Final Project Fire Insurance
Transcript of Final Project Fire Insurance
-
7/30/2019 Final Project Fire Insurance
1/22
INDEX
Chapter
no
Name Page no
1. Introduction of assurance
2. New India Assurance co
3. Products
4. Various Products & plans
5. Analysis & Review
6. Questions & conclusion
-
7/30/2019 Final Project Fire Insurance
2/22
THE NEW INDIA ASSURANCE CO.
Introduction-
Assurance industry has always been a growth-oriented industry
globally. On the Indian scene too, the assurance industry has always
recorded noticeable growth vis--vis other Indian industries.
The new India assurance Co. Ltd. was the first general assurance
company to be established in India in 1850, which was a wholly British-
owned company. The new India assurance company to be set up by an
Indian was Indian Mercantile assurance Co. Ltd., which was established in
1907. There emerged many a assurance player on the Indian scene
thereafter. The general assurance business was nationalized after the
promulgation of General Insurance Business (Nationalization) Act, 1972.
The post-nationalization general assurance business was undertaken by the
assurance Corporation of India (GIC) and its 3 subsidiaries:
1. New India Assurance Company Limited
2. National Insurance Company Limited
3. United India Insurance Company Limited
Towards the end of 2000, the relation ceased to exist and the four
companies are, at present, operating as independent companies.
The Life assurance Corporation (AIC) was established on 01.09.1956 and
had been the sole corporation to write the life assurance business in India.
-
7/30/2019 Final Project Fire Insurance
3/22
The Indian assurance industry saw a new sun when the assurance
Development Authority invited the applications for registration as assurors
in August, 2000. With the liberalization and opening up of the sector to
private players, the industry has presented promising prospects for the
coming future. The transition has also resulted into introduction of ample
opportunities for the professionals including Chartered Accountants.
The Indian assurance industry is featured by the attributes:
Low market penetration;
Ever-growing middle class component in population.
Growth of consumer
Movement with an increasing demand for better assurance products;
Inadequate application of information technology for business.
Adequate
Fillip from the Government in the form of tax incentives to the assured,
etc.
The industry formations need to keep vigil on these characteristics of
the Indian market and formulate their strategies to entail maximum
contribution to the output of the sector.
The Indian life and non-life assurance business accounted for merely
0.42 percent of the world's life and non-life business in 1997. The figures of
the basic parameters of the industry's performance viz. assurance Density
and assurance Penetration also are evident of the hitherto existing low-yield
Indian market conditions.
The term "assurance Penetration" broadly measures the contribution of
the assurance industry in relation to a nation's entire economic productivity.
The figure of premium vis--vis the GDP of 1999 stood at 0.54 percent for
-
7/30/2019 Final Project Fire Insurance
4/22
non-life assurance business and 1.39 percent for the life assurance business.
The term "assurance Density" reflects the assurance purchasing power.
The premium per capita in India amounted to US $ 2.40 for assurance and
US $ 6.10 for life assurance in 1999 but with the deregulation of the sector, a
sea change in the scene is most likely.
The assurance sector in India has come a full circle from being an open
competitive market to Nationalization and back to a liberalized market
again. Tracing the developments in the Indian assurance sector reveals the
360- degree turn witnessed over a period of almost two centuries.
STRUCTURE OF THE ASSURANCE INDUSTRY
The structure of the assurance industry comprises of the Operating
department, Administrative department and the finance department. The
Operating Department generally performs the basic functions pertaining to
the designing of products, marketing thereof, servicing the insured, the
insured, management of portfolio, etc.
The Administrative Department looks after the day-to-day affairs of
the company. The Finance Department backs the operations and
administration of the company by accounting for the transactions,
streamlining the flow of funds, materializing the management decisions, etc.
The Administration Department as well as the Finance Department,
usually, functions through in-house setup. The Finance Department
functions in the areas of accounting, financial and management reporting,
budgeting and controlling, etc. and thus renders enormous scope for finance
-
7/30/2019 Final Project Fire Insurance
5/22
professionals. The new entrants in the assurance sector are likely to call for
the services of the Chartered Accountants for their financial setup
requirements. The Chartered Accountants have engaged themselves in the
audit of assurance Companies since long. With the transition in the
insurance sector, the horizons for their contribution have broadened.
