Basics of Insurance

Contents:Contents: Life

insurance insurance market scenario trends in insurance

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 General

 Insurance  Emerging

Learning Insurance

 What

Is Insurance

Insurance is concerned with protection of economic value of assets.Tangible assets are human beings, house, furniture, motor cycle etc.Intangible assets are liabilities
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History of Insurance

 It

started from Lloyd s coffee house London  First policy issued in England in 1583  In India first policy issued in 1870
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History of Insurance


LIC of India formed in 1956 after nationalization of life insurance Business of 245 private insurance companies General insurance business of 107 insurance companies was nationalized in 1972 & four public sector General Insurance Companies were formed
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Classes of Insurance
A. Life insurance B. General insurance General insurance is further classified:classified:1.Fire insurance 2.Marine insurance 3.Miscellaneous insurance
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Miscellaneous Insurances:Insurances:1.Motor insurance 2.Mediclaim insurance 3.Householders insurance 4.Shopkeepers insurance 5.Engineering insurances etc.
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Fundamental Principles of Insurance

1.Insurable interest- Means financial interest interest2.Utmost good faith- Greater duties of faith faithon proposer & insurer 3.Indemnity3.Indemnity- Actual compensation of loss. not applicable in life policies

Fundamental Principles of Insurance

4.Subrogation4.Subrogation-Transfer of rights of insured to insurer.Not applicable in life policies. 5.Contribution5.Contribution-Sharing of loss by all insurers.Not applicable in life policies.
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Market Scenario before Irda Act 1999

Life insurance company 1. LIC of India General insurance companies 1.National insurance company ltd 2.New India assurance company ltd 3.Oriental insurance company ltd 4.United India insurance company ltd

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Market Scenario after Irda Act 1999

Stage of Liberalization, Privatization & Globalization

(Competition between public sector & private sector)
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Life Insurance Companies

1.Bajaj Allianz Life Insurance Company Ltd 2.Birla Sun Life Insurance Company Ltd 3.HDFC Standard Life Insurance Company Ltd 4.ICICI Prudential Life Insurance Company Ltd 5.ING Vysya Life Insurance Company Ltd

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Life Insurance Companies

6.Max New York Life Insurance Company Ltd 7.Met Life India Insurance Company Ltd 8.Kotak Mahindra Old Mutual Life Insurance Company Ltd 9.SBI Life Insurance Company Ltd

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Life Insurance Companies

10.Tata AIG Life Insurance Company Ltd 11.Reliance Life Insurance Company Ltd 12.Aviva Life Insurance Company Ltd 13.Sahara India Life Insurance Company Ltd
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Life Insurance Companies

14.Shriram Life Insurance Company Ltd 15.Bharti Axa Life Insurance Company Ltd 16.Life Insurance Corporation Of India 17.Future Generali India Life Insurance Company Ltd.

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Life Insurance Companies

18. IDBI Fortis Life Insurance Company Ltd. 19.Canara 19.Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd. 20.Aegon Religare Life Insurance Company Limited. 21. DLF Pramerica Life Insurance Co. Ltd. 22. Star Union Dai-ichi Life Insurance Co. DaiLtd. 23.India First Life Insurance Company Ltd.
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General Insurance Companies

1.Bajaj Allianz General Insurance Company Ltd 2.Icici Lombard General Insurance Company Ltd 3.Iffco Tokio General Insurance Company Ltd 4.Reliance General Insurance Company Ltd 5.Royal Sundaram Alliance Insurance Company Ltd
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General Insurance Companies

6.Tata AIG General Insurance Company Ltd 7.Cholamandalam Ms General Insurance Company Ltd 8.HDFC8.HDFC-ERGO General Insurance Company Ltd 9.Star Health & Allied Insurance Company Ltd

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General Insurance Companies

10.Export Credit Guarantee Corporation Ltd 11.Agriculture Insurance Company Of India Ltd 12.National Insurance Company Ltd 13.New India Assurance Company Ltd
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General Insurance Companies

14.Oriental Insurance Company Ltd 15.United India Insurance Company Ltd 16. Apollo Munich Health Insurance Company Ltd

