HEALTHCARE AND ACCIDENT INSURANCE POLICIES

 Health insurance  is not mandatory in many countries. At times some countries  , depending  upon their evaluations  of the financial status of the applicant for a visa, may like to ensure  that the applicant is capable of financing  his medical expenses  in the event of the a health  contingency.  The public sector non-life insurance  policies companies launched the Overseas  medical Policies or Overseas  Mediclaim  policies  , as they are popularly known, in India for the first time in 1984,  . The purpose of such a  policy was to meet the medical expenses of the Indian residents  undertaking  bonafide trips abroad for policy was a to meet the medical expenses   business or official purpose or for holidays accompanied by the spouse and children , or to  offer healthcare to foreign nationals  in India working for MNCs and receiving  their salaries in Indian rupees...

Initially the cover started purely as a medical insurance  cover and  subsequently its scope was widened to include  personal accident loss of passport , loss of checked baggage and personal  belongings delay in checked baggage , personal liability etc., Private  insurance  companies operating in India also offer Overseas Healthcare  Plans more or loss on the same lines as the Overseas  Mediclaim policies offered by the sector insurance  companies. More appropriately  the private companies promote  their plans as / Travel Insurance Cover’ under different names. Some insurance  companies are planning  to introduce short-term destination-specific  overseas insurance  cover

at a cheaper  cost for short duration  travels . For example  those who would like to travel in Asia or the Asia-Pasific, region for a week or so  may avail of such short durations  plans that are competitively priced.  An over seas  medical  insurance  cover has two components. That part of the insurance  cover that deals  purely with the medical aspect  of the insurance . The part  that deals with matters  other than medical care. A majority of insurance  companies  offer overseas insurance  with both components mentioned  above....

At the same time, the option  available  to the  proponent  to purchase  an economy  package  covering  only healthcare  requirements . To avoid  any hassle in the event of a claim  many of the insurance  companies  offering  such plans insist  on the ECG report , urine report , etc., in case the age of the proponents is 60 years or more . For travel  in certain countries, such medical reports may be insisted  upon even for those  whose age is  less then  60 years.  As far as  the pricing is concerned, it is related to the age of the traveller  the duration  of the journey, the amount  of cover  required and the regions in which travel is to be undertaken.  For example  , ICICI Lombard’s  travel insurance  product has different plans for  the individual  traveller Platinum Gold , Silver  and Bronze. the Silver Cover targets  the cost-conscious traveller. the Silver Cover is vanilla, pure-health plan with medical repatriation  and dental cover benefits. The latter  two are offered over and above the medical sum insured. The silver Family  Plan is an optional with  attractive pricing  for the family. It provides  price  advantage while providing  economics  cover. The company  also offers Corporate or Group Travel Plans, comprising basic. Cover a cost-effective purpose specific product and Standard cover, a value for money product. ICICI Lombard’s  travel insurance  does not insist on any medical examinations   up to age of 70 and in certain cases, covers pre-existent diseases. The Senior Citizens Overseas  Travel plan generally excludes  pre-existing diseases  . Some of the companies without specifically  excluding  cover the sickness  under certain life-threatening  circumstances. In the absence of any definition  as to what constitutes a life threatening  situation  one looses his/her sleep through out the sojourn. To enable the senior citizens travelling  abroad  with a  peaceful  frame of mind the insurance  companies  may render  yeomen  service by  defining  the pre existing  conditions  or pre-existing  diseases  and also  elaborating  the present vague and amorphous statement  that the preexisting  diseases would would be eligible  for hospitalization  expense  under ‘life threatening  situations’  Travel Care Classic is a standard travel insurance  plan with  accident  and medical  reimbursement  coverage  of up to US 50, 000 . This  plan  conceived  by Tata AIG is exclusively  designed  for Thomas  Cook (India) Ltd.  the international travel and tour operators, with a  network of 54 branches  across 16 cities  in India . The company has a global  presence with offices in all major cities  of the world. Many of the private  sector insurance  companies offering  travel  insurance  have  tied up with  reputed  travel agencies  and tour operators  . Such policies are also  available online

Critical Illness Insurance Policy Online

 Critical illness insurance pays out a lump sum if the policy holder is diagnosed  with any of the serious illness such as cancer, heart diseases stroke, multiple sclerosis , Alzheimer’s  diseases  , Parkinson’s disease et al. Critical illness insurance cover are a marketed as riders to contracts  of life insurance or as stand-alone products. Depending  on the context the Critical insurance covers are considered  as a life insurance products  or as health care  plans under General insurance. The important of critical insurance cover are is aptly brought  out by Nick Kirwan the Chairman of the Critical illness insurance Working Group of the Association  of British  insurers (ABI) .

According to kirwan  ,critical illness insurance helps people protect themselves and their families  from the potentially devastating  financial consequences of critical  illness. A cash lump sum helps  ease financial worries  when one has to undergo treatment and recuperation. An unconfirmed  report states that:   a.  Men  have a 50% chance of developing  some form of cancer in their  lifetime, and the risk is 33% for women.  b.  One in every three men develops some major cardiovascular problem  by the time he attains the age of 60, and the chances are 10% for women.   

