pce part a 1 the basic of insurance n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
PCE – Part A(1) The Basic Of Insurance PowerPoint Presentation
Download Presentation
PCE – Part A(1) The Basic Of Insurance

Loading in 2 Seconds...

play fullscreen
1 / 73

PCE – Part A(1) The Basic Of Insurance - PowerPoint PPT Presentation


  • 133 Views
  • Uploaded on

PCE – Part A(1) The Basic Of Insurance . Revision 01 (25/11/2011). INTRODUCTION OF INSURANCE. CHAPTER 1. UNFORTUNATE EVENTS OF RISK. Need for Income. Sources of Income. How Insurance Works?. Some forms of risk Pooling of Risk Concept of Insurance

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'PCE – Part A(1) The Basic Of Insurance' - ismail


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
pce part a 1 the basic of insurance

PCE – Part A(1) The Basic Of Insurance

Revision 01 (25/11/2011)

unfortunate events of risk
UNFORTUNATE EVENTS OF RISK

Need for Income

Sources of Income

how insurance works
How Insurance Works?
  • Some forms of risk
  • Pooling of Risk
  • Concept of Insurance
  • Fund Has to Meet
  • Fund Can Become Deficit
  • Premium have to be adequate in Competitive Market
the law of large numbers
The Law of Large Numbers
  • Large number of similar loss exposure
  • Loss exposure must be independent
  • Random or chance occurrence of losses
what is insurance
What is Insurance?
  • Protection against financial loss caused by fortuitous events
  • Essential features of Insurance
      • Economic institution
      • Based on principle of mutuality or cooperation
      • Objective is to accumulate funds to pay claims
      • Only certain risk can be insured
functions of insurance
Primary Function

Equitable distribution of the financial losses of the few who are insured among the many insured

Secondary Functions

  • Cost stabilization
  • Stimulates business enterprise
  • Removes fear and worries
  • Reduction of losses
  • Means of saving
  • Sources of capital for investment
  • Provides employment for many
Functions of Insurance
slide8

Classes of Insurance

Life

General

Premature Death

Motor Vehicles

Retirement

Ship

Sickness

Building

Disability

Liability

Personal Accident

history of insurance
History of Insurance
  • Earliest Beginning of Insurance
  • Marine Insurance
  • 1706 – Amicable Society for a Perpetual Assurance
  • 1762 – Equitable Assurance – Level Premium System
insurance in malaysia
Insurance in Malaysia
  • 18th Century – British System
  • Principal document governing the conduct of insurance business in Malaysia
      • Insurance Act 1963
      • Insurance Act 1996
role of an insurance agent
Role of an Insurance Agent
  • Bring financial relief

(aggrieved dependents)

  • Bring financial relief

(property loss)

  • Inculcate the discipline of savings
  • Provide other forms of insurance related services to the public.
slide12

CHAPTER 2

NATURE OF RISK & RISK MANAGEMENT

slide13

Perils Losses

Fire Property

Profit/ Revenue

Lives (at times)

Illness Future Earnings

Medical Expenses

Negligence Court Awards

Legal Expenses

Concept of Insurance

slide14

Hazard

Physical Hazard

Physical chance

that increases the

condition of loss

Moral Hazard

Character Defect in

an individual that increases

the chance of loss

Wooden Construction

Dishonesty

Carelessness

Unreasonableness

Poor mechanical condition of a car

Concept of Insurance

slide15

Basic Categories of Risk

  • Pure
  • (Loss or No Loss)
  • Speculative
  • (Profit, Loss or No Loss)
  • Fundamental

(Entire Economy)

  • Particular

(Individuals)

methods of handling risk
Methods of Handling Risk

Risk Avoidance

Loss Control

  • Loss Prevention
  • Loss Minimization

Risk Retention

Risk Transfer

  • Non Insurance Contract
  • Insurance Contract
characteristic of insurable interest
Characteristic of Insurable Interest
  • Financial Values
  • Large number of similar risk
  • Pure risk only
  • No catastrophic losses
slide19

Characteristic of Insurable Interest

  • Fortuitous losses
  • Insurable interest
  • Legal and not against public policy
  • Reasonable Premium
slide20

CHAPTER 3

THE BASIC PRINCIPLES OF INSURANCE

&

AN INTRODUCTION TO TAKAFUL

principles of insurance
Principles of Insurance
  • Insurable Interest
  • Utmost Good Faith
  • Indemnity
  • Subrogation
  • Contribution
  • Proximate Cause
insurable interest

