final reeport

8/8/2019 Final Reeport

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OOMD

Assignment 2

on

General Insurance

Submitted by:

C338:Tanvi Patil

C353:Prajakta Sant

C355:Nimita Shetty

C368:Mansi Vartak

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INTRODUCTION

Insurance can be given as the benefit provided by a particular kind of indemnity contract,

called an insurance policy; that is issued by one of several kinds of legal entities (stock company,

mutual company, reciprocal, or Lloyds organization, for example), any of which may be called

an insurer; in which the insurer promises to pay on behalf of or to indemnify another party,

called a policyholder or insured; that protects the insured against loss caused by those perils

subject to the indemnity in exchange for consideration known as an insurance premium.

General insurance policies, including automobile and homeowners policies, provide

payments depending on the loss from a particular financial event. General insurance typically

comprises any insurance that is not determined to be life insurance.

Procedure for insurance:

1) Contract prospects for insurance study their insurance needs thereby persuading them to

buy.

2) Complete all the formalities for proposal of new insurance like

a) Filling of the proposal forms

b) Collecting supporting documents and premium

c) Arrange inspection if necessary and ensure that warranties and special conditions

(if any) are properly explained.

d) Asset the insured in filing the proper documents and profits for making a claim.

Principles of Insurance:

A large number of homogeneous exposure units. The vast majority of insurance policies

are provided for individual members of very large classes. Automobile insurance, for

example, covered about 175 million automobiles in the United States in 2004. The existence

of a large number of homogeneous exposure units allows insurers to benefit from the so-

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called law of large numbers, which in effect states that as the number of exposure units

increases, the actual results are increasingly likely to become close to expected results. There

are exceptions to this criterion. Lloyds of London is famous for insuring the life or health of

actors, actresses and sports figures. Satellite Launch insurance covers events that are

infrequent. Large commercial property policies may insure exceptional properties for which

there are no homogeneous exposure units. Despite failing on this criterion, many exposures

like these are generally considered to be insurable.

Definite Loss. The event that gives rise to the loss that is subject to insurance should, at least

in principle, take place at a known time, in a known place, and from a known cause. The

classic example is death of an insured on a life insurance policy. Fire, automobile accidents,

and worker injuries may all easily meet this criterion. Other types of losses may only bedefinite in theory. Occupational disease, for instance, may involve prolonged exposure to

injurious conditions where no specific time, place or cause is identifiable. Ideally, the time,

place and cause of a loss should be clear enough that a reasonable person, with sufficient

information, could objectively verify all three elements.

Accidental Loss. The event that constitutes the trigger of a claim should be fortuitous, or at

least outside the control of the beneficiary of the insurance. The loss should be pure, in the

sense that it results from an event for which there is only the opportunity for cost. Events that

contain speculative elements, such as ordinary business risks, are generally not considered

insurable.

Large Loss. The size of the loss must be meaningful from the perspective of the insured.

Insurance premiums need to cover both the expected cost of losses, plus the cost of issuing

and administering the policy, adjusting losses, and supplying the capital needed to reasonably

assure that the insurer will be able to pay claims. For small losses these latter costs may be

several times the size of the expected cost of losses. There is little point in paying such costs

unless the protection offered has real value to a buyer.

Affordable Premium. If the likelihood of an insured event is so high, or the cost of the event

so large, that the resulting premium is large relative to the amount of protection offered, it is

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not likely that anyone will buy insurance, even if on offer. Further, as the accounting

profession formally recognizes in financial accounting standards (See FAS 113 for example),

the premium cannot be so large that there is not a reasonable chance of a significant loss to

the insurer. If there is no such chance of loss, the transaction may have the form of insurance,

but not the substance.

Calculable Loss. There are two elements that must be at least estimatible, if not formally

calculable: the probability of loss, and the attendant cost. Probability of loss is generally an

empirical exercise, while cost has more to do with the ability of a reasonable person in

possession of a copy of the insurance policy and a proof of loss associated with a claim

presented under that policy to make a reasonably definite and objective evaluation of the

amount of the loss recoverable as a result of the claim.

