Page 23 - Insurance Surveyors Book Ebook IC S01

Survey And Loss Assessment IC-S01

Nonlife policies are usually of shorter duration of one year.

There are some policies with longtail which means the liability of the insurers

does not end with the duration of the policy period. It may extend to several

years or even after the expiry of the policy period.

In non- life insurance there are three major classes - fire, marine and

miscellaneous insurance

Assumptions play an important role in the insurance business. Insurance premium is

generally calculated on the basis of probability of happening of a certain event. The

insurers assume that in case of a similar situation tomorrow what may be the

expected loss that the company may suffer. Premium is based on such assumption.

The probability of the risks depends on the frequency of the occurring of the peril

and its subsequent impact. The frequency of occurrence of the peril and extent of

damage depends on a number of factors. Some of these factors are controllable and

some are uncontrollable. For example earthquakes and floods are not controllable,

since it is the act of god. But a fire in a factory may be controlled if proper risk

management measures are taken in the factory.

Premiums are decided on the basis of probabilities.

Probability depends on hazard.

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