Insurance Scheme

The company you’re
contracting with is a member
of the REAL Assurance
Scheme. To give you peace of
mind we’ve arranged a scheme
that will protect the money you
pay the company up front, just
in case they cease to trade
before they deliver the goods
to you. Of course this is very
unlikely to happen, but
unfortunately it does from
time to time.
The scheme is called the
Deposit and Advance
Payment Insurance Scheme.
The way it works is explained
in this leaflet.
Deposit and Advance
Payment Insurance Scheme
Please read the
important information
set out in this leaflet
How it works
You will not be asked to pay
anything for the insurance
cover, either to the REAL
Assurance Scheme or to the
company you’re contracting
with. Once you’ve signed the
contract the company you’ve
contracted with will register
your name and address and the
total value of the contract with
the Insurance Scheme
Administrator (Warranty
Services Ltd trading as QANW).
You should tell the company
that you’re happy for them to do
this on your behalf.
Once the Insurance Scheme
Administrator receives your
details they will send the policy
documents confirming the cover
you have in place directly to
you. The policy will be in your
name and the agreement will
be between you and the Insurer,
Guaranteed Protection
Insurance (GPI) Ltd.
What it covers
The policy will be valid from the
date you paid the deposit until
the date agreed in the contract
for the goods to be delivered to
you for installation (so long as
this period is 120 days or less). If
the company later tells you it’s
unable to deliver the goods on
the agreed date, through no fault
of yours, you should contact the
Insurance Scheme Administrator
(QANW) and ask for a policy
extension. (If by any chance the
extension is for longer than 30
days you may be asked to pay a
small additional premium which
the company should agree to
refund you.) You should address
any specific queries about the
cover to the Insurance Scheme
Administrator (QANW).
We guarantee that your details
will not be passed to any-one
else under any circumstances.
The Insurance Administrator will
only keep your details on their
system for the length of time the
policy is valid for. After that they
will be destroyed. During that
time they will be treated in line
with data protection legislation.
What you need to do
Once you receive the policy
document, you should keep it
safe until you receive the goods
ready to be installed. You should
also keep careful records of the
deposit and advance payments
you make. Please note that If
you’ve paid by credit card, the
insurance provider will expect
your credit card company to
refund you the money in the
event the company ceases to
trade before they’ve delivered
the goods to you.
If you find out the company
you’ve contracted with has
ceased to trade you should
follow the Claims Procedure
outlined on your policy
document. Where you have a
valid claim, the insurer can:
either refund you the value of
the deposit and any advance
payment; or find another
company that is a member of
the REAL Assurance Scheme,
to provide you with equivalent
goods up to the limits of the
policy. In this case you would
still have to pay the balance of
the contract price once the
installation is complete.
Warranty insurance
With your policy document you
will be offered the chance to
insure the workmanship
guarantee the company will give
you when the installation is
complete. The insurance will be
valid for the same period as the
guarantee. Please note that this
is not the same as the
manufacturer’s guarantee(s) but
is the guarantee for the installation
work itself. This extra insurance
will cost you around £35.
It is entirely up to you to decide
whether to take out the
insurance or not. You will only
receive one letter from the
Insurance Scheme Administrator
(QANW) about this, with your
other policy document. We have
approved the letter to be sure
that it is not misleading in any
way. If you decide to take out
the insurance you will need to
complete the application form
provided.
FSA regulation
It’s important for you to know
that the company you’re
contracting with is not selling
you the insurance cover. They
are not allowed to comment on
the insurance cover other than in
informing you about it and
passing you this leaflet. This is
because the company is not
regulated by the Financial
Services Authority (FSA) to sell
or advise in respect of
insurance. Both the Insurance
Scheme Administrator (QANW)
and the Insurer behind the
Scheme (GPI Ltd) are authorised
and regulated by the FSA.
It’s also important for you to
know that neither the REAL
Assurance Scheme nor the
company has received any
commission or other inducement
for setting up or participating in
the Deposit and Advance
Payment Insurance Scheme.
The Office of Fair Trading, which
backs the REAL Assurance
Scheme, is supportive of the
Insurance Scheme which fulfils
their goal to ensure that
consumers’ funds paid in
advance are safeguarded.
More information
You can find full details of the
Deposit and Advance Payment
Insurance Scheme, the policy,
the relevant terms and
conditions Frequently Asked

Insurance for small business

Why take out insurance for your business?
Running a business is risky, and often involves putting your own finances at risk. Trying to work out what insurance you need when starting out or even afterwards is difficult. However, running a business with basic insurance is a smart way to manage the risks and reduce uncertainty.
▌What to insure and for how much? If you’re starting out, working out what to insure against before you’ve even made a profit is hard. Will you insure for every possible risk, or just the most likely? Which are more likely in your business? How much cover do you need? If you over-insure you waste money, and if you under-insure and then make a claim, the insurance company can reduce what they will pay you. This information sheet lists the common risks you can insure for and suggests how to get the best deal.
▌What is ‘under-insurance’? When you take out a policy for a certain amount of cover, and it’s less than the value of what’s being insured, the insurance company can (legally) reduce what it pays you for any claim, including small claims. Insurance companies use different ways to work out how much they’ll reduce a claim by if you’re under-insured. Check your policy for details.
▌What insurance do I need by law? If you employ staff, by law your business needs WorkSafe Injury Insurance in case they’re injured. If you’re an employee of your own incorporated company, you’ll need WorkSafe Injury Insurance to cover yourself. If you’re a sole trader or in a partnership, you’re not eligible for WorkSafe Injury Insurance, so a wise move is to get sickness and accident insurance. Sole traders and partnerships should also consider income-protection insurance. Even though not legally required, operating without a public liability policy for the business is not recommended.
▌Tip
Some industry associations buy insurance in bulk to offer better deals to their members.
If you belong to an association, contact them to find out if they can help you. Your association’s insurer is also more likely to know about risks common or unique to your industry.
They may also offer income protection insurance which most people don’t realise is tax deductible.
▌You can tailor a policy to suit your business Insurance policies can be changed to suit your needs. If a policy doesn’t cover a particular risk in your business, you can ask to have a separate clause added to the policy. To save money and avoid buying policies you don’t need, consult with an insurance broker or get quotes from several insurance companies.
▌Packaging several policies together is generally cheaper Try to buy your insurance from a company normally offering business insurance instead of one selling mainly domestic insurance. Combined types of insurance (small business ‘packs’) are available. Some examples of these are commercial, shop, retail, industrial, office, trades, and business vehicle insurance.
▌Payments (premiums) can be paid in instalments Insurance companies often let you pay premiums in monthly instalments but some will charge for this. Page 1 of 4 | November 2011
Small Business Victoria: Information Sheet
▌Insurance for small business
Types of insurance policies
(‘Essential’ and ‘worth-considering’ are just a guide. Make your own assessment based on your needs.)
Essential policies
Cover against
Professional indemnity
If you supply advice you can be sued for financial loss due to errors or omissions. The cover should stay in force even after you give the advice, if you retire etc. Examples of professionals are: architects, designers, education workers, real estate agents, health workers and consultants. Extended cover is ‘run-off cover’.
Personal accident, illness or disability
Your inability to work and loss of income. Unless you are an employee of a proprietary limited company, WorkSafe Injury Insurance won’t cover you.
WorkSafe Injury Insurance
Claims from the death, injury or illness of employees arising from their employment. Includes legal costs. This insurance is compulsory.
Fire and perils
Damage to buildings or contents by fire, lightning, explosion, malicious damage, earthquakes, storm and water. Most fire and perils policies don’t cover you for flood damage caused by overflowing watercourses e.g. rivers.
Burglary
Theft involving violent, forcible entry, loss or damage to stock, goods held in trust and all contents for which you are responsible within the premises. Does not normally cover theft by employees or others entitled to be on the premises.
Engineering equipment
Some plant has to be inspected every year and certified. Usually comes with engineering policy, with cover for equipment risks like breakdown and explosion.
General property
Loss of tools of trade or profession, stock in trade and office contents, whether they are at or away from the premises.
Goods in transit
Loss or damage to your property while in transit, either within Australia or overseas. This can also include laptops used in your business.
Products liability
Claims of goods causing injury or damage. If you sell, supply or deliver goods, even if you repair goods or supply them as a service.
Public liability
Third parties suing you for personal injury or property damage they sustain while on your property if you’re negligent.
Worth considering
Cover against
Business interruption
Provides cash flow based on expenses and expected net profit if business is interrupted by damage to property by fire or other insured perils. Make sure the policy goes on until the business income reaches what it was before the loss.
Directors and office bearers liability
Cost of civil legal action if directors and officers of companies and non-profit organisations are sued for negligence carrying out their duties and responsibilities.
Employee dishonesty or Fidelity guarantee
Loss of money or goods due to the fraudulent or dishonest conduct of an employee for their own gain, or the benefit of other persons or organisations.
Electronic equipment and breakdown
Cost to replace computers and data re-entry after an insured event e.g. a fire.
Employment practices liability
Claims and legal costs by employees for employment-related allegations. Examples: sexual harassment, wrongful dismissal, or discrimination on the basis of age, race, sex or religion. Covers your firm, directors and officers.
Glass breakage
Accidental breakage to a shop window, glass display case or refrigeration cabinet.
Income protection insurance
Loss of income to the age of 65 by disability. This is an allowable personal tax deduction. Often overlooked and confused with WorkSafe Injury Insurance. Some super schemes offer it at a reduced rate.
Key person insurance
Death or long-term disability of a ‘key person’, usually someone vital to the continued running or profitability of the business.
Loss of money
Theft of cash and items such as postal orders, cheques and stamps from business premises or while in transit.
Machinery breakdown
Loss due to fusion (‘burning out’) of electric motors used in your business.
Perishable food or stock deterioration
Cost of replacing food or other stock due to refrigeration or power failure.
Motor insurance
All company/business vehicles must be insured for third party injury liability. A comprehensive policy covers third party property damage and own damage.
Product recall
Cost of recalling a product, except for malicious acts, such as food tampering.
Tax audit
If you’re audited by the Australian Tax Office, covers the cost of your accountant preparing information required to a fixed limit.
Trade credit
Losses causes by bad creditors, especially if the business relies heavily on credit, you are moving into a new market or dealing overseas on credit terms. It can also be used if your industry looks like it is heading into a downturn.
Unregistered equipment
Insures unregistered machines such as backhoes, excavators and diggers for damage as well as theft. You’ll need a separate third party liability policy for these.
Weather
Loss of crops, trade or an activity not going ahead because of weather.
