BULLET QUESTION ON INFORMATION TECHNOLOGY

GROUP IV

1 THE IMPORTANCE AND ADVANTAGE OF

INFORMATION TECHNOLGY IN THE FIELD OF
INSURANCE, IN TODAY’S COMPETETIVE SCENARIO.

 Communication plays the most vital role in today’s globally

expanding play field of insurance too as in other commercial
spheres
 Like blood in the veins is important for life, the flow of
information inter-office and / or intra-office is required
foremost for the fittest to survive.
 As Insurance is primarily based upon analysis of
accumulated data therefore role of I.T. becomes important
for further research thereon & development thereby.
 In today’s world, with the consumer becoming computer
savvy and the increased use of computers, it makes it easier
for the insurer to access the ultimate user i.e. the customer,
through its Company’s Website.
 Not only it helps the Insurer to access its prospective as well
as existing customers, but he also get to know his
requirements/grievances/feedback through the interactive
website.
 With the emergence of the new forum of
redressal/information by way of introduction of the Act of
RTI, the flow of required information between offices has
become faster through use of IT modes.
 With available facilities and by expertise of actuaries, the use
IT by insurers makes it simpler to devise and improve upon
 the products as well as meet the demand of the new scene of
de-tarrifed market.
 IT facilities help the insurers to improve upon the services to
its customers by way of expeditious issuance of policies and
settlement of claims etc.
 Analyse the financial results and thereby improve upon the
performance as well as work upon attaining profits.
 Similarly, advantage of IT can help in HR development by
establishing a database of employees and analyzing the same
for harnessing the human resources to the optimum.

2. Steps to be taken while extending an expired Project

Insurance Policy
 To ascertain reasons why the Policy was not extended
although the Project is not completed.
 To find out whether there was any Loss after the expiry of
the Policy.
 If there is no Loss and the reasons explained by the Insured
for not extending the expired Policy is satisfactory,
the proposal may be considered.
 The Insurance Company will arrange a Pre-acceptance
Inspection by a qualified Engineer to evaluate the Project in
terms of percentage completion as well as the quality of
Project work.
 The Sum Insured in that case will be reckoned as of
incomplete percentage on 100% Project Cost.
 If the report of the inspecting Engineer is not a qualifying
report, the extension of Insurance may be considered.
 Accordingly, the Insurance Premium Bill will be raised at the
initial project Premium rate but the Premium amount will
have to be paid on the Sum Insured stated above from the
date of expiry of the policy.
  If there is a Loss, the Insurance Company will impose
additional deductible with a specific condition that for the
earlier Loss the Company will have no Liability.
 If all the conditions are satisfactory the Company will issue
the endorsement extending the Policy after receipt of the
Premium

3. List out the limitations of the fire consequential loss policy

i) Under Insurance against property damage under fire

policies
ii) Difference between the value of stock at the time of fire and the
value at the time of replacement
iii)Undamaged stock in the fire
iv) Cost of preparation of fire and consequential loss claims
v)Litigation costs
vi)Third party claims
vii) Failure to recover book debts owing to destruction of records
viii) Loss of good will
ix)Deterioration or spoilage of goods of perishable nature or goods
in process not damaged by fire
x) Fines and Penalties payable due to delayed fulfillment or
cancellation of sale/service contract

4. IMPORTANCE OF REINSURANCE BY INSURANCE

COMPANIES

 Increasing the capacity to handle larger risk by passing to the

re- insurer.
 It gives greater flexibility in size and types of risk.
 Enhancing ability to accept larger lines than the capital
allows.
 Ability to write untested and new risk exposures
  To get the knowledge about the development of insurance
thinking and techniques of other countries.
 To achieve a lower expense ratio by increasing inward
Premium.
 To earn an investment income.
 To increase the net retention.
 Prevent Accumulation of claims under different classes.
 Stabilizing operating result
 Ensures long-term profitability as well as compliance of
Solvency norms.

5. Abuses of Job Rotation Policy

.>Before 2000 the GIPSA companies allowed individuals to retire

in one line and one location

>The individuals developed vested interests overriding

organizational interest

>In order to prevent this Job rotation policy was introduced

>However, without succession planning the individuals continue to

be indispensable

>Moreover, the present policy defines only stationed tenure and

not Region or Zone tenure

>Thus the favoured were accommodated within 30 kilometers and

others shunted 300 Kms.