.  Men above the age of 40 fall critically  ill at some time or the other in life between the ages of 40-65. A critical illness insurance policy is designed to provide  the much needed financial cushion, at a time  when it is needed the most. This policy offers choices one may not have in other policies . Healthcare or Medi claim policies do not cover the various indirect  costs associated  with hospitalization  whereas the lump sum amount given to the insured  , once the illness is diagnosed  goes a long way in relieving financial pressure  and mental stress. The terms and conditions  and the method of financial assistance may be vary from company to company depending  upon the target, marketing group and method of product differentiation . For example, in critical illness policies  with accelerated  riders the  basic cover may cease to be  operative once a critical  insurance claim is lodged , and is in policies with stand-alone riders, the basic insurance cover continues even after lodging the critical  insurance claim. Some other plans provide for the reduction  in the payments of premium by adjustments  in basic  sum insured . Typically  a critical  illness insurance policy has the following  benefits. To get the benefit, the insured must be  diagnosed for any of the specified or identified diseases. Before signing a contract the proponent should examine  the number of  specified diseases covered by the contract. Generally companies may cover 8-10 diseases, and more diseases  may be added on payment of extra premium. LIC’s  Asha Deep II’ that pioneered critical illness as an additional benefit  initially  covered only four specified diseases viz., malignant  cancer renal failure of both  kidneys. coronary  artery diseases in cases where by pass surgery has been conducted  and paralytic  stroke leading  to permanent  disability all subject to conditions . 

considering  the cost of treatment  , LIC was offers critical illness cover as a  rider benefit to other plans, and offers  this benefits to existing policy holder under certain plans. Once the diseases  is officially diagnosed  and admitted by the company the insured gets the following  benefits according  to the terms of the policy. It should be noted  that the benefits be noted the benefits vary from company to company:  1.  The company may pay the agreed sum insured in one lump sum and down own no further liability.   2.  No benefits will be paid on the maturity of the policy  , if the policy holder suffers no identified critical illness.  3.  Alternatively according to the terms of the contract  the company may pay 50% of the sum insured (subject to certain ceiling) on diagnosis, and the balance  to the family on the death of the insured or on survival  at the end of the term.  4.   Annual payment  of an amount  equal to 10% of the sum assured , commencing  from the policy’s  anniversary  falling  on or after the date of affliction until the date of maturity or death, whichever is earlier  (e. g. Asha Deep II , an LIC policy).  5.  Waiver of premium as per as the terms and conditions  of the policy,  6.   Rider benefits , if any like terms benefits accidental death, disability etc.,  General conditions  of offer may also vary from company to company, The age at entry ranges  between the ages of 18 and 65 years, and some companies  may restrict the maximum  age of the entry  to less than 65 years.  The sum insured ranges  from Rs. 5 lakhs to Rs. 25 Lakhs and they are available for varying terms.  In India apart from the four nationalized  insurance companies  . Bajaj Allianz market na critical illness policy, and ING Vysya has its policy  called Conquering Life Critical illness Plan. Health First Plan of Tata AIG offers critical illness  cover as a rider benefit. Apart from these companies  cited as examples many other private  insurance companies also market such plans. Considering  the difficulties  experienced  by the insuring public  in UK, the Association  of British Insurers  (ABI)  is contemplating  possible changes  to the critical illness insurance policies that are now marketed in the UK. Following  are

the major references:

LIFE INSURANCE CONTRACT DEFINITION

  The first contract  of life insurance as we know it today appears to have been issued by a group of London based marine underwriters on June 18, 1583, on the life of a person named William Gybbons for a sum assured of  383-6-8, and the premium  charged was 30-13-4 for a term of one years. As Gybbons died during the currency  of the policy on may 29, 1584, the policy  resulted in a claim. The insurance company disputed the claim on the grounds that the assured had survived twelve lunar months  of 28 days each and therefore , no claim was  payable . But the Court decreed  that as Gybbons had died within  one calender year. they company had to honour the claim, and the company paid the sum assured . Many  writers, doubt the authenticity of the informations . 

For example, the sum assured in certain writings  is shown as 400, and some differences in the date of the policy have also been observed.  In a  contract of life insurance there are two parties, viz.,  he insurer and the Insured some books use the expressions like insurant. insuree etc., instead  of the insured. the insured is generally called the life assured . In a life insurance contract the life assured undertakes to pay an agreed sum as a premium to the insurer at stipulated intervals called the ‘ Mode during the selected term. According  to the nature of the insurer at stipulated intervals called the contract and the type of life insurance cover purchased by the assured the insurer is required to pay the contracted sum of the legal heirs or to the nominee of the assured if death  occurs during the currency  of the contract  or to the assured  on the expiry of the selected  term if the contract so provides . Normally, the premium uniform bur according  to the nature of the plan, there could  be variations. 

As life insurance contractors  are of a longer durations, they are aptly called  ‘Long Terms’  the usage is common in the US Considering the fact that life insurance is meant  as a long term savings for the protections  of the family in December 2005 the IRDA put an end to the practice  of some of the insurer’s  issuing  linked assurances commonly known ULI  policies  for terms than five years.  The method of paying  the premium is called the  ‘Mode of Premium Payments’

 The assured is required to pay the premium on the date of the policy  anniversary covering  the ensuing  one year. In practice to facilitate policy holder in the payment of premium and also to ensure the retention of the business in their books, companies  offer half yearly  quarterly  and monthly payments modes or frequencies. generally an extra amount is the  charged  in the cased of non-pay role deduction  if the policies is where the premium is paid on the a monthly  basis to cover the extra cost. 

Some Companies  offer a grace period of one month from the due date of the premium. If the premiums is not paid within this period the insurer, may levy a fine or many also demand proof  of continued  state of the  goof health to continue the risk cover. It these  requirements  are not complied with, the policy lapses due to the non-payments  of premium and the  insurance cover  ceases, or based on the terms a proportionate cover a lone  may be available unless the policy is revived subject to the payments  of the unpaid premium with interest and productions  of satisfactory  evidence of health.  

