In House Training Program on

“Basic Course on General Insurance”

Venue: Head Office, Board Room

Motor Insurance Underwriting

Date: 16th September, 2014

Shahedul Haque
Assistant Vice President &
Head of Branch Control Department
Prime Insurance Company Limited

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 Motor Insurance
•Private Car

•Commercial Vehicle

•Motor Cycle

•Motor Transit

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Types of Motor Insurance Policy Classes of Motor
Insurance

• Comprehensive • Private Vehicles

Policy
• Commercial Vehicles
• Act Liability
• Motor Cycle

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 Categories of Motor Vehicles
For the purpose of Insurance Motor vehicles have been divided into three
categories:

1. Private Vehicle: Private vehicles means vehicles which are under private
registration and used for private purposes and not used for hire or reward,
shall come under the scope of the private vehicles Insurance category.

2. Commercial Vehicles: All vehicles other than private cars or motor cycles
excluding vehicles running on rails come under this category.

3. Motor Cycles: Motor Cycles with or without side cars, pedal cycles and
motor scooters with or without side cars come under this category.

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 Comprehensive Certificate/Policy
This certificate/policy provides protection in respect of:

a) Own Damage or loss of the vehicle

b) Liability of the Insured in respect of death or bodily injury to third

party and damaged caused to the property of the third party arising
out of the use of the motor vehicle on the road.

c) Act Liability only, i.e. legal liability of the Insured in respect of death
and bodily injury to third party arising out of the motor vehicle’s use
on a public road.

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 Scope of Coverage under Comprehensive Motor Policy

 The insurer will indemnify the insured against loss of damage to the
motor vehicle and or its accessories whilst there on
1. By fire explosion, self ignition or lightning
2. By burglary housebreaking or theft
3. By riot and strike including malicious activities
4. By earthquake
5. By flood, typhoon, Hurricane, Storm, tempest, Inundation, Cyclone,
Hailstorm’ Frost
6. By accidental external means
7. Whilst in transit by road, rail, inland water way, lift, elevator or air

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 Act Liability or Third Party Motor Certificate/Policy

Subject to the limit of the liability, the Insurer will indemnify the Insured against all
sums including claimants cost and expenses for which the Insured shall become
legally liable to pay as per provision of the Act, under the following circumstances:

 In respect of the death of or bodily injury to any person or damage to any

property of third party caused by or arising out of the use of the motor vehicle
in public place.

 In respect of the death of or bodily injury to any passenger of public service

vehicle caused by or arising out of the use of the Motor vehicle in a public
place.

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 Act Liability Coverage
The liability as described at the previous slide under the policy
will be as follows:

a) Death Tk. 20,000/-

b) Critical Injury Tk. 10,000/-

c) Minor Injury Tk. 5,000/-

d) Property Damage Tk. 50,000/-

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 Extra Benefits with an additional premium

Death Property Damage

• Tk. 20,000.00 to 80,000.00 • Tk. 50,000.00 to 2,00,000.00

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 General Regulations of Motor Tariff

 Transaction of motor business in Bangladesh is done in accordance

with the rules, regulations, rates, advantages, terms , conditions
laid down in the Bangladesh Motor Tariff approved by the Central
Rating Committee as per the provision of part 1.3BBB, of the
Insurance amendment act, 1990 (Act, IV of 1938). The current
Motor tariff is effective from 01-01-1998 in binding on all Insures.

 General regulations provides the guidelines for all types of motor

business unless otherwise provided in the respective sections of
P.V., C.V. & M.C. A total of 32 regulations are incorporated under
general regulations.

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 General Regulations Motor Tariff
1. Business not provided for: Business for provided in this tariff, to be referred to the committee.
2. Policy Form: Two types of policy forms to be used.

a) Comprehensive Policy Forms: Separate policy forms to be used for private vehicle, motor cycle & commercial
vehicle.

Policy Form shall obtain two-sections:

i. Section-I, Own Damage Section.

ii. Section-II, Act Liability Section.

Under own damage section the loss or damage to the Insured vehicle to be covered.
Under Act liability section the liability of the Insured, as per motor vehicle amendment act 1991, shall be covered.

b) Act liability Policy Form: A common policy form for all types of vehicle i.e. Private Vehicle, Motor Cycle &
Commercial Vehicles to be used. Liability of the Insured made compulsory by motor vehicle amendment act, 1991
as well as additional liabilities may be Insured.

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 General Regulations of Motor Tariff
3. Geographical Area: Bangladesh.