Contributions have broadened.
There has, emerged a king-size pool of opportunities that the
Chartered Accountants can explore and apply their professional wisdom and
experience to.
BASIC FUNCTIONS OF THE ASSURANCE INDUSTRY
1. Risk Perception and Evaluation:
The fundamental function of an insurer is to provide a cover against
the detriment caused to the insured due to the happening of certain specified
and agreed events. Thus, prior to providing such umbrella through a product,
the insurer has to assess the risk involved in the transaction. The insurer has
to identify the element of risk prevalent in the concerned industry or a
particular unit. The perception of risk requires the study of variables through
various methods including the application of scientific and statistical
techniques and correlation thereof with the industry or unit under study in
light of their basic environmental and infra-structural characteristics.
2. Designing the Insurance Product:
-
7/30/2019 Final Project Fire Insurance
6/22
On the basis of the risks perceived, the insurer develops a product to cover
the stipulated risks. While designing an insurance product, an insurer
decides its cost to be charged from the insured in the form of premium,
reduction thereof in certain cases like not lodging any claim during the
previous covered period(s), suggesting the implementation of risk-mitigating
measures, etc.
3. Marketing of the Product:
The core function of the marketing force of an insurance company is
to generate awareness about the insurance products among the target market.But in the Indian scenario, where the insurance penetration is too low as
compared to the other nations, the marketing force needs to perform the pro-
active role in developing an insurance culture. It is through the efficiency of
the sales force of an insurance company that the desirability and the success
of a product are determined.
Adequate knowledge of the insurance industry, products and the
modalities attached therewith. Further, the marketing personnel should be
adequately backed by the back-office setup.
4. Selling of the Products:
The term selling in the context of Assurance industry connotes theissuance of policies to the applicant proposer. The Assurance basically
embodies the covenant between the insurer and the insured wherein the
former agrees to indemnify the latter for the loss caused to him on the
happening of the certain agreed events up to a specified limit. The life
-
7/30/2019 Final Project Fire Insurance
7/22
insurance policy generally contains the agreement whereby the insurer
agrees to pay to the insured or the beneficiary of the policy an agreed
amount on the expiry of the term of the policy or in the event of the death of
the insured respectively. The additional benefits in the shape of Riders viz.
Accidental Death Benefit, Double Sum Assured, Critical Illness benefits;
Waiver of Premiums, etc. can also be appended with the policy on the
payment of an additional premium.
5. Management of Portfolio:
The management of the portfolio includes the assessment ofrequirement of funds, identification of various sources of finance, the
evaluation of the sources in the light of their cost, availability, timing, etc.,
reconciling the features of various sources with the needs of the company
and the selection of appropriate conjunction of sources. The insurer
possesses huge amount of funds, which need proper management. The
management of the portfolio of an insurance company requires the
identification of investment avenues, evaluation thereof and the selection of
the most appropriate mix of alternatives where the funds of the company can
be invested. The selection requires the knowledge of finance related
functions and techniques apart from the in-depth know of the patterns of
requirement of funds in the company as well as in the industry as a whole.
-
7/30/2019 Final Project Fire Insurance
8/22
ABOUT US
New India is a leading global insurance group, with offices and
branches throughout India and various countries abroad. The companyservices the Indian subcontinent with a network of 1068 offices, comprising
26 Regional offices, 393 Divisional offices and 648 branches. With
approximately 21000 employees, New India has the largest number of
specialist and technically qualified personnel at all levels of management,
who are empowered to underwrite and settle claims of high magnitude.
New India has been rated "A-" (Excellent) by A.M.Best Co., making it the
only Indian insurance company to have been rated by an international rating
agency. Rating based on following factors:
Superior Capital Position Strong Operating Performance Only Company to develop significant International operations, long
record of successful trading outside Indi
-
7/30/2019 Final Project Fire Insurance
9/22
PROFILE
History Present Position
International Presence
Our Strengths
Pioneers
Citizens' Charter
History
Incorporated on July 23rd, 1919 Founded by the House of Tata Founder
member - Sir Dorab Tata. Nationalised in 1973 with merger of Indian
companies.
