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Executive Summary

Insurance is age-old industry in India. Many nationalized general insurance companies are
serving their services in all areas of India. The service industry is one of the fastest growing
sectors in India today. The upcoming sectors which are really showing the graph towards
upwards are - Telecom, Banking, and Insurance. These sectors really have a lot of
responsibility towards the economy. Amongst the above-mentioned areas insurance is one
sector, which took a lot of time in positioning itself.
The project covers the Insurance Sector In Cotton Corporation Of India Ltd, It covers the
all risk in industry and cover the material damage /loss of the company.

The project is all about General Insurance which is use in Cotton Corporation Of India Ltd
[CCI].In CCI mainly Five General Insurance policies used. These policies are Standard Fire
And Special Perils Policy, Burglary BP Policy, Schedule-Marine Cargo Open Policy-Inland
only,Electronic Equipment Insurance Policy, Fidelity (Floater) Insurance Policy
The project is about Standard Fire & Special Perils policy [SFSP].Further project covers who
can take insurance & what policy covers.It also shows the key advantages of Standard Fire &
Special Perils Policy.
This report will help a Rational person to understand a basis of General Insurance & Standard
Fire & Special Perils Policy. This project shows how CCI use those policies in the company.

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Introduction to the project

I. Introduction

To study the Insurance sector in the market & factors that cover the risk & affect the
sector.Life is full of unexpected events and not all of them are pleasant. Natural
calamities such as an earthquake, avalanche, storm or fire can put human life and
property at risk. Standard Fire & Special Perils Insurance Policy safeguards against
the losses that can arise due to a fire and perils

II. Objective of the Study

To understand concept of general insurance.
To understand standard fire & special perils policy.
To study terms and conditions of standard fire & special perils policy.

III. Scope and Limitation of the Study
Study is in depth related to standard fire & special perils policy.


Time was critical factor for study
Though I tried to collect primary data but they were limited for purpose of study
The study is limited to my experience and knowledge.
Employees were busy in their work so they are not able to share information.







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CCI - An Organisation
The Cotton Corporation of India Ltd. a Govt. of India undertaking under the
Ministry of Textiles, Govt. of India is engaged in the business of procurement of raw cotton
(kapas) from the farmers through Agriculture Produce Market Committees (APMC),
processing the same into Full Pressed bales (FP bales)
and supply of FP bales to domestic mills as well as in export. The Corporation is doing the
marketing operations through a network of 19 branch offices located in different
cotton growing State and sale offices in cotton
consumption States in the country. The Head Quarter of the Corporation is at CBD Belapur,
Navi Mumbai.

CCI Operations cover all the cotton growing states in the country comprising of
Punjab, Haryana and Rajasthan in Northern Zone
Gujarat, Maharashtra and Madhya Pradesh in Central Zone and Andhra Pradesh
Karnataka & Tamil Nadu in Southern Zone as also in Orissa.
In Maharashtra, CCI made its entry during cotton season 2002-03, after the state government
of Maharashtra relaxed its monopoly procurement scheme thereby allowing ginneries, traders
& CCI to purchase raw cotton from the farmers of the state.


Scope Of Work
The Corporation presently sells its stock of FP Cotton Bales, on day to day basis
through indents received from interested mills / buyers based on
branch wise/ variety wise days sale quotes so decided by the Sales committee at corporate
level and notified on our website. Besides the existing procedure, now the
corporation intends to sell FP Cotton Bales through e auction also. The selected
ASP will provide eauction software and also undertake all the activities relating to it.


Business Description
Extending necessary marketing support to the cotton growers in selling their kapas produce at
most competitive prices in the various market yards in all cotton growing States through
timely intervention beginning from day one of the kapas arrivals till the end of season,
procurement operations spread over more than 225 market yards in the

THE COTTON CORPORATION OF INDIA LIMITED
CCI is the nodal agency for ensuring price support to cotton farmers in India


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History

The Cotton Corporation of India Ltd (CCI) was set up in 1970 by GoI as a public sector unit
to deal in marketing of cotton. In 1985, CCI was appointed as the sole agency for undertaking
price support operations. Until 2003,
CCI operated in all the cotton growing states other than Maharashtra. Since the cotton season
of 2003, CCI has been allowed to purchase raw cotton in Maharashtra as well


Operation
Extending necessary marketing support to the cotton growers in selling their kapas produce at
most competitive prices in the various market yards in all cotton growing States through
timely intervention beginning from day one of the kapas arrivals till the end of season,
procurement operations spread over more than 225 market yards in the country.


Mission
Helping cotton farmers by ensuring them remunerative price for their produce and thereby
protect their interest.

Vision
Achieving the twin visions of (a) rendering help to the cotton farmers by way of social
services and (b) endeavouring to attain commercial gain by sustained growth of the
Corporation.



