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PREFACE

1. OBJECTIVES:
 To know what are the trends in General Insurance.
 To find out the developments in the General Insurance
 To find out general insurance and which are the companies involved in
 To find out the Procedure of Claims.

2. METHODOLOGY:

 The study was carried out in Mumbai.


 Extensive Library Research was carried out.
 Various Websites were referred.
 Primary data was collected through interviews.
 Various books, magazines and newspapers have been referred.
EXECUTIVE SUMMARY

Insurance is not the sale of products, but servicing customers. It is a system, by


which the losses suffered by a few are spread over many, Exposed to similar risks.
Insurance is a protection against financial loss arising: on the happening of an
unexpected event. Insurance companies collect premiums to provide for this
protection. A loss is paid out of the premiums collected from the insuring public and
the Insurance Companies act as trustees to the amount collected. The very
fundamental principle of spreading of the risk is actually practiced by the insurance
companies by reinsuring the risks that they have insured. The opening up of the
Insurance Sector to Private Companies, has made available more products and world
class service to Indian Customer.
This project has been made with an objective to give an insight into various
facts of General Insurance sector in India.An attempt has been made to explain
the apex body of General Insurance. i.e.
General Insurance Corporation of India, its structure, products and subsidiaries.
Also the review of latest entrants into insurance sector viz private players like
TATA AIG General Insurance Company, Reliance General Insurance Company
limited, Bajaj Allianz General Insurance Company, IFFCO Tokio General
Insurance Company, Royal Sundaram General Insurance Company limited and
ICICI Lombard General Insurance Company have been described in brief, Due
to the growth in the technological sector of the country, the insurance companies
have started utilizing these technologies to it’s optimum level. A case study
based on the devastating Mumbai floods on 26 th July 2005 is been prepared and
facts of the case are being listed along with the effect of the particular situation
on the General Insurance Companies is been justified.
INDEX
Origin of Insurance
Whenever there is uncertainty there is risk. We do not have any control over
uncertainties which involves financial losses. The risk may be certain events like
death, pension, retirement or uncertain events like theft, fire, accident, etc.
Insurance is a financial service for collecting the savings of the public and
providing them with risk coverage. It comes under service sector and while
marketing this service due care is taken in quality product and customer
satisfaction. The main function of the Insurance is to provide protection against
the possible chances of generating losses.
The insurance sector in India has come a full circle from being an open
competitive market to nationalization and back to a liberalized market again.
Tracing the developments in the Indian insurance sector reveals the 360-degree
turn witnessed over a period of almost two centuries.

Brief History of the Insurance Sector


The business of life insurance in India in its existing form started in India in
the year 1818 with the establishment of the Oriental Life Insurance Company in
Calcutta. Some of the important milestones in the life insurance business in India
are:
1. 1912: The Indian Life Assurance Companies Act enacted as the first
statute to regulate the life insurance business.
2. 1928: The Indian Insurance Companies Act enacted to enable the
government to collect statistical information about both life and non-life
insurance businesses.
3. 1938: Earlier legislation consolidated and amended to by the Insurance
Act with the objective of protecting the interests of the insuring public.
4. 1956: 245 Indian and foreign insurers and provident societies taken over
by the central government and nationalized. LIC formed by an Act of Parliament,
viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the
Government of India. The General insurance business in India, on the other hand,
can trace its roots to the Triton Insurance Company Ltd., the first general
insurance company established in the year 1850 in Calcutta by the British.
Some of the important milestones in the general insurance business
in India are:
1. 1907: The Indian Mercantile Insurance Ltd. set up, the first company to
transact all classes of general insurance business.
2. 1957: General Insurance Council, a wing of the Insurance Association of
India, frames a code of conduct for ensuring fair conduct and sound business
practice
3. 1968: The Insurance Act amended to regulate investments and set
minimum solvency margins and the Tariff Advisory Committee set up
4. 1972: The General Insurance Business (Nationalization) Act, 1972
nationalized the general insurance business in India with effect from 1st January
1973. 107 insurers amalgamated and grouped into four companies’ viz. the
National Insurance Company Ltd., the New India Assurance Company Ltd., the
Oriental Insurance Company Ltd. and the United India Insurance Company Ltd.
GIC incorporated as a company
INSURANCE SECTOR
The opening up of Insurance sector was a part of the on going liberalization
in the financial sector of India. The changing face of the financial sector and the
entry of several companies in the field of life and non life Insurance segment are
one of the key results of these liberalization efforts. Insurance business by way
of generating premium income adds significantly to be the GDP.
Over the past three years, more than thirty companies have expressed interest
in doing business in India. The IRDA (Insurance Regulatory Development
Authority) is the regulatory authority, which looks over all related aspects of the
insurance business. The provisions of the IRDA bill acknowledge many issues
related to insurance sector.
The IRDA bill provides guidance for three levels of players - Insurance
Company, Insurance brokers and Insurance agent. Life Insurance sector is one of
the key areas where enormous business potential exists. In India currently the
life insurance premium as a percentage of GDP is 1.3 % against, 5.2 per cent in
the US.
General Insurance is another segment, which has been growing at a faster
pace. But as per the current comparative statistics, the general insurance
premium has been lower than life insurance. General Insurance premium as a
percentage of GDP was a mere 0.5 'per cent in 1996. In the General Insurance
Business, General Insurance Corporation (GIC) and its four subsidiaries viz.
New India Insurance, Oriental Insurance, National Insurance and United India
Insurance, are doing major business. The General Insurance Industry has been
growing at a rate of 19 percent per year
The entry of several private insurance companies, particularly international
insurance companies, through joint ventures, will speed up the process of
insurance mobilization. The competition will unleash new schemes and benefits,
which will give consumers a better Chance to save as well as insure. The
regulatory system in India is relatively new and takes some more time to make
the Insurance sector a perfectly competitive one.
Insurance Regulatory Authority of India issued regulations on 15 subjects
which included appointed. Actuary, actuarial report, Insurance agents, Solvency
margins, re-insurance, registration of Insurers, and obligation of insurers to rural
and social sector, investment and accounting procedure. The reform in Insurance
in India is guided by factors like availability of a variety of products at a
competitive price, improvement in the quality of customer services etc. Also the
employment opportunities in the Insurance sector wil1 increase as major players
set their business plans in India. The policy of the government to open up the
financial sector and the Insurance sector is expected to bring greater FDI inflow
into the country. The increase in the investment limit in this vital sector has
generated considerable business interests among the foreign Insurance
companies" Their entry wil1 certainly change the Insurance sector considerably.
Insurance Sector Reforms:
In 1993, Malhotra Committee, headed by former Finance Secretary and RBI
Governor R.N. Malhotra was formed to evaluate the Indian insurance industry
and recommend its future, direction. The Malhotra committee was set up with
the objective of complementing the reforms initiated in the financial sector.
In 1994, the committee submitted the report and some of the key
recommendations included:
Structure:
1. Government stake in the insurance Companies to be brought down to
50%.
2. 2. Government should take over the holdings of GlC and its subsidiaries
so that these subsidiaries can act as independent corporations.
3. All the insurance companies should be given greater freedom to operate.
Competition:
I. Private Companies with a minimum paid up capital of Rs. 1 bn should be
allowed to enter the industry.
2. No Company should deal in both Life and General Insurance through a single
entity.
3. Foreign companies may be allowed to enter the industry in collaboration
with the domestic companies.
4. Postal Life Insurance should be allowed to operate in the rural market.
5. Only one State Level Life Insurance Company should be allowed to
operate in each state.
Regulatory Body:
1. The Insurance Act should be changed.
2. An Insurance Regulatory body should be set up.
Controller of Insurance (Currently a part from the Finance Ministry) should
be made independent.
Investment:
1. Mandatory Investments of LIC Life Fund in government securities to be
reduced from 75% to 50%.
2. GIC and its subsidiaries are not to hold more than 5% in any company
(There current holdings to be brought down to this level over a period of time.)
Customer Service
1. LIC should pay interest on delays in payments beyond 30 days.
2. Insurance companies must be encouraged to set up unit linked pension plans.
3. Computerization of operations and updating of technology to be carried
out in the insurance industry.
The committee emphasized that in order to improve the customer
Services and increase the coverage of the insurance industry should open up
to competition. But at the same time, the committee felt the need to exercise
caution as any failure on the part of new players could ruin the public confidence
in the industry. Hence, it was decided to allow competition in a limited way by
stipulating the minimum capital requirement of Rs. 100 crores. The committee
felt the need to provide greater autonomy to insurance companies in order to
improve.
Insurance Regulatory Authority
On the recommendations of the Malhotra Committee, government has set up
an interim Insurance Regulatory Authority (IRA), with a view to activate an
insurance regulatory apparatus essential for proper monitoring and control of the
insurance industry. The IRA is headed by a chairman who is also Controller o0f
insurance and chairman of TBC. The other members of the IRA, not exceeding
seven in number of whom not more than three shall serve full time, shall be
nominated by the central government.

