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1 MEANING OF INSURANCE
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property. Insurance is a collective bearing of risk. Insurance is a financial device to spread the risks and losses of few people among a large number of people, as people prefer small fixed liability instead of big uncertain and changing liability. Insurance can be defined as a legal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event, which may be certain or uncertain. The other party called insured pays in exchange a fixed sum known as premium. Insurance is desired to safeguard oneself and ones family against possible losses on account of risks and perils. It provides financial compensation for the losses suffered due to the happening of any unforeseen events.
There are number of other hot topics like penetration of Health Insurance, Rural marketing of insurance, new distribution channels, new product ranges, insurance brokers regulation, incentive scheme of development officers of LIC etc. So it offers lot of scope for studying the insurance industry. Right now the insurance industry has great opportunities in a country like India or China which huge population. Also the penetration of insurance in India is very low in both life and non-life segment so there is lot potential to be tapped.
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Utmost good faith Indemnity Subrogation Contribution Insurable Interest Proximate Cause
Indemnity
When the event that is insured against occurs, the Insured will be placed in the same monetary position that he/she occupied immediately before the happening of the event. In the event of a claim the insured must:
Prove that the event occurred Prove that a monetary loss has also occurred Transfer any rights that he/she may be having for the recovery from another source to the Insurer, if he/she is fully indemnified.
Subrogation
With regards to insurance, subrogation is a feature of principle of indemnity and therefore only applies to contracts of indemnity and hence does not apply
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to life assurance or personal accident policies. It aims to prevent an insured to recover more than the indemnity that he receives under his insurance (where that represents the full amount of his loss) and enables the insurer to recover or reduce the loss.
Contribution
The right of an insurer to call on other insurers similarly, but not necessarily equally, liable to the same insured to share the loss of an indemnity payment i.e. a travel policy might have an overlapping cover with the contents section of a household policy. The principle of contribution permits the insured to make a claim against one insurer. The insurer then has the right to call on any other insurers liable for the loss in order to share the claim settlement
Insurable Interest
If an insured wants to enforce an insurance contract before the Courts he must have an insurable interest in the subject matter of the insurance, which means that he benefits from its preservation and suffers from its loss. In case of nonmarine insurances, it is necessary for the insured to have insurable interest when the policy is taken out and also at the date of loss giving rise to a claim under the policy.
Proximate Cause
An insurer is liable to pay a claim under an insurance contract only if the loss that gave rise to the claim was proximately caused by an insured peril. This means that the loss should be directly credited to an insured peril without any break in the chain of causation.
Modern Insurance Illegal almost everywhere else in Europe, life insurance in England was vigorously promoted in the three decades following the Glorious Revolution of 1688. The type of insurance we see today owes it's roots to 17th century England. Lloyd's of London, or as they were known then, Lloyd's Coffee House, was the location where merchants, ship owners and underwriters motto discuss and transact business deals. While serving as a means of risk-avoidance, life insurance also appealed strongly to the gambling instincts of England's burgeoning middle class. Gambling was so rampant, in fact, that when newspapers published names of prominent people who were seriously ill, bets were placed at Lloyds on their anticipated dates of death. Reacting against such practices, 79 merchant underwriters broke away in 1769 and two years later formed a New Lloyds Coffee House that became known as the real Lloyds. Making wagers on people's deaths ceased in 1774 when parliament forbade the practice. Insurance moves to America The U.S. insurance industry was built on the British model. The year 1735saw the birth of the first insurance company in the American colonies in Charleston, SC. The Presbyterian Synod of Philadelphia in 1759, sponsored the first life insurance corporation in America for the benefit of ministers and their dependents. And the first life insurance policy for the general public in the United States was issued, in Philadelphia, on May 22, 1761. But it wasn't until 80 years later (after 1840), that life insurance really took off in a big way. The key to its success was reducing the opposition from religious groups.In 1835, the infamous New York fire drew people's attention to the need to provide for sudden and large losses. Two years later, Massachusetts became the first state to require companies by law to maintain such reserves. The great Chicago fire of 1871 further emphasized how fires can cause huge losses in densely populated modern cities. The practice of reinsurance, wherein the risks are spread among several companies, was devised specifically for such situations. With the creation of the automobile, public liability insurance, which firstmade its appearance in the 1880s, gained importance and acceptance?
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More advancement was made to insurance during the process of industrialization. In 1897, the British government passed the Workmens Compensation Act, which made it mandatory for a company to insure its employees against industrial accidents. During the 19th century, many societies were founded to insure the life and health of their members, while fraternal orders provided low-cost, membersonly insurance. Even today, such fraternal orders continue to provide insurance coverage to members, as do most labor organizations. Many employers sponsor group insurance policies for their employees, providing not just life insurance, but sickness and accident benefits and old-age pensions. Employees contribute a certain percentage of the premium for these policies. Final Thoughts Even though the American insurance industry was greatly influenced by Britain, the US market developed somewhat differently from that of the United Kingdom. Contributing to that was America's size; land diversity and the overwhelming desire to be independent. As America moved from colonial outpost to an independent force, from a farming country to an industrial nation, the insurance business developed from a small number of companies to a large industry. Insurance became more sophisticated, offering new types of coverage and diversified services for an increasingly complex country.
8)Conversion from Term to Permanent: When in need of temporary protection, individuals often purchase term life insurance. If one owns a term policy, sometimes a provision is available that will allow her to convert her policy to a permanent one without providing additional proof of insurability. 9)Disability Waiver of Premium Waiver of Premium is an option or benefit that can be attached to a life insurance policy at an additional cost. It guarantees that coverage will stay in force and continue to grow.
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