Present Position
Gross Premium (in India) of Rs. 5017.20 crores in the year 2006-2007, as
against Rs. 4791.49crores in the year 2005-2006. Assets Rs. 27444.57crores
as on 31st March 2007. Network of Offices-26 Regional Offices, 393
Divisional Offices, 614 Branches and 34 Direct Agent Branches. Rank No. 1
in the Indian market. Largest Non-Life insurer in Afro-Asia excluding
Japan. First Indian non-life company to cross Rs. 5000 crores Gross
Premium. Global Re-insurance facilities. Over-seas presence in countries
like Japan, U.K, Middle East, Fiji and Australia.
http://www.newindia.co.in/about-company.asp#1http://www.newindia.co.in/about-company.asp#2http://www.newindia.co.in/about-company.asp#3http://www.newindia.co.in/about-company.asp#4http://www.newindia.co.in/about-company.asp#5http://www.newindia.co.in/about-company.asp#6http://www.newindia.co.in/about-company.asp#6http://www.newindia.co.in/about-company.asp#5http://www.newindia.co.in/about-company.asp#4http://www.newindia.co.in/about-company.asp#3http://www.newindia.co.in/about-company.asp#2http://www.newindia.co.in/about-company.asp#1 -
7/30/2019 Final Project Fire Insurance
10/22
International Presence
Overseas operations commenced in 1920. Operations in 24 countries in the
year 2004-05. Network of 19 Branches, 12 Agencies, 2 Associate companies
and 2 Subsidiary companies in the year 2004-05. Overseas Premium of Rs.
892.35 crores in the year 2004-05, which accounts for more than 80% of
total overseas premium in India. Pre
Our Strengths
Largest number of Offices - In India and Abroad Trained and technically
qualified staff 1068 fully computerised offices across India. "A-" (Excellent)
rating by A.M.Best & Co (Europe) First domestic company to be rated by an
International Rating Agency Rating based upon following factors: Superior
capital position Strong operating performance Strong market position Onlycompany to develop significant International operations, long record of
successful trading outside India.
Pioneers
First company to set up an Aviation Insurance Department in 1946. First company to handle the Hull Insurance requirements of the Indian
Shipping Fleet.
First company to establish its own Training School. First company to introduce the concept of 'Model Office Training'. First company to create department in Engineering insurance.
-
7/30/2019 Final Project Fire Insurance
11/22
Pioneer in Satellite insurance.
Citizens Charter
Our Mission
To develop general insurance business in the best interest of thecommunity.
To provide financial security to individuals, trade, commerce and allother segments of the society by offering insurance products and
services of high quality at affordable cost
Our Values
Highest priority to customer needs. High standards of public conduct. Transparency in operations.
Our Commitment to the citizens
We will respond to all commercially viable general insurancerequirements of the citizens, including products for weaker sections of
the society at affordable price within three months from the date on
which such a requirement is received.
We will ensure issuance of 100% of documents within a period ofseven days.
-
7/30/2019 Final Project Fire Insurance
12/22
We will ensure that prospectus of the various insurance products areprovided to the customers and the extent of coverage is explained for
his choosing the appropriate product. A written proposal will be
obtained from the insured wherever necessary and accordingly the
policy will be prepared.
We will settle all claims within a time schedule envisaged hereunder:A. Personal life insurance claims within 30 days on completion of all
requirements.
B. Property claims within 30 days on completion of all requirements.
C. Liability claims within 30 days on completion of process of law.
We will promote customer education in general insuranceproducts/services by holding workshops in various centers.
We will open a customer service cell in all ROs/DOs in addition to theexisting 'May I Help You' counters.
We will set up proper grievance redressal mechanism in everyoperating office and will educate the clients about the same including
the system of grievance redressal thorough ombudsman.
On request to the policy issuing office, we will make available to acustomer, the status of his claim and/or claim settlement details within
seven working days.
We will adhere to the IRDA guidelines in protecting thepolicyholders' interest.
