PnC Insurance - Training Slides

PROPERTY & CASUALTY

INSURANCEIHL Consulting

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Agenda• P&C Insurance– Definition and Practice Slides 03 -

07

• Overview of various Personal P&C Insurance Slides 08 –33

• Overview of various Commercial P&C Insurance Slides 34 –66

• IT solutions available to meet P&C Insurance Slides 67 –73

• Clients at Infosys dealing in P&C Insurance Slides 74 –79

• Questions / Discussion points Anytime

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P&C Insurance - Overview• Property & Casualty insurance deals with insurance on

property (homes, cars, cargo, valuables and businesses) and casualty (legal liability for losses caused by injury to other people or damage to the property of others).

• It could broadly be classified as – Personal and Commercial, depending upon the insured.

• All guiding principles of Insurance viz. Uberrimae fidei, Indemnity, Subrogation, Causa proxima, Exclusions, Deductibles etc. all apply to it in addition to LoB specific rules and regulations.

• General mechanism for P&C insurance involves – New Business Application >> Underwriting >> Policy Administration >> Claims Management >> Policy RenewalSource : INS 22 Study Material, 1st Edition & INS 23 Study Material, 2nd Edition

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New Business Application & Underwriting• The customer contacts an insurance agent or insurance

company directly to inquire about – Types of coverage available– Costs related to coverage for a specific need (such as a new

house)• Customer chooses the policy type and package and fills

out an application, which is then sent to an insurance company underwriter.

• Underwriting FactorsAgent’s Recommendation

Amount of coverage requested

Policyholder’s Previous Loss History

Policyholder’s Previous Insurance History

Underwriting Factors

Source : INS 22 Study Material, 1st Edition & INS 23 Study Material, 2nd Edition

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Policy Administration• Based on the underwriting factors, the insurer will either

– accept the application, or– reject the application, or– accept the application with modifications

• The policy sent to the insured includes the following –– Declarations Page– Insuring Agreement– Endorsements– Modifications

• It is the policyholder’s responsibility to read the policy and make sure the coverage provided is what was requested.

• The policyholder is required to submit the premium payment finally.

Source : INS 22 Study Material, 1st Edition & INS 23 Study Material, 2nd Edition

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Claims Management• Generally, when a claim is registered, the claim

representative / adjuster has the responsibility to offer a fair settlement to the injured party subject to the maximum limits of the policy. Once the claimant and company agree on the amount of loss, the company pays that amount. If there is disagreement over the claim, the matter may go to arbitration, mediation, or court for resolution.

• Property Claim – In the event of loss, the policyholder calls their agent or company claims department to report the loss/file a claim. The claims representative will investigate the loss. They will determine whether a policy is in force, and prepare a repair estimate.

• Liability Claim – If a third party makes a claim alleging that the policyholder is responsible for damage to/losses by the claimant, the insurance company claims representative would assess the claim, verify insurance coverage, and interview the policyholder, claimant, and the claimant’s medical doctor to determine the extent of injuries and negligence.Source : INS 22 Study Material, 1st Edition & INS 23 Study Material, 2nd Edition

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Policy Renewal• Most policies (especially personal lines) run for either six

months or 12 months and are renewed at the end of that period. However, policies also can be cancelled or non-renewed by either the policyholder or the insurer.

• The policyholder can choose to cancel the policy during the policy period or move to another insurer at the end of the policy period.

• The insurer can decide to non-renew a policy if the insured has had an unacceptable number of claims, and can cancel a policy during the policy period for non-payment of premium or other specific reasons.

• Advance notice to the policyholder is required for cancelling the policy and for non-renewing it.Source : INS 22 Study Material, 1st Edition & INS 23 Study Material, 2nd Edition

PERSONAL P&C INSURANCE

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Overview of Personal P&C Insurance• Personal P&C Insurance covers the financial consequences of

loss to Individuals and families caused by damage to property, illness, injury, disability and unemployment.

• Types of Personal Insurance –– Automobile Insurance– Homeowners Insurance– Other Residential Insurance– Health and Disability Insurance

Source : INS 22 Study Material, 1st Edition

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Personal Automobile Insurance• Personal Automobile Insurance is insurance purchased for

personal vehicles. Its primary use is to provide protection against losses incurred due to damage caused to the vehicle and against liability that could be incurred in an accident.

• Automobile insurance can cover some or all of the following items:

• Medical payments arising out of an accidentThe insured party • Physical damage to the vehicle during a mishapThe insured vehicle

• Damage caused to any other car(s) and people Third parties • Loss caused due to accidental fire or by theftThird party, Fire

&Theft

• Persons riding in the insured vehicle without regard to fault in the auto accident

No Fault Auto Insurance


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Personal Automobile Insurance• Essentials of an Auto Policy –

– Insurance Company: Indicates Insurance Co. providing the coverage

– Named Insured: Refers to the policyholder(s)– Policy Period: The period of coverage (6 Months/ 1 Year)– Description of Insured Autos: Vehicles Covered– Schedule of Coverages: Indicates Coverages provided along

with the limits and deductibles– Applicable Endorsements: Endorsements that are attached

to the policy– Lienholder: Legal ownership of the vehicle– Garaged Location: Where auto is primarily garaged– Rating Information: Rating class of the vehicle– Signature: Authorized legal representative of the insurer


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Personal Automobile Insurance• 6 parts to the Summary of Coverages

– Part A- Liability Coverage– Part B- Medical Payments Coverage– Part C- Uninsured Motorists Coverage– Part D- Coverage for Damage to Your Auto– Part E- Duties After an Accident or Loss– Part F- General Provisions

• Types of Endorsements– Endorsements covering motorcycles, recreational vehicles, and

customizing equipment– Other endorsements affecting multiple coverages– Underinsured motorists coverage endorsement– Endorsements affecting physical damage coverage


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Homeowners Insurance• Homeowners insurance is a type of property insurance that

covers private homes. It is an insurance policy that combines various personal insurance protections which can include losses occurring to one's home, its contents, loss of its use, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.

