Email: jl.stacruz@tcs.com Password: J********2727! EID: 2641417

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OM zoom login: 6561874687 800821

Training details:

9:30 PM to 11:30 PM EST on 19th, 20th& 21st April via Zoom(ID - 9947794728 and Passcode - 123123).

insured- individual who is in the policy paying the fee insurer- the company whom you bought the policy deductible- amount of money that your insurance policy pays. ensure you share the costs.

How insurance policy works

beneficiary/nominee - people who gets the benefits of your insurance.

-insurance will ask you how you would like to pay the premium depending on the policy. -cost of premium depends on the more risk you are in the insurance company homeowner policy

example 500 deductible 3000 usd premium =2500 will gave to the insured person

• there will be a specific deadline for the policy

what should you consider when we buying insurance policy -research about the insurance policy to avoid fraud and bankruptcy

What is risk: -possibility of an unfortunate event

70000 bill covergae 3 mil usd

===================================== what is risk ?

• the possibility of an unfortunate event
• unpredictability ; risk exists when there is uncertainty about future or doubt about the outcome of an event; greater the uncertainty, greater is the risk
• the possibility of a loss or damage

*****introduction to risk & insurance

pure risk

• a situation that can only end in a loss
• either loss or no loss
• the risks of an accident, a car theft or earthquake

speculative risk

• a situation that might also end in a gain
• loss or gain or no change
• the risks of stock investment or lottery

fundamental risk

• a risk w/c is so vast in scale that is uninsurable, due to its size and catastrophic potential e.g., earthquake risks in a region known to be prone to earthquake..

particular risk

• a risk w/c is localized in nature e.g., fire in a factory w/c might impact the neighboring buildings but rarely will impact the whole community.

*****insurable vs. uninsurable risk

• if the insurance company has enough statistics to work out the probability of the risk, this is called an insurable risk.
• a risk is uninsurable when an insurance company cannot calculate the probability of the risk. Risk is too widespread (e.g war) or when the loss is incurred due to your own deliberate actions, it cannot be insured.

**** introduction to risk & insurance -process by which a company identifies, measures, reduces and avoids risk wherever possible. Where it is not possible to reduce or avoid a risk, companies assume a certain amount of risk according to their financial strength and then buy either traditional or non-traditional insurance to provide protection for or transfer of remaining risks.

The risk management strategy is then actively monitored to respond to changing circumstances.

Risk management involves identifying and assessing the risks we face. 4 risk management techniques that can be used to eliminate or reduce their exposure to financial risk are: -prevention or avoidance of risk -control of risk -acceptance or risk -transfer of risk

-risk prevention/avoidance: a risk management technique whereby risk of loss is prevented or avoided by not indulging in those activities which have the risk. E.g. A man avoiding bad habits which may pose as health hazard

-risk control: a risk management technique of putting up adequate safety and security measures to minimize the severity of losses. e.g. installing fire fighting equipments in factories or houses or taking adequate vaccinations

-risk rentention: a risk management technique where some losses are planned to be accepted should they occur. It is viable strategy for small risks where the insurance cost would be greater than the total losses sustained over time. This also includes risks that are catastrophic in proportion and cannot be insured against as the premiums would not be feasible. E.g. the risk associated with a war is retained by the insured.

-risk transfer: A risk management technique where the risk on the asset is transferred by the owner against certain amount, such that if anything happens to the asset, the losses would be compensated for by the insurance company

*****Characteristics of insurable risks: for a risk - a potential loss- to be considered insurable , it must have certain characteristics

-the loss must occur by chance

• the loss must be definite (in terms of time and money) -the loss must be significant -the loss rate must be predictable (law of large numbers) -the loss must not be catastrophic to the insurer

insurance products are designed in accordance with basic principles that define which risks are insurable.

the loss must be definite:

• for most types of insurance, an insurable loss must be definite in terms of time (when to pay policy benefits) and amount (how much those benefits should be)
• death, illness, disability and retirement are generally identifiable conditions, insurers typically can determine when a loss occurred -determining the amount of benefits depends on whether the insurance policy is a contract of indemnity of a valued contract

contract of indemnity- an insurance policy under which the amount of the policy benefit payable for a covered loss based on the actual amount of financial loss that results from the loss, as determined at the time of loss. Most medical insurance policies are contracts of indemnity. valued contract- it specifies the amount of the policy benefit that will be payable when a covered loss occurs, regardless of the actual amount of the loss that was incurred. Most life insurance policies are valued contracts.

