Escolar Documentos
Profissional Documentos
Cultura Documentos
International insurance
Lecture course
Chiinu 2003
Contents
Theme 1. Economic Essence, Functions and Classification of Insurance.
1.1. Economic essence and functions of insurance..
1.2. Classification of insurance
1.3. Types of insurance funds...
Theme 2. Juridical Aspects of Insurance Activity.
2.1. Forms of insurance activity...
2.2. State control over the insurance activity...
2.3. Forms of control over insurance companies activities.
2.4. The core and main elements of the contract of insurance.
Theme 3. Insurance Marketing..
3.1. The essence of the insurance marketing
3.2. Methods of promotion of insurance services.
3.3. Insurance middlemen.
3.4. The essence of the insurance market.
Theme 4. Insurance Market in Foreign Countries.
4.1. Insurance development tendencies on the international level...
4.2. The Insurance Market of the USA.
4.3. The Insurance Market of Great Britain.
4.4. The Insurance Market of Germany
4.5. The Insurance Market of Switzerland...
4.6. The Insurance Market of Russia
4.7. The Insurance Market of Moldova
Theme 5. Property Insurance.
5.1. Physical persons property insurance
5.2. Juridical persons property insurance
5.3. The conclusion of insurance contract
5.4. The measuring of damage and compensation...
Theme 6. International Practice of Transport Insurance...
6.1. Motor-vehicle insurance
6.2. Vessel insurance
6.3. Marine freight insurance
6.4. Containers insurance.
6.5. Aircraft insurance..
Theme 7. The Insurance of Responsibility on the International Level.
7.1. The insurance of the civil responsibility of car-owners
7.2. The insurance of the civil responsibility of carriers to passengers
7.3. The insurance of the civil responsibility of the enterprises of the sources of high danger
7.4. The insurance of professional responsibility.
Theme 8. Economic and Political Risks Insurance...
8.1. Commercial risks insurance..
8.2. Insurance against losses due to production interruptions..
8.3. The insurance of new technique and technology risks..
8.4. Political risks insurance.
8.5. Export credits insurance
Theme 9. Personal Insurance.
9.1. Life insurance
9.2. Additional pension insurance
9.3. Accident insurance
9.4. Compulsory insurance of passengers
9.5. Voluntary medical insurance.
9.6. Medical insurance of persons going abroad..
Theme 10. Reinsurance...
10.1. The essence and the meaning of reinsurance
10.2. Types of reinsurance contracts..
10.3. Proportional reinsurance
10.4. Disproportional reinsurance..
Bibliography
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1.2.
Classification of insurance.
1.3.
Functions of insurance:
1) The core of risk and redistributing function is that the insurance funds are
redistributed among the participants due to concluding the insurance agreement
and consequence of insurance events.
2) The core of preventive function is that insurance companies carry out
financing of unfavourable events. For this the insurance company forms a set of
preventive actions for the account of allocations.
3) The core of saving function is that a sum of money is saved by means of
life insurance and is connected with the defence of the achieved income.
4) The core of controlling function is that the insurance companies control
the activities of their clients concerning their observing of safety measures.
1.2. Classification of insurance.
A classification of insurance is the distribution of insurance services
according to the groups defined by some common signs. There exist classifications
based on forms and on branches of insurance.
Classification based on forms of insurance.
Insurance is carried out in two forms: obligatory and voluntary.
Obligatory forms are defined by the following principles:
1) The obligatory insurance is defined by the law, according to which the
underwriter must insure the corresponding objects, and the insurer must take
necessary insurance payments. The law usually stipulates all necessary terms and
the order of carrying out the given kind of insurance.
2) For the overall obligatory insurance indicated by the law, the insurance
agencies carry out annual registration of the insured objects, make payments and
charge premiums in the stipulated terms.
3) Automatic insurance covering of the objects is indicated by the law. The
insurer mustnt announce the appearance of the insured objects to the insurance
2.2.
2.3.
2.4.
Nowadays there are the insurance companies of the following legal forms:
1) Joint-stock insurance companies are companies that are formed to carry
out insurance operations, which nominal capital is formed by issuing or selling
shares. They usually function on the same legal basis as other joint-stock
companies and can carry out any kinds of insurance on license basis.
2) State insurance organisations are juridically independent organisations,
the capital of which is partially or totally formed from the state funds.
3) Mutual insurance communities form a system of contractual relations
between the insurers, usually between construction, transportation, industrial and
financial corporations where they join their capital with one reason to cover their
possible losses. Every participant of such a community becomes both an
underwriter and an insurer.
4) Private insurance companies belong to one owner or his family. English
corporation Lloyds is a unique form of such a corporation of private
underwriters. All members of Lloyds join in syndicates to increase their capital
when assuming the insurance risks. Insurance premiums and losses are
proportionally distributed among the members of the syndicate according to their
financial interests.
5) Non-governmental retiring fund is a special form of personal insurance
which guarantees rental payments to insurer on achieving by them a particular age.
6) Captive insurance company is a joint-stock insurance company
protecting generally insurance interests of the founders.
2.2. State control over the insurance activity.
The activities of the underwriters radically differ from other enterprises
activities as they are aimed towards uninterrupted process of compensation of
losses caused by different circumstances. A big portion of responsibility of the
underwriter for his activities requires a State insurance control. In general this
control means the study of financial situation of the underwriter and his financial
solvency.
The aim of the state control is to provide and develop the market of
insurance services, ensuring necessary conditions for the underwriters activities as
well as defence of his interests.
State control must help to establish insurance companies that have strong
financial ground; avoid forming speculative and forged companies. These
functions are performed by State Insurance Supervision at the Ministry of Finance.
