IC 01 – Principles of Insurance | III Licentiate Exam Prep 2025 – Mock Tests, Study Guide, eBook & 9R™ Mastery Plan

IC 01 – Principles of Insurance | III Licentiate Exam Prep 2025

Mock Tests, Printed Book, eBook, Udemy Practice Set, 9R™ Study Plan & On-Demand Coaching

Prepare confidently for the III Licentiate Exam – IC 01 Principles of Insurance with our all-in-one study suite. Access chapter-wise online mock tests, 700+ MCQs, Udemy model question bank, and a strategic 9R™ Exam Mastery Study Plan aligned with IRDA regulations and updated syllabus. Get printed guides, eBooks, and expert coaching to master key concepts like insurable interest, utmost good faith, risk management, indemnity, subrogation, and contribution. Ideal for first-time test takers and insurance professionals.

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IC 01 – Principles of Insurance | III Licentiate Exam 2025 — At a Glance

• Certification Body: Insurance Institute of India (III)
• Exam Module: IC 01 – Principles of Insurance under the III Licentiate Examination
• Ideal For: Aspiring insurance professionals, freshers, agency advisors, and anyone entering the general/life insurance domain
• Exam Format: 100 MCQs | 2 Hours | 60% Passing Marks | No Negative Marking
• Mode of Exam: Online and test-centre based modes available across India
• Eligibility Criteria: No mandatory qualifications | Open to 12th pass, graduates, and working professionals in BFSI
• Key Topics Covered: Principles like Utmost Good Faith, Insurable Interest, Indemnity, Contribution, Subrogation, and Proximate Cause along with Risk & Hazard, Insurance Terminology, and overview of IRDAI Regulations
• Reference Framework: IRDAI Circulars, IRDAI Portal, SEBI, AMFI, and Ministry of Finance
• Frequently Tested Concepts: Risk management in insurance, principles of contract, insurance documents, claim processes, and regulatory compliance
• Popular Queries Covered: “What is Indemnity in IC 01?”, “How to understand Utmost Good Faith vs. Insurable Interest?”, “What is Subrogation and Contribution with examples?”
• Exam Relevance: Ideal for learners preparing with mock tests, chapter-wise practice sets, 9R™ Exam Mastery Plan, and printed/eBook-based study

Pro Tip: Start with mock tests + glossary revision and focus on concepts like indemnity, risk & hazard, and policy documentation. Use the 9R™ Plan to decode which chapters carry higher weightage.

Available Formats for IC 01 – Principles of Insurance | III Licentiate Exam Prep

Prepare confidently for the IC 01 – Principles of Insurance module under the III Licentiate Exam with flexible learning options. Whether you're looking for online mock tests, chapter-wise practice questions, printed books, or mobile-friendly eBooks — each format is designed to support your success through a structured 9R™ Exam Mastery Plan. All resources are aligned with III latest syllabus and IRDAI norms covering all recent regulatory updates.

Choose a Format That Fits Your Study Style:

Online Mock Test | Chapter-wise Practice | 700+ Questions | Track & Improve

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eBook for Kindle & Google Play | IC 01 Short Guide | 500+ Question Bank

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Why Choose Our Study Materials for IC 01 – Principles of Insurance III Licentiate Exam Prep 2025?

• IC 01 mock tests are designed based on the latest III Licentiate exam syllabus issued by the Insurance Institute of India (III).
• Each test covers core principles such as Insurable Interest, Utmost Good Faith, Indemnity, Subrogation, Contribution, Proximate Cause—exactly how they're framed in the exam.
• Includes 700+ MCQs with explanations curated for chapter-wise preparation, concept retention, and IRDAI-linked terminology understanding. Stay aligned with updates from IRDAI Circulars.
• Smart analytics included with our online mock test series to track progress, identify high-weightage chapters, and improve weak areas.
• Content available in multiple formats: Online Mock Test, Udemy Practice Test, Printed Guide Book, Kindle eBook, and our 9R™ Exam Mastery Study Plan.
• We regularly track and decode key updates from IRDAI and III circulars to help learners understand regulatory changes from an exam perspective. Our expert team simplifies each circular into actionable insights and probable MCQs. Stay updated via our Regulatory Updates Resource Page.
• Helps avoid common mistakes like misinterpreting indemnity application or confusing "risk" vs. "hazard"—as reported by past candidates.
• All tools are synced with real exam insights, previous-year patterns, and expert-designed mastery plans for first-time exam success.
• Developed by domain SMEs who have trained BFSI professionals and guided hundreds of III candidates across India.

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Quick Navigation – IC 01 Principles of Insurance | III Licentiate Exam

• IC 01 Exam 2025 — At a Glance
• Available Formats: Mock Test, Book, eBook
• Key Features & Benefits
• IRDAI & III Circulars – Exam-Oriented Updates
• Eligibility, Format & Marking Scheme
• How to Prepare: Study Flow & Chapter Mapping
• Frequently Tested Concepts & Keywords
• 9R™ Exam Mastery Framework
• Glossary: Key Insurance Terminology
• FAQs – Based on Actual Exam Taker Questions
• Other III Licentiate Modules (IC 02, IC 11)
• Full Curriculum Structure by III

III Licentiate IC 01 – Principles of Insurance study materials now available in multiple formats.

