29978552 insurance sector ppt

8/8/2019 29978552 Insurance Sector Ppt

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What is insurance?

The definition of insurance can be made from two

points:

Functional definition.

Contractual definition.

FUNCTIONAL DEFINITION

Insurance is a co-operative device to spread theloss caused by a particular risk over a number of

persons who are exposed to it and who agree to

insure themselves against the risk.


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Contractual Definition

In the words of justice Tindall, Insurance is a

contract in which a sum of money is paid to

the assured as consideration of insurers

incurring the risk of paying a large sum upon

a given contingency.


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TYPE OF INSURANCE

INSURANCE

LIFE

INSURANCE

GENERAL

INSURANCE


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LIFE INSURANCE

Life insurance is a written contract between the

insured and the insurer, that provides for the

payment of the insured sum on the date of the

maturity of the contract or on the unfortunate

death of the insured, whichever occurs earlier.


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GENERAL INSURANCE

General insurance or non-life

insurance policies, including automobile

and homeowners policies, provide

payments depending on the loss from a

particular financial event. General

insurance typically comprises any

insurance that is not determined to belife insurance.


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TYPES OF GENERAL INSURANCE

Health insurance

Business insurance

Automobile insuranceFire insurance etc.


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HEALTH INSURANCE

Just like one looks to safeguard ones

wealth, these policies ensure guarding

the insurer's health against any

calamities that may cause long term

harm to ones life and even hamper ones

earning ability for a lifetime. Some

examples of this type of policy aremediclaim policy, personal accident,

group accident, traffic accident, etc.


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Business Insurance

Risks of loss of profits/business, goods, plantand machinery are most profound in case ofbusiness. Under this head they cover the

most widely used policies that cover abusiness from any loss of the above kind.

Some of these policies are burglaryinsurance, shopkeepers insurance, key-maninsurance, marine insurance, public liabilityinsurance, workmen compensationinsurance, air transit insurance, fidelityguarantee insurance etc.


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Automobile Insurance

Auto Policy is required to be taken to

cover the risks that arise to the owner,

vehicle and third party. This includes theCompulsory Vehicle Policy (In India, by the

Motor Vehicles Act, every car owner is

required to covered against Act risks) and

the Comprehensive Vehicle Policy.


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FIRE INSURANCE

This policy is required to be

taken to prevent any loss of

profits / property from incidentalfire. Eg: fire insurance and fire

consequential loss policy.


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HISTORY OF INSURANCE IN INDIA

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Phase Period Industry

Phase I

a. Life Insurance

b. General Insurance

1818 to 1956(about 138 yrs)

1850 to 1972

(about 122 yrs)

Many (245) private sector companies only,competitive market.

Many (107) private sector companies only,

competitive market.

Phase II

a.Life Insurance

b.General Insurance

1956 to 2000

(about 44 yrs)

1972 to 2000

(about 28 yrs)

Nationalization, public sector or State

monopoly, only one company.

Nationalization, public sector monopoly, only

one company with its four subsidiaries.

Phase III

Life Insurance and

General Insurance

After 2000

Opened to the entry of private domestic and

foreign companies, mixed sector of public and

private sector units, oligopoly of public sector

companies (14 life insurance and 12 general

insurance companies)


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HISTORY OF INSURANCE IN INDIA contd..

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-1818 First life insurance company Oriental Life InsuranceCompany (in Calcutta).

- 1850 First general insurance company Tritan Insurance

Company (in Calcutta)

- Till 1956/1972 life and general insurance industry grown in

terms of number of companies (life 245 and General 107 with

complete private sector ownership), the volume of premium,

investible resources, and so on. And both type of insurance

companies were competitive.

- The insurance was regulated through the Insurance Act, 1938.

- The picture changed after the Independence.


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HISTORY OF INSURANCE IN INDIA contd..

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- In 1956, 245 Indian and Foreign life insurers and provident

societies were nationalized, and new single entity namelyLIC was established by passing the LIC Act, 1956.

- Similarly, in 1972, 107 general insurers were nationalized

through the passing of General Insurance Business

(Nationalisation) Act, 1972.- The existing 107 insurers were amalgamated and grouped into

Five companies, viz., National Insurance Company (NIC),

New India Assurance Company (NIAC), Oriental Insurance

Company (OIC), United India Insurance Company (UIIC),and General Insurance Corporation (GIC).

- Then insurance industry transformed into monopoly and

Oligopolistic state or public sector insurance industry in India.


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Life Insurance Corporation of India (LIC) was formed in

September 1956 by an Act of Parliament, LIC Act 1956 with

a contribution of Rs. 50 million.