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CCI - Its objectives


CCI was established on 31st July 1970 as a Government Company registered under the
Companies Act 1956. In the initial period of setting up, as an Agency in Public Sector,
Corporation was charged with the responsibility of equitable distribution of cotton among the
different constituents of the industry and to serve as a vehicle for the canalization of imports
of cotton.
With the changing cotton scenario, the role and functions of the Corporation were also
reviewed and revised from time to time. As per the Policy directives from the Ministry of
Textiles, Government of India in 1985, the Corporation is nominated as the Nodal Agency of
Government of India, for undertaking Price Support Operations, whenever the prices of kapas
(seed cotton) touch the support level. As per this Textile Policy of 1985, the specific role
assigned to the Corporation, in brief, is as under:
To undertake price support operations, whenever the market prices of kapas touch the
support prices announced by the Government of India, without any quantitative limit;
To undertake commercial operations only at CCI's own risk;
To purchase cotton to fulfill the export commitments; &
To act as implementing agency for Mini Missions III & IV of TMC.
As a Nodal Agency of Government of India to undertake price support operations,
Corporation keeps itself in preparedness to meet the eventualities of price support operations.
As and when kapas prices touch the level of Minimum Support Price (MSP), kapas purchases
are made under MSP operations without any quantitative limits. Under these MSP operations,
cotton farmers are free to offer their kapas produce to CCI and Corporation continues
purchases of such kapas till the prices rule at MSP level.
In the event of kapas prices ruling above MSP level, Corporation undertakes commercial
operations at its own cost for supply of cotton to mills in the State sector as well as private
sector. All these operations are dovetailed to benefit the cotton growers on the one hand and
supply of quality cotton to the textile mills on the other hand.
Technology Mission on Cotton comprises of 4 Mini-Missions. Mini-Mission I (Research) has
ICAR as the nodal agency and Mini-Mission II (Transfer of Technology) has the department
of Agriculture and Co-operation as the nodal agency while Mini-Mission III (Development of
Market Infrastructure) and Mini-Mission IV (Modernisation/Upgradation of G&P factories)
are administered by the Ministry of Textiles through CCI. Out of 250 market yards
sanctioned under MM-III, 132 market yards reported completion and out of 1000 G & P units
under MM-IV 712 G&P factories were modernized.
An implementing agency of MM-III and IV of Technology Mission on cotton, CCI has made
all out efforts to achieve the laid down targets in respect of development of market yards and
modernization of ginning and pressing factories.However, the term of TMC has expired on
21.12.2010.

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Operations Network







CCI buys raw cotton directly from the cotton farmers through the aegis of Agricultural
Produce Market Committees (APMCs) conducted auctions in the APMC yards. CCI officials
are present in such markets from the day one of the arrivals till the same continues. All such
purchases by CCI are in open competition with other traders and State agencies participating
in the auctions and the main objectives remain to ensure remunerative prices to the cotton
farmers /on the one hand and procure standard quality raw cotton on the other hand.
At present, CCI is operating in all cotton growing States 258-300 procurement centres under
the control of respective Branch Office in each State. Apart from 15 Branch Offices, there are
4 Sales Branches to cater to the needs of the textile mills for sale and supply of quality cotton
as also for rendering the necessary after sales services


COMPANY RANKING

INCOME

NET PROFIT

NET WORTH

143

364

284


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Organizational Chart












Board of Director
CMD
CVO
Director (Marketing) Director (Finance) HRD
Branch Vigilance
Purchase H.O. Vigilance Fin & Account
Secretarial
Internal Audit
Legal
Administration
IT
Estates
Clearing forwarding
Sales
Internal Treads
Planning
Hindi
Warehousing

Statistics
Protocol
Liaison
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Introduction To Insurance
In law and economics, insurance is a form of risk management primarily used to hedge
against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer
of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a
company selling the insurance; an insured or policyholder is the person or entity buying the
insurance policy.

The insurance rate is a factor used to determine the amount to be charged for a certain
amount of insurance coverage, called the premium. Risk management, the practice of
appraising and controlling risk, has evolved as discrete field of study and practice.

The transaction involves the insured assuming a guaranteed and known relatively small loss
in the form of payment to the insurer in exchange for the insurers promise to compensate
(indemnify) the insured in the case of a large, possibly devastating loss.

The insured receives a contract called the insurance policy which details the conditions and
circumstances under which the insured will be compensated.
Insurance involves pooling funds from many insured entities (known as exposures) in order
to pay for relatively uncommon but severely devastating losses which can occur to these
entities.

The insured entities are therefore protected from risk for a fee, with the fee being dependent
upon the frequency and severity of the event occurring. In order to be insurable, the risk
insured against must meet certain characteristics in order to be an insurable risk. Insurance is
a commercial enterprise and a major part of the financial services industry, but individual
entities can also self-insure through saving money for possible future losses.


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TYPES OF INSURANCE


















LIFE INSURANCE
GENERAL INSURANCE
PRODUCT
FEFEATURES
ISSUE RELATING TO
USE OF INSURANCE
PROPERTY
INSURANCE
PEPOLE
LIABILITY
PECUNINARY INSURANCE
PROFESSIONAL
INDEMNITY SPECIAL RISKS
PACKAGES SUCH AS HOME
SHOPS OFFICE etc
NOT COVERED
INDIVIDUAL
POLICIES
GROUP
POLICIES
ANNUITY
POLICIES
FIRE,BURGLARY
MOTOR
MARIN,MONEY IN
TRANSIT,MACHINERY
BREAKDOWN
ELECTROINC EQPT &
BOILER
HEALTH,
PERSONAL
ACCIDENT
OVERSEAS
TRAVEL
WORKMANS
COMPENSAO
N DIRECTORS
&OFFICERS,
PUBLIC
&PRODUCT
LIABILITY
LOP-FIRE LOP-
MACHINERY
BREAKDOWN
CREDIT
&FIDELITY
INSURANCE
OPTIMIZATION
GRIEVANCE HANDLING
ORGANIZING SOURCING
CONTROL
Baggage
Contractors plant &
eqpt,Rural,Crop
Covered
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General Insurance

