WEST EVAN COLLEGE OF BUSINESS, HEALTH AND ALLIED SCIENCE

COMMUNICATION
Communication is the transmission of information from one point or person
to another point or person. Involves two-way process of reaching mutual
understanding, in which participants not only exchange (encode-decode)
information, news, ideas and feelings but also create and share meaning. In
general, communication is a means of connecting people or places. In
business, it is a key function of management--an organization cannot operate
without communication between levels, departments and employees. See also
communications.

Communication is a function that is indispensable for commerce. All types of

trade transactions, receiving of trade inquiries, sending of information about
dispatch of goods, receiving of payment, etc.” Communication is a function
that is indispensable for commerce. All types of trade transactions, receiving
of trade inquiries, sending of information about dispatch of goods, receiving
of payment, etc. are possible with the help of Communication

Trade business cannot function efficiently if the buyers and sellers do not
make proper use of communication channels. It is through communication
that all formalities of transaction are completed. An efficient communication
system brings businessman close to each other not only in one country but
in the whole world.

Management and supervision also remain incomplete and shabby in the

absence of proper communication. Communication means sharing of ideas in
common. When we communicate, we are trying to establish a rationale with
someone. We are trying to share information, ideas or attitudes.
Communication is basically the fine-tuning of the receiver and the sender,
aimed at affecting a particular message.

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ELEMENTS OF COMMUNICATIONS

Seven major elements of communication process are: (1) sender (2) ideas (3)
encoding (4) communication channel (5) receiver (6) decoding and (7)
feedback.

Communication may be defined as a process concerning exchange of facts or

ideas between persons holding different positions in an organisation to
achieve mutual harmony. The communication process is dynamic in nature
rather than a static phenomenon.

Communication process as such must be considered a continuous and

dynamic inter-action, both affecting and being affected by many variables.

1. Sender: The person who intends to convey the message with the
intention of passing information and ideas to others is known as sender
or communicator.

2. Ideas: This is the subject matter of the communication. This may be an

opinion, attitude, feelings, views, orders, or suggestions.

3. Encoding: Since the subject matter of communication is theoretical

and intangible, its further passing requires use of certain symbols such
as words, actions or pictures etc. Conversion of subject matter into
these symbols is the process of encoding.

4. Communication Channel: The person who is interested in

communicating has to choose the channel for sending the required
information, ideas etc. This information is transmitted to the receiver
through certain channels which may be either formal or informal.

5. Receiver: Receiver is the person who receives the message or for whom
the message is meant for. It is the receiver who tries to understand the
message in the best possible manner in achieving the desired objectives.

6. Decoding: The person who receives the message or symbol from the
communicator tries to convert the same in such a way so that he may
extract its meaning to his complete understanding.

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7. Feedback: Feedback is the process of ensuring that the receiver has

received the message and understood in the same sense as sender
meant it.

THE IMPORTANCE OF COMMUNICATION IN BUSINESS

Unity

A company that works to develop strong communication with each other is a

united company. Each team member shares the same goals in this case, and
everyone knows what their co-workers have on their plate. By simply keeping
in touch on a regular basis, everyone remains united and working together.
This instils a cooperative atmosphere rather than encouraging the idea of
having a bunch of individual people only looking out for themselves. All
companies have a vision for their success, and through communication, that
vision spreads to everyone. The result is a happier, healthier workplace where
things get done more efficiently and a bigger likelihood of retaining the top
talent.

Feedback

When communication is stressed, it creates an open environment where

everyone feels comfortable talking with each other. When that level of comfort
is present in a business, employees feel confident that they can express their
ideas about the work process to each other and even to management.
Feedback is a vital component of communication, and it works both ways.
Management give feedback to the employees in regards to how well they’re
faring at their duties, and employees feel safe giving feedback on how well the
company’s policies and procedures are working. Communication is not
communication if it only comes from one direction.

