Page 19 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Insurance Laws and Practices

Notes
justified. If the insurance policy is taken in the name of the vehicle purchaser, there is no
question of paying the amount straightaway to the financier. [United India Insurance Co
Ltd v/s Inder Singh Chauhan – IV (2006) CPJ 15 (NC)]
Question

Discuss the decisions taken by the National Commission in a group of three members.
Source: http://www.business-standard.com/article/pf/case-studies-on-insurance-claims-111050500049
_1.html

1.7 Summary

Insurance is a form of risk management, primarily used to hedge against the risk of a
contingent or an uncertain loss.

Insurance is defined as the equitable transfer of the risk of a loss, from one entity to
another, in exchange for payment.

An insurer is a company selling the insurance; an insured or policyholder is the person or
entity buying the insurance policy.
At some point, you will probably consider the purchase of life insurance to provide your
family with additional economic security should you die unexpectedly. Generally, life
insurance provides for a fixed benefit at death.
The insurer considers the losses expected for the insurance pool and the potential for
variation in order to charge premiums that, in total, will be sufficient to cover all of the
projected claim payments for the insurance pool.
The risk of any unanticipated losses is transferred from the policyholder to the insurer
who has the right to specify the rules and conditions for participating in the insurance
pool.

Indian insurance companies offer a comprehensive range of insurance plans, a range that
is growing as the economy matures and the wealth of the middle classes increases.
The Insurance Regulatory and Development Authority Act of 1999 brought about several
crucial policy changes in the insurance sector of India. It led to the formation of the
Insurance Regulatory and Development Authority (IRDA) in 2000.
IRDA has the responsibility of protecting the interest of insurance policyholders.
The Authority takes up with the insurers any complaint received from the policyholders
in connection with services provided by them under the insurance contract.
Economic activity and growth are greatly facilitated by the existence of the market in
mobilizing the saving and allocating them among competing users.

Insurance as a part of the financial system provides valuable services to those affected by
various risks or contingencies.

1.8 Keywords

Accident: An event definite in time and place and is unintended, unforeseen, unexpected and one
time is called as an accident.
Financial System: Financial system may be defined as set of institutions, instruments and markets,
which gather savings and channel them to their most efficient use.

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