1. Overview
The General Insurance Examination tests a candidates understanding of nonlife insurance products, the legal framework, underwriting practices and claims handling. The syllabus is divided into four main modules:
- Insurance Principles and Terminology
- Policy Forms and Coverage Types
- Risk Assessment, Pricing and Underwriting
- Claims Management and Dispute Resolution
Successful candidates must be able to analyse realworld scenarios, apply statutory regulations, and communicate recommendations clearly. The following notes aim to condense the essential concepts into a single, easytoreview page.
2. Fundamental Principles
2.1 Insurable Interest
Insurable interest exists when the policyholder would suffer a financial loss or suffer prejudice if the insured event occurs. It must be present at the time of contract formation; otherwise the policy is void.
2.2 Utmost Good Faith (Uberrimae Fidei)
Both parties must disclose all material facts. Nondisclosure or misrepresentation can lead to repudiation of the contract or a reduction in the claim payout.
2.3 Indemnity
The purpose of insurance is to restore the insured to the financial position they were in before the loss, not to provide profit. This principle underpins the calculation of claim settlements.
2.4 Subrogation
After paying a claim, the insurer acquires the insureds rights against third parties responsible for the loss. This avoids double recovery and helps keep premiums affordable.
2.5 Proximate Cause
The proximate cause is the dominant, efficient cause that sets the loss in motion. Determining it is crucial when multiple events contribute to a loss.
3. Policy Structure & Common Coverages
3.1 Key Elements of a Policy
| Element | Description |
|---|---|
| Declarations | Names of insured, address, policy period, sum insured and premium. |
| Insuring Agreement | Statement of what is covered and the basis of liability. |
| Exclusions | Specific risks or circumstances not covered. |
| Conditions | Obligations of both insurer and insured (e.g., notice of loss). |
| Endorsements | Amendments that modify coverage, limits or terms. |
3.2 Major Types of General Insurance
- Property Insurance Buildings, contents, machinery, stock.
- Motor Insurance Thirdparty liability, comprehensive, owndamage.
- Liability Insurance Public liability, professional indemnity, product liability.
- Marine & Cargo Hull, cargo, freight, war risk.
- Travel & Personal Accident Trip cancellation, medical expenses, accidental death.
3.3 Common Policy Clauses
- Average Clause Applies when sum insured is less than the actual value; loss is reduced proportionally.
- Coinsurance Insured must maintain a minimum coverage ratio; otherwise a penalty applies.
- Extension of Time Allows delayed notice of loss under specified circumstances.
- War & Terrorism Exclusion Typically excluded unless expressly added.
4. Risk Management, Pricing & Underwriting
4.1 Risk Identification & Classification
Risks are grouped as:
- Pure risks Only loss possible (e.g., fire, theft).
- Speculative risks Both gain and loss possible (generally excluded).
4.2 Underwriting Process
- Collect application data and loss history.
- Assess exposure location, construction type, occupancy.
- Apply rating factors age, claims frequency, credit score.
- Determine premium, limits and any special conditions.
- Issue policy or propose modifications.
4.3 Rating Factors (Illustrative)
| Factor | Effect on Premium |
|---|---|
| Construction Material | Fireresistant material lower premium |
| Location | Highrisk area (flood zone) surcharge |
| Loss History | Multiple recent claims higher rate |
| Security Measures | Alarms, CCTV discount |
4.4 Reinsurance
Insurers transfer a portion of their risk to reinsurers to protect against large losses. Common forms include quota share, excessofloss and facultative reinsurance.
5. Claims Process & Dispute Resolution
5.1 Steps in a Typical Claim
- Notice of Loss Policyholder must inform insurer promptly, usually within 2448 hours.
- Documentation Submit police reports, invoices, photos, and a completed claim form.
- Adjustment Claims adjuster assesses damage, verifies coverage and estimates loss.
- Settlement Payment made according to the policy terms (cash, repair, replacement).
- Recovery (Subrogation) Insurer pursues liable third parties if applicable.
5.2 Common Reasons for Claim Denial
- Failure to give timely notice.
- Nondisclosure of material facts.
- Loss caused by an excluded peril.
- Insufficient sum insured (average clause).
5.3 Dispute Resolution
If a claim is contested, the following avenues are available:
- Internal appeals Resubmission to the insurers grievance department.
- Alternative Dispute Resolution Mediation or arbitration under the insurance code.
- Court action As a last resort, seeking judicial determination.
6. Revision Tips & Study Strategies
- Focus on Definitions Many exam questions test precise terminology (e.g., act of God, constructive total loss).
- Use Flowcharts Map the claim process, underwriting steps, and policy structure to visualise sequences.
- Practice Past Papers Identify recurring scenarios such as fire loss calculations or liability exclusions.
- Memorise Key Ratios Average clause formula, coinsurance penalty, and subrogation rights.
- Teach Back Explain concepts to a peer; teaching reinforces retention.
- Time Management Allocate 40% of study time to theory, 30% to practice questions, 20% to case studies, and 10% to revision of weak areas.
Remember that the exam evaluates both knowledge and analytical ability. Read each question carefully, identify the relevant principle, and construct a concise answer that directly addresses the issue.
