Paper II - General Insurance Set Two

Guidance Notes
These are issued by the Insurance Agents Registration Board and especially provide Guidelines for insurance agents’ compliance on.

“Minimum Requirements” Specified for Insurance Brokers
These were specified in accordance with the provisions of the ICO which introduced a framework for the supervision of self-regulation by the insurance broking industry. The “minimum requirements” specified for insurance brokers cover such matters as:
(i) qualifications and experience;
(ii) capital and net assets;
(iii) professional indemnity insurance;
(iv) keeping of separate client accounts;

Average Adjusters
These experts are found with Marine insurance claims. More specifically, they specialize in General Average (GA) claims.Because of their special expertise, average adjusters may also be used with hull and with especially complicated cargo losses

The different methods and comments thereon are as follows:
(a) Payment of Money
Payment with cash (almost invariably by cheque) is by far the commonest method of claims settlement.(b) Paying for Repairs Direct(c) Replacement
This is another option allowed by most property insurance policies.d) Reinstatement.

Reinstatement
This is a word that has a number of meanings in insurance. In the context of claims settlement methods, it means the restoration of the insured property to the condition in which it was immediately before its destruction or damage.

Specific Exclusions
These are exclusions which the underwriter decides should be applied to specific policies, but a few examples may serve as illustrations:
(i) Personal accident insurance: an insured may have a particular problem to his back (e.g. “slipped disc”).
(ii) Motor insurance: a particular member of the insured’s family could have a bad record of driving accidents, so policy cover may be specially limited to exclude him.
(iii) “All risks” insurance: insuring an item of jewelry which is perhaps worth millions of dollars presents certain problems.

It is important to note that there is no automatic right to cancel any contract (and this includes insurance). Apart from situations where the law allows or requires the contract to end, unless contract terms specifically allow cancellation (premature termination), this can only happen by mutual consent.
In practice, most general insurance policies do have a cancellation clause (or cancellation condition).

VALID CLAIMS
For a claim to be valid, it must satisfy a number of requirementsGiven this premise, we should note the following:
(a) Claims are the insurer’s “shop window”(b) Claims should not be refused lightly(c) Confidence of the customers

In the common law, the insured’s duties will include:
(a) reasonable cooperation with the insurer;
(b) a duty to minimize loss as far as is reasonably possible;
(c) not to jeopardize the insurer’s rights (e.g. salvage or subrogation)
(d) absence of fraud (in any form).

This aspect is more difficult and subjective. Also, the true nature of the insured may not be apparent until a claim arises. However, we may briefly say that moral hazard, in its adverse form, could show itself in:
(i) Dishonesty: in extreme or serious forms, this means fraud;
(ii) Carelessness: which can easily produce losses or accidents;
(iii) Unreasonableness: a person may be totally honest in the accepted sense of the word, but they may create big problems by opinionated views and inflexibility;
(iv) Social behaviour: by which is meant general public behaviour, expressing itself, for example, in vandalism and social disturbances.