4. Valued Policies: Not allowed except for vintage cars.

5. Definition of Vintage Cars: Any motor vehicle of over 40 (Forty) years old & certified to be
working condition by an Automobile Engineer/Surveyor.

6. Period of Insurance: The premium furnished in the tariff is for policy issued or renewed for one
year. No policy may be issued or renewed a period longer than one year except the Insured applies
to extend the policy for further period less than one year to suit the convenience of the Insured in
regard to renewal date, in which case the additional premium payable by the Insured shall be
calculated on pro-rata basis subject to the following Warranty.

“ In consideration of the premium in this case being calculated at pro-rata proportion of the annual
premium , it is agreed by the Insured that the policy will be renewed on the expiry period for
further period of 12 months falling which the difference between the premium now paid & the
premium at short period rates shall be paid to the Insurer by the Insured.”

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 General Regulations of Motor Tariff
7. Short Period Scale: Policies issued or renewed for shorter periods than 12 months
must be charged on the following scale:

Period Chargeable Premium

01 Week 20% of the Annual Premium
01 Month 25% of the Annual Premium
02 Month 35% of the Annual Premium
03 Month 50% of the Annual Premium
04 Month 60% of the Annual Premium
06 Month 75% of the Annual Premium
08 Month 85% of the Annual Premium
Exceeding 08 Months Full Annual Premium

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 General Regulations of Motor Tariff
8. Cancellation of certificate of Insurance:

I. Where any alteration is made in the policy affecting the information

shown on the certificate , the same must be returned to the Insurer for
cancellation & new certificate must be issued.

II. Whenever a policy of Insurance is terminated or suspended by any

means before its expiry, the Insured should advise to return the
certificate within 07 (seven) days or if the certificate is lost or destroyed
make a declaration to that effect with copy of G.D. copy.

III. Where a policy of Insurance is cancelled or suspended by the Insurer,

who has issued the policy, the Insurer shall within seven days notify such
cancellation to the registering authority.

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 General Regulations of Motor Tariff
9. Lost, Destroyed or mutilated Certificate: In such case Insured must follow:

I. To declare that the certificate of Insurance has been lost, destroyed, mutilated
with full particulars of the circumstances connected with the loss & the efforts
made to find it or

II. Return to the Insurer the certificate of Insurance in a defaced or mutilated

condition.

III. In case of loss or destroyed certificate a copy of G.D. entry to be submitted.

IV. A fee of Tk. 30.00 (Thirty) to be paid to issue a duplicate.

After issuance of duplicate certificate if original is found, it shall be delivered to the

Insurer.

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 General Regulations of Motor Tariff
10. No Claim Bonus (NCB): A rebate in accordance with the following scale may be
allowed by the way of deduction from the premium required for the next renewal:

(On Damage Premium) PV/CV MC

No Claim made for presiding year of Insurance 30% 15%
No Claim made for presiding 02 consecutive year of Insurance 40% 20%
No Claim made for presiding 03 consecutive year of Insurance 50% 25%

On Act Liability Premium irrespective of class of vehicle PV/CV MC

No Claim made for presiding year of Insurance 10% 10%
No Claim made for presiding 02 consecutive year of Insurance 20% 20%
No Claim made for presiding 03 consecutive year of Insurance 25% 25%

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 General Regulations of Motor Tariff
Subject to the following rules:

i. The NCB shall reduced by two steps for each claim until reached the basic premium.

ii. The NCB shall follow the fortune of the original Insured & not the vehicle.

iii. Where during the currency of a policy an additional vehicle is included in the
schedule (other than by substitution) provided the Insurance has been operative for
less than 06 (six) months a NCB of 30% for comprehensive policies of the private &
commercial vehicle & 15% for comprehensive policy of the motor cycle may be
allowed.

iv. With prior written information to the Insurer, a vehicle is not replaced NCB earned at
time of expiry of the last completed year of Insurance may be allowed up to two years
on a subsequent Insurance.

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 General Regulations of Motor Tariff

v. When an Insured who earned a bonus, renews his policy on short period terms or
having renewed policy for twelve months subsequently request cancellation on
short period terms, appropriate rate of bonus may be allowed.

vi. Where an Insured coming from aboard can prove that he has earned a NCB, may
be allowed on new Insurance in Bangladesh.

vii. If the Insured renews his Insurance with another Insurer, NCB may be allowed on
production of a certificate regarding enlightenment of NCB duly signed by an
officer not officer not below the rank of Vice President/ DGM or authorized
officer.

viii. NCB must be shown separately on renewal notice & policy.