• Types of Homeowners Insurance Policies– Basic Form Homeowner Policy– Broad Form Homeowner Policy– Special Form Homeowner Policy– Renter's Insurance– Premier Homeowner Policy– Condominium Policy– Older Houses


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Homeowners Insurance Policy Structure• Section I – Property Coverages

– Coverage A : Dwelling - Covers the value of the dwelling itself .

– Coverage B : Other Structures - Covers other structure around the property which are not used for business, except as a private garage.

– Coverage C : Personal Property - Covers personal property, with limits for the theft and loss of particular classes of items .

– Coverage D : Loss of Use/Additional Living Expenses - Covers expenses associated with additional living expenses and fair rental value.

– Additional Coverages - Covers a variety of expenses such as debris removal, reasonable repairs, damage to trees and shrubs for certain named perils , fire department changes, removal of property, credit card / identity theft charges, loss assessment, collapse, landlord's furnishing, and some building additions.


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Homeowners Insurance Policy Structure• Section II – Liability Coverages

– Coverage E – Personal Liability Covers the cost of a claim or a suit filed against the insured because of bodily damage or property damage.

– Coverage F – Medical Payments to others Covers the necessary medical expenses incurred by others (not an insured) within three years of an injury.

– Additional Coverages – Covers a variety of expenses such as claim expenses, Premium on bonds, reasonable expenses and post judgement Interest .


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Homeowners Insurance Endorsements• Endorsements that modify Section I

– Scheduled Personal Property Endorsement– Scheduled Personal Property Endorsement (With Agreed Value

Loss Settlement)– Endorsements That Increase Limits– Other Structures- Increased Limits– Increased Limit on Personal Property in Other Residences– Increased Special Limits of Liability– Increased Limit on Business Property– Inflation Guard– Water Back-Up and Sump Discharge or Overflow


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Homeowners Insurance Endorsements• Endorsements that modify Section II

– Personal Injury– Business pursuits– Additional Residence Rented to Others– Incidental Low- power Recreation Motor Vehicles– Owned Snowmobile– Watercraft

• Endorsements that modify Section I and II– Additional Insured– Residence held in Trust– Home Daycare Coverage– Structures Rented to others


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Other Residential Insurance - Overview• Insurance that covers residential property apart from those

covered under standard Homeowners, Renters or Condominium policies.

• Types of Residential Insurance Policies –– Dwelling Insurance Policies– Mobile Home Coverage– Personal insurance for Farms and Ranches– Flood Insurance– Insurance for Hard-to-Insure Residences


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Dwelling Insurance

• Traditionally, Dwelling insurance is a type of insurance policy used to insure only a dwelling. It doesn't cover any surrounding property or any personal items contained inside the dwelling. However, ISO* Dwelling Policies cover the dwelling and its contents with exception to any theft coverage, personal property and liability coverage. It is significantly cheaper than a traditional Homeowners policy.

• Structures Eligible for Dwelling Policies –– Mobile homes at a permanent location– Houseboats in some states– Certain incidental business occupancies, if they are operated by

the owner- insured or by a tenant of the insured location


* ISO – Insurance Services Office

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Mobile Home Coverage• Mobile Home coverage relates to the cover provided to

homes that are not built on permanent foundations.

• Mobile Home coverage may cover the following losses:– Damage to or destruction of mobile home– Damage to or destruction of other structures on the residence

premises– Damage to or destruction of personal property in the mobile

home or in other structures– Loss of use of the mobile home– Liability loss because of bodily injury to others or damage to the

property of othersSource : INS 22 Study Material, 1st Edition

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Personal Insurance for Farms and Ranches• Personal insurance for farms and ranches covers farmers and

ranchers and their land, where they work and usually reside, from loss exposures. PIFR policies consist of Property and Farm Personal Liability Coverages.

• Property Coverages include –– The Farm dwelling– Related private structures– Household personal property– Additional living expenses and loss of rent

• Farm personal Liability Coverages include –– Personal Injury– Expanded custom farming– Additional business activities– Fruit or vegetable picking by the public– Farm chemicals liability


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Flood Insurance• Flood Insurance covers the insured’s dwelling, as well as its

contents from losses that may occur due to catastrophic floods. Flood Insurance may be written only in communities that the Federal Emergency Management Agency (FEMA) has designated as participating communities in the National Flood Insurance Program.

• Flood Insurance is available on:– Protect Homes– Condominiums– Apartments– Non-Residential buildings


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Insurance for Hard-to-Insure Residences• Insurance for Hard-to-Insure Residences cover homes, which

insurers are reluctant to insure under standard homeowners or dwelling policies due to their exposure to greater-than-average losses.