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General Insurance Companies

17.Future Generali India Insurance Company Ltd 18. Universal Sompo General Insurance Co. Ltd. 19.Shriram General Insurance Company Limited 20.Bharti AXA General Insurance Company ltd. 21.Raheja QBE General Insurance Company Limited 22.SBI General Insurance Company Ltd. 23.Max Bupa Health Insurance Company Ltd. 24.L & T General Insurance Company Ltd.
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Market Intermediaries
Who procure the insurance business:business: Agents  Corporate agents  Insurance brokers  Banks (Bancassurance)

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Other market Intermediaries

 Surveyors

Who assess the loss in Non-Life Insurance NonClaims  TPA ( Third Party Administrators) Who provide the claim settlement service in health insurance policies

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Basic Life Insurance Policies

Term assurance policy


  

Provides death cover only during policy period Premium is low No refund of premium Sum assured paid on death

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Whole Life Policy

  

 

Death cover only Period is not specified Premium is low & paid during life time No refund of premium Sum assured paid on death

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Endowment Assurance Plan



Covers death & survival benefits Sum assured paid on death or on maturity of policy Period of policy at the option of proposer Most common plan
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Money Back Policy

 Available  Covers  Lump  Full

for different periods

death & survival benefits

sum paid periodically

sum assured paid on death

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Unit Linked Insurance Policies (ULIP)

 Each

premium split into units and risk premium for life cover  Units are priced as per current market value  Sum assured & current value of units paid on death as per policy condition  Current value of units paid on maturity

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Annuity (Pension) Plans

 These

are pension plans  Immediate annuity or deferred annuity starts at specified age periodically  Single premium paid for immediate annuity  Premium in installments paid for deferred annuity  Life cover simultaneously
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Important aspects of Life Insurance Policies

    

Policies available with bonus or without bonus Death due to accidents can be covered for additional S.A. Policies available exclusively for women & children Additional cover for major diseases available Guaranteed bonus policies available

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Important aspects of Life Insurance Policies

 Policies

available for limited period premium payment & risk for longer policy period  Premium can be paid in monthly, quarterly, half yearly, yearly installments

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Important aspects of Life Insurance Policies

 Loans

are available on policies  Lapsed policies can be revived  Policy can be surrendered after three years  Nomination & assignment can be done

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General Insurance Policies

 Fire

policies  Marine policies  Motor vehicle policies  Personal line policies  Health insurances  Liability insurances  Rural insurance policies  Engineering insurances
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Fire
Standard fire policypolicy-

Policies

Common policy for buildings, shops,offices, Industrial & manufacturing risks

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FIRE POLICIES-SPECIAL POLICIES POLICIES-

Industrial & Manufacturing clients

 Floater

policy  Declaration policy  Floater declaration policy  Reinstatement value policy  Industrial all risk policy  Consequential loss policy
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Marine Policy
Marine Cargo Policy


Policy insures physical loss or damage to the goods in transit by road, rail, air, water caused due to accidents, fire etc. etc.

Marine Hull Policy



Policy insures marine ships,steamers etc.

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Special Marine Cargo Policies

For business, industries, importers and exporters  Annual policy  Special declaration policy  Open cover  Open policy

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Motor Vehicle Policies

 Liability only motor policy Mandatory motor vehicle policy  Package motor policy Motor policy additionally insures loss and damage of the motor vehicle due to theft and accidents along with third party risk is called a package motor policy. policy.
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Personal Line Insurances

holders policy  Shop keepers policy  Personal accident policy  Group personal accident policy  Fidelity guarantee policy
 House

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Health Insurance
 Medi

claim policy  Overseas medi claim policy  Videsh yatra mitra policy  Corporate frequent travelers policy  Employment & study policy  Group medi claim policy  Cancer policy
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Liability Insurances
public liability policy  Public liability policy  Products liability policy  Professional indemnity policy  Lift (third party) policy  Director s liability policy  Employer s liability policy
 Compulsory
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Rural Insurance Policies



Cattle policy Poultry policy Agricultural pump set policy Crop insurance
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Engineering Insurances
    

Machinery Breakdown Insurance Loss of Profits (Machinery Breakdown) Insurance Electronic Equipment Insurance Erection All Risk Insurance (EAR) Storage cum Erection Insurance (SCE)
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Engineering Insurances

    

Contractors All Risk Insurance (CAR) Contractors Plant and Machinery Insurance (CPM) Boiler and Pressure Plant Insurance Loss of Profits (Boiler Explosion) Insurance Deterioration of Stocks Insurance.