INSURERS:
Insurance industry, as on 1.4.2000, comprised mainly two players: the state
insurers:
1. Life Insures:
1.1. Life insurance corparatio of india (LIC) General insuers
1.2. General insurance corporation of india(GIC)
INSURANCE INDUSTRY:
CLASSIFICATION
INSURANCE
Life General
Insurance Insurance
Life Insurance Oriental
Corporation Insurance
of India. Company Ltd

New India
Assurance
Company Ltd.

National
Insurance
Company Ltd.

United India
Insurance
Company Ltd.
SOME PLAYERS IN THE INDUSTRY:
Life General
Insurance Insurance

Bajaj Alliaz General


ICICI Prudential Life
Insurance Company
Insurance Ltd.
Ltd

Tata AIG Life Reliance General


Insurance Insurance Company
Corporation Ltd. Ltd.

ING Vysya Life Tata AIG General


Insurance Insurance Company
Corporation Ltd. Ltd.

Om Kotak Mahindra
Royal Sundaram
Life
Alliance Insurance
InsuranceCorporation
Company Ltd.
Ltd.
4 I’s of Insurance Service
The 4 I’s refers to the different dimensions/ characteristics of any service.
Unlike pure product, services have its own characteristics and its related
problems. So the service provider needs to deal with these problems accordingly.
The service provider has to design different strategies according the varying
feature of the service. These 4 I’s not only represent the characteristics of
different services but also the problems and advantages attached to it.
These 4 I’s can be broadly classified as:
• Intangibility
• Inconsistency
• Inseparability
• Inventory

4 I’s of
Insurance
Service

Intangibility Inconsistency Inseparability Inventory

• Intangibility:
Insurance is a guarantee against risk and neither the risk nor the guarantee is
tangible. Hence, insurance rightly come under services, which are intangible.
Efforts have been made by the insurance companies to make insurance tangible
Inconsistency
Service quality is often inconsistent. This is because service personnel have
different capabilities, which vary in performance from day to day. This problem
of inconsistency in service quality can be reduced through standardization,
training and mechanization.
• Inseparability
Services are produced and consumed simultaneously. Consumers cannot and
do not separate the deliverer of the service from the service itself. Interaction
between consumer and the service provider varies based on whether consumer
must be physically present to receive the service.
• Inventory
No inventory can be maintained for services. Inventory carrying costs are
more subjective and lead to idle production capacity. When the service is
available but there is no demand, cost rises as, cost of paying the people and
overhead remains constant even though the people are not required to provide
services due to lack of demand.

In the insurance sector however, commission is paid to the agents on each


policy that they sell. Hence, not much inventory cost is wasted on idle inventory.
As the cost of agents is directly proportionate to the policy sold
GENERAL INSURANCE
With the opening up of the insurance industry to the private sector, the need
for a strong, independent and autonomous Insurance Regulatory Authority was
felt. As the enacting of legislation would have taken time, the then Government
constituted through a Government resolution an Interim Insurance Regulatory
Authority pending the enactment of a comprehensive legislation.
The Insurance Regulatory and Development Authority Act, 1999 is an act to
provide for the establishment of an Authority to protect the interests of holders of
insurance policies, to regulate, promote and ensure orderly growth of the
insurance industry and for matters connected therewith or incidental thereto and
further to amend the Insurance Act, 1938, the Life Insurance Corporation Act,
1956 and the General insurance Business (Nationalization) Act, 1972 to end the
monopoly of the Life Insurance Corporation of India (for life insurance business)
and General Insurance Corporation and its subsidiaries (for general insurance
business).
Definition and meaning:
1. INSURANCE:
Insurance is the means of managing risk and protection against financial loss
arising as a result of contingencies, which may or may not occur.
In other words, insurance is the act of providing assurance, against a possible
loss, by entering into a contract, with one who is willing to give assurance.
Through this contract the person willing to give assurance binds himself to make
good such loss, if it occurs
2. GENERAL INSURANCE:
General insurance means managing risk against financial loss arising due to
fire, marine or miscellaneous events as a result of contingencies, which may or
may not occur.
General Insurance means to “Cover the risk of the financial loss from any
natural calamities viz. Flood, Fire, Earthquake, Burglary, etc.. i.e. the events
which are beyond the control of the owner of the goods for the things having
insurable interest with the utmost good faith by declaring the facts about the
circumstances and the products by paying the stipulated sum , a premium and not
having a motive of making profit from the insurance contract.”
Some of the General Rules:
1. Mis-description :
The insurance policy shall be void and all the premiums paid by insured may be
forfeited by the insurance company in the event of mis-presentation or mis-
declaration and/or non-disclosure of any material facts.
2. Reasonable care :
The insured shall take all reasonable steps to safeguard the property insured
against any loss or damage. Insured shall exercise reasonable care that only
competent employees are employed and shall take all reasonable precautions to
prevent all accidents and shall comply with all statuary or other regulations
3. Fraud :
If any claim under the policy may be in any respect fraudulent or if any
fraudulent means or device are used by the insured or any one acting on the
insured’s behalf to obtain any benefit under the insurance policy, all the benefits
under the insurance policy may be forfeite
Few basic principles of general insurance are :
1. Insurable interest
2. Utmost good faith
3. Subrogation
4. Contribution
5. Indemnity
5 Risks of loss not covered under general insurance are:
The loss or damage or liability or expenses whether direct or indirect occasion
by happening through or arising from any consequences of war, invasion, act of
foreign enemy, hostilities (whether war be declared or not), civil war, rebellion
revolution, civil commotion or loot or pillage in connection therewith and loss or
damage caused by depreciation or wear and tear. However the risk of loss or
damage by war can be insured by payment of additional premium in some cases
only
Product levels:
In this figure there is a nucleus or core in the center, which is supported by
series of tangible and intangible features and benefits and these form a cluster
around the core product.
Level Type of services Contents Insurance sector

