Project on a Study on Organizational Structure of

Oriental Insurance Company Ltd

CHAPTER - I

INTRODUCTION

1.0 Insurance is a method through which one can just spread over the risk. It
is a way of reducing uncertainty of occurrence of an event. It is co-operative
effort where in the loss occurred by a specific risk in spread over a large number
of persons. Insurance is a solution for reducing risk, large number of people
collect small amount, known as premium and out of this losses are paid to the
suffering persons.

1.1 ORIGIN AND DEVELOPMENTS OF INSURANCE

No one know that when the insurance transactions started? The origin of
insurance is lot in antiquity. However, there are certain evidences on the basis of
which one can say that the earliest form of insurance was marine insurance.
Evidences are also on record that arrangements embodying the ideas of
insurance were being practiced in Babylone and India, centuries ago.
References are also available in Hammurabi Manu (Manav Dharma Shashtra).
The word ‘Yogakshema’ used in ‘Rig-Veda’ suggested that some form of
community insurance was being carried on by the Aryans in our country well
over 3000 years ago. The existence of burial society also acknowledge that
insurance played significant role in Buddhist period when it used to help the
family of a deceased person by building a house and protecting the widows.
Marine insurance came earliest than fire insurance and life insurance came and
lastly other forms of insurances were developed in the world.

1
1.2 MARINE INSURANCE

Marine insurance was the first form of the insurance business. It is said
that it probably began in north Italy by the end of 12 th century. The Italian
merchants who came to England in 12th or 13th century covered their risk of
assets with insurance. The first marine policy called “Polliza” was issued in
Italy in 1300. “Charter of insurance” was also established in 1300 in Belgium.
Insurance was similarly developed in other European countries like Spain,
France, Germany and Holland. Insurance sector was greatly developed in the
time of Queen Elizabeth-I in England during the 14 and the 15 th centuries.
Lombards, the ex-communicated businessmen of Italy captured the whole
market of marine insurance business. They run the business along with other
and settled docent the street of London which was later on famous by the name
of ‘Lombard Street’ – a well known place for marine insurance transactions.

The present form of marine insurance is developed by the Lloyds

Association which was established in 1774 by a man Mr. Edward Lloyds, a
coffee merchant with the publication of ‘Lloyds News’. The merchants gathered
into the coffee house and took liability in marine insurance business as per their
financial position. Even today, Lloyds Association is one of the leading firms
transacting marine insurance in the whole world. Later on Marine Insurance Act
was passed in 1906 in England. Other countries had also passed the marine
insurance act nearly the same period. It was passed in 1963 in India.

1.3 FIRE INSURANCE

The evidences of emergence of fire insurance can be seen in 16 century in

Germany. There was a scheme made to spread over the fire risk a group of
people in Oldenburg in 1609 by collecting the premium. The market of fire
insurance was greatly developed after the great fire of London in 1666 in 25 th
2
which 85% of the houses burnt to ashes and property worth 10 crores sterling
was completely destroyed. The first fire insurance office was established in
London in 1680. ‘Sunlife’ office was set up in 1710 in London. The industrial
revolution gave impetus to develop the fire insurance business because there
was great expansion of machinery used. The market for fire insurance expanded
for protecting the highly cost machinery. Fire Insurance started in India with
the establishment of Triton Insurance Company in Calcutta in 1850. The North
British Mercantile company came into existence in 1861.Fire insurance has very
slow trend for progress in India up to nationalization of general insurance.

1.4 LIFE INSURANCE

The origin of Life Insurance business was not so earlier. There is no

specific evidence available through which one can consider how the idea of life
insurance developed. The first life insurance policy issued on the life of Mr.
William Gybbons on 18th June, 1653 in England. It was issued for one year
period. The first registered life office in England was ‘hand in hand’ society
which was established in 1690. Mutual Life Insurance Company came into
existence later on in 1696. The first mortality table prepared in the 19 th century
gave impetus to the life insurance transactions.

Life Insurance started in India by Europeans with the establishment of

‘Oriental Life Insurance Company’ in 1818. ‘Bombay Mutual Life Insurance’
came into existence in 1871. In 1874, the third company entered into the same
business of life insurance called ‘The Oriental Government Security Life
Assurance’. The life insurance act passed in 1956 in India.

3
1.5 MISCELLANEOUS INSURANCE

The Industrial revolution gave impetus to certain miscellaneous

insurance like accident insurance, liability insurance, theft and burglary
insurance and fidelity insurance. There are certain latest forms of insurance like
cattle insurance, crop insurance, profit insurance and consequential loss
insurance.

1.6 ORIGIN OF GENERAL INSURANCE

Insurance was a method of sharing of the losses, embodying the principle

of co-operation existed in the early civilization. Evidences are available that
proves loss of profits in industry was insured by the village co-operatives in
India during the Aryan Civilization. “Bottomary Bonds” were the first plan,
which considered insurance as a technique of providing protection against the
fortuitous events for a consideration. The medilevaranean merchants as early as
in the fourth century B.C issued the bonds. The Bottomary loan was an advance
of money on a ship during the period of a voyage. It was repayable with the
agreed rate of interest, on the arrival of the ship safely at destination. There
were possibilities of losing the ship during the voyage; the obligation to repay
the loan was extinguished in that case. The interest payable constituted a sort of
premium for the risk of total loss. Similar loans were issued on the security of
cargo and were called” Respondentia bonds” There are references found in
“Manav Dharma Shashtra”, code of Manu which contained rules for sea form
contracts observed by the traders from Broach and Surat who set sailed in
Indian built ships with Indian merchandise to Lanka, Egypt and Greece. The
other four-runner of insurance was the marine practice of general average
hereby losses incurred to save the common venture, were shared by
contributions from all the interests – ship, freight and cargo all the things saved

4
by the general average at. The Rhodians also practiced it in their Mediterranean
trade in 916 B.C.

The earliest transaction of insurance can be traced out to the beginning of

the fourteenth century in Northern Italy. Some Italian merchants were engaged
in the Mediterranean trade with India via Constantinople and with the European
countries by land. It originated the practice of breaking of the botany bonds into
two instruments covering separate transactions.

1) The advance of money, which was to be repaid on the safe arrival of the
ship.
2) A policy of assurance, which paid the amount, stated, in the event of loss
of sea. This was the beginning at marine insurance business.

1.7 HISTORY OF GENERAL INSURANCE IN INDIA

Even though marine insurance practiced today was introduced in U.K in

the 15th century, it was established only at the beginning of the 19 th century.
There are some evidences about between 1797 and 1810; marine insurance
companies were established in Calcutta. It was the centre of the east India
Company’s trade and commerce. Thus, the marine insurance was the earliest
form of insurance in India.

Alliance British and foreign fire insurance company established an

agency office at Madras in 1825 and introduced fire insurance in India. Some
British companies which basically conducted the import export business had
also started the insurance activities as a subsidiary line of activity. The British
company appointed the different managing directors for different fields as like
sugar factories, tea estates, cotton mills, jute mills and the managing directors
controlled the insurance of these fields, which they placed, with British
Insurance Companies.

5
 Around 50 foreign offices commenced the insurance business through
agency houses in the year 1885. Most of them were British and few of them
were from Australia, New Zealand and the Continent. Some of these insurance
offices were members of the fire offices committee which formed in 1858 in
London. There was no uniformity of rates of premium because all of the
companies were not members of tariff body. The first Indian general insurance
company was formed to transact insurance business in 1850, namely the Triton
Insurance Corporation. By the end of the 19th century, the Indian Businessmen
had taken active interest in insurance business as brokers in western India. Fire
insurance transacted only in metropolitan cities like Bombay, Calcutta and
Madras during this period. The fire insurance had become popular in other areas
as industries developed outside the metropolitan cities. The Indian broker
commenced their business in western India and gradually captured the control
of the business. There was an institute of brokers placed the business directly
without any intermediary.

