Role of LIC

LIFE INSURANCE IN INDIA

Insurance in India can be traced back to the Vedas. For instance, Yougkshema, the name of
Life Insurance Corporation of India's corporate headquarters, is derived from the Rig Veda.
The term suggests that a form of 'community insurance' was prevalent around 1000 BC and
practised by the Aryans.

Bombay Mutual Assurance Society, the first Indian life assurance society, was formed in
1870. Other companies like Oriental, Bharat and Empire of India were also set up in the
1870 – 90s.

The Insurance Act was passed in 1912, followed by a detailed and amended Insurance Act
of 1938 that looked into investments, expenditure and management of these companies'
funds.

By the mid – 1950s, there were around 170 insurance companies and 80 provident fund
societies in the country's life insurance scene. However, in the absence of regulatory
systems, scams and irregularities were almost a way of life at most of these companies'
funds.

As a result, the government decided to nationalise the life assurance business in India. The
Life Insurance Corporation of India was set up in 1956 to take over around 250 life
assurance companies. After the RN Malhotra Committee report of 1994 became the first
serious document calling for the re-opening up of the insurance sector to private players –
that the sector was finally opened up to private players in 2001.

WHAT IS LIFE INSURANCE

Life Insurance is a contract for payment of a sum of money to the person assured on the
happening of the event insured against. Usually the contract provides for the payment of an
amount on the date of maturity or at specified dates at periodic intervals or at unfortunate
death, if it occurs earlier. It is concerned with two hazards that stand across the life- path of
every person that of dying prematurely leaving a dependent family to fend itself and that of
living to old age without visible means of support.

GROWTH OF NEW BUSINESS

During the 1997-98 LIC sum assured through policies 63927.83 Crore Rs. In 1998-99 LIC
sum assured 75606.26 Crore Rs. In 1999-00 LIC sum assured 91490.94 Crore Rs. In 2000-
01 LIC sum assured 124950.63 Crore Rs. In 2001-02 LIC sum assured 192784.96 Crore Rs.
We can see that LIC gets success in new business.

NUMBER OF POLICIES

In 1997-98 LIC's number of polices are 850.03 in lakh. In 1998-99 LIC'S number of polices
are 917.26 in lakh. In 1999-00 LIC's number of polices are 1013.89 in lakh. In 2000-01
LIC's numbers of policies are 1131.11 in lakh. In 2001-02 LIC's number of policies 1258.76
in lakh. We can see that LIC's position is very good. Numbers of policies are increased.

ANALYSIS OF INCOME

This chart shows various income of LIC. LIC gets 14.11 % income through first year
premium. LIC gets 40.74 % income from Renewal Premium. LIC gets 12.43 % income from
Single Premium. LIC gets 31.19 % income from investments. LIC gets income 1.53 % from
Miscellaneous.

CONCLUTION

LIC gets achievement in various fields. We can see that LIC gets success in new business.
Numbers of policies are increased. We can see LIC's income from various fields. Overall LIC
has doing profitable business. But it is only LIC's own business. But it is not compared with
other's insurance institute. So it is not completed.
 Brief History of Insurance
The story of insurance is probably as old as the story of mankind. The same instinct that prompts
modern businessmen today to secure themselves against loss and disaster existed in primitive
men also. They too sought to avert the evil consequences of fire and flood and loss of life and
were willing to make some sort of sacrifice in order to achieve security. Though the concept of
insurance is largely a development of the recent past, particularly after the industrial era – past
few centuries – yet its beginnings date back almost 6000 years.

