UNIVERSITY OF MUMBAI

PROJECT ON
AN ANYLTICAL STUDY OF INSURANCE COMPANY
W.R.T. TATA AIG
SUBMITTED BY
AMARKUMAR SYRYAWANSHI
ROLL NO.: 38
ADVANCED ACCOUNTANCY PART 1
ADVANVCED FINANCIAL ACCOUNTING
IN PARTIAL FULLFILLMENT OF THE DEGREE OF
MASTER OF COMMERCE
2015-16
UNDER THE GUIDENCE OF
PROF. NEELAM SHAIKH
VIDYA PRASARAK MANDAL, THANE
K.G.JOSHI COLLEGE OF ARTS &
N.G. BEDEKAR COLLEGE OF COMMERECE
CHENDANI BUNDER ROAD, THANE-400601

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Declaration
I, student of M.Com. (Part - I) Roll No. : 38 hereby declare that the
project title AN ANLYTICAL STUDY OF INSURANCE COMPANY

W.R.T. TATA AIG for the subject ADVANCED FINANCIAL ACCOUNTING

submitted by me for semester - II of the academic year 2015-16, is based on actual work
carried out by me under the guidance and supervision of PROF. NEELAM SHAIKH. I
further state that this work is original and not submitted anywhere else for any
examination.

PLACE

AMARKUMAR SURYAWANSHI
ROLL NO: 38

DATE

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ACKNOWLEDGEMENT
It is indeed a great pleasure and proud privilege to present this project work.

I take this opportunity to express my gratitude and acknowledge to all the individuals
involved both directly and indirectly for their valuable help and guidance.

This project has been an attempt to give information about the AN ANALYTICAL

STUDY OF INSURANCE COMPANY W.R.T. TATA AIG .

I expressed my deep since of gratitude to founder and president of Vidya Prasarak
Mandal. I express my heartful thanks to our honorable Principal for her constant
support and motivation.

I express special thanks to my guide Prof. NEELAM SHAIKH under whose guidence
the project conceived , planned and executed.

I would also like to thank the college library and its staff for patiently listening and
guiding me. I would like to thank my family also.

Thank You.

Index
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Chapt
er no

Subchap
ter

1.1

Introduction

1.2

Insurability

1.3

Legal

1.4

Indemnification

10

1.5

Methods of insurance

12

1.6

Types of insurance

13

1.7

Review of insurance business in India

18

1.8

19

2.1

Policies and measures to develop insurance

market
IRDA ACT 1999

2.2

Protection of interest of policy holders

22

2.3

Literature review

23

2.4

Research Methodology

25

3.1

Company profile

26

3.2

Financial statements

31

4.1

Conclusion

33

4.2

Bibliography

34

Particulars

Pag
e no

20

Chapter 1
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1.1 Introduction
Methods for transferring or distributing risk were practiced by Chinese and
Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively.[1] Chinese
merchants travelling treacherous river rapids would redistribute their wares across many
vessels to limit the loss due to any single vessel's capsizing. The Babylonians developed
a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and
practiced by early Mediterranean sailing merchants. If a merchant received a loan to
fund his shipment, he would pay the lender an additional sum in exchange for the
lender's guarantee to cancel the loan should the shipment be stolen or lost at sea.
At some point in the 1st millennium BC, the inhabitants of Rhodes created the
'general average'. This allowed groups of merchants to pay to insure their goods being
shipped together. The collected premiums would be used to reimburse any merchant
whose goods were jettisoned during transport, whether to storm or sinkage.
Separate insurance contracts (i.e., insurance policies not bundled with loans or
other kinds of contracts) were invented in Genoa in the 14th century, as were insurance
pools backed by pledges of landed estates. The first known insurance contract dates
from Genoa in 1347, and in the next century maritime insurance developed widely and
premiums were intuitively varied with risks. [3] These new insurance contracts allowed
insurance to be separated from investment, a separation of roles that first proved useful
in marine insurance.
Insurance is the equitable transfer of the risk of a loss, from one entity to another
in exchange for money. It is a form of risk management primarily used to hedge against
the risk of a contingent, uncertain loss. An insurer, or insurance carrier, is selling the
insurance; the insured, or policyholder, is the person or entity buying the insurance
policy. The amount of money to be charged for a certain amount of insurance coverage
is called the premium. Risk management, the practice of appraising and controlling risk,
has evolved as a discrete field of study and practice.
The transaction involves the insured assuming a guaranteed and known relatively
small loss in the form of payment to the insurer in exchange for the insurer's promise to
compensate (indemnity) the insured in the case of a financial (personal) loss. The
insured receives a contract, called the insurance policy, which details the conditions and
circumstances under which the insured will be financially compensated
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Since the mankind, every individual were ready for some type of sacrifice to
avoid the evil consequences of flood and fire. The same instinct is now in todays
businessmen to secure themselves against loss and disaster. This instinct was the main
reason for the birth of Insurance. Beginning date of Insurance is almost 6000 years back
but it largely developed in the past few centuries, particularly after the industrial era.
In India, insurance has a deep-rooted history. It finds mention in the writings of
Manu ( Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ). The
writings talk in terms of pooling of resources that could be re-distributed in times of
calamities such as fire, floods, epidemics and famine. This was probably a pre-cursor to
modern day insurance. Ancient Indian history has preserved the earliest traces of
insurance in the form of marine trade loans and carriers contracts. Insurance in India
has evolved over time heavily drawing from other countries, England in particular.