▌Tip
To understand insurance for exporting or importing, talk to a freight forwarding company. Look in the Yellow Pages.
This is a complex area of insurance as responsibility for the goods changes several times between their dispatch and their delivery.
▌Watch out!
Your home insurance does not cover you for legal liability if you’re running a home-based business.
Be certain to take out a business public liability policy, as this becomes void in a domestic policy. Car insurance is also affected if the car is used for business purposes.
Page 2 of 4 | November 2011
Small Business Victoria: Information Sheet
▌Insurance for small business
Insurance brokers — a source of expert advice
▌Use an expert – use an insurance broker An insurance broker is a professional insurance expert who will represent your interests if you have to make a claim. This contrasts with an insurance company or insurance agent who may act in their own interests or those of the insurance company. The more insurance companies your broker has access to, the more likely it is they can offer you an effective policy at the best price.
▌Checklist
What to ask when choosing a broker:
their qualifications
􀀳
who will service the account
􀀳
the number of insurance companies they have access to
􀀳
what experience they have with your size and type of business
􀀳
their services
􀀳
how they charge
􀀳
referees - especially those with your type of business
􀀳
if they’re members of the National Insurance Brokers Association (NIBA) and subscribe to the General Insurance Brokers’ Code
􀀳
▌Tip
If you’re about to take out a policy, think about the likely risks to your business. If the policy is vague on these or they’re not mentioned, ask for an extra clause to be added to the policy. This reduces the chance the insurer will be able to say they weren’t notified of the risk.
▌Tip
Generally the cheaper the policy, the more restrictive the policy. Make sure you read what is not covered in the Exclusions section.
Choose a broker who understands the day-to-day risks of your business. If you do, you’ll get a policy that covers the risks particular to your business and not just the standard (although potentially catastrophic) events like a fire. For example, a customer of a beauty salon sued the salon after an adverse skin reaction. The insurance company wouldn’t pay the claim as they ‘weren’t notified of the risk’. A competent broker would have added a clause to cover adverse skin reactions when they prepared the policy.
Some types of business are classed as hazardous risks and it’s hard to get insurance for them. It’s likely only a broker will know where to find the best cover. If you go directly to an insurer you’ll be told what cover they have and what they‘re prepared to offer you at the time.
Insurance brokers:
􀂄
are experts at matching business needs with available insurance
􀂄
can put together a business insurance package, and these usually cost less than if you take out several policies separately
􀂄
are licensed and regulated by Australian Securities and Investments Commission (ASIC) and their own code of conduct and practice
􀂄
can offer special risk management services and technical advice
􀂄
are helpful when you need to make a claim as they can be present when the loss assessor visits or can help negotiate a settlement (for a service fee)
􀂄
can independently run all your insurance business as ongoing consultants and will advise you when they make a change or charge a fee
􀂄
charge fees, some of which are tax deductible
▌How do I choose a broker? Choose a broker who has access to at least several insurance companies and deals with your size and type of business. To find the brokers in your local area, visit the National Brokers Association (NIBA) ‘needabroker’ website (contact details on the last page).
Once you’ve found several, make an appointment to see each one and:
􀂄
decide if you want to deal with a small or large firm
􀂄
ask them to write you a proposal (use the checklist at the left to help ask the right questions)
▌What does a broker charge, and can the fees be refunded? Brokers are paid by salary, fees and bonuses. They get commissions from 0-25% per policy from insurance companies and underwriters. A broker’s fee depends on how much advice and work they need to do. Some of the broker’s fees may be allowable tax deductions.
▌What else can a broker advise on? Some brokers can prepare a risk assessment. This takes some of the guesswork out of how much cover you need. It may also help you reduce your risks and policy costs. Page 3 of 4 | November 2011
Small Business Victoria: Information Sheet
▌Insurance for small business
When things go wrong…
􀂄
Insurance is a financial product regulated by the federal Corporations Act 2001 and the General Insurance Reform Act 2001. Insurers abide voluntarily by the General Insurance Code of Practice 2005.
▌Tip
Make sure any policy for loss of business income goes on until your business income reaches the same figure it was before your loss e.g. fire.
􀂄
Brokers act on your behalf in a dispute with an insurance company and are bound to act with integrity under the Financial Services Reform Act 2004, the Corporations Act 2001, and the Insurance Brokers Code of Practice.
􀂄
Each insurance company and broker company must offer an internal complaint resolution service. If there’s a dispute, you’ll be expected to try to solve the dispute with the broker or insurance company first.
􀂄
Register a claim against your insurance company with Victorian Civil and Administrative Tribunal (VCAT), or Financial Ombudsman Service (FOS).
􀂄
You can take a dispute with an insurance broker to Insurance Brokers Disputes Limited (IBD). To hold a licence, brokers must be part of an approved external consumer complaints-handling scheme run by Insurance Brokers Disputes (IBD) Limited.
Finding a broker and getting more information
National Insurance Brokers Association of Australia (NIBA)

The Top 10 Global Insurance Companies

Increasing profitability, market share and competitive edge
Financial Services Management Report
Source: The Top 10 Global Insurance Companies
Total life and non-life premium volume
in the top five European markets
“Last year saw a further decrease in life insurance premium
income, in many countries including the UK. This trend is
because of the recession and persistent low interest rates,
resulting in life insurers offering lower returns...”
Improve profitability and exploit new opportunities in insurance markets
using this new report’s analysis of the strategies helping top insurers remain global leaders...
BUSINESS INSIGHTS
Total Premium Volume (€m)
Business Insights’ portfolio of financial services management reports are designed to help you make well
informed, timely business decisions. We understand the problems facing today’s financial services executives when
trying to drive your business forward, and appreciate the importance of accurate, up-to-date, incisive product,
market and company analysis. We help you to crystallize your business decisions.
The strength of our financial services research and analysis is derived from access to unparalleled databases
and libraries of information and the use of proprietary analytic techniques. Business Insights reports are authored
by independent experts and contain findings garnered from dedicated primary research. Our authors’ leading
positions secure them access to interview key executives and to establish which issues will be of greatest strategic
significance for the industry.
Our financial services portfolio of reports can be used across a wide range of business functions to assess market
conditions and devise future strategies. The order form on the back of this brochure lists titles available within the
following categories: Banking, Finance, Insurance, Wealth Management, Investment and Strategy.
Business Intelligence for the Financial Services Industry
“Japan is an
over-insured market.
Three of the top 10
Japanese insurers,
Mitsui Life, Sumitomo
Life, and Asahi Life,
have been marked
with non-investment
grade ratings...”
Examining the Key Issues
• Bancassurance - identify the most effective models using this
report’s examination of penetration levels and profiles of major
European bancassurers including Lloyds TSB, Allianz, Banca
Unicredito and Caj Madrid.
• New European regulations - predict their effects by reading this
reports explanation of the impact of changes to regulations
including depolarization in the UK and pension reform in Germany.
• Global stock-market decline - discover the strategies global
insurers are implementing to compensate for the resulting
reduction premium revenues and sluggish growth.
• Mergers and Acquisitions - they may offer access to new market
segments, new products and new customers, but find out the real
costs and benefits of mergers including that of Allianz and Dresdner
in this report’s analysis of merger activity.
Germany 19% 51% 9% 21% 0%
UK 18% 17% - 56% 9%
Italy 56% 34% 9% 1% 0%
France 61% 8% 6% 9% 16%
Spain 77% 0% 3% 20% 0%
IFAs/ Other
brokers
Direct
sales-force
Tied
agents
Banks/
bancassurers
Country
The Top 10 Global Insurance Companies
The Answers to Your Questions
• Which countries show the most rapid growth in insurance premiums?
• What is the most effective method of life insurance distribution
through bancassurance in each of the major European markets?
• What are the key characteristics of the world's most successful
insurers?
• How and why are so many insurers seeking to enter new markets?
• Which life insurance distribution channels are the most popular in
Europe and why?
• How are insurers reacting to the effects of stock-market decline?
Last year, after two years of worldwide recession the insurance market
finally showed signs of recovery. However, increased competition from
new entrants combined with a lack of consumer confidence still create a
difficult environment in which to either acquire or retain customers.
The Top 10 Global Insurance Companies: Increasing profitability,
market share and competitive edge provides an overview of the
global insurance market, including statistics on both life and non life
insurance. Uniquely, this report not only details the global insurance
market but also analyses the key issue of bancassurance. Ten extensive
profiles of global insurers are included, examining the reasons behind
each organisation’s growth, their potential weaknesses and defining the
threats that could affect their global position in the future.
Find new ways to gain profit using this report's analysis of key
market trends and the strategies of the world's most successful
insurers.
“The most successful bancassurance market in
Europe is Spain, where banks dominate the market
with 77% market share. Prior to 1992, banks were
not allowed to distribute life assurance products.
Spanish banks own seven of the top 10 life
assurance competitors...”
Source: The Top 10 Global Insurance Companies:
Increasing profitability, market share and
competitive edge
Distribution of life assurance by distribution
channel
Source: The Top 10 Global Insurance Companies
“After the lesson
learned by the Allianz
and Dresdner deal,
bancassurance players
prefer strong
partnerships rather
than full-scale
mergers...”
• Growth rates in the global insurance industry are recovering after
two years of global recession. To limit exposure to the stock-market
insurers are trying to diversify their portfolios into less risky products
including bonds.
• Insurers are expanding their product offerings and making their
services more customer friendly in search of higher profitability.
• Non-life insurance growth is being driven by renewed premium
rate increases rather than new business, as new non-financial
entrants create competition.
• Unit linked insurance real growth was negative in France, Spain
and the UK as customers were reluctant to buy products directly
linked to the stock-market.
• Developing markets in Asia are now an increasingly attractive
market for insurers, especially China, because of its strong growth
and low insurance market penetration.
Key findings from this report
The Value Proposition
Benefit from 130 pages of expert insight and analysis, enabling you to:
• Increase profitability by directing your investments to the
products and markets targeted by top insurers.
• Identify the best bancassurance strategy for your company
using this report's examination of the most successful European
bancassurance models.
• Benchmark your performance against the top European
insurers, learn best practices, avoid their mistakes, replicate their
successes and be aware of the potential threats they are facing.
• Improve your strategic planning using global premium income
and growth data split at country level.
“UK insurers face
tighter regulations
after the collapse of
the commercial
insurer, Independent
Insurance and the
problems at Equitable
Life, the world's oldest
mutual life assurer...”
