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7/26/2019 c1 - Brief Introduction to General Ins.
1/23
COURSE CODE: SJER3218
INTRODUCTION TO
GENERAL INSURANCE(PENGENALAN KEPADA INSURANS AM)
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COURSE INFORMATION
Brief Introduction to General Insurance
Risk and Its Treatment
Different Definitions of Risk Chance of Loss Peril and Hazard Classification of Risk Major Personal Risks and Commercial Risks Burden of Risk on Society Techniques for Managing Risk
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COURSE INFORMATION
The Insurance Mechanism
Definition and Basic Characteristics of Insurance
Characteristics of an Ideal Insurable Risk
Adverse Selection and Insurance Insurance vs. Gambling
Insurance vs. Hedging
Types of Insurance
Benefits and Costs of Insurance to Society
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COURSE INFORMATION
Fundamentals of Risk Management
Meaning of Risk Management
Objectives of Risk Management
Steps in the Risk Management Process Identify, Measure and Analyze Loss Exposures
Appropriate Techniques for Treating Loss Exposures
Implement and Monitor Risk Management Program
Benefits of Risk Management Personal Risk Management
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COURSE INFORMATION
Risk Identification & Measurement
Outlines the basics of risk identification andreviews basic material on probability and statistics
Pooling Arrangements and Diversification ofRisk
Explains how pooling arrangements diversify risk
and that pooling arrangements are the essence ofinsurance transactions
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COURSE INFORMATION
Insurance Pricing
Presents general factors affecting insurancepremiums. Highlights the incentives of insurers to
classify, discusses when classification is desirable,explains the underwriting cycle and summarizesinsurance price regulation
Risk Aversion and Risk Management byIndividuals and Corporations
Presents basic theory on the demand for insuranceby individuals and businesses
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COURSE INFORMATION
Legal Principles in Insurance
Principle of Indemnity
Principle of Insurable Interest
Principle of Subrogation Principle of Utmost Good Faith
Requirements of an Insurance Contract
Distinct Legal Characteristics of Insurance
Contracts Law and the Insurance Agent
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COURSE INFORMATION
Analysis of Insurance Contracts
Basic parts of an insurance contract
Definition of the Insured
Endorsements and Riders
Deductibles
Coinsurance
Other-insurance provisions
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COURSE INFORMATION
Insurance Company Functional Operations
Rate making
Underwriting
Production
Claims settlement
Reinsurance
InvestmentsOther functions
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COURSE INFORMATION
Insurance Company Financial Operations
Property and Casualty Insurers Balance Sheet,Income and Expense Statement, Measuring Profit
and Loss
Insurance Documents (in Malaysia)
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COURSE INFORMATION
The Classes of General Insurance Business & ItsPractices (in Malaysia)
Automobile Insurance (in The United States)
Presents basic features of personal auto policies andrating factors used in pricing these policies. Alsoprovides a detailed discussion of compulsory liability
coverage and no-fault insurance
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COURSE INFORMATION
Homeowners Insurance (in The United States)
Presents basic features of homeowners policies andrating factors used in pricing these policies. Also
provides a detailed discussion of the impact ofcatastrophes on property insurance markets
Other Property and Liability Insurance Coverages
(in The United States)
Commercial Property Insurance Coverages (in TheUnited States)
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INSURANCE IN BRIEF
Primary Function of Insurance:-
Equitable distribution of financial losses of the few who are insuredamong the many insured.
Secondary Function of Insurance:-
Stabilization of costs managing the risks;
Stimulation of business enterprise transfer of risks;
Provision of security for expansion of business removal of fears
and worries of potential losses; Reduction of losses both in frequency & security through risk
improvements and many others.
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GENERAL INSURANCE IN BRIEF
What is General Insurance?
General insurance provides cover against risks usually not coveredby life insurance.
It is usually made for a period of 1 (one) year or less and at the end ofthe period are renewable by mutual consent of the insurer and theinsured.
End of policy period insurer reassesses the risk and the premiumrate may be changed:-
Change in the nature of the individual risk to be insured; Notification of changes as part of utmost good faith.
Most general insurance contracts are contracts of indemnity.
Usually, there will be a large number of small claims and very fewextremely large claims.
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GENERAL INSURANCE IN BRIEF
What is General Insurance?
More than 1 (one) claim can be made in each year of insurance underthe same policy.
The insured risk may not rise in line with the duration of insuranceand in fact, it may decrease due to better safety measures taken bythe insured e.g. installation of water sprinklers.
Basic principles governing the conduct of general insurancebusiness:-
Insurable Interest;
Utmost Good Faith;
Subrogation;
Contribution;
Proximate Cause.
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GENERAL INSURANCE IN BRIEF
Several main General Insurance classes (in Malaysia):-
Fire & Perils Fire, House owners, Householders, Consequential Loss, Industrial
All Risks
Marine Hull & Machinery, Collision Liability, Cargo and Freight etc.
Motor Private Cars, Commercial Vehicles (including Special Types) and
Motorcycles Miscellaneous Accident
Burglary, All Risks, Money, Plate Glass, Fidelity Guarantee, Bondsetc.
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GENERAL INSURANCE IN BRIEF
Several main General Insurance classes (in Malaysia):-
Liability
Employers Liability, Public Liability, WC, FWCS etc.
Engineering Electronic Equipment, CAR, EAR, Machinery Breakdown etc.
Aviation
Hull and Liability etc.
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GENERAL INSURANCE IN BRIEF
General Underwriting:-
Underwriting process of assessment and selection ofrisks and the determination of premium, terms and
conditions. Purpose anti selection, adequacy of premium charged.
Process identification, evaluation of risk and selectionof risks through proposal forms, additional
questionnaires and survey.
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GENERAL INSURANCE IN BRIEF
Determination of Premiums, Terms and Conditions
Premium is the price for insurance. For majority classesof insurance, the premium charged is the premium rate
per unit coverage x by the number of units of coveragerequired = % rate of the sum insured / limit of liability =RM premium.
Coverage, risk improvement (pre-acceptance), warranties
(control hazards), exclusions, restricted cover and excess.
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GENERAL INSURANCE IN BRIEF
Minimum premium
Short period or pro-rata
Premium warranty (60 days), 7 days (Agents) or Cash
Before Cover (CBC)
Tariff rating:-
Revise Fire Tariff (including discount)
Revise Motor Tariff Others (Non-Tariff):-
All Risks Basic Fire rate + 25%
Other than All Risks - Ongoing market rate
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GENERAL INSURANCE IN BRIEF
Insurance Documents:-
Proposal form information gathering, completed and duly signed for assessment of risk being proposed (excluding Marine Cargo andLarge Risks);
Cover note temporary policy as evidence of an insurance contractwhilst the actual policy is issued;
E-cover note motor insurance business;
Certificate of insurance normally issued when insurance is madecompulsory by law e.g. RTA, Marine;
Policy not the contract of insurance but represents writtenevidence of it. It has to stamped;
Endorsement amendments / alterations to the policy;
Renewal notice, Claim form, Discharge form etc.