General insurance or non-life insurance policies, including automobile and homeowners
policies, provide payments depending on the loss from a particular financial event.
General insurance typically comprises any insurance that is not determined to be life
insurance. It is called property and casualty insurance in the U.S. and Non-Life
Insurance in Continental Europe.
Classification
Commercial lines: products are usually designed for relatively small legal entities. These
would include workers' comp (employers liability), public liability, product liability,
commercial fleet and other general insurance products sold in a relatively standard fashion to
many organizations. There are many companies that supply comprehensive commercial
insurance packages for a wide range of different industries, including shops, restaurants and
hotels.
Personal lines: products are designed to be sold in large quantities. This would include autos
(private car), homeowners (household), pet insurance, creditor insurance and others.
General Insurance provides much-needed protection against unforeseen events such as
accidents, illness, fire, burglary etc. Unlike Life Insurance, General Insurance is not meant to
offer returns but is a protection against contingencies. Almost everything that has a financial
value in life and has a probability of getting lost, stolen or damaged can be covered
through General Insurance policy.
Property (both movable and immovable), vehicle, cash, household goods, health, dishonesty
and also ones liability towards others can be covered under general insurance policy. Under
certain Acts of Parliament, some types of insurance like Motor Insurance and Public Liability
Insurance have been made compulsory.
With the opening up of the insurance industry to the private sector, the need for a strong,
independent and autonomous Insurance Regulatory Authority was felt. As the enacting of
legislation would have taken time, the then Government constituted through a government
resolution an Interim Insurance Regulatory Authority pending the enactment of a
comprehensive legislation.

The Insurance Regulatory and Development Authority Act, 1999 is an act to provide for the
establishment of an Authority to protect the interests of holders of insurance policies, to
regulate, promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the Insurance Act, 1938, the
Life Insurance Corporation Act, 1956 and the General insurance Business (Nationalization)
Act, 1972 to end the monopoly of the Life Insurance Corporation of India (for life insurance
business) and General Insurance Corporation and its subsidiaries (for general insurance
business).
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Benefits of Insurance to Business
Reduced reserve requirements
Capital freed for investment
Indemnification
Reduction of uncertainty
Reduced cost of capital
Reduced credit risk
Loss control activities
Business and social stability

Benefits of Insurance to Society
Protects wealth of the country
Helps in economic growth
Control inflation

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Major types of insurances are as mentioned below:
Life insurance: Descendent's family receives financial benefits. Life insurances also
offer paid proceeds to the beneficiary.
Automobile insurance: Usually automobile insurances cover damages and legal
financial expenditures of the automobile driver.
Health insurance: Health insurance cover the expenditures associated to treatment
and medical expenditures.
Credit insurance: Borrowers often fail to repay debts,loans and mortgages due to
certain unavoidable circumstances,credit insurances can be of great help during such
crisis.
Property insurance: Property protection insurance provide protection from risks
associatedtotheft,fire,floodsetc.


This type of insurance can be further classified into specialized forms as follows:
o Fire insurance
o Earthquake insurance
o Flood insurance
o Home insurance
Boiler insurance At present insurance market is much vibrant than before and has an impact
on the rates ofdifferentinsurancepremiums.








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What is IRDA?
The IRDA Act, 1999 was passed as per the major recommendation of the Malhotra
Committee report (1994) which recommended establishment of an independent regulatory
authority for insurance sector in India. Later, It was incorporated as a statutory body in April,
2000. The IRDA Act, 1999 also allows private players to enter the insurance sector in India
besides a maximum foreign equity of 26 per cent in a private insurance company having
operations in India. It serves as an Authority to protect the interests of holders of insurance
policies, to regulate, promote and ensure orderly growth of the insurance industry and for
matters connected therewith. IRDA role is to protect rights of policy holders & they provides
registration certification to life insurance companies & responsible for renewal, modification,
cancellation & suspension of this registered certificate.

What IRDA Do?

IRDAs Mission
Insurance Regulatory and Development Authority (IRDA) Act, 1999 spells out the Mission
of IRDA as:

... to protect the interests of the policyholders, to regulate, promote and ensure orderly
growth of the insurance industry and for matters connected therewith or incidental
thereto......


Functions and Duties of IRDA

Section 14 of the IRDA Act, 1999 lays down the duties, powers and functions of IRDA.
Registering and regulating insurance companies
Protecting policyholders interests
Licensing and establishing norms for insurance intermediaries
Promoting professional organisations in insurance
Regulating and overseeing premium rates and terms of non-life insurance covers
Specifying financial reporting norms of insurance companies
Regulating investment of policyholders funds by insurance companies
Ensuring the maintenance of solvency margin by insurance companies

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General insurance companies

Public Sector
Government of India wholly owned 4 companies:
National Insurance Company
New India Assurance Co Ltd
Oriental Insurance Co Ltd
United India Insurance Co Ltd

Private Sector
sanmuga raj General Insurance
Bharti AXA General Insurance
Continental Insurance Services
Future Generali India Insurance
ING Vysya Life Insurance
HDFC ERGO General Insurance
ICICI Lombard
IFFCO Tokio
Liberty Videocon General Insurance Co Ltd
L & T General Insurance
Magma HDI General Insurance Co Ltd
Max Life Insurance Co ltd
Raheja QBE General Insurance
Reliance General Insurance
Royal Sundaram
SBI General Insurance
Shriram General Insurance
Tata AIG General
Universal Sompo General Insurance
Cholamandalam MS General Insurance Company Limited