Obligations of the State Insurance Supervision:
1) introducing the unique State Insurance Registry;
2) auditing in insurance companies;
3) control over the insurance rates;
4) control over the payability of underwriters;
5) setting the rules about forming and placing insurance reserve funds;
6) ensuring the publicity of insurance activities;
7) checking the authenticity of the presented reports;
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The literature:
1. Law of RM of 15 July 1993 The Official Monitor of
the RM 12, December 1993.
2. , a book under edition of professor Reitman L.I., The
bank and exchange scientific consultative center, M., 1992.
3. Basacov I.I. , Rostov-on-theDon, , 1999.
4. Serbinovski B.U., Garikusha V.N. , Rostov-on-theDon, , 2000.
5. under edition of L.I. Korchevskaia, ..
Turbina, ., , 96.
6. The decision of the Government of the RM 77 of 3 February 1996
.
3.2.
3.3.
Insurance middlemen.
3.4.
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The Insurance service is the specific goods the sale of which is quite
difficult. The central part of the underwriters marketing is sales activity, oriented
to the sale or the insurance services promotion from the underwriter to the insurer.
The sales activity is a range of the insurance companys action that may be
taken as two important tasks to form the demand for the insurance services and
to satisfy the insurance clients interests of a company.
The demand formation is a goal-oriented influence on potential clients with
one purpose to raise the achieved demand level by the insurance company up to the
wished level. It influences potential insurer with the help of advertising, forming a
positive image of the underwriter, holding the meetings for concluding the
insurance agreements, differentiation of tariffs for the insurance services,
combination of the insurance services with different forms of trade and juridical
service.
The second important task of marketing is satisfaction of insurance interests.
It is noted that the level of the insurance of the clients service influences the
demand, i.e. the higher the service level, the bigger demand for his insurance
services.
If the insurance services demand goes down, the leaders should find out the
reasons and take measures directed to their elimination.
Practically marketing is oriented to:
1) reasons of the necessity and goal-orientation of rendering some kinds of
the insurance services;
2) demand formation on the insurance services;
3) satisfaction of the clients insurance interests;
4) price forming;
5) regulation of the insurance activity;
6) pure organisation of the insurance services promotion;
7) coordinating and planning the production, sales and financial activity of a
company;
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achievement of goals.
However the specific marketing functions are: collecting and analysing the
information about the market, making contacts with the insurers, managing the
assortment of the insurance services.
Strategic marketing solves the following tasks: the selection of the
perspective company activities, orientation and kinds of the insurance services,
making image and prestigious marking, definition of the price policy.
Tactical marketing is oriented to form the system of relations of the services
consumers, interaction with public, providing forms and methods of sales, sales
management in accordance with the strategic goals.
3.2. Methods of promotion of insurance services.
There are three main methods of insurance services promotion: extensive,
exclusive and selective.
Extensive method is using services of any go-between company, capable to
conclude one or more insurance contracts.
Exclusive method is used when the insurance company counteracts with
only one general insurance agent, which has an exclusive right to conclude
insurance contract in a given region. This contract should be concluded in favour
of the above-mentioned insurance company.
Selective method is used, when the insurance company counteracts with two
or more general agents in a given region.
Insurance service promotion is connected with the process of forming
demand for the insurance services. Promotion includes any kind of informing
people about insurance services or an insurance company. There are two basic and
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- controls duly received insurance fees from the insurer to the underwriter;
- renders advice and assistance in receiving insurance sum of money by the
insurer or the insurance compensation when the insurance accident happens.
The insurance broker is not entitled to:
- fulfil other kinds of activity;
- take part in the authorised capital of the insurance companies, hold
stocks, shares and other rights of participation.
The insurance broker is responsible for:
- the fulfilment of liabilities, stipulated in the agreement;
- reliability, objectivity, completeness and due information given to the
client and controlling authorities;
- the secrecy of the information, that is the commercial secret of a client.
The detailed list of the insurance brokers liabilities and the responsibility to
the insurer or the underwriter for their fulfilment are given in the agreement
concluded between them.
3.4. The essence of the insurance market.
Insurance market is a socio-economic area where the insurers that need
insurance services operate, underwriters (insurance companies) satisfying the
demand for them and insurance middlemen.
The first section in the insurance market is an insurance company. That is
the very place where the process of creation and usage of the insurance fund is
exercised, some economic relations are formed and others appear; personal group
and collective interests are interconnected.
Insurance Company is an isolated structure, effecting the conclusion of the
insurance agreements, and their fulfilment. Economically isolated insurance
companies build their relations with other underwriters on the basis of reinsurance
and co-insurance.
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Insurance Company must choose what kind of exact service it will offer and
towards what kind of group it will be orientated. The segmentation is spread
according to geographic and demographic signs, the level of income, etc.
Geographic segmentation is built according to regional signs: republic,
district, city, land, region.
Demography is built on age, sex, level of the family income.
The questions for the control:
1. Speak on the essence and basic tasks of insurance marketing.
2. Speak what targets the practical marketing is directed to.
3. Specify the basic functions and obligations of an insurance agent.
4. Enumerate the obligations of an insurance broker.
5. Characterise the essence of an insurance market.
6. Classify the insurance market.
7. Characterise the principles of insurance market segmentation.
The literature:
1. , a book under edition of professor Reitman L.I., The
bank and exchange scientific consultative center, M., 1992.
2. Basacov I.I. , Rostov-on-theDon, , 1999.
3. Serbinovski B.U., Garikusha V.N. , Rostov-on-theDon, , 2000.
4. under edition of L.I. Korchevskaia, ..
Turbina, ., , 96.
5. Gvozdenko
A.A.