Life Insurance in its modern form came to India from England in the year 1818. Oriental Life
Insurance Company started by Europeans in Calcutta was the first life insurance company on
Indian Soil. All the insurance companies established during that period were brought up with the
purpose of looking after the needs of European community and Indian natives were not being
insured by these companies. However, later with the efforts of eminent people like Babu
Muttylal Seal, the foreign life insurance companies started insuring Indian lives. But Indian lives
were being treated as sub-standard lives and heavy extra premiums were being charged on them.
Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company
in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with
highly patriotic motives, insurance companies came into existence to carry the message of
insurance and social security through insurance to various sectors of society. Bharat Insurance
Company (1896) was also one of such companies inspired by nationalism. The Swadeshi
movement of 1905-1907 gave rise to more insurance companies. The United India in Madras,
National Indian and National Insurance in Calcutta and the Co-operative Assurance at Lahore
were established in 1906. In 1907, Hindustan Co-operative Insurance Company took its birth in
one of the rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The
Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were some of the
companies established during the same period. Prior to 1912 India had no legislation to regulate
insurance business. In the year 1912, the Life Insurance Companies Act, and the Provident Fund
Act were passed. The Life Insurance Companies Act, 1912 made it necessary that the premium
rate tables and periodical valuations of companies should be certified by an actuary. But the Act
discriminated between foreign and Indian companies on many accounts, putting the Indian
companies at a disadvantage.

The first two decades of the twentieth century saw lot of growth in insurance business. From 44
companies with total business-in-force as Rs.22.44 crore, it rose to 176 companies with total
business-in-force as Rs.298 crore in 1938. During the mushrooming of insurance companies
many financially unsound concerns were also floated which failed miserably. The Insurance Act
1938 was the first legislation governing not only life insurance but also non-life insurance to
provide strict state control over insurance business. The demand for nationalization of life
insurance industry was made repeatedly in the past but it gathered momentum in 1944 when a
bill to amend the Life Insurance Act 1938 was introduced in the Legislative Assembly. However,
it was much later on the 19th of January, 1956, that life insurance in India was nationalized.
About 154 Indian insurance companies, 16 non-Indian companies and 75 provident were
operating in India at the time of nationalization. Nationalization was accomplished in two stages;
initially the management of the companies was taken over by means of an Ordinance, and later,
the ownership too by means of a comprehensive bill. The Parliament of India passed the Life
Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of India
was created on 1st September, 1956, with the objective of spreading life insurance much more
widely and in particular to the rural areas with a view to reach all insurable persons in the
country, providing them adequate financial cover at a reasonable cost.

LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate
office in the year 1956. Since life insurance contracts are long term contracts and during the
currency of the policy it requires a variety of services need was felt in the later years to expand
the operations and place a branch office at each district headquarter. Re-organization of LIC took
place and large numbers of new branch offices were opened. As a result of re-organisation
servicing functions were transferred to the branches, and branches were made accounting units.
It worked wonders with the performance of the corporation. It may be seen that from about
200.00 crores of New Business in 1957 the corporation crossed 1000.00 crores only in the year
1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But
with re-organisation happening in the early eighties, by 1985-86 LIC had already crossed
7000.00 crore Sum Assured on new policies.

Today LIC functions with 2048 fully computerized branch offices, 109 divisional offices, 8
zonal offices, 992 satallite offices and the Corporate office. LIC’s Wide Area Network covers
109 divisional offices and connects all the branches through a Metro Area Network. LIC has tied
up with some Banks and Service providers to offer on-line premium collection facility in
selected cities. LIC’s ECS and ATM premium payment facility is an addition to customer
convenience. Apart from on-line Kiosks and IVRS, Info Centres have been commissioned at
Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many
other cities. With a vision of providing easy access to its policyholders, LIC has launched its
SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the
customer. The digitalized records of the satellite offices will facilitate anywhere servicing and
many other conveniences in the future.

LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance
and is moving fast on a new growth trajectory surpassing its own past records. LIC has issued
over one crore policies during the current year. It has crossed the milestone of issuing
1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the
corresponding period of the previous year.

From then to now, LIC has crossed many milestones and has set unprecedented performance
records in various aspects of life insurance business. The same motives which inspired our
forefathers to bring insurance into existence in this country inspire us at LIC to take this message
of protection to light the lamps of security in as many homes as possible and to help the people
in providing security to their families.

Some of the important milestones in the life insurance business in India are:

1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started
functioning.
1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its
business.

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life
insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of
protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies are taken over by the central
government and nationalised. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a
capital contribution of Rs. 5 crore from the Government of India.

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.

Some of the important milestones in the general insurance business in India are:

1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of
general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of
conduct for ensuring fair conduct and sound business practices.

