CLAIM SETTLEMENT

OF

GENERAL INSURANCE COMPANY

A CASE STUDY OF UNITED INDIA INSURANCE

COMPANY LIMITED, SAMBALPUR

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INTRODUCTION

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1.1 INTRODUCTION

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 losses 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 incurred. The opening up of the insurance
sector to private companies has made available more products and world
class service to Indiancustomers.

Insurance other than Life Insurance falls under the category of

general insurance. General insurance comprises of insurance of property
against fire, burglary etc.,personal insurance such as accident and health
insurance and liability insurance which covers legal liabilities. There are
also other covers such as Errors and omissions insurance for professionals,
credit insurance etc.

Non-life insurance companies have products that covers property

against fire and allied perils,flood, storms and inundation, earthquake and so
on. There are products that cover property against burglary, theft etc. The
non-life companies also offer policies covering machinery against
breakdown, there are policies that cover the hull of ships and soon. A
marine cargo policy covers goods in transit including by sea, air and road
.Further, Insurance of motor vehicles against damages and theft forms a
major chunk of non-life insurance business. In respect of insurance of
property , it is important that the cover is taken for the actual value of the

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property to avoid of being imposed a penalty should be there be a claim,
where a property is undervalued for the purposes of insurance , the insured
will have to bear a rateable proportion of the loss . For instance if the value
of a property is ₹100 and it is insured for ₹50 , in the event of a loss to the
extent of say ₹50 , the maximum claim amount payable would be ₹25 (50%
of the loss being borne by the insured for underinsuring the property by
50%) . This concept is quite often not understood by most insured.

Personal insurance covers include policies for accidents, health etc.

Products offering personal accidents cover are benefit policies. Health
insurance covers offered by non-life insurers are mainly hospitalization
covers either on reimbursement or cashless basis. The cashless service is
offered through third party administrators who have arrangement with
various service providers i.e. hospital.

Accident and health insurance policies are available for individuals as

well as groups. A group could be a group of employees of an organization
or holders of credit cards or deposit holders in a bank etc. Normally when a
group is covered insurers offer group discounts.

Liability insurance covers such as motor third party liability

insurance, workmen’s compensation policy etc. Offer cover against legal
liabilities that may arise under the respective statues – Motor Vehicles Act,
The Workmen’s Compensation Act etc. Some of the covers such as the
foregoing (Motor third party and Workmen’s Compensation Policy) are
compulsory by statute. Liability Insurance not compulsory by statute is also
gaining popularity these days. Many industries insure against Public
Liability. There are liability covers available for products as well.

There are general insurance products that are in the nature of package
policies offering a combination of the covers mentioned above. For

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instances there are package policies available for householders, shopkeepers
and also for professionals such as doctors, chartered accountants etc. Apart
from offering standard covers, insurers also offer customized or tailor made
ones.

Suitable general insurance covers are necessary for every family. It is

important to protect one’s property, which one might have acquired from
one’s hard earned income. A loss or damage to one’s property can leave one
shattered. Losses created by catastrophes such as the tsunami,earthquakes,
cyclones etc have left many homeless and penniless. Such losses can be
devastating but insurance could help mitigate them. Property can be
covered, so also the people against personal accident. A health insurance
policy can provide financial relief to a person undergoing medical treatment
whether due to a disease or an injury.

Industries also need to protect themselves by obtaining insurance

covers to protect their building , machinery , stocks etc . They need to cover
their liabilities as well financers insist on insurance. So, most of the
industries or businesses that are financed by banks and other institutions do
obtain covers. But are they obtaining the right covers? And are they insuring
adequately are questions that need to be given some thoughts. Also
organizations or industries that are self-financed should ensure that they are
protected by insurance.

Most general insurance covers are annual contracts. However, there

are few products that are long term. It is important for proposers to read and
understand the terms and conditions of a policy before they enter into an
insurance contract. The proposal form needs to be filled in completely and
correctly by a proposer to ensure that the cover is adequate and the right
one.

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 1.2 OBJECTIVESOF THE STUDY

The objectives of the study are as follows:

 To evaluate the claim settled by UNITED INDIA INSURANCE

COMPANY LIMITED.
 To examine the cases unsettled by the company and the reason
thereof.
 To deposit the mobilization of deposits of the company.

1.3 RELEVANCE OF THE STUDY

This study gives ideas about dedication of UNITED INDIA

INSURANCE COMPANY to the nation. This company has a variety of
products, schemes and policies in order to cater to the insurance needs of
people, which is applicable to every segment. This company serves the
country as a whole.

1.4 SCOPE OF THE STUDY

The area or scope of the study covers the UNITED INDIA

INSURANCE COMPANY LIMITED of Sambalpurdivision. This project
gives an idea of “Claim Settlement of United India Insurance Company
Limited’’ of Sambalpurdivision.

