Selection of Risk Purpose of Selection Proposal should be accepted or not Rate of premium (Amt.

of risk) Classification of Risk and Determination of Premium Avoid adverse selections.

Factors Affecting Risk Age (Minimum and maximum) Build ( Heights, Weight, Chest, etc.) Physical condition Medical examination Personal History health record, habits, occupations etc. Family History Occupation- Drivers job, chemical industry, income, etc. Residence good climate Present Habits Gender Economical Status Defence Services Nationality

Sources of Risk Information - The proposal form - Medical examination - Agents report - The Inspection report Independent agency - Private friends report - Family Physician Report - Neighbors and Business Associates Measurement of Risk Purpose: Fixation of premium - VALUE OF SERVICE (Utility of insurance to each cant be determined, Higher premium will not attract business. - COST OF SERVICE - Expenses of business + small profit (No loss, no gain) - Cost of claim - Cost of Administration (Fixed and recurring) Cost of Claim - Forecasting of death is very important - experience of medical science - Experience of past record Can we calculate the time of death on the basis of experience of past death record? Ans: Death of one life can not be forecasted but no. of death from a group of persons of the same age can be forecasted on the basis of 1. Theory of probability 2. Law of large numbers. Theory of probability - Certainty occurrence of death is 100% ( occurrence of any event) - Simple Probability Mutually exclusive event known as simple probability Ex: At the age of 40 years, 2 persons die out of 10,000 persons Probability of death of a person who is of 40 years can be expressed as

2/10,000 = .02% or .0002 of units. - Compound Probability Multiplication is applied when the probability of the combined happening of two or more independent events. Ex. Age 40 - probability .0002 Age 42 - probability .0003 .0002 x .0003 = .0000006

Law of Large Numbers - Accuracy of data - The large no. of units Claim Management - Claim mgt is related to efficiency of the organization - Speed, courtesy, fairness, level of service are related to claim management - It affects the customer satisfaction - Goodwill of the organization - result in cash outflow - Correctly assume the claim files a. Claim with fraud attitude b. Claims filed due to incorrect interpretations of clauses in the policy documents. Motor insurance claims have become major threat to the survival of the co. Most of insurance companies have separate claim department in which they have Claim administration Hierarchical structure in form of authority (in monetary limit)

Claim Settlement procedures in general insurance 1. Loss or damage should be reported to insurer immediately 2. Complete claim form along with an estimate of the loss has to be submitted 3. Inspection to the damaged items to assess the loss 4. specialist licensed surveyor will deputed in case of major loss (loss more than Rs. 20,000 under section 64 UM of insurance act) 5. Investigation that loss or damage has occurred or not due to an insured peril. Fire Insurance Claim Copies of the Policy complete with terms, conditions and warranties. Claim form duly completed by the insured. Survey report should include Indication of the cause of loss Establishment of liability Assessment of loss Confirmation of compliance of policy terms, conditions and warranties. Admissibility of the claim Photographs Police reports Fire Brigade report

Motor Insurance Claims - Claim form

Registration certificate Driving License Load challan Fitness certificate Report to police Survey report In Damage claim, estimate of repairs.

Med claim (Hospitalization) Duly completed claim form Bills, receipts, and discharge card Cash memos from hospital Bills from chemist Receipts and pathological test reports Surgeon bill and receipt.

Claim Management in Life Insurance Life insurance claim can be categorized as 1. Maturity claims 2. Death Claim Certain features are common to life insurance claimPolicy must be in force at the time of claim Insured must be covered by the policy Nothing was outstanding to the insurer at the time of claim The claim is covered by the policy A scrutiny from legal angle.

Maturity Claims - Endowment polices including money back policies. - Payable sum assured and bonuses - Document required Policy document, Age proof, Deed of assignment, Discharge form. Death Claims If the insured dies before the expiry of the term of the policy, it is called as death claim. The death of the life assured has to be intimated in writing to the insurer. In case of claims by death, after receipt of intimation of death, the following documents are required. Policy document Deed of assignment / reassignment Proof of age, if age is not already admitted Certificate of death Legal evidence of title if policy is not assign to nominated Form of discharge executed and property witnessed.

If the claim has occurred with 3 years. Statement from the last medical attendant, from hospital, from the person who has attended the funeral, from employer. Insurance Underwriting Insurance underwriters evaluate the risk and exposures of potential clients. They decide how much coverage the client should receive, how much they should pay for it, or whether even to accept the risk and insure them. Underwriting involves measuring risk exposure and determining the premium that needs to be charged to insure that risk. The function of the underwriter is to acquire or to "write" business that will make the insurance company

money, and to protect the company's book of business from risks that they feel will make a loss. In simple terms, it is the process of issuing insurance policies.

Classification of risks - Physical Hazard (Age, Sex, Build, Physical Conditions, Personal History, Family History) - Occupational Hazard (Nature of Job) - Moral hazard (Intentions of the proposer) Data for underwriting - Proposal form - Medical Examination - Agent or officer report Decision may be one the following Accept as proposed Accept with extra premium Accept with modify terms Accept with specific clause Postpone for specific period Decline (risk is too heavy to be covered)

Recent Trends (Constantly under review) - Person who would not have been insured some forty years ago are now insurable - Collect the information of habit - Lower premium rate for working women.