Max India JVs with BUPA to set up health insurance co. in India

India's leading healthcare services provider Max India Ltd said it has partnered with UK's BUPA Finance Plc for setting up a health insurance company in India.
Max India, which operates hospitals and a life insurance business, would hold 50 stake in the joint venture, the Delhi-based company said in a statement.

Of the remaining stake, British United Provident Association or BUPA would hold 26 percent and Max India chairman Analjit Singh would hold 24 percent.

Presently, Indian laws do not allow foreign firms to hold more than 26 percent stake in any joint venture in the insurance sector.

The venture would commence business operations by September 2009 with an initial investment of £12 million or Rs.100 crore.

Max India is already in the life insurance business with the US-based New York Life Insurance.

The new venture will provide a suite of products, including in-patient covers, out-patient covers and preventive care covers, to both consumer and business customers.

"The Indian health insurance market has massive potential, with a growing, young, population. We believe that many of its citizens will be looking for the high quality of care and customer service that Max Bupa will be well placed to offer," said Ray King, CEO, BUPA Group.

"Max India has been in dialog with leading international players for the health insurance business. Our decision to partner with BUPA was based on the synergies and unique strengths that BUPA brings to this venture. BUPA has the expertise in creating and delivering differentiated health-insurance products and a proven ability to operate in, and adapt to, international health care markets. Through Max India, we will capitalize on our knowledge and experience in the health and life insurance sectors," Max India chairman Analjit Singh said.

According to latest market estimates, the current value of India's health insurance industry stands at $800 million and is expected to rise to $8 billion by 2015.

Set up in 1947, BUPA OR British United Provident Association has grown to become an international health and care company, with 45 percent market share in the UK health insurance market. It is also a market leader in Spain, in Europe and in emerging markets.

With main focus on health insurance business, the company employs over 55,000 people, serving over 10 million customers in over 200 countries.

You can keep your best staff by buying them life insurance

The traditional life insurance product where one pays a premium to an insurance company to provide life cover in event of a dreaded event such as death or disability is something Ugandans have been putting on the shelf for the past three decades.

However, this week Liberty Life Assurance Uganda Limited led a revived initiative to reintroduce the product to the Ugandan market.

Ugandans have become accustomed to keeping wealth for the next generation in either land, buildings or animals. Due to bad experiences with currency reforms, fears of inflation and tradition many Ugandans prefer such avenues for wealth retention as opposed to a traditional insurance product.

This is changing and we are now seeing a number of corporate organisations coming forward to buy life insurance for their employees’ security, well being and future estates. Individuals are also coming forward.

Life insurance makes sense from a diversification perspective. As the Bible says “A good man leaves an inheritance for his children’s children”.

Therefore, as one sets up land and buildings, bearing in mind that the ultimate beneficiary is actually the next generation, it has also become vital that one considers a diversification strategy and also looks at different alternatives, including life insurance.

Life insurance has been designed to ensure that after a given company has put down a fixed annual premium, in the event of the demise of a staff member, the estate of the staff member receives at least 24 months salary as a soft landing.

Such funds can be utilised to cater for children’s education and day-to-day upkeep. It can also be utilised to acquire land or set up a building or business.

Life insurance has become a motivating factor for employees’ to remain within an institution long term. Further to that, it has also become a bargaining tool for employees who seek to move from one organisation to another.

Therefore a number of Ugandan institutions and individuals now view life insurance as a necessity. The challenge is now to make the product easily available to the average Ugandan who is not employed by a corporate institution.

As a diversification strategy to ensure wealth retention and sustenance for the next generation in event of a dreaded disease, injury or disability the insurance industry needs to be structured for the average Ugandan. The challenge is for the country’s insurance industry to rise to the occasion.

Pension funds are now also looking to life insurance as a necessity for their members. This is good news for Ugandans because it acts as a top-up to one’s pension. Therefore in the event of a dreaded event an individual and/or their estate will receive a top-up on their pension savings.

Liberty Life therefore continues to roll out strategies to ensure that life insurance is a reality in the Ugandan market and is partnering with Stanbic Investments to roll out its Libwealth strategy in Uganda.

At the moment the Ugandan Libwealth strategy ensures that in addition to life insurance improved pension fund management and health insurance also becomes a reality to the average Ugandan worker.

Improved pension fund management will be discussed, debated and encouraged through forums such as the Stanbic Business Club which was also launched this week. The Stanbic Business Club was launched on July 10 by Bernard Katompa, CEO of Liberty Africa.

It seeks to bring together pension fund trustees from over 50 pension schemes in Uganda to interact together on topical issues and exchange ideas towards improved pension fund management in Uganda as we transition into a new dispensation of pension reform.

Such interaction has become increasingly important given that a number of organisations have moved ahead of pending legislation to introduce international best practice in management of their pension schemes.

The forum on July 10, possibly for the first time in Uganda’s history, therefore brought together over 40 pensions fund organisations and leading pension industry players to interact together on a formal and informal basis to exchange ideas towards improving Uganda’s pension industry.