Printed Guide Book can be ordered from Amazon or Flipkart.
eBook edition is available on Kindle and Google Play Books for convenient digital access.

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Stay Updated with IRDAI & III Circulars — Aligned for IC 01 Principles of Insurance Exam 2025

Regulatory changes directly impact insurance practices and are key to scoring high in the III Licentiate IC 01 – Principles of Insurance Exam. At GurukulOnRoad, we decode every relevant IRDAI and Insurance Institute of India (III) circular to help you understand complex insurance concepts like utmost good faith, indemnity, subrogation, contribution and risk management—in the context of what may appear in your exam.

Each update is tagged with possible MCQ framing areas, simplified summary, and application insights tailored for the III Licentiate syllabus 2025. Explore our latest curated content on the IRDAI & III Regulatory Update Resource page.

• IRDAI Circular 2025: New Disclosure Rules for Life Insurance Agents — Key Changes for IC 01 Exam
• Revised Syllabus Highlights for III Licentiate IC 01 – Principles of Insurance (2025 Pattern)
• View All IRDAI & III Circulars — Updated Weekly for Licentiate Exam Prep

Browse All Insurance Regulatory Updates

Overview: IC 01 – Principles of Insurance (III Licentiate Exam 2025)

The IC 01: Principles of Insurance module is a foundational paper of the Insurance Institute of India (III) Licentiate Certification. This exam is mandatory for candidates pursuing a career in India’s insurance sector and lays the groundwork for advanced papers like IC 02 – Practice of Life Insurance and IC 11 – Practice of General Insurance. It covers essential insurance concepts such as Risk and Hazard, Insurable Interest, Utmost Good Faith, Principle of Indemnity, Subrogation, Contribution, and more.

Whether you are a fresher or an industry professional aiming for certification, our III Licentiate Exam Prep for IC 01 offers a complete solution: Online Mock Tests, UDEMY Practice Tests, a Printed Guide Book, eBook, and the 9R™ Exam Mastery Framework Study Plan. All our content is aligned with the latest official 2025 III Handbook and exam pattern.

Our platform is especially curated to address key learner goals—how to pass the IC 01 exam on the first attempt, understanding key insurance principles, mastering chapter-wise terminology, and solving MCQs based on IRDA regulations and real-world scenarios. This exam is not just about theory but understanding the logic behind insurance frameworks. With our support, you'll gain the clarity and confidence needed to ace this essential paper in your Licentiate journey.

Preparation Guide & Study Plan

Preparing for the III Licentiate IC 01: Principles of Insurance exam requires a focused and strategic approach. Based on the official III Exam Handbook 2025, this paper tests your understanding of core Insurance Principles along with specific concepts like risk and hazard, insurable interest, utmost good faith, subrogation, indemnity, and contribution.

Whether you’re exploring IC 01 mock tests, PDF notes on principles of insurance, or a complete exam preparation guide, our unique 9R™ Exam Mastery Study Plan gives you a structured roadmap. This includes chapter-wise practice questions, online mock tests, concept revision decks, and performance analytics—all crafted specifically for III Licentiate Exam 2025.

1. Download and review the official III Licentiate IC 01 syllabus from the III official site.
2. Start with our chapter-wise practice test for IC 01 to build topic clarity.
3. Use our analytics dashboard to identify weak areas and prioritize revision.
4. Attempt multiple Full length Mock Test to simulate the real exam.
5. Refer to our Printed Guide Book or eBook for in-depth theory and simplified explanation of legal doctrines.
6. Stay updated with IRDAI Circulars & III Regulatory Updates and revise areas from a question-framing lens.
7. Request your customized 9R™ Exam Mastery Plan as per your pace and availability. Request now for a tailored study plan.

Expert Tip: Don’t just read—practice repeatedly using mock tests & quizzes designed to mimic the real exam environment. Our IC 01 Practice Tests & UDEMY MCQs are aligned to the official pattern and chapter blueprint.

9R Study Plan Framework: Crack IC 01 – Principles of Insurance with Confidence

Preparing for the III Licentiate Exam: IC 01 – Principles of Insurance under time pressure? Our signature 9R™ Exam Mastery Framework is a high-impact, time-efficient study strategy tailored specifically for insurance aspirants. This structured plan is designed to build mastery across all IC 01 chapters, including risk management, principles like indemnity, subrogation, contribution, and key insurance terminology.

1. R1 – Read: Start with a focused reading of the official III Licentiate Exam Handbook for IC 01 (Latest Handbook 2025).
2. R2 – Recall: Summarize concepts like Utmost Good Faith, Insurable Interest, Risk & Hazard in your own words.
3. R3 – Review: Go through highlighted areas in your printed guidebook or eBook, especially legal and underwriting chapters.
4. R4 – Rehearse: Practice chapter-wise MCQs and mock tests based on each unit like reinsurance, claims, and accounts.
5. R5 – Resolve: Clarify doubts using our mock test solution guides and explanations to prevent concept-level errors.
6. R6 – Revise: Pay special attention to IRDAI regulations and recent updates via our Regulatory Update Hub.
7. R7 – Replicate: Attempt full-length III Licentiate mock tests under timed conditions to simulate real exam pressure.
8. R8 – Reflect: Review analytics, identify weak zones (e.g., subrogation vs contribution), and retune your strategy.
9. R9 – Reattempt: Retake all wrong-answer zones with focused revision before your final exam attempt.

