FUNDAMENTAL OF INSURANCE (INS 312/210)

TITLE

BUSINESS PROPOSAL OF PRUDENTIAL ASSURANCE MALAYSIA BERHAD

PREPARED BY

Muhammad Hisyamuddin Amin 2012653284

Muhammad Adib b Azizan 2012299106

Muhammad Shazarul Hafiz b Ghazali 2012607112

Muhd Zul Amirul Amin b Che Mohd Zohari 2012619246

Muhd Aliff Omar b Shamsudin 2012245998

PREPARED TO

EN HADZLI B ISHAK

LECTURER OF BUSINESS MANAGEMENT DEPARTMENT

UiTM KEDAH

SUBMISSION DATE

24 MARCH 2015

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TABLE OF CONTENTS

NO PARTICULAR PAGE REMARKS

1

Table of Contents

2

2

Vision, mission and Core Value

3

3

Risk and Nature of Risk

4

4

Principle of Insurance

8

5

Type of Insurance and Coverage

13

6

Example of Claim Form

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1.0 HISTORY OF PRUDENTIAL ASSURANCE MALAYSIA

Prudential has a long history in Asia, having maintained a presence in the region for over

eighty years. Today, we are one of Asia's leading life insurers and one of the region's largest

asset management companies. With our significant portfolio of businesses, multi-channel

distribution capabilities, strong strategic partnerships, customer-centric products and services,

and considerable brand equity, Prudential maintains an unrivalled position for continued growth

in Asia.

Prudential Assurance Malaysia Berhad (PAMB) was established in Malaysia in 1924. For

the financial year ended 31 December 2014, it achieved RM1.12 billion in new business annual

premium equivalent (APE). New business sales include both life insurance sales and Takaful

contributions. Takaful products distributed by PAMB’s Wealth Planners and agents are

underwritten by Prudential BSN Takaful Berhad.

As a leading and innovative insurer, PAMB serves the savings, protection and investment

needs of Malaysians by offering a full range of financial solutions through its 45 branches

nationwide. With more than 1,500 employees, PAMB is committed to helping people achieve

their hopes and dreams for a brighter and financially secure future.

PAMB is an indirect wholly owned subsidiary of UK-based Prudential plc. Established in

London in 1848, Prudential plc is incorporated in England and Wales, and its affiliated

companies constitute one of the world's leading financial services groups. It provides insurance

and financial services through its subsidiaries and affiliates throughout the world. Prudential plc

has been in existence for 167 years, and has £496 billion in assets under management as at 31

December 2014.

Prudential Assurance Malaysia Berhad is not affiliated in any manner with Prudential

Financial, Inc, a company whose principal place of business is in the United States of America.

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2.0 VISION, MISSION AND CORE VALUE OF PRUDENTIAL

Our Vision The No.1 Insurer in the Hearts and Minds of our People and Customers.

Our Mission Financial Freedom and Peace of Mind for All Malaysians.

Innovate & Create

Opportunities

Demonstrate Care

& Understanding

We pursue new

initiatives and

challenge ourselves to

create opportunities

We understand and care about the needs

and expectations of our employees,

customers, agents, partners and

shareholders

Collaborate Deliver Excellence

We encourage

openness, mutual trust,

and teamwork

throughout the

organization.

We fulfill our promises and deliver on a

clear set of expectations, maintaining our

integrity at all times

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3.0 RISK AND NATURE OF RISK

Risk can be defined as the uncertainty which concerning the occurrence of a

loss. The uncertainty refers to a state of mind characterized by doubt which is based on

a lack of knowledge about what will or will not happen in the future. The probability

refers to an area or study which measure the chance of occurrence of a particular

event.

The probability theory can be divided into three which is:

I. Priori probability

Which can be determined when the total numbers of possible event are

known.

II. Empirical probability

Can be determined by the basis of historical data.

III. Judgmental probability

Is determined based on the person predicting the outcome.

The other related concept that relate with the risk is:

1. Hazard

Hazard is conditions that increase the chance of loss. It can be divided

into three which is physical hazard, moral hazard and morale hazard. For

physical hazard is a physical condition that’s increase the condition of

loss. For moral hazard, it is a character defect in an individual that

increase the chance of loss. And finally is morale hazard that is

carelessness or indifferent to loss because of existing of insurance.

