MEANING OF INSURANCE Insurance is a method which gives protection as well as security against financial loss to a great and some

extent depending on the circumstances and situations. In simple words we can call it the shifting of risk to insurer in consideration of a payment called as Premium.

DEFINITION OF INSURANCE According to Mac Gill Insurance is a process in which uncertainties are made certain. According to John Megi Insurance is a plan where in persons collectively share the losses of risk. William Beveridge says The Collective bearing of Risk is Insurance .

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We can make some point: Insurance is a device by which risks are distributed among large number of persons. It provides security against losses or risks from the premium collected by different policy holders a common fund is raised and contribution of each person is calculated and then the compensations are made it secures uncertain events

DEFINITION GIVEN BY DICTIONARY OF BUSINESS AND FINANCE ‡ Insurance is a form of contract or agreement under which one party agrees in return for a consideration to pay an agreed amount of money to another party to make good a loss, damage or injury to something of value in which the insured has a pecuniary( it means economic) interest as a result of some uncertain event. It is a device by which loss is likely to be caused by an uncertain event is spread over a number of persons who are exposed to it and who propose to insure themselves against such an event .

ORIGIN AND DEVELOPMENT OF LIFE INSURANCE .

In England the concept of insurance emerged in 6th Century. The W. Richard Mortin issued the first policy on William Gybbon s life in the year 1536. Later two companies by the names Hand in Hand Society and The Mercer s Company came into existence in the year 1696 and 1698 respectively. Gybobon s policy gave great publicity for the life insurance. .

In France the life insurance was prohibited till 19th century. . In Germany the first life insurance business came up in 1806 but later closed down due to internal wars.

the Bombay Life Started giving insurance policies for two three year terms.In India the concept of insurance came into being with the advent of East India Company in 18th century. The first foreign company which started business of insurance in India was Oriental Company in the year 1818 afterwards it was changed to New Oriental . After first World War many companies came into existence . In 1823.

Ltd Reliance Life Insurance Co.Ltd OM Kotak Mahindra Life Insurance Co. 13. 9. 2.(pvt)Ltd Sahara India Life Insurance Co. 6. 3. 8.Ltd Aviva Life Insurance Co. 14. 4.Ltd ING Vysya Life Insurance Co.Ltd the Metlife India Insurance Co.Ltd SBI Life Insurance Co.Ltd ICICI Prudential Life Insurance Co. 10. 7. 11. 12.Ltd Tata AIG Life Insurance Co. 5.Ltd Shri Ram Life Insurance Co.(pvt)Ltd Birla Sun life Life Insurance Co.Ltd Bharti AXA Life Insurance Co.Ltd Max New York Life Insurance Co. HDFC Standard Life Insurance Co.PRIVATE PLAYERS IN LIFE INSURANCE 1. 15.(pvt) Ltd Bajaj Alliance Life Insurance Co.Ltd .

ORIGIN AND DEVELOPMENT OF GENERAL INSURANCE .

1972. . For General Insurance business the govt.Except the life insurance all insurances come in general insurance. formed the General Insurance Corporation of India Act.

. 4.Oriental Fire and General Insurance Companies Ltd.National Insurance Companies Ltd. 2.New India Insurance Companies Ltd. 3.Public Player in General Insurance Business 1. United India Fire and General Insurance Companies Ltd.

IFFCO Tokio General Insurance Company Ltd. 6.Bajaj Allianz General Insurance Company Ltd. 4.Tata AIG General Insurance Company Ltd.Royal Sundram Alliance Insurance Company Ltd. (Joint Venture with Fiat Auto) 2.Reliance General Insurance Company 3.Private Player in General Insurance Business 1.ICICI Lombard General Insurance Company Ltd . 5.

Protection of Financial Risk 7.Offer and Acceptance 2.Lawful Object 3.Subrogation .Co-operative Device 6.ESSENTIAL ELEMENTS/NATURE OF INSURANCE 1.Contract 4. Certainty and Contingency 10.Consideration 5.Good Faith 8.Contract of Indemnity 9.