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What is a risk?
Risk, in insurance terms, is the possibility of a loss or other adverse event that has the
potential to interfere with an organizations ability to fulfill its mandate, and for which an
insurance claim may be submitted.
What is risk management?
Risk management ensures that an organization identifies and understands the risks to which it
is exposed. Risk management also guarantees that the organization creates and implements an
effective plan to prevent losses or reduce the impact if a loss occurs.
A risk management plan includes strategies and techniques for recognizing and confronting
these threats. Good risk management doesnt have to be expensive or time consuming; it may
be as uncomplicated as answering these three questions:
1. What can go wrong?
2. What will we do, both to prevent the harm from occurring and in response to the harm
or loss?
3. If something happens, how will we pay for it?
Benefits to managing risk
Risk management provides a clear and structured approach to identifying risks. Having a
clear understanding of all risks allows an organization to measure and prioritize them and
take the appropriate actions to reduce losses. Risk management has other benefits for an
organization, including:
Saving resources: Time, assets, income, property and people are all valuable resources
that can be saved if fewer claims occur.
Protecting the reputation and public image of the organization.
Preventing or reducing legal liability and increasing the stability of operations.
Protecting people from harm.
Protecting the environment.
Enhancing the ability to prepare for various circumstances.
Reducing liabilities.
Assisting in clearly defining insurance needs.
An effective risk management practice does not eliminate risks. However, having an effective
and operational risk management practice shows an insurer that your organization is
committed to loss reduction or prevention. It makes your organization a better risk to insure.

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Role of insurance in risk management
Insurance is a valuable risk-financing tool. Few organizations have the reserves or funds
necessary to take on the risk themselves and pay the total costs following a loss. Purchasing
insurance, however, is not risk management. A thorough and thoughtful risk management
plan is the commitment to prevent harm. Risk management also addresses many risks that are
not insurable, including brand integrity, potential loss of tax-exempt status for volunteer
groups, public goodwill and continuing donor support.

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What Insurance policy CCI used?
Cotton Corporation Of India Ltd [CCI] Use Five Policies are as follow:-
Standard Fire And Special Perils Policy
Burglary BP Policy
Schedule-Marine Cargo Open Policy-Inland only
Electronic Equipment Insurance Policy
Fidelity (Floater) Insurance Policy

Fidelity (Floater) Insurance Policy
The term Insured wherever appearing in this policy means any person,partnership firm or
anybody of persons whether incorporated or not with whom the Employee who is included in
the schedule attached hereto has a contract of employment.
The term Employee wherever appearing in this policy means any person(other than a
person whose employment is of a casual nature and who is employed otherwise than for the
purposes of the Insureds trade or business) who has entered into a contract of employment
with the insured whether such contract of employment is expressed or implied, oral or in
writing.

Electronic Equipment Insurance Policy
This is a specially designed policy which covers accidental loss or damage to electronic
equipment.
What equipment can be covered under this policy:
The policy covers the following types of equipments:

1. Electronic data processing machine.
2. Telecommunication equipment.
3. Transmitting and receiving installations(including Radio, TV, Cinema Sound
Reproduction and Studio Equipment).
4. Material testing and research equipment.
5. Electro-Medical Installations.
6. Signal and Transmitting units.
7. Office calculators, duplicating machines and Reproduction machines.
8. Control and supervisory units.

Note: The above items should not be portable and mobile. Who can take this policy:
This policy can be taken by the owner, lesser or hirer of electronic equipment.

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Schedule-Marine Cargo Open Policy- Inland Only
Clauses
1. Inland Transit(Rail or Road)-Clause A (All Risks)
2. Strikes,Riots,Civil Commotion Clause ( Inland Transit not in conjuction with Ocean
going Voyage)
3. Institute Radioactive Contamination, Chemical,Biological, Bio-Chemical And
Electromagnetic Weapons Exclusions Clause 10.11.2003
4. Institute Cyber Attack Exclusion Clause 10.11.2003
5. Private Carrier Limitation Of Liability (Inland Transit) Clause.
Warranties
1. Warranted cargo is carried in a closed vehicle/ wagon or a vehicle/ wagon duly
covered with a serviceable tarpaulin.
2. Warranted vehicle clean and fit to carry cargo.
Other Terms And Conditions
1. All dispatches made during the previous month shall be declared within 10
th
of the
succeeding month.
2. Open policies are subject to retention of minimum deposit premium of Rs.5000/- or
premium collected where actual premium is less than Rs.5000.Refund of premium
shall be applicable only for policies where the premium collected during the policy
period is more than Rs.5000/-
3. Where the premium collected during the policy period is more than Rs.5000/-refund
applicable shall be premium collected less premium on actual declaration during the
policy period or premium collected less Rs.5000/- whichever is less
4. Per Sending Limit- Road: INR 4,000,000/- Rail: INR 220,000,000/-
5. Per Location Limit- Road & Rail: INR 300,000,000/-
6. Voyage Details From Anywhere in India ti Anywhere in India on warehouse to
warehouse basis.
Exclusions
1. Excluding loss of or damage to cargo due to rust, oxidation, discoloration,
mechanical,electrical, electronic derangement, denting, chipping and unless caused by
Inland Transit Clause(Road/Rail)
2. Excluding second hand/ used items/ rejects/ return transits/ tall end transits unless
written agreement is taken as to the rate and other terms prior to commencement of
such transits.
3. Excluding loss of or damage to cargo due to moisture, sweat, mould, mildew,
bacterial, fungal and parasitic infestation unless caused by Inland Transit
Clause(Road/Rail)-B perils. (applicable in case of transit by Rail/Road)
4. Excluding shortage and leakage from sound and sealed packing.


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Burglary BP Policy
Operative Clause
The company hereby agrees subject to terms, conditions and exclusions herein contained or
endorsed or otherwise expressed hereon to indemnify the Insured to the extent of intrinsic
value of:
Any loss of or damage to property or any part thereof whilst contained in the premises
described in the schedule hereto due to Burglary or House-breaking (theft following an actual
forcible and violent entry of and /or exit from the premises) and Hold-up.
Damage caused to the premises to be made good by the Insured resulting from burglary and /
or house-breaking or any attempt there at any time during the period of insurance.
Provided always that the liability of the company shall in no case exceed the sum insured
stated against each item or Total Sum Insured stated in the Schedule.
Special Conditions:-
Reinstatement of Sum Insured:
Immediately upon the happening of any loss or damage as described in the policy,the
Total Sum Insured and the Sum Insured upon the various descriptions of property which have
been lost or damaged, shall be reduced by the amount of loss or damage occurring during the
current period of Insurance unless the Company consents, upon payment of additional
premium to reinstate the full Sum Insured.