>In the absence of rotation in line Management exposure and

experience is limited stunting individual and organizational
growth.
>Job rotation pre supposes identification of talent, Job profiling
and succession planning

>It should also be based on station, regional and zonal tenure

>This would help right distribution of Manpower and its optimal

utilization

6. Enumerate the role of intermediaries in procuring

general insurance business;

i) Fast developing distribution channel.

Ii) Corporate agents, bancassurance and brokers are Strong
intermediaries
iii) Intermediaries are bound by the code of conduct as per IRDA
iv) They have to adhere to the functions stated by IRDA
v) Link between the insured and insurer
vi) Have to be fair to the interest of insured and insurer
vii) Provides services to the policy holder
viii) Should be updated with the latest covers available in the
market and happenings in the international market
ix) Should have sound knowledge regarding the underwriting
philosophy, risk retention capacity and solvency margin of various
insurers
x) Should play a role in claims administration and management of
insured

7. What are the factors to be considered by a prudent

underwriter while accepting a risk.

i) Features of the risk to be accepted.

ii) Past claims experience of the insured.

iii) Moral Hazard of the insured.

iv) Company’s guidelines on the risk.

vi) Past claims experience of the category of risk.

vii) Competition.

viii) Whether discounts should be applied.

ix) Excess, if any to be imposed.

x) Profit consideration.

8.OPENING UP OF NON-LIFE INSURANCE SECTOR IN

INDIA-EFFECT ON GIPSA COMPANIES-WAYS OUT FOR
SURVIVAL

 Rate of accretion of business of GIPSA Companies is less

than the rate of growth of the Non-life insurance market
resulting in falling market share.
 Loss of profitable business.
 SVRS resulted in brain drain, which was meant for shedding
non-performing workforce.
 High overhead cost and slow pace of technological
advancement adding to the woes.
 Lack of operational freedom and bureaucratic mindset
becoming main hurdles.
 Motivation, training and change of mindset with service
orientation the need of the hour.
 Focus on qualified, experienced and effective employees and
need based postings.
 Merging of offices and improvement on technology front are
of immediate need.
  Constitution of Core Team at the HO and ROs to tap and
keep Corporate Clients.
 Recruitment of employees with professional qualification to
inject fresh blood and so fresh ideas in the organization.

9. Enumerate in crisp points the features of a Business

Interruption Policy to enable a prospective buyer to
understand its significance

 Business interruption policy is intended to enable a business

to recover after a disaster and prevent a shut down.
 The policy can be issued only in conjunction with a policy
covering physical loss or damage to property or as a part of a
package policy
 The period during which the business results will be affected
should be chosen in advance by the insured
 Business interruption policy compensates against the loss of
the net profit which the business would have earned had the
disaster not occurred.
 It also pays the operating expenses, which the business
continues to incur even when there is no turnover provided
they are adequately insured as standing charge.
 The insured is also compensated for any extra expenses other
than the normal operating expense which he incurs only
during the period of interruption of business provided it
results in lowering the business interruption costs.
 The wages paid to workman during the period of restoration
can also be included as an additional item under the policy.
 The insured can also include Auditors Fees which he has to
pay either as a standing charge or as a separate item
 The policies are available in different nomenclatures,
Advance Loss of profits to cover projects, Fire and
Machinery Loss of profits to cover the industrial risks
  In the changing economic scenario, a policy against business
interruption is a must for any business to retain its market
share and stay ahead of the competitors

10. MANY SOURCES OF AUTHORITY – FOR MASTERING

OTHER PEOPLE AT YOUR WORKPLACE.

 HIERARCHICAL : Power derived from position in

management or organization structure.
 INFORMATION : Information or Knowledge other does not
posses.
 EXPERTISE : possessing a particular skill set or range of
experience.
 REPUTATION: The power you acquire from your track
record and past performance.
 CHARISMA: The so called magic ingredients – personality,
voice, appearance, energy, warmth, presence etc.
 POSITIONAL : Unique nature of role. Key position in a
critical communication network.
 COERCIVE: Power to punish and impose sanctions on
others.