1.5 METHODOLOGY USED FOR THE STUDY

This research work is based on secondary data. Simple tables have

been used to analyze the data. The data collected for the purpose of study

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from the website of United Insurance Company (www.uiic.com), annual
report of United India. Insurance Company, various booklets, books and
also personally from the divisional manager of UIIC,Sambalpur.

1.6 LIMITATIONS

Despite the possible efforts data beyond a period of five years are not
available. Hence, the study does not entail analysis beyond a period of five
years. The study is based upon secondary data only. Use of primary data has
not been made.

1.7 DESIGN OF THE STUDY

The design of the study consisted of five chapters namely:-

CHAPTER -1:-The chapter-1 contains introduction of the project which is

mainly includes objectives of the scope of the study, relevance of the study,
methodology and limitations of the study.

CHAPTER – 2:-The chapter -2 briefly contains about the profile of general

insurance company which deals with history of GIC , principle of GIC ,
category of GIC , classification of Indian Insurance Industry . United India
Insurance Company Limited of Sambalpurdivision: An overview and
organizational structure of United India Insurance Company Limited in
Sambalpur division their duties and responsibilities.

CHAPTER – 3:- The third chapter contains the saving mobilization by

United India Insurance Company.

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CHAPTER – 4:- The fourth chapter contains meaning of claim settlement
and analysis of claim settlement by UIIC .

CHAPTER – 5:- The last chapter contains the summary of findings ,

suggestions and conclusion .

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 CHAPTER-2

PROFILE OF GIC

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2.1 BRIEF HISTORY OF GENERAL INSURANCE

The entire general insurance business in India was nationalized by the

Government of India(GOI) through the General Insurance Business
Nationalization Act (GIBNA) of 1972 . 55 Indian insurance companies and
52 other general insurance operations of other companies were nationalized
through the act.

The General Insurance Corporation of India (GIC) was formed in

pursuance of section 9(1) of GIBNA. It was incorporated on 22 November
1972 under the Companies Act, 1956 as a private company limited by
shares. GIC was formed to control and operate the business of General
Insurance in India.

The GOI transferred all the assets and operations of the nationalized
general insurance companies to GIC and other public sector insurance
companies. After a process of mergers and consolidation, GIC was re-
organized with four fully owned subsidiary companies: Nation Insurance
Company Limited, New India Assurance Company Limited, Oriental
Insurance Company Limited and United India Insurance Company Limited
GIC and its subsidiaries had a monopoly on the General Insurance business
in India until the landmark Insurance Regulatory and Development
Authority Act (IRDA Act) of 1999came into effect on 19 April 2000. This
act also amended the GIBNA Act and Insurance Act of 1938. The act along
with the amendments ended the monopoly of GIC and its subsidiaries and
liberalized the insurance business India.

In November 2000, GIC was renotified as India’s Reinsurer, but its

supervisory role over its subsidiaries was ended. This was followed by the
General Insurance Business Amendment Act of 2002. Coming into effect
from 21 March,2003.These subsidiaries was transferred to the Government

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of India, which in turn divested its stake in the companies through listing on
Indian Stock Exchange.

2.2 PRINCIPLES OF GIC

There are seven principles of Insurance. They are as follows:

 Principle of utmost good faith.

 Principle of Insurable Interest
 Principle of Indemnity
 Principle of Contribution
 Principle of Subrogation
 Principle of Loss Minimization
 Principle of Causoproxima

PRINCIPLE OF UTMOST GOOD FAITH

Under this insurance contract both the parties should have faith over
each other. As a client it is the of the insured to disclose all the facts to the
insurance company. Any fraud or mispresentation of facts can result into
cancellation of the contract.

PRINCIPLE OF INSURABLE INTEREST

Under this principle of insurance, the insured must have interest in the
subject matter of the insurance. Absence of insurance makes the contract
null and void. If there is no insurable interest, an insurance company will
not issue a policy.

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 For Example: - The owner of a taxicab has insurable interest in the
taxicab because he is getting income from it. But, if he sells it he will not
have an insurable interest left in the taxicab.

PRINCIPLE OF INDEMNITY

Indemnity means security or compensation against loss or damage .

The principle of indemnity is such principle of insurance stating that an
insured may not be compensated by the insurance companies in an amount
exceeding the insured’s economic loss.

According to the principle of indemnity, an insurance contract is

signed only for getting protection against unpredicted financial losses
arising due to future uncertainties. Insurance contract is not made for
making profit else its sole purpose is to give compensation in case of any
damage or loss.

PRINCIPLE OF CONTRIBUTION

Principle of contribution is a corollary of the principle of indemnity.