Improves Customer Relationships

No business would succeed without customers, and every company exists to

serve them. Communicating with customers is every bit as important as

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communication within the workplace. Thankfully, this is easier today that it’s
ever been, as there are a wide variety of ways to keep in touch with your
customer base. Consider this course on connecting with your customer base
through blogging for one method, but no matter what method you use to reach
out to your customers, keeping constant communication going will bring your
company much closer with the ones that spend the money on your products
or services.

Improves Employee Relationships

No friendship is ever formed without a good level of communication. The more

a company’s employees communicate with each other, the closer they will
become naturally over time. Bear in mind that much of communication takes
place without the need for words, so it’s important to master both verbal and
non-verbal communication, both in the written form as well as body language.

Enforcing Rules

Every business must have a code of policies and procedures that must be
followed in order for everyone to succeed. Maybe there is a specific process for
a task, for example, or maybe there are certain consequences for
underperforming. Either way, you want to make all this very clear to your
employees, or it isn’t possible to do this without strong communication skills.

Enhanced Innovation

No matter how skilled and talented the people at the top of your company are,
you can never have too many ideas. By encouraging everyone at your
business, whether big or small, to openly share their thoughts without fear of
being shut down, you will quickly notice the employees that have the most to
add. Your best employees have ideas on how you can make your business run
even better, and it’s wise to give them a chance to speak. A business can
become more innovative overnight just by working together to be good
communicators, and that’s bad news for your competition and good news for
your revenue.

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TYPES OF COMMUNICATION

1. Oral communication is the process of verbally transmitting

information and ideas from one individual or group to another. Oral
communication can be either Formal or Informal. Examples of informal
oral communication include:

▪ Face-to-face conversations

▪ Telephone conversations

▪ Discussions that take place at business meetings

2. Written communication involves any type of message that makes use

of the written word. Written communication is the most important and
the most effective of any mode of business communication.

Examples of written communications generally used with clients or other

businesses include:

▪ Email

▪ Internet websites

▪ Letters

▪ Proposals

▪ Telegrams,

▪ Faxes

▪ Postcards

▪ Contracts

▪ Advertisements

▪ Brochures and

▪ News releases.

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3. Visual communication is the transmission of information and ideas

using symbols and imagery. It is one of three main types of
communication, along with verbal communication (speaking) and non-
verbal communication (tone, body language, etc.). Visual
communication is believed to be the type that people rely on most, and
it includes signs, graphic designs, films, typography, and countless
other examples.

FACTORS WHICH SHOULD BE CONSIDERED IN CHOOSING A MEDIUM

OF COMMUNICATION.

▪ Quickness/Speed There are many types of transactions conducted

during the business hours. One must speed up the transmission of
message on the basis of importance and urgency of transaction. If the
party is available in the transacted place, oral communication is
enough. If the party is residing in the same city, telephonic message is
good: if outside the city, message through Subscribers' Trunk Dialing
(STD). If much distance is there, then telegram can also be sent. If the
matter is not urgent, a mere letter will be sufficient.
▪ Accuracy If the accuracy of the message is the prime motive, a letter
will serve the purpose Telephonic conversation might be misheard by
the other party. Even telegrams, sometimes lead to wrong conclusion.
Therefore, success can be reaped by a letter, provided the letter is
properly written. Therefore, the communication medium which is
selected should ensure accuracy in the transmission of messages.
▪ Safety There is always risk when valuables are sent by post. Therefore,
for safety purposes, important documents may be sent by registered
post; for further safety by registered and insured post.
▪ Secrecy In business field, certain transactions have to be kept
confidential. When one aims at secrecy, letter will achieve the aim. In
other communication systems, secrecy may leak out to unwanted
persons.

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▪ Record Record of the message is essential and is possible only if it is in

writing. For this purpose, duplicate copies of the letters can be
preserved and they are good proof against disputes, relating to the
transaction, in future. There is no record for oral communication.
▪ Cost The cost of communication is also important. Before adopting any
system, the expenses in different means may also be considered. The
material cost (stationery) and labour cost in preparing the letter will
also be considered.
▪ Distance Distance between the persons who are parties to
communication is an important factor. If distance is too short, face to
face communication is suitable. If there is distance, message can be
transmitted through phone or telegram or letter.