The then Finance Minister Mr. C. D. Deshmukh whilepiloting the bill for nationalization outlined the objectives of

LIC thus: To conduct the business with utmost economy with

the spirit of trusteeship; to charge premium no higher than

warranted by strict actuarial considerations; to invest the funds for obtaining maximum yield for the policy holders

consistent with safety of capital; to render prompt and

efficient service to policy holders thereby making Insurance

widely popular.12/30/2010 15


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LIC OF INDIA contdPresently the LIC has a network of seven zones; 100 divisions and

2,048 branches, personnel exceed seven lakhs employees andover six lakhs agents.

Vision: A trans-nationally competitive financial conglomerate ofsignificance to societies and Pride of India.

Mission: To explore and enhance the quality of the life of people

through financial security by providing products and services ofaspired attributes with competitive returns and by renderingresources for economic development.

Values: Caring and Courtesy, Initiatives and Innovation, Integrityand Transparency, Quality and Returns, Participation andRelationship, and Trustworthiness and Reliability

Culture: Agility (quickness), Adaptability, Collaboration,Commitment, Discipline, Empowerment, Sensitivity, andExcellence.

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LIC OF INDIA contdObjectives

Spread Life Insurance widely and in particular to the ruralareas.

Maximise mobilization of peoples savings by making

insurance-linked savings adequately attractive.

Deployment of funds to the best of advantage of the investors

as well as the community as whole, keeping in view national

priorities and obligations of attractive return.

Conduct of business at most economy and with the full

realisation that the money belongs to the policyholders.

Act as trustee of the insured public in their individual and

collective capacities.

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PRINCIPLES AND INVESTMENT POLICY OF LICs

1. Security of funds, and

2. Maximization of return of investment,

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Investment Policy

1. Central Govt. marketable securities being not less than 20%

2. Loans to Housing Bank including above (1) being not less than 25%

3. State Govt. securities including Govt. Guaranteed marketablesecurities, inclusive of (2) above being not less than 50%

4. Socially oriented sectors including public sector, co-operative sector

house building by policyholders, own house scheme, inclusive of (3)

above not less than 75%

5. Private corporate sector, loans to policyholders for construction and

acquisition of immovable property 25%


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INVESTMENT POLICY OF

LICs

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INVESTMENT POLICY OF

LICs contd

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Working of insurance


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LIC Products & Plans


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Jeevan Anurag Komal Jeevan

CDA Endowment Vesting at

21

Marriage Endowment Or

Educational Annuity Plan

CDA Endowment Vesting

18

Jeevan Kishore Jeevan Chhaya

Child Career Plan Child Future PlanChild Fortune Plus


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Jeevan Aadhar

Jeevan Vishwas

The Endowment Assurance Policy

The Endowment Assurance Policy-Limited Payment

Jeevan Mitra(Double Cover Endowment Plan)

Jeevan Mitra(Triple Cover Endowment Plan)

Jeevan Anand

New Janaraksha Plan

Jeevan Amrit


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The Whole Life Policy

The Whole Life Policy- Limited Payment

The Whole Life Policy- Single Premium

Jeevan AnandJeevan Tarang

Two Year Temporary Assurance Policy

The Convertible Term Assurance Policy

Anmol Jeevan-I

Amulya Jeevan-I


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Jeevan Saathi Plus

Jeevan Saathi

Jeevan Nidhi

Jeevan Akshay-VI

New Jeevan Dhara-I

New Jeevan Suraksha-I


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Wealth Plus

Market Plus I

Profit Plus

Money Plus-I

Child Fortune Plus

Jeevan Saathi Plus


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MAJOR PLAYERS


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PRIVATE SECTOR COMPANIES-Several leading private sector companies have entered in the fieldof insurance sector, both in life and non-life insurance.

-There are several MNCs, in Joint Venture with Indian privatesector firms, have started operations in a big way.

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Private Players in the Life Insurance Business

Regd.

No.

Date of

Regd.

Name of the

Company

Who Owns it (in percentage)

101 23.10.00 HDFC Standard Life Standard Life, UK- 18 and HDFC 82104 15.11.00 Max New York Life New York Life - 26 and Max India 74

105 24.11.00 ICICI Prudential Life Prudential, UK- 26 and ICICI Bank 74

107 10.01.01 Om Kotak Mahindra Old Maruthi, South Africa 26 and Kotak

Mahindra 74

109 31.01.01 Birla Sunlife Sun Life of Canada26 and Birla Capital 74

110 12.02.01 Tata AIG AIG, US 26 and Tatas 74

111 30.03.01 SBI Life Cardif SA, France 26 and State Bank of

India 74

114 02.08.01 ING Vysya ING, Holland26 and GMR Group, Hyd54

and ING Vysya Bank20


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Regd.No.

Date ofRegd.

