Basics of Insurance

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BasicsofInsurance

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Contents-

• Life insurance
• General insurance
• Insurance market scenario
• Emerging trends in insurance

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Learning Insurance

• What Is Insurance
• Insurance is concerned with protection of
  economic value of assets.Tangible assets are
  human beings, house, furniture, motor cycle
  etc.Intangible assets are liabilities

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History of Insurance

• It started from Lloyds coffee house London
• First policy issued in England in 1583
• In India first policy issued in 1870

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History of Insurance

• LIC of India formed in 1956 after
• nationalization of life insurance
• Business of 245 private insurance
• companies
• General insurance business of 107
• insurance companies was
• nationalized in 1972 four public sector
  General Insurance Companies were formed

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Classes of Insurance

• A. Life insurance
• B. General insurance
• General insurance is further
• classified-
• 1.Fire insurance
• 2.Marine insurance
• 3.Miscellaneous insurance

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Miscellaneous Insurances-

• 1.Motor insurance
• 2.Mediclaim insurance
• 3.Householders insurance
• 4.Shopkeepers insurance
• 5.Engineering insurances
• etc.

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1.Insurable interest- Means financial
interest 2.Utmost good faith- Greater duties
of faith on proposer insurer
3.Indemnity- Actual compensation of loss.
not applicable in life policies

• Fundamental
• Principles of Insurance

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Fundamental Principles of Insurance

• 4.Subrogation-Transfer of rights of insured to
  insurer.Not applicable in life policies.
• 5.Contribution-Sharing of loss by all
  insurers.Not applicable in life policies.

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Market Scenario before Irda Act 1999

• Life insurance company
• 1. LIC of India
• General insurance companies
• 1.National insurance company ltd
• 2.New India assurance company ltd
• 3.Oriental insurance company ltd
• 4.United India insurance company ltd

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Market Scenario after Irda Act 1999

• Stage of
• Liberalization,
• Privatization
• Globalization
• (Competition between public sector private
  sector)

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Life Insurance Companies

• 1.Bajaj Allianz Life Insurance Company Ltd
• 2.Birla Sun Life Insurance Company Ltd
• 3.HDFC Standard Life Insurance Company Ltd
• 4.ICICI Prudential Life Insurance Company Ltd
• 5.ING Vysya Life Insurance Company Ltd
• 6.Max New York Life Insurance Company Ltd

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Life Insurance Companies

• 7.Met Life India Insurance Company Ltd
• 8.Kotak Mahindra Old Mutual Life Insurance
  Company Ltd
• 9.SBI Life Insurance Company Ltd
• 10.Tata AIG Life Insurance Company Ltd
• 11.Reliance Life Insurance Company Ltd

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Life Insurance Companies

• 12.Aviva Life Insurance Company Ltd
• 13.Sahara India Life Insurance
• Company Ltd
• 14.Shriram Life Insurance Company
• Ltd
• 15.Bharti Axa Life Insurance Company
• Ltd
• 16.Life Insurance Corporation Of
• India

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Life Insurance Companies

• 17.Future Generali India Life Insurance
• Company Ltd.
• 18. IDBI Fortis Life Insurance Company
• Ltd.
• 19.Canara HSBC Oriental Bank of
• Commerce Life Insurance Company Ltd.

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Life Insurance Companies

• 20.Aegon Religare Life Insurance
• Company Limited.
• 21. DLF Pramerica Life Insurance Co. Ltd.
• 22. Star Union Dai-ichi Life Insurance Co.
• Ltd.
• 23.India First Life Insurance Company Ltd.
• 24. Edelweiss Tokio Life Insurance Co. Ltd

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General Insurance Companies

• 1.Bajaj Allianz General Insurance Company Ltd
• 2.Icici Lombard General Insurance Company Ltd
• 3.Iffco Tokio General Insurance Company Ltd
• 4.Reliance General Insurance Company Ltd
• 5.Royal Sundaram Alliance Insurance Company Ltd

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General Insurance Companies

• 6.Tata AIG General Insurance Company Ltd
• 7.Cholamandalam Ms General Insurance Company Ltd
• 8.HDFC-ERGO General Insurance Company Ltd
• 9.Star Health Allied Insurance Company Ltd

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General Insurance Companies

• 10.Export Credit Guarantee Corporation Ltd
• 11.Agriculture Insurance
• Company Of India Ltd
• 12.National Insurance Company
• Ltd
• 13.New India Assurance Company
• Ltd

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General Insurance Companies

• 14.Oriental Insurance Company
• Ltd
• 15.United India Insurance Company
• Ltd
• 16. Apollo Munich Health Insurance Company Ltd

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General Insurance Companies

• 17.Future Generali India Insurance Company
• Ltd
• 18. Universal Sompo General Insurance Co.
• Ltd. 
• 19.Shriram General Insurance Company Limited
• 20.Bharti AXA General Insurance Company ltd.
• 21.Raheja QBE General Insurance Company Limited
• 22.SBI General Insurance Company Ltd.
• 23.Max Bupa Health Insurance Company Ltd.
• 24.L T General Insurance Company Ltd.