“Almost all of the
global insurers are
trying to win a share
of the precious, fast
growing Chinese
market, forecasted by
FT World Insurance to
be $33.82 billion by
2005...”
Strengths
Strong U.S. brand name:
State Farm has been in the insurance business for over 75 years and during this
time the company has grown from a small farm mutual auto insurer to one of
the world's largest financial institutions. Further, its customer oriented service,
strong distribution network in the United States and positive financial ratings all
contribute to its brand image, which can be leveraged suitably.
Major U.S. property and casualty insurer
State Farm is the main home insurer in the United States, the company has over
73 million policies in force and about 28 million households are insured with
the company. One out of every five automobiles in the United States is insured
by State Farm, meaning that State Farm is the main car insurer in the country.
The company is licensed to sell insurance products in all 50 states, an
advantage over other insurance companies operating there.
Extensive distribution network
State Farm has about 76,000 employees working across the United States and Canada and nearly 17,000 agents who are trained to sell State
Farm insurance products and 58,000 staff members. However, the company had to close some of its offices, including the Winter Haven office.
Weaknesses
Risk factors: weather and equity markets
State Farm has significant exposure to severe weather, such as windstorms and hail, given its top five market share throughout the United
States. Another risk is the fact that the personal lines insurance industry is heavily regulated, which imposes limits on company's ability to alter
rates, or products. Additionally, State Farm is exposed to equity market volatility and it has asbestos exposure in discontinued operations, which
further increases the risk the business faces. The exposure to equity markets was one of the reasons why the year 2001 experienced the largest
underwriting loss ever. The year 2003 saw some improvements, and the property and casualty ratio for State Farm has improved, by moving
from 125.1% in 2001 to 100.6% in 2003.
Home insurance, construction, replacement, repair costs
Homeowners insurance is facing some difficulties at the moment, due to the fact that according to some insurers, it is now increasingly used
like a warranty product, rather than protection against sudden and accidental losses. Competitive actions over the course of previous years,
such as offering low deductibles and inadequate exclusions for mould or water damage claims in the policy form, contributed to the lowered
threshold for filing a claim affecting all homeowner insurers. At the end of 2002 the company announced an unexpected increase in
homeowners insurance rates by an average 5.2%. According to State Farm, although mould and water claims are starting to stabilise now in
the homeowners insurance market, construction, replacement and repair costs are increasing.
Mutual status means lack of ability to raise capital
State Farm insurance is a large mutual insurance company, which means that it is owned by its policyholders. However, the mutual status
restricts the potential for development transparency of its operations and it means that the company is unable to raise capital by selling
stocks, which can be used for funding growth and paying for acquisitions.
Sample information from the report
Chapter 9: State Farm Insurance Companies
Threats
• High interest rate increases
• Increasing property prices
• Regulatory changes
• Competition
Opportunities
• Cost conscious management
• Small business insurance market
Weaknesses
• Risk factors: weather, equity performance
• Home insurance, construction, repair and
replacement costs
• Mutual status means lack of ability to raise
capital
Strengths
• Strong US brand name
• Major US property and casualty insurer
• Extensive distribution network
State Farm Insurance Companies
SWOT Analysis
Source: The Top 10 Global Insurance Companies
Order this report today to find out more...
Table of Contents
EXECUTIVE SUMMARY
• The global insurance market overview
• The top 10 global insurers: Company analysis
CHAPTER 1: INTRODUCTION
• Report structure
- Global insurance overview
- Introducing the top 10 global insurance companies
CHAPTER 2: THE GLOBAL INSURANCE OVERVIEW
• Summary
• Introduction
• Life and non-life insurance markets worldwide
- Definitions
• European life bancassurance overview
- Unit linked policies
- Opportunities in European bancassurance
- Regulations
CHAPTER 3: ALLIANZ
• Summary
• Overview
• History
• SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
• Company activity snapshot
CHAPTER 4: AXA
• Summary
• Overview
• History
• SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
• Company activity snapshot
CHAPTER 5: AMERICAN INTERNATIONAL GROUP INC.
• Summary
• Overview
• History
• SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
CHAPTER 6: ASSICURAZIONI GENERALI S.P.A.
• Summary
• Overview
• History
• SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
CHAPTER 7: ING GROEP N.V.
• Summary
• Overview
• History
• SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
• Company activity snapshot
CHAPTER 8: NIPPON LIFE INSURANCE COMPANY
• Summary
• Overview
• History
• SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
• Company activity snapshot
Table of Contents
CHAPTER 9: STATE FARM INSURANCE COMPANIES
• Summary
• Overview
• History
• SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
• Company activity snapshot
CHAPTER 10: AVIVA PLC
• Summary
• Overview
• History
• SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
• Company activity snapshot
CHAPTER 11: ZURICH FINANCIAL SERVICES
• Summary
• Overview
• History
• SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
• Company activity snapshot
CHAPTER 12: THE DAI-ICHI MUTUAL LIFE INSURANCE
COMPANY
• Summary
• Overview
• History
• SWOT analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
• Company news
CHAPTER 13: REPORT CONCLUSIONS
• Summary
• Global insurance industry recovers
• Japanese stagnation
• China, the land of potential
• Stricter regulations
• Bancassurance
CHAPTER 14: APPENDIX
• Definitions of distribution channels
• Index
TABLES
- Total life/non-life premium volume
(top five European markets, 2000-2003)
- Stock market indices
(major European markets, 2000-2004)
- Total life insurance premium volume
(top five European countries, 2000-2003)
- Allianz SWOT Analysis
- Axa SWOT Analysis
- AIG SWOT Analysis
- Generali SWOT Analysis
- ING Groep SWOT Analysis
- Nippon Life Insurance Company SWOT Analysis
- State Farm Insurance SWOT Analysis
- Aviva SWOT Analysis
- Zurich SWOT Analysis
- Dai-Ichi SWOT Analysis
FIGURES

Home insurance

Home insurance explained : including tenant and condominum
insurance / Tony Bain, John Mitchell. -- 2nd ed.
Includes index.
ISBN 1-895792-06-1
1. Homeowner's insurance--Canada. I. Mitchell, John, 1932-
II. Insurance Bureau of Canada III. Title.
HG9986.4.C3B33 2004 368'.096'0971 C2004-903018-3
INSURANCE BUREAU OF CANADA
HOME INSURANCE EXPLAINED
Insuring your home
If you are like most people, you will probably never
need to submit an insurance claim. But no one is
immune to bad luck, and it is good to know that
the premiums of many people like you are available
to pay for your mishaps and misfortune, should
they occur. Within limits, home insurance reimburses
you for your financial loss arising from mishaps that
are generally “sudden and accidental” and, therefore,
hard to predict and prevent.
Throughout Canada, private insurance companies
compete for your business either directly through
their own agents, or through independent brokers.
They compete not only on price, but also on service
and coverage. There is no such thing as a standard
home insurance
policy. Because
coverage may vary
from one insurer
to another, it is
important to have
your broker or
agent explain the
policy to you
before you agree
to purchase the
coverage. You
are also welcome to call any of Insurance Bureau
of Canada’s (IBC’s) consumer information centres
listed at the end of this pamphlet.
Do I need to have home insurance?
Most banks or mortgage companies will insist that
you purchase coverage, and will ask for proof of
insurance before lending you money to buy a home.
If you are renting, your landlord will likely require
that you have a certain amount of liability
insurance, to pay for any damage you may
cause to the property.
When to buy home insurance
Insurance coverage on your home should begin
as soon as you become the legal owner or tenant,
even if the home is still under construction.
(Your home insurance policy can also cover related
building materials on or adjacent to your property.)
Before moving, call your broker or agent and go
over any special insurance needs related to the
move (e.g., covering contents in transit, or
simultaneously at both old and new locations, etc.).
Please be advised that theft insurance applies only
when a building is ready for occupancy; vacant
buildings are not normally insured for theft for
more than 30 days (see “Vacant premises,” page 8).
It pays to compare
Not all home insurance policies are created equal,
nor are they priced the same. When buying a new
policy or renewing a current one, you may wish to
obtain quotes from a variety of insurance agents
(who work for one insurer), and independent
brokers (who represent different insurers). When
dealing with independent brokers, it is important
to know which companies they represent and
where they place most of their business.
When comparing quotes and coverage, don’t forget
service! While good service may cost a bit more,
it may well be worth it.
INSURANCE BUREAU OF CANADA 1
HOME INSURANCE EXPLAINED
Note to tenants: If you're
renting your home, you
may wish to skip the grey
sections on pages 11, 12,
13 and 15; these will likely
apply to homeowners only.
Please be sure to read the
special section on tenant
insurance (page 10).
2 INSURANCE BUREAU OF CANADA
HOME INSURANCE EXPLAINED
Know your insurer
You may wish to enlist the aid of a reference library
in researching insurers’ financial ability to meet
their obligations to policyholders. Most insurance
companies buy reinsurance (insurance for insurers)
to enhance their ability to pay claims. Be sure to
talk to your agent or broker about this as well.
But what if...?
In the unlikely event of an insurer’s collapse,
the industry-funded Property and Casualty
Insurance Compensation Corporation (PACICC)
will respond to claims of policyholders under most
policies issued by property and casualty insurance
companies. The maximum recovery from PACICC
will be $250,000 with respect to all unpaid claims
for losses arising from a single occurrence. PACICC
will also refund 70% of the “unearned” (unused)
premium (maximum payout $700) applicable from
the date of the insurer’s collapse until the policy’s
expiry date.
Insurance shopping tips
Discounts
Some insurers offer discounts or other incentives
for policyholders who install sprinkler systems and
monitored intruder alarms. Some reduce premiums
for seniors. Employment by a particular organization,
or membership in an organization such as a credit
union or alumni association may qualify you for an
“affinity” discount. Some insurers offer discounts
to loyal, long-term policyholders – a factor worth
considering if you have been happy with your
insurer’s prices and service. Your insurer may also
be willing to offer you a discount if you choose to
insure both your car and your home with them.
Deductibles
Consider lowering your premiums by opting for
higher deductibles for claims relating to your home
and its contents. A deductible is the self-retained
part of each loss (the part you pay for yourself);
it is not a feature of liability insurance, however.
Don’t under- or overinsure!
Don’t underinsure the contents of your home.
Estimate the value of your possessions and update
your inventory (see page 14) at least once a year.
Remember to include taxes. If the value of your
possessions is greater than the amount of contents
coverage specified in your policy, have it changed
accordingly. Minimum contents coverage for
homeowners is normally a percentage of the
value of the building.
