What are the different
ways to buy general Insurance?
What is the difference between
an Agent and a Broker?
What should I look for in an agent?
Is it necessary to buy insurance
through an agent?
What services does a broker provide?
What factors affect the cost of
Insurance?
What is Underwriting?
What is Reinsurance?
Who do you file your claim with?
What are the things to be taken
care of while filing a claim?
What happens after a claim has
been filed?
What impact does a deductible
have while settling a claim?
Who keeps an eye
on the Insurance companies?
» Through an agent,
broker or any other such intermediary.
» Anyone using the
title broker is usually independent and generally aims to find
you the best deal on the market.
» Other intermediaries
might just quote the best deal from a fairly small panel of
insurance companies or represent a single insurance company.
» You can approach
the insurance company directly. If you approach the company
directly, the chances of getting a better rate are very high.
» An agent is the
representative of Insurance Company whereas a broker is the
representative of the consumer or the policyholder.
» An agent could
be a paid employee of the Insurance Company or could be an
independent businessman.
» Agents are there
to help you.
» At the most basic
level, any agent should be able to:
a) answer your questions about insurance.
b) provide you with a thorough assessment of your insurance
needs.
c) offer you a choice of insurance products to meet those
needs.
» Also, your insurance
agency should provide you with prompt, quality service in
the case of a claim.
» Just as important
is the level of professional confidence and personal comfort
you feel with the agent.
» Many people stick
with the same insurance agent for decades, even generations.
» It helps to find
an agent you can get to know and trust
» You can buy many
insurance products without help from an agent.
» Typically potential
policyholders will be contacted by mail, or they can call
a toll-free number to apply for a product.
» The advantage
of this type of distribution system is that expenses are usually
much lower because there are no agent commissions to be paid.
» These savings
can be passed onto the consumer through lower premiums.
» The main disadvantage
is that the policyholder does not receive as much, or sometimes
any, personal service either when buying a product or filing
a claim.
In general an insurance broker would:
» Provide pre sales
and after sales service to customers
» Provide relevant
information to the underwriters for risk assessment and ascertain
the premium
» Structure product
and design covers that meet the specific requirements of customers
» Recommend risk
improvement and loss minimization measures
» Provide a collection
of Premiums
» Provide risk management
and insurance education.
The factors that can affect the cost of insurance include:
» The likelihood
of a loss occurring —The greater the probability a loss will
occur the higher the rate. E.g. Floods Insurance in parts
of North-east India.
» Purchase of a
large amount of coverage (that is, if the item you are insuring
is quite valuable) -- The chances are there could be a large
claim and the premium will need to cover that possibility.
Underwriting of a risk involves the consideration of material
facts on the basis of which a decision will be taken whether
to accept the risk and if so, at what rate of premium.
Insurance companies practice the fundamental principle of
spreading their risk too. Further reinsuring the risks that
the insurance company has insured does this.
You file a claim with the insurance company that issued your
policy. In case of policies received on account of your employment
you may have to file claims through the HR administrator.
» Most companies
offer a call centre facility.
» Alternatively,
you can:
a) contact your agent
b) write to your insurance company intimating the claim.
» There is usually
a claim form that needs to be filled. This can be:
a) downloaded from the insurance company’s website.
b) be obtained by visiting the insurance company’s office.
c) provided to you by your agent.
Be thorough and exact when reporting damage and always tell
the truth. Withholding vital information or exaggerating the
facts can, not only lessen your chances of the claim being
settled to your satisfaction, but also may be considered a
crime. (Insurance fraud costs consumers crores of rupees a
year.
» Once your claim
has been filed, the insurance company will assign a surveyor.
» He or she is charged
with investigating your claim and then making a recommendation
to the insurance company.
» The recommendation
can be to accept the claim and pay the full amount requested,
accept part of the claim and make partial payment, or refuse
the claim and make no payment.
» The insurance
company will then make a decision regarding your claim and
notify you of its final decision. The amount of compensation
offered can vary according to the surveyor’s analysis.
» If you have no
deductible, the company will pay 100% on a covered loss.
» To understand
how a deductible works, consider the following: If the deductible
on your motor insurance is Rs. 1000 it means you agree to
pay this amount first, and your insurance company will pay
for damages exceeding this deductible.
» By increasing
your deductible from Rs. 1000 to Rs. 2500 or even Rs. 3500
this decreases the insurance company’s risk. This could mean
a savings in your premium.
» Insurance is a
heavily regulated industry.
» The Insurance
Regulatory and Development Authority controls insurance regulations
in India. In addition to approving rates, the regulatory body
is involved in all insurance matters on behalf of private
citizens and businesses.
» It issues operating
licenses to insurers and agents, based on among other things:
a) ability to meet the requirements for conduct
b) knowledge about insurance issues.
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