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Insurance Lawinsurance Law And And

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STUDY MATERIAL
PROFESSIONAL PROGRAMME
INSURANCE LAW AND PRACTICE
MODULE 3
ELECTIVE PAPER 9.3
ICSI House, 22, Institutional Area, Lodi Road, New Delhi 110 003 tel 011-4534 1000, 4150 4444 fax +91-11-2462 6727 email [email protected] website www.icsi.edu

© THE INSTITUTE OF COMPANY SECRETARIES OF INDIA
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(iii)
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 [email protected]
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

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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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Lesson No.

ARRANGEMENT OF STUDY LESSONS
ELECTIVE PAPER 9.3: INSURANCE LAW AND PRACTICE (100 Marks) 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



Page
2 2 3 4 4 5 5 6 6 6 6 7 7 8 8 9 9 9 10 10 10 11 11 11 11 11 11 12 12 12 13 14
15 16

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Differentiation Insurance and Guarantee



Insurance and Wager



Disclosures



Material Facts



Effect of Non-Disclosure



Representations



Active and Passive Duty of Disclosure



Moral Hazards



LESSON ROUND UP

...

SELF TEST QUESTIONS

...

Lesson 3 INSURANCE CONTRACT AND INDIAN MARKET CONDITIONS

Learning Objectives

...

Nature of Insurance Contract



Essentials for a Valid Contract



Features of Insurance Contract



(a) Aleatory



(b) Adhesion



(c) Utmost Good Faith



(d) Executory



(e) Unilateral



(f) Conditional



(g) Personal contract



(h) Warranties and Representations



(i) Misrepresentations and Concealments



(j) Fraud



(k) Impersonation (False pretenses)



(l) Parol (or Oral) evidence rule



Types of Insurance



Concept of Intermediaries



Role of Intermediaries in Insurance Industry



Dissemination of Information to the Marketplace



Types of Insurance Agents



Individual Agents



Renewal of Licence



Authorisation to Sell for One Insurer at a Time



Licensing of Corporate Agents



Requirements for becoming a Corporate Agent



Renewal of licence



Micro Insurance Agents



Role of an Insurance Agent



Insurance Broker



Licensing of Insurance Brokers



Categories of Insurance Brokers



Page
19 20 20 21 22 22 23 23 23 24
25 26 26 28 28 28 28 29 29 29 29 29 30 30 30 30 31 31 32 32 34 34 36 36 36 37 38 38 39 39 39 39

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Role of an Insurance Broker



Requirements for Licensing of an Insurance Broker



Theoretical and Practical Training requirements



Annual Fee



Renewal of licence



Difference between Insurance Agent and Insurance Broker



Surveyors and Loss Assessors



Requirements for Issue of a Licence for Surveyor or Loss Assessor



Role of a Surveyor or Loss Assessor



Third Party Administrators-Health



Requirements for becoming a TPA



Qualifications of CEO or CAO of TPA



Decision Making on Claims by TPAs Prohibited



Bar on Non-Insurance Healthcare Schemes



Agreement between a TPA and an Insurance Company



Change of TPAs for Servicing of Health Insurance Policies



Data and Related Issues



Certification of Insurance Professionals and Training Organisations



The Salient Features of Instructions as Issued By IRDA for

Accredited Training Institutes



LESSON ROUND UP

...

SELF TEST QUESTIONS

...

Lesson 4

REGULATORY ENVIRONMENT – SPECIFIC LEGISLATIONS

Learning Objectives

...

History of Insurance in India



Life Insurance



General Insurance



Regulation of Insurance business in India



Acts/Regulations common to General and Life Insurance Business in India



Regulations governing/affecting Life Insurance Business in India



Regulations Affecting General Insurance Business in India



Why Regulation of Insurance Businesses is Required



Constitution of Insurance Regulatory and Development Authority



Powers/Functions of IRDA



Framework under the Insurance Act, 1938



Important Provisions of Insurance Act

(a) Incorporation of Insurance Companies



(b) Requirements as to Capital, Transfer of Shares, Voting Rights



(c) Deposits with RBI



(d) Accounts, Audit and Actuarial Reports and Abstract



(e) Provisions Relating to Invwstments



Formation of Subsidiary Companies for doing Insurance Business



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InsurancePrinciplesPracticesConceptsSyllabus