As the Chinese say “a journey of a thousand miles begins with one step”.

It is indeed hoped that the promised introduction of a pension industry regulator by December 2008 will lead to increased activity within the Ugandan economy and stock markets. Much as Uganda still has a long way to go, such a regulator will be in a position to provide insight and direction.

Members of pension funds are calling for improved returns as well as reduced bureaucracy in obtaining their hard earned savings when the time comes.

Regulation should therefore go a long way in ensuring that this improvement becomes a reality for the average Ugandan worker who understands that improved governance is the way to go.

Max India in JV with UK health insurance major

Healthcare and insurance company, Max India, has forayed into health insurance through a joint venture with UK health insurance major, British United Provident Association (BUPA). Max India will hold 50% in the JV, promoter and chairman Analjit Singh and his family will hold 24%, and BUPA will hold the remaining 26%, reports Our Bureau.

BUPA has the option of raising its stake in the JV to 50% when the sector opens up. The JV, Max Bupa Health Insurance, will initially invest Rs 100 crore, a Max India release said. This is Max India’s second venture in the insurance sector. It already has a 26:74 general insurance JV with US-based New York Life Insurance.

“We have been interested in the health insurance sector for a long time, but were waiting for some regulatory reforms to take place. Our decision to partner with BUPA was based on the synergies and unique strengths that BUPA brings to this venture,” said Max India chairman, Analjit Singh.

. BUPA has the expertise in creating and delivering differentiated health-insurance products and a proven ability to operate in and adapt to international health care markets. Through Max India, we will capitalise on our knowledge and experience in the health and life insurance sectors,”

Mr Singh told ET that BUPA was the market leader in the health insurance sector in most of the market it operates. ‘It has a 45% market share in the UK health insurance market. It is the market leader in Spain, in Europe and in emerging markets,’’ he said.

BUPA group chief executive, Ray King, said, “The Indian health insurance market has massive potential, with a growing, young, population. We believe that many of its citizens will be looking for the high quality of care and customer service that Max BUPA will be well placed to offer.”

Health Insurance is a under penetrated market in India, a country where about 70% of the healthcare spend is in the private sector. According to industry estimates, the country’s healthcare spend is expected to touch Rs 3,33,480 crore by 2012 from Rs 1,53,330 in 2006. But less than 2% of the country’s population have any private health related insurance covering.

How To Select The Best Health Insurance Plan

We all are at risk of some kind of medical emergency in our lives and to meet the treatment expenses, we need to insure ourselves. There are different companies offering medical insurance and one needs to know their health insurance quotes, before going for an affordable health insurance. Through medical insurance, we make an agreement with the insurance company whereby we pay a fixed amount of money at regular intervals to them. In the event of some medical exigencies, the company bears the exorbitant cost of the medical treatment.

You can opt for varied health insurance for your health plan. One is the group insurance companies and the other is individual health insurance companies. The first is involved in insuring large groups of people who are the employees of company, while the later is responsible for providing health insurance of self-employed people.

While you are looking for some medical insurance, you should make a comparative evaluation of different medical insurance quotes of plans from a good number of medical insurance providers. By doing this, you come to know the different plans on health and medical insurance available and the cheap health insurance plan that best suits you.

Another major point to note before going in for your health insurance plan is the financial rating of the company. This rating will help you to know the financial strength of the insurance company. One can know the capability of the company in clearing the medical bill claim that is made to the company. The best way to know the ratings of the financial companies is through the Internet in websites like Moody’s, Weiss and eHealthInsurance and A.M. Best etc.

The next step is to find the doctor’s employment and educational histories of the health insurance company. You need to get the trust in yourself about the doctors and be content about the care that you expect from the health insurance company. The company should also be prompt in answering your queries.

There are many insurance companies across the United States which provide their own insurance quotes. These free quotes can be found in the offices of the companies as well as on their websites. You need to evaluate the health insurance company as well as its health care network before going for any agreement. If you are using the Internet, you can fill in some details on your computer screen and get their health insurance quote.

The rate that you have to pay for any health insurance plan is determined by the company and they are regulated by the state the company is located. However, there are certain types of medical insurance available that cater to different situation and the purpose for which the insurance is availed. Thus, there are individual health insurance, family health insurance, International medical insurance, Travel medical insurance and Major medical insurance plan which a health insurance company can provide.
One of the popular websites for providing information on individual health insurance quotes is Whataquote.com. The site gives information on for online health insurance quotes, Self Employed Health Insurance quotes and Family Health Insurance quotes.

Health Care insurance For Visitors To The US

Visitor medical insurance is an essential part of the global economy in today’s times. People are opting to explore other countries for business and travel ventures. When one travels in one’s own country, he or she need not apply for a separate policy to cover him or her for emergency medical services. Such a facility is available under the regional health insurance scheme.

Visitor medical insurance policy for a travel to USA guarantees that you are safe in the destination land and away from your country. Visitors travel insurance is designed to avert financially incapacitating situations in the event of a medical emergency or some such unforeseen event while traveling overseas. Thus, for all people who wish to plan a trip to USA, visitor health insurance is strongly recommended.