"
",
.,
, 1998.
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4.2.
4.3.
4.4.
4.5.
4.6.
4.7.
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note
the
process
of
active
concentration
of
insurance
capital
and
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increases there arises the necessity to extract money invested into securities, bank
deposits, etc.
At present many insurance companies experience low profitability. It is quite
dangerous for other juridical persons of the market economy as underwriters play a
very important role in their business. The West gets used to insure everything
including bankruptcy consequences, that is why the legislation of any civilised
country protects underwriters as a last instance in property protection.
World reinsurance companies such as Munich Re, Swiss Re tend to
increase reinsurance to 15% for big risks. The largest European underwriter
Lloyds in its turn changes its policy in the area of terrorist acts insurance. Now
they establish the limit to $50 million payment under such kinds of insurance.
4.2. The Insurance Market of the USA.
There are more than 8000 property insurance companies and about 2000 life
insurance companies in the USA, while in the countries of European Economic
Community only 4200. The American insurance monopolies control about 50% of
the whole insurance market of developed countries in the world.
The insurance industry of the USA is the only industry, which is not subject
to antimonopoly legislation of the country.
Every state has its own insurance supervision and its own regulation body.
There is neither a single federal legislation about the insurance and nor a single
federal body on insurance activities supervision. Every state puts forward its own
requirement to a minimum capital level, kinds of future companies; it regulates in
general the insurance activity by giving licenses to brokers, agents and insurance
companies themselves.
There are two types of insurance companies in the USA: joint-stock
companies and mutual insurance companies. There are no federal insurance
companies. The shares of stock companies may be acquired both by physical and
juridical persons.
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McLenan, Alexander & Alexander, French Hall, Fred G. James and others
may be enumerated as independent brokerage firms.
Some companies, especially brokerage companies, have special subdivisions
dealing with the analysis of other companies activities. The major factors on
which the analysis is made are: financial situation, claim payments, level of
services, safety and loss prevention, flexibility in the activity of the company, cost
of services (minimal prices).
The electronic bank of all insurance companies is widely used in the USA. It
gives the possibility to divide the companies according to their risks, premium
sizes and so on.
The largest insurance companies of the world and first of all of the USA are
the financial conglomerates: besides insurance activities they can also deal with
crediting, organising checking services for their clients, issuing credit cards, as
well as operate with real estate, securities and capital through their branches on
their clients behalf. The internationalisation of insurance business is going on.
The leading companies of the insurance market of the USA.
The largest transnational property insurance company State Farm Mutual
Automobile Insurance Company headed the list for premium collection not only
in the USA but in the world as well. It was set up in 1922 in Illinois. This is a
company dealing with mutual transport insurance, property insurance, accident and
aviation insurance and reinsurance.
Signa is one of the leading widely diversified insurance corporations.
American International Group is one of the leading international
diversified insurance groups and the largest underwriter against trade and industrial
risks in the USA. It started operating in 1919 in Shanghai. Now its a holding
company, which holds 44 branches in 130 countries of the world. Staff is about 28
thousand people.
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The largest companies of the USA are also: Metropolitan Life Insurance
Co, Continental Corporation, Prudential Insurance Company of America,
Allstate Insurance Company.
The foreign business of American monopolies and foreign companies
activities in the USA bring about 2 trillion $ premiums.
The activities of all underwriters in the USA are thoroughly analysed by
consulting companies: A.M.Best, Moody S., Standart & Poors, which issue
their activities catalogues quarterly. They publish the official ratings of insurance
companies relating to their reliability and payability. The major factors for
analysing are: financial situation, payments of claims and the level of services,
safety and loss preventing, flexibility and cost of services. The level of losses,
income and the efficiency of investment interests and the level of debts are
considered the main criteria of the insurers activities.
4.3. The Insurance Market of Great Britain.
Within many years the insurance business of Great Britain is concentrated in
London being the world financial centre. The largest London international
insurance market services financial flows of a number of countries and companies.
The representations and subsidiaries of the world largest insurance companies are
located in London. Within many decades and up till now English insurance market
dictated rules and conditions of insurance.
The English insurance market is unique on some criteria. So, having a
comparatively small size of domestic insurance market (5.3%), its share in
international operations makes up nearly 20% of total world insurance business.
The British insurance companies operate in 43 countries.
Nearly the tenth part of all insurance premiums in the world enters the
British insurance corporations accounts.
Personal insurance in Great Britain is concentrated in specialised insurance
companies and pension funds, as well as in investment companies effecting the
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sale of real estate to the people. A stable increase of insurance premiums takes
place within the recent ten years. It has happened thanks to the alteration of
pension legislation in Great Britain, which, in its turn, has created economic
stimuli to acquire Policies of private pension insurance by able-bodied population.
The property insurance among people is presented by a number of
traditional kinds. They are the insurance of automobiles and house-holding
property. The property insurance is also characterised by stable rates of
development.
The basis structure of London insurance market Lloyds is presented by
400 insurance syndicates, which join physical persons underwriters carrying out
the insurance business of a corporation. The underwriters bear unlimited
responsibilities for obligations under the terms of insurance contracts within the
framework of the syndicate. Lloyds operates on 5 major markets marine,
property, aviation, automobile and short-term life insurance.
Marine insurance makes up 40% of all insurance premiums, received by the
corporation, the biggest part comes from international operations.
Annually more than 5 trillion pounds are accumulated by insurance offices
of Great Britain.
Insurance contracts in Great Britain are made by insurance companies direct,
as well as through underwriters agents and middlemen.
Large international insurance brokers and independent insurance agencies,
working on a commission basis, play an important role on the insurance market of
Great Britain.