Request Your Personalized 9R™ Exam Mastery Study Plan

This proven 9-day strategy aligns with the latest III Licentiate exam pattern and ensures you’re well-versed in high-weightage areas such as insurance contracts, legal provisions, reinsurance principles, and underwriting logic. Perfect for aspirants seeking IC 01 mock tests, printed notes, or eBooks to complete their preparation with precision.

FAQ: Frequently Asked Questions for III Licentiate Exam 2025 – IC 01 Principles of Insurance

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Q1: What is the syllabus of IC 01 Principles of Insurance?

IC 01 covers foundational insurance topics such as risk & hazard, underwriting, rating principles, subrogation, contribution, legal aspects, reinsurance, and insurance accounts. It also emphasizes principles like utmost good faith and insurable interest. Visit the III official site for full syllabus.

Q2: How can I get Gurukul’s 9R™ Exam Mastery Framework for IC 01?

Use the “Request 9R™ Study Plan” button on this page. Just share your background, current prep level, and focus areas. You’ll receive a 9-day personalized preparation strategy aligned to IC 01.

Q3: How can I learn key insurance terms like subrogation, indemnity, and contribution?

Refer to our glossary of over 100+ terms tailored for III Licentiate aspirants, especially IC 01 topics such as principles of insurance and legal terminology.

Q4: What’s the exam format and passing criteria for IC 01?

The IC 01 exam has multiple-choice questions. Duration: 2 hours. You must score at least 60% to pass. No negative marking. Focus on concepts and practice tests.

Q5: How regularly are IRDA/III updates reflected in Gurukul’s content?

We update content within 2 working days of any IRDA or III circular. Plus, we provide exam relevance, MCQ examples, and circular snapshots under IRDAI Circulars.

Q6: Is the printed IC 01 Guide Book available on Amazon or Flipkart?

Yes. The “Principles of Insurance IC 01” printed guide is available on Amazon and Flipkart. It includes chapterwise summaries, exam tips, and practice MCQs.

Q7: Where can I access the IC 01 eBook?

The eBook version of our IC 01 guide can be accessed via Google Play Books and Amazon Kindle. Ideal for on-the-go learning.

Q8: What are the most important chapters in IC 01 for scoring high?

Focus on Chapter 4 & 5 (Principles of Insurance), Chapter 6 (Subrogation, Contribution), and Chapter 7 (Legal Aspects). These carry high weight in the III Licentiate exam mock test.

Q9: Are numerical questions part of the IC 01 Principles of Insurance exam?

Minimal numericals appear, but expect scenario-based MCQs on rating, underwriting, claims, and risk assessment principles.

Q10: What is the best way to prepare for the IC 01 exam?

Follow a structured study plan like Gurukul’s 9R™ Framework, solve chapter-wise practice tests, revise from printed/eBook guides, and analyze previous year questions.

Q11: How to register for the III Licentiate IC 01 exam?

Visit insuranceinstituteofindia.com, create/login to your student account, choose IC 01 subject, select exam date/center, and make payment online.

Q12: Can I appear for the exam online from home?

Currently, III Licentiate exams are conducted at designated centers. Remote proctored options may not be available. Check the III site for latest updates.

Q13: Is coaching mandatory for IC 01 or can I self-study?

You can clear IC 01 with self-study using quality guides, mock tests, and structured plans. Coaching may help for faster concept clarity or guided practice. If needed can avail our On-Demand coaching.

Q14: How to download III's official IC 01 material?

Log in to your III student dashboard and go to “eBooks” or study material section. Official PDFs are available after enrollment.

Glossary & Key Definitions for III Licentiate – IC 01: Principles of Insurance 2025

This curated glossary provides high-importance definitions and conceptual clarity for learners preparing for the IC 01: Principles of Insurance paper under the III Licentiate Exam. Each term is aligned with the latest Insurance Institute of India (III) exam standards and includes terminology critical for mastering mock tests, printed/eBook guides, and our exclusive 9R™ Exam Mastery Framework. Whether you are using our online mock tests, Udemy practice questions, or printed resources, this glossary will support quick revision, domain understanding, and real-exam application.

Glossary Block 1: Core Insurance Terminologies for III Licentiate Exam 2025

• Peril: A peril is an event or incident that may cause a loss or damage to life or property. In insurance, perils such as fire, earthquake, flood, or theft are covered under respective policies. Insurance doesn't prevent perils but offers financial compensation for losses arising due to such perils.


• Risk: Risk refers to the uncertainty of an event's outcome. In insurance, it is the possibility that a loss may or may not occur due to the happening of a peril. Risk is central to insurance as it determines the need and scope of coverage.


• Hazard: A hazard is a condition that increases the probability or severity of a loss due to a peril. Hazards can be physical or moral, and they influence underwriting decisions and premium calculations in insurance.


• Physical Hazard: A physical hazard arises from the tangible characteristics of the subject matter insured, like flammable materials in warehouses or faulty wiring in buildings, increasing the chance of fire or damage.


• Moral Hazard: Moral hazard refers to the dishonest behavior or fraudulent intent of the insured, such as concealing medical history to obtain a life insurance policy or exaggerating claims for financial gain.


• Morale Hazard: Often confused with moral hazard, morale hazard arises from careless attitudes due to having insurance coverage. For example, insured individuals may neglect basic safety measures assuming they’re financially protected.