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Market Intermediaries

• Who procure the
• insurance business-
• Agents
• Corporate agents
• Insurance brokers
• Banks (Bancassurance)

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Other market Intermediaries

• Surveyors
• Who assess the loss in Non-Life Insurance
  Claims
• TPA ( Third Party Administrators)
• Who provide the claim settlement service in
  health insurance policies

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Basic Life Insurance Policies

• Term assurance policy
• Provides death cover only
• during policy period
• Premium is low
• No refund of premium
• Sum assured paid on death

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Whole Life Policy

• Death cover only
• Period is not specified
• Premium is low paid
• during life time
• No refund of premium
• Sum assured paid on death

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Endowment Assurance Plan

• Covers death survival
• benefits
• Sum assured paid on death
• or on maturity of policy
• Period of policy at the option
• of proposer
• Most common plan

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Money Back Policy

• Available for different periods
• Covers death survival benefits
• Lump sum paid periodically
• Full sum assured paid on death

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Unit Linked Insurance Policies (ULIP)

• Each premium split into units and risk
• premium for life cover
• Units are priced as per current
• market value
• Sum assured current value of units paid on
  death as per policy condition
• Current value of units paid on maturity

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Annuity (Pension) Plans

• These are pension plans
• Immediate annuity or deferred annuity starts at
  specified age periodically
• Single premium paid for immediate annuity
• Premium in installments paid
• for deferred annuity
• Life cover simultaneously

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Important aspects of Life Insurance Policies

• Policies available with bonus or without bonus
• Death due to accidents can be covered for
  additional S.A.
• Policies available exclusively for women
  children
• Additional cover for major diseases available
• Guaranteed bonus policies available

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Important aspects of Life Insurance Policies

• Policies available for limited period premium
  payment risk for longer policy period
• Premium can be paid in monthly, quarterly, half
  yearly, yearly installments

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Important aspects of Life Insurance Policies

• Loans are available on policies
• Lapsed policies can be revived
• Policy can be surrendered after three years
• Nomination assignment can be done

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General Insurance Policies

• Fire policies
• Marine policies
• Motor vehicle policies
• Personal line policies
• Health insurances
• Liability insurances
• Rural insurance policies
• Engineering insurances

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Fire Policies

• Standard fire policy-
• Common policy for buildings, shops,offices,
  Industrial manufacturing risks

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FIRE POLICIES-SPECIAL POLICIES

• Industrial Manufacturing
• clients
• Floater policy
• Declaration policy
• Floater declaration policy
• Reinstatement value policy
• Industrial all risk policy
• Consequential loss policy

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Marine Policy

• Marine Cargo Policy
• Policy insures physical loss or damage to the
  goods in transit by road, rail, air, water
  caused due to accidents, fire etc.
• Marine Hull Policy
• Policy insures marine ships,steamers etc.

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Special Marine Cargo Policies

• For business, industries,
• importers and exporters
• Annual policy
• Special declaration policy
• Open cover
• Open policy

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Motor Vehicle Policies

• Liability only motor policy
• Mandatory motor vehicle policy
• Package motor policy
• Motor policy additionally insures loss and
  damage of the motor vehicle due to theft and
  accidents along with third party risk is called
  a package motor policy.

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Personal Line Insurances

• House holders policy
• Shop keepers policy
• Personal accident policy
• Group personal accident policy
• Fidelity guarantee policy

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Health Insurance

• Medi claim policy
• Overseas medi claim policy
• Videsh yatra mitra policy
• Corporate frequent travelers policy
• Employment study policy
• Group medi claim policy
• Cancer policy

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Liability Insurances

• Compulsory public liability policy
• Public liability policy
• Products liability policy
• Professional indemnity policy
• Lift (third party) policy
• Directors liability policy
• Employers liability policy

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Rural Insurance Policies

• Cattle policy
• Poultry policy
• Agricultural pump set
• policy
• Crop insurance

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Engineering Insurances

• Machinery Breakdown Insurance
• Loss of Profits (Machinery
• Breakdown) Insurance
• Electronic Equipment Insurance
• Erection All Risk Insurance (EAR)
• Storage cum Erection Insurance
• (SCE)

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Engineering Insurances

• Contractors All Risk Insurance (CAR)
• Contractors Plant and Machinery Insurance (CPM)
• Boiler and Pressure Plant Insurance
• Loss of Profits (Boiler Explosion) Insurance
• Deterioration of Stocks Insurance.