1. Life insurance policy


1 Core service Basic service product 2. Non Life insurance policy

• After sales service


• Low
purchase conditions that
2 Expected service claim
must be met.
settling
period.
• Technology
Something • Online premium
Augmented
3 different, payment
service
• Payment through credit cards
• Standing instruction to bank

Features that attract the customers and are


4 Potential useful to them.
service

The core product of insurance company is insuring life and non life products.
People opt for this service as they want to secure their life, people dependent on
them and other valuable things in life.
The time factor plays an important role while providing service to the
customer. The customer expects that the procedures for settling the claim should
be short and not much time consuming. They should get the benefits of the
service as soon as possible.
Today the technology is boosting in each and every field. Insurance is not an
exception. Companies have started providing customers facility of online
payment of premium through their websites. They also provide online assistant to
the customer the policy status and how to calculate the premium. To calculate the
premium they just need the present age, the type of police, sum assured, and
accident covered if any. By filling in this information you can calculate the
amount of premium you have to pay. The customer can pay their premiums by
means of credit cards or can also give standing instruction to the bank in order to
pay their monthly premiums.
The insurance companies also provide loan facilities against their policies. At
present loans are granted on unencumbered polices as follows:
• Up to 90% of the Surrender Value for policies, where the premium due is
fully paid-up, and
• Up to 85% of the Surrender Value for policies where the premium due is
partly paid-up.
The minimum amount for which a loan can be granted under a policy is
Rs150. The rate of interest charged is 10.5% p.a., payable half-yearly. Loans are
not granted for a period shorter than six months, or on the security of lost policies
(the assured must have the duplicate policies) or on policies issued under certain
plans. Certain types of policies are, however, without loan facility.
FREQUENT TERMS USED
Agent:
An insurance company representative licensed by the state, who solicits,
negotiates or effects contracts of insurance, and provides service to the
policyholder far the insurer.
Actual Total Loss:
It is a loss where the goods are completely lost and become irrecoverable
Additional cover:
An insurance policy extended to cover additional risk perils such as strikes.
Riots and Civil commotion etc on payment of extra premium.
Agreed value policy:
Policy which undertakes to pay a specified amount in case of total loss.
Under this case the policy does not take into account the current market value.
Assessor:
Person who estimates the value of goods for the purpose of apportioning the
sum payable by the underwriters to settle the claims. Also called as Surveyor.
Assured:
Party indemnified against 19ss by means of insurance.
Burglary:
It is a theft committed by breaking into or out of the premises. Evidence of
breaking In, Is necessary
Coverage:
The scope of protection provided under a contract of insurance; any of several
risks covered by a policy.
Cargo insurance:
A generic term used in both inland marine and ocean marine insurance to
designate the type’s of insurance available to provide coverage for cargo that is
being transported by truck, rail, air, ship, or boat.
Certificate of Insurance:
A statement of coverage issued to an individual insured, specifying the
insurance benefits and principal provisions applicable to the member.
Claim:
The formal request by a policyholder or a claimant for payment of loss under
an insurance policy.
Co-insurance:
A provision under which an insured who carries less than the stipulated
percentage of insurance to value, will receive a loss payment that is limited to
the same ration which the amount of insurance bears to the amount required;
Cover Note:
Is the document that is issued provisionary pending issuance of insurance Policy.
Indemnity:
Legal principle that specifies an insured should not collect more than the
actual cash value of a loss but should be restored to approximately the same
financial position as existed before the loss.
Insurable Interest:
A condition in which the person applying for insurance and the person who is
to receive the policy benefit will suffer all emotional or financial loss, if any
untouched event occurs. Without insurable interest, an insurance contract is
invalid,
Insurance:
Social device for minimizing risk of uncertainty regarding loss by spreading
the risk over a large enough number of similar exposures to predict the
individual chance of loss.
Net Premium:
The portion of premium rate which is designed to cover benefits of the
policy, excluding expenses, contingencies and profit.
Policy:
Is the legal document that has the conditions of the insurance contract.
Premium:
It is the amount paid to secure an insurance policy.
Salvage:
Recovery made by an insurance company by the sale of property which has
been taken over from that insured as a part of loss settlement. The remains of
damaged vehicle or any other property.
Third party:
Any person other than the two parties signing an insurance, contract.
Underwriting:
Underwriting of a risk involves consideration of material, facts on the basis of
which a decision will be taken whether to accept the risk and if so at what rate of
premium.
Public Sector Subsidiaries
I. Oriental Insurance Company.
The Oriental Insurance Company Ltd. (OICL) is one of the leading General
Insurance companies in India and is a subsidiary of the General Insurance
Corporation (GIC) of India. It is one of the oldest Insurance. If companies and
was established in the year 1947. The Company transacts all kinds of non-life
insurance business ranging from insurance covers for very big projects to small
rural insurance covers. OICL, is the –
• First to have underwritten the biggest Grass Root Refinery Project,
Reliance Jamnagar Refinery.
• First to have issued a Package Policy under mega risk to PSU Oil giants. .
• First to have issued Advance Loss of Profits policy in India.
• First to have issued directors & Officers liability policy in India.
• First to introduce Kidnap & Ransom cover in India.
• First to have issued Stock Brokers and Stock Exchange custodial
services policy in India.
• First to have issued tailor-made cover for Cellular Communication
systems.
• First to have front office computerization drive in India.
• First to have a system of in-house loss assessment upto statutory limits.
• First to have started motor third party conciliatory proceeding
THE PROFILE
The Oriental Insurance Company' Ltd. (OICL) is one of the leading General
Insurance companies in India and is a subsidiary of the General Insurance
Corporation (GIC) of India. It is one of the oldest Insurance companies and was
established in the year 1947. The Company transacts all kinds of non-life
insurance business ranging from insurance covers for very big projects to small
rural insurance covers.
OICL has its Head office in New Delhi, the capital of India. The Company has
21 Regional Offices, 311 Divisional Offices and 635 Branch offices in various
cities of the country.
Reinsurance connections are spread all over the world. The Company has a
very high reputation in the Reinsurance market.
