Contents

INTRODUCTION TO INSURANCE ....................................................................................... 2

HISTORY OF INSURANCE .................................................................................................... 5
TYPES OF INSURANCE ....................................................................................................... 10
PURPOSE AND NEED OF INSURANCES........................................................................... 15
NATURE OF INSURANCE: ................................................................................................ 18
LIFE INSURANCE ................................................................................................................. 29
MARINE INSURANCE .......................................................................................................... 39
FIRE INSURANCE ................................................................................................................ 47
VEHICLE INSURANCE......................................................................................................... 50
INSURANCE ORGANISATION IN INDIA .......................................................................... 55
CONCLUSION ........................................................................................................................ 65
BIBLIOGRAPHY .................................................................................................................... 66

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INTRODUCTION TO INSURANCE

Insurance is a means of protection from financial loss. It is a form of risk management

primarily used to hedge against the risk of a contingent, uncertain loss.

An entity which provides insurance is known as an insurer, insurance company,

insurance carrier or underwriter. A person or entity who buys insurance is known as
an insured or policyholder. The insurance transaction involves the insured assuming a
guaranteed and known relatively small loss in the form of payment to the insurer in
exchange for the insurer's promise to compensate the insured in the event of a covered
loss. The loss may or may not be financial, but it must be reducible to financial terms,
and usually involves something in which the insured has an insurable interest
established by ownership, possession, or preexisting relationship.

The insured receives a contract, called the insurance policy, which details the
conditions and circumstances under which the insurer will compensate the insured.
The amount of money charged by the insurer to the insured for the coverage set forth
in the insurance policy is called the premium. If the insured experiences a loss which
is potentially covered by the insurance policy, the insured submits a claim to the
insurer for processing by a claims adjuster. The insurer may hedge its own risk by
taking out reinsurance, whereby another insurance company agrees to carry some of
the risk, especially if the risk is too large for the primary insurer to carry.

DEFINITION

Insurance is an arrangement in which you pay money to a company, and they pay
money to you if something unpleasant happens to you, for example if your property
is stolen or damaged, or if you get a seriousillness.

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PRINCIPLES

Insurance involves pooling funds from many insured entities (known as exposures) to
pay for the losses that some may incur. The insured entities are therefore protected
from risk for a fee, with the fee being dependent upon the frequency and severity of
the event occurring. In order to be an insurable risk, the risk insured against must
meet certain characteristics. Insurance as a financial intermediary is a commercial
enterprise and a major part of the financial services industry, but individual entities
can also self-insure through saving money for possible future losses.

Insurability

Risk which can be insured by private companies typically shares common

characteristics:

1. Large number of similar exposure units: Since insurance operates through

pooling resources, the majority of insurance policies are provided for
individual members of large classes, allowing insurers to benefit from the law
of large numbers in which predicted losses are similar to the actual losses.
2. Definite loss: The loss takes place at a known time, in a known place, and
from a known cause. The classic example is death of an insured person on a
life insurance policy. Fire, automobile accidents, and worker injuries may all
easily meet this criterion. Other types of losses may only be definite in theory.
Occupational disease, for instance, may involve prolonged exposure to
injurious conditions where no specific time, place, or cause is identifiable.
three elements.
3. Accidental loss: The event that constitutes the trigger of a claim should be
fortuitous, or at least outside the control of the beneficiary of the insurance.

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Legal

When a company insures an individual entity, there are basic legal requirements and
regulations. Several commonly cited legal principles of insurance include:

1. Indemnity – the insurance company indemnifies, or compensates, the insured

in the case of certain losses only up to the insured's interest.
2. Benefit insurance – as it is stated in the study books of The Chartered
Insurance Institute, the insurance company does not have the right of recovery
from the party who caused the injury and is to compensate the Insured
regardless of the fact that Insured had already sued the negligent party for the
damages (for example, personal accident insurance)
3. Insurable interest – the insured typically must directly suffer from the loss.
Insurable interest must exist whether property insurance or insurance on a
person is involved. The concept requires that the insured have a "stake" in the
loss or damage to the life or property insured. What that "stake" is will be
determined by the kind of insurance involved and the nature of the property
ownership or relationship between the persons. The requirement of an
insurable interest is what distinguishes insurance from gambling.
4. Utmost good faith – (Uberrima fides) the insured and the insurer are bound by
a good faith bond of honesty and fairness. Material facts must be disclosed.

Indemnification

To "indemnify" means to make whole again, or to be reinstated to the position that

one was in, to the extent possible, prior to the happening of a specified event or peril.
Accordingly, life insurance is generally not considered to be indemnity insurance, but
rather "contingent" insurance (i.e., a claim arises on the occurrence of a specified
event). There are generally three types of insurance contracts that seek to indemnify
an insured:

1. A "reimbursement" policy
2. A "pay on behalf" or "on behalf of policy"
3. An "indemnification" policy

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HISTORY OF INSURANCE

The history of insurance consisted of the development of the modern business

of insurance against risks, especially regarding cargo, property, death, automobile
accidents, and medical treatment.

The industry helps to eliminate risks spreads risks from the individual to the larger
community, and provides an important source of long-term finance for both the
public and private sectors. The insurance industry is generally profitable and
provides attractive employment opportunities for white collar workers.

HISTORY OF INSURANCE IN INDIA

1. Insurance since Ancient times

In India, Insurance has well established history of more than thousand years.
In Rigveda, there is a concept called Yogakshema, which means prosperity, well
being and security of people. Also Insurance was mentioned in Manusmrithi,
Dharmashastra and Arthashastra. In those times insurance refers to pooling of
resources that could be re-distributed in times of natural calamities such as fire,
floods, epidemics and famine. This was probably a pre-cursor to modern day
insurance.

2. Modern Day Insurance

The modern form of Life Insurance came to India from England in the year
1818. Oriental Life Insurance Company started by Europeans in Calcutta was the
first life insurance company on Indian Soil.

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 The insurance companies established during that period were brought up with
the purpose of looking after the needs of European community and Indian natives
were not being insured by these companies. However, later with the efforts of
eminent people like Babu Muttylal Seal, the foreign life insurance companies
started insuring Indian lives. But Indian lives were being treated as sub-standard
lives and heavy extra premiums were being charged on them.

Bombay Mutual Life Assurance Society heralded the birth of first Indian life
insurance company in the year 1870, and covered Indian lives at normal rates.
Bharat Insurance Company (1896) was also one of such companies inspired by
nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance
companies such as the United India in Madras, National Indian and National
Insurance in Calcutta and the Co-operative Assurance at Lahore

3. Life Insurance Companies Act, 1912

In the year 1912, the Life Insurance Companies Act, and the Provident
Fund Act were passed. The Life Insurance Companies Act, 1912 made it
necessary that the premium rate tables and periodical valuations of companies
should be certified by an actuary. But the Act discriminated between foreign and
Indian companies on many accounts, putting the Indian companies at a
disadvantage.

4. Insurance Act 1938

From 44 companies with total business-in-force as Rs.22.44 Crores, it rose to

176 companies with total business-in-force as Rs.298 Crores in 1938. With a view
to protect the interests of the Indian Insurance companies, the earlier legislation
was amended with the enactment of the Insurance Act 1938, which consists
comprehensive provisions for effective control over the activities of insurers or
insurance organizations.

The Insurance Act 1938 was the first legislation governing the life insurance
and non-life insurance and to provide strict state control over insurance business.

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 5. Birth of Life Insurance Corporation of India

On 19th of January, 1956, that life insurance in India was nationalized.

About 154 Indian insurance companies, 16 non-Indian companies and 75
provident were operating in India at the time of nationalization. Nationalization
was accomplished in two stages; initially the management of the companies was
taken over by means of an Ordinance, and later, the ownership too by means of a
comprehensive bill.

The Parliament of India passed the Life Insurance Corporation Act on

June 1956, and the Life Insurance Corporation of India was created on September
1956, with the objective of spreading life insurance much more widely and in
particular to the rural areas with a view to reach all insurable persons in the
country, providing them adequate financial cover at a reasonable cost.

The LIC had monopoly till the late 90s when the Insurance sector was
reopened to the private sector.

6. History of General (non-life) Insurance

The history of general insurance dates back to the Industrial Revolution in the
west during the 17th century. General Insurance in India has its roots in the
establishment of Triton Insurance Company Ltd. at Kolkata in the year 1850 by
the Britishers. In 1907, the Indian Mercantile Insurance Ltd. was established and
was the first company to transact all classes of general insurance business.

In 1957, General Insurance Council (GIC), a wing of the Insurance

Associaton of India was established The General Insurance Council framed a code
of conduct for ensuring fair conduct and sound business practices across Non-Life
or General insurance sector.

In 1968, the Insurance Act was amended to regulate investments and set
minimum solvency margins. The Tariff Advisory Committee was also established
in the same year.

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 With the passing of the General Insurance Business (Nationalization) Act in
1972, general insurance business was nationalized. A total of 107 insurers were
amalgamated and grouped into four companies namely National Insurance
Company Ltd. at Kolkata, the New India Assurance Company Ltd. at Mumbai,
the Oriental Insurance Company Ltd at New Delhi and the United India Insurance
Company Ltd at Chennai.

7. Malhotra Committee

The Government set up a committee in 1993 under the chairmanship of R.N.

Malhotra, former Governor of RBI (Reserve Bank of India), to propose
recommendations for initiation and implementation of reforms in the Indian
insurance sector. The objective of setting up this committee was to complement
the pace of reforms initiated in the financial sector.

The aforesaid committee submitted its report in 1994 wherein it was

recommended that the private sector be permitted to enter the Indian insurance
sector. It also recommended the participation of foreign companies by allowing
them to enter into an MOU (Memorandum of Understanding) by floating Indian
companies, preferably a joint venture with Indian partners.

8. Birth of IRDA

Following the recommendations of the Malhotra Committee report, the

Insurance Regulatory and Development Authority (IRDA) Act, in 1999 was
passed by the Indian Parliament.

The IRDA opened up the Indian insurance market in August 2000 by inviting
application for registration proposals. Foreign companies were allowed entry into
Indian insurance sector with an upper ceiling on ownership of up to 26%
participation. The IRDA has been granted the powers to frame regulations under
Section 114A of the Insurance Act, 1938.

From 2000 onwards, IRDA has framed various regulations for carrying on
insurance business to protection of Indian policyholders‘ interests including the
registration of Life & Non-Life (General) Insurance companies.

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 9. Insurance a thriving sector

At present there are 28 general insurance companies including the ECGC and
Agriculture Insurance Corporation of India and 24 life insurance companies
operating in the country.

The insurance sector is a massive one and is thriving at a speedy rate of 15-
20%. Together with banking services, insurance services add about 7% to the
country‘s GDP. A well-developed and evolved insurance sector is a boon for
economic development as it provides long- term funds for infrastructure
development at the same time strengthening the risk taking ability of the country.

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TYPES OF INSURANCE

Any risk that can be quantified can potentially be insured. Specific kinds of risk that
may give rise to claims are known as perils. An insurance policy will set out in detail
which perils are covered by the policy and which are not. Below are non-exhaustive
lists of the many different types of insurance that exist. A single policy that may cover
risks in one or more of the categories set out below. For example, vehicle insurance
would typically cover both the property risk (theft or damage to the vehicle) and the
liability risk (legal claims arising from an accident). A home insurance policy in the
United States typically includes coverage for damage to the home and the owner's
belongings, certain legal claims against the owner, and even a small amount of
coverage for medical expenses of guests who are injured on the owner's property.

Business insurance can take a number of different forms, such as the various kinds of
professional liability insurance, also called professional indemnity (PI), which are
discussed below under that name; and the business owner's policy (BOP), which
packages into one policy many of the kinds of coverage that a business owner needs,
in a way analogous to how homeowners' insurance packages the coverages that a
homeowner needs.

1. Medical insurance

Health insurance policies cover the cost of medical treatments. Dental insurance, like
medical insurance, protects policyholders for dental costs. In most developed
countries, all citizens receive some health coverage from their governments, paid for
by taxation. In most countries, health insurance is often part of an employer's benefits.

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 2. Auto insurance

Auto insurance protects the policyholder against financial loss in the event of an
incident involving a vehicle they own, such as in a traffic collision.

Coverage typically includes:

 Property coverage, for damage to or theft of the car

 Liability coverage, for the legal responsibility to others for bodily injury or
property damage
 Medical coverage, for the cost of treating injuries, rehabilitation and
sometimes lost wages and funeral expenses.

3. Gap insurance

Gap insurance covers the excess amount on your auto loan in an instance where your
insurance company does not cover the entire loan. Depending on the company's
specific policies it might or might not cover the deductible as well. This coverage is
marketed for those who put low down payments, have high interest rates on their
loans, and those with 60-month or longer terms. Gap insurance is typically offered by
a finance company when the vehicle owner purchases their vehicle, but many auto
insurance companies offer this coverage to consumers as well.

