Introduction. General Insurance. Introduction Fire Insurance Marine / Transit Insurance Miscellaneous Insurance. Reinsurance

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1 General Insurance Introduction Fire Insurance Marine / Transit Insurance Miscellaneous Insurance o Motor Insurance o Cash-in-Safe Insurance o Cash-in-Transit Insurance o Burglary Insurance/Combined Fire & Burglary Insurance o Personal Accident Insurance / Group Personal Accident Insurance o Fidelity Guarantee Insurance o Passenger Coupon Insurance o Contractors All Risk Insurance (CAR) o Erection All Risk Insurance/Storage-cum-Erection All Risk Insurance (EAR) o Contractors Plant & Machinery Insurance (CPM) o Aviation Insurance o Cattle Insurance Reinsurance Introduction We all know that the world we live in is imperfect with uncertainties of risk evolving around us round the clock. One may be very wise and intelligent but never can he say nor predict as to when the worst might strike. Well! Misfortune strikes one and all, irrespective of caste, creed, color & status and virtually there exists no measures to check it from happening nor there will be an end to it. God forbid! Should such become a reality, then all our pride, joys & hopes will be shattered, our properties reduced to scrapes, rubbles & ashes. Naturally, the more property an individual owns, the more they will lose and likewise, greater the responsibility an individual shoulders, the greater will be the impact if they succumb to accidents or becomes physically disabled. It is a fact that nothing in this world can completely protect us nor compensate us fully, but the only way out to do so is to prepare and equip oneself for such situations with the best. This

2 best is to take a practical step by reducing our financial vulnerability to risks that one is exposed to and seek the soothing hands of true friend to cling on during such hours of dismay. This is obviously non other than INSURANCE. What is Insurance? Insurance is paying little money now for financial protection in future during the times of need. It is a way of sharing risks with others but definitely not an investment that one might expect to get one s money back. The General Insurance Department of the Royal Insurance Corporation of Bhutan Ltd. offers three types of broad Insurance schemes to cater all your insurance needs as hereunder. Fire Insurance Under the fire Insurance portfolio, there are two types of policies, "Standard Fire Policy" and "Rural House Insurance" o Standard Fire Policy, which is an insurance of property against the risks of fire and/or lightning, which can also be extended to cover additional perils like flood/inundation, landslide, earthquake, storm, explosion, spontaneous combustion and Strike, Riot & Civil Commotion on payment of additional premium. What is covered by this policy? 1. Material damage by Fire/Lightning and any other extended perils specified above covered by payment of additional premium. 2. Damage to building and property by water and fire fighting appliances used for extinguishing the fire. 3. Damage to property during removal from the burning building. What is not covered by this policy? 4. Loss or damage due to war and nuclear radioactivity. 5. Theft during & after the occurrence of fire. 6. Destruction under the orders of civil authority.

3 7. Subterranean fire. 8. Natural fermentation. 9. Loss or damage to electrical appliances due to over running, short circuit and electricity leakage but can be covered by paying additional premium. Sum Insured The sum insured declared should reflect the present market value of the property as far as possible to avoid any under/over insurance. The procedures for deriving the most suitable present market value are as follows; 10. Building: The cost of constructing a new building of same type less depreciation for the number of years in use. The rate of depreciation applicable depends on the type of construction and its approximate useful life. 11. Machinery: For the machinery that can be replaced, the same principle as in the case of building shall apply i.e. cost of replacement less depreciation for number of years in use. However, for the old and obsolete machinery, the value of new similar machinery less depreciation with proper adjustments for its utility & condition etc. and balance useful life shall apply. 12. Stock: The cost/value of stock should reflect all expenses such as cost, insurance, freight and overhead, if any, upto the place of insurance depending on the status of the insured such as manufacturer, wholesaler and retailer. However, if the sum insured declared does not reflect its present market value then the condition of average applies in case of any claim (i.e. if the sum insured is less than the present market value, the amount of loss payable will also be proportionately less and if the sum insured is higher than the present market value, the loss payable will be as per