BARRIERS OF COMMUNICATION

▪ Lack of skilled personnel in communication

▪ Lack of modern communication equipment

▪ increased in costs in communication

▪ bad weather condition affects communication adversely.

▪ remoteness of some areas makes them not easily accessible.

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 WEST EVAN COLLEGE OF BUSINESS, HEALTH AND ALLIED SCIENCE

TOPIC: INSURANCE

Insurance: is an agreement in which a person makes regular payments to a

company and the company promises to pay money if the person is injured or
dies, or to pay money equal to the value of something (such as a house or car)
if it is damaged, lost, or stolen. Or is the Risk-transfer mechanism that
ensures full or partial financial compensation for the loss or damage caused
by event(s) beyond the control of the insured party. Under an insurance
contract, a party (the insurer) indemnifies the other party (the insured)
against a specified amount of loss, occurring from specified eventualities
within a specified period, provided a fee called premium is paid. In general
insurance, compensation is normally proportionate to the loss incurred.

Insurance police: is a contract whereby the insurer will pay the insured (the
person whom benefits would be paid to, or on behalf of), if certain defined
events occur. Subject to the "fortuity principle", the event must be uncertain.
The uncertainty can be either as to when the event will happen (e.g. in a life
insurance policy, the time of the insured's death is uncertain) or as to if it will
happen at all (e.g. in a fire insurance policy, whether or not a fire will occur
at all).

INSURANCE COMPONENTS

Premium; is the amount of money that an individual or business must pay

for an insurance policy. The insurance premium is considered income by the
insurance company once it is earned, and also represents a liability in that
the insurer must provide coverage for claims being made against the
policy. The amount of insurance premium that is required for insurance
coverage depends on a variety of factors. Insurance companies examine the
type of coverage, the likelihood of a claim being made, the area where the
policyholder lives or operates a business, the behaviour of the person or
business being covered, and the amount of competition that the insurer.

Risk: is the event against which insurance is taken out e.g. fire, theft etc.The
insured is compensated on the actual risk insured in case the loss happens.

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Sum insured: This is the price of the property insured as declared by the
proprietor at the time of applying for insurance.

Insurer: Insurance company that issues a particular insurance policy to an

insured. In case of a very large risk, several insurance companies may
combine to issue one policy. after its insured driver caused a three-car
accident on the interstate, the driver's insurer was forced to settle the property
damage claims of the two non-liable drive.

Insured: a person or entity whose interests are protected by an insurance

policy; a person who contracts for an insurance policy that indemnifies him
against loss of property or life or health etc.

The policy holder who agrees to pay a premium against the insurers promise
to pay a certain sum in case certain event should happens.

INSURANCE AND ASSURANCE

Insurance refers to the events or incidents which may or may happen e.g
fire,theft etc while

Assurance refers to incidents which bound to happen or that must happens

e.g death and old age.

The following point shows the ROLE AND IMPORTANCE OF INSURANCE:

Insurance has evolved as a process of safeguarding the interest of people from

loss and uncertainty. It may be described as a social device to reduce or
eliminate risk of loss to life and property.

Insurance contributes a lot to the general economic growth of the society by

provides stability to the functioning of process. The insurance industries
develop financial institutions and reduce uncertainties by improving financial
resources.

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1. Provide safety and security: Insurance provide financial support and

reduce uncertainties in business and human life. It provides safety and
security against particular event. There is always a fear of sudden loss.
Insurance provides a cover against any sudden loss. For example, in
case of life insurance financial assistance is provided to the family of
the insured on his death. In case of other insurance security is provided
against the loss due to fire, marine, accidents etc.

2. Generates financial resources: Insurance generate funds by collecting

premium. These funds are invested in government securities and stock.
These funds are gainfully employed in industrial development of a
country for generating more funds and utilised for the economic
development of the country. Employment opportunities are increased
by big investments leading to capital formation.