1.2 Insurability
Risk which can be insured by private companies typically shares seven common
characteristics:

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1. Large number of similar exposure units: Since insurance operates through

pooling resources, the majority of insurance policies are provided for individual
members of large classes, allowing insurers to benefit from the law of large
numbers in which predicted losses are similar to the actual losses. Exceptions
include Lloyd's of London, which is famous for insuring the life or health of
actors, sports figures, and other famous individuals. However, all exposures will
have particular differences, which may lead to different premium rates.
2. Definite loss: The loss takes place at a known time, in a known place, and from
a known cause. The classic example is death of an insured person on a life
insurance policy. Fire, automobile accidents, and worker injuries may all easily
meet this criterion. Other types of losses may only be definite in theory.
Occupational disease, for instance, may involve prolonged exposure to injurious
conditions where no specific time, place, or cause is identifiable. Ideally, the
time, place, and cause of a loss should be clear enough that a reasonable person,
with sufficient information, could objectively verify all three elements.
3. Accidental loss: The event that constitutes the trigger of a claim should be
fortuitous, or at least outside the control of the beneficiary of the insurance. The
loss should be pure, in the sense that it results from an event for which there is
only the opportunity for cost. Events that contain speculative elements such as
ordinary business risks or even purchasing a lottery ticket are generally not
considered insurable.
4. Large loss: The size of the loss must be meaningful from the perspective of the
insured. Insurance premiums need to cover both the expected cost of losses, plus
the cost of issuing and administering the policy, adjusting losses, and supplying
the capital needed to reasonably assure that the insurer will be able to pay
claims. For small losses, these latter costs may be several times the size of the
expected cost of losses. There is hardly any point in paying such costs unless the
protection offered has real value to a buyer.
5. Affordable premium: If the likelihood of an insured event is so high, or the cost
of the event so large, that the resulting premium is large relative to the amount
of protection offered, then it is not likely that the insurance will be purchased,
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even if on offer. Furthermore, as the accounting profession formally recognizes

in financial accounting standards, the premium cannot be so large that there is
not a reasonable chance of a significant loss to the insurer. If there is no such
chance of loss, then the transaction may have the form of insurance, but not the
substance (see the U.S. Financial Accounting Standards Board pronouncement
number 113: "Accounting and Reporting for Reinsurance of Short-Duration and
Long-Duration Contracts").
6. Calculable loss: There are two elements that must be at least estimable, if not
formally calculable: the probability of loss, and the attendant cost. Probability of
loss is generally an empirical exercise, while cost has more to do with the ability
of a reasonable person in possession of a copy of the insurance policy and a
proof of loss associated with a claim presented under that policy to make a
reasonably definite and objective evaluation of the amount of the loss
recoverable as a result of the claim.
7. Limited risk of catastrophically large losses: Insurable losses are ideally
independent and non-catastrophic, meaning that the losses do not happen all at
once and individual losses are not severe enough to bankrupt the insurer;
insurers may prefer to limit their exposure to a loss from a single event to some
small portion of their capital base. Capital constrains insurers' ability to sell
earthquake insurance as well as wind insurance in hurricane zones. In the United
States, flood risk is insured by the federal government. In commercial fire
insurance, it is possible to find single properties whose total exposed value is
well in excess of any individual insurer's capital constraint. Such properties are
generally shared among several insurers, or are insured by a single insurer who
syndicates the risk into the reinsurance market.

1.3 Legal
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When a company insures an individual entity, there are basic legal requirements and
regulations. Several commonly cited legal principles of insurance include:[18]
1. Indemnity the insurance company indemnifies, or compensates, the insured in
the case of certain losses only up to the insured's interest.
2. Benefit insurance as it is stated in the study books of The Chartered Insurance
Institute, the insurance company doesn't have the right of recovery from the
party who caused the injury and is to compensate the Insured regardless of the
fact that Insured had already sued the negligent party for the damages (for
example, personal accident insurance)
3. Insurable interest the insured typically must directly suffer from the loss.
Insurable interest must exist whether property insurance or insurance on a
person is involved. The concept requires that the insured have a "stake" in the
loss or damage to the life or property insured. What that "stake" is will be
determined by the kind of insurance involved and the nature of the property
ownership or relationship between the persons. The requirement of an insurable
interest is what distinguishes insurance from gambling.
4. Utmost good faith (Uberrima fides) the insured and the insurer are bound by a
good faith bond of honesty and fairness. Material facts must be disclosed.
5. Contribution insurers which have similar obligations to the insured contribute
in the indemnification, according to some method.
6. Subrogation the insurance company acquires legal rights to pursue recoveries
on behalf of the insured; for example, the insurer may sue those liable for the
insured's loss. The Insurers can waive their subrogation rights by using the
special clauses.
7. Causa proxima, or proximate cause the cause of loss (the peril) must be
covered under the insuring agreement of the policy, and the dominant cause
must not be excluded

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8. Mitigation In case of any loss or casualty, the asset owner must attempt to
keep loss to a minimum, as if the asset was not insured

1.4 Indemnification
To "indemnify" means to make whole again, or to be reinstated to the position that one
was in, to the extent possible, prior to the happening of a specified event or peril.
Accordingly, life insurance is generally not considered to be indemnity insurance, but
rather "contingent" insurance (i.e., a claim arises on the occurrence of a specified
event). There are generally three types of insurance contracts that seek to indemnify an
insured:
1. A "reimbursement" policy
2. A "pay on behalf" or "on behalf of policy"
3. An "indemnification" policy
From an insured's standpoint, the result is usually the same: the insurer pays the loss
and claims expenses.
If the Insured has a "reimbursement" policy, the insured can be required to pay for a
loss and then be "reimbursed" by the insurance carrier for the loss and out of pocket
costs including, with the permission of the insurer, claim expenses.
Under a "pay on behalf" policy, the insurance carrier would defend and pay a claim on
behalf of the insured who would not be out of pocket for anything. Most modern
liability insurance is written on the basis of "pay on behalf" language which enables the
insurance carrier to manage and control the claim.
Under an "indemnification" policy, the insurance carrier can generally either
"reimburse" or "pay on behalf of", whichever is more beneficial to it and the insured in
the claim handling process.

