This is based on co-insurance agreement

Books of Account

Suggested Answers to DIRM (Diploma in Insurance Risk Management) Technical Examination November 2006

Institute of Chartered Accountants of India

(http://www.icai.org/)

Risk examination

A shipping company owns an ocean-going steamer valued at Rs 32 crore, and insured with three insurance companies X, Y and Z. The amount underwritten is: X (Rs 6 crore), Y (Rs 10 crore), and Z (Rs 6 crore). One stormy night, the steamer met with an accident and the loss suffered was Rs 4 crore. Now, what is the liability of each insurance company in this case?

"This is based on co-insurance agreement. The loss has to be shared proportionately," explains Suggested Answers to DIRM (Diploma in Insurance Risk Management) Technical Examination November 2006, from the Institute of Chartered Accountants of India (http://www.icai.org/).

More