TRAVEL INSURANCE AND POLICIES

Invariably  the travel insurance cover  offered by  insurance companies are a  combination of health cover and cover against other miscellaneous  risks. In India  both the public and private sector non-llife  insurance companies market  travel  insurance plans as generic products or under  different brand names. The benefits  and the premium may vary  marginally from company  to company  depending  upon the package. The claim are subject  to deductibles as shown in the schedule , and wherever  the claim is less than the deductible  , no claim is payable. A standard travel  insurance plan offers the following benefits. FLIGHT RISKS: The plan covers  death and dismemberment in the event of an air transport accident  . It may also include  coverage for delayed or cancelled  flights. It is a advisable  that the insured should carefully read the details and ascertain  what constitutes a “ cancelled” or “ delayed” flight.

   LOSS OF CHECKED IN BAGGAGE: The plan covers the cost of replacing  luggage and all its contents. A traveller  should be aware that airlines are usually not obligated to provide  any compensations  exceeding  the amount agreed up to by the international air carries in various conventions , the latest being the Montreal  Protocol. The present limit is US $ 20 per kilogram and the total  compensations is limited to $ 300. International  carries  do not settle  the claims straight  away. It involves a lot of procedures and is a  time-consuming process.  A travel  insurance package  covers losses exceeding  what is a  payable by the international carriers.   DELAY OF CHECKED  BAGGAGE.:  The plan covers  delays exceeding twelve hours  in the  arrival of the checked in luggage. It covers  expenses towards the purchase of essentials  to replace  the delayed  items to the extent specified in the schedule .   LOSS OF PASSPORT: The insurance covers the expenses  the insured  had to essentially incur to obtain  a new passport  in the event of loss of the old passport.  PERSONAL LIABILITY: Wherever the insured  in his/her private capacity  becomes legally liable  for paying compensations  due to bodily injuries  suffered by a third party or losses to third properties, the policy indemnifies the liability according to the terms set in the schedule  of insurance. 

EVACUATION FOR MEDICAL TREATMENT: The plan provides reimbursement for costs associated with evacuation  from a remote site for  medical treatment,. It also provides reimbursement for actual treatment  while away from home as per the terms of the contract.  In additional to the above , there are policies  that are designed to provide  indemnifications  for the cancellations  of vacations , delayed flights, damages to rented cars, etc.,  Some of the policies are yet to be marketed in India.  Indian private insurance  companies vie with each other to offer innovative travel insurance policies. 

  Some of the innovative  features of the insurance covers offered by the companies like Bajaj Allianz , Tata AIG, and ICICI Lombard , In addition to the regular benefits include.  Meeting the travel expenses  of one of the parents or an immediate member of the family in the event that their presence is required  abroad  due to the ward falling sick  and being hospitalized  for seven consecutive  days. The travel cost is provided  by a round -trip economy -class air ticket and accommodation  expenses.  Facility for the reimbursement of the term fee paid in advance  if the student falls sick and is not in a  position  to attend classes and has to discontinue  the studies.  Provision for the payment of future fees if the sponsor is permanently  disabled due to an accident or dies in an accident or due to some diseases  . the insurance company  then pays all the future fees and relieves  the student of his financial worries. 

  Provision  to bail out  the insured in case he or she is imprisoned  for any reason. Policies like that Corporate Frequent Travellers Policy. Globetrotter Overseas  Corporate  (Group) Travel insurance by  ICICI Lombard, and the International Business Travel Policy of HDFC Chubb are some of the annual policies issued to companies to cover executives  who frequently fly abroad in connection with their company work. The Executive  Travel Policy, the Annual Multi-Trip Business Travel Policy, Executive Guard etc., are policies that offer round the clock cover to executives  against  loss of baggage passport, etc.,  irrespective of the fact whether  they are in India or abroad.  Some of the travel insurance policies, like the Suhana Safar Policy, cover personal accident and baggage for any family for travel within India for a maximum period of 60 days by any mode of transport. The insurance cover is available  for periods ranging from 30 days  to one year (comprising 365 days. ). The rate of premium varies from  company . Even within the same company, the premium depends  upon the  type of the plan chosen.  Tata AIG has three types  of plans covering travel insurance, and ICICI Lombard has two types. The benefits also depends upon the type of plan chosen

SETTLEMENT OF CLAIMS AND INSURANCE

 Settlement of the claims is the  culmination of a contract of life insurance . It will not be an exaggeration  to say that the image of an  insurance company , created in the minds of policy holders in a  particular and the insuring public in general, depends, on the  efficiency and effectiveness  with which claims are processed and settled. The speed  with which they are settled acts like a booster to the morale of the marketing  force of a company . Claim  settlement , therefore  occupies an important place in the total operations of an   insurance company.

 In fact the  insurance Regulatory  and Development Authority  (IRDA)  has issued instructions  to all  insurance companies to settle  claims within a period of 30 days failing which they should pay a penel interest at the rate of 10 percent for the   the period of delay . This impose a statutory obligation on every  insurance company. Basically the following  two types of claim which come before an  insurance company:  1. Maturity claims,  2.  Death Claims:  1.  MATURITY CLAIMS: Maturity claims come up for payments in the following manners: (1) All  endowments  types of policies have pre-determined date of maturity which is shown  in the policy bond.   (2) Under joint  life policies on the lives of couples  claim by way of maturity arises in the following ways:  (a) Both the lives survive the date of maturity  in which case maturity claim is payable.  (b)  During the term of the policy. one of the lives dies and death  claims paid. Even thereafter  the second surviving  life remains covered till the maturity date. . In the event of the second life surviving  up to the maturity date, the sum  assured becomes payable as maturity  claim. The insurer  therefore, has to keep track of the cases that may come up as maturity claims.  

