Insurance Services

By : Gaurang Badheka FSM, Sem - 3

Insurance
Risk and Uncertainty: There is nothing certain in this world Except the Death and the Tax yet the death and tax are uncertain as nobody knows when will he die or when tax will change - Benjamin Franklin

Risk v/s Uncertainty

Risk is a condition in which there is a possibility of an adverse deviation from a desired outcome. The degree of risk refers to likelihood of occurrence of an event. It is to a large extent measurable. Uncertainty implies that the individual does not have knowledge of an objective risk situation and can only make subjective evaluation. risk is the state of real world and uncertainty is the state of mind. Risk is measurable uncertainty. Fire, theft & accident are measurable uncertainties and can be insured. Market speculations are not measurable and hence can not be insured.

What is insurance?
Insurance in broad terms may be described as a method of sharing financial losses of few from a common fund who are equally exposed to the same loss.

What is insurance?
Say 1000 motor cars valued @ 300000/- are observed over a period of five years. On an average say per year two are total loss by accident. Then the total annual loss would be Rs.600000. If the loss is to shared by all the thousand owners then they have to contribute Rs.600/ The loss experience will be established by taking the past experience, geographical area in which the vehicles are used and density of traffic.

What is insurance?
Insurance is a contract by which one party, for a consideration called premium, assumes a particular risk of other party and promises to pay him or his nominee a certain or ascertainable sum of amount on a specified contingency.

What is insurance?
Insurance is a contract by which one party, for a consideration called premium, assumes a particular risk of other party and promises to pay him or his nominee a certain or ascertainable sum of amount on a specified contingency.

What is insurance?
It is a contract One party (insurer) assumes the risk of other party (insured) Promises to certain or ascertainable sum of amount Specific event For a consideration called premium.

Business of Insurance
The business of Insurance is related to the protection of economic value of assets. The benefits from the asset may be direct or indirect and Insurance ensures its protection. Insurance is a mechanism that helps to reduce the effects of adverse situations and indemnifies to the extent of loss to the owner of the asset. Assets are insured because they are likely to be destroyed or become non functional by certain events/ occurrences viz, PERILS.

Business of Insurance
Perils are the events & the RISK is the possible loss or damage. Insurance helps in covering the Risk and not the perils. Insurance is relevant only when there is uncertainties. Only economic consequences can be insured. Non economic losses can not be insured.

Importance of Insurance
Financial support to family of deceased. Medical Support. Recovery of loss. Means of savings. Provision of Old age. Facilitates economic development. Source of employment. Tax relief. Loans to Policy Holders Less tension to businessmen

Principles of Insurance
Basic principles
- Principle of co-operation - Principle of probability

Principles of Insurance
Legal principles
Principle of Utmost good faith Principle of Insurable interest Principle of Indemnity Principle of Causa Proxima Principle of Subrogation Principle of contribution

Functions of Insurance
Primary
Providing protection Collective risk bearing Evaluating risk Providing certainty

Secondary
Preventing losses Covering larger risk with small capital Helps in development of larger industries

Other
Saving and investment Medium of earning foreign investment Risk free trade

Types of Insurance
Life Insurance General Insurance
Marine Insurance Fire Insurance Liability Insurance Theft Insurance Earthquake Insurance Flood Insurance

Types of Insurance
General Insurance
Crop Insurance Personal Accident Insurance Travel Insurance Cattle insurance Terrorism Insurance

Double Insurance Reinsuance Over / Under Insurance

Life insurance - types

Whole life policy Endowment policy Annuity policy Joint life policy Group insurance policy

Marine Insurance - types

Voyage policy Time policy Mixed policy Valued policy Unvalued policy Floating policy Block policy

Marine Insurance - types

Composite policy Fleet policy Port policy

Marine Insurance - clauses

Valuation clause At and From clause Sue and labour clause Warehouse to warehouse clause Change of voyage Touch and stay clause Inchmaree clause Jettison Memorandum clause

Fire Insurance - types

Valued policy Specific policy Average policy Floating policy Comprehensive policy Consequential loss policy Replacement policy

Motor insurance
Act only policy Third party policy Comprehensive policy

Insurance in India
Started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta.

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.