• FAIR Plans : Fair Access to Insurance Requirements or FAIR plans are state run programs that provide basic property insurance coverage on buildings, dwellings, and their contents for property owners who are unable to obtain coverage in the standard insurance market. To be eligible for FAIR plan coverage, the property to be insured must meet the FAIR plan’s inspection criteria.

• Under most FAIR plans, the following types of exposures are considered uninsurable:

– Vacant Property– Property poorly maintained– Property subject to unacceptable physical hazards– Property in violation of law or public policy– Property not built in accordance with building and safety codes


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Other Personal Property and Liability Insurance• Other Personal and Liability Insurance consists of

insurance which cover individuals and families who have special needs.

• It consists of:– Personal Inland Marine Insurance– Personal Watercraft Insurance– Personal Umbrella Insurance

• Personal Inland Marine Insurance covers miscellaneous types of property, such as movable property, goods in domestic transit, and property used in transportation and communication. Inland marine policy that provides coverage for property that “floats” or moves (such as jewelry, furs, or cameras) rather than providing coverage at a fixed location are called personal inland marine floaters.


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Personal Inland Marine Insurance• General Conditions: With certain exceptions, such as fine

arts, the amount paid for a covered loss is the least of the four following amounts -

– The actual cash value of the insured property at the time of loss or damage.

– The amount for which the insured could reasonably be expected to have the property repaired to its condition immediately before loss

– The amount for which the insured could reasonably be expected to replace the property with property substantially identical to the article lost or damaged.

– The amount of insurance stated in the policy

• Types of Personal Inland Marine Floaters– Personal articles floater (PAF)– Personal property floater (PPF)– Personal effects floater (PEF)


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Personal Watercraft Insurance• Personal watercraft insurance covers personal vessels which

include small rowboats, canoes, outboard and inboard motorboats, sailboats, houseboats, and power yachts.

• Personal Watercraft Insurance covers the following losses:– Damage to the boat’s hull as a result of a collision with another

boat– Theft of the boat’s motor or equipment– Damage to the boat’s propeller from hitting an underwater

object– Lightening damage to electrical and navigational equipment

aboard the boat– Wind damage to the sail– Fire damage to the boat trailer


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Personal Umbrella Insurance• Personal Umbrella Insurance covers catastrophic claims or

judgments arising from personal liability exposures associated with homes, automobiles, boats, recreational vehicles, sports, and other personal activities. A catastrophic claim is one that is so large that if uninsured, or underinsured, can impair the insured’s standard of living.

• The personal umbrella policy provides additional liability limits over any underlying insurance, such as homeowners coverage, personal auto liability, and personal watercraft liability policies.

• The personal umbrella policy typically provides broader coverage than that provided by underlying policies. This broad coverage is called drop down coverage.


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Personal Health and Disability Insurance• Personal Health and disability insurance provides protection

against the loss exposures of poor health and injury.

• Basic Medical Expenses Coverage –– Hospital Expense Insurance: HEI covers medical expenses

while the patient is in the hospital, such as daily room-and-board and miscellaneous expenses incurred during the hospital stay.

– Surgical Expense Insurance: SEI covers part or all of a physician’s fee for a surgical operation.

– Physicians’ Visits Insurance: PVI covers no-surgical care provided by an attending physician other than a surgeon.


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Major Medical Insurance• Major Medical Insurance covers medical expenses resulting

from illness or injury that are not covered by a basic medical expense plan.

• Types of Major Medical Plans– Supplemental plans cover medical expenses that exceed the

limits of the underlying basic medical expense policy.

– Comprehensive plans are a combination of the basic medical expense coverage and major medical insurance.


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Personal Dental Insurance• Personal Dental Insurance covers normal dental care and

damage to teeth in an accident.

• Types of Dental Plans –

– Scheduled Plan covers dental services which are listed in a schedule and a specific dollar amount is paid for each service. Most scheduled plans do not have deductibles or coinsurance.

– Non-scheduled Plan covers most dental services and dentists are reimbursed on the basis of their usual, reasonable, and customary charges subject to any limitations on benefits stated in the plan.


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Other Types of Personal Health Plans• Long-Term Care Insurance pays for extended medical care or

custodial care received in a nursing home, hospital or home.

• Managed Care Plans provide coverage for cost-effective medical services to plan members.

• Health Maintenance Organization is a managed care plan that provides a range of comprehensive health-care services to its members for a fixed, prepaid fee; members’ choice of healthcare providers is usually restricted to those in the HMO network.

• Preferred Provider Organization is a managed care plan that contracts with healthcare providers for medical services provided to plan members at discounted fees; members choice of healthcare providers is not restricted, but members have a financial incentive to choose contracted providers.


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Other Types of Personal Health Plans contd…• Exclusive Provider Organization is a managed care plan that

pays only for medical care received within the network of preferred providers.

• Point-of-Service Plans is a managed care plan that combines the characteristics of a HMO and a PPO; has a network of preferred providers who, if used by the member, charge little or nothing for services; healthcare received out of the network is covered, but members must pay substantially higher coinsurance charges and a deductible.

• Disability Income Insurance pays periodic income payments to an insured who is unable to work because of sickness or injury.