2. Peril

Peril can be determined as the cause of loss.

3. Loss

Loss is a reduction or disappearance of economic value.

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Classification of risk

Can be divided into three which is:

A. Pure and speculative risk

Pure risks exist when there is either possibility of loss or no loss.

Speculative risks exist when there is possibility of profit, loss or no

loss.

B. Fundamental risk and particular risk

Fundamental risk is a risk that affects the entire economy or large

number of persons or groups within the economy.

Particular risk is a risk that effect only individual not the entire

economy or community.

C. Financial risk and no financial risk

Financial risk is when the outcome can be measured in monetary

terms.

Non-financial risk is when the outcome cannot be measured

financially

Type of Pure risk.

a) Personal risk

Contain the risk of premature death, risk of old age, risk of poor health,

risk of unemployment.

b) Property risk

Contain the direct loss, indirect loss and extra expense.

c) Liability risk

Under our legal system, you can be held legally liable if you do something

that result in bodily injury or property damage to someone else.

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d) Risk arising from failure of others

When another person agrees to perform a service for you, he/she

undertakes an obligation that you hope will be met. When the person’s

failure meet this obligation would result in your financial loss.

Type of risk exposure

i. Physical asset exposure

ii. Financial asset exposure

iii. Liability exposure

iv. Human asset exposure

Burden of risk

Financial loss

Larger emergency fund

Loss of certain goods and services

Worry and fear

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4.0 PRINCIPLE OF INSURANCE

Nature of contract is a fundamental principle of insurance contract. An insurance contract comes

into existence when one party makes an offer or proposal of a contract and the other party

accepts the proposal. A contract should be simple to be a valid contract. The person entering into

a contract should enter with his free consent.

There are 6 type of Principle of Insurance which is

Principle of Insurable Interest

Principle of Utmost Good Faith

Principle of Indemnity

Principle of Subrogation

Principle of Contribution

Principle of Proximate Cause

Principle of Insurable Interest

The principle of insurable interest states that the person getting insured must have insurable

interest in the object of insurance. A person has an insurable interest when the physical existence

of the insured object gives him some gain but its non-existence will give him a loss. In simple

words, the insured person must suffer some financial loss by the damage of the insured object.

For example, the owner of a boat has insurable interest in the boat because he is getting income

from it. But, if he sells it, he will not have an insurable interest left in that boat.

From above example, we can conclude that, ownership plays a very crucial role in evaluating

insurable interest. Every person has an insurable interest in his own life. A merchant has

insurable interest in his business of trading. Similarly, a creditor has insurable interest in his

debtor.

Terminology of Insurable Interest

The insured must have insurable interest in the subject matter of insurance.

In life insurance it refers to the life insured.

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In marine insurance it is enough if the insurable interests exist only at the time of

occurrence of the loss.

In fire and general insurance it must be present at the time of taking policy and also at

the time of occurrence of loss.

The owner of the party is said to have insurable interest as long as he is the owner of the

it.

It is applicable to all contracts of insurance.

Principle of Utmost Good Faith

Principle of Utmost Good Faith is a very basic and first primary principle of insurance.

According to this principle, the insurance contract must be signed by both parties (i.e insurer and

insured) in an absolute good faith or belief or trust.

The person getting insured must willingly disclose and surrender to the insurer his complete true

information regarding the subject matter of insurance. The insurer's liability gets void (i.e legally

revoked or cancelled) if any facts, about the subject matter of insurance are either omitted,

hidden, falsified or presented in a wrong manner by the insured.

The principle of Utmost Good Faith applies to all types of insurance contracts.

Terminology of Utmost Good Faith

Both the parties i.e. the insurer or the insured should a good faith towards each other.

The insurer must provide the insurer complete, correct and clear information of subject

matter

The insurer must provide the insurer complete, correct and clear information regarding

terms and conditions of the contract.

This principle is applicable to all contracts of insurance i.e. life, fire and marine

insurance.

Principle of Indemnity

Indemnity means security, protection and compensation given against damage, loss or injury.