Resist any advice to overinsure the building by
including the market price of the land in the
insured value. Whatever the limits of your policy,
you cannot claim for more than the actual loss to
insured property. “Insured property” does not
include the market value of the underlying land.
Tell your insurer about major changes
If you plan to build a rental apartment into your
home, duplex it, begin operating a business there,
or make any other significant alterations to the
structure or the way it is used, be sure to tell your
insurance representative. For insurance to work
well, full disclosure of risk is required. With
insurance, the best surprise is no surprise at all!
Wood-burning stoves
Caution: Wood stoves are a common source of
fires and carbon-monoxide poisoning, particularly
if they are not properly installed and maintained.
Insurance companies often want to inspect such
installations. Consult your agent or broker before
buying or renting a home with a wood-burning
stove or before installing one.
Home insurance policies
Homeowner insurance policies cover the building
and its contents (contents only for tenants and
condominium owners) for “direct loss” (see page
15) or damage caused by insured perils, which
may be stated individually or merely described as
“all risks” (see page 15).
COMPREHENSIVE*
A “comprehensive” policy covers both the
building and contents for all risks that are NOT
specifically e xcluded. (See “Optional coverages,”
page 5 and “Uninsurable perils,” page 7.)
BASIC/NAMED PERILS*
If you are inclined to save money by carrying
more of the financial risk yourself, you may wish
to consider a “named perils” policy, which covers
only those perils, such as fire or theft, that ARE
specifically in cluded in the policy. (See “Insurable
perils,” page 4.)
BROAD*
If the “comprehensive” policy costs more than
you want to pay, and you find the “named perils”
policy too risky, a mid-price compromise is the
so-called “broad” policy, which provides
“comprehensive” coverage on big-ticket items like
buildings, and “named perils” coverage on contents.
(See “Insurable perils,” page 4; “Optional coverages,”
page 5; and “Uninsurable perils,” page 7.)
NO-FRILLS*
Some insurers offer very basic or “no-frills”
coverage for properties that don’t meet their
normal underwriting standards. Contact your agent
or broker for details. If physical problems with your
home are the only reason it does not meet insurers’
standards, you may save money in the long run by
correcting the deficiencies in order to qualify your
home for better coverage.
INSURANCE BUREAU OF CANADA 3
HOME INSURANCE EXPLAINED
*Policy wordings and coverages may vary within these general policy
categories from one insurer to another; trade names may also be used.
Insurable perils
This section applies mainly to “broad” coverage for
contents, to “named perils” and “basic” coverage for
both building and contents. Insurable perils include:
AIRCRAFT OR VEHICLE IMPACT
ELECTRICAL CURRENT
EXPLOSION
FALLING OBJECT (not including objects propelled
by snowslide or earth movement)
FIRE
LIGHTNING
RIOT
SMOKE (released suddenly from malfunctioning
cooking or heating devices, but not from fireplaces)
THEFT
TRANSPORTATION (of personal property while it
is temporarily away from your home; includes
building fixtures and fittings being repaired or in
seasonal storage)
VANDALISM (while building is normally occupied)
WATER DAMAGE (this is a complex issue;
be sure to discuss it carefully with your
agent or broker)
WIND AND HAIL (applies to the outside of a
building except for antennas, satellite dishes, etc.;
the interior of a building and its contents are
covered only if the storm has first created an
opening)
WINDOW GLASS (breakage in a building
that is normally occupied; not covered
by tenant insurance)
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HOME INSURANCE EXPLAINED
Water damage
Coverage usually includes damage arising from
sudden and accidental escape of water from an
indoor plumbing, heating, sprinkler or air-conditioning
system; or from an indoor or outdoor “domestic
appliance” on your premises; or from a water main.
“Domestic appliance” is defined in the policy and
includes water heaters, water beds and swimming
pools. “Water” may be in liquid form, or it may be
steam or ice. However, coverage for freezing damage
is restricted to property inside your home and there
are special requirements if your home is unoccupied
for more than four consecutive days during the normal
heating season. (Read carefully the comments about
freezing under “Uninsurable perils,” page 7.)
Coverage usually excludes damage arising from
[1] floodwater (see also page 7) such as that from an
overflowing creek; [2] repeated or continuous water
seepage (from a cracked basement wall, for example,
or from an unrepaired pipe); [3] sewer back-up
(see “Optional coverages,” page 5).
Sudden and accidental
escape of water
Optional coverages
Coverages for the following perils, not normally
included in any type of home insurance policy,
may often be purchased separately:
EARTHQUAKE – Particularly worth considering
in quake-prone regions of Quebec and British
Columbia. Cost varies according to location and
type of construction. Your insurer may be able
to advise you of steps you can take to minimize
the risk of earthquake damage to your home.
FURNACE OIL SPILLS – Consider replacing steel
tanks more than 20 years old. Beware of damage
to concealed pipes and tubing. (See also page 9.)
SEWER BACK-UP – Useful in some low-lying
areas, particularly those with combined storm and
sanitary sewers. Your insurer can advise you about
the merits of back-flow prevention devices.
Replacement cost and actual cash value
The calculation of how much money your insurer
will pay to you following an insured loss is
described in your policy, usually under “Basis of
Claim Payment.”
ACTUAL CASH VALUE (ACV)
Insuring property for ACV means that it will be
replaced with something of like kind and quality,
minus an allowance for depreciation due to wear,
condition, age, and obsolescence. So, for example,
if your five-year-old, $1,700 stereo is stolen,
you may get only $300.
REPLACEMENT COST
Insuring property for Replacement Cost means
that it will be replaced with something of like kind
and quality, with no allowance for depreciation.
So in this case, you would get $1,700 for your
five-year-old stereo.
CONTENTS
Unless it is otherwise noted in the policy, claim
settlements for damage or loss to the contents of
your home are for ACV. (See “Replacement cost
endorsement” below.)
BUILDINGS
Home insurance policies usually include
Replacement Cost coverage for building losses.
The settlement can be up to, but not greater than,
the amount of insurance on the building as stated
in the policy. If the replacement cost of the
building has been underestimated, the policy will
not pay more than the cost stated in the policy.
(See “Guaranteed replacement cost endorsement,”
page 6.)
A note about roofs: Some policies will pay only
depreciated values, as low as 25%, for damaged roofs
that are near the end of their designed service life.
Extra coverage you can purchase
REPLACEMENT COST ENDORSEMENT
(FOR CONTENTS): This endorsement removes
the depreciation deduction on loss or damage to
contents. Items are insured for the amount it
would cost to replace them with a brand new item
of like kind and quality.
INSURANCE BUREAU OF CANADA 5
HOME INSURANCE EXPLAINED
GUARANTEED REPLACEMENT COST ENDORSEMENT
(FOR BUILDINGS): This endorsement will make up
a shortfall in the event that the replacement cost of
your home is underestimated.
BY-LAW ENDORSEMENT (FOR BUILDINGS): When
construction codes and zoning bylaws change,
existing buildings are usually exempted. But when
a severely damaged building has to be substantially
rebuilt, the entire building may have to comply
with current standards. The “by-law” endorsement
covers any additional expenses to bring the building
up to standards.
Other considerations
▲A claim for replacement cost on a building
usually requires that reconstruction occur on the
original site.
▲Whether you are insured for ACV or
Replacement Cost, a deductible may apply
(see “Making a claim,” page 13).
▲When you and your insurer agree on cash
settlement of a claim, there are “no strings
attached;” you can spend the money as you
please.
▲If you have Replacement Cost coverage for the
contents of your home, and you suffer a loss or
damage, you may receive actual cash value as a
down payment while an adjuster assesses the
claim further (see “Making a claim,” page 13).
▲Keep in mind that most home insurance policies
have limits on the amount you can claim for cash
and securities, and for other items such as
bicycles, jewellery and boats (see “Personal
property,” page 15).
Additional living expenses
There are three circumstances that may entitle you
to additional living expenses: UNFIT TO LIVE IN,
LOST RENTAL INCOME and DENIED ACCESS (see
details below). Note that this coverage does not
reimburse you for all expenses, only those which
are over and above your normal cost of living.
A single claim limit normally applies to any
combination of the three circumstances. For
homeowners, the limit is usually equal to 20%
of the building coverage; for tenants it is 20% of
contents coverage.
UNFIT TO LIVE IN
If an insured peril makes your home unfit to
live in, and you have to move out while insured
damage is being repaired, your insurer will cover
any necessary increase in living expenses –
including moving costs – so that your household
can maintain its normal standard of living. Payment
is limited to the reasonable time required to repair
or rebuild your home, or for you to settle elsewhere.
LOST RENTAL INCOME
If you have a tenant paying you rent, and he/she
is forced to leave because of insured damage
to your home, your policy will reimburse you FAIR
RENTAL VALUE for the reasonable time required for
repairs or rebuilding. Rent-related expenses, such as
heating or electricity, that don’t continue during
reconstruction, would be deducted. If your tenant
cancels the lease due to the inconvenience, lost
rental income beyond the period of repairs/
rebuilding would not be covered.
6 INSURANCE BUREAU OF CANADA
HOME INSURANCE EXPLAINED
DENIED ACCESS
If you are denied access to your home by the police
or other civil authority as a direct result of damage
by an insured peril to neighbouring premises – such
as when a burning house collapses and breaks a gas
main – you may be reimbursed by your insurer for
additional living expenses and/or lost rental income
for up to two weeks. Additional coverage may be
available in the event of mass-evacuation, for
example, following a toxic spill from a train wreck.
Check your policy.
Uninsurable perils
A home insurance policy is not a maintenance
contract. Home insurance is generally intended
to help policyholders cope with the financial
consequences of unpredictable events that are
“sudden and accidental.” Predictable events,
such as flooding of a home built on a flood plain,
or preventable events, such as frozen indoor pipes,
are not covered.
The following perils are generally uninsurable:
WATER DAMAGE CAUSED BY FLOODWATER –
Certain areas are prone to floods, and so damage
caused in this way is considered predictable. Water
damage arising from a sudden rupture of an indoor
water pipe would be a different story; that damage
would be covered.
DAMAGE ARISING FROM THE FREEZING OF
INDOOR PLUMBING – This is generally regarded
as preventable. If you are away from home for
more than four days during the normal heating
season, you must drain the plumbing or arrange
to have your home checked daily by a competent
person to ensure that heat is maintained. However,
if freezing-related damage were to occur despite
such precautions, it would likely be covered.
DAMAGE FROM FREEZING OUTSIDE THE HOME –
This is not covered; nor is damage from waves,
melting or moving snow and ice, and heaving frost.
