AUTO INSURANCE INFORMATION

Reserve is the amount of funds or assets necessary for a company to have at any given time to enable it, with interest and premiums paid as they shall

accrue, to meet all claims on the insurance. The reserve is always reckoned as a liability, and is calculated on net premiums. When a business creates a “Reserve”, they are essentially setting aside a certain amount of money for a specific purpose. Reserves are monies set aside to act as a buffer against future losses.Reserving is a fundamental aspect of a business management principle. It is all the more a basic requirement for an Insurance company as it reflects in the insurance companies’ balance sheet. The change in reserves is a significant item on the income statement. A small change, adjustment, or error in the reserves can have a major impact on the income reported by a company. Actuaries calculate the reserves.To emphasize the impact of Reserve, we shall see an example -Reserves of Insurance Company “X” –1,34,60,59,480
Change in Reserves– 7,21,69,080
Net Income– 13,28,303In this example, a 0.1% error in the reserves would wipe out the net income itself.Hence, it is clear that the apparent profitability of a business as well as its solvency is highly dependent on the value of the reserves. Most of the key functional performance statistics used by insurance company analysts depend in some way upon the reserve value.The reserving process provides great insights in to the past claims performance and policy exposures and these can influence the terms and conditions offered on future business, including the basis of decisions to cease underwriting certain classes or to withdraw from insurance entirely in order to support alternative enterprises that may offer better rates of return or capital.Claims that occur during a year of insurance are generally paid of the premiums received during that year. But, it is obvious that, while closing of accounts there could be a number of claims which are unpaid and will be settled in the following year.For this purpose, the Insurer has to keep aside a reserve amount to settle those claims. This amount set aside for paying out the claims is called the Reserve for Outstanding Claims.The reason why there is such spill over of claims settlement could be:1.Some claims may be in the process of investigation, survey, arbitration or litigation.
2.There can be some other claims which have been surveyed but final payment not released.Such reserves normally include the amount of liability for claims that are classified as:a)Reported and surveyed but not yet paid
b)Reported but not yet surveyed.The reserve for outstanding claims also includes provision for Incurred but not reported (also called IBNR claims). Here, claims may arise in the year of account but may be intimated during the following year.Majority of General Insurance policies are annual contracts and issued throughout the year. Such contracts tend to end on different dates. Their end dates can come or claims can occur after the date of reckoning for accounting purposes. Summarily, as at the closing date of accounts, there will be unexpired liability under various policies and it becomes necessary for the Insurance Company to make provision to pay for losses which may occur during the unexpired term of the policies. Such provisions are called as Reserves for the Unexpired Risk or Unearned Premium Reserve.We can actually calculate the unexpired portion of the premium under each policy. But, the data involved would be large. There are several methods for calculation of the unexpired portion of the premium. Some of the most popular ones are: Pro-rata or 1/365 method, 1/24 method, 1/8 method, Blanket method based on some set forth percentage, which is being used widely. There is a simple calculation formulated by means of a percentage of premium income that can be allotted for reserves for unexpired risk.This calculation is based on some valid assumptions like:Under Policies issued duringUnexpired risk as at the end of the following year 1st quarter ј 2nd quarter 2/4 or Ѕ 3rd quarter ѕ 4th quarter 1/1 Average 5/8 i.e. 62% approx.Assuming that all policies are evenly distributed throughout the year, the percentage of premiums which have not been earned at the end of the year will is 62 percent.Further, the percentage is reduced to 60% taking into consideration some short period policies which would expire before the closing of accounts. Provision for commission and management expenses is not required because it is already collected as a part of the premium rate. So, 40% is the logical percentage that would be required as provision for reserve.But, as per the provisions of the Insurance Act, 1938, insurers are required to provide to 50% of the premium in fire, marine, cargo and miscellaneous classes and 100% in marine hull insurance as reserves.