4. Income protection insurance

Disability insurance policies provide financial support in the event of the policyholder
becoming unable to work because of disabling illness or injury. It provides monthly
support to help pay such obligations as mortgage loans and credit cards. Short-term
and long-term disability policies are available to individuals, but considering the
expense, long-term policies are generally obtained only by those with at least six-
figure incomes, such as doctors, lawyers, etc. Short-term disability insurance covers a
person for a period typically up to six months, paying a stipend each month to cover
medical bills and other necessities.

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Long-term disability insurance covers an individual's expenses for the long term, up
until such time as they are considered permanently disabled and thereafter Insurance
companies will often try to encourage the person back into employment in preference
to and before declaring them unable to work at all and therefore totally disabled.

5. Casualty insurance

Casualty insurance insures against accidents, not necessarily tied to any specific
property. It is a broad spectrum of insurance that a number of other types of insurance
could be classified, such as auto, workers compensation, and some liability
insurances.

Crime insurance is a form of casualty insurance that covers the policyholder against
losses arising from the criminal acts of third parties. For example, a company can
obtain crime insurance to cover losses arising from theft or embezzlement.

6. Life insurance

Life insurance provides a monetary benefit to a decedent's family or other designated

beneficiary, and may specifically provide for income to an insured person's family,
burial, funeral and other final expenses. Life insurance policies often allow the option
of having the proceeds paid to the beneficiary either in a lump sum cash payment or
an annuity. In most states, a person cannot purchase a policy on another person
without their knowledge.

Annuities provide a stream of payments and are generally classified as insurance

because they are issued by insurance companies, are regulated as insurance, and
require the same kinds of actuarial and investment management expertise that life
insurance requires. Annuities and pensions that pay a benefit for life are sometimes
regarded as insurance against the possibility that a retiree will outlive his or her
financial resources. In that sense, they are the complement of life insurance and, from
an underwriting perspective, are the mirror image of life insurance.

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Certain life insurance contracts accumulate cash values, which may be taken by the
insured if the policy is surrendered or which may be borrowed against. Some policies,
such as annuities and endowment policies, are financial instruments to accumulate or
liquidate wealth when it is needed.

In many countries, such as the United States and the UK, the tax law provides that the
interest on this cash value is not taxable under certain circumstances.

7. Burial insurance

Burial insurance is a very old type of life insurance which is paid out upon death to
cover final expenses, such as the cost of a funeral. The Greeks and Romans
introduced burial insurance c. 600 CE when they organized guilds called "benevolent
societies" which cared for the surviving families and paid funeral expenses of
members upon death. Guilds in the Middle Ages served a similar purpose, as did
friendly societies during Victorian times.

8. Property insurance

Property insurance provides protection against risks to property, such as fire, theft or
weather damage. This may include specialized forms of insurance such as fire
insurance, flood insurance, earthquake insurance, home insurance, inland marine
insurance or boiler insurance. The term property insurance may, like casualty
insurance, be used as a broad category of various subtypes of insurance, some of
which are listed below:

9. Liability

Liability insurance is a very broad superset that covers legal claims against the
insured. Many types of insurance include an aspect of liability coverage. For example,
a homeowner's insurance policy will normally include liability coverage which
protects the insured in the event of a claim brought by someone who slips and falls on
the property; automobile insurance also includes an aspect of liability insurance that
indemnifies against the harm that a crashing car can cause to others' lives, health, or
property.

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The protection offered by a liability insurance policy is twofold: a legal defense in the
event of a lawsuit commenced against the policyholder and indemnification (payment
on behalf of the insured) with respect to a settlement or court verdict. Liability
policies typically cover only the negligence of the insured, and will not apply to
results of willful or intentional acts by the insured.

10.Credit

Credit insurance repays some or all of a loan when the borrower is insolvent.
Mortgage insurance insures the lender against default by the borrower. Mortgage
insurance is a form of credit insurance, although the name "credit insurance" more
often is used to refer to policies that cover other kinds of debt. Many credit cards offer
payment protection plans which are a form of credit insurance.

Trade credit insurance is business insurance over the accounts receivable of the
insured. The policy pays the policy holder for covered accounts receivable if the
debtor defaults on payment. Collateral protection insurance (CPI) insures property
(primarily vehicles) held as collateral for loans made by lending institutions.

11.Other types

All-risk insurance is an insurance that covers a wide range of incidents and perils,
except those noted in the policy. All-risk insurance is different from peril-specific
insurance that cover losses from only those perils listed in the policy. [32] In car
insurance, all-risk policy includes also the damages caused by the own driver.

The country, foreign nationals must also be covered under DBA. This coverage
typically includes expenses related to medical treatment and loss of wages, as well as
disability and death benefits.

Expatriate insurance provides individuals and organizations operating outside of their

home country with protection for automobiles, property, health, liability and business
pursuits.

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PURPOSE AND NEED OF INSURANCES

Insurance is tricky. It's not like buying a chair or a shirt or groceries. When you buy
insurance, you're buying a promise. It's a promise that if something catastrophic
happens to your business, your carrier is going to assist you to make your business
whole again. Sometimes, though, it's tempting to question the value of insurance
because it is an intangible product.

1. Insurance Keeps Commerce Moving

In the days after the 9/11 attacks, there were many worries about insurance
coverage. Acts of war are not covered by insurance. Was terrorism an act of war?
The big question was, How would the 9/11 attacks be classified? Fortunately, the
insurance industry decided the attacks were not an act of war.

However, after 9/11, some insurers began excluding terrorism. But the federal
government stepped in and required coverage in the name of keeping commerce
moving. In this case, insurance likely prevented many businesses from avoiding
terrorist-targeted operations, such as refineries and chemical haulers.

2. Lenders Require Insurance

This reason is tied to No. 1. Lenders require that you have insurance. Think about it:
Mortgage lenders want proof of insurance before you buy or build a new building. In
short, to get the money your business needs to keep going, it‘s likely you enjoy the
benefits of insurance. Without insurance, your winning business model can't get the
funding it needs to take its first step, or your established business model can't get the
funding to evolve and better compete.

3. Insurance is Compulsory in Some States

Insurance is important because sometimes it's the law! A great example of this is auto
insurance. Auto insurance is compulsory in Wisconsin (home of HNI HQ). Auto
insurance helps mitigate the risk of life on the road (of which there are

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many!). Workers' compensation is a form of compulsory insurance that's required in
most states.

4. Insurance Grants Peace of Mind

Insurance, an intangible, provides another intangible: peace of mind. Business owners

can take on certain business ventures because they can shift the risk — thanks to
insurance. This reason is the counterpart to No. 2 — lenders require insurance.
Insurance is the required (by lenders) safety net that lets entrepreneurs explore
opportunity.

5. Insurance Ensures Family and Business Stability

Insurance is a safety net for when risks go wrong. Life insurance can support the
life of a family, should a member be lost. It‘s similar for a business. Should a key
member or piece of equipment go out of commission, the business can carry on,
thanks to insurance. This reason why insurance is important dovetails nicely with
peace of mind (No. 4). It all goes back to the idea that insurance, when activated,
makes policyholders whole again.

6. Insurance Protects the Small Guys

When you look at your industry, you see the "big guys" and the "small guys." If a risk
goes wrong, the big guys will be able to survive. They can take a hit. But the little
guys can't take a hit. As a result, they are more risk averse, and in some cases, they
sell out to the big guys. If enough little guys leave the industry (and one big guy
swallows them up), you're left with a monopoly. With insurance, however, the little
guys have support if they want to take a risk, which means they stick around longer.
What it comes down to is that insurance helps prevent monopolies from forming.

7. Insurance is the Right Thing to Do

A sobering example of insurance in action is the West Fertilizer Co. explosion in

Texas this spring. The explosion did $100 million in damage to the community,
including schools and hospitals. The fertilizer company had only $1 million in general
liability coverage.

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Now the city is suing West Fertilizer and likely will win all of the company‘s
remaining property and assets that were not damaged by the disaster. This is because
the fertilizer company did not have enough insurance. What‘s more is the city also
is suing the suppliers to the fertilizer plant, claiming they knew they were supplying
inherently dangerous materials. In the case of the West, Texas, plant explosion,
insurance could have helped a community to recover after a crisis.

8. Protection for you and your family

Your family depend on your financial support to enjoy a decent standard of living,
which is why insurance is especially important once you start a family. It means the
people who matter most in your life may be protected from financial hardship if the
unexpected happens.

9. Reduce stress during difficult times

None of us know what lies around the corner. Unforeseen tragedies such as illness,
injury or permanent disability, even death – can leave you and your family facing
tremendous emotional stress, and even grief. With insurance in place, you or your
family‘s financial stress will be reduced, and you can focus on recovery and
rebuilding your lives.

10. To enjoy financial security

No matter what your financial position is today, an unexpected event can see it all
unravel very quickly. Insurance offers a payout so that if there is an unforeseen event
you and your family can hopefully continue to move forward.

11. Peace of mind

No amount of money can replace your health and wellbeing – or the role you play in
your family. But you can at least have peace of mind knowing that if anything
happened to you, your family‘s financial security is assisted by insurance.

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NATURE OF INSURANCE:

Insurance means the act of securing the payment of a sum of money in the event
of loss or damage to property, life, a person etc., by regular payment of
premiums. Insurance is a method of spreading over a large number of persons, a
possible financial risk too serious to be conveniently sustained by an individual.
The aim of all types of insurances is to protect the owner from a variety of risks
which he anticipates. The happening of the specified event must involve some loss
to the insured or at least should expose him to adversity which is, in the law of
insurance, called commonly the ‗risk‘.

The nature of insurance depends on the nature of the risk required to be

protected. An insurance contract makes available the risk coverage to the insured.
The buyer of insurance pays a fixed premium in exchange for a promise of
compensation in the event of some specified loss. Insurance is bought because it
gives peace of mind to the holders. This comfort stage is important in personal
and business life.

Though the most important purpose of insurance is to provide risk coverage,

when the contract period extends over a long time, as in the case of life
insurance, premium payments comprise of two components – one for buying risk
coverage and the other towards savings. The joining together of risk coverage and
savings is peculiar with the life insurance and is more common in developing
countries like India.

In the industrially superior countries, the short duration life insurance contracts
without a savings component are equally popular. In the developing economies
because of the savings component and the long nature of the contract, life
insurance has become an important instrument of activating the long-term funds.
The savings component puts the life insurance in straight competition with other
financial institutions and savings instruments.

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In many developed countries, citizens are to a certain extent protected by social
security schemes provided by the government. These schemes offer financial aid
to citizens who are eligible on grounds of unemployment, old age, sickness,
disability, etc. The social security scenario in India is quite different, having
traditionally been the responsibility of the family or community. However, with
industrialization, urbanization, breakup of the joint family system and
weakening of family bondage, it has become necessary to provide social security
arrangements that are institutionalized and regulated by the state rather than the
society.

The issues relating to social security are listed in the ‗Directive Principles of
State Policy‘ of the Constitution of India. While the subject of ‗social security
insurance‘, ‗employment and unemployment‘ form Item 23 of the Concurrent
List, and the subject of ‗the welfare of labour including conditions of work‘,
‗provident fund‘, ‗employee‘s liability‘, ‗workmen‘s compensation‘, ‗invalidity
and old age pension‘ and ‗maternity benefits‘ form Item 24, also of the Concurrent
List.

During the initial years of development and planning, it was believed that with
the process of development, a greater number of workers would join the
organized sector and eventually get covered by formal social security
arrangements. However, the actual experience has proved otherwise. There is now
almost a stagnation of employment in the organized sector with increase in the
inflow of workers into the informal sector. The unorganized workforce is
characterized by scattered and fragmented areas of employment, seasonality, lack
of job security and low legislative protection. Currently, out of an estimated
workforce of nearly 400 million, only less than 10 percent have the benefits of
formal social security protection. Although the government has a few centrally
funded social assistance programmes like National Old Age Schemes and
National Family Benefit Schemes, the number of people covered as well as the
benefits is very meager. Furthermore, in a country like India, where there is no
provision for unemployment benefits, the concept of insurance becomes extremely
important.

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 1. Legal nature of insurance contract -

The concept of insurance as an effective mechanism for risk transference was

first introduced in the marine trade. Later on, the utility of the concept was
realized in its expansion to the non-marine types like life and fire insurance.
Almost until the middle of the nineteenth century these were the three types which
obtained prominence in insurance law. The applicability of the principle of
insurance has been found to be wider and today, besides the various types like
motor, accident and fidelity insurance, its scope is extended to crop and cattle
insurance. Insurance has become the usual mode of ensuring security against
future contingencies and it plays a significant role in the social and commercial
life of all modern communities.

The law of insurance forms part of the general law of contract and whatever
type of contract of insurance may be, it always represents the agreement
between the assured and the insurer. The essential ingredients of a contract
under law, for example, offer and acceptance, consideration, capacity of the
parties, mutuality of understanding and legality of object are of equal
application to a contract of insurance. But there is the existence of a separate
set of principles distinctly applicable to a contract of insurance that furnishes the
correct appraisal of the nature of insurance contract.

