MOTOR

INSURANCE

Welcome
To
All Participants
 United Insurance Company Limited

Md. Anisur Rahman

B.COM (HONS.), M.COM, MARKETING (D.U.)
MBA, FINANCE (D.U.)
ABIA (INSURANCE DIPLOMA)
DAIBB (BANKING DIPLOMA)
Joined United Insurance Co. Ltd. as Deputy Managing Director in December 2016.
Earlier served Reliance Insurance Limited, Pragati Insurance Limited and United
Insurance Company Limited. Worked as an Instructor of Bangladesh Insurance Academy.
Started career as a banker with Standard Chartered Bank in March 1982. Moved to
Investment Corporation of Bangladesh and Bangladesh Krishi Bank.
Received intensive training program at the University of Philippines, Manila,
Reinsurance Management in Bangkok and Arab Insurance Group (ARIG) in Bahrain.
Attended a number of Seminars on Insurance and Claims related issues at home and
abroad.
 Contents of Lecture
• Motor Insurance Underwriting
• Types of Motor Vehicles that are covered
under Motor Insurance Policy
• Classification of Motor Business
• Outline of Cover
• Exclusions
• Depreciation
• Compulsory Excess
• No Claim Bonus
• Proposal Form
• Claims

Organized by :
BANGLADESH INSURANCE ACADEMY
MOTOR INSURANCE
UNDERWRITING
Motor Insurance business is generally considered to be an
unprofitable class of business. In recent years the claims
experience has shown signs of deterioration. With the increase in
the number of vehicles and traffic density, higher costs of labor
and spare parts, control of claims is imperative.

It is therefore most essential to adopt a sound underwriting policy

which involves not only careful selection of risk and imposition of
appropriate terms and conditions but also close monitoring of
risks and imposition of appropriate terms and condition but also
close monitoring of risks at renewal in the light of claim
experience.
The first step in underwriting is a close scrutiny
of the Proposal Form which must be fully
complete.

The Proposal Form reveals information which is

used not only for rating purposes but also for
underwriting the risk, i.e. deciding whether to
accept the risk and the terms and conditions
thereof.
The underwriting of motor business may be
considered under the headings:
The vehicle
The use of the vehicle
The geographical area of operation
The driver of the vehicle
The claims experience
The underwriting approach differs according to the type of
vehicle. All vehicles are classified according to their use, such
as, private cars, motor cycles, scooters and commercial
vehicles.
The important point to be considered is the year of
manufacture, the purchase price and the insured’s declared
value (IDV) of the vehicle based on the present market value. If
the vehicle is older than 5 years, the IDV of the vehicle is fixed
on the basis of understanding between the insurer and the
insured. Thus the possibility of under insurance is minimal.
Note that a vehicle may be considered to be a Constructive
Total Loss, where the aggregate cost of retrieval and/or repair
of the vehicle subject to the terms and conditions of the policy
exceed 75% of the IDV.
Under insurance would, of course, penalize the insured in the
event of total loss of the vehicle (e.g. theft), as liability would
then be restricted to the insured’s estimated value or the
market value whichever is less. Majority of motor claims are
for partial damage and the absence of pro-rata average
adversely affects the insurers.

The age of the vehicle is important from the underwriting

point of view. It is natural that, as a vehicle becomes older,
defects appears more frequently and mental fatigue sets in.
The underwriting guidelines adopted differ from insurer, but
there is broad agreement in the approach adopted.
Comprehensive risk on the older vehicle is only accepted subject
to satisfactory inspection report by the insurer’s automobile
engineers or other officials or independent surveyors. The
inspection report would cover the condition of the engine, body
work, efficiency of the break, tyre, steering and general
maintenance of the vehicle.