OICL specializes in devising special covers for large projects like Power
Plants, Petro-chemical, Steel Plants and chemical plants. It has a highly
technically qualified and competent team of professionals, to render the best
customer service. The Company has a dedicated project cell at the Head Office
as well as major cities of India. A special R & D team has been dedicated to
bring out special innovative covers like Stock-Brokers' Policies, Special Package
Policies etc.
MISSION
 To develop general insurance business in the best interest of the community
 To provide financial security to individuals, trade and commerce by
offering insurance products and service of high quality at affordable cost
COMMITMENTS TO THE CITIZENS
 In areas coming within competence of GIC respond to all commercially viable
 general insurance requirements of the citizens, not hitherto available within
three months from the date on which such a demand is received.
 In areas covered by tariff, appropriate proposals will be submitted to the
Tariff Advisory Committee with appropriate comments within two months.
 Continue to provide customized insurance products for weaker sections of
the society at affordable price within six months of receipt of a request for
a specific type of cover.
 Prepare booklets on standard policy covers setting out essential
information and make such booklets readily available for purchase at
suitable places.
 Promote customer education in general insurance service by holding
workshops in important regional centers.
 Make available to a customer, on request to the policy issuing office, the
status of his claim and/or claim settlement details within 7 working days.
 Endeavor to set up a system of Ombudsman at four metropolitan cities to
conciliate disputes on personal line insurance claims
CORPORATE OBJECTIVES:
 To serve better the insurance needs of the entire community, keeping
CUSTOMER as the focus..
 To manage Business profitably, Manage funds judiciously and deploy
investible funds for optimum Yield.
 To manage Business profitably, Manage funds judiciously and deploy
investible funds for optimum Yield.
 To work towards minimization of losses and develop Risk Management
Technologies.
 To function as a strong and dynamic non-life insurer
PRODUCTS:
The various products can be grouped under the following categories:
 Individuals/Family
 Marin
 Professionals
 Business/Office/Traders
 Engineering/Industry
 Agriculture/Sericulture/Poultry
 Animals/Birds
 Aviation
 Motor Vehicle – Private/Commercial
 Health-Mediclaim
 Overseas Mediclaim
 Personal Accident
II. The New India Assurance Company.
Established by Sir Dorab tata in 1919, New India’ was the first fully Indian
owned insurance company in India. There were nearly 150 insurance firms in
India - including ones from France, the UK and America. These were operated
through managing agencies in India largely held by Indian business houses.New
India is a leading global insurance group, with offices and branches throughout
India and various countries abroad. The company services the Indian
subcontinent with a network of 1,130 offices, comprising 26 Regional offices,
366 Divisional offices and 738 Branches. With approximately 25,000 employees,
New India has the largest number of specialist and technically qualified
personnel at all levels of management, who are empowered to underwrite and
settle claims of high magnitude
New India has historically been a frontrunner in several diverse fields of
business and industrial activity. New India are lead underwriters of India's Space
programn1e having insured several INSAT and other, satellites. New India are
pioneers in Engineering insurance, Financial risks insurance and are now offering
customized Risk Management solutions to our: corporate clients in the Private
and public Sectors in Power, Telecom, Petrochemicals, Steel and Automobile
industries
New India's foreign operations started with the establishment of an office in
London in 1920. An international presence was built up by New India as a direct
writing Company in 23 countries spanning 5 continents. It increased its reach
and capacity, for reinsurance facilities for all classes of business.
Starting way back in the 1920s, New India's UK operations have now taken
deep root. New India is party to one of the oldest reinsurance treaties in the UK
market. Through participation in Aviation and Marine Hull underwriting, New
India has, over a period of time, strengthened its market presence. In 1980's with
the establishment of a full-fledged branch to underwrite UK Business, it has
extended its UK operations, authorized by the Department of Trade and industry
The New India commenced its Japan operations in 1950, and now: operates
through 8 branches. The Japanese operation covers 35% of the Company’s
overseas premium income.
II. The National Insurance Company
Since incorporation in the year 1906, National Insurance~ Company has been
carrying out general insurance business under private management until 1972,
the year of its nationalization. In the same year 22 foreign and 11 Indian
Insurance Companies were amalgamated with National Insurance Company
Limited, as a subsidiary company of General Insurance Corporation of India
Headquartered in Calcutta it has an organizational network of over 964
offices with around 20,077 trained workforces. The company also has operations
in Hong Kong and Nepal and ranks among the top global business insurers. Later
on in 2002, with the passage of Insurance amendment Bill (2002), National
Insurance Company has been delinked from GlC and. has been functioning as an
independent company
Its product range includes motor vehicle insurance; fire insurance on
buildings and other assets; various crime covers like burglary and theft of cash;
machinery breakdown cover for industrial equipment; transit damage cover for
imported or exported goods; as well as legal liability cover.
Professional indemnity and directors and officer’s liability covers are some
of the new covers. NICO General Insurance seeks to attract clients and
intermediaries and flexibility in claims settlements, and at the same time
ensuring that we do not erode shareholder value. The objective is to add value to
the shareholders' funds whilst ensuring customer satisfaction? The strength of
NGI is in its balance sheet.
NICO General Insurance views the future and its prospects as extremely
bright, exciting and rewarding for staff, clientele and shareholders alike.
IV. United India Insurance Company
United India Insurance is one of the four subsidiaries of the General
Insurance Company carrying on general insurance business with its head office
at Chennai. Later on in 2002, with the passage of Insurance amendment Bill
(2002), United India Insurance has been Del inked from GIC and has been
functioning as an independent company.
UI spans the country with a network of 1123 offices and manpower of Over
21,000 employees. The organizational structure comprises 22 regional offices,
327 divisional offices.., and 777 branch offices, supported by 21,505 employees.
ICRA has maintained the iAAA rating, indicating the claims paying ability of
United India Insurance (UII) to be of the highest order. The rating takes into
consideration the favorable prospects for the domestic general insurance industry
following the deregulation of the sector.
UII continues to be a dominant player in the Indian insurance industry, with
an overall market share of 25% and a leadership position in the southern
markets. UII is a Pioneer of Personal Insurance Products in India who
