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Fire Insurance policy Under Indian Insurance Law

India Note 0 Insurance 09:19

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<b>Fire Insurance policy Under Indian Insurance Law</b></h2>
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An insurance contract occurs when a person seeking insurance protection enters into a contract with the insurer will compensate for the loss of property by or incidental to fire and electric apparatus, explosion, etc. This is primarily a contract and at Thus, as governed by the general law of contract. However, it has some special features such as insurance transactions, such great faith, insurable interest, indemnity, subrogation and contribution, etc. these principles are common to all insurance contracts and are governed by special principles of law.<br />
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<b>FIRE INSURANCE:</b><br />
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According to S. 2 (6A), "fire insurance business" means the business carried out otherwise than incidentally to some other class of insurance business, contracts of insurance against loss by or incidental to fire or other event, usually included among the risks insured in the fire insurance business.<br />
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According to Halsbury, is an insurance contract whereby the insurer agrees for consideration to indemnify the insured to some extent, and subject to certain terms and conditions against loss or damage by fire, what could happen to the property of insured for a specific period.<br />
Thus, fire insurance is a contract whereby the person seeking insurance protection enters a contract with the insurer will compensate for the loss of property by or incidental to fire or lightning, explosion, etc. This policy is designed to ensure the property of both items damage losses occur due to complete or partial by fire.<br />
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<b>In its strictest sense, an insurance contract is a fire:</b><br />
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1. Whose principle object is insurance against loss or damage by fire.<br />
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. 2 degree of liability of the insurer is limited by the sum insured and not necessarily by the magnitude of the loss or damage suffered by the insured, and<br />
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March. Insurer which has no interest in the safety or destruction of the insured property, apart from the liability undertaken under the contract.<br />
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<b>FIRE INSURANCE LAW GOVERNING</b><br />
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There is no sure fire promulgation of legal government, as in the case of marine insurance which is regulated by the Marine Insurance Act of India 1963. The Insurance Act of India, 1938 is primarily related to the regulation of insurance business as such and not with any general or special law principles relating to the fire of the other insurance contracts. So in the absence of any legislation on the matter, the Indian courts have in dealing with the topic of fire insurance have relied so far on judicial decisions of the courts and the opinions of the English Law Insurance Business (Nationalisation) Act, 1872. Jurists.<br />
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To determine the value of property damaged or destroyed by fire in order for compensation under a fire insurance policy, which was the value of the insured property, which was to be measured. Prima facie that the reference value is measured by the market value of the property before and after the loss. However, these methods of assessment did not apply in cases where the market value does not represent the actual value of the property insured, as the property was used by the insured as a home or for conducting business. In such cases, the extent of damages was the cost of recovery. In the case of Lucas v New Zealand Insurance Co. Ltd. [1] in which the insured property was purchased and held as an investment that produces income, and therefore, the court held that the proper measure of damages for property damage by fire was the replacement cost.<br />
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<b>Insurable interest</b><br />
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A person who is so interested in a property that has benefits of its existence and prejudice by its destruction is said to have an insurable interest in that property. Such a person can insure the property against fire.<br />
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The ownership interest must exist both at the start and at the time of loss. If not there at the start of the contract can not be the object of the insurance and if not at the time of the loss, which does not suffer the loss and no need for compensation. Therefore, selling the property insured and is damaged by fire after that, he does not suffer any loss.<br />
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<b>RISKS COVERED UNDER FIRE INSURANCE</b><br />
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The date of conclusion of an insurance contract is the issue of the policy is different from the acceptance or risk taking. Section 64-VB only lays down broadly that the insurer can not take the risk before the date of receipt of the premium. Rule 58 of the Rules of Insurance, 1939 speech in advance of premiums in view of the secondary (!) Of Section 64 Section VB, which allows the insurer to assume the risk of later date. If the proponent did not want a particular date, it was possible that the proponent to negotiate with the insurance of that term. Precisely therefore, the Apex Court has said that final acceptance is the holder or the insurer depends simply on how the negotiations have progressed insurance. Although the following are the risks which seem to have covered a fire insurance policy, but they are not fully covered by the Policy. Some contentious areas are as follows:<br />
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<b>FIRE:</b> Destruction or damage to property insured by its own fermentation, natural heating or spontaneous combustion or its undergoing any heating process or drying can not be treated as damage due to fire. For example, paint or chemicals in a factory undergoing heat treatment and consequently damaged by fire is not covered. In addition, burning of property insured by a public authority is excluded from the scope of coverage.<br />
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<b>LIGHTNING:</b> Lightning may cause a fire or other damage, such as a roof broken by a falling chimney struck by lightning or cracks in a building due to a lightning strike. Both fire and other damage caused by lightning are covered by the policy.<br />
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<b>AIRCRAFT DAMAGE:</b> Loss or damage to property (by fire or otherwise) directly caused by aircraft and other devices and / or air articles dropped there from is covered. However, loss or damage resulting from pressure waves caused by aircraft traveling at supersonic speed, are excluded from the scope of the policy.<br />
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Riots, strikes, malicious damage and terrorism: The act of any person taking part together with others in any disturbance of the public peace (not war, invasion, riot, civil commotion, etc.) is interpreted as a riot, strike or terrorist activity. Unlawful action would not be covered by the policy.<br />
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Storm, cyclone, typhoon, tempest, hurricane, tornado, flood and inundation: the storm, cyclone, typhoon, tempest, Tornado and Hurricane are the different types of violent natural disturbances are accompanied by thunder and strong winds and heavy rains. Flood or flooding occurs when water rises to an abnormal level. Flood or flooding not only be understood in the common sense of the terms, ie, floods in the river or lake, but also the accumulation of water due to choke drains are considered flooding.<br />
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Impact damage: the impact of any vehicle of rail / road or animal by direct contact with the insured property is covered. However, such vehicles or animals should not belong to, or owned by the insured or any occupier of the premises or its employees while acting in the course of their duties.<br />
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Sinking and INCULUDING ROCKSIDE LANDSLIDE: Destruction or damage caused by the collapse of part of the site on which the property or Landslide / Rockslide is covered is located. While mean subsidence subsidence or building at a lower level, Landslide means sliding down of land usually on a hill.<br />
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However, the normal cracking, settlement or bedding down of new structures; settlement or movement of made up ground; coastal or river erosion; defective design or workmanship or use of defective materials; and demolition, construction, alteration or repair of any property or ground-works or structural excavation, are not covered.<br />
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BURSTING AND / OR overflow of water tanks, apparatus and pipes: Loss or damage caused by water or otherwise because of breakage or accidental overflow of water tanks, apparatus and pipes are covered.<br />
