Basics of Insurance

Contents:

Life insurance General insurance Insurance market scenario Emerging trends in insurance
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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 Lloyds 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
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Miscellaneous 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 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.
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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 6.Max New York Life Insurance Company Ltd

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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
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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 Ltd 16.Life Insurance Corporation Of India
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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.

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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

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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.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: Agents Corporate agents Insurance brokers Banks (Bancassurance)

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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

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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 for different periods Covers death & survival benefits Lump sum paid periodically Full 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 policy-

Policies

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

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FIRE POLICIES-SPECIAL 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.

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.
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Personal Line Insurances

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

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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
Compulsory public liability policy Public liability policy Products liability policy Professional indemnity policy Lift (third party) policy Directors liability policy Employers liability policy

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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. IRDAs 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 Irda (protection of policyholders interest ) regulations, 2002

Irda ( licencing of corporate agents) regulations 2002

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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

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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 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 29-012010

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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.

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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.

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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

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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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