Unit Ten

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Unit Ten

• Insurance Market
• and Claims Setting

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Insurance Market
The structure

• sellers the insurance companies and Lloyds
• underwriting members
• buyers the general public, industry and
• commerce, and public authorities
• middlemen the insurance intermediaries
• and agents, and consultants

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London insurance market

• The companies that are members of the
• Institute of London Underwriters (ILU)
• London Insurance and Reinsurance
• Market Association (LIRMA)
• PI Clubs (Protection and Indemnity Club)

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• Fringe companies (companies that operated on the
  fringes of Lloyds Market)
• Contact offices (offices of some foreign
  companies maintained in London to accept any
  business offered to them by brokers for the head
  office)

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What have led to a rationalization with insurance?

• Over capacity
• Fall in stock markets
• Global terrorism
• The growth of the compensation culture
• in the UK

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General Procedures for Notification of Claims

• The first and most important point to make is
  that the notification of a claim is the
  responsibility of the insured.
• The means by which claims are normally intimated
  is the claim form.

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• The procedure for notification and handling of
  claims under life assurance policies is quite
  different.
• These procedures often involve the use of the
  courts.

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Property Insurance Clauses
1.The Insured Property

• The property insured hereunder shall refer
• to all properties specified in the Policy and the
  
• Schedule attached hereto either owned by the
• Insured or held by him in trust or on joint
• account with others for which he is responsible.

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2.Properties Insured by Special Agreement

• Unless specially agreed upon between the
• insured and the company and stipulated in the
• policy, gold, silver, pearls, diamonds, precious
• stones, postage stamps, ancient coins, antiques,
• articles of virtue, ancient books and paintings
• and work of fine art and computer systems
• records shall not be covered under the Policy.

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• Under no circumstances shall securities,
  bills,
• banknotes, documents, account books, drawings,
• suns and ammunition and explosives be covered
• hereunder.

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3.Scope of Cover

• Fire, thunder-and-lightning and explosion or
  bursting of water pipes
• Storm, hurricane, typhoon, cyclone, flood,
  seaquake, hailstorm, rockslide, avalanche,
  earthquake, volcanic explosion, subsidence of
  ground and subterranean fire
• Crashing aircraft and parts or articles falling
  from aircraft.

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4. Exclusions

• loss of or damage to the insured properties
  caused by war, warlike operation, act of
  hostilities, armed conflicts, confiscation,
  requisition, strike and riot
• loss of or damage to the insured properties
  caused by intentional act and actual fault of the
  Insured and his representative

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• loss of or damage to the insured properties
  directly or indirectly arising from nuclear
  reaction, nuclear radiation or radioactive
  contamination
• loss of or damage to the electric equipment or
  apparatus due to overloading, overvoltage,
  electric line contact, arcing, leakage of
  electricity, short-circuiting, electricity
  discharged from atmosphere and other electric
  phenomena

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• loss of or damage to the insured property
  occasioned by its own fermentation, natural
  heating, spontaneous combustion or by its
  undergoing any heating or drying process
• loss or damage arising from the burning of the
  property by order of any public authority
• loss or damage caused by or arising from
  suspension of production or interruption of
  business and other indirect losses

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• loss of or damage to the insured property caused
  by storms whilst it is stored in the open or
  under the shed made of reeds, cloth, straws or
  asphalt felt
• other accidents or natural calamities not covered
  under Article 3 hereinabove.

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5.Treatment of Claim

• In the event of any loss or damage which might
  give rise to a claim hereunder, the Insured shall
  notify the Company immediately and furnish
  detailed information about the loss or damage to
  the Company in writing.

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• The Insured shall take all necessary measures to
  minimize loss or damage to the least extent and
  the Company shall pay for the expenses reasonably
  incurred in this respect up to the sum insured of
  the items sustaining loss or damage.

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• In lodging a claim, the Insured shall submit to
  the Company the Policy, a claim list and all
  other necessary document. The time of validity of
  claim shall not exceed a period of one year
  counting from the date of loss.

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• In case of a loss of or damage to the insured
  property falling within the scope of the Policy,
  the indemnity shall be based upon the market
  value of the property prevailing at the time of
  loss. In case the market value of the property so
  damaged is lower than the sum insured, the claim
  shall be settled on its market value.

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• In case its market value is in excess of the sum
  insured hereunder, the difference shall be held
  as the self-insurance of the Insured and the
  Company shall only be liable to pay such
  proportion as the sum insured bears to the market
  value of the property so lost or damaged. If the
  property is insured severally in items, the
  provision of this clause shall be applicable to
  each of them.

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• If the insured property sustains a partial loss,
  the Company may either effect a cash settlement
  based on the depreciation of the damaged
  property, or alternatively pay for the repairs
  cost for restoring the damaged property to the
  nearest condition existing immediately before the
  loss.

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• If the claim for a loss to the insured property
  is settled on a total loss basis, the salvage
  value shall be deducted from the indemnity paid
  by the Company.

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• When a claim has been settled, the sum insured
  shall be reduced by the amount so settled and an
  endorsement to this effect be issued by the
  Company but no return premium therefore shall be
  made.

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• If at the time of any loss or damage to the
  insured property, there is any other subsisting
  insurance or insurances, whether effected by the
  Insured or by any other person or persons,
  covering the same property, the Company shall not
  be liable to pay or contribute more than its
  ratable proportion of such loss or damage.

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6.Other Matters

• The Insured shall take reasonable measures to
  avoid occurrence of accidents to the insured
  property and pay sufficient attention to and put
  into practice the justified recommendation for
  prevention of loss put forward by the
  representative of the Company.

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• In case of any change in the Insured Property or
  increase in the risk exposure, the Insured shall
  forthwith advise the Company in writing for the
  latter to endorse the Policy accordingly. If the
  Insured fails to do so, the Company shall not be
  liable for any loss or damage resulting from such
  change or increased risk exposure.

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• This insurance may be either terminated at any
  time the request of the Insured or cancelled at
  any time at the option of the Company by giving a
  15-day prior notice to the Insured. In the former
  case the Company shall retain a premium
  calculated on short period basis for the time the
  Policy has been in force and in the latter case
  such premium shall be calculated on pro-rata
  daily basis.

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• All disputes under this insurance arising between
  the Insured and the Company shall be settled
  through friendly negotiation. Where a settlement
  fails after negotiation, such dispute shall be
  submitted to arbitration or to court for legal
  action. Unless otherwise agreed arbitration or
  legal action shall be carried out in the place
  where the defendant is domiciled.