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insurance
SHIKHA RAJPUT (0141PG016)
ANKITA JINDAL (0141PG026)
Sum assured is the amount that your beneficiary will get if you die during the
policy term. Therefore, choosing a sum assured is very important because
through insurance you create a financial cushion for your family
Basic Terms
Importance of insurance
Types of insurance
Life insurance
A life insurance policy is a contract with an insurance company. In exchange for premiums
(payments), the insurance company provides a lump-sum payment, known as a death
benefit, to beneficiaries in the event of the insured's death.
MARKETING CHANNELS
Direct Marketing
(9 - 10 %)
Agency Selling
(28
- 30 % )
Bancassurance
(60%)
Total income that individual is expected to earn over the remainder of his life.
HLV concept considers human life as a kind of property or asset that earns an income.
HLV help to determine how much insurance one should have for full protection.
ILLUSTRATION
HLV = 96000/8%
= 1200000
Endowment
plans
ULIP
Money back
policy
Whole life
policy
POLICY CLAIM
Life insurance claim can arise either:
Life
The Insurance Regulatory and Development Authority (IRDA) is a national agency of the
Government of India, based in Hyderabad. It was formed by an act of Indian Parliament known as
IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements.
Mission "to protect the interests of the policyholders, to regulate, promote and ensure orderly growth
of the insurance industry and for matters connected therewith or incidental thereto.
New Entrance:
Aviva India
General insurance
Property loss
Fire insurance
Travel insurance
marine insurance
Fire insurance
Marine insurance
Marine insurance covers the loss or damage of ships, cargo, terminals, and any
transport or cargo by which property is transferred, acquired, or held between the
points of origin and final destination.
Med
In case of an accident
Motor insurance
Insurance companies look at various characteristics to determine the premium that an individual is
charged. Auto insurance premiums are based on factors such as where you live, your age, and your
driving record. Homeowners insurance premiums are based on factors such as where you live and
the value of your home and its contents. Health insurance premiums are based on factors such
as your age, sex, where you live, and health status. Life insurance premiums are based upon
your life expectancy, which can vary by your age, sex, tobacco usage and overall health condition.
Each insurance company determines premiums differently since the rating plans differ. Talk to your
insurance company or agent about the specifics of how your policy premium was determined.
Insurers use risk data to calculate the likelihood of the event you are insuring against
happening. This information is used to work out the cost of your premium. The more likely the
event you are insuring against is to occur, the higher the risk to the insurer and, as a result, the
higher the cost of your premium.
An insurer will take two important factors into account when working out the premium they will
charge.
How likely is it in general terms that someone will need to make a claim?
Is the person who wants to take out a policy a bigger or smaller risk than the average policyholder
(for example, a young person with a high-powered car may be charged a higher premium as
they are statistically more likely to be involved in an accident than a mature, experienced
driver)?
REINSURANCE
Reinsurance occurs when multiple insurance companies share risk by purchasing insurance policies from
other insurers to limit the total loss the original insurer would experience in case of disaster. By spreading
risk, an individual insurance company can take on clients whose coverage would be too great of a burden for
the single insurance company to handle alone. When reinsurance occurs, the premium paid by the insured is
typically shared by all of the insurance companies involved.
Risk Transfer - Companies can share or transfer of specific risks with other companies
Arbitrage- Additional profits can be garnered by purchasing insurance elsewhere for less than the premium the
company collects from policyholders.
Capital Management - Companies can avoid having to absorb large losses by passing risk; this frees up
additional capital.
Solvency Margins - The purchase of surplus relief insurance allows companies to accept new clients and avoid the
need to raise additional capital.
The international reinsurance market reached USD 240 billion at the end of 2013, representing 5% of the
global insurance business, according to a report presented during "Les Rendez-vous de September" main press
conference in Monte-Carlo. Thus, in 2013, the reinsurers' business value increased by 5.7%, while the
market grew by only 0.6%.
The global reinsurers' top 10 continues to be dominated by MUNICH Re and SWISS Re, which have been
ranking 1st and 2nd since 1990. SCOR ranked 5th this year, as a result of the acquisitions made by the company
on the American market. The top 10 players in the reinsurance industry now hold 62% of the business
volume, compared with 56% in 2000 and 22% in 1980.
TYPES OF REINSURANCE
.
1. Facultative Coverage
This type of policy protects an insurance provider only for an individual, or a specified risk, or contract. If there are several risks or
contracts that needed to be reinsured, each one must be negotiated separately. The reinsurer has all the right to accept or deny a
facultative reinsurance proposal.
2. Reinsurance Treaty
Unlike a facultative policy, a treaty type of coverage is in effect for a specified period of time, rather than on a per risk, or contract basis. For
the duration of the contract, the reinsurer agrees to cover all or a portion of the risks that may be incurred by the insurance company
being covered.
3. Proportional Reinsurance
Under this type of coverage, the reinsurer will receive a prorated share of the premiums of all the policies sold by the insurance
company being covered. Consequently, when claims are made, the reinsurer will also bear a portion of the losses. The proportion of
the premiums and losses that will be shared by the reinsurer will be based on an agreed percentage. In a proportional coverage, the
reinsurance company will also reimburse the insurance company for all processing, business acquisition and writing costs. Also
known as ceding commission, such costs may be paid to the insurance company upfront.
CONTD
4. Non-proportional Reinsurance
In a non-proportional type of coverage, the reinsurer will only get involved if the insurance companys losses exceed a specified amount, which is
referred to as priority or retention limit. Hence, the reinsurer does not have a proportional share in the premiums and losses of the insurance provider. The
priority or retention limit may be based on a single type of risk or an entire business category.
5. Excess-of-Loss Reinsurance
This is actually a form of non-proportional coverage. The reinsurer will only cover the losses that exceed the insurance companys retained limit.
However, what makes this type of contract unique is that it is typically applied to catastrophic events. It can cover the insurance company either on a per
occurrence basis or for all the cumulative losses within a specified period.
6. Risk-Attaching Reinsurance
Under this type of contract, all policy claims that are established during the effective period of the reinsurance coverage will be covered, regardless of whether
the losses occurred outside the coverage period. Conversely, no coverage will be given on claims that originate outside the coverage period, even if the
losses occurred while the reinsurance contract is in effect.
7. Loss-occurring Coverage
This is a type of treaty coverage where the insurance company can claim all losses that occur during the reinsurance contract period. The important
factor to consider is when the losses have occurred and not when the claims have been made.
ADVANTAGE OF RE-INSURANCE
The reinsurance has the effect of stabilizing income and losses over a period of years.
Reinsurance contract makes it possible to purchase only one policy from an insurer.