The legislative basis of insurance activity of Great Britain is the law about
the insurance companies, which was passed in 1982, with further alterations and
amendments.
The insurance legislation of Great Britain is in harmony with new insurance
instructions of EC. The special Law of the Lloyds insurance corporation, passed
in 1982, regulates the insurance activity of this corporation.
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The functions of the insurance control body in Great Britain are performed
by the Insurance Department of Trade and Industry.
The activities of insurance middlemen in Great Britain also subject to
regulation and licensing. First of all it refers to the activities of insurance and
reinsurance brokers. In accordance with Insurance Brokers Act, 1977 there has
been established the Insurance Brokers Registration Council, IBRC in Great
Britain. This body regulates and supervises the activities of insurance brokers
operating on the British insurance market. The IBRC also holds the State Register
of insurance brokers.
There is also a special organ of British insurance market Policyholders
Protection Board which has been established in accordance with the Policyholders
Protection Act, 1975. Due to this Act there have been created all the necessary
conditions for setting up a special compensation fund for insurers which is formed
for the account of all monetary charges of insurance companies having licenses
and performing insurance activities in Great Britain. In case of insurance company
failure monetary means of the compensation fund will be used for full or partial
compensating of their losses under the agreements of obligatory insurance.
Insurance Company Act, 1982 establishes minimal requirements to the level
of underwriters paying capacity. The technique of calculation of the level of
paying capacity corresponds to the requirements of EC directives on the matters of
insurance activity. All insurance companies are obliged to make an annual financial
report. The financial report by all means goes through the independent audit
procedure.
There exists a compulsory responsibility insurance of car owners, air
transporters, riders, domestic animals owners. Besides there has been envisaged a
compulsory insurance of professional responsibility for lawyers, accountants,
insurance brokers as well as for operators of atomic energy units.
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accountants and hunters insurance and so on. Some federal lands require
compulsory fire insurance.
Insurance business in Germany is strictly limited by Federal Insurance
Supervision Act, 1983, with subsequent amendments adopted in December 1985
and October 1990.
All underwriters operating in Germany are obliged to follow the level of
payability according to legislation adopted in regards to insurance companies of
EC countries. There are additional requirements for foreign underwriters operating
in Germany.
Germany has accumulated a considerable experience in reinsurance. The
biggest reinsurance company is Cologne reinsurance company, whose premiums
account for 2 billions Euro, and Munich reinsurance company, which is the biggest
reinsurance company in the world. It offers reinsurance protection, and skilled
assistance in the problems of insurance and reinsurance.
German insurance market is divided into 39 insurance groups. Ten of them
collect 51% of total premiums. The first place is taken by insurance group
Alliance. Its market share is more than 20%. Alliance company is included
into a list of 10 biggest world companies. Other big insurance companies are
insurance company Colony, concern Gerling. The Folksfurzorge group
controls 5% of the total market. Companies dealing with reinsurance have higher
concentration. In this field 5 firms possess almost 75% of total premiums.
The stability of these monopolists is based on accumulated financial
resources. In general only 13% of companies financial resources are paid to
policyholders, the main part of them are capital investments. Capital investments
of insurance companies provide 25% of all investments into national economy, and
their profit forms 1/5 of gross revenue of insurance agents.
The typical feature of recent years is international character of German
insurance companies activities. The process of developing foreign markets began
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in 1950. Even then reinsurance companies were more active than primary
insurance companies.
All operations abroad are executed by branches and through controlled
foreign companies. The greater part of foreign branches is situated in WestEuropean countries. In other countries there prevails participation in local
insurance
companies.
In
general,
German
insurance
companies
have
representations in 17 countries.
4.5. The Insurance Market of Switzerland.
Insurance market in Switzerland is highly developed. There are 117
insurance companies in the country, including 23 personal insurance companies, 82
companies of general insurance and 12 reinsurance associations.
The characteristic feature of Switzerland insurance market is a combination
of national and foreign capitals. Insurance companies are often transnational
corporations with vast foreign interests.
The biggest insurance company is Zurich Ferziherungsgezelishaft. The
company is a leader of powerful insurance group including 34 subsidiaries in the
country and abroad. The Zurich group also includes Vita the third company
for personal insurance, as well as Albina and Turegum public insurance
companies. Zurich concern occupies the strongest positions in the USA, 6
subsidiaries control practically all kinds of insurance there. There is Zurich
American among them, its premiums allowed it to be listed in 40 main American
insurance companies. There are subsidiaries in Germany, Canada, Great Britain
and many other countries.
Swiss companies occupy the strongest positions in reinsurance business.
They account for more than half of all premiums from abroad. Inside the country
more than half of all premiums is from personal insurance.
Switzerland has the highest index of collecting premiums per capita. A Swiss
family spends 15% of family income on insurance policies. It is the main item of
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of payment works out at 70%, which is incomparable to the world level of 90%
and more. In fact Russian underwriters exceedingly evaluate the undertaken risks
and the probability of insurance incidents. The high share of insurance premiums
remaining at the disposal of the company enables it not to search other variants of
profitable and reliable investing.
Less than 10% of potential risks is being insured (against 90 95% in the
majority of advanced countries), 90% enterprises property is not secured by
insurance protection.
The most well-known insurance companies in Russia are Rosno, Afes,
Ingosstrah, Energogarant, Lukoil.
4.7. The Insurance Market of Moldova.
At present in Moldova there are about 40 insurance companies having
licences to fulfil the insurance activities on the territory of Moldova. In general
insurance companies were formed as multi-branch organisations and they have
licences for different kinds of insurance activities.