My article written here does not tell you whether you should go in for Life Insurance Policies but it features more on the aspect of what policies provide

you and what are the prerequisites for taking up a policy. Our emphasis will also be on long term life insurance plans. But before we discuss anything further about policies let us first understand the meaning of the term “Insurance”. YYou might think why does he want to tell us the meaning of the term Insurance? We all know that. But for me this article aims to educate those people who may not know what Insurance and Life insurance is all about. Insurance is an agreement between two parties “insurer” and “insured”. It is a contractual agreement by the insurer and the insured where the insurer undertakes in exchange for a fixed sum called premiums; to pay the other party called insured a fixed amount of money on the occurrence of a certain event. A loss arising out shall be paid from the premium money collected from the insuring public and the insurance company acts as trustees for the amount collected. But why should you take up insurance and why should you spend money on buying the policy. Apart from Tax benefits that it provides it also safeguards your loved ones in the event of any unforeseen happenings. Certain Insurance contracts are also made compulsory by legislation.For example:-·Motor Vehicles Act 1988, stipulates that a person driving a vehicle in a public place should hold a valid insurance policy covering ” Act” risks.·Another example of compulsory insurance pertains to the Environmental Protection Act, wherein a person using or carrying hazardous substances (as defined in the Act) must hold a valid public liability (Act) policy.You must have seen the famous LIC (Life Insurance Company of India) ad on the television where a character called Mrs. Sharma is seen crying in front of the photograph of Late. Mr. Sharma after their daughters wedding. There is a voice over which says that “Today all your work has been done” but she says that all the real work was done by them when he had purchased the life insurance policy from a reputed Life Insurance Company. This tells us how life insurance policies have helped in securing the future for all our loved ones. It is also shown to be an act of responsibility and that every individual should do it in order to secure future. With the advent of life insurance came other types of insurance and endowment policies such as child endowment and pension plans for the aged. The tax benefits that these policies provide are as follows.Tax Relief:1. Under Section 88 of Income Tax Act, a portion of premiums paid for life insurance policies are deducted from tax liability. Similarly, exemption is available for Health Insurance Policy premiums.2. Money paid as claim including Bonus under a life policy is exempted from payment of Income Tax.Encourages Savings:An insurance scheme encourages thrift among individuals. It inculcates the habit of saving compulsorily, unlike other saving instruments, wherein the saved money can be easily withdrawn.The beneficiaries to an insurance claim amount are protected from the claims of creditors by affecting a valid assignment.For a policy taken under the MWP Act 1874, (Married Women’s Property Act), a trust is created for wife and children as beneficiaries.Life Policies are accepted as a security for loan. They can also be surrendered for meeting unexpected emergencies.So frankly speaking there is no alternative to insurance. With so many benefits in hand I believe that everyone should have one insurance policy because they say “You may not know what the future has in store for you”. Now the question arises from where do you get an insurance policy? There are two ways for this, one is either you approach the company directly or secondly you approach an Insurance agent who will take all the effort of filling in the form and will charge commission on the total sum assured. The commission charges varies depending upon the policy and the number of years the premium is paid. Typically the scenario is this as taken from Wikipedia+ 35 - 40% for 1st year premium if the premium paying term is more than 20 years
+ 25 - 30% for 1st year premium if the premium paying term is more than 15 years
+ 10 - 15% for 1st year premium if the premium paying term is less than 10 years
+ 7.5% - yr 2 and 3rd year and 5% - thereafter for all premium paying terms.In case of Mutual fund related - Unit linked policies it varies from 1.5% to 60% on the premium paid.Agency commission for retail pension policies:+ 7.5% for 1st year premium and 2.5% thereafterMaximum broker commission - 30%Referral fees to banks - Max 55% for regular premium and 10% for single premium. However in any case this fee cannot be more than the agency commission as filed under the product.But the above structure may change depending upon the market you are into. In India the agent’s commission may differ.With Bharti Life we offer a full-customized support with a personalized plan for you. Our executives out there to provide you with the best life insurance plans and Long term Life Insurance. Just write to us at service@bharti-axalife.com or Visit www.bharti-axalife.com for more info.

