BeNew Insurance

Emerging Risks It is a risk resulting from a newly identified hazard to which a significant exposure may occur, or from an unexpected new or increased significant exposure and/or susceptibility to a known hazard. Emerging risks have high potential for loss as they often go unrecognised until they materialise in unexpected large-scale, high-impact risk events, or spontaneously developing trends. For example: Increasing cyber attacks due to the rise of digitalisation worldwide. 2013: Grounding of Dreamliners Flood in Thailand 2011 and Pakistan 2022. 2001: Attack on the World Trade Center Emerging risks are particularly important in the context of strategic planning, because strategic planning has a longer term horizon, assumptions about the future are much more critical and are much more likely to become invalid during the planning horizon. Emerging risks are identify by 1) Conduct emerging risk reviews. 2) Integrate reviews into the strategic planning process. 3) Identi

Warranty It is a clause which the policyholder must term in an insurance contract which must be exactly and literally complied with. Examples of warranty; Alarm system warranty when buying a policy for burglary. If you have an insurance policy providing coverage for burglary or theft of your business contents and you are robbed while the alarm system is off-line, the alarm system warranty will not cover the loss. Sub-contractor warranty, If this warranty is contained in your policy, it is your requirement that you must receive written proof of insurance from any subcontractor that you hire prior before they commence work for you. You could be held responsible for the negligent acts of subcontractors. An insurer (the underwriter) has the right to limit their risk by placing warranties on their policies therefore, if the warranty is breached the policy is void. Failure to comply to your warranty could VOID your coverage regardless of the cause of the loss and the coverages and exc

Compulsory Insurance Those classes of insurance policies made compulsory by law, to individuals or businesses want to engage in certain financially risky activities. There is reason enough to bring in the aspect of compulsory insurance is critical starting point, which is that a liability system is considered as a system aiming at the deterrence of accidents on efficiency grounds and that moral hazard and adverse selection can be controlled. For example protecting third parties with automobile owners getting a third party motor vehicle insurance, or the general public workers compensation cover for institutions. it is no exaggeration to say that compulsory insurance plays a central role in the operation of tort law in action. Accidents on the roads account for the vast majority of personal injury claims, and accidents at work though recently overtaken by public liability claims are in third position: both of these are covered by compulsory insurance. In a general sense, compulsor

Insurance-linked securities Insurance-linked securities (ILS) are financial instruments that allow investors to speculate on a variety of events, including catastrophes such as hurricanes, earthquakes and pandemics. ILS have become popular with both insurers and investors in recent years. They allow an insurer to purchase additional protection for low-frequency, high-severity losses such as those connected to natural catastrophes. Meanwhile, investors are attracted to ILS because returns are not correlated with the financial markets thereby enabling diversification within their portfolios. The size of the ILS market; Since 2015, only once has issuance in Q4 exceeded the $2 billion mark, so it is impressive that it is now more than $3 billion. Combined with the previous three quarters of the year, Q4 2019 issuance took the total outstanding market size to a record end-of-year high of $41 billion. A fairly valued investment opportunity for ILS is one that compensates investors suffi

Fraud in Insurance Caims Insurance fraud is a "specific" intent crime. This means a prosecutor must prove that the person involved knowingly committed an act to defraud. According to SUBEX, the true cost of insurance fraud in the global insurance fraud market size shows that 3-4% of all claims filed are fraudulent. An insurance fraud act is completed when one makes a misrepresentation (written or oral) to an insurer with knowledge that is untrue is sufficient. Insurance fraud is any act committed to defraud an insurance process. It occurs when a claimant attempts to obtain some benefit or advantage they are not entitled to, or when an insurer knowingly denies some benefit that is due. Surprisingly we are understanding fraud in Insurance Caims is a tel way thing that is may be committed by either the insurer of insured, but most common with insured. When dictected claim will be repudiated and policy cancelled ab initio (from the beginning). Some of the example of clai