3. Under Fixed Term Marriage/ Educational Annuity Plan, benefits  are payable on the maturity date even if the policy holder dies before that date. The only effect of death  will be that further premiums  cease. Thus, claim under the policy is also   payable as maturity claim.   4.  Under Money Back Plains , survival  benefits become due for payment after regular interval of 4 or 5 years depending  upon the terms of the policy. These survival  benefits are treated claims by maturity  because date of payments is pre-determined.  CLAIMS INTIMATIONS: Claims by maturity and their date of maturity are known  before hand . Therefore every  insurance company  prints. Claims  Intimation Registers well in advance of the date of maturity. Then printed letters are usually sent to the policy holder to inform them to comply with the requirements  for payments of claim amount . It gives instructions  for obtaining  payments. A copy of this is also endorsed to the agent so that he is able to maintain his liaison with the claimant . This letter of instructions for obtaining the payment is called the claim intimations letter.   

BASIC REQUIREMENT FOR SETTLEMENT OF  MATURITY CLAIMS: The requirements are as under:  (a) Original  policy bond, if loan was availed from the insurer, (b) Discharge form  duly completed and executed. ( C ) Age of proof  , if age was not admitted  previously . The salesmen are advised to realises the importance  of age admission at the time of obtaining policy. Their attention is also drawn to Section 45 to Insurance Act whereby it is obligatory  on the part of the life assured to furnish  age proof at the time of claim settlement.  (d) If any assignment or re-assignment was executed  by a separate  deed or deeds, such deeds must be submitted  along with the other documents as listed above:. (e) Insurer’s  office sends the Discharge Form as per item (b) above along with the claim intimation  letter. The policy holder  has to return  their Discharge  Receipt  duly completed  with the policy bond.  If the policy stands assigned in favour of a Bank or an institution or some individual  the discharge  form will be return by the institution or the individual along with the policy bond.

 A nominee  has no locus standi in the event of claims by maturity.   2.  DEATH CLAIMS: Life  insurance is basically for providing financial  security to the families of deceased policy holder. Death claim settlement naturally assumes very great importance in the total operations of any life  insurance company. Despite  several problems  encountered,  Life  insurance companies  struggle to efficiently and effectively attend to this  function. The death claims are generally  divided into a two category  viz, normal death claim  and premature claim. If the assured dies after two years of the commencement of the policy it is treated as normal death claim. In case, the assured dies within two years  of the commencement  of the policy, it is called premature claim. The actual procedure involved in death claim is as follows.

FACTORS TO BE CONSIDERED FOR RATING

 The following factors are generally  taken in to a account while determining the rating of vessels and cargo:  (A) RATING UNDER HULL INSURANCE: (a) TYPES AND TRADE: The quality and fitness of the ship  to serve as a carrier on the particular route is an important factor considered for rating on hull insurance .  The insurer, while underwriting the risk, would like to know the ship with regard to its builder and owner , structural strength to resist strains  adaptability to carry various  kinds of a cargo and its age, and physical condition  the types of engine and its horse power and the special types  of equipments  etc.,

 The risk to be insured depends upon the vessel’s  construction and according to the standard I ,e, commercial standard in the trade,. The rates of premium are determined accordingly.  (b): MANAGEMENT:  The management of the ship entirely  depends upon the shipowner for up keeping the ship. In order  to avoid a bad  track record through  negligence  , indifference, etc., the shipowner appoints  efficient  officers  and crew in the ship. As the nature of risk will vary  depending   upon the efficiency  of management the rates  of premium will also vary.  ( C ) PAST CLAIM EXPERIENCE: The number of claim made by the insurance during the past few years is to be considered  for fixing the rates of premiums. If there were too many claims in the past, the insurer will charge higher rates of premiums on different  marine risks. (d) VALUATION  OF VESSEL : The valuation of the vessel to be insured is very  important  for determining  the rate. The insurer  while underwriting the risk, should verify the valuation  and should ask for the valuation  certificate  from competent  surveyors before granting  the covers . Valuations  includes  adjustment  for the  gross registered  tonnage make machinery installed therein, type, special for the gross equipments  modern gadgets nature and type of a engine, age and  horse power etc.,

 (e): POLICY CONDITIONS: The liability of the insurer increases or decreases  depending  upon the insurance policy conditions given for a bearing the risk. So according to variation  of liability premium  varies.  (f): REPAIR COST: Extra expenditure incurred for the safety of the vessel  is also to be considered  for determining the rates of premium. These expenditures  are incurred at the port when the ship is repaired . These expenditures  or losses  are expressed  as particular average or general average. The definition  of particular average is that the loss or damage must be accidently for or fortuitously  caused by a  peril insured against , and it concerns solely the person interested in the subject  matter of insurance and his underwriting  . On the other hand, General Average implies some voluntary sacrifice of the property made or extraordinary expenditure incurred at a time of peril threatening  the whole property involved in a common maritime adventure with a  view to preserving it  from the peril.