The Competition Commission has been conducting an in-depth review of the payment protection insurance sector after a referral from the Office of Fair Trading,

and following on from the Financial Services Authority who began investigation in 2005. There have been many problems within the sector including high premiums being charged for the cover and just recently the Commission announced that banks are raking in 80% of the premiums that they charge for payment protection in profits.As a result of this the Competition Commission are exercising their legal rights by forcing the sector to reveal the profits made from the cover. With consumers paying out over Ј4 billion for payment protection cover last year alone banks are reluctant to reveal how much of this is profit.Payment protection is sold alongside borrowing such as loans and credit cards when consumers take out the borrowing. It has even been known to have been included in with the cost of the loan without the consumer being aware. Not only is the cover very expensive when taken out this way but very little information is given regarding the key facts and exclusions which exist in all payment protection insurance policies.Some typical reasons which could stop a person from claiming on a policy include being retired, self-employed, suffering an illness which is pre-existing or if you only work in part time employment. While these are the most common there can be others set out by providers so reading the small print is essential.Taking your payment protection alongside your loan or credit card with the high street lender means you will be paying up to five times more for the cover than if you have gone with an independent specialist provider. 50% to 80% payout rates looked at by the Commission were found to be typical on the selling of pi with the high street lender, and 40% to 65% when it came to selling mortgage protection. While some changes for the better have been seen since the Financial Services Authority handed out fines with the latest being a mortgage firm, much more needs to be done when it comes to the way the high street lender “rips-off” the consumer.When taken with an independent specialist provider, protection insurance can give you an income once you have been out of work for a certain period of time due to an accident, sickness or unemployment. The waiting period can be anywhere between 31 and 90 days dependant on the provider and can last between 12 and 24 months. The income you get each month is tax free and can stop you from getting behind on your credit card or loan repayments.An independent specialist will not only be able to save you money on your payment protection but also make sure that you have access to the key facts and exclusions in a policy which could mean you would be ineligible to make a claim. A lack of this information is what led to the investigation and the mis-selling scandal in the first instance. Hopefully changes will be made for the better in the future and payment insurance will become affordable to all individuals but for now buying the cover from a specialist is the best option.

Younger drivers have always been a victim of high premiums when it comes to taking out car insurance. While this has always been the case premiums could

rise higher after it was announced that very few young drivers take responsibility for high accident rates and fail to change their behaviour whilst driving which many consider to be dangerous driving.A recent study revealed that around 44% of Britain’s younger drivers believed that older people were not safe on the road and 63% said that harsher measures should be in force such as taking away their license and a ban on driving. Accident rates are soaring and younger drivers are blaming older drivers and so are failing to heed safety measures and change their own ways whilst on the road.Around 45% of drivers aged between 17 and 23 questioned believed they were safe drivers and despite the fact that they had little experience on the road classed themselves as confident in their driving ability. Despite their insistence younger drivers have been associated with high accident rates and one very good reason why could be the fact that one in four male drivers have openly admitted to driving their car after having had a drink or taken drugs. A staggering 44% admitted that they have climbed into the car the morning after a heavy drinking session.While these findings do suggest that younger drivers are a higher risk 4 out of 5 believe they are targeted wrongly and unfairly have to pay higher premiums for their car insurance. However there are some drivers out there that do abide by the law and follow safety rules and regulation to the tee and these drivers should go with a specialist broker when it comes to looking for the cheapest young drivers insurance.A specialist broker will be able to conduct a search based on those offering insurance for cheaper rates with added incentives. Along with finding cheaper insurance premiums for the younger driver, the individual can take advantage of the hints, tips and information that a specialist will make available which can help to keep the cost of the premiums down.Taking an advanced driving course which is particularly aimed at the younger driver can make a difference to the cost of the insurance as can the engine size and make and model of car that the youngster wishes to insure. Above all proving that you are one of the safety conscious drivers is the best way of reducing the cost of young driver’s car insurance and of course of ensuring that you remain safe and accident free on the road. As with any type of insurance policy, young drivers insurance being no exception, you have to check the small print of the policy before signing on the dotted line. Exclusions can be found in the small print and it will also tell you what is and is not covered and how much the insurance will cost along with the excess that comes attached with all insurance policies.