It applies to all contracts of indemnity, if the insured has taken out more
than one policy on the same subject matter.

According to this principle, the insured can claim the compensation

only to the extent of actual loss either from all insurers or from any one
insurer. If one insurer pays full compensation then that insurer can claim
proportionate claim from the other insurers.

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PRINCIPLE OF SUBROGATION

Principle of subrogation is an extension and another corollary of the

principle of indemnity. It also applies to all contracts of indemnity.
According to the principle of subrogation , when the insured is compensated
for the losses due to damage to his insured property then the ownership right
of such property shifts to the insurer .

This principle is applicable only when the damaged property has any
value after the event causing the damage. The insurer can benefit out of
subrogation rights only to the extent of the amount he has paid to the
insured as compensation.

PRINCIPLE OF LOSS MINIMIZATION

According to the principle of loss minimization, insured must always

try his level best to minimize the loss of his insured property,in case of
uncertain events like a fire outbreak , or blast etc . The insured must take all
possible measure and necessary steps to control and reduce the losses in
such a scenario. The insured must not neglect and behave irresponsibly
during such events just because the property is insured. Hence, it is a
responsibility of the insured to protect his insured property and avoid further
losses.

PRINCIPLE OF CAUSOPROXIMA

This principle or in simple English words, the principle of proximate

cause, means when a loss is caused by more than one causes, the proximate

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or the nearest or the closest cause should be taken into consideration to
decide the liability of the insurer.

The principle states that to find out whether the insurer is liable for
the loss or not the proximate cause and not the remote must be looked into.

2.3 CATEGORY OF GIC

General insurance is also known as Non-life insurance in India. There

are total 16 General Insurance companies in India. These 16 General
Insurance Companies have been classified into two broad categories
namely:

(a) Public Sector Undertakings

(b) Private Sector Undertakings

PUBLIC SECTOR UNDERTAKINGS

These insurance companies are wholly owned by the government of

India. There are total 4 PSU’s in Indianamely:

(a) National Insurance Company Ltd

(b) Oriental Insurance Company Ltd
(c) The New India Assurance pvt ltd
(d) United India Insurance Company ltd

PRIVATE SECTOR UNDERTAKINGS

There are total 12 private General Insurance Companies in India namely :

(a) Bajaj Allianz General Insurance co. ltd

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 (b) Apollo DKV Health Insurance ltd
(c) Cholamandalam MS General Insurance co ltd
(d) Future generaliinsurance co ltd
(e) HDFC Ergo general insurance co ltd
(f) ICICI Lombard general insurance ltd
(g) Iffcotokio general insurance pvt ltd
(h) Reliance general insurance ltd
(i) Royal sundaram general insurance co ltd
(j) Star health and allied insurance
(k) TATA AIG General Insurance co ltd
(l) Universal Sompo General Insurance pvt.Ltd

List of General Insurance Companies in India

Public Sector Private Sector Other General
Insurance
Companies –
Specialised

 Agriculture Insurance Apollo Munich Health ECGC Ltd. (formerly

Co. of India Ltd. Insurance Co. Ltd. Export Credit
 National Insurance  Bajaj Allianz General Guarantee
Co. Ltd. Insurance Co. Ltd. Corporation of India
 The New India  Bharti AXA General Ltd.)
Assurance Co. Ltd. Insurance Co. Ltd.  General Insurance
 The Oriental  Cholamandalam MS Corporation of India
Insurance Co. Ltd. General Insurance Co.
 United India Ltd.
Insurance Co. Ltd.  CignaTTK Health

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 Insurance Co. Ltd.
 Future Generali India
Insurance Co. Ltd.
 HDFC ERGO General
Insurance Co. Ltd.
 ICICI Lombard
General Insurance Co.
Ltd.
 IFFCO-Tokio General
Insurance Co. Ltd.
 Kotak Mahindra
General Insurance Co.

Types of General Insuranc

Motor Insurance
Motor insurance covers all damages and liability to a vehicle
against various on-road and off-road emergencies. A comprehensive
policy even secures against damage caused by natural and man-made
calamities, including acts of terrorism.

Motor insurance offers protection to the vehicle owner against:

 Damage to the vehicle

 It also pays for any third party liability determined by law against the
owner of the vehicle
Motor insurance is mandatory in India as per the Motor Vehicles Act,
1988 and needs to be renewed every year. Driving a motor vehicle
without insurance in a public place is a punishable offence.

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 In fact, third party insurance is a statutory requirement in our country
i.e. the owner of the vehicle is legally liable for any injury or damage
caused to a third party life or property, by or arising out of the use of
the vehicle in a public place.

A comprehensive motor insurance policy would include personal

accident and liability only policy (third party insurance) in addition to
own damage cover (damage to owner’s vehicle) in one policy.