Insurance on imported cars presents several problems. There is

a problem of obtaining spare parts. The cost of repair of the
imported car also high, not only because of the cost of materials
but because of the intricate design which would mean more time
spent on dismantling or reassembling.
 HI CL E S
TO R V E
OF M O N D E R
TY PE S ER E D U
R E CO V LI C Y
T H AT A NC E P O
I NS UR A
MOTO R
PRIVATE VEHICLE
Car and Car type Vehicles including Jeep, Station Wagon, Microbus etc.
not exceeding 15 seats and used for :
Social, domestic and pleasure purposes or
Professional purposes of the insured and/or
Used by any employee of the insured for such purposes
Official purposes and/or in connection with the insured’s business
including carriage of the employees of the insured
Passenger vehicles exceeding 15 seats owned by Hotel, School and any
other Firms, Companies or Organizations used for official purposes in
connection with the insured’s own business including the carriage of the
employees of the insured.
Goods carrying vehicles, such as Trucks, Lorries etc. used for the
carriage of the insured’s own goods only.
MOTOR CYCLE AND SCOOTER

• Used for social, domestic and pleasure purposes

• Business or professional purposes (excluding
carriage of goods other than samples) of the insured
but excluding use for hire or reward racing, pace
making, reliability, trials, speed testing and use for
any purpose in connection with Motor Trade.
 COMMERCIAL VEHICLE
Applicable to all Vehicles not provided for under the Private Vehicle or
Motor Cycle Tariff
The Tariff is sub-divided as under :
•Goods Carrying Vehicles (Carriage of Goods for Hire or Reward)
•Trailers
•Vehicles used for Carrying Passengers for hire or reward
•Public Passenger Service Vehicles
•Taxis or Private Car Type Vehicles plying for public hire
•Motorized Rickshaws used for carrying passengers for hire or
reward
•Miscellaneous and Special Type of Vehicles
•Motor Trade Road Risks
 COMMERCIAL VEHICLE TARIFF

CLASS - A : GOODS CARRYING VEHICLE

CLASS A (1) : GOODS CARRYING FOR HIRE OR REWARD
A (2) : TRAILER

CLASS - B : PASSENGER CARRYING VEHICLE

CLASS B (1) : PUBLIC PASSENGER SERVICE VEHICLE
CLASS B (2) : TAXI OR PRIVATE CAR TYPE VEHICLE
PLYING FOR PUBLIC HIRE (CONTRACT CARRIAGE)

CLASS - C : MOTORISED RICKSHAWS

USED FOR CARRYING PASSENGERS FOR HIRE OR REWARD
 CLASS - D : MISCELLANEOUS AND SPECIAL TYPE OF
VEHICLES
Agricultural & Forestry Vehicle, Airlines Vehicle, Ambulance, Agledozer,
Anti Malarial Van, Breakdown Vehicle, Bulldozer & Bullgradler, Cinema
Film Recording and Publicity Van, Clark Tractor Elevator, Compressor,
Crane, Delivery Truck, Dispensaries, Dragline Excavator, Dumper, Dust
Cart, Water Carts, Road Sweepers & Tower Wagons, Electric Trolleys or
Tractors, Excavators, Fire Brigade & Salvage Corps Vehicles, Footpath
Rollers, Forklift Truck, Grabs & Griting Machines, Hearses, Horse Boxes,
Lawn Movers, Lader Carrier Car, Leveller, Letourna Dozer, Loader,
Mechanical Navies Shovels, Military Tea Van, Milk Van, Mobile Plants,
Mobile Shops & Canteens, Mobile Surgeries & Dispensaries, Oil & Petrol
Transport Vehicle, Postal Vans, Prison Vans, Refuse Carts, Rippers, Road
Rollers, Road Sweeper, Road Sprinklers, Scrappers, Sheep Foot Tamping
Rollers, Shovels, Site Clearing and Leveling Plants, Spraying Plant,
Tankers, Tar Sprayers, Tower wagon, Traction Engines-Tractors, Trail
Builders, Tree Dozers, Trolleys & Goods Carrying Tractor, Vehicles used
for Driving Tuition, Water Carts, Welding Plants, X-Ray Vehicle.
Classification of Motor Business
•Private car
•Commercial Vehicle
•Motor Cycle

Types of Cover
•Comprehensive
•Act Liability
 OUTLINE OF COVER

Comprehensive Policy
SECTION I - Loss or damage to Vehicle (Own Damage) caused by
• Accidental external means
• Fire
• External explosion
• Self-ignition
• Lightning
• Flood, typhoon, hurricane
• Volcanic eruption
• Earthquake or other convulsion of nature
• Burglary
• Theft
• Malicious act
 OUTLINE OF COVER