Subrogation The basic idea behind subrogation is that insurers have a right to receive payment for bills that they have paid on behalf of their insureds. The principle of subrogation states that once the insurance company has compensated the insured for the losses incurred by him/her, the ownership of the property is transferred to the insurance company. Subrogation allows the insurer to claim the amount of loss from the third party who is responsible for the loss. For instance, take a scenario of a road accident where two parties are involved, one of them being the insured. The cause of the accident is the reckless driving of one party. In this case, the insurer will provide the insurance claim amount to the insured as well as sue the third party carrier that caused the accident. The importance of this doctrine is that it allows your insurer to recoup costs, including your deductible, from the at-fault third party insurance company, if the accident was not your fault. A successfu

Contract of Insurance Agreement between the insurer and the Insured where the insurer promises the insured party that she will save or indemnify him (insured) from losses caused by a particular contingent event, on the payment of an amount called premium. It carries the guidelines to protect each party to the contract What are the components of an insurance contract: Firstly, an insurance contract should mention the amount needed to purchase the insurance coverage, also known as the insurance policy premium. The insured can pay this premium to the insurer annually, bi-annually, or quarterly. Secondly, an insurance contract should mention the policy limit, the amount of coverage that the insurer provides to the insured. Finally, the insurance contract should mention the deductibles, the amount or percentage that the insured agrees to pay before the insurer sets in to pay the compensation. Insurance contracts can be of two types based on the type of object for which the insuranc

Declinature Refusal of an insurer or reinsurer to accept or renew an existing policy after careful evaluation of the application for insurance. The insurer may denied cover to a policyholder on the basis that their responses to a renewal form were either incomplete (non-disclosure) or misleading (misrepresentation). Facts by law where such a breach has occurred, the insurer can avoid the policy if it can show: the breach, or misrepresentation, “deliberate or reckless” or the “misrepresentation was careless”. However this declinature must not be out of invariable practice by the insurer, or policyholder could not be expected to know that the relevant information provided or not provided could trigger declinature, or the insurer did not have any waived compliance with the duty of disclosure. Recent case finds insurers may be entitled to rely on new grounds for declinature even if not referred to in original declinature letter. For example declining financial assistance to a pol

Proximate Cause Proximate cause refers to a doctrine by which a plaintiff must prove that the defendant's actions set in motion a relatively short chain of events that could have reasonably been anticipated to lead to the plaintiff's damages. Therefore an actual cause that is also legally sufficient to support liability in someone (entity) wrongful action that cause damage. If the defendant's actions were "proximate" or close enough in the chain of causation to have foreseeably led to the plaintiff's damages, courts will impose liability. Proximate cause is a key principle of insurance and is concerned with how the loss or damage actually occurred and whether it is indeed as a result of an insured peril. The important point to note is that the proximate cause is the nearest cause and not a remote cause. An example proximate cause can be when a driver of “Car A” runs a red light and hits “Car B,” which had a green light, causing injury to the driver of Ca

Arbitration Alternative to litigation for the settlement of disputes. It is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court. The good thing about arbitration it often resolved disputes much more quickly than court proceedings, and so reduce the cost of attorney fees. Arbitration can only take place if both parties have agreed to it. An existing dispute can be referred to arbitration by means of a submission agreement between the parties. In contrast to mediation, a party cannot unilaterally withdraw from arbitration. Arbitration can be mandatory or voluntary, binding or non-binding. Arbitration has four types of functions: resolving contractual disputes between management and labor, addressing interests of different parties in bargaining situations such as public sector labor

Moral Hazard It is a situation where an economic actor has an incentive to increase its exposure to risk because it does not bear the full costs of that risk. For example, when a corporation is insured, it may take on higher risk knowing that its insurance will pay the associated costs. Moral hazard is very common in the insurance and lending industries but also can exist in employee-employer relationships. The phrase “moral hazard” originally comes from the insurance world and is based largely on the fact that each party has different information regarding a situation. The information is typically not passed on to the insurance company because it would typically result in either higher premium requirements or the inability to obtain the insurance policy. Asymmetric information gives the risk-taking party incentive to take even greater risks, knowing that the other party will absorb them. For example, insured individuals may more willingly take additional risks in their activities