2. Basic principles of insurance -

Though insurance has been differentiated into marine, fire, life etc., there are
certain general principles applicable to all forms of insurance. These general
principles serve as a guide to the sound interpretation of the purpose of the
insurance contracts in their diversified forms. The principles of indemnity,
insurable interest, uberrima fides (utmost good faith) and the existence of risk are
some of the principles having common application.

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 Following are the some of the important principles of insurance:

A. Existence of risk:

It is vital to every contract of insurance that the subject matter should be exposed
to the contingency of loss or risk. Risk involves the happening of an uncertain
event adverse to the interest of the assured. In marine insurance the ship or cargo is
exposed to the loss by perils of the sea. In fire insurance the risk is in the
destruction of property by fire. In life insurance, the risk is in the death of the
assured, though a certainty, but uncertain as to the time of its happening. In an
abstract sense, risk may be defined as the chance of loss. It can either be an
uncertainty as to the outcome of some event or events, or loss as the result of at
least one possible outcome. In any case, the promise of the insurer is to save the
assured against the uncertain consequences.

B. Principle of indemnity:

Insurance is essentially a contract of indemnity. All the claims of the assured

will be adjusted only with reference to the actual loss sustained by him. Thus, it
is implied in every contract of insurance that the assured in case of a loss against
which the policy has the actual loss, is to prevent fraud on the part of the
assured. It checks the temptation to gain by unfair means and the willful causing
of loss. However, the factual basis for the application of the principle of indemnity
is not the prevention of crime or consideration of public policy but it derives from
the inherent nature of the bargain.
In assessing the amount payable on a contract of insurance, the principle of
indemnity is a guiding principle. It is common that insurers limit their liability to a
particular amount of money known as the ‗sum assured.‘ In case of loss, the ‗sum
assured‘ is all that the assured is entitled to even if the value of the premium paid
is less than it. But in all other cases, except in the valued policies (in Marine
Insurance) the insurer is liable to indemnify only to the tune of the actual loss,
even though the ‗sum assured‘ is a higher amount. In ‗valued policies,‘ the parties
agree that the value of the subject-matter shall be agreed. The object of the valued
policies is to avoid dispute after the loss occurs as to the quantum of the assured‘s
interest.

21
In contracts of life insurance, personal accident and sickness insurances and in
some forms of emergency insurance, the loss is frequently measured in monetary
terms. They are to be distinguished from contracts of indemnity like marine and
fire insurance. It is now well established that life insurance in no way resembles a
contract of indemnity. Not seldom the contract of life insurance is considered as
an arrangement for profitable investment. It is because the assured by paying the
premiums is effecting a saving, the cumulative sum which he can recover after the
expiry of the fixed period.
Life insurance may properly be considered as an investment of money because it
enables to secure an ultimate fund to those persons who have no greater
opportunity of making savings or which left to themselves, they would have found
it beyond their means. Yet, the objective of a contract of life insurance is mainly
to provide compensation for the risk of death happening at an uncertain time.
Though, it is considered as a sort of investment, it holds good in some cases, it is
departing from the essential feature of insurance security against risk. It is,
therefore observed that a life policy is not a contract of indemnity.
Generally; a contract of indemnity is entered into for the sole purpose of making
good a loss incurred. The value of a life, however, is incapable of estimation and
except, in a limited sense, cannot be ―made good‖ by insurance. The important
distinction which thus arises between life insurance and the other forms of
insurance is that the principle of ―subrogation,‖ under which the insurer (i.e., the
company) takes the right of recovery against the third party causing the loss, has
no application to life insurance.

C. Difference between the contract of insurance and wager agreement:

The basic principle of indemnity on which the greater part of the law of
insurance is based, prima facie, negatives any treatment of insurance on par with
wagering contracts. The wagering contracts are those, wherein ―two persons,
professing to hold opposite views touching the issue of a future uncertain event,
mutually agree that, dependent upon the determination of that event, one shall
win from the other, and that the other shall pay and hand over to him, a sum of
money‖.

22
Again, the difference between a wagering agreement and a contract depends
upon whether the person making it has or has not an interest in the subject
matter of the contract. That means, ―if the event happens the party will gain an
advantage, if it is frustrated he will suffer a loss‖. Probably, the common feature
of the two types of agreement – the element of uncertainty, gave rise to the
misconception of insurance in terms of gamble. According to Sir William
Anson, the Father of the ―Law of Contract‖—

A wagering contract is made normally with a view to secure profit. The

probability of the happening of an event is completely irrelevant to the interests of
the parties except for the chance of gain. A wager is concerned with the happening
of an event per se and the consequential determination of the conflicting interests.
The purpose is to win or lose in lieu of the mere probability of an event. In
insurance, the interest of the assured in the subject matter of risk known as the
insurable interest and is of the utmost importance in the insurance contract. 55 A
contract of insurance is described as aleatory contract. It is speculative to such an
extent that the parties may not know whether the event insured against will occur
or not, thus involving a case of mutual risk. The insurer in turn, for a
comparatively small sum in the form of a premium undertakes to compensate
against a heavy loss. But such undertakings will normally be with reference to
actuarial practice and therefore insurance always stands apart from a mere
speculative venture.
The insurance can only be with reference to a previously existing risk and unlike
a wager does not create risk with its inception. In the case of insurance, the
individual subjected to the risk before negotiations, obtains security and to that
extent there will be a shifting of risk rather than creation of it. Therefore, it can be
said that the insurance accomplishes the reverse of a wagering contract.
At one time the life insurance was considered to be immoral, as ―gambling in
human life‖. This idea arose because policies were taken where no insurable
interest existed and where the insurance was affected solely for speculative
purposes. Life insurance, however, is now chiefly used and properly regarded as
an economic and social necessity and when properly understood cannot be
considered as a ―wager‖, even though a large financial gain may result from the
early death of an insured. On the other hand, a wagering contract is one where

23
profit is sought to be made through chance, while the true object of life insurance
is rather the opposite, the avoidance of loss arising through chance. A life
insurance policy therefore is not a wagering contract, which would be
unenforceable on grounds of public policy. The life insurance was regarded as a
contract of indemnity similar to the other contracts of insurance even during
1854.

Therefore, following are the differentiable points between the life insurance and
other forms of insurance:
1. Most of the contracts of insurance are frequently annual contracts and the
insurers have the option to refuse renewal at the end of each and any
period of insurance. In some cases the insurer reserves the right to
terminate the insurance anytime on a proportionate return of premium in
respect of the unexpired period of the risk. Life assurance contracts are,
in the main, long-term contracts and in the absence of any fault or any
flaw the insurer has no option to cancel the insurance.
2. The risk insured against under a fire, accident or marine insurance
contract may or may not occur but the event insured against under life
assurance contract is bound to happen.
3. The general contract of insurance continues to be a contract of indemnity,
but life insurance is considered as an assurance contract.

D. Principle of insurable interest:

The test for a valid insurance contract is the existence of the insurable interest.
The ‗insurable interest‘ is nothing but an interest of such a nature that the
occurrence of the event insured against would cause financial loss to the insured
and such an interest which can be or is protected by a contract of Insurance. This
interest is considered as a form of property in the contemplation of law.

The insurable interest should exist at the time of happening of an event in the
general insurance contracts, but is not necessarily so in the case of the life
insurance contracts. This is because the former is a contract of indemnity and the
latter is a contract of assurance. Taking an example of fire insurance, it is clear
that an insured person suffers no loss under a policy if at the time of loss or
damage to the property; he has no interest in it either as full or partial owner.

24
In this context of insurable interest, life insurance stands on different ground. No
value can be assigned to human life in the same way as is done in respect of
tangible property. But all the same, it is possible to measure the extent of loss
that would be caused by the failure of a particular life. An insurable interest of
some kind is necessary to every contract of insurance of whatever kind and any
insurance made without such interest is illegal and void. The guiding factor in
this regard is that an insurable interest is a reasonable expectation of financial
benefit from the continued life of the subject or an expectation of loss if the
subject dies. For instance, a parent has a clear insurable interest in the life of a
minor child, since he is entitled to the services and earnings of that child.
The concept of insurable interest primarily appears to be an invention of the
courts. It may be necessary for the assured to show interest but common law
contains no general prohibition of contracts in which no insurable interest exists.
It was perhaps introduced to curb insurances by way of wager, and obtained
statutory recognition. The presence of insurable interest is insisted for two
reasons:

(1) An assured cannot be taken to have suffered any damage if he has no

interest in the property insured at the time of loss.

(2) Secondly, if the interest of the assured is limited to something less than the
full value of the subject matter, no greater damage than his interest in the
subject matter will result.
In both the cases; the interest in the subject-matter is required by the terms of the
contract itself, since the promise of the insurer will be only to compensate the
actual loss.
To have insurable interest, it is essential that there should be some contractual or
proprietary right, whether legal or equitable so long as it is enforceable in the
courts. Accordingly, the main principles determining the existence of insurable
interest are (a) the interest must be enforceable at law (b) the continued existence
of the interest will be beneficial to the assured. Strict legal or pecuniary interest is
not necessary. Under the contract of life insurance, the assured has insurable
interest in his own life to an unlimited extent. But, where a person takes
insurance on the life of another, the criteria applied in assessing the insurable

25
interest are of great importance. It is not the legal or beneficial interest as in the
case of marine and fire insurance, but the person insuring the life of the other
must stand in such relationship as will justify a reasonable expectation of
advantage or benefit from the continuance of the life of the person on whom the
insurance is affected. The test applicable is whether there was actual dependence
of the person affecting the insurance, whose life is insured, or he had an
expectancy of some advantage from the continued existence of the person
insured.

The effect of the requirement of insurable interest in all contracts of insurance

seems to be two-fold. Its absence makes a contract of insurance equivalent to a
wager. Also, the principle of indemnity cannot be applied unless there be some
interest in the subject-matter, because, the actual loss alone will be indemnified.
Thus it became a preventive of wagering policies and also limited the amount
recoverable to the loss sustained by the assured.

E. Principle of utmost good faith:

In the case of ordinary commercial transaction, the legal maxim ―Caveat

Emptor‖ (meaning ―let the purchaser beware‖) prevails. In the absence of an
enquiry the other party to the contract is under no obligation voluntarily to furnish
detailed information regarding the subject matter of the contract. It is, however,
understood that one party to the contract should not be misled by the other by any
false declaration. All the same, it is open to both the parties to the contract to
satisfy them and each party is entitled to make the best bargain that he can make.
As a contrast to such commercial contracts the insurance contract is dominated by
the legal maxim ―the utmost good faith‖.

The observance of the utmost good faith by the parties is vital to a contract of
insurance. Insurance is also called as an uberrima fide contract because the
parties are required to confirm to a higher degree of good faith than in the general
law of contract. Good faith and honesty though principles of equity and justice are
equally applicable to every agreement; yet, in contracts other than insurance, the
parties are free to settle their own terms. In a contract of sale of goods, ―Caveat
Emptor‖ is the principle and the seller has no obligation to make known to the
purchaser all the facts that might affect his decision. But in insurance there is
26
something more than an obligation to treat the insurer honestly and frankly. An
insurance being a device of risk transference stands on a separate basis. The non
disclosure of a material fact by the assured whether fraudulent or innocent, has the
same effect of avoiding the contract.

This fundamental principle applies to all branches of insurance. It may be

summarized from one of the several judgments pronounced:
The onus of good faith lies equally on both the parties to the contract, but in the
nature of things the assured has to pay more particular attention to the
observance of the principles. The selection of a life for insurance by the company
depends to a large extent on the information supplied by the proposer. As the
company solicits proposals from the general public whose members are total
strangers to the company, there is an urgent need for disclosing all material facts
within the knowledge of the proposer to enable the company to come to a
decision. The proposer has within his knowledge all the facts, which are material
to the risk. The proposer is morally and legally bound to disclose all matters,
which in point of fact are material to the contract.

The question as to which information is material to the contract is wide one. In

case of a dispute, a court or a committee of arbitrators may decide it. But this
cannot certainly be left to the opinion of the proposer. Every circumstance is
material which would influence the judgment of a prudent insurer in fixing the
premium or determining whether he will take the risk - this definition has been
embodied in the Marine Insurance Act, 1906 and is equally applicable to the life
insurance. Nevertheless, the proposer is excused from explicitly disclosing certain
facts. These are:

(1) What the insurer already knows?

(2) What the insurer ought to know?

(3) What the insurer waives being informed of? and

(4) Features, which lessen the risk?

27
Thus in an insurance contract each party acts on the good faith of the other. If
the proposer conceals or misrepresents material facts, the contract is vitiated.
Deliberate concealment or misrepresentation amounts to fraud, and the policy is
legally void. The innocent misstatement or misrepresentation renders the policy
voidable at the option of the insurer up to two years. In practice, however,
policies are usually allowed to continue, subject to adjustment, if the company is
satisfied that there was no intention on the part of the assured to defraud it. 77 As
stated before, full disclosure of the material information having a bearing on the
risk is necessary on the part of the proposer. This is due to the principle of
uberrima fides that governs the insurance business. The statements made by the
proposer in the proposal and his statement before a medical examiner is, in legal
language, either representations or warranties.