4 the present market value only despite the premium being paid for the higher value). Premium The premium payable depends on the type of 13. Construction, stock and machinery. 14. Location of the risk. 15. Safety measures undertaken. 16. Adjoining property or surroundings. o Rural House Insurance, as per the memorandum of understanding drawn between the Royal Government, represented by Ministry of Home Affairs & Ministry of Finance and the Royal Insurance Corporation of Bhutan Ltd., a scheme was formulated whereby RICBL is to extend insurance cover to all the houses in the rural areas of all the Dzongkhags in the Kingdom What is covered under this scheme/policy? This scheme/policy covers the any financial loss incurred by the insured due to the occurrence of the following perils; 1. Fire 2. Earthquake 3. Flood 4. Landslide 5. Storm What is not covered by the policy? The losses or damages due to the perils other than the above are not covered by this scheme/policy. Sum Insured The sum insured under this scheme are according to the class of houses approved by the Royal Government for their tax purpose, which are broadly classified in two categories,

5 6. Permanent House for a maximum Sum Insured of Nu. 100,000/-. 7. Semi-permanent House for a maximum Sum Insured of Nu. 40,000/-. Marine / Transit Insurance Premium The premium payable are fixed for the each classes which are 8. Nu. 150/- for permanent houses. 9. Nu. 60/- for Semi-permanent houses. Marine insurance is an insurance against various risks relating to movement of goods from one place to another by various means of transport such as air, sea and land. The extents of coverage are for the losses due to accident, fire, collision, bad weather theft, pilferage, non-delivery, breakage, leakage depending on the cover sought and warranties imposed. The rate for this insurance varies according to the nature of goods, packing, route of transit etc. and is guided by our rating guide. Miscellaneous Insurance Motor Insurance Motor Insurance, under the motor insurance, two types of cover are available. 1. Third Party Liability Motor Insurance is an insurance against the liability to the public risks. It covers the liability under the Road Safety and Transport Act, which are broadly the a) injury to a third party and b) damage to property belonging to third party. Which mau be extended to cover drivers & passengers. 2. Comprehensive Insurance is also a motor insurance in addition to the Third party Liability Insurance, which covers any types of damage or loss to the vehicle itself. This Policy can also be extended to cover extra fittings,

6 with payment of extra premium. No Claim Discount for an accident free insurance period is available under this, which is applicable to the own damage premium only. Optimal cover varying from Nu. 5,000/- to Nu. 20,000/- is also available for commercial vehicle considering the expenses involved on additional premium. Cash-in-Safe Insurance This is a special type of burglary insurance to cover the loss of money from the safe. The conditions of this cover are the same as that of burglary insurance. Cash-in-Transit Insurance This is an insurance against loss of money while in transit from one place to another duration of which should not exceed 48 hours. This policy covers loss due to snatching, hold up and absconding by the carrying employee. However, the maximum limit of cover for any one transit is fixed. Burglary Insurance Burglary insurance is an insurance to protect any loss to property due to burglary. Burglary under this policy means felonious entry to the premises by violent and forcible means. Insurance of cash against burglary can also be carried out by this policy as Cash-in-safe. Care should be taken while issuing this policy in respect of moral integrity of the proposer. The rate charged depends upon the type of construction, security measures available, nature of good and location of premises and is normally upto 3 % of Sum Insured. Personal Accident Insurance / Group Personal Accident Insurance The Personal Accident Insurance is an insurance to render financial relief to the individual or his dependents in case of accidents, be it a simple or a grievous injury and / or even death. The accident under this policy must be a fortuitous event caused by an external visible and violent force. The extents of coverage or benefit are for death, and total/partial permanent/temporary disablement, loss of limb, loss of sight,

7 etc. The rate applicable depends upon the type of benefit sought and occupation, which is defined in the proposal form. Fidelity Guarantee Insurance Fidelity Guarantee Insurance is an insurance to indemnify the employer against any direct pecuniary loss that he may sustain through acts of fraud or dishonesty by an employee in the course of employment. The need of this insurance is generally in respect of the employees who handle cash and store. The extent of cover is in respect of loss caused by acts of forgery, embezzlement, fraudulent conversion of money and stock in trade etc. which should be reported to the insurer within 6 months latest. The rate charged depends upon the status and length of service of the employees and is normally upto 3 % of Sum Insured maximum. Passenger Coupon Insurance The Passenger Coupon Insurance is a cheapest form of personal accident policy in the market and is basically a scheme to supplement the existing compulsory passenger cover by the bus operators under Road Safety & Transport Act, which grants additional benefit to the claimants apart from the compensation payable by the bus operator. The terms and conditions, scope of cover are the same as that in Personal Accident Insurance except that the duration is restricted to a particular specified single journey. Contractors All Risk Insurance (CAR) The Contractors All Risk Insurance provides a comprehensive cover to all types of civil engineering works against accidental damage to the construction works/projects enabling the contractor to meet his contractual obligations thus also protectecting the interest of the principal as owner of the project. This policy covers all risk like;

