General Insurance

The Great Fire of London. • Consumed • 13,200 houses, • 87 churches, • most of the City authority

buildings

gutted the medieval City of London inside the old Roman City Wall

Destroyed the homes of 70,000 out of 80,000 of the city’s inhabitants

Sunday, 2nd Sept. to Wednesday, 5th Sept 1666

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What is Fire Insurance ?• “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 customarily included among risks insured against the fire insurance policies.” – Insurance Act, 1938.

• A fire insurance is a contract under which the insurer in return for a consideration (premium) agrees to indemnify the insured for the financial loss which the latter may suffer due to destruction of or damage to property or goods, caused by fire, during a specified period.

• The insurer is liable to make good the actual amount of loss not exceeding the maximum amount fixed under the policy.

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Fire• 'Fire' means the production of light and heat by

combustion or burning. • There is said to be a fire within the meaning of

fire insurance when: There is actual ignition. The fire is purely accidental or fortuitous in origin so

far as the insured is concerned. There must be something on fire which ought not to

be on fire.

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Actual ignition• No Claim without a Flame.• The fire must result from actual ignition and the resulting

loss must be proximately caused by such ignition. • The damage should be occasioned by fire.• Loss or damage caused by excessive fire heat cannot be

included in ‘loss or damage fire’.• Loss or damage must be either by ignition of article or

property or premises or part thereof.• If lightning causes ignition, there is actual ignition. • If water causes damage when used to put out fire, Fire,

and not water is the villain.

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Accidental or fortuitous• Fire must be accidental • or magnitude of the fire must be accidental –

eg. Cooking stove.• The cause of fire is immaterial unless it as the

deliberate act of the insured.• It is immaterial whether the fire comes to the

insured property or the insured property comes to the fire.

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Life assurance V Fire InsuranceLife Fire/ Marine

1. Contract for liquidated sum. A contract of indemnity.2. Event is certain Event is uncertain3. Longer period Short period – one year4. Insurable interest at the time

of contractMarine: at the time of claim. Fire: at time of contract and claim

5. Insurable interest cannot be measured in terms of money

Can be measured in term of money.

6. Facility of Surrender value. No such surrender7. Nomination facility available Only assignment is possible.8. Loan against the Policy No such facility.9. Premium paid in installments. Payment in lump sum10. Premium according to age. Premium according to risk.

11. Life is the subject mater. Property or other assets.

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Types of Fire Insurance

Specific Policy Valued Policy Average Policy Floating policy Reinstatement Policy Consequential loss Policy Comprehensive policy A Blanket policy

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Specific Policy• The insurer undertakes to make good the loss to

the insured up to the amount specified in the policy.

• The value of property is not relevant in determining the amount of indemnity in case of a specific policy.

• Example: A building worth Rs.2,00,000 is insured against fire for Rs.

1,00,000. If the damage to the property is Rs.75,000 the insurer will get the

full compensation. If damage is Rs.2,00,000, Rs. 1,00,000 is payable.

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Valued Policy• The value declared in the policy is payable by the

insured in the event of a total loss irrespective of the actual value of loss.

• The policy violates the principle of indemnity. • The insurer has to pay a specified amount quite

independent of the market or actual value of the property at the time of loss.

• So such a policy is very rarely issued. • It may be issued only on artistic work, antiques and

similar rare articles whose value cannot be determined easily.

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Average Policy

• Under a fire insurance policy containing the ‘average clause’ the insured is liable for such proportion of the loss as the value of the uncovered property bears to the whole property.

• This principle applies if the property is underinsured. • Example:

House insured for Rs. 4,00,000 though its actual value is Rs.6,00,000.

Part of the house is damaged in fire and the insured suffers a loss of Rs. 3,00,000

The amount of compensation to be paid by the insurer is Rs. 2,00,000

Claim Payable =Sum Insured * Actual Loss

=400000*300000

=200000Value of the Property 6000

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Floating policy• Used for covering fluctuating stocks of goods

held in different locations. • With every transaction of sale or purchase, the

quantities of goods kept at different places fluctuate.

• It is difficult for the owner to take a policy for a specific amount.

• The best way is to take out a floating policy for all the stocks of goods.

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Reinstatement Policy• Also called ‘New for Old’ Policy• Such policies avoid conflict of indemnity.• The insurer has the right to reinstate or replenish

the property destroyed instead of paying compensation to the insured in cash.

• It may be granted on building, machinery, furniture, fixture and fittings only.

• Restoration of damaged portion of the property to a condition substantially the same, but not better or more extensive than its condition, at the time of its renovation

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Consequential loss Policy• Provides for loss of tangible and intangible properties.• The insured may suffer a greater financial loss on account

of dislocation of business caused by fire• .e.g. close down business after fire for repair, to meet

fixed expenses such as rent, salaries, taxes and other expenses as usual.

• Such considerable loss to the insured is not covered by the ordinary fire policy.

• In order to cover such loss by fire, the ‘Consequential Loss Policy’ has been introduced.

• The loss so suffered is separately calculated from the loss actually suffered.

