Insurance

Insurance.

A practice or arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium.

The ACT 1963 divides insurance business into 2 types:

# Life business : concerns life policies.

# General business : includes all other insurance business.

Some of risk facing business includes:

·         Financial risk.

·         Market risk

·         Risk of death of the person in a business which is dependent by them(owner, a partner or a  manager)

·         Product risk ( face by manufacturers)

·         Risk of good which was purchase (damage or destruction of plant or warehouse or in transit)

·         Risk of loss of the firm’s assets through damages. ( item in plants damage or destruct by fire, flood, wind, or other perils while in plant).

Types of insurance:

1.      life insurance:

life insurance that pays out a sum of money either on the death of the insured person or after a set period.

2.      Marine insurance:

marine insurance is insurance against loss by damage or destruction of cargo, freight, merchandise, or the means or instruments of transportation and communication whether on land, sea, or air.

3.      Fire insurance:

Fire insurance is a specialized form of insurance beyond property insurance, and is designed to cover the cost of replacement, reconstruction or repair beyond what is covered by the property insurance policy.

4.      Accident insurance:

A general, an unplanned, unexpected, and undesigned  (not purposefully caused) event which occurs suddenly and causes injury or loss, a decrease in value of the resources, or an increase in liabilities.

5.      Motor insurance:

A motor insurance policy is a mandatory policy issued by an insurance company as part of prevention of public liability to protect the general public from any accident that might take place on the road. (gives important to loss, accident, and the other parties damages)

6.      Aviation insurance:

Insurance against claims and losses arising from the ownership, maintenance, or use of aircraft, hangars, or airports including damage to aircraft, personal injury, and property damage.

Definition:

A ‘CONTRACT OF INSURANCE’ is a contact where a person (the insurer) agrees to indemnify another person (the insured) against loss which may arise upon the occurrence of some event or to pay a certain definite sum of money on the occurrence of the particular even.

-The loss which is being insured against is called the ’risk’.

- The insurer and the insured enter into a contract of insurance, and the document containing the terms of the contract is called the ‘policy’.

-The insured pays the insurer ‘premium’ which is the consideration paid by the insured either in the form of the lump of sum or a periodical amount.

- Consideration for a contract of insurance is premium.

- A contract of insurance may be said to be a contract where the insured is indemnify against unforeseeable loss or damage which may or may not occur.

-In a insurance contract, the party taking out the insurance coverage is known as the ‘insured’ while the company who takes on the risk is known as the’insurer’.

Contract of insurance, found in a document called a policy:

·         *In conditions of paying of the payment of sum money (called premium).

·         *Agrees identify the insured / assured (the person who taking insurance).

·         *Against some risk such as fire, accident or theft, such death).

      

       Two classes of persons make up the category of insurer:

       

       *Insurance companies:

         a contract, represented by a policy, in which an individual or entity receives financial protection or      reimbursement against losses from an insurance company. The company pools clients' risks to            make payments more affordable for the insured.

       *Underwriters:

         They assume the risk themselves, but frequently will insure the risk at lower premium.  

        

        Contracts of indemnity.

         A contract of insurance is basically one where the insurance is indemnified against unforeseeable        loss or damages which may or may not occur. (except MARINE INSURANCE)

         

        Insurable interest.

        In every contract of insurance, the insured has to have an "insurable interest". NOT ALL RISK         CAN BE INSURED. ( house or car destroyed fire, or natural disasters).

        MACAURA v NOTHERN ASSURANCE CO LTD [1925] AC 619

      Facts: Macaura owned a tree plantation was covered by an insurance policy. He subsequently sold the plantation to a company of which he was the only shareholder, though the purchase money remained owing to him. After the sale, Macaura continued to insure the plantation in his own name, a fire broke out and destroyed the plantation. When Macaura attempted to claim on the policy, the company refused to pay.

     Issue: Whether Macaura had an insurable interest at the time of the loss.

      Held: The insurance company did not have to pay. The plantation company was legal entity in its own right, separate from its shareholders and while it was the owner of the plantation and had an insurable interest, it had no policy. Macaura, on the other hand, had a policy, but because he had assigned the plantation to the company he had no insurable interest.

      Renewal of The Policy

-          Before the expiration of the policy, the insurer will send the insured a renewal notice, usually 28 days prior to the policy lapsing.

-          The renewal notice is an offer by the insurer to the insured, with acceptance taking place generally on payment of the premium.

-          Life policies are normally treated as ongoing contracts and as  are not subject to renewal.

         Renewal of the Policy.

         Before the expiration of the policy, the insured will sent a renewal notice, usually 28 days period to    the policy lapsing.

    

         Utmost good faith:

         Both parties should reveal each others. The principle means that every person who enters into a          contract of insurance has a legal obligation    to act with utmost good faith towards the company          offering the insurance.

          Conditions and Warranties.

           When the insured commits a breach of conditions or warranty, the insurer is entitled to disclaimed      liability. In the insurance contract, certain terms may be deemed as conditions or warranties, the          breach of which would entitle the insurer to repudiate liability and avoid the policy.

           Exemption clauses:

           its a common for insurance contracts to contain exemption clauses which seek to exempt the                insurer from some liability which he would otherwise be under. If the insurer is so exempted from      liability, he would not be liable under insurance policy.

           Completion of proposal from by an agent.

           A person who wishes to effect an insurance would be required to fill up the proposal form himself.      Insurance are arranged through intermediaries who can be the employees of insurance companies,      agents or brokers.

           # Insurance agent act on behalf of a particular insurer.

           # insurance broker acts as an independent adviser, not 'tied' to any one insurer.



           For more information based on case study:

          https://www.acquia.com/resources/case-study/large-insurance-company
          http://www.medallia.com/resource/insurance-agent-satisfaction/
          https://www.myinsuranceinfo.com/
          https://www.aia.com.my/en/index.html