Limited risk of catastrophically large losses. The essential risk is often aggregation. If the

same event can cause losses to numerous policyholders of the same insurer, the ability of that

insurer to issue policies becomes constrained, not by factors surrounding the individual

characteristics of a given policyholder, but by the factors surrounding the sum of all

policyholders so exposed. Typically, insurers prefer to limit their exposure to a loss from a

single event to some small portion of their capital base, on the order of 5%. Where the loss

can be aggregated or an individual policy could produce exceptionally large claims, the

capital constraint will restrict an insurers appetite for additional policyholders. The classic

example is earthquake insurance, where the ability of an underwriter to issue a new policy

depends on the number and size of the policies that it has already underwritten. Wind

insurance in hurricane zones, particularly along coast lines, is another example of this

phenomenon. In extreme cases, the aggregation can affect the entire industry, since the

combined capital of insurers and reinsures can be small compared to the needs of potential

policyholders in areas exposed to aggregation risk. In commercial fire insurance it is possible

to find single properties whose total exposed value is well in excess of any individual

insurers capital constraint. Such properties are generally shared among several insurers, or

are insured by a single insurer who syndicates the risk into the reinsurance market.

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Acronyms used in insurance:

Insurance policy: It is a document issued by the insurance company which assures

that the insured that in case of occurrence of any covered risk, the insurance company

will indemnify him for his losses.

Loading: If an insured has availed of excessive claims in one year (usually more than

three) then on the next renewal of his policy the insurance company asks the insured

to pay an amount in addition to the premium. This additional amount is called

loading.

Premium: To purchase an insurance policy, a person has to pay an amount called the

premium.

Renewal: Most of the policies are valid for one year. After one year, the insured has

to pay again his premium and renew his policy.

Insurance agent: He is an authorized person appointed by the insurance company to

get the business for insurance company.

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PROBLEM STATEMENT

Insurance, in law and economics, is a form of risk management primarily used to hedge against

the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a

potential loss, from one entity to another, in exchange for a premium. Insurer, in economics, is

the company that sells the insurance. Insurance rate is a factor used to determine the amount,

called the premium, to be charged for a certain amount of insurance coverage.

The basic aim of insurance companies is to spread the risk of one person over a number

of people. Anything and everything, whose probability of occurring cannot be predicted, can be

insured. In other words insurance can cover anything that cannot be predicted like accidental

injuries, theft, sickness, natural calamities etc.

Insurance companies are of two types:

Life insurance companies, which sell life insurance, annuities and pensions products.

Non-life or general insurance companies, which sell other types of insurance.

The basic difference between life insurance and general insurance is that life insurance

policies are long-term policies while general insurance policies are issued for duration of only 1

year. We will be concentrating only on general insurance.

Modern insurance companies offer a wide range of life insurance policies to meet the

needs of a variety of people. The two most common types of policies are term life and whole life.

Life insurance is a very important part of personal financial planning because it is the quickest

and easiest source of cash for your family upon your death. Within days, the insurance company

will deliver a check to your designated beneficiaries. This provides the money needed for funeral

expenses, as well as for family living expenses.

The general insurance is basically divided into 5 sections. These five sections are FIRE,

MARINE, MOTOR, MISCELLANEOUS and ENGINEERING. Out of these, fire, motor and

engineering fall under tariff insurance, while marine and miscellaneous fall under non-tariff

insurance. Tariff insurance means that the rates for calculating premium amount of these policy

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have been fixed by the tariff advisory committee (TAC). Any general insurance company selling

a policy falling under tariff insurance has to strictly follow the rates mentioned in the tariff book.

On the other hand general insurance companies can fix their own rates for policies falling under

non-tariff insurance.

All the insurance policies that an insurance company has are different from each other.