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An entity seeking to transfer risk (an individual, corporation, or association of any type,
etc.) becomes the 'insured' party once risk is assumed by an 'insurer', the insuring party,
by means of a contract, called an insurance policy. Generally, an insurance contract
includes, at a minimum, the following elements: identification of participating parties
(the insurer, the insured, the beneficiaries), the premium, the period of coverage, the
particular loss event covered, the amount of coverage (i.e., the amount to be paid to the
insured or beneficiary in the event of a loss), and exclusions (events not covered). An
insured is thus said to be "indemnified" against the loss covered in the policy.
When insured parties experience a loss for a specified peril, the coverage entitles the
policyholder to make a claim against the insurer for the covered amount of loss as
specified by the policy. The fee paid by the insured to the insurer for assuming the risk
is called the premium. Insurance premiums from many insureds are used to fund
accounts reserved for later payment of claims in theory for a relatively few claimants
and for overhead costs. So long as an insurer maintains adequate funds set aside for
anticipated losses (called reserves), the remaining margin is an insurer's profit.

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1.5 Methods of insurance

In accordance with study books of The Chartered Insurance Institute, there are the
following types of insurance:
1. Co-insurance risks shared between insurers
2. Dual insurance risks having two or more policies with same coverage
3. Self-insurance situations where risk is not transferred to insurance companies
and solely retained by the entities or individuals themselves
4. Reinsurance situations when Insurer passes some part of or all risks to another
Insurer called Reinsure

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1.6 Types of insurance

Any risk that can be quantified can potentially be insured. Specific kinds of risk that
may give rise to claims are known as perils. An insurance policy will set out in detail
which perils are covered by the policy and which are not. Below are non-exhaustive
lists of the many different types of insurance that exist. A single policy may cover risks
in one or more of the categories set out below. For example, vehicle insurance would
typically cover both the property risk (theft or damage to the vehicle) and the liability
risk (legal claims arising from an accident). A home insurance policy in the United
States typically includes coverage for damage to the home and the owner's belongings,
certain legal claims against the owner, and even a small amount of coverage for medical
expenses of guests who are injured on the owner's property.
Business insurance can take a number of different forms, such as the various kinds of
professional liability insurance, also called professional indemnity (PI), which are
discussed below under that name; and the business owner's policy (BOP), which
packages into one policy many of the kinds of coverage that a business owner needs, in
a way analogous to how homeowners' insurance packages the coverages that a
homeowner needs..
Auto insurance
Auto insurance protects the policyholder against financial loss in the event of an
incident involving a vehicle they own, such as in a traffic collision.
Coverage typically includes:
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Property coverage, for damage to or theft of the car

Liability coverage, for the legal responsibility to others for bodily injury or
property damage

Medical coverage, for the cost of treating injuries, rehabilitation and sometimes
lost wages and funeral expenses

Gap insuranc
Gap insurance covers the excess amount on your auto loan in an instance where your
insurance company does not cover the entire loan. Depending on the company's specific
policies it might or might not cover the deductible as well. This coverage is marketed
for those who put low down payments, have high interest rates on their loans, and those
with 60-month or longer terms. Gap insurance is typically offered by a finance
company when the vehicle owner purchases their vehicle, but many auto insurance
companies offer this coverage to consumers as well. If you are unsure if GAP coverage
had been purchased, you should check your vehicle lease or purchase documentation.
Health insuranceHealth insurance policies cover the cost of medical treatments. Dental
insurance, like medical insurance, protects policyholders for dental costs. In most
developed countries, all citizens receive some health coverage from their governments,
paid for by taxation. In most countries, health insurance is often part of an employer's
benefits.

Income protection insuranceDisability insurance policies provide financial

support in the event of the policyholder becoming unable to work because of
disabling illness or injury. It provides monthly support to help pay such obligations
as mortgage loans and credit cards. Short-term and long-term disability policies are
available to individuals, but considering the expense, long-term policies are
generally obtained only by those with at least six-figure incomes, such as doctors,
lawyers, etc. Short-term disability insurance covers a person for a period typically
up to six months, paying a stipend each month to cover medical bills and other
necessities.

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Long-term disability insurance covers an individual's expenses for the long

term, up until such time as they are considered permanently disabled and thereafter.
Insurance companies will often try to encourage the person back into employment
in preference to and before declaring them unable to work at all and therefore
totally disabled.

Disability overhead insurance allows business owners to cover the overhead

expenses of their business while they are unable to work.

Total permanent disability insurance provides benefits when a person is

permanently disabled and can no longer work in their profession, often taken as an
adjunct to life insurance.

Workers' compensation insurance replaces all or part of a worker's wages lost

and accompanying medical expenses incurred because of a job-related injury.

