1. Insurance
Animesh Modi
MBA-Finance

2. What is Insurance ?
Insurance is a protection against financial loss arising on the
happening of an unexpected event.
Insurance companies collect premiums to provide for this protection.
A loss is paid out of the premiums collected from the insuring public.
Insurance Companies act as trustees to the amount collected

3. Insurance is a contract between 2 parties.
On party called the insurer who undertakes for a fixed
amount called premium
To pay the other party called the insured a fixed amount
of money on the happening of an certain event
.
.
What is Insurance ?

4. Why Insurance ?

5. Life
Insurance
Motor
Insurance
Health
Insurance
Travel
Insurance
Property
Insurance
Marine
Insurance
Type of
Insurance

6. The risk is an event or happening which is not planned but eventually happens with
financial consequences resulting in loss. There is saying higher the risk more the profit.
In simple words risk is danger, peril, hazard, chance of loss, amount covered by insurance,
person or object insured.
This might involve the loss, theft, or damage of valuable property and belongings, or it
may involve someone being injured.
In insurance terms, risk is the chance something harmful or unexpected could happen.
What is Risk ?

7. Asset Peril Hazard
Life Cancer Excessive Smoking
Factory Fire Explosive material left Unattended
Car Car Accident Careless driving by driver
Peril and Hazard

8. Likewise any uncertainty of economic loss is if secured by paying certain sum of amount to an insurance
company is transferring of risk.
A person fearing attack on his life employees Body Guards and pays them the monthly salary is an attempt to
secure himself for loss of his life.
In simple words when one feels unsecured and wishes to get secured by payment of certain amount is known
as transfer of risk.
The insurer company is engaged in the business of selling the insurance, (willing to accept the risk) the
person desirous of purchasing the insurance (willing to transfer the risks).
The Insurance is a form of risk management. It is primarily used to transfer risks of loss in exchange for
payment of certain amount known as premium.
Transfer of Risk ?

9. The term “mitigation” refers
to the principle that a party
who has suffered loss must
take reasonable action to
ensure that no further loss is
suffered.
This “loss”, and the
accompanying “reasonable
action”, will vary depending
on the nature of the case
Mitigation

10. WHAT IS GENERAL INSURANCE ?
Any sort of 'non-life'
insurance policy falls under
General Insurance
It is also called as property &
casualty insurance
General Insurance covers
property against :
• Fire
• Theft
• Flood storm
• Earthquake and so on
It also covers
• Machinery against breakdown
• Hull of ships
• Motor vehicles against damages etc.
General insurance covers
almost everything including
your home, car and health
These policies are easy to
purchase online

11. Type Of General Insurance

12. It is a
mandatory
product to buy
after you
purchase your
car
Car repair
expenses can be
claimed in case
of a car accident
It provides protection
against third-party
liability and physical
damages from:
• Fire
• Theft
• Burglary
• Earthquake
CAR INSURANCE

13. This insurance is purchased to
protect an individual or a
business
• Property damage
• Bodily injury to third part
It covers the risk of
It cover legal pay-outs and costs
for which the person insured
would be held responsible
LIABILITY INSURANCE

14. MARINE INSURANCE
Marine insurance refers to coverage provided for the loss or even damage that has been
caused to cargo, ships, terminals between their points of origin and final destination
Four types of
marine
insurances:
Hull Insurance
Cargo Insurance
Freight
Insurance
Liability
Insurance

15. FIRE INSURANCE
It covers any damage
to property as a
result of a fire
It goes beyond
property insurance
and covers:
The cost of
reconstruction
The cost of
replacement
The cost of
repair
The loss can be
ascertained only
after the fire has
occurred
The insurer is liable
to the actual amount
of loss not exceeding
the maximum
amount fixed under
the policy

16. Engineering Insurance
It is also referred to business insurance
It provides coverage for
• Damage to machinery
• Business interruption
• Computers and electronic equipment

17. Burglary Insurance
Insurance provided against the damage in one’s residence as a result of burglary/theft is
known as burglary insurance
It provides financial compensation against loss or damage to property contained in your
premises by acts of burglary
It is essential to purchase this plan, especially in areas which are prone to thefts.
This Insurance covers
• Cash
• Valuables
• Securities kept in a locked safe
• Cash box in locked steel cupboard

18. INSURANCE COMPANY
OPERATIONS

19. Insurance Company Operations
The most important insurance company operations consist of the
following:
• Ratemaking
• Underwriting
• Production Claim
• Settlement
• Reinsurance
Insurers also engage in other operations, such as accounting, legal services, loss
control, and information systems.

20. Rating And Ratemaking
Ratemaking refers to the pricing of insurance and the calculation of
insurance premiums .
A rate is the price per unit of insurance.
An exposure unit is the unit of measurement used in insurance pricing,
which varies by line of insurance.
The person who determines rates and premiums is known as an actuary . An
actuary is a highly skilled mathematician who is involved in all phases of
insurance company operations, including planning, pricing, and research.

21. Rating And Ratemaking
Rating is a process of multiplying a rate determined by actuaries
by the number of exposure units, and then adjusting by various
rating plans.
In life insurance, the actuary determines premiums for life and
health insurance policies and annuities also determine the legal
reserves a company needs for future obligations.
In property and casualty insurance, actuaries also determine the
rates for different lines of insurance and also determine the
adequacy of loss reserves,allocate expenses, and compile
statistics for company management and for state regulatory

22. Underwriting
Underwriting refers to the process of selecting, classifying, and pricing
applicants for insurance.The underwriter is the person who decides to
accept or reject an application.
Statement of Underwriting Policy: Underwriting starts with a clear
statement of underwriting policy.
An insurer must establish an underwriting policy that is consistent with
company objectives.

23. Features To determine the level of risk presented by the proposer
To classify risk based upon the risk characteristics (not all risk are
equal)
E.g. In the field of property insurance, wooden structures are at a greater
risk of burning than stone structures; hence, a higher premium
An individual who suffers from a serious illness (e.g., cancer, diabetes
etc.) is at a greater risk of premature death
None of the insurance companies would wish to incur losses in excess of the amount of
premium
E.g. In case of vehicle insurance, an insurance company might charge higher premium in
the case of: young drivers, old models of vehicles, drivers with a history of accidents
Underwriting

24. Production
The term production refers to
the sales and marketing
activities of insurers. Agents
who sell insurance are
frequently referred to as
producers .
Life insurers have an agency or
sales department. This
department is responsible for
recruiting and training new
agents and for the supervision
of general agents, branch office
managers, and local agents.
Property and casualty insurers
have marketing departments.
Toassist agents in the field,
special agents may also be
appointed.

25. Claims Settlement
Every insurance company has a
claims division or department for
adjusting claims. This section of the
chapter examines the basic
objectives in adjusting claims, the
different types of claim adjustors,
and the various steps in the claim-
settlement
Basic Objectives in Claims
Settlement:
- Verification of a covered loss
- Fair and prompt payment of claims
- Personal assistance to the insured

26. Reinsurance
The amount of insurance retained by the ceding company for its own account is called the retention
The insurer that accepts part or all of the insurance from the ceding com pany is called the reinsurer .
The primary insurer that initially writes the insurance is called the ceding company .
Reinsurance is an arrangement by which the primary insurer that initially writes the insurance transfers
to another insurer (called the reinsurer) part or all of the potential losses associated with such insurance .

27. Thank You