1. Insurance and Risk Management
General Insurance
Marine insurance
-- Oldest form of insurance
It covers
-- cargo insurance
-- hull insurance
It has its origin to London where Lloyds Underwriters evolved
“Ship and Goods Policy”.
Even though it originally started to cover the risk of loss due to
voyage in ocean, now marine insurance covers the following:
Export and import of goods by ocean going vessels
Coastal shipments by steamers, sailing vessels, mechanised boats
Shipments by inland vessels or country crafts or barges
Consignments by rail, road, airways and post incidental to the above.

2. Insurance and Risk Management
General Insurance
Marine insurance
Marine Insurance is governed by Marine Insurance Act 1963.
It is governed by the basic principles of insurance namely
Utmost good faith
Insurable interest
Indemnity
Subrogation
Contribution and
Proximity
Let us briefly discuss the above.

3. Insurance and Risk Management
General Insurance
Marine insurance
Utmost good faith
The insured is supposed to disclose in the proposal all material facts
relevant to the contract which he knows and he ought to know.
2. Insurable interest
The insured must have a legal relationship to the subject matter of
insurance and stand benefited by its safety.
3. Indemnity
Indemnity means security or protection against loss or damage.
The insurer provides compensation for loss only to the extent of loss
or damage suffered.

4. Insurance and Risk Management
General Insurance
Marine insurance
4. Subrogation
It means “ the transfer of rights and remedies of the insured to the
insurer who has indemnified the insured in respect of the loss”
5. Contribution
It is a right of an insurer who has paid a claim under a policy to recover
a proportionate amount from other insurers who are also liable for
the loss
6. Proximity or proximate cause
The insurance contract is to provide cover against loss caused by a
particular peril or event.
If the loss is caused by two events, one the insured and the other
not insured, then it has to be seen which event has contributed most to
the loss, whether the insured or not insured?
This process of verifying the cause of loss is called as proximity cause.

5. Insurance and Risk Management
General Insurance
Marine insurance
Who can take marine insurance?
Hull insurance on the vessel can be taken by the owner of the vessel.
It can not be transferred or assigned without the concurrence of
the insurer.
Freight insurance can be taken by the owner/ operator or charterer
of the vessel. It also can not to be transferred.
Cargo insurance can be taken by the buyer of the cargo or the seller.
Insurable interest need NOT be established at the time of insurance.
But the insured must have the insurable interest at the time of loss.
This is the major difference between marine insurance and other
Insurances.

6. Insurance and Risk Management
General Insurance
Marine insurance
Marine Risk– Institute cargo clause
Marine insurance contract is evidenced by the policy and the clauses
attached to it.
In respect of export / import policies, the Institute Cargo Clauses
drafted by the Institute of London Underwriters are adopted by
insurance companies.
For policies covering inland trade, the clauses drafted by Tariff
Advisory Committee are followed.
Duration of the cover
The cover will be for the period from the time the goods are loaded at
the place named in the policy till the time they are discharged at the
place named therein or on the expiry of 60 days after completion of
discharge at the port of destination, whichever is earlier.
Open cover

7. Insurance and Risk Management
General Insurance
Fire Insurance
Even though the cover is named as fire risk, conventionally fire risk
covers he following:
Fire
Lightning
Explosion
Riot, strikes, civil commotion
Malicious damage
Terrorists attack
Cyclone, storm, hurricane etc.
The normal principles under which other insurance policies are issued
are applicable for fire insurance also.
One important clause is the “Average clause”

8. Insurance and Risk Management General Insurance
Fire Insurance
Average Clause
Fire risk is generally for property or the goods.
The insured is expected to take insurance cover for the full value of
property or goods.
In the event of a loss, if it is found that he has not insured for the
full value of the goods or property, he will be paid only proportionately.
The proportion will be between the value of the goods and the extent of
cover taken.
Assuming the goods stored in a godown are for a value of Rs200,000.
The insured has taken a policy for only Rs100,000.
A fire takes place and the loss comes to Rs100,000.
How much will be the compensation?
Since the insured has taken cover only for 50% of the actual value,
he will be compensated only to the extent of 50% of the loss.