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<b>MISSILE TEST OPERATIONS: </b>Destruction or damage due to the impact or otherwise of the trajectory / projectiles regarding missile test operations by the Insured or any other person who is covered.<br />
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<b>LEAK sprinkler INSTALLATIONS:</b> Damage caused by water discharged or accidentally leaked out of the automatic sprinkler installations in the premises of the insured, is covered. However, destruction or damage caused by repairs or alterations to the buildings or premises; repairs removal or expansion of the sprinkler system; and construction defects known to the insured, are not covered.<br />
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<b>BUSH FIRE:</b> This covers damage caused by burning, whether accidental or not, scrub and forest and land clearing by fire but does not include loss or damage caused by forest fires.<br />
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<b>RISKS NOT COVERED UNDER FIRE INSURANCE POLICY</b><br />
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Claims not maintainable / covered under this policy are:<br />
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or theft during or after the occurrence of the insured risks<br />
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or war or nuclear perils<br />
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or electrical breakdown<br />
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prescribed burning or by a public authority<br />
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or Subterranean Fire<br />
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• Loss or damage to bullion, precious stones, curios (worth over Rs.10000), plans, drawings, money, valuables, checkbooks, computer records, unless they are categorically included.<br />
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• Loss or damage to moved to a different location (except machinery and equipment for cleaning, repair or renovation of more than 60 days) goods.<br />
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<b>FEATURES OF FIRE INSURANCE CONTRACT</b><br />
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<b>A fire insurance contract has the following features namely:</b><br />
<b><br /></b>
<b>(A) Fire insurance is a personal contract</b><br />
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A fire insurance contract does not guarantee the safety of the insured property. His goal is to see that the insured suffers loss by reason of his interest in the property insured. Therefore, if your connection to the insured property ceases to be transferred to another person, the insurance contract also comes to an end. It is not so much related to the subject matter of insurance as to automatically switch to the new owner who gives the subject. The contract of fire insurance is therefore merely a personal contract between the insured and the insurer for the payment of money. It can be validly assigned to another only with the consent of the insurer.<br />
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<b>(B) is entire and indivisible contract.</b><br />
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If insurance is a binding character and content of the action and machinery, the contract expressly agrees to be divisible. So, when the insured is guilty of breach of duty to the insurance company in relation to one subjects included in the policy, the insurer may avoid the contract as a whole and not only with respect to that particular subject mater, unless that the right is restricted by the terms of the policy.<br />
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<b>(C) Cause of fire is immaterial</b><br />
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In fire insurance, the insured wishes to protect from any damage that may occur in the event of a fire, however, may be caused. While the loss is due to fire, in the sense of politics, it is immaterial what the cause of the fire is, in general. Therefore, whether it was because the fire was lit improperly or was lighted properly but attended thereafter negligently or if the fire was caused due to the negligence of the insured or its employees or strangers is immaterial and insurer is liable to indemnify the insured. In the absence of fraud, the immediate cause of the loss seemed only.<br />
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The cause of the fire, however becomes material to be investigated<br />
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(1). Where the fire was not caused by negligence, but deliberate<br />
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(2) When the fire's cause must fall with the exception in the contract.<br />
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<b>LIMITATION OF TIME</b><br />
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Liability insurance was an agreement by the insurer to give the insured a contractual right, which at first sight, came into operation immediately when the loss was suffered by the occurrence of an insured event, to be put by the insurer in the same position in which the accused would not have occurred had the event, but in a better position. Had primary responsibility, ie, to compensate, and this is secondary responsibility to put the insured in position before the loss, either by paying a specific amount or could be otherwise. But the fact that the insurer had a choice as to how he would put the secured in position before the loss did not mean he was not required to compensate one way or another, immediately the loss occurred. Primary liability if the insured event occurs that. Thus, the time ran from the date of loss and not from the date the policy was avoided and any claims submitted after this period would be barred by limitation [2].<br />
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<b>WHO CAN ASSURE FIRE?</b><br />
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Only those who have insurable interest in a property can take a fire insurance on same. The following are some of the kinds of people that have been held to have an insurable interest in the property and can ensure that property:<br />
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1. Owners property, whether alone or co-owner or partner of the company that owns the land. It is not necessary that they should also possess. Therefore, lesser and tenant can thus secure or severely joint manner.<br />
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2. The seller and the buyer are entitled to secure. The seller's interest continues until transportation and even after that is completed, if he has a lien on it unpaid seller.<br />
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3. The mortgagor and mortgagee have two different interests in the mortgaged property and can ensure, by Lord Esher MR "The mortgagee does not claim interest in the mortgagor, but by virtue of the mortgage has been given a distinct interest from the mortgagor "[3]<br />
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4. Trustees are legal and actual beneficiaries of trust property and each can secure beneficial owners.<br />
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5. Depositories such as vehicles, pawnbrokers or warehouse men are responsible for there safety and property entrusted to them and can be secured.<br />
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<b>PERSON NO RIGHT TO ENSURE</b><br />
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One who has no insurable interest in a property can not be assured. For example:<br />
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1. An unsecured creditor can not insure the goods of the debtor, as their duty is only against the debtor personally. However, you can ensure the life of the debtor.<br />
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Two. A shareholder of a company can not insure the property of the company as it has no insurable interest in an asset of the company, even if he is the sole shareholder. As was the case Macaura Northen Assurance Co. v [4] Macaura. Because neither as simple nor as shareholder creditor had any insurable interest in it.<br />
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<b>CONCEPT OF FAITH SUM</b><br />
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Like all insurance contracts are contracts of utmost good faith, the proponent of fire insurance is also a positive obligation to make full disclosure of all material facts and making false statements or not misdescreptions it during negotiations for obtaining of the policy. This duty of utmost good faith applies equally to the insurer and the insured. There must be complete good faith on the part of the insured. This duty to exercise the utmost good faith is ensured b requiring the proposer to declare that the statements contained in the proposal are true, that will be the basis of the contract and that any incorrect or false statement therein shall avoid politics. The insurer can then rely on them to assess the risk and set the premium and accept or reject the risk.<br />