-
7/30/2019 Final Project Fire Insurance
13/22
FINANCIAL RATING
For the sixth consecutive year, the Company has been rated as "A-"
(Excellent) by M/s. A.M. Best Europe Ltd. The rating reflects Company's
excellent risk adjusted capitalisation, prospective improvement in
underwriting performance and its leading business profile in the direct
insurance market in India. A partially off-setting factor is the Company's
reliance on investment income which counter balances underwriting losses.
But the outlook is stable. A.M. Best believes the Company's risk adjusted
capitalisation is excellent and anticipates that it will remain sufficient to
absorb the likely growth in the net premium. Further it also expects that
there will be a reduction in the combined ratio in the years to come. The
Company is likely to maintain its leading business position as the largest
direct insurer in India, despite increased competition from private players.
http://www.newindia.co.in/fin-rating.asphttp://www.newindia.co.in/fin-rating.asphttp://www.newindia.co.in/fin-rating.asphttp://www.newindia.co.in/fin-rating.asp -
7/30/2019 Final Project Fire Insurance
14/22
PERFORMANCE
New India Assurance Company is the largest non-life insurer in India. The
financial strength of the Company is reflected from the following figures:-
-
7/30/2019 Final Project Fire Insurance
15/22
WORKFORCE
Employee Strength (as on 31.03.2012)
Category Total Number of
Employees
Function
Class I 5504 Supervisory
Class II 2574 Development Force
Class III 9032 Clerical/Secretarial
Class IV 2049 Substaff/Drivers
P. T. S. 389
TOTAL 19548
-
7/30/2019 Final Project Fire Insurance
16/22
PRODUCTS
PRODUCTS
PERSONAL
COMMERCIAL
INDUSTRIAL
SOCIAL
-
7/30/2019 Final Project Fire Insurance
17/22
Definition
Standard firepolicy that usually covers fire due to any cause, subject to some exceptions
which too may be covered with additional premium. These policies may be extended further
(by paying additional premium) to include collateral damages or losses such as loss of
income.
Fire Insurance Definition
Fire insurance means insurance against any loss caused by fire. Section 2(61 of theInsurance Act defines fire insurance as follows: Fire insurance business means the
business of effecting, otherwise than incidentally to some other class of business,contracts of insurance against loss by or incidental to fire or other occurrence customarilyincluded among the risks insured against in fire insurance policies.
What is Fire?
The term fire in a Fire Insurance Policy is interpreted in the literal and popular sense.There is fire when something burns. In English cases it has been held that there is no fireunless there is ignition. Stanley v. Western Insurance Co. Fire produces heat and light buteither o them alone is not fire. Lighting is not fire. But if lighting ignites something, thedamage may be covered by a fire-policy. The same is the case with electricity.
Characteristics of Fire Insurance
1. Fire insurance is a contract of indemnity. The insurer is liable only to the extent of theactual loss suffered. If there is no loss there is no liability even if there is a fire.
2. Fire insurance is a contract of good faith. The policy-holder and the insurer mustdisclose all the material facts known to them.
3. Fire insurance policy is usually made for one year only. The policy can be renewedaccording to the terms of the policy.
4. The contract of insurance is embodied in a policy called the fire policy. Such policiesusually cover specific properties for a specified period.
5. Insurable Interest: A fire policy is valid only if the policy-holder has an insurable interestin the property covered. Such interest must exist at the time when the loss occurs. In
English cases it has been held that the following persons have insurable interest for the
purposes of fire insurance- owner; tenants, bailees, including carriers; mortgages andcharge-holders.
6. In case of several policies for the same property, each insurer is entitled to contributionfrom the others. After a loss occurs and payment is made, the insurer is subrogated to
the rights and interests of the policy-holder. An insurer can reinsure a part of the risk.
