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    ASI Insurance PDF

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    SARDER JERIN SARAH
    1. Insurance is defined as an agreement where one party agrees to pay another a certain sum upon a given event in exchange for a premium payment. Insurance differs from gambling as gambling creates new risks while insurance handles existing risks, and insurance is socially productive while gambling can be unproductive. 2. Term insurance only provides death benefits for a specified term, while endowment insurance provides both death and maturity benefits but has higher premiums. 3. The doctrine of indemnity guarantees restoring the insured to their prior financial position, while subrogation allows the insurer to recover costs from negligent third parties. Indemnity does not apply to life insurance due to the inability to quantify a human life's value.

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    ASI Insurance PDF

    Uploaded by

    SARDER JERIN SARAH
    80 views5 pages
    1. Insurance is defined as an agreement where one party agrees to pay another a certain sum upon a given event in exchange for a premium payment. Insurance differs from gambling as gambling creates new risks while insurance handles existing risks, and insurance is socially productive while gambling can be unproductive. 2. Term insurance only provides death benefits for a specified term, while endowment insurance provides both death and maturity benefits but has higher premiums. 3. The doctrine of indemnity guarantees restoring the insured to their prior financial position, while subrogation allows the insurer to recover costs from negligent third parties. Indemnity does not apply to life insurance due to the inability to quantify a human life's value.

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    1. Insurance is defined as an agreement where one party agrees to pay another a certain sum upon a given event in exchange for a premium payment. Insurance differs from gambling as gambling creates new risks while insurance handles existing risks, and insurance is socially productive while gambling can be unproductive. 2. Term insurance only provides death benefits for a specified term, while endowment insurance provides both death and maturity benefits but has higher premiums. 3. The doctrine of indemnity guarantees restoring the insured to their prior financial position, while subrogation allows the insurer to recover costs from negligent third parties. Indemnity does not apply to life insurance due to the inability to quantify a human life's value.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    80 views5 pages

    ASI Insurance PDF

    Uploaded by

    SARDER JERIN SARAH
    1. Insurance is defined as an agreement where one party agrees to pay another a certain sum upon a given event in exchange for a premium payment. Insurance differs from gambling as gambling creates new risks while insurance handles existing risks, and insurance is socially productive while gambling can be unproductive. 2. Term insurance only provides death benefits for a specified term, while endowment insurance provides both death and maturity benefits but has higher premiums. 3. The doctrine of indemnity guarantees restoring the insured to their prior financial position, while subrogation allows the insurer to recover costs from negligent third parties. Indemnity does not apply to life insurance due to the inability to quantify a human life's value.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 5

    Insurance

    01. State briefly a suitable definition of insurance. Why insurance is not a


    gambling?
    Ans: Insurance may be defined as a consisting one party (the insurer) agrees
    to pay to the other party (the insured) or his beneficiary, a certain sum upon a
    given contingency (the risk) against which insurance is sought.
    Insurance is not a gambling because-
    1. Gambling creates new speculative risk whereas insurance is a technique for
    handling an already existing pure risk.
    2. Gambling can be socially unproductive whereas insurance is socially
    productive.
    02. Differentiate between term insurance policy and endowment insurance
    policy.
    Term Insurance Policy Endowment Insurance Policy
    Term insurance plans only provide Endowment insurance plans
    protection for the term specified in provide protection along with an
    the policy document. investment opportunity.
    It offers just the death benefits. It offers death as well as maturity
    benefits.
    It has lower premium rates than the It has higher premium rates than the
    endowment insurance policy term insurance policy

    03.Explain the Doctrine of indemnity and subrogation related to insurance


    contract. Why principle of indemnity is not applicable in life insurance
    contract?
    Ans: Doctrine of indemnity: The term indemnity means security or
    protection against a loss. Doctrine of Indemnity is a guarantee to restore the
    insured back to the position he or she was financially prior to the loss. This
    means the insured cannot make a profit from an insurance claim. Doctrine of
    Indemnity is applicable for life insurance policy
    Doctrine of subrogation: It refers to the right of the insurer to recover from
    a negligent third party after settlement of a claim made to the insured. The
    insurer is entitled only to the amount it has paid under the policy. The insured
    cannot impair the insurer's subrogation rights. Subrogation does not apply to
    life insurance contracts.
    • Since the value of human life cannot be ascertained, the doctrine of
    indemnity does not apply as it is not possible to quantify the loss.