These visitor health insurance schemes are designed for visitors, international students, tourists, business people as well as skilled workers. The motive behind these visitor insurance policies is to make sure that a visitor is underwritten against any possible accidents that he/she may have to face while traveling in USA.

They are offered to provide maximum coverage to the buyers. For instance, policies especially available for international students on a students visa to USA may even cover them if they travel outside USA. These policies need to be purchased after the relevant travel documents have been procured. Many insurance companies provide for such visitors insurance policies to make the stay of a visitor to USA comfortable.

The American health care industry is best known for its medical assistance and hospital facilities. However, the costs that one may need to bear while taking advantage of such services may be grippingly high for an ordinary person. Paying the medical bills may leave the person virtually penniless overnight.

If you do not have an insurance policy, medical treatment may turn out to be very expensive and even out of reach. If you do not have medical coverage for such emergency reasons, you may end up paying a lot of money from your own pocket. The bills in a good hospital in USA can reach up to thousands of dollars per day. For this reasons, the local residents of USA have medical coverage for themselves under some suitable regional health plan.

In order that you are able to avail the visitors health insurance, you need to meet a predetermined criteria. Only if you fit this eligibility criteria, you can get coverage for a policy which can help in cases like medical illness, accidents, injuries, emergencies like medical evacuation, medical assistance coverage, etc. Some insurance plans from insurance companies also provide compensation for high limit accidental deaths and dismemberment.

At the time of purchasing the visitor medical insurance policy, you must make a mention of the illness or ailments that you suffer from. The provisions that allow for coverage may be dependent on your age. For example, people above the age sixty are allowed to travel only for forty-two days for a single trip policy while those below sixty may be allowed to take a trip for ninety days under the same policy.

Different Types Of Life Insurance

Universal Life Insurance
Universal life insurance is a variation of whole life insurance. It is a blend of term insurance and a savings account. It earns interest at a money market rate, the policy holder paying an annual fee for coverage, which includes a fee for managing the policy. Funds not used for paying the life insurance earn a tax deferred interest.

With a universal life insurance policy, the premium can fluctuate. The policy holder decides how much to devote toward insurance and how much toward savings. The face amount of the policy can be changed as well as the amount of premium payments and how often they are paid. However, the insured must make certain their savings are large enough to cover the monthly premiums for the insurance as well as the policy expenses. If the savings are not sufficient enough, the monthly charges will consume the cash value and the policy will be of no value.

Universal life insurance offers two options. The first option is keeping the death benefits the same from year to year if the policy holder does not request any changes. The second option is having the death benefit at any time stay equal to the original face value in addition to the policy 's cash worth.

Universal life insurance can often give an elevated interest rate when inflation rises, even if the insuring company guarantees a low rate. Because of this risk, premiums are lower for whole life insurance but pricier for term insurance for younger individuals. In addition, when the price for managing the policy is added to the premium, the policy holder will receive a lower return on their investment. It is crucial to keep in mind that changes in interest rates will affect both a policy holder’s yields and premiums.

Variable Life Insurance
Variable life insurance is a type of permanent life insurance that allows the holder to target their premium to one or more detached investment funds. These funds can be fixed income investments, stocks, bonds, or money market funds. Depending on the company policy, the holder can change their investments from two to five times annually. Unlike universal life insurance, with variable life insurance the insured can manage the investment of their cash value.

The policy, however, can be risky because the investment has the ability to rise or fall. The cash value and investment will differ, depending on what the investment fund does. The death benefit cannot fall below the total amount of life insurance primarily purchased. As with traditional whole life insurance, the policy holder pays fixed premiums and can borrow against the policy at either fixed or variable rates.

Because an individual decides where to invest their money and put themselves at risk, variable life insurance should be considered. Insurers must, by law, offer variable life insurance by prospectus. A prospectus is a document that gives the prospective policy holder important facts concerning the company and the policy. Variable life insurance can often cost more than other varieties of cash value life insurance. According to current laws the cash value of variable life insurance, similar to those of universal life insurance and whole life insurance, cannot be taxed until the policy holder cashes in their policy.

Universal Variable Life Insurance
Universal variable life insurance is also commonly referred to as flexible premium variable life insurance. This kind of policy combines the flexible features found in universal life insurance policies and the investment alternatives of variable life insurance. As with universal life insurance, the policy holder can choose to raise or lower their premiums in a single policy. As with variable life insurance, individuals have the right to decide how their cash worth will be invested.

The insurance company does not have to make any kind of guarantee on the policy holder’s cash value. With universal variable life insurance, the value of the cash fund is in direct relation to the market worth of the assets in the cash worth fund. Therefore, a policy holder could have $15,000 in net cash worth one day and $10,000 on the following day, dependent on market fluctuation. Thus, one of the central problems with universal variable life insurance is that the policy holder can lose their insurance coverage.

Adjustable Life Insurance
Adjustable life insurance is another variety of permanent protection that allows the policy holder to change the amount of their premiums. They can also increase or decrease the face amount of the policy, or lessen the protection period. If the policy holder increases the death benefit, they must prove that they are still in fact insurable.