Maintenance of Books & Keys:
The Insured shall keep a daily record of cash contained in the Safe or Strong room and
such record shall be deposited in a secure place other than the Safe or Strong room and
produced as docurnentary evidence in support of a claim under this policy.The keys of the
Safe or Strong room shall not be left on the premises out of business hours unless the
premises are occupied by the Insured or any other authorized employee of the Insured in
which case such keys if left on the premises shall be deposited in the vicinity of the Safe or
Strong room.





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INTRODUCTION TO STANDARD FIRE AND
SPECIAL PERILS POLICY

The Standard Fire & Special Perils (SFSP) Insurance, designed to cover loss or damage to
Buildings, Plant & Machinery, Tools, Instruments and accessories, Furniture, Fixtures and
Fittings, Electrical Installations, Stocks in trade including work in progress, etc due to Fire
and Act of God perils. This policy is vital for all types of industry and trade groups, offices,
service occupancies, households and assets belonging to all sections of the society.
I. Fire : Excluding destruction or damage caused to the property insured by
a) Its own fermentation, natural heating or spontaneous combustion
Its undergoing any heating or drying process.
b) Burning of property insured by order of any Public Authority.
II. Lightning
III. Explosion/ Implosion: Excluding loss, destruction of or damage
a. To boilers (other than domestic boilers),economizers or other vessels, machinery or
apparatus (in which steam is generated) or their contents resulting from their own
explosion/ implosion.
b. Caused by centrifugal forces.
IV. Aircraft Damage: Loss, Destruction or damage caused by Aircraft, other aerial or space
devices and artides dropped there from excluding those caused by pressure wav
V. Riot, Strike and Malicious Damage: Loss of or visible physical damage or destruction
external violent means directly caused to the property insured but excluding those caused by
a. Total or partial cassation of work or the retardation or interruption or cessation of any
process or operations or omissions of any kind.
b. Permanent or temporary dispossession resulting from confiscation , commandeering,
requisition or destruction by order of the Government or any lawful constituted
Authority.
VI. Storm, Cyclone, Typhoon, Tempest, Hurricane, Flood and Inundation [STFI]: Loss,
destruction or damage directly caused by Storm, Cyclone, Typhoon, Tempest, Hurricane,
Flood and Inundation excluding those resulting from earthquake, Volcanic eruption or other
convulsions of nature.
VII. Impact Damage:Loss of or visible physical damage or destruction caused to the property
insured due to impact by any Rail/Road vehicle or animal by direct contact not belonging to
or owned by the Insured or any occupier of the premises or their employees while acting in
the course of their employment.
VIII. Bush Fire: Excluding loss, destruction or damage caused by Forest Fire.Provided that the
liability of the Company shall in no case exceed in respect of each item the sum expressed in
the said Schedule to be insured thereon or in the whole the total
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Note:-
STFI and RSMD perils can be deleted at the inception of the policy for which
suitable reduction in premium rate is allowed.
Fire Policy is an annual policy
Long Term policy (for a minimum period of three years) is also available for
"dwellings" only with suitable discounts in premium.
Cover for STFI and RSMD perils can also be given during currency (where they
are deleted at inception by choice) in special circumstances
Excess amount under the policy:
Sum Insured upto 10 crore per location.

Non AOG Perils- Flat Rs 10,000.

AOG Perils- 5% of claim amount subject to a minimum of Rs 10,000.

Sum Insured above 10 crore for a location

Non AOG Perils- 5% of claim amount subject to a minimum of Rs 10,000.

AOG Peril - 5% of claim amount subject to a minimum of Rs 25,000.
How to claim

In the unfortunate event of a claim please:
1. Immediately intimate such loss / damage to the nearest office with a copy to the
policy issuing office, so that a Competent Surveyor may be deputed to for loss
assessment.
2. Take all steps to minimise the loss, as if no insurance has been taken.
3. give an account of all properties damaged or destroyed with estimated amounts
having regard to their values as on the time and date and place of loss, not including
profit of any kind
4. cooperate with surveyors by providing all the necessary documents for assessment of
loss and establishing liability.
5. cooperate with the insurer.
6. inform particulars of all other insurances existing on the property at the time of loss.
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Documents required by insurer for processing the claim:

Claim due to Fire and/or Explosion
1. Copy of Claim intimation given to Company together with xerox of policy &
premium receipt
2. Duly filled Claim Form
3. Police Panchnama / First Information Report/Final Police Report (Forensic Deptt.)
4. Fire Brigade Report
5. Photographs of Damaged Property showing extent of damage &/or video film of loss

Claim due to Flood, Storm, Cyclone, Earthquake, Subsidence/ Landslide
1. Copy of Claim intimation given to Company together with Xerox of policy &
premium receipt
2. Duly filled Claim Form
3. To substantiate quantum of loss, value of damaged insured property just prior to loss,
& value of salvage. please make available to surveyors/investigators fixed Asset
Register, original Bills/ Invoice, Repairs / Replacement Bills/Invoices and stock
Register
4. Newspaper cutting wherein the incidence of occurrence of
flood/storm/cyclone/earthquake/landslide has been reported
5. Meteorological Report


Claim due to Riot, Strike, Malicious Damage and Terrorism (RSMDT)
1. Copy of Claim intimation given to Company together with xerox of policy &
premium receipt
2. Duly filled Claim Form
3. Police Panchnama/First Information Report/Final Investigation Report
4. Fire Brigade Report
5. To substantiate quantum of loss, value of damaged insured property just prior to loss,
& value of salvage. please make available to surveyors/investigators fixed Asset
Register, original Bills/ Invoice, Repairs/Replacement Bills/Invoices and stock
Register
6. Newspaper cutting wherein the incidence of riots has been reported
7. Photographs of Damaged Property showing extent of damage &/or video film of loss


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How to calculate Insurance Premium?