Common motor insurance categories include:

 Car Insurance
 Two Wheeler Insurance
 Commercial Vehicle Insurance
Some attractive benefits of motor insurance include roadside
assistance, cashless servicing at nation-wide network of workshops and
garages, personal accident cover, towing assistance.

Health Insurance
Health care costs are increasing every year. Sedentary lifestyle
and stress at work negatively affect the health and can result in a
critical illness or medical emergency. Such a scenario is sure to
adversely affect one financially, due to the massive outlay of money on
medical expenditure. A health insurance policy is the only way to
mitigate the financial risks, apart from leading a healthy lifestyle.
Health insurance guarantees peace of mind in times of crisis, and helps
secure own health and that of one’s family.

Health insurance covers the medical and surgical expenses of the

insured individual due to hospitalisation from an illness. Additional
riders enhance the benefits and scope of the cover.

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 Health insurance often includes cashless facility at empanelled
hospitals, pre and post hospitalisation expenses, ambulance charges,
daily cash allowance etc.

Common types of health insurance policies include:

 Individual Policy
 Family Floater Policy
 Surgery Cover
 Comprehensive Health Insurance

Travel Insurance
International travel, whether on vacation or business, can turn into a
nightmare if one experiences contingencies like loss of baggage, loss
of passport, delay in flight, medical emergency etc. Such eventualities
will surely take the fun away from travelling.

Travel insurance, also referred to as visitor insurance, covers one

against unseen medical and non-medical emergencies during overseas
travel, ensuring a worry-free travel experience. It protects the insured
against misfortunes while travelling. Backed up by travel insurance,
the whole experience is like no other.

Different types of travel insurance policies include:

 Individual Travel Policy

 Family Travel Policy
 Student Travel Insurance
 Senior Citizens Travel Policy

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 In addition to the above, some insurance companies offer special
plans like a corporate travel policy or comprehensive policy for travel
to special destinations like Asia and/or Europe.

Home Insurance
Home is often the most treasured possession of an individual and
also the largest financial investments one makes in life. Safeguarding
the physical structure and contents of home seems like a logical thing
to do.

Home insurance protects the house and/or the contents in it,

depending on the scope of insurance policy opted for. It secures the
home against natural calamities and man-made disasters and threats.
Home insurance provides protection against risks and damages from
fire, burglary, theft, flood, earthquakes etc. covering the physical asset
(building structure) and valuables (contents) in it.

Home insurance ensures that one’s hard-earned savings are

utilised to meet important needs instead of using them for rebuilding
the house if some harm was to come to it.

Marine (Cargo) Insurance

Business involves the import and export of goods, within
national borders and across international borders. Movement of goods
is fraught with risk of mishaps which can result in damage and/or
destruction of shipments. This leads to substantial financial losses for
both the importers as well as the exporters.

Marine cargo insurance covers goods, freight, cargo and other

interests against loss or damage during transit by rail, road, sea and/or
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 air. Shipments are protected from the time the goods leave the seller’s
warehouse till they reach the buyer’s warehouse. Marine cargo
insurance offers complete financial protection during transit of goods
and compensates in the event of any loss suffered.

The party responsible for insuring the goods is determined by the

sales contract. Marine cargo insurance policy can be taken by buyers,
sellers, import/export merchants, buying agents, contractors, banks etc.
The policy usually covers the cargo, but can also be extended to cover
the interest of a third party post transfer of ownership as determined by
terms of sale.

Common types of policies:

 Open Cover
 Open Policy
 Specific Voyage Policy
 Annual Policy
The hull of a ship or boat can be insured under marine hull insurance.

Rural Insurance
Insurance solutions to meet the needs of agriculture and rural
businesses form part of rural insurance. IRDA has stipulated annual
targets for insurers to provide insurance to the rural and social sector.

As per these regulations, insurers are required to meet year-wise

targets:

 In percentage terms of policies underwritten and percentage of total

gross premium income by general insurers under rural obligation
 In terms of the number of lives under social obligation.
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 Commercial Insurance
Commercial insurance encompasses solutions for all sectors of
the industry arising out of business operations. Insurance solutions for
automotive, aviation, construction, chemicals, foods and beverages,
manufacturing, oil and gas, pharmaceuticals, power, technology,
telecom, textiles, transport and logistics sectors. It covers small and
medium scale enterprises, large corporations as well as multinational
companies.

Common types of commercial insurance:

 Property Insurance
 Marine Insurance
 Liability Insurance
 Financial Lines Insurance
 Engineering Insurance
 Energy Insurance
 Employee Benefits Insurance
 International Insurance Solutions

Other Types of General Insurance:

 Property Insurance
 Personal Accident
 Householder
 Shopkeeper
 Corporate Insurance
 Commercial Insurance
 Fire Insurance
 Crop Insurance

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2.4 UNITED INDIA INSURANCE COMPANY LIMITED OF
SAMBALPUR DIVISION: AN OVERVIEW:

The Sambalpur area is located on north western part of Odisha, it is

bounded by Jharsuguda and Sundargarh district on the North,Sonepur and
Angul district on south,deogarh district on the east and bargarh district on
the west.