Private or Personal Mortgage Insurance

To explain personal mortgage insurance which means a borrower gets down, then less than 20% of the value of the house as capital of the creditor will tell the borrower that they need to take a Private Mortgage Insurance PMI also called for loan companies. The insurance payment of insurance PMI continues to mortgage repayments have equaled 20% of the original value of the house. Old people do not know when their mortgage payments had crossed the threshold of 20% equity and they continued to pay PMI, which resulted in lawsuits relating to private mortgage insurance that insurance companies took the position that were not informed when the cancel the PMI and mortgage companies said that the borrower was supposed to inform the insurance company. But now mortgage companies are by law to inform the insurance companies to cancel a PMI and stop taking PMI payments. However, if a default on payments of its installation PMI deductions may continue. There are other clauses in which the borrower can stop PMI payments.

Personal mortgage insurance covers the lender and the borrower. If the value of the property decreases the borrower pays the PMI will continue until the borrower is equal to 20% of capital if the borrower does not default on payments installation, then the PMI is cancelled after the borrower reaches 20% of capital . In some cases, equity requirement can be 22%. It is the lender who makes the PMI and, therefore, the creditor must inform the borrower on the status of PMI payments and when will stop. In the case of FHA or VA mortgage, no PMI.

For ending his private mortgage insurance earlier you can pay up the balance of the down payment to bring the capital to 20% of its original value (the value of the house at the time the mortgage was taken) and at the end of the mortgage, private insurance. Personal mortgage insurance is taken by the lender and the borrower has the right to ask the lender how much he is paying for private mortgage insurance, and can use a calculator, free mortgage of private insurance, which is available on the network. Some creditors maintain a special phone line for lenders to collect information about your private mortgage insurance. If one is paying $ 40 per month for private mortgage insurance, which means one is paying US $ 480 per year so you must know when it ends and not go to pay premiums long after it is over.

The private mortgage insurance cancellation laws that are home mortgages that were signed on or after July 29, 1999, the personal or private mortgage insurance must be terminated automatically when the borrower of capital reaches 22 percent on the value of the original property. If the mortgage payments are currently private mortgage insurance can be canceled if requested, when reaching the 20 percent of the original equity, if the value of property and mortgage payments are current. There are some exceptions that if the creditor has called mortgage loan as a ‘high risk’. That is, if one has not been current on payments of plots in the previous year. A third is a case has other mortgages also named guarantees on the same property. If the mortgage was taken before July 29, 1999, then you can ask the staff mortgage insurance canceled once the capital exceeds 20 percent. Therefore, the borrower has to initiate the request for cancellation itself.

Current private mortgage insurance rates are dependent on the state and who lives in the county and you can ask a mortgage companies to give a quote. The personal mortgage insurance depends on the mortgage amount and the terms on which one took the mortgage. If the personal mortgage insurance deduction is a part of the mortgage facility then make sure that he is marked separately so you can calculate as to when to apply for its annulment.

Disability Insurance

If you are a person who works in medical sector or others which needs your physical ability, you may need to consider about having disability insurance to face unexpected cases like if a disability occurs to yourself and you are no longer able to do your job.

Go to the website at ProtectYourIncome.com to see more details about disability insurance. This kind of insurance is intended to cover your cost when you are experiencing of being physical disable to do your current job so that you are no longer receiving your regular income. The service is intender for those who work as a physician, dentist, attorney and others like individuals with the minimum income of $100,000.

Your disability will give big influence to your life if that happens, so you had better to protect yourself and your family from now on. Take a better learning at the website or call them by phone for toll free, for more information about physician disability insurance you can visit their web now.

Mobile Home Insurance

Lots of people who are not familiar with the world of mobile homes are surprised to find out that there is such a thing as mobile home insurance. Yes, just as there is insurance for regular homes, so is there insurance for those who dwell in a mobile home. If you are looking to purchase a mobile home insurance policy, you need to make sure of exactly what kind of policy you are getting before you agree to buy. It stands to reason that you are going to look for the best price on a policy you can find, as most people do. What is more important than the price is the coverage that you are getting for that price.

Cheap mobile home insurance is not always a bargain. This is perhaps better understood by those mobile home owners who, for example, weather a massive hailstorm in their mobile home. When they attempt to file a claim in order to get the damage repaired, they discover that hailstorms are only covered during a Leap Year. Now, obviously this is a hypothetical example, but imagine how disappointing it would be to have damage to your home and then find out that your insurance will not cover it! This is why you need to read over any mobile home policy very carefully so that you understand what it does and does not cover.

You definitely want mobile home insurance that will protect your personal property as well as the mobile home itself. The contents of your mobile home are valuable to you, and some people own things that have great monetary value like jewelry or various collectibles. You need to have these things insured in case of a break-in or a fire, or any damage that could harm your property as well as the mobile home that contains the property. Do realize that not all mobile home insurance will cover your personal property unless you buy additional coverage for the more expensive property that you own.

