FIRE INSURANCE: THE INDIAN CONTEXT Abner Joby Joy swans merging a on oft exe egrets nth gal conn dia marance har sow come ofthe fancy staged rad proressing toads eons an ipsa resi nda 03 ‘fer ample arte of mora prds er aor of te ares of amon vite Th paper foes an nee te Fire snc my ox ne tars ah a one of he ety ine and nes Sore reel rectal eee re eee eee (aisnsaswellath pth aba. Hl canines the dared senaroofIndan ire ncrence market, iraooucrion Drees t Cotte ly Pack ty Tiber nly at oe itera othe Teeter ect a iralcowinayt en Seereceotaeetslacary feats acree "ibtenes na anaes Seatac soatan erste ‘Sas be wo co ot torres S's to, mv. tn ly “Seton "Sol nee rly ‘ony cng pe (Sia opti oh care ‘Src tanh waa cee Suitable insurance covers ae indepensable for overy family andy hisimporantor ‘sechindvcualo understand he necessity ot Insurance and adopt appropriate and equate insurance covers to seloguard nthe unantipatecris. INDIAN INSURANCE REGULATION - THE KEYMILESTONES. Insurance Act, 1008 In 1808, the Insurance Act was passed in order to protect he interest ofthe pub. The Act contained various provisions for regulating the insurers actos. In 1967, the General nsuranes Counc ‘as formed. The Coun tamed a code of conduct s at ensure fi concit seedsound aaurance busines practees The General Insurance Business (Natonaizaton) Act was passed inthe yor 1972, As a reat, the general the 107 insurers were combined and ‘rouped ino four compares - Natal Insurance Company Ui, the Now nda Assurance Company Lt, the Orta Insurance Company Lid and the United India Insurance Company is. The {Gono Irswance Corporation of nda was incorporated a company in 1971, 191099, hetasrance Regutony an Development Autorty (ROA) were formed, © reguste end develop the Incian insurance indus. The DA Act led to the opening up of the Indian Insurance market for prvate players 2 at) oy ‘The Act permite foreign companias the ownership ofupto 26%, + Current there are 23 ie insurers and 24 generalinaurersinour county ‘THE GENESIS OF FIRE INSURANCE. ‘The beginning of fre insurance was the ‘attermah ofthe great feof Londonin 166. ‘London went through major destructive tres and worst ofall the Great Fre ofLondon inthe year 1686, It stated in a baker's shop on Pudding Lane and destroyed more than 438 ‘acres, 13,000 houses, 89 churches ands of fother buildings. Those trying times ‘demonstrated the crucial need for some ‘The Indian Fire Insurance market Is sal in is early stages ofdevelopment. From the commencement of Insurance in Ind till today, the fire Insurance industry in our country has crossed several imllestones and has witnessed drastic challenges such as etariffing and the recentrocession. financial compensation and that brought ‘about significant ‘changes which inated the Fre Insurance, Several views exit with regard to the fist Fire Insurance Company. By and large, it has been accepted that Dr Nicholas Baron was the fst to commence fee Insurance protection inthe name of The Fre Ofc’ (aterknown as "The Phoenie).Thiswas tatedin the year 1680. ‘Contibutorship for Insuring Houses, Chambers, of Roome from Loss by Fire by Amicable Contributions’ was the first ‘mutual fre ineurance company ‘anditwas st upinthe year 1696. In 1905, was absorbed by the ‘Commercial Union Assurance Company, Ltd, otLondon. Fre Ingurance in india, a8 we know it today, has come a long way. Previously, the Fre ineurance policy used to provide coverage just for fre peris. The other paris were available only as ‘add ons’ which could be covered solely on payment of sdditional premium and the choice was let 10 the insured. Subsequent to some of the major ‘tmosphericperisin ourcounty and theriots of 1984, the need for @ package policy to ‘cover ast of penis was realized. In course of ‘ime, suitable revisions wore made and a package policy was designed to cover other pets such as riots, stikes, storms etc. Earthquake and few other pois silldo not tall Under the package policy. required, tse havetobetakenas addon covers, INDEMNIFYINGFIRELOSSES.. The word is exposed