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Comprehensive policy• It is also known as ‘all insurance policy’.• Covers the risks of the fire arising out of any

cause that is civil commotion, lightening, riots, thefts, labor disturbances and strikes etc.

• ‘Comprehensive’ does not mean that every type of risk is covered.

• There may be exclusions and limitations.

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Other types• Blanket policy :

to cover all the fixed and current assets of an enterprise by one insurance.

• Declaration policy: Trader takes out a policy for the maximum value of stock which

may be expected to hold during the year. At a fixed date each month, the insured has to make a declaration regarding the actual value of stock at risk on that date. On the basis of such declaration, the average amount of stock at

risk in the year is calculated and this amount becomes the sum assured.

• Sprinklers leakage policy. It covers the loss arising out of water leakage from sprinklers which are setup to extinguish fire.

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Add-on Covers• Forest Fire• Spontaneous combustion• Deterioration of Stocks in cold storage• Earthquake (Fire & Shock)• Terrorism• Impact damage due to Insured’s own Rail/ Road

Vehicles, fork Lifts, Cranes, stackers and the like and articles dropped there from

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Rights of the Insurer• Right to avoid the policy- in case of willful act and

misrepresentation.• Right of entry control over the property- on the happening

of the event to take the possession of the property.• Right of reinstatement- replace the asset • Right of subrogation - entitled to all rights and remedies

available to the insured after indemnifying• Right to contribution- when more than one policies are

taken by the insured, loss will be shared with other insurers.

• Right to salvage - assured to hand over the salvage to the insurance company in case of loss to the property insured.

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Implied Conditions • Existence of Property when policy is effected• Insured Property must be property damaged• Insurable interest from the time of

commencement of risk and up to the completion of the contract.

• Observe good faith in disclosure, efforts to prevent and extinguish the fire with reasonable care.

• The subject matter of insurance should be described in the policy as to identify it clearly.

Express conditions are described in the policy.

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Claims• Notice in writing to the insurer.• Evidence regarding loss by fire.• Filing the prescribed form with all details• Inspection of loss by Insurer• Double insurance – contribution• More than one fire, total pay out will not

exceed the insured amount.• Waiver is the voluntary relinquishment of a

known right. Insurer my pay as a waiver.

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Rate Fixation Rate calculation is made in following manner;i) Base rate for the class of property.ii) Reduction in rates based on exclusion and add on covers.iii) Extra tariff for hazardous assets.iv) Discount is allowed for claim experience.v) Further discount is allowed for betterment of risk.Followings are to be considered on fixation of premiumvi) Type of insuredvii) Location of propertyviii) Storage facility and other infrastructureix) Additional premium on ‘add-on covers’ and discount on

‘exclusion’.

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Rate Fixation• Three steps:

Classification Discrimination Fixing or schedule rating.

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Classification• The risks are classified into various classes

according to factors affecting fire risk. Construction of Structure Occupancy Nature of flooring Height Floor and Wall Opening Exposure Lighting heating and power Place or situation Protection Time of loss

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Discrimination• The differentiation of the rates for individual

risks in a particular class.• Risks are differentiated from each other

according to the merits and demerits of the individual risk.

• Equitable basis of ratting.

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Schedule Rating• An empirical standard for the measurement of relative quantity

of fire hazard.• It is based on the theory that the aggregate fire hazard of any

risk is capable of ultimate analysis into its component factors to each of which could be assigned an appropriate charge

• A standard or average premium is determined as a base for calculating the premium.

• The rate arrived at the is the net premium, which is just sufficient to meet all the losses in that particular risk.

• This is loaded with expenses to arrive at the gross premium or office premium

Average Fire Rate R =Total Loss

*100Total Values of insurance

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Tariff Rating• Fire insurance business is governed by the tariffs

formulated by the Tariff Advisory committee• TAC is a statutory body established under the provisions

of The Insurance (Amendment ) Act 1968.• TAC control and regulate the rates, advantages, terms and

conditions offered in respect of general insurance • Tariffs provide rates for almost all classes of risk • also provide rules and regulations for the business and

standard form of wordings for the contract.• Regional committees at Delhi, Calcutta Chennai, Mumbai.• Each region has its own Tarff applicable to risks in in its

territorial jurisdiction.• Tariffs are determined based on principles of rate fixation.

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Documents • Proposal Form- contains details of proposer, type of

coverage, details of subject matter, sum insured, insured declaration/authentication, risk inspection report.

• Cover note- is issued pending issue of policy covers proposer’s detail, sum insured, details of risk covered, premium detail, date of issue and validity, date of commencement and expiry of cover, authentication, warranties and clauses.

• Policy document- must follow the format prescribed by the tariff. Must contain all the information as contained in the cover note, and endorsement and alteration made to the policy.

MARINE INSURANCE

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Marine Insurance - Defined• A contract of Marine insurance is a contract whereby the Insurer

undertakes to indemnify the assured, in manner and to the extent thereby agreed , against marine losses, that is to say, the losses incident to marine adventure.

