General insurance products and markets
This domain tests whether you can explain how general insurance products are constructed, distributed and regulated in India, and how product design choices change the risk transferred.
Product mechanics
General insurance is a contract of indemnity: the insured is restored to their pre-loss financial position, not better off. Key mechanics include insurable interest, utmost good faith, proximate cause and subrogation. Sum insured may be reinstatement value, market value or agreed value. Deductibles and excesses retain small losses with the insured; co-insurance shares large losses; the average clause reduces claims where the sum insured is below the value at risk.
Market and regulation
IRDAI licenses insurers, intermediaries and products. Fire and engineering covers are largely file-and-use; motor third-party liability remains tariff-driven, while own-damage is market-priced. Distribution runs through agents, brokers, bancassurance and web aggregators. GIC Re has a statutory role as the national reinsurer, and order-of-preference rules govern cessions abroad.
Worked example
A property policy has sum insured INR 80 lakh, actual reinstatement value INR 1 crore, a loss of INR 20 lakh and a INR 50,000 deductible. The average clause applies: recoverable = 20 lakh x 80/100 = 16 lakh. After the deductible, the claim is 15.5 lakh. If the policy were agreed-value, the average clause would not apply and the claim would be 19.5 lakh, subject to policy terms.
Traps
Do not confuse sum insured with indemnity value. The average clause is not a deductible. Motor third-party pricing is not fully deregulated. Check whether a policy is reinstatement, market value or agreed value before calculating.