Insurance
An insurance is a legal contract between an insurer and a policyholder represented by a policy document to protect the financial interest of the insured/ policyholder in the event of mishaps, for agreed payment of consideration called premium.
Insurer
The insurance company that accepts premium from the policyholder for covering the risks and agrees to pay the claim during the time of mishaps based on the policy terms and coverage. Insurers in Bhutan; Bhutan Insurance Limited & Royal Insurance Corporation of Bhutan Limited.
Policyholder
The person or an entity who arranges to buy insurance policy and is the policy owner.
Insured
The insured is a person or an entity whose interests in life, health or properties are proposed for coverage by an insurance policy. Till the time the proposal is accepted & premium is paid, the party making the proposal is known as Proposer. Once policy is concluded the Proposer becomes the Insured.
Premium
The amount of money to be paid as agreed with the Insurer who after assessing the risk quotes the premium chargeable with terms and conditions for the insurance, and that the Proposer pays for availing the Insurance.
Agent/Sales Executive/Referral
An appointed person or an entity representing the insurance company to sell insurance products on behalf of the insurance company.
Direct Broker
A licensed broker who provides insurance consultation services to the clients, negotiates with insurance company on the behalf of the clients and helps in placing the business.
Reinsurance Broker
A licensed broker who arranges reinsurance for the insurance companies.
Composite Broker
A licensed broker who is allowed to engage in both direct and reinsurance broking.
Underwriter
The official of an Insurance Company who decides to accept or reject the insurance proposal based on the details provided by the Proposer. The official also advises the premium, terms and conditions of insurance in case the proposal is acceptable.
Underwriting
It is the process where the insurance companies analyze the risk offered to them & decide whether to accept or reject insurance proposals. If acceptable then they indicate the terms & premium to be charged for the proposal given to them. It also involves protecting the Company by suitable reinsurance support wherever required.
Proposal Form
A preprinted application form of an insurance company which is to be filled up by a potential client for providing the material facts & other details for the consideration of the Underwriter.
Policy
A legal contract document with schedule issued by an insurance company to the policyholder setting out details of risk covered, with terms and conditions of the contract, based on details provided by the Proposer.
Policy period
The policy period is the timeframe during which the policy is in force. The period will start from the beginning or effective date to the expiry or end date set out in the policy schedule.
Claim
A claim is lodged by the policyholder on the Insurer for monetary compensation, on the occurrence of the event covered under the policy resulting in loss/ damage to insured property or legal liability sustained, as the case may be, as per the terms and conditions set out in the insurance policy availed by the policy holder.
Excess (Deductible)
An amount mentioned in the policy which is to be borne by the policy holder from the total loss amount which becomes payable due to loss event under the policy as per terms. If the claim amount is less than excess (deductible) amount the claim is not paid. The purpose is to eliminate dealing with minor claims and also making Insured to share the loss to some extent.