Proximate means nearest. It is only the nearest reason and not the remote reason which is taken into account. The insurer is liable to compensate only if the nearest cause comes within the meaning of risk involved.

When more than one insurance policy is taken to cover the same subject matter, it is known as double insurance.

(i) It is a contract of insurance, in which an insurer enters into a contract with another insurer to insure the whole or a part of risk covered by the first insurer.
(ii) It happens when an insurance company feels that it cannot bear the entire risk alone by itself.
(iii) In such case, it transfers a part of the risk to other insurance companies.

(i) According to section 39 of the Insurance Act, 1938, nomination is the process of appointing or nominating a person or persons by the insured, to receive the payment of the policy, in the event of death.
(ii) The person who is authorized to receive the payment of the policy is called nominee.

Health insurance policy is a contract between an insurer and an individual or group, in which the insurer agrees to provide specified health insurance at an agreed upon price (premium).

1. Whole Life Policy
2. Endowment Life Policy
3. Joint Life Policy
4. Annuity Policy
5. Children's Endowment Policy

Subrogation means transfer of rights and remedies (against any third party) of the insured to the insurer after the indemnity has been effected. For example, if a car belonging to Mr. Sankar is damaged due to negligence of Mr. Raja. Mr. Sankar is fully compensated by the insurer the insurer, can be Mr. Raja. In this case, Mr. Sankar cannot sue Mr. Raja to recover any compensation.

(i) Marine insurance is a contract of insurance under which the insurer undertakes to indemnify the insured in the manner and to the extent thereby agreed against marine losses.
(ii) The insured pays the premium in consideration of the insurer's (underwriter's) guarantee to make good the losses arising from marine perils or perils of the sea.
(iii) Marine perils can be collision of ship with the rock, fire, ship attacked by the enemies, etc. These perils cause damage, destruction or disappearance of the ship and cargo and nonpayment of freight.
(iv) Through marine insurance policy, the insurer undertakes to compensate the owner of a ship or cargo'for complete or partial loss at sea.
The Essential' elements of Marine Insurance Contracts are:
1. It is based on the principle of indemnity
2. The contract is based on utmost good faith.
3. The insurable interest must exist at the time of loss.
4. The principle proximate cause will apply to marine loss only.

Section 14 of IRDAI Act, 1999 lays down the duties and functions of IRDAI as follows:
(i) It issues the registration certificates to Insurance Companies and regulates them.
(ii) It provides license to insurance to intermediaries such as agents and brokers after specifying the required qualifications and set norms/code of conduct for them.
(iii) It promotes and regulates the professional organizations related with insurance business to promote efficiency in insurance sector.
(iv) It regulates and supervises the premium rates and terms of insurance covers.
(v) It specifies the conditions and manners, according to which the insurance companies and other intermediaries have to make their financial reports.
(vi) It regulates the investment of policy holder's funds by insurance companies.
(vii) It also ensures the maintenance of solvency margin (company's ability to payout claims) by insurance companies.

IRDAI - Insurance Regulatory Development and Authority is the statutory, independent and apex body that governs, regulates and supervises the Insurance Industry in India. It was constituted in the year 2000 by Parliament of India Act called IRDAI Act, 1999. Presently IRDAI headquarters is in Hyderabad.

"Insurance is a plan by themselves which large number of people associate and transfer to the shoulders of all, risk that attaches to individuals" - According to John Magee.

The types of Business Risks are:
(i) Speculative risks:
Speculative risks are the kind of risks which have the possibility of gain as well as the possibility of loss. Such risks are the result of market conditions . Favourable market conditions result in gains whereas unfavourable market conditions result in losses.
Example: Use of better technology helps to produce better quality products at cheaper prices. This may increase the demand and thus result in higher profits.
(ii) Pure risks:
Pure risks are the type of risks where business suffers loss only if the risk occurs. Non-occurrence of such risks leads 'to absence of loss.
Example: Business may suffer loss only if fire, theft or strike occurs.
(iii) Insurable risks:
Insurable risks are the type of risks where business can insure the probable losses by paying a predetermined premium to an insurance company. At the time of loss the insurance company pays compensation on the basis of agreed terms and conditions. Loss arising from natural and physical risks can be insured as the probability of risk can be determined .
Example: Company can insure its stock against fire or theft and if it loses its stock due to fire or theft in office, the insurance company pays compensation only up to a extent of the value lost.
(iv) Uninsurable risk:
Losses arising from unforeseen natural events, political changes or trade cycles are called uninsurable risks. Loss due to earthquake or flood or cyclone cannot be estimated and their probability cannot be calculated. Government directly takes care of the affected persons. Losses to businesses due to policy decisions of ruling political parties in a country, or due to economic depression cannot be insured. These uninsurable risk events are called uncertainties. The concept of risk is different from uncertainty. During uncertain events decisions cannot be taken.