specializes in non-life insurance products including Medical and Accident
Insurance. It enjoys a market share of over 25 percent of the non-life insurance
sector in India.
PRIVATE COMPANIES
1. Bajaj Allianz General Insurance Company:
Allianz AG:
Allianz group was founded in 1890 and is one of the world's leading insurance
companies with over 100 year's experience in insurance and related services. It is
also the largest insurer in Europe. Allianz group has multi-local structure and
presence in over 70 countries. The key business areas of Allianz group include
General Insurance (property, engineering, marine, motor, casualty and
miscellaneous), Reinsurance, Risk Management, Life & health insurance, Asset
Management and Pension Funds Management.
Bajaj Auto Ltd.
Bajaj Auto Ltd the flagship company of Bajaj Group was incorporated in 1945
as Bachraj Trading Corporation. Initially it started by assembling two and three
wheelers in collaboration with Piaggio of Italy. After the expiry of the Agreement
in 1971 the two and three wheelers acquired the brand name of Bajaj. The
strength of the company lies in its strong brand image and ability to offer value
for money products leveraging on its large-scale operations.
The Joint Venture
Bajaj Allianz General Insurance a joint venture non-life company promoted
jointly by Bajaj Auto and German insurer- Allianz. Indian auto major holds 74%
while Allianz holds 26% in the Joint Venture, and has an authorized and paid up
capital of Rs. ll0 crores. Mr. Graham Norris is the CEO of the company. Bajaj
Allianz General Insurance will leverage the customer base and expertise of Bajaj
Auto Ltd and Allianz.
Royal Sundaram General Insurance Company Limited:
Sundaram Finance
Sundaram Finance Limited (SF) was established In 1954 with a paid-up
capital of Rs. 0.02 million, primarily to assist the development of Road Transport
Industry.
SF has been providing financial assistance to road transport operators for
acquiring commercial vehicles under hire purchase system. Emerging as the
leader in the industry, SF has been staying at that position for over four decades.
SF diversified into equipment leasing in 1981.
Royal & Sun Alliance
Royal & Sun Alliance is one of the world's leading international Insurance
companies. The Sun was established in 1710 and is the oldest. Insurance
company in existence still trading under its original name. The
Alliance was founded in 1824 and the Royal in 1845.
The Group's international presence began to emerge in the 18th century with
business ventures in mainland Europe. Forays into the US and Canadian markets
followed in the 19th century, and in 1998, Royal & Sun Alliance became the first
UK insurance company to be granted a license to operate in China.
The Joint Venture
The joint venture bringing together Royal & Sun Alliance Insurance and
Sundaram Finance Limited started its operations from March 2001. The
company is Head Quartered at Chennai, and has two Regional Offices, one at
Mumbai and another one at Delhi. The venture is aiming at Rs. 120 Crores in
revenue during first year of its operations and is confident of breaking even by
fifth year.
ICICI Lombard General Insurance Company:
ICICI
ICICI Ltd. was established in 1955 by the World Bank, the Government of
India and the Indian Industry, to promote industrial development of India by
.Providing project and corporate finance to Indian industry.
Since inception, ICICI has grown from a development bank to a financial
conglomerate and has become one of the largest public financial institutions in
India. ICICI has thus far financed all the major sectors of the economy, covering
6,848 companies and 16,851 projects.
Lombard
Lombard Canada Ltd., is a leading insurance management company
responsible for providing insurance management services for all of the Lombard
group's commercial, personal, and specialized insurance companies. Canadian
owned and operated, Lombard Canada Ltd. has its head office in Toronto and has
annual sales in excess of$500 million and is a wholly owned subsidiary of
Fairfax Financial Holdings Limited (FFH on the TSF Lombard Canada Ltd. has
achieved a reputation for providing solid underwriting performance, diversified
books of business and strong capital positions.
The Joint Venture
ICICI Lombard General Insurance Co will be headed by Mr. Sanjiv Kerkar.
ICICI would hold about 74 percent stake, while Canadian insurer Lombard would
hold the maximum permissible 26 percent and commence business with a start-
up capital ofRs.100 crore. ICICl Lombard has plans to sell covers to the
corporate clients of ICICl. St the same time it will sell property insurance for
ICICI home loan seekers and auto insurance for those availing of car finance.
4. Tata AIG General Insurance Company Limited:
TATA Group
Tata Enterprises with 82 companies, spread over seven sectors and with an
annual turnover exceeding US $ 8.8 billion, employs more than 262,000 people.
Tata Group has shown over years that it is a value driven company and has"
pioneering contributions in various fields including insurance, activation, iron
and steel. Tata companies have forged a number of global alliances with eminent
international partners in several fields. In terms of capital market performance as
many as 40 listed Tata companies account for nearly 5% 6fthe total market
capitalization of all listed companies.
TATA Group in Insurance
The Late Sir Dorab Tata was the founder Chairman of New India Assurance Co.
Ltd., a group company incorporated way back in 1919.
Government of India took over the management of this company as a part of
Nationalization of general insurance companies in 1972. Not deterred by the
move, Tata group have ventured into" risk management services having tied up
with AIG group, back in 1977, with the incorporation of Tata AIG Risk
Management Services Pvt. Ltd.
AIG
“American Insurance Group is the leading U.S. based international insurance
and financial services organization and the largest underwriter of commercial and
industrial insurance in the United States. Its member companies write a wide
range of commercial and personal insurance products through a variety of
distribution channels in over 130 countries and jurisdictions throughout the
world.
AIG's global businesses also include financial services and asset management,
including aircraft leasing, financial products, trading and market making,
consumer finance, institutional, retail and direct investment fund asset
management, real estate investment management, and retirement savings
products.
The Joint Venture
Tata AIG General Insurance Co. Ltd. has a start-up capital of Rs. 125 crores
of which 74 per cent has been brought in by Tata Sons and American partner
brings in the balance 26 per cent.
Tata -AIG plans to be the first Indian insurance company to offer a
comprehensive policy to cover various risks in the IT sector, risk arising out of
virus, cyber crime, negligent acts, errors and omissions and third party liability
from a security failure. Other products on offer are property, casualty, marine,
directors and officer’s liability, accident and health, homeowners and automobile
insurance.
Bajaj Allianz General Insurance Products
o Personal Accident
o Hospital Cash Daily Allowance Policy
o Health Guard
o Critical Illness
o Burglary Insurance
o Householders Insurance
o Travel Companion
o Fidelity Guarantee Policy
o Office package
o Money Insurance
o Public Liability
o Plate Glass Insurance
o Consequential Loss (Fire) Insurance Policy