• Catastrophic Risk: A catastrophic risk is a high-severity risk affecting a large number of people or assets simultaneously. Events like tsunamis or earthquakes fall under this and may even threaten the solvency of insurers.


• Important Risk: An important risk refers to events that significantly impact finances but are not large enough to be termed catastrophic, such as loss of employment, illness, or business slowdown.


• Financial Risk: A financial risk results in monetary loss and is quantifiable. Insurance is primarily concerned with financial risks—such as asset damage or loss of income due to illness—since these can be calculated and compensated.


• Non-Financial Risk: A non-financial risk affects emotions or relationships and is not easily quantifiable, like loss of reputation or love. These risks are generally not insurable unless they result in a financial liability.


• Static Risk: Static risks occur without any changes in the economic or political environment and are predictable, such as theft or fire in stable conditions. These are best suited for insurance coverage.


• Dynamic Risk: Dynamic risks arise from changes in the economy, technology, or political landscape. Though hard to predict, they can lead to financial losses, like stock market fluctuations or inflation.


• Pure Risk: Pure risks involve only the chance of loss, not gain. Insurance covers only pure risks—examples include death, accident, and fire—as they meet the principle of insurability.


• Speculative Risk: Speculative risks involve the possibility of both loss and gain, such as gambling or stock trading. These are not insurable because they are voluntary and profit-driven.


• Fundamental Risk: A fundamental risk affects large populations or groups, like natural calamities, pandemics, or war. These risks are typically handled by governments or through risk pooling mechanisms.


• Particular Risk: A particular risk affects individuals or small groups, like a house fire or car accident. These are personal in nature and typically covered under standard insurance policies.


• Risk Management: Risk management is the process of identifying, analyzing, and handling risks. Techniques include retention, transfer, reduction, and avoidance. It forms the backbone of both individual and enterprise insurance planning.


• Maximum Possible Loss (MPL): MPL is the worst-case scenario for a loss if a peril were to strike. It estimates the total value at risk and helps insurers and insured assess risk exposure.


• Probable Maximum Loss (PML): PML is the expected maximum loss after accounting for preventive measures. It is calculated as MPL × Probability of peril striking, and used extensively in underwriting and reinsurance.


• Risk Retention: Risk retention means bearing the financial consequences of a risk internally without transferring it to an insurer. It could be done knowingly (self-insurance) or unknowingly due to lack of cover.



Glossary Block 2: Insurance Industry, Risk Transfer & Regulatory Framework for III Licentiate Exam 2025



• Asset (in Insurance Context): An asset is anything that has economic value and provides benefits to its owner—whether tangible (like a car, house, or machinery) or intangible (like human life or skills). In insurance, the risk to these assets is covered to ensure continued benefit to the owner despite unexpected events.


• Economic Value of Asset: This refers to the monetary worth of the benefits an asset provides to its owner. For instance, a business earns revenue, a car provides transportation convenience, and a person earns salary—these benefits define the asset’s insurable value.


• Premium: The premium is the amount paid by the insured to the insurance company in exchange for risk coverage. It is calculated based on the probability of risk, type of asset, and various underwriting factors like age, health, and occupation.


• Sum Assured (SA): The sum assured is the maximum compensation payable by the insurer in the event of a claim. It is the upper limit of financial protection agreed upon at the time of buying the insurance policy.


• Insurer: The insurer is the insurance company that undertakes the risk on behalf of the insured, promising to pay compensation for covered losses in exchange for a premium.


• Insured: The insured is the person, entity, or object whose risk is covered under an insurance policy. The insured receives compensation from the insurer in the event of a covered loss.


• Risk Pooling: Risk pooling is the fundamental principle of insurance wherein individuals facing similar risks contribute to a common fund (via premiums), from which losses are compensated. It spreads the financial burden of a few over many.


• Probability of Risk: This is the likelihood of a loss occurring, often expressed in percentage terms. Premiums are typically proportionate to this probability. For instance, if 2 out of 100 cars may meet with an accident, the probability of risk is 2%.


• Pooling Mechanism: This refers to the collective contribution model of insurance where all members exposed to similar risks pay premiums into a fund managed by the insurer. When a loss occurs, the compensation is paid from this pool.


• Transfer of Risk: Insurance is a transfer of risk from the insured (who cannot bear the loss) to the insurer (who has the financial capacity to bear it) in return for a premium. It is a key function of insurance.


• Liberalisation of Insurance Sector: Refers to the opening of the Indian insurance market in 2000 to private players and foreign investment. This allowed competition, improved products and services, and led to the establishment of the IRDAI as a regulator.


• Insurance Regulatory and Development Authority (IRDAI): IRDAI is the statutory regulatory body established in 1999 to supervise, license, and regulate the insurance industry in India. It ensures financial stability, fair practices, and protects policyholders’ interests. Reference: irdai.gov.in


• Life Insurance: Life insurance covers risks related to human life. It provides financial protection against premature death and longevity risks (living too long), ensuring income replacement or retirement security for the insured’s dependents.


• General Insurance: Also known as non-life insurance, this includes coverage for all assets other than human lives—such as property, vehicles, and liability risks. Major categories include fire, marine, motor, health, and miscellaneous insurance.


• Fire Insurance: A fire insurance policy covers damage or loss to property due to fire and allied perils like riots, earthquakes, storms, or malicious acts. It protects both physical assets and consequential financial losses.