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Govt. Heath Insurance & Healthcare Programs• These are Healthcare programs run by the Government and

they consist of –

– Medicare: Social insurance program that covers the medical expenses of most individuals age sixty-five and older.

– Medicaid: Federal-state welfare program that covers the medical expenses of low income persons, including those who are aged, blind, or disabled; members of families with dependent children; and pregnant women as well as certain children.

– Workers Compensation: Social Insurance program that provides valuable health and disability insurance protection to employed workers.


COMMERCIAL P&C INSURANCE

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Commercial Insurance• It is a property & liability insurance for businesses and other

organizations.

• Lines of Commercial Insurance –

• It could be – Monoline Policy (only one LoB) and Package Policy (combination of 2 or more LoB)

•Commercial Auto Insurance •Inland & Ocean Marine Insurance

•Commercial Property Insurance

•Crime Insurance

•Commercial General Liability Ins.

•Farm Insurance

•Equipment Breakdown Insurance

•Excess & Umbrella Liability Ins.

•Business Income Insurance •Professional Liability Insurance•Worker’s Compensation & EL Ins.

•Aircraft Insurance

•Business owners Insurance •Environmental InsuranceSource : INS 23 Study Material, 2nd Edition

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Commercial Package Policy

Commercial Package Policy (CPP)

Commercial Policy Conditions

Common Declarations

Commercial Property Dec. Page


Inland Marine Conditions Form




Commercial Property Coverage Form(s)

CGL Dec. Page

CGL Coverage Form

Crime Dec. Page

Crime Coverage Form

Equipment Breakdown Protection Dec. Page

Equipment Breakdown Protection Coverage Form

Inland Marine Dec. Page

Inland Marine Coverage Form(s)

Auto Dec. Page

Auto Coverage Form

Commercial Property Causes of Loss Form(s)

Commercial Property Conditions Form

= + +

Source : INS 23 Study Material, 2nd Edition

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Commercial Auto Insurance - Overview• Commercial Auto Insurance is meant for organization

that owns one or more autos. Commercial property and general liability insurance exclude commercial auto exposures.

• Commercial Auto Exposures – – Physical damage to an auto can reduce its value or reduce

business income.– Organization may have to defend itself against suits alleging

negligent ownership, maintenance, or use of autos thereby creating auto liability.

• ISO enlist 03 different Coverage Forms – Business Auto Coverage, Garage Coverage and Motor Carrier Coverage forms.

• Business Auto Coverage covers liability arising out of the ownership, maintenance, or use of autos and physical damage to autos owned, leased or hired by the insured.


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Commercial Auto Insurance Coverage Forms• Structure of Business Auto Coverage Form (filed by ISO)

–– Section I : Details about the ”covered” automobiles– Section II : Details about the liability coverage– Section III : Details about the physical damage coverage– Section IV : Details about the “conditions” of Comm. Auto

Insurance– Section V : Enlists various pertinent “definitions”

• Garage Coverage covers the commercial auto and general liability exposures of auto and trailer dealers.

• Motor Carrier Coverage covers businesses using autos to transport their own or other’s property.


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Rating of Commercial Auto Insurance• Commercial Auto Insurance rating shall conform to ISO

Commercial Lines Manual’s automobile rules and statutes.

• Private passenger vehicles are rated per the private passenger premium tables.

• Trucks, Tractors, and Trailers are rated per –– Size Class (Light / Medium / Heavy / Extra-Heavy)– Business Use (Service / Retail / Commercial)– Radius (Within 50 miles, 51 – 200 miles, Beyond 200 miles)


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Commercial Property Insurance - Overview• Types of Property –

– Real Property (Immovable Property) – Land, Building etc.– Personal Property (Movable Property) – Furniture, Fixture, H/W

etc.– Tangible Property – Properties which physically exist.– Intangible Property – Trademark, Copyrights, S/W, IP etc.

• Structure of Comm. Property Coverage part –– Commercial Property Declarations– Commercial Property Coverage Forms (one or more)– Causes of Loss Forms (one or more)– Commercial Property Conditions– Endorsements (if any)


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Building & Personal Property Coverage Form• 09 sections of BPP Coverage Form –

• Insuring fluctuating values – Due to wide fluctuations in property values (e.g. stocks, inventory etc.), it is difficult to underwrite and evaluate accurately. Value Reporting Form and Peak Season Limit of Insurance endorsements provide possible solution to this problem.

• Specific Insurance (Covers each building and its property for a specific limit) vs Blanket Insurance (Covers either – one type of property in one or more separately rated buildings or two or more types of property in one or more separately rated buildings).

1. Covered Property2. Property Not Covered3. Additional Coverage4. Coverage Extensions5. Limits of Insurance

6. Deductibles7. Loss Conditions8. Additional Conditions9. Optional Coverage


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Causes of Loss Form• Types –

– Basic Form : Fire, lightning, explosion, windstorm, hail, smoke, riot etc.