Exclusions
• Consequential loss, normal wear & tear, mechanical or electrical
breakdowns
• Any accidental loss or damage due to driving the vehicle under
influence of intoxicating liquor or drugs
• Any accidental loss or damage and/or liability occurred outside
the Geographical area
• Any claim arising out of contractual liability
• Any liability directly/indirectly arising out of ionizing radiations or
contamination by radioactivity from any nuclear fission/waste
• Any accidental loss or damage and/or liability directly/indirectly
or proximately/remotely occasioned by or arisen out of War,
Invasion, act of foreign enemies, hostilities, or Warlike operation
 OUTLINE OF COVER

SECTION II – Liability to Third Party

• death or bodily injury to any person
• damage to property other than property belonging to
the insured
• property held in trust by or in the custody or control of
the insured or any member of the insured’s household

LIMIT OF LIABILITY
Death Tk. 20,000
Severe hurt Tk. 10,000
Minor injury Tk. 5,000
Property damage Tk. 50,000
 Deductibles
Depreciation & Compulsory Excess

DEPRECIATION IN RESPECT OF AGE OF PRIVATE VEHICLE

• 50% Deductible is applicable for damage to all rubber, nylon, plastic
parts, tyre and battery
• Considering the age of car, the scale of depreciation is applicable as follows :

Age of Private Vehicle Depreciation

Up to 1 year Nil
Above 1 year but not exceeding 2 years 10%
Above 2 years but not exceeding 3 years 15%
Above 3 years but not exceeding 4 years 20%
Above 4 years but not exceeding 5 years 25%
Above 5 years but not exceeding 6 years 30%
Above 6 years but not exceeding 7 years 40%
Over 7 years 50%
 Deductibles
Depreciation & Compulsory Excess

DEPRECIATION IN RESPECT OF AGE OF COMMERCIAL VEHICLE

• 50% Deductible is applicable for damage to all rubber, nylon, plastic

parts, tyre and battery
• Considering the age of car, the scale of depreciation is applicable as follows :

Age of Commercial Vehicle Depreciation

Up to 6 Months Nil
Between 6 months and 1 year 5%
Between 1 year and 2 years 10%
Between 2 years and 3 years 15%
Between 3 years and 4 years 25%
Between 4 years and 5 years 35%
Between 5 years and 10 years 40%
Over 10 years 50%
 Deductibles
Depreciation & Compulsory Excess

DEPRECIATION IN RESPECT OF AGE OF MOTOR CYCLE

• 50% Deductible is applicable for damage to all rubber, nylon, plastic

parts, tyre and battery
• Considering the age of car, the scale of depreciation is applicable as follows :

Age of Motor Cycle Depreciation

Up to 6 Months Nil
Between 6 months and 1 year 5%
Between 1 year and 2 years 10%
Between 2 years and 3 years 15%
Between 3 years and 4 years 25%
Between 4 years and 5 years 35%
Between 5 years and 10 years 40%
Over 10 years 50%
 Deductibles
Depreciation & Compulsory Excess

COMPULSORY EXCESS

•Private Vehicle : Withdrawn

•Commercial Vehicle : 1% of the sum insured with a
minimum of Tk. 5,000 for each and
every loss
•Motor Cycle : Tk. 500 for each & every loss
 Deductibles
Depreciation & Compulsory Excess
COMPULSORY EXCESS
Apart from the above, there are provisions for deductibles depending on age
of the diver and type of driving license that the driver possesses

COMPULSORY EXCESS FOR DRIVER (BOTH PRIVATE &

COMMERCIAL)
•Under 25 years of Age BDT 1,000
•Over 25 years of Age and has held a valid Driving Licence
other than Learner’s Driving Licence for a period of less than 1 year
BDT 800
•Over 25 years of Age and has held a valid Driving Licence
other than Learner’s Driving Licence for a period of
more than 1 year but less than 2 years BDT 700
•Over 25 years of Age and has held a valid Driving Licence
other that Learner’s Driving Licence for a period of
more than 2 years but less than 3 years BDT 500
 Deductibles
Depreciation & Compulsory Excess

COMPULSORY EXCESS
COMPULSORY EXCESS FOR DRIVER (MOTOR CYCLE)

Under 25 years of Age

BDT 300
Over 25 years of Age and has held a valid Driving Licence
other than Learner’s Driving Licence for a period of
less than 1 year BDT 300
•Over 25 years of Age and has held a valid Driving Licence
other than Learner’s Driving Licence for a period of
more than 1 year but less than 2 years BDT 200
•Over 25 years of Age and has held a valid Driving Licence
other that Learner’s Driving Licence for a period of
more than 2 years but less than 3 years BDT 100
 NO CLAIM BONUS (NCB)
(PRIVATE CAR / COMMERCIAL VEHICLE)

