UNIT-3

GENERAL INSURANCE
-Concept of General Procedure
-Group Insurance
-Group Insurance Types
-Health Insurance
-Accident Insurance
-Motor Insurance
-Fire Insurance Marine Insurance
Claim settlements
 MEANING OF GENERAL INSURANCE

• It refers to the insurance contracts that do not come under the

field of life insurance. The different forms of general insurance
are fire,marine,motor,accident and other miscellaneous non-life
insurance.
• Like life insurance,general insurance products come at a price
in the form of premium.
 EVOLUTION OF GENERAL INSURANCE
• The first general insurance company in India,Triton Insurance Company
Ltd., was established in 1850. it was owned and established by the
british.
• General Insurance in India was nationalised with the General Insurance
Business Act of 1972.By this process of nationalisation the govt. of
inida took charge of 55 insurance companies in India and 52 insurers
who were in the General Insuance Business.
• The merger of General Insurance companies led to the formation of the
four subsidiaries under the general insurance company of india.
• They were the 1.National Insurance Company Limited, 2.The New India
Assurance Company Ltd, 3.The Oriental Insurance Company
Limited,4.United India Insurance Company Ltd.
Nationalization: General Insurance was finally nationalised in1972.there were 107 general insurance
companies operating at the time.they were mainly large city oriented companies catering to the organised sector.
They were of different sizes,operating at different levelseneral Insurance Cirporation was incorporated as a
holding company in nov.1972 and it commenced business on Jan 1, 1973.

• Malhotra committee and liberalization: The Malhotra Committee, officially known as the Committee on
Reforms of the Insurance Sector, was appointed by the Government of India in April 1993. Chaired by R.N.
Malhotra, the committee was tasked with examining the regulation and structure of the insurance industry in
India.
• In January 1994, the committee submitted its report, which recommended significant reforms to liberalize the
insurance sector. These recommendations included:
• Allowing private sector participation: The committee suggested opening up the insurance sector to private
players to increase competition and efficiency.
• Regulatory framework: It proposed the establishment of an independent regulatory authority to oversee the
insurance industry.
• Foreign investment: The committee recommended allowing foreign investment in the insurance sector to
bring in capital, technology, and expertise.
• Based on these recommendations, the Indian government enacted the Insurance Regulatory and
Development Authority Act (IRDA Act) in 1999, which led to the liberalization of the insurance sector. This
allowed private companies to enter the market, increased competition, and improved the overall efficiency and
 FEATURES OF GENERAL INSURANCE

These are generally observed in case of Life,Marine,fire and general insurance.

• Sharing of Risk: Risk is shared among all the insured in the form of premium.
• Co-operative Device: A group of persons may be brought together
voluntarily or through publicity or through solicitation of the agents.
• Value of Risk: There are methods of evaluation of risks. If there is expectation
of more loss, Higher premium may be charged. So,the probability of loss is
calculated at the time of insurance.
• Payment at Contingency: The payment is made at a certain contingency
insured. If the contingency occurs, payment is made.Since the life insurance
contract of certainty, because the contingency,the death or the expiry of
term,will certainly occur,the payment is certain.
• Amount of Payment: The amount of payment depends upon the value of loss
occurred due to the particular insured risk provided insurance is there up to
that amount. In property and general insurance, the amount of loss as well as
the happening of loss, are required to be proved.
• Large number of Insured persons: To spread the loss immediately, smoothly
and cheaply large number of persons should be insured.
• Insurance is not a gambling: The life insurance is essentially non-speculative; in
fact, no other business operates with greater certainties. From the insured point
of view, too insurance is also the antithesis of gambling. Nothing is more
uncertain than life and life insurance offers the only sure method of changing
that uncertainty into certainty.
• Insurance is not charity: Charity is given without consideration but insurance is
not possible without premium. It provides security and safety to an individual
and to the society although it is a kind of business because in consideration of
premium it guarantees the payment of loss.
 PRINCIPLES OF GENERAL INSURANCE
1.Principles of Utmost Good Faith: Each party to the proposed contract is legally
obliged to disclose to the other all information which can influence the others
decision to enter the contract.

