MEANING
FUNCTIONS
OBJECTIVES
ROLE
BANKING AND INSURANCE
•
PRINCIPLES OF INSURANCE
•
MEANING
1) INSURANCE MAY
BE DEFINED AS A FORM OF CONTRACT BETWEEN TWO PARTIES WHEREBY ONE PARTY INSURER
AGREES TO COMPENSATE THE OTHER PARTY(INSURED) AGAINST A LOSS(WHICH MAY OR MAY
NOT ARISE) AGAINST A PAYMENT OF A CONSIDERATION(PREMIUM)
2) FUNCTIONAL
DEFINITION:- INSURANCE IS A PROCESS IN WHICH UNCERTAINTIES ARE MADE CERTAIN.
3) LEGAL
DEFINITION:-INSURANCE IS A CONTRACT IN WHICH A SUM OF MONEY IS PAID BY THE
ASSURED IN CONSIDERATION OF THE INSURER’S INCURRING THE RISK OF PAYING A LARGE
SUM UPON A GIVEN CONTINGENCY.
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IMPORTANT TERMS
1) INSURED:- HE
IS PERSON WHO SEEKS PROTECTION.
2) INSURER:-
PARTY OR THE INSURANCE COMPANY WHO UNDERTAKE THE RISK. WHO PAYS THE MONEY ON
THE HAPPENING OF A CONTINGENCY.
3) PREMIUM: IS
THE AMOUNT PAID BY THE INSURER TO THE INSURER
4) COMPENSATION:-IS
THE AMOUNT PAID BY THE INSURER TO INSURED ON THE HAPPENING OF DEFINED CONTINGENCY.
5) INSURANCE
POLICY:-INSURANCE CONTRACT IN WHICH TERMS AND CONDITIONS OF INSURANCE ARE
DEFINED
6) INSURED
AMOUNT:- MAXIMUM AMOUNT WHICH THE INSURED MAY GET IN CASE OF LOSS,
7) RISK : IT
REFERS TO UNCERTAINTY ABOUT LOSS
8) CONTINGENCY:-
HAPPENING OR NON HAPPENING OF AN EVENT ON WHICH THE LOSS DEPENDS
9) PERIL : IT IS
AN EVENT THAT HAS CAUSED A PERSONAL OR PROPERTY LOSS
•
FEATURES OF INSURANCE
1) IS A CONTRACT
BETWEEN THE INSURER AND INSURED. WRITTEN FORM AND IT MUST CONTAIN ALL THE
ESSENTIALS OF A VALID CONTRACT UNDER INDIAN CONTRACT ACT OF 1872
2) PREMIUM PAID
TO THE INSURER IS THE CONSIDERATION AGAINST THE COVERAGE OF THE RISK
3) SHARING OF
FINANCIAL RISK
4) INSURANCE IS
COOPERATIVE DEVICE BY WHICH RISKS ARE DISTRIBUTED AMONG LARGE NUMBER OF
PERSONS.
5) BASE ON THE
LAW OF
6) INSURANCE IS
PLAN IN WHICH LOSSES OF UNCERTAIN EVENTS ARE CONSIDERED.
7)
FEATURES OF INSURANCE
8) THE INSURANCE
CONTRACT IS BASED ON THE CONCEPT OF UBERRAMAE FIDLE I.E GOOD FAITH
9) CONTRACT OF INDEMNITY:-ALL THE CONTRACTS OF INSURANCE ARE CONTRACTS OF INDEMNITY EXCEPT
LIFE INSURANCE. THE PAYMENT IS MADE ON THE HAPPENING OF A CERTAIN CONTINGENCY INSURED.
10) PREMIUM
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FUNCTIONS OF INSURANCE
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PRIMARY FUNCTION:-
1) INSURANCE
PROVIDES CERTAINTY BY REDUCING THE RISK
2) RISK SHARING
3) INSURANCE
PROVIDES SECURITY TO THE PERSON AGAINST THE RISKS OF UNCERTAIN EVENTS
4) INSURANCE
PROVIDES PROTECTION TO ASSETS OF THE BUSINESS HOUSE
•
SECONDARY FUNCTION:
1. PREVENTION OF
LOSS: THE INSURANCE COMPANY ASSIST FINANCIALLY TO THE HEALTHY ORGANIZATION IN
SECURING THEIR LOSSES AND ADVICE TO ADOPT VARIOUS METHODS AND TECHNIQUES WHICH
HELP IN REDUCING THE LOSSES
2. PROVIDES
CAPITAL TO THE INDUSTRY BY INVESTING IN THE SHARE CAPITAL ,PROVIDING MEDIUM TERM AND LONG TERM LOANS TO THE INDUSTRIES
3. IMPROVES
EFFICIENCY:BY REDUCING THE FEAR OF LOSSES
4. ECONOMIC
PROGRESS
5. JUDGING THE
PROFITABILITY OF MAJOR PROJECTS
•
OTHER FUNCTIONS
1. EXPANSION OF
FOREGIN TRADE
2. ENCOURAGE
SAVING
3. CHECK
INFLATION
4. FEELING OF
SECURE AND RELAXED
5. CREDIT
FACILITIES
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ROLE AND OBJECTIVE OF INSURANCE
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RELEVENCE TO INDIVIDUAL:
1. INSURANCE
PROVIDES SECURITY AND SAFETY
2. AFFORDS PEACE
OF MIND
3. PROTECTS
MORTGAGED PROPERTY
4. INSURANCE THE
ELIMINATES THE DEPENDENCY
5. LIFE
INSURANCE FULFILLS THE VARIOUS NEEDS:-
a. FAMILY NEEDS
b. OLD AGE NEEDS
c.
READJUSTMENT NEEDS
d. SPECIAL NEEDS
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ROLE AND OBJECTIVE OF INSURANCE TO BUSINESS
•
UNCERTAINTY OF BUSINESS IS REDUCED
•
INCREASE IN EFFICIENCY OF BUSINESS
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KEY MAN IDENTIFICATION
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ENHANCEMENT OF THE CREDIT
•
BUSINESS CONTINUATION
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WELFARE OF THE EMPLOYEE
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ROLE AND OBJECTIVE OF INSURANCE TO THE SOCIETY
1. WEALTH OF THE
SOCIETY IS PROTECTED
2. ECONOMIC
GROWTH OF THE COUNTRY
3. REDUCTION OF
INFLATION
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