The brokers faced the common problems due to the competition and
formed an association of Fire Insurance Agents in 1882 in Bombay. Similar
associations were established in Calcutta in 1888 and in Madras in 1896. In the
year 1894 there was first Indian tariff for fire business formed in India. Then
after the Bombay city and Mofussil Tariff were formed in 1895, which was
followed by the Calcutta Tariff in 1900. The first underwriters association was
established in Bombay in 1872. The association worked in close conjunction
with both the fire offices committee and the accident offices association of
London. Due to the developed industry and commerce, there was an increase of
insurance potential. Many British offices had already made a success of their
business through agency. They began to convert the agency houses into branch
offices or to open new branch offices. The Indian insurance market attracted
few American Offices.

6
 The Swadeshi movement provided impetus to the development to
insurance in India. On the political and economic ground, the need for purely
Indian insurance companies to cater to the insurance requirements of the
mercantile community was keenly felt. The Indian Mercantile Insurance
Company established in 1907 with the Indian capital. At the end of the First
World War, here were seven largest Indian offices were established. The merely
established companies had faced severe competition from the foreign insurance
companies. The Indian companies had no enough expenses as well as no
technical expertise where as the foreign insurers are superior in both of field
them the Indian companies.

The position of Indian insurance companies was further aggravated by the

fact that exchange banks did not recognize the policies issued by the Indian
Insurance companies except up to the small amount. Thus, it was the
requirement of the government interference by appointing a special officer in
1935.He investigated and presented report on insurance law reports. Thus
according to the suggestions and findings of the report, the Indian insurance act
was passed in 1938 and brought into force in 1939. The act was important
landmark in the history of Indian insurance industry. Then government had
controlled uniformly over all insurance companies whether foreign or Indian.
There were some important provisions made by the insurance act 1938 as
follows.

i) Statutory deposits, registration of insurers

ii) Periodical returns to government
iii) Prohibition of rebating out of commission / premiums
iv) Fixation of commission rates
v) Licensing of agents
vi) Criteria of the post of superintendent of insurance (later designated
controller of insurance). There was a steady development of Indian
insurance between 1940 and 1950. Indian enterprises set up various
industries like textiles, sugar, paper, cement, paints etc. under the
7
 influence of the ‘Swadeshi Spirit’. The industrial development was under
the protective tariffs. Moreover the Second World War as an indirect
result helped rapid expansions of Indian industries in 1939. The share of
insurance business of the Indian insurance companies registered a sharp
increase from 11% in 1929 to 31% in 1939.

The explosion occurred on the board the S.S. fort Stikine in Bombay
Docks on 14th April 1944 had created an extra ordinary situation for the
insurance industry. The government took a sympathetic view and issued the
Bombay Expansion Ordinance 1944. It provides the compensation for losses of
insured property. The compensation also extended to uninsured property and
personal injuries. There was a partition of the country in 1947 between India
and Pakistan. It came with the specific problems for insurance industry in India.

The claim settlement procedures become very complex due to unavailability of

sufficient records which were destroyed during the riots and they were
compulsory required to investigate the reality of the claim. There were some
cases in which the policy number also destroyed due to the same difficulties.
The insurance companies had faced many difficulties. They had to shift their
offices from the area of Pakistan to India. It was done after the considerable
time.

There were a great insurance potential during the Second World War thus,
10 composite offices and 15 general offices were established and some Indian
businessmen had purchased several foreign business houses. Industrial houses,
banks and insurance companies were closely inter-related through common
owners. It had an unhealthy influence on the insurance market as a whole, for
various reasons. The situation had led to the appointment of Cowasjee Jahangir
Committee, which led to the amendment of the Insurance Act, 1938 in 1950.

The main changes due to the amendment were as follows.

8
 a) Limitation on expenses of management
b) Limitation of commission payable to principal agents and ordinary agents
c) Establishment of the Insurance Association of India.

The insurance companies had to regulate their management expenses

including commission within the prescribe scale. Under the above mentioned
amendments, the scales were in the form of percentage of gross direct premium
on a descending slab system.

The act established a statutory association of insurance companies which

is called as insurance association of India. Indian insurance companies entered
into the association as a member whereas the foreigner companies entered as
associate members. The association had two councils.

i) Life Insurance Council

ii) General Insurance Council

The general insurance council had operated through the executive

committee whose functions are to aid and advise insurance companies in the
matter of rendering efficient service to policy holders and setting up standard of
conduct and sound practices. The general insurance council constituted the
Tariff committee, which controls and regulates the rates, terms and conditions of
the insurance business. The Tariff committee is the committee which controls
and regulates the rates, terms and conditions of the insurance business. The
Tariff committee had operated through the regional councils in Bombay,
Calcutta, Delhi and Madras. The councils constituted the sectional committees
for fire, marine and miscellaneous business. The whole object of the
organizational structure is to create a collective sense of responsibility among
the Insurance Companies and statutory machinery to advise the government in
the matter of control and supervision of insurance companies. It was a unique
experiment in cooperation between business and government.

9
 The period from 1951 onwards the five year plans initiated the rapid
development of insurance business made possible by large scale economic
development which increased insurance consciousness among the people. The
problem of preserving foreign exchange actually felt in India as a result of drain
on foreign exchange involved. Thus, all the insurance companies both Indian
and foreign companies operating in India formed the Indian reinsurance
cooperation, in 1956 to provide reinsurance facilities. The insurance companies
were obliged to make compulsory cessions to the Corporation at a fixed
percentage. The reinsurance market became more strengthened by the setting up
of another professional insurance company called the Indian Guarantee and
General Insurance Company Ltd. in 1961 which received similar sessions on a
company basis.

Life Insurance Corporation had also entered into the field of general
insurance in the year 1964. There was a requirement to save foreign exchange in
marine hull insurance where the premiums are substantial. All Indian ships were
insured in India in 1953. The capacity of the market was limited, so foreign
reinsurance was required. The rates had to be fixed in consultation with London
reinsures.

With the co-operation of the London Joint Hull Committee in 1965, An

Indian Hull committee was formed under the aegis of the Tariff Committee,
which has the assumed responsibility for rating Indian Hulls. There was a
demand for nationalization of general insurance to introduce a socialistic pattern
of society. The insurance act further amended and gave wide powers to the
controller of insurance. A Tariff Advisory Committee replaced the general
insurance. The Act had made provisions for licensing of surveyors and loss
assessors. The general insurance business act was passed in 1972. The
government has established the general Corporation of India with effect from 1 st

10
January 1973. All the 107 insurance companies were merged with one or the
other of the four subsidiaries of the general insurance Corporation.

1.8 INSURANCE IN INDIA

The history of insurance in our country is somewhat darken. The earliest

reference of life insurance was available in the days of East India Company,
when the policies were taken only by the British officers. The policy was issued
by British officers in sterling currency. Oriental was the first foreign insurance
company established in India in 1818. Foreigners, orphans and widows were
become subject matter for the oriental company. The company started accepting
the Indians in 1934 due to the efforts of Babu Muttylal. ‘Bombay Life’, a
company had issued short term policies for 2-3 years in 1823. Raja Ram Mohan
Roy, the man who pleaded for protecting widows through government insurance
‘Bombay Mutual Life Assurance Society was established by some prominent
citizens of Bombay in 1871. European merchant also started ‘Bombay
Insurance Society’ in 1893 by voluntary efforts. Mr. Curstjee Furdoonju was the
first insured person of India. This policy was insured in 1848 by royal Insurance
which started in 1845. It was the beginning of the Indian insurance venture.