Contract: Insurance is a form of contact under which one party agrees inreturn of a consideration to pay an agreed amount of money to another Party to make good for a loss.1. there should be a lawful offer by applicant and lawful acceptance of the same by the insurer. .Offer and Acceptance : To create a valid insurance contract. damage. injury to something of value in which the insure has a pecuniary interest as a result of some uncertain event.Lawful Object: Pupose for which the insurance has to be taken must be a legal object. The contact will be invalid if the policy is against the public interest and illegal 3. 2.

So insurance is a contract by which one party in a consideration called premium. financial risk 7.Protection of Financial Risk: the insurance can be done only for the risk which can be covered ar calculated in terms of money i. It is the duty of both the parties to disclose all the relevant facts relating to contract to each other. 5.Consideration: it is the most essential element in the insurance contract .Co-operative Device: insurance is a contract in which a large number of people associate themselves and transfer their individual risk to the association so formed.4. .e. 6.Promise made for nothing are unenforceable under the Indian Contract Act. non disclosure or fraud concerning the material facts.Good Faith: there should not be any misrepresentation .

The principle of indemnity means compensation upto the limit of actual loss or value of policy which ever is low.8.Contract of Indemnity: the basic object of the insurance is to shift the loss of person to the insurance company which can be easily distributed among large number of persons.Subrogation: after the insured is compensated for the damage the right of the ownership of the property is transferred to the insurer. . 10. 9. Certainty and Contingency: in case of life insurance the payment of the amount is certain at the time of maturity/ death/ expiry of policy whereas the payments in other insurances is made only in case of happenings of uncertainties.

Provides Security . Distributes Risks 3.Functions of Insurance Primary Functions 1. Provides certainty 2.

Insurance advices for loss reduction .Increases Efficiency 3. Helps to judge the viability of major projects.Provides Capital ‡ Reduces financial risk ‡ Premium collected can be used for industrial development ‡ Insurance makes easy for the company to apply and secure loan hypothecating insurance policies.Secondary Functions 1. 2. 4.

Other Functions 1. Increases Goodwill of the firm . Expansion of Foreign Trade 3. Economic Development 2. Encourages Saving 5. Provides funds to invest 4. Checks inflation 6.

income of widow .Importance of Insurance Importance to Individual 1. it provides security and safety 2. 4. family. 6. 5. settlement of children. Provides peace of mind Eliminates Dependency Servers as a source of savings Proves as a sound investment Fulfilling various needs like old age. 3.

4. Financial Help Reduces uncertainty of losses Improves efficiency Indemnification(covers the loss) Insurance policy act as a document that be Pledged for loan 6. Continuous business 7.Importance to Business 1. 5. 3. Employee s Security . 2.

Economic Development Earns Foreign Exchange Source Capital formation Premium act as Source of Income . 3. 2.Importance to Commerce 1. 4.

Protection to society wealth Economic Growth of the country Standard of living Removal of social evils. 3. . 4. 2.Importance to the Society 1.

Personal Insurance Life Insurance Personal Accident Insurance Health Insurance 2.Types of Insurances On the basis of Risk 1.Property Insurance Fire Insurance Marine Insurance Rural Insurance Theft Insurance Machinery Insurance Aircraft Insurance Motor Insurance .

Conti 3. Liability Insurance Re-Insurance Workmen Compensation Insurance Public Liability Insurance Motor Insurance (third party) .

Social Insurance Accident Insurance Sickness Insurance disablement Insurance Maternity Insurance Old age Insurance Unemployment Insurance . General Insurance Fire Insurance Marine Insurance 2. Life Insurance 3.Commercial point of view 1.

3. 5. 4. 2.Development point of view 1. Marine Insurance Fire Insurance Life Insurance Miscellaneous Insurance Social Insurance .

1. covers incidents like sinking. . burning. stormy winds.Marine Insurance Concerned with overseas trade conducted thru sea routes. collision. sea dacoities. Its related to ship or cargo and the traders and owners of ship always like to ensure the safe arrival of their cargo and ships.