• Section 2(13)A of The Insurance Act 1938: • “Marine Insurance business” means the business of effecting

contracts of insurance upon vessels of any description including cargoes freights and other interest which may be legally insured in or in relation to such vessels, cargoes and freights, goods, wares, merchandise and property of whatever description insured for any transit by land or water or both and whether or not including warehouse risks or similar risks in addition or as incidental to such transit and includes any other risks customarily included among the risks insured against in marine insurance polices.

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Marine Vs Fire InsuranceMarine Fire

1. Freely Transferable. Only with the consent of insurer.2. Insurance can be for a subject

matter ‘ lost or not lost ‘ : both the parties are ignorant of the safety or otherwise of the goods.

Insurable interest should be available at the time of contract also.

3. Short period or for a voyage One year4. Insurable interest at time of loss. Also at time of contract5. A cretin Profit margin is also

allowed in Claim.Claim for actual loss or insured amount whichever is low.

6. Standard form of Policy prescribed by Law.

No standard form prescribed.

7. Moral responsibility of the cargo owner does not exist.

Moral responsibility of insurer is an important aspect.

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Types of Marine Insurance• Two broad categories - ocean marine insurance and Inland marine

insurance.• Ocean marine insurance is a form of transportation insurance. It is

classified into 4 categories: Hull insurance

• covers physical damage to the ship or vessel Cargo insurance

• covers the shipper of the goods if the goods are damaged or lost. Open cargo policy can be used for regular shipment. The open cargo policy has no expiration date and remains in force until it is cancelled.

Protection and Indemnity (P&I) Insurance• provides comprehensive liability insurance for property damage or bodily

injury to third parties. Freight Insurance

• indemnifies the ship owner for the loss of earnings if the goods are damaged or lost and are not delivered.

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Implied Warranties• Seaworthiness of Ship.

At the commencement of the voyage or at each stage of voyage.

Seaworthiness is relative term - suitability for the season, sea, etc.

suitability and adequacy of her equipment, adequacy and experience of the officers and crew.

Include cargo - worthiness• Legality of Venture

Eg. Trading with enemy, violating national laws, smuggling, ventures prohibited by law.

• Non- deviation No deviation and delay of voyage

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Classes of Policies1. Voyage Policy• insured against risk in respect of a particular voyage from a port of

departure to the port of destination• covers the subject matter irrespective of the time factor. • not suitable for hull insurance as a ship usually does not operate over

a particular route only. • The policy is used mostly in case of cargo insurance.2. Time Policy• for specified period of time, usually not exceeding 12 months. • generally used in connection with the insurance of ship.3. Mixed Policies• It is a mixture of voyage and time policies.• for a certain time period and for a certain voyage or voyages, • e.g., Kolkata to New York, for a period of one year. • generally issued to ships operating on particular routes.

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Classes of Policies .. 4. Valued Policies• The value of the subject matter is agreed between the insurer

and the insured at the time of taking the insurance. It includes invoice price of goods freight, insurance and other charges ten to fifteen percent margin to cover expected profits.

5. Unvalued policy• the value of subject matter insured has to be ascertained

wherever the subject matter is lost or damaged. 6. PPI Policies• Policy Proof of Interest• Honored by the insurer even in absence of insurable interest.• Issued on mutual understanding and is called honored polices.• Since this is not legally enforceable, it is called wagering policies.

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Classes of Policies …7. Floating Policy• A merchant who is a regular shipper of goods can take out a ‘floating policy’ to

avoid botheration and waste of time involved in taking a new policy for every shipment..

• It does not include the name of the ship and other details. • the insured takes a policy for a huge amount • The other details are required to be furnished through subsequent declarations.• The underwriter goes on recording the entries in the policy. • When the sum assured is exhausted, the policy is said to be “fully declared” or

“run off”.8. Block Policy• This policy covers other risks also in addition to marine risks. • A single policy known as block policy may be taken to cover all risks. E.g. when

the goods are dispatched by rail or road transport for shipment, a single policy may cover all the risks from the point of origin to the point of destination.

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Assignment• A marine insurance policy may be transferred by assignment unless the

terms of the policy expressly prohibit the same. • The assignment may be made either by endorsement on the policy

itself or on a separate document. • The insured need not give a notice or information to the insurer or

underwriter about assignment. • In case of death of the insured, a marine policy is automatically

assigned to his heirs.• At the time of assignment, the assignor must possess an insurable

interest in the subject matter insured. • An insured who has parted with or lost interest in the subject matter

insured can not make a valid assignment.• After the occurrence of the loss also, the policy can be assigned freely

to any person. The assignor merely transfers his own right to claim to the assignee.

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Marine Losses• A loss arising in a marine adventure due to perils of the

sea is a marine loss. Marine loss are classified into - Total loss and Partial Loss.Total Loss: implies that the subject matter insured is fully destroyed and is totally lost to its owner.

• It can be Actual total loss or Constructive total loss. Actual total loss

• subject matter is completely destroyed or so damaged that it ceases to be a thing of the kind insured.

• e.g. sinking of ship, complete destruction of cargo by fire, etc. Constructive total loss

• The ship or cargo insured is not completely destroyed but is so badly damaged that the cost of repair or recovery would be greater than the value of the property saved.