LIFE INSURANCE
In 1870 two British life insurance companies entered in India and attempted to do life
insurance business on Indian lives. After that many Indian & foreign companies started
business in India and by the year 1955 there were 255 insurance companies operating in
India and transacting the business to the extent of Rs 200 crores. Due to the following
reasons the Government decided to nationalize the life insurance industry w.e.f 1/7/1956.
1. No full guarantee to the Policyholders (who are insured).
2. The concept of trusteeship (confidence) was lacking.
3. Many insurance companies went into liquidation (bankrupt).
4. There was malpractice in the business.
5. Non-Spreading of life insurance.
6. No insurance in rural areas.
7. No group insurance
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8. No social security
To overcome the abovementioned problems the life insurance business was nationalized
and formed Life Insurance Corporation with following features: 1. The Central Govt.
guaranteed the Policyholders through the LIC. 2. Being a Corporation formed under
Special Act Passed by the Parliament therefore the public can trust. 3. The LIC cannot be
liquidated without the order of the Central Govt. 4. Under the LIC Act, all day-to-day
functions of the Corporation and the method of Investment in Govt. Securities were
defined. Therefore, the malpractices were eliminated. After the nationalization the life
insurance business has grown substantially in very first year i.e. from Rs 200 crore upto
1956 to Rs 328 crores in 1957 and till privatization in 2000 the business was transacting
worth Rs 73436 crores.

GENERAL INSURANCE
Prior to nationalization of the General Insurance Business in 1972 by enactment of the
General Insurance Business Nationalization Act 1972 (GIBNA 1972) there were 55 Indian
Companies and 52 non-Indian Companies carrying of the business of General Insurance in
India. Before the nationalization the total premium written by these companies was Rs.170
crores as on 1971. At that time the key Economic indicators were as follows: Gross
Domestic Product Rs. 36503 Crores Per Capita Income Rs. 675 Crores Population 541 mns
To understand the why of nationalization in the first place it is sufficient to read the
following excerpts from the speech of the then Finance Minister Mr.Y.B.Chavan. The
primary objective of nationalization of general Insurance was to make it meaningful to the
common man, to carry its message to the remotest corner of the country and to give it its
rightful place in the economy of the country.
When it was in the private sector it was a mere handmaid to trade and industry and
served to cater to the interests of a limited clientele. Worse still it functioned in a manner
favoring the interests of a few at the expense of, needless to say, the majority. There were
allegations of malpractices on a big scale. It was the objective of nationalization to
remove these malpractices and usher in an era of Insurance run on sound business
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principles and functioning on healthy and egalitarian lines. The emphasis should be on
spreading the message of Insurance as widely as possible and on ensuring that it gives the
right weightage to the weaker sections of the society.
The principle of competition must have its useful role to play, but not at the expense of
unhealthy rivalry. General Insurance is a service and proper and efficient service is due to
the policyholder as a matter of right. The Corporation exists for the benefit of the
policyholder. Business must cease to work under purely mercenary motives. Whenever,
one feels the need for protection against an unpredictable contingency, a suitable Insurance
cover should be available. No excuse should be given that a particular cover is not
conventionally given or that other markets of the world do not give it. Healthy employeremployees relationship is of vital importance to achieve the main objectives of
nationalization. It will be necessary for the Corporation to review the rating structure in
order to ensure that all classes of the policyholder receive a fair deal and the equitable rate
of premium.
The Act led to the formation of the General Insurance Corporation (GIC) and the
shares of the Indian Insurance Companies and the units of other Insurance Companies
operating in India along with the General Insurance business of LIC were transferred to the
GIC. The Indian companies became subsidiaries of GIC and the non-Indian Companies
were transferred to 4 companies selected as flag companies to operate from 4 zones as
under: 1. National Insurance Co. Ltd., with its Head Office at Calcutta. 2. The New India
Assurance Co. Ltd. with its Head Office at Mumbai. 3.
The Oriental fire & Insurance Co. Ltd., with its Head Office at New Delhi (from 1974)
(now named as The Oriental Insurance Co. Ltd.) 4. United India fire & General Insurance
Co. Ltd., with its Head Office at Madras (now named United India Insurance Co. Ltd.) The
basis of allocation of the 107 companies was the geographical areas of operation i.e. south
based companies were allotted to United India, the North based to the Oriental Insurance,
the West based to the New India Assurance and East based National Insurance. The 4 flag
companies became the subsidiaries of General Insurance Corp. with effect from
1/1/1973.The total business has gone from Rs 1145 crores in 1973 to Rs 9522 crores in
2000.

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1.7 Review Of Insurance Business In India

From above you must have observed that the insurance business has grown manifold
after the nationalization of Life Insurance in 1956 and General Insurance in 1972. But the
international comparison as per details given below will show that insurance penetration
and insurance density in India is at low level as compared to the developing/developed
countries. The reasons for low penetration may be that the insurance sector was totally in
the hands of the public enterprises. It is observed that the public enterprises in any country
cant perform all the economic and business effectively. Even in the socialist country,
public enterprises in all the fields cant discharge their full responsibilities. It is also said
that complete governmentalization or nationalization will lead towards slavery.
Though the Indian economy is a mixed economy (not in Insurance sector till 2000) but
the expectation from the public enterprises is too much. In fact, the support and subsidy
provided by the Govt. indirectly punishes the taxpayer and the countrymen. Keeping in
view these problems the Indian Govt. started the liberalization process in 1991. Though the
liberalization, privatization and globalization (LPG) has taken place in many sector but the
insurance sector was liberalized, privatization and globalized in the year 2000.