• Marine Insurance: Marine insurance provides coverage for goods in transit via sea, road, air, or rail. It protects against risks like shipwreck, piracy, weather damage, and loss or damage during shipping.


• Export Credit and Guarantee Corporation (ECGC): ECGC is a Government of India-owned company that provides insurance to Indian exporters against non-payment risks from foreign buyers due to commercial or political reasons.


• Professional Liability Insurance: This insurance protects professionals like doctors, lawyers, engineers, and accountants from financial liabilities due to negligence, errors, or omissions in their services that lead to client losses.


• Longevity Risk: Longevity risk is the financial risk of outliving one’s resources, especially in retirement. Life insurance pension plans help mitigate this risk by providing regular payouts beyond expected life expectancy.


• Transfer of Insurance Policy: Refers to the legal shifting of an insurance policy from one person to another, typically requiring the insurer’s consent. If a car is sold, the insurance must also be transferred to the new owner for claims to be valid. Visit the III Official Site for guidelines.
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Glossary Block 3: Risk Management, Reinsurance & Regulatory Concepts for III Licentiate Exam 2025



• Risk Avoidance / Prevention: Eliminating the possibility of loss by not engaging in risky activities or implementing preventive measures like safety systems. While complete avoidance isn't always feasible, it's a primary risk management step. [Ref: IRDAI]
• Risk Reduction: A method to minimize the severity or frequency of losses using pre-emptive measures like fire drills or structural reinforcements, focusing on reducing impact rather than eliminating risk.
• Risk Retention: Choosing to bear the risk internally without transferring it to an insurer, often by setting up reserve funds. Used when risks are predictable or insurance is unaffordable.
• Reserve Fund: A financial cushion set aside by individuals, businesses, or insurers to cover unexpected losses or claims. It plays a key role in insurance solvency and liquidity management.
• Risk Transfer: The process of shifting financial risk to a third party, usually through an insurance contract, allowing policyholders to mitigate the economic impact of loss.
• Underwriting: The evaluation process used by insurers to decide policy terms, acceptability, and premium pricing based on the risk profile of applicants. [Ref: III Official Site]
• Micro-Insurance: Low-ticket insurance designed for economically weaker sections, covering small sums (typically Rs. 50 to Rs. 50,000). Regulated under IRDAI to boost inclusion.
• Law of Large Numbers: A statistical principle crucial in insurance. The larger the pool of similar exposure units, the more predictable the expected losses, enabling accurate premium setting.
• Solvency Margin: The required financial buffer—assets in excess of liabilities—that insurers must maintain to ensure claim-paying capacity and financial soundness. Mandated by IRDAI.
• Valuation of Liabilities: Actuarial estimation of the insurer’s future obligations under in-force policies. Essential for calculating reserves and maintaining solvency. [Ref: IRDAI]
• Reinsurance: A risk-spreading mechanism where an insurer cedes a part of its risk portfolio to another insurer (reinsurer) to safeguard against large losses.
• Ceding Company: The original insurer that transfers part of its risk to a reinsurer under a reinsurance contract, thereby reducing its exposure.
• Retrocession: A reinsurance transaction where a reinsurer transfers a portion of the reinsured risk to another reinsurer, helping manage aggregate exposure.
• Quota Share Reinsurance: A proportional reinsurance agreement where a fixed percentage of all policies, premiums, and claims is shared between insurer and reinsurer.
• Excess of Loss Reinsurance: A non-proportional contract where the reinsurer pays only when claims exceed a predefined limit. Ideal for protecting against catastrophic events.
• Pool Arrangement: A collective agreement among insurers to share high-risk exposures (e.g., nuclear, terrorism). Risks and premiums are pooled to mitigate individual insurer liabilities.
• Premium Reserve: A statutory reserve from premium income kept aside by insurers to meet future liabilities arising from policyholder claims.
• Social Security Insurance: Government-led programs ensuring protection to vulnerable groups via schemes like health insurance, pension, and life cover (e.g., PMJJBY, Ayushman Bharat).
• Economic Development via Insurance: Insurance supports economic growth by protecting capital, encouraging entrepreneurship, and acting as a source of long-term infrastructure investments.
• Insurance Investment Regulations: Rules defined by the Insurance Act and enforced by IRDAI that govern how and where insurers can invest collected premiums to ensure safety, solvency, and national development.
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Glossary Block 4: Intermediaries, Regulatory Bodies & Grievance Mechanisms for III Licentiate Exam 2025
Insurance Agent: An individual or corporate entity licensed by IRDAI to sell insurance policies on behalf of one life and one general insurer. Agents act as intermediaries, earn commission, and must meet mandatory training and certification criteria.
Corporate Agent: An organization such as a bank or firm licensed by IRDAI to distribute insurance products. Designated persons within the organization are trained and certified to conduct insurance business under regulatory compliance.
Insurance Broker: A licensed independent intermediary who represents clients and offers products from multiple insurers. Brokers deal in life, general, and reinsurance and are paid brokerage instead of commission.
Composite Broker: A broker licensed to act as both direct and reinsurance broker. Requires ₹250 lakh minimum capital and handles life, general, and reinsurance simultaneously. Regulated by IRDAI.
Reinsurance Broker: A specialized intermediary who arranges reinsurance for insurers. They help negotiate terms and structure for large risk portfolios between insurers and reinsurers.
Commission (Agent Remuneration): The regulated payment made by insurers to agents for procuring business. Rates vary based on product, term, and policy year and are capped by IRDAI.
Brokerage (Broker Remuneration): The regulated fee paid to brokers for placing insurance or reinsurance business. Distinct from commission and subject to oversight by IRDAI.
Surveyor / Loss Assessor: A licensed technical expert appointed to inspect and evaluate claims in general insurance. Mandatory for claims exceeding ₹20,000, ensuring fair and accurate settlements.
Survey Report: A detailed report prepared by a surveyor outlining findings, nature and extent of loss, and claim recommendations. It guides claim decisions in non-life insurance.
Medical Examiner: A certified doctor who assesses a proposer’s health for life or health insurance underwriting. Helps insurers detect medical risks and evaluate insurability.
Third Party Administrator (TPA): An IRDAI-licensed entity that facilitates health insurance services like cashless claims, hospital networks, and documentation. TPAs improve claim efficiency and insurer service standards.
Insurance Regulatory and Development Authority of India (IRDAI): The apex regulatory body overseeing India’s insurance sector. IRDAI licenses entities, monitors compliance, protects policyholders, and ensures financial soundness. [Visit IRDAI]
Insurance Ombudsman: A quasi-judicial officer appointed to resolve customer complaints against insurers. Offers speedy, cost-effective grievance resolution for claims up to ₹20 lakhs. [Council for Insurance Ombudsman]
Detariffication: The removal of fixed premium tariffs in general insurance to allow risk-based pricing. Introduced in 2007 under IRDAI oversight, enhancing market competitiveness and innovation.
File and Use Guidelines: As per IRDAI, insurers must file details of new products, rates, and terms before launch. Approval ensures product transparency and safeguards consumer interests.
Grievance Redressal Mechanism (IRDA): A formal system to address policyholder complaints via toll-free number 155255 or email (complaints@irda.gov.in), monitored by IRDAI for service accountability.
Tariff Advisory Committee (TAC): Previously responsible for standardizing general insurance premiums and terms. Post-detariffing, it now maintains historical data and standard policy wordings.
Educational Institutions (Insurance Sector): Bodies like III, National Insurance Academy, and Institute of Actuaries of India offer structured programs including Licentiate, Associateship, and Fellowship to build industry expertise.
Ombudsman Award: A binding resolution passed by the Insurance Ombudsman, accepted by the complainant. It mandates insurer compliance within 15 days, with a maximum limit of ₹20 lakhs.
Underwriting Policy: A structured framework outlining an insurer’s criteria for risk acceptance, premium setting, and decision-making authority. Ensures consistent and compliant underwriting.
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Glossary Block 5: Customer-Centric Insurance & Digital Evolution for III Licentiate Exam 2025
Insured: The insured is the individual, group, or organization covered under an insurance policy. They are the party who faces the financial loss from a specified peril and whose interest the insurance contract protects. In the Indian context, the insured can be retail individuals, SMEs, or corporate clients.
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Source: IRDAI | Source: III