Peril - cause of the risk eg: when building burns , fire is the peril . when person dies, death is a peril hazard- source of danger eg: wooden building which can catch fire easily

identifiers of loss

exposure: the state of being subject to the loss hazard: conditions that increase the probability of loss peril: the cause of the loss

exposure: house hazard: hurricane peril: the flood

****asssets

• any item of significant economic value owned by an individual or corporation, especially that which could be converted to cash
• every asset whether physical or in form of human being has a value
• assets can either be destroyed or become non-functional which will cause a cause a loss to the owner

Insurance- is a mechanism that helps reduce the impact and effect of such adverse situations or risks.

***insurability of specific risks -standard risks- proposed insureds who have a likelihood of loss that is nit significantly greater than average; traditionally, most individual life and health insurance policies have been issued at standard premium rates. the premium rates that standard risks are charged are called standard premium rates. -preferred risk - proposed insureds who present a significantly less-than-average likelihood of loss; preferred risks are charged lower-than-standard premium rates. -sub standard risk (special class risk)- proposed insureds who have significantly greater-than-average likelihood of loss but are still found to be insurable -declined risk- proposed insureds who are considered to present a risk that is too great for the insurer to cover

what is insurance ? it is a contract for risk transfer where, in exchange for an agreed sum of money (the premium) the insurer agrees to pay (or provide a benefit to, or for) the insured if a particular event should happen. The insurer, after the transfer becomes the risk taker.

**contract law

• a policy if insurance is a contract
• a contract can be defined as a legally enforceable transaction between two or more parties.

6 essential ingredient of a valid contract -capacity -intension to create legal relations -offer -acceptance -consensus ad idem (agreement) -consideration

PREMIUM

• it is a consideration paid by the policy holder, to the insurance company for the "insurance contract" in order to get benefits offered by an insurance policy -a default in premium payment will result into discontinuance of contract. The policy will be treated as lapsed and expected benefits will not be available

types of insurance companies* -life insurance companies: companies cover risks related to human lives, they offer different plans to cover the risks of dying too early as well as the risk of living for too long, -non life insurance companies: cover risks other than those related to human lives except personal accident and health insurance which are pertinent to human lives. Assets either provide monetary benefit (like machines in the factory generating income) or provide convenience (like a car). Hence they need to be insured as assets are exposed to various risks. -reinsurance companies- every insurance company has a threshold to accept risk beyond which if it accepts risk, it becomes a threat to its existence. So once the insurance companies reach that limit, they too transfer some of their risks, The company which accepts risk from insurance companies is called reinsurance company. reinsurance companies take on a definite percentage of the risks from the insurance company in a return for a payment or consideration

***Business functions of an insurance company **

*Product team:

• develops plans with new features and advantages
• calculates the costs associated with the plan
• determines the premium to be charged

*actuary: -mathematically evaluates likelihood of events and risks. -quantifies contingent outcomes associated with uncertain undesirable events -determines the terms and conditions of insurance policies like calculation of premium rates, pension fund management, etc -determines current contributions and investment policies -forecasts future payouts

*marketing team:

• brand promotions and brand building through different media -identifying various channels of product distribution

*sales team: -recruits distributors (agents,brokers,etc.) -reaches out to the customers with the right kind of plan

*new business team: -collects new proposal forms along with other supporting docs -scrutinizes the proposal forms and data -provides customer service

*underwriting team: -assesses risk associated with a proposal -takes decisions about acceptance or rejection of the risks

*agency management: -recruits and trains new agents - calculates and processes commission

*policy servicing team: -facilitates endorsement, policy re-instatement, policy surrender/ termination -handles customer queries complaints as well as handles orphan policies

*Claims management team: -takes care of claim notification, evaluation, processing, determining beneficiary -facilitates claim payment

*investment team - invests the excess of premiums to facilitate profit booking

*Legal team: -provides inputs in product development -creates contracts with agents and customer -handles litigations