2.Principle of Insurable Interest: The subject matter of the Insurance contract may
be a property, or an event that may create a liability but it is not the property or
the potential liability which is insured but it is the pecuniary interest of the insured
in that property or liability which is insured.

3.Principle of Indemnity: “Financial compensation sufficient to place the insured in

the same financial position after a loss as he enjoyed immediately before the loss
occurred.
 FUNCTIONS OF GENERAL INSURANCE
• Primary Functions
• Secondary Functions
• Indirect Functions
1.Primary Functions: i)Provide Protections, ii)To Provide Certainty,
iii)Distribution of Risk
2.Secondary Functions: i)Helps in Economic Progress, ii)In
Prevents Losses
3.Indirect Functions: i)A Forced Savings, ii)Promote Foreign Trade,
iii)Others
 POLICY DOCUMENTS AND FORMS

1. Proposal forms: The company’s printed proposal form is normally used for making an
application for the required insurance cover.
In Marine Cargo Insurance, Insurance document is no the practice to use a proposal form,
although sometimes it is usual to obtain a questionnaire or a declaration form duly completed.
In Fire Insurance, the practice varies among the companies, proposal forms are not generally used
for large industrial risks where inspection of the risk is arranged before acceptance of the risk.
2.Policy Forms: it is like proposal forms,vary within wide limits as between different classes of
insurance but they have certain feature in common.The policy is a document which provides
evidence of the contact of insurance. It has to be stamped in accordance with provisions of the
Indian Stamp Act 1899.
3.Cover Note: it is a document issued in advance of the policy.it is issued when the policy cannot
for some reason or the other,be issued straight away.Cover notes are issued when the
negotitations for insurance are in progress and it is necessary to provide cover on a provisional
basis.
4.Certificate of Insurance: In motor insurance, in addition to the policy, a certificate of
insurance is required by the Motor Vehicle Act.
In Marine Insurance,certificate of insurance is issued to provide evidence of cover on
shipments insured under cargo open cover or floating policies.
5.Endorsments: It is the practice of insurers to issue policies in a standard form,covering
certain perils and excluding certain others.if it is intended,t the time of issuing the policy
to modify the terms and conditions of the policy.
 GROUP INSURANCE
• Group Insurance is Insurance that covers a defines group of people,for example the
members of a society or professional association or the employees of a particular
employer.
Importance Of Group Insurance Schemes:
1.Default Insurance Cover.
2.Free Cover Limit.
3.Tax Benefits.
4.No need to worry about premium payment.
5.Easy premium payment options for employers.
6.Useful for employees wellbeing.
7.Coverage can be extended with riders.
8.Cost Effective.
9.Worldwide coverage.
Characteristics of group Insurance schemes:
1. No Waiting Period
2. Cashless hospitalisation at network hospitals
3. Pre-And Post-Hospitalisation charge
4. Coverage for pre-illness
5. Coverage for dependents
6. Coverage for ancillary charges
 SPECIAL FEATURES OF GROUP
INSURANCE
1. Master Contract
2. Flow of Insureds
3. Affordability
4. Group Term Life Coverage
5. Group Permanent Life Coverage
6. Group Ordinary
7. Group Paid-up
8. Universal Life
 CLASSIFICATION OF GENERAL INSURANCE

i. Motor Insurance Plans: A standard Motor insurance or better known as a

car insurance Policy is usually the insurance coverage mandated by law
to drive on the road. It primarily covers you against liability damages and
unexpected repairs.
ii. Health Insurance: Health is insurance against the risk of occuring
medical expenses among individuals.
iii. Marine Insurance:Marine insurance cover the loss or damage of vessels
at sea or on inland waterways.
iv. Cargo insurance:Covers the transit regardless of the method of transit.
v. Travel insurance: It is intended to cover the medical expenses of losses
incurred while travelling either with in one’s default of travel suppliers
and other losses incurred while travelling either within one’s own country
or internationally.
vi. Aviation Insurance: It grants protection against the loss or damage to the aircraft as also
the legal liability to third parties and to passangers arising out of the operation of the
aircraft.
vii. Personal Accident Insurance: It provides that if the insured shall sustain any bodily injury
resulting solely and directly from accident caused by external violent and visible means then
the company shall pay to the insured or his legal representative,the sum or sums set foprth
in the policy.
viii. Disability Insurance: It provides financial support in the event of the policy holder
ubecoming unable to work because of disabling illness or injury.It provides monthly support
to help pay such obligations as mortgage loans and credit cards.
Long term disability Insurance:It covers an individual’s expenses for the longterm, up until
such time as they are considered permanent disabled and therafter.
Disability overhead Insurance: Allows business owners to cover the overhead expenses of
their business while they are unable work.
Total Permanent disability Insurance: it provides beneift when a person is permanently
disabled and can no longer work in their profession.
 HEALTH INSURANCE

