Money Insurance: This policy is meant for coverage of the money belonging to a commercial establishment while (1) In transit from or to a Bank or specified Offices and Locations while it is in the custody of authorized representatives (2) In 'Safe' or any specialized storage facility for the overnight keeping of ‘Money' after business hours (3) At Cash Counter, or 'Till, during regular
Business hours. 'Money' is defined to include Cash, Cheques, Bank Drafts, Treasury Notes, Postal Orders and stamps, and is covered against loss by Burglary, Theft, Robbery or any fortuitous cause. Loss caused by dishonesty or fraud of employees is excluded, but can be covered on payment of extra premium.
Fidelity Guarantee: This policy protects an Employer against financial loss caused by the dishonesty, or 'infidelity,' of an employee. Uniquely, not only does the policy cover losses due to act committed (1) During the period of insurance, but also (2) those committed during a period of uninterrupted service with the Insured but discovered within the policy period or within twelve months of its expiry, and (3) in case of the death, dismissal or retirement of an employee, if discovered within twelve months of the death, dismissal or retirement. The Policy records the limits of liability covered for each employee, either by individual names, or by designations and categories. The Employer is required to initiate suitable action, including launch of criminal
proceedings against the Employee accused of infidelity or fraudulent act, and to suitable restrain or totally remove him from work to prevent any recurrence.
All Risks: The All Risks policy is meant for the coverage of the Jewelry, whether ornaments of gold, silver or other precious metals, curios, cameras, watches or other such valuable articles belonging to a person or his family. While most policies cover a property while at a specified location, this policy recognizes that Jewelry is most at risk when worn, and not just when it is stored, and therefore the policy covers articles without limitation to location. However, at insurance, each article is listed with a specific value which is expected to be based on the valuation certified by a qualified Jeweler. The cover is either against 'All Risks' other than those specifically excluded, or can be very extensive, stretching from Fire, Theft, Riot and Strike, Accident, and any 'Fortuitous Cause,' thus giving protection against any conceivable and legitimate contingency. However, the policy does specifically exclude damage by (1) Cleaning, repairing, restoration, wear and tear (2) Breakage, scratching or cracking of articles of glass or of fragile nature (3) Mechanical or Electrical Breakdown unless it is the result of accidental external means (4) Theft from a Car unless it is a fully enclosed 'Saloon' type of vehicle which is properly locked at the time of loss. Jewelers Insurance: This policy is designed to provide insurance solutions for Jewelers with respect to their stock-in-trade and associated assets. It covers Ornaments, Plate and Bullion, gems, money (1) while at the Jewelers establishment against fire, burglary, robbery, riot and strike, and malicious damage (2) while in the custody of the Insured, partners, employees or goldsmiths and workers entrusted with it, against the perils mentioned above (3) during transit by Registered Post Parcel, Air Freight or Angadias, and also covers (4) Furniture, Fixtures and Fittings of the Jeweller's establishment. The policy was only to be issued to Jewelers, whether Retails or Wholesale, but not to those primarily only manufacturing jewellery like goldsmiths or diamond cutters, or pawnbrokers or Angadias. Bankers Indemnity: This is a package
policy targeted at Banks. It covers all the Administrative offices, branches, sub offices and establishments of a Bank. The money and banking instruments are covered against contingencies such as (1) On Premises, against fire, riot and strike, malicious damage, burglary, robbery, hold-up (2) In Transit, if lost, stolen, mislaid, whether due to negligence or fraud of employees (3) by Forgery or alteration of Banking instruments by criminal acts whether of employees or others (4) while being sent by Registered Post Service, or, (5) while in the custody of registered appraisers of the bank.
Liability Insurance Products
Workmen's Compensation: If a workman is injured during the course of his employment then the Employer is legally liable to pay compensation to him for the injuries or disabilities, or to the legal heirs in case of death. This policy compensates an Employer for payment of compensation as required under provisions of (1) The Workmen's Compensation Act, 1923 (2) The Fatal Accidents Act, 1855, (3) Common Law. It also pays for any legal costs in case there is litigation contesting the claim. The policy covers not only the employees of the Insured but also workmen employed by a Contractor or sub-contractor, though for this additional premium may be charged.
Public Liability: This policy provides Organizations and Incorporated Companies cover against legal liability to pay damages to third parties as a consequence of death, injury or damage to property. The cost of litigation is also covered. Such civil liabilities are said to arise when there is some alleged negligence on the part of the Insured leading to the third party suffering death, injury or damage to property. The policy can be extended to provide additional cover for liabilities arising out of events which may have themselves been the result of natural calamities like flood or earthquakes, or related to 'Pollution' traceable to the Insured, or linked to the transportation of hazardous material or effluents by the Insured. A unique feature is that the coverage is for a 'Retroactive Period. This concept should be clearly understood. If a policy has been in force with the insurers for several years in the past, then a claim made under the current policy but for an event that occurred during the effective period of any of the past policies, called ʻretroactive period is held covered.
