III IC-78 cheat sheet

IC-78 is a professional (licentiate/associateship-track) subject examination of the Insurance Institute of India; the syllabus is organized around insurance principles, practice, and the regulatory framework applicable to Indian insurers, so answers must be framed in Indian statutory terms (Insurance Act 1938, IRDA Act 1999, IRDAI regulations) rather than foreign equivalents.

Core principle set: insurable interest (present at inception for life; at inception and at loss for property), utmost good faith, indemnity (property/liability) versus benefit (life/personal accident), proximate cause, subrogation (indemnity contracts only, arising after payment), contribution (same subject matter, same peril, same interest, same insured, policies covering the same loss), and mitigation of loss.

Utmost good faith is a mutual duty: the proposer must disclose all material facts (facts a prudent underwriter would treat as affecting acceptance or premium), and non-disclosure or misrepresentation renders the contract voidable at the insurer's option; warranties, if breached, discharge liability from the date of breach.

Indemnity is the measure: property claims are settled on reinstatement or market value depending on the policy, subject to average (under-insurance) where the sum insured is less than the value at risk - claim = loss × (sum insured / value at risk). Life policies are benefit policies, so the sum assured is paid without proof of loss.

Reinsurance operates on proportional (quota share, surplus) and non-proportional (excess of loss, stop loss) bases; facultative is case-by-case, treaty is automatic, and retrocession is reinsurance of a reinsurer. The insurer remains fully liable to the policyholder regardless of reinsurance arrangements.

IRDAI (Insurance Regulatory and Development Authority of India) is the statutory regulator under the IRDA Act 1999; its functions include licensing insurers, brokers, agents and TPAs, protecting policyholders, registering products, prescribing solvency margins, and adjudicating complaints through the IRDAI grievance machinery and the Insurance Ombudsman scheme (award up to INR 30 lakh, complaint within one year of rejection).

Life insurance underwriting: mortality assessment via proposal form, medical examination, and agent's confidential report; standard, sub-standard (extra premium/liability), and declined risks; premium components are mortality, interest, and expense loading; reserves (mathematical reserves) are liabilities, and surplus is distributed as bonus (participating) or declared as dividend.

General insurance underwriting: rating factors, deductible/excess, no-claim bonus, and claims handling steps - intimation, survey (mandatory surveyor for claims above the prescribed threshold), documentation, assessment, settlement, and salvage/subrogation recovery. Fire, marine, motor, and liability policies each carry distinct standard exclusions and conditions specified in the tariff/wordings.

Professional conduct and ethics: agents and brokers must disclose commission, act on the insurer's and prospect's behalf with transparency, avoid rebating (a breach of the Insurance Act and IRDAI regulations), maintain confidentiality, and comply with anti-money-laundering (KYC) requirements.

Questions are typically split between objective/multiple-choice items and descriptive answers; allocate time by marks (roughly 1.5 minutes per mark for descriptive responses) and answer every compulsory question before attempting optional ones.

Descriptive answers score best when structured as definition → principle/legal provision → application to the scenario → conclusion; examiners award marks for citing the correct statute, section, or regulation rather than for length.

Numerical questions on average (under-insurance), contribution, salvage, and premium computation should show the formula, the substitution, and a clearly labeled final answer; carry units (INR, %) through every step.

Distinguish similar concepts explicitly - indemnity vs. benefit, subrogation vs. contribution, reinsurance vs. coinsurance, warranty vs. representation, void vs. voidable - because these are frequent high-frequency differentiators.

For case-study questions, identify the peril, the proximate cause, the policy conditions, and any exclusion before deciding whether the claim is payable; state the reasoning even where the conclusion is 'not payable'.

Quote figures only where confident (e.g., Ombudsman award limit INR 30 lakh, complaint window one year); if a numeric limit is uncertain, describe the rule qualitatively rather than risk a wrong figure.

Review the IIO syllabus weightings for the specific IC-78 sitting: the syllabus and study material are published by the Insurance Institute of India, and the exam tests the current edition, so check the edition year before revising.