• Need for health insurance: Inflation for food and clothing is in single digits,medicare
costs escalate in double digits.
• Health insurance offers considerable flexibility in terms of disease/ailment coverage.
• Health insurance plans covers as many as 30 critical illnesses and 80 surgical
procedures.
• Types of health insurance:
1. Hospitalization plans: these are also called as indemnity plans.
For a member of the family in case of individual health policies and;
For a family as a whole in case of a family health insurance policy.
2.Hospital daily cash benefit plans: It is a defined benefit policy, as evident from the
name,it pays out a defined sum of money for every day of hospitalization regardless of
actual costs.
3.Critical illness plans: It is a benefit-base insurance plan which pay a lumpsum amount on
 CASHLESS HOSPITALIZATION SERVICES
Leading insurance providers in the country have a network of hospitals which
can offer cashless hospitalization services for the benefit of customers.
Policy holders can avail some tax benefits under sec 80D and senior citizens
under 80DD of the Income Tax Act 1961. In all, a policyholder can avail of tax
benefit of upto Rs.55,000 section 80D.
 ACCIDENT INSURANCE
Personal accident covers provides you financial assistance in case you suffer an accident
which leads to a serious injury or death.
An accident can include events such as the following:
• Injury caused because of any kind of fall or collision.
• Any kind of train/road or plane accident.
• Any kind of injury due to gas cylinder burst.
• Injuries because of burning, drowning, Poisoning etc.,
1.Temporary Disability: Payment is made only up to a maximum period of 52 weeks.
2.Permanent Disability: An individual is eligible for the entire insured sum in the event of a
permanent total disability.
A certain pre-decided % of the sum is provided by the insurance company.
 MOTOR INSURANCE IN INDIA
It is a compulsory requirement for all new vehicles used weather for commercial or
personal use. The insurance companies have tie-ups with leading automobiles
manufacturers.
Auto premium is determined by a number of factors and the amount of premium
increases with the rise in the price of the vehicle.
There are different types of motor insurance in india:
1.Private car insurance: premium is based on the make and buy of the car. Where the
car is registered and the year of manufacture.
2.Two wheeler insurance: it covers accidental insurance for the drivers of the vehicle.
Premium depends on the current showroom price multiplied by the depreciation rate
fixed by the tariff advisory committee at the beginning of the policy holder.
3.Commercial vehicle insurance: it provides cover for all the vehicles which are not used
for personal purposes like trucks and HMV’s.
Premium depends on the showroom price of the vehicle place of registration.
 FIRE INSURANCE
• It is generally covered by All india fire tariff effective from 30-3-2001 issued by tariff
advisory committee.
• It covers building, offices,machinery,contents and personal belongings of office.
• Insured should take all possible steps to minimize the loss at the happening of the
event.
• It also covers the cost of replacement, reconstruction or repair beyond what is covered
by the property insurance policy.
• It can also provide for nearby damages of beside structures.
 FEATURES OF FIRE INSURANCE
• Payment of premium.
• Contract of indemnity.
• Offer & Acceptance.
• Utmost good faith.
• Insurable interest.
• Contribution.
• Period of fire insurance.
• Claims.
 TYPES OF FIRE POLICIES
1. Valued policy:
2. Unvalued policy.
3. Specific policy.
4. Average policy.
5. Floating policy.
6. Stock Declaration policy.
7. Loss of profit policy.
8. Standard fire policy.
9. Re instatement policy.
10. Schedule policy.
11. Sprinkler leakage policy.
12. Excess policy.
13. Maximum value with discount policy.
 PRACTICE OF FIRE INSURANCE IN INDIA
• Fire
• Lightening
• Explosion/Implosion.
• Aircraft damage.
• Riot,Strike and Malicious Damage.[RSMD]