Fire Insurance

100K

Insurable Interest

Subject Matter of Insurance

Subject Matter of the Insurance Contract

insurable interest1
Insurable Interest
  • When Must Insurable Interest Exist?
  • Who Has Insurable Interest?
slide24

UTMOST GOOD FAITH

Ordinary Commercial Contract

Insurance Contract

Uberrima Fides

Caveat Emptor

Disclose fully and accurately

ALL MATERIAL FACTS

slide25

NON DISCLOSURE

MISREPRESENTATION

BREACHES OF UTMOST GOOD FAITH

VOIDABLE CONTRACT

UTMOST GOOD FAITH

indemnity
INDEMNITY
  • General Insurance- Contracts of Indemnity
  • Life & PA are not contracts of Indemnity
subrogation
SUBROGATION

An insured who has indemnified an insured for a loss may exercise the insured’s rights to claim from the third party in respect of the loss

proximate cause
PROXIMATE CAUSE
  • Which amongst many cause of losses can be taken to be the dominant cause of loss?
slide30

PRINCIPLES OF TAKAFUL OPERATION

TAKAFUL

TABARUK

MUDHARABAH

the insurance market

THE INSURANCE MARKET

Chapter 4

CHAPTER 4

slide32

INSURANCE MARKET: MAIN COMPONENTS

SELLERS

INTERMEDIARIES

BUYERS

slide33

MAIN COMPONENTS- BUYERS

  • Individuals
  • Association
  • Societies
  • Small Business Enterprises
  • Corporation
  • Public Enterprises
slide34

MAIN COMPONENTS: SELLERS

  • Life Insurer
  • General Insurers
  • Composite Insurers
  • Proprietary Company
  • Co-operative Society
slide36

OTHERS COMPONENTS:SERVICE SPECIALIST

  • Doctors
  • Hospitals
  • Engineers
  • Marine and Cargo Surveyors
  • Loss Adjuster / Investigators
  • Loss Assessors
slide38
Administration

Electronic Data Processing (EDP)

Accounting

Investment

Agency or Sales

ORGANIZATION STRUCTURE

slide39

ORGANIZATION STRUCTURE

  • Marketing
  • Underwriting
  • Claims
  • Customer Service
  • Actuarial
slide40

Insurance Related Institution:Generalinsurance

  • Motor Insurers’ Bureau (MIB)
  • Insurance Mediation Bureau (IMB)
  • Persatuan Insurance Am Malaysia (PIAM)
  • Insurance Brokers’ Association of Malaysia (PIAM)
  • Association of Malaysia Loss Adjustor (AMLA)
slide41

Insurance Related Institution : Life Insurance

  • Life Insurance of Association of Malaysia (LIAM)
  • National Association of Malaysia Life Financial Advisors (NAMLIFA)
  • The Actuarial Society of Malaysia (ASM)
  • The Malaysian Insurance Institute (MII)
consumer protection statutory regulations

CONSUMER PROTECTION & STATUTORY REGULATIONS

CHAPTER 5

AT & D- Center for Learning Excellence

self regulation
SELF REGULATION

OBJECTIVES:

  • Instill Discipline
  • Protection to Consumer
related association
PIAM

IBAM

AMLA

LIAM

RELATED ASSOCIATION

General Insurance

Life Insurance

statutory regulation
STATUTORY REGULATION
  • Enforcement of Insurance Act 1996 by Director General of Insurance
  • Purpose of Regulation:
    • Protection of Public Interest
    • Promotion of Fairness & Equity
    • Fostering of Competence
    • Playing a Development Role
the companies act 1965
THE COMPANIES ACT 1965

THE PRINCIPAL IS REQUIRED TO:

  • Prepare & submit annual accounts
  • Methods of valuing assets
  • Method of valuing liabilities
  • Provision for depreciation
the insurance contract

CHAPTER 6

THE INSURANCE CONTRACT

AT & D- Center for Learning Excellence

essentials of an insurance contract
ESSENTIALS OF AN INSURANCE CONTRACT
  • Intention to create a legal relationship
  • Offer & Acceptance
  • Consent- Consensus Ad Idem
  • Consideration
  • Legal capacity to contract
  • Legality of the contract
slide49

DEFECTIVE CONTRACT

  • Can be classified into three fold:
  • VOID
  • VOIDABLE
  • UNENFORCEABLE
slide50

DEFECTIVE CONTRACT

VOID

  • Law held to be no contract at all
  • Totally invalid
  • Cannot be enforced in a court of law
slide51