1968: The Insurance Act amended to regulate investments and set minimum solvency margins
and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalisation) Act, 1972 nationalised the
general insurance business in India with effect from 1st January 1973.

107 insurers amalgamated and grouped into four companies viz. the National
Insurance Company Ltd., the New India Assurance Company Ltd., the
Oriental Insurance Company Ltd. and the United India Insurance Company
Ltd. GIC incorporated as a company.
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LIC Limitation
(a) Regulations respecting general terms and conditions of insurability The Director shall from
time to time, after consultation with the advisory committee authorized under section 4025 of
this title, appropriate representatives of the pool formed or otherwise created under section 4051
of this title, and appropriate representatives of the insurance authorities of the respective States,
provide by regulation for general terms and conditions of insurability which shall be applicable
to properties eligible for flood insurance coverage under section 4012 of this title, including - (1)
the types, classes, and locations of any such properties which shall be eligible for flood
insurance; (2) the nature and limits of loss or damage in any areas (or subdivisions thereof)
which may be covered by such insurance; (3) the classification, limitation, and rejection of any
risks which may be advisable; (4) appropriate minimum premiums; (5) appropriate loss-
deductibles; and (6) any other terms and conditions relating to insurance coverage or exclusion
which may be necessary to carry out the purposes of this chapter. (b) Regulations respecting
amount of coverage In addition to any other terms and conditions under subsection (a) of this
section, such regulations shall provide that - (1) any flood insurance coverage based on
chargeable premium rates under section 4015 of this title which are less than the estimated
premium rates under section 4014(a)(1) of this title shall not exceed - (A) in the case of
residential properties - (i) $35,000 aggregate liability for any single-family dwelling, and
$100,000 for any residential structure containing more than one dwelling unit, (ii) $10,000
aggregate liability per dwelling unit for any contents related to such unit, and (iii) in the States of
Alaska and Hawaii, and in the Virgin Islands and Guam; the limits provided in clause (i) of this
sentence shall be: $50,000 aggregate liability for any single-family dwelling, and $150,000 for
any residential structure containing more than one dwelling unit; (B) in the case of business
properties which are owned or leased and operated by small business concerns, an aggregate
liability with respect to any single structure, including any contents thereof related to premises of
small business occupants (as that term is defined by the Director), which shall be equal to (i)
$100,000 plus (ii) $100,000 multiplied by the number of such occupants and shall be allocated
among such occupants (or among the occupant or occupants and the owner) under regulations
prescribed by the Director; except that the aggregate liability for the structure itself may in no
case exceed $100,000; and (C) in the case of church properties and any other properties which
may become eligible for flood insurance under section 4012 of this title - (i) $100,000 aggregate
liability for any single structure, and (ii) $100,000 aggregate liability per unit for any contents
related to such unit; and (2) in the case of any residential property for which the risk premium
rate is determined in accordance with the provisions of section 4014(a)(1) of this title, additional
flood insurance in excess of the limits specified in clause (i) of subparagraph (A) of paragraph
(1) shall be made available to every insured upon renewal and every applicant for insurance so as
to enable such insured or applicant to receive coverage up to a total amount (including such
limits specified in paragraph (1)(A)(i)) of $250,000; (3) in the case of any residential property for
which the risk premium rate is determined in accordance with the provisions of section 4014(a)
(1) of this title, additional flood insurance in excess of the limits specified in clause (ii) of
subparagraph (A) of paragraph (1) shall be made available to every insured upon renewal and
every applicant for insurance so as to enable any such insured or applicant to receive coverage up
to a total amount (including such limits specified in paragraph (1)(A)(ii)) of $100,000; (4) in the
case of any nonresidential property, including churches, for which the risk premium rate is
determined in accordance with the provisions of section 4014(a)(1) of this title, additional flood
insurance in excess of the limits specified in subparagraphs (B) and (C) of paragraph (1) shall be
made available to every insured upon renewal and every applicant for insurance, in respect to
any single structure, up to a total amount (including such limit specified in subparagraph (B) or
(C) of paragraph (1), as applicable) of $500,000 for each structure and $500,000 for any contents
related to each structure; and (5) any flood insurance coverage which may be made available in
excess of the limits specified in subparagraph (A), (B), or (C) of paragraph (1), shall be based
only on chargeable premium rates under section 4015 of this title, which are not less than the
estimated premium rates under section 4014(a)(1) of this title, and the amount of such excess
coverage shall not in any case exceed an amount equal to the applicable limit so specified (or
allocated) under paragraph (1)(C), (2), (3), or (4), as applicable. (c) Effective date of policies (1)
Waiting period Except as provided in paragraph (2), coverage under a new contract for flood
insurance coverage under this chapter entered into after September 23, 1994, and any
modification to coverage under an existing flood insurance contract made after September 23,
1994, shall become effective upon the expiration of the 30-day period beginning on the date that
all obligations for such coverage (including completion of the application and payment of any
initial premiums owed) are satisfactorily completed. (2) Exception The provisions of paragraph
(1) shall not apply to - (A) the initial purchase of flood insurance coverage under this chapter
when the purchase of insurance is in connection with the making, increasing, extension, or
renewal of a loan; or (B) the initial purchase of flood insurance coverage pursuant to a revision
or updating of floodplain areas or flood-risk zones under section 4101(f) of this title, if such
purchase occurs during the 1-year period beginning upon publication of notice of the revision or
updating under section 4101(h) of this title.
 Development