The premium is of two types: (1) Net Premium and (2) Gross Premium. The two premiums
are further sub-divided into two parts: (i) single premium, and (ii) level premium. The net
premium: is based on the mortality and interest rates whereas the gross premium depends
upon the mortality rate, the assumed interest rate, the expenses and the bonus loading.
Single premium is paid in one lump sum while the level premium is paid periodically in
installments. The level premium may be yearly, half-yearly, quarterly and monthly. Firstly,
net single premium is calculated and other premiums are based on this calculation.
Net Single Premium
Net single premium is that premium which is received by the insurer in a lump sum and is
exactly adequate, along with the return earned thereon, to pay the amount of claim wherever
it arises whether at death or at maturity or even at surrender. It does not provide for expenses
of management and for contingencies.
Steps for Calculation
1. Determine what constitutes a claim (a) death, (b) survival or (c) both.
2. Determine when claims are paid (a) at the beginning, (b) at the end, or (c) during the year.
3. Determine the number of insured.
4. Determine the duration of the policy.
5. Determine the probable number of claims per year.
6. Determine the value of claims per year.
7. Determine the number of years of interest involved and find the present value of a rupee.
8. Determine the present value of the claim for each year.
9. Determine the present value of all future claims.
10. Determine the net single premium, (i.e., present value of future claims) divided by
number assumed for buying policy.
The step of premium calculation varies according to the nature of the policy which will be
clear later on. When premium is calculated several questions emerged simultaneously.
Assumptions underlying Rate Computations
There are certain variables which are to be assumed at a level for calculation and alterations
in premium calculation are made at later stage according to the change in the variable. The
following factors are assumed while calculating the net single premium.
(i) As many policies of the given type are being issued as is the number of persons.
(ii) Premiums are collected in advance or in the beginning of the period.
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(iii) All collections are immediately invested and will remain invested until money is needed
for the payment of claims.
(iv) The insurer will receive an assumed rate of interest. The assumed rate should be
conservative to avoid future decline in interest rate.
(v) The interest or dividend or any return of the invested funds is immediately invested for re-
earning.
(vi) Mortality rate will be the same as given in the mortality table and will he uniformly
distributed throughout the year.
(vii) All policies are of the same amount, say, Rs. 1,000.
(viii) Claims will be paid only at the end of the period.
These assumptions may not be totally practicable, but they are taken as for making
calculation easy. The changes in assumption can be adjusted accordingly.
Calculation of Net Single Premium:
The calculation of net single premium is discussed in different types of policies.
Term Insurance:
This is the simplest type of contract whereby, payment is made only when the life assured
dies within the term specified. Nothing will be paid if death does not occur during the
designated term. This is also called temporary insurance. The premium is received in advance
and it will not be returned if life assured survives.
The premium is paid only once in a single sum at the inception of the policy. Death claims
will be paid at the end of the year in which they occur and not at the end of the term. Thus the
probability of death in each year along with the present value, of the claim for each year will
be calculated because the death may occur at any moment and the insurer may be required to
pay. The term may be one, two, five or seven years.
Here we assume that the period of term insurance is 5 years. Before we start we assume that
the (1) rate of return on investment is 3 per cent and the mortality experience will be like the
one shown in the oriental 1953-54 Experience Life Table. The person is proposing at the age
of 40 for the period of 5 years.
The number of details can be known from the above table we assume that each person dead
will be paid Rs. 1,000. The next factor of calculation is that the insurer will earn a fixed
return on the investment, therefore, only the present value of the claim should be taken as a
premium. Thus, the net single premium for each year will be calculated:
Number of deaths x Amount of claims x Present value of Re. 1 = Present value of claims.
Where P stands for the present value, S for the amount of which present value is to be
calculated and for the rate of interest and n for number of years for which present value is to
be calculated.
Thus, the present value of claim for the first year will be 273 x 100 x 0.971 = 265083 because
the number of deaths are 273 and the total amount of claim, so, would be 2,73,000. If
multiplied by factor of present value it gives present value of claim.
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Thus the net single premium will be the same whether it has to be calculated on the basis of
group policy or on the basis of single policy; the probability method is generally used for
calculation of premium.
Net Single Premium in Whole Life Policies:
A whole life policy continues for the whole of life and promises to pay the sum assured upon
the death of the insured to his beneficiary.
This policy is like the term insurance policy with only difference that instead of being limited
to a definite number of years, it continues for the largest possible length of life and will
certainly be paid at some time. It has been assumed in most of the mortality table that the life
will continue up to 100 years.
Therefore, the calculation of premium will start from the date of commencement of risk to the
100th year. If a person has taken policy at age 45, the calculation will continue until 100th
year.
The chances of death in each separate year will be multiplied by the face value of the policy
and this amount is discounted by the present value for the period.
Net Single Premium in Pure Endowment Policy:
In this policy, insurer promises to pay the insured value in case the holder survives a certain
fixed period. Thus the holder of 5 years pure endowment will be paid only when he survives
at the end of 5 years.
The insured, cannot get possession of the money invested in a pure endowment before the
expiration of the endowment period. If the insured dies during this period, the entire premium
paid is forfeited.
Net Single Premium in Ordinary Endowment Policy:
Under this policy payment of claim amount is made at the survival of the term or at the death
of the life assured whichever is earlier. Payment in this case is certain. Since payment is
based on the death and survival, the net premium is calculated on death and survival rate.
The net single premium on the basis of death has been discussed in case of term insurance
and on the basis of survival in case of pure endowment assurance. For example, we have to
complete net single premium of ordinary endowment policy of 5 years, we can easily base
our calculation on death and survival rates.
Net Single Premium in Double Endowment :
Under this policy, double of the amount is paid if the life assured survives at the end of the
term of policy and only single amount will be paid if the death occurs within the term. Thus,
it is first like ordinary endowment policy with only difference that double of the policy
amount is paid if life assured survives up to the term.
Since the double of the policy amount is paid at the survival, one more premium on the basis
of pure endowment is added to the premium of ordinary endowment policy. For example,
double endowment policy is to be calculated of Rs. 1,000 for 5 years.'
The Net Single Premium of Ordinary Endowment + Net single premium of Pure Endowment
Policies for 5 years issued at same age.
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= policy for 5 years issued at the same age.
= Rs. 862.78 + 846.60 = 1709.38.
Thus, the net single premium of double endowment policy of Rs. 1,000 for 5 years will be
Rs. 1.709.38. If death occurs within the term, he is paid merely Rs. 1,000 and Rs. 709.38 will
be a loss to him; but if he survives up to the period, he is paid Rs. 2,006 only on payment of
Rs. 1,709.38. Actuarial expression of net single premium in this case will be:
Net Single Premium for a Joint Life Policy :
Under this policy payment of claim will be made at the first death of the assured lives who
may be two or more. Here, the process of calculation will be the same as has been discussed
in term insurance with only difference that the probability of death is compound one. The
compound probability of death is calculated by addition of the probability of deaths of one
other and all of the envy aged. For example:
Compound Probability of any one of the two lives assured will be
(a) Probability of death of the younger person
(b) Probability of death of the older person
(c) Probability of death of both the persons.
It is calculated by multiplying the probability of death of each person. The compound
probability may also be calculated by the following method.
Net Single Premium for Last Survival Policy :
The policy amount is payable, under this policy, only when all lives covered by the policy
expire. The compound probability of all policy-holders is calculated. The calculation will
continue up to the youngest life's reaching to the highest age of the mortality table, it will not
stop at the first death. Thus, the compound probability will be
= Probability of death of one person x Probability of death of other person.
When the youngest son is supposed to be dead, calculation stops.
Definitions :
1. Gross Profit
The amount by which
progress shall exceed
amount of the
Uninsured Working Expenses.
Note : The amounts of the opening and closing stocks and work in progress shall be arrived at
in accordance with the
Insured's normal accountancy methods, due provision being made for depreciation
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2. Uninsured Working Expenses
The following variable expenses of the business are not covered by this policy :
A. turnover and purchase taxes
B. purchases (less discounts received)
C. carriage, packing and freight.
3. Turnover
The money (less discounts allowed) paid or payable to the Insured for goods sold and
delivered and for services rendered in the course of the business at the Premises.
4. Indemnity Period
The period beginning with the occurrence of loss destruction or damage and ending not later
than the Maximum Indemnity Period thereafter during which the results of the Business shall
be affected in consequence thereof. Provided always that the Company is not liable for the
amount equivalent to the rate of gross profit applied to the standard turnover during the
period of Time Exclusion of ______ days stated in the schedule.
5.Rate of Gross Profit
The Rate of Gross Profit earned on the turnover during the financial year immediately before
the date of loss destruction or damage

