made by the insurance companies
to make insurance tangible to some extent by including letters and forms
10

Object 1

•
Inconsistency

Service quality is often inconsistent. This is because service personnel have different capabilities,
which vary in performance from day to day. This problem of inconsistency in service quality can be
reduced through standardization, training and mechanization.
•
Inseparability
Services are produced and consumed simultaneously. Consumers cannot and do not separate the
deliverer of the service from the service itself. Interaction between consumer and the service provider
varies based on whether consumer must be physically present to receive the service.
•
Inventory
No inventory can be maintained for services. Inventory carrying costs are more subjective and lead to
idle production capacity. When the service is available but there is no demand, cost rises as, cost of
paying the people and overhead remains constant even though the people are not required to provide
services due to lack of demand.
In the insurance sector however, commission is paid to the agents on each policy that they sell. Hence,
not much inventory cost is wasted on idle inventory. As the cost of agents is directly proportionate to
the policy sold

GENERAL INSURANCE

With the opening up of the insurance industry to the private sector, the need for a strong, independent
and autonomous Insurance Regulatory Authority was felt. As the enacting of legislation would have
taken time, the then Government constituted through a Government resolution an Interim Insurance
Regulatory Authority pending the enactment of a comprehensive legislation.
The Insurance Regulatory and Development Authority Act, 1999 is an act to provide for the
establishment of an Authority to protect the interests of holders of insurance policies, to regulate,
promote and ensure orderly growth of the insurance industry and for matters connected therewith or
incidental thereto and further to amend the Insurance Act, 1938, the Life Insurance Corporation Act,
1956 and the General insurance Business (Nationalization) Act, 1972 to end the monopoly of the Life
Insurance Corporation of India (for life insurance business) and General Insurance Corporation and its
subsidiaries (for general insurance business).
Definition and meaning:
1. INSURANCE:
Insurance is the means of managing risk and protection against financial loss
arising as a result of contingencies, which may or may not occur.
In other words, insurance is the act of providing assurance, against a possible loss, by entering into a
contract, with one who is willing to give assurance. Through this contract the person willing to give
assurance binds himself to make good such loss, if it occurs.
EXECUTIVE SUMMARY
Insurance is not the sale of products, but servicing customers.

It is a system, by which the losses suffered by a few are spread over many, Exposed to similar risks.
Insurance is a protection against financial loss arising: on the happening of an unexpected event.
Insurance companies collect premiums to provide for this protection. A loss is paid out of the premiums
collected from the insuring public and the Insurance Companies act as trustees to the amount collected.
The very fundamental principle of spreading of the risk is actually practiced by the insurance
companies by reinsuring the risks that they have insured. The opening up of the Insurance Sector to
Private Companies, has made available more products and world class service to Indian Customer.
This project has been made with an objective to give an insight into various facts
of General Insurance sector in India.
An attempt has been made to explain the apex body of General Insurance. i.e.
General Insurance Corporation of India, its structure, products and subsidiaries.
Also the review of latest entrants into insurance sector viz private players like TATA AIG General
Insurance Company, Reliance General Insurance Company limited, Bajaj Allianz General Insurance
Company, IFFCO Tokio General Insurance Company, Royal Sundaram General Insurance Company
limited and ICICI Lombard General Insurance Company have been described in brief, Due to the
growth in the technological sector of the country, the insurance companies have started utilizing these
technologies to it’s optimum level. A case study based on the devastating Mumbai floods on 26th July
2005 is been prepared and facts of the case are being listed along with the effect of the particular
situation on the General Insurance Companies is been justified.
ICICI

ICICI Ltd. was established in 1955 by the World Bank, the Government of India and the Indian
Industry, to promote industrial development of India by .Providing project and corporate finance to
Indian industry.
Since inception, ICICI has grown from a development bank to a financial conglomerate and has
become one of the largest public financial institutions in India. ICICI has thus far financed all the major
sectors of the economy, covering 6,848 companies and 16,851 projects.
Lombard
Lombard Canada Ltd., is a leading insurance management company responsible for providing
insurance management services for all of the Lombard group's commercial, personal, and specialized
insurance companies. Canadian owned and operated, Lombard Canada Ltd. has its head office in
Toronto and has annual sales in excess of$500 million and is a wholly owned subsidiary of Fairfax
Financial Holdings Limited (FFH on the TSF Lombard Canada Ltd. has achieved a reputation for
providing solid underwriting performance, diversified books of business and strong capital positions.
The Joint Venture
ICICI Lombard General Insurance Co will be headed by Mr. Sanjiv Kerkar. ICICI would hold about 74
percent stake, while Canadian insurer Lombard would hold the maximum permissible 26 percent and
commence business with a start-up capital ofRs.100 crore. ICICl Lombard has plans to sell covers to
the corporate clients of ICICl. St the same time it will sell property insurance for ICICI home loan
seekers and auto insurance for those availing of car finance

Products

The different types of General insurance products are listed below. While most policies are optional
that is at the behest of the insured, some are mandatory. The mandatory ones are:•
Motor Insurance
•
Public liability (for corporate class)
Other policies include:
Fire insurance
o
Building or flat
o
Furniture fixtures & other content’s
o
Loss of profit that is consequential loss
Miscellaneous insurance
o
Personal insurance
o
Burglary ,theft
o
Workmen’s compensation
o
Fidelity guarantee
o
Cancer

Marine Cargo Insurance

o
Cargo In Transit
o
Cargo Declaration Policy
Marine Hull Insurance

Inland vessels ocean going vessels, fishing & sailing vessels, freight at risk, construction of ships,
voyage insurance of various vessels, ship breaking , insurance Awaiting break up, insurance Oil &
energy in respect of onshore & offshore risks including construction risk.
Non – Traditional / Rural
o
Cattle / Hens
o
Crop
o
Water Pump for agriculture
o
Hut
o
Other Livestock
o
Motor Insurance
Motor insurance is mandatory for all types of vehicles in India. There are two types of
motor insurance viz