7. Fire policies cover losses caused proximately by fire. The term loss by fire is interpretedliberally. Example: A women hid her jewellery under the coal in her fireplace. Later on
http://www.businessdictionary.com/definition/standard.htmlhttp://www.businessdictionary.com/definition/fire.htmlhttp://www.businessdictionary.com/definition/cover.htmlhttp://www.businessdictionary.com/definition/due.htmlhttp://www.businessdictionary.com/definition/subject-to.htmlhttp://www.businessdictionary.com/definition/exception.htmlhttp://www.businessdictionary.com/definition/premium.htmlhttp://www.businessdictionary.com/definition/policy.htmlhttp://www.businessdictionary.com/definition/paying.htmlhttp://www.businessdictionary.com/definition/collateral-damage.htmlhttp://www.businessdictionary.com/definition/capital-gain-loss-holding-period.htmlhttp://www.businessdictionary.com/definition/income.htmlhttp://www.businessdictionary.com/definition/income.htmlhttp://www.businessdictionary.com/definition/capital-gain-loss-holding-period.htmlhttp://www.businessdictionary.com/definition/collateral-damage.htmlhttp://www.businessdictionary.com/definition/paying.htmlhttp://www.businessdictionary.com/definition/policy.htmlhttp://www.businessdictionary.com/definition/premium.htmlhttp://www.businessdictionary.com/definition/exception.htmlhttp://www.businessdictionary.com/definition/subject-to.htmlhttp://www.businessdictionary.com/definition/due.htmlhttp://www.businessdictionary.com/definition/cover.htmlhttp://www.businessdictionary.com/definition/fire.htmlhttp://www.businessdictionary.com/definition/standard.html -
7/30/2019 Final Project Fire Insurance
18/22
she forgot about the jewellery and lit the fire. The jewellery was damaged. Held, she
could recover under the fire policy.
8. Nothing can be recovered under a fire policy if the fire is caused by a deliberate actofpolicy-holder. In such cases the policy-holder is liable to criminal prosecution.
9. Fire policies generally contain a condition that the insurer will not be liable if the fire iscaused by riot, civil disturbances, war and explosions. In the absence of any specific
expectation the insurer is liable for all losses caused by fire, whatever may be the causes
of the fire.
10.Assignment: According to English law a policy of fire insurance can be assigned only withthe consent of the insurer. In India such consent is not necessary and the policy can be
assigned as a chose-in-action under the Transfer of Property Act. The insurer is bound
when notice is given to him. But the assignee cannot be recovering damages unless he
has an insurable interest in the property at the time when the loss occurs. A stranger
cannot sue on a fire policy.
11.Payment of Claims: Fire policies generally contain a clause providing that upon theoccurrence of fire the insurer shall be immediately notified so that the insurer can take
steps to salvage the remainder of the property and can also determine the extent of the
loss. Insurance companies keep experts on their staff of value the loss. If in a policythere is an international over valuation of the property by the policy-holder, the policy
may be avoided on the ground of fraud.
Fire Insurance, Fire Insurance Policy
A fire insurance policy involves an insurance company agreeing to pay a
certain amount equivalent to the estimated loss caused by fire to the insured,
within the time specified in the contract. The indemnity is subject to change
depending upon the policy. One should confirm with the insurer about the
types of risks covered, since one cannot insure the property against all types
of risks of fire.
0
Insurance policies are legally binding contracts between an insurance
company and a policyholder that establishes the details of coverage,
-
7/30/2019 Final Project Fire Insurance
19/22
specifying the conditions or perils and compensation provided should they
occur. A fire insurance policy is a specific type of property insurance which
covers the insured in the event their home is lost or damaged during a fire. It
is a common investment and is often required and included as part of a
homeowners insurance policy when a mortgage is approved.
A fire insurance policy typically has four different coverage areas. The
dwelling portion refers directly to the home itself. The coverage for the
dwelling should always be enough to adequately replace the home.
Rebuilding expenses are often determined based on the actual square footage
of the home in question. The portion referring to other structures includes
the coverage of garages or sheds that are not part of the dwelling itself andare considered a separate area.
Personal property is considered a separate coverage area as well and
includes the contents within the home that are not part of the dwelling itself,
for example furniture, electronics, computer equipment, clothing and
jewelry. Personal property items of considerable value should be specifically
listed as part of the fire insurance policy, items that are not explicitly valuedtend to be compensated with a standard amount.
The fourth coverage area relates to additional expenses that exceed the
insureds usual cost of living as a result of the fire damage. This can refer to
the expenditures of temporary housing among other things, all incurred
when forced to live away from your residence during the process of
rebuilding or repairing. These expenses need to be documented in order to
receive reimbursement later. Usually there is a limit set for additional
expenses claimed.