– Broad Form : Basic Form perils+ falling objects, snow/ice, water perils

– Special Form : Covers “risks of direct physical loss”

• Sections – – Section A : Covered causes of loss – Fire, Explosion, Windstorm

etc.– Section B : Exclusions – Earth Movement, Nuclear Hazard, War

etc.– Section C : Additional Coverage – Limited Coverage for Fungus,

Wet Rot– Section D : Limitation – Loss caused by vehicle of insured, Wear

& Tear– Section E : Definitions – For all types of causes mentioned in the

policy


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Commercial Property Conditions• Coverage is doomed void in case of concealment or misrepresentation of

material facts, or in case of fraud.• Coverage under policy will not be affected by acts or omissions of persons

other than the insured. Violation of a policy condition at one location shall not the coverage at any other location.

• Duplication of insurance under two or more coverage is not allowed.• Legal Action against Insurers can only be entertained if the insured has

complied to all policy conditions and has brought the legal action to notice within 02 years of the occurrence of the event (loss).

• No benefit of insurance shall be extended to Bailee in case of any damage.

• Insurer has the Rights of Recovery (Subrogation) against other parties.Source : INS 23 Study Material, 2nd Edition

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Commercial Property Endorsements• Ordinance or Law Coverage – Covers 3 types of losses resulting

from the enforcement of building ordinance or laws –– The value of undamaged portion of building that must be demolished– The cost to demolish the building’s undamaged part & remove debris– The increased cost to rebuild the property.

• Spoilage Coverage – Covers damage to perishable goods due power outage or contamination of insured’s refrigerating, cooling and humidity control equipment.

• Manufacturer’s consequential loss assumption• Brands and Labels – It permits the insured to stamp the word

“salvage” on the merchandise or to remove its brands/labels before it is sold by the insurer as salvage.

• Flood Coverage• Earthquake and Volcanic eruption coverage


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Rating Commercial Property Coverage• Premiums may be affected by –

– Limit of Insurance– Covered causes of loss– Coinsurance percentage– Deductible Amount– Optional Coverage– COPEL (Construction, Occupancy, Protection, Exposure &

Location)

• Specific Rating vs Class Rating – Specific Rating bases a building’s property insurance rate on

inspecting and evaluating that particular building.– Class Rating uses rates reflecting the average probability of loss

for business within large groups of similar risks. This is predominantly used for rating commercial properties.


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Commercial General Liability Ins. - Overview• CGL Insurance covers many of the common liability loss

exposures faced by an organization, including its premises, operations, and products.

• If Mr. Gupta visits Big Bazar and while shopping he slips on the uneven and breaks his arm. If Mr. Gupta sues the store to recover the medical expenses and lost wages, Big Bazar will sustain a liability loss (which may be covered under CGL Insurance).

• But, if Big Bazar incurs cost to make the floor even to avoid any such occurrence in future, it won’t be reimbursed. Also, indirect costs, time consumed while defending the claim, adverse publicity etc. would not be covered.


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Loss Exposures covered by CGL• Premises Liability – A customer slips on a spill in the insured’s

store and breaks his ankle.

• Operations Liability – While soldering pipes, an employee of the insured plumbing contractor accidentally sets a customer’s house on fire.

• Products Liability – A defective gas range manufactured by the insured causes an explosion that damages the buyer’s home.

• Completed Operations Liability – A completed building constructed by the insured collapses, injuring tenants and pedestrians.


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CGL Coverage Forms• 3 different ISO Coverage Forms –

– A : Bodily Injury and Property Damage Liability– B : Personal and Advertising Injury Liability– C : Medical Payments

• Insurer, in Coverage A, promises –– To pay damages on behalf of the insured– To defend the insured against claims or suits seeking damages

covered under the policy.• Insurer, in Coverage A, excludes –

– Expected or Intended injury– Contractual Liability– Liquor Liability (manufacturers, distributors or sellers)– Workers Compensation & Employers Liability– Pollution, War, Fire Legal liability etc.


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A - Bodily Injury and Property Damage Liability• Insurer’s duty to pay damages only when –

– Insured is legally obligated to pay damages, and– Damages result from bodily injury or property damage defined

in the policy, and– Policy must apply to bodily injury or property damage, and– It must be caused by an occurrence, and– The occurrence must take place in coverage territory, and– It must occur during the policy period, and– It must not be known to the insured or certain other persons

before the policy period.


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B - Personal and Advertising Injury Liability• CGL Coverage B covers liabilities resulting from numerous

offenses like –– False arrest, detention, or imprisonment;– Malicious prosecution;– Wrongful eviction from/entry into a room/dwelling by owner/lessor;– Oral or written publication of any material that slanders or libels a

person or organization;– Oral or written publication of any material that violates a person’s

right of privacy;– Use of another’s advertising idea; and– Copyright infringement.


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Coverage Form C - Medical Payments• Coverage C of the CGL form obligates the insurer to pay for

medical expenses of persons injured on the insured’s premises or as a result of insured’s operations.

• It excludes – – Bodily injury to any insured (other than a volunteer worker)– Anyone who is hired to do work for an insured or for his tenant– Anyone who is entitled to workers compensation benefits to the

injury– If a person is injured while taking part in athletics– Bodily injuries which are excluded under Coverage A


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Equipment Breakdown Insurance - Overview• Covers loss due to accidental breakdown of equipment that

operates under pressure or that controls, transmits, or uses power (electrical or mechanical).

• Example cases –– A heating boiler in a telephone company switching office

exploded and tore through the roof like a missile.– A factory boiler that over-heated as a result of low-water

conditions sustained damage to its furnace tubes & a portion of rear tube sheet.