For many years the insurance in Moldova was done by the Gosstrah that
was the monopolist on the local insurance market. In the beginning of 1990 there
was the demonopolization of the insurance market. The joint-stock insurance
company Asito has appeared. Many private insurance companies began to be
formed and by the middle of 1990 they have achieved big and essential results.
Now Joint Insurance Company QBE-ASITO possesses 70% of all
operations effected on the National Insurance market of Moldova. Thus the
majority of the underwriters are small and weak.
Eight insurance firms have approximately 9% of the market portfolio of
shares that belong to private foreign investors (England, Ireland, Russia, Ukraine,
Romania, Bulgaria, Malta). These companies are: QBE-ASITO, AFES-M,
ARTAS, ASSIND, BOIANA, DELTA, GALAS, PROTECT-IMPEX,
SAIMEX and others.
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In accordance with the rating, being held by the insurance supervision of the
republic, the most reliable companies of Moldova are: QBE-ASITO, AFES-M,
MOLDOVA-ASTROVAZ, CARAT, ORATEH, AUTO, DONARISGROUP, PROTECT-IMPEX, GALAS, ASIVIT.
The insurance activity in RM is effected on the basis of The laws about the
Insurance and is controlled by the State Insurance Supervision.
Moldova Republic legislation stipulates for the contracts of insurance being
concluded abroad only those kinds of activities which are not under national
underwriters insurance. Foreign companies are allowed to open representations in
Moldova which have the right to fulfil the insurance activities on the territory of
the republic, having licences given by the State Insurance Supervision body.
In Moldova the Regulation of the insurance broker is established. It arranges
relations between the insurers, underwriters and brokers. However, today only
three broker firms have been established and registered, and the majority of
policies are distributed through the insurance agents.
The questions for the control:
1. Enumerate and characterise the organisational forms of insurance most
spread all over the world.
2. Characterise the most advanced insurance markets.
3. Speak on peculiarities of the USA insurance market.
4. Enumerate types of insurance most often applied in the USA.
5. Characterise the methods of state regulation of insurance activities in
Great Britain.
6. Speak on international Insurance Corporation Lloyds.
7. Characterise insurance and reinsurance markets in Germany.
8. Enumerate and characterise types of voluntary and obligatory insurance
in Germany.
9. Speak on peculiarities of insurance market in Switzerland.
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V.P.,
Enikov
I.G.
5.2.
5.3.
5.4.
37
5.1.
38
10)
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means of transport;
11)
objects, which are in the insured space, but not owned by the
policyholder.
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The insurance contract is concluded on the basis of the formal letter from the
insurer.
The insurance contract is confirmed by the Insurance Policy.
Premiums can be paid in a lump sum or at agreed dates. Insurance contract
comes into force after the first premium is paid, but not before the date, stipulated
by the contract.
The underwriters responsibilities:
1) to make the insurer aware of general terms;
2) to pay compensation in the insurance case;
3) to pay compensation in advance (if the amount of compensation is clear
and investigations are not completed within 3 months period);
4) to compensate the expenses, caused by preventing damage;
5) to keep in secret all kinds of information obtained in the process of
insurance.
The insurers responsibility:
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Compensation is paid:
- if the property is fully destroyed, total insurance sum is paid after
deducting the value of the remains;
- if the property is partly damaged, the compensation will be equal to the
sum of restoring expenses.
Restoring expenses include:
- expenses on materials, spare parts and payment for workers;
- delivery expenses;
- other expenses, connected with improving the objects;
- expenses connected with temporary or additional repairing.
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Full destruction takes place if remaining cost and expenses for restoring
taken together exceed of the insured object.
The insured object is considered damaged, if restoring expenses and
remaining cost do not exceed the real cost of the insured object (at the moment of
insurance case).
Compensation includes the insurers expenses on saving the insured
property and reducing the damage.
In all cases compensation, including expenses on reducing the damage and
restoring the damaged property, should not exceed the insurance sum.
The underwriter, who paid compensation, has the right to claim the sum
from the third party, responsible for caused damage.
If the insurer has already received the compensation from the third party, the
insurance company should only pay the difference between the sum stated in the
insurance contract and the sum received.
The questions for the control:
1. Enumerate the objects and risks of physical persons property insurance.
2. Give types of property which are not subject to insurance coverage under
the conditions of insurance of physical persons property.
3. Speak how the insurance sum and insurance premium are determined
under juridical persons property insurance.
4. Enumerate the risks taken for insurance under juridical persons property
insurance.
5. Speak what property is not taken for insurance under the conditions of
juridical persons property insurance.
6. Speak on the regulations of concluding the insurance contract on
property types of insurance.
7. Enumerate the liabilities of an insurer and an underwriter on the
conditions of property types of insurance.
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Motor-vehicle insurance.
6.2.
Vessel insurance
6.3.
6.4.
Containers insurance
6.5.
Air-craft insurance
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insurance agreement these persons are insured against long or constant disability or
death.
The insurance of the driver and passengers can be exercised according to the
system of places or to the lumpsum system. It is stipulated that the insurance
sum is established for each place in the car. The total number of insured places are
determined according to the motor-vehicles technical passport data. Under
lumpsum system the total insurance sum is established for all passengers and the
driver. Each of them is considered to be an insured person having a definite share
from the total insurance sum.
As a rule an insurance agreement is concluded for the period of one year or
from one to eleven months.
When concluding an agreement, the insurer is obliged to present information
about the motor-vehicle, the model, the year of car output, power and volume of
the engine, colour, registration member and so on. If the insurer doesnt present
full and authentic information, which affects the determination of risk or the
amount of insurance premium, the underwriter has the right to consider the
insurance agreement to be invalid.