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Marine Losses- Partial Loss• A partial loss occurs when the subject matter is

partially destroyed or damaged. Partial loss can be general average or particular average. General average

• refers to the sacrifice made during extreme circumstances for the safety of the ship and the cargo. This loss has to be borne by all the parties who have an interest in the marine adventure.

• e.g. A loss caused by Jettison must be shared by various parties. Particular average

• loss arising from damage accidentally caused by the perils insured against. Such a loss is borne by the underwriter who insured the object damaged. e.g. If a ship is damaged due to bad weather the loss incurred is a particular average loss

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Insurable Interest• Insurable interest in the subject-matter insured must exist

at the time of the loss. It need not exist when the insurance policy is taken.

• Under marine insurance, the following persons are deemed to have insurable interest:a) The owner of the ship.b) The owner of the cargo.c) A creditor who has the security of the ship or cargo.d) The master and crew of the ship have insurable interest in

respect of their wages.e) In case of advance freight, the person advancing the freight has

an insurable interest if such freight is not repayable in case of loss.

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Policy ConditionsConditions are inserted into policy in the form of clauses: • Hull clauses:

Institute time Clauses Incorporated in Hull Policies losses resulting from collision, standing, general average etc. All risks policy may be issued or certain risks may be excluded from the

policy by inserting suitable clauses• Cargo Clauses:

Institute Cargo clauses Insurance of goods, nature, extent, and scope of the insurance Additional marine perils are inserted through special clauses.

• Freight Clauses Institute Freight clauses Loss of freight due to maritime perils which may be insured for a period or

for a voyage.

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Description of the Clauses1. Assignment Clause freely assignable and no notice is to be given to the underwriter. But for hull insurance, consent of underwriter is essential

2. Lost or not lost The merchant gets information of the shipment of his cargo very late after the sailing

of the steamer and therefore, it is not known whether the subject matter was lost or not lost.

The insurer undertakes to indemnify the insured whether subject matter was lost or not before the issue of the policy.

3. At and from clause Applicable for voyage policies insuring hull and freight. Determines the time when the actual risk commences Cover available while it is lying at the port of departure. If the policy contains ‘from’ only instead of ‘at and from’ , the risk commences from

the time of departure of the ship and not earlier.4. Warehouse to warehouse clause Risk commences form the specified place and continues to the specified place of

destination named in the policy. The risk of land, craft transport and transshipment are covered under a single marine

policy.

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5. Deviation, touch and stay cause Any departure form the specified course of the voyage or a customary

course (if not specified in the policy) amounts to deviation. A deviation is different form the change of voyage.

• In change of voyage, the agreed upon destination is changed – intention to change the voyage is sufficient to end the liability of the underwriter.

• In deviation, there should be actual deviation. Once deviation has taken place, the risk ceases to attach for the rest of the voyage.

Deviating is excused if it is caused by:• It is caused by circumstances beyond the control of the master and his

employer.• It is necessary to comply with an express or implied warranty.• It is necessary for the safety of the ship or subject matter insured.• For the purpose of saving human life or aiding a ship in distress where human

life may be in danger.• Deviation caused by barratrous conduct of the master of the crew, if barratry

be one of the perils insured against.

Description ..

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6. Inchmaree Clause Named after a steamer called “Inchmaree’, in 1887, where claim

was denied since the donkey pump of the steamer was damaged. This clause provide indemnity to the insured for damage to the

hull or machinery resulting from the negligence of the master or crew or from explosion or latent defects.

This clause is also inserted in cargo polices.7. Running Down Clauses

Also called collision clause and is included in hull polices. The amount of damage extends to include damage done by the

vessel to other ship, her cargo and compensation for loss of employment in consequence of collision .

Only three fourth of the liability is met by the insurer and rest is to be borne by the owner of the ship.

Description ..

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8. Sue and Labour Clause Underwriters pay expenses in addition to the loss. Limitations of Expenses in the above clause:

• must be incurred for the benefit of the subject mater insured.• Must be reasonable • Must be incurred by the assured, his factors, his servants or assigns.• incurred to avert or minimise a loss form a peril covered by the policy.

9. Reinsurance clause Reinsurer is liable only for claims for which the insurer is legally liable Alteration in the original policy to be with consent of the reinsurer.

10. Memorandum Clause Provide minimum limit to the underwriters liability regarding claims for

particular average by exempting him from such claims.11. Continuation clause

The vessel continue to be covered even after completion of voyage under the policy at a pro rata premium to her port of destination.

Description ..