The best way to know how much mobile home insurance you need is to imagine that your mobile home and everything in it had been destroyed in a fire. How much money would it cost to replace everything, mobile home included? This is the coverage amount you should try to get when purchasing a policy.

When you have lined up a few companies that you think you might be interested in purchasing insurance, be sure you check out their business record with the Better Business Bureau, and try to ascertain how long they have been selling mobile home insurance. You want to make sure you are choosing a reputable company that is experienced in selling this type of insurance.

3 reasons to consider pet insurance

NEW YORK -- The cost of owning a pet has gone up in recent years.

New technologies in medical treatment make it possible for pets to undergo treatments similar to those available to humans for life-threatening diseases. And just as with humans, these treatments aren't cheap.

If you've never thought about buying health insurance for your pet, you might want to entertain the idea. From Liz Pulliam Weston at MSN Money, here are three reasons to consider pet insurance:

More treatable diseases. Cancers and other once-fatal conditions for your pet can be treated and even cured. That's right. It's possible to have your pet receive radiation therapy or a kidney transplant. While this is great news for Fido -- he may live longer now -- it's not great news for your wallet. These procedures can cost $1,000 and up.

New medical technology. Vets have more tools handy to assess a pet's health. These tests and screens can be quite sophisticated. MRIs are just one example. Not only do these screens come at a price, they often turn up problems that otherwise would have gone undiscovered and untreated.

Health care inflation. All those medical and technological advancements have caused veterinary fees to rise. As you bring your pet in for annual visits to the doctor, it's going to cost a little more every year.

Important component while purchasing a vehicle

At a time when motown customers are facing heat over high fuel prices and soaring interest rates, shouldn’t they strive to extract every penny they spend on their automobile purchase?

Valid question, you may say, but most customers choose to ignore an important component while purchasing a vehicle — motor insurance.

They just consider it a legal requirement without which they can’t bring their new vehicle on road. Indeed, motor insurance is a necessity which covers you against damage to your own vehicle and damage to the third party.

Broadly, there are two types of auto insurance — comprehensive policy and third party insurance.

In comprehensive insurance, you get full cover for every possible damage, including dents, technical problems, repair, accidents and even for car theft.

Higher exit load in mutual fund with insurance

There are some fund houses that offer life insurance benefit in the investment of various mutual fund schemes through systematic investment plans (SIP). This is the new concept adopted by fund houses to lure investors towards their mutual funds, initiated by DSPML AMC in 2005 with the name of Super SIP.

Some other players like Birla Sun Life Mutual Fund, Kotak AMC and Reliance Mutual Fund have come out with the same concept with new flavours. Birla Sun Life's MF scheme is known as Century SIP in which insurance expenses will be borne by the AMC. Generally these AMCs charge higher exit load in such schemes in case of redemption before maturity.

The ratings of some 5-star funds have now fallen to 3-star and the returns are also much less than their peers. I have invested through SIPs in two such funds— Reliance Vision and Magnum Global. I have to renew my investments in these funds in June. What should be my strategy? Should I renew my SIP in the same funds, just because they were performing better earlier or should I switch to other 5-star rated funds? Also tell me when I should decide to exit the fund. -Dr Purayil, Chennai

Mutual funds are rated on the basis of the composite measure of both returns and risks. There are two main reasons responsible for the slipping of star rating. One may be that the fund's performance is really declining and other may be the fund has shown average performance but other funds have fared better.

Reliance Vision is a large cap oriented fund. In the past nine months, it has slipped in its performance from being an above-average fund to just an average fund. Its rating is the reflection of its performance. It was sited continuously in 5-star rated category since October 2002.

Its ranking has shifted downward from 5-star to 4-star in September 2007 and further slipped to 3-star in March 2008. Though it has not fared well in recent times, its past performance must be taken into account. As on June 6, 2008, it has delivered 44.52 per cent & 32.58 per cent annualised returns in the last 5 and 10 years respectively.

Magnum Global Fund has delivered 55.86 per cent annualised returns (category return is 40.92 per cent) in the last 5 years. Its ranking has decreased from 5-star to 4-star in March 2008.

It is always advisable to not change your investment decisions on the basis of short-term performance. While churning your portfolio, you must ask yourself whether your investments are yielding returns that you want. Before changing of funds in your portfolio, other points that must be kept in mind are load and short-term capital gains tax. Since you are renewing your portfolio, take a look at other 5- star funds like HDFC Top 200 and HSBC Equity.

I want to know the tax implication (long and short-term) on arbitrage funds, equity derivative funds and also the international equity funds. - Dipankar Dutta

Arbitrage funds are treated just like equity funds while computing tax liability. Hence there will be no tax liability on holding of more than one year.

Equity derivative funds work on a similar theme as arbitrage funds and seek to generate income through arbitrage opportunities (taking advantage by mis-pricing between different markets like cash market and derivative market).

Asset allocation of equity derivative funds varies according to their investment objective. Some funds take more exposure on equity and equity derivative whereas others concentrate on debt markets. Hence, their tax-implications also vary.

