Insurance examinations - Tips on insurance - Part-001

01. What do you know by the history of insurance?

·         The idea of insurance was mooted out during 14^th century

·         Marine insurance is the oldest form of insurance throughout the world

·         Fire insurance and life insurance were subsequently undertaken by insurers

·         Fire insurance originated in Germany during 16^th century

·         Life insurance started in England during 16^th century

·         The first life that was insured was of Mr. William Gybbons on 18.6.1653

·         The first registered office of life was in England with the name Hand in Hand society in 1696

·         Life insurance was started during the year 1818 in Bengal Presidency

·         The name of the company was Orient Life Assurance Company

·         Bombay Life Assurance Company was started in 1823

·         Triton insurance company was commenced for general insurance in 1850

·         During 1871, Bombay Mutual Life Assurance Society was established

·         During 1874 Oriental Government Security Life Assurance Co Ltd was established

·         The first company which transacted general insurance business was the Indian Mercantile insurance company limited

·         During 1912, in order to regulate  insurance the Indian Life Assurance companies act was formulated

·         During the year 1928, the Indian Insurance companies act was enacted

·         During 1938, there were 176 insurance companies in India

·         The image of insurance was tainted on account of frauds during 1920 and 1930

·         Insurance act was passed during 1938

·         245 Indian and foreign life insurers and provident societies were under one nationalized corporation during 1956

·         Life Insurance Corporation was formed by an act of Parliament vide LIC act 1956

·         The initial capital for LIC was Rs. 5 crore

·         During 1968, insurance act was amended to regulate investment and also set up of tariff advisory committee

·         Non life insurance business/general insurance remained with private sector till 1972

·         There were 107 companies involved in the business of general operations

·         General Insurance business was nationalized in India as per General Insurance Business (Nationalisation) act 1972 with effect from 1.1.1973

·         107 private insurance companies were amalgamated and grouped into four companies namely – National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance Company

·         The above companies were the subsidiaries of General Insurance Company – GIC

·         Malhotra committee was formed during the year 1993 headed by former Finance Secretary and RBI governor R N Malhotra

·         During the year 1999, IRDA act was passed and paved way for privatization of insurance sector in India

·         During the year 2002, IRDA act and insurance act have been amended

02. What is the present level of insurance industry in India?

·         Insurance business in India can be classified into Life Insurance business and General Insurance Business

·         LIC of India is taking care of life insurance business

·         General Insurance Corporation of India namely GIC Limited is taking care of general insurance business

·         United India Insurance Company, Oriental Insurance Company, New India Assurance Company and National Insurance Company are part and parcel of General Insurance Corporation of India

·         Insurance sector in India was liberalized in March 2000 by the formation of IRDA

·         IRDA means Insurance Regulatory and Development Authority

·         As on 2,2.2011, there were 23 life insurance companies and 24 non life insurance companies in the market.

03. What are the concepts of Insurance?

·         Insurance business can be divided in four classes namely: Life Insurance, Fire insurance, Marine insurance and Miscellaneous insurance

·         Life insurers transact life insurance business

·         General insurers transact the rest

·         No composites are permitted as per law

04. What are the specific principles of insurance?

·         The specific principles of insurance are – uberrima fida(utmost good faith); insurable interest; indemnity; proximate clause; subrogation

05. What are the benefits of life insurance?

·         The benefits of life insurance are – protection against untimely death, saving for old age, encourage savings, initiates investment, credit worthiness, social security, tax benefits.

06. What are the objectives of nationalization of insurance industry?

·         To ensure general insurance business to the best advantage to the community

·         To promote competition in the economy

·         To prevent monopoly growth and concentration of wealth

·         To spread the activities over geograp0hical frontiers

·         To innovate new products to suit the requirements of the different sections of the population

·         To meet the social objectives by formulating policies for weaker sections

07. What are the major recommendations of Malhotra committee?

·         Insurance intermediaries

·         Surveyors

·         Product pricing

·         Rural insurance

·         Regulation of insurance business

·         Liberalisation

·         Investment

·         Restructuring of general insurance

·         Detariffing

08. What do you mean by Insurance Institute of India?

·         Insurance Institute of India was established in 1955

·         The examinations conducted by Insurance Institute of India are –

·         The Inspector’s examination (general insurance)

·         Certificate of insurance salesmanship (agents)

·         Licentiate, associate and fellowship

·         Pre recruitment test to insurance agents

09. Persons have insurance interest in which types of properties?

·         Persons who have insurance interest in different types of properties are as detailed below:

·         Immovable properties

·         Movable properties

·         Business

·         Ships

·         Commencement of risk

·         Cause proxima

·         Payment of premium

·         Right to contribution

·         Mitigation of loss

10. What are the different classifications of insurance?

·         Life insurance

·         Non life insurance – namely fire insurance business, marine insurance business, miscellaneous insurance business

·         Retail insurance

·         Corporate insurance

·         Coinsurance

·         Universal insurance

·         Direct insurance

·         Reinsurance

11. What are the various acts connected with insurance?

·         Indian contract act 1872

·         The Insurance company act 1938

·         General Insurance Business (Nationalisation) act 1972

·         Life Insurance act 1956

·         IRDA act 1999

·         Consumer protection act 1986

·         Foreign exchange maintenance act 1999

·         Motor vehicles act 1988

·         Marine Insurance act 1963

·         Married women’s property act 1874

12. What do you mean by actuary?

·         Actuary is a technical expert who combines an understanding of the risks involved in insurance