There are three variants of this policy, (1) Public Liability - Non Industrial Risks, for Offices, Hotels, Cinemas, Hospitals, Schools, etc (2) Public Liability - Industrial Risks, for Factories and Godowns (3) Public Liability Insurance Act 1991 policy, for owners, users or transporters of hazardous materials taken in compliance with the provisions of the Act. Product Liability: Manufacturers of
products, whether they are 'final products for use, or form part of a product, are exposed to the contingency of being held legally liable to third parties who may suffer death, injury or property damage due to some manufacturing defect in the product, in the packaging or delivery, or the instruction about use. The policy covers legal costs also. The cover under the policy is effective for the Retroactive period.
Directors and Officers Liability: Any decision or action taken by a Director or Officer of a Company, whether individually in their official capacity or jointly with colleagues, even after full care is taken to comply with all laws, could have inadvertent consequences resulting in infringement of some law or regulation. This could result in prosecution, legal costs, and award by Courts of damages to third parties, all of which would be a loss to the Company. The possibility for such mishaps is increasing in a world that is integrating into one global marketplace, where even the laws in any two countries may not be the same, and a perfectly normal action in one country could be non-compliant' in another.
The D & O' Liability policy provides compensation for Loss to the Organization due to (1) Mistaken Actions taken by Directors or Officers in their individual capacity (2) Wrongful Acts committed in official capacity (3) Legal Expenses associated with Legal Defense (4) Award by Law Courts of Legal Expenses of Shareholders proceeding against a Director or Officer. The policy excludes (1) all dishonest, fraudulent or malicious acts (2) Bodily Injury or Damage to Property of Third Party (3) Personal Guarantee (4) Libel and Slander (5) Pollution damage (6) Product Liabilities. Professional Indemnity: This policy is meant to cover the legal liability of Professional persons for their
'Errors or Omissions of action or advice while delivering professional services. Legal costs and expenses are also covered. The policy is effective for the 'retroactive period. Only 'civil liabilities are covered, and all 'criminal liabilities are excluded. The policy can be taken by (1) Doctors and Medical Practitioners (2) Medical Establishments (3) Engineers, Architects and Interior Decorators (4) Lawyers (5) Chartered Accounts, Financial Accountants and Management Consultants.
Engineering Insurance Products
Of the six products that are classified under the Engineering Insurance category, perhaps Machinery Breakdown insurance is the oldest, and the one which most often comes to mind, though others are equally important in terms of their role in risk management.
Machinery Breakdown: Plant and Machinery is an integral part of all industrial and commercial operations. All types of machines can be insured under this policy against loss arising from accidental electrical and mechanical breakdown. Additional cover can be taken for the civil works, surrounding property of Insured and Third Party liabilities. The machinery must be insured for a value equal to cost of a new machine of the same type. The policy excludes losses caused by (1) faulty workmanship or materials (2) failure of lubrication (3) mal-functioning of safety devices (4) electrical short-circuiting (5) entry of a foreign body in a running machine. Electronic Equipment: The Electronic Equipment Insurance (EEI) policy is designed to cover the entire range of electronic equipments, from those meant for domestic use to those for commercial and industrial use. It be used to cover Computers, Television sets, Data Processing and Telecommunications equipment, Audio-Video Transmitting and Receiving Installations, Cinema, Sound Reproduction and Studio equipment, Medical equipments, Industrial Control and Supervisory units, and similar equipments. The cover is against sudden, unforeseen damage by accidental external means, except those specifically excluded. As such some of the significant perils and losses covered are Fire and allied can perils, Flood and Earthquake damage,
Riot and Strike, Malicious damage and Terrorism losses, Burglary and Theft, Short-circuiting and electrical fire, damage by falling objects, water, humidity, smoke and dust. The policy excludes losses by 'wear and tear,' loss to consumables and operating media, consequential losses, those which are the contractual responsibility of other parties, due to war or gross negligence. Erection All Risks: This policy is designed to provide coverage during the 'project' stage. It insures Plant, Machinery, steel structures and associated civil work during the stage of constructioninstallation against accidental losses by any peril except those specifically excluded. It is therefore an 'all risks' type of cover as what is not covered is specifically mentioned, and everything else is covered during the stage of storage, erection, construction, testing and commissioning of the project.
The range of perils covered and losses usual experienced range from (1) Fire and allied perils (2) Riot and Strike, Malicious damage (3) Flood etc damages (4) Burglary (5) Landslide and subsidence, Collapse (6) Impact damage and due to foreign objects, and very significantly, (7) Faults in Erection and (8) Human Error. The cover can be further extended on payment of extra premium to include 'Liability to Third Parties and perils such as Earthquake, Terrorism and Damage to Surrounding Property.
The policy specifically excludes losses caused by (1) Faulty design, defective material or bad workmanship (2) Manufacturing defects (3) Willful negligence (4) Wear and tear (5) Inventory losses (6) War (7) Nuclear hazards.