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Liberalization: means abolition of industrial licensing, removal of the limit on industrial

investment & a more welcoming approach to foreign investment.
Globalization: means opening of the Indian economy for global cooperation in
economic activities. This would involve foreign direct investment in industry and foreign
institutional investors investing in the securities market by way of mutual funds etc.,
removal of quantitative restrictions on imports and reduction of import tariff. Privatization:
means refers to allowing private sector to invest in government companies as well as invest
in areas earlier reserved for the public sector. It also implies greater participation of private
sector in areas exclusively reserved for public sector.
Before liberalization the Insurance sector was controlled by Controller of Insurance but
now the corporate body known as Insurance Regulatory & Development Authority (IRDA)
has been formed under IRDA Act 1999 whose main objectives are as follows: So far, the
IRDA has issued licences to 20 Life Insurance companies and to 15 General Insurance
companies including exclusive health insurance company. The private insurers have started
their business during the year from 2000 to 2001; and till date there is growth in insurance
penetration from 1.93 to 2.40 as well as insurance density from 8.50 to 9.36.

1.8 Policies And Measures To Develop Insurance Market

The Authority has taken a pro-active role in the establishment of a vibrant Insurance
market in the country by taking the following steps:
i)
ii)

The market regulation by prudential norms,

The registration of players who have the necessary financial strength

iii)

to withstand the demands of a growing and nascent market,

) The necessity to have fit and proper person in-charge of

iv)

businesses,
The implementation of a solvency regime that ensures continuous

v)

financial stability, and above all,

The presence of an adequate number of insurance companies to
provide competition and choice to customers all these steps lead to
the establishment of a regime committed to an overall development

vi)

of the market in normal times.

Prescribed rural and social sector norms in respect of Insurance
business being underwritten by the companies.
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vii)

The companies have also been asked to devise insurance policy to

specific sector in the economically weak population.

Chapter 2
2.1 IRDA act 1999
Insurance Regulatory & Development Authority (IRDA) Composition of
Authority under IRDA Act, 1999
As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development
Authority (IRDA, which was constituted by an act of parliament) specify the
composition of Authority
The Authority is a ten member team consisting of
(a)

AChairman;

(b) Five whole-time members;

(c)

four part-time members,

(all appointed by the Government of India)

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Duties, Powers and Functions of IRDA:Section 14 of IRDA Act, 1999 laysdown the duties,powers and functions of IRDA..
(1)

Subject to the provisions of this Act and any other law for the time being in force,

the Authority shall have the duty to regulate, promote and ensure orderly growth of the
insurance business and re-insurance business. Without prejudice to the generality of the
provisions contained in sub-section, the powers and functions of the Authority shall
include, A. Issue to the applicant a certificate of registration, renew, modify, withdraw,
suspend or cancel such registration
B. Protection of the interests of the policy holders in matters concerning assigning
of policy, nomination by policy holders, insurable interest, settlement of
insurance claim, surrender value of policy and other terms and conditions of
contracts of insurance;

C. Specifying requisite qualifications, code of conduct and practical training for

intermediary or insurance intermediaries and agents;
D. Specifying the code of conduct for surveyors and loss assessors;
E. Promoting efficiency in the conduct of insurance business;
F. Promoting and regulating professional organisations connected with the
insurance and re-insurance business;
G. Levying fees and other charges for carrying out the purposes of this
Act;
H. Calling for information from, undertaking inspection of, conducting enquiries
and investigations including audit of the insurers, intermediaries, insurance
intermediaries and other organisations connected with the insurance business;
I. Control and regulation of the rates, advantages, terms and conditions that may
be offered by insurers in respect of general insurance business not so controlled
and regulated by the Tariff Advisory Committee under section 64U of the
Insurance Act, 1938 (4 of 1938);
J. Specifying the form and manner in which books of account shall be maintained
and statement of accounts shall be rendered by insurers and other insurance
intermediaries;
K. regulating investment of funds by insurance companies;
L. Regulating maintenance of margin of solvency;
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M. Adjudication of disputes between insurers and intermediaries or insurance

intermediaries;
N. Supervising the functioning of the Tariff Advisory Committee;
O. Specifying the percentage of premium income of the insurer to finance schemes
for promoting and regulating professional organisations referred to in clause (f);
P. Specifying the percentage of life insurance business and general insurance
business to be undertaken by the insurer in the rural or social sector; and
Q. Exercising such other powers as may be prescribed.

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2.2 Protection of Interest of Policy Holders

IRDA has the responsibility of protecting the interest of insurance policyholders. Towards
achieving this objective, the Authority has taken the following steps:
IRDA has notified Protection of Policyholders Interest Regulations 2001 to provide for:
policy proposal documents in easily understandable language; claims procedure in both
life and non- life; setting up of grievance redressal machinery; speedy settlement of
claims; and policyholders' servicing. The Regulation also provides for payment of interest
by insurers for the delay in settlement of claim.
The insurers are required to maintain solvency margins so that they are in a position to
meet their obligations towards policyholders with regard to payment of claims.
It is obligatory on the part of the insurance companies to disclose clearly the benefits,
terms and conditions under the policy. The advertisements issued by the insurers should
not mislead the insuring public.
All insurers are required to set up proper grievance redress machinery in their head
office and at their other offices.
The Authority takes up with the insurers any complaint received from the policyholders in
connection with services provided by them under the insurance contract.

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2.3 Literature review

Khan, M.K. (1978) attempts to know the opportunities and prospects in the
career of a life insurance sector. He explains about what a good career is and how a
good career should be for selling of life insurance products.