Insurance law is the name given to practices of law surrounding insurance, including insurance
policies and claims. It can be broadly broken into three categories - regulation of the business of
insurance; regulation of the content of insurance policies, especially with regard to consumer
policies; and regulation of claim handling.

Contents
[hide]

• 1 Development of Insurance Law

• 2 Common law of insurance - basic principles
o 2.1 Insurable interest and indemnity
o 2.2 Utmost good faith
o 2.3 Warranties
• 3 Regulation of insurance companies
o 3.1 In the United States
o 3.2 In the European Union
o 3.3 Rest of World
• 4 See also
• 5 References

• 6 External links

[edit] Development of Insurance Law

The earliest form of insurance is probably marine insurance, although forms of mutuality (group
self-insurance) existed before that. Marine insurance originated with the merchants of the
Hanseatic league and the financiers of Lombardy in the 12th and 13th centuries, recorded in the
name of Lombard Street in the City of London, the oldest trading insurance market. In those
early days, insurance was intrinsically coupled with the expansion of mercantilism, and
exploration (and exploitation) of new sources of gold, silver, spices, furs and other precious
goods - including slaves - from the New World. For these merchant adventurers, insurance was
the

"means whereof it cometh to pass that upon the loss or perishing of any ship there followeth not
the undoing of any man, but the loss lighteth rather easily upon many than upon a few... whereby
all merchants, especially those of the younger sort, are allured to venture more willingly and
more freely."[1]

The expansion of English maritime trade made London the centre of an insurance market that, by
the 18th century, was the largest in the world. Underwriters sat in bars, or newly fashionable
coffee-shops such as that run by Edward Lloyd on Lombard Street, considering the details of
proposed mercantile "adventures" and indicating the extent to which they would share upon the
risks entailed by writing their "scratch" or signature upon the documents shown to them.

At the same time, eighteenth-century judge William Murray, Lord Mansfield, was developing
the substantive law of insurance to an extent where it has largely remained unchanged to the
present day - at least insofar as concerns commercial, non-consumer business - in the common-
law jurisdictions. Mansfield drew from "foreign authorities" and "intelligent merchants"

"Those leading principles which may be considered the common law of the sea, and the common
law of merchants, which he found prevailing across the commercial world, and to which every
question of insurance was easily referrable. Hence the great celebrity of his judgments, and
hence the respect they command in foreign countries".[2]

By the 19th century membership of Lloyd's was regulated and in 1871, the Lloyd's Act was
passed, establishing the corporation of Lloyd's to act as a market place for members, or "Names".
And in the early part of the twentieth century, the collective body of general insurance law was
codified in 1906 into the Marine Insurance Act 1906, with the result that, since that date, marine
and non-marine insurance law have diverged, although fundamentally based on the same original
principles.