to a wide variety of unforeseen natural peris such as fre, storm, earthquake, landside etc. The great fires in Fome in 64 B.C, The Great Chicago Fre, The Great Fire of London, San Francisco Earthquake Fre, Huicane Katrina, Cyclone Nargis ete are few of the devastating ‘occutrencesinthe past. India too has experienced a numberof major Catastrophic losses In recent times. Mumbai floods, teunami disasters and the earthquakes in various states are a fow amongst those. In spite of such exposures to natural catasvophic losses, the insurance penetration level in ur county every it is necessary for every one to think of some reliable monetary support, to shield against ‘such unexpected occurtnces. The Standard Fire and Special Pers pocy is wel suite to indemnity the insured against losses which may arseoutoreandaliod ports, ‘As por the Standard Fire & Special Pris pokcy.treshouldbe hostile. itshould not be in @ place in which itis intended to be. There has to be actual ignition and the fre should be accidental orforutousinorgn. Fire Insurance i classiied under the General {0n-te) insurance WHAT CAN BE INSURED UNDER FIRE INSURANCE? ‘The subject matter offre insurance policy can be any kind of property with financial vale; such as buildings (including plinth and ‘oundaton), plants and machineries, stocks, furniture, dures ana ttings, other contents, stocks oteFPS wer ‘Anypersonororgrizatonthathasinsurabie WHATDOES THIS POLICY EXCLUDE? «Expenses incurred on architects, exit-2 stn te bec mat 6a er aowng ae sme of he eo exons Suneyos aod Costing Engeers _THPas esas Pas Se ee ee of a Standard Fre & Special Peis policy. Foos and on removal of debris by the [yaa pas a ob us] — These clusions ae not appable 12 insured ater ass, n oxess of and sat aoe Set ‘The sum insured in Standard Fro & Speci poices covering dings. ‘Svotheclamamounsrespactvy eer Peis polis canbe fed on Markt Valve : ew, oo a Basis or on eintstomert value Bas. Tro S855 + Detrraton of Stocks inthe premises sea nec second aerate, io, the Rensatment > The fest 5% of each and evry cm of cold storages resulting trom | Faeries | maa oes tbe applotorsto 10, 000 acide power ure, suosequentta kis, exe wi \aueBasiscanotbe applied foe stocks. ject fo 8 minimum of idertal power are, subsea eee ent respect each and vey ss aig out camages at the promises of Power ‘srs raed (F 2OG pos covered under ep. Staionbecauseofaninsred pen Decanon pics ce WHAT PERILS ARE COVERED UNDER. Shar vunc rene Lapunno, athy ‘ert pes sna STANDARD FIRE & SPECIAL PERILS Cyne vnnucunmernice + Deteoaton of stock noid storage ete ek Poucy? apa eae premise reautng fom versions in levees | tin es oe et meer temperature due to any damage ot oss “hte at ‘The Standard Fre & Special Pets oley ee temperature to any damags me rodes cover fr 14 pes Tose areas [ON rd ot of oer Pr tothe eat storage rachine, os |] i Until onus se fotons- i on reeutotoperaton of naire pert ‘ator © Excees is aplable par oven per ‘smashed see st sppleabe per event pas 5 aes eevee insure ea fc oe > Losses sing ot ot war & war lates + pact Daag caused ce o he | tg mPa Ba ec 3. Explosion implosion pore, erizing ractations,radoociy ‘vehicles, cranes ete owned by the eee a pra be sh Nene Posen or contamination not esuting nares, ra ama Flot Ske & Matous Damage, flat doseeded ald ao + Spontaneous ombuston toys = : insured prs “Theatre mine rab tech fone © impectDamage. oe *Onisonisnzeuston staan Gee ae te 7 Sibsdreaentandnincing ecco sang ches ete eects es oti to > Loss to the socks in cold storage + Eahauake, ‘CONSEQUENTIAL LOSS INSURANCE 8. Mesietetng operatons. premises "aus to vraions i + Spoiage Matai Damage Cover ‘Standare Fie & Speci Pers poy provides 9. Loskage rom Automatic Sprinkler ‘temperature, Expenses incured on coverage only for propery damagos. AS eri ‘chtecs, Surveyors and Consuting + Leatage and Contamination Cover rentioned eae tis poly excudes Engineers Foes in excess of 9% of he (Poplcabeteolandchemicaisony). Consequential loss, Le, the isuer i not 10 Bush claim amount. Expenses incured on + TemporaryRemoilotStecksClauee, 20/10 py fr lose of profs resulting from 11. Storm, Cylons, Tyoneon, Tempest, real fcebis bythe insured aor a oa propery samages.Toinsernty eines Humeane, Tomado, Flood and loss ineacesso Soha clam amount + LossotRentcause. Against such mishaps, insurers offer Inardaton. ‘Consequential loss or Fe Loss of rots > Loss of income, loses cst delay + IauranceotAdsional Expenses otRent acts bos tolack of ansrenss arenes! 