Redundancy insurance can give you a replacement income if you were to find yourself without money coming in if you unlucky enough to be made redundant.

With more and more businesses tightening their belts no ones job is safe and while you could receive redundancy money it would not last very long if you had to repay your mortgage, any loans and continue to pay essential outgoings as well.Providing you did not take voluntary redundancy and you have checked other exclusions within a policy you could receive a tax free income each an every month you were out of work with which you could continue to repay your mortgage, loan, credit card and essential outgoings. This would greatly relieve the stress and of course means you would not have to break into any savings or redundancy money in order to be able to keep on top of things.However while redundancy cover can be an essential lifeline it is not suitable for the circumstances of all individuals because there are exclusions which could mean you would be ineligible to make a claim. Some of the most common exclusions include if you are only in part time work, are self-employed, suffer from an ongoing illness or if you are only working in a part time position. Providers can add others so you have to check the terms and conditions of any policy you are considering taking out before you buy it.Buying the cover that is offered alongside a loan or mortgage is the most expensive way of taking out the cover and very little information is given regarding the exclusions and key facts of the policy. In addition the cover will cost you up to 5% more than had you gotten quotes independently.Providing a policy is suitable for your circumstances then it would begin to payout once you had been out of work for between 31 and 90 days and would then continue to payout for between 12 and 24 months depending on the provider in question. Mortgage cover taken out as redundancy cover would allow you to continue paying your mortgage repayments and so you would not be in fear of losing the roof over your head. Loan protection cover will give you money so that you can comfortably pay your loan repayments and income cover will protect your income in general so you can pay your essential outgoings.Payment protection has come under fire for many reasons since the investigation by the Financial Services Authority began in 2005. Mis-selling occurred and fines were handed out to several names on the high street with the most recent being a mortgage firm of which not only the firm but also the Chief Executive received a personal fine. The Financial Services Authority investigated over 4,000 cases of mis-selling in 2007 alone including redundancy cover even though recommendations were outlined which were supposed to be followed. While some changes for the better have been made clearly many more need to be made.

There are around 20 million loan insurance and mortgage insurance policies in the UK and it is thought that around half of these could have been mis-sold.

The mis-selling scandal began in 2005 when it was brought to the attention of the Office of Fair Trading and the Financial Services Authority and fines were subsequently handed out to well known high street lenders and providers.The majority of those who received fines were high street lenders who were pushing the cover alongside a loan or credit card while giving out very little information regarding the exclusions. This meant the consumer was buying a product they did not understand.However, it is important to realise that it is the poor selling techniques and lack of knowledge those selling loan insurance have that has caused the problems with loan cover and not the actual policy itself. When bought correctly with the exclusions in mind loan protection can work the way it is designed to do and can give a financial lifeline to those with a lost income.The Financial Services Authority set out guidelines and recommendations for providers to follow which it was hoped would put an end to the mis-selling. While some have followed these guidelines, the Financial Services Authority (FSA) announced that they have investigated over 4,000 cases of mis-selling in 2007 which was double the amount of the year previous. This clearly means that much more has to be done if faith in the products is to be restored.Providing a policy is suitable for your circumstances then the cover would begin to payout once you had been out of work for a pre-determined amount of time which is usually between 31 and 90 days. Once the policy has begun to payout then it would continue to do so for between 12 and 24 months again depending on the provider. Loan insurance can be a very valuable lifeline to have because getting behind on the repayments means at the very least earning yourself a bad credit rating which can take years to remedy.You do need to look out for the exclusions within the cover. Some of the most common exclusions include working part time employment, suffering an illness which is ongoing or if you are of retirement age. There can be others depending on the provider so it is essential that you do read the key facts of the policy before you buy it.One of the changes in the pipeline when it comes to the way that loan insurance polices are sold is the introduction of comparison tables by the FSA. The tables will highlight the exclusions in a policy and will also tell the consumer how much the cover would cost. To help the consumer choose between which type of payment protection would be most suitable for their needs there will be a serious of questions which will lead to the correct solution and the consumer getting the cover which best suits their circumstances.