DAMAGE BY INSECTS AND RODENTS
(E.G., TERMITES, SQUIRRELS, MICE,
RATS) – This is not insurable,
except for damage to building glass.
Many policies also exclude damage
by raccoons.
DIRECT DAMAGE RESULTING FROM
THE INTENTIONAL APPLICATION OF HEAT
(E.G., CLOTHING SHRUNK BY A CLOTHES DRYER,
BURNED BY AN IRON) – This is not covered.
However, if the dryer were to set the clothing
on fire and the flames spread to the room and its
contents, the resulting collateral damage would
be covered.
DAMAGE BY SNOWSLIDE, LANDSLIDE AND
OTHER FORMS OF EARTH MOVEMENT
(SEE “EARTHQUAKE,” PAGE 5) – This is not
insurable. However, damage from a fire or
explosion caused by earth movement would
be covered.
INSURANCE BUREAU OF CANADA 7
HOME INSURANCE EXPLAINED
What else is not covered?
There are certain items that may be in or around
your home, but which are not covered by a basic
home insurance policy:
BUSINESS PREMISES, EQUIPMENT AT HOME
Loss or damage to buildings or structures is not
normally insured if these are used for business
or commercial farming. Business equipment is
covered only while at your home, typically up to
a $2,000 limit. There is no coverage for samples
and merchandise for sale. If these limits are a
problem, you may wish to consider buying an
insurance policy – or an endorsement to your
home insurance policy – that is designed for
home-based businesses.
VACANT PREMISES
Insurance coverage on dwelling and contents ceases
automatically when the premises have been vacant
for more than 30 consecutive days without the
insurer’s prior approval. Coverage for certain perils
such as vandalism lapses immediately. A “vacant”
building, regardless of the presence of furnishings,
is one that you have moved out of, not intending
to return. Be sure to notify your insurer before you
vacate your home.
YOUR LAWN
Damage to your lawn is not covered by a typical
home insurance policy.
PROPERTY OF ROOMERS OR BOARDERS
If you have roomers or boarders who are not
related to you, their property is not automatically
covered by your contents insurance.
Coverage limits
In addition to overall dollar limits for liability,
contents, etc., there are sub-limits on the amount
you can claim for some items. Check your policy
to be sure, but listed here are some items that are
typically subject to coverage limits:
Many insurers no longer limit coverage of silverware.
Reasonably priced supplementary insurance is
usually available. These “riders” or “floater”
policies provide all-risks coverage for specific
items – often fragile and/or valuable – subject
to certain exclusions. Coverage can be world-wide
and there is usually no deductible.
Your liability to others
(See also “Tenant insurance” and “Condominium insurance.”)
The personal liability portion of home insurance
applies at your home or anywhere in the world to
bodily injury you may unintentionally inflict on
others – often referred to as “third parties” – or
to accidental damage you may do to their property.
For example, suppose a visitor or a household
employee were to be injured by slipping on a wet
floor in your home, and you were judged to be
legally responsible, you would be covered for the
damages you were legally obliged to pay because
of the injury. No deductibles apply.
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HOME INSURANCE EXPLAINED
▲ negotiable securities
▲ cash
▲ garden tractors
▲ watercraft
▲ computer software
▲ bicycles
▲ jewellery and gems
▲ watches
▲ furs
▲ coin, stamp and
card collections
▲ manuscripts
Liability coverage does not apply to injuries
sustained by you or by members of your immediate
household. There is no liability coverage for disease
transmission and physical – including sexual –
abuse. Also, there is no coverage for “punitive”
damages awarded by a court; only “compensatory”
damages are covered.
Sometimes an insurer may not wait for a claim to
occur before taking remedial action, as when a
spill of home heating oil threatens to migrate (see
also page 5) to adjacent property. Regardless of
the insurance coverage for oil spills on your own
property, your insurer may elect to clean up the
mess quickly so as to prevent you from incurring
liability for damaging your neighbour’s property.
YOUR BOATS, GOLF CARTS, TRAILERS...
AND LIABILITY
Your homeowner’s liability insurance automatically
covers losses arising from your ownership or
non-business use of:
▲a trailer, except when it’s attached to a motor
vehicle;
▲boats with outboard motors up to 16hp (inboard
up to 50hp); sailboats up to 26ft long (see your
policy for exact limits);
▲golf carts on a golf course;
▲self-propelled lawnmowers, snowblowers, garden
tractors (25hp maximum, used mainly on your
own property); and
▲motorized wheelchairs or scooters (3 wheels
minimum, designed for disabled persons).
If you own a vehicle that is not included in the list
above, you may need to purchase an endorsement
for that vehicle. Talk to your insurance representative.
LIABILITY ARISING FROM USE OF WATERCRAFT
OR MOTORIZED OFF-ROAD VEHICLES OWNED
BY OTHERS
You are covered for claims arising from your use
of watercraft owned by others (without restriction
as to size or power), so long as the owner has given
consent, and you are not using the craft for racing
or business.
You are also covered for claims arising from your
use of off-road vehicles owned by others (ATVs,
dirt-bikes, etc.), with the same conditions.
Such watercraft and vehicles must not be subject to
registration or licensing, and must not be owned by
you or any person insured by your home insurance
policy. Damage to the actual craft/vehicle is not
covered.
BUSINESS ACTIVITIES
Home insurance is not business insurance. However,
you are insured against liability claims arising from
certain business activities, as follows:
▲Rental of portions of your two- or three-family
dwelling, usually occupied in part by you, as a
private residence, providing that no family unit
includes more than two roomers or boarders.
▲Rental of space in your residence for incidental
office, school or studio occupancy.
▲Rental of up to three garage spaces for cars.
▲Occasional rental of the part of your home that
you normally live in.
▲Temporary or part-time business pursuits – such
as babysitting – of an insured person under 21.
Any other business pursuits require specific
insurance arrangements; check the summary page
of your policy.
INSURANCE BUREAU OF CANADA 9
HOME INSURANCE EXPLAINED
LEGAL DEFENCE AND SETTLEMENT
If someone alleges in a lawsuit that you are
responsible for injuring him or her – or for
damaging his or her property – your insurer
will defend you against any resulting suit for
compensation, even if the suit is groundless,
false or fraudulent. Of course, the suit has to be
related to your insurance coverage. Policy limits
on third-party liability coverage do not include
legal defence costs.
Note: Your insurer has the right to investigate,
negotiate and settle any claim or suit as it sees fit.
This includes choosing a lawyer(s).
VOLUNTARY PAYMENTS
If you or another member of your household
injures someone else or damages his or her
property unintentionally (or even intentionally,
if the injury or damage is caused by a child
12 years of age or younger), you may compensate
that person for the losses, regardless of whether
you are legally liable, and your policy will reimburse
you (check your policy for dollar limits). This is
called “voluntary payment for damage to property”
and “voluntary medical payments” coverage, and
is standard in most homeowner policies.
Note: This provision can apply to loss or injury
experienced by household staff, but members of
your household are not covered. The recipient(s)
of voluntary payments must agree not to sue you.
Limits for this coverage are relatively low.
Tenant insurance
Landlords have relatively few legal obligations to
compensate tenants for damage to or loss of their
tenants’ personal possessions. Tenants, on the
other hand, are responsible for harm they may
cause to any part of the building in which they live
or to others who live or visit there.
THE BASICS
“Basic liability” and “contents” coverage are essential.
A fire ignited by a tenant’s defective toaster, or
flooding caused by a malfunctioning dishwasher,
could cause a great deal of damage not only to
the tenant’s unit, but to the entire apartment
complex, potentially leaving the tenant liable for
hundreds of thousands of dollars in damage.
For this reason, tenant insurance includes liability
coverage comparable to that included in a typical
homeowner policy.
In terms of insuring your own belongings, you may
think you have very little of value, until you have to
replace it all. A few pieces of furniture, no matter
how modest, can easily cost several thousand
dollars to replace. Your clothes, which you have
likely accumulated over several years, would also
cost thousands to replace all at once. If you bought
a CD player on credit and it is destroyed by fire or
stolen, you are stuck paying the balance of your
debt, and will likely want to spend several hundred
dollars more on a replacement. For all the reasons
above, it is recommended that all tenants insure the
contents of their homes.
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HOME INSURANCE EXPLAINED
INSURANCE BUREAU OF CANADA 11
HOME INSURANCE EXPLAINED
Tenants and condominium owners
may incur liabilities
OPTIONAL COVERAGES
“Tenant’s improvements” coverage is important
because policies generally have standard limits that
are sometimes not high enough to cover all of the
improvements that you may have made to your
rented home or apartment. Such improvements
could include broadloom (carpet), built-in cabinets
or sound systems. Tenant’s improvements coverage
can be purchased in addition to your standard
policy, and ensures that, in the event of a loss,
you can return your home to the way it was.
Condominium insurance
Condominium owners experience some of the best
aspects of both home ownership and renting. As a
condominium owner, you have title to your own
unit, as well as a share in common areas such as the
lobby, swimming pool, parking garage or garden.
In fact, virtually the whole structure is common
except, perhaps, for the interior paint and wallpaper
and floor covering of your unit. However, you and
your fellow owners can be held personally liable if
things go wrong. A condominium insurance policy
is a low-cost way to remove some of the financial
worries of condominium ownership.
THE BASICS
“Basic liability” and “contents” coverage are as
important for condominium owners as they are
for all homeowners and tenants. (See the many
references under “Liability to others” and
“Contents” in the index.)
OPTIONAL COVERAGES
“Owner’s improvements” coverage is an important
consideration as most policies have standard limits,
which may not be high enough to cover upgrades
(carpet, hardwood, custom counters or light fixtures,
built-in cabinets or sound systems, etc.).
“Supplemental” coverage insures your condominium
unit itself so that you will be protected in the event
that the corporation’s insurance is insufficient. Your
agent or broker can explain in more detail.
“Loss assessment” coverage is an important
feature of condominium insurance because you
share responsibility with others for common
property. The insurer will pay, up to a stipulated
limit, your portion of any special assessment that
is valid under your condominium corporation’s
governing rules:
▲ if it is due to a direct loss that affects a shared
part of the premises (see first paragraph) and
if it has been caused by an insured peril;
▲ if it is due to legal liability arising out of
shared ownership of common areas of the
condominium premises (for example, to
compensate a visitor for injuries incurred by
tripping over a frayed carpet in a corridor);
▲ providing that the assessment has not been
made necessary because of a deductible in
the corporation’s own insurance policy.
