Answer to Question #166095 in Management for Kamal

Question #166095

Subject: insurance management


1.what is the impact of insurance regulatory and Development Authority Act, 1999 on Insurance sector in India ?(please give at least 8 to 10 points for this in detail )


2.discuss the various liabilities of insurer? elaborate your answer with example?( please answer in detail in 200 to 250 words)


1
Expert's answer
2021-03-01T09:43:37-0500

1)


Effect on Regulation of Insurance Industry

Insurance Regulatory and Development Authority regulates the Insurance sector. It aims to protect the interest of the insurance policy holders. It also encourages and ensure the systematic growth of the insurance industry.

Effect over protection of policyholders

IRDA has great impact over the protection of policyholders. The Authority aims to provide fair treatment to all the policyholders.

Effect over Awareness about Insurance

IRDA is taking steps to increase awareness amongst the masses about the benefits of insurance. There is a separate Consumer education website of IRDA to educate people about insurance.

Effect over Insurance Market

There is a drastic effect of Insurance Regulatory and Development Authority over insurance market. IRDA regulates the insurance market and ensure the systematic and speedy growth of the insurance market.

Effect over Development of Insurance Product

All the insurance companies must take approval from Insurance Regulatory and Development Authority before launching any new product or before making any changes in the existing product or withdrawing a product. The insurers who wishes to launch a new product or make changes to the existing product or withdrawing a product shall submit an application to the Authority in the prescribed form along with the necessary details and reasons for the change reasons

Effect on Competition between Private and Public sector

As there is more demand from the customer for new, beneficial and improved insurance products, there is a healthy competition amongst the insurers. This acts as a boon to the customer. Improved products along with attractive schemes has been designed by the public sector to give tough competition to the private sector.

Effect over Banks and Post Offices

With the increasing awareness amongst people about the benefits of insurance, the flow of funds have shifted to the insurance industry from Banks and Post Offices. Insurance has become a medium for not only covering losses and risks but has also become a popular way to save tax.

Q2)   The term liability insurance refers to an insurance product that provides an insured party with protection against claims resulting from injuries and damage to other people or property. Liability insurance policies cover any legal costs and payouts an insured party is responsible for if they are found legally liable

1) Commercial general liability (CGL) policy: A CGL policy protects the businesses against the claims arising out of bodily injury and property damage arising out of:

  • Premises
  • Operations
  • Products
  • Completed operations

It also covers the losses caused due to advertising and personal injury.

2) Directors and Officers liability insurance: It is a type of liability insurance that covers the directors and officers against the claims made by

  • Employees
  • Suppliers
  • Competitors
  • Regulators
  • Customers
  • Shareholders
  • Other stakeholders

3) Professional indemnity insurance: A Professional Indemnity Insurance is a type of liability insurance that covers the businesses or individuals who provide advice or a professional service to clients. It covers the compensation claims when its clients for making a mistake sue the business.

4) Cyber risk insurance: A cyber insurance policy is designed to help an organization or business to cover against the liability and property losses arising due to any electronic activity that the business engages in. This policy helps to offset the risk involved with recovery, after a cyber-related security breach.

5) Commercial crime insurance: A Commercial Crime Insurance policy offers to protect the businesses against the losses due to third-party fraud or employee fidelity. It protects the business against:

  • Employee dishonesty
  • Theft of money
  • Burglary
  • Robbery
  • Forgery
  • Computer fraud

 

6) Carrier legal liability insurance: Carrier legal liability insurance covers the insured for the physical loss or damage to goods or merchandise directly caused by fire or/and accident to the vehicle while such goods or merchandise are in transit. It covers for the losses of the goods or merchandise when they are in the custody of the insured.

7) Product liability insurance: A product liability insurance covers the business against the claims arising with respect to its products and services. The claims may arise due to personal injury or property damage caused due to the products or services of the business.

8) Trade credit insurance: This insurance helps the business owners to protect their accounts receivable from loss due to credit risks such as protracted default, insolvency or bankruptcy.



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