PRINCIPLE OF INSURANCE Insurance. Definition: (insurance is a financial arrangement which distributes the cost of unexpected losses''.

Insurance mean reducing or managing of risk. Insurer: definition (The person who avail the insurance to customers like Unsurance Company. Insured : Definition: (the person or customer who bought the insurance. TYPES OF INSURANCE : (1) MARINE INSURANCE. The insurance of water equipment like boat or ship. 2 3 Lifeiurance. the insurance of human life. Fire the insurance of things which unexpected loss relates to the fire.

insurance.

2ND PAGE HISTORY OF INSURANCE: Insurance system was started from 1900 BC. Actually, the business of insurance was started in 14th century . We can divide this time period into three times First time period 14th 17th century. Second time period 18th mid of 19th century . Third time period 19th to date. Definition of insurance: Insurance is a social device providing financial compensation for the effect of misfortune the payment being made from the accumulated contribution of all participants in the scheme. (lumsum:- the large amount of money mean full amount of insurance policy) (premium: the instalment of insurance policy). Premium: Premium is defined as a installment policy by insurance holder in shape of money to insurance company.

3rd page: Insurance Policy In Pakistan: Per-capita insurance is Rs 10 10000 Rs in U.S.A 2000 Rs in U.K. 1:- Poverty. The main reason which effect the growth of insurance business. 70% people in Pakistan are poor. The illiterate people can not think in term of sparing procuring insurance policies. 2:- ILLITERACY. Understand the necessity and importance of insurance Stumbling Blocks

3:- LACK OF INSURANCE MINDNESS. 1 2 Some people are not at all insurance minded. They do not like to insure.

4:- LACK OF INSURANCE PERSONNEL. 1 People who deal insurance business must be properly trained.

IMPORTANCE OF INSURANCE IN TRADE AND COMMERCE. Insurance for loss, theft, or damages would provides ''financial protection'' toboth parties to the transaction at a point during the transaction.

5 IMPORTANCE OF INSURANCE.

 Firstly insurance like banking when we are ensured we have to pay premium. Secondly insurance can easily invest its funds in industry, agriculture and commerce. Thirdly protect against damagers to life and property .if a person has got his life insured his family will get enough money on his death. In advanced countries a person have education, health and employment insurance. 6th page. SCOPE OF INSURANCE BUSINESS. Scope. Range or field and opportunities of activities. Scope Of Insurance In Business Business insurance field (1) Banking sector (2) Business investment Medical Insurance Field. (1) Health . (2) Disability. (3) Dental Insurance Engineering Insurance Field. (1) Equipment. (2) Technology. Agriculture Insurance Field. (1) Crops, Seeds. (2) live Stock. (3) Land. Property Insurance Field. (1) Fire. (2) Theft. Education and other Insurance Field. 7th page LIFE INSURANCE: PROCEDURE OF GETTING POLICY. Selection of the company. Proposal. Medical Examination. Acceptance of proposal. Payment of Premium. Issue of policy (Executive Director of Insurance company). 8th page. KINDS OF LIFE INSURANCE. (1) ENONMENT POLICY. May be taken for varying period of time say 20 years, 25 years.

 Money payable at the end of period the period mentioned in the policy. Insured dress before the policy matures money become payable to the beneficiary. (2) UNPROFITABLE POLICY: The insured amount will paid without profit. (3) PROFITABLE POLICY: Profit will pay generally . Premium will be high. (4) WHOLE LIFE INSURANCE POLICY Insured person pay premium whole life. (1) Straight Life. (2) Limited payment life. (3) Single premium life. 9th page. (5) TERM INSURANCE: Maximum for ten years. (6) GROUP LIFE INSURANCE: One year renewable plan, giving insurance coverage to the group of employees working in office or factory without medical examination. (7) POINT LIFE POLICY: Cover the life of two persons e.g. Husband & Wife , two partners. (8) FAMILY PROTECTION POLICY: Specific period of time. (9) CHILDRENS EDUCATIONAL POLICY. For the high education of children. (10) INSURANCE OF LAST SERVIVAL: Obtained policy two or more than two persons. (11) ANNUITIES: payable by monthly, quarterly and half yearly not in lumsum. 10th page. FIRE INSURANCE What is Fire? The term fire should be understood in it's ordinary sense. It means production of light and heat by combustion. WHAT IS FIRE INSURANCE? Indemnity caused by particular period.

 Premium is also fixed in contract the insurance company will compensate the loss but not more than the insurance amount. ESSENTIALS/ PRINCIPLES. (1) Insurable interest (at the time of losses). (2) Absolute good faith ( the contract will invalid in case of fraud). 11th page. (3) Contract of indemnity (compensation up to insured amount limit). (4) Personal right ( A man who's name mentioned in the contract have right to receive insured amount). (5) Personal Contract (6) Direct loss. (7) Particular period (1 year) (8) Description o property. (9) Premium consideration, ( mention the rate of premium). 12th page. TYPES OF POLICIES OF FIRE INSURANCE. (1) VALUED POLICY. Liability of insurer is fixed at the time the policy is taken indemnity does not apply to such policies. (2) UNVALUED POLICY. Value of property is not predetermined in case of loss the value is computed by assessment. (3) FLOATING POLICY. Goods belonging to the same person but lying in different loss at different places to one sum for one premium. 13th page. (4) AVERAGE POLICY. Contain average clause. (Property insured 40 thousands. Value of property 80 thousands . Loss 20 thousand). claim = insured amoun x actual loss _______________________ value of property (5) SPECIPIC POLICY Less than the real value of property

Actual loss : e.g. Policy = Rs 10000, worth = Rs 15000 if loss is Rs 6000 = 6000 if loss is Rs 10000 = 10000 if loss is Rs12000 = 12000. (6) PROFIT INSURABLE POLICY => Time duration 5 years. => Previous year average.