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The questions in the proposal form for a policy of fire may be so framed as to obtain all the information that is relevant to the insurance company to know in order to assess risk and set the premium, ie, all the facts materials. Therefore it is required that the proponent will also give information on:<br />
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o The name and address of the proposer and occupation<br />
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o The description of matter that has ensured sufficient to identify the purpose of including<br />
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o A description of the locality where it is<br />
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o How the property is used either for manufacturing purposes or dangerous trade.etc<br />
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o If already insured<br />
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o And also the story of the ant personal insurance, including claims made buy if the proposer, etc.<br />
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In addition to the questions in the proposal form, the proposer must disclose whether questioned or not<br />
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1 Any information indicating the risk of fire to be above normal.;<br />
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Two. Any fact which would indicate that the responsibility of the insurance company may be more than normal can be expected, as the existence of the manuscripts or documents of value, etc., and<br />
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3 Any information you have about most.; danger involved.<br />
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The proponent is not required to disclose-<br />
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. 1 The information that the insurer can presume to know in the ordinary course of business as an insurance company;<br />
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. 2 The facts tend to show that the risk is lower than otherwise;<br />
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. 3 Data regarding the information is waived by the insurer; and<br />
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April. Facts need not describe in view of a political condition.<br />
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Thus has it insured is under a solemn obligation to make full disclosure of material facts that may be relevant to the insurance company to take into account when deciding whether the proposal should be accepted or not. Upon submission of the relevant facts, the<br />
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<b>DOCTRINE OF THE APPROXIMATE CAUSE</b><br />
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Where more dangers than an act simultaneously or successively, it is difficult to assess the relative impact of each hazard or select one of them as the real cause of the loss. In such cases, the doctrine of proximate cause helps determine the actual cause of the loss.<br />
Immediate cause was defined in Pawsey v Scottish Union and National Ins. Co., [5] as "the active and efficient cause that sets in motion a chain of events that leads to a result without the intervention of any force started and working actively from a new and independent source." It is dominant and effective even though it is not the closest in time cause. Therefore, when a loss is necessary to investigate and determine the immediate cause of the loss in order to determine if the insurer is liable for the loss occurs.<br />
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<b>Immediate cause of DAMAGE</b><br />
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A fire policy covers risks where damage is caused by the path of the fire. Fire can be caused by lightning, explosion or implosion. It may be a result of riot, strike or by reason of any act, malicious. However, these factors should ultimately lead to a fire and the fire must be the proximate cause of the damage. Therefore, a loss caused by the theft of property by militants would not be covered by the fire policy. The view that the loss was covered under the clause of willful misconduct and thus. The insurer was required to comply with the claim is untenable, because unless and until the fire is the proximate cause f damage, no claim under a fire policy would maintain. [6]<br />
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<b>PROCEDURE FOR MAKING A FIRE INSURANCE POLICY</b><br />
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Mentioned below are the steps to make a fire insurance policy:<br />
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. 1 Selection of Insurance Company:<br />
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There are many companies offering fire insurance against unforeseen events. The person or company should be careful in selecting an insurance company. The judgment must be based on items such as goodwill, and long standing in the market. Insurance companies can be approached either directly or through agents, some of them are appointed by the company itself.<br />
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. 2 Presentation of the Proposal Form:<br />
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The individual or business owner must submit a completed proposal prescribed the necessary details to the insurance company for due consideration and approval. The information contained in the Proposal Form must be given in good faith and must be accompanied by documents that verify the actual value of the property or property to be insured. Most companies have a custom proposal in which accurate information must be provided their own forms.<br />
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. 3 Study of the Property / Consideration:<br />
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Once the format duly completed proposal is submitted to the insurance company, which makes an "in situ" survey of the property or assets that are the subject of insurance. This by researchers or experts appointed by the company and they need to inform them after a thorough research and survey is usually done. This is essential to assess the risk and calculate the premium rate.<br />
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. 4 Acceptance of the proposal:<br />
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Once the detailed and comprehensive report is submitted to the insurance company by inspectors and officials involved, the first takes a close reading of the Proposal and report. If the company is convinced that their is no gap or foul play or fraud involved, formally "accept" Proposal Form and directs the insured to pay the first premium to the company. It should be noted that the insurance policy begins after the payment and acceptance of premium by the insured and the company, respectively. The Insurance Company will cover notes issued after acceptance of the first premium.<br />
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<b>PROCEDURE OF RECEIPT OF NOTICE OF LOSS</b><br />
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Upon receipt of notification of the loss, the insurer requires the insured to provide details concerning the loss of a claim relating to the information below-<br />
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. 1 The circumstances and cause of the fire;<br />
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2 Assignment and location of the premises where the fire occurred.;<br />
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3 assured interest in the insured property.; ie the capacity in which the insured claims if any others are interested in the property;<br />
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. 4 additional property insurance;<br />
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. 5 Value of each item of property at the time of the loss, together with evidence thereof, and the salvage value, if any; and<br />
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6. Claimed Amount<br />
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This information activity relating to the claim is a prerequisite to the insurer's liability. The information above will allow the insurance company to check-<br />
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(1) The policy is in force;<br />
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(2) The danger that causes the loss is an insured peril;<br />
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(3) The property is lost or damaged insured property.<br />
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Rules for calculating the value of the property<br />
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The value of the insured property is-<br />
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1) Its value at time of loss, and<br />
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2) In the place of loss, and<br />
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3) Its actual or intrinsic without any regard for its sentimental value valley. The potential loss of profit or other consequential loss should not be taken into account.<br />
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<b>COMPLAINTS</b><br />
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How is a claim arises?<br />