United insurance company limited was incorporated as a company on

18th February 1938. General insurance Business in India was nationalized in
1972. 12 Indian Insurance Companies, 4Cooperative Insurance Societies
and Indian operations of 5 Foreign Insurers, besides General Insurance
operations at Southern region of Life Insurance Corporation of India were
merged with United Insurance Company Limited. After Nationalization
United India has grown by leaps and bounds and has 18300 work forces
spread across 1340 offices providing insurance cover to 1 Crores policy
holders . The Company has variety insurance product to provide insurance
cover from bullock carts to satellites.

United India has been in the forefront of designing and implementing

complex covers to large customers, as in cases of ONGC Ltd, GMR –
Hyderabad International Airport Ltd, and Mumbai International Airport Ltd
Tirumala- TirupatiDevasthanam etc. We have been also the pioneer in
taking Insurance to rural masses in large level implementation of Universal
Health Insurance Programme of Government of India
&VijayaRajiJananiKalyan ( covering 45 lakhs women in the state of
Madhya Pradesh) , Tsunami Jan BimaYojana ( in 4states covering 4.59
lakhs of families) , National Livestock Insurance and many such schemes .

We have also made our presence in more than 200 tier II & III towns and
villages through our innovative Micro Offices.

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 In the SambalpurDivision, United India Insurance Company is located
near the Gaiety Talkies in the first floor of Shilok Complex.

2.5 ORGANIZATIONAL STRUCTURE OF UNITED INDIA

INSURANCE COMPANY LIMITED IN SAMBALPUR DIVISION
THEIR DUTIES AND RESPONSIBILITIES:

In the Sambalpur division the divisional manager is the head of the

organization. Under divisional manager a management committee is
working. In this managers committee these several departments are headed
by the different managers.

The first and foremost duty and responsibility of divisional manager

will be to develop business of the own area by proper responsibility
simultaneously the divisional offices and also takes responsibility of the
administration.

1. BRANCH SUPPORT DEPARTMENT

The branch manager is the head of this branch support department. As

a branch manager, the first and foremost responsibility will be to develop
business by proper management at his field force and by active work in the
field.

2. MARKETING DEPARTMENT

The head of the marketing department is the sales manager. He

organizes the sales department, policy serving department and fixed training
department. Sales Managers duty is to verify works of the development
officers,agents, HGA and assistants working in sales department of the
divisional office.

3. LEGAL AND HOUSE PROPERTY FINANACE DEPARTMENT

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 The head of the department is the legal manager. His duty is to
manage the legal matter follow up and property related loans etc.

4. FINANCE AND ACCOUNTS DEPARTMENT

Under the finance and accounts department the finance manager is the
head of the department. He deals the divisional accounts, branch accounts,
general accounts and development officer’s accounts.

5. NEW BUSINESS AND ACTUARIAL DEPARTMENT

The head of the department of the NB and actuarial department is

known as manager of NB and actuarial. He deals the underwriting and
valuation.

6. PERSONNEL AND IR DEPARTMENT

In this department personnel manager is the head of the department.

The personnel manager takes responsibility for industries relations, H.R.D
carrier planning and manpower planning. The personnel manager duty is to
give training to the staff and supervision.

7.OFFICE SERVICES

In this department manager manages the head of the department. In

this office services department manage duty to check how much staff
working in the OS department. His duties also to prepare budgets of new
equipment, furniture and fixtures, account for the division office.

8. PLANNING AND REVIEW

Manager is the head of the department of the planning and review

department. The manager’s duty is to take responsibility of planning of this
department and gives training the junior staffs.

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9. PENSIONS AND GROUP DEPARTMENT

In this department manager is also the head of the department. In this

department manager takes responsible of policy holders of the divisional
office.

10. CLAIM DEPARTMENT

The manager is the head of the claim department. His duty is to settle
the claims.

11.RESEARCH AND DEVELOPMENT DEPARTMENT

The manager is the head of the department. Here, various research

works are done; make various planning to develop the organization.

12.UNIT LINKED INSURANCE POLICIES DEPARTMENT (ULIP)

The ULIP Manager is the head of the department. In this department

the manager’s duty is to manage the policy holder and also processes
services to the ULIP policyholder.