Normally, the condominium corporation’s own
insurance coverage will be adequate. Insurancerelated
special loss assessments seldom occur.
Insuring your cottage
If you own a cottage, not on the premises of your
primary dwelling, you may insure it separately or
have it insured on the same policy as your home
insurance. Coverage is usually more limited than
with dwellings that are occupied year-round.
Burglary can be covered, but not theft; in other
words, for a claim to be considered, there must be
signs of forcible entry and/or exit. In winter, make
sure that snow does not accumulate on the roof;
a collapse due to the weight of snow would not be
covered. Your agent or broker can explain further.
Remember to include outbuildings, fences, and so
on when calculating the coverage you need.
Insurance to cover vandalism and malicious acts
is not automatically included but can often be
purchased separately. Although most policies
covering cottages do not specify separate amounts
of insurance for outbuildings, they do allow up to
a specified percentage of the amount of insurance
to be used for this purpose.
12 INSURANCE BUREAU OF CANADA
HOME INSURANCE EXPLAINED
A little off the top,
please!
Insuring your mobile home
Mobile (not motor) homes and their contents
can be insured only for “named perils.”
Replacement cost insurance is available for
contents, but usually not for the mobile home
itself. The cost of removing the home from
the path of an endangering peril such as fire
or wind can be covered. To qualify for the
same kind of basic insurance “package” as a
regular home, mobile homes must usually
be “tied-down” to keep them from shifting
during strong winds. Any gaps in the
foundation must be protected by a “skirt”
to keep out animals and debris.
Some so-called “mobile” homes – often
factory-built, “double-wide” assemblies –
properly installed on substantial foundations
and hooked up to water and sewer systems,
may qualify for conventional home insurance.
With cottage insurance, it is particularly important
to invest whatever time it takes to be certain that
you understand the policy’s limits before you agree
to coverage. Also, if your “cottage” is really more
of a “second home” and has many of the features
of a primary dwelling, you may be able to obtain
better insurance coverage. Again, talk to your agent
or broker.
Making a claim
If you have suffered a loss for which you are
insured, inform your insurance agent or broker
of the nature of your claim. If there has been
a burglary or theft, the police must also be
informed. You’ll be required to supply information
about the circumstances of the claim as well as
reasonable evidence to justify the amount claimed.
Your insurer will want to know exactly what was
stolen, when you acquired it, and what you paid for
it. A claims adjuster may then be appointed – at no
cost to you – to look after the details. You should
take reasonable steps to protect against additional
damage. If a pipe has burst, for example, shut off
the water supply. Don’t dispose of damaged goods
without first getting your insurer’s “okay.” In some
instances, your insurer may arrange assistance for
temporary repairs, such as covering a damaged roof,
or boarding over a broken picture window.
If you have replacement cost coverage, some
insurers will assist you by providing the cash
value of the used item immediately, topping up
that amount later when you provide proof of
replacement purchase within 180 days of the loss.
There are exceptions, however, such as when you
have been using an already damaged or obsolete
item for some purpose other than its original one
(e.g., a defunct refrigerator as a bookcase). When
part of a pair or set of items is damaged, the loss
will be calculated as a reasonable proportion of
the whole set.
DEDUCTIBLES
Most insurance claims are subject to a deductible –
the initial amount of every claim that is paid by the
policyholder. Deductibles help make insurance
more affordable for everyone by eliminating minor
“nuisance” claims. Keep the amount of your
deductible in mind when making a claim. If a
policy has a $500 deductible, for example, you
would receive only $100 for a $600 claim.
INSURANCE BUREAU OF CANADA 13
HOME INSURANCE EXPLAINED
Know what you own!
An up-to-date inventory of your possessions and
a record of their value will be helpful to you,
your insurer, police and others in the event of a
burglary or fire. After a loss, it could be difficult
for you to recall the details of things that are now
damaged or missing. Some people like to make a
drawer-by-drawer, room-by-room video recording
of their possessions; some use a regular camera.
An audio cassette recorder could be useful for
making a spoken list of collections – books, tools,
stamps, etc. This would capture more detail than
you could achieve with a camera. Written or typed
descriptions are useful, too; be sure to include
makes, models, serial numbers or other identifying
marks. Keep purchase receipts for major items.
Store your inventory records in a safety-deposit
box or another
secure location
away from your
home.
Insurance fraud,
illegally acquired property
1-877-IBC-TIPS
It is a serious crime to file a false or “inflated”
insurance claim. Insurance fraud hurts honest
policyholders by driving up the cost of insurance
for everyone. Each year, insurance fraud costs
insurers and policyholders in Canada $3 billion.
If you suspect that someone you know is involved
in insurance fraud, call 1-877-IBC-TIPS (422-8477)
or visit www.ibc.ca to submit a confidential tip, and
help keep insurance costs down for all Canadians.
Note: Illegally acquired property is not insurable
and some policies exclude smuggled items which
have not been declared to Canada Customs.
Damage that results from your criminal activity
would not be covered, nor would any intentional
damage by you.
14 INSURANCE BUREAU OF CANADA
HOME INSURANCE EXPLAINED
Keep a record
of your possessions
“Insurance-speak” simplified
There is some language that is specific to the
insurance industry. Other common words can
also be given special meaning in the context of
“insurance-speak.” We hope you find this glossary
helpful; your comments and suggestions for future
editions are welcome.
“ALL RISKS” OR “ALL PERILS”
The term “all risks,” or “all perils,” describes
insurance for losses due to a wide range of causes.
Instead of listing each insured peril, such as fire,
lightning and so on, the policy covers all loss or
damage to insured property that is the result of
any “risk” that is not specifically excluded.
“All risks” is a confusing insurance term and does,
in fact, incorporate numerous listed exclusions,
allowing coverage to be priced more fairly. Perhaps
a better description would be “all common risks.”
A “risk,” or “peril,” is a chance event that is
unexpected and accidental as far as the policyholder
is concerned. For example, if a dog’s tail sweeps an
ornament off a table and onto the floor where it
breaks, that is due to a “risk”; the ornament would
not otherwise have broken. The gradual wearing
out of clothes, however, or the rotting of fruit, are
quite natural and expected, and therefore are not
insurable “risks.”
“DIRECT LOSS”
A “direct loss” arises when insured property or
goods are damaged or lost. The term does not
include other losses or expenses incurred as an
indirect result of the damage, such as having to
rent a video camera if your own is destroyed by
fire shortly before you leave on a vacation trip.
“PERSONAL PROPERTY”
Your home insurance policy will cover the contents
of your home and other personal property that
you own, wear or use (including clothing, cameras,
furniture, etc.) while on your premises. It may even
cover uninsured personal property of others,
excluding roomers or boarders who are not related
INSURANCE BUREAU OF CANADA 15
HOME INSURANCE EXPLAINED
“DWELLING”
Your “dwelling” coverage applies to your home
and “attached structures” such as a garage or
carport. Permanently installed outdoor equipment
on the premises, such as a swimming pool and the
equipment attached to it, is included. Building
materials for use in construction, alteration or
repair of the insured dwelling or related structures
on the premises are covered, too, if they are on the
site or adjacent to it. Theft and vandalism losses
during construction are usually not covered.
You may apply up to 10% of the amount of
insurance on your dwelling to insure building
fixtures and fittings, such as mirrors or air
conditioners that may have been removed
temporarily for repair or seasonal storage.
You may apply up to 5% of your insurance to
trees, plants and shrubs (weather damage excluded);
but there is often a limit for any one item.
Separate structures and buildings on the same
premises as the primary dwelling are also covered
for specified amounts, usually up to 10% of the
main coverage. This could apply to detached
garages, tool sheds, retaining walls, and even
landscaping. If 10% seems too low, consider
buying additional coverage.
Your right to privacy
The nature of insurance requires consumers and
claimants to supply some relevant personal
information to insurance companies. Without such
disclosure, insurers would find it difficult to assess
premiums and pay claims fairly. Collection, use
and disclosure of your personal information are
governed by the Privacy Commissioner of Canada,
under the Personal Information Protection and
Electronic Documents Act (PIPEDA). PIPEDA
requires insurers, agents and brokers wishing to
collect, use or disclose your personal information to
state all purposes for which the information will be
used, and to obtain your consent for such collection,
use and disclosure. If you have any questions or
concerns regarding how your information is used,
it is your right to have them addressed before you
apply for coverage or submit a claim. For more
information on PIPEDA (a.k.a. PIPED Act), visit
www.privcom.gc.ca.
Questions? Concerns? Just ask!
When you buy home insurance, you buy peace
of mind. Insurance is a product like any other,
and it works better when both sellers and buyers
are knowledgeable. If you have questions that
are not answered in this pamphlet, all you have
to do is ask!
For more information:
▲ Talk to your agent/broker.
▲ Look under “Insurance, Homeowners” in your
local library for up-to-date, comprehensive
books on insurance written expressly for
consumers.
▲ Call IBC’s consumer information centre in your
region (contact information on the back page of
this brochure), and talk to a knowledgeable and
experienced information officer.
to you. Your policy will normally cover personal
property while it is temporarily away from your
home anywhere in the world. Personal property not
normally kept at home is not covered. Personal
property in a warehouse is usually covered against
theft without time limit; but other perils may not
be covered, or may be covered only up to 30 days,
so be sure to consult your agent or broker.
“SUBROGATION”
Your insurer may try to recover some or all of its
costs in settling your claim by suing others responsible
for the loss. The effect is roughly the same as if you
yourself were to sue the responsible party, except
that you are compensated more quickly by your own
insurer, often on a replacement-cost basis.
“YOU” AND “YOUR”
When the text of an insurance policy uses the words
“you” or “your,” it refers to insured person(s) named
on the coverage summary page. The policy also
includes, while living in the same household, a named
insured person’s legal – and sometimes common-law –
spouse, the relatives of either, or any person under 21
in their care.
16 INSURANCE BUREAU OF CANADA
HOME INSURANCE EXPLAINED

Micro Insurance

MicroInsurance, Improving risk management for the poor» is edited by ADA with the support of the Luxembourg Development Cooperation
To receive the coming issues of , please contact insurance@microfinance.lu
The newsletter is available in English, French and Spanish.
The term “health micro-insurance” encompasses
a wide variety of schemes. These include: mutual health organizations,
which are autonomous associations based on the solidarity and democratic participation of their members; insurance schemes, which are organized and managed
by health care providers; health insurance
schemes set up by other actors, such as NGOs, microfinance institutions, cooperatives or trade unions.
