a study on auto insurance in new india assurance

7/24/2019 A Study on Auto Insurance in New India Assurance

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The New India Assurance Co. Ltd., based in &umbai, is one of the five public

sector insurance companies in India. It is the 'largest general insurance company of

India on the basis of gross premium collection inclusive of foreign operations'. It

as founded by (orab Tata in )*)*, and nationali+ed in )*-. %reviously it as a

subsidiary of the eneral Insurance /orporation of India "I/#. 0ut hen I/

became a reinsurance company as per the IR(A Act )***, its four primary

insurance subsidiaries New India Assurance, 1nited India Insurance, 2riental

Insurance and 3ational Insurance got autonomy.

3e India Assurance provides &arine Insurance %olicy as ell as the shipping

/argo policy hich helps to recover the damage to the ships and the goods during

the travel from origin to the destination. This policy covers goods, freight and other

interests against loss or damage to goods hilst being transported by rail, road, sea

and4or air.


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OBJECTIES

i# To determine and analy+e the &arket %otential of the 3e India Assurance /o.

$td.

ii# To determine hether the customers are satisfied ith the auto insurance

policies of the company.iii#To kno the customer aareness regarding the 3e India Assurance /o. $td

and its products.iv# To study and determine the competitor position in the market.v# To kno the future plans of the people for buying the auto insurance policies.

Though this study is purely explorative in nature, it is brought ith a number of

limitations. The most outstanding among them could be listed as follos.i# Adequate secondary data are not available regarding financial aspects of

3e India Assurance /o. $td.ii# This study concentrates more on the role and performance of 3e India

Assurance /o. $td ithout considering the role played by the company in

life insurance sector.iii#This study does not analy+e the problems faced by the customers.iv# 5tudy of primary data is not available.

!EANIN" O# INSURANCE


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$Insurance is the equitable transfer of the risk of a loss, from one entity to another

in exchange for payment. It is a form of risk management primarily used to hedge

against the risk of a contingent, uncertain loss. An insurer, or insurance carrier, is a

company selling the insurance; the insured, or policyholder, is the person or entity

buying the insurance policy. The amount to be charged for a certain amount of

insurance coverage is called the premium. Risk management, the practice of

appraising and controlling risk, has evolved as a discrete field of study and

practice. The transaction involves the insured assuming a guaranteed and knon

relatively small loss in the form of payment to the insurer in exchange for the

insurer!s promise to compensate "indemnify# the insured in the case of a financial

"personal# loss. The insured receives a contract, called the insurance policy, hich

details the conditions and circumstances under hich the insured ill be

financially compensated.

Insurance is a form of risk management in hich the insured transfers the cost of

potential loss to another entity in exchange for monetary compensation knon as

premium. Insurance allos individuals, businesses and other entities to protect

themselves against significant potential losses and financial hardship at a

reasonably affordable rate. 6e say 'significant' because if the potential loss is

small, then it doesn!t make sense to pay a premium to protect against the loss. After

all, you ould not pay a monthly premium to protect against a 789 loss because

this ould not be considered a financial hardship for most. Insurance is a technique

herein a number of people, ho are exposed to similar risk, participate in the

scheme and contribute in the shape of periodic premiums. 5uch premiums are

received by the insurer ho is able to pay out of the premiums received by him, for

the losses of some of those ho have participated in the scheme. Thus it is

onderful technique of spreading and transfer or risks.


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:veryone that ants to protect themselves or someone else against financial

hardship should consider insurance. This may include

%rotecting family after one!s death from loss of income

:nsuring debt repayment after death

/overing contingent liabilities

%rotecting against the death of a key employee or person in your business

0uying out a partner or co


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%ISTORY O# INSURANCE

Turning to insurance in the modern sense "i.e., insurance in a modern money

economy, in hich insurance is part of the financial sphere#, early methods of

transferring or distributing risk ere practiced by /hinese and 0abylonian traders

as long ago as the -rd and =nd millennia 0/, respectively. /hinese merchants

travelling treacherous river rapids ould redistribute their ares across many

vessels to limit the loss due to any single vessel!s capsi+ing. The 0abylonians

developed a system hich as recorded in the famous /ode of >ammurabi, c.