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 CHAPTER – 3

SAVING MOBILISATION

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3.1 CONCEPT FOR SAVINGS FOR SAVING
MOBILISATION

Central to the problem of savings mobilization is the concept of

savings that has been handed down the economic theory from Marshall to
Keynes and in the post Keynesian economics economists have defined
savings as a residual of consumption (saving = income – consumption ) .

Resources can be mobilized either for short term or for long term.
Economy consists of huge number of enterprises and individuals
requirements of all of them differ. Some have surplus cash to save, while
some other needs cash. Some firms/individuals wants to make good their
short term liquidity requirements from wants money for long term capital
investment. So distinction can be made as to period for which one intends to
lend or burrow. In this sense financial market is categorized into money
markets and capital markets.

In money market, period involved is one year or less , while in capital

markets period is generally more than one year . Banks basically caters to
money market and mobilizes resources from the savers to burrowers. (This
is because distinguished features of a bank accepts deposits and open
current accounts). But it plays a significant role in capital markets too as it
lend for the capital investment purposes. As economy of the country grows,
highly specialized institutions comes up which caters exclusively to capital
needs and bank continues its money market business. These institutions are
known as capital market intermediaries.

These intermediaries like insurance companies , housing finance

companies , pension funds and investment funds etc which mobilize savings
and funds long term investments .

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 The person having surplus money for long term may be willing to
lend or to invest. These forms distinction between debt and equity.In
former, lender will get a fixed return and the latter investor will get share of
his profit. These are invested through different types of intermediaries. As
per interest of lender, may be mutual fund,debt, stock market etc.

In financial market, financial assets are created such as

debenture,shares, bonds etc.Financial assets represent claims of their holder
over certain assets with certain quantity. This claim arises because of a
contract between two parties e.g. lenders and borrowers or buyer and seller.

A very important implication that arises from discussion is that

savings can be increased even when income are low or static.Furthermore
the motivation to save could increase income saving are in various forms
and these forms meet to be channelized into financial system.

Non-financial savings could be converted into financial savings in

institutions. A common practice in rural societies is cash hoarding. These
could be channelized into financial system by stable financial institutions.

The national savings bank and earlier the Ceylon saving bank and the
post office savings bank performed this role.

3.2 IMPORTANCE OF SAVING MOBILISATION

The mobilization of rural savings is important for economic

development for several reasons. Foremost among these reasons is the fact
that the rural sector constitutes about a third of the country’s population in
order to develop a healthy and viable rural financial market, resources
should be mobilized from the rural sector itself.

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 In other words, rural saving mobilization is integral and essential. It is
a component for developing a sustainable rural financial market. Much of
the rural sector’s development could be financed from the sector itself, if
only the correct techniques, incentives and institutions are provided.

However in most countries the emphasis has been ongoing credit to the
rural sector programmes are designed to give credit from government funds
or persuade , cajole or compel banks to give credit on “soft terms “ . Such
programmes often tend to be corrupt,inefficient,irresponsible, inadequate
and erratic in their flow of funds.

3.3 FACTORS INFLUENCING SAVINGS

Five economic conditions affect and influence savings. While these

factors influence the willingness and capacity to save, it is the institutions
factors that are discussed later that provide the facility to save in turn to
influence the willingness and capacity to save.

Interest rates have a bearing on savings mobilizations. While slight

changes in interest rate do not necessarily affect savings, high interest rates
do provide an incentive to saving.There is growing evidence interest rates
do affect rural people willingness to save. For instance it has been shown
that people shift their savings from lower interest higher liquidity savings to
higher interest lower liquidity fixed deposits when the interest rates of the
latter are distinctly attractive high interest rates attract new
deposits.Infact,high interest rates create an interest consciousness among
people even who cannot calculate interest rate accurately.

The people especially rural people do not make fine decision regarding
the real interest rates.Yet there is a high rate of inflation.People are aware

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that financial investments are unprofitable and that it does not pay to keep
cash.

They may save but not in financial forms.They would buy land or
jewellery or even some consumer durables whose price they know would
rise quite sharply and visibly in short time. The third factor
which influence the capacity to save is the income levels and the cost of
living when income are low and the cost of living are rising when the
capacity to save is less.The fourth factor is the availability of consumer
durables.

Social and cultural values play an important role in influencing decisions

to save. For instance society which requires a dowry systems or possession
of jewellery may save more for such needs. Therefore social and cultural
values, as well as expectations of the future are important influence on
people’s propensity to save.

Institutional factors have an important bearing on rural saving

mobilization. It is the institution and the techniques adopted by them which
provide the facility for saving. In turn, the facilities to save influence the
willingness of individuals to save.

The type of banks that are established should be suited to the rural
clientele. Bankers should go out to their rural customers rather than expect
rural folk to come to them. If branch banks are of the same type as urban
banks and use the same the same approaches in their banking , then it is
likely that such banks would attract only larger customers such as land
owners , traders , merchants rather than the larger number of rural ordinary
folk .

