Insurance claim settlement

Speedy claim settlement is a major factor in selection of an insurance companies by its customers. For filing a a claim on your home or auto insurance policy , you should contact the concerned insurance companies branch office or contact your advisor/agent for claim processing. You fill out a claim form and wait for a claim adjuster to review the claim. Then if all the documents submitted meet the requirements of the insurance company, the cheque will be processed as per the norms.

Risk tolerance

The risk an individual can take depends to a large extent on the number of dependents an individual has. The more the number of dependents, the less risk he or she can afford to take.

The person will also need to find a suitable insurance policy so that their dependents can meet their daily expenses in case his regular source of income vanishes.

Car insurance

Car insurance is the insurance purchased to protect the owner against losses due to damage in  traffic accidents or the liability incurred due to such incidents. Usually the insured party, vehicle and third parties are covered but in some cases, the insurance may also cover those traveling in the car, irrespective of who is responsible for the accident.

The car insurance premium to be paid varies depending on the government, in some countries the amount is decided by the government, in other countries by the insurance company based on statistical data. Some of the factors which determine the amount of car insurance to be paid include the car model, how the car will be used, driver age, gender, driving records and the type of insurance coverage selected.

In Canada, basic auto insurance is compulsory, though the basic requirements for auto insurance coverage differ from province to province. For a car insurance quote Quebec , coverage may include aspects which are not included in the public auto insurance system . An auto insurance quote Ontario should be obtained from several private insurance companies to obtain the best rates. All accident victims can avail of some form of no fault insurance in all the provinces of Canada.

Types of insurance

Insurance companies offer a variety of insurance products for different people available depending on the lifestyle they lead. The life insurance policy is related to the life of a person who taken the policy. It is a contract in which the insurance company agrees to pay a specified amount to the person after expiry of the policy period mentioned in the contract or on the death of insured person, whichever is earlier.

The insurance which covers indemnified losses caused by fire comes under fire insurance. It is helpful to the factory owners, hotels transporters, industrialists, cinema house owners, shops; service centers providers and godown owners whose assets can be destroyed by fire.

Marine insurance is the insurance of ships, boats and cargo against marine losses. This is an insurance against risk while traversing the seas such as bad weather, pirates, detainment of cargo, hijacking and other problems.

Miscellaneous insurance may be personal or business related and include the  following:

  • accident insurance
  • burglar insurance
  • health insurance
  • travel insurance
  • motor car insurance
  • employer’s liability insurance
  • crop insurance
  • machinery insurance

Insurance and economic development

The origin of the insurance systems used today can be traced more than 5000 years ago. In ancient times, people whose property and other resources were vulnerable to the losses from natural and man made causes came together and created a social fund by contributing to it. In case of any disaster, they could withdraw money from this fund as per their needs

Insurance plays a very important role in the economic development of a country. It encourages an individual to save money . In a way, the payment of premium of insurance is a kind of savings and it can be withdrawn by the policy holder before the completion of period of insurance policy.

The funds collected by the insurance companies from their policy holders are made available to the industries and traders in the country. The premium amount is invested in industries and trade by providing capital and loans. This helps companies to undertake new industrial projects or expansions for factories. The money is also used by traders in increasing both their sales in the local markets and enter into contracts with foreign companies. The returns from these investments and loans boost the profits of the insurance company and in this way helps in the development of trade and industry of the country and growth of the Gross Domestic Product (GDP).

Insurance

The word Insurance means a provision to compensate the loss caused to the property or assets due to unexpected reasons called perils. The wealth of an individual is related to the creation and production of assets of economic values. A person spends most of his or her working hours in the creation of assets through earned income or by using the physical factors of production. The main aim behind this is to earn money to lead a comfortable life for himself, herself or the family.

When life of such assets is exhausted as expected, it is substituted by a new asset. But if such a asset is destroyed by accident or due to some unforeseen event, then the owner of the asset has to suffer loss of benefits in the form of comforts. He needs a mechanism which can help him to reduce the loss he has suffered. Insurance provide such mechanism. Insurance is a mechanism which is helpful to reduce the adverse effects of unexpected happenings, causing loss to the property or to the life of an individual.

It is a sort of contract in which Insurer agrees to compensate the person taking the insurance. The insurance company agrees to pay a certain sum of money to compensate the loss with the payment of money by the party covered by the insurer and is called a ‘Premium’. Agreement between Insured and Insurer is known as “Policy” which is the evidence of the contract. In a Policy Agreement, the conditions of policy on whose basis insurance is given, are printed. This policy conditions guide the insured and the insurer on all occasions to carry out their obligations towards each other.

Threats that affect business continuity

Some of the threats that affect business continuity are:

1. Disease – contagious diseases, epidemics or illness with no known vaccination or cure. Employees may not be able to attend office

2. Earthquake – can lead to loss of life and property, damage to business assets

3. Fire – result in  destruction of  important documents and records , damage to property

4. Floods and water logging  – destruction of  important documents and records

5. Cyber attack – hacking into companies intranet, website or servers,  computers infected by viruses or trojans

6. Disruption in power supply for offices, transport facilities for employees and water supply for industries

7. Loss of  important / experienced employees to competitors , ill health or accidents

8. Terrorist attacks – which may directly damage the company infrastructure or can disrupt business for a few days.

Business continuity planning

Business continuity planning is the process by which an organization prepares for future incidents which could adversely affect the operation of the organization, including its future growth prospects.

Many organizations were anticipating problems as the date changed to January 1, 2000 (the y2k problem). However, no major problem was reported due to proper planning by the IT departments of most companies. After the 9/11 terrorist attacks in USA, which disrupted many businesses for several days, most large organizations have developed comprehensive plans for business continuity .

Many small organizations do not plan for business continuity due to lack of foresight, though studies show that disasters like fire can adversely affect the operation of these firms. More than 30% of these companies shut down operation when faced with an unexpected problem

Handling risk

Handling risk is important for different professionals

# Export and import financing Managers and Corporate who intends to expand their overseas exposures with potential high risk under-developed and developing markets.
# Executives in charge of finance related issues
# Marketing group to have a better understanding of country risks and commercial risks and the
issues relating to funding operations and to know the technical issues in handling letter of credit and guarantees
# Small and Medium Enterprises:for identifying the suitable financial package offered by the banks and to choose the appropriate facility / technique.
# Bankers and financial institution representatives handling corporate clients under corporate and   retail banking and those marketing team personnel selling trade service products.

Risk Management in International Trade

Risk Management in international trade involves reducing the cost of funds and managing the risks in international exposure
Apart from foreign exchange currency risk, exporters are facing commercial risk on probable default of the unknown buyers in new markets.

Identifying the risks in international trade, quantifying and managing such risks with appropriate facilities / products / instruments are becoming professional functions of a corporate.

This involves knowledge of the following:
# Updates on export finance – Rupee and foreign currency credit facilities at pre and post
shipment stages – issues relating to merchanting trade operations;
# Availing trade credit for imports in the form of supplier’s credit or buyer’s credit or external   commercial borrowing
# Identifying the country risk, currency risk and commercial risks in trade transactions;
# Managing commercial risks through letter of credit, guarantees,standby credits – update on the
proposed changes on letter of credit transactions (UCPDC ICC 600 review)
# New techniques in managing export receivables through  international factoring, forfaiting and
line of credit facilities.
# Managing the foreign exchange risks through risk management strategies.