Niche Market (Insurance): A niche market in insurance refers to a narrowly defined customer segment with specialized needs, such as health insurance for senior citizens, classic car coverage, or racehorse insurance. Indian insurers often segment and target niches for efficiency and product differentiation.


Retail Insurance: Retail insurance serves individual customers and small businesses. Products include life, health, motor, and personal accident insurance. In India, this is a rapidly growing sector, aided by digital sales and policy aggregator platforms.


SME Insurance: SME Insurance is tailored for Small and Medium Enterprises and covers risks like fire, burglary, liability, and business interruption. In India, insurers often offer packaged policies with simplified underwriting for shops, offices, and small factories.


Corporate Insurance: Corporate insurance refers to large-scale risk coverage for mid-size to multinational companies. Policies are often customized and negotiated through brokers. Examples include marine cargo, group life, fire and engineering, cyber risk, and liability insurance.


Internal Customer: An internal customer refers to departments or individuals within the same organization who rely on one another’s output to complete tasks. Though not external buyers, their satisfaction and process efficiency matter greatly in insurance service delivery.


Packaged Product (Insurance): A packaged product is a bundled insurance policy offering multiple covers (e.g., fire, theft, liability) in a single product with standard terms. Commonly used for SMEs in India, it simplifies underwriting and administration for both insurer and client.


Digital Distribution (Insurance): Digital distribution in insurance refers to online and tech-enabled channels like websites, mobile apps, and call centers used for marketing, selling, and servicing policies. In India, digital-first insurers are disrupting traditional agency networks.


Remote Selling (Insurance): Remote selling is the practice of selling insurance policies through non-physical touchpoints—web portals, apps, chatbots, and tele-calling. It is gaining traction in India, especially for retail health, travel, and motor products.


Insurance Broker (Corporate Focus): An insurance broker acts on behalf of clients (not insurers) to source the best coverage across multiple insurers. In the corporate segment, brokers negotiate large policies, provide risk advice, and support claims. Over 90% of India’s large corporate business is brokered.


Customer Segmentation (Insurance): Customer segmentation is dividing insurance consumers into identifiable groups (e.g., millennials, working professionals, SMEs) to offer targeted products and marketing strategies. Indian insurers are increasingly leveraging data for micro-segmentation.