Actually, in spite of their dynamic nature, micro-health insurance schemes, in general,
are quite fragile. They do not possess the hindsight and experience needed for an accurate determination of the financial risks they face. The financial safeguards of such schemes – reserves, reinsurance – and their promoters’ level of competence in the area of insurance are presently still limited.
Given such a context, the foundations of these schemes – that is, the assumptions upon which they are based – must be particularly
firm. A scheme will have greater chances of surviving, and subsequently of developing, if it is well designed from the outset. Therefore, conducting a systematic
feasibility study appears to be essential.
One element of such a study would be data-collection. The data-collection consists
of gathering the information needed
to design the health micro-insurance scheme. This information will be used to select the services to be covered, benefit/premium combination(s), partner health care providers, etc.
The information gathered may also be used to put together a description of the initial situation, which will serve as a reference
for later evaluating the scheme’s impact on the frequentation of health facilities,
the means of treatment sought in response to illness, etc.
The information should also be used for designing the health micro-insurance scheme that will subsequently be implemented.
This involves steps such as to:
1. Define the benefit plans, that is, the health services to be covered and the levels
of coverage.
The health services to be covered by the scheme may be pre-selected on the basis of priority criteria. The criteria may vary from one type of organization to the next; but in general include:HEALTH MICRO-INSURANCE SCHEMES:
THE IMPORTANCE OF CONDUCTING A
FEASIBILITY STUDY
- The “real” health needs of the population.
Priority is given to services that contribute to reducing significantly the mortality rate and the morbidity rate of certain illnesses.
- The population’s “felt” and “expressed” health needs. These are the health services that people would like for the scheme to cover on priority basis.
- The financial difficulties associated with the utilization of these services. Priority should be given to services that pose serious problems in terms of financial
accessibility.
- Problems of cost recovery and financing
(from the standpoint of health care providers). Priority services are those that demonstrate the highest rates of outstanding payments or whose utilization
is insufficient (problem relating to the amortization of equipment).
Page 1
The Working Group on Microinsurance, initiated by CGAP and comprising of representatives from donors, multilateral agencies, NGOs, private insurance companies and other interested parties, was established in 2001 to promote the development of insurance services for the poor through increased stakeholder coordination and information sharing. Currently chaired by the International Labour Organization (ILO), the Working Group is organised into eight subgroups. To share information about microinsurance initiatives, the Working Group issues this quarterly Newsletter. For more information contact Craig Churchill, churchill@ilo.org
Improving risk management for the poor
March 2006
Health Micro-Insurance Schemes:
The Importance of Conducting a
Feasibility Study .................................1
Insurance Regulators Cooperate with CGAP on Future Microinsurance
Regulation ..........................................2
Yeshasvini Trust’s Health Insurance ......3
Selected Info ......................................4
More Info ............................................5
News from the Working Group .............6
N°9
Subgroup Contacts: Subgroup Operations and Donor Guidelines: mjmccord@microinsurancecentre.org Subgroup Demand: moniquec@mfopps.org Subgroup Regulation: brigitte.klein@gtz.de Subgroup Dissemination: insurance@microfinance.lu Subgroup Performance Indicators: denis@garandnet.net; johnwipf@yahoo.com Subgroup Health Insurance: bruno.galland@groupecidr.org; Klaus.Fischer@fas.ulaval.ca Subgroup Agriculture (Rural) Insurance [tbd] Subgroup Capacity Building: gramm25652@aol.com
«MicroInsurance, Improving risk management for the poor» is edited by ADA with the support of the Luxembourg Development Cooperation
Regulation and supervision of micro-insurance
is a key factor for the future growth and success of micro-insurance activities. As pointed out in a previous edition of this newsletter (No. 5, December 2004), the regulatory framework consistent with insurance principles protects the rights of policyholders. Furthermore, it enables the development of the insurance market by making insurance affordable and accessible.
Well-adapted regulation helps designing appropriate products for the low-income segment of the population besides ensuring the long-term stability of micro-insurance providers.
In recognition of this background, the International
Association of Insurance Supervisors
(IAIS) and the Regulation, Supervision
and Policy (RSP) Subgroup of the CGAP Working Group on Micro-insurance
have agreed to cooperate in the area of regulation and supervision of micro-insurance.
The IAIS represents insurance
Fig. 2: Criteria for selecting benefit/premium combination(s)
ConceptINSURANCE REGULATORS COOPERATE WITH CGAP ON
FUTURE MICRO-INSURANCE REGULATION
2. Calculate the corresponding premiums. The method of calculation proposed (see figure 1) consists of six steps:
- Calculate the pure premium
- Adjust the pure premium
- Calculate the safety loading
- Calculate the unit operating costs
- Calculate the unit surplus
- Calculate the total premium
3. Verify that the benefit/premium combination(s) is balanced.
A compromise must be worked out, together
with the target population, between
the benefits to be provided and the premiums to be paid. In order to achieve this compromise, the actors associated with the scheme must ensure that each of the potential scenarios fulfils four criteria or requirements (see figure 2).
4. Select the partner health care providers
and define the agreement(s) scheme wish to conclude with them. These may include:
- a fee agreement
- an agreement concerning patient reception
procedures for insured persons or concerning treatment protocols
- an agreement concerning payment methods: fee-for-service or global fee
- and/or a third-party payment agreement
5. Define the scheme’s organization and its main methods of operation.
For each operating rule, for instance, different
options, with the advantages and disadvantages and the corresponding accompanying
measures, are available.
Source: Health Micro-Insurance Schemes: Feasibility
Study Guide Volume 1: Procedure and Volume 2: Tools (ILO/STEP 2005)
Premium
(health service)
Adjusted
pure premium
Safety
loading
Unit operating
coast
Unit
surplus
Payment
of operating expenses
Claims settlement
Accumulation
of reserves
Surplus
generation
Welfare
activites
=
+
+
+
Fig. 1: Calculation formula of the individual premium for a given health service
Adverse selection
Fraud and abuse
Moral hazard and the risk
of over-prescription
Catastrophic cases
Frouth criterion:
The scenario selected must enable the scheme tu guard against
Third criterion:
The premium must be affordable
Second criterion:
The coverage provided must be visible
First criterion: The health care coverage provided must be relevant
This text is taken from Health Micro-Insurance Schemes: Feasibility Study Guide (2005). This guide aims to encourage promoters and operators, and support their efforts, to conduct a systematic feasibility study prior to the establishment or further development of a scheme. Volume 1 provides step-by-step instructions for carrying out a feasibility study and assists actors in organizing the process of conducting the study. Volume 2 provides examples of supporting materials, tools, practical examples and methods of analysis and calculation, which offer concrete support for each step of the procedure. This guide available in French and English was produced by the “Strategies and Tools against social Exclusion and Poverty” (STEP) programme of the Social Protection Sector of the International Labour Organization (ILO).
Page 2
Improving risk management for the poor
March 2006
N°9
Improving risk management for the poor
March 2006
«MicroInsurance, Improving risk management for the poor» is edited by ADA with the support of the Luxembourg Development Cooperation
N°9
regulators and supervisors from more than 180 jurisdictions.
Representatives from IAIS members of developing and developed countries met with the Regulation Subgroup on 18 February
2006 in Basel, Switzerland. They discussed the current state of micro-insurance
regulation and options to create more conducive regulatory frameworks for the development of microinsurance.
Regulation of micro-insurance is a challenge
for most supervisory authorities. Data on the functioning of micro-insurance
is scarce and a micro-insurer’s business
process differs from established insurance
operations. Many of the micro-insurance
providers do not have experience with the technical and legal aspects of insurance.
Thus, they need comprehensive guidance and support in implementing legal and prudential requirements. The risk parameters used by the regulators are designed for the high-premium and high-volume business of typical commercial insurers. Micro-insurers, however, handle small policies and premiums and often work with fragmented underwriting and claiming processes.
IAIS and the RSP Subgroup have formed a Joint Working Group (JWG). More information
on this in section News from the Working Group: Regulation Subgroup.
Article written by Thomas Wiechers, GTZ
The Yeshasvini Cooperative Farmers Health Scheme in Karnataka (India) is a young but incredibly successful microinsurance
scheme in terms of membership. Having started in 2003 with 1.6 million insured right away, it covered 2.2 million lives in its second year of operation, but in the third year it dropped to 1.45 million members after doubling the premium.
This (still) amazing success is possible through a tight partnership with the cooperative
sector enabled through the Karnataka
Department of Cooperation. The department used its influence to encourage
cooperative societies to market the product actively. The marketing strategy applied by the societies’ secretaries varies:
while most convince their members to join, a few simply enrolled their members.
Yeshasvini Trust decided to design a benefit package focussing on high cost / low frequency events. More than 1,600 surgeries are covered under the scheme. The maximum coverage provided for one person per year amounts to Rs. 200,000 ($4,545). The annual premium per client
was recently increased from Rs. 60 ($1.40) to Rs. 120 ($2.70). A person can claim the benefits in one of 150 (mainly) private hospitals aligned with the insurance
scheme. A rate for each surgery is fixed. Additionally, free outpatient department
(OPD) treatment is provided. The patient does not need to handle money; the insurer pays the health care provider for pre-approved surgeries, so the service is cashless to the policyholder.
Yeshasvini is a self-funded scheme and not linked to any insurance company.
Linking to an insurance company was considered as to reinforce financial stability
and terms were negotiated. This option
to transform the self-funded scheme into a partner-agent model was seriously discussed in the trust. However, the trust feared losing ownership and control of the scheme and the partnership was refused. Reinsurance is the favoured option now.
Yeshasvini outsources the administration of the scheme to a Third Party Administrator,
a profit-oriented company. This company authorizes surgeries, processes claims and maintains a register of the members.
The scheme received government subsidies
in all years of operation. With the increased premium in the third year, the scheme is expected to get closer to financial
viability.
Although Yeshasvini can use the cooperative
structures to channel information to clients, many policyholders are not well informed about the benefits and how to claim them. YESHASVINI TRUST’S HEALTH INSURANCECase Study
Some Lessons
• With the cooperative sector Yeshasvini found a partner reaching out to the rural
masses and having proved to be a strong distribution network. This stable structure helps to build up a huge number of members quickly.
• Political involvement can push the development of the scheme forward; but one has to be cautious not to lose sight of the initial motivations in the scheme.
• Yeshasvini lined up with about 150 private high quality hospitals. The good reputation of these hospitals contributes to the attractiveness of the scheme.
• The business relationship between cooperative societies and their members helps in the subscription periods of the scheme: members are in regular contact
with their cooperative society anyway and can deduct the premium for the insurance directly from their business income.
