Flow of presentation

 What is insurance?
 Types of insurance
 Features of insurance
 Advantages and disadvantages
 elements of life insurance contract
 Growth and development of insurance in India
 Competition private insurance
 Increased economy activity
 IRDA to from Benchmark
What Is Insurance?
 The term insurance can be defined in
both financial and legal terms.
The financial definition focuses on an
arrangement that redistributes the cost
of unexpected losses, that is the
collection of a small PREMIUM
PAYMENT from all exposed and
distributed to those suffering loss.
The legal definition focuses on
CONTRACTUAL ARRANGEMENT
where by one party agrees to
compensate another party for LOSSES.
Two types of insurance
 Life insurance
 Non- life insurance
Life insurance

 It covers the human life, and most important income earning

source. It needs to be protected much before other assets
which the human capital generates. Human life can be lost
through unexpectedly early death or sickness and disabilities
caused by accidents.
 There are different kinds of plants under life insurance
1) Term plans
2) fundamental plans
3) money back plans
4) unit- linked insurance plans
5) guaranteed plans
6) pension plans
Non- life insurance (General insurance)

 In general insurance field there are 10

sectors where insurance is required in
addition to other miscellaneous
sector.
Kinds of non life insurance
 A) fire insurance
 B) marine insurance
 C) motor vehicle insurance
 D)personal accident insurance
 E) health insurance
 F) industrial all risks insurance
 G) professional indemnity cover
 H) videsh yatra insurance
 I) travel insurance
 J) office risk coverage insurance
 K) personal accident insurance
Features
 1) protection from losses.
 2) presence of uncertainties.
 3) spreading of risk.
 4) safeguard against risk.
 5) reduce the impact of the risk of loss.
 6) protection against misfortunes.
Advantages
 Reimbursement for losses.

 Reduction in tension and fear.

 Avenue for investment with good returns.

 Prevention of losses.

 Credit multiplication

Disadvantages
 Cost of business operations
 Fraudulent and exaggerate claims
Elements of insurance contract
 A) application for insurance
 B) binders or (memorandum)
 C) policy document
i) heading
ii) body of contract
iii) back side of policy document
 D) endorsements
 E) riders
Growth and development of insurance
in India
 The insurance sector in India dates back to 1818 when the first
insurance company was established - the oriental life
insurance company of Calcutta.
 In 1972 ,the general insurance business (nationalisation) act
was passed for nationalising the 107 insures with effect from
1st January ,1973 ,and all 3 companies were amalgamated and
grouped into four companies,
 National insurance company ltd.

 New Indian assurance co. ltd. and.

 Oriental insurance co. Ltd.

 United India insurance co.ltd.

Competition in private insurance
 Though private life cos were making huge losses, promoters
were only willing to bring in more money. But a crashing
market has exposed the sector’s weaknesses.
 Strengths:- highly capitalised institutions/strong distribution
network / efficient use of information technology.
 Opportunities:- new product come capture the flight to
safety/growing demand for protection cover/ ability to offer
better returns post –tax
 Weakness:-higher than expected lapsation of policies/over
exposure to capital markets/campanies long way from break
even.
 Threats:-inability to manage expenses/fall in market may hurt
persistency of policies/financial crises may create capital
constraints competition from mutual funds and new pension
companies.
Increased economic activity
 Although economic activity in
industries has slowed down since
2007-08 sooner or later there will be
an upswing. The increase in the
growth rate in various sectors
accompanies by the growth in trade in
the contract of fulfilment of
commitments to the world trade
organisation(WTO) will signal a
growth in the demand for insurance
covers of new types.
IRDA to form Benchmarks
 Valuation of insurance companies is back on the the regulators
radar. The insurance regulatory and development is on course
to develop commonly accepted benchmark and disclosures to
value insurance companies as this would be crucial when
Indian partners dilute their shareholding.
 India insurance sector accounts for around 5% of the GDP and
has the largest no. of the life insurance policies in force in the
world.