Reinsurance Reinsurance is also known as insurance for insurers or stop-loss insurance. It is the practice whereby insurers transfer portions of their risk portfolios to other parties by some form of agreement to reduce the likelihood of paying a large obligation resulting from an insurance claim. Reinsurance occurs when multiple insurance companies share risk by purchasing insurance policies from other insurers to limit their own total loss in case of disaster. By spreading risk, an insurance company takes on clients whose coverage would be too great of a burden for the single insurance company to handle alone. The purpose of reinsurance is to protects the cedent against a single catastrophic loss or multiple large losses. Reinsurance also affords protection against casualty losses in which multiple insureds can be involved in one occurrence. The fundamental principles of insurance such as insurable interest, utmost good faith, indemnity, subrogation and proximate cause also apply

Insurable Interest A financial interest that a person has in something such as a particular property or another individual, which means that the person would suffer a loss should that property or individual be harmed or in the happening of some event. Therefore to have an insurable interest in something means you own it, or would suffer financially if it were damaged or destroyed or if an eventuality occurs. Insurable interest is most common in immediate family and business relationships for example; -Yourself -Spouse -Children (adopted or natural) -Grandparents and grandchildren -Siblings -Corporations and business partnership An example of insurable interest is a policyholder buying property insurance for their own house but not for their neighbour's house. The person does not have an insurable interest in any financial loss arising from damage to their neighbour's house. Similarly having financial hardship if the insured person were to pass away. For example, Joe and Je

Private and Public Health Insurance Public health care is usually provided by the government through national healthcare systems. Private health care can be provided through “for profit” hospitals and self-employed practitioners, and “not for profit” non-government providers, including faith-based organizations. Private health insurance plans are generally more expensive, but potentially more comprehensive and customizable. Public health insurance plans are less expensive due to governments assistance (subvention), but may be less comprehensive than you would like due to certain limitations or restrictions. Base on your budget you want to select the insurance plan that is most convenient for you. #benewinsurance #insurtech #inclusiveinsurance #insurance #reinsurance #takaful

Bancassurance Is a relationship between a bank and an insurance company that is aimed at offering insurance products or insurance benefits to the bank's customers. In this partnership, bank staff and tellers become the point of sale and point of contact for the customer. Bancassurance as we know it today appears to have begun in France in the 1970s (which would account for its seemingly French name). Spain was also an early adopter, in the 1980s. Both of those countries continue to be bancassurance market share leaders. The insurance company benefits from increased sales and a broader client base without having to expand its sales force. The bank benefits by receiving additional revenue from the sale of insurance products. Buying insurance at the bank is convenient, especially in small towns where insurance agents may be scarce, contrarily buying at the bank may discourage consumers from shopping around and getting a competitive price on their insurance. In a bancassurance s

Doctrine Of Utmost Good Faith The doctrine of utmost good faith, also known by its Latin name uberrimae fidei, is a minimum standard, legally obliging all parties entering a contract to act honestly and not mislead or withhold critical information from one another. This doctrine oblige both the insurer and the policyholder to act honestly toward each other. You should voluntarily disclose, accurately and fully, all relevant information to the risk being insured (for example, the car or the house being insured) whether requested or not. This principle is important to the insurer in it gives the insurer a full and accurate picture of the risk that is proposed to them. Insurance Contract being a financial contract needs to follow Utmost Good faith. Commercial contracts are subject to the principle of Caveat Emptor i.e. let the buyer beware. Hence it becomes very important for the policyholder to disclose all relevant information at the time of commencement of the policy so that they f

Who is an Insured? Insured is a generic term that refers to any person or entity legally entitled to receive the benefits of an insurance policy, typically claim payments. Generally insurers make payments to insureds after they experience a covered loss, damage, or an injury that qualifies for payment under the policy's terms. The main difference between an insured and a named insured is that: an insured party is any person or entity that is legally qualified to receive insurance payments after a loss occurs, while a named insured is a more specific term referring to individuals or companies listed on a policy’s declaration page. The relationship between a insured and insurer is that in the contract of insurance, the insurance company makes a promise to compensate for the losses incurred by the insured on the happening of a contingency. Contingency refers to the event that causes the loss, which often includes the policyholder's death or the destruction of a property.