There is no age barrier

and it requires no previous occupational experience but one must be a professional

and capable of creating opportunities in building personality. The relationship of life
Insurance agent with clients is not temporary and the service rendered has no
substitutes.

He also observes that life insurance agent remains, in a sense, permanent

server to the clients.

Ramesh Jain (1980) conducts a case study at Sagar branch, Calcutta, of Life
Insurance Company view the spread of life insurance in a particular area and to
channelize the mobilized

saving for nation building activities. Analyzing the

processing of procurement of insurance business and administration of Life Insurance

Company in branch level, the study also brings out the growth of total new business
and about 30% of Life Insurance Companies individual assurance business originated
from the rural sector - it adds to the privilege of Life Insurance Company to contribute
their investments to many of the vital projects and schemes under 20 point
programmes. The findings of the study were to establish servicing center to have
continuous interaction with the policyholders and the sagar branch has still greater
potentialities of expansion in rural area.
Rajkumar (1985) views that advertising is to influence a customer, who has a
limited spending power and it seems to operate through familiarizing spreading news
over

cog

inertia

and

image

building

improving

market

share,

educating,

informative and to have staff support. As far as insurance industry is concerned,

misconception is a common problem and the pre-testing revealed that most of the rich
people are associated with insurance and he viewed that the treatment of Life
Insurance Company to the public is always unfair.

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Shesha Ayyar, V. (1986) in his article entitled Product Development has

discussed various issues connected with developing new polices such as the
importance of developing new schemes and various problems involved in the
development of new schemes in Company. He suggested the need for including
ancillary benefits such as accident benefits, disablement and hospitalization benefits.
Rajan Saxena (1986)

in his article entitled Life Insurance Services

discusses various issues relating to life insurance. The author insists on the
importance of life insurance and discusses on various strategies of life insurance.
Mishra, M.N. (1987) made a study to appraise the strategies of Life
Insurance Company. While reviewing the strategies, the author felt that before 1960
Life Insurance Company did not give much attention to the objective of customer
satisfaction, but from 1980 onwards the corporation has taken several remedial
measures to provide better customer service and improve the customer satisfaction.
Ashis Deb Roy (1987) in his article entitled We Care for our Customers
has examined the nature and importance of better customer services to policyholders
and has emphasized the need for quality in service. He has given a detailed note on
the various steps to be taken by Life Insurance Company to improve the customer
service such as training programmes conducted by Company to its agents and
employees, opening new branches and introduction of computers in insurance branch

4.2 Research Methodology

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The researcher has used descriptive type of research for the project. Descriptive
research is very common in business and other aspects of life. In fact, most of the marketing
research youve heard about or participated in can be categorized as descriptive research.
With a descriptive research design we are usually trying to describe some group of people or
otherentities. Descriptive research, is used to describe characteristics of a population or
phenomenon being studied.
Descriptive research does not fit neatly into the definition of either quantitative or
qualitative research methodologies, but instead it can utilize elements of both, often within
the same study. The term descriptive research refers to the type of research question, design,
and data analysis that will be applied to a given topic. Descriptive statistics tell what is, while
inferential statistics try to determine cause and effect.

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Chapter 3
3.1 Company Profile
Tata AIG General Insurance Company Limited is an Indian general insurance company,
and a joint venture between the Tata Group and American International Group (AIG). Tata
Group holds 74 per cent stake in the insurance venture with AIG holding the balance 26
percent. Tata AIG General Insurance Company, which started its operations in India on 22
January 2001, provides insurance to individuals and corporates. It offers a range of general
insurance products including insurance for automobile, home, personal accident, travel,
energy, marine, property and casualty as well as several specialized financial lines. The
Company's products are available through various channels of distribution
like agents, brokers, banks (through bank assurance tie ups) and direct channels
like Telemarketing, Digital Marketing, worksite etc.
History
Tata AIG General Insurance Company Limited (Tata AIG General) is a
business Collaboration of the Tata Group and American International Group, Inc. (AIG). Tata
AIG General merges two major finance organizations i.e. the Tata Group's prominent
headship place in India and AIG's global presence as the world's leading international
insurance and financial services Organization. This joint venture has started its operations
in India from 22 January 2001. The company provides both corporate and personal insurance
services. The organization offers an array of general insurance covers which are well thoughtout under commercial and consumer demands. The commercial sector
covers Energy, Marine, Property and several specialized Financial covers, while the
consumer insurance service offers a variety of general Insurance products such as insurance
for Automobiles, personal accident, casualty, home, health and travel. The company has made
the availability for its services from end to end channels of distribution like agents, banks
(through bancassurance tie ups), brokers and direct channels like tele-marketing, ecommerce, website, etc. The headquarters of the company is situated in Mumbai. The
company has provided the employment to more than 2000 qualified professionals across the
country in more than 160 locations.