The Turnover during the twelve months immediately before the date of loss destruction or
damage

The Turnover during that period in the twelve months immediately before the date of loss
destruction or damage which corresponds with the Indemnity Period appropriately adjusted
where the indemnity
Period exceeds twelve months to which such adjustments shall be made as may be necessary
to provide for the trend of business and for variations in or other circumstances affecting the
Business either before or after loss destruction or damage or which would have affected the
Business had the loss destruction or damage not occurred, so that the figures thus adjusted
shall represent as nearly as may be reasonably practicable the results which but for the loss
destruction or damage would have been obtained during the relative period after the loss
destruction or damage.

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Provisions :
Memo 1 - Benefits from Other Premises
If during the indemnity period goods are sold or services are rendered elsewhere than at the
premises for the benefit of the Business either by the Insured or by others acting on his
behalf, the money paid or payable in respect of such sales, or services shall be taken into
account in arriving at the Turnover during the Indemnity Period.
Memo 2 - Return of Premium
If the Insured declares at the latest nine months after the expiry of any policy year that the
Gross Profit earned during the accounting period of twelve months most nearly concurrent
with any period of insurance, was less than the sum insured thereon a pro rata return of
premium not exceeding one third of the premium paid on such sum insured for such period of
insurance shall be made in respect of difference.
If any loss destruction or damage has concurred giving rise to a claim under this policy, such
return shall be made in respect only of so much of said difference as is not due to such loss
destruction or damage.

