Insurance

Insurance

Insurance
Insurance
In the contract of insurance, the insurer
agrees/undertakes the consideration of a
sum of money, to make good the loss
suffered by the insured against a specified
risk such as fire and any other similar
contingency
or
compensate
the
insured/beneficiaries on the happening of a
specified event such as accident or death.
There are two parties Insured
Insurer

Insurance
Insurance
Depending on the subject matter, the
insurance policies can be classified into two
types Life Insurance
General Insurance

Life
Life Insurance
Insurance

Under which a specified amount becomes

payable on the death of the insured or upon
the expiry of a specified period of time,
which ever is earlier

Types
Types of
of Life
Life Insurance
Insurance Policies
Policies
1. Endowment policy

The insured amount is payable either at the end

of a specified number of years or upon death of
the insured person, which ever is earlier.
2. Whole Life Policy

The premium continues to be paid through the

life of the assured, but the amount becomes
payable only after death.
3. Limited payment life Policy

Similar to the whole life policy

The premium is to be paid only for a certain

number of years.

Types
Types of
of Life
Life Insurance
Insurance Policies
Policies
4. Joint Life Policy

The policy money becomes payable either on

maturity of the policy or on the death of any of
the persons jointly insured.
5. Convertible Whole Life Policy

The rate of premium is quite low initial.

After some time, the assured is given an option

to convert the policy into endowment policy.
6. Double Accident Indemnity Policy

The assured dies of an accident his survivors

get double the amount of the policy

General
General Insurance
Insurance

General Insurance which covers losses

caused by fire, accident and marine
adventures and so on

Fire
Fire Insurance
Insurance Policies
Policies

Is a contract under which the insurer

agrees, in consideration of a premium, to
pay loss or damage by fire during specified
period.

Types
Types of
of Fire
Fire Insurance
Insurance Policies
Policies
1. Specific Policy

The loss suffered by the assured is covered only

up to a specific amount, which is less which is
less than the real value of the property.
2. Comprehensive Policy

It is also known as an all-in-one policy

It covers losses arising from any kind risks such

as fire, theft, burglary and so on
3. Valued Policy

The insurer agrees to pay fixed sum of money

irrespective of the amount of loss to the insured

Types
Types of
of Fire
Fire Insurance
Insurance Policies
Policies

4. Floating Policy

It covers property lying at different

places against lose by fire
E.g. goods placed in two godowns at
two different places.

Marine
Marine Insurance
Insurance Policies
Policies

A contract of marine insurance is a contract

under which the insurer indemnifies the
insured against losses that is, losses relating
to marine adventure or to navigation or
commerce on sea.

Types
Types of
of Marine
Marine Insurance
Insurance Policies
Policies

1. Voyage Policy

It insures the subject matter at and

from or from one place to another
2. Time Policy
The subject matter is insured for a
definite time not exceeding a year.
3. Mixed Policy
It covers the risk during a particular
voyage for a specified period.

Types
Types of
of Marine
Marine Insurance
Insurance Policies
Policies

4. Valued Policy

it is a policy which specifies the agreed

value of the subject matter.
5. Open and Unvalued Policy
The value of the subject matter is not
specified
In case of any loss, it is ascertained
subject to the limit of sum insured.
6. Floating Policy

Privatization
Privatization of
of Insurance
Insurance
India opened insurance sector for private
sectors in the year 1998-99.
Indian
companies can start insurance
business with foreign collaboration.
To control the insurance business IRDA Act
was enacted in the year 1999.
After
2000
many
private
insurance
companies entered both in life insurance
and general insurance
After 2000 private players captured nearly
10-15% of the shares

Legislative
Legislative measures
measures
1.
2.

Insurance Act 1938

Insurance Regulatory Authority
Following the recommendations of the
Malhotra Committee, the enactment of a
comprehensive legislation, on February 23,
1996, the govt, of India approved the
setting up of IRA under the over all control
of the Ministry of Finance to regulate the
insurance sector in the place of controller
of Insurance

Legislative
Legislative measures
measures
Features of IRA

The chairman of IRA was the ex-officio COI

under the Insurance Act 1938 and the
exercised all the powers vested with the COI.

The govt. could assign such additional nonstatutory functions as may be considered
necessary to the IRA, to enable it to
effectively regulate, promote and ensure the
orderly growth of the insurance industry

3.
3. Insurance
Insurance Regulatory
Regulatory Development
Development Authrity
Authrity Act
Act
(IRDA)
(IRDA) 1999
1999

The IRDA Act enacted in 1999 to provide for

the establishment of IRA to protect the
interests of holders of insurance policies, to
regulate, promote and ensure orderly growth
of the insurance industry and to amend the
Insurance Act 1938, The LIC act 1956 and the
general Insurance Business Act 1972.

Powers
Powers and
and Functions
Functions

Issue to the applicant a certificate of

registration, to renew, modify, withdraw,
suspend or conceal such registration.
Protection of the interests of the policy holder.
Specifying requisite qualifications and practical
training for insurance intermediaries and
agents.
Specifying the code of conduct for surveyors
and loss assessors.
Promoting and regulating professional
organizations connected with the
insurance and reinsurance business.

Powers
Powers and
and Functions
Functions

Promoting
and
regulating
professional
organizations connected with the insurance
and reinsurance business.
Undertaking
inspection
of
insurers,
intermediaries
and
other
organizations
connected with the insurance business.
Control and regulation of the rates, terms and
conditions that may be offered by insurers in
respect of general insurance business, not so
controlled by insurance Act 1938
Specifying the form and manner in which
books of account be maintained.

Powers
Powers and
and Functions
Functions

Regulating investment of funds by insurance

companies.
Settlement of disputes between insurer and
intermediaries.
Specifying the percentage of premium income
of the insurer.
Specifying the percentage o life insurance
business and general insurance business.
Exercising such other powers as may be
prescribed.

Role
Role of
of IRDA
IRDAin
in Privatization
Privatization

To control especially, private insurance

players IRDA Act was enacted in the year
1999.
It issued many guidelines for the private
insurance players to start their business as
per
the
Malhothra
committee
recommendations.
The new entrants should write a specified
portion of their business in rural areas.
The minimum paid up capital of a new
entrant should be Rs. 100 crore.

Role
Role of
of IRDA
IRDAin
in Privatization
Privatization

Foreign players allowed only joint venture

with Indian companies
No single company should be allowed to
transact both life and general insurance
business.