Tata AIG General Insurance Company Products


o Executive Guard
o Family Guard
o Travel Guard
o Home Secure
o Business Guard Sanjeevani
o Business Guard Jyothi
Reliance General Insurance Company Limited:
Reliance Group'
Reliance 'Group is India's largest business house has annual sales turnover of
Rs. 41,280 crore (US$ 9,003 million) and has posted a net profit of Rs. 2,940
crore (US $ 641 million) for the 12-month period ending June 30, 2000. The
Group has total assets of Rs. 52,100 crore and net worth of Rs. 22,415 crore. It
has a large investor base of over 5 million, as well as a large customer base in
retail (textiles, LPG, Cellular phones, etc.) and commercial segments.
Reliance Industries Limited, India's largest private sector enterprise, is a,
major player in the Indian petrochemicals sector. Relianc6~s operations capture
value addition at every stage from producing crude oil and gas to polyester and
polymer products and are vertically integrated to the production of textiles.
Reliance has one of the largest marketing networks in the Indian Industry. All its
brands are market leaders.
Reliance General Insurance Company Limited
Reliance group has announced its plans to enter the Indian insurance sector-
both in the life and general insurance businesses'. Reliance Industries plans to
bring in around Rs. 300 Crores into its insurance venture through its financial
arm Reliance Capital Ltd.
Reliance group will be the lead investor for this initiative. The two companies
will have an initial authorized capital of Rs.200 crores (US $ 43.62 million) each.
This is the first application from an Indian company without a foreign insurance
tie-up. However, Reliance will associate with international insurance consultants
to bring the best practices in the business to India.
Iffco Tokio General Insurance Company ltd
Iffco
Indian farmer’s fertilizers cooperative limited was created on Nov 3, 1967 as a
multi unit cooperative society engaged in production and distribution of fertilizers
the byelaws of the society provide a broad framework for the activities of IIFCO as a
cooperative society the main emphasis is on production and distribution of fertilizers
The Tokio marine and fire insurance
The Tokio marine and fire insurance (Tokio marine) company holds a leading
position in Japan’s property and casualty insurance industry. It is the second
largest in P & C insurance market in the world.
With superior capitalization, stable profitability and conservative management
tem the company provides a large rage of property and casualty insurance
products n services including, automobile fire and personal accident to retail
corporate clients
The Joint Venture
IFFCO TOKIO General Insurance Company is a joint venture promoted by
India Farmers Fertilizers Co-Operative, Tokio Marine and fire Insurance
Company, Japan, the fifth largest insurance company in the world, Krishak
bharathi Cooperative ltd. (KRIBHCO), and Indian potash. Their contribution to
the Rs.100 crore equity capitals is 49 percent, 20 percent and 5 percent
respectively. The head Office is in Delhi and operating Office are in about 20
cities.
IFFCO Tokio Insurance Products
• Home & Family Protector
• Standard Fire & Special Perils
• Burglary and House Breaking
• Personal accident
• Trade Protector
• Travel Protector
Market Share
As by this time we are well versed with all the General Insurance companies
both Public and private we know how each company contributes serving the
customers and also generating revenue through it. We also know that General
Insurance contributes towards the Gross Domestic Profit, but now let us see how
these companies individually contribute towards the Gross Domestic Profit
through the way of Market Share of each company both Private & Public.
As we can see in the Pie Charts a comparison of 3 consecutive years have
been taken which are 2003-04, 2004-05 & 2005-06.
Public Companies have been dominating the General Insurance Market since
a long time, the market share of Private companies have been improving in the
last few years by approximately 6 % each year, but then too Public sector
companies capturing the major market.
But also in Public sector companies New India Assurance is been leading the
way which is been closely followed by the remaining. Among the private players
we can note that ICICI Lombard is leading the way.
By considering 2005-06 as the base year, we can note that the market share of
Public companies have been deteriorating having 73.43% of the market share
from 85.54% in the year 2003-04.
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITARIAN
Insurance Regulatory and Development Authority Act, 1999, came into being from
19/04/2000.
Objects are stated in Act are as follows:
"An Act to provide for establishment of Authority to protect interests of
holders of insurance policies to regulate, promote and ensure orderly growth of
insurance industry and for matters connected there with and further to amend
Insurance Act, 1938, Life Insurance Corporation Act, 1956 and General
Insurance Business (Nationalization) Act, 1972".
Composition:
IRDA will consist of a chairperson and not more than Five whole time
members and not more than four part time members.
Whole time members shall hold office for 5 years or until age of 62 (65 in
case of chair person) whichever is earlier. Part time members shall hold office
for not more than 5 years.
Powers and Function of Authority
1. To regulate, promote and ensure orderly growth of insurance and re-
insurance business
2. To issue a certificate of registration, renew, modify, withdraw, suspend or
cancel such registration of applicant, i.e. insurance company
3. To prepare a code of conduct for agents, surveyors and loss accesses and
other intermediaries who take part in insurance business
4. To exercise all powers and perform all functions of controller of Insurance
under Insurance Act, 1938
5. To protect interest of policy holders in matters concerning assignment of
policy, settlement of claims, terms and conditions of contract etc.
6. To promote efficiency in conduct of insurance business
7. To promote and regulate professional organizations connected with insurance
business
8. To regulate investment of funds of insurance companies
9. To regulate maintenance of margin of solvency
10. To adjudicate disputes between insurers and intermediaries
11. To call for information from" undertake inspection and conduct
enquiries and investigations including audit of insurers, intermediaries etc.
12. To control and regulate rates', advantages, terms and conditions offered
by Insurers in respect of general insurance business riot so controlled by Tariff
Advisory committee
13. To prescribe manner and forms in which books of accounts is to be
maintained
14. To exercise other powers as such may be prescribed by central government.
Insurance Advisory Committee:
Authority has power to appoint a committee to provide guidance to Authority
and committee is called Insurance Advisory Committee.
This committee contains not more than 25 members excluding ex-officio
member representing interest of commerce, trade industry, agriculture, surveyors,
agents, intermediaries etc.
Chairperson and members ~f Authority are ex-officio members of Insurance
Advisory Committee.
 Code of conduct for insurance agent: Every insurer agent shall,
 Identify himself and insurance company of whom he is an agent
 Disclose his license to prospect on demand
 Give requisite information in respect of insurance product offered for sale
by his insurer and into account needs of prospect while recommending a
specific 'plan.
 Disclose scales of commission payable to him if asked by prospect
 Indicate premium to be charged by insurer on insurance product
 Explain to prospect nature of information required in proposal from and
also importance of disclosure of material information
 Bring to notice of insurer any adverse habits or income inconsistency of
Prospect
 Inform promptly about acceptance of rejection of proposal by insurer.
 Render necessary assistance to policyholder or claimant in complying
with, requirements of settlement of claims
Products
The different types of General insurance products are listed below. While
most policies are optional that is at the behest of the insured, some are
mandatory. The mandatory ones are:
 Motor Insurance
 Public liability (for corporate class) Other policies include:
 Fire insurance
 Building or flat
 Furniture fixtures & other content’s
 Loss of profit that is consequential loss Miscellaneous insurance
 Personal insurance o Burglary ,theft
 Workmen’s compensation
 Fidelity guarantee
 Cancer
 Mediclaim
 Comprehensive Package Policy for jewelry, T.V, V.C.R, Furniture etc…
Policy Marine Hull Insurance
Inland vessels ocean going vessels, fishing & sailing vessels, freight at risk,
construction of ships, voyage insurance of various vessels, ship breaking ,
insurance Awaiting break up, insurance Oil & energy in respect of onshore &
offshore risks including construction risk.
Property Insurance
Property insurance covers land, buildings and the contents of building.
There are several types of Property insurance packages, but the most common are
the Fire Insurance and burglary Insurance
Fire Insurance
Fire insurance is a comprehensive policy, which goes beyond only fire accidents.
The policy, besides covering loss on account of fire, also covers loss on
account of the following
Overseas Mediclaim Policy – Travel Insurance
Policies issued in India under Overseas Mediclaim Scheme, as approved by
Reserve Bank Of Indian residents traveling abroad for any approved visits viz.
Business, Study Tour, Specialized training conferences, Employment or higher
studies. Premium on such policies may be collected in rupees but for employment in
foreign currency.
This policy was originally introduced in 1984, to provide for payment of
medical expenses in respect of illness suffered or accident sustained by Indian
residents during their overseas trips for official or holiday purposes.
In. 1998, a new policy known as VIDESH YATRA MITRA, was made
available for Business and Holiday Travelers. Cover for corporate frequent
travelers were also introduced.
The policy provides for following Sections:-
1) Medical Cover
2) Repatriation Of Remains
3) Checked Baggage Loss / Baggage Delay
4) Passport Loss
5) Personal Accident – Overseas
6) Personal Liability
7) Hijack Relief Benefit

The plan available now with various companies are however not the same as
each company has introduced. Some variation in the cover to suit the varying
requirements.
Types of overseas Mediclaim insurance policy
1) Individual Overseas Mediclaim insurance policy
2) Student Overseas Mediclaim insurance policy
3) Senior Citizen Mediclaim insurance policy