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Insurance Law
 The

Insurance Act 1938 (amended)  Insurance Regulatory & Development Authority Act 1999

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IRDA
 Insurance

Regulatory & Development Authority is the controlling and regulatory apex body in the country for insurance sector and its chairman and members are appointed by Government of India. IRDA s HQ is located at Hyderabad

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Insurance Regulations (Regulations issued by IRDA)

 IRDA

Actuarial Report and Abstract 2000  IRDA Registration of Indian Insurance Companies 2000  IRDA Insurance Advertisement and Disclosure 2000  IRDA The IRDA (Meetings) 2000  IRDA Investments (Life and General) 2000  IRDA Statements of Accounts 2000
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Insurance Regulations (Regulations issued by IRDA)

 IRDA

The Insurance Advisory Committee (Meetings) Regulations, 2000  IRDA Assets, Liabilities, and Solvency Margin of Insurers Regulations, 2000  IRDA Obligations of Insurers to Rural Social Sectors Regulations, 2000  IRDA Licensing of Insurance Agents Regulations, 2000  IRDA Appointed Actuary 2000
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Insurance Regulations (Regulations issued by IRDA)

    

IRDA General Insurance - Reinsurance Regulations, 2000 IRDA The IRDA (Staff) 2000 IRDA Surveyors and Loss Assessors 2000 IRDA Reinsurance Life 2000 IRDA Revised Investment Regulations in April 2001

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Insurance Regulations
 Irda

(third party administrators) regulations 2001 (protection of policyholder s interest ) regulations, 2002 ( licencing of corporate agents) regulations 2002
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 Irda

 Irda

Insurance Regulations
 Irda

(manner of receipt of premium) regulation 2002  Irda (licencing of brokers) regulation 2002  Irda (micro-insurance) regulations, 2005 (micro IRDA (Treatment of Discontinued Linked Insurance Policies) Regulations, 2010  IRDA (Sharing of Database for Distribution of Insurance Products) Regulations, 2010
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IRDA Guidelines on Corporate Governance for the Insurance Sector



IRDA vide letter no. IRDA/F&A/CIR/025/2009-10 dated IRDA/F&A/CIR/025/200905-0805-08-2009 has issued detailed guidelines to all insurers on corporate governance for the insurance sector for compliance with effect from 01-04-2010 and an 01-04Amendment No.1 has been issued vide letter no.IRDA/F&I/CIR/F&A/014/01/2010 no.IRDA/F&I/CIR/F&A/014/01/2010 dated 29-0129-012010

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Growth of Insurance Business

 Life

Insurance Premium from Rs.400 crores in 1956 to Rs.221791 crores in 20082008-09 with 10.15 % growth over 2007200708  General Insurance Premium from Rs.200 crores in 1972 to Rs.38182 crores in 2009200910 with 16.55 % growth over 2008-09 200853

Emerging Trends
in General Insurance from 1.1.2007 leading to greater price war & new products in future  Banks entering insurance market through joint ventures with foreign finance majors
 Detariffing

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Emerging Trends
Increasing Role of  Insurance Brokers  Bancassurance  Corporate Agency  IT intervention & uses

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Emerging Trends
Greater Job Opportunities  For thousands of Insurance Managers, IT Professionals  For lacs of Insurance Advisors  For Insurance Professionals  For Risk Managers  For Underwriters  For claim Settlements
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Emerging Trends
 Increasing

No. of Insurance companies & Intermediaries  Increasing Awareness about Insurance  Growth in GDP  Increasing No. of Middle Class

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Emerging Trends
 Vast

No. of uninsured population  Underinsurance  Untapped potential for General Insurance

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Emerging Trends
 Increasing

awareness about Health

Insurance  Increasing awareness about Personal Line Insurance like House, Shop, Personal Accident  Market flooded with new insurance products

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