The tax implication on ICICI Equity & Derivative Fund is the same as equity oriented funds while the tax treatment on JM Financial Equity & Derivative Fund and Benchmark Derivative Fund are as same as debt funds.

International Equity funds basically park a major portion of their corpus in overseas market instruments. If the overseas investment amount is greater than 65 per cent, then in that case, the tax implication will be the same as that of a debt fund.

Important component while purchasing a vehicle

Vehicle insurance policies cover losses caused to the vehicles. However, all losses are not covered under the insurance policy. The Insurance companies do not provide a complete coverage from all risks, losses and liabilities.

Certain risks and damages are expressly excluded from the insurance coverage. Further there are certain deductibles from the insurance claims. So one will not get the full reimbursement of the loss incurred in case of any damage to the vehicle. Usually such 'exclusions' and 'deductibles' are specifically mentioned in the policy document.

While taking an insurance policy, one should carefully go through these clauses so as to ascertain the insurance coverage provided by the insurance company and the risks one needs to bear himself. A few of these risks can still be covered by paying an extra premium for the same to the insurance company.

The Insurance Company shall not be liable in respect of the following:

Any accidental loss, damage or liability caused or sustained outside the geographical area Any claim arising out of any contractual liability Any accidental loss, damage or liability caused sustained or incurred whilst the vehicle insured is:

Being used otherwise than in accordance with the 'Limitations as to Use' or Being driven by a person other than a driver as stated in the Driver's Clause. Any accidental loss or damage to any property or any loss or expense resulting or arising there from or any consequential loss Any liability of whatever nature caused directly or indirectly by ionising radiations or contamination by radioactivity from any nuclear fuel or from any nuclear waste from the combustion of nuclear fuel.

Any accidental loss, damage , liability caused directly or indirectly from nuclear weapons material Any accidental loss, damage or liability arising out of war, invasion, the act of foreign enemies, hostilities or warlike operations, civil war, mutiny, rebellion , military or usurped power or by any direct or indirect consequence of any of the said occurrences .

In the event of any claim the insured shall prove that the accidental loss, damage or liability arose independently of and was in no way connected with any of the said occurrences. In default of such proof, the Insurance Company shall not be liable to make any payment in respect of such a claim In addition to the exclusions there are some deductibles from the claim.

The Insurance Company shall not be liable for each and every claim for loss of or damage to the vehicle insured in respect of the deductibles. The deductibles depend on the type of vehicle .

The Company shall not be liable to make any payment in respect of the following damages: Consequential loss, depreciation , wear and tear, mechanical or electrical breakdown, failures or breakages Damage to tyres and tubes unless the vehicle is damaged at the same time in which case the liability of the company shall be limited to 50 percent of the cost of replacement.

Any accidental loss or damage suffered whilst the insured or any person driving the vehicle with the knowledge and consent of the insured is under the influence of intoxicating liquor or drugs. The costs of repairs and replacements would have to be borne by the insured himself.

Insurance

Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium. An insurer is a company selling the insurance. The insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.

Principles of insurance

Commercially insurable risks typically share seven common characteristics.

1. A large number of homogeneous exposure units. The vast majority of insurance policies are provided for individual members of very large classes. Automobile insurance, for example, covered about 175 million automobiles in the United States in 2004. The existence of a large number of homogeneous exposure units allows insurers to benefit from the so-called “law of large numbers,” which in effect states that as the number of exposure units increases, the actual results are increasingly likely to become close to expected results. There are exceptions to this criterion. Lloyd's of London is famous for insuring the life or health of actors, actresses and sports figures. Satellite Launch insurance covers events that are infrequent. Large commercial property policies may insure exceptional properties for which there are no ‘homogeneous’ exposure units. Despite failing on this criterion, many exposures like these are generally considered to be insurable.
2. Definite Loss. The event that gives rise to the loss that is subject to insurance should, at least in principle, take place at a known time, in a known place, and from a known cause. The classic example is death of an insured on a life insurance policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory. Occupational disease, for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable. Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information, could objectively verify all three elements.
3. Accidental Loss. The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be ‘pure,’ in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks, are generally not considered insurable.
4. Large Loss. The size of the loss must be meaningful from the perspective of the insured. Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing and administering the policy, adjusting losses, and supplying the capital needed to reasonably assure that the insurer will be able to pay claims. For small losses these latter costs may be several times the size of the expected cost of losses. There is little point in paying such costs unless the protection offered has real value to a buyer.
5. Affordable Premium. If the likelihood of an insured event is so high, or the cost of the event so large, that the resulting premium is large relative to the amount of protection offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the accounting profession formally recognizes in financial accounting standards, the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chance of loss, the transaction may have the form of insurance, but not the substance. (See the U.S. Financial Accounting Standards Board standard number 113)
6. Calculable Loss. There are two elements that must be at least estimable, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim.
7. Limited risk of catastrophically large losses. The essential risk is often aggregation. If the same event can cause losses to numerous policyholders of the same insurer, the ability of that insurer to issue policies becomes constrained, not by factors surrounding the individual characteristics of a given policyholder, but by the factors surrounding the sum of all policyholders so exposed. Typically, insurers prefer to limit their exposure to a loss from a single event to some small portion of their capital base, on the order of 5 percent. Where the loss can be aggregated, or an individual policy could produce exceptionally large claims, the capital constraint will restrict an insurers appetite for additional policyholders. The classic example is earthquake insurance, where the ability of an underwriter to issue a new policy depends on the number and size of the policies that it has already underwritten. Wind insurance in hurricane zones, particularly along coast lines, is another example of this phenomenon. In extreme cases, the aggregation can affect the entire industry, since the combined capital of insurers and reinsurers can be small compared to the needs of potential policyholders in areas exposed to aggregation risk. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any individual insurer’s capital constraint. Such properties are generally shared among several insurers, or are insured by a single insurer who syndicates the risk into the reinsurance market.