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The company announces a net profit of 260.31 crore for FY 2011-12

Profit goes up 402 percent - from Rs.51.79 crore to Rs. 260.31 crore

New business premium from traditional business at 45 percent - up from 29 percent

Operating expenses to total premium ratio drops to 21 percent from 24 percent

AUM grows by 15 percent

Tata AIG Life Insurance Company, the life insurance joint venture formed by Tata Sons

and AIA Group (AIA), today announced that it has changed its name to Tata AIA Life
Insurance Company (Tata AIA Life).
The company was set up as a joint venture between the leading Indian conglomerate Tata
group and the leading international insurance organisation American International Group
(AIG). It was licensed to operate in India on February 12, 2001, and started operations on
April 1, 2001. Since its inception, Tata Sons owns 74 percent stake in joint venture, with the
remaining 26 percent share held by AIA, a 100 percent owned subsidiary of AIG at that time.
In 2010, AIA went public in Hong Kong and raised $20.51 billion through an initial
public offering (IPO). The IPO was the third largest globally at the time of listing, after which
AIA emerged as the largest independent publicly listed Pan-Asian life insurance group in the
world. AIA has a strong heritage and fundamentals of over 90 years in the Asian insurance
market. It has wholly-owned main operating subsidiaries or branches in 14 markets in Asia
Pacific.
To create a uniform identity of AIA owned companies post this IPO, the two promoters of
this joint venture have chosen to change the companys name to Tata AIA Life. However, the
company makes this transition just in its name; its single-minded focus in protecting the
financial well-being of its customers remains unchanged.
Commenting on the occasion, Farrokh K Kavarana, chairman, Tata AIA Life, said, The
Tata group, along with our valued partner AIA, continue to remain committed to the Indian
market and our valued customers and partners through our renamed entity Tata AIA Life.
28 | P a g e

Over the past 11 years, we as a company have strived to build a solid foundation of providing
financial protection to our customers. We are confident that this strong foundation will enable
us to stand unwaveringly in good stead and realise full potential of the vast Indian market.
Huynh Thanh Phong, executive vice president and regional chief executive, AIA, said, In
order to reflect the true brand identity of AIA and communicate its unique market position,
history and its ongoing commitment to customers and partners in Asia Pacific region, the
promoters of the joint venture have chosen to change the name of the company from Tata
AIG Life Insurance to Tata AIA Life Insurance. The rechristened Tata AIA Life will continue
to focus on building a premier agency sales force to meet the savings and protection needs of
the customers in India with protection-centric products.
Suresh Mahalingam, managing director, Tata AIA Life, elaborated, While we make
this transition in our name, nothing else will change. The promoters, the distribution network,
the teams, the products, the technology and more importantly, our commitment towards
putting the customers at the centre of everything we do, remain unchanged. The foundation of
trust that our company has been built upon will continue to be strengthened with the vast
expertise that AIA brings with over 90 years of leadership in the life insurance business in the
Asia Pacific region
Performance of Tata AIA Life for the financial year 2011-12
Tata AIA Life also announced its financial results for the fiscal 2011-12, posting a net profit
of Rs260.31 crore.
The total premium income for the financial year ending March 2012 stood at Rs3,630 crore
as against Rs3,985 crore posted for the financial year 2010-11. Of this, the new business
premium collection stood at Rs940 crore. The renewal premium for the same period was at
Rs2,690 crore, as against Rs2,653 crore in the last fiscal. Traditional business accounted for
45 percent of the new business premium as against 29 percent in the last fiscal.
During the financial year, the company further enhanced its operating efficiencies resulting in
the reduction of the operating expenses to total premium ratio to 21 percent against 24
percent in the previous financial year.
The total assets under management of the company has increased by 15 percent to Rs14,519
crore from Rs12,622 crore in the last fiscal. As on March 31, 2012, the paid-up capital of the
29 | P a g e

company stood at Rs1,954 crore.

Commenting on the company's performance, Mr Mahalingam said, The company has
maintained focus on optimum utilisation of resources and a healthy balance in the product
mix between traditional and unit linked business. The cost management effectively delivered
profitable growth for the company with statutory profit of Rs260.31 crore. A solvency margin
of 284 percent further underlines the robust financial health of the company.
Recent Performance of AIA
For the year that ended November 30, 2011, AIA reported record new business growth with a
40 percent increase in value of new business and 22 percent increase in annualised new
premium. For the same period, AIAs embedded value stood at $27,239 million, up by $2,491
million from $24,748 million as on November 30, 2010. It had total assets of $114,461
million as of November 30, 2011.

Tata Aig Health Insurance

TATA AIG Health insurance is an insurance against the risk of suffering medical expenses
among individuals. Simply AIG Health Insurance covers the cost of an insured medical and
surgical expenses. Difficulties never announce their arrivals. Some of these risks can often
bring unexpected hospitalization causing a financial burden on you and your family. The
medical costs, charges like diagnostic tests, Surgeons fees, etc. may turn out to be very
expensive. Tata AIG Health Insurance realizes your needs appear from such unpredicted
situations and offers a range of insurance policies that will help you maintain your savings.
About TATA AIG General Insurance
Tata AIG General Insurance Company Limited is an Indian General assurance company.
TATA AIG General Insurance company Ltd. is a joint venture between the Tata Group and
American International Group (AIG). TATA AIG General Insurance company limited
headquarters located in Mumbai, India. In Total Capital, TATA has 74% stake in the
enterprise while AIG held the remaining 26%. Tata AIG General Insurance Company started
its operations in India on 22 January 2001. Tata AIG provides insurance to individuals and
corporates.

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Tata AIG General Insurance offers a wide range of insurance policies to fulfill the common
man needs. Tata AIG offers insurance plans in different domains like Motor, Travel, Health,
Individual Personal Accident, Home, Lifestyle Insurance. Tata Aig Health Insurance plan is
one of the most important general Insurance plans offered by Tata AIG.
Tata AIG Health Insurance Plans
Tata AIG General Insurance offers Health Insurance plans. Here we are providing an
overview of Coverages, Benefits and Key features offered by Tata AIG Health Insurance
Policies.
List of Tata AIG General Health Insurance Plans offered by Tata AIG General
Insurance
1.