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INDUSTRIAL ALL RISKS POLICY
S C H E D U L E
Agency Code No.
Agency Licence No.
Expiry date of Licence
Risk Code No.
Policy No. __________________ In lieu of Cover Note No. _____________
Issued at __________________________ Date_______________________
Period of Insurance ________ months from ________ a.m./p.m of _________
to midnight of ____________
Address of Issuing Office_____________________Coinsurance if any :
SUM INSURED :
SECTION I : MATERIAL DAMAGE

LOCATION/PREMISES BUSINESS SUM INSURED

Deductible -
(Attach detailed schedule for each location/ premises in the format given in
Annexure A


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SECTION II : BUSINESS INTERRUPTION

Gross Profit :- Rs. ______________
Standing Charges :- Rs. ______________
Indemnity Period :- _________ months
Time Exclusion :- _________days
PREMIUM
Section I: Rs.
Section II: Rs.
Total: Rs.
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InsuredAnnexure II

Application for Industrial All Risks Policy
1. Name of the Insured
2. Location/Premises Business Sum Insured


N.B.: Detailed Schedule of the Property proposed for Insurance for each location/premises be
submitted in the format given in Annexure A.
3. Voluntary Deductible proposed to be opted for
(a) Material Damage Claims - Section I -
(b) Business Interruption Claims - Section II -
4. Premium Data
Please furnish details of Sum Insured and Premium paid location wise for the past 5 years (if
available for 10 years) in Annexure B.
5. Claims Data
Claims Data for each claim be furnished in the format given in Annexure C




Authorised Signatory Authorised Signatory
(Name of the Insured) (Name of the Insurance Co.)
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Annexure B
Premium Data
Location/Premises -
Policy/Perils - Fire Policy C/EQ/STFI/EEI/B.I.(Fire)/B.I.(MLOP) (Please submit details of
premium on a separate sheet for each Policy/Peril)


Policy Period Sum Insured Premium
(Rs. in Lakhs) (Rs.in Lakhs)



Authorised Signatory
(Name of the Insurance Company)

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Annexure C

Claims Data Sheet

(Please submit separate Claim Data sheet for each claim)
Material Damage Business Interruption
Date of Loss
Policy Period
Policy/Peril
Cause of Loss
Sum Insured
Amount Assessed by
Surveyor
Amount Paid
Deductible


For Business Interruption Losses please give following additional information :
Indemnity Period months
Interruption Period days
Time Excess days



Authorized Signatory
(Name of the Insurance Co.)

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LIST OF CHECK-LISTS

GENERAL CHECK LIST - Annexure 1
SPECIAL CHECK LISTS APPLICABLE TO FOLLOWING SPECIFIC INDUSTRIES :
1. Paper & Board Mills - Annexure 2
2. Light and heavy engineering automobile
mfg., watch factories and ship building yards - Annexure 3
3. Textile Mills - Annexure 4
4. Chemical manufacturing - Annexure 5




















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Findings & Recommendation
Who can take the Insurance?
Persons with insurable interest in the property to be insured like owners,banks and financial
institutions.
The Policy Covers.
Buildings, plant and machinery, furniture, fixtures and fittings, electrical installations, stocks,
stocks in trade including work in progress etc belonging to any industry, offices, service
occupancies, households etc
Key advantages of Standard Fire and Special Perils Insurance are
A comprehensive policy which covers all tangible assets normally exposed to the risk
of fire and natural perils.
Wide scope of cover at reasonable cost
A host of add-on covers to opt from depending on the individual requirement.
Optional deletion of STFI & RSMD group of perils.

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WHAT IS NOT COVERED UNDER THIS POLICY
War and war like perils
Nuclear risks
Pollution or contamination even caused by insured perils
High value items like gold, cash unless specified
Stock inside the Cold Storage
Damage to equipment caused by electrical short circuit. However subsequent damages arising
out of such fire is covered
Expenses incurred towards fees of Architects, Surveyors & Consulting Engineers in excess of
3% of claim amount
Expenses incurred towards removal of debris in excess of 1% of claim amount
Loss of earnings, markets, loss by delay, any other consequential losses
Spoilage of material due to stoppage even though stoppage may be due to operation of perils
insured
Loss by theft during or after the occurrence of any loss / peril
Earthquake, volcanic eruption
Property not in the premises or removal of property to any other premises except machinery
sent for repairs / cleaning for a period of 60 days .


Company business is limited to Cotton Insurance coverage only so they can expand
themselves to other godowns like wood,textile clothings etc.

Company Insurance is preferred by cotton godowns to have healthy relationship with them.










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Conclusion

The Cotton Corporation of India Ltd. a Govt. of India undertaking under the
Ministry of Textiles, Govt. of India is engaged in the business of procurement of raw cotton
(kapas) from the farmers through Agriculture Produce Market Committees (APMC).

General Insurance provides much-needed protection against unforeseen events such as
accidents, illness, fire, burglary etc. Unlike Life Insurance, General Insurance is not meant to
offer returns but is a protection against contingencies. Almost everything that has a financial
value in life and has a probability of getting lost, stolen or damaged, can be covered
through General Insurance policy.
" In this project, product features and issues relating to use of insurance for respective
products are addressed in detail." Benefits of insurance like " Reduced reserve requirements
Capital freed for investment. To business as well as to society are understood in detail.
The Standard Fire & Special Perils (SFSP) Insurance, designed to cover loss or damage to
Buildings, Plant & Machinery, Tools, Instruments and accessories, Furniture, Fixtures and
Fittings, Electrical Installations, Stocks in trade including work in progress, etc due to Fire
and Act of God perils.
In this project details regarding who can take the insurance, things like " Persons with
insurable interest in the property to be insured like owners, banks and financial
institutions..covered by SFSP and key benefits such as.." A comprehensive policy which
covers all tangible assets normally exposed to the risk of fire and natural perils.& Wide scope
of cover at reasonable cost of SFSP are well understood..
..






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Bibliography


Ref Site:-

www.cotcorp.gov.in
www.irda.gov.in
www.policyholder.gov.in
www.preservearticles.com

Book:-
Corporate Insurance Sharada Kumaraswamy
V Kumaraswamy