Customer Mindset: The customer mindset in insurance refers to the mental and emotional state of the customer across the policy lifecycle—purchase, premium payments, claim, and renewal. Understanding these shifts helps insurers improve communication and service delivery.


Death Claim: A death claim is a request for policy benefits made by the nominee or beneficiary upon the death of the insured in a life insurance policy. Settlement involves document verification, claim form submission, and insurer approval under IRDAI timelines.


Maturity Proceeds: Maturity proceeds are the benefits received by the insured at the end of the policy term in savings or investment-linked life insurance policies. It may include sum assured plus bonuses or returns, if applicable.


Distressed Claimant: A distressed claimant is someone experiencing emotional or financial hardship, often seen during death or hospitalization claims. In Indian insurance practice, empathy and support from insurers are crucial to reduce grievances.


Moral Hazard (Life Insurance): Moral hazard refers to the risk that the insured may act dishonestly or fraudulently to gain from an insurance policy. For example, someone overly eager to be insured might signal concealed risk, triggering red flags during underwriting.


Claim Process Communication: Claim process communication involves clearly explaining the steps, forms, and timelines required to settle a claim. In India, IRDAI emphasizes transparency and customer service, especially in life and health claim scenarios.


Perception Gap in Insurance: A perception gap occurs when customers feel dissatisfied due to unmet or misunderstood expectations about coverage or claim settlements. Bridging this gap through education and communication is vital for customer satisfaction.


Attrition Rate (Insurance Agents): The attrition rate refers to the percentage of insurance agents leaving the profession annually. In India, it is high due to pressure, income variability, and the emotionally challenging task of selling intangible protection products.


Insurance Advisor’s Role in Emotional Sales: An insurance advisor’s role goes beyond selling. In India, especially in life insurance, they must help clients emotionally visualize risks like death or hospitalization and offer financial solutions. This involves trust-building and deep interpersonal skills.


Glossary Block 6: Legal & Technical Principles in Insurance
Insurance Contract: An insurance contract is a legally binding agreement between the insurer and the insured, where the insurer promises to pay a predetermined sum (sum assured or claim amount) upon the occurrence of a specified event (such as death, accident, or damage), in exchange for the payment of premiums by the insured. The contract outlines the subject matter, liabilities, premiums, exclusions, and other terms and conditions.


Sum Assured: The sum assured is the fixed amount agreed upon in a life insurance contract that is payable to the nominee upon the insured’s death or maturity, depending on the policy. It forms the basis of the policyholder’s financial cover and is a core term in value contracts like life insurance policies.


Premium Payment Modes: Premiums are periodic payments made by the policyholder to the insurance company in exchange for coverage. Payment modes include monthly, quarterly, half-yearly, yearly, or single premium. In India, these can be made via cash, cheque, ECS, or credit cards, and are governed by IRDAI regulations.


Term Insurance Policy: A term insurance policy is a pure risk cover under which the insurer pays a death benefit to the nominee if the policyholder dies during the term. No maturity benefit is paid if the insured survives the policy duration. It is a cost-effective option for life coverage.


Risk in Insurance: Risk refers to the possibility of a financial loss due to an uncertain event (like death, fire, or illness). In insurance, the subject matter of risk must be insurable, lawful, and quantifiable. Risk assessment determines premium pricing and policy issuance.


Exclusions in Insurance: Exclusions are specific events or conditions listed in an insurance policy that are not covered. For instance, suicide in the first policy year or self-inflicted injuries are common exclusions in life and accident insurance contracts in India.


Void Contract: A void contract is a legally unenforceable agreement due to illegality or violation of public policy. For example, a policy taken to insure stolen goods or contraband is void ab initio (from inception) under Indian insurance laws.


Insurable Interest: Insurable interest is a legal and financial interest of the policyholder in the continued safety of the subject matter. It must exist at the time of taking the policy in life insurance and at both proposal and claim stages in general insurance.


Keyman Insurance: A Keyman Insurance is taken by a company on the life of a key employee whose loss can affect business profitability. The company is both the proposer and beneficiary, and it can claim tax benefits under Indian tax laws within specified limits.


Indemnity: Indemnity refers to compensation provided by the insurer to restore the insured to their original financial position before the loss. It applies primarily to general insurance and ensures that no profit arises from a claim.


Underinsurance & Condition of Average: When the sum insured is less than the actual value of the property, the insured is considered underinsured. In such cases, the claim is reduced proportionally under the "Condition of Average" clause to ensure fairness across policyholders.


Deductibles or Excess: A deductible is the portion of the claim that the insured has to bear before the insurer pays the balance. It helps avoid small or fraudulent claims and is pre-agreed at the time of underwriting, especially in marine or health policies.


Agreed Value Policy: In agreed value policies, the insurer and the insured agree on the value of the insured item (e.g., artwork, vintage car) at policy inception. This value is paid in case of total loss, avoiding valuation disputes later.


Principle of Subrogation: This principle allows the insurer, after indemnifying the insured, to assume the insured’s legal rights to recover the loss from a third party responsible for it. It prevents double recovery and applies only to general insurance contracts.


Principle of Contribution: When multiple policies cover the same risk, the contribution principle ensures that the claim is shared among insurers in proportion to the sum insured. It prevents the insured from profiting through multiple claims for the same loss.