Name of theCompany

Who Owns it (in percentage)

116 03.08.01 Allianz Bajaj Allianz AG, Germany 26 and Bajaj Auto 74

117 06.08.01 Metlife Metlife, US26, Shapoorji Pallonji30 and J&K

Bank25

121 03.01.02 AMP Sanmar AMP, Australia26 and Sanmar Group, Chennai 74

122 03.01.02 Aviva Aviva PLC, UK 26 and Dabur Investments 74

*** *** Reliance Life

*** *** Bharathi AXA

127 06.02.04 Sahara IndiaInsurance

128 07.11.05 Shriram Life

Insurance

Private Players in the Life Insurance Business

CURRENT SCENARIO contd.


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MARKET SHARE


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Growing at the rate of15-20% annually

75% population has no insurance

Adds 7% to countrys GDP

LIC market share come down to 75% and private insurers

increased over24%

Annuity or pension product have over 33% of market

Unity linked insurance scheme have monopoly


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GENERAL INSURANCE CORPORATION (GIC)

Prior nationalization there were 68 Indian insurers (includingLIC) and 45 non-Indian insurers did the business.

In Nov. 1972, the general insurance business was nationalizedby the General Insurance Business (Nationalized), Act 1972(GIBNA) and vested in the hand of the GIC and its four subsidiaries viz.

1. National Insurance Co. Ltd.,

2. New India Assurance Co. Ltd.,3. Oriental Fire and General Insurance Co. Ltd., and

4. United India Insurance Co. Ltd.

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.

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G I C contd

GICs four subsidiaries:

1. National Insurance Co. Ltd.,2. New India Assurance Co. Ltd.,

3. Oriental Fire and General Insurance Co. Ltd., and

4. United India Insurance Co. Ltd.

The Govt of India took over Control, supervision, and policy

making is with GIC.

The premium income for GIC comes mainly through the obligatoryreinsurance premium on a quota share basis from subsidiaries on

their direct business in India (almost 20% of subsidiaries business

come to GIC).

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G I C contdTYPES AND STRUCTURE OF BUSINESS

- General insurance policies are not financial claims.

- There is no guarantee of renewal of policy on the same terms oron any terms.

- The contract is short-term contract.

- The general insurance companies do not collect savings.

- Policy claims are unpredictable.- Assets are held in relatively liquid form.

- GIC meets the requirements of industrial, manufacturing,commercial, services, household, and agricultural sectorsthrough wide rage of 115 products, granting insurance coverage.

- GIC has been promoting insurance cover in the field oflivestock, poultry, sericulture, horticulture, pump sets, and

personal accidents.

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PRINCIPLES AND INVESTMENT POLICYGIC

1. Central Govt. securities being not less than 20%

2. State Govt. securities and other government guaranteed

securities, including (1) above, being not less than 30%

3. Loans to HUDCO/DDA/GIC-HF and to state govts. Forhousing and fire fighting equipment, not less than 15%

4. Market sector not more than 55%

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I R D A

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IRDAS MISSION

To protect the interests of the policyholders, to regulate,

promote and ensure orderly growth of the insurance industryand for matters connected therewith or incidental thereto.

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Composition of Authority under IRDA Act, 1999

As per the section 4 of IRDA Act' 1999, Insurance Regulatory

and Development Authority (IRDA, which was constituted by

an act of parliament) specify the composition of Authority.

The Authority is a ten member team consisting of

a. a Chairman;

b. five whole-time members;c. four part-time members,

(all appointed by the Government of India)


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Duties, Powers and Functions of IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers andfunctions of IRDA.

1. Subject to the provisions of this Act and any other law for the

time being in force, the Authority shall have the duty to

regulate, promote and ensure orderly growth of the insurance

business and re-insurance business.

2. Without prejudice to the generality of the provisions

contained in sub-section (1), the powers and functions of the

Authority shall include:

a. issue to the applicant a certificate of registration, renew,

modify, withdraw, suspend or cancel such registration;


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Duties, Powers and Functions of IRDA contd

b. protection of the interests of the policy holders in mattersconcerning assigning of policy, nomination by policy

holders, insurable interest, settlement of insurance claim,

surrender value of policy and other terms and conditions of

contracts of insurance;

c. specifying requisite qualifications, code of conduct and

practical training for intermediary or insurance

intermediaries and agents;

d. specifying the code of conduct for surveyors and lossassessors;

e. promoting efficiency in the conduct of insurance business;


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Duties, Powers and Functions of IRDA contd

f. specifying the form and manner in which books of accountshall be maintained and statement of accounts shall be

rendered by insurers and other insurance intermediaries;

g. regulating investment of funds by insurance companies;

h. regulating maintenance of margin of solvency;

i. adjudication of disputes between insurers and

intermediaries or insurance intermediaries;

j. supervising the functioning of the Tariff Advisory Committee;


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CONCLUSION

Growth of Indian economy is an investmentdriven growth

Opens a wide variety of investment

avenues Companies help to gain knowledge of

products and services

Achieve a better standard for near futurelife


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THANK YOU


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29978552 insurance sector ppt

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