A warranty in insurance is a statement or condition incorporated in the

contract relating to the risk, which the applicant presents as true and upon
which it is presumed that the insurer relied in issuing the contract. Marine
insurance, the first branch of insurance to develop commercially, evolved
the doctrine of warranty. The Marine Insurance Act, 1906 (England), gives
the following definition of a warranty -

The other replies given by the proposer, which are not intended to have the force
of warranty, are known as representations. In life insurance, there is a recital
clause by which the answers given in the proposal and the replies made to the
medical examiner are made as the basis of the contract and thereby given the
effect of warranty.80 The present tendency of the offices is to treat the replies as
representation. Any misstatements are, therefore, judged from this approach and if
the company thinks that the misstatement is material, that is, the knowledge of the
correct statement would have influenced the decision of the company adversely;
the insurer can seek to avoid the policy on the ground of non-disclosure or
misstatement and must also offer to return the premiums.

28
LIFE INSURANCE
Life insurance (or life assurance, especially in the Commonwealth of Nations) is a
contract between an insurance policy holder and an insurer or assurer, where the
insurer promises to pay a designated beneficiary a sum of money (the benefit) in
exchange for a premium, upon the death of an insured person (often the policy
holder). Depending on the contract, other events such as terminal illness or critical
illness can also trigger payment. The policy holder typically pays a premium, either
regularly or as one lump sum. Other expenses, such as funeral expenses, can also be
included in the benefits.

Life policies are legal contracts and the terms of the contract describe the limitations
of the insured events. Specific exclusions are often written into the contract to limit
the liability of the insurer; common examples are claims relating to suicide, fraud,
war, riot, and civil commotion.

Modern life insurance bears some similarity to the asset management industry and life
insurers have diversified their products into retirement products such as annuities.

Life-based contracts tend to fall into two major categories:

 Protection policies: designed to provide a benefit, typically a lump sum payment,

in the event of a specified occurrence. A common form—more common in years
past—of a protection policy design is term insurance.
 Investment policies: the main objective of these policies is to facilitate the growth
of capital by regular or single premiums. Common forms (in the U.S.) are whole
life, universal life, and variable life policies.

History

Amicable Society for a Perpetual Assurance Office, established in 1706, was the first
life insurance company in the world.

An early form of life insurance dates to Ancient Rome; ―burial clubs‖ covered the
cost of members' funeral expenses and assisted survivors financially. The first
company to offer life insurance in modern times was the Amicable Society for a
Perpetual Assurance Office, founded in London in 1706 by William Talbot and Sir
Thomas Allen.[3][4] Each member made an annual payment per share on one to three

29
shares with consideration to age of the members being twelve to fifty-five. At the end
of the year a portion of the ―amicable contribution‖ was divided among the wives and
children of deceased members, in proportion to the number of shares the heirs owned.
The Amicable Society started with 2000 members.

The first life table was written by Edmund Halley in 1693, but it was only in the
1750s that the necessary mathematical and statistical tools were in place for the
development of modern life insurance. James Dodson, a mathematician and actuary,
tried to establish a new company aimed at correctly offsetting the risks of long term
life assurance policies, after being refused admission to the Amicable Life Assurance
Society because of his advanced age. He was unsuccessful in his attempts at procuring
a charter from the government.

His disciple, Edward Rowe Mores, was able to establish the Society for Equitable
Assurances on Lives and Survivorship in 1762. It was the world's first mutual
insurer and it pioneered age based premiums based on mortality rate laying "the
framework for scientific insurance practice and development" and ―the basis of
modern life assurance upon which all life assurance schemes were subsequently
based‖.

Mores also gave the name actuary to the chief official—the earliest known reference
to the position as a business concern. The first modern actuary was William Morgan,
who served from 1775 to 1830. In 1776 the Society carried out the first actuarial
valuation of liabilities and subsequently distributed the first reversionary bonus (1781)
and interim bonus (1809) among its members.[7] It also used regular valuations to
balance competing interests.[7] The Society sought to treat its members equitably and
the Directors tried to ensure that policyholders received a fair return on their
investments. Premiums were regulated according to age, and anybody could be
admitted regardless of their state of health and other circumstances.

The sale of life insurance in the U.S. began in the 1760s. The Presbyterian Synods
in Philadelphia and New York City created the Corporation for Relief of Poor and
Distressed Widows and Children of Presbyterian Ministers in
1759; Episcopalian priests organized a similar fund in 1769. Between 1787 and 1837
more than two dozen life insurance companies were started, but fewer than half a
dozen survived. In the 1870s, military officers banded together to found both the

30
Army (AAFMAA) and the Navy Mutual Aid Association (Navy Mutual), inspired by
the plight of widows and orphans left stranded in the West after the Battle of the Little
Big Horn, and of the families of U.S. sailors who died at sea.

Parties to contract

The person responsible for making payments for a policy is the policy owner, while
the insured is the person whose death will trigger payment of the death benefit. The
owner and insured may or may not be the same person. For example, if Joe buys a
policy on his own life, he is both the owner and the insured. But if Jane, his wife, buys
a policy on Joe's life, she is the owner and he is the insured. The policy owner is the
guarantor and they will be the person to pay for the policy. The insured is a
participant in the contract, but not necessarily a party to it.

The beneficiary receives policy proceeds upon the insured person's death. The owner
designates the beneficiary, but the beneficiary is not a party to the policy. The owner
can change the beneficiary unless the policy has an irrevocable beneficiary
designation. If a policy has an irrevocable beneficiary, any beneficiary changes,
policy assignments, or cash value borrowing would require the agreement of the
original beneficiary.

In cases where the policy owner is not the insured (also referred to as the celui qui
vit or CQV), insurance companies have sought to limit policy purchases to those with
an insurable interest in the CQV. For life insurance policies, close family members
and business partners will usually be found to have an insurable interest. The
insurable interest requirement usually demonstrates that the purchaser will actually
suffer some kind of loss if the CQV dies. Such a requirement prevents people from
benefiting from the purchase of purely speculative policies on people they expect to
die. With no insurable interest requirement, the risk that a purchaser would murder the
CQV for insurance proceeds would be great. In at least one case, an insurance
company which sold a policy to a purchaser with no insurable interest (who later
murdered the CQV for the proceeds), was found liable in court for contributing to
the wrongful death of the victim (Liberty National Life v. Weldon, 267 Ala.171
(1957)).

31
Contract terms

Special exclusions may apply, such as suicide clauses, whereby the policy becomes
null and void if the insured commits suicide within a specified time (usually two years
after the purchase date; some states provide a statutory one-year suicide clause). Any
misrepresentations by the insured on the application may also be grounds for
nullification. Most US states specify a maximum contestability period, often no more
than two years. Only if the insured dies within this period will the insurer have a legal
right to contest the claim on the basis of misrepresentation and request additional
information before deciding whether to pay or deny the claim.

The face amount of the policy is the initial amount that the policy will pay at the death
of the insured or when the policy matures, although the actual death benefit can
provide for greater or lesser than the face amount. The policy matures when the
insured dies or reaches a specified age (such as 100 years old).

Costs, insurability, and underwriting

The insurance company calculates the policy prices (premiums) at a level sufficient to
fund claims, cover administrative costs, and provide a profit. The cost of insurance is
determined using mortality tables calculated by actuaries. Mortality tables are
statistically based tables showing expected annual mortality rates of people at
different ages. Put simply, people are more likely to die as they get older and the
mortality tables enable the insurance companies to calculate the risk and increase
premiums with age accordingly. Such estimates can be important in taxation
regulation.

In the 1980s and 1990s, the SOA 1975-80 Basic Select & Ultimate tables were the
typical reference points, while the 2001 VBT and 2001 CSO tables were published
more recently. As well as the basic parameters of age and gender, the newer tables
include separate mortality tables for smokers and non-smokers, and the CSO tables
include separate tables for preferred classes.

The mortality tables provide a baseline for the cost of insurance, but the health and
family history of the individual applicant is also taken into account (except in the case
of Group policies). This investigation and resulting evaluation is
termed underwriting. Health and lifestyle questions are asked, with certain responses
possibly meriting further investigation.

32
Specific factors that may be considered by underwriters include:

 Personal medical history;

 Family medical history;
 Driving record;
 Height and weight matrix, otherwise known as BMI (Body Mass Index).

Based on the above and additional factors, applicants will be placed into one of
several classes of health ratings which will determine the premium paid in exchange
for insurance at that particular carrier.

Life insurance companies in the United States support the Medical Information
Bureau (MIB), which is a clearing house of information on persons who have applied
for life insurance with participating companies in the last seven years. As part of the
application, the insurer often requires the applicant's permission to obtain information
from their physicians.

Automated Life Underwriting is a technology solution which is designed to perform

all or some of the screening functions traditionally completed by underwriters, and
thus seeks to reduce the work effort, time and/or data necessary to underwrite a life
insurance application. These systems allow point of sale distribution and can shorten
the time frame for issuance from weeks or even months to hours or minutes,
depending on the amount of insurance being purchased.

The mortality of underwritten persons rises much more quickly than the general
population. At the end of 10 years, the mortality of that 25-year-old, non-smoking
male is 0.66/1000/year. Consequently, in a group of one thousand 25-year-old males
with a $100,000 policy, all of average health, a life insurance company would have to
collect approximately $50 a year from each participant to cover the relatively few
expected claims. (0.35 to 0.66 expected deaths in each year × $100,000 payout per
death = $35 per policy.) Other costs, such as administrative and sales expenses, also
need to be considered when setting the premiums. A 10-year policy for a 25-year-old
non-smoking male with preferred medical history may get offers as low as $90 per
year for a $100,000 policy in the competitive US life insurance market.

33
Most of the revenue received by insurance companies consists of premiums, but
revenue from investing the premiums forms an important source of profit for most life
insurance companies. Group Insurance policies are an exception to this.

In the United States, life insurance companies are never legally required to provide
coverage to everyone, with the exception of Civil Rights Act compliance
requirements. Insurance companies alone determine insurability, and some people are
deemed uninsurable. The policy can be declined or rated (increasing the premium
amount to compensate for the higher risk), and the amount of the premium will be
proportional to the face value of the policy.

Many companies separate applicants into four general categories. These categories
are preferred best, preferred, standard, and tobacco. Preferred best is reserved only for
the healthiest individuals in the general population. This may mean, that the proposed
insured has no adverse medical history, is not under medication, and has no family
history of early-onset cancer, diabetes, or other conditions.[21] Preferred means that the
proposed insured is currently under medication and has a family history of particular
illnesses. Most people are in the standard category.

People in the tobacco category typically have to pay higher premiums due to the
higher mortality. Recent US mortality tables predict that roughly 0.35 in 1,000 non-
smoking males aged 25 will die during the first year of a policy.[22] Mortality
approximately doubles for every extra ten years of age, so the mortality rate in the
first year for non-smoking men is about 2.5 in 1,000 people at age 65.[22] Compare
this with the US population male mortality rates of 1.3 per 1,000 at age 25 and 19.3 at
age 65 (without regard to health or smoking status).

Death proceeds

Upon the insured's death, the insurer requires acceptable proof of death before it pays
the claim. If the insured's death is suspicious and the policy amount is large, the
insurer may investigate the circumstances surrounding the death before deciding
whether it has an obligation to pay the claim.

Payment from the policy may be as a lump sum or as an annuity, which is paid in
regular installments for either a specified period or for the beneficiary's lifetime.

34
Insurance VS Assurance

The specific uses of the terms ―insurance‖ and ―assurance‖ are sometimes confused.
In general, in jurisdictions where both terms are used, ―insurance‖ refers to providing
coverage for an event that might happen (fire, theft, flood, etc.), while ―assurance‖ is
the provision of coverage for an event that is certain to happen. In the United States,
both forms of coverage are called ―insurance‖ for reasons of simplicity in companies
selling both products. By some definitions, ―insurance‖ is any coverage that
determines benefits based on actual losses whereas ―assurance‖ is coverage with
predetermined benefits irrespective of the losses incurred.

Life insurance may be divided into two basic classes: temporary and permanent; or
the following subclasses: term, universal, whole life, and endowment life insurance.

Term insurance

Term assurance provides life insurance coverage for a specified term. The policy does
not accumulate cash value. Term insurance is significantly less expensive than an
equivalent permanent policy but will become higher with age. Policy holders can save
to provide for increased term premiums or decrease insurance needs (by paying off
debts or saving to provide for survivor needs).

Mortgage life insurance insures a loan secured by real property and usually features a
level premium amount for a declining policy face value because what is insured is the
principal and interest outstanding on a mortgage that is constantly being reduced by
mortgage payments. The face amount of the policy is always the amount of the
principal and interest outstanding that are paid should the applicant die before the
final installment is paid.