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After a fire insurance contract has come into existence, a claim may arise from the operation of one or more insured perils in a property without obligation. It is possible, in addition to one or more hazards uninsured also operating simultaneously or in succession to the property. In order that the claim be valid the following conditions must be met:<br />
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. 1 occurrence must take place due to the operation of an insured or where both insured and other perils operated, dominant or efficient cause of the loss must have been a risk insured risk;<br />
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. 2 The implementation of the hazard should not fall within the scope of the exceptions to the policy;<br />
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. 3 event must have caused loss or damage to insured property;<br />
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. 4 occurrence must be during the term of the policy;<br />
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May. The insured must have complied with all conditions of policy and must also meet the requirements to be met after the claim had arisen.<br />
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<b>MATERIAL FACTS OF FIRE INSURANCE: </b>previous conviction of the accused<br />
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The criminal record might affect an insured moral hazard, which insurers must evaluate, and non-disclosure of a serious crime such as theft by the plaintiff was a non-disclosure of material.<br />
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<b>DUTY OF ASSURED IN OUTBREAK OF FIRE,</b> implicit duty<br />
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At the outbreak of a fire the insured has an implicit obligation to observe good faith towards insurers and pursuant to which the insured must do everything possible to prevent or minimize the loss. To this end, you must (1) take all reasonable steps to extinguish the fire or prevent its spread, and (2) help firefighters and others in their attempts to do so in any case, does not come in your way.<br />
With this object the insured property may be removed to a safe place. Any loss or damage to insured property may suffer in the course of attempts to fight the fire or while being transported to a place of safety, etc., will be considered loss caused by fire.<br />
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If the insured fails in its duty voluntarily and thereby increases the burden of the insurance company, the insured shall be deprived of his right to revive the compensation under the policy [7].<br />
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<b>RIGHTS OF INSURER IN FIRE OUTBREAK</b><br />
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Rights (A) includes<br />
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Corresponding to the rights of the insured, insurers have rights by law, in view of the liability they have undertaken to indemnify the insured. Thus, insurance companies have the right to-<br />
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or take reasonable steps to extinguish the fire and to minimize property loss, and<br />
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o To this end, ready to take possession of the property.<br />
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Insurers shall be liable to make good all the damage of the property may suffer in the measures taken to put out the fire and as long as in his power, because everything is considered a natural and direct consequence of the fire; therefore, it has been argued in the case of Ahmedbhoy Habibhoy v Bombay Fire Marine Ins. Co [8] that the extent of the damage flowing from the insured risk must be evaluated when the insurer gives back rather than at the time the danger ceased.<br />
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(B) losses caused by the measures taken to avoid the risk<br />
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The damage occurred because of the measures taken to prevent an insured risk was not a consequence of that risk and was not recoverable unless the insured risk had begun to operate. In the case of Liverpool and London and Globe Insurance Co. Ltd v Canadian General Electric Co. Ltd., [9], the Supreme Court of Canada held that "the loss was caused by the mistaken belief that firefighters that their action was necessary to prevent an explosion, and the loss was not recoverable under the insurance policy that covers only damage caused by the explosion of fire., and the loss was not recoverable under the insurance policy, which covers only damage caused by fire or explosion. "<br />
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(C) Rights-ready<br />
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Condition 5 - in order to protect their rights and insurers have been established to improve the rights expressly in this condition, according to which in case of any breakage or damage to the insurer and any person authorized by the insurance company can occur enter, take or keep possession of the building or premises where the damage occurred or require to be delivered to them and deal with it all the reasonable effects review, organize, extract, or sell or dispose of the same on behalf of whom appropriate.<br />
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How and when a claim is made?<br />
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In the case of a fire loss covered by the policy of fire insurance, the Insured shall immediately give notice thereof to the insurance company. Within 15 days of the occurrence of such loss, the Insured must submit a claim in writing, giving details of the damage and estimated values. Details of other insurances on the same property also must be declared.<br />
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The Insured must obtain and submit, at his own expense, any documents, such as plans, account books, research reports, etc. in demand by the insurance company.<br />
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<b>HOW CAN LEAVE INSURANCE?</b><br />
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Insurance policy may cease fires in any of the following circumstances, namely:<br />
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(1) Insurer avoiding the policy because of the insured making misrepresentation, misdescription or non-disclosure of any particular material;<br />
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(2) If a fall or displacement of any rank insured building or structure or part thereof, at the expiration of seven days, where, unless it causes the fall or shift was due to the action of any risk insured ; despite this, the insurance can be revived on revised terms if the notice has been given to the company as soon as the occurrence takes place;<br />
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(3) The insurance may be terminated at any tie at the request of the insured and, at the option of the company 15 days notice to policyholders<br />
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<b>CONCLUSION</b><br />
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Tangible property is exposed to various risks such as fires, floods, explosions, earthquakes, riots and wars, etc, and insurance protection you can have against most of these risks severally or in combination. The way the cover is expressed is numerous and varied. Fire insurance in the strict sense refers to the granting of protection against fire and fire only. So while granting a fire insurance policy requirements are all met what. The insured have a moral and legal obligation to be in the utmost good faith and should be telling a true story and not just a false motives of greed to recover the money. In addition, all insurance policies help in the development of a developing nation. Hence, insurance companies have a burden to help the insured when the insured are in trouble.<br />
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<b>REFERENCE:</b><br />
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1. (1983) VR 698 (Supreme Court of Vienna)<br />
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2. Callaghan v Dominion Insurance Co. Ltd. (1997) 2 Lloyd's Rep. 541 (QBD)<br />
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3. Small v Transport Insurance Association of the United Kingdom (1897) 2 QB 311<br />
4. (1925) AC 619<br />
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5. (1907) Case.<br />
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6. Compañía Nacional de Seguros v Ashok Kumar Barariio<br />
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7. Devlin v Queen Insurance Co., (1882) 46 611 UCR.<br />
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8. (1912) 40 IA 10 pcs<br />
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9. (1981) 123 DLR (3d) 513 (Supreme Court of Canada)<br />
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Recommended books:<br />
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1. Economics of Fire Protection by Ganapathy Ramachandran<br />
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February. Modern Insurance Law by John Birds<br />
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Three.'s Manual Regulatory and Development Authority Act and Regulations Insurance Allied Laws, by Nagar<br />
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Fire Insurance policy Under Indian Insurance Law

