2. WHAT IS INSURANCE?
Insurance is actually a contract between 2 parties whereby one
party called insurer undertakes in exchange for a fixed sum called
premium to pay the other party in case of happening of a certain
event
Insurance in India has its history dating back till 1818, when
Oriental life Insurance Company was started by European in
Kolkata to fulfill the needs of the European Community.
The oldest existing insurance company in India is National
insurance Company Ltd, which as founded in 1906 and is
nationalized in 1972
3. NEED OF INSURANCE
For security
Old age pension
As an investment/or saving mechanism
For tax benefits + Tax free cash on maturity
Financial Planning
Provides prevention of losses
4. PRINCIPLES OF INSURANCE
The 7 principles of insurance are:
Principle of utmost good faith
Principle of Insurable interest
Principle of indemnity
Principal of subrogation
Contribution
Principle of causa proxima
Principle of Loss Minimisation
5. SERVICES IN INSURANCE SECTOR
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Insurance
Life Insurance
Term Life
Insurance
Permanent
Life Insurance
General
Insurance
Fire Insurance
Marine
Insurance
Mediclaim
Business
Motor Vehicle
6. RE-INSURANCE
The practice of insurers transferring portions of risk portfolios to
other parties by some form of agreement in order to reduce the
likelihood of having to pay a large obligation resulting from
an insurance claim. The intent of reinsurance is for an insurance
company to reduce the risks associated with underwritten policies by
spreading risks across alternative institutions.
General Insurance Corporation of India is the Reinsurance Company
in India
There are two basic methods of reinsurance:
Facultative Reinsurance
Treaty Reinsurance
7. DOUBLE INSURANCE
Duplicate protection provided when two companies deal with the same in
dividual and undertake to indemnify that person against the same losses.
When an individual has double insurance, he or she has coverage by two
different insurance companies upon the identical interest in the
identical subject matter.
If a husband and wife have a duplicate medical insurance coverage
protecting each another, they would have double insurance. An individual
can rarely collect on double insurance, however, majority of insurance
contracts contains provision that prohibits this
8. LIFE INSURANCE CORPORATION
(LIC)
The Parliament of India passed the Life Insurance Corporation Act on
the 19th of June 1956, with the objective of spreading life insurance
much more widely and in particular to the rural areas with a view to
reach all insurable persons in the country, providing them adequate
financial cover at a reasonable cost.
The company was founded on 1st September, 1956 when
the Parliament of India passed the Life Insurance of India Act that
nationalised the private insurance industry in India. Over 245
insurance companies and provident societies were merged to create
the state owned Life Insurance Corporation.
Today, the LIC has 8 zonal offices, around 113 divisional offices, 2,048
branches and 992 satellite offices and corporate offices
LIC's slogan yogakshemam vahamyaha is in Sanskrit language which
translates in English as "Your welfare is our responsibility".
9. CONTINUED…
Type : Public Sector
Industry : Financial services
Headquarters : Mumbai, India
Key people: S.K Roy (Chairman),
Sushobhan Sarker (Managing Director),
S.B Mainak (Managing Director)
N.R Guha (Managing Director),
V.K Sharma (Managing Director),
Usha Sangwan (Managing Director)
Products : Life insurance, health insurance, investment management, mutual fund
Owner: Government of India
Subsidiaries: LIC Housing Finance
LIC Pension Fund Ltd.
LIC International
LIC Cards Services
LIC Nomura Mutual Fund
10. GENERAL INSURANCE CORPORATION (GIC)
Prior nationalization there were 68 Indian insurers (including LIC) and 45 non-Indian
insurers did the business.
In Nov. 1972, the general insurance business was nationalized by the General
Insurance Business (Nationalized), Act 1972 (GIBNA) and vested in the hand of the GIC
and its four subsidiaries:
1. National Insurance Co. Ltd.,
2. New India Assurance Co. Ltd.,
3. Oriental Insurance Co. Ltd., and
4. United India Insurance Co. Ltd. 10
11. GIC was incorporated as a holding company in 1992.
General Insurance Business is completely owned by the
government.
The paid up capital of GIC was fully subscribed by the
Government and of four subsidiaries.
It was controlled by a single organization with four subsidiaries
The Government of India took over Control, supervision, and
policy making of GIC.
The premium income for GIC comes mainly through the obligatory
reinsurance premium on a quota share basis from subsidiaries on
their direct business in
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12. IRDA ACT
The Insurance Act, 1938 provided comprehensive regulation of the insurance
business in India.
In 1993, Govt. of India, with a view to examine the structure of the insurance industry
& to recommend changes to make it more competitive & efficient, appointed a
committee under the chairmanship of former Governor of Reserve Bank of India, Sh.
R. N. Malhotra. The committee submitted its report in Jan. 1994. In 1999 the bill titled
as Insurance Regulatory & Development Authority Bill 1999 was introduced in
parliament. After discussion & debate the Bill become an Act known as Insurance
Regulatory & Development Authority (IRDA) Act,1999.
The aim of the Authority is “to protect the interest of holders of Insurance policies to
regulate, promote and ensure orderly growth of Insurance industry & for matters
connected therewith”
The IRDA Act has ramifications on The Insurance Act (1938), The Life Insurance
Corporation Act (1956) and The General Insurance Business(Nationalisation) Act
(1972).
13. FEATURES OF IRDA ACT
Act to establish the regulatory authority
Insurance advisory committee
Ending the monopoly of LIC and GIC
The insurance business opened to Indian companies only
Renewal of registration
Capital adequacy requirement
Deposits
Investment of assets
Power of investigation and inspection
Tariff advisory committee
Licensing of surveyors and loss assessors
Sufficiency of the assets
No risk to assume unless premium received in advance
Reinsurance