According to the principle of indemnity, an insurance contract is signed only for getting

protection against unpredicted financial losses arising due to future uncertainties. Insurance

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contract is not made for making profit else its sole purpose is to give compensation in case of any

damage or loss.

In an insurance contract, the amount of compensations paid is in proportion to the incurred

losses. The amount of compensations is limited to the amount assured or the actual losses,

whichever is less. The compensation must not be less or more than the actual damage.

Compensation is not paid if the specified loss does not happen due to a particular reason during a

specific time period. Thus, insurance is only for giving protection against losses and not for

making profit.

However, in case of life insurance, the principle of indemnity does not apply because the value

of human life cannot be measured in terms of money.

Terminology of Indemnity

Indemnity means a guarantee or assurance to put the insured in the same position in

which he was immediately prior to the happening of the uncertain event. The insurer

undertakes to make good the loss

It is applicable to fire, marine and other general insurance.

Under this the insurer agrees to compensate the insured for the actual loss suffered.

Principle of Subrogation

Subrogation means substituting one creditor for another.

Principle of Subrogation is an extension and another corollary of the principle of indemnity. It

also applies to all contracts of indemnity.

According to the principle of subrogation, when the insured is compensated for the losses due to

damage to his insured property, then the ownership right of such property shifts to the insurer.

This principle is applicable only when the damaged property has any value after the event

causing the damage. The insurer can benefit out of subrogation rights only to the extent of the

amount he has paid to the insured as compensation.

For example, Mr. Jalal insures his house for RM 1 million. The house is totally destroyed by the

negligence of his neighbour Mr. Amir. The insurance company shall settle the claim of Mr. Jalal

for RM 1 million. At the same time, it can file a law suit against Mr. Amir for RM 1.2 million,

the market value of the house. If insurance company wins the case and collects RM 1.2 million

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from Mr. Amir, then the insurance company will retain RM 1 million (which it has already paid

to Mr. Jalal) plus other expenses such as court fees. The balance amount, if any will be given to

Mr. Jalal, the insured.

Terminology of Subrogation

As per this principle after the insured is compensated for the loss due to damage to

property insured, then the right of ownership of such property passes on to the insurer.

This principle is corollary of the principle of indemnity and is applicable to all contracts

of indemnity.

Principle of Contribution

Principle of Contribution is a corollary of the principle of indemnity. It applies to all contracts of

indemnity, if the insured has taken out more than one policy on the same subject matter.

According to this principle, the insured can claim the compensation only to the extent of actual

loss either from all insurers or from any one insurer. If one insurer pays full compensation then

that insurer can claim proportionate claim from the other insurers.

For example, Mr. John insures his property worth RM 100,000 with two insurers "Prudential

Insurance" for RM 90,000 and "Kurnia Insurance" for RM 60,000. John's actual property

destroyed is worth RM 60,000, then Mr. John can claim the full loss of RM 60,000 either from

Prudential Insurance or Kurnia Insurance, or he can claim RM 36,000 from Prudential and RM

24,000 from Kurnia Insurance.

So, if the insured claims full amount of compensation from one insurer then he cannot claim the

same compensation from other insurer and make a profit. Secondly, if one insurance company

pays the full compensation then it can recover the proportionate contribution from the other

insurance company

Terminology of Contribution

The principle is a corollary of the principle of indemnity.

It is applicable to all contracts of indemnity.

Under this principle the insured can claim the compensation only to the extent of actual

loss either from any one insurer or all the insurers.

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Principle of Proximate Cause

Principle of Proximate Cause, means when a loss is caused by more than one causes, the

proximate or the nearest or the closest cause should be taken into consideration to decide the

liability of the insurer.

The principle states that to find out whether the insurer is liable for the loss or not, the proximate

(closest) and not the remote (farest) must be looked into.

For example, a cargo ship's base was punctured due to rats and so sea water entered and cargo

was damaged. Here there are two causes for the damage of the cargo ship - (i) The cargo ship

getting punctured because of rats, and (ii) The sea water entering ship through puncture. The risk

of sea water is insured but the first cause is not. The nearest cause of damage is sea water which

is insured and therefore the insurer must pay the compensation.