Tata AIG MediPrime.

2.

Tata AIG Wellsurance Executive Policy.

3.

Tata AIG Wellsurance Family Policy.

4.

Tata AIG Wellsurance Woman Policy.

5.

Tata AIG Critical Illness.

6.

Tata AIG Individual Accident and Sickness Hospital Cash Policy.

7.

Tata AIG MediPlus.

8.

Tata AIG MediSenior.

9.

Tata AIG MediRaksha.

10. Tata AIG Group Accident and Sickness Hospital Cash Policy.
Overview of Tata AIG Health Insurance Plans
Tata AIG Health Insurance plans to help you to manage the medical costs the charges like
surgeons fees, diagnostic tests, etc. that may turn out to be expensive and protect your family
31 | P a g e

against financial emergencies. Todays domain demands more of anyone looking to construct
a mark in this competitive world. Somewhere between the pressure to meet demands and the
burning desire to excel, ones health is often the first of the compromises.

3.2 Financial Statement

BALANCE SHEET AS AT 31ST MARCH, 2015

EQUITY AND LIBILITIES

(a)
(b)

Share capital
Reserves and surplus
Shareholders Funds
Non-current liabilities
Long-term provisions
.................................................................................................................................................
(a) Trade payables
(b) Other current liabilities
(c) Short-term provisions
Current Liabilities
TOTAL ..............................................................................................................................................

(a) Fixed assets

Tangible assets
Intangible assets
(b) Non-current investments
(c) Deferred tax assets (net)
(d) Long-term loans and advances
Non-current assets
(a) Current
(b) Trade
(c) Cash and cash
(d) Short-term loans and
(e) Other current
Current
TOTAL ..................................................................................................................

5,509.
209,434.
214,944.

5,509.5
201,047.
206,557.

435.6
3
467.9
138.2
11,327.
11,933.
227,313.
36

357.3
4
668.3
157.4
11,015.
11,841.
218,755.
68

23.2
0.89
223,184.
312.3
223,521.
48.24
1,232.66
730.73
1,780.73
3,792.36
227,313.

ASSETS

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18.7
0.54
192,365.
311.5
192,696.
21,796.1
176.65
1,150.85
621.65
2,314.22
26,059.5
218,755.

Other income
16.93
....................................................................
....................................................................
Total Revenue ..........................................................................................................................................................................

216.94
23,111.71

22,304.67

954.30

725.68

1.04

10.90

554.05

800.25

1,509.39

1,536.83

21,602.32

20,767.84

(1) Current tax .........................................................................................................................................................................

Year ended
31.3.2015
2,951.09

(` in lacs)
year ended
31.3.2014
2,900.00

Revenue from operations .....................................................................................................................................................

(2) Deferred tax .......................................................................................................................................................................

12,997.41
-

12,674.35
-

Profit for the year ......................................................................................................................................................................

10,097.37
18,651.23

9,413.38
17,867.84

16.93

216.94

33.85
23,111.71

32.43
22,304.67

954.30

725.68

1.04

10.90

554.05

800.25

1,509.39

1,536.83

21,602.32

20,767.84

(1) Current tax .........................................................................................................................................................................

2,951.09

2,900.00

(2) Deferred tax .......................................................................................................................................................................

18,651.23

17,867.84

33.85

32.43

Expenses :
Employee benefits expense .................................................................................................................................................
Depreciation and amortisation expenses
.......................................................................................................................
Other expenses .........................................................................................................................................................................
Total Expenses
Profit before tax ........................................................................................................................................................................
Tax expense :
Particulars

Other income
.............................................................................................................................................................................
Earnings
per equity
share (Face Value `10/- per share)
.............................................................................................
Basic and Diluted (`)................................................................................................................................................................
Total Revenue ..........................................................................................................................................................................
Significant Accounting Policies ...........................................................................................................................................
Expenses :
Accompanying Notes are an integral part of the Financial Statements.
Employee benefits expense .................................................................................................................................................
Depreciation and amortisation expenses
.......................................................................................................................
Other expenses .........................................................................................................................................................................
Total Expenses
Profit before tax ........................................................................................................................................................................
Tax expense :

Profit for the year ......................................................................................................................................................................

Earnings per equity share (Face Value `10/- per share)
.............................................................................................
Basic and Diluted (`)................................................................................................................................................................
Significant Accounting Policies ...........................................................................................................................................

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Accompanying Notes are an integral part of the Financial Statements.

Profit And Loss Statement

Chapter 4
4.1 Conclusion
After the deep study of insurance sector of India, I can tell that this is the sector, which has
most business opportunities perhaps in India. Insurance industry is one of the fastest sectors
in India.Insurance sector has been growing by 25% to 30% and it is expected to increase by
50% in coming 5 years. After the opening up of the insurance sector, it has become much
competitive and insurance awareness among people has increased. As far as the
comparison of Reliance Life Insurance and other players is concerned, there are both positive
as well as negative impacts on both the sides. For Reliance Life Insurance, the negative
aspect is that its market share is low. For private players the negative aspect is that they
have to fight with the public sector giant which is established player with a high brand value.
But the positive impact is that the life insurance awareness has increased and the business
of Reliance Life Insurance has increased.

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4.2 Bibliography
BOOKS
Author name
CA (Dr.)Varsha Ainapure

Book Name
MANAN PAKSHAN

WEBSITES
www.google.com
www.wikipedia.com
www.scribd.com

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