INSURANCE LAWINSURANCE LAW AND AND …

STUDY MATERIAL

PROFESSIONAL PROGRAMME

INSURANCE LAW AND PRACTICE

MODULE 3

ELECTIVE PAPER 9.3

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? THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

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PROFESSIONAL PROGRAMME

INSURANCE LAWS AND PRACTICE

Company Secretaries have a pivot role to play in the Insurance Sector. A Company Secretary can work as a compliance officer in an Insurance Company and play an important role in ensuring compliance to complicated legal, regulatory and supervisory issues all the time, transcending various spheres of Insurance Company's operations. So, in order to build the capacity of Companies Secretaries to work as a compliance officer in Insurance Companies and to provide them a specialized knowledge in Insurance laws and practice, New Syllabus for Professional Program contains one of the five elective papers titled `Insurance Law and Practice'. The students interested in pursuing their career in Insurance sector may opt for this subject.

The syllabus and contents of this paper has been developed in association of Insurance Institute of India, Mumbai.

An attempt has been made to cover fully the syllabus prescribed for each module/subject. The presentation of topics may not always be in the same sequence as given in the syllabus. Candidates are expected to take note of all the latest developments relating to the subjects covered in the syllabus by referring to IRDA Circulars, Financial Dailies, Economic Journals, Latest Books and Publications on the subjects/topics concerned

Although due care has been taken in publishing this study material, yet the possibility of errors, omissions and/or discrepancies cannot be ruled out. This publication is released with an understanding that the Institute shall not be responsible for any errors, omissions and/or discrepancies or any action taken in that behalf.

Should there be any discrepancy, error or omission noted in the study material, the Institute shall be obliged if the same are brought to its notice for issue of corrigendum in the e-bulletin, `Student Company Secretary'. In the event of any doubt, students may write to the Directorate of Academics in the Institute for clarification at academics@icsi.edu.

There is Open book examination for this Elective subject of Professional Programme. This is to inculcate and develop skills of creative thinking, problem solving and decision making amongst students of its Professional Programme and to assess their analytical ability, real understanding of facts and concepts and mastery to apply, rather than to simply recall replicate and reproduce concepts and principles in the examination.

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PROFESSIONAL PROGRAMME

SYLLABUS FOR

ELECTIVE - PAPER 3: INSURANCE LAWS AND PRACTICE (100 MARKS)

Level of Knowledge: Expert Knowledge Objective:

To acquire To acquire specialized knowledge of law and practice relating to Insurance.. Detailed Contents:

1. Understanding and Managing Risk

Risk Management - Perils - Nature ? Risk Analysis ? Planning ? Control - Mechanism for Transfer of risk Insurance and Reinsurance 2. General Principles and Concepts of Insurance

Insurable Interest - Indemnity - Uberrimae fidei - Proximate Cause - Subrogation and Contribution Differentiation Insurance and Guarantee - Insurance and Wager - Disclosure ? Moral Hazards 3. Insurance Contract and Indian Market Conditions

Nature of Insurance Contract - Features of Insurance Contract - Types of Insurance - Concept of Intermediaries ? Market Players and their Roles - Agents, Brokers, Surveyors & Loss Assessors, Health Third Party Administrators, Certification of Insurance Professionals, Training Organizations. 4. Regulatory Environment ? Specific Legislations

Regulation of Insurance Business, Insurance Act, Insurance Regulatory and Development Act, Powers and Functions of IRDA, Relevant Regulations and Guidelines issued by IRDA, Licensing, Audit & Supervision, Investments, Amalgamation and Transfer, Grievance Redressal, Rural and Social Sector obligations, Micro Insurance, Financial inclusion, Product Approval. 5. Regulatory Environment - General

Other Relevant Legislation (Motor Vehicles Act, Marine Insurance Act, Employees State Insurance Act etc.), Consumer Protection, Courts, Tribunals, Insurance Ombudsmen, Arbitration. 6. International Regulatory Framework

International Association of Insurance Supervisors ? Future Trends 7. Life Insurance - Practices, Procedures

