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LESSON 7

LESSON 7. Common types of insurance protection for business I. TOPICS TO BE COVERED. COMPREHENSIVE INSURANCE FOR BUSINESS. Personal loss. MOTOR INSURANCE - RISKS FROM OPERATING A COMPANY’S OWNED VEHICLE. Major areas of risk involved. MOTOR INSURANCE - TWO MAIN COVERAGES.

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LESSON 7

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  1. LESSON 7 Common types of insurance protection for business I

  2. TOPICS TO BE COVERED

  3. COMPREHENSIVE INSURANCE FOR BUSINESS Personal loss

  4. MOTOR INSURANCE -RISKS FROM OPERATING A COMPANY’S OWNED VEHICLE Major areas of risk involved

  5. MOTOR INSURANCE -TWO MAIN COVERAGES

  6. MOTOR INSURANCE – IN HONG KONG • Situation in Hong Kong

  7. MOTOR INSURANCE – IN HONG KONG • Insurance with third party only coverage can deal with most of the claims from liability caused by the insured vehicle • Insurance with comprehensive coverage can handle the physical damages to the insured vehicle or even when the car is stolen • For private motor car insurance with comprehensive coverage medical expenses are available to the insured and other occupants of the car in case of accident • For commercial vehicle the arrangement would be different and subject to different situations

  8. Underwriting margin = underwriting profit/loss expressed as a percentage of earned premiums Source: Office of the Commissioner of Insurance Annual Report, 2015

  9. IMPLICATIONS ON BUSINESS

  10. CASE FOR DISCUSSION: AUTONOMOUS VEHICLE • Also known as driverless car or self-driving car, which is the vehicle that can find its own way by using various sensor systems detecting the surrounding environment and move on without any human control. The autonomous car integrate and analyse all the information received from its environments and make decisions on the path getting to its destination. There are different levels of automaton and the highest one is that the car can determine what path to go after the destination being set. It can go anywhere which is allowed by law without any human intervention. • While many car manufacturers and IT firms are working hard in developing and launching the autonomous vehicle many governments are trying to get the legislation compatible to such new and revolutionary move. • In 2016, California had initiated a law that would allow completely driverless vehicles operating on the road • One of the major arguments is who should be liable when accident happens and what insurance policy should be taken out for such cases

  11. CASE FOR DISCUSSION: AUTONOMOUS VEHICLE • The autonomous vehicle is found to be very helpful in reducing accident rate • In U.S. the analysis found that around 90% of accident is mainly due to human error and costs associated was about 212 billion dollars in 2012 • It was estimated that the autonomous vehicle can reduce the costs by 190 billion dollars • In addition, the introduction of autonomous vehicle would stimulate much higher demand for cars since many people who are not suitable or incapable of driving would like to buy one because they no longer need to acquire all the driving skills and pay constant attention to the road situations.

  12. CASE FOR DISCUSSION: AUTONOMOUS VEHICLE Questions: • Who should be held responsible in case an accident happens due to the malfunction of the autonomous vehicle? • Who should pay for the damages of other people’s property and injuries of other people when the autonomous vehicle is liable for the accident? • Who should pay for the damage of the autonomous vehicle and the loss of driver when the vehicle itself is liable for an accident? • What insurance is needed and who should be the policyholder?

  13. FIDELITY INSURANCE – COVER LOSS DUE TO DISHONEST EMPLOYEES • Loss or damages caused by dishonesty of employees (with/without external parties) • In Hong Kong it is covered by fidelity (guarantee) insurance • Only cover loss due to employee’s cheating behaviours e.g. stealing money from cashier but not mistakes or errors owing to incompetence of employees • Coverage could be for all staff or specified individual or group/posts • In determining granting or continuing related policies, the insurance company would consider whether sufficient risk prevention and reduction strategies have been employed by the company

  14. REVISIT THE TOPICS COVERED

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