What Is Your ‘Contribution’?

 What Is Your 'Contribution'?  No Responses »
Sep 102011
 

The term ‘contribution’, falls under the principles of insurance. When the individual taking up a cover obtains more than one policy on one risk, the principle of contribution comes into play. The aim of `contribution’ is to distribute the actual amount of loss amongst the different insurers who are liable for the same risk under different policies with respect to the same subject ( i.e. a car, house etc.).

This means that while the individual taking up insurance cover may take up more than one policy to cover the same risk, he/she cannot recover in total more than a full indemnity ( compensation for damage or loss). In other words, the right of contribution arises when:

1. There are different policies which relate to the same subject

2. The policies cover the same peril which caused the loss

3. All the policies continue to be valid at the time of the loss and

4. One of the insurers has paid to the insured individual more than his share of the loss.

Scenario 1 A house owner has covered his house worth Rs.1 crore with 2 companies for Rs.1 crore each. In case the house is destroyed due to a mishap that falls under the cover, each of the companies will pay Rs.50 lakhs, so that the house owner is compensated for his Rs.1crore house.

Scenario 2 The house owner has taken a cover of Rs.1 crore from one company and for Rs.50 lakhs with another company for his house worth Rs.1 crore Now if the house is destroyed completely due to a mishap that falls under the insurance cover, the companies will provide a cover that amounts to the total value of the house as per the ratio of their `sum assured’.

i.e. Here the company that provided a cover for Rs.1 crore will pay (1 crore/1.5 crore x 1 crore[loss] =) Rs.66.67 lakhs and the company that provided an insurance cover for Rs.50 lakhs will pay (50 lakhs/1.5 crore x 1 crore =) Rs.33.33 lakhs

Scenario 3 Here, let’s assume that the house owner has taken a cover for his house worth Rs.1 crore with 2 companies for Rs.50 lakhs each. In this case, if the house is destroyed due to a mishap that falls under the insurance cover, each company will pay Rs.50 lakhs to make good the loss of the house owner, which is Rs.1 crore.

Scenario 4 Let’s say, the house owner has taken up insurance for his house worth Rs.1 crore for only Rs. 50 lakhs. This is a case of under insurance. In this case if the house is destroyed due to a mishap that falls under the insurance cover, the company will pay only (Rs.50 lakhs/1 crore[ratio of insurance]x 50 lakhs[ `sum assured' ]=) Rs.25 lakhs.

Remember though that the principle of contribution does not apply to life insurance.

Preventing loss or damage to insured property

In the event of a mishap, the individual who has taken the cover must take all possible steps to mitigate or minimize the loss to the subject (house, car etc.) of insurance. He should act in the same manner in which he would have acted in the absence of the insurance cover. This means that it is the duty of the individual to make a reasonable effort and take all available precautions to save the insured subject property.

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 Posted by at 3:03 am

Introduction to High Performing Health Plans

 Introduction to High Performing Health Plans  No Responses »
Sep 092011
 

Introduction to High Performing Health PlansWhat exactly are High Performing Health Plans (HPHP), and are these methods and principals that any organization – large or small – can replicate?

The easy answer is yes.

Most Fortune 500 companies have created HPHP’s within their organizations.

Employers have redefined the deal with employees, optimizing their investments in building and sustaining a culture of health, while capturing a health dividend for the business. These groups realized long ago that they could achieve better results by replacing old models and processes with new ones.

By doing so, these organizations benefit from a healthier workforce, which in turn reduces overall health expenditures. In addition, they typically pay lower Workers Compensation costs, reduce lost productivity and absenteeism, and benefit from an overall happier workforce.

High Performers meet several objectives within key areas:

1. Manage Employer and Employee Costs,

2. Enhance efficient purchasing of healthcare services,

3. Enhance Employee satisfaction, understanding and involvement in health benefit programs, and

4. Support Employees’ good health while addressing health risks and current health problems in the employee population.

Now we can explore some of the key aspects that these companies enjoy:

HPHP’s have a distinct cost advantage over their non-performing counterparts:

• They pay 18% less – roughly $2,000 per employee – for their health benefit programs than a low-performing competitor.