14th page. LIFE INSURANCE. Life insurance is the contract where by the insurer promises to pay in exchange for certain premium paid in lumsum insured on the completion of the definite period or on the death of the assured himself or to his/her nominator. ORIGING OF LIFE INSURANCE. THREE HANARD. (1) Paying too soon. (2) Living too long. (3) Becoming disable. PURPOSE OF LIFE INSURANCE In the view of insurer: to provide to financial security against death. 15th page. In the view of insurant/insured: financial protection to the family members. Provision of fund. Peace of mind. 16th page. CHARACTERISTICS OF INRUANCE.

1. POOLING. => Sharing the losses, =) Heart of insurance, 2. Payment of fortuitous. => unexpected losses,(Earthquake, fire, accident). 17th page KINDS OF INSURANCE ORGANIZATIONS. (1) BUSINESS INSURANCE It refers to the personal liability including financial institutions like bank. (2) HEALTH INSURANCE . It covers protection against critical illness like aids. Cancer. (3) CASUALITY INSURANCE. According to the criminal law of insurance this insurance provides protection against unexpected losses like bomb blast, earthquake. (4) LIFE INSURANCE It provides financial security against death and also giving face value. (5) PROPERTY INSURANCE: It provides protection against risk to property such as fire, theft and weather damaged. 18th Page (6) MARINE AND TRANSPORTATION Protects against shipping

companies it include read transport etc. 19th page. MARINE INSURANCE An important form of insurance dating 5000 years back . In recent it has been split up into two parts (1) Ocean marine insurance (perils including sinking, capsizing, stranding collision, theft, fire. (2) Inland marine insurance (collision of trucks, theft, fire, wind falling, flood, lightening . TYPES OF MARINE INSURANCE. (1) Time Policy: Subject matter is ensured for specific time period e.g. 12 january 2011 to 12 (December , 2011). (2) VOYAGE POLICY: Subject matter for particular safe from Karachi to london. 20TH PAGE. (3) MIXED POLICY :

Both time period and voyage policy are include (4) FLOATING POLICY: It is related two type or cargo insured generally taken by regular supplies. 21TH PAGE. RIGHTS AND DUTIES OF INSURER (1) to observe good faith towards the insured person at the time of contract. 2.The insurer must be do it's minimize for suffering the losses of insured person. 3. an appropriate measure must be taken to prevent the losses. 4. Remaining property is to be removed after damaged by fire or etc. RIGHT AND DUTIES OF INSURED 1. He must disclosed all the material foot. 2. To try his/her best to save the property insured. 3. To take all reasonable measure for protection.

ROLE OF STATE IN DEVELOPING INSURANCE: 1 State can play vital role. 2 Most developed countries have side by side the insurance business. 3 Consumer freely choose . 4 Free choice of policy. 5 Government insurance. 6 Legal compensating.

7 Social security benefits. ESSENTIAL OF INSURANCE CONTRACT 1 Insurable interest. 2 Fraud Or Misrepresentation = Not concede any fact about age or profession. = Contract should be honest in their dealings. 3 Notice of proof of loss. = Death of insurable person. = immediate notice of the death. 4 Cause proximal = unexpected losses 5 Principle of Indemnity. = All contracts of insurance are contracts of indemnity. = Except life insurance.

RiskTransfer. Transfer

from

the

insured

to

insurance

company.

RISK AND CHANCE RISK . risk can be defined as uncertainty concerning the accuracy of loss and gain Chance : chance is based on probability of an event chance can be defined as calculated risk / Classification of Risk : (1) Pure risk : in this type of risk there is no loss no gain. E.g. accident , death . earthquake. flood etc. (2) Speculative risk : in this type of risk , which offer the possibility of loss and gain e.g. you have purchased the shares their market may be up or down. (3) fundamental Risk : this type of risk effects the whole society e.g. bomb blast . earthquake.

(4) Specific Risk: this type of risk effects on individual ( particular risk) e.g. Accident, paralyzed.

2nd page: (3) contract of indemnity ( compensation up to insured amount limit) (4) Personal right ( a man who's name mentioned in the contract have right to recive insured amount . (5) Personal contract. (6) Direct loss. (7) Particular loss. (8) Description of property. (9) Premium consideration (mention the rate of premium). Short Note 1 Aviation Insurance or Air Craft Insurance 2 Credit Insurance or Property Insurance 3 Endowment Insurance 4 Automobile Insurance Employee's Liability. 5 Poverty 6 Right & duties of insurer. 7 Right & duties of insured 8 Principle of Insurance 9 Condition of Insurance. P.O.I 1 INSURANCE, DEFINATION, SCOPE, ORIGIN 2 BASIC PRINCIPLES. 3 IMPORTANCE OF INSURANCE IN TRADE OF COMMERCE. 4 WHAT IS LIFE INSURANCE? DEFINE TYPES OF LIFE INSURANCE SHORT NOTES 1 PREMIUM 2 ENDOWMENT INSURANCE 3 POVERTY 4 CLAIM 5 RISK AND ENHANCE CLASSIFICATION OF RISK?