However, in case of life insurance, the principle of proximate cause does not apply. Whatever

may be the reason of death (whether a natural death or an unnatural death) the insurer is liable to

pay the amount of insurance

Terminology of Proximate Cause

The loss of insured property can be caused by more than one cause in succession to

another.

The property may be insured against some cause and not against all cause

In such an instance, the proximate cause or nearest cause of loss is to be found out.

If the proximate cause is the one which is insured against the insurance company is

bound to pay the compensation and vice versa.

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5.0 TYPE OF INSURANCE AND COVERAGE

5.1 Crisis Cover Plus.

Comprehensive coverage covering critical illness and more.

Crisis Cover Plus is a level term assurance that provides protection upon death, total and permanent

disability and upon diagnosis of any of the 36 critical illnesses which is:

4. AIDS as a result of a blood transfusion

5. Alzheimer’s Disease

6. Aorta Surgery

7. APALLIC Syndrome

8. Aplastic Anemia

9. Bacterial Meningitis

10. Benign Brain Tumor

11. Blindness

12. Brain Surgery

13. Cancer

14. Chronic Liver Disease

15. Chronic Lung Disease

16. Coma

17. Coronary Artery Disease Requiring Surgery

18. Deafness

19. Encephalitis

20. Full Blown AIDS

21. Fulminant Viral Hepatitis

22. Heart Attack

23. Heart Valve Replacement or Repair

24. Kidney Failure

25. Loss of Limbs

26. Loss of Speech

27. Major Organ Transplant

28. Major Burns

29. Major Head Trauma

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30. Motor Neuron Disease

31. Multiple Sclerosis

32. Muscular Dystrophy

33. Other Serious Coronary Artery Disease

34. Paralysis

35. Parkinson’s Disease

36. Poliomyelitis

37. Primary Pulmonary Arterial Hypertension

38. Stroke

39. Terminal Illness

This plan also has the flexibility to allow you to add on optional benefits such as medical & health

optional benefits to enhance your protection.

Benefit

Crisis Cover Plus is a level term assurance. This plan will pay out a lump sum benefit upon the event of

death or total permanent disability or diagnosis of any of the 36 critical illnesses.You can choose to

enhance your protection by add on optional benefits.

Crisis Cover Plus pays:

1. Death benefit

2. Total and permanent disability before 60 years old or age 60 next birthday

3. Critical illnesses upon diagnosis of one of the 36 critical illnesses.

Who can apply:

Anyone between the ages of 1-60 years on their next birthday can take up this plan.

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5.2 Crisis Defender & Early Crisis Protector

Shield yourself with Prudential's comprehensive critical illnesses coverage.

Crisis strikes from time to time. With increasing healthcare cost, even a minor incident can

change one’s lifestyle. Introducing the Crisis Defender and Early Crisis Protector, riders designed to offer

financial support right from the early stages of critical illnesses. Crisis Defender is an optional benefit

that is designed to pay a lump sum benefit upon diagnosis of any of the 36 critical illnesses. Any claims

on this benefit will not affect the coverage of your basic plan. Early Crisis Protector is an optional benefit

under Crisis Defender that provides Early Stage Critical Illness Benefit and Special Benefit.

Benefit

Crisis Defender and Early Crisis Protector provide you:

1) The Shields that cover 85 illnesses, conditions and medical procedures in total.

With Crisis Defender and Early Crisis Protector, you are widely covered for a range of 46 Low and

Medium Severity illnesses/conditions/medical procedures, and 36 High Severity Critical Illnesses. The

benefits don't stop there! Early Crisis Protector also covers 3 specified diabetic complications.

2) Claim up to 6 times

You can claim up to 6 times under Crisis Defender and Early Crisis Protector.

3) No waiting in between claims

There is no waiting in between claims. We will pay the subsequent claims immediately if you develop

other covered illness or the illness deteriorates further.

Early Crisis Protector also provides additional one-off lump sum benefit for the following specified

diabetic’s complications:

a) Surgery for Type 2 Diabetic retinopathy;

b) Limb amputation due to Type 2 Diabetic Complications; or

c) Severe diabetic nephropathy resulting in kidney failure.