 When such sacrifice ha been made or expenditure  incurred the whole property  preserved shall contribute to the  loss sustained  or the expenditure  incurred . All expenses will be treated  as a General Average  expenditure. The Marine Insurance Act 1963 states that temporary  repairs made for the common safety shall be admitted  as a general average. So under the applications  of general averages the general average contributions are recoverable from respective  marine insurers  insuring the ship  provided the expenses do not exceed the insured value.  (g): NATURAL FACTORS AND TOPOGRAPHY: The insurer also considers the route and terms of the contracts . Some natural hazards are permanent  in nature and some  are seasonal  . For example frequency of storm , shallow water narrow channel. ice, tides, seaquakes are to be taken into account  while calculating  premium chargeable   on a particular route. 

RATE FIXATION IN FIRE INSURANCE

The term Rate Fixation refers to determination  of an appropriate premiums rate for different risks. The rate  fixation in fire  insurance is not so scientific  as in life  insurance. While fixing the rates of premium for different risks in fire  insurances various factors or both  the physical and moral hazards are to be property evaluated  and calculation  work is to be carried out as accurately as possible. The rates of premiums determined  must be adequate  not unfairly discriminatory not excessive, economically feasible stable and flexible  and should encourage   loss prevention. In other  words the rates of premium should be adequate  enough to provide for full payments  of claims including catlastrophe  losses administrative  costs I.e. printing costs. transport  requirements  staff salaries  etc., provision for unexpectedly  large claim in the form of reserve and a margin of profit. 

  SYSTEM  OF RATE FIXATION:  The actual process of rating  consists  of three steps viz. (1) Classifications (2) Discrimination and (3) Fixing rates or schedule rating. (1) CLASSIFICATIONS:  The first step in fixing  rates of the premiums for different risks is the process of classifying  the various properties to be insured. Properties  are generally classified  into three categories  viz (a) Common or ordinary (b) Hazardous and:  ( C ) Extra hazardous or doubly  hazardous. Different rates of  premiums are determined for each class of property. These classifications  do not hold good for a long  time because  of varied nature of risk. Now the risk or properties  are classified into a various  classes according to factors affecting  fire risk.   (a) CONSTRUCTIONS: For the purpose of rating simple risks e.g.  dwellings offices  etc., building are classified into two categories according  materials  used in constructions  of external walls and roof. Class A constructions includes building which have external wall of stone/ bricks concrete  blocks and off RCC / Masonry  asbestos concrete  sheets Metel sheets/ Tiles . The layer of grass  hay or reeds on incombustible roofing is permitted . Any  constructions  other than Class “A”  constructions as above stated is considered class “B”  constructions. (b) OCCUPANCY : Risks or properties  are classified according to occupancy of the premises e.g.  Private residents shops, godowns,  industrial or manufacturing  risks etc., Again the goods stored in godown  are classified into non-hazardous  and external  hazardous categories  . 

This system  of classifications  takes into account the various  factors of occupancy which may cause or aggravate fore loss or damage such as the nature of goods exposed to varying degrees to ignition . combustion etc., manufacturing  process  methods of heating lighting  and power etc.   ( C ) NATURE OF FLOORING: Wooden floors add fuel to fire . Besides wooden floors collapse easily in the event of fire, causing damage  to property on lower floors  through falling machinery  or goods from upper floors.  (d) HEIGHT: The greater the number of stroeys the greater the  hazard because of difficulties  of fire extinguishment  . Besides the greater number of floors involve of the risk of collapse of the upper floor causing heavy impact damage.  (e) FLOOR AND WALL OPENINGS: Openings in the floor for lifts and belts constitute higher physical hazard. It may cause greater chances of ignition of fire and can cause difficulty in extinguishing  the fire.  (f) EXPOSURE:  The degree of risk  of each building is influenced  by its surroundings . If a number of factories  and workshops are situated around dwelling houses, the hazard involved  is far greater. 

  (g) LIGHTING  HEATING AND POWER: The fire may take place  due to short circuit . combustion  can also arise from faulty installation  and dampness . The lighting  system e.g. gas or oil leakage  of fuel and naked flames cause more hazard to property.  (h) PLACE: The geographical  area where the property is located  is of great importance . Losses compared with the amount to the of  insurance vary from State to State.  (I)TIME/: Five years is generally taken as a minimum period  upon which rates are based. Good and bad years must be  averaged out for rate making purposes over a  sufficiently  long period of time to enable the companies  to accumulate  during the years of light losses, funds necessary to absorb  the stock of heavy losses at other times.  (j) PROTECTION: Protection may be of two kinds: Public and Private. Public or Municipal protection   is of great importance. Private protection consist  of device installed by the owner such as fire extinguisher  sprinklers system and buckets, fire alarm etc.  

HISTORY OF LIFE INSURANCE

(1) EARLY DEVELOPMENTS: The early development of life insurance closely linked with that of marine  insurance. The first  life  insurers  were marine  insurance underwriters  , who started issuing  policies on the life of a merchants, master and the crew of the ship sailing along with the goods. . If a ship was captured, the insurer paid the ransom  needed to secure release of the captain  and the sailors . Life  insurance policies were granted during the reign of Queen Elizabeth. These early  contract took the form of temporary  assurance  covering  the life assured  for a short period only. These were issued by the private individual  known as underwriters who formed  Mutual assurance Associated  which were in a way, self- insurance  clubs. They issued annuities and pension and for a husbands.

The  first recorded life policy  was issued by on 18.6.1583 on the life of William Gibbons for 12 months  at the  rate of 8%  of 382,65.84 for which sum sixteen underwriters  were responsible. However this first policy was subject to a dispute  over payment because the policy holder died within 11 months of issuing  the policy. The underwriters  contended that the policy  period of 12 months  related to lunar months , which has expired. Happily the court ruled that the payment must be made. 