30
3.4 SAVING MOBILISATION BY UNITED INDIA
INSURANCE COMPANY

According to my study GIC is totally different from LIC and banking

institutions because they accept deposits but GIC do not accept deposits
because it is a government undertaking in which the government ask for the
share of the investment after showing the revenue , profit and loss account
in which tax is deducted and also ask for the claims , premiums paid and
settled to the insurers regarding mediclaim , marine , fire etc .

31
 CHAPTER – 4

CLAIM SETTLED BY GIC

32
4.1 MEANING OF CLAIM SETTLEMENT

We provide services to our client for claim management also i.e. after
sales service. It is most important as the basic idea of purchasing insurance
is to get the claim when the need arises.

United India Insurance Company limited understands that the CLAIM

assistance is a 5 step process that begins prior to placing your insurance. We
first understand and minimize the risk that lead to claim, because a claim is
threat to our business continuity.Events that may result in claims may
interrupt our business cause delays which damage our credibility from
buyers and comprise our ability to renew our policy with our existing or a
new insurer. Over a period of time fewer and lower claims result in our
premium costs effectively being reduced either through a rate reduction or a
no – claim bonus.

Insurance follows the CLAIM process:

C – Consult with your officers to analyze our entire claim history.

L – Localize the most frequently occurring events that result in claim.

A – Analyze the root causes of those events and addresses each one
systematically and rigorously.

I – Implement a risk reduction or elimination program and improve on it

over time.

M – Manage and monitor the program diligently.

At United Insurance India Company ltd, CLAIM Management is an

integral of our total risk management solutions. Our claim management
team is one of the most competent in the industry.

33
4.2 PERFORMANCE OF UNITED INDIA INSURANCE COMPANY
LIMITED IN SAMBALPUR DIVISION

United India Insurance Company Limited performance related to

claim settlement shows that the company has settled all the claims of the
public. This can be shown with the help of the following table:

TABLE 4.1

YEAR GDP (IN LACS) % CHANGE

2011-12 8179 -
2012-13 9266 11.73%
2013-14 9709 4.56%
2014-15 10692 9.19%
2015-16 12250 12.72%

(Source: Data collected from UIIC,Sambalpurdivision)

INTERPRETATION

An analysis of the above table reveals that the premium mobilization incases
of the company registers an increasing trend. It is because of the fact that
people are more conscious to get their vehicles registered.

34
14000

12000

10000

8000

GDP

6000

4000

2000

0
2011-2012 2012-13 2013-14 2014-15 2015-16

35
 TABLE – 2

NET PREMIUM EARNED

YEAR PREMIUM (IN LACS) % CHANGE

2011-12 6087 -
2012-13 7489 18.72%
2013-14 7603 1.4%
2014-15 8816 13.75%
2015-16 10023 12.04%
(Source: Data collected from UIIC,Sambalpurdivision)

INTERPRETATION

The analysis of above table reveals that the Net Premium Earned is
going with an up and down trend where the highest premium earned is in
the year 2015-16 where the amount is ₹10,023.

36
12000

10000

8000

6000 PREMIUM

4000

2000

0
2011-12 2012-13 2013-14 2014-15 2015-16

37
 TABLE – 3

TOTAL NO.OF POLICIES

YEAR NO.OF POLICIES(IN % CHANGE

LACS)
2011-12 188 -

2012-13 204 8.51%

2013-14 214 4.90%

2014-15 204 4.67%

2015-16 226 10.78%

(Source: Data collected from UIIC,Sambalpurdivision)

INTERPRETATION

An analysis of the above table reveals that there has been a consistent
increase in the rate of the different type general insurance policies. Hence,
the company is able to mobilize the resources by way of premium
collection. It covers fire, motor vehicles and other types of general
insurance.

38
250

200

150

no. of policies

100

50

0
2011-12 2012-13 2013-14 2014-15 2015-16

39
 TABLE – 4

NUMBER OF CLAIMS SETTLED

YEAR CLAIMS SETTLED(IN % CHANGE

LACS)

2011-12 180 -

2012-13 232 28.89%

2013-14 154 33.62%

2014-15 146 5.19%

2015-16 256 25.32%

(Source: Data collected from UIIC,Sambalpurdivision)

INTERPRETATION

The analysis of the above table reveals that UIIC plays a significant
role by setting the claims made by different types of claimants. The branch
is extremely cautious and follows the rules to pay the claims of the
beneficiaries as quickly as possible. Hence, it has assumed a place of
distinction in the field of general insurance in Sambalpur.