8 1. Fire including fire fighting operation, lightening, explosion, 2. Accidental damage during storage, 3. Riot, strike and malicious damage, 4. Flood, inundation and subsidence, 5. Strom, tempest, cyclone, hurricane, 6. Earthquake, landslide and rockslide, 7. Theft and burglary and 8. Accidental damage during the course of construction. This policy can also be extended with payment of additional premium to cover Escalation in Price, Clearance & Removal of Debris, Machinery, Third Party Liability, Surrounding property, Additional Customs Duty and Maintenance Cover upto 12 months. Erection All Risk Insurance (EAR) The Erection All Risk Insurance provides a comprehensive cover to all types of project whether big or small involving erection works against accidental loss or damage to machinery and erection materials during storage, erection and testing / commissioning. This policy enables the erector to meet his contractual obligations thus also protecting the interest of the principal as owner of the project. This policy covers all risk like; 1. Fire including fire fighting operation, lightening, explosion, 2. Accidental damage during storage, 3. Riot, strike and malicious damage, 4. Flood, inundation and subsidence, 5. Strom, tempest, cyclone, hurricane, 6. Earthquake, landslide and rockslide, 7. Damage due to lack of skill, negligence 8. Damage due to use of defective material and workmanship 9. Theft and burglary and 10. Accidental damage during the course of erection. This policy can also be extended with payment of additional premium to cover Escalation in Price, Clearance & Removal of Debris, Machinery, Third Party Liability, Surrounding property, Additional Customs Duty, Overtime, Nightwork, Civil Engineering

9 work associated with the erection and Maintenance Cover upto 12 months. The risk to the materials to be erected while in transit or during storage at site for the project can also is included under this single Policy, with which this Policy will then become Marine Cum Erection All Risk Insurance (MCE) and Storage Cum Erection All Risk Insurance (SCE) respectively. Contractors Plant & Machinery Insurance (CPM) The Contractors Plant & Machinery Insurance is a specially designed policy for contractors using construction equipment for their need in the business such as heavy duty crane to compressors to bulldozers and excavators etc. This is an all risks policy covering practically all unforeseen eventualities except the exclusions applied worldwide as follows; 1. Loss or damage due to electrical or mechanical breakdown, 2. Loss or damage of replaceable parts and attachments, 3. Damage due to explosion, 4. Damage to vehicles designed and licensed for general road use unless exclusively used on site, 5. Damage due to partial or total immersion in water, 6. Damage occurring while in transit from one location to another, 7. Normal wear and tear and ones operating in mines, 8. Damage due to use of in the manner other than for which it was designed and 9. Damage due to nuclear hazards or war. The coverage under this policy can also be strengthened by opting to extend with payment of additional premium to cover Clearance & Removal of Debris, Third Party Liability, Surrounding property, Additional Customs Duty, Overtime and Nightwork to expedite repairs. Aviation Insurance Aviation business involves lot of technicality compared to other type of business. The value concentration is also very high which is issued on the internationally accepted currency like US$. The main exposure is the Third Party liability like Cargo, Mail,

10 Passenger and other third party properties. The risk to be insured comprises of Hull, Liability and war-allied perils. The rates and terms for this is not like other line of business where it is quoted by the insurer but here the reinsurer quotes the rates and terms on the basis of overall market experience. The placement of reinsurance can be made in the particular market like LLOYDS which have to be done through broker due to involvement of many reinsurers. Apart from main Hull and Liability policy R.I.C.B.L have issued Crew Personal accident and Loss of license policy. R.I.C.B.L have settled so far the claim of US$ 2.5 million any financial stress. Cattle Insurance This Cattle Insurance Policy is designed to cover the indigenous, cross breed and exotic type of cattle owned by individuals or farms and financed by financial institutions for commercial purpose. The issue of this policy is restricted and is subjected strict terms and conditions. This policy covers loss due to death only by accidents, other fortuitous cause, diseases subject to vaccination, surgical operations, Strike Riot and Civil Commotion and Terrorism. Reinsurance RICBL have business tie up of all govt. Companies and other foreign companies like Munich Re., Tokio Marine, Swiss Re etc. by way of reinsurance. As such RICBL have huge capacity to undertake large risk.