[edit] Common law of insurance - basic principles

Common law jurisdictions in former members of the British empire, including the United States,
Canada, India, South Africa, and Australia ultimately originate with the law of England and
Wales. What distinguishes common law jurisdictions from their civil law counterparts is the
concept of judge-made law and the principle of stare decisis - the idea, at its simplest, that courts
are bound by the previous decisions of courts of the same or higher status. In the insurance law
context, this meant that the decisions of early commercial judges such as Mansfield, Lord Eldon
and Buller bound, or, outside England and Wales, were at the least highly persuasive to, their
successors considering similar questions of law.

At common law, the defining concept of a contract of commercial insurance is of a transfer of

risk freely negotiated between counterparties of similar bargaining power, equally deserving (or
not) of the courts' protection. The underwriter has the advantage, by dint of drafting the policy
terms, of delineating the precise boundaries of cover. The prospective insured has the equal and
opposite advantage of knowing the precise risk proposed to be insured in better detail than the
underwriter can ever achieve. Central to English commercial insurance decisions, therefore, are
the linked principles that the underwriter is bound to the terms of his policy; and that the risk is
as it has been described to him, and that nothing material to his decision to insure it has been
concealed or misrepresented to him.

In civil law countries insurance has typically been more closely linked to the protection of the
vulnerable, rather than as a device to encourage entrepreneurialism by the spreading of risk. Civil
law jurisdictions - in very general terms - tend to regulate the content of the insurance agreement
more closely, and more in the favour of the insured, than in common law jurisdictions, where the
insurer is rather better protected from the possibility that the risk for which it has accepted a
premium may be greater than that for which it had bargained. As a result, most legal systems
worldwide apply common-law principles to the adjudication of commercial insurance disputes,
whereby it is accepted that the insurer and the insured are more-or-less equal partners in the
division of the economic burden of risk.

[edit] Insurable interest and indemnity

Most, and until 2005 all, common law jurisdictions require the insured to have an insurable
interest in the subject matter of the insurance. An insurable interest is that legal or equitable
relationship between the insured and the subject matter of the insurance, separate from the
existence of the insurance relationship, by which the insured would be prejudiced by the
occurrence of the event insured against, or conversely would take a benefit from its non-
occurrence. Insurable interest was long held to be morally necessary in insurance contracts to
distinguish them, as enforceable contracts, from unenforceable gambling agreements (binding
"in honour" only) and to quell the practice, in the seventeenth and eighteenth centuries, of taking
out life policies upon the lives of strangers. The requirement for insurable interest was removed
in non-marine English law, possibly inadvertently, by the provisions of the Gambling Act 2005.
It remains a requirement in marine insurance law and other common law systems, however; and
few systems of law will allow an insured to recover in respect of an event that has not caused the
insured a genuine loss, whether the insurable interest doctrine is relied upon, or whether, as in
common law systems, the courts rely upon the principle of indemnity to hold that an insured may
not recover more his true loss.

[edit] Utmost good faith

The doctrine of uberrimae fides - utmost good faith - is present in the insurance law of all
common law systems. An insurance contract is a contract of utmost good faith. The most
important expression of that principle, under the doctrine as it has been interpreted in England, is
that the prospective insured must accurately disclose to the insurer everything that he knows and
that is or would be material to the reasonable insurer. Something is material if it would influence
a prudent insurer in determining whether to write a risk, and if so upon what terms. If the insurer
is not told everything material about the risk, or if a material misrepresentation is made, the
insurer may avoid (or "rescind") the policy, i.e. the insurer may treat the policy as having been
void from inception, returning the premium paid.

[edit] Warranties

In commercial contracts generally, a warranty is a contractual term, breach of which gives right
to damages alone; whereas a condition is a subjectivity of the contract, such that if the condition
is not satisfied, the contract will not bind. By contrast, a warranty of a fact or state of affairs in an
insurance contract, once breached, discharges the insurer from liability under the contract from
the moment of breach; while breach of a mere condition gives rise to a claim in damages alone.