Period of Insurance Reduction on Own Damage Premium

Comprehensive Act Liability
• No Claim during preceding year 30% 10%
• No Claim during preceding 40% 20%
2 consecutive years
• No Claim during preceding 50% 25%
3 consecutive years
 NO CLAIM BONUS (MOTOR CYCLE)

Period of Insurance Reduction on Own Damage Premium

Comprehensive Act Liability
No Claim during preceding year 15% 5%
No Claim during preceding 20% 10%
2 consecutive years
No Claim during preceding 25% 15%
3 consecutive years
 LOSS OF NO CLAIM BONUS

No Claim Bonus should not be totally withdrawn in

the event of a claim, but should be reduced by two
steps for each claim until the insured has reached the
basic premium.

For example, an insured who is getting 50% NCB and

makes one claim will get only 30% NCB in the
following year.
CLAIM LOADING (PRIVATE CAR/COMMERCIAL VEHICLE)

Period of Insurance Loading for Comprehensive risk

• One Claim in preceding period of insurance 30%

• Two Claims in preceding period of insurance 40%
• Three Claims in preceding period of insurance 50%

When a loading has been applied and the insured does not make any claim
during that policy period, the basic premium at next renewal will apply.
 PROPOSAL FORM

Proposal in insurance means a request from the proposer to the insurance

company for giving protection against a risk.
This request may be made
orally (face to face or over telephone)
in writing through a letter
very formally through a printed proposal form supplied by the insurers
Based on the information provided in the Proposal Form
the underwriter is to decide as to whether he will accept the risk
if to accept at what rate of premium, terms and conditions
A convention has developed for using insurers’
printed forms in case of fire, accident and liability insurances and
slips or declaration forms in case of marine
 Important common questions that
are found in any Proposal Form

•Name : It is important for identification Should be correctly

and accurately written, so that the policy can
incorporate the correct name and identity.
•Address : Should be accurately given Because of identity and
communication Sometime for rating purpose.
•Construction : Should be specifically mentioned It is necessary
for rating purpose Construction of surrounding buildings with
distance.
•Occupation : Particularly important in case of Life, Personal
Accident, Fidelity Guarantee, Workmen’s
Compensation & Liability insurance that will influence the
rate or decision of an underwriter.
 Important common questions that
are found in any Proposal Form
• Subject-matter : Should be properly described So that correct
insertion can be made on the policy
• Lighting/ power : To be declared accurately
• Sum insured : Should be adequately mentioned. It is the limit
of the insurer’s liability Must represent the actual
market value
• Claims History : Truthfully answered Details of all previous
related losses, whether insured or not, must be correctly
given
• Other insurances : Information of past or present related insurances
is required. It is important for applying
contribution amongst various policies wherever applicable
• Declinature : Insurer would like to know whether any
insurance of this proposer was previously
declined by any other insurers
 Important common questions that
are found in any Proposal Form
• Declaration : Every proposal form contains a declaration to the
effect that:
a) Answers given are true
b) Nothing has been concealed or misrepresented
c) Proposer agrees to pay the premium and accept a
policy that is usually issued by the insurer for that
class of business
d) The proposal form and the declaration shall form
the basis of the contract
• Signature : a) To be signed by the proposer or
b) by the authorized person when the proposer is
not an individual
• Date : Signature is required to be dated
 CLAIMS
Intimation of loss is required to be given to the insurance
company as soon as it comes to the notice of the insured. The
claim may be intimated through fax, e-mail or telephone
followed by letter. The claim intimation letter must ordinarily be
given within 24 hours but not later than 48 hours
under any circumstances. The intimation should contain the
following:
• Date, time and place of occurrence
• Cause of loss
• Probable quantum of loss
• Policy Number
• Person(s) to be contacted with contact number(s) with
address
 DOCUMENTS REQUIRED FOR MOTOR LOSS

Documents needed for settlement of Act Liability Claims :