1.9 GENERAL INSURANCE

The general insurance business in India, can trace its roots to the
‘TRITON INSURANCE COMPANY, the first general insurance company
established in the year 1850 in Calcutta by the Britisher. The ‘INDIAN

11
MERCHANTILE INSURANCE LTD.’ set up in 1907. It was the first company
to transact all classes of general insurance business. General insurance council
as a wing of the insurance association of India framed a code of conduct and
count business practices in 1957. During 1968, the Insurance Act amended to
regulate investments and set minimum solvency margins and the TARIFF
ADVISORY COMMITTEE set up in 1972 the General Insurance Business
(Nationalization) Act, 1972 nationalized the general insurance business in India
with effect from 1st January 1973. One hundred and seven insurers amalgamated
and grouped into four companies like

1) National Insurance Company Ltd.

2) The New India Assurance Company Ltd.
3) The United India Insurance Co. Ltd.
4) Oriental Insurance Co. Ltd.

General Insurance Company incorporated as a main company which

held the power to control and manage above said four subsidiaries companies.
Bombay Mutual Assurance Society Ltd. Oriental Government Security Life
Assurance Co. Ltd., Bharat and Empire of India were the well organized units in
the field of insurance business established in India. The history can classify on
the basis of following period

a) Before Independence
b) After independence
c) During globalization

1.10 BEFORE INDEPENDENCE

Indian national congress and other Swadeshi Movement started in earlier

part of twentieth century, which became cause for refused to purchase English
goods and the matter became root for preferring Indian insurance. Thus, many
Indian insurance companies came into existence. Indian insurance business

12
stimulated through the First World War Indian life, the national, The Hindustan
Co-operative, The Bombay Life, The Asian Life and The General Assurance
were some prominent. Many industrialists started their own insurance
companies during 1919 to 1932 due to the recession in the Indian economy. In
1919, New India was started by the TATA Group. The Jupiter General was
started by Lalaji Narnji in 1919. Both of them were the most prominent results
of that economic recession. ‘LAXMI’, ‘VULCAN’, ‘THE BRITISH INDIA’,
THE ZENITH’ were other companies which had started their insurance business
from that period.

The transactions of insurance companies were negligible till the end of the
First World War. There after the position began to change, outbreak of Second
World War stimulated the rapid progress of Indian Insurance Business. The
number of the Indian Companies transacting in insurance business were only 80
in the year 1920. It was increased up to about 240 during the Second World War.
Speculative business was also involved in the insurance companies by
themselves through such financial irregularities, so that government appointed a
committee under the chairmanship of Sir Cowasjee Jahangir to examine the
insurance structure. The committee was found that the insurance companies
were not working satisfactorily.

1.11 AFTER INDEPENDENCE

The independence of India followed by the partition it was resulted that

there were 218 head offices in India and 12 in Pakistan in 1946. The network of
insurance sector was drastically changed. The insurance act was passed by

13
government in 1956. The period 1952 to 1955 was the period of pre
nationalization of insurance company. The Indian insurer was not in satisfactory
condition due to great depression in Jute, Tea and other cash crops. In 1955 the
last year of pre nationalization, the total business was 2207 crores on 749000
polices. The total investments were 318.9 crores. The government of India took
decision of nationalization of insurance business in 1956 by taking management
and control of all 245 existing companies. All insurance companies continued to
exist as separate entities and the ownership also continued until the life
insurance act, came into existence on 1-9-1956.

India is the first country in the whole world to nationalize the life
insurance business. The objectives of insurance sector were as under.

 To establish socialistic pattern of society

 To provide complete security to the policy holders.
 To avoid mal practices
 To protect the interest of citizen.

1.12 DURING GLOBALIZATION PERIOD:

The insurance sector regulated according to the industrial policy passed

by government industrial policy 1990 was the milestone for globalization as
well as liberalization. In April, 1993 government set up a high power committee
headed by Mr. R. N. Malhotra to suggest reforms in the insurance sector and
make it more efficient and competitive. The committee recommended the
establishment of a strong and effective insurance regulatory authority in the
form of a statutory autonomous board on the lines of SEBI.

In 1999, the insurance sector opened up for private companies in life as

well as Non-life insurance companies. It was followed by the establishment of
IRDA (insurance Regulatory and Development Authority) in April 2000. The

14
foreign companies looked upon the untapped profit potentials in Indian
insurance industry and rushed over here.

1.13 DEFINITIONS OF INSURANCE

There are many definitions of insurance. We can classified them into two
aspects

I. Functional definitions
II. Contractual definitions

I. Functional Definitions

Insurance has varied aspects. There is emphasis on functions of insurance

in functional definitions. According to this aspect, definition of insurance must
include the following points.

 Cooperative effort
 Spread risk over a large number of people
 Method to provide security.

There are certain definitions which include above said points as follows

1) “Insurance may be defined as a social device providing financial

compensation for the effects of misfortune, the payments being made
from the accumulated contributions of all parties participating in the
scheme.-- D. S. Hansell
2) “Insurance is a co-operative device to spread the loss caused by a
particular risk over a number of persons who are exposed to it and who
agree to insurance themselves against the risk”.-- R. S. Sharma
3) “Insurance may be described as a social device whereby a large group of
individuals, through a system of equitable contribution, may reduce or
eliminate certain measurable risks of economic loss common to all
members of society.”
15
 Encyclopedia

II. Contractual definitions

These definitions are quite different. The definition must include

1) An agreement
2) A Consideration and
3) The happening of a particular event.

The following authors have given the contractual definition of the

insurance

1) “Insurance is a contract in which a sum of money is paid to the insured in

Consideration of insurance incurring the risk of paying a large sum upon
a given contingency” - Justice Tindall
2) “Insurance is a contract by which one party, for a Consideration called
premium, assumes particular risk of the other party and promises to pay
to him or his nominee a certain or ascertainable sum of money on a
specified contingency.” -E.W. Patterson
3) “Insurance is the process by which a firm (the insurance company) for a
fee (the premium) agrees to pay another firm or individual (the insured) a
sum of money stated in a written contract (the policy), if a loss occurs” -
Boon and Kurtz
4) “In its legal aspect it is a contract, the insurer agreeing to make good any
financial loss the insured may suffer within the scope of the contract and
the insured agreeing to pay a Consideration (the premium)” -Riegal and
Miller

After considering these definitions, one can clearly understand the

concept of insurance. Insurance as a whole is a co-operative device to spread the
loss caused by a particular risk over a number of persons who are exposed to it
who agree to insure themselves against that risk.

1.14 SUBJECT MATTER OF INSURANCE

16
 The subject matter of insurance describe in policy itself. There are
various subject matters for example, a person, any asset, property, right, interest,
life or liability. Thus in fire insurance the subject matter may be a car or a shop,
in case of life insurance the subject matter of insurance is the life of a person
and in an accident insurance, the matter may be one’s liability for body injuries
or damages to the property of a third party. Thus the subject matters are
different depends upon the policy.

1.15 SCOPE OF INSURANCE

Insurance has very wide scope due to cutthroat competition in every

service section of business. Insurance can do anything except giving back the
life of the dead person. Insurance can restore the loss to the extent if promises to
do. Insurance can make good the less to the extent it promises to do. It can put
the suffered person in the same position as he was in before the loss occurred.
Life insurance provides immediate financial assistance to the family of the
deceased. W.A. Dinsdale considers the scope of insurance as under: “There are
very few events against the happening of which insurance is now a days unable
to provide protection.” Today life becomes more and more complex. Social
systems are also changing fast, so the scope of insurance becomes wider. One
can purchase insurance on any risk event. Riegal and miller in their book said
‘Insurance principles and Practices’ have mentioned the scope of insurance as
under:

“Every individual is exposed to innumerable risks connected with life,

physical exertion, business and recreation and most individuals are interested in
escaping, if possible the injurious consequences of such risks”.