• They pay 20% less than their low-performing counterparts.

• While 35% of low performers report double-digit rate increases, high performing companies are keeping trends well below national averages. Over 33% of these organizations have held their costs to 4% or less.

• Additional aspects of the health dividend for these organizations include supporting/building the company reputation, attracting the needed workforce, maintaining productivity and supporting workforce well-being – all areas where high performers are roughly twice as likely as low-performers to report positive impact delivered by their health programs.

• Investments in wellness programs, communication and measurement disciplines – hallmarks of the HPHP’s – will be increasingly prevalent across all companies just three years from now.

• As a final critical point, ongoing program performance could have significant implications for employees under healthcare reform. Regardless of how the impact of reform unfolds, it’s clear that companies with efficient programs and a clear, forward-looking strategy for supporting workforce health will be the winners in the new environment.

We often hear the phrase “bending the cost curve”. Easier said than done in most instances, but implementing the High Performing strategies most certainly get us closer to actually reducing costs.

 Posted by at 2:59 am

Kidnap Insurance: An Overview

 Kidnap Insurance: An Overview  No Responses »
Sep 082011
 

Kidnap and ransom insurance is also known as K&R insurance. It is established to secure people and companies that operate in certain areas known to have high kidnapping incidents. This type of insurance covers the kidnapping, extortion, and hijacking risks. It is a policy that provides compensation to the holder in case loss is incurred. Contrary to misconceptions, this type of insurance does not promise to pay the ransom imposed by the kidnappers. It is the insured who will pay the ransom. After paying the ransom, the insured can claim for reimbursement.

Usually, kidnapping insurance policies provide reimbursement for the cost incurred as a result of the kidnapping. This includes medical expenses aside from ransom. Personal accident and losses are also subject to reimbursement. Death, disablement, and loss of employment shall be compensated. The insurance provider shall also pay for crisis management and psychiatric intervention. Kidnapping insurance policy coverage may also involve kidnap prevention training aside from reimbursements.

Holding an insurance policy for kidnapping does not mean you can stop exercising vigilance. Many companies give crisis management training to workers before sending them to high-risk zones. Such training may teach them what to do in case of hostage or hijacking situations. This training can help reduce losses that happen as a result of kidnapping.

Kidnap and extortion are real perils for corporations that operate locally or abroad. However, many companies are too complacent. They think chances of kidnapping or extortion are low. However, when such incidents happen, that is when they realize what they missed out on. The cases of kidnapping around the world are compelling. Then again, it is easy to overlook the threat.

Around the world, there are more than one thousand cases of kidnappings involving professionals and corporate executives. Aside from kidnappings, there are also terroristic attacks that endanger people working in high-risk countries. Life and health of workers sent to other countries should be considered. Kidnapping and other terroristic attacks subject victims to injuries. Worst case scenario is that the perpetrators kill their victims.

Not everyone needs a kidnapping insurance. Generally, high-profile individuals should get this form of insurance policy. Kidnappers know the high-profile or wealthy people. These people are likely to be their victims. Once kidnapped, the victim may have no choice but to follow the kidnappers’ orders. This would usually mean he or she has to pay for ransom, which usually is a huge amount of money. Without insurance, these people are at risk of losing big amounts of money. With the right insurance, however, they are guaranteed of reimbursement. For high-profile people who have to travel to high-risk countries, such guarantees could be extremely advantageous.

Kidnappers may not distinguish between wealthy and average-earning individuals. You may only be thinking that kidnapping is limited to countries with high likelihood of terrorism, but the truth is radical group exists virtually everywhere.

Aside from ransom reimbursement, kidnap and ransom insurance policies also promise assistance to family and company of the insured kidnap victim. While paying for kidnapping insurance may seem to be an unimportant expenditure, it may be very advantageous to certain people.

For more information about kidnap & ransom insurance and extortion insurance visit our website kidnapandransom.net

 Posted by at 2:56 am
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