Fire Insurance policy Under Indian Insurance Law

Fire Insurance policy Under Indian Insurance Law An insurance contract occurs when a person seeking insurance protection enters into a...

Insurance laws in India

India Note 0 Insurance 09:08

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<b>INTRODUCTION</b><br />
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"Insurance should be bought to protect you against a calamity that would otherwise be devastating."<br />
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In simple terms, insurance allows someone who suffers a loss or accident to be compensated for the effects of their misfortune. Allows you to protect yourself against everyday risks to your health, home and financial situation.<br />
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<b>Insurance in India</b> started without any regulation in the nineteenth century. It was a typical story of a colonial epoch: few British insurance companies dominating the market it serves mostly large urban centers. After independence, it took a theatrical turn. Insurance was nationalized. First, companies life insurance were nationalized in 1956, and then the general insurance business was nationalized in 1972. Was only in 1999 that the private insurance companies have been allowed to return them to the business of insurance with a maximum of 26% foreign ownership.<br />
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"The insurance industry is enormous and can be quite daunting. Insurance is being sold for almost anything and everything you can imagine. Determine which is right for you can be a very daunting task."<br />
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Concepts of insurance have been extended beyond the coverage of tangible assets. Now the risk of losses due to sudden changes in currency exchange rates, political disturbance, negligence and liability for damages can also be covered.<br />
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But if a person invests carefully secure property prior to any unexpected contingency then he will be suitably compensated for his loss as soon as the extent of damage is determined.<br />
<br />
The entry of the State Bank of India with its proposal of bank assurance brings a new dynamics in the game. The collective experience of the other countries in Asia has already deregulated their markets and has allowed foreign companies to participate. If the experience of other countries is any guide, the dominance of the Life Insurance Corporation and General Insurance Corporation is not going away anytime soon.<br />
The aim of all insurance is to compensate the owner against loss arising from a variety of risks, which anticipates, to his life, property and business. Insurance is mainly of two types: life insurance and general insurance. General insurance means Fire, Marine and several insurance which includes insurance against burglary or theft, surety insurance, employer's liability, and insurance of motor vehicles, livestock and crops.<br />
<br />
LIFE <b>INSURANCE IN INDIA</b><br />
<br />
"Life insurance is the love letter ever written.<br />
<br />
The crying of a hungry baby at night is calm. Relieves the heart of a grieving widow.<br />
<br />
It is the comforting whisper in the silent dark hours of the night. "<br />
<br />
Life insurance made its debut in India over 100 years ago. Its salient features are not as widely understood in our country, as it should be. There is no legal definition of a life insurance policy, it is defined as a contract of insurance whereby the insured agrees to pay certain sums called premiums, at a specific time, and in consideration thereof the insurer agreed pay certain sums of money on certain condition sand in specified in the happening of a particular event contingent on the duration of human life.<br />
<br />
Life insurance is superior to other forms of savings!<br />
<br />
"Death does not exist. Life Insurance exalts life and defeats death.<br />
<br />
It is the premium paid for the freedom of life after death. "<br />
<br />
Savings through life insurance guarantee full protection against risk of death of the saver. In life insurance, the death, the sum assured is payable (with bonuses where applicable) whereas in other savings schemes, only the amount saved (with interest) is payable.<br />
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The essential features of life insurance are: a) it is a contract for human life, which b) provides for the payment of a lump sum, and c) the amount is paid after the expiry of the specified period, or in the death of the insured. The very purpose and object of the insured in making policies of life insurance companies is to safeguard the interests of its subsidiaries viz., Wife and children, as the case may be, even in the premature death of the insured as a result of the occurrence in any contingency. A life insurance policy is also generally accepted as security, even for a commercial loan.<br />
<br />
NON-LIFE INSURANCE<br />
<br />
"Every asset has a value and general insurance business relates to the protection of economic value of assets."<br />
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Non-life insurance, insurance other than life insurance, such as fire, marine, accident, medical vehicles engine and home insurance. Assets would have been created through the efforts of the owners, who may be in the form of building, vehicles, machinery and other tangible property. Since tangible property has a physical shape and consistency, is subject to many risks ranging from fire, allied perils to theft and robbery.<br />
Few of the general insurance policies are:<br />
<br />
Property Insurance: The home is the most valuable possession. The policy is designed to cover various risks in one policy. Provides protection of property and the interest of the insured and family.<br />
<br />
Health insurance: coverage, which takes care of medical expenses following hospitalization from sudden illness or injury is provided.<br />
Personal Accident Insurance: This insurance provides compensation for loss of life or injury (partial or permanent) caused by an accident. This includes reimbursement of the costs of treatment and the use of hospital facilities for treatment.<br />
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Travel Insurance: The policy covers the insured against various eventualities while traveling abroad. It covers the insured against personal accident, medical expenses and repatriation, loss of checked baggage, passport, etc.<br />
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Liability Insurance: This policy covers directors and officers or other professionals against loss arising from claims made against them by reason of any wrongful act in their official capacity.<br />
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Car Insurance: Vehicles Act states that every motor motor vehicle plying on the road has to be insured, with at least Liability only policy. There are two types of policy one covering the act of liability, while other covers insurers all liability and damage to one vehicle.<br />
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JOURNEY OF AN INFANT adolescence!<br />
<br />
Historical Perspective<br />
<br />
The history of life <b>insurance in India</b> dates back to 1818 when it was conceived as a means to provide for English Widows. Interestingly in those days a higher premium was charged for Indian lives than non-Indian lives as Indian lives were considered riskier for coverage.<br />
<br />
The Bombay Mutual Life Insurance Society started its business in 1870. It was the first company to charge same premium for both Indian and non-Indian lives. The Oriental Assurance Company was founded in 1880.'s General insurance business in India, meanwhile, has its roots in the Triton (Tital) Insurance Company Limited, the first company general insurance established in 1850 in Calcutta by Britons. Until the end of the insurance business of the nineteenth century was almost entirely in the hands of foreign companies.<br />
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Insurance regulation formally began in India with the approval of the Companies Act, 1912 Life Insurance and Provident Fund Act 1912. Several frauds during the 20's and 30's desecrated insurance business in India. In 1938 there were 176 insurance companies. The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict state control over insurance business. The insurance business grew at a faster pace after independence. Indian companies strengthened their control over this business, but despite the growth witnessed, insurance remained an urban phenomenon.<br />
<br />
Born The Government of India in 1956, brought together over 240 private life insurers and mutual provident societies under one nationalized monopoly and Life Insurance Corporation (LIC) corporation. Nationalization was justified on the grounds that it would create much-needed funds for rapid industrialization. This is in accordance with the path chosen by the Government of the State lead planning and development.<br />
<br />