1.16 NATURE AND CHARACTERISTICS

17
 The characteristics of Insurance are as under:

 A cooperative device
 A contract
 Consideration
 Protection against the risks
 Device to spread the risks
 Based upon certain principles
 Social device
 Regulated by law
 It is not a wagering.

1.17 SIGNIFICANCE OF INSURANCE

As the industrial revolution comes with cut throat competition, the

chances of uncertainty are also increasing day by day. Insurance plays
significant role for not only an individual or for a family but it has spread over
the entire nervous system of the nation. According to the famous philosopher J.
Royce, Insurance Principles comes to be more and more used and useful in
modern affairs. Not only does it serve the ends of individuals, it tends more and
more both to pervade and transform our modern social order. It brings into new
synthesis, not merely pure and applied sciences, but private and public interests,
individual prudence and a large regard for the general welfare theft and charity
one famous author named “Dinsdale” also explains the significance of insurance
as under. “No one in the modern world can afford to be without insurance”.
Insurance provides various advantages to various fields. One can classify the
significance as under.

 Security encourages the habit of forced thrift.

 Provides mental peace increase efficiency.
 Contribution to the conservation of health.
 Cover for legal Liability.
 Security to the mortgaged property.
 Foster economic independence.
 Encourages savings.

18
  Provision for the future.
 Awareness towards losses.
 Credit Facility.
 Tax exemption.

Traditionally, general insurance includes fire insurance, marine insurance

and miscellaneous insurance. It includes almost all insurance without life
insurance. Insurance act 1938 Section - 2 provides its definition as under.
“General Insurance Business means fire, marine or miscellaneous insurance
business, whether carried on singly or in combination with one or more of
them”.

Thus, general insurance business does not mean that the businessmen
must transact with all of their plans. It may be carried on single plan or in
combination with one as like fire and marine or more of them like almost
insurance plans. “Fire Insurance Business” means the business of effecting,
otherwise than incidentally to some other class of insurance business, contracts
of insurance against loss by or incidental to fire or other occurrence customarily
included among the risks insures against in fire insurance policies. “Marine
insurance business” means the business of effecting contracts of insurance upon
vessels of any description including cargoes, freights and other interests which
may be legally insured in or relation to such vessels, cargoes and freights,
goods, wares merchandise and property of whatsoever description insured for
any transit by land or water, or both, whether or not including ware house risks
or similar risks in addition or as incident to such transit, and includes any other
risks customarily included among the risks insured against in marine insurance
policies. Thus, marine insurance policies protect the businessmen from the risks
to the vessels, cargoes, freight and other interests during the transportation by
sea.

1.18 ORIENTAL INSURANCE COMPANY LTD

19
 Oriental Insurance Company Ltd, a subsidiary company of
the General Insurance Corporation (GIC) of India, started its operation in
India on 12th September 1947 at Bombay (now in Mumbai) as a public
sector company. The company became a subsidiary of Life Insurance
Corporation of India in 1956 and continued to serve as such till 1973. The
main goal of the company was to set involved in the business of general
insurance thus catering to the needs of all kinds of people and are quite famous
for their coverage of products associated with steel and chemical plants,
petrochemical and power plants.

In 2002, after the Insurance Amendment bill was passed, the company
was de- linked from GC and all its shares has been transferred to the
Central Government. The company has evolved in great respects over the
years and slated to become one of the leading insurance companies of the
country. Presently the company has made its presence felt into the other
segments of insurance as well The company has gone up to
accomplish a premium of Rs. 4077.90 crores (2008-09) from the premium
of Rs. 99,946 in 1950.

A good life is a beautiful dream. We love building, our house brick by

brick, acquire assets tastefully and aspire to make life comfortable every day.
Business security and personal safety in the present times concern everyone.
Measures are taken to prevent things going out of hand yet and an element of
fear keeps dotting us.

Hard earned assets acquired during life time may be under some threat
due to unforeseen circumstances. An industry or establishment may encounter a
situation that may get out of the hands of human beings. Someone on the road
may be insensitive to the precautions being taken to cross the road. Anything

20
may happen anytime. Can we offset the uncertainty? Probably not - But this
can be transferred very simply through the means of taking insurance.

An individual may get insured his property like house and its contents,
car etc, against various perils. Health and Personal Accident Insurance support
during hard times. Even liabilities arising from various situations can also be
covered.

A business enterprise can get coverage for its assets against various risks
like fire; flood, earthquake etc. to name a few, at a nominal premium and go on
to insure Business Interruption Many liabilities arising during course of
business are also taken care of.

Likewise industries also find protection through various insurance

policies for fire and allied perils; business interruption and workmen insurance.
The transit of the equipment to the site entails many hazards arising from ocean ,
rail, air or road Acts of God or terrorism may cripple any industry before it starts
up or in operation. All can be covered loans advanced by financial institutions
may get threatened by operation of unforeseen events. Many more situations
may emerge that one may not have even thought of.

The value of the property (sum insured) which is exposed to the risks
should be kept almost equal to the loss one may sustain considering the present
state or market value. One may also think of taking insurance on replacement
(re-instatement) value. The cost of imperishable may not be taken into account,
e.g. land. The basis of fixing sum insured may vary from property to property or
risk to risk but bottom line remains almost same.

Personal accident insurance can be taken for an individual, family or a

group. The sum insured is based on earning. Health insurance packages are
available for individual, family or group basis.

21
 Oriental Insurance Company Ltd has a set up of more than 1000
offices. Marketing staff is also always keen to reach you. Our agents are there
to canvas the business. We can also buy selected insurance products on this
Portal as well In addition the Portal enables you to view the policies already
taken by you and the status of any claim which may have been reported What
you really need to do is to identify your requirements where you would need
insurance protections and contact Oriental Insurance Company.

1.19 REVIEW OF LITERATURE

Some studies conducted in context with the performance evaluation of

Insurance Corporations and General Insurance Companies of India. The
Researcher has studied those research works which are as follows:

1) Robi Elenekave has explained in detail why various retirement plans and
pension plans don’t give the desired returns. The main difficulty is the use
of incorrect method for calculations done to find out the return on
investment. This is primarily due to wrong assumptions. The study
provides information about the various precautions which need to be
considered before planning so that the desired results can be achieved.
2) Another paper provides insight about how various financial sectors invest
in bond market. The study was how the different players investment
different instruments according to the risk appetite and desired rate of
return. The study shows that life insurance sector mainly invests in
government bond which are low return and low risk instrument. The
investment in government bond it shows that life insurance companies are
more conservative in investment.
22
3) K. Subhash has presented the history of India’s life insurance industry in
three stages before independence, after independence and post
liberalization which not only provides information but also help in
analyzing the impact of these major changes. The authors have also
discussed the huge potential which exists in the rural India. The insurance
company must realize the importance of rural sector because the future
lies there. The author commented about the increasing share of private
player in the existing market. This confirms the availability of
opportunity in this sector. The paper also provides the importance of
professional and focused approach which was given no importance.
4) Tapen Sinha has discussed the various challenges and opportunities in the
insurance market. One of the very important factors which have been
discussed in the study is the importance of developing new and better
products. As the scenario changes the need of an individual also changes
so any organization must understand and fulfill these needs. The new
product development requires constant research so organization must also
focus on it.
5) Roger G. Ibbotson discusses how financial planners and advisors have
recently started to recognize that human capital must be taken into
account when building optimal portfolios for individual investors. Any
investor’s human capital has a unique mortality risk. However, life
insurance in its forms can hedge against this mortality risk. Thus, human
capital affects both the optimal asset allocation and the optimal demand
for life insurance. This paper provides a unified framework based on
human capital in order to enable individual investors to make both
decisions jointly.
6) Rakesh Niraj study tells how the flow of information in any organization
is important. For any organization to grow, the flow of information must
be good both upwards as well as onwards. The proper flow of
information will also ensure proper flow of goods and services from