[edit] Regulation of insurance companies

Insurance regulation that governs the business of insurance is typically aimed at assuring the
solvency of insurance companies. Thus, this type of regulation governs capitalization, reserve
policies, rates and various other "back office" processes.

[edit] In the United States

As a preliminary matter, insurance companies are generally required to follow all of the same
laws and regulations as any other type of business. This would include zoning and land use,
wage and hour laws, tax laws, and securities regulations. There are also other regulations that
insurers must also follow. Regulation of insurance companies is generally applied at State level
and the degree of regulation varies markedly between States.

Regulation of the insurance industry began in the United States in the 1940s , through several
United States Supreme Court rulings. The first ruling on insurance had taken place in 1868 (in
the Paul v. Virginia ruling[3]), with the supreme court ruling that insurance policy contracts were
not in themselves commercial contracts. This stance did not change until 1944 (in the United
States v. South-Eastern Underwriters Association ruling [4]), when the Supreme court upheld a
ruling stating that policies were commercial, and thus were regulatable as other similar contracts
were.

In the United States each state typically has a statute creating an administrative agency. These
state agencies are typically called the Department of Insurance, or some similar name, and the
head official is the Insurance Commissioner, or a similar titled officer. The agency then creates a
group of administrative regulations to govern insurance companies that are domiciled in, or do
business in the state. In the United States regulation of insurance companies is almost
exclusively conducted by the several states and their insurance departments. The federal
government has explicitly exempted insurance from federal regulation in most cases.

In the case that an insurer declares bankruptcy, many countries operate independent services and
regulation to ensure as little financial hardship is incurred as possible (National Association of
Insurance Commissioners operates such a service in the United States [5]).

In the United States and other relatively highly-regulated jurisdictions, the scope of regulation
extends beyond the prudential oversight of insurance companies and their capital adequacy, and
include such matters as ensuring that the policy holder is protected against bad faith claims on
the insurer's part, that premiums are not unduly high (or fixed), and that contracts and policies
issued meet a minimum standard. A bad faith action may constitute several possibilities; the
insurer denies a claim that seems valid in the contract or policy, the insurer refuses to pay out for
an unreasonable amount of time, the insurer lays the burden of proof on the insured - often in the
case where the claim is unprovable. Other issues of insurance law may arise when price fixing
occurs between insurers, creating an unfair competitive environment for consumers. A notable
example of this is where Zurich Financial Services [6] - along with several other insurers - inflated
policy prices in an anti-competitive fashion. If an insurer is found to be guilty of fraud or
deception, they can be fined either by regulatory bodies, or in a lawsuit by the insured or
surrounding party. In more severe cases, or if the party has had a series of complaints or rulings,
the insurer's license may be revoked or suspended. It should be noted that bad faith actions are
exceedingly rare outside the United States. Even within the US the full rigour of the doctrine is
limited to certain States such as California.

[edit] In the European Union

Member States of the European Union each have their own insurance regulators. However, the
E.U. regulation sets an harmonsied prudential regime throughout the whole Union. As they are
submitted to harmonised prudential regulation, and in consistency with the European Treaty
(according to which any legal or natural person who is a citizen of a Union member State is free
to establish him-, her- or itself, or to provide services, anywhere within the European Union), an
insurer licensed in and regulated by e.g. the United Kingdom's financial services regulator, the
Financial Services Authority, may establish a branch in, and/ or provide cross-border insurance
coverage (through a process known as "free provision of services") into, any other of the member
States without being regulated by those States' regulators. Provision of cross-border services in
this manner is known as "passporting".

[edit] Rest of World

Every developed sovereign state regulates the provision of insurance in different ways. Some
regulate all insurance activity taking place within the particular jurisdiction, but allow their
citizens to purchase insurance "offshore". Others restrict the extent to which their citizens may
contract with non-locally regulated insurers. Still others do both. In consequence, a complicated
muddle has developed in which many international insurers provide insurance coverage on an
unlicensed or "non-admitted" basis with little or no knowledge of whether the particular
jurisdiction in or into which cover is provided is one that prohibits the provision of insurance
cover or the doing of insurance business without a licence.