Marine Insurance is Classified into three groups 1. Hull Insurance. the shipping company will also lose the freight. Freight Insurance-In case the cargo or ship gets destroyed .when ship is insured against the risk of sea transportation. It can be done for a period of time or for a particular journey. The shipping company may issue the frieght received or to be received . Policy covering such risk is called Freight insurance . Cargo Insurance 2. 3.

Indian Insurance Act. the occurrence customarily included among the risks insured against in fire insurance policies .2. contracts of insurance against loss by or incidental to fire or other.Fire Insurance According to Sec(2). otherwise than incidentally the some other class of insurance business. 1938 Fire insurance business means the business of affecting.

There must be actual fire or ignition Goods damaged by heat or smoke will be part of actual combustion. 2. . The fire must be accidental and not intentional.Scope of Fire Insurance 1.

Risk covered under the fire insurance 1. Blasting of boiler used for household purpose 3. Fire or ignition 2. Blast of gas used for the purpose of lighting and heating in any building. . Blast of gas cylinder used for household cooking 4.

excessive heat or cold. Burning as an order by the govt. cheques. Caused by wrong mixing of chemicals 4. Precious stones. cyclones. storms. . Loss by riots. 2. natural calamities such as earthquakes. floods. 3. stamps. artistic goods and articles. account books and records will only be insured if mentioned specifically in the policies. maps.Risk not covered under the fire insurance 1. civil disturbance. war. drought.

Life Insurance .3.

one year MI.Difference between Life.one year .10 20 years not for one year FI. fire and Marine Insurance Risk LI-payment is made at the time of death or a the maturity of the policy FI-on the occurrence of the event MI-on the occurrence of the event Tenure LI.

Indemnity of Loss LI-not applicable payment as per agreed terms as loss of a life can not be measured FI.based on type of product and risk involved MI.applicable( Actual loss or Policy value which ever is less) MI.applicable( Actual loss or Policy value which ever is less) Object LI-security and investment FI.protection element MI-Protection and security element Premium LI-premium rates are fixed FI.based on type of product and risk involved .

quarterly. half yearly or it can also be paid in single installment for full year FI-always in a prepaid form MI-always in a prepaid form Double Insurance LI-there can be a double insurance under life insurance( one policy from one insurer and second from another) FI-can not get more than the actual loss.Payment of premium LI-Monthly. MI-Actual loss or the policy amount which ever is less .

premium calculation is easy FI.bit difficult MI-too difficult Value of Policy LI-one can get policy of any amount policy on his life FI. .cannot exceed more than the actual value of the asset MI-cannot exceed more than the value of the cargo ship and freight.Classification of risk and premium LI.

4. Social Insurance Social insurance is a technique of social security and it includes all the sections of society. through appropriate organizations. According to the ILO Social security is the security that society furnishes. against certain risk to which its members are exposed . .

Forms of Social Insurance ‡ ‡ ‡ ‡ ‡ ‡ Sickness Insurance Accident Insurance Disablement Insurance Maternity Insurance Old age Insurance Unemployment Insurance .

5. Personal Insurance ‡ Life Insurance ‡ Personal Accident Insurance ‡ Health Insurance (mediclaime) .

Property Insurance ‡ ‡ ‡ ‡ ‡ ‡ ‡ Fire Insurance (already discussed) Marine Insurance (already discussed) Rural Insurance Motor vehicle Insurance Burglary Insurance Theft Insurance Baggage Insurance .6.

6(c) Rural Insurance ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Crop Insurance Cattle Insurance Sheep and Goat Insurance Poultry Insurance Aqua Insurance shrimps and prawn Insurance Sericulture Insurance-silk worm Insurance Honeybee Insurance Failed well Insurance Hut Insurance Animal Driven Cart Insurance .

6(d) Motor Vehicle Insurance 6(e)Burglary Insurance.Robbery/ theft/ dacoits 6(f)Theft Insurance 6(d) Motor Vehicle Ins urance 6(e)B urglary Ins urance.R obbery/ theft/ 6(g)Baggage Insurance.T ravelling Ins urance .Travelling Insurance dacoits 6(f)T heft Ins urance 6(g)B aggage Ins urance.

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