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Insurance Law

• The Insurance Act 1938
• (amended)
• Insurance Regulatory Development Authority Act
  1999

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IRDA

• Insurance Regulatory Development Authority is
  the controlling and regulatory apex body in the
  country for insurance sector and its chairman and
  members are appointed by Government of India.
  IRDAs HQ is located at Hyderabad

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Insurance Regulations(Regulations issued by IRDA)

• IRDA Actuarial Report and Abstract 2000
• IRDA Registration of Indian Insurance Companies
  2000
• IRDA Insurance Advertisement and Disclosure 2000
• IRDA The IRDA (Meetings) 2000
• IRDA Investments (Life and General) 2000
• IRDA Statements of Accounts 2000

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Insurance Regulations(Regulations issued by IRDA)

• IRDA The Insurance Advisory Committee (Meetings)
  Regulations, 2000
• IRDA Assets, Liabilities, and Solvency Margin of
  Insurers Regulations, 2000
• IRDA Obligations of Insurers to Rural Social
  Sectors Regulations, 2000
• IRDA Licensing of Insurance Agents Regulations,
  2000
• IRDA Appointed Actuary 2000

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Insurance Regulations(Regulations issued by IRDA)

• IRDA General Insurance - Reinsurance Regulations,
  2000
• IRDA The IRDA (Staff) 2000
• IRDA Surveyors and Loss Assessors 2000
• IRDA Reinsurance Life 2000
• IRDA Revised Investment Regulations in April 2001

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Insurance Regulations

• Irda (third party administrators) regulations
  2001
• Irda (protection of policyholders interest )
  regulations, 2002
• Irda ( licencing of corporate agents)
  regulations 2002

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Insurance Regulations

• Irda (manner of receipt of premium) regulation
  2002
• Irda (licencing of brokers) regulation 2002
• Irda (micro-insurance) regulations, 2005
• IRDA (Treatment of Discontinued Linked Insurance
  Policies) Regulations, 2010
• IRDA (Sharing of Database for Distribution of
  Insurance Products) Regulations, 2010

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IRDA Guidelines on Corporate Governance for
the Insurance Sector

• IRDA vide letter no. IRDA/FA/CIR/025/2009-10
  dated 05-08-2009 has issued detailed guidelines
  to all insurers on corporate governance for the
  insurance sector for compliance with effect from
  01-04-2010 and an Amendment No.1 has been issued
  vide letter no.IRDA/FI/CIR/FA/014/01/2010 dated
  29-01-2010

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Growth of Insurance Business

• Life Insurance Premium was Rs.400 crores in 1956.
  First year life premium of 2011-12 stood at Rs.
  114232 crores against Rs.125826 crores in 2010-11
  
• General Insurance Premium was Rs.200 crores in
  1972.In 2011-12 it increased to Rs. 58357 crores
  from Rs. 47355 of 2010-11.

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Emerging Trends

• Detariffing in General Insurance from 1.1.2007
  leading to greater price war new products in
  future
• Banks entering insurance market through joint
  ventures with foreign finance majors

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Emerging Trends

• Increasing Role of
• Insurance Brokers
• Bancassurance
• Corporate Agency
• IT intervention uses

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Emerging Trends

• Greater Job Opportunities
• For thousands of Insurance
• Managers, IT Professionals
• For lacs of Insurance Advisors
• For Insurance Professionals
• For Risk Managers
• For Underwriters
• For claim Settlements

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Emerging Trends

• Increasing No. of Insurance companies
  Intermediaries
• Increasing Awareness about Insurance
• Growth in GDP
• Increasing No. of Middle Class

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Emerging Trends

• Vast No. of uninsured population
• Underinsurance
• Untapped potential for General Insurance

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Emerging Trends

• Increasing awareness about Health Insurance
• Increasing awareness about Personal Line
  Insurance like House, Shop, Personal Accident
• Market flooded with new insurance products