Page 317 - IC38 GENERAL INSURANCE

A. Proposal forms

The insurance documentation is provided for the purpose of bringing understanding
and clarity between insured and insurer. There are certain documents that are
conventionally used in the insurance business. The insurance agent, being the
person closest to the customer, has to face the customer and clarify all doubts
about the documents involved and help her in filling them up. The insurance
company comes to know the customer and her insurance needs only from the
documents that are submitted by customer. They help the insurer to understand
the risk better.

Agents should understand the purpose of each document involved and the
importance and relevance of information contained in the documents used in
insurance.

1. Proposal forms

The first stage of documentation is essentially the proposal forms through which
the insured informs:

 who she is,
 what kind of insurance she needs,
 details of what she wants to insure, and
 for what period of time

Details would mean the monetary value of and all material facts connected
with the subject matter of insurance.

c) Risk assessment by insurer

ii. ―Proposal form‖ is to be filled in by the proposer for insurance, for
furnishing all material information required by the insurer in respect of a
risk, in order to enable the insurer to decide:

 whether to accept or decline and
 in the event of acceptance of the risk, to determine the rates,

terms and conditions of a cover to be granted

Proposal form contains information which are useful for the insurance
company to accept the risk offered for insurance. The principle of utmost
good faith and the duty of disclosure of material information begin with the
proposal form for insurance.

The duty of disclosure of material information arises prior to the inception
of the policy, and continues even after the conclusion of the contract. (This
principle has been discussed in Chapter 2 in detail.)

311