– A short circuit in the aluminum bus in an apartment building caused extensive damage to building’s cables and wiring.

• Why EBI if I already have taken BPPI?– Not restricted to perils mentioned in BPP– Electrical or Mechanical breakdown & Steam Boiler explosion

excluded in BPP– To cover business income loss, extra expenses and other losses.


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Equipment Breakdown Insurance• 10 insuring agreements of ISO EB Form –

• Limits of EBI –– Overall Limit – Maximum quantum of cover (including all forms

of liabilities on the insurer) against a covered peril/incident.

– Individual Sub-limits for Ammonia Contamination, Hazardous Substance, Water damage etc. (generally 25000 USD each).

•Property Damage •Newly acquired Premises•Expediting Expenses •Ordinance or Law•BI Loss & Extra Expenses •Errors & Omissions•Spoilage Damage •Brands & Labels•Utility Interruption •Contingent BI Loss & Extra

Expenses


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Business Income Insurance• BII covers the reduction in the insured’s net income due to

interruption in operations caused by a covered peril.

• Business Income Loss = Foregone Profit + Continuing Expenses + Extra Expenses

• Types – – Business Income (and Extra Expense) Coverage Form– Business Income (Without Extra Expense) Coverage Form

• Additional Coverage – Expenses to reduce loss, Civil Authority, Alterations & New Buildings etc.

• Exclusions – Off-premises services interruption, Finished Stock, Delay /Suspension /Lapse /Cancellation of agreements etc.


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Workers Compensation & Employers Liability Insurance

• It started with industrialized nations. Presently, it covers all states of the US and provinces of Canada.

• Workers Compensation Statute : It obligates employers, regardless of fault, to pay specified medical, disability, rehabilitation and death benefits for their employee’s job-related injuries and diseases.

• WC & EL Insurance covers –– Employee injury claims arising out of industrial accidents or

occupational disease.– Liability claims arising out of workers compensation laws.


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Important Aspects of WC&EL Insurance• Benefit Administration

– Administered by Workers Comp. Board / Industrial Commission.– Employee notifies the employer >> Employer submits injury

report to Insurer >> Insurer transmits to Administrator >> Claim settled.

• Persons/Employments Covered– Covers virtually all industrial workers.– Applicable for regular/temporary/leased employee and those

under an independent contractor except “Casual Employee”.– Farm labour, Domestic work, Maritime workers etc. are exempt.

• Extraterritorial Provisions– If Mr. X, an employee of ABC Insurance, MI is injured while on

work in LA, he shall be subject to WC regulations of MI.– The same applies for expats provided they have not been out of

the US for more than a stipulated period (generally, 30 days – 06 months).


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WC & EL Policy StructurePer NCCI*, WC&EL Policy consists of –

• Information Page – Details about insured, coverage period, summary of coverage provided, State WC regulations etc.

*NCCI– National Council on Compensation Insurance, US

• Policy Form –1. Workers Compensation Insurance2. Employers Liability Insurance3. Other States Insurance4. Your Duties (if injury occurs)5. Premium6. Conditions

• Endorsements (if any) – Provisions to add/remove/modify certain coverage, conditions etc. can be mentioned in this section.


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Six parts of the Policy Form• Part 1 deals with WC statutes of listed state. Includes coverage

details and rights of the insurer and insured.• Part 2 deals with EL statutes (e.g. occupational injuries, 3rd party

claims etc.) of listed state. Includes EL exclusions & limits of liability.• If the insured wishes to expand in other states (not listed on Info

page), Part 3 provides provisions/details on this.• Part 4 details the duties and rights of the insured in case any claim

occurs. It also details the procedure for intimating the claim.• Part 5 details about the premium – factors affecting premium,

segregation of premium and premium determination procedure.• Part 6 enlists policy conditions like – Cancellation Process, Role of

primary Insured in representing its members, Transfer of Rights etc.


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Marine Insurance - Overview• Insurance on the risks of transportation of goods is one of the

oldest (with origins in the Greek & Roman maritime loan) and most vital forms of insurance.

• Marine Insurance Act, 1906 of UK is the basis of marine insurance across the globe with country-state-specific changes.

• All basic principles of insurance like “uberrimae fidei “, “insurable interest”, “indemnity”, “subrogation”, “causa proxima” etc. apply to it in addition to specific clauses like “Franchise”, “Average” etc.

• Broadly 02 categories – Inland Marine Insurance (inland) and Ocean Marine Insurance (international transit, generally sea).


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Inland Marine Insurance• Insurance cover against perils of inland transit which may

cause damage to property or which may create liabilities out of such an incident.

• Goods in domestic transit – Common Carrier vs Contract Carrier vs Private Carrier

• Bailment Contracts – a) For benefit of bailor (owner), b) For benefit of bailee (temporary possession) and, c) For mutual benefit of bailor and bailee.

• Filed Inland Marine Coverage – – Commercial Articles– Camera & Musical Instruments– Physicians & Surgeons Equipment– Signs, Film, Theatrical Property, Jewelry etc.


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Inland Marine Insurance• Non-filed Inland Marine Coverage –

– Contractors Equipment– Builders Risk– Transit (Trip transit policy vs Annual transit policy)– Motor Truck Cargo Liability– Difference in Conditions policy

• Rating of Inland Marine Coverage– ISO Commercial Lines Manual (CLM) for filed class inland marine

insurance.