23
 organization to customer and proper flow of information from customer
to organization. The information from customers will help the
organization in providing better goods and services to the customer. For
the above purpose, organization must ensure good channel partner who
can provide the organization with correct feedback. Hence it becomes
very important for any organization to acquire good channel partners.
7) Stephen P. Robbins has discussed how group dynamics works in any
organization. The success of any organization depends on the success of
its various teams and how these teams work together. The book provides
various techniques which can be used by any organization to get result
from the team effort. The conflict resolution is a major task in any group.
Various techniques which the organization can use in conflict resolution
are also discussed. Another important aspect covered is the importance of
leadership in the organization. The various forms of leadership have been
discussed and the kinds of leadership which can be effective in particular
situations are also discussed.
8) R. Wayne Mondy has discussed the importance of training and
development in any organization. The training provides skills to perform
the current job where as the development involve learning beyond present
need. The various type of training are discussed which can be used
according to the requirement. Training and development are not only
important for better performance of an individual but it also gives
satisfaction. The major factors which influence training and development
are found to be management support, commitment of trainee and trainer,
complexity of the organization. The process of developing good training
plans is also provided. In another part author has discussed the
importance of right man for right job. The compensation strategies are
also given which are very crucial for ant industry.
9) Philip Kotler has discussed the importance of channels partners. Better
the channel partners better will be the delivery model. Detailed discussion

24
 about how to design the channel structure so that all the requirements
could be fulfilled is provided. The various issues faced by the
organization while managing the channels are also given. When an
organization has more than one channel it becomes very important that all
the channels should be integrated in such a way that the organization gets
the best out of all. At times due to the conflicting benefit of the different
channels the conflict arise so various strategies to manage these issues is
also discussed in the chapter.
10) Michael J. Etzel has written about the marketing of services. The
marketing of services is different from the goods because of the
characteristic of service like intangibility, inseparability, heterogeneity
etc. Brief about pricing strategies is also given in case of services. The
authors have also given the impact of technological development on the
services marketing. The author has also given the importance of brand
and after sales support in case of services as perception of the customers
plays an important role. In other part of the book the authors has
described the importance of distribution channels and designing of the
same. A channel partner should be considering as partner according to
discussion. The legal complications associated with channels are also
discussed. These complications are necessary to take into the
consideration while managing the channels. The conflicting interest of
channels both horizontally and vertically are also taken into the
consideration.
11)Boone has discussed about the importance of personal financial planning.
The concept of time value of money has also been elaborated. The
importance of creating and implementing budget is given under money
management. The other important concepts for financial planning like
credit management and understanding taxes are also explained. In one
section the authors have discussed the importance of investment and what

25
 should be the major considerations while making any investment. The
considerations include the risk associated with the investment, return on
the investment etc. The importance and benefits of life insurance has also
been given. The discussion also includes various legal aspects associated
with life insurance. The overview of retirement planning is also given
which includes importance and benefit of retirement planning. Various
tools for proper retirement planning are also discussed.
12) Dr. P. Pariasamy has written a book, “Principles and Practices of
Insurance“, published by Himalaya Publishing House. The book provides
a detail coverage of risk management, general insurance, life Insurance,
Fire insurance and Marine insurance in a comprehensive way.
13) February 2004, IRDA Journal, an article written by Mr. Sandeep
Batra, titled “Need for Change “. In this article, he has focused on
proposed amendments and progress of life insurance in India. He has
covered the effects of the changes in the Law on Insurance industry.
14) The researcher has collected information from the site named,
“www.indiaspace.com” It has an article on “Privatization of Insurance
Industry in India”
15) Chartered financial analyst – February-2003, has a special survey
of insurance sector. An issue covers many articles such as “A High
Growth Market”, “New distribution Channels”, “Customer focus”, “Legal
Issues”.
16) Shri G. V. Rao, a retired Chief Managing Director, The Oriental
Insurance Company Ltd. has evaluated general insurance companies
underwritten gross premium up to January 2004 and written an article in
IRDA Journal, March, 2004.

1.20 PLAN OF THE STUDY

 The first chapter embodies a comprehensive introduction about the

Oriental Insurance Company Ltd in India and also gives some important
Review of Literature.
26
  The second chapter explains the Research Methodology.
 The Organizational Structure of Oriental Insurance Company Ltd in India
and its various schemes are explained in the third chapter.
 The last chapter would provide a required findings and valid suggestions
for further improvement in Oriental Insurance Companies Ltd in India.

CHAPTER – II

RESEARCH METHODOLOGY

2.0 Insurance is an important growing part of the financial sector in virtually

all the developed and developing countries. A resilient and well regulated
insurance industry can significantly contribute to economic growth and efficient
resource allocation through transfer of risk and mobilization of savings. In
addition, it can enhance financial system efficiency by reducing transaction
costs, creating liquidity and facilitating economies of scale in investment. The
objective with which this study is taken up and the methods by which the
secondary data is required to be collected are discussed in this chapter.

2.1 OBJECTIVES OF THE STUDY

 The aim of this study is to know about various functional departments in

the organization.
 To make an awareness of the general insurance industry.
 To know the roles of managers in various departments.
 To understand the different products and their position on the
market in terms circulation and reader ship.
 To analyze the performance of the organization.

27
2.2 HYPOTHESIS

The two hypothesis which are proposed to be verified are

i) The organizational structure of Oriental Insurance Company Ltd in India

is effective in improving the performance of Oriental Insurance Company
Ltd in India.
ii) The Oriental Insurance Company Ltd has been successful in providing
insurance facilities to the public in various areas.

2.3 METHODS OF STUDY

Though this study is purely fact finding in nature, a lot of secondary

data are required for its successful completion hence it is necessary to explain in
details the methods by which these data are sought to be collected.

2.4 COLLECTION OF SECONDARY DATA

This research study is purely relied on the secondary data. The

secondary data required for the study could be obtained mostly form books,
journals, official’s reports; periodicals brought by the Government of India in
addition to these, efforts would be made to collect as much information from the
internet about the organizational structure of Oriental Insurance Company Ltd
in India. These information would make the analysis exhaustive and through
going in every respect.

28
2.5 THE USE OF THE STUDY

Though this study is apparently elementary in nature, it would be of

numerous uses for the researchers in the days ahead.

1) It would be of very great use to understand the role played by Oriental

Insurance Company Ltd for overall development of the economy by
mobilizing the funds.
2) The study would give any casual reader of the project an exposure to the
ways and means of enhancing various insurance policies of Oriental
Insurance Company Ltd.
3) Numerous innovative studies would speak off in the days ahead about the
performance of Oriental Insurance Company Ltd.

2.6 SCOPE OF THE STUDY

The organization study will help to attain a firsthand experience of

overall functioning of the organization. It provides a chance to interact with the
authorities and employees in the organization. It helps to understand the practical
problems faced by the managers for decision making and other organizational
activities.

Though this study is purely explorative in nature, it cannot be denied

that it could be of numerous uses to researchers and enthusiasts. This study has
a wider scope among the insurance sector. The study which focuses on various
aspects such as competitive position of Oriental Insurance Company Ltd,
strengths and weaknesses of insurance covers, customer’s perception, etc also
holds good for other companies in the life and non-life insurance segment.

29
 The outcome of the study, which are based on the above aspects can be
utilized by the marketing department of both life and non-life insurance
companies.