CHANGING SCENARIO OF GENERAL INSURANCE MARKET


'Looks to the future with confidence and optimism'
Brief the history of general Insurance.
In India General Insurance business started, Marine Insurance started on later
part of the 17th century. Before nationalization in 1947 we have 147 insurance
companies, foreign and Indian both. But during there nationalization, in 1973 we
have 107 companies that merge into four companies, i.e. taken over by
Government.
General Insurance Corporation of India (GIC) was set up in 1973 as a holding
company, with four subsidiary operating companies - National Insurance co Ltd.,
New India Assurance Co. Ltd., Oriental Insurance co Ltd., and United India
Insurance Co Ltd., with a clear cut mission as set out in the Act.
The overall scenario in the insurance market in India after nationalization.
GIC and its subsidiaries function through a vast country - wide network of
around 4100 offices spread across the length and breadth of the country, GIC has
taken the benefit of insurance to almost every district, across hilly terrain and
often inaccessible areas of the country. The customer interface is made easy
through a network of agents, development officers and employees at Branch,
Divisional and Regional offices as well as at the corporate level
The GIC and its subsidiaries have a workforce of approximately 86,000
In 1973 tainted at various levels through in house training institutions. Now
the total number of employees went up.
The industry has also promoted the National Insurance Academy (NIA),
which is the premier training institute in insurance, catering not only to Indian
Nationals but also to select foreign nationals. The industry issues around 23
million documents and settles 2 million claims every year.
Country wide computerization in the recently past has made the task of
policy- holder's servicing easier and rapid. At the same time, profitable lines and
premium components increases and we became a investment company.
Where does Indian Insurance sector stand compared to International
Insurance Sector?
Technologically, Indian insurance sector is quiet comparable with the
international sector. Our vast resources of skilled and technical manpower, huge
market potentiality and technical know-how - all are comparable with the
international market. But lacking in the process of computerization and in
pricing (premium rate) is also seen. In product, we have demand in less because
lack of awareness for adequate insurance cover in India with insuring public.
Our marketing strategy is not very modern. But we are trying to rectify both
these (Technology and Marketing) areas. The problems faced by Indian
Insurance Sector Today:
The Schemes
Recognizing its organizational strengths, the Govt. of India has also entrusted
the corporation with the administration of various schemes for social melioration
and public welfare. Social security schemes benefiting millions of Citizens below
the poverty line. Personal Accident Insurance and Hut Insurance are operated all
over the country for which the premiums are paid by the Government. The GIC
administers on behalf of Government, the crop Insurance scheme for areas and
crops notified under the crop Insurance Scheme.
Various low cost mass insurance policies have been evolved over a period of
time, e.g.
'Jan Arogya Bima Policy'.
Role General Insurance Industry is playing in the growth of economy of the
country:
The General Insurance Industry has an enviable track record among public
sector units. It has a consistent profit and dividend paying record accompanied by
a steady growth in its financial resources.
Through investments in the- Government sector and: socially - oriented
Sectors the Industry has contributed immensely to the nation's development. The
industry is recognized as one of the largest financial' Institutions in the Country.
The ventures initiated by the industry in the areas of Mutual Fund, Housing
Finance have done exceedingly well in recent years.
To protect the country's foreign exchange reserves, the reinsurance
arrangement are so organized that maximum retention is made possible within the
country while at the same time protecting interests of the policy holders. The
GIC'S inwards reinsurance wing, called the SWIFT, maximizes the foreign
exchange balance by acting as an international insurer-accepting risk from all
over the globe.
GIC'S International operation:
GIC'S international operations span over 31 countries around the globe. The
reinsurance expertise built over a long period has made the Indian Insurance
Industry a globally acknowledged reinsurer of repute GIC'S risk management
skill has been backed by specialists with a vast insurance experience.
Thus, the technical and underwriting skills have been acknowledged in the
international market. The corporation operates in 17 countries through
branches and agencies, whereas in another 14 countries, it has subsidiaries and
associate companies. The GIC has a subsidiary company known as 'India
International Pvt, Ltd.,' operating in Singapore and a joint-venture company,
Kenindia Insurance co. Ltd.
The impact of liberalization of economy in the activities of GlC.
With the liberalization of economy, General Insurance in India is poised for a
quantum jump, both in quality and quantity.
Vision for the future:
It is estimated that the industry will outstrip the present rate of growth and
reach a premium value of over Rs. l,20,000 millions by taking advantage of the
extra-large mega-risk and social awareness of insurance in general, even as . a
developing country turns into a developed country.
The task before the industry to service the growing number of policy-holders
would equally see a quantum jump in issuance of documents and settlement of
claims. Matching reserves and consequent investment will be a natural corollary.
It is expected that the investment portfolio will touch around Rs. 2,50,000
millions by the end of the next decade, with the strength built up over the years
since nationalization, GIC new looks to the future with confidence and
optimism, takes on global chal1enge with its high standard of service, innovative
initiative and a compelling social perspective.
GIC's plan - in new business areas:
The two new areas that GIC is getting into are the areas of health care and
crop insurance. For the health care business, the corporation has received
permission to set up a separate management services company. GIC has plans to
increase the scope of cover in health care, personal accident and crop insurance
and will require expertise in pricing the products.
The Research & Development activities:
They have just entered these areas and for the coming five years we are
investing approximately 500 crores. GIC'S R & D cell is created backed up
market research data.
The subsidiaries of GIC are becoming an autonomous body.
Privatization in the insurance sector of India - Is it in the right direction
It's purely a government decision and the nationalized sector is ready to face
the challenge. And have taken the challenge to stand in the stiff competition.
And now, many private companies have entered the market. These companies
are a result of merger of Indian companies with foreign companies.
TRENDS
Trends in any sector basically refers to the up gradations or acquiring new
technologies which has replaced the conventional methods in any organizations
In Today’s automated and modernized era any organization cannot take a
chance by not maintaining pace with the competition.
With the passage of time and taking into consideration today’s needs and
changing scenario insurance companies should also adopt new technology i.e. it
should be trendy enough to meet customer needs and expectations.
Trends or use of technology should be such that it is eco friendly enough to be
used by customers. Today, right from a grocery shop to I.T sector technologies is
explored to the fullest
E-Business or E-commerce has sown its seeds in every sector of business
which is one of the strongest sign of improvement and technology.
As we are dealing here with insurance industry let us see the technology
involved in the Insurance sector.
Technological:
• Computerization:
Initially, in the late 1950’s the insurance companies used Unit Record
Machines (Electro Magnetic Machines) to process data punched into cards.
Computers were introduces in the mid 1960’s and by the 1980’s the Unit Phased
Machines were phased out and the entire process was computerized. This brought
about greater efficiency and quick service delivery.
• Internet:
Internet usage has drastically improved in the last decade. There was a
tremendous increase in the use of technology by GIC during the late 1990’s. The
companies Launched its website in the mid 1990’s to offer basic services such as
modifying policies (change of address, change of nominee, etc) and querying the
status of the policy.
But today, the internet has completely changed the service delivery process.
Internet is today used to even sell insurance policies. Internet is, in fact, proving
to be one of the widely used distribution networks for selling insurance policies.
Also internet is used for sending premium notices to policy holders through e-
mails.
Also GIC has a special feature on its website. It has a premium calculator
which accurately displays the amount of premium month wise and the remaining
balance. One just has to enter the age, name of the insurance policy, the sum
assured and whether there is an accident cover or not. By keying in this
information, the entire premium amounts are shown within no time. This has
helped the customer in a way so that he/she doesn’t have to travel all the way to
the branch to ascertain the amount of premium to be paid.
• Metropolitan Area Network (MAN) and Wide Area Network (WAN):
GIC has commissioned a MAN connecting more than 75 branches in Mumbai.
This enabled the policy holders to pay their premiums and get their status report,
surrender value quotations and loan quotation, from any branch in the city.
Following the MAN in Mumbai, seven MAN centres (Chennai, Bangalore, Delhi,
Calcutta, Pune, Hyderabad, and Ahmedabad) became operational.