3. Life insurance encourages savings: Insurance does not only protect

against risks and uncertainties, but also provides an investment
channel too. Life insurance enables systematic savings due to payment
of regular premium. Life insurance provides a mode of investment. It
develops a habit of saving money by paying premium. The insured get
the lump sum amount at the maturity of the contract. Thus life
insurance encourages savings.

4. Promotes economic growth: Insurance generates significant impact

on the economy by mobilizing domestic savings. Insurance turn
accumulated capital into productive investments. Insurance enables to
mitigate loss, financial stability and promotes trade and commerce
activities those results into economic growth and development. Thus,
insurance plays a crucial role in sustainable growth of an economy.

5. Medical support: A medical insurance considered essential in

managing risk in health. Anyone can be a victim of critical illness
unexpectedly. And rising medical expense is of great concern. Medical
Insurance is one of the insurance policies that cater for different type

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of health risks. The insured gets a medical support in case of medical

insurance policy.

6. Spreading of risk: Insurance facilitates spreading of risk from the

insured to the insurer. The basic principle of insurance is to spread risk
among a large number of people. A large number of persons get
insurance policies and pay premium to the insurer. Whenever a loss
occurs, it is compensated out of funds of the insurer.

7. Source of collecting funds: Large funds are collected by the way of

premium. These funds are utilised in the industrial development of a
country, which accelerates the economic growth. Employment
opportunities are increased by such big investments. Thus, insurance
has become an important source of capital formation.

PRINCIPLES OF INSURANCE.

1. Nature of contract: Nature of contract is a fundamental principle of

insurance contract. An insurance contract comes into existence when
one party makes an offer or proposal of a contract and the other party
accepts the proposal. A contract should be simple to be a valid contract.
The person entering into a contract should enter with his free consent.
2. Principal of utmost good faith: Under this insurance contract both
the parties should have faith over each other. As a client it is the duty
of the insured to disclose all the facts to the insurance company. Any
fraud or misrepresentation of facts can result into cancellation of the
contract.
3. Principle of Insurable interest: Under this principle of insurance, the
insured must have interest in the subject matter of the insurance.
Absence of insurance makes the contract null and void. If there is no
insurable interest, an insurance company will not issue a policy. An
insurable interest must exist at the time of the purchase of the
insurance. For example, a creditor has an insurable interest in the life
of a debtor, A person is considered to have an unlimited interest in the
life of their spouse etc.

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4. Principle of indemnity: Indemnity means security or compensation

against loss or damage. The principle of indemnity is such principle of
insurance stating that an insured may not be compensated by the
insurance company in an amount exceeding the insured’s economic
loss. In type of insurance the insured would be compensation with the
amount equivalent to the actual loss and not the amount exceeding the
loss. This is a regulatory principal. This principle is observed more
strictly in property insurance than in life insurance. The purpose of this
principle is to set back the insured to the same financial position that
existed before the loss or damage occurred.
5. Principal of subrogation: The principle of subrogation enables the
insured to claim the amount from the third party responsible for the
loss. It allows the insurer to pursue legal methods to recover the
amount of loss, For example, if you get injured in a road accident, due
to reckless driving of a third party, the insurance company will
compensate your loss and will also sue the third party to recover the
money paid as claim.
6. Double insurance: Double insurance denotes insurance of same
subject matter with two different companies or with the same company
under two different policies. Insurance is possible in case of indemnity
contract like fire, marine and property insurance. Double insurance
policy is adopted where the financial position of the insurer is doubtful.
The insured cannot recover more than the actual loss and cannot claim
the whole amount from both the insurers.
7. Principle of proximate cause: Proximate cause literally means the
‘nearest cause’ or ‘direct cause’. This principle is applicable when the
loss is the result of two or more causes. The proximate cause means;
the most dominant and most effective cause of loss is considered. This
principle is applicable when there are series of causes of damage or loss.

ELEMENTARY OF COMERCIAL KNOWLEDGE - LEVEL 4 BY, MR: PONCIAN