Here is a summary of some steps you can take to help lower your home insurance premium: Contact your insurance company or local neighbourhood watch scheme,

who can provide information packs about making your property more secure. Ensure that all windows have locks fitted and that your doors are fitted with deadlocks. Insurers may offer a discount of up to 10% off your contents insurance if you have these kinds of locks fitted. Consider fitting an alarm to your property, ensuring work is carried out by a recognised alarm fitter. Bear in mind that expensive alarms might require annual servicing, but such a step could help give a discount of up to 10% on your policy. If you have had any additional safety or security features - such as closed-circuit television, fire precautions and home safes - it is best to declare these to your house insurer provider, as it could mean a discount on your premium. Most policies will require you to pay the first Ј50 of any claim - but if you’re willing to pay a little extra on your excess you can reduce your premium. Check that you live in a neighbourhood watch area. If so, check with your insurer to see if you can still qualify for a small discount. Just like with car insurance, a record of no previous claims can make a difference to your premium. Some policies now offer the option to protect your no claims bonus. If you don’t have protection already and you need to make a claim, consider if it would be cheaper to pay for the loss or damage yourself rather than affecting your no claims bonus - which could affect your premiums in the future. Age can be a factor in whether you get a good deal on home insurance - statistically the older you get, the less likely you are to have an accident - there are some providers who offer extra benefits to those over the age of 50. Lifestyle can also play a part in your premium, be sure to declare as many details as possible to your insurance provider - such as whether you smoke - as this might affect your premium. Some insurers offer additional discounts if you apply online, and with a wide variety of cheap home insurance providers to choose from it might be worth shopping around for a deal that suits you. Before taking out a policy, you need to make a list of what you need to insure, as well as determining a price and level of cover for each item. Having an idea of what you want to protect before searching for an affordable home insurance policy will help to minimise the time you spend searching for a quote and purchasing a cheap home insurance policy.

Home insurance is a collective term for two different types of cover. However, home insurance policies differ in levels of protection and premium specifics,

such as protection for areas including electrical goods and other valuables.Buildings insurance provides protection of the construction side of your property, helping to cover the re-build cost of your property in event of damage caused by fire or subsidence. The re-build value of your home can usually be found on your mortgage agreement or property deeds.Contents insurance covers almost everything you take with you when moving house. It is advisable to make a list of the rooms in your house and to notate the value of all the items - from CDs to clothing - contained in each room. Add these individual amounts together and use the total amount to see which contents insurance policy would suit you.It’s always best to double check and to calculate an accurate figure for your buildings and contents insurance before shopping for a home insurance policy, it may be an awkward process but if done correctly can help save money on your premiums.If you need both buildings and contents insurance, it might be worth shopping around for quotes for both policies. Most insurers do offer separate policies, however whilst one might be cheaper for buildings cover it might not suit your needs when it comes to contents insurance.All insurance policies protect against the risk of financial loss. However there are steps you can take in order to reduce the risk of damage or loss to your property and possessions. It’s best to contact your home insurance provider before getting any security improvements installed on your property as they can give advice on the cost-cutting impact of such improvements.In part two you can find a handy guide to a few effective measures which, if checked and followed, could lead to a lower house insurance premium.