The (non-life) insurance business continued to prosper with the private sector until 1972. Their operations were restricted to organized trade and industry in large cities. The general insurance industry was nationalized in 1972 With this, nearly 107 insurers were amalgamated and grouped into four companies -. National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance Company. These were subsidiaries of the General Insurance Company (GIC).<br />
<br />
The life insurance industry was nationalized under the Life Insurance Corporation (LIC) Act of India. In some ways, the LIC has become very flourishing. Aside from being a monopoly, has some 60-70 million policyholders. Given that the middle class in India is around 250-300 million, the LIC has captured 30 percent of it odd. About 48% of customers of the LIC are from rural and semi-urban areas. This probably would not have happened if the letter of the LIC not specifically set a target to serve rural areas. A high savings rate in India is one of the exogenous factors that have helped the LIC to grow rapidly in recent years. Despite the savings rate is high in India (compared to other countries with a similar level of development), the Indians show a high degree of risk aversion. Thus, almost half of the investments are in physical assets (such as property and gold). About twenty percent are in low yield (but safe) bank deposits. In addition, about 1.3 percent of GDP are insurance related savings vehicles life. This figure has doubled between 1985 and 1995.<br />
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A point of view World - Life<b> Insurance in India</b><br />
<br />
In many countries, insurance has been a form of savings. In many developed countries, an important part of domestic savings is in the form of donation insurance plans. This is not surprising. The prominence of some developing countries is even more amazing. For example, South Africa has the second. India lies between Chile and Italy. This is even more surprising considering the levels of economic development in Chile and Italy. Therefore, we can conclude that there is an insurance culture in India despite a low per capita income. This promises well for future growth. Specifically, when the income level improves, insurance (especially life) is likely to grow rapidly.<br />
<br />
INSURANCE SECTOR REFORM:<br />
<br />
Committee Reports: a known Anonymous One!<br />
<br />
Although Indian markets were privatized and opened to foreign companies in various sectors in 1991, insurance remained out of bounds in both cases. The government wanted to proceed with caution. With pressure from the opposition, the government (at the time, dominated by the Congress Party) decided to establish a committee headed by Mr. RN Malhotra (the then Governor of the Reserve Bank of India).<br />
<br />
Malhotra Committee<br />
<br />
The liberalization of the insurance market in India was suggested in a report published in 1994 by the Malhotra Committee, indicating that the market should be open to competition from the private sector, and finally, the competition of foreign private sector. The level of customer satisfaction of LIC was also investigated. Inquisitively, the level of customer satisfaction seemed to be high.<br />
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In 1993, Malhotra Committee - headed by former Finance Secretary and RBI Governor Mr. RN Malhotra - was formed to evaluate the insurance industry in India and recommend its future course. The Malhotra committee was set up with the objective of complementing the reforms initiated in the financial sector. The reforms were aimed at creating a suitable more efficient and competitive financial system to the needs of the economy taking into account the structural changes presently happening and recognizing that insurance is an important part of the global financial system in which it was necessary to address the need for similar reforms. In 1994, the committee submitted the report and some of the key recommendations include:<br />
<br />
Structure<br />
<br />
Commitment of the Government in insurance companies was reduced to 50%. The government should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent companies. All insurance companies should be given greater freedom to operate.<br />
Competition<br />
<br />
Private companies with a minimum paid up capital of Rs.1 billion should be allowed to enter the sector. No company should deal in both Life and General Insurance through a single entity. Foreign companies may be allowed to enter the industry in collaboration with local firms. Postal Life Insurance should be allowed to operate in the rural market. Only one State Level Life Insurance Company should be allowed to operate in each state.<br />
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Regulator<br />
<br />
The Insurance Act should be changed. An Insurance Regulatory body should be set. Driver Insurance - a part of the Finance Ministry-should be made independent.<br />
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Investments<br />
<br />
Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50%. GIC and its subsidiaries must not exceed 5% in any company (there current holdings to be brought to this level over a period of time).<br />
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Customer service<br />
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LIC should pay interest on delays in payments beyond 30 days. Should encourage insurance companies to establish the unit linked pension plans. Computerization of operations and updating of technology to be carried out in the insurance industry. The committee emphasized that in order to improve customer services and increase the coverage of insurance policies, industry should be open to competition. At the same time, the committee felt the need to exercise caution as any failure of new competitors could ruin the public confidence in the industry. Therefore, it was decided to allow competition in a limited way by stipulating the minimum capital requirement of Rs 100 crores.<br />
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The committee discussed the need to provide greater autonomy to insurance companies in order to improve their performance and enable them to act as independent companies with economic motives. To this end, it has proposed the creation of an independent regulatory body - Regulatory and Development Authority Insurance.<br />
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Reforms in the insurance industry began with the approval of the IRDA Act in Parliament in December 1999. IRDA since its incorporation as a statutory body in April 2000 has meticulously stuck to its timetable for drawing up the regulations and registration of insurance companies in the private sector.<br />
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Since it was established as an independent statutory body the IRDA has put in a framework of globally compatible regulations. The other decision taken simultaneously to provide support systems to the insurance sector and in particular the life insurance companies was the launch of the IRDA online service for issue and renewal of licenses to agents. Approval of institutions for imparting training to agents has also ensured that insurance companies would have a trained insurance agents in place to sell their products workforce.<br />
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The Government of India liberalized the insurance sector in March 2000 the approval of the Authority Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership. Under current guidelines, there is a cap of 26 percent equity to foreign partners in an insurance company. There is a proposal to increase this limit to 49 percent.<br />
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The opening of the sector is likely to lead to greater spread and deepening of <b>insurance in India</b>, which may also include the restructuring and revitalization of the public sector enterprises. In the private sector 12 life insurance and 8 general insurance companies have been registered. A lot of private insurance companies that operate in both segments life and non-life have started selling their insurance policies since 2001<br />
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Mukherjee Committee<br />
<br />
Immediately after the publication of the Malhotra Committee, a new committee, Mukherjee Committee was created to make concrete plans for the requirements of insurance companies recently formed. Recommendations of the Mukherjee Commission never made public. But, from the information that was leaked it became clear that the committee recommended the inclusion of a number of ratios in the balance sheets of insurance companies to ensure transparency in accounting. But the Finance Minister objected to it and held by him, probably on the advice of some of the potential competitors that could affect the prospects of a developing insurance company.<br />
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LAW COMMISSION OF INDIA ON REVIEW OF THE INSURANCE ACT 1938 - 190 Report of the International Law Commission<br />