• Claim Intimation Letter
• Copy of relevant Certificate/Policy/Endorsement
• Photocopies of Registration Certificate, Tax Token,
Fitness Certificate, Route Permit & Driving Licence
• GD / FIR of the concerned Police Station
• Final Investigation Report of the Police
• Original Succession Certificate of the Court
• Form ‘KA’ duly signed by the TNO/1st Class Magistrate
• Post Mortem Report, if applicable
• Original Death Certificate, if applicable
 
Additional paper/documents as may be required subject to nature, cause and
circumstances of loss.
 DOCUMENTS REQUIRED FOR MOTOR LOSS

Documents for settlement of Own Damage (Private Vehicle) Claims :

1. Claim Intimation Letter

2. Claim Form duly filled in and signed by the insured
3. Copy of the relevant insurance Certificate/Policy/Endorsement
4. Photocopies of Registration Certificate, Fitness Certificate,
Tax Token and Route Permit
5. Photocopy of Valid Driving License of the Driver
6. Driver’s Statement on the incident duly attested by the Insured

7. General Diary/FIR with original seal of the concerned Police Station

8. Final Investigation Report of Police duly certified by the court
(in case of theft loss)
 DOCUMENTS REQUIRED FOR MOTOR LOSS

Documents for settlement of Own Damage (Private Vehicle)

Claims :
Contd..

9. Fire Brigade Report, in case of Total Loss by fire/ignition

10. Estimates of repair, in case of partial loss

11. Survey Report issued by the licensed surveyor including

photographs
12. Letter of Indemnity in lieu of Final Police Report, if required
13. Letter of Abandonment along with certificate from a qualified
Automobile Engineer in case of Total Loss due to accident
14. Letter of Subrogation with all original papers and Ignition key, in
case of Total Loss
15. Loss Voucher and Satisfaction Note duly signed and sealed
 DOCUMENTS REQUIRED FOR MOTOR LOSS

Documents for settlement of Own Damage

(Commercial Vehicle) Claims :
1. Claim Intimation Letter
2. Claim Form duly filled in and signed by the insured
3. Copy of the relevant insurance Certificate/Policy/Endorsement
4. Photocopies of Registration Certificate, Fitness Certificate,
Tax Token and Route Permit
5. Photocopy of Valid Driving License of the Driver
6. Driver’s Statement on the incident duly attested by the Insured
7. General Diary/FIR with original seal of the concerned Police Station
8. Final Investigation Report of Police duly certified by the court
(in case of theft / RSD loss)
9. Fire Brigade Report, in case of Total Loss by fire/ignition
10. Estimates of repair, in case of partial loss
 DOCUMENTS REQUIRED FOR MOTOR LOSS

Documents for settlement of Own Damage

(Commercial Vehicle) Claims : Contd..
11. Survey Report issued by the licensed surveyor including photographs

12. Letter of Indemnity in lieu of Final Police Report, if required

13. Letter of Abandonment along with certificate from a qualified
Automobile Engineer in case of Total Loss due to accident

14. Letter of Subrogation with all original papers, in case of Total Loss
15. Loss Voucher and Satisfaction Note duly signed and sealed
 DOCUMENTS REQUIRED FOR MOTOR LOSS

Documents for settlement of Own Damage

(Motor Cycle) Claims :
1. Claim Intimation Letter
2. Claim Form duly filled in and signed by the insured
3. Copy of the relevant insurance Certificate/Policy/Endorsement
4. Photocopy of Registration Certificate and Tax Token
5. Ignition Key of the Motor Cycle (in case of theft)
6. Original Motor Cycle Insurance Certificate (in case of theft)
7. Photocopy of Valid Driving License of the Driver
8. Driver’s Statement on the incident duly attested by the Insured
9. General Diary/FIR with original seal of the concerned Police
Station
10. Final Investigation Report of Police duly certified by the court
(in case of theft / RSD loss)
11. Fire Brigade Report, in case of Total Loss by fire/ignition
12. Estimates of repair, in case of partial loss
 DOCUMENTS REQUIRED FOR MOTOR LOSS

Documents for settlement of Own Damage

(Motor Cycle) Claims : Contd..

13.Survey Report issued by the licensed surveyor including

photographs
14.Letter of Indemnity in lieu of Final Police Report, if required
15.Letter of Subrogation with all original papers and Ignition key, in
case of Total Loss
16.Loss Voucher and Satisfaction Note duly signed and sealed
Thank you