)89 0/, and practiced by early &editerranean sailing merchants. If a merchant

received a loan to fund his shipment, he ould pay the lender an additional sum in

exchange for the lender!s guarantee to cancel the loan should the shipment be

stolen or lost at sea.

The business of life insurance in India in its existing form started in India in the

year)?)? ith the establishment of the 2riental $ife Insurance /ompany in

/alcutta. 5ome of the important milestones in the life insurance business in India

are

)*)= The Indian $ife Assurance /ompanies Act enacted as the first statute toregulate the life insurance business.

)*=? The Indian Insurance /ompanies Act enacted to enable the government to

collect statistical information about both life and non


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)*-? :arlier legislation consolidated and amended to by the Insurance Act ith

the ob@ective of protecting the interests of the insuring public.

)*8 =B8 Indian and foreign insurers and provident societies taken over by the

central government and nationali+ed. $I/ formed by an Act of %arliament, vi+. $I/

Act, )*8,ith a capital contribution of Rs. 8 crore from the overnment of India.

The eneral insurance business in India, on the other hand, can trace its roots to

the Triton Insurance /ompany $td., the first general insurance company

established in the year )?89 in /alcutta by the 0ritish.

5ome of the important milestones in the general insurance business in India are

)*9 The Indian &ercantile Insurance $td. set up, the first company to transact all

classes of general insurance business.

)*8 eneral Insurance /ouncil, a ing of the Insurance Association of India,

frames a code of conduct for ensuring fair conduct and sound business practices.

)*? The Insurance Act amended to regulate investments and set minimum

solvency margins and the Tariff Advisory /ommittee set up.

)*= The eneral Insurance 0usiness "3ationali+ation# Act, )*= nationali+ed the

general insurance business in India ith effect from )st Canuary )*-. )9 insurers

amalgamated and grouped into four companiesD vi+. the 3ational Insurance

/ompany $td., the 3e India Assurance /ompany $td., the 2riental Insurance

/ompany $td. and the 1nited India Insurance /ompany $td. I/ incorporated as

a company.


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Ut(ost "ood #aith

%rinciple of Ut(ost "ood #aith is a very basic and first primary principle of

insurance. According to this principle, the insurance contract must be signed by

both parties "i.e. insurer and insured# in an absolute good faith or belief or trust.

The person getting insured must illingly disclose and surrender to the insurer his

complete true information regarding the sub@ect matter of insurance. The insurer!s

liability gets void "i.e. legally revoked or cancelled# if any facts, about the sub@ect

matter of insurance are either omitted, hidden, falsified or presented in a rong

manner by the insured.

Insura)*e Interest

The principle of insurable interest states that the person getting insured must have

insurable interest in the ob@ect of insurance. A person has an insurable interest

hen the physical existence of the insured ob@ect gives him some gain but its nonence it is a responsibility of the insured to protect his insured

property and avoid further losses.

'rinci,*e O- Causa 'ro+i(a

%rinciple of Causa Proxima "a $atin phrase#, or in simple :nglish ords, the

%rinciple of %roximate "i.e. 3earest# /ause, means hen a loss is caused by more

than one causes, the proximate or the nearest or the closest cause should be takeninto consideration to decide the liability of the insurer. The principle states that to

find out hether the insurer is liable for the loss or not, the proximate "closest# and

not the remote "farest# must be looked into.

#or e+a(,*e < A cargo ship!s base as punctured due to rats and so sea ater

entered and cargo as damaged. >ere there are to causes for the damage of the

cargo ship < "i# The cargo ship getting punctured because of rats, and "ii# The sea

ater entering ship through puncture. The risk of sea ater is insured but the first

cause is not. The nearest cause of damage is sea ater hich is insured and

therefore the insurer must pay the compensation.


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>oever, in case of life insurance, the principle of Causa 'ro+i(adoes not apply.

6hatever may be the reason of death "hether a natural death or an unnatural

death# the insurer is liable