<br />
The Law Commission on June 16, 2003 published a consultation paper on the review of the Insurance Act 1938. The previous exercise to amend the Insurance Act 1938 was carried out in 1999 at the time of the enactment of the Law Insurance Regulatory Development Authority, 1999 (IRDA Act).<br />
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The Commission carried out this year in the context of policy change that has allowed private insurance companies, both in the areas of life and non-life. A need has been felt to toughen the regulatory mechanism even while streamlining the existing legislation in order to remove the portions that have become redundant as a result of recent changes.<br />
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The main areas of change, the consultation paper proposes that:<br />
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a.merging of the provisions of the IRDA Act with the Insurance Act to avoid multiplicity of laws;<br />
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b.deletion of redundant and transitory provisions of the Insurance Act, 1938;<br />
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c.Amendments reflect the change in policy to allow private insurance companies and strengthening the regulatory mechanism;<br />
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d.Providing strict rules concerning the conditions of 'solvency margin' and investments by the public and insurance companies in the private sector;<br />
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e.Providing for a full-fledged grievance redressal mechanism that includes:<br />
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The constitution of Grievance redressal Authority (GRA) comprising legal one and two technical members to deal with complaints / claims of policyholders against insurers (the GRAs are expected to replace the current system of the insurer appointed Ombudsman);<br />
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Appointment of officers of the award by the IRDA to determine and implement penalties on defaulting insurers, brokers and insurance agents;<br />
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Having an appeal against the decisions of the IRDA, GRAs and adjudicating officers to an Insurance Appellate Tribunal (IAT) comprising a judge (sitting or retired) of the Court / Supreme Judge of the Supreme Court as chairman and two members who have sufficient experience in insurance;<br />
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Provide a legal appeal to the Supreme Court against the decisions of the IAT.<br />
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LIFE AND NON-LIFE INSURANCE - Development and Growth!<br />
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The year 2006 proved to be a landmark for the insurance industry as a regulator of the Law of the Regulatory Authority for Insurance Development year laid the groundwork for the general insurance pricing freedom since 2007, while many companies has announced plans to attack the sector.<br />
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Both domestic and foreign players continued their robust long pending demand to increase the FDI limit from 26 percent to 49 percent, and towards the fag end of the year, the government sent the bill Integral Insurance Group of Ministers for consideration amid strong reservation from Left parties. The bill is likely to be taken in the Budget session of Parliament.<br />
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Infiltration rates of health and other non-life <b>insurance in India</b> are well below the international level. These facts indicate a huge potential for growth in the insurance sector. The hike in FDI limit on the 49 percent was given by the Government last year. This has not been put to work as legislative changes are required for this hike. Since the opening of the insurance sector in 1999, foreign investments of Rs. 8700000000 have leaned towards the Indian market and 21 private companies have been granted licenses.<br />
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The participation of private insurers in various industry segments has increased on account of both their capturing a part of the business, which was signed earlier by the public sector insurers and also creating additional business boulevards. To this effect, the insurance companies in the public sector have been unable to leverage their inherent strengths to capture additional premium. For premium growth in 2004-05, 66.27 per cent has been captured by private insurers despite having market share of 20 percent.<br />
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The life insurance industry recorded a premium income of Rs.82854.80 crore in 2004-05, against Rs.66653.75 crore in the previous year, registering a growth of 24.31 percent. The contribution of the first year premium, single premium and renewal premium to the total premium was Rs.15881.33 crore (19.16 percent); Rs.10336.30 crore (12.47 percent); and Rs.56637.16 crore (68.36 percent), respectively. In 2000-01, when the industry was opened to private players, the life insurance premium was Rs.34, 898.48 million rupees which constituted of Rs. 6996.95 crore in the first year premium, Rs. 25191.07 crore of renewal premium and Rs. 2740.45 crore of single premium. Post opening, single premium had declined from Rs.9, 194.07 million rupees in 2001-02 to Rs.5674.14 crore in 2002-03 with the withdrawal of the guaranteed return policies. Although rose marginally 2003-04000000 Rs.5936.50 rupees (4.62 per cent growth) 2004-05, however, witnessed a significant change in income from single premiums increased from Rs. 10336.30 crore showing 74.11 per cent growth during 2003-04.<br />
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The market size of life insurance in force increased economic growth and the consequent increase in per capita income. This resulted in a favorable growth in total premium both for LIC (18.25 per cent) and for new insurers (147.65 per cent) in 2004-05. The fastest growing new insurance companies should be viewed in the context of a very low base in 2003 -. 04 However, the new insurers have improved their market share of 4.68 in 2003-04 to 9.33 in 2004-05.<br />
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The segment wise break up of fire, marine and miscellaneous segments in case of insurance companies in the public sector was Rs.2411.38 crore, Rs.982.99 crore and Rs.10578.59 crore, ie a growth (-) 1.43 percent, 1.81 percent and 6.58 percent. The public sector insurers reported growth in Motor and Health segments (9 and 24 percent). These segments represent 45 and 10 percent of the business underwritten by the public sector insurers. Fire and "Others" accounted for 17.26 and 11 percent of written premium. Aviation Liability, "Others" and Fire recorded negative growth of 29, 21, 3.58 and 1.43 percent. In no other country that opened while India have foreign companies been able to capture a market share of 22 percent in the life segment and 20 percent in the general insurance segment. The participation of foreign insurers in other Asian markets competition is not more than 5 to 10 percent.<br />
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The life insurance sector grew new premium at a rate never seen before, while the general insurance sector grew at a faster pace. Two new players entered the life insurance - life Shriram and Bharti Axa Life - taking the total number of players in the lives of 16 There was a new entrant in the field of non-life in the form of an insurance independent health -. Star Health and Allied Insurance, taking non-life players to 14.<br />
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A large number of companies, mostly banks nationalized (about 14), such as Bank of India and Punjab National Bank have announced plans to enter the insurance industry and some of them have also formed joint ventures.<br />
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The proposed FDI cap change is part of the comprehensive amendments to<b> insurance laws</b> -. The Insurance Act 1999, LIC Act, 1956 and IRDA Act, 1999 After the proposed amendments to <b>insurance laws</b> LIC would be able to maintain reserves while insurance companies would be able to raise resources other than equity.<br />
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About 14 banks are in line to enter the insurance sector and the year 2006 saw several announcements of joint ventures, while others scout partners. Bank of India has partnered with Union Bank and Japanese insurance major Dai-ichi Mutual Life while PNB tied up with Vijaya Bank and director of foraying into life insurance. Allahabad Bank, Karnataka Bank, Indian Overseas Bank, Dabur Investment Corporation and Sompo Japan Insurance Inc. have been tied to form a company of non-life insurance, while the Bank of Maharashtra has been associated with Shriram Group and the Sanlam Group South Africa Company for non-life insurance.<br />
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Insurance laws in India