– For non-filed class, common practice includes Loss Experience rating, Judgment rating, case-to-case transit evaluation along with market forces.


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Ocean Marine Insurance• Insurance cover against perils of sea which may cause

damage to property or which may create liabilities out of such an incident.

• Major 3 types – Cargo Insurance, Hull Insurance and Protection & Indemnity Insurance.

• Cargo Insurance covers the shipper or receiver of the goods if the goods are damaged or lost while in transhipment from one place to another.

• It could be covered either under Voyage Policy (single trip) or Open Cargo Policy (for a policy term until either insured or insurer cancels it).

• Loss could be quantified by bill of lading or invoice or an agreed value. But in general practice, it is valued as = Amount of Invoice + Freight + x % (for additional expenses).Source : INS 23 Study Material, 2nd Edition

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Ocean Marine Insurance• Warehouse to warehouse clause ensures complete cover

from point of origin to point of final destination.

• All risk coverage except loss due to delay, war, strikes, riots or civil commotion.

• Hull Insurance covers physical damage to vessels including their machinery and fuel against the perils of sea, fire, lightning, earthquake, barratry and all other like perils.

• It could be covered either under Voyage Policy (at-and-from-via) or Time Policy (for a specified period, round the globe with some restrictions).

• A vessel is insured for an agreed value and in case of total loss, the same is payable. For partial loss, cost of repairs is insurer’s liability.


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Ocean Marine Insurance• Protection & Indemnity insurance covers ship owners against

various liability claims due to operating the insured vessel.

• P&I Liabilities may arise out of - Damage to public property, injury to passengers and crew, injury to persons on other ships (collision) etc.

• A significant portion of P&I insurance is underwritten by P&I Clubs.

• Cargo underwriters may consider past loss experience, type of packing, trade route, time of the year, volume of shipments, port conditions, ocean and inland carriers etc. while deciding upon premium.

• Hull and P&I underwriters may consider factors like size, type and age of the vessel, area of navigation, trade in which it is employed, past record etc. while deciding upon premium. Source : INS 23 Study Material, 2nd Edition

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Miscellaneous Commercial Insurance Types• Crime Insurance – Coverage for loss of money & securities caused by

employee theft. Also covers robbery, burglary & theft.

• Key-man Insurance – Coverage to compensate for financial losses that would arise from the death or extended incapacity of the key member (highly skilled professional) of the business specified on the policy.

• Professional Liability Insurance – Protects professional practitioners such as Chartered Architectural Technologists, Architects, Quantity surveyors, Home inspectors, Lawyers, Physicians, and Accountants against potential negligence claims made by their patients/clients.

• Aircraft Insurance – Covers liability due to insured’s ownership, maintenance, or use of aircraft; physical damage to aircraft owned or used by the insured; and other aircraft loss exposures.

• Surety Bonds – In a surety bond, the surety (usually an insurer) guarantees to the obligee that principal will fulfill an obligation or perform as promised. If principal fails to honour the contract, surety will fulfill the obligation. Source : INS 23 Study Material, 2nd Edition

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Few important things to remember - • Though there are several different kinds of personal and

commercial P&C Insurance, generally they are taken as a package policy and not in silos.

• There may be instances where property damages and liabilities out of an accident could call for multiple insurers. Principle of “Contribution” comes to respite to handle such situations.

• The basic principles of insurance “indemnity”, “insurable interest” and “risk pooling” shall apply to all forms. An insured shall not make profit out of insurance.

IT SOLUTIONS FOR P&C INS.

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IT Solutions for P&C Insurance• 3i Infotech’s PREMIA – Policy Admin & Analytics

– PREMIA is a web-based application that provides a broad range of components for small and mid-sized insurers and is gaining some momentum in the North American marketplace. PREMIA provides a 360 degree view of a carrier’s information, allowing a user to search on all lines of business, policies, claims, billing info, customers, etc.

• IBM’s C’uram – Workmen’s Compensation– The Cúram Business Application Suite is a comprehensive solution that

includes both core SEM and program-specific components required to support a social enterprise. It is designed to help agencies manage their clients in a holistic and integrated manner.

• TCS’s BαNCS (Insurance Suite)– TCS BαNCS’ flagship insurance offering provides an end-to-end solution

for insurers in both the property/casualty and life sectors. TCS BαNCS insurance solution offers new business and underwriting, policy service, claims administration, and several other components. TCS BαNCS insurance solution is also in use in 14 countries outside of North America.

Source : “Policy Administration Systems for Commercial Lines P/C Insurers US 2009, May 2009

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3i Infotech’s PREMIA• PREMIA offers 6 of the 7 advanced policy administration

functions.