These MAN centres were connected to each other by a WAN network. This
WAN was designed for distributed processing without a central database – each
division maintained a database of the policyholders. The central office in
Mumbai maintained an index of policy numbers and the corresponding IP
addresses of the servers where the details of the policy were maintained.
• Electronic Clearance Service (ECS):
Almost all the big organizations today provide the ECS facility to its
customers. A policy holder having an account in any bank which is a member of
the local clearing house can opt for ECS debit to pay premiums. The advantage
here is that once the option is exercised, the policy holder need not visit a branch
for paying the premium or collecting the receipts. On the day indicated by the
policy holder, the premium amount will be directly debited to the bank account of
the policyholder and the receipt will be issued by the designated branch office.
Bank ATM’s:
Many insurance companies have a tie-up with commercial banks so as to
enable policyholders to use the facility of paying premiums through the bank
ATM’s. ICICI Lombard has a tie up with ICICI bank; Bajaj Allianz has a tie-up
with Corporation bank and UTI Bank.
• Call Centres and SMS services
Almost all the insurance companies have their own call centres which cater to
the phone based queries of the policyholders. This service is 24x7 and they have
the Interactive Voice Response (IVR) systems at all the branches.
Also, LIC and other companies now provide SMS services going with the new
trends like SMS banking in the banking sector.
Claims
The Settlement of claims constitutes one of the important functions in an
insurance organisation.
The proper settlement of claims requires a sound knowledge of thee law,
principles and practices governing insurance contracts and in particular a
thorough knowledge of the terms and conditions of the standard policies and
various extensions and modifications there under.
The procedure in respect of claim a under various classes of insurance follows
a common pattern and may be considered under 3 broad headings
Preliminary procedure
It is essential that early notification of the loss is received by insurance undue
delay in notification would adversely affect the position of the insurer. However
if there is any delay in notification or not or weather is material will be ultimately
decided by the courts based on the facts of the individual cases
The notice of loss condition in liability policies provides for two aspects
a.) Notification of the happening of the accident immediately
followed by b.) Notification of the receipt of claim or suit filed against
the insured.
Under certain types of policies (e.g. Burglary) notice is also to be given to
police authorities.
Loss Minimization
At common law, there is a duty on the part of the insured to observe good
faith .This duty of good faith means that at all times the insured has to act as if he
is uninsured.
For E.g., the private car package policy provides , among other things , that
the insured shall take all reasonable steps to safeguard the motor car from loss or
damage and to maintain it in efficient condition. In the event of any accident or
breakdown the motor car shall not be left unattended without proper precautions
being taken to prevent further damage or loss.
Procedural
On receipt of intimation of loss or damage insurers check that:
a.) the policy is in force on the date of occurrence of the loss or
damage
b.) The loss or damage is by a peril insured by the policy.
c.) Notice of loss received without undue delay.

After this check up the loss is allotted a number and entered in the claims
register.
Claim Forms
The contents of the claim form vary with each class of insurance .In general
the claim in general the claim form is designed to elicit full information regarding
the circumstances of the loss such as date of loss, time, cause of loss, extent of
loss etc claim forms are invariably sued in fire and miscellaneous insurance.
Investigation and Assessment
On receipt of the claim form duly completed from the insured the insurers
decide about the investigation and assessment of loss if the loss is small the
investigation to determine the cause and extent of loss is done by an officer of the
insurers. Some times even this may be waived and the loss settled he basis of the
claim form only.
The investigation of larger or complicated claims is entrusted to independent
professional surveyors who are specialist in their line the appointment of a
surveyor is intimated to the claimant the surveyor is furnished with all relevant
claim papers such as claim form policy copy etc…However, many a times
surveyor is appointed and survey is carried immediately on receipt on notice of
loss, that is even before claim form could be issued.
Claims documents
In addition to the claim form independent survey report certain documents are
required to be submitted by the insurers to substantiate the claim for example for
fire claims for fire claims a report for the fire brigade for motor claims driving
license registration copy police report etc
Arbitration
It is distinct from litigation and is a method of settling disputes under contract
in accordance and conciliation act 1996.
Settlement
The claim is processed on the basis of Claim form
Independent report from Surveyors, legal opinion, medical opinion etc as the
case may be. Various documents furnished by the insured. Any other evidence
secured by the insurers
If the claim is in order settlement is effected by cheque the payment is entered
in claims register as well as in the relevant process record. Appropriate recoveries
are made from the insurers if any.
Case Study
26/7/2005 – Mumbai under water
Mumbai will never be the same again. And so will the insurance sector in
Mumbai after the 26/7 floods. Torrential rains which killed thousands and
rendered many homeless, also led to loss of business and vehicles.
• The facts:
As fallout of the torrential rains, the non-life insurance sector was flooded
with more than 10000 claims totalling over Rs. 2000 crores. However, these did
not include the 50000 cars that have been damaged in Maharashtra.
While the top four private sector general insurance companies, ICICI
Lombard General Insurance, Bajaj Allianz General Insurance, Iffco Tokio
General Insurance and Tata AIG have together received claims worth over Rs
1,000 crore; the four state-owned general insurance companies New India
Insurance, Oriental Insurance, United Insurance and National Insurance received
claims close to Rs 1,500 crore.
Private insurer, Bajaj Allianz General Insurance Company Ltd (BAGICL)
alone had received claims for at least 10,000 motor vehicles after the recent
floods in Mumbai.

As several companies temporarily closed down their operations and godown


stocks went missing, corporate claims were the highest, in terms of value. Next
came claims for cars and household goods and from shopkeepers and traders for
their warehouses. A majority of individuals and small and medium entrepreneurs
also submitted claims.

ONGC's insurance claim is considered to be the largest given its loss of $ 500
million after fire gutted the Bombay High rig.
Insurance firms set up special cells to visit victims and settle claims. In many
firms, the special teams worked round-the-clock to take stock of the loss and
speed up the settlement process.
Bajaj Allianz settled claims worth about Rs 200 crore without any
documentation, to the victims of the recent floods in Mumbai.
After the natural calamity, the Finance Minister sought speedy redressal of
claims. He directed the Chairmen and Managing Directors of the four public
sector general insurance companies that claims below Rs 50,000, arising out of
the recent floods in Maharashtra and Gujarat, should be settled by August 31.

Public sector player, National Insurance Company received 3,000 claims for
Rs 350 crore from its customers in Mumbai for damage to property caused by the
recent rains.

While some insurers had taken a re-insurance cover, some have not. Mumbai
floods brought to fore the ill-preparedness both among the mega polis
administrative officials and the insurance sector. While the latter seems to have
realized the damages, the former is still grappling with the situation. As death toll
continues to rise, insurance firms have realized the need to better manage natural
calamities. The premium for flood covers may rise in coming years.
The effect:

Here’s a warning to the lakhs of Mumbaikars who are planning to insure their
houses in the wake of the recent deluge. One will have to read the fine print
carefully. Public sector insurance firms are quietly planning to drop the word
‘flood’ from the policy.

As of now, a household insurance policy is basically a fire insurance policy,


which also incorporates a flood insurance policy. However, with 10,000 policy-
holders filing claims totalling Rs 1,500 crores, insurance firms are looking at new
ways to keep their heads above water. After the last calamity—the Latur quake of
1993— insurance firms had dropped earthquakes from the household insurance
policy.

Those wanting to insure their homes against flooding may now have to pay a
separate premium. The insurance sector has suffered losses of about Rs 1,500 crore.
These companies may not get re-insurance for these policies as they had not taken
re-insurance for these small individvidual policy

Questionnaire

Q1.) What according to you, Is the General Insurance market growing to its
maximum level or some more products/dimensions are yet to be
discovered?

Q2.) According to what are the trends in General Insurance?


Q3.) On an average how much time does it take to settle a claim (period)?

Q4.) How important is re-insurance according to you?

Q5.) In General Insurance Corporation, public Sector companies are


dominating past many years? Why?

Q6.) What are Challenges faced by General Insurance companies?

Q7.) What are the future prospects of General Insurance