Page 34 - The Insurance Times June 2020

of which they are made, as opposed to deterioration caused Now let us consider the case of design defect.
by external forces.
This is an excluded situation but it can lead to operation of
Latent defect is a problem with a product, property, etc. an Insured Peril the damages thus caused can be called
that is hard to notice and may not be noticed before it is ensuing damages and are covered.
bought.
The element or the property having the design defect is
Therefore there is an element of cover here too amidst the not payable as this is an excluded property Conversely in a
exclusions. building there is design defect let us say in one of the beams.
This design defect does not trigger any peril.
As we all know when a Peril Triggers we look at the
Proximate Clause of Loss. However due to mild Earthquake Cover the building
collapses.
The Proximate Cause is defined as:
Here the defective condition has not led to an Insured Peril
Proximate cause is the primary cause of a loss. but the building has collapsed and the design defect has

contributed to the collapse of the building.
It is not necessarily the closest cause in time or space nor
the first event that sets in motion a sequence of events
Here the loss will not be payable.
leading to a loss.
Excluded Peril Insured Peril Damage Covered
Proximate cause produces particular, foreseeable
consequences without the intervention of any independent It would be interesting to read the exclusion word by word
or unforeseeable cause. and then relate with what has been written above.

It is also known as legal cause. Many such incidents happen and it is important to go back
to the basics of Insurance and to the wordings of the Policy.
Let us now look at the doctrines: The Insurance policy is a Contract and it is a legally
enforceable contract and it is important to weigh each word
Scenario 1: of the Policy with a legal eye keeping in mind the basic
Let us assume that a Excluded Peril triggers an Insured Peril principles of Insurance.
which then leads to a damage.
It may be pertinent to note here that Project Insurance
The damage thus gets covered. Policies do provide for Design Defect Covers of various forms
and there are different Design Defect Cover wordings
Rain - Flood. available. T

IDBI Federal Life profit rises 22% to Rs. 162 crore

IDBI Federal Life Insurance reported a 22 per cent increase in its net profit to Rs. 162 crore in 2019-20.
"This is the eight consecutive year of profit for the organisation since it first declared profit in 2012-13," the private
sector life insurer said in a statement.

However, its total premium declined 4.65 per cent to Rs. 1,843 crore in 2019-20 from Rs. 1,933 crore in 2018-19.
Renewal premium grew 14 per cent year-on-year to Rs. 1,282 crore last fiscal.
"While 2019-20 has been a challenging year for the organisation, we have taken a number of steps to steady the
course. We focussed on growing distribution footprint primarily through our proprietary channels, while continuing to
strengthen bottomline parameters such as costs, surrenders, claims, profit after tax and solvency margin," said Vighnesh
Shahane, Managing Director and CEO.

Its solvency ratio stood at 298 per cent in 2019-20, down from 334 per cent a year ago. Assets under management
grew seven per cent to Rs. 9,775 crore in 201920 from Rs. 9,107 crore in 2018-19.

34 The Insurance Times, June 2020