-
7/30/2019 Final Project Fire Insurance
20/22
When insurance companies pay losses on claims it is either based on actual
cash value or replacement value. Actual cash value commonly refers to the
fair market value of the home at the time the loss or damage is incurred.
Replacement value means the insured would be compensated for the entire
cost or replacing, repairing, or rebuilding the home. Actual cash value can beconsiderably less than the replacement value and is usually less preferable.
Most fire insurance policies also cover any water damage resulting from the
process of fighting the fire, such as that created from a fire hose or a broken
pipe. Some insurance policies also make stipulations for building code
upgrades, for example if current building codes require a specific material
but the home in question had a substandard quality of material, the
homeowner would be expected to account for the discrepancy in cost
relating to the repair process.
What is the extent of coverage under a Fire Insurance Policy?
Fire insurance provides protection for the estimated value of the physical
house. However, there are a number of exclusions to the same, for example
medical bills, loss of human life and pets, loss of personal belongings,
structures outside the property (including garages and gazebos), damage to
the landscape and expenses for accommodation for the time being. These
things can be covered under a package of extended property insurance.
What are the main types of Fire Insurance policies?
* Specific Policy: The insurer is liable to pay a set amount lesser than the
propertys real value. In this policy, the propertys actual value is not
considered to determine the indemnity. The average clause, which requires
the insured to bear the loss to some extent, does not play a role in this policy.
In case the insurer inserts the clause, the policy will be known as an average
policy.
* Comprehensive policy: This all-in-one policy indemnifies for loss
arising out of fire, burglary, theft and third party risks. The policyholder may
-
7/30/2019 Final Project Fire Insurance
21/22
also get paid for the loss of profits incurred due to fire till the time the
business remains shut.
* Valued policy: This policy is a departure from the standard contract of
indemnity. The amount of indemnity is fixed and the actual loss is not takeninto consideration.
* Floating policy: This policy is subject to the average clause. The
extent of coverage expands to different properties belonging to the
policyholder under the same contract and one premium. The policy may also
provide protection to goods kept at two different stores.
* Replacement or Re-instatement policy: This policy is subject to the re-
instatement clause, which requires the insurance company to pay for
replacing the damaged property. So, instead of giving out cash, the insurer
can re-instate the property as an alternative option.
Why does one need Fire Insurance?
Fire insurance is important because a disaster can occur at any time. There
could be many factors behind a fire, for example arson, natural elements,
faulty wiring, etc. Some facts that stress the importance of fire insurance
include:
* Fire contributes to the maximum number of deaths occurring in America
due to natural disasters.
* Eight out of ten fire deaths take place at home.
* A residential fire takes place after every 77 seconds.
* The major reason for a residential fire is unattended cooking
-
7/30/2019 Final Project Fire Insurance
22/22
Fire Insurance Claim Procedure:
Individuals/corporates must inform insurer as early as possible , in no case laterthan 24 hours.
Provide relevant information to the surveyor/claim representative appointed bythe insurer.
The surveyor then analyzes the extent/ value of loss or damage. The claim process takes anywhere between one to three weeks.
What is Covered in Fire & Special Perils Policy?
Accidental fires, lightning, explosion and implosion due to pressure vessels(usedfor domestic purposes)
By rioting mob, striking workers, malicious acts by third parties and damage byterrorists
Impact damage by any rail/road vehicle or animal by direct contact.
Commodities damaged by water used for extinguishing fire. Loss\damage caused by pulling down of adjacent buildings by the fire brigade to
prevent the flames from progressing. Breakage of commodities in the process of their removal from the premises where
fire is intense. Aircraft and other aerial and and/or space devices and/or articles dropped
therefrom, excluding destruction or damage occasioned by pressure waves causedby such devices
Payments made to people employed in extinguishing fire. Subsidence and landslide, including rock slide. Natural calamities like storm, cyclone, typhoon, hurricane, tornado, flood and
impact damage. Damages caused due to bursting or overflowing of water tanks, apparatus and
pipes Bush Fire