Application of Principles in Life Insurance Contract ?- Representation - Assignment and Nomination - Title and Claims - Tax Law Implications - Concept of Trusts in Life Policy - Stamp Duties - Role and Function of Life Insurance Companies. 8. Life Insurance & Pension Products

Life Insurance Products ? Proposals, Policy and documentation

(v)

9. General Insurance - Practices and Procedures ? Focus Underwriting

Application of Principles in General Insurance Contracts ? Structure of the Policy ? Insurance Documentation ? Underwriting and Rating - Disclosure - Terms and Conditions. 10. General Insurance - Practices and Procedures ? Focus Claims

Claims Procedures ? Underinsurance - Condition of Average - Recovery ? Salvage. 11. General Insurance Products

? Property Insurance (Fire and Engineering) ? Marine Insurance (Hull and Cargo) ? Motor Insurance ? Business Interruption ? Liability Insurance (Public, Products, Professional, Directors & Officers etc) ? Personal Lines (Health, Accident, Travel, Residential Premises etc.) ? Rural and Agricultural ? Micro-Insurance ? Other Miscellaneous lines (Burglary, Bankers' Risks, Fidelity etc.) 12. Ethics and Corporate Governance Framework for Insurance Companies Financial Statements, Protection of Policy holders, Concept of Treating Customers Fairly (TCF), Actuarial and Other Certifications

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LIST OF RECOMMENDED BOOKS ELECTIVE

PAPER 9.3 : INSURANCE LAW AND PRACTICE

List of Recommended Books:

1. M. N. Srinivasan

: Principles of Insurance Law, Wadhwa & Co.

2. Rajiv Jain

: Insurance Law and Practice, Vidhi Publication Private Limited

3. Taxmann

: Insurance Manual, Taxmann Publication Private Limited

4. Bharat

: Manual of insurance Laws, Bharat Publication Private limited

5. Dr. Avtar Singh

: Law of Insurance, Universal Publication Pvt. Limited

6. George E. Rejda

: Principles of Risk Management and Insurance

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ARRANGEMENT OF STUDY LESSONS

ELECTIVE PAPER 9.3: INSURANCE LAW AND PRACTICE (100 Marks)

Lesson No.

Subject

1.

Understanding and Managing Risk

2.

General Principles and Concepts of Insurance

3.

Insurance Contract and Indian Market Conditions

4.

Regulatory Environment ? Specific Legislations

5.

Regulatory Environment - General

6.

International Regulatory Framework

7.

Life Insurance - Practices, Procedures

8.

Life Insurance & Pension Products - Life Insurance Products ? Proposals,

Policy and documentation

9.

General Insurance - Practices and Procedures ? Focus Underwriting

10.

General Insurance - Practices and Procedures ? Focus Claims

11.

General Insurance Products

12.

Ethics and Corporate Governance Framework for Insurance Companies

(viii) PROFESSIONAL PROGRAMME

INSURANCE LAW AND PRACTICE

CONTENTS

Lesson 1 UNDERSTANDING AND MANAGING RISK

What is Risk

...

Uncertainty

...

Peril and Hazard

...

Basic Categories of Risk

...

Speculative or Dynamic Risk

...

Pure or Static Risk

...

Fundamental Risks and Particular Risks

...

Subjective Risk

...

Objective Risk

...

Static Risks

...

Dynamic Risk

...

Financial and Non-financial Risks

...

Risk Management

...

Role of Insurance in Risk Management

...

Risk Management Process

...

Risk Analysis

...

Risk Planning and Control

...

Risk Avoidance

...

Risk Retention

...

Active Risk Retention

...

Passive Risk Retention

...

Risk Transfer

...

Transfer of Risk by Contracts

...

Hedging Price Risks

...

Conversion to Public Limited Company

...

Loss Control

...

Loss prevention

...

Loss reduction

...

Loss Control-Ideal Method for Handling Risk

...

Insurance and Reinsurance as a Risk Transfer Techniques

...

LESSON ROUND UP

...

SELF TEST QUESTIONS

...

Lesson 2

GENERAL PRINCIPLES AND CONCEPTS OF INSURANCE

Learning Objectives

...

Understanding Principles of Insurance

...

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