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Application of Crisis Defender

We will pay you the benefit if you are diagnosed with a critical illness covered under Crisis Defender. In

the event of critical illness before age 5 next birthdays, the proportion of the Crisis Defender sum

assured payable is 20%, 40%, 60%, 80% and 100% for age 1, 2, 3, 4 and 5 next birthday respectively.

Early Crisis Protector

We will pay you the benefit if you are diagnosed with the illnesses, conditions or medical procedures

covered under Early Crisis Protector. You are allowed to make multiple claim as long as the sum assured

has not been fully paid. Once we have paid a claim, a subsequent claim of the same or lower severity

within the same category will no longer be covered.

However, for a subsequent claim of higher severity within the same category, we will pay you:

i. The difference between the relevant amount for the subsequent claim and the amount we paid to you

for the previous claim(s); or

ii. The reduced amount of benefit at the time the subsequent claim is made; whichever is lower.

For a subsequent claim from a different illness category, we shall pay you:

i. The relevant amount for the subsequent claim; or

ii. The reduced amount of benefit at the time the subsequent claim is made; whichever is lower.

Note: We will pay your claims as long as you have survived 30 days after being diagnosed with the

illnesses or conditions covered under Crisis Defender and Early Crisis Protector.

Premium Information

The premium that you need to pay will depend on your age, gender and smoking status. You would have

to pay premiums throughout the duration of the benefits.

Premiums can be paid yearly, half-yearly, quarterly or monthly via Auto Debit, Credit Card, Cash or

Cheque.

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Who can Apply :

Crisis Defender: Anyone between 1 to 70 years old on their next birthday.

Early Crisis Protector: Anyone between 19 to 70 years old on their next birthday.

56.3 PRUhealth

PRUhealth is a regular premium medical rider plan that reimburses medical expenses incurred in

the event of hospitalisation. Not only does this plan reward policyholders with No Claims Bonus (NCB)

for those who do not make any claims for the year, you now have the option to choose the level of

deductible (the fixed amount you must pay out of the total medical fees, excluding cost of daily room &

board, for any one disability during a 90-day period) of RM3,000 or RM10,000 other than the default

coinsurance option.

5.4 PRUmultiple crisis cover

PRUmultiple crisis cover -A plan that allows you to bounce back after a critical illness...again and

again.PRUmultiple crisis cover is a term plan that recognizes the need for enhanced protection and

peace of mind. This plan not only covers you against death, Total and Permanent Disability (TPD), it also

protects you against a wide range of critical illnesses and allows you to make MULTIPLE critical illness

and cancer claims.

But not only that, you may also add on supplementary benefits that will further enhance your

PRUmultiple crisis cover plan, which means you can customize this plan with features that would best

suit your needs

5.5 PRUcancer plan

PRUcancer plan is a regular premium non-participating plan that provides coverage up to age

80. This plan provides comprehensive coverage against early stage cancer, cancer, as well as

compassionate benefit upon death. Upon maturity of the policy, a lump sum benefit will be payable.

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5.6 PRUflexi med

Enjoy greater flexibility with a medical card that lets you choose what you want.

PRUflexi med is a regular premium investment-linked medical rider that reimburses medical expenses

incurred in the event of hospitalization.

5.7 PRUlady

PRUlady is a regular premium non-participating life insurance plan that provides you with

protection against the financial impact arising from female illnesses, death or disability up to expiry age

of 70 years old. In addition, it also pays Life Change Benefit for various life events. Upon maturity, 100%

of total premiums that you have paid (excluding extra premium charged for sub-standard life and

service tax, if applicable) will be refunded to you. Furthermore, it protects all mothers-to-be against

pregnancy complications and their child against congenital anomalies.

5.8 PRUvalue med

Get MORE with PRUvalue med.

Wouldn’t it be great if there is a medical plan that not only promises you a lifetime of assurance for all

your medical needs, but also helps you save with more benefits?

Introducing, PRUvalue med, a medical plan that combines extraordinary values and savings. With

PRUvalue med, you will never have to choose between your health and finances as your healthcare

needs are what matters most to us.

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6.0 CLAIM PROCESS

How to submit a claim

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