• Even expensive surgeries can be covered if the number of insured is big enough to avoid strong effects of adverse selection and to cross-subsidise the ill person. Single surgeries of up to Rs. 96,000 ($2182) are covered.
• Increasing premium hand in hand with insufficient information results in drastically declined membership.
Page 3
«MicroInsurance, Improving risk management for the poor» is edited by ADA with the support of the Luxembourg Development Cooperation
Improving risk management for the poor
March 2006
N°9
The major breakthrough of this scheme is without doubt insuring so many people in such a short time, which was only possible
through the strong partnership with the Department of Cooperation. It used its authority to make cooperative societies actively distribute the product in one way or the other. The network of well-reputed private hospitals made the product even more attractive.
It is remarkable that the Yeshasvini scheme is likely to be financially self-sustaining
from the third year of operation. The subsidies the scheme received so far seem to be well invested.
Source: Yeshasvini Trust, Karnataka – India (Ralf Radermacher, Natasha Wig, Olga van Putten-Rademaker,
Verena Müller and David Dror, Case Study No. 20, November 2005).
Download from http://www.microfinancegateway.
org/files/30774_file_Yeshasvini_Trust_Good_and_Bad_Case_Study_No_1_._20.pdf
Page 4
Glossary
Benefit plan: Consists of both the list of covered health services and the level of coverage that corresponds to each service. A scheme may offer one or more benefit plans from which members may choose: for example, a basic plan and an extended plan (including a greater number of services, and in some cases, higher levels of coverage). Each benefit plan has a corresponding premium level; the premium level of an extended formula is higher than that of a basic plan.
Fee-for-service: A method of payment in which the health care provider is paid for each health service delivered and covered by the health micro-insurance scheme.
Source: Health Micro-Insurance Schemes: Feasibility Study Guide Volume 2: Tools (ILO/STEP 2005) http://www.ilo.org/public/english/support/publ/xtextsp.htm#b571XSelected Info
About IAIS
Established in 1994, the International Association of Insurance Supervisors (IAIS) represents insurance regulators and supervisors of more than 180 jurisdictions from around the world including emerging countries.
Since 1999, the IAIS has welcomed insurance professionals as observers of their work. Currently there are more than 100 observers
representing industry associations, professional associations, insurers and reinsurers, consultants and international financial institutions.
The IAIS is committed to developing standards and guidelines that can be used by insurance supervision throughout the world. IAIS papers represent best practices, or targets, for supervisors to work towards; they can be implemented in a flexible manner depending on the circumstances within each jurisdiction.
The IAIS works closely with other financial sector standard setting bodies and international organisations to promote financial stability.
Source: http://www.iaisweb.org
«MicroInsurance, Improving risk management for the poor» is edited by ADA with the support of the Luxembourg Development Cooperation
Some Articles and Websites
Get Ready for Next Phase of Reforms (Interview with C. S. Rao, chairman of IRDA, Venkatachari Jagannathan, January 2006).
Download from http://www.domain-b.com/finance/insurance/2006/20060105_reforms.html
Never too little (Dirk Reinhard, D+C, January 2006).
Download from http://www.inwent.org/E+Z/content/archive-eng/01-2006/foc_art6.html
Website Gret - SKY Health Insurance Program of Cambodia: http://www.sky-cambodia.org/
Website of the newly founded Belgium microhealthinsurance platform MASMUT (Micro
Assurances Santé- Mutuelles de Santé): www.masmut.be
Website Foundation Entrepreneurs de la Cité: http://www.entrepreneursdelacite.org/
Website AMIN (Asian Microinsurance Network): http://www.ilo.org/amin
Conference and Training
National Conference on Microinsurance from April 17-28, 2006 in Hyderabad, India. More information: http://www.ilo.org/amin/ShowConferences.
do
Designing and Implementing Microinsurance from June 22-24, 2006 in Queyon City, Philippines. Contact info@sedpi.com or visit www.sedpi.com
Page 5 More Info
AssEF - Association d’Entraide des Femmes, Benin (Olivier LOUIS dit GUERIN, Case Study No. 22, February 2006). This case study is an interesting example of a health insurance scheme being implemented by a microfinance institution. Download from http://www.microinsurancecentre.org/resources/Documents/
22%20-%20AssEF%20Good%20and%20Bad%20Practices%20No%2022.pdf
Yeshasvini Trust, Karnataka – India (Ralf Radermacher, Natasha Wig, Olga van Putten-Rademaker, Verena Müller and David Dror, Case Study No. 20, November
2005). This case study is interesting
with regards to its scale. (See also featured case study in this newsletter). Download from http://www.microfinancegateway.
org/files/30774_file_Yeshasvini_Trust_Good_and_Bad_Case_Study_No_1_._20.pdf
Karuna Trust, Karnataka - India (Ralf Radermacher,
Olga van Putten-Rademaker, Verena Müller, Natasha Wig and David Dror, Case Study No. 19, December 2005). This case study is good example of pairing insurance with existing public structures. Download from http://www.microfinancegateway.org/files/30234_file_Karuna_Trust_Good_and_Bad_Case_Study_No._19.pdf
Health Microinsurance: A Comparison of Four Publicly-run Schemes - Latin America (Jens Holst, Case Study No. 18, November 2005). This case study compares
four health insurance schemes in Bolivia, Peru, El Salvador and Paraguay, which were all driven in one way or another
by local government. Download from http://www.microfinancegateway.com/files/30074_file_LatinAmericaHealthGoodandBadCaseStudyNo11.18.
pdf
More case studies on Microinsurance Focus: http://microfinancegateway.org/resource_
centers/insurance/article/28448/
Latest Good and Bad Practises Case Studies
Health Micro-Insurance Schemes: Feasibility Study Guide Volume 1: Procedure (ILO/STEP 2005).
More information: http://www.ilo.org/public/english/protection/socsec/step/index.htm
Health Micro-Insurance Schemes: Feasibility Study Guide Volume 2: Tools (ILO/STEP 2005).
More information: http://www.ilo.org/public/english/protection/socsec/step/index.htm
Micro-assurance: Défis, mise en place et commercialisation (Marc Nabeth, Editions
L’argus de l’assurance, 2006).
More information: http://www.lamicrofinance.org/content/article/detail/17313?PHPSESSID=6a3753399292d3443b384ba3357a6c2f
Agricultural Insurance Revisited: New Developments and Perspectives in Latin America and the Caribbean (Mark Wenner, IADB, October 2005).
Download from http://www.iadb.org/sds/doc/RUR%2DAgriculturalInsuranceRevisitedNOV05.pdf
Insurance of Crops in Developing Countries (R.A.J. Roberts, by FAO Agricultural Services Bulletin, Nr. 159, 2005).
Download from http://www.ruralfinance.org/servlet/BinaryDownloaderServlet/27021_Insurance_of_crops.pdf?filename=1135189287882_InsuranceCrops_withcover.pdf&refID=27021
Into Action: Microinsurance – Summary Report Microinsurance Conference (Craig Churchill, Dirk Reinhard and Zahid Qureshi, Munich Re Foundation, CGAP Working
Group on Microinsurance and ILO, January 2006).
Download from http://www.munichre-foundation.org/NR/rdonlyres/A7C0E563-3F94-41A5-B7A7-1CAC19C85F96/0/IntoAction01_2006_Microinsurance_E.pdf
Microinsurance: An Overview of Client, Provider and Support Perspectives (Toon Bullens and Herman Abels, MIAN, NOVIB Working Paper Nr. 1, 2005).
Download from http://62.251.91.146/miansupport/Microinsurance_brochure.pdf
Latest Publications
Improving risk management for the poor
March 2006
N°9
Regulation Subgroup
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Joint Issues Paper with the IAIS: IAIS and this subgroup have formed a Joint Working Group (JWG) and agreed to prepare an Issues
Paper on Microinsurance Regulation and Supervision, which is expected to be published in October 2006. The objective of the paper is to describe current practices and challenges in regulation and supervision of microinsurance and to point to important considerations for the design of legal frameworks for microinsurance operations. Representatives of the supervisory authorities of India, South Africa, Morocco, USA and Germany and of IAIS and the CGAP Working Group will work on this paper.
Country Studies: The subgroup (via Klaus Fischer and Lavall University) has submitted a significant proposal to IDRC (Canadian research agency) to fund a series of six to seven country studies to develop a more detailed understanding of regulatory obstacles (and solutions) for making insurance more accessible. At the same time, GTZ has approached BMZ for support for this initiative; while additional assistance is expected from FinMark and the ILO. The process of developing the project design and proposal has been very collaborative and we are keeping our fingers crossed that our efforts will bear fruit.
For further information please contact Dr. Brigitte Klein at brigitte.klein@gtz.de
Dissemination Subgroup
Conference 2006 Proposal by Munich Re Foundation: The WG has decided to join the efforts of Munich Re Foundation for a 2006 Conference. The conference will be in South Africa end of November. The conference will aim at microinsurance practitioners and experts from around the world.
Newsletter: Three issues are planned for 2006 (including this one) in English, French and Spanish. The translation into Spanish is due to a partnership with Centro Afin in Bolivia.
Other objectives for 2006: Launch of new website, finalise donor guidelines, publish topical briefs and a comprehensive book on microinsurance and review the dissemination strategy.
Feedback on Preliminary Donor Guidelines for Supporting Microinsurance:
The guidelines’ objective is to guide donors thinking about launching microinsurance projects. The guidelines help donors make key decisions at all stages of the project cycle, from design and implementation to monitoring. Since the guidelines are a work in progress, the CGAP Working Group on Microinsurance is soliciting feedback on their usefulness.
Following are a few highlights of feedback collected to date:
o Strongest feedback was on the perceived bias in the guidelines on the partner-agent model.
• Consider the question of donor support to mutuals/self-help groups. Other models can be viable and easier to put in place.
• The guidelines over-estimate the interest/ability of insurance companies to serve the low-income markets. We cannot over-rely on insurance companies. Specific comments on this with regard to Africa.
o Criteria for selecting both MFIs and countries to work in, are not very realistic. Guidelines do not reflect the reality of countries where many donors work.
o Reinsurance is very difficult to access, and may not always be needed.
o The guidelines do not take a “systemic” enough approach—not enough guidance on the role of donors at the meso and macro levels.
o Need more discussion on the role of donors in developing training modules, building the capacity of trainers, and tools development.
o Mention more specifically that donor funding is often ill-adapted to microinsurance; microinsurance projects require small amounts of money for longer periods of time.