• Strom,Cyclone,Typhoon, /Tempest,Hurricane,Tornado,Flood and Inundation [STFI]
• Impact Damage
• Subsidence and Land slide
• Bursting and/or overflowing of Watertanks, Apparantus and pipes.
• Missile Testing Operations.
 PROCEDURE TO INSURE THE PROPERTY UNDER FIRE
INSURANCE
1. Filling the proposal form: Description of the property would be.., Construction of external
walls roof number of storey etc., Occupation of each floor, Presence of hazardous
goods,Process of manufacture, The sum of proposed insurance,Period of
insurance,History of previous losses.
2. Inspection of the property:The risk inspection report is submitted by the insurer’s
engineers.
3. Payment of Premium: based on the proposal form and engineers report the insurance
company will submit the premium rates to the property owner and if theses rates
acceptable to him then he should pay the amount to the insurance company.
4. Issue of Cover note/Policy Document: On receipt of a completed proposal form and/or
inspection report,the cover note is issued,pending preparation of the policy document.
Whenever there are any changes that has to be incorporated by way of endorsments which
are issued to record changes such as alteration in risk,increase or decrease of sum
insured,etc.
 PROCEDURE TO SETTLE THE FIRE INSURANCE
CLAIM
• If there is any damage or loss arising due to fire,should be immediately inform the
company in writing with estimated amount of loss.
• Survey Report: the loss caused by fire should be evaluated by the licensed by the govt. is
appointed to give a report on the loss.
• Claim form: The policy holder will submit the claim form with the following information…
Name & Address, date of loss, time & place from where the fire started, Cause of fire,
Details of property damaged such as description etc., value of the time of fire, FIR at
nearest station.
• Settlement of claim: On the basis of the claim form and the survey report, decision is
taken about the settlement or otherwise of the loss.
 BASIC DOCUMENTS REQUIRED FOR FIRE
INSURANCE CLAIM
• Claim form duly filled in & signed.
• FIR is filed.
• Fire Brigade Report.
• Laboratory test report together with the mandate given, if applicable.
• Record of labour involved in activities related to claim.
• Original Repair/Replacement Bills with receipt.
• Photographs if arranged.
• Departmental Note on the incident.
 MARINE INSURANCE
• It is an agreement whereby the insurer undertakes to indemnify the insured, in the
manner and to the extent thereby agreed, against transit losses, that is to say losses
incidental to transit.
• It includes : Cargo insurance which provides insurance cover in respect of loss of or
damage to goods during transit by rail,sea or air.
FEATURES :
o Imbursement of Premium.
o Contract of Indemnity.
o Utmost Good faith.
o Offer & Acceptance.
o Insurable Interest.
o Contribution.
o Period of marine Insurance.
 CLASSIFICATION OF MARINE INSURANCE

• Hull Insurance
• Cargo Insurance
• Freight Insurance
• Liability Insurance
 TYPES OF MARINE INSURANCE POLICIES

• Voyage Policy
• Time Policy
• Mixed Policy
• Valued policy
• Open or un-valued policy
• Floating policy
• Wagering or Honour policy
 CLAIMS OF MARINE INSURANCE
1. Submission of form: Name of the shipper or consignor,Full description of goods to be
insured,Method and type of packing,Voyage and mode of transit,Risk cover required.
2. Quotation from the insurance company: Nature of commodity,method of packing,The
vessel,Type of insurance policy.
3. Payment of Premium
4. Issue of cover note/Policy: Cover note, Marine policy, Open policy,Open cover.
 INDIAN GENERAL INSURANCE COMPANIES
1. The Oriental Insurance company Ltd.
2. National Insurance Company ltd.
3. SBI General Insurance.
4. L&T General Insurance Company
5. Bajaj Allianz General Insurance
6. ICICI Lombard General Insurance Company
7. IFFCO TOKIO General Insurance Company
8. The Reliance General Insurance
9. Royal Sundaram General Insurance
10. Tata ALG General Insurance Company Limited