Group life insurance

Group life insurance (also known as wholesale life insurance or institutional life
insurance) is term insurance covering a group of people, usually employees of a
company, members of a union or association, or members of a pension
or superannuation fund. Individual proof of insurability is not normally a
consideration in its underwriting. Rather, the underwriter considers the size, turnover,
and financial strength of the group. Contract provisions will attempt to exclude the
possibility of adverse selection. Group life insurance often allows members exiting

35
the group to maintain their coverage by buying individual coverage. The underwriting
is carried out for the whole group instead of individuals.

Permanent life insurance

Permanent life insurance is life insurance that covers the remaining lifetime of the
insured. A permanent insurance policy accumulates a cash value up to its date of
maturation. The owner can access the money in the cash value by withdrawing
money, borrowing the cash value, or surrendering the policy and receiving the
surrender value.

The three basic types of permanent insurance are whole life, universal life,
and endowment.

Whole life

Whole life insurance provides lifetime coverage for a set premium amount (see main
article for a full explanation of the many variations and options).

Universal life coverage

Universal life insurance (ULl) is a relatively new insurance product, intended to

combine permanent insurance coverage with greater flexibility in premium payments,
along with the potential for greater growth of cash values. There are several types of
universal life insurance policies, including interest-sensitive (also known as
―traditional fixed universal life insurance‖), variable universal life (VUL), guaranteed
death benefit, and has equity-indexed universal life insurance.

Universal life insurance policies have cash values. Paid-in premiums increase their
cash values; administrative and other costs reduce their cash values.

Universal life insurance addresses the perceived disadvantages of whole life namely
that premiums and death benefits are fixed. With universal life, both the premiums
and death benefit are flexible. With the exception of guaranteed-death-benefit
universal life policies, universal life policies trade their greater flexibility off for
fewer guarantees.

―Flexible death benefit‖ means the policy owner can choose to decrease the death
benefit. The death benefit can also be increased by the policy owner, usually requiring
new underwriting. Another feature of flexible death benefit is the ability to choose
option A or option B death benefits and to change those options over the course of the

36
life of the insured. Option A is often referred to as a "level death benefit"; death
benefits remain level for the life of the insured, and premiums are lower than policies
with Option B death benefits, which pay the policy's cash value—i.e., a face amount
plus earnings/interest. If the cash value grows over time, the death benefits do too. If
the cash value declines, the death benefit also declines. Option B policies normally
feature higher premiums than option A policies.

Endowments

The endowment policy is a life insurance contract designed to pay a lump sum after a
specific term (on its 'maturity') or on death. Typical maturities are ten, fifteen or
twenty years up to a certain age limit. Some policies also pay out in the case of critical
illness.

Policies are typically traditional with-profits or unit-linked (including those with

unitized with-profits funds).

Endowments can be cashed in early (or surrendered) and the holder then receives the
surrender value which is determined by the insurance company depending on how
long the policy has been running and how much has been paid into it.

Accidental death

Accidental death insurance is a type of limited life insurance that is designed to cover
the insured should they die as the result of an accident. ―Accidents‖ run the gamut
from abrasions to catastrophes but normally do not include deaths resulting from non-
accident-related health problems or suicide. Because they only cover accidents, these
policies are much less expensive than other life insurance policies.

Such insurance can also be accidental death and dismemberment insurance or AD&D.
In an AD&D policy, benefits are available not only for accidental death but also for
the loss of limbs or body functions such as sight and hearing.

Accidental death and AD&D policies very rarely pay a benefit, either because the
cause of death is not covered by the policy or because death occurs well after the
accident, by which time the premiums have gone unpaid. To know what coverage
they have, insureds should always review their policies. Risky activities such as
parachuting, flying, professional sports, or military service are often omitted from
coverage.

37
Accidental death insurance can also supplement standard life insurance as a rider. If a
rider is purchased, the policy generally pays double the face amount if the insured
dies from an accident. This was once called double indemnity insurance. In some
cases, triple indemnity coverage may be available.

Senior and pre-need products

Insurance companies have in recent years developed products for niche markets, most
notably targeting seniors in an ageing population. These are often low to moderate
face value whole life insurance policies, allowing senior citizens to purchase
affordable insurance later in life. This may also be marketed as final expense
insurance and usually have death benefits between $2,000 and $40,000. One reason
for their popularity is that they only require answers to simple ―yes‖ or ―no‖
questions, while most policies require a medical exam to qualify. As with other policy
types, the range of premiums can vary widely and should be scrutinized prior to
purchase, as should the reliability of the companies.

Health questions can vary substantially between exam and no-exam policies. It may
be possible for individuals with certain conditions to qualify for one type of coverage
and not another. Because seniors sometimes are not fully aware of the policy
provisions it is important to make sure that policies last for a lifetime and that
premiums do not increase every 5 years as is common in some circumstances.

Pre-need life insurance policies are limited premium payment, whole life policies that
are usually purchased by older applicants, though they are available to everyone. This
type of insurance is designed to cover specific funeral expenses that the applicant has
designated in a contract with a funeral home. The policy's death benefit is initially
based on the funeral cost at the time of prearrangement, and it then typically grows as
interest is credited. In exchange for the policy owner's designation, the funeral home
typically guarantees that the proceeds will cover the cost of the funeral, no matter
when death occurs. Excess proceeds may go either to the insured's estate, a designated
beneficiary, or the funeral home as set forth in the contract. Purchasers of these
policies usually make a single premium payment at the time of prearrangement, but
some companies also allow premiums to be paid over as much as ten years.

38
MARINE INSURANCE
Marine insurance covers the loss or damage of ships, cargo, terminals, and any
transport by which the property is transferred, acquired, or held between the points of
origin and the final destination. Cargo insurance is the sub-branch of marine
insurance, though Marine insurance also includes Onshore and Offshore exposed
property, (container terminals, ports, oil platforms, pipelines), Hull, Marine Casualty,
and Marine Liability. When goods are transported by mail or courier, shipping
insurance is used instead.

History

Marine insurance was the earliest well-developed kind of insurance, with origins in
the Greek and Roman marine loan. it was the oldest risk hedging instruments our
ancestors used to mitigate risk in medieval times were sea/marine (Mutuum) loans,
commenda contract, and bill of exchanges.Separate marine insurance contracts were
developed in Genoa and other Italian cities in the fourteenth century and spread to
northern Europe. Premiums varied with intuitive estimates of the variable risk from
seasons and pirates. Modern marine insurance law originated in the Lex
mercatoria (law merchant). In 1601, a specialized chamber of assurance separate from
the other Courts was established in England. By the end of the seventeenth century,
London's growing importance as a centre for trade was increasing demand for marine
insurance. In the late 1680s, Edward Lloyd opened a coffee house on Tower
Street in London. It soon became a popular haunt for ship owners, merchants, and
ships' captains, and thereby a reliable source of the latest shipping news.

Lloyd's Coffee House was the first marine insurance market. It became the meeting
place for parties in the shipping industry wishing to insure cargoes and ships, and
those willing to underwrite such ventures. These informal beginnings led to the
establishment of the insurance market Lloyd's of London and several related shipping
and insurance businesses. The participating members of the insurance arrangement
eventually formed a committee and moved to the Royal Exchange on Cornhill as
the Society of Lloyd's. The establishment of insurance companies, a developing
infrastructure of specialists (such as shipbrokers, admiralty lawyers, bankers,
surveyors, loss adjusters, general average adjusters, etc.), and the growth of
the British Empire gave English law a prominence in this area which it largely

39
maintains and forms the basis of almost all modern practice. Lord Mansfield, Lord
Chief Justice in the mid-eighteenth century, began the merging of law merchant
and common law principles. The growth of the London insurance market led to the
standardization of policies and judicial precedent further developed marine insurance
law. In 1906 the Marine Insurance Act codified the previous common law; it is both
an extremely though and concise piece of work. Although the title of the Act refers to
marine insurance, the general principles have been applied to all non-life insurance. In
the 19th century, Lloyd's and the Institute of London Underwriters (a grouping of
London company insurers) developed between them standardized clauses for the use
of marine insurance, and these have been maintained since. These are known as the
Institute Clauses because the Institute covered the cost of their publication. Out of
marine insurance, grew non-marine insurance and reinsurance. Marine insurance
traditionally formed the majority of business underwritten at Lloyd's. Nowadays,
Marine insurance is often grouped with Aviation and Transit (cargo) risks, and in this
form is known by the acronym 'MAT'.

It is common for marine insurance agencies to compete with the offerings provided by
local insurers. These specialist agencies often fill market gaps by providing cover for
hard-to-place or obscure marine insurance risks that would otherwise be difficult or
impossible to find insurance cover for. These agencies can become quite large and
eventually become market makers. They operate best when their day to day
management is independent of the insurers who provide them with the capital to
underwrite risks on their behalf.

Practice

The Marine Insurance Act includes, as a schedule, a standard policy (known as the
"SG form"), which parties were at liberty to use if they wished. Because each term in
the policy had been tested through at least two centuries of judicial precedent, the
policy was extremely thorough. However, it was also expressed in rather archaic
terms. In 1991, the London market produced a new standard policy wording known as
the MAR 91 form using the Institute Clauses. The MAR form is simply a general
statement of insurance; the Institute Clauses are used to set out the detail of the
insurance cover. In practice, the policy document usually consists of the MAR form
used as a cover, with the Clauses stapled to the inside. Typically, each clause will be
stamped, with the stamp overlapping both onto the inside cover and to other clauses;

40
this practice is used to avoid the substitution or removal of clauses.because marine
insurance is typically underwritten on a subscription basis, the MAR form
begins: We, the Underwriters, agree to bind ourselves each for his own part and not
one for another. In legal terms, liability under the policy is several and not joint, i.e.,
the underwriters are all liable together, but only for their share or proportion of the
risk. If one underwriter should default, the remainder are not liable to pick his share of
the claim. Typically, marine insurance is split between the vessels and the cargo.
Insurance of the vessels is generally known as "Hull and Machinery" (H&M). A more
restricted form of cover is "Total Loss Only" (TLO), generally used as a reinsurance,
which only covers the total loss of the vessel and not any partial loss. Cover may be
on either a "voyage" or "time" basis. The "voyage" basis covers transit between the
ports set out in the policy; the "time" basis covers a period, typically one year, and is
more common.

Protection and indemnity

A marine policy typically covered only three-quarter of the insured's liabilities

towards third parties (Institute Time Clauses Hulls 1.10.83). The typical liabilities
arise in respect of collision with another ship, known as "running down" (collision
with a fixed object is a "allision"), and wreck removal (a wreck may serve to block a
harbour, for example). In the 19th century, shipowners banded together in mutual
underwriting clubs known as Protection and Indemnity Clubs (P&I), to insure the
remaining one-quarter liability amongst themselves. These Clubs are still in existence
today and have become the model for other specialized and noncommercial marine
and non-marine mutuals, for example in relation to oil pollution and nuclear risks.
Clubs work on the basis of agreeing to accept a shipowner as a member and levying
an initial "call" (premium). With the fund accumulated, reinsurance will be purchased;
however, if the loss experience is unfavourable one or more "supplementary calls"
may be made. Clubs also typically try to build up reserves, but this puts them at odds
with their mutual status.Because liability regimes vary throughout the world, insurers
are usually careful to limit or exclude American Jones Act liability.

41
Actual total loss and constructive total loss

These two terms are used to differentiate the degree of proof that a vessel or cargo has
been lost. An actual total loss occurs when the damages or cost of repair clearly equal
or exceed the value of the property. A constructive total loss is a situation in which
the cost of repairs plus the cost of salvage equal or exceed the value. The use of these
terms is contingent on there being property remaining to assess damages, which is not
always possible in losses to ships at sea or in total theft situations. In this respect,
marine insurance differs from non-marine insurance, with which the insured is
required to prove his loss. Traditionally, in law, marine insurance was seen as an
insurance of "the adventure", with insurers having a stake and an interest in the vessel
and/or the cargo rather than simply an interest in the financial consequences of the
subject-matter's survival.

The term "constructive total loss" was also used by the United States
Navy during World War II to describe naval vessels that were damaged to such an
extent that they were beyond economical repair. This was most often applied
to destroyer-type ships in 1945, the last year of the war, many which were damaged
by kamikazes. By this time enough ships were available for the war that some could
be disposed of if severely damaged.

General averages

Average in marine insurance terms is "an equitable apportionment among all the
interested parties of an such an expense or loss."

General average stands apart for marine insurance. In order for general average to be
properly declared, 1) there must be an event which is beyond the shipowner's control,
which imperils the entire adventure; 2) there must be a voluntary sacrifice, 3) there
must be something saved. The voluntary sacrifice might be the jettison of certain
cargo, the use of tugs, or salvors, or damage to the ship, be it, voluntary grounding,
knowingly working the engines that will result in damages. General average requires
all parties concerned in the maritime venture (hull/cargo/freight/bunkers) to contribute
to make good the voluntary sacrifice. They share the expense in proportion to the
'value at risk" in the adventure. Particular average is the term applied to partial loss be
it hull or cargo.