9. Insurance and Risk Management
General Insurance
Fire Insurance
Tariff
The cost of insurance, premium is generally called as tariff in
fire insurance.
Earlier it was fixed by Tariff Advisory Committee.
Sine , it is fixed by individual insurance companies.
Duration of fire policies
Issued for 12 month period and can be renewed for another 12 month
period.
Longer duration policies can be issued only for covering residential
houses.

10. Insurance and Risk Management
General Insurance
Motor Insurance
Governed by Motor Vehicles Act 1988.
Insurance is compulsory to cover third party risk.
Other risks also can be covered.
Basic principles of insurance will apply to motor insurance also.
For deciding the cost of insurance namely premium, vehicles are
divided as under:
Private cars/ two wheelers
Goods carrying vehicles
Passenger carrying vehicles
Miscellaneous and special types of vehicles
There are many other insurances as health, transit, theft, and other
miscellaneous schemes

11. Insurance and Risk Management
Customer Service- Complaint Redressal
Ombudsman
-- a quasi judicial authority
-- set up under Redressal of Public Grievances Rules, 1998
-- appointed by the governing Body of the Insurance Council
Powers of Ombudsman
To receive and consider
any total or partial repudiation of claims by the insurer
any dispute regarding premium paid or payable in terms of the policy
any dispute with regard to legal construction of policies in so far as
they relate to claims
delay in settlement of claims
non issuance of any insurance document to customer after receipt of
premium
The Ombudsman acts as a counsel and mediator.
His decision whether a complaint is fit to be heard is final.

12. Insurance and Risk Management
Customer Service- Complaint Redressal
Ombudsman
Conditions to be satisfied for complaining to Ombudsman:
1. When the insurance company has not replied the complainant within
one month.
2. The company has rejected the complaint
3. The reply given is not satisfactory
4. The complainant has NOT gone to civil court or consumer forum
5. The complaint to Ombudsman is made within 1 year from rejection
of representation by the insurance company or sent its final reply.

13. Insurance and Risk Management
Customer Service- Complaint Redressal
Ombudsman
Ombudsman settles through mediation and mutual consent.
Makes a recommendation within one month from receipt of complaint
If the complainant accepts it, he sends his acceptance with in 15 days
Ombudsman forwards the recommendation and acceptance to insurer
Insurer has to comply within 15 days and inform compliance
What happens if not settled through mutual agreement?

14. Insurance and Risk Management
Customer Service- Complaint Redressal
Ombudsman
Where the complain is not settled through mutual consent,
Ombudsman will pass an “award” within 3 months from the receipt of
Complaint.
The complainant has to convey his acceptance or not within 1 month.
When the award is accepted, the insurer has to execute the award
within 15 days and confirm compliance to Ombudsman.
If the complainant is not agreeing with the award, he can choose
other means of redressal like court.
Whether recommendation or award, the insurer has to comply with,
if the complainant accepts it.
Ombudsman can also award ex-gratia payment if he deems it fit.

15. Insurance and Risk Management
Consumer Protection Act 1986 (COPRA)
15th March each year is observed as “ world consumers day”.
It was on this day in 1962, John F kennedy, the then US President
declared the rights of consumers as
Right to safety
Right to be informed
Right to choose
Right to be heard
These rights also find a place in the socio economic agenda of India.
In order to serve the cause of consumers at large, the above Act came
in to force on
The aim is to provide simple, speedy and inexpensive redressal of
grievance of consumers.

16. Insurance and Risk Management
Consumer Protection Act 1986 (COPRA)
The following are the Forums with quasi judicial power
District Consumer Redressal Forum headed by a District Judge
with financial jurisdiction of Rs lacs
2. State Commission headed by Judge of High Court with
financial limit of Rs 1.00 crore
3. National Commission headed by a judge of Supreme Court to hear
disputes above Rs 1.00 crore.
State and National Commissions have appellate powers also.
Supreme Court is the ultimate judicial authority.
The Act defines a consumer as a person who buys goods or services
for a consideration for his use.

17. Insurance and Risk Management
Consumer Protection Act 1986 (COPRA)
Life Insurance is a service rendered to the Public.
There is a consumer relationship between the insurer and the insured.
Therefore insurance company comes under the purview of the Act.
If an insured finds defect or deficiency in services he can seek
redressal in any of these Forums.
Now a days, these Forums proceed against insurance Agents also,
as they are also responsible for the insurance decision taken by the
insured.