Page 193 - RISK Management IC 86

The Insurance Times

claim amount received in excess of the original cost
of the assets is subjected to capital gains tax. If
however such as is replaced in the same assessment
year, the company can claim initial depreciation and
investment allowance and reduce the amount of
capital gains tax.

Apart from the fact that contributions to a self
insurance fund are not tax deductible expense it has
some other disadvantages also. Since self insurance
is related to the assets of one particular firm, the
spread of risk which is the main basis of an insurance
would not be available here.

Also, the fund would be insufficient in the initial
years to meet substantial claims the affecting the
financial position of the company. In Indian
perspective, the expertise required to set up an ad
minister insurance fund also may not be available to
many companies.

ii) The Availability and Cost of Credit -changes in both
the ease with which loans can be obtained and the
market interest rates obviously affects the

Website: www.bimabazaar.com Call: 033-22184184 / 40078428 194

Copyright@ The Insurance Times. 09883398055 / 09883380339