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Marine cargo coverage• Marine policy generally subject to:

ICC – A, ICC B, ICC C( For sea transits) Inland Transit ( Rail/ Road)Clauses – A Institute Cargo Clauses( Air Cargo)

• Extensions are: SRCC Institute War clause, FOB

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Institute Cargo Clauses “C” Covers the following :• Loss or damage to the subject- matter insured reasonably attributable to:

Fire or explosion Vessel or craft being stranded, grounded, sunk or capsized Overturning or derailment of land conveyance Collision or contact of vessel / craft or conveyance with any external object

other than water Discharge of cargo at the port of distress ii. Loss / damage to the subject –

matter insured caused by: General Average sacrifice Jettison

• General Average contribution and Salvage charges incurred to avoid loss from any cause (s) except those excluded

• Liability under “Both to Blame Collision” clause of contract of Affreightment

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Institute Cargo Clause “B” • covers the aforesaid risks of ICC (C) and• Loss / damage reasonably attributable to earthquake,

volcanic eruption or lightning;• Loss or damage caused by

Entry of sea, lake, or river water into vessel, craft, lift van or place of storage

total loss of any package lost overboard or dropped whilst loading into or unloading from vessel or craft

• General Average contribution and Salvage charges incurred to avoid loss from any cause (s) except those excluded

• Liability under “Both to Blame Collision” clause of contract of Affreightment

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Institute Cargo Clause (A)• Covers the following risks• All Risks of loss / damage to the cargo insured except

those specifically excluded.• General average and salvage charges incurred to avoid

loss form any cause covered under the insurance.• Liability under “Both to Blame Collision” clause of

contract

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Exclusions• Willful Misconduct of the Assured• Ordinary Leakage, wear & tear• Insufficiency of packing• Inherent vice• Delay - even if delay is caused by a peril insured• Insolvency or financial default of owner manager charterer etc • Arising from use of nuclear weapons• Malicious damage-only in ICC-B&C• Un-seaworthiness of vessel

• This may be waived unless the assured or their servant is privy to such Un-seaworthiness or un cargo worthiness

• War/capture seizure arrest/derelict mines • Caused by strikers/resulting from strikes/terrorist.

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Return of Premium• The premium is refundable under the following circumstances:• By agreement in the policy

Improvement of the character of insurance eg. Change of ship to safer routes, first class liner, good packing etc

If claim does not arise. Cancellation of policy due to change of ownership of the hull. Mutual cancellation of the policy.

• For reasons of equity Non attachment of risk. Undeclared balance in an open policy Total failure of an apportionable part of the consideration When assured had no insurable interest throughout the life of policy. Insurer can cancel when there is unreasonable delay in commencing

the voyage. Over insurance.

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What , if there is a Claim?• Loss minimisation steps to be undertaken.• A Prompt Notice of Claim• If ship owner is also liable for any loss or damage, he or his

agent is also entitle d to a written notice.• Following documents are required at the time of claim:

Policy or certificate of insurance. Bill of Lading Invoice of bill Copy of Protest – certified before a counsel or notary public. Certificate of survey Account sale or bill of sale. Letter of subrogation. In case of total loss, notice of abandonment

EXPORT CREDIT

INSURANCE

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Export Credit Risk• Exports

Goods Services

• Credit Extending supplier credit: DP, DA, OA

• Risk Possibility of non-payment of accounts receivables

Types of Export Credit Risks

Export Credit Risk

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Political Risk• Some countries may experience major

political instability

defaults on payments exchange transfer blockages nationalization

confiscation of property

leading to…

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Credit Risk• The risk of

Insolvency Default Fraud Unwillingness to accept the goods on the

part of the buyer

Credit risk

All resulting in…..

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Transfer Risk..

Exchange or trade controls introduced in

Buyer's country

Weakness in economy of

Buyer's country, viz. low

reserves, BOP problemsFailure of

Buyer's Bank affecting

payment of outstandings

…arising from all/any of the above

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Transfer Risk• Weakness in economy of Buyer's country, viz.

low reserves, BOP problems

• Failure of Buyer's Bank affecting payment of outstandings

• Exchange or trade controls introduced in Buyer's country

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Legal Risk• Differences in law can be expected in overseas

countries• These may have an impact in such areas as:

import procedures taxation employment practices currency dealings property rights the protection of intellectual property agency/distributorship arrangements

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Export Credit InsuranceRisks covered by export credit insurers:• Commercial Risk

Insolvency/ Bankruptcy Breach of Contract Payment Default Refuse to take delivery of goods

• Political Risk.

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Role of ECGC• Providing credit insurance covers to exporters

against loss in export of goods & services• Providing export credit guarantees to banks &

FI’s to enable exporters obtain better facilities from them

• Providing Overseas Investment Insurance to Exporters - Indian Entrepreneurs in Overseas Ventures (Equity/Loans)

• Maturity Factoring

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Standard Polices – Risks covered • COMMERCIAL RISKS

Insolvency of buyer/LC opening bank Default of buyer Repudiation by buyer

POLITICAL RISKS War/civil war/revolutions Import restrictions Exchange transfer delay/embargo Diversion of Voyage Risk

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Country evaluationAssessment and evaluation of political risks associated

with countries for the purpose of premium calculation, determining types of cover and terms of coverCountry reviews are taken up on a regular basis for up/down grading

• Country Underwriting involves assessment of a country’s ability and likelihood to honour its commitments undertaken both, as part of trade as well as sovereign debt

• The country risk is evaluated on the basis of the politico-economic situation prevailing in a country

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Country Classification• ECGC classifies the countries with the help of an objective scoring

methodology• Under the rating system followed, the weighted averages of

scores on economic risk rating, political risk rating, past experience of ECGC, trade relations with India and experience with other credit insurers are calculated to arrive at the Country Risk Indicator

• While underwriting the country risk, ECGC places the country either in Open Cover of Restricted cover

• The basis for deciding on the type of cover and terms of cover is a host of economic and political factors

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Open Cover Countries• Cover with No Restrictions• Cover is offered usually on normal terms and

conditions i.e. 90% cover, 4 months waiting period for ascertainment of loss and settlement of claims, etc.