12 BumingancoroverioningotWiater —_consoqueniaosses, oss duet the forandAteraveAocommadaton. the poicyhaders and because ofthe higher “Tanke Acparsin andes levels of complexities and technicalios 18 Up 10 9% ofthe dam amount to WHAT EXTRA COVERS DOES THIS + Bartup Epenees invotad, hase poles he ot gained cove the Architects, Suveyors and POLICY OFFER? ‘ata Comes tom Al Inds Fre Tt muchimperance nnd Coneuting Engineers Fees. (On payment of sons gromism, the rent orn FIRE INSURANCE, POST DETARIFFING 14 Up to 1% ofthe cam amount Stancar Fre and Special Pers palcy can “Te above ale i sur fhe pes ntarfreguatad markets, heres antes cover the Debs Removal by the vie few acd on covers to, Some of ee eases! ‘otto tr route are ed, contro and Insurestolwingaloss. ‘hose add oncoversre; Strrnicheranserensems esciease. monitored by te roglatry body. Fe ane 2Engineering wore two key classes of Ineuranes which ware under theta gene tu 2007. One othe major mle stones nthe Indian Fre Insurance industry was. the removal of the reticions on picing. The contro over the pring fear classes of Insurance were witha by IROA 2007. In India, carting tok place in thee pases. ‘Currey, except i the case of motor tr ary aba nsurancs, he insurers are gen the lery to make decisions at ther own ‘The wane rom atari suc toa prc; > fie ines rates, rp in reno ‘owes & pin protabity > Huge competion saep dcouning & Incoased pce wars mang fe ners > reread oes of barsaning by he customers > Markel ven pring mechanisms > nereasc osu on mero the nderting capacis > Trt on proper sk management & cena ota > Emphasis onthe saves eves > Rosin demand ortchrcalyproient personnal nthe insranon ity > Mere foes on personal nes of insurance bins ‘ain abon—atan Lutte) ably Laity PxBiam PARE PLAHeam Maine Cao Mute C0 ae Capo Aarne Hl Maron atne fo Fe fra froresing Enoretng Enos ‘uto00tu00— A000 ‘AioTP —MoTP tT? 190 gst etes Ted Souce: Post detarngtelncian General insurance Incusuy has ‘undergone several tough Cchatenges such asthe dene in business ‘igueswhichintuledtothe increase noes ratios and decline in proftabilty. Yet, this bert of detain, Ht practiced juiciousy an open up new avenue of probity in the general insurance business ia our county, ‘Graph 1 Total promium underwritten by Indian CGeneralinsurers (within naa) rwieseer Pat ec ovo 1608074 0 1202.09 inant - Th ‘a= "il enn entin raph -2 Premium (Within Ida) Underweten By Indion Generalinsuers (Segment. Wise) Promumfn Rs Coos) foal a Sg ‘ow a5 0 mw as) BS 00039" 2 yee ‘exw 1&2 - Oat compe tom OM emt “THE WAY FORWARD. Tha Indian Fre Insurance market i stains fear stages of development. Fom the commencement of Insurance in nda i today, the fre insurance incusty in our county has crossed soveal milestones and has winessod drasie changes sve) a8 ‘etnting anaterenent recession. The path ahead would definitely be tallonging, But no doubt, would provide abundant growth opportunities for the Insurers. Thrust on judicious underwriting practices, better risk management techniques, product customization, higher focus on service levels, T enabled senices land. vibrant disbuton channels. would certainly improve the insurance pensation levels in our country and would raise the lovelstothe global standards REFERENCES. 1 Fire insurance Underwriting (IC ~ 54), Isucanee inte of nda, Mumbat hip: /www casact orgieducationiclrs) 20g /nandout/INTNL taste pa! hit: remarks. co.ukMistory hi itp wirda.govie’ itp enirdaindia org! hipsiwww pler55.comiinsuranceithe history-tnsurance/ tp / tae org) gag Joby Joy Faculty Member SCMS-COCHIN Pratap Nagar Kelomassory Cochin