Insurance laws in India

INTRODUCTION "Insurance should be bought to protect you against a calamity that would otherwise be devastating." In simple ...

Insurance in india insurance is still sold on premise of investment

India Note 0 Insurance 12:05

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insurance in india insurance is still sold on premise of investment</h2>
The last couple of years have been tough for the life insurance industry , which had to deal not only with fast-paced reforms , but also reducing agents give the distribution in number. As a result , insurers focused their attention on raising the bancassurance channel for distribution. Anuj Agarwal , President & CEO , Bajaj Allianz Life Insurance Co. Ltd, explains the impact of shrinking agency channel and the measures taken by the company to make the soft sell and settling claims faster.<br />
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Insurance companies promoted by banks have grown faster than those who rely on the agents. How hard have been the years?<br />
<br />
Companies that are promoted by banks tend to grow faster because it is easier for banks to leverage their existing customer base . In this sense, productivity levels are significantly higher for banks than individual agents. We have also seen many changes in regulation and in rapid succession. It is easier to adapt to a change in one go . When the rules change regularly , it is difficult to maintain the pace of growth of the individual agents . Our agents depend primarily on new business premiums; after the new rules , fees were reduced , but the productivity of the agents did not increase much, but now every major reforms have taken place and the market is stabilizing. We do business mainly through agents , but we are looking for a partner for bancassurance.<br />
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The advantage of agents leaving the industry is that only serious fall , which should improve the quality of sales.<br />
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There are three main stakeholders in the insurance business : distributor, shareholders and customers. Earlier, the value to dealers was on the upper side. Many non-serious agents came aboard during the rise of the stock market , so that rationalization is good in the long term. But you have to realize that the cost of insurance distribution in India is one of the least in South Asia and Southeast Asia.<br />
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Under the commission is sustainable if there are tools like technology to simplify work . We must consider how much of a need to maintain a livelihood through a life insurance agent. In Southeast Asia, the infrastructure is well in place and there are dedicated agents . You will not see 30-40% of agents disappear without accountability, as happened in India. In addition, the prosecution is very strict. In addition, more importance is given to training. In India , insurance is being sold on the premise of investments. People do not take the trouble to go through the policy document. Therefore, it is very important that the dealer does a good job of explaining the product. This is what selling is based on need and reduce mis-selling .<br />
There is again a mixture of skewed products . Earlier, insurance plans , primarily in units of account ( ULIPs ) were sold and is now traditional plans .<br />
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Ulips are sold in a big way , when the industry was in the process of expansion. In Ulips , the risk is assumed by the customer and very little capital is required by the shareholder . The capital is being deployed for expansion and the markets were doing well. Ulips are transparent products but meant for sophisticated customers. The problem was that they were sold worldwide. After commissions are reduced , traditional plans made a comeback . Currently 13 % of our business comes from 87% Ulips and traditional plans. We are working in a traditional child plan. We want to have a balance of 30 % from Ulips and 70% of plans for a traditional ideal mix .<br />
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What are your technology initiatives to streamline sales processes ?<br />
<br />
We launch our application in March. Initially , it was intended to collect the renewal premium but now use it for faster policy issuance from the pilot launch also generated renewal premiums of about 3,000 policyholders.<br />
The agent describes the policy and gives a demonstration at the same time using this application on a tablet. After the formalities , the premium may be paid immediately , either through debit or credit card , using a device mobile POS . The client receives an instant notification . In general, life insurance sales leads 4-5 visits for discussions and another 2-3 visits to collect the documents . With the application , this can be done in a matter of hours. There are a lot of cost savings, which may not be visible directly , but indirectly shown benefits such as shorter delivery and collection of renewal premiums smoothly.<br />
<br />
Insurance regulator Insurance repositories launched last year, but insurers are still alliance with them. Why?<br />
<br />
We are in the various stages of the connection with at least three repositories . There are some fundamental concerns with digitization policies . Policyholders do not read insurance documents , even when it is in paper form ; if policies are online, they are even more unlikely to bother . The second question is about the costs . Current digitization rate is too high, and we have to pay all the five repositories . In addition , you will get our systems built into them . A central repository would be better.<br />
<br />
Claims settlement ratio of your business has improved 89 % in the retail segment in FY13 to 91% in FY14 . What are you doing differently?<br />
<br />
We have a team now claims notification , which helps the candidate the necessary formalities. But what has improved our claims experience is the action we took in late claims . This took place last year. If the claim is delayed more than 30 days , we promise to pay interest at 10.5 % per day late. Our rate of settlement of claims in general ( group and individual policies) was 97.45 % for FY14 .<br />
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Insurance in india insurance is still sold on premise of investment

Insurance in india insurance is still sold on premise of investment

insurance in india insurance is still sold on premise of investment The last couple of years have been tough for the life insurance ind...

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