• Currently ECGC places 195 countries under Open Cover

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Restricted Cover Countries• Political and/or economic conditions are relatively deteriorating

or have deteriorated• likelihood of payment delays or non-payment.

Category 1: Countries for which revolving limits are approved• cove valid 12 month)• ILCs opened or confirmed by banks listed in Banker’s almanac or by local

banks whose reports are satisfactory. Cover will be 90%• Normal cover of 90% on DP/DA terms subject to satisfactory report on the

buyer• 20 countries under this category

Category 2: Countries where Specific Approval will be given on case to case basis on merits

• Valid for six months• Normal waiting Period of 4 months• Only 7 countries - Afghanistan, Argentina, Cuba, East Timor, Iraq, North Korea,

Somalia

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Restricted Cover Countries• Options exercised to control risk in Restricted Cover

countries: Reduce percentage of cover Increase waiting period for the settlement of claim Provide cover against availability of government

guarantee/confirmed ILCs Payment in convertible currency Fix country exposure limit Fix transaction limit per exporter per buyer Fix bank exposure limit

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Schemes for Exporters Short Term Cover: Payment within 180 days• SCR or Standard Policy:

cover risks in respect of all shipments on short term credit by exporters with anticipated annual turnover of > Rs.50 lacs

• Turnover Policy: variation of SCR policy with additional discounts and incentives to exporters

who pay a premium of not less than Rs. 10 lacs per year. • Small Exporters Policy

Similar to SCR Policy, but for exporters with anticipated annual turnover of Rs.50 lacs or less

• Specific Shipment Policy (Short term) To cover risks in respect of a specific shipment or shipments against a specific

contract• Commercial & Political • Political Only• LC Commercial and Political

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Schemes for Exporters.. • Exports (Specific Buyer Policy)

To cover risks in respect of all shipment to one or a few buyers

Commercial & Political Political Only LC Commercial & Political

• Exports of Services Policy To cover the risks of insolvency and default and political

risks for services rendered• Without Recourse Export maturity Factoring

Undertaking to pay the amount due for a shipment on the maturity of the credit period.

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The Indian Health Scenario• Total Expenditure on health in India is nearly 6% of the entire GDP• Government spending is less than 25% against the average

spending of 30 - 40 % in other developing countries.• Indian health insurance industry stands at INR 5,125 Crores with

only a small Section of the total population (around 2%) being covered so far.

• CAGR of around 35 % (FY2002-08)• Health Insurance industry in India is one of the fastest growing

segments. Health Insurance - potential to become a Rs.25000 crores industry by 2012.

• No. of Elderly People in the Developing World will TRIPLE in 25yrs. (WHO)

• In India, the no. of people above 60 yrs is about 8% today. The t no. expected to hit 21% by 2025. (Asia Insurance Review)

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Market Size & Growth Rate

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 20080

1000

2000

3000

4000

5000

6000

761 10041354

17322222

3209

5125

Market Size: (INR) - Crores

Market Size: (INR) - Crores

CAGR – 35%

Health Insurance Plans

Health Insurance Plans

Private Social Community Based / Micro Insurance

offered by Commercial Organization

Government initiated

managed by Community

/ Groups

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Challenges• Increase in health care costs• High financial burden on the poor• Need for long term and nursing care for senior

citizens• Increasing burden of new diseases and health

risks• Due to under funding, preventive and primary

care and public health functions are yet to meet their objectives.

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Social / Government Schemes• CGHS Schemes for Government Employees• ESIS Schemes• Rashtriya Swasthya Bima Yojana (RSBY)

With participation of health insurer Implemented in 11 states Extended to other section of populace other than

BPL• State Governments have also initiated several

schemes where there is participation of Insurers to run the Scheme

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RSBY• launched by Ministry of Labour and Employment, GOI.• to provide health insurance for BPL families. • Beneficiaries entitled to hospitalization coverage for most of the

diseases up to Rs. 30,000/- • Pre-existing conditions are covered. No age limit. • Coverage extends to five members of the family - the head of

household, spouse and up to three dependents. • Beneficiaries need to pay only Rs. 30/- as registration fee• Central and State Government pays the premium.• Insurer selected on the basis of a competitive bidding.• Biometric smart card with fingerprints and photographs.• Card can be used in any RSBY empanelled hospital in India.• Can be split for individual members of migrant family.• Cashless benefit in hospitals

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HEALTH INSURANCEThe Individual Medishield Policy covers

• Hospitalisation Expenses & Domiciliary Hospitalisation (treatment at home in case patient is not in condition to be moved to hospital) incurred for treatment of disease / injury sustained during policy period

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COVERAGES • Hospitalization expenses including Room,

Board, Nursing, Doctor’s fees, Cost of Medicines, Pathological Tests, etc.