DEFECTIVE CONTRACT

VOIDABLE

  • Valid at the beginning
  • Remain valid until the aggrieved party exercises to treat it void
slide52

DEFECTIVE CONTRACT

UNENFORCEABLE

  • Failure to comply with legal formalities
slide53

CHAPTER 7

LAW OF AGENCY

AT & D- Center for Learning Excellence

authority of an agent
AUTHORITY OF AN AGENT
  • Express Authority
  • Implied Authority
  • Usual Authority
  • Apparent or Ostensible Authority
  • Ratification
slide55

CLASSES OF AGENT

  • SPECIAL AGENT
  • GENERAL AGENT
  • UNIVERSAL AGENT
slide56

DUTIES OF AN AGENT

  • NOconflict of interest
  • DO NOTdisclose confidentialinformation
  • DO NOTtake any secret profit or bribe
  • DO NOTdelegate duties to sub-agent
obligations of the principal
Pay remuneration & expenses as agreed or, falling agreement as is customary; or falling a custom, to pay what is reasonable

Indemnify the agent against consequences of any act lawfully done, within his authority, on behalf of his principal

OBLIGATIONS OF THE PRINCIPAL
termination of agency
TERMINATION OF AGENCY
  • REVOCATION
  • RENUNCIATION
  • COMPLETION
  • EXPIRATION
termination of agency1
TERMINATION OF AGENCY
  • MUTUAL AGREEMENT
  • DEATH, LUNACY OR BANKRUPTCY
  • OPERATION OF LAW
characteristics of insurance agents
CHARACTERISTICS OF INSURANCE AGENTS

Insurance agents are agents of whom?

  • Insurer ~“Qui Facit Per AliumFacit Per Se”
  • Insured ~“Assisting clients on filling up the
  • application form”
the insurance act 1996 section 151
THE INSURANCE ACT, 1996 [SECTION 151]

“A person who is authorized by an insurer to be its insurance agent and who solicits or negotiates a contract of insurance in that capacity shall be deemed, for the purpose of the formation of the contract, to be the agent of the insurer and the knowledge of that insurance agent shall be deemed to be the knowledge of the insurer”

Law of Agency p.p 7/6

slide62

THE INSURANCE ACT, 1996 [SECTION 151]

shall not apply…..

Where there is collusion or connivance between the insurance agent and the proposer in the formation of the contract of insurance

slide63

THE INSURANCE ACT, 1996 [SECTION 151]

shall not apply…..cont’

Where a person has ceased to be an insurance agent of a insurer and it has taken reasonable steps to inform, or bring to the knowledge of, potential policy owners and the public in general of the fact of such cessation

slide64

THE INSURANCE ACT, 1996 [ SECTION 150 (4) ]

No licensed insurer or insurance agent, in order to induce a person to enter into or offer to enter into a contract of insurance with it or through him…

shall make a statement, which is misleading, false or deceptive, whether fraudulently or otherwise

slide65

THE INSURANCE ACT, 1996 [ SECTION 150 (4) ]

shall fraudulently conceal a material fact; or

in the case of an insurance agent,, use sales brochures or sales illustration not authorized by the licensed insurer

PENALTY: ONE MILLION RINGGIT

characteristics of insurance agents1
CHARACTERISTICS OF INSURANCE AGENTS
  • PREMIUM COLLECTIONS
      • E.g. Home service life policy
characteristics of insurance agents2
CHARACTERISTICS OF INSURANCE AGENTS
  • THE CREATION OF THE RELATIONSHIP
  • THE EXTENT OF THE AGENT’S AUTHORITY
marketing after sales services
MARKETING & AFTER SALES SERVICES

CHAPTER 8

AT & D- Center for Learning Excellence

sales vs marketing
Often do not meet consumer needs

Developed & Marketed with the consumers’ need in mind

Sales Oriented

Products

Market Oriented

Products

Vs.

SALES VS. MARKETING
functions of the marketing department
Planning & Controlling

Market Identification

Product Development

Pricing

Selection of Distribution Channel

Promotion

FUNCTIONS OF THE MARKETING DEPARTMENT
slide71

Prospecting

Sales

presentation

THE SELLING PROCESS

Sales

Interview

Closing

Handling

Objections

consumer buying decision process
CONSUMER BUYING DECISION PROCESS

Problem Recognition

Information Search

Evaluation of alternative polices

Purchase

Post-Purchase evaluation

personal selling
PERSONAL SELLING

Agent has to gain expertise in:

  • Product knowledge
  • Market selling
  • Selling techniques
    • Order processing
    • Creative selling
    • Missionary selling