They differ from each other on the basis of the insurable interest and the way the premium is

calculated. As of now, the insurance agent has to physically carry all the work sheets with him

which will help him to calculate the premium. For example, in a Medic aim Policy, the premium

to be paid depends on the insureds age. So to calculate the premium, for a Medic aim Policy, the

insurance agent has to manually look into the table and find the premium payable corresponding

to the age of insured.

The aim of the software is to avoid such manual calculations on behalf of the insurance

agents. The agent has to simply fill in the required details and the software will do all the

required calculations. The series of calculations is as follows:

Compute the premium.

Check if any loading (excess premium) is applicable.

Check if any discounts can be given.

Add the applicable service tax.

In addition to calculate the premium, software will also maintain a record of all the

insurance policies sold by the agent. The software will then remind the agent about the

renewal of the policy which is usually after a year.

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INDEX

The following is the book report that encompasses all the aspects of the general insurance.

Introduction.

Problem statement.

Analysis.

Identifying the right classes.

Identifying the right attributes.

Data dictionary.

Identifying the right associations.

Object model.

Identifying the events.

Scenario based on problem statement.

Event trace diagram.

Dynamic state model.

Data flow model.

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ANALYSIS

OBJECT MODEL

The object model describes the real world object classes and their relationships with each

other.

The main steps involved in designing an object model are as follows:

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1. Identify Objects, associations and classes.

2. Prepare data dictionary.

3. Identify associations between objects.

4. Identify attributes of objects and links.

5. Organize and simplify object classes using Inheritance.

6. Verify that access path exist for likely questions.

7. Group classes into modules.

Identifying object classes

The nouns are extracted from the problem statement and are tentatively considered as

classes. They are as follows:

We now discard the unnecessary and incorrect classes according to following criteria.

1. Redundant Classes:

If two classes express the same information, the most descriptive name should be kept.

2. Irrelevant classes:

If a class is not much related with the system or it doesnt have a role to play in the

system, these classes are called irrelevant classes and should be eliminated from the system.

3.Vague Classes:

A class should be specific. Tentative classes that have ill defined boundaries should be

eliminated.

4. Attributes:

Classes that are properties of an individual object should be restated as attributes.

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5. Operations:

If a name describes an operation that is applied to the object, then it is not a class. Such

names become a part of the dynamic model.

6. Roles:

The name of a class should reflect its intrinsic nature and not the role that it plays in an

association.

7. Implementation constructs:

Constructs extraneous to the real world should be eliminated from the analysis model.

They are usually used in the implementation stage. Processes, date structures and algorithms are

implementation constructs.

8. Relevant Classes:

Classes that are descriptive by themselves are retained.

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Figure 1. Insurance classes identified from knowledge of problem domain.

KEEPING THE RIGHT CLASSES

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GOOD CLASSES:

1. Agent.

2. Company.

3. Customer

4. Policy details.

BAD CLASSES:

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Redundant class:

1. Staff.

2. Account.

Irrelevant class:

1. Loan.

2. Bank.

3. Medical.

Vague class:

1. Enquiries

2. Deduction.

Attributes:

1. Employee share.

2. Employer share.

3. Salary.

Operations:

1. Facilities.

2. Termination of policy.

3. Withdrawal.

4. Money recovery.

Roles:

1. Employee.2. Employer.

Implementation Constructs:

1. Default Payment.

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Identify and add attributes for objects and links

Eliminate unnecessary and incorrect attributes with the following criteria:

1. Object- If the independent existence of an entity is important, rather than just its value,

then its an object.

2. Qualifiers- If the value of an attribute depends on particular context, and then the

attributes is stated as qualifiers.

3. Names- A name is an object attribute when it does not depend on context.

4. Identifiers- Object Identifiers are implicit in object models are implicit in object models

and hence are not stated.

5. Link Attributes- They are stated as an attribute of link only.

6. Internal values- If an attribute describes an internal state of an object that is invisible

outside the object then it is eliminated from analysis.