2.7 NEED OF THE STUDY

This study helps the company to identify its competitive position among
its industrial competitors by which the company can further improve its
performance to enjoy high reputation among clients. This study also helps in
making necessary changes in the attributes of the insurance cover offered by the
company so that the customers can enjoy the benefits of the insurance cover.
The need for the study also arises to identify and offer additional insurance
products according to the expectations of the customers.

2.8 LIMITATIONS OF THE STUDY

There were certain limitations in undertaking this research work. As it

is understood that the limitations are a part of the project, they have been
overshadowed by the benefits of the study.

1) Adequate secondary data are not available regarding the various

insurance policies of Oriental Insurance Company Ltd.
2) The study mainly based on secondary data.
3) Time is a major constraint.

Till date, no systematic research project study has been made on the
organizational structure on Oriental Insurance Company Ltd in India. Therefore
a study on the organizational structure on Oriental Insurance Company Ltd in
India becomes worthwhile to promote the overall performance of Oriental
Insurance Company Ltd in India.

30
 CHAPTER – III

ORGANISATIONAL STRUCTURE OF ORIENTAL

INSURANCE COMPANY LTD

3.0 The Oriental Insurance Company Ltd was incorporated at Bombay on 12

September 1947. The Company was a wholly owned subsidiary of the Oriental
Government Security Life Assurance Company Ltd and was formed to carry out
General Insurance business. The Company was a subsidiary of Life Insurance
Corporation of India from 1956 to 1973 (till the General Insurance Business
was nationalized in the country). In 2003 all shares of the company held by the
General Insurance Corporation of India were transferred to Central
Government.

Oriental Insurance with its head Office at New Delhi, India has 23
Regional Offices and nearly 1000 operating Offices in various cities of the
country. The Company has overseas operations in Nepal, Kuwait and Dubai.
The Company has a total strength of around 16, 000 employees. From less than
a lakh at inception, the Gross Premium went up to Rs.58 crores in 1973 and
during 2006-07 the figure stood at a mammoth Rs. 4020 crores.

3.1 CORPORATE OBJECTIVES

1) Act as a financially sound corporate entity with high business ethics.

31
 2) Implement best human resource development practices to build a highly
efficient, dedicated and motivated workforce with high morale and moral
values.
3) Optimally utilize the information technology infrastructure.
4) Provide excellent customer service.
5) Run the business profitably through prudent underwriting and efficient &
proper claim management.
6) Effectively manage our reinsurance operations.
7) Effectively manage our investments for optimizing yield.
8) Have effective risk management systems.
9) Improve the penetration of non-life insurance by proper underwriting,
innovation & marketing.

3.2 VALUES

 Highest priority to customer needs.

 High standards of public conduct
 Transparency in operations

3.3COMMITMENT

a) In areas coming within competence of GIC respond to all

commercially viable general insurance requirements of the citizens,
not hitherto available within three months from the date on which such
a demand is received
b) In areas covered by tariff appropriate proposals will be submitted
to the Tariff Advisory Committee with appropriate comments within
two months.
c) Continue to provide customized insurance products for weaker
sections of the society at affordable price within six months of receipt
of a request for a specific type of cover.
d) Establish customer information counters at all regional centers by
December, 1997 and computerize these centers by March, 1998.

32
 These computerized centers will be extended to divisional offices in
stages by December, 1999.
e) Establish 'May I Help You' facility to cater to customers information
requirements at the Headquarters of the insurance companies by 15th
August, 1997
f) Ensure issuance of 90% of documents within a period of 30 days from
15th August, 1997 and progressively reduce the period to 15 days by
August, 1998 and to 7 days by August, 1999.
g) Prepare booklets on standard policy covers setting out essential
information and make such booklets readily available for purchase at
suitable places.
h) Set up Zonal Advisory Committees at the four metropolitan cities by
December, 1997 to interact with customers and get feedback on
insurance services
i) Promote customer education in general insurance service by holding
workshops in important regional centers.
j) Make available to a customer, on request to the policy issuing office, the
status of his claim settlement details within 7 working days.
k) Settle all claims within a times schedule envisaged hereunder :-
 Personal life insurance claims within 30 days on completion of all
requirements.
 Property claims within 60 days on completion of all
requirements.
 Liability claims within 30 days on completion of process of law.
l) Endeavour to set up a system of Ombudsman at the four
metropolitan cities to conciliate disputes on personal life insurance
claims.

3.4 MANAGEMENT

Oriental Insurance is a professionally managed independent Board-run

Company. Illustrious personalities like Shri T. A. Pai ( who later became

33
Cabinet Minister in the Union Government ), Shri K. R. Puri, who rose to be the
Governor of RBI and Shri B. D. Pande (who later became the Governor of West
Bengal) were among our past Chairmen. At present Dr. A. K. Saxena is
Chairman-Cum-Managing Director of our Company. The Board of Directors of
our Company includes eminent personalities in various fields.

3.5 ABSTRACT OF ORIENTAL INSURANCE COMPANY LTD

 To keep the focus on customer and serve their insurance requirements.

 To offer high quality service being customer friendly.
 To invest funds for optimum grant and engage in profitable business.
 To optimize the retentively of Indian business and carry on
reinsurance policies and foreign operations.
 To establish Risk management Technologies and minimize the losses

3.6 GROWTH OF ORIENTAL INSURANCE COMPANY LTD

Oriental Insurance Company Ltd. has its head office at New Delhi
and 26 regional offices all over the country Apart from this the company
also has over 900operating offices and overseas operation, mainly in Kuwait,
Dubai and Nepal. The company presently has around 15,000 technically
qualified, effective, committed and highly trained workforce covering various
segments. The Solvency Margin as of 31st March, 2009 is 1.66 in
comparison to the desired Solvency Mar6ri of 1.5 made compulsory by the
Indian Regulatory Body, IRDA

 A pre-tax loss of Rs 82.66 crores & post-tax loss of Rs. 52.66 crores
for the year 2008- 09 was recorded after considering the income
from the dividend, interest and rent of Rs 60823,crores and Profit on
sale of Investments of Rs387.39.
 The company recorded the gross premium income in India during the
year 2008-09 at Rs. 396426 and abroad at Rs. 113.64 crores in
comparison to Rs. 92, 07 in the previous year re6stering a growth

34
 of 4.55%. On the other hand the net premium income both in
domestic and foreign operations recorded a rise of 12.38% from
Rs.2878.67 crores in 2007-.08 to Rs. 3235.10 crores in 2008-09. An
overall surplus of Rs. 15.27 crores was registered in the company's
foreign operations.
 The company has gone ahead to make itself more technolo6cally
updated and IT friendly and have their very own websites. The
implementation of Integrated Non- Life Insurance Application
Software (INLIAS) in their company has ascertained a better
customer service. Furthermore, the company has been credited with
the highest rating by leading Indian Credit Rating Agenciagency,
rated the company as B++ (Very Good).

3.7 CORPORATE MISSION

Contribute to the socio economic objectives of the nation by

being a vibrant and viable organization catering to the moving
insurance needs of the community. Towards this end we mill strive for
effective management of business operations.

3.8 GOAL SETTING FLOW

Vision, Mission,
Business Goals Annual Company
Business plan Objectives
Strategy Budget

35 Regional/
Individual Departmental/
Objectives Functional
Business Plan
3.9 PRODUCT PROFILE

Oriental's vast product portfolio has been specially designed to cater to the
needs of consumers in India. We develop general insurance plans in the best
interests of our customers. Oriental Insurance continues to provide customized
insurance products for all sections of the society at affordable prices.

Now we can buy and renew policies Online. Buy a new Insurance policy,
Renew an existing Oriental Insurance policy or renew policies bought from any
other general insurance company by registering yourself on our Portal and
paying online through your debit card / credit card or Net-banking. To check out
various online facilities available, you may login on the Portal.

