The concept of
rebate for large sum assured is not applicable. It depends on many factors such
as a types of scheme, amount of benefits age profiles, and premium
rates applicable as per the
professional/ occupation of the group. Premium depends whether it is only risk coverage or it
involves accumulations or funding. Hence
complete data is required from
the mas ter policy holder for calculation of premium. There should be minimum percentage for example 75% to join the group
insurance scheme. Otherwise there will
be anti selection against the insurer i,
e only the old and sick will join the scheme. All new members should compulsorily join in order to improve the age profile of the group. Those people who did not volunteer to join the scheme initially may not be allowed to join a on a later date
to avoid anti selection . The scale of benefit usually uniforms and there is not choice for the
individual . Some times the groups are
categories as managerial, supervisory,
clerical and subordinate and accordingly
different benefits are given to
different categories. The insurer always
has a right to call for the medical examination
if the sum assured exists the free cover limit for a particular life warrants a medical test.
EXPERIENCE RATING: Life cover is normally
granted for one year under group schemes and it
renewed every year providing
fresh data. This gives oppertunity
for the underwriting to revise
the premium on the basis of the composition of the group as well as based on
the claim experience of earlier year. This kind of rating on the best basis of
claim experience is called experience rating.
This can be profit sharing , I
,e returning or adjusting a part of the
earlier year’s premium for the next year
if the claim experience is favorable or revision of the premium upward of the
scheme is making losses due to the more claims.
Thus, experience ratings is a vital means of adding flexibility to group
underwriting. RENEWAL OF GROUP
SCHEMES: Normally a notice is sent to
the master policy holder to renew the scheme 2 months in advance. Here the
insurer adds 10 to 20% to the existing premium and calls for the same under the hope that the inclusions for the year would be taken care of. The master policy holder provides the
additions and deletions on the renewal date. On the receipt of the above the
renewal premium is calculated and
adjusted as per the hoc amount received from the master policy holder.
OCCUPATIONAL RATINGS: As we have seen so
far occupations plays an important part
in the assessing the risk in both individual
and group underwriting . The risk
varies depending on the
occupation./ profession. Hence it is
necessary to have a close look at the occupations and arrive at some extra premiums ratings as
per the following typical groups mentioned.
1. AMUSEMENT AND SPORTS ., a. horse racing jockeys (flat racing). b. jockey
(hurdles). c. riding boys. d. gentlemen riders. e. trainers of horse. f. cinema stunt actors and coachers. g. polo players and instructors. h. professional athletes– bicycles racers/
motorcycle racers, boxers, wrestlers, I.
theaters and circus artists– acrobats,
trapeze., j. explorers., 2.
CONSTRUCTION:” a. scaffolder
steel erector, b. painter. c. tunneling/, d. air compressor operator., civil engineer, structural engineer, e. dumper, shovel driver., f. winch driver., g. conveyor
operator., h. power loader
operator., I. roof bolter ., j. timber man., k. borer.,
l. driller ., m. tunnel miner.,
n. tunneller using explosions. 3.
CLIMBING AND MOUNTAINEERING: a. include
all forms of mountaineering , rock
climbing and caving,., b. hill
climbing – tracking., c. all climbers and guides., 4. DRIVERS. a. public carriers (passenger or goods with
national permit)., 5.
MANUFACTURER., a. acid., b. led burners., c. explosive and ammunition., d. salvage operations., e. handling explosives., 6. MARINE
INDUSTRY: a. persons employed in
submarines., including war risk., commissioned
officers and other ranks., b.
drivers., c. merchant marine– employed
in ships carrying oil and other inflammable product., 7. OIL AND NATURAL GAS: a. drilling
assistance, fire fighter, mechanics., crane operators., top man.,
rig man, and derrick men., 8. SEWERS AND SEWAGE DISPOSERS: a. laborers and cleaners and inspectors of
underground duties., 9. AVIATION:
a. include private and club aviation .,
b. pilots with license ., c.
aerobatic flying , air facing., d. ballooning, gliding., e., paragliding., f. parachuting., g. sky diving., h. sky surfing./.,I. diving sports., j.
diving as a pastime, special
expeditions., k. internal exploration of
wrecks., l. all motor sports., m. motor cycle racing., . n. sprint events., o. motor sports car user like sports car.,
saloon car, mud racing, etc., p. power
boat racing and yachting., q. army and
navy person/air force officers. These are all only typical grouping or
occupations. Many new professions such as bungee jumping which is not listed., will also included on
individual basis while underwriting the risk.
REINSURANCE; Under both
individual and group underwriting the insurer may cede some portion of his risk
to another insurer may cede some portion
of his risk to another insurer in order to share the risk. The other insurer is
called the reinsurer and this process is called reinsurance. Further
insurance is pooling risk so that the
loss is shared by the entire group. Thus
the actual loss becomes average loss. The risk also gets reduced
by applying the theory the actual loss becomes average loss., The risk
also gets reduced by the applying the theory of law of large numbers. This
helps in assessing the future risk more accurately. These are some of the
typically retention limits for life
insurance about beyond which the risk
is ceded to a reinsurer. Individual assurance expect term assurance : Rs. 40
lakhs., Convertible term assurance and
one-year renewal term assurance : Rs. 30 lakhs., These are for
standard lives whereas for substandard lives the retention limit may be
Rs. 20 lakhs for individual assurance and Rs. 15 lakhs for term assurance.
Retention limit for riders like female
critical illness accident., cover congenital disability cover and critical
illness riders will be further lower for reinsurance purpose.