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External & Internal customer of insurance, Principles of Insurance Video Lecture | Principles of Insurance - B Com

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FAQs on External & Internal customer of insurance, Principles of Insurance Video Lecture - Principles of Insurance - B Com

1. What is the difference between an external customer and an internal customer in the insurance industry?
Ans. An external customer in the insurance industry refers to individuals or organizations that purchase insurance policies or products from an insurance company. They are the ultimate policyholders who directly benefit from the coverage and services provided by the insurer. On the other hand, internal customers in the insurance industry are individuals or departments within the insurance company itself who rely on and interact with other departments or teams to fulfill their roles and responsibilities. Examples of internal customers include underwriters, claims processors, and customer service representatives.
2. What are the principles of insurance in the context of the B Com exam?
Ans. The principles of insurance in the context of the B Com exam refer to fundamental concepts that govern the functioning of the insurance industry. These principles include: a) Principle of Utmost Good Faith: It requires both the insurer and the insured to disclose all relevant information honestly and truthfully during the insurance contract negotiation. b) Principle of Insurable Interest: It states that the insured must have a financial interest in the subject matter of the insurance policy, such as ownership or potential loss, to obtain insurance coverage. c) Principle of Indemnity: It ensures that the insured is compensated for their actual loss or damage, up to the insured amount, without making any profit from the insurance claim. d) Principle of Contribution: It applies when an insured person has multiple insurance policies covering the same risk. In such cases, each insurer shall contribute proportionately to the claim settlement. e) Principle of Subrogation: It allows the insurer to assume the rights of the insured after compensating for the loss and take legal action against any third party responsible for the insured's loss.
3. How can insurance companies benefit from having external customers?
Ans. Insurance companies benefit from having external customers in several ways: a) Premium Revenue: External customers paying premiums generate a significant source of revenue for insurance companies, which is essential for their financial stability and operational sustainability. b) Risk Pooling: By having a large number of external customers, insurance companies can pool and spread the risk among policyholders. This enables them to provide coverage to individuals or organizations facing potential losses while maintaining a balanced risk portfolio. c) Market Expansion: External customers increase the market reach of insurance companies by creating opportunities to provide insurance coverage to a wider range of individuals and businesses. This helps in expanding the customer base and increasing market share. d) Customer Loyalty: Satisfied external customers who have positive experiences with their insurance policies and claims processing are more likely to remain loyal to the insurance company. This can lead to recurring business and positive word-of-mouth referrals. e) Cross-Selling Opportunities: Insurance companies can leverage external customers to cross-sell or upsell additional insurance products, such as adding health insurance to an existing auto insurance policy. This can further enhance their revenue streams.
4. How do internal customers contribute to the success of an insurance company?
Ans. Internal customers play a crucial role in the success of an insurance company in the following ways: a) Efficient Operations: Internal customers, such as underwriters, claims processors, and customer service representatives, ensure the smooth functioning of various operational processes within the insurance company. Their expertise and timely execution contribute to efficient policy issuance, claims settlement, and customer support. b) Risk Assessment: Internal customers involved in risk assessment, such as actuaries and underwriters, analyze data and assess the potential risks associated with insurance policies. Their accurate risk evaluation helps the insurance company set appropriate premiums and coverage terms, minimizing the company's exposure to adverse events. c) Compliance and Legal Support: Internal customers in compliance and legal departments ensure that the insurance company adheres to regulatory requirements and legal obligations. Their knowledge and actions help mitigate legal risks, maintain the company's reputation, and avoid penalties or fines. d) Customer Satisfaction: Internal customers who directly interact with external customers, such as customer service representatives and claims handlers, contribute to customer satisfaction. Their professionalism, empathy, and prompt resolution of queries or issues enhance the overall customer experience and strengthen the company's reputation. e) Innovation and Growth: Internal customers, including product development teams and marketing professionals, contribute to the introduction of new insurance products and strategies. Their innovative ideas and market research help the insurance company adapt to changing customer needs, seize growth opportunities, and maintain a competitive edge.
5. What are some frequently asked questions regarding the principles of insurance in the B Com exam?
Ans. Here are five frequently asked questions related to the principles of insurance for the B Com exam: 1. What is the significance of utmost good faith in insurance contracts? Ans. Utmost good faith requires both the insurer and the insured to disclose all relevant information honestly and truthfully during the insurance contract negotiation. It ensures transparency, fairness, and mutual trust between the parties. 2. How does the principle of indemnity protect the insured? Ans. The principle of indemnity ensures that the insured is compensated for their actual loss or damage, up to the insured amount, without making any profit from the insurance claim. It aims to restore the insured to the same financial position they were in before the loss occurred. 3. Can you explain the principle of contribution in insurance? Ans. The principle of contribution applies when an insured person has multiple insurance policies covering the same risk. In such cases, each insurer shall contribute proportionately to the claim settlement, preventing the insured from receiving more than the actual loss amount. 4. What is the purpose of the principle of insurable interest? Ans. The principle of insurable interest states that the insured must have a financial interest in the subject matter of the insurance policy, such as ownership or potential loss, to obtain insurance coverage. It ensures that insurance is based on legitimate financial risks and prevents speculative insurance contracts. 5. How does the principle of subrogation benefit insurance companies? Ans. The principle of subrogation allows the insurer to assume the rights of the insured after compensating for the loss and take legal action against any third party responsible for the insured's loss. It helps insurance companies recover the claim amount and reduce their financial burden, resulting in cost savings for the company and potentially lower premiums for policyholders.
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