The Principle of Contribution Two or more insurers each liable for a covered loss should participate in the payment of the loss. Through a payment by each party interested (insurer)of his share in any common liability. Having paid its share of a loss, an insurer may be entitled to equitable contributiona legal right to recover part of the payment from another insurer whose policy was also applicable. Many insurance policies stipulate the formula under which contribution among multiple insurers will take place. Two standard methods are Contribution by limits and Contribution by equal shares. For example a property worth 5000 is insured with Company A for 3000 and with company B for 1000. The owner in case of damage to the property for 3000 can claim the full amount from Company A but then he cannot claim any amount from Company B. Now, Company A can claim the proportional amount reimbursed value from Company B. Before contribution can operate the following conditions must be ful

Principle of Indemnity The principle of indemnity governs that an insurance contract compensates you for any damage, loss or injury caused only to the extent of the loss incurred. Insurance contract ensures that the insurer does not make a profit in the event of an incurred loss.. Principle of Indemnity ensures that: a) The objective of the insurer is to put you back in the same financial condition which you were in before the loss. b) You are compensated after the insurer fully inspects and calculated the loss. The claim you receive is neither less nor more than the loss. c) This principle is followed to ensure that you do not get profited through insurance claim. A common example of indemnification happens with reagrd to insurance transactions. This often happens when an insurance company, as part of an individual's insurance policy, agrees to indemnify the insured person for losses that the insured person incurred as the result of accident or property damage. When you sig

Microinsurance It is the protection of low-income people against specific perils in exchange for regular premium payments appropriate to the likelihood and cost of the risk involved. The main aim of microinsurance is to providing solutions that help low-income people manage the hazards of life. Similar to regular insurance, microinsurance is available for a wide variety of risks, including health, term life, death, disability, and even farming-related insurance risks for crops and livestock. Typically, there are four main methods for delivering microinsurance: the provider-driven model, the full-service model, the community-based model, and the partner-agent model. Developing countries often use microinsurance products. Many emerging markets are widening the reach of insurance services to those segments of the population that have remained underserved. Microinsurance is not confined to any specific product or product line or a specific provider type. It covers a wide variety of r

Who is an Insurer? Insurers have existed for thousands of years in various forms. They are essentially those that have the financial means to protect another. Some say the oldest form of insurance was written in the Code of Hammurabi — a set of laws written around 1750 BC that said ship merchants could finance their cargo with lenders (what would be considered insurers today). If the cargo made it to port safely, the merchants paid back the lenders. If the cargo did not make it back because of a shipwreck or accident, then merchants did not have to pay it back. The premiums for this were quite high because the risk of loss was difficult to predict The party to an insurance contract who underwrites an insurance risk and undertakes to provide financial compensation, or responsible for paying claims under a contract of insurance. The insurer is the company that pays out that compensation. They’re the company that designs the insurance policy and sets the terms of the agreement. The wo

An Insurance Broker Is an intermediary who sells, solicits, or negotiates insurance on behalf of a client for compensation or An independent intermediary who negotiates the Insurance or and Reinsurance contracts, receives a commission for the services. An insurance broker is not about selling insurance policies; it’s about providing a first class service to clients looking for specialist advice. And rather than selling you a policy, an insurance broker actually buys you an insurance policy that meets your insurance and business need. Upon meeting with a new client, the first thing a broker will do is determine what their client’s insurance needs are. Depending on the type of insurance the client is shopping for, they might ask a few questions, or they might ask for documentation in the form of inspection reports, appraisals, property valuations, and so on. Your insurance broker will negotiate with insurance underwriters on your behalf to help find you the exact cover you need. A

Workers Compensation A province-administered program that provides benefits to workers who are injured during the course and scope of employment. In a workers’ compensation case, no one party is determined to be at fault. The amount that a claimant receives is not decreased by his/her carelessness, nor increased by an employer’s fault. However, a worker loses his/her right to workers’ compensation if the injury results solely from his or her intoxication from drugs or alcohol, or from the intent to injure him/herself or someone else. There are three main types of benefits under workers Compensation: medical benefits, income benefits, and death benefits, each type is statutorily defined and limited. The limits are set in the law. These benefits can help: -Cover their medical care and medical treatment -Replace most of their lost wages if they take time off from work to recover -Provide disability benefits -Give death benefits, like helping pay for a funeral if they lose their