MFRS 4 insurance contracts

MFRS 111 -1

insurance Industry
MFRS 4 insurance contracts

1. Introduction
2 main parties in the insurance business: 1- the insured and 2) the insurer. The insured is the individual or organization, which had agreed to contribute an amount of money and been relieved from the risks The insurer is usually an organization, which manages the money and undertakes the risks.

MFRS 111 -3

Introduction
• The insurance business can be broadly categorized into two classes, the general insurance and the life insurance. • life insurance business is involved in life insurance policies. • general insurance business is involved in policies other than life insurance policies such as marine, motor vehicles, fire and theft. • Takaful -Islamic insurance, which also offers life and general insurance, but is managed according to the syariah laws.

MFRS 111 -4

2. Definitions
• Several terms used in General Insurance Business. • Acquisitions cost are commissions and agency related expenses incurred in securing premium on general insurance policies. • Claims are demand by any party for payment by the insurer of a policy benefit on account of an alleged loss resulting from an event or events alleged to be covered by a policy of insurance.

MFRS 111 -5

2. Definitions
• Premium is the amount payable to an insurer under a policy as consideration for the obligations assumed by the insurer. • • Reinsurance is an arrangement whereby the re-insurer in consideration of a premium, agrees to indemnify the principal ceding insurer against the loss, or part of the loss, which the latter may sustain under the policy or policies that the insurer has written. • • Re-insurer is an insurer who accepts part of a risk from a ceding insurer by way of insurance. •
MFRS 111 -6

Acts, Standards and Guidelines
• The Insurance Act 1996 (the Act)