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Average – is the situation in which the insured has under-insured, i.e., insured an item
for less than it is worth. Average will apply to reduce the claim amount payable.
An average adjuster is a marine claims specialist responsible for adjusting and
providing the general average statement. An Average Adjuster in North America is a
'member of the association of Average Adjusters' To insure the fairness of the
adjustment a General Average adjuster is appointed by the shipowner and paid by the
insurer.

Excess, deductible, retention, co-insurance, and franchise

An excess is the amount payable by the insured and is usually expressed as the first
amount falling due, up to a ceiling, in the event of a loss. An excess may or may not
be applied. It may be expressed in either monetary or percentage terms. An excess is
typically used to discourage moral hazard and to remove small claims, which are
disproportionately expensive to handle. The term "excess" signifies the "deductible"
or "retention".

A co-insurance, which typically governs non-proportional treaty reinsurance, is an

excess expressed as a proportion of a claim in percentage terms and applied to the
entirety of a claim. Co-insurance is a penalty imposed on the insured by the insurance
carrier for under reporting/declaring/insuring the value of tangible property or
business income. The penalty is based on a percentage stated within the policy and the
amount under reported. As an example: a vessel actually valued at $1,000,000 has an
80% co-insurance clause but is insured for only $750,000. Since its insured value is
less than 80% of its actual value, when it suffers a loss, the insurance payout will be
subject to the under-reporting penalty, the insured will receive 750000/1000000th
(75%) of the claim made less the deductible.

Tonners and chinamen

These are both obsolete forms of early reinsurance. Both are technically unlawful, as
not having insurable interest, and so were unenforceable in law. Policies were
typically marked P.P.I. (Policy is Proof of Interest). Their use continued into the
1970s before they were banned by Lloyd's, the main market, by which time they had
become nothing more than crude bets. A "tonner" was simply a "policy" setting out
the global gross tonnage loss for a year.

43
Specialist policies

Various specialist policies exist, including:

 Newbuilding risks: This covers the risk of damage to the hull while it is under
construction.
 Open Cargo or Shipper’s Interest Insurance: This policy may be purchased by
a carrier, freight broker, or shipper, as coverage for the shipper‘s goods. In the
event of loss or damage, this type of insurance[5] will pay for the true value of the
shipment, rather than only the legal amount that the carrier is liable for.
 Yacht Insurance: Insurance of pleasure craft is generally known as
"yacht insurance" and includes liability coverage. Smaller vessels such as yachts
and fishing vessels are typically underwritten on a "binding authority" or
"lineslip" basis.
 War risks: General hull insurance does not cover the risks of a vessel sailing into
a war zone. A typical example is the risk to a tanker sailing in the Persian
Gulf during the Gulf War. The war risks areas are established by the London-
based Joint War Committee, which has recently (when?) moved to include
the Malacca Straits as a war risks area due to piracy. If an attack is classified as a
"riot" then it would be covered by war-risk insurers.
 Increased Value (IV): Increased Value cover protects the shipowner against any
difference between the insured value of the vessel and the market value of the
vessel.
 Overdue insurance: This is a form of insurance now largely obsolete due to
advances in communications. It was an early form of reinsurance and was bought
by an insurer when a ship was late at arriving at her destination port and there was
a risk that she might have been lost (but, equally, might simply have been
delayed). The overdue insurance of the Titanic was famously underwritten on the
doorstep of Lloyd's.
 Cargo insurance: Cargo insurance is underwritten on the Institute Cargo
Clauses, with coverage on an A, B, or C basis, A having the widest cover
and C the most restricted. Valuable cargo is known as specie. Institute Clauses
also exist for the insurance of specific types of cargo, such as frozen food, frozen
meat, and particular commodities such as bulk oil, coal, and jute. Often these

44
 insurance conditions are developed for a specific group as is the case with the
Institute Federation of Oils, Seeds and Fats Associations (FOFSA) Trades Clauses
which have been agreed with the Federation of Oils, Seeds and Fats Associations
and Institute Commodity Trades Clauses which are used for the insurance of
shipments of cocoa, coffee, cotton, fats and oils, hides and skins, metals, oil
seeds, refined sugar, and tea and have been agreed with the Federation of
Commodity Associations.

Warranties and conditions

A peculiarity of marine insurance, and insurance law generally, is the use of the
terms condition and warranty. In English law, a condition typically describes a part
of the contract that is fundamental to the performance of that contract, and, if
breached, the non-breaching party is entitled not only to claim damages but to
terminate the contract on the basis that it has been repudiated by the party in breach.

By contrast, a warranty is not fundamental to the performance of the contract and

breach of a warranty, while giving rise to a claim for damages, does not entitle the
non-breaching party to terminate the contract. The meaning of these terms is reversed
in insurance law. Indeed, a warranty if not strictly complied with will automatically
discharge the insurer from further liability under the contract of insurance. The
assured has no defense to his breach, unless he can prove that the insurer, by his
conduct, has waived his right to invoke the breach, possibility provided in section
34(3) of the Marine Insurance Act 1906 (MIA). Furthermore, in the absence of
express warranties the MIA will imply them, notably a warranty to provide a
seaworthy vessel at the commencement of the voyage in a voyage policy (section
39(1)) and a warranty of legality of the insured voyage (section 41).

Salvage and prizes

The term "salvage" refers to the practice of rendering aid to a vessel in distress. Apart
from the consideration that the sea is traditionally "a place of safety", with sailors
honour-bound to render assistance as required, it is obviously in underwriters'
interests to encourage assistance to vessels in danger of being wrecked. A policy will
usually include a "sue and labour" clause which will cover the reasonable costs
incurred by a shipowner in his avoiding a greater loss.

45
At sea, a ship in distress will typically agree to "Lloyd's Open Form" with any
potential salvor. The Lloyd's Open Form (LOF) is the standard contract, although
other forms exist. The Lloyd's Open Form is headed "No cure — no pay"; the
intention being that if the attempted salvage is unsuccessful, no award will be made.
However, this principle has been weakened in recent years, and awards are now
permitted in cases where, although the ship might have sunk, pollution has been
avoided or mitigated.

In other circumstances the "salvor" may invoke the SCOPIC terms (most recent and
commonly used rendition is SCOPIC 2000) in contrast to the LOF these terms mean
that the salvor will be paid even if the salvage attempt is unsuccessful. The amount
the salvor receives is limited to cover the costs of the salvage attempt and 25% above
it. One of the main negative factors in invoking SCOPIC (on the salvor's behalf) is if
the salvage attempt is successful the amount at which the salvor can claim under
article 13 of LOF is discounted.

The Lloyd's Open Form, once agreed, allows salvage attempts to begin immediately.
The extent of any award is determined later; although the standard wording refers to
the Chairman of Lloyd's arbitrating any award, in practice the role of arbitrator is
passed to specialist admiralty QCs. A ship captured in war is referred to as a prize,
and the captors entitled to prize money. Again, this risk is covered by standard
policies.

46
FIRE INSURANCE

A fire insurance is a contract under which the insurer in return for a consideration
(premium) agrees to indemnify the insured for the financial loss which the latter may
suffer due to destruction of or damage to property or goods, caused by fire, during a
specified period. The contract specifies the maximum amount , agreed to by the
parties at the time of the contract, which the insured can claim in case of loss. This
amount is not , however , the measure of the loss. The loss can be ascertained only
after the fire has occurred. The insurer is liable to make good the actual amount of
loss not exceeding the maximum amount fixed under the policy.

A fire insurance policy cannot be assigned without the permission of the insurer
because the insured must have insurable interest in the property at the time of contract
as well as at the time of loss. The insurable interest in goods may arise out on account
of (i) ownership, (ii) possession, or (iii) contract. A person with a limited interest in a
property or goods may insure them to cover not only his own interest but also the
interest of others in them. Under fire insurance, the following persons have insurable
interest in the subject matter:-

 Owner
 Mortgagee
 Pawnee
 Pawn broker
 Official receiver or assignee in insolvency proceedings
 Warehouse keeper in the goods of customer
 A person in lawful possession e.g. common carrier, wharfinger, commission
agent.

The term 'fire' is used in its popular and literal sense and means a fire which has
'broken bounds'. 'Fire' which is used for domestic or manufacturing purposes is not
fire as long as it is confined within usual limits. In the fire insurance policy, 'Fire'
means the production of light and heat by combustion or burning. Thus, fire, must
result from actual ignition and the resulting loss must be proximately caused by such
ignition. The phrase 'loss or damage by fire' also includes the loss or damage caused
by efforts to extinguish fire.
47
The types of losses covered by fire insurance are:-

 Goods spoiled or property damaged by water used to extinguish the fire.

 Pulling down of adjacent premises by the fire brigade in order to prevent the
progress of flame.
 Breakage of goods in the process of their removal from the building where fire
is raging e.g. damage caused by throwing furniture out of window.
 Wages paid to persons employed for extinguishing fire.

The types of losses not covered by a fire insurance policy are:-

 loss due to fire caused by earthquake, invasion, act of foreign enemy,

hostilities or war, civil strife, riots, mutiny, martial law, military rising or
rebellion or insurrection.
 loss caused by subterranean (underground) fire.
 loss caused by burning of property by order of any public authority.
 loss by theft during or after the occurrence of fire.
 loss or damage to property caused by its own fermentation or spontaneous
combustion e.g. exploding of a bomb due to an inherent defect in it.
 loss or damage by lightening or explosion is not covered unless these cause
actual ignition which spread into fire.

A claim for loss by fire must satisfy the following conditions:-

 The loss must be caused by actual fire or ignition and not just by high
temperature.
 The proximate cause of loss should be fire.
 The loss or damage must relate to subject matter of policy.
 The ignition must be either of the goods or of the premises where goods are
kept.
 The fire must be accidental, not intentional. If the fire is caused through a
malicious or deliberate act of the insured or his agents, the insurer will not be
liable for the loss.

48
Types of Fire Insurance Policies:-

 Specific policy:- is a policy which covers the loss up to a specific amount

which is less than the real value of the property. The actual value of the
property is not taken into consideration while determining the amount of
indemnity. Such a policy is not subject to 'average clause'. 'Average clause' is
a clause by which the insured is called upon to bear a portion of the loss
himself. The main object of the clause is to check under-insurance, to
encourage full insurance and to impress upon the property owners to get their
property accurately valued before insurance. If the insurer has inserted an
average clause, the policy is known as "Average Policy".
 Comprehensive policy:- is also known as 'all in one' policy and covers risks
like fire, theft, burglary, third party risks, etc. It may also cover loss of profits
during the period the business remains closed due to fire.
 Valued policy:- is a departure from the contract of indemnity. Under it the
insured can recover a fixed amount agreed to at the time the policy is taken. In
the event of loss, only the fixed amount is payable, irrespective of the actual
amount of loss.
 Floating policy:- is a policy which covers loss by fire caused to property
belonging to the same person but located at different places under a single sum
and for one premium. Such a policy might cover goods lying in two
warehouses at two different locations. This policy is always subject to 'average
clause'.
 Replacement or Re-instatement policy:- is a policy in which the insurer
inserts a re-instatement clause, whereby he undertakes to pay the cost of
replacement of the property damaged or destroyed by fire. Thus, he may re-
instate or replace the property instead of paying cash. In such a policy, the
insurer has to select one of the two alternatives, i.e. either to pay cash or to
replace the property, and afterwards he cannot change to the other option.

49
VEHICLE INSURANCE

Vehicle insurance (also known as car insurance, motor insurance, or auto insurance)
is insurance for cars, trucks, motorcycles, and other road vehicles. Its primary use is to
provide financial protection against physical damage or bodily injury resulting
from traffic collisions and against liability that could also arise from incidents in a
vehicle. Vehicle insurance may additionally offer financial protection against theft of
the vehicle, and against damage to the vehicle sustained from events other than traffic
collisions, such as keying, weather or natural disasters, and damage sustained by
colliding with stationary objects. The specific terms of vehicle insurance vary with
legal regulations in each region.

History

Widespread use of the motor car began after the First World War in urban areas. Cars
were relatively fast and dangerous by that stage, yet there was still no compulsory
form of car insurance anywhere in the world. This meant that injured victims would
seldom get any compensation in an accident, and drivers often faced considerable
costs for damage to their car and property.

A compulsory car insurance scheme was first introduced in the United Kingdom with
the Road Traffic Act 1930. This ensured that all vehicle owners and drivers had to be
insured for their liability for injury or death to third parties whilst their vehicle was
being used on a public road.[1] Germany enacted similar legislation in 1939 called the
"Act on the Implementation of Compulsory Insurance for Motor Vehicle Owners."

Coverage levels

Vehicle insurance can cover some or all of the following items:

 The insured party (medical payments)

 Property damage caused by the insured
 The insured vehicle (physical damage)
 Third parties (car and people, property damage and bodily injury)
 Third party, fire and theft
 In some jurisdictions coverage for injuries to persons riding in the insured vehicle
is available without regard to fault in the auto accident (No Fault Auto Insurance)
 The cost to rent a vehicle if yours is damaged.