7. Final detail- Omit minor attributes that are unlikely to effect operations.

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RIGHT ATTRIBUTES

CLASSES ATTRIBUTES

1. Customer

2. Agent.

3. Policy_details.

4. Company.

customer_name,customer_address,

customer_id, age.

agent_name, agent_id, ph_no, agent_address.

Maturity_dt,policy_no,policy_type,

premium.

company_id, comp_address, comp_name

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DATA DICTIONARY

Agent- Agent works for a company. He is responsible for providing various insurance

policies that are provided by company. He approaches the customers and explains the

details of policies and their benefits. Agent can work for many companies.

Company- Company provides the insurance policies for various customers. It has

various departments for different insurances. Company employs agents to reach the

customers. Company can hire a particular agent for various departments.

Customer- Customer holds one or more insurance policies. Any person applying for the

insurance policy is a customer. A customer has to satisfy certain criteria before insuring.

Policy details- All the details regarding the insurance policy are provided in policy

details. They have information such as maturity date, policy number, policy type,

premium details.

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Identifying Associations

Any dependency between two or more classes or a reference from one class to another class is an

association. Implementation decisions for associations should be made outside the analysis

model. Associations are mainly derived from verb phrases in the problem statement while some

other depends on real world knowledge or assumptions. These have to be verified with the

requesters, as they are not in the problem statement.

The unnecessary and incorrect associations are discarded on the following criteria.

1. Association between eliminated classes.

2. Irrelevant or implementation associations.

3. Actions.

4. Ternary association.

5. Derived association.

6. Misnamed association.

7. Role names.

8. Qualified associations.

9. Multiplicity.

10. Add missing associations.

Right Associations

Agents work for a company.

Company maintains policy details.

Customer buys insurance policy from agent.

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Figure 2.Object model for general insurance.

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IDENTIFYING EVENTS

Company is formed.

Application to form a company is filed.

Inspection is done.

If inspection is correct, the application is passed.

Agent joins the company.

The company promotes add campaigns for post of agents.

The candidates are interviewed.

The selection of candidates is done.

The candidate joins the company.

Agent approaches customer.

Agent explains the policies of insurance.

After the customer is convinced, the form is filled by customer.

The form is submitted to agent.

The relative documents are submitted.

Agent approaches company.

The agent submits the form to company.

The company verifies documents.

An account of customer is created.

The customer account is updated with premium.

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SCENARIO

1. Company is formed.

2. Inspector inspects company details.

3. Company hires agent.

4. Agent searches for customer.

5. Agent provides policy details to the customer.

6. Customer accepts the policy.

7. Agent provides customer with forms.

8. Customer fills the form.

9. A customer submits the form to agent along with the necessary

documents.

10. Agent submits the form to company.

11. Company approves the form and creates the account for the customer.

12. Customer pays the premium according to the policy rules and time

period.

13. Company updates the account.

14. Company refunds the customer after the maturity period is over or

incase any harm to the insured property.

15. The customer account is closed.

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EVENT TRACE DIAGRAM

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STATE DIAGRAM

Company is formed:

Procedure for insurance:

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Company management:

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SYMBOLS USED IN FUNCTIONAL MODEL

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DATA FLOW DIAGRAM

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SYSTEM DESIGN

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SYSTEM DESIGN

System design is a high level strategy for solving the problem and building a solution.

System design includes decisions about the organizations of the system into subsystems, the

allocation of subsystems to hardware and software components and major conceptual and

policy decisions that form the frame work for detailed design. The overall organization of a

system is called the system architecture.

Overview of System Design

System design is a first design stage in which the basic approach to solving the problem

is selected. During system design, the overall structure and style are decided. The system

architecture is the overall organization of the system into components called subsystem.

The architecture provides the context in which more detailed decisions are made in later

design stages. By making high level decisions that apply to the entire system, the systemdesigner partitions the problem into subsystems so that further work can be done by several

designers working independently on different subsystems.

The system designer makes the following decisions:

Organize the system into subsystems.

Identify concurrency inherit in the problem.

Allocate subsystems to processors and tasks.