40
300

250

200

150
claims settled

100

50

0
2011-12 2012-13 2013-14 2014-15 2015-16

41
 TABLE 5

PREMIUM MOBILIZED

YEAR PREMIUM(IN LACS) % CHANGE

2011-12 1687.57 -

2012-13 1756.56 4.62%

2013-14 1429.02 19.06%

2014-15 1569.63 9.84%

2015-16 1747.20 11.31%

(Source: Data collected from UIIC,Sambalpurdivision)

INTERPRETATION

An analysis of the above table reveals that the branch has consistently
mobilized premium by accepting a number of policies from the
policyholders. It is because of the fact that this branch adopts modern
approach in settling the claims of the beneficiaries and thereby has earned
goodwill in the market.

42
1800

1600

1400

1200

1000

800

600

400

200

0
2011-12 2012-13 2013-14 2014-15 2015-16

43
 TABLE – 6

AMOUNT OF CLAIM SETTLED

YEAR AMOUNT (IN LACS )

2011-12 2821.98

2012-13 41.01

2013-14 -

2014-15 453.20

2015-16 -

(Source: Data collected from UIIC,Sambalpurdivision)

INTERPRETATION

An analysis of the above table reveals that with exception to 2013-14

and 2015-16 the company has settled a number of claims and spent lakhs of
rupees for the payment. In the year 2013-14 and 2015-16 no claim has been
made by the beneficiaries due to non-occurrence of accidents etc.

44
Reasons for outstanding claims

 The first and foremost reason for which the claims remain
outstanding is that both the parties either the insurer or insured
may not have given or obtained the survey report.
 The second reason is that paper work / documentary evidence
is not provided by insured properly.
 The third reason is that the statistics is not being obtained
properly for which the insurance company may not be able to
forecast in future for the present conditions.
 The last reason may be due to non-compliance of the policy
conditions by the GIC.

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4.3 PROCEDURE OF CLAIMS SETTLEMENT

The settlement of claims constitutes one of the important functions in

an organization. The proper settlement of claims requires a sound
knowledge of three 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 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 whether 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:-

 Notification of the happening of the accident immediately.

 Notification of the receipt of claim or suit filed against insured.

Under certain types of policies (e.g. Burglary) notice is also to be given to

police authorities.

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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-

 The policy is in force on the date of occurrence of the loss or damage.

 The loss or damage is by a peril insured by the policy.
 Notice of loss received without undue delay.

After this checkup 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 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.

47
INVESTIGATION AND ASSESSMENT

On receipt of the claim form duly completed from the insured the
insurers decide about the investigation to determine the cause and extent of
loss is done by an officer of the insurers. Sometimes even these may be
wide and the loss settled the basis of claim form only.

The investigation of larger or complicated claim is entrusted to

independent professional surveyors to a specialized in their line the
appointment of a surveyor is intimated to the claimants the surveyor is
furnished with all the 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 i.e. 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 insurer and substantiate the
claim for e.g. for fire claims, a report for the fire brigade, for motor claims,
driving license registration copy ,police report etc .

48
 CHAPTER – 5

SUMMARY OF FINDINGS

SUGGESTIONS AND CONCLUSIONS

49
5.1 SUMMARY OF FINDINGS

Insurance under United India Insurance Company can be defined as a

co-operative device to spread the loss caused by a particular risk over
people who is exposed to it and who agree to ensure themselves against that
risk. It should not be confused with peril which is defined as the cause of
loss or with hazard which is a condition that may increase the chance of
loss. The risk cannot be averted but loss occurring due to a certain risk can
be distributed amongst the agreed persons.

The insurance is also defined as a social device to accumulate funds

to meet the uncertain losses arising through a certain risk to a person insured
against the risk.

FINDINGS OF THE STUDY

 It is observed from the study that this company has mobilized a lot of
premium that has been collected from different policyholders.
 It is further observed that there has been a tremendous change in case
of sale of general insurance policies. It indicates the significant role
played by the company in the field of general insurance.
 It is further observed that the company expeditiously settles the
claims of different policyholders. An analysis of the statement given
by the officers reveal the company has not outstanding claims every
year.
 It is observed that the company has played a significant role by
contributes a lot of money towards premium mobilization.

50
5.2 SUGGESTIONS

The branch should organize awareness programmes from time to time

so that persons who avoid purchase of general insurance policy will be
attracted to go for it.

5.3 CONCLUSION

The Sambalpur Division operates the operation as per the guidelines

of the corporate office located in Chennai. It makes its own plan for the
settlement of claims operations. After meeting all the expense, surplus is
transferred to the corporate office the various services to the policy holders
are provided at the divisional office. All the claims are restricted to
Sambalpur jurisdiction. Although the position of GIC has been taken a jolt
by the entry of private players in the market, the corporation has been
successful in maintaining its position. This research can be proved useful
for future studies about the corporation and can be used by the students and
professionals for references.

51