The various insurance product types are given below:

3.9.1 Marine Insurance

Oriental insurance company ltd brings to India a wide range of marine

cargo products from various international markets. Their products considerably
widen the scope of coverage presently enjoyed by the insured population
without necessarily involving a high premium.

3.9.2 Burglary insurance

Burglary Insurance for machinery, stock in trade, furniture, fixtures &

fittings and for goods held in trust or on commission for the insured is

36
responsible. Burglary Insurance covers burglary or housebreaking accompanied
by either forcible or violent entry into/exit from the premises and hold-up.

3.9.3 Engineering Insurance:

 Erection All Risks Insurance

The Erection All Risks policy is a comprehensive insurance, which
provides complete protection against all types of risks associated with
erection, testing, commissioning of machinery, plant and equipment
during constructional stage.
 Boiler & Pressure Plant Insurance
It covers the risk of explosion and collapse of any boiler or other pressure
plant in the course of ordinary working.
 Contractor's All Risks Insurance
All types of civil engineering works, ranging from small buildings to
massive dams are exposed to damage from a wide range of causes such as
fire, lightning, flood, inundation, storm, cyclone and other accidental
damages. It is a comprehensive insurance which provides complete
protection against all types of civil construction risks.
 Machinery Breakdown Insurance
Oriental insurance company ltd extend its hand offering Machinery
Breakdown Insurance Cover ably supported by most capable technocrats
to throw more light about the mechanical side of all machines.

 Marine-Cum-Erection Insurance
It is developed as a comprehensive product to manage the risk and
insurance needs in course of erection as well as during transit. It is a
combination of Erection-All-Risks and Marine Insurance to cater to the
needs of the client where Marine/Transit insurance is connected with
Erection All Risks Insurance of any project.
 Contractor's Plant & Machinery
Contractor's Plant & Machinery is an exclusive all risks policy covering
the plant & machinery used by the contractors at the site for various
projects. It covers the property whether they are at work or at rest or

37
 being dismantled for the purpose of cleaning or overhauling, or in the
course of operations or when being shifted within the premises or during
subsequent re-erection, but in any case only after successful
commissioning.

3.9.4 Liability Insurance:

 Product Liability Insurance

Liability arises from a civil wrong or breach of personal duty imposed by
law on a person and owed to his/her fellow citizens. In some countries
legal rights and duties are framed in a Civil Code. In others they are not
codified but drawn from the precedent of decisions handed down in the
courts over the centuries; this is known as "Common Law".
 Workmen's Compensation Insurance
It provides Insurance against occupational accident or disease to an
employee whilst in course of his employment.
 Public Liability Act
It provides indemnity against the Insured's liability at law to the public in
general (excluding employees) for bodily injury and loss of or damage to
property due to the business activities carried on in insured's premises.

3.9.5 Business solutions:

 Industrial All Risks Policy

It’s a wide and comprehensive cover for the large sized business where
the assets at all locations of the insured exceed Rs.100 Corers. It is an All
Risks Policy covering a wide range of perils such as fire and allied perils,
burglary, accidental damage, breakdown as well as business interruption.
 Office Shield
A flexible policy specifically designed to meet the insurance needs of
your modern office, irrespective of the number of locations.
 Hotel Shield
Tailor-made cover designed to suit the specific needs of the Hotel
Industry.
 Enterprise Shield

38
 It is a newly devised package providing total insurance solutions for
industries. You do not need to analyze and evaluate a large number of
insurance policies to insure your business completely.
 Education Shield
Tailor-made cover designed to suit the specific needs of Education
Industry.
 Traders Shield
It is an attractive policy that provides shopkeepers with a basic insurance
package and a further range of optional covers.
 All Risks Policy for Portable Equipments
It offers an overall solution to cover portable items like laptops, mobiles,
cameras and projectors.

 Standard Fire and Special Perils Policy

It offers cover against fire and allied perils and the perils of nature. The
policy can cover building (including plinth and foundation), plant and
machinery, stocks, furniture, fixtures and fittings and other contents.
 Consequential Loss (Fire) Insurance
It provides protection against loss of profits in business due to an
interruption in business consequent upon an insured peril covered under
the material damage policy.

3.9.6 Employee solutions:

 Group Personal Accident Policy

It is a worldwide cover providing protection for the employees against
any accidental injuries sustained by the individuals resulting in death and
disablement.
 Group Health
Health Premium Platinum is a comprehensive health insurance package,
designed for the employees of company and their family members.
 Workmen's Compensation
Workmen's Compensation provides cover to target clients as required by
law in support to project insurances or property insurances.

39
3.10 ORIENTAL TRAVEL INSURANCE

Oriental Overseas Travel Mediclaim Insurance is available to Indian

Citizen between 6 months and 70 years of age who are undertaking bonafide
trips outside India which will not involve any form of manual work and do not
exceed 180 days duration unless specifically extended.

The overseas mediclaim policy provides indemnity for expenses

necessarily incurred for immediate treatment of illness, diseases contracted or
injury first sustained (during the period of insurance of overseas travel subject
to policy terms and conditions.) and in addition also personal accident, total loss
of checked baggage, delay of checked baggage, loss of passport and personal
liability covers. (During the period of insurance of overseas travel subject to
policy terms and conditions)

3.11 HEALTH INSURANCE

Oriental health insurance family floater policy is issued for a period of

one year and it offers two plans - Silver plan Sum insured in multiples of
Rs.1,00,000/- and upto Rs.5,00,000/- per person aged 18 years and above. Gold
plan Sum Insured in multiples of Rs. 2, 00,000/-, and upto Rs.10, 00,000/- per
person aged 18 years and above. 50% of this limit for persons less than 18 years

3.12 HOME INSURANCE

The House holder's Insurance Policy is a comprehensive shelter that

protects your house and the various contents in it against a variety of risks. It is
a single policy that takes care of a number of contingencies. The policy is
divided into 10 sections. Sec 1(B) and a minimum of any 2 other sections are
compulsory. Section 1: Fire and Allied Perils. Section 2: Burglary. Section 3: All
risks. Section 4: Plate Glass. Section 5: Breakdown of domestic appliances.

40
Section 6: T.V. Set. Section 7: Pedal Cycles. Section 8: Baggage Insurance.
Section 9: Personal Accident. Section 10: Public Liability.

3.13 APPLYING FOR HEALTH INSURANCE

With rising medical costs, it has now become imperative for everybody
to get Health Insurance coverage. Here are the Top 6 factors to keep in mind:

3.13.1 Adequate Coverage Amount

Take an adequate cover to protect yourself and everyone who is

dependent on your income - e.g. your family members. Hospitalization costs are
higher in metros; people living in metros typically should opt for a higher
coverage amount.

3.13.2 Re-imbursement or Cash Allowance?

Health Insurance comes in various flavors. It is imperative that you

understand the difference between re-imbursement plan and a cash allowance
plan. A cash allowance plan cannot replace a re-imbursement plan (often
referred to as "Mediclaim" - because here the amount you get is based on the
actual amount of expense incurred whereas in a cash allowance you get a fixed
lump sum for every day you spend in the hospital - no matter how expensive the
treatment might be.

3.13.3 Cashless Facility

Imagine having to run around to arrange for cash in an emergency

situation for getting admitted to the hospital of your choice! Most insurance
companies had launched cashless cards for re-imbursement based plans - so that
you could simply present the card at the time of admission and an administrator
would take care of settling your hospital bills directly from the insurance
company. However in mid-2010, several public sector insurers withdrew

41
support for the cashless facility. Before buying your Health Insurance, you may
want to check with your insurer how many hospitals does he offer support for
the cashless facility and especially about the hospitals in your area. But please
remember that just because a hospital is in the cashless network at the time of
taking your first policy it may not remain in the cashless network when your
claim arises. So this cannot be the sole factor for deciding about the health
insurance company.