  (2)  LIFE INSURANCE IN 18TH CENTURY:  It was in the eighteen century the societies  began of the  to be formed with the object of granting life  assurances . The Amicable  Society (1705)  the equitable Life Assurance Society. (1762.,), the West Minister Society (1792) were some important societies  .The application of the mortality  tables in 1755 by the Dodson and the introductions  of actuarial  science revolutionized  the whole concept  of life  insurance. As the life  insurance became better known, a practice grew up of speculating in lives,  particularly  of well-known  people, like kings, national leaders or prisoners particularly , if charged  with an offence that would call for capital punishment  upon conviction . The premiums varied with their reputation  and state of health. If person of this  category fell seriously ill a huge amount of the insurance  was written. In order to put  an end to this speculation with the  its attendant  evils,  an Act called  the “Life Assurance Act” (commonly known as the Gambling Act), was passed in 1774. It prohibited all  insurance on lives expect those  satisfying  insurable interest requirements . 

  (3)  LIFE IN\SURANCE IN 19 TH CENTURY:  During the early years of the nineteen  century a large number of life  insurance companies were formed. A large number of companies  failed and many of them preferred  to amalgamate their business . In order to stabilise the business  further . Life Assurance companies Act 1870 was passed. Further Act was passed in 1871.   (4): LIFE INSURANCE IN 20TH CENTURY:  The above legislation  was repealed by the Assurance Companies Act 1909, which  was applied to all classes  of the  insurance business. Later on, various  acts were passed to meet the growing needs of the industry and to protect the insured. Some of these  acts are : Industrial Assurance  Act 1923,. Assurance Companies Act 1946, Insurance Companies Act 1956 and the Companies Act 1967

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(5)  LIFE INSURANCE IN INDIA:  In India an English  insurance company known as oriental Life Insurance Company started its operation in Calcutta in the year 1818. It insured the employees of East India Company  only. A good member of European  companies had entered the Indian scene by 1870, but mostly European  lives were insured by them. The first Indian company by the name of : Bombay Mutual Life Assurance Society” was set up in1870-71. Then came in 1874 the “ Oriental Government Security Life Assurance company”. Swedeshi  Movement started in the wake of freedom struggle  in India, gave birth to many Indian  insurance companies and some very important prominent Indian  names were associated with the life  insurance industry. In 1956, the life  insurance business was nationalized by taking over 245 companies and by forming one single  corporation  named as Life  insurance Corporation  (LIC) of India. Now Life  insurance Corporation of India and 12 private life  insurance companies are permitted to carry  on life  insurance business in India. 

GENERAL PRINCIPLES OR ESSENTIALS OF INSURANCE CONTRACT

:A contract of  insurance is a legal agreement  between two or more parties and has to comply with the provisions of the Indian  Contract Act 1872. Insurance contract also is governed by the general  law of contract as embodied in the Indian Contract Act. An  insurance contract id defined as an agreement  between the insurer and insured in consideration of having received the premium  from the insured to undertake to make good the financial loss of the insured, subject to limit of a specified amount, suffered by the financial loss of the insured,  as a result of a loss or damage of the insured property by specified perils  insured against  during the stated period. All  insurance contracts  must have the following five essential elements in order that may be enforceable by law:

(1) OFFER AND ACCEPTANCE: The person who wants to take up covers  again particular perils  offers his risk through a proposal from to the  insurance company. When the premium is received by the company and cover note or policy is issued by the company, it signifies the acceptances the proposal .

(2) CONSIDERATION: The premium paid is the consideration and on  receipt  of the premium by the  insurance company, the contract comes in force. The consideration need not be money  only but it must be valuable . It may be sums, rights, interest, profit or benefit (4) COMPETENCY: A proposer  should have capacity to enter  into a contract. If the proposer  is of sound mind and has attained  age of majority, he is said to be competent to enter into a   insurance contract. Also he must not be debarred by any law to which he is subject  to enter into agreements . Any  insurance policy taken by a legal  guardian  on a minor life will constitute a valid  contract. 

  (5) LAWFUL OBJECT: The object for which an agreements  entered  should be lawful. Such object should not be illegal, or against  the interest of the public. In proposal from the object  of  insurance asked which should be legal and the object should not be  concealed. If the object  of an  insurance. like the consideration  is found to be unlawful  the policy is void. Moreover, the object  of the contract should not be of gambling nature.

IMPORTANCE/ ADVANTAGES OF INSURANCE

 The importance  of  insurance cannot be  neglected  in the presents day when  uncertainty  is prevailing  every where. In the words of Dinsdale, no one in the modern world can  afford to be without  insurance. The importance  of  insurance not only limited to an individual  or to a family. It has been spread over the entire  nervous system of business and over the country as a whole. As such it can be studied under the following headings:  

(1) PROVIDERS SECURITY AND SAFETY: Insurance offers financial  protections against large and uncertain losses  to the lives and properties of an individual in consideration  of a small amount of premium . In life  insurance payment is made , when the bread winner of a family dies or a the term of  insurance policy expires. Fire  insurance protects against losses  due to fire while  marine  insurance offers protection  against loss of ship cargo and freight . In other  insurances, relevant  policies offer necessary protection against loss of a given contingency. (2)  PROVIDES PEACE OF MIND: Every body is exposed  to various types of risks such as a of  accident, risk of a health hazards risk of loss of property due to theft and fire etc., thus, everybody is tensed about these risks. By offering  protection to these risks,  insurance eliminate there  all tensions and fear from the minds of insured and provides them a complete peace of mind.