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 General Regulations of Motor Tariff
Concession for lay up: ( not applicable to trailers & vehicles used for hire or reward for
motor trade purpose). When a vehicle is laid up in garage & not is uses for a period of two
consecutive months or more & provide:

i. The vehicle is not undergoing repairing as a result of claim.

ii. Previous notice in writing has been given to the Insurer.
iii. If the Insurance certificate has been returned to the Insurer.
iv. Period of suspension is not 12 months from the original expiry of policy.

Under Act liability policy the concession may be incorporated either by:

A. Pro-rata return of premium for the period of laid up may be credited to the Insured
after charging of Tk. 30.00 (thirty) for this concession. The returned premium to be
adjusted from the next renewal premium & not a cash refund.
B. The expiry date of the current period of Insurance may be extended for a period equal
to the period to the period of laid upon payment of Tk. 30.00 (Thirty).

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 General Regulations of Motor Tariff
Under Comprehensive Policy the concession may be accounted for either by:

a) The liability of the Insurer may be restricted for loss or damage by Fire &
Theft only, in such case a pro-rata return of premium for the laid up
period may be allowed for the period charging at the rate of 15 paisa per
hundred taka on the FIV (Full Insured Value) per month or part thereof,
subject to a minimum premium of Tk. 50.00 (Fifty). The return premium
to be adjusted form the next renewal & not a cash refund.

b) Expiry date of the current period of Insurance may be extended for a

period equal to the period of laid up on payment of a premium of Tk.
50.00 (Fifty).

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 General Regulations of Motor Tariff
Claim Loading (Own damage section only):

• If the Insured is not entitle to any NCB & made claim or claims during the proceeding year of
Insurance, the basic premium at next renewal shall be loaded in accordance with the following
scale:

One Claim in the preceding year of Insurance 30%

Two Claim in the preceding year of Insurance 40%
Three Claim in the preceding year of Insurance 50%

• The loading is applicable on basic premium.

• The loading shall be based on experience immediately over one year.
• Where a loading has been applied & the Insured do not make any claim during last policy year it
will come to basic premium only at the renewal.
• The loading shall follow the fortune of the Insured & shall apply to any new or substitute vehicle
in place of old vehicle.
• If there is four claims in the preceding year than the comprehensive policy may be reverted to act
liability cover at next renewal.

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 General Regulations of Motor Tariff
11. Insurance outside Bangladesh: Certificate/Policy may not be extended to cover outside
Bangladesh.

12. Registration & Insurance of a vehicle: Except in case of temporary situation or in respect of
Motor trade risks it is contrary to Insure any vehicle in a name other than that in which the
vehicle is registered.

13. Vehicles subject to hypothecation agreement polices must be issued in the name of
registered owner of the vehicle & pledges interest should be protected by endorsement no.
54. But in case of a vehicle be registered in the name of financial authority instead of pledge,
may be Insured in the joint name, on submission on a attested copy of the hypothecation
agreement & proposal form signed by both.

14. None-fare paying passenger: the provision under section-11 (ii) of commercial vehicles
comprehensive Insurance policy must be deleted for vehicles other than passenger service
vehicles. In case of act liability Insurance for private vehicles, motor cycles & commercial
vehicles other than passenger service vehicles , the provision under item 1 (ii) must be
deleted.

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 General Regulations of Motor Tariff
15.Fleet Rating Rules: Application for fleet rating may be made to the
committee provided the case complies with requirements furnished in
the tariff.

• Fleet means comprising at least ten vehicles. Where the vehicles

comprising a fleet of more than one class i.e. private vehicle, commercial
vehicle & motor cycle, the appropriate policy form to be used for each
class of vehicle
• All vehicles in a fleet must be the property of one individual public
authority, company, firm, subsidiary company.

16.Exclusion of riot & strike including malicious activities: If the liability for
loss by riot & strike including malicious activities referred in the section 1
item (s) shall be done by the Insured a rebate of 0.50% on F.I.V. may be
allowed. Endorsement no. 21 must be used.

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 General Regulations of Motor Tariff

16.Exclusion of special perils:

Earthquake (Fire & Shock damage) : a rebate of 0.25%

on F.I.V. may be allowed as mentioned in Endorsement
no. 22.

Flood & Cyclone: a rebate of 0.25% on F.I.V. may be

allowed as mentioned in Endorsement no. 23.

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Prime Insurance Company Limited

w w w. p r i m e - i n s u ra n c e . n et
Question session

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