·         He also understands the mathematical techniques to develop insurance products to manage these risks

·         He advises on pricing the insurance products

·         He calculates the reserves to be held for meeting the financial risks of the insurance products

·         IRDA has made it compulsory for any life insurance company to appoint an actuary

·         Without actuary insurance companies cannot carry on their life insurance business

13. What are the essentials of a valid contract?

·         Offer and acceptance

·         Intention

·         Consideration

·         Capacity of parties

·         Free consent

·         Lawful object

·         Agreement not declared valid

·         Certain

·         Legal formalities

14. What are the different kinds of contract?

·         Voidable contract

·         Void agreement

·         Void contract

·         Illegal agreement

·         Express contract

·         Implied contract

·         Executed contract

·         Executor contract

·         Unilateral contract

·         Bilateral contract

15. What are the various types of life insurance policies?

·         Term insurance

·         Whole life policy

·         Endowment

·         Health insurance

·         Joint life policy

·         With profit

·         Without profit

·         Double accident benefit

·         Annuity policy

·         Policies for women

·         Pension insurance

·         Postal life insurance

·         Rural insurance plans

·         Group life insurance

·         Insurance policies for children

·         Money back policy

·         Unit Linked Policy

16. What do you mean by term insurance?

·         Term insurance offers pure risk cover without any element of saving for a given term.

·         No benefits are available to the policyholder till his death

17. What do you mean by whole life insurance?

·         The premium is payable for the life time of the assured or for a lesser period.

·         Sum assured is payable only on the death of the assured

18. What do you mean by endowment plans?

·         This is considered to be the most popular plan of life assurance.

·         It covers the life of the assured in the event of his early death

·         It also provides for repayment of a lump sum to the assured if he survives on the date of maturity

19. What do you mean by money back policy?

·         It provides life insurance cover

·         Periodical payments are also paid to the assured

·         The policyholder need not wait to get the returns till the date of maturity

20. What do you mean by children’s assurance plan?

·         The life of a child can be covered from the age of 7.

·         Once the child becomes a major he can continue the policy

How a teacher differs from the trainer?

During the course of a discussion,  the following was the topic selected by the forum members:

Why is training so important for a job/on the job after undergoing so many years of education ? Does it mean that the trainers are doing better job than the teachers ?

The valid points emanated from three members are reproduced here below for the information of the readers:

Member 01:

Necessarily there is a difference between a teacher and the trainer.   It is like working in a hotel. A person who manages the kitchen is called as the chef and the person who manages the entire administration is called as the “manager”. The same person can be a chef at one point of time while he accepts the role of a chef and a manager while he assumes the role of a manager; however, the individual remains the same.

In the instant case, the teacher fills the knowledge gap. He is instrumental in enabling the students  understand more on the subjects chosen. In the case of a trainer, he enables the trainee to acquire certain competencies. Unless a person acquires the necessary competencies like communication ability, leadership quality, time management, inter personal relationship, problem solving capability, emotional skills etc, whatever may be his academic caliber he cannot justify the post he occupies. It may be managing a retail shop – where he has to handle the difficult customers, manage time to service the customers promptly and efficiently.

Member: 02

As earlier said, the same person can be a teacher and the trainer. While the individual  performs the role of a teacher, he concentrates much on the subjects he has to handle rather than the behavioural aspects of the student. He takes much care in delivering the inputs rather than the reactions on the part of the students except the learning inquisitiveness in them. This is on account of the facts that he may not be having required time and to mention specifically, as a teacher he has to necessarily make a thorough research over the subjects he handles rather than personality sitting in front of him .

In the case of a trainer, he has no subjects to teach. He has only personalities in front of him to be trained. He has no books to read; however, he has individuals to be motivated, geared up and tuned up.  Towards training the personalities he  focuses his in depth study in reading  mindset of the trainees and  employs various tools and techniques by which the students are driven out from their present mindsets. He necessarily focuses more on communication ability, leadership quality , problem solving ability , time management, logical thinking etc.

When the student wants to learn a subject, his role is said to be a student and when he wants to learn his own competencies and soft qualities, he is called as a trainee and while the teacher makes an earnest attempt in enabling the student understand the subjects, the trainer enables the trainee understand his own traits hidden in the form of strengths and weaknesses.

Member: 03

In a sense dice are loaded against the teachers; however, in favour of the trainers. A teacher has to cover a variety of topics. It is almost like everything under the sun. Most of the business schools especially in countries like India expect the students to cram as many as twelve to fifteen courses in a semester during the course of acquiring one MBA qualification. This increases the burden not only on the part of the students; however,   the teachers as well. Normally they are always sailing on the comparison mode with their counterparts in other business schools. The time available for completion of these types of exercises is very limited. Moreover, teachers by virtue of the qualities acquired through their profession rarely possess real life experiences to highlight the students in pursuit of acquiring any soft qualities.

A trainer on the other hand has fairly a narrow and focused set of items in front of him to cover. These are normally related to the immediate job requirements of the students. The trainer needs to have varieties of live-wire examples to drive home the trainees in understanding the required competencies and the lab or practice sessions which are more valuable to bring in requisite skills are also likely to be more focused in case of company-organised or facilitated programmes.

In the case of industry-oriented  training programmes, the focus is requirement based and confined to limited walls. This is almost a luxury that the teacher in a school or college environment cannot afford.