   (3) ELIMINATES DEPENDENCY:  In case the bread-winner of a family dies, the family members  of the deceased  insured do not have to carry begging bowls for alms. As the life of the bread-winner of the family was already insured, the insurer will pay the agreed sum to his family members. With the funds provided by the insurer the family member  can be lead a decent life without seeking helping  hand of a others.  (4)  SOURCE OF SAVINGS: Life  insurance inculcates the habit  of savings  amount the general  public by compelling  them to pay premiums regularly  on the policies taken by them. When a man knows that he must pay the premium failing which his policy will lapse  he has to cut down the unnecessary expenses and save something to pay the premium. At the time of maturity of policy, the insured gets the accumulated money which can be utilized for building a house, marriage of daughter, education of children or for any capital expenditure.  

 (5)  SOUND INVESTMENT:  Some life policies  possess all the elements of investments I, e,  regular savings, capital formation  and return on the capital along with certain additional  returns. These elements  are found in policies like endowment policies, money back policies, unit linked  insurance plans etc.,   (6) PROTECT MORTGAGED PROPERTY:   Generally the middle class policy holder purchase assets or construct a building  by borrowing  money from  insurance companies . In case the insured dies before repaying  the loan, the legal representative of deceased  insured can pay off the unpaid  loan with the amount  provided by the insurer and keeps the assets of the family intact.  

(7) OTHER USES: Life insurer fulfils the needs of an individual person such as family needs,  old age needs, Re-adjustment needs, income for widow and widower, clean-up, funds and clean-up expenses  such as a for ritual ceremonies, payment of taxes, etc., The insurer also helps  to meet requirements  of funds  in emergencies and in the event of unwanted losses in the form of compensation

FUNCTIONS OF FIRE INSURANCE POLIECES

  The true functions of fire insurance is to equalize heavy fire losses of a few individuals by distributing  them over  a large number of persons  held together by the ties of insurance  . The greatest  advantage  of fire insurance lies in a the fact of individual enterprise  and security  but his this does not counteract  the fire waste in any  way:  on the other hand it actually  encourages the dishonest insurance to burn their own property and realize  its cash value from an insurance company  which would not be possible but for  insurance. Of course  by the better system of rating and fixing  premium according  the actual  risk, the insurance does  reduce the fire waste to some extent.  

FEATURES OF FIRE INSURANCE:  The following  are the features of fire insurance: 

  (1)  ESSENTIALS OF A VALID CONTRACT: Like any other  ordinary contract a fire insurance contract must fulfil the essential elements  of a valid contracts.   ( 3)  GOOD FAITH :   A fire insurance contract being a  contract of utmost good faith requires  the insured and the insurer to disclose everything  which is a the  in their knowledge and which   might affect the contract.  (4)  INSURABLE INTEREST : A fire policy is a valid only if the policy holder has an insurable interest  in the property insured.   (5)  CONSIDERATION:  Fire insurance policy is a issued for a  lawful consideration I.e. premium.   

(6)  TENURE OF THE POLICY:  Fire insurance policies are issued usually for one year durations  but in some cases for shorter  periods also.  (7)  SCRAP: The scrap of whatever is left  of the goods or properties after damage or destroyed by fire automatically pass on the hands of the insurer after the payments of the claim under fire insurance.  (8)  SEVERAL POLICIES: In case of several policies for the same property  each insurer is a entitled to contributions  from other insurers  . After indemnifications  the insurer is subrogated  to the rights and the interest of the policy holder. 

  (9): NO CLAIM WHEN A FIRE IS  DELIBERATE:  Nothing can be recovered from fire insurance company  if the fire is caused deliberately.  (10) NO CLAIM UNDER CERTAIN CONDITION: Fire policies generally  contain conditions  exonerating the insurer from liability  under certain circumstances  like riot, civil, disturbances, war etc., In the absence of any specific  exceptions  the insurer  is liable  for all losses caused by the fire whatever  may be its causes.  (11)  INDIRECT RISKS: The fire insurance also includes indirect risks such as a comprehensive  risks, consequential  risk caused by fire and reinstatement  or rehabilitations risks which occur after the fire destroys  the goods or properties.  (12)  ASSIGNMENT:  Fire policies can be assigned  with the prior  consent of the insurer. 

  (13). INTIMATION OF FIRE: On occurrence of the fire, the insurer should be intimated immediately  so that he could salvage the remainder of the property and can also  determine the amount of loss.  (14) COVER NOTE:  In fire insurance  cover a note is a  issued in advance of the policy and usually contains the same terms and conditions  on which a policy is to be issued  . If any  a loss  occurs before the policy is issued. Cover note will sufficient to prove the insurance.  (15)  SETTLEMENT  OF CLAIM: The claim  may be settled in case or by reinstating or rehabilitating   the goods or properties damaged by fire under the fire insurance.

DEVELOPMENT OF MARINE INSURANCE

As discussed in chapter 1, Marine  insurance  is the oldest class of general  insurance  business  . It began probably in the cities of northen Italy around the end of 12th century.  From Italy, marine  insurance  spread to Spain, Belgium, England and other countries. In England marine  insurance  was spread  brought by the Lombard merchants  who established  themselves in London and controlled a large portion of British commerce in the 15th  and 16th centuries .