Unemployment insurance is a term used for mortgage payment protection, loan protection and income protection which is taken out in case some time in the

future you find yourself unemployed by way of unexpected redundancy. While there have been many problems associated with the cover it can be a valuable lifeline if you should come out of work by giving you a tax free income each month.Cover can be taken out just to protect against becoming unemployed or for additional cost you can include becoming unable to work through accident or sickness. The cover can be invaluable if you suddenly lose your income but unemployment insurance is not suitable for all individuals due to the exclusions in a policy. Common ones in all policies are if you suffer an ongoing illness, are of retirement age, only work part time or are self-employed. Always check the terms and conditions of a policy because exclusions will also depend on the provider.Once you have made sure that a policy would be suitable then you have to decide which type of cover would be in your best interest. Mortgage insurance will give you a tax free income so that you can keep the roof over your head by continuing to pay your mortgage each month. Loan payment protection will be needed if you have monthly loan repayments to make each month or credit card repayments. Income protection can be taken out to make sure you will be able to continue paying essential outgoings and so not have to change your lifestyle too much.Unemployment cover could begin to give you an income from between the 31st and 90th day of being out of work continually. Once the cover has started to payout it would continue to do so for between 12 and 24 months which usually is more than enough time for you to find work and get back on your feet again. The premiums for the cover are based on the amount of your income; loan, mortgage or credit card repayments that you wish to cover and also how old you are at the time of taking out the cover.While premiums do vary a standalone specialist provider will always offer the cheapest quotes for unemployment insurance and along with this they will always give the essential key facts so the individual can make an informed decision regarding the suitability of a policy.Since the investigation began by the Financial Services Authority in 2005 following a super complaint by the Citizens Advice faith has been lost in payment protection policies. However it should be remembered that it is not the fault of the actual products but those who sell the cover with little or no sales experience. The majority of those fined have been high street lenders who sell unemployment insurance alongside loans, mortgages and credit cards. The safest and cheapest way to buy any type of payment protection policy is with someone who specialises in selling this type of cover, a specialist will have the answers to any questions relating to payment protection.

Unemployment cover can give you an income and peace of mind when bought correctly but you do have to shop around for the cover and be aware that there

are reasons which could stop you from making a claim. The cover is taken out in case you should find yourself unemployed by such as redundancy and without the money to continue meeting your essential outgoings, mortgage repayments or loan repayments.Unemployment cover can be taken out as loan payment protection, mortgage protection or income protection and all policies have exclusions in them that could prevent you from making a claim. Exclusions which are common to all policies include being retired, self-employed, suffering a pre-existing medical condition or only being in part time work. While these are just the common ones there can be others and this is one of the reasons why you have to read the small print of a policy before you buy the cover.Mortgage protection can give you an income if you should become unemployed with which to carry on paying your mortgage each month. The State gives very little help even if you are entitled to receive any and this means that your home could be at risk of repossession. Loan payment protection will cover your monthly loan repayments each month so that you do not get into debt and income protection will give you an income to replace up to a certain amount of your own. All policies can be taken out to just cover unemployment or you can choose to add on sickness and accident cover.Providing you have ensured that a policy would be in your best interests it would begin to payout once you had been continually off work for anywhere between 31 and 90 days. Cover would then continue providing you with a tax free income for between12 and 24 months depending on the provider.While cover is usually pushed alongside a mortgage, loan or credit card this is the dearest way to take it and a far better option is going with an independent specialist provider. A specialist will always offer the cheapest premiums and along with this will ensure that you have access to the key facts needed to determine if a policy is suitable. A lack of information regarding payment protection products including unemployment cover is what has led to the cover getting a bad name, which stemmed from the 2005 investigation by the Financial Services Authority.March 2008 will see the introduction of tables which will allow the individual to compare unemployment cover to see which is the most suitable for their needs. It should make the cover more transparent by revealing the exclusions and will tell the consumer how much the cover will cost in total. Unemployment cover is confusing and many have been coerced into taking out a policy that they could not hope to claim against but providing you stick with an independent provider and read the small print it can work.