50
 The cost to tow your vehicle to a repair facility.
 Accidents involving uninsured motorists.

Different policies specify the circumstances under which each item is covered. For
example, a vehicle can be insured against theft, fire damage, or accident damage
independently.

If a vehicle is declared a total loss and the vehicle's market value is less than the
amount that is still owed to the bank that is financing the vehicle, GAP insurance may
cover the difference. Not all auto insurance policies include GAP insurance. GAP
insurance is often offered by the finance company at time the vehicle is purchased.

Excess

An excess payment, also known as a deductible, is a fixed contribution that must be

paid each time a car is repaired with the charges billed to an automotive insurance
policy. Normally this payment is made directly to the accident repair "garage" (the
term "garage" refers to an establishment where vehicles are serviced and repaired)
when the owner collects the car. If one's car is declared to be a "write off" (or
"totaled"), then the insurance company will deduct the excess agreed on the policy
from the settlement payment it makes to the owner.

If the accident was the other driver's fault, and this fault is accepted by the third
party's insurer, then the vehicle owner may be able to reclaim the excess payment
from the other person's insurance company.

The excess itself can also be protected by a motor excess insurance policy.

Compulsory excess

A compulsory excess is the minimum excess payment the insurer will accept on the
insurance policy. Minimum excesses vary according to the personal details, driving
record and the insurance company. For example, young or inexperienced drivers and
types of incident can incur additional compulsory excess charges.

51
Voluntary excess

To reduce the insurance premium, the insured party may offer to pay a higher excess
(deductible) than the compulsory excess demanded by the insurance company. The
voluntary excess is the extra amount, over and above the compulsory excess, that is
agreed to be paid in the event of a claim on the policy. As a bigger excess reduces the
financial risk carried by the insurer, the insurer is able to offer a significantly lower
premium.

Basis of premium charges

Depending on the jurisdiction, the insurance premium can be either mandated by the
government or determined by the insurance company, in accordance with a
framework of regulations set by the government. Often, the insurer will have more
freedom to set the price on physical damage coverages than on mandatory liability
coverage.

When the premium is not mandated by the government, it is usually derived from the
calculations of an actuary, based on statistical data. The premium can vary depending
on many factors that are believed to affect the expected cost of future claims. Those
factors can include the car characteristics, the coverage selected (deductible, limit,
covered perils), the profile of the driver (age, gender, driving history) and the usage of
the car (commute to work or not, predicted annual distance driven).

1. Neighborhood

The address of the owner can affect the premiums. Areas with high crime rates
generally lead to higher costs of insurance.

2. Gender

Because male drivers, especially younger ones, are on average often regarded as
tending to be more aggressive, the premiums charged for policies on vehicles whose
primary driver is male are often higher. This discrimination may be dropped if the
driver is past a certain age.

On 1 March 2011, the European Court of Justice decided insurance companies who
used gender as a risk factor when calculating insurance premiums were breaching EU
equality laws. The Court ruled that car-insurance companies were discriminating
against men. However, in some places, such as the UK, companies have used the

52
standard practice of discrimination based on profession to still use gender as a factor,
albeit indirectly. Professions which are more typically practiced by men are deemed
as being more risky even if they had not been prior to the Court's ruling while the
converse is applied to professions predominant among women.[40] Another effect of
the ruling has been that, while the premiums for men have been lowered, they have
been raised for women. This equalisation effect has also been seen in other types of
insurance for individuals, such as life insurance.

3. Age

Teenage drivers who have no driving record will have higher car insurance premiums.
However, young drivers are often offered discounts if they undertake further driver
training on recognized courses, such as the Pass Plus scheme in the UK. In the US
many insurers offer a good-grade discount to students with a good academic record
and resident-student discounts to those who live away from home. Generally
insurance premiums tend to become lower at the age of 25. Some insurance
companies offer "stand alone" car insurance policies specifically for teenagers with
lower premiums. By placing restrictions on teenagers' driving (forbidding driving
after dark, or giving rides to other teens, for example), these companies effectively
reduce their risk.

Senior drivers are often eligible for retirement discounts, reflecting the lower average
miles driven by this age group. However, rates may increase for senior drivers after
age 65, due to increased risk associated with much older drivers. Typically, the
increased risk for drivers over 65 years of age is associated with slower reflexes,
reaction times, and being more injury-prone.[citation needed]

4. Marital status

Statistics show that married drivers average fewer accidents than the rest of the
population so policy owners who are married often receive lower premiums than
single persons.

5. Profession

The profession of the driver may be used as a factor to determine premiums. Certain
professions may be deemed more likely to result in damages if they regularly involve
more travel or the carrying of expensive equipment or stock or if they are
predominant either among women or among men.

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 6. Vehicle classification

Two of the most important factors that go into determining the underwriting risk on
motorized vehicles are: performance capability and retail cost. The most commonly
available providers of auto insurance have underwriting restrictions against vehicles
that are either designed to be capable of higher speeds and performance levels, or
vehicles that retail above a certain dollar amount. Vehicles that are commonly
considered luxury automobiles usually carry more expensive physical damage
premiums because they are more expensive to replace. Vehicles that can be classified
as high performance autos will carry higher premiums generally because there is
greater opportunity for risky driving behavior. Motorcycle insurance may carry lower
property-damage premiums because the risk of damage to other vehicles is minimal,
yet have higher liability or personal-injury premiums, because motorcycle riders face
different physical risks while on the road. Risk classification on automobiles also
takes into account the statistical analysis of reported theft, accidents, and mechanical
malfunction on every given year, make, and model of auto.

7. Distance

Some car insurance plans do not differentiate in regard to how much the car is used.
There are however low-mileage discounts offered by some insurance providers. Other
methods of differentiation would include: over-road distance between the ordinary
residence of a subject and their ordinary, daily destinations.

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INSURANCE ORGANISATION IN INDIA

LIC (Life Insurance Corporation of India):

LIC, or Life Insurance Corporation of India, as it is known in its extended form, is
India‘s sole life insurance provider from the public sector. Having commenced
operations in 1956, LIC is the oldest life insurance company in the country, and it was
formed thanks to the amalgamation of over 245 provident societies and insurance
companies. The company‘s headquarters is located in Mumbai, and it currently boasts
more than 110 divisional offices in addition to 8 zonal offices, more than 14 lakh
insurance agents, and more than 2000 branches.
LIC offers a vast array of life insurance policies, stretching from term life insurance
plans to investments to savings products. It is one of the few companies that is
currently thriving in both rural as well as urban areas in the country.
The term insurance plans offered by LIC include LIC‘s Anmol Jeevan II, LIC‘s
Amulya Jeevan II, LIC‘s e-Term, and LIC‘s New Term Assurance Rider. The unit-
linked insurance plans offered by LIC include pension plan, child plans and
investment plans.
Under pension plans, there are three options to choose from – Jeevan Akshay – VI,
Varishtha Pension Bima Yojana, and LIC‘s New Jeevan Nidhi. The only child plan
that LIC has made available to its customers at the moment is LIC‘s New Children‘s
Money Back Plan, but there are 12 options so far as investment plans are concerned,
including LIC Jeevan Tarun Plan, LIC‘s New Jeevan Anand, LIC‘s New Endowment
Plan, LIC‘s Single Premium Endowment Plan, LIC‘s Jeevan Rakshak Plan, LIC‘s
Limited Premium Endowment Plan, LIC‘s JEEVAN Lakshya, LIC‘s Jeevan Sangam,
LIC‘s New Bima Bachat, LIC‘s New Money Back Plan – 20 Years, LIC‘s New
Money Back Plan – 25 Years, and LIC‘s Jeevan Tarang.

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SBI Life Insurance:
SBI Life Insurance was registered in 2001 and commenced operations as a joint
venture between BNP Paribas Cardiff and State Bank of India – two among the
biggest service providers so far as the finance sector is concerned. BNP Paribas
Cardiff holds 26% stock in the company while SBI holds the other 74%.
SBI Life Insurance Company has one of the largest product portfolios in the industry,
offering solutions for a variety of situations. The unit-linked insurance plans made
available by the company include SBI Life – eWealth Insurance, SBI Life – Smart
Wealth Assure, SBI Life – Smart Scholar, SBI Life – Smart Power Insurance, SBI
Life – Smart Wealth Builder, SBI Life – Saral Maha Anand and SBI Life – Smart
Elite. The two child insurance plans that can be purchased from the company include
SBI Life – Smart Champ Insurance and SBI Life – Smart Scholar.
The pension plans offered by SBI Life Insurance Company include SBI Life – Saral
Pension, SBI Life – Retire Smart and SBI Life – Annuity Plus. The protection plans
that can be availed from the company include SBI Life – Smart Shield, SBI Life –
Saral Shield, SBI Life – eShield and SBI Life – Grameen Bima. If you‘re looking for
savings plans, the options at your disposal include SBI Life – Smart Swadhan Plus,
SBI Life – Smart Humsafar, SBI Life – Smart Money Planner, SBI Life – CSC Saral
Sanchay, SBI Life – Smart Income Protect, SBI Life – Smart Guaranteed Savings
Plan, SBI Life – Smart Money Back Gold, SBI Life – Shubh Nivesh, SBI Life – Saral
Swadhan Plus and SBI Life – Flexi Smart Plus.
In addition to individual policies, SBI Life Insurance Company also offers group
insurance policies which include corporate solutions such as SBI Life – Kalyan ULIP
Plus, SBI Life – CapAssure Gold, SBI Life – Gaurav Jeevan and SBI Life – Swarna
Jeevan. The group protection plans offered by the company include SBI Life –
Pradhan Mantri Jeevan Jyoti Bima Yojana, SBI Life – Sampoorn Suraksha and SBI
Life – Suraksha Plus. The company also offers a group loan protection plan called
SBI Life – RiNn Raksha.
The group micro insurance plans offered by SBI Life Insurance Company include SBI
Life – Grameen Shakti and SBI Life- Grameen Super Suraksha. The company also
offers online plans such as SBI Life – eShield, SBI Life – eWealth Insurance and SBI
Life – Annuity Plus.

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ICICI Prudential Life Insurance:
ICICI Prudential Life Insurance Company was formed as a joint venture between
Prudential Plc., which is one of the largest global financial services group from the
UK, and ICICI Bank, which is among the biggest and most successful private banking
institutions in India. ICICI Bank holds 74% of the stake in ICICI Prudential Life
Insurance Company, while Prudential Plc. Holds 26%.
The company remains India‘s primary private life insurer to have been accredited
from Fitch Ratings with a National Insurer Financial Strength rating of AAA. ICICI
Prudential has was also voted as the country‘s Most Trusted Private Life Insurer for
three years in succession thanks to its delivery of quality products and services.
ICICI Prudential Life Insurance Company offers a wide variety of plans and schemes.
The only term life insurance plan made available by the company is ICICI Pru
IProtect Smart, but customers have options to choose from when it comes to selecting
unit-linked insurance plans. The ULIPs offered by ICICI Prudential Life Insurance
Company include ICICI Pru Guaranteed Wealth Protector, ICICI Pru Wealth Builder
II, ICICI Pru Elite Wealth II, and ICICI Pru Elite Life II.
ICICI Prudential Life Insurance Company also offers pension plans to its customers,
and the options at your disposal include ICICI Pru Easy Retirement and ICICI Pru
Immediate Annuity, whereas the child plans from which you can choose include
ICICI Pru Smart Life, ICICI Pru SmartKid Regular Premium, and ICICI Pru
SmartKid Premier. The investment plans you can avail from ICICI Life Insurance
Company include ICICI Pru Cash Advantage and ICICI Pru Savings Suraksha.

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HDFC Standard Life Insurance:
HDFC Standard Life Insurance Company is among the best Life Insurance providers
in India. It is a private institution that offers long-term insurance solutions to
customers in almost 1000 cities across the country. Registered in 2000, the company
is headquartered in Mumbai and currently boasts around 14,000 employees in
addition to over 400 branches to ensure that all the insurance requirements of their
customers are catered to. The main products offered by the company include
investment, savings, pension and health in addition to other specially-designed
solutions for women and children.
Among all its achievements, HDFC Standard Life Insurance Company stands out for
becoming the pioneer in the finance sector to provide pension plans to customers
under the new IRDA regulations. The company offers protection plans, health plans,
retirement plans, young star plans, savings and investment plans, and women‘s plans.
As of now, the only protection plan offered by the company is HDFC Life Click to
Protect Plus, but there are plenty of options to choose from when it comes to
retirement plans, including HDFC Life Personal Pension Plans, HDFC Click to Retire
ULIP, HDFC Life Pension Super Plans, HDFC Life Single Premium Pension Plans,
HDFC Life Guaranteed Pension Plans and HDFC Life New Immediate Annuity Plan.
HDFC Standard Life Insurance Company offers two kinds of health plans, viz. HDFC
Life Cancer Care Plan and HDFC Life Health Assure Plan. The savings and
investment plans offered by the company include HDFC Life Click2Invest Plans,
HDFC Life Sanchay, HDFC Life Super Income Plan, HDFC SL Crest, HDFC Life
ClassicAssure Plus, HDFC Life Super Savings Plan, HDFC Life ProGrowth Plus,
HDFC SL ProGrowth Super II, HDFC SL ProGrowth Flexi, HDFC Life Sampoorna
Samriddhi Plus, HDFC Life Sampoorna Nivesh, HDFC Life Invest Wise Plan and
HDFC Life Uday.