3.13.4 Age until Renewals allowed

Most of us will certainly fall ill at some point of our lives - and the
chances are that we will fall ill when we are older. Entering into a new Health
Insurance plan is significantly cheaper and easier when one is young & healthy.
The chances of having any major pre-existing disease is lower so most plans are
available and also the insurance company must disclose today the premiums
applicable today as well as the premiums applicable at an older age Ensure that
your health insurance plan is renewable after 65 - because at that age, you don't
want to discover that health insurance is difficult to get when you need it the
most.

3.13.5 Co-pay

One of the fears insurance companies nurse is that the customer might
opt for unusually expensive hospital rooms or procedures than are warranted. To
overcome this, some insurance companies introduce a co-pay or sub-limits. In a
co-pay you are required to share some of the expenses incurred-regardless of the
amount covered.

42
 E.g. say you have a 3 lac cover and the bill you want to be re-imbursed
amounts to Rs. 2 lacs. With a plan that has a 20% co-pay, you will only get 80%
of the bill re-imbursed by the insurer - i.e. Rs. 1.6 lacs and you will have to bear
the rest). For the same coverage amount, a plan with a co-pay should come with
a much lower premium than one without a co-pay. Sub-limits simply restrict the
amount of re-imbursement for individual bill items - e.g. even a Rs 1 lac bill
may not be fully re-imbursed for a Rs 3 lac coverage amount, if say the sub-
limits set on room rentals/ doctors fees/ OT charges - or even a specific
procedure (e.g. cataract/ knee replacement) is exceeded. Again a plan with sub-
limits should have a lower premium for it to be worth considering.

3.13.6 Temporary and Permanent exclusions

Normally most policies provide coverage for pre-existing diseases only

after a waiting period. Remember pre-existing disease is not just the disease you
are suffering from at the time you took the first policy but also any other disease
that is caused due to such pre-existing disease. A common example is that heart
illness will also be treated as pre-existing (even though at the time you took the
first policy you had no heart disease) if you had diabetes when you took the first
policy since the heart illnesses is caused by Diabetes. This single item is
responsible for most of the disputes between insurance companies and
consumers. So make sure you disclose everything that is required in the form.
Please do not sign a blank form and leave it to the agent to fill the form later.
This will ensure that at least at the end of the waiting period you will get the
disease covered. If you do not disclose the disease then you run the risk of your
policy being cancelled or a renewal being denied if this fact is discovered later.

43
 Apart from the above illness contracted during the first 30-90 days of the
first policy is normally not covered. Some specific diseases/treatment such as
cataract, knee replacement, etc. may also be covered only after a waiting period.

There are permanent exclusions as well such as beauty treatment, sexually

contracted diseases, non allopathic hospitalization expenses, etc. Always read
the policy brochure carefully and also look at the section dealing with
permanent exclusions in the policy document. Keep a copy of all documents
submitted to the insurance company for your future reference. Any promise
made by the agent or even an official of the insurance company has no value
unless it is in writing or at least on email. So if you are basing your decision on
any such promise make sure you get it in record in some form.

CHAPTER – IV

SUMMARY, FINDINGS AND CONCLUSION

4.0 Oriental Insurance is a professionally managed independent Board-run

Company. Insurance was a method of sharing of the losses, embodying the
principle of co-operation existed in the early civilization. Insurance covers
many risks and uncertainties in the world of business and act as a boon to the
industrial or commercial concerns and general public. Businessman can easily
and confidently transfer the risk of loss of insurance. It also safeguards the
interest of individual and public. Businessman does not have to worry about
losses or damage when the risk of loss to their property is duly insured. They

44
will receive compensation against actual loss takes place. In life insurance, life
policy gives financial protection to the dependents to the extent of the assured
who may be the only breadwinner initially. An insured businessman or
policyholder can enjoy normal expected profits. As the property of the
businessman is duly insured and he can get a normal profit margin, he can
change lower prices to consumers. Insurance has the effect of improving credit
standing of businessman, commercial banks and financial institutions insisted
for insurance of articles, which are kept as security for loans.

4.1 FINDINGS

1) Introduction chapter explained the history, review of literature,

fundamental principles of Oriental Insurance Company Ltd in India and
the methods by which the study sought to be undertaken are discussed in
this chapter.
2) The methodology chapter gave the essential hypotheses, objective and
techniques which are used to prove the statement of the research study
and also analyzed in detail about the Organizational Structure of Oriental
Insurance Company Ltd in India.
3) The third chapter gives the essential of organizational structure and
various insurance products introduced by Oriental Insurance Company
Ltd in India to provide immediate financial assistance to the insurers.

4.2 SUGGESTIONS

45
 1) The Oriental Insurance Company Ltd should pay more attention to meet
the present scenario demands almost all the customers to have a general
insurance cover in order to protect from future uncertainty.
2) Oriental Insurance Company Ltd should simplify the procedure for the
convenience of customer.
3) Oriental Insurance Company Ltd should offer insurance cover at
reasonable premium rates to the customers.
4) To create goodwill through good customer satisfaction.
5) The company has to focus more on the auto/car insurance segment and
health insurance segment. Majority of the respondents have preference
towards auto/car insurance as it is a must to have insurance for their
vehicles by law. Therefore, the company has got enough opportunities to
earn huge profits from both these segments.
6) The company can create more awareness about its products among
potential customers by means of advertisements and efficient insurance
agents, which in turn will help in increasing its customer base.

4.3 CONCLUSION

The Indian insurance industry undoubtedly displays great potential.

India’s high saving rate, customary lack of social security nets and a tradition of
frugality are expected to be key growth drivers. Despite India’s vast population,
rural poverty and lack of awareness about insurance products have constrained
the growth of insurance business in the past. This is expected to change with the
recent deregulation and liberalization of the insurance sector. Improved nutrition
and medical standards have improved the life expectancy necessitating the
provision comfortable standard of living to the retires. Another factor closely
related is the rising middle class that will encourage increased insurance
spending and their growing risk awareness.

India is poised to experience major changes in its insurance market.

Insurers will operate in an increasingly deregulated and liberalized environment.

46
However, in spite of the liberalization, Oriental Insurance Company Ltd will
continue to maintain their dominant position in the market, at least in the
foreseeable future. However given the enormous potential of the Indian market,
it is for the insurers to come out with new product, better packaging and
improved customer service. Product innovation and channel diversification will
gain momentum, in line with global trend of financial service convergence.

BIBLIOGRAPHY

1) Mishra M. N. (2004), “Insurance Principles & Practice”, S. Chand &

Company Limited, New Delhi.
2) Agrawal Raj and Diwan, Parag, Business Environment, First Edition,
Excel Books, Delhi – 2000.
3) Insurance Institute of India Principals of General insurance, Bombay.
4) Insurance Institute of India, General insurance Institute of India, Bombay.
5) Agrawal Raj, Business Environment, Excel Books, New Delhi, Second
Edition – 2002
6) Periasamy P. (2008) “Principles and Practice of Insurance” Himalaya
Publishing House, Mumbai
7) Ravichandran K. (2007) “Recent Trends in Insurance Sector in India”,
Abhijeet Publications, Delhi

JOURNALS AND PERIODICALS

1) Insurance watch
2) Fortune India
3) Business today
4) Journal – IRDA
5) Journal – Insurance Institute of India
47
 WEB SITES

1) www.irda.org
2) www.bimaonline.com
3) www.indiaiinfoline.com
4) www.insuranceinstituteofindia.com

48