Utmost Good Faith: Insurance contracts are based on the principle of "uberrima fides" or utmost good faith. Both parties, especially the proposer, must disclose all material facts truthfully. Non-disclosure or misrepresentation can render the policy void.


Section 45 – Indisputability Clause: Under Section 45 of the Insurance Act, 1938, a life insurance policy cannot be questioned after two years except on grounds of proven fraud. Within the first two years, the insurer can repudiate a policy for material non-disclosure.


Proximate Cause: Proximate cause is the closest, effective cause of a loss in a chain of events. For a claim to be payable, the proximate cause must be an insured peril under the policy. It is particularly relevant in fire and marine insurance.


Personal Contract (of Insurance): Insurance contracts are personal in nature, meaning the insurer underwrites the risk based on the proposer’s attributes. These contracts cannot be transferred without the insurer’s consent, except in certain cases like life insurance through assignment.


Material Fact: A material fact is any information that influences an insurer's decision to accept or reject a risk or determine premium. Examples include medical history in life insurance or the nature of goods in marine insurance. Disclosure is mandatory.


Glossary Block 6: Insurance Proposals, Premiums & Legal Framework for III Licentiate Exam 2025
Proposal: A proposal is the formal application submitted by an individual to an insurance company requesting insurance coverage. It contains details of the subject matter, type of insurance required, sum assured, and personal information. The insurance process begins with the submission of a proposal.


Endorsement: An endorsement is a written amendment or addition to an insurance policy that alters its original terms and conditions. It is issued by the insurer and becomes part of the policy document, often used to include or exclude specific perils or extend coverage.


Subject Matter of Insurance: This refers to the item or person being insured under the policy. It could be a tangible asset like a vehicle or property, or an intangible one like human life in life insurance. The subject matter is the basis upon which risk is evaluated and premium is calculated.


Term of Insurance: The term of insurance indicates the duration for which the insurance coverage is valid. It could range from a few hours (in travel insurance) to a year (in general insurance) or several decades (in life insurance).


Conditions Precedent / Subsequent / to Liability: These are clauses in an insurance policy:
• Precedent: Must be fulfilled before contract commencement (e.g., material disclosures).
• Subsequent: Must be complied with during the policy period (e.g., notifying change of use).
• To Liability: Must be met for the insurer’s liability to arise (e.g., reporting a claim within specified time).


Representation: A representation is a statement made by the proposer during the insurance application process. It could be factual or a belief, and must be substantially true. Misrepresentation—whether innocent or fraudulent—can lead to denial of claims or cancellation of policy.


Warranty: A warranty is a condition or promise made by the policyholder that must be strictly complied with. Breach of warranty, even if not related to the claim, can make a general insurance policy voidable at the insurer’s option.


Ex-Gratia Payment: An ex-gratia payment is a payment made by an insurer even when the claim is technically not payable under the policy terms. It is a discretionary gesture, often made in case of minor breaches where overall conditions are met.


Assignor / Assignee: An assignor is a policyholder who transfers their policy rights to another person. The assignee is the recipient of those rights. Assignment can be absolute or conditional, and is common in life and marine cargo insurance.


Actuary: An actuary is a qualified professional who applies statistical, financial, and economic models to assess insurance risks, determine premium rates, evaluate reserves, and ensure solvency of insurance companies. Their role is critical in life and general insurance sectors.


Premium Reserve / Life Fund: A premium reserve is the portion of premium set aside to meet future policy liabilities. In life insurance, this is known as the Life Fund, where all revenues are pooled and claims are settled from it over the duration of long-term policies.


Net Business: Net business refers to the total insurance business retained by the insurer after deducting the portion reinsured with other insurers (ceded business) and adding business accepted from other insurers (accepted reinsurance). It represents the actual risk borne by the insurer.


Expense Ratio: The expense ratio is the proportion of premium income used to cover administrative and operational expenses of the insurance company. It is a key metric for profitability and regulatory compliance.


Incurred Claims Ratio (ICR): ICR is the ratio of claims incurred to the premium earned during a specific period. It helps assess underwriting performance and is calculated separately for each class of business to inform future strategy.


Mortality and Morbidity Tables: These tables show statistical data on death (mortality) and sickness/injury (morbidity) rates in a population. Prepared by actuaries, IRDA, and institutions like NFHS and LIC, they are vital for pricing life and health insurance products in India.


No Claim Bonus (NCB): NCB is a benefit provided to policyholders who do not make any claim during a policy term. It is offered as a discount on renewal premium or an increase in sum insured (in mediclaim), and acts as an incentive for responsible behavior.


Malus: Malus is a penalty in the form of increased premium applied at the time of renewal if a policyholder has made significant claims in the previous period. It is the opposite of a No Claim Bonus.


Declaration Policy: A declaration policy is issued when stock levels fluctuate significantly. The insured declares stock value at regular intervals, and the final premium is adjusted based on average stock levels during the policy period.


General Average: General average is a marine insurance term that refers to voluntary and reasonable sacrifice or expenditure (like jettisoning cargo) made during a peril to protect the ship or cargo. All stakeholders share the resulting loss proportionally.


Arbitration Clause: An arbitration clause allows disputes between insurer and insured to be resolved outside courts through mutually appointed arbitrators. It is a cost-effective and faster alternative to litigation, especially in cases involving admitted liability but disputed claim amount.

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