Choose and approach for management of data stores. Handle access to global resources.

Choose the implementation of control in software.

Handle boundary conditions.

Set trade-off priorities.

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Breaking the systems into subsystems

The first step in system design is to divide the system into a small number of components.

Each major component of the system is called the subsystem. Each subsystem encompasses

aspects of the system that share some common properties.

A subsystem is not an object or a function but a package of classes, operations, events

and constraints that are interrelated and that have a reasonably well defined and small interface

with other subsystems. A subsystem is usually identified by the services it provides. A service is

a group of related functions that share common purpose, such as IO processing, drawing pictures

or performing arithmetic. A subsystem defines a coherent way of looking at one aspect of the

problem.

Each subsystem has a well defined interface to the rest of the system. The interface

specifies the form of all interactions and the information flow across subsystem boundaries but

does not specify how the subsystem is implemented internally. Each subsystem can then be

designed independently without affecting others.

The relationship between two subsystems can be client-supplier or peer to peer. In a

client-supplier relationship, the client calls on the supplier, this performs some service and

replies with the result. The client must know the interface of the supplier, but the supplier does

no have to the interfaces of its clients because all the interactions are initiated by clients using the

suppliers interface.

Layers

A layered system is an ordered set of virtual words, each build in terms of the ones below

it and providing the basis of implementation for the ones above it. The objects in each layer can

be independent although there is often some correspondence between objects in different layers

below it, but has no knowledge of the systems above it. Layer architectures come in two forms:

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closed and open. In a closed architecture each layer is built in terms of the immediate lower

layer. In an open architecture, a layer can use features of any lower layer to any depth.

Partitions

Partitions vertically divide a system into several independent or weakly coupled

subsystems, each providing one kind of service. The subsystems may have some knowledge of

each other .

A system can be successively decomposed into subsystems using both layers and

partitions in various possible combinations. Layers can be partitioned and partitions can be

layered.

Identifying Concurrency

In the analysis model as in the real world and in hardware, all objects are concurrent. In an

implementation, however, not all software objects are concurrent because one processor may

support many objects. In practice many objects can be implemented on a single processor if the

objects cannot be active together. One important goal of system design is to identify whichobjects must be active concurrently and which objects have activity that is mutually exclusive.

The later objects can be folded together in a single thread of control or task.

Identifying inherit concurrency:

The dynamic model is the guide to identifying concurrency. Two objects are inherently

concurrent if they can receive events at the same time without interacting. If the events are

unsynchronized the objects cannot be folded on to a single thread of control. Independent

systems are desirable because they can be assigned to different hardware units without any

communication cost.

Two subsystems that are inherently concurrent need not necessarily be implemented as

separate hardware units. The purpose of hardware interrupts operating system is to stimulate

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logical concurrency in a uniprocessor. Often the problem statement specifies that objects must be

implemented at distant hardware units.

Defining concurrent tasks

Although all objects are conceptually concurrent, in practice many objects in a system are

interdependent. By examining the state diagram of individual objects and the exchange of events

among them, many objects can often be folded together into a single thread of control. A thread

of control is a path through a set of state diagrams on which a single object at a time is active. A

thread remains within a state diagram until a object sends an event to another object and waits

for another event. The thread passes to the receiver of the event until it eventually returns to the

original object. The thread splits if the object sends an event and continues executing. On each

thread of control, only a single object at a time is active. Threads of control are implemented as

tasks in computer system.

Management of Data Store

The internal and external data stores in system provide clean separation points betweensubsystems with well defined interfaces. In general each data store may combine datastuctures,

files, and databases implemented in memory or on secondary storage devices.

The kind of data that belongs in a formal database:

1. Data that requires access at fine levels of details by multiple users.

2. Data that can be efficiently managed with DBMS commands.

3. Data that must port across many hardware and operating system platforms.

4. Data that must be accessible by more than one application program.

Handling global resources

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The system design must identify global resources and determine mechanics for

controlling access to them. Global resources include physical units such as processors, tape

drives, and communication satellites: space, such as a disk space, a workstation screen, and

button on a mouse: logical names, such as object ids, filenames, and class names; and access

to share data such as databases.