The insurance policy is issued for the full 'project period' which could be less or more than a year, starting from the time of arrival of the first consignment at project site, extending through period of storage, erection, testing and final commissioning of the insured project. Anyone who is the Owner, Contractor, Sub-contractor or a Financier of the project can take this policy. If the policy period extends beyond one year the premium can be paid in installments.
Contractors All Risks: This policy is meant for insurance of Civil Engineering projects, or those where the civil works form the predominant part and plant or machinery is a negligible component. This is in contrast with target segment of the Erection All Risks policy which is projects which are for erection of Plant and Machinery, and where civil works are only a necessary and associated component. In all other respects regarding features, coverage, exclusions and policy administration these two policies are similar. Contractor's Plant and Machinery: Plant and Machinery belonging to a Contractor and used on-site for the construction or erection of a project is exposed to various hazards. This policy offers cover for such Plant and Machinery at the project site, while it is in use, at rest, being moved within the site or dismantled for maintenance and overhaul. The coverage is against all perils, risks and losses other than those specifically excluded. As such, the bouquet of coverage is much the same as that under the EAR and CAR policies reviewed above. In addition to the main exclusions under those policies, the CPM policy also excludes the damages related to (1) electrical and mechanical breakdown, lack of lubrication or coolant (2) movable parts such as bits,
drills (3) wear and tear (4) while in transit between different locations. This policy is issued for an annual period. Boiler and Pressure Plant: This is a less known but valuable coverage for Industrial Boilers, Pressure Vessels and steam pipes. These are covered against (1) Damage, excepting damage by fire, notably by Explosion or implosion (2) Damage, other than by fire, to surrounding property (3) Legal Liability to Third Parties for bodily injury and damage to property. The policy specifically excludes Fire and the allied perils covered under the Fire policy, as well as specific conditions connected to the operation of such equipment.
Government Business Segment
Both 'Rural Insurance' business and ‘Mass Health' segment have been classified under the category of 'Government' business, only for the reason that the main business driver for both has been government initiatives rather than the evolution or crystallization of demand from consumers. Most products from these categories are also classified as 'Micro Insurance' which is discussed a little later in another chapter. the
Rural Insurance witnessed extensive product development at the hands of the four Public Sector insurance companies during the period following nationalization of General Insurance business. They created a product for every conceivable rural asset from Cattle and other agricultural livestock, to fisheries, Poultry, Sericulture and Honeybees, down to Huts, Animal Driven Carts and Agricultural Pump sets. Attempts have also made to develop ‘Mass' insurance products for insurance of persons. At this place we shall briefly examine two products to acquire an overall perspective.
Cattle and Livestock Insurance: The standard policy insured individual Milch animals and Stud Bulls or Buffaloes for a Sum equal to their Market Value. These were covered against the contingency of Death Permanent Total Disablement if resulting from accident, illness, surgical operation or due to Riot or Strikes. The full Sum Insured was payable in case of death, and 75% in case of PTD which was defined as the total inability to yield milk, or to calve, or to perform the purpose of acquisition declared at the time or of insurance. The policy excluded the usual perils commonly excluded from General Insurance policies such as intentional injury, war or nuclear hazards.
Pradhan Mantri Suraksha Bima Yojna (PMSBY) Policy: This is an example of the mass 'Group'insurance product, for insurance of 'persons,' targeting both Rural and Urban buyers. The Scheme under which these policies are sold was launched in 2015. The scheme is to be administered and operated by the Banking sector. All Banks are required to offer to their Savings Bank Account holders, between the age of 18 to 70 years, the opportunity to voluntarily join the Scheme after paying premium which would be directly debited to their Bank Account. The Bank was free to choose any Insurance Company, whether Public Sector or Private Sector, as its partner for Insurance services. The enrollment was for an initial period from 1st June 2015 to 31st May 2016, and could be continued year-onyear after that for similar durations. The enrolled persons were granted a ‘Personal Accident cover for a Capital Sum Insured of Rs. 2.00 lac, which was payable in the event of Death or
Permanent Total Disablement, i.e. loss of two eyes, or any two limbs, or one limb and one eye, as a result of any 'accident. An amount of Rs. 1.00 lac was payable for the loss of one eye or of any one limb. The annual premium payable was Rupees Twelve only. This is an affordable product, with simple features, meant for the 'mass' market, being offered to a very wide customer segment through the extensive distribution network of the Banking sector. In its features and structure this policy has much in common with the 'Janata Personal Accident Policy of 1980s vintage, which never sold well enough to attain popular recognition, but neither faded away with time, and still forms a part of the PSU product portfolio.
The demand and sales of policies like the JPA and the Cattle insurance policy was a byproduct of Government schemes for the economic development of rural India, which revolved around asset creation on the basis of finance provided through the Banking Sector. Insurance of these assets was necessary to protect the financial interest of the Banks, and that is what drove the demand. The story
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