Indemnification

The technical definition of "indemnity" means to make whole again. There are two types of insurance contracts; 1) an "indemnity" policy and 2) a "pay on behalf" or "on behalf of" policy. The difference is significant on paper, but rarely material in practice.

An "indemnity" policy will never pay claims until the insured has paid out of pocket to some third party; i.e. a visitor to your home slips on a floor that you left wet and sues you for $10,000 and wins. Under an "indemnity" policy the homeowner would have to come up with the $10,000 to pay for the visitor's fall and then would be "indemnified" by the insurance carrier for the out of pocket costs (the $10,000).

Under the same situation, a "pay on behalf" policy, the insurance carrier would pay the claim and the insured (the homeowner) would not be out of pocket for anything. Most modern liability insurance is written on the basis of "pay on behalf" language.

An entity seeking to transfer risk (an individual, corporation, or association of any type, etc.) becomes the 'insured' party once risk is assumed by an 'insurer', the insuring party, by means of a contract, called an insurance 'policy'. Generally, an insurance contract includes, at a minimum, the following elements: the parties (the insurer, the insured, the beneficiaries), the premium, the period of coverage, the particular loss event covered, the amount of coverage (i.e., the amount to be paid to the insured or beneficiary in the event of a loss), and exclusions (events not covered). An insured is thus said to be "indemnified" against the loss events covered in the policy.

When insured parties experience a loss for a specified peril, the coverage entitles the policyholder to make a 'claim' against the insurer for the covered amount of loss as specified by the policy. The fee paid by the insured to the insurer for assuming the risk is called the 'premium'. Insurance premiums from many insureds are used to fund accounts reserved for later payment of claims—in theory for a relatively few claimants—and for overhead costs. So long as an insurer maintains adequate funds set aside for anticipated losses (i.e., reserves), the remaining margin is an insurer's profit.

Insurer's Business Model

Profit = earned premium + investment income - incurred loss - underwriting expenses.

Insurers make money in two ways: (1) through underwriting, the process by which insurers select the risks to insure and decide how much in premiums to charge for accepting those risks and (2) by investing the premiums they collect from insureds.

The most complicated aspect of the insurance business is the underwriting of policies. Using a wide assortment of data, insurers predict the likelihood that a claim will be made against their policies and price products accordingly. To this end, insurers use actuarial science to quantify the risks they are willing to assume and the premium they will charge to assume them. Data is analyzed to fairly accurately project the rate of future claims based on a given risk. Actuarial science uses statistics and probability to analyze the risks associated with the range of perils covered, and these scientific principles are used to determine an insurer's overall exposure. Upon termination of a given policy, the amount of premium collected and the investment gains thereon minus the amount paid out in claims is the insurer's underwriting profit on that policy. Of course, from the insurer's perspective, some policies are winners (i.e., the insurer pays out less in claims and expenses than it receives in premiums and investment income) and some are losers (i.e., the insurer pays out more in claims and expenses than it receives in premiums and investment income).

An insurer's underwriting performance is measured in its combined ratio. The loss ratio (incurred losses and loss-adjustment expenses divided by net earned premium) is added to the expense ratio (underwriting expenses divided by net premium written) to determine the company's combined ratio. The combined ratio is a reflection of the company's overall underwriting profitability. A combined ratio of less than 100 percent indicates underwriting profitability, while anything over 100 indicates an underwriting loss.

Insurance companies also earn investment profits on “float”. “Float” or available reserve is the amount of money, at hand at any given moment, that an insurer has collected in insurance premiums but has not been paid out in claims. Insurers start investing insurance premiums as soon as they are collected and continue to earn interest on them until claims are paid out.

In the United States, the underwriting loss of property and casualty insurance companies was $142.3 billion in the five years ending 2003. But overall profit for the same period was $68.4 billion, as the result of float. Some insurance industry insiders, most notably Hank Greenberg, do not believe that it is forever possible to sustain a profit from float without an underwriting profit as well, but this opinion is not universally held. Naturally, the “float” method is difficult to carry out in an economically depressed period. Bear markets do cause insurers to shift away from investments and to toughen up their underwriting standards. So a poor economy generally means high insurance premiums. This tendency to swing between profitable and unprofitable periods over time is commonly known as the "underwriting" or insurance cycle.