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Bajaj Allianz Life Insurance:
Bajaj Allianz Life Insurance Company was formed as a joint venture between
Germany‘s Allianz SE and India‘s Bajaj Finserv. The company was registered in
2001 under the name of Bajaj Allianz Life Insurance Company and has turned out to
be one of the best and most trusted life insurers in the country. Apart from life
insurance products, the company also offer several general insurance products as well
as other financial services in 70 countries across the globe. The company‘s
performance in recent years has been truly exceptional and its receipt of the ―Best
Life Insurance Company in the Private Sector‖ at the BFSI Awards ceremony in 2015
confirmed just that.
The term life insurance solutions offered by the company include iSecure Plan,
iSecure More Plan and iSecure Loan Plan. The unit-linked insurance policies offered
by the company include Investment Plan – Future Gain and Investment Plan –
Fortune Gain. The company also offers pension plans such as Bajaj Allianz Lifelong
Assure Plan, Bajaj Allianz Pension Guarantee Plan and Bajaj Allianz Retire Rich
Plan.
Among the child plans offered by Bajaj Allianz Life Insurance Company are
Traditional Savings Plan – Bajaj Allianz Young Assure and Bajaj Allianz Lifelong
Assure, while the investment plans made available to customers include Savings Plan
– Save Assure, Savings Plan – Guarantee Assure and Investment Plan – Invest
Assure.

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Max Life Insurance:
Having commenced operations in 2001 as a joint venture between Mitsui Sumitomo
Insurance Co. Ltd. – a general insurance company that is also a member of the MS &
AD Insurance Group, and Max India Ltd. – a multi-business corporate firm from
India, Max Life Insurance Company has grown into one of the most efficient and
admired private life insurance providers in the country.
The company has developed a reputation for providing comprehensive retirement and
life insurance solutions for protection and long-term savings to over 30 lac individuals
across the country. Max Life Insurance Company has won several accolades over the
years to show for its quality products and services, the most prominent of the lot being
the ―Best Underwriting Initiative of the Year‖ at the Asia Banking Financial Services
and Insurance Excellence Awards in 2015.
The company boasts a relatively large product portfolio. The term life insurance plans
offered by Max Life Insurance Company include Max Life Online Term Plan Basic
Life Cover, Max Life Online Term Plan Life Cover + Monthly Income, Max Life
Online Term Plan Life Cover + Increasing Monthly Income, Max Life Super Term
Plan, Max Life Platinum Protect II and Max Life Premium Return Protection Plan.
The unit-linked insurance plans offered by the company include Regular Premium
plans, Ma Life Fast Track Super Plan and Max Life Maxis Super Plan.
Among the pension plans you can purchase from Max Life Insurance Company are
Max Life Forever Young Pension Plan, Max Life Guaranteed lifetime Income Plan
and Max Life Life Perfect Partner Plan. The investment plans on offer include Max
Life Guaranteed Income Plan, Max Life Whole Life Super and Max Life Life Gain
Premier. The only child plan available with the company at the moment is Max Life
Shiksha Plus Super Plan.

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Birla Sun Life Insurance:
Birla Sun Life Insurance Company Limited was formed as a joint venture between
Sun Life Financial Inc. and the Aditya Birla Group and is currently one of the best
global financial services provider. The company has gained a strong reputation for
contributing significantly to the growth of the life insurance sector, making it one of
the biggest insurance providers in India. The company currently has more than two
million customers as it offers a comprehensive range of policies that include
protection plans, solutions for the future of children, health and wellness products,
wealth with protection plans, savings with protection plans and retirement packages.
Birla Sun Life Insurance Company Limited has more than 500 branches in addition to
over 85,000 empanelled advisors. The company is also accredited with the release of
unit-linked life insurance policies among various other pioneering feats.
The term life policies offered by Birla Sun Life Insurance Company Limited include
Birla Sun Life Insurance Protector Plan Plus, Birla Sun Life Insurance Future Guard
Plan, Birla Sun Life Insurance Easy Protect Plan and Birla Sun Life Insurance Protect
@ Ease. The savings with protection plans you can purchase from the company
include Birla Sun Life Insurance Vision MoneyBack Plus Plan, Birla Sun Life
Insurance Vision Life Income Plan, Birla Sun Life Insurance VisionEndowment Plan,
Birla Sun Life Insurance Savings Plan, Birla Sun Life Insurance Vision Life Secure
Plan, Birla Sun Life Insurance Income Assured Plan, Birla Sun Life Insurance Vision
Regular Returns Plan, Birla Sun Life Insurance Vision Endowment Plus Plan and
Birla Sun Life Insurance Guaranteed Future Plan.
The only solution for children‘s future offered by Birla Sun Life Insurance Company
Limited is the Birla Sun Life Insurance Vision Star Plan. However, there are options
to choose from when it comes to purchasing retirement solutions, including Birla Sun
Life Insurance Empower Pension Plans, Birla Sun Life Insurance Immediate Annuity
Plan and Birla Sun Life Insurance Empower Pension.
Birla Sun Life Insurance Company Limited also offers unit-linked insurance plans,
such as Birla Sun Life Insurance Wealth Max Plan, Birla Sun Life Insurance Wealth
Secure Plan, Birla Sun Life Insurance Wealth Assure Plan, Birla Sun Life Insurance
Fortune Elite Plan and Birla Sun Life Insurance Wealth Aspire Plan.

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Kotak Life Insurance:
One of the largest life insurance providers in India, Kotak Mahindra Life Insurance
Company is a joint venture between Old Mutual Fund and Kotak Mahindra Bank Ltd.
Old Mutual Fund holds 26% of the stake in the company while Kotak Mahindra Bank
Ltd. holds the remaining 74%. The headquarters of the company is located in Mumbai
and the company has grown exceptionally ever since it commenced operations in
2001. In fact, it is India‘s fastest growing insurance provider and currently boasts
more than 4 million customers. The clam settlement ratio of the company is among
the highest in the industry, highlighting the company‘s quality business practice.
Kotak Mahindra Life Insurance Company has an impressive insurance product
portfolio. The term life insurance plans that can be purchased from the company
include Kotak Preferred e-Term Plan, Kotak Preferred Term Plan, Kotak Saral
Suraksha and Kotak Term Plan. The unit-linked insurance plans offered by the
company include Kotak Assured Income Plan, Kotak Single Invest Advantage, Kotak
Platinum, Kotak Wealth Insurance, Kotak Ace Investment Plan and Kotak Invest
Maxima.
The pension plans made available by Kotak Mahindra Life Insurance Company
include Kotak e-Lifetime Income Plan and Kotak Lifetime Income Plan, but the only
option available under child plans is Kotak Headstart Child Assure. However, when it
comes to investment plans, you have a variety of options to choose from, including
Kotak Sampoorn Bima Micro-Insurance Plan, Kotak Gramin Bima Yojana, Kotak
Assured Income Accelerator, Kotak Premier Moneyback Plan, Kotak Assured
Savings Plan, Kotak Classic Endowment Plan and Kotak Premier Endowment Plan.

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Reliance Life Insurance :
Reliance Life Insurance Company Limited is among the most important subsidiaries
of Reliance Capital, which is among the best financial service companies in the
country. The company has a diversified business portfolio, and customers can find
products across a variety of categories, including insurances of all types, mutual funds
and asset management.
Reliance Life Insurance Company Limited has more than 10 million customers and
boasts in excess of 800 branches around the country. The company also employs more
than 1 lac advisors, and has gained a reputation as the biggest non-bank supported
private life insurance company.
Reliance Life Insurance Company Limited has a relatively huge insurance portfolio
too. Whether you are looking for protection plans, health plans, child plans, retirement
plans, savings and investment plans, group plans or unit-linked life insurance policies,
the company has it all.
Under protection plans, the options at your disposal include Reliance Term Plan,
Reliance Online Term Plan, and Reliance Online Income Protect. Under health plans,
customers can choose from Reliance Easy Care Fixed Benefit Plan, Reliance Care for
You Advantage Plan, and Reliance Health Total. The retirement plans offered by
Reliance Life Insurance Company Limited are Reliance Immediate Annuity Plan and
Reliance Smart Pension Plan.
With regards to savings and investment plans, Reliance Life Insurance Company
Limited offers three options, viz. Reliance Super Money Back Plan, Reliance
Guaranteed Money Back Plan, Reliance Fixed Savings, Reliance Blue Chip Savings
Insurance Plan, Reliance Increasing Income Insurance Plan, Reliance Fixed Money
Back Plan, Reliance Lifelong Savings, Reliance Future Income, Reliance Smart Cash
Plus Plan, Reliance Money Multiplier Plan, Reliance Endowment Plan, and Reliance
Super Endowment Plan.
Among the child insurance plans that you can choose from Reliance Life Insurance
Company Limited are Reliance Education Plan and Reliance Child Plan. And under
unit-linked life insurance policies, the options include Reliance Pay Five Plan and
Reliance Classic Plan II.

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PNB MetLife Insurance
Founded in 2001, PNB MetLife India Insurance Company Limited, also known as
PNB MetLife, has established itself as one of india‘s most successful, and reliable life
insurance provider. Some of the prominent shareholders in this venture include
MetLife International Holdings LLC (MIHL), Jammu & Kashmir Bank Limited
(JKB), Punjab National Bank Limited (PNB), M. Pallonji & Co. Private Limited,
besides others. Moving forward, PNB got approval from the Competition
Commission of India in January 2013 to acquire a 30% stake in MetLife India
Insurance, following which, the name of the venture was rebranded to PNB MetLife
India Ltd.
PNB MetLife boasts of a country-wide presence with 111 offices located across the
country which cater to the insurance requirements of more than 100 million people.
This feat has been made possible primarily with the help of PNB‘s wide-spread and
penetrating distribution network, along with MetLife‘s long-standing expertise in the
field of insurance.
With the help of multiple bank partners and over 10,000 financial experts, PNB
MetLife has makes affordable insurance solutions accessible to millions of people.
Currently, PNB MetLife offers a variety of life insurance plans such as online plans,
child plans, savings plans, health plans, wealth plans, group insurance plans,
retirement plans and rural plans.
Some of the leading insurance plans offered by PNB MetLife include PNB MetLife
Guaranteed Income Plan, PNB MetLife guaranteed Savings Plan, PNB MetLife
money Back Plan, PNB MetLife Mera Term Plan, PNB MetLife Mera Heart &
Cancer Care, PNB MetLife Endowment Savings Plan, PNB MetLife Mera Jeevan
Suraksha Plan, MetLife Smart Child Plan, PNB MetLife College Plan, PNB MetLife
Family Income Protector Plus, PNB MetLife immediate Annuity Plan, PNB MetLife
Retirement Savings Plan, PNB MetLife Monthly Income Plan-10 Pay, among others.

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CONCLUSION

Insurance is an umbrella against a rainy day. It is an agreement between the Insurer

and the Insured in which the insured is assured by the insurer to compensate the loss
occurred by a particular cause during a certain period by a definite cause in exchange
of some consideration known as premium. Life Insurance provides protection to the
family at the premature death of an individual or gives adequate amount at an old age
when earning capacities are reduced. In this way, Life Insurance does not only
provide protection but also it is a sort of investment wherein a certain sum is
returnable to the insured at the time of death or at the expiry of certain period. This
agreement is based on utmost good faith and insurable int As regards Life Insurance
Corporation of India, it came into existence on Sep 1, 1956 when the Life Insurance
business was nationalized by the Government of India. Since then, Life Insurance
Business has undergone a number of changes. In 1993, the Government of India setup
the Malhotra Committee headed by Shri R.N. Malhotra, the Governor of Reserve
Bank of India with a view to suggest reforms in the Insurance Sector. At the
recommendation of this committee, Insurance Regulatory Development Authority
came into existence in 2000 to regulate the Insurance Business in Private Sector. As
regards ICICI Prudential Life Insurance Company Limited, it was established on
November 24, 2000 and since then, it has been working in the partnership of ICICI
Bank and Prudential plc. U.K. and occupy a place of pride being number one in
Private Sector rest.

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BIBLIOGRAPHY

WEBSITE:
 www.google.com
 www.investopedia.com
 https://en.wikipedia.org/
 https://iedunote.com/fire-insurance
 https://archive.india.gov.in/business/manage_business/fire_insurance.p
hp

BOOKS:
 FUNDAMENTAL OF INSURANCE
 INSURANCE CONCEPTUAL

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