• Pre-existing disease after 3 continuous claim free Policy years with the same insurer.

• Prosthetic Devices like Pacemaker, Artificial Limbs etc.

• Transplants including Donor’s treatment and cost of organs

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COVERAGES• Daily Allowance for defraying miscellaneous

expenses for the duration of Hospitalization• Dental surgery and treatment following an

accident • Pre-Hospitalization and Post Hospitalization

expenses including authorized home nursing for 60 days each.

• Health check up after every block of 4 claim free years.

• Ambulance service expenses

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IMPORTANT POINTS• Hospitalization should be for a minimum period of 24 hours

except for specific treatments such as eye surgery, lithotripsy, tonsillectomy etc.

• There is provision for Cumulative Bonus whereby Basic Sum Insured gets enhanced by 5% each year on renewal (maximum 50%) subject to no claims being lodged under the Policy.

• Family Discount is available for insuring two or more family members under the Policy.

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IMPORTANT POINTS• Section 80 D benefit under Income Tax Act is

available on Medishield premium paid by cheque for self and/or family (consisting of self, spouse, dependent children and dependent parents)

• There is a sub-limit under the Policy for Domiciliary Hospitalization where expenses of treatment at home are reimbursed under specified conditions.

• Limits are also specified under the Policy for daily Room/ICU/ITU rents, Ambulance Charges and Daily Allowance during Hospitalization

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GROUP MEDICLAIM INSURANCE• THE COVER IS SAME AS IN INDIVIDUAL

MEDICLAIM POLICY. CUMULATIVE BONUS IS NOT AVAILABLE AND MATERNITY COVER CAN BE GRANTED AT EXTRA PREMIUM.

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OTHER HEALTH POLICIES• CANCER POLICY (CPAA): CAN BE GRANTED TO THE MEMBERS OF

CANCER PATIENTS AID ASSOCIATION • CRITICAL ILLNESS INSURANCE POLICY IS ALSO AVAILABEL WHICH

PAY ONLY IF SOME CRITICAL ILLNESS IS FOUND.• OVERSEAS MEDICLAIM INSURANCE: PAYS MEDICAL EXPENSES IN

RESPECT OF ILLNESS AND INJURY BY INDIAN RESIDENTS DURING THERE OVERSEAS TRIPS.

• EMPLOYMENT AND STUDY POLICIES HAS BEEN DESIGNED FOR INDIAN CITIZEN TEMPORARILY POSTED ABROAD AS STUDENT FOR PERSUING STUDIES.

PERSONAL ACCIDENT

INSURANCE

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PERSONAL ACCIDENT INSURANCE

What is covered

Injuries caused by an accident

Permanent partial/total disability due to accident

Temporary total disablement

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How much is the compensationDeath – 100%of Capital Sum Insured (CSI)Loss of

Sight of both eyesTwo limbs 100% of CSIOne limb and one eye

Loss ofSight of one eye/ one limb Hearing in both ears/speech

Permanent total disablement – 100% of CSIOther permanent disablement – as assessed by a DoctorTemporary total disablement – 1% of CSI per week subject to a maximum of Rs. 6000/-

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CUMULATIVE BONUS• THE SUM INSURED WILL INCREASE BY 5%

ON EVERY RENEWAL PROVIDED THE POLICY IS RENEWED WITHIN 30 DAYS OF EXPIRY . MAX ACCUMULATION IS 50 %

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SPECIAL FEATURES• COVER IS ON WORLDWIDE BASIS• PREMIUM IS BASED ON THE OCCUPATION OF

THE PERSON.• AGE LIMIT IS 5YEARS TO 70 YEARS• FAMILY PACKAGE IS ALSO AVAILABLE WITH

DISCOUNTED RATES• GROUP POLICY CAN ALSO BE ISSUED FOR AN

EXISTING GROUP.

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RATINGRATING IS BASED ON OCCUPATION OF THE PERSON. SO THE OCCUPATIONS ARE CLASSIFIED IN THREE RISK GROUP ACCORDING TO DEGREE OF HAZARD

• RISK GROUP-I: DOCTORS, LAWYERS, ARCHITECTS,TEACHERS,BANKERS ETC.

• RISK GROUP-II: BUILDERS, CONTRACTORS, ENGINEERS ETC• RISK GROUP-III: WORKERS EMPLOYED IN UNDERGROUND

MINES, EXPLOSIVE INDUSTRY JOKKIES, CIRCUS EMPLOYEES ETC.