As a rule, documents which are regarded to be the basis for the
determination of the amount of insurance premium for locally produced motorvehicles are the data from corresponding price-lists. As to foreign made motorvehicles the corresponding documents are the invoice of manufacturing works of
the official dealer as well as home and foreign catalogues.
The amount of insurance premium is calculated according to the rates being
set up depending on the model of motor-vehicle or variant of insurance.
The insurance agreement under which the insurance reimbursement is paid
remains valid until the period of insurance expires. The underwriters liabilities for
insurance repayment are established as difference between insurance sum and
repaid insurance reimbursement.
46
47
amount of received reimbursement after deducting the cost of stolen spares and
repair of the motor-vehicle.
6.2.
Vessel insurance.
48
49
exact naming of cargo, kind of packing, number of places, weight of cargo, the
number and the date of the bill of lading or of some other transport documents;
naming the year of shipbuilding, flag and tonnage of the vessel; method of placing;
the place of sailing, transfer of cargo and its destination; the date of the vessels
sailing, insurance amount of cargo, insurance conditions.
These requirements in this or that modification correspond to the Standard
Conditions of London Institute Underwriters the most authoritative International
Insurance Organisation in the sphere of Marine Insurance.
The responsibilities for all risks are the widest, though they dont cover all
the risks. Some risks are excluded: damage to and loss of cargo due to any military,
pirate actions, confiscation, arrest or distraction of cargo on the authorities
demand (these risks can be insured additionally); radiation, infringement of the
rules of cargo transportation and storage, lack of cargo while packing is not
damaged, etc.
The responsibilities for private accident, in contrast to the first variant, are a
definite list of risks under which the underwriter bears the responsibility, but the
volume of underwriters responsibility is less here.
The responsibility for loss or damage only in case of a shipwreck coincides,
on the whole, with the responsibility for the private accident. The difference is that
in the latter case the underwriter bears the responsibility only for the complete loss
of cargo, as to the damage to the cargo the underwriter is responsible for it only in
case of the shipwreck.
In all above cases the underwriter compensates losses and expenses
associated with the wreck and all necessary charges for cargo rescuing and of loss
lessening.
The international trade unifying terms of loss and types of trade contracts
have been elaborated. Four basic types of trade deals (CIF, CAF, FOB and FAS)
are most widely spread.
50
Under CIF terms (cost, insurance, freight) Sellers are obliged to deliver
goods to the port, to load them on board the vessel, to pay freight, to ensure the
cargo against marine risks in transit and to send buyers all necessary documents.
Under CAF terms (cost and freight) Sellers undertake to conclude and to pay
the contract of marine transportation of goods to the place of destination and to
deliver the goods on board the vessel. Buyers should ensure goods.
Under FOB terms (free on board) Sellers deliver and load goods on board
the vessel which is hired by Buyers and the Buyers should ensure goods in transit.
Transactions on FAS terms (free alongside ship) are similar to those on FOB
terms, the difference is that under FAS terms Sellers deliver goods to the quay and
the risks pass on to correspondingly.
6.4.
Containers insurance.
International practice shows that the most effective, from the point of view
of cargo storage, is their transportation in special containers.
Containers insurance has its specific features. The objects of insurance are
containers where the cargo is placed and in this capacity they are a part of the
vessel. Their insurance is exercised under special insurance contracts usually
concluded on standard English conditions. The volume of insurance coverage may
be different at that.
Under the insurance of containers against all risks, the underwriter is
responsible for all risks of their complete loss within the period of insurance.
The underwriter is not responsible for the depreciation or gradual worsening
of containers quality as well as for their loss, damage and possible expenses
caused by the delay in voyage. Losses because of containers damage are
reimbursed in the sum which does not exceed the cost of restoration of damaged or
lost parts after deducting their depreciation interest.
Under containers insurance against complete loss they reimburse losses
against containers destruction as well as against containers share in the shipwreck
51
as well as expenses incurred for the rescuing of containers and lessening the losses.
Charges for containers repairing are not subject to reimbursement under given
conditions.
The insurance agreement is concluded on the basis of the written statement
of the insurer which must include the following information about the object of
insurance: the type of the container, volume, cost, the naming of the vessel-carrier,
the date of the vessels voyage, the place of departure, the place of destination, etc.
6.5.
Aircraft
insurance
contract
Aircraft insurance.
is
an
agreement
about
underwriters
52
the damage suffered by the object of insurance is reimbursed after deducting the
cost of this spare part.
While insuring the aircraft the insurance sum can be calculated at the
amount that doesnt exceed its actual cost for the moment of concluding the
insurance contract.
The Aircraft Insurance Policy can contain the following conditions:
- the losing of aircraft (if there is no information about it within 15 or more
days);
- emergency landing and expenses associated with the rescuing of the
aircraft (in case of its landing due to force major circumstances and impossibility
to take off from the place of such landing, the expenses for providing this taking
off or aircraft transportation are reimbursed);
- the cost of repair of damaged aircraft (if the insurance case is
acknowledged, the terms and limits of the corresponding expenses reimbursement
is agreed upon);
- the determination of complete loss of aircraft.
Under aviation insurance in contrast to other kinds of insurance, premiums
are calculated individually taking into account the factors which determine the
degree of the risk, type of aircraft, the year of its manufacture, technical
conditions. Pilots skills, the intensity of aircraft operation, information about
conditions of its maintenance, the character of transported cargoes and a number of
other factors are taken into consideration.
The questions for the control:
1. Enumerate variants of vehicle insurance.
2. Speak on the regulations of concluding an insurance contract and
payment of insurance reimbursement under the terms and conditions of vehicle
insurance.
53
7.2.
54
7.3.