 Lombards were great traders in addition to their goods, they brought with them their  business methods and practices such as a banking  insurance  etc., By end of 16th century  however the Lombards lost their grip over the marine business and the  business passed on into the hands  of Lloyds  of London , who used to discuss marine matters in the coffee houses. One such  coffee house was opened by Edward Lloyd in 1680. This  become a great centre for marine business and  insurance  transactions. Generally a close-knit association  of insurers emerged in 1774 in London which was  a  known as Lloyds  Association. This association has contributed a lot for a the  development of marine  insurance   business. Even today , Lloyd’s  association is considered  as a pioneer international marine  insurance  centre. Later on, marine  insurance  as a  was modified and Marine Insurance Act 1906 was passed in England, Similar statutes  were passed in other countries also 

. In India  till  fairly recently there was no  statute relating  specifically  to marine  insurance . The subject was governed by the . Provisions  of the British Marine  insurance  Act 1938. In 1963, an Act was enacted known as the Marine  insurance  Act. It came into force  from 1st August 1963, by this Act, the rules  relating to marine  insurance  in India  have been codified.  LLOYD’S ASSOCIATION:  As Lloyd’s association has contributed a lot for a the  developments of marine  insurance  at the international level, it is better to have knowledge about its origin  and operations. In   England in addition to Marine  insurance  companies  a sizable  business  is done by the Lloyd’s  association of underwriters  who carry on marine  insurance  business in their  individual capacities. 

The Association  originated from a coffee house any run by Edward Lloyd in Tavern street in 1689, where person interested  in shipping used to meet for collecting shipping information. At that time though the Electric Telegraph was not known yet to satisfy  these customers. Lloyds  established  means of getting news about shipping by semaphore Telegraphs  from the coast, as also by means of correspondence  from the various  parts of the world. The meagre activities , rather whims of the far-sighted proprietor of the coffee-canteen graduallygrew-upin various directions concerning shipping and a are directly responsible for the establishment of a world -wide organizations  which is a  unique today. 

There is a  practically no part in the world today where one does not come across with at least  one agent of the “ Lloyd’s “ These agents , living in different parts of the world. gather information  relating  to shipping and forward the same to central organizations  where it is recorded and published daily in the Lloyds list.

CLASSIFICATION OF INSURANCE BUSINESS

  Insurance can be broadly  into two classes: 

  1.  FIRST AND THIRD PARTY INSURANCE:  whereas  third party insurance  is insuring against one’s potential liability in law to pay damage to another. The law reflects  this difference by demanding that some  third party insurance should be compulsory and also  by recognized  that in a practice. third party insurance involves  the third party as much as the insured  person. 

  2.  LIFE AND  OTHER INSURANCES:  This classification  which is well recognized  in law and meaningful  in insurance circles  distinguish  between life insurance or one hand and all other insurance on the other. This classification  is highlighted  in the  given below.   The above mentioned types of insurance are discussed  in the pages to come: 

  (1) LIFE INSURANCE: It is a contract  in which  the insurance company, in consideration of a premium paid either in lump sum  of instalment undertakes to the person for whose benefit  the policy is undertaken a certain sum of a  money on the death  of the insured  or on the expiry of the policy, whichever  occurs first. For  life insurance the risk covered  against  is death .

The life insurance company pays the sum assured in the event of death. This insurance is not only  a protections but  is a sort of investment  because a certain sum is a  returnable  to the insured at the death or at the expiry of a period.  In contract  to fire or marine insurances.  life insurance does not contain the element  of indemnity because the lose arising out of the death of a person cannot be estimated . Since  the some for which a policy is taken is assured to be paid whether there is a death or not, contract  of life insurance is also often referred to as  Life Assurance. Let us now have a look  at some interesting  aspect of life insurance in one. two, three method. 

  GENERAL  INSURANCE”  General insurance business  refers to fire , marine and miscellaneous  insurance business whether carried on singly or in a combinaion  with one or more of them. Let us see each of the components  of General  in the pages to come:  (1)  FIRE INSURANCE: It is a contract of indemnity under which the insurance  company undertakes to pay the insured for the damage or loss caused to the property insured against  fire for considerations  of premium . Normally the fire insurance policy  is for a period of one year after which it is a to be a renewed from time to time. A claim for loss by fire must satisfy the following conditions: (a) There must be actual loss: and   (b)_Fire must be accidental and non-intentional.  The risk covered by the a fire insurance contract  is the loss resulting  from fire or some cause  which is the proximate cause of the loss. If damage is caused by overheating  without  ignition, it will not be regarded  as a fire loss within  the meaning of fire insurance and the  loss will not be recoverable  from the insurer.    

MARINE INSURANCE: Insurance took its birth in the form of marine insurance. Foreign  trade in earlier days was full of several sea hazards like sinking or sea  of the ship, fire to the vessel, storms, seizure or capture by the enemy or sea  pirates, collision, etc., Marine insurance was  conceived to safeguard the traders from these evils  of the sea.. Marine insurance is an arrangement  by which the insurer undertakes to the compensate  the owner  of a ship or cargo for complete or partial  loss at sea and also the loss of freight. Generally the following objects are sought to be insured  under marine insurance.  (a)  CARGO INSURANCE: When a  marine insurance taken by the cargo owner to be compensated for loss a caused  to his cargo in the course of its transmission  , it is known as cargo insurance.  (b) FREIGHT INSURANCE: Marine insurance is taken to guard against recovery of freight  is called freight insurance.   ( C ) HULL INSURANCE: When the ship is the  life  is a  insured as a whole it is a  termed as hull insurance.