LIABILITY INSURANCE

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LIABILITY INSURANCEThe Liability Policies cover Insured’s legal liability to pay

compensation to third parties for

death, injury or property damage claims arising out of accidents in connection with insured’s business

financial loss claims arising out of errors and omissions caused in Insured’s professional or official activities

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VARIOUS TYPE OF POLICIES AVAILABLE

COMPULSORY PUBLIC LIABILITY: • An Act Policy providing immediate relief to persons

affected by accidents occurring at applicable units.• No fault Liability Cover• Compulsory for all units handling hazardous

substances with threshold limits defined in the act.

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COMPULSORY PUBLIC LIABILITY• Fatal accident Rs 25,000/- per person.• Permanent disability Rs 25,000/- per person• Permanent partial disability on basis of

percentage of disability• Temporary partial disability fixed monthly

relief of Rs 1000 per month upto max of 3 months

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COMPULSORY PUBLIC LIABILITY• Actual medical expense up to Rs 12,500/- • Damage to property Rs 6000/-• Rate of premium is based on limit of indemnity

and turnover. • Every insurer has to pay the environment relief

fund an amount equivalent the premium received by the insurer.

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PRODUCT LIABILITYDefinition:• Any tangible property (after it has left the

custody or control of the Insured) which has been designed, manufactured, sold, supplied or serviced by the insured.

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LIABILITIES COVEREDPolicies shall cover all sums which the insured shall become legally liable to pay as damages in consequence of

accidental death/ bodily injury or disease to Third parties

Loss of or damage to Third Party property arising out of any defect in the products manufactured and covered under the policy after such products have left the Insured’s premises

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RATING

• The rates of premium depends on the risk group, limit of indemnity and ratio of indemnity AOA to AOY. Exports can be covered as extension of the policy or a separate policy can also be issued

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Professional indemnity• Policies are designed to provide insurance

protection to the professionals against the legal liability to pay damages arising out of negligence in the performance of their professional duties. E.g. doctors, lawyers, architects

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DIRECTORS & OFFICER’S LIABILITY POLICY

• Policy is designed for directors & officers who hold position of trust and responsibility and may become liable to pay damages to shareholders, employees and creditors etc. for wrongful acts committed by them. The policy provides protection against the civil liability.

ENGINEERING

INSURANCE

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ENGINEERING INSURANCE• Contractors all risk• Erection all risk• Marine cum erection• Machinery breakdown• Boilers & pressure plant• Machinery loss of profits• Advance loss of profits• Electronic equipment policy• Deterioration of stocks policy

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CONTRACTOR ALL RISK

• THE POLICY IS DESIGNED TO PROTECT THE INTEREST OF CONTRACTOS AND PRONCIPLES IN RESPECT OF CIVIL ENGINEERING PRODUCTS. E.G BUILDING, BRIDGES, TUNNELS ETC

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ERECTION ALL RISK

• POLICY IS DESIGNED TO COVER RISKS INVOLVED WITH ERECTION OF ELECTRICAL PLANT AND MACHINERY OR EQUIPMENT INVOLVING NO OR VERY LESS CIVIL WORK.

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MARINE CUM ERECTION• MARINE CUM ERECTION COVER POLICY STARTS

FROM THE MOVEMENT THE EQUIPMENT LEAVES THE MANUFACTURERS WAREHOUSE WITHIN THE COUNTRY OR OVERSEAS AND CONTINUES DURING THE VOYAGE AND THERE AFTER DURING ERECTION, TESTING AND COMMISSIONING.

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MACHINERY BREAKDOWN

• POLICY COVERS ELECTRICALS AND MACHANICAL EQUIPMENTS AGAINST UNFORSEEN AND SUDDEN PHYSICAL DAMAGES BY ANY CAUSE

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BOILER PRESSURE PLANT• POLICY COVERS THE BOILERS AND

PRESSURE VESSELS AGAINST DAMAGE TO THE BOILER AND SURROUNDING POLICY OF THE ASSURED INCL THIRD PARTY LIABILITY. FIRE RISK IS EXCLUDED

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MACHINERY LOSS OF PROFIT• POLICY IS DESIGNED TO REDUCE THE

LOSSES OF THE INSURED INCURRED BECAUSE OF INERRUPTION OF BUSINESSES DUE TO MACHINERY BREAKDOWN. POLICY CAN ONLY BE ISSUED IN CONJUCTION WITH MACHINERY BREAKDOWN.

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ADVANCE LOSS OF PROFIT

• ALSO KNOWN AS DELAY IN START UP POLICY AND COVERS FINANCIAL CONSEQUENCES OF A PROJECT BEING DELAYED BECAUSE OF ACCIDENTAL DAMAGE TO THE PROJECT MATERIAL.

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DETERIORATION OF STOCKS

• COVERS THE RISK OF DETERIORATION OF STOCK FOLLOWING OF BREAKDOWN OF REFRIGERATION PLANT AND MACHINERY.

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ELECTRONIC EQUIPMENT POLICY• THE POLICY COVERS 3 SECTIONS:• SECTION-I: COVER APPLIES TO UNFORSEEN AND

SUDDEN PHYSICAL LOSS RESULTING IN REPAIR OR REPLACEMENT OF EQUIPMENT

• SECTION-II: EXTERNAL DATA MEDIA COVER • SECTION-III: INCREASED COST OF WORKING