PURPOSE, CONCEPT AND NEED OF

INSURANCE
Since the actual opening up of Insurance sector in India has preceded by a
Keen debate about the positive and negative aspects of the liberalization, it is
analyzed here in some detail especially the Indian perception

• The setting up of insurance Regulatory and Development Authority

(IRDA) 1999 was a clear signal of the end of the monopoly in the
insurance Sector

• There are Several challenges that an Insurance company has to face

In particular, it needs to ensure the protection of interests of all the
Stake holders

• Handling reforms with confidence in year 2000 , India has witnessed a

Transition from the earlier less dynamic to present day change driven
Conditions

• The Insurance regulatory and development act has strengthened

International confidence about the government’s commitment to
Bring about changes in the insurance sector

• Emerging trends the world over , the think tank for India are now
clear

• Further deregulation of the market;

• Greater concern for the customer;

• Newer products and services;

• Competition and quality consciousness;

• Cost effective Operations ;

• Restructuring of the public Sector;

• Consolidation of domestic insurance markets;

• Technology driven shift in product design;

• Actual Operations and distribution; and

 • Convergence of Financial services

►Basic concept of Insurance is protection against a financial loss, arising on the

Happenings of an unexpected event

►Insurance is a contract between two parties whereby one party called insurer,

Takes a fixed sum called premiums, in exchange to pay the other party on the

Happening of a certain event

► People purchase insurance for various reasons – old age security, risk coverage

Tax rebate, money for child’s marriage and money for child’s education

► BENEFITS OF INSURANCE

► Insurance is an investment of security, savings and peace of mind

► Safeguard oneself and one’s family for future requirements

► Peace of Mind in case of financial loss & encourage savings

► Get a tax rebate

► Rebates on the tax payable section 80 CC of income tax act

► Protection from claims made by creditors

► Security against a personal loan, housing loan or other types of loan

► Provide a protection cover to industries, agriculture, women and child

INSURANCE PENETRATION IN INDIA

India is 23rd rank internationally among the largest insurance market

Global Market today $2100 billion with an annual premium collection of $7.2 billion

Just 0.34% of Global market today

In India 74% of population lives in the rural area – Source I.R.D.A.

The industry must learn different technique for rural business in areas like Product

Development and pricing, market, development of Sales Channels, sales Process,

Service to Customers and financial management with a rural bias

Another area of vast improvement is in the service attitude and delivery

Multiple touch points have emerged – contact centers, email, facsimile, websites

Insurance industry in India only in past 2 years have given employment to the tune

Of 17000 people across India

It is clear that the face of insurance in India is changing but with the changes, come

A host of Challenges, and it is the credible players with a long term vision and

Robust strategy that will survive

Whatever developments, the future and Opportunities in insurance industry will

Surely be exciting
FUNDAMENTALS / PRINCIPLES OF INSURANCE

• UTMOST GOOD FAITH

• INSURABLE INTEREST

• INDEMNITY

• SUBORGATION

• CONTRIBUTION

• PROXIMATE CAUSE

• THE DEBATE ABOUT OPENING UP INSURANCE SECTOR

• REPORT OF THE COMMITTEE ON REFORMS IN THE INSURANCE

SECTOR 1994

• DEREGULATION, GLOBALIZATION AND PRIVATIZATION ARE

NEW ROUTES FOR INSURANCE SECTOR

• THE GLOBAL CONTEXT ABOUT INSURANCE REFORMS

• INDIA’S INITIATIVES IN OTHER SECTORS

• STRENGHTS AND WEAKNESSES

• DISMANTLING RESTRICTIVE BARRIERS

• POSITIVE EFFECTS OF COMPETITION

• BENEFITS OF GLOBALISATION

• NEED FOR LARGER RESOURCES FOR INFRASTURE

DEVELOPMENT

• NEED TO SPREAD INSURANCE COVER WIDER

• LIMITED CHOICE AVAILABLE TO THE CUSTOMER
 • COMPETITION FAVOURED BY THE CUSTOMER
MAJOR CHALLENGES IN THE INSURANCE SECTOR

• ENTRIES OF FORIGN COMPANIES IN INDIAN MARKET

• POLICIES AT THE INDUSTRY LEVEL

• CHANGE IN THE MINDSET

• ADEQUACY OF CAPITAL

• QUALITY OF PERSONNEL – RECRUITMENT AND TRAINING

• THE TOTAL STRENGH OF PUBLIC SECTOR IN INSURANCE SECTOR

IS 2 LACS EMPLOYEES

• UPGRADATION OF ORGANISATIONAL AND TECHNICAL SKILLS

• TRAINING OF SPECIALISTS

• MARKET RELATED POLICIES

• COST – CONSCIOUSNESS

• MAINTAING / ACQUIRING A COMPETITIVE EDGE

• TECHNOLOGICAL UPGRADATION

• INITIATIVES FOR ADOPTING TECHNOLOGY IN THE PUBLIC

SECTOR

• THE IMPORTANCE OF GOVERNMENT POLICIES

• IMPLICATIONS OF TECHNOLOGY FOR INSURANCE

• ACCOUNTING PRACTICES

• SCALE OF OPERATIONS

• GLOBAL INTEGRATION

• PUBLIC SECTOR RESTRUCTING

• REDEFINED ROLE AND OWNERSHIP PATTERN

• REDESIGING THE ORGANISATION SET UP

• A NEW APPROCH TO MARKETING

• INTERMEDIARIES AND RELIANCE ON NEW TECHNOLOGIES

• EMPHASIS ON TRAINING

• NEW RANGE OF PRODUCTS AND SERVICES

• NEW PRODUCTS TO MEET THE CHALLENGING PATTERN OF

RISKS

• INCREASED ECONOMIC ACTIVITY

• CHANGE IN LIFESTYLE

• RISK RE;ATING TO NEW TECHNOLOGIES

• POLITICAL RISK

• ENVIOURMENTAL RISK

• HEALTH COVER

• SOCIAL INSURANCE

• FINANCIAL RISK INSURANCE

• LOSS OF PROFIT COVER

• RESPONSIBILTY UNDER NEW COMPANY LAW

• COVER AGAINST UNFORSEEN CIRCUMSTANCES

• NEED FOR MORE COMPREHENSIVE COVERS

• PRODUCT DEVELOPEMNT

• BETTER EXPLOITATION OF EXISTING COVER

• PERSONAL AND INSTITUTIONAL COVERAGE

• RURAL AREAS

EVOLVING MARKETS AND STRATERGIES

• UNIQUE FEATURES OF INSURANCE MARKETING

• A PROFESSIONAL APPROCH TO MARKETING

• DESIGNING NEW STRATERGIES

• GETTING OUT OF CONTROL PRICE REGIME

• RELIABLE DATABASE FOR PRICE FIXATION

• PRICE BEHAVIOUR IN A DEREGULATED MARKET

• PRICES NOT THE SOLE CONSIDERATION

• CUSTOMER SATISFACTION

• USE OF TECHNOLOGY IN DISTRIBUTION

• TECHNOLOGY DRIVEN MARKETING

• CLAIMS SETTLEMENT

• TECHNOLOGY IN CLAIMS PROCESSING

• ROLE OF SURVEYERS

• OPPORTUNITY TO APPEAL

• IMPORTANCE OF DISTRIBUTION CHANNELS