55
money, according to the current exchange rate taking into consideration the
depreciation and is limited by 10 000 minimal salaries.
The insurance compensation for damage to the property of third persons
includes:
- expenses in connection with the loss of the estate;
- expenses on the reconstruction works of the estate;
- transport expenses of the suffered and expenses for taking the damaged
transport in tow.
In case of causing bodily injuries or death, the compensation is paid only to
those suffered persons that were outside the transport, which caused the accident.
Green card is an agreement that forms a special group of international
agreements about the insurance of the car-owners responsibility. The main
elements of Green card system are national bureaus of countries participants of
the agreement. The control under the fulfilment of the car-owners responsibility
insurance in the international auto communication is made through these bureaus.
As a rule, this control is made at the equipped frontier crossings. The National
Bureau together with the insurance companies decide questions of how to settle the
claims submitted by third persons concerning the insurance cases inside the
country and abroad. The National Bureaus are united into the International Bureau
of the Green card (head-quartered in London), that coordinates their activities.
7.2.
56
Insuring the responsibility of the air-carriers the insurers are those persons
that run the air transport belonging to them.
The injury is understood to be as death, bodily injury or the damage caused
to the property of third persons out of the air transport and on the land.
The matters of the civil responsibility of the air-carrier are regulated by the
rules of the International air-rules, particularly by Rome Convention about
reimbursement of the damage, caused by foreign airplanes to third persons.
According to the insurance contract of the carriers responsibility the underwriter
pays that sum of money that the insurer is obligatory to pay according to the law as
the compensation for causing bodily injuries or causing the damage to goods or to
the property of the third persons in the result of the insurance accident.
As to the sea-transport the insurance of the ship-owners responsibility that
is considered as an independent branch of the insurance is made. This insurance
stipulates the liabilities of the ship-owner connected with the harm caused to life,
health of the passengers, to the crew, dockers in the port and so on. The damages
caused to the property of the third persons are also the obligations of the insurance.
This property are: other vessels, goods, personal things of the vessels crew,
passengers or other persons and port installments.
The insurance of the ship-owners responsibility is effected through the
clubs of the mutual insurance. At present, there are about 70 of such kinds of clubs
in Great Britain, Switzerland, Norway, USA.
The insurance of the auto-carriers responsibility on the auto-transport is
made in case of damages connected with the transportation of goods or passengers.
The conditions of the auto-carriers responsibility are determined by the legislation
of every country and rules of the international laws, established by the Convention
about the international carriage of goods by roads.
The contract of the insurance of the auto-carriers responsibility in
international transportation includes the following risks:
57
58
59
and 3 years from the date of discovering hidden consequences of the caused
damage.
The responsibility of the underwriter on all the damages appeared during the
process of the Policy can not exceed the certain limit. The rate of the premium
depends on the profession, age, the length of service, the date of receiving the
qualification, the total number of the employees and so on.
The questions for the control:
1. Specify the objects and risks of insurance of civil responsibility of
automobile owners.
2. Speak on the regulations of concluding the insurance contract and
insurance reimbursement under the conditions of insurance of civil responsibility
of automobile owners.
3. Enumerate types of losses which are included in insurance coverage
under the insurance of civil responsibility of automobile owners.
4. Speak on international system of insurance of civil responsibility Green
card.
5. Characterise the insurance of civil responsibility of air-carriers.
6. Speak on peculiarities of insurance of civil responsibility of shipowners.
7. Characterise the insurance of civil responsibility of auto-carriers.
8. Specify the objects and risks of insurance of civil responsibility of
enterprises sources of high danger.
9. Enumerate types of losses which are reimbursed under the conditions of
insurance of civil responsibility of enterprises sources of high danger.
10. Characterise the conditions and risks of insurance of professional
responsibility.
60
The literature:
1. Law of RM of 15 July 1993 The Official Monitor of
the RM 12, December 1993.
2. The conditions of compulsory insurance of civil responsibility of the
owners of transport and municipal electric transport, the Official Monitor of the
RM 1 of 26 January 1995.
3. , a book under edition of professor Reitman L.I., The
bank and exchange scientific consultative center, M., 1992.
4. Basacov I.I. , Rostov-on-theDon, , 1999.
5. Serbinovski B.U., Garikusha V.N. , Rostov-on-theDon, , 2000.
6. under edition of L.I. Korchevskaia, ..
Turbina, ., , 96.
7. Rules and conditions for property and personal types of insurance
responsibility and financial risks elaborated by the insurance stock company
QBE-ASITO.
8.2.
8.3.
8.4.
8.5.
61
8.1.
62
63
8.2.
64
connected with the introduction of additional shifts, overtime works, urgent repair,
the use of less intensive machines and processes, etc. The necessary condition of
reimbursement of such expenses is the following their amount shouldnt exceed
the sum of damage under other clauses.
In order to make the insurers interested in avoiding idleness and making
steps to reduce losses one should reimburse only part of damage suffered by
insurers, the rest of it is left on the insurers liability.
Together with general limits of liability under given insurance there should
be excluded from reimbursement additional damage caused by production stop due
to the change of initial project of reconstruction of damaged objects, planned
repair, the authorities prohibition to carry out reconstructing works, the insurers
lack of material, labour and financial resources necessary for removing the causes
of idle time.
Payment rates are established in percentage to the cost of manufacturing
gross produce.
8.3.
65
insurance. As high valuable objects are subject to insurance, as a rule their full list
with the indication of their characteristics is made up.