OBJECT DESIGN

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OBJECT DESIGN

The object design phase determines the full definitions of the classes and associations

used in the implementations, as well as the interfaces and algorithms of the methods used to

implement operations. The object design phase optimizes data structures and algorithms.

OVERVIEW OF OBJECT DESIGN

During object design we carry out the strategy chosen during system design and flesh out

details. There is a shift in emphasis from application domain concepts to computer concepts.

We must choose among different ways to implement the objects discovered during analysis

keeping in mind factors like minimizing execution time, memory and other measures of cost.

The operations identified during analysis must be expressed as algorithms with complex

operation decomposed into simpler internal operations. The classes, attributes and

associations from analysis must be implemented as data structures.

Steps for object design

During object design we perform the following steps:

Combine the three models to obtain operations on classes.

Design algorithms to implement operations. Optimize access paths to the data.

Implement control for external interaction.

Adjust class structure to increase inheritance.

Design associations.

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Determine object representation.

Package classes and associations into modules.

Combining the three models

After analysis we have the object, dynamic and functional model. But the object model is the

main framework around which designs is constructed. The object models from analysis doesnot

show operations. We convert the actions and activities of the dynamic modeling processes of the

functional model into operations attached to he classes in the object model. We begin mapping

the logical structure of the analysis model into a physical organization of a program.

DESIGNING ALGORITHMS

Each operation specified in the functional model can be formulated as a functional model. The

analysis specification tells what the operation does from the view port of its client, but the

algorithm shows how it is done.

As algorithm designers we must:

Choose algorithm that minimize the cost of implementing operations.

Select Data Structures appropriate to the algorithms.

Define new internal classes and operations as necessary.

Assign responsibility for operations to appropriate classes.

Choosing Algorithms

Many operations are simple enough that the specification in th functional model alreadyconstitutes a satisfactory algorithm, because the description of what is done also shows how it is

done. Most functions are simple mathematical or procedural definitions. Often the simple

definition is the best algorithm for computing the function. While in some cases the simple

definition of an operation is hopelessly inefficient and must be implemented with a more

efficient algorithm.

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We choose the Algorithm based on the following factors:-

Computational complexity.

Ease of implementation and understandability.

Flexibility.

Fine tuning the object Model.

Choosing Data Structures

Choosing Algorithms involves choosing the data structures they work on. During object

Design we must choose the form of the data structures that will permit efficient algorithms. We

may use generic data Structures provided by C++ for implementing the algorithms required in

the library.

The Dictionary of the computer is implemented using an array of objects of class

dictionary. Class Dictionary has members keywords and info. Class dictionary of each array

object is instantzed with keywords available and the member info is initialized with the

corresponding information about the keyword.

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ALGORITHM

Company management system.

1. START.

2. A company is formed.

3. Inspector checks the company details.

4. If details are eligible, then go to 5 else go to 9.

5. Company makes add campaigns for the post of agents.

6. Candidates apply for the post.

7. If eligible, then candidate is selected.

8. Candidate is appointed as agent.

9. Company details are rechecked and if correct, go to 5 else 10.

10. END.

Approach Customer

1. START.

2. Agent approaches the customer.

3. The agent explains policy to customer.

4. If customer agrees, go to 5, else go to 9.5. Customer accepts the policy.

6. The agent provides the form.

7. The customer fills the form.

8. The customer submits the relative documents.

9. Reassure the customer and go to 6.

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10. END.

Account updates.

1. START.

2. Agent submits the form to company.

3. Company approves the form.

4. Company inspects the documents of customer.

5. If documents are correct, go to 6, else go to 9.

6. Create an account of customer.

7. Customer pays the premium.

8. Customer account is updated.

9. Ask the customer to verify the documents. If found correct, then go to 6 else go to

10.10. END.

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final reeport

Documents