    04.What is reinsurance business? Discuss briefly the prospects of insurance


    business in Bangladesh.
    Ans: Reinsurance business is the practice of risk-transfer and risk-sharing
    between and amongst insurance companies. Reinsurance is “insurance for
    insurance companies”. In other words, a “second level of insurance”.
    Reinsurance companies provide insurance against loss for other insurance
    companies.
    The insurance industry of Bangladesh has witnessed a steady growth and
    attracted a lot of interest in recent years. prospects of insurance business in
    Bangladesh are given below:
    1. Higher GDP: The GDP of our country is increasing than the previous
    years which results in increase of per capita income. So this growing
    GDP and income holds bright prospects for insurance companies.
    2. Increased population: There is a big opportunity lies ahead for the
    insurance companies as the population of our country are increasing day
    by day.
    3. New business's individual insurance: There are so many new
    businesses starting every day and manufacturing sector is booming with
    global demand. Every business is insured under an insurance company
    to protect its company from any kind of accident.
    4. Education sector: Insurance companies can provide different types of
    scheme to expand education.
    5. Agriculture sector: The uncertainty of agriculture due to crop failure
    caused by climate variation, drought, cyclone, flood and pests affects
    farmer income as well as government revenue demand for insurance
    protection against crop loans, livestock loans, fisheries loans and
    equipment loans are also increasing day by day.
    05. Discuss the elements of special contract related to insurance with
    example.
    Ans: The elements of special contract related to insurance are discussed
    below:
    1. Insurable Interest: Insurable interest means that the subject matter of
    the contract must provide some financial gain by existing for the insured
    and would lead to a financial loss if damaged or destroyed.
    2. Utmost Good Faith: Principle of utmost good faith is based on a high
    degree of honesty on both parties to an insurance contract. Both parties
    should disclose the material facts truly & fully.
    3. Indemnity: Doctrine of Indemnity is a guarantee to restore the insured
    back to the position he or she was financially prior to the loss.
    4. Subrogation: Doctrine of Subrogation refers to the right of the insurer
    to recover from a negligent third party after settlement of a claim made to
    the insured.
    5. Warranties: A warranty is a statement that becomes part of the
    insurance contract and any breach of warranty leads the Insurer to become
    free from liabilities.
    6. Proximate Cause: It refers to the Active efficient cause. Property may
    be insured against some but not all causes of loss. When a property is not
    insured against all causes, the nearest cause is to be found out. proximate
    cause is important in determining whether coverage applies or if liability
    can be imposed on the negligent party.
    7. Assignment and Nomination
    8. Return of Premium
    06. Discuss the doctrine of subrogation and warranty in insurance contract.
    Ans: Doctrine of subrogation: It refers the right of the insurer to recover
    from a negligent third party after settlement of a claim made to the insured.
    The insurer is entitled only to the amount it has paid under the policy. The
    insured cannot impair the insurer's subrogation rights. Subrogation does not
    apply to life insurance contracts.
    Warranty: A warranty is a statement that becomes part of the insurance
    contract and is guaranteed by the maker to be true in all respects. Certain
    conditions and promises in insurance contract need to be fulfilled by the
    insured. in case of breach of warranty, Insurer becomes free from liabilities.

    07. Briefly discuss the historical development of insurance business in


    Bangladesh with current status.
    Ans:
    Before the partition of the country, there were about 75 insurance companies
    operating in the country. Although they were headquartered in West Pakistan.
    When Bangladesh gained independence in 1972, the companies started
    operating under the Bangladesh Insurance Act.

    The Bangladesh Insurance Order 1972 was issued on March 26, 1972 and the
    Government of Bangladesh took steps to nationalize all types of large
    industrial enterprises and banking and insurance business in order to
    implement the socialist principles of the Bangladesh Constitution. As a result,
    all the insurance companies in Bangladesh were transformed into state-owned
    insurance companies by Presidential Order No. 95 dated August 8, 1972. 75
    insurance companies were grouped in 5 (five) insurance companies. Of the
    five life insurance companies, two were related to life insurance & three were
    related of general insurance. In order to run an insurance business
    successfully, there was a need to consolidate the insurance business.
    Therefore, on 14th May, 1983, the Insurance Corporation Ordinance - 1973
    was passed and the five state-owned insurance companies were transformed
    into two companies. The two life insurance companies are called 'Bangladesh
    Jibon Bima Corporation' and the three general insurance companies are called
    'Bangladesh Sadharan Bima Corporation'. Insurance Development and
    Regulatory Authority (IDRA) was instituted on January 26, 2011, as the
    regulator of the insurance industry being empowered by the Insurance
    Development and Regulatory Act, 2010 by replacing its predecessor, Chief
    Controller of Insurance.
    There are 81 insurance companies operating in the country. Among the
    companies 53 companies are listed with the stock exchanges.

    08. Discuss the present scenario of insurance business in Bangladesh with the
    role of Insurance Academy.
    Ans: There are 81 insurance companies operating in the country and they
    need to be regulated under comprehensive laws and guidelines and supervised
    by a strong regulatory authority named Insurance Development and
    Regulatory Authority (IDRA). The Insurance Act 2010 said the sector needs
    to be managed properly and he strengthened by reducing business risks, and
    local and international insurance laws need to be harmonized considering the
    socio-economic aspect of the country, and protect the interest of policy
    holders and other beneficiaries. The Bangladesh Insurance Academy was
    established in 1973 to enhance the professional skills of the officers engaged
    in the insurance business in Bangladesh. This organization has been playing
    a significant role in the development of professional skills and the
    development of the insurance system. Along with banking and other financial
    sectors in Bangladesh, insurance business is also making significant
    contribution for economic development.

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