Source : “Policy Administration Systems for Commercial Lines P/C Insurers US 2009, May 2009

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IBM’s Cúram Business Application SuiteWorkforce Services Solution

Source : “Cúram Business Application Suite on IBM System z” Application Manual

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Cúram Solutions provide –• Accurate eligibility determination and entitlement assessment.• Support for the management and processing of temporary

payments.• Support for multiple access channels within a single system.• Tools for capturing and reporting worker data.• Client registration and referral to supportive service requirements.• Full claim life cycle management.• Service planning tools.• Tools for monitoring financial data.• Automated support for change-in circumstance processing,

overpayment processing and re-assessment.Source : “Cúram Business Application Suite on IBM System z” Application Manual

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TCS BαNCS (Insurance Suite)• TCS BαNCS solutions include line-of-business products for

property and casualty, workers’ compensation, extended warranty, individual life, group life and reinsurance. It is a flexible platform that helps insurers to become bigger, leaner and smarter.

• Product Workbench, the product management component of TCS BαNCS Insurance, supports the development of innovative and complex insurance products across all business lines.

• Agent Workbench, a component on BαNCS Insurance, is a stand-alone, connected, on-demand, browser-based application, which enables sales personnel to conduct pre-sale and post-sale activities offline efficiently. Its functions include - Illustration, Plan combination and comparison; System management and administration; Insurance calculation; Manage Customer information and a lot of Utilities.

Source : http://www.tcs.com/offerings/bancs/solutions/insurance

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Insurance solutions at Infosys• Infosys partners with leaders across all segments of the insurance

industry - Life, P & C, LTC, Reinsurance, Specialty lines. Our IT services footprint covers application development and maintenance, infrastructure services, BPO and business consulting.

• Our New Business Excellence (NBX) solution for P & C enables commercial lines carriers to revamp new business processes and leverage technology. NBX helps carriers improve their operational efficiency and makes underwriting more effective by making it data driven, thus creating a robust platform for sustained profitable growth.

• Our Claims Excellence - Life and Health solution uses a combination of workflow automation, electronic content management, system integration and information channel management to transform claims processing.

• Our insurance outsourcing services reduce operating costs while increasing efficiency, responsiveness, consistency and quality.

Source : http://www.infosys.com/offerings/industries/insurance/industry-offerings/pages/index.aspx

P&C CLIENTS AT INFOSYS

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P&C Insurance Clients at Infosys

• AON Corporation• Allstate Corporation• AMB Generali• Axis Capital Holding• Chubb• Genworth Financial• Nationwide

• Northwestern Mutual Life• PMI• RBS Insurance• SAFECO Insurance• Swiss Re• VKB• ….and many more!!!

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AON Corporation• Aon Ltd. is world’s second largest Risk Management Company with

revenues of $7.60 billion (2009).

• 59,000+ Employees worldwide, headquarters based in Chicago, IL. It operates through 600 Offices in over 125 Countries and Sovereignties.

• Best Employee Benefit Consulting Firm and Best Retail Agent/Broker in 2007 by Business Insurance.

• Aon provides products and services in Risk services, Specialty risk services, Outsourcing services, Human capital consulting, Management consulting.

• Aon Corporation has been associated with Infosys Technologies since 1998.

• Projects –

http://en.wikipedia.org/wiki/File:AON_logo.png

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Allstate Corporation• Allstate is the second-largest personal lines insurer in the United

States with revenues of $32 billion (2009).

• The Allstate Corporation encompasses more than 70,000 professionals. Headquarters based in Northbrook, IL.

• Allstate sells 13 major lines of insurance, including auto insurance, home insurance, life insurance, and commercial insurance.

• Allstate Corporation has been associated with Infosys Technologies since 2006.

• Projects – DMEA (Distribution & Marketing), Alliance (Legacy to Web Apps migration), Transcend (Annuity), Interlink etc.

http://en.wikipedia.org/wiki/File:Allstate_svg1.svg

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Swiss Reinsurance Company• Swiss Re is one of the oldest insurance companies in the world with

revenues of CHF 33 billion (2009).

• Swiss Re is the world’s second-largest reinsurer, not only in the United States but internationally.

• 10500+ Employees worldwide. Swiss Re has its headquarters at Zurich, with 90 offices in 25 countries.

• As one of the world’s leading and most diversified reinsurers, Swiss Re provides reinsurance products and financial services that enable risk taking essential to enterprise and progress.

• Swiss Re has been associated with Infosys Technologies since ????.

• Projects –

http://en.wikipedia.org/wiki/File:Swiss_Re.svg

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Nationwide Insurance• Nationwide Insurance, a Fortune 100 company based in Columbus,

Ohio is one of the largest insurance and financial services companies in the world.

• Nationwide provides a full range of insurance and financial services, including auto, homeowners and commercial insurance, life insurance, annuities, retirement plans, mutual funds and employer-related administrative services.

• Nationwide currently has about 36,000 employees with revenues of $ 22 billion (2009) operating in all 50 states of the US.

• Nationwide has been associated with Infosys Technologies since 2005.

• Projects –

http://en.wikipedia.org/wiki/File:Nationwide_Insurance.svg

THANK YOU!!!

“The contents of this document are proprietary and confidential to Infosys Technologies Ltd. and may not be disclosed in whole or in part at any time, to any third party without the prior written consent of Infosys Technologies Ltd.”

“© 2008 Infosys Technologies Ltd. All rights reserved. Copyright in the whole and any part of this document belongs to Infosys Technologies Ltd. This work may not be used, sold, transferred, adapted, abridged, copied or reproduced in whole or in part, in any manner or form, or in any media, without the prior written consent of Infosys Technologies Ltd.”

Documents

PnC Insurance - Training Slides