III IC-104 flashcards
III IC-104 · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Insurable interest
- The assured must stand to lose financially from the event insured. It must exist at inception for life and personal covers, and at the time of loss for property and marine covers.
- Principle of indemnity
- The assured is restored to the pre-loss financial position, no better and no worse. It applies to property, liability and marine cargo, but not to life or personal accident fixed benefits.
- Utmost good faith
- Both parties must disclose all material facts relevant to the risk. Non-disclosure or misrepresentation makes the contract voidable at the insurer's option, subject to policy terms.
- Proximate cause
- The nearest efficient cause of loss, not the last event. If an excluded peril is the proximate cause, the claim fails even where an insured peril also operated.
- Subrogation
- After paying an indemnity, the insurer acquires the assured's recovery rights against a third party. Recovery cannot exceed the amount paid and does not apply to life policies.
- Contribution
- Insurers covering the same interest, peril and assured share the loss rateably. No insurer pays more than its independent liability under its own policy.
- Average clause
- Where the sum insured is below the value at risk, the claim is reduced proportionately: claim equals sum insured divided by value at risk, multiplied by the loss.
- Sum at risk
- The amount actually at risk at any time, equal to the sum assured minus the accumulated reserve. Reinsurance and risk cover are based on this figure.
- Numerical rating
- Life underwriting method using a base of 100 with debits and credits for age, health, occupation and habits. Higher scores indicate higher mortality and extra premium.
- No-claim bonus
- A discount on own-damage motor premium for each claim-free year, subject to a maximum. It is forfeited if a claim is made during the policy period.
- Institute Cargo Clauses C
- The narrowest marine cargo cover, covering major casualties such as stranding, sinking, collision, fire and explosion. It excludes theft and general average sacrifice unless specifically included.
- Business interruption cover
- Indemnifies lost gross profit and increased cost of working following insured material damage, subject to the indemnity period and sum insured.
- Quota share reinsurance
- The insurer cedes a fixed percentage of every risk in a class, and the reinsurer pays the same percentage of losses and receives the same percentage of premium.
- Excess of loss reinsurance
- The reinsurer pays losses above the insurer's retention up to a limit. It may be written per risk, per occurrence or per event.
- IBNR reserve
- Incurred but not reported reserve estimates claims that have occurred but are not yet notified. It is part of technical provisions and affects solvency.
- Solvency margin
- Admissible assets minus liabilities, expressed against the required solvency margin. IRDAI requires a control level of 1.5 times the required margin.
- Bima Bharosa
- IRDAI's online grievance redressal portal where policyholders register complaints against insurers and track resolution within prescribed timelines.
- Free-look period
- The period after policy issuance during which the policyholder may cancel and receive a refund of premium less proportionate risk and expenses, as prescribed.
- Insurance Ombudsman
- A quasi-judicial authority that hears eligible policyholder complaints free of cost within monetary limits. Awards are binding on the insurer.
- Moral hazard
- Risk arising from dishonest intent, such as deliberate arson or exaggerated claims. It is managed through investigation, deductibles and claims controls.
- Morale hazard
- Risk arising from carelessness or indifference because insurance exists. Deductibles, co-insurance and risk improvement conditions help control it.
- Retention and cession
- Retention is the amount of risk the insurer keeps; cession is the amount transferred to reinsurers. Net premium reflects premium retained after cession.
- Facultative reinsurance
- Reinsurance placed risk by risk, with the insurer free to offer and the reinsurer free to accept. It is used for large or unusual risks.
- Combined ratio
- Loss ratio plus expense ratio. A ratio above 100 percent indicates an underwriting loss before investment income is considered.
- Unearned premium reserve
- The portion of written premium relating to the unexpired policy period. It is held as a liability and released as premium is earned.
- ULIP
- Unit-linked insurance plan where premium is allocated to units after charges. Fund value is NAV-based, with a sum assured payable on death.
- Critical illness cover
- A fixed-benefit policy paying a lump sum on diagnosis of a listed condition, subject to survival periods. It is not an indemnity cover.
- Third Party Administrator
- An IRDAI-registered entity managing health claims and cashless networks for insurers, following TPA regulations and service standards.
- Anti-money laundering KYC
- Customer due diligence, identity verification, record-keeping and suspicious transaction reporting required under PMLA and IRDAI guidelines.
- IFRS 17 measurement
- Insurance contracts measured using fulfilment cash flows and a contractual service margin, replacing existing accounting and disclosure practices.
- Repudiation of claim
- Rejection of a claim based on policy terms, communicated in writing with reasons and supporting evidence. It must comply with policy conditions and natural justice.
- Mis-selling prohibition
- Insurers and intermediaries must not guarantee returns, rebate premium or misrepresent policy terms. Violations attract penalties and licence action.