Property and casualty insurers currently make the most money from their auto insurance line of business. Generally better statistics are available on auto losses and underwriting on this line of business has benefited greatly from advances in computing. Additionally, property losses in the US, due to natural catastrophes, have exacerbated this trend.

Finally, claims and loss handling is the materialized utility of insurance. In managing the claims-handling function, insurers seek to balance the elements of customer satisfaction, administrative handling expenses, and claims overpayment leakages. As part of this balancing act, fraudulent insurance practices are a major business risk that must be managed and overcome.

History of Insurance

In some sense we can say that insurance appears simultaneously with the appearance of human society. We know of two types of economies in human societies: money economies (with markets, money, financial instruments and so on) and non-money or natural economies (without money, markets, financial instruments and so on). The second type is a more ancient form than the first. In such an economy and community, we can see insurance in the form of people helping each other. For example, if a house burns down, the members of the community help build a new one. Should the same thing happen to one's neighbour, the other neighbours must help. Otherwise, neighbours will not receive help in the future. This type of insurance has survived to the present day in some countries where modern money economy with its financial instruments is not widespread (for example countries in the territory of the former Soviet Union).

Turning to insurance in the modern sense (i.e., insurance in a modern money economy, in which insurance is part of the financial sphere), early methods of transferring or distributing risk were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively. Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel's capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen.

Achaemenian monarchs were the first to insure their people and made it official by registering the insuring process in governmental notary offices. The insurance tradition was performed each year in Norouz (beginning of the Iranian New Year); the heads of different ethnic groups as well as others willing to take part, presented gifts to the monarch. The most important gift was presented during a special ceremony. When a gift was worth more than 10,000 Derrik (Achaemenian gold coin) the issue was registered in a special office. This was advantageous to those who presented such special gifts. For others, the presents were fairly assessed by the confidants of the court. Then the assessment was registered in special offices.

The purpose of registering was that whenever the person who presented the gift registered by the court was in trouble, the monarch and the court would help him. Jahez, a historian and writer, writes in one of his books on ancient Iran: "[W]henever the owner of the present is in trouble or wants to construct a building, set up a feast, have his children married, etc. the one in charge of this in the court would check the registration. If the registered amount exceeded 10,000 Derrik, he or she would receive an amount of twice as much."

A thousand years later, the inhabitants of Rhodes invented the concept of the 'general average'. Merchants whose goods were being shipped together would pay a proportionally divided premium which would be used to reimburse any merchant whose goods were jettisoned during storm or sinkage.

The Greeks and Romans introduced the origins of health and life insurance c. 600 AD when they organized guilds called "benevolent societies" which cared for the families and paid funeral expenses of members upon death. Guilds in the Middle Ages served a similar purpose. The Talmud deals with several aspects of insuring goods. Before insurance was established in the late 17th century, "friendly societies" existed in England, in which people donated amounts of money to a general sum that could be used for emergencies.

Separate insurance contracts (i.e., insurance policies not bundled with loans or other kinds of contracts) were invented in Genoa in the 14th century, as were insurance pools backed by pledges of landed estates. These new insurance contracts allowed insurance to be separated from investment, a separation of roles that first proved useful in marine insurance. Insurance became far more sophisticated in post-Renaissance Europe, and specialized varieties developed.

Toward the end of the seventeenth century, London's growing importance as a centre for trade increased demand for marine insurance. In the late 1680s, Mr. Edward Lloyd opened a coffee house that became a popular haunt of ship owners, merchants, and ships’ captains, and thereby a reliable source of the latest shipping news. It became the meeting place for parties wishing to insure cargoes and ships, and those willing to underwrite such ventures. Today, Lloyd's of London remains the leading market (note that it is not an insurance company) for marine and other specialist types of insurance, but it works rather differently than the more familiar kinds of insurance.

Insurance as we know it today can be traced to the Great Fire of London, which in 1666 devoured 13,200 houses. In the aftermath of this disaster, Nicholas Barbon opened an office to insure buildings. In 1680, he established England's first fire insurance company, "The Fire Office," to insure brick and frame homes.

The first insurance company in the United States underwrote fire insurance and was formed in Charles Town (modern-day Charleston), South Carolina, in 1732. Benjamin Franklin helped to popularize and make standard the practice of insurance, particularly against fire in the form of perpetual insurance. In 1752, he founded the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire. Franklin's company was the first to make contributions toward fire prevention. Not only did his company warn against certain fire hazards, it refused to insure certain buildings where the risk of fire was too great, such as all wooden houses. In the United States, regulation of the insurance industry is highly Balkanized, with primary responsibility assumed by individual state insurance departments. Whereas insurance markets have become centralized nationally and internationally, state insurance commissioners operate individually, though at times in concert through a national insurance commissioners' organization. In recent years, some have called for a dual state and federal regulatory system for insurance similar to that which oversees state banks and national banks.