The insurance of new technique and technology is carried on against risks
associated with their use. These are the following risks:
- errors in machines design and technology elaboration;
- errors in materials selection and in manufacturing;
- unexpected appearance of more sophisticated technique and technology
on the market;
- hidden defects which cant be revealed during testing;
- the operation stop of measuring, regulating and precautionary devices;
- increased tension and pressure, short circuit;
- errors in servicing the techniques and technological line;
- carelessness, evil intent of separate persons;
- other causes leading to machine destruction and production stop.
Losses are subject to reimbursement if they appeared due to accidental error
or premeditated actions of persons, who were professionally trained for the
operation with new technique or technology. If unskilled employees are allowed to
run the modern technical (technological) installations then the appearance of losses
mustnt be regarded as premeditated ones and they are not subject to
reimbursement.
The insurance against technical and technological risks doesnt stipulate the
coverage of losses against military actions, strikes, confiscation of property, fires,
explosions, calamities.
8.4.
risk
of
nationalisation
or
expropriation
without
adequate
compensation;
66
67
- the terms and conditions of the contract of sale or service rendering dont
conform to the legislative or other requirements of the country of a shipper, buyer
or transit;
- the lack of set of a shipping documents;
- the payment is not effected or cant be effected due to reasons depending
on the exporter country;
- goods are not accepted or accepted and given back .
The exchange rate difference, interests for failing payments causing from
contractual liabilities, the sum of penalty and other similar expenses are not
considered as a risk.
The important condition of insurance contract of export credits is the socalled period of expectation of payment. Under this condition the underwriters
liability doesnt happen immediately after the payment has been effected within
stipulated period of time but after expiring of a definite period. As a rule it is 60
90 days. This period is necessary in order to clear up the causes of non-payment
and to take steps for their elimination.
Export credits insurance abroad is exercised by specialised companies
usually belonging to the state or the state has the control block of shares in them.
In Great Britain the insurance of such risks is exercised by governmental
Department of Export Credits Guarantee, Lloyds corporation, in Germany the
company Germes, in France the company Caface. It should be born in mind
that the companies carrying out export credit insurance have at their disposal a
bank of data of the majority of world export import firms. It contains
characteristics of their financial situation and soundness.
The questions for the control:
1. Characterise objects and methods of determining the insurance sum
under the insurance of commercial risks.
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69
Life insurance.
9.2.
9.3.
Accident insurance.
9.4.
9.5.
9.6.
Life insurance.
The distinguishing feature of this insurance is its double function: risk and
accumulative one. Life insurance contract can be concluded in favour of a physical
person from his birth (but at the moment of concluding the contract his or her age
should not exceed 70 years old). Insurance contract cant be concluded in favour of
disable persons, if they are more than 49% disable (I and II group invalids).
The insurance sum is stipulated at the moment of concluding the contract
and should not be less than 1000 leis, maximum sum is not limited. The insurance
premiums depends on the insurant age, insurance period, insurance sum. Special
tables help to calculate these premiums.
The insurance cases are:
- the insurance contract termination;
- disability, resulted from an accident;
70
The main core of this kind of insurance is to increase pension paid by the
state after retirement. According to the insurance contract, additional pension is
paid to the insurant monthly. Insurance period is defined as difference between
pension age of the insurant (60 years for men, 55 years for women) and his (her)
actual age at the moment of concluding the contract. When the insurance period
expires, the pension period comes in force. Life-long additional pension will be
paid to the insurant within this period.
Additional pension amounts to 50 leis and more (as the insurer wishes).
Agreed additional pension can be paid monthly or within agreed period of
time after the insurance period expires (if the insurer has paid all premiums).
If the insurant died, no compensation will be paid in case that he had
received less than 5 annual pensions. If the insurant has received less than 5 annual
pensions, the beneficiary will get the difference between 5 annual pensions and
sum of pensions already received by the insurant.
71
If the insurant has died within the period of the insurance, the beneficiary
will get the insurance sum equal to premiums paid by the insurer.
9.3.
Accident insurance.
72
9.4.
73
74
75
76
77
78
79
80
81
82
83
BIBLIOGRAPHY
1. Law of RM of 15 July 1993 The Official Monitor of
the RM 12. December 1993 page 376, pages 121139 or
of 15 December 1993.
2. The conditions of compulsory insurance of civil responsibility of the
owners of transport and municipal electric transport (enclosure 1 to the decision
of the Government of the RM 956 of 28 December 1994) the Official Monitor of
the RM 1 of 26 January, 1995, pages 285 295.
3. The decision of the Government of the RM 77 of 3 February 1996
.
4. Green Mark R., Trieschmann James S. Risk and Insurance, 7th ed.,
Cincinnati, 1988.
5. Webb Bernard L., Horn II Stephen, Flitner Arthur Commercial
Insurance, Malvern, Insurance Institute of America, 1987.
6. White Eugen, Deposit Insurance, Washington, The World Bank, 1995.
7. Garcia G.G.H., Deposit insurance: Obtaining the Benefits and Avoiding
the Pitfalls, International Monetary Fund, 1996.
8. Garcia G.G.H., Deposit insurance: A survey of actual and best
practices, International Monetary Fund, 1999.
9. Purcaru Ion, Mircea Iulian, Lazar Gh., Asigurari de persoane i de
bunuri: Aplicaii. Cazuri. Soluii., Bucureti, Ed. Economica, 1998.
10. Vacarel Iulian, Bercea Fl., Asigurri i reasigurri, Bucureti, Ed.
Expert, Coediie Marketer, 1993.
11. , a book under edition of professor Reitman L.I., The
bank and exchange scientific consultative center, M., 1992.
12. Alenicheva V.V., Alenicheva T.D. ,
, East-service, 1994.
84
A.A.
"
",
.,
, 1998.
22. Zubritski
V.P.,
Enikov
I.G.
85