(i) Whole Life Policy
(1) Under this policy, the sum insured is payable only on the death of the assured to the beneficiaries or legal heirs of the deceased.
(2) The premium is payable for a fixed period (20 or 30 years) or for the whole life of the assured.
(3) If the premium is payable for a fixed period, the policy will continue till the death of the assured.
(ii) Endowment Life Assurance Policy :
(1) Under this type of policy, the insurer undertakes to pay the assured a specified sum on the attainment of a particular age or on his death, whichever is earlier.
(2) In case of death of the assured before he attains the specified age, the sum is payable to his legal heir or the nominee.
(3) Otherwise, the sum is paid to the assured, when he attains a particular age. Thus, the endowment policy matures after a limited number of years.
(iii) Joint Life Policy (JLP) :
(1) The policy is taken up jointly on the lives of two or more persons is known as Joint Life Policy.
(2) On the death of anyone person, the sum assured or policy amount is paid to the other survivor or survivors.
(3) The premium is paid jointly or by either of them in installments or lump sum.
(iv) Annuity Policy:
(1) Under this policy, the assured sum or policy amount is payable in monthly or annual instalments after the assured attains a certain age.
(2) In this case, either the whole amount of the premium is paid once or premium is paid in instalments over a certain period.
(3) This policy is useful to those who prefer a regular income after a certain age.
(v) Children's Endowment Policy:
This policy is taken to provide funds for the education or marriage of children.
For Example: Jeevan Anurag Policy. In this policy, the amount is payable by the insurer when the children attain a particular age. The premium is paid by the person entering into the contract. However, no premium will be paid, if he/she dies before the maturity of the policy.

Causes of Business Risks:
Business risks arise due to a variety of causes, which are classified as follows :
(i) Natural Causes:
(1) Human beings have little control over natural calamities like flood, earthquake, lightning, heavy rains, famine, etc.
(2) These result in heavy loss of life, property, and income in business.
(ii) Human Causes:
Human causes include such unexpected events like dishonesty, carelessness or negligence of employees, stoppage of work due to power failure, strikes, riots, management inefficiency, etc.
(iii) Economic Causes:
(1) These include uncertainties relating to demand for goods, competition, price, collection of dues from customers, change of technology or method of production, etc.
(2) Financial problems like rise in interest rate for borrowing, levy of higher taxes, etc., also come under this type of causes as they result in higher unexpected cost of operation of business.
(iv) Other Causes:
These are unforeseen events like political disturbances, mechanical failures such as the bursting of boiler, fluctuations in exchange rates etc. Which lead to the possibility of business risks.

Principles of Insurance:
Insurance concept was started to distribute risk among group or people. Co-operation is the basic principle behind every Insurance contract. The following are the important principles of Insurance.
a) Utmost Good Faith:
1. According to this principle, both insurer and insured should enter into contract in good faith.
2. Insured should provide all the information that impacts the subject matter.
3. Example: Mr. M is a heart patient. But he hides this fact to the LIC while taking a life policy. On his death due to a heart attack, LIC can refuse to pay compensation to his legal representative because a material fact was not disclosed by the insured.
b) Insurable Interest:
1. The insured must have an insurable interest in the subject matter of insurance.
2. Insurable interest means some pecuniary interest in the subject matter of the insurance contract.
3. The insured must have an interest in the preservation of the thing or life insured, so that they will suffer financially on the happening of the event against which they are insured.
4. Example, a businessman has insurable interest in his stock of goods.
c) Indemnity :
1. Indemnity means security or compensation against loss or damages.
2. In insurance, the insured would be compensated with the amount equivalent to the actual loss and not the amount exceeding the loss.
3. "The principle of indemnity is not applicable to life insurance because one cannot estimate the loss due to the death of a person".
d) Causa Proxima:
1. The word 'Causa proxima' means 'nearest cause'.
2. According to this principle, when the loss is the result of two or more cause, the proximate cause, i.e. the direct.
3. The direct, the most dominant and most effective cause of loss should be taken into consideration.
4. The insurance company is not liable for the remote cause.
e) Contribution:
1. The same subject matter may be insured with more than one insurer then it is known as 'Double Insurance'.
2. In such a case, the insurance claim to be paid to the insured must be shared on contributed by all insurers in proportion to the sum assured by each one of them.
3. Example: A businessman gets his factory insured against fire for Rs 10,00,000 with insurer A and Rs. 5,00,000 with insurer B.
4. Due to fire, a loss of Rs 1,50,000 occurred.
5. Then, insurers A and B will contribute the loss in the ratio of 2:1.
6. A will pay Rs. 1,00,000 and B will pay Rs. 50,000.
f) Subrogation:
1. Subrogation means 'stepping the shoes on others'.
2. According to this principle,once the claim of the insured has been settled, the ownership right of the subject matter of insurance passes on to the insurer.
3. Example Mr.B gets his motor car insured. Some of its parts got damaged in a road accident.
4. He gets the insurance claim and gets the damaged parts replaced with new ones.
5. In this case the damaged parts will be taken by the insurance company.
6. The insured has no right over the damaged parts since they had already got compensation for the damaged parts.
g) Mitigation:
1. In case of a mishap, the insured must take off all possible steps to reduce or mitigate the loss or damage to the subject matter of insurance.
2. This principle ensures that the insured does not become negligent about the safety of the subject matter after taking the insurance policy.