Basics of Insurance

Contents:- Life insurance General insurance Insurance market scenario Emerging trends in insurance

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

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

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

Classes of Insurance A. Life insurance B. General insurance General insurance is further classified:- 1.Fire insurance 2.Marine insurance 3.Miscellaneous insurance

Miscellaneous Insurances:- 1.Motor insurance 2.Mediclaim insurance 3.Householders insurance 4.Shopkeepers insurance 5.Engineering insurances etc.

Principles of Insurance Fundamental Principles of Insurance 1.Insurable interest- Means financial interest 2.Utmost good faith- Greater duties of faith on proposer & insurer 3.Indemnity- Actual compensation of loss. not applicable in life policies

Fundamental Principles of Insurance 4.Subrogation-Transfer of rights of insured to insurer.Not applicable in life policies. 5.Contribution-Sharing of loss by all insurers.Not applicable in life policies.

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

Market Scenario after Irda Act 1999 Stage of Liberalization, Privatization & Globalization (Competition between public sector & private sector)

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 6.Max New York Life Insurance Company Ltd

Life Insurance Companies 7.Met Life India Insurance Company Ltd 8.Kotak Mahindra Old Mutual Life Insurance Company Ltd 9.SBI Life Insurance Company Ltd 10.Tata AIG Life Insurance Company Ltd 11.Reliance Life Insurance Company Ltd

Life Insurance Companies 12.Aviva Life Insurance Company Ltd 13.Sahara India Life Insurance Company Ltd 14.Shriram Life Insurance Company Ltd 15.Bharti Axa Life Insurance Company 16.Life Insurance Corporation Of India

Life Insurance Companies 17.Future Generali India Life Insurance Company Ltd. 18. IDBI Fortis Life Insurance Company Ltd. 19.Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd.

Life Insurance Companies 20.Aegon Religare Life Insurance Company Limited. 21. DLF Pramerica Life Insurance Co. Ltd. 22. Star Union Dai-ichi Life Insurance Co. Ltd. 23.India First Life Insurance Company Ltd. 24. Edelweiss Tokio Life Insurance Co. Ltd

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

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

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

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

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.

Market Intermediaries Who procure the insurance business:- Agents Corporate agents Insurance brokers Banks (Bancassurance)

Other market Intermediaries Surveyors Who assess the loss in Non-Life Insurance Claims TPA ( Third Party Administrators) Who provide the claim settlement service in health insurance policies

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

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

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

Money Back Policy Available for different periods Covers death & survival benefits Lump sum paid periodically Full sum assured paid on death

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

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

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

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

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

General Insurance Policies Fire policies Marine policies Motor vehicle policies Personal line policies Health insurances Liability insurances Rural insurance policies Engineering insurances

Fire Policies Standard fire policy- Common policy for buildings, shops,offices, Industrial & manufacturing risks

FIRE POLICIES-SPECIAL POLICIES Industrial & Manufacturing clients Floater policy Declaration policy Floater declaration policy Reinstatement value policy Industrial all risk policy Consequential loss policy

Marine Policy Marine Hull 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. Marine Hull Policy Policy insures marine ships,steamers etc.

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

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.

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

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

Liability Insurances Compulsory public liability policy Products liability policy Professional indemnity policy Lift (third party) policy Director’s liability policy Employer’s liability policy

Rural Insurance Policies Cattle policy Poultry policy Agricultural pump set policy Crop insurance

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

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.

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

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

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

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

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

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

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

IRDA Guidelines on Corporate Governance for the Insurance Sector IRDA vide letter no. IRDA/F&A/CIR/025/2009-10 dated 05-08-2009 has issued detailed guidelines to all insurers on corporate governance for the insurance sector for compliance with effect from 01-04-2010 and an Amendment No.1 has been issued vide letter no.IRDA/F&I/CIR/F&A/014/01/2010 dated 29-01-2010

Growth of Insurance Business Life Insurance Premium was Rs.400 crores in 1956. First year life premium of 2009-10 increased from Rs. 109290 crores to Rs.125826 crores in 2010-11 with 15.13 % growth. General Insurance Premium was Rs.200 crores in 1972.In 2010-11 it increased to Rs. 42568 crores from Rs. 34944 of 2009-10 with 21.68 % growth.

Growth of Insurance Business Further in 2010-11 Health insurance increased to Rs. 1558 crores with 44.76 % growth, Agriculture insurance increased to Rs. 1960 crores with 29 % growth, Credit insurance increased to Rs. 885.67 crores with 8.84 % growth.

Emerging Trends Detariffing 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

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

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

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

Emerging Trends Vast No. of uninsured population Underinsurance Untapped potential for General Insurance

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