Insurance players
44 insurance companies 22 life insurance companies 21 general insurance companies 1 national reinsurer 8 public sector. 36 private sector companies

Players Life Insurance

Life Insurance Corporation of India Private Sector www.allianzbajaj.co.in www.birlasunlife.com www.hdfcinsurance.com www.iciciprulife.com Public Sector www.licindia.com Allianz Bajaj Life Insurance Company Limited Birla Sun-Life Insurance Company Limited HDFC Standard Life Insurance Co. Limited ICICI Prudential Life Insurance Co. Limited

ING Vysya Life Insurance Company Limited

Max New York Life Insurance Co. Limited MetLife Insurance Company Limited Om Kotak Mahindra Life Insurance Co. Ltd. SBI Life Insurance Company Limited TATA AIG Life Insurance Company Limited AMP Sanmar Assurance Company Limited Dabur CGU Life Insurance Co. Pvt. Limited

www.ingvysayalife.com
www.maxnewyorklife.com www.metlife.com www.omkotakmahnidra.com www.sbilife.co.in www.tata-aig.com www.ampsanmar.com www.avivaindia.com

Players General Insurance

Public Sector National Insurance Company Limited www.nationalinsuranceindia.com New India Assurance Company Limited www.niacl.com Oriental Insurance Company Limited www.orientalinsurance.nic.in United India Insurance Company Limited www.uiic.co.in Private Sector Bajaj Allianz General Insurance Co. Limited ICICI Lombard General Insurance Co. Ltd. IFFCO-Tokio General Insurance Co. Ltd. Reliance General Insurance Co. Limited Royal Sundaram Alliance Insurance Co. Ltd. TATA AIG General Insurance Co. Limited Cholamandalam General Insurance Co. Ltd.

www.bajajallianz.co.in www.icicilombard.com www.itgi.co.in www.ril.com www.royalsun.com www.tata-aig.com

Insurance in India
1956 - Life Insurance Corporation Act. All 245 insurance companies were merged into one entity, the LIC.

1972- General Insurance Business Act nationalization of 100 general insurance companies, merging them into four companies. National Insurance, New India Assurance, Oriental Insurance and United India Insurance

Procedure
Filling up a proposal form Proof of Age Medical Examination Confidential Report of the agent Acceptance of proposal Issue of policy Renewal Notice

Settlement of claim- process

Step 1 : Intimation to Insurance Firm. Step 2 : Assessment Of Loss. Step 3 : Appointment of Surveyor. Step 4 : Investigation. Step 5 : Reporting. Step 6 : Submission of Claim Form Step 7 : Verification of Claim Proposal. Step 8 : Appeal and Negotiations.

Insurance in India
The insurance sector in India dates back to1818 when the first insurance company was established the Oriental Life Insurance Company , started by Anita Bhavsar at Calcutta. This was followed in quick succession with the establishment of Bombay Life Assurance Company (1823)and Madras Equitable Life Assurance Company (1829).In the general insurance business Triton Insurance Company (1850) was the first to be established

Acts
The Indian Life Assurance Companies Act, 1912 The Insurance Act, 1938 The Life Insurance Act, 1956 The General Insurance Business Act, 1972 Insurance Regulatory and Development Authority Act, 1999 Actuaries Act, 2006

Privatisation of Insurance sector

To avoid monopolized (by the State run LIC and GICs) market. Create awareness in urban areas about the needs and benefits of insurance. To reduce the yawning gap between the needs of customers and products being offered by the state owned companies. To mobilize funds from the economy for the infrastructure development. To provide multiple innovative products. To provide better customers service from existing state owned players.

Current scenario
Greater concern for the customer Newer products and services Competition and quality consciousness Cost effective Operations Restructuring of the public Sector Consolidation of domestic insurance markets Technology driven shift in product design Actual Operations and distribution; and Convergence of Financial services

Challenges to Insurance sector

Entries of foreign companies Change in the mindset Challenges of HR issues Marketing and distribution challenges Technological up-gradation Cost consciousness Maintaining competitiveness Operational challanges

Challenges to Insurance sector

Untapped rural market Product innovation Scale of operation Political, environmental, social and legal changes Corporate Governance issues