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life, property and business. It is also referred to as Assurance. The term Assurance is basically the earlier term and was used alike for both life and general insurance. The term insurance was initially used in 1635 in connection with Fire insurance and was quickly adopted as extensively as Assurance. In 1826, it was proposed that the term insurance be used for general insurance and the term assurance restricted for life insurance. References to practices similar to insurance are found in the ancient Indian texts of Rigveda. Rigveda refers to the concept of "Yogakshema"1 - loosely meaning 'the well being, prosperity and security of people'. Archaeological excavation at the site of Aryan civilization has yielded evidence of a practice similar to insurance, insuring loss of profits in industry. Insurance is mainly of two types: life insurance and general insurance. General insurance means Fire, Marine and Miscellaneous insurance which includes insurance against burglary or theft, fidelity guarantee, insurance for employer's liability, and insurance of motor vehicles, livestock and crops. The insurance sector is of considerable importance to every developing economy; it inculcates the savings habit, which in turn generates long-term funds for infrastructure building. The nature of insurance business ensures constant inflow of funds - the payout is staggered and contingency related thereby making it readily available for investment on infrastructure building. Insurance is one sector whose contribution to GDP is quite significant. Post independence, the Indian Government nationalized the private life insurance companies with a view to raise funds for the infrastructure developments, which lagged behind pathetically. The scatter of general insurance companies was brought under one umbrella the General Insurance Company in 1972. INSURANCE IN INDIA The Insurance sector in India is governed by Insurance Act, 1938, the Life Insurance Corporation Act, 1956, General Insurance Business (Nationalization) Act, 1972, Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related Acts. The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360-degree turn witnessed over a period of almost two centuries. Nationalization however brought with it the public sector bureaucracies, cumbersome procedures and inefficiencies but still these nationalized companies managed to have millions of policyholders. History of Insurance in India The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are: 1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning. 1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its
and the United India Insurance Company Ltd. Some of the important milestones in the general insurance business in India are: 1907: The Indian Mercantile Insurance Ltd. the National Insurance Company Ltd.. to provide maximum risk coverage to the investor. the first company to transact all classes of general insurance business. on the other hand. can trace its roots to the Triton Insurance Company Ltd. the first general insurance company established in the year 1850 in Calcutta by the British.. 1956. frames a code of conduct for ensuring fair conduct and sound business practices. 2) Spread Insurance and provide risk coverage Another objective is to spread insurance whether life or non-life to each and every corner of the country especially rural areas. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1957: General Insurance Council. OBJECTIVE OF INSURANCE COMPANIES 1) Social objective. the New India Assurance Company Ltd.business. LIC formed by an Act of Parliament. LIC Act. 1972: The General Insurance Business (Nationalization) Act. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. a wing of the Insurance Association of India.. 3) Encourage savings Other objectives include encouraging people to save for the future by making insurance linked savings more attractive and secure. 1956: 245 Indian & foreign insurers and provident societies taken over by the central government and nationalized.The core objective of insurance company is social commitment. 1972 nationalized the general insurance business in India with effect from 1st January 1973. . GIC incorporated as a company. 107 insurers amalgamated and grouped into four companies viz. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. viz. 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 5 crore from the Government of India. The General insurance business in India. set up. with a capital contribution of Rs. the Oriental Insurance Company Ltd. to socially and economically backward classes and provide them reasonably priced financial cover against risk.
2) Aid to savings: Life insurance encourages savings. ICICI Prudential Life Insurance Co. HDFC Standard Life Insurance Co. Ltd. 6. Max New York Life Insurance Co. 3) Liquidity: In case of insurance. Ltd. 5. In case of demise. Allianz Bajaj Life Insurance Co. These companies are: Sr. Life Insurance Corporation of India Private Sector 2. 7. 4. it is easy to acquire loan on the security of any policy that has acquired loan value. 4) Tax Relief: Life insurance is the best way to enjoy tax deductions on income tax. Ltd. marriage or even periodical needs of cash over a stretch of time can be less stressful with the help of these policies. which may arise from time to time. Name of the Company LIFE INSURERS Public Sector 1. life insurance assures payment of the entire amount assured (with bonus wherever applicable) whereas in other savings schemes. only the amount saved (with interest is payable). half yearly or yearly. 3.No. It allows long term savings since payments can be made effortlessly because of the easy instalment facility. Ltd. Ltd. quarterly. Birla Sunlife Insurance Co. ING Vysya Life Insurance Co. This is available for amounts paid by way of premium for life insurance. Ltd. ADVANTAGES OF INSURANCE OVER OTHER SAVINGS 1) Protection: Savings through insurance guarantee full protection against risk. Expenses like children s education. If we include public sector companies then there will be 13 life insurance and 13 general insurance companies. by investing in a combination of different plans. INSURANCE COMPANIES IRDA has so far granted registration to 12 private life insurance companies and 9 general insurance companies. 5) Money when you need it: An investor can meet its certain monetary needs.4) Nation building The funds created are then utilized and invested for nation building. . Premium can be paid either monthly.
Ltd. 4. Oriental Insurance Co. Om Kotak Mahindra Life Insurance Co. Ltd. 2) 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. Reliance General Insurance Co. 11. IRDA Rules for protection of interest of policy holders: IRDA has the responsibility of protecting the interest of insurance policyholders. SBI Life Insurance Co. HDFC Chubb General Insurance Co. Ltd.8. 6. 9. Ltd. MetLife Insurance Co. Dabur CGU Life Insurance Co. Ltd. Cholamandalam General Insurance Co. Tata AIG Life Insurance Co. 9. 13. Ltd. The advertisements issued by the insurers should not mislead the insuring public. . 10. Bajaj Allianz General Insurance Co. 3) It is obligatory on the part of the insurance companies to disclose clearly the benefits. United India Insurance Co. claims procedure and setting settlement of claims. Ltd. Ltd. 7. IFFCO Tokio General Insurance Co. 3. Ltd 10. 11. Ltd. 12. 4) All insurers are required to set up proper grievance redress machinery in their head office and at their other offices. Ltd. terms and conditions under the policy. Ltd. Ltd. The regulation also provides for payment of interest by insurers for the delay in settlement of claims. TATA AIG General Insurance Co. GENERAL INSURERES Public Sector 1. 12. ICICI Lombard General Insurance Co. Royal Sundaram Alliance Insurance Co. Ltd. Ltd. 2. National Insurance Co. 8. Ltd. Export Credit Guarantee Corporation 13. Private Sector 5. Ltd. Ltd. IRDA has taken following steps towards achieving the objective: 1) IRDA has notified Protection of Policyholders Interest Regulations 2001 to provide for: policy proposal documents in easily understandable language. AMP Sanmar Assurance Co. New India Assurance Co.
up from2. Secondly the public insurance companies have limited number of policies to offer to their subscribers while in case of private insurance companies. India s general insurance sector is expected to grow at an 18% rate in 2008. The comparable figure for 2007 was 13%. LIC plans to buy equities worth Rs. President. These young pensioners are under 40 individuals who are purchasing retirement plans. 3) Young breed of pensioners in Indian Insurance market: The Indian insurance market is being increasingly characterised by the presence of young pensioners as per an article in Times of India . This factor is mainly responsible for hike in private insurance market share which will grow further which is why the ASSOCHAM estimates that its growth rate could even exceed 140%. India : Life Insurance Corporation (LIC) is India s biggest institutional investor.N. LIC plans to increase its equity investment by one third in 2008. Dhoot.1% in 2007-08. the market share of public insurance companies have come down to 70% in last 4-5 years from over 97%. 450 billion for the year 2008-09. their policy numbers are many and the premium amount as well as maturity period is much competitive as against those of public insurance companies. affluent young generation. ASSOCHAM. in which a private sector insurance business will achieve a growth rate of 140%. 28% of the premiums collected by the Indian Insurance companies are from retirement plans. who believe in going for a planned retirement. Venugopal N. These findings are made by The Associated Chambers of Commerce & Industry of India (ASSOCHAM) on Insurance in next 2 years . The . The company has outlined a new investment strategy. 4) Focus on alternative distribution network: In 2008-09 LIC plans to increase its focus on alternative channels of distribution network as way of reaching out to masses. The comparable figure for 2007 was Rs. 2000 billion by 2009-10. India s Insurance Market in 2010 Indian insurance sector is likely to register exceptional growth of 200% and attain a size of Rs. said that on account of intense marketing strategies adopted by private insurance players.Bhandari. 2) Investment strategies from LIC. It is also the largest life insurance company in India. Mr. The growing Indian economy has created an upwardly mobile. The private players has been offering rate of return (RoR) to its policy holders which is estimated at about 35% as against 20% of domestic insurance companies. As per data by IRDA. the Secretary General of General Insurance Council.Indian Insurance Market in 2008 1) Indian Insurance sector touted to record an 18% growth: According to K. 340 billion. The number of policies sold through bancassurance and other channels should grow to 5% of total business.
This would enhance investors trust in the sector and would ultimately increase the investment in the field. Indian insurance companies should broaden their distribution network. fair and transparent guidelines and make sure that old and new players are subject to the same standards. An extensive rural agent network for sale of insurance products could be established. . The agent can play a major role in creating awareness. The rural market offers tremendous growth opportunities for insurance companies and insurers should develop viable and cost effective distribution channels. The 25 million credit cards used till date offer a huge data base and opportunity for insurance companies. CONCLUSION Despite number of investment avenues. The ASSOCHAM found that there are total 124 million rural households.private sector insurance players have started exploring the rural markets in which until recently. ASSOCHAM suggests that insurance needs to be packaged in such a form that it appears as an acceptable investment to the rural people. The number of potential buyers of insurance is certainly attractive but much of the population might not be accessible for the new insurers. the public players had the monopoly. motivating purchase and rendering insurance services. the share of private insurance players would increase substantially as these have been able to generate a faith among their rural consumers. there exists a lot many opportunities for investor as well as insurance company in the sector. Regulators must formulate strong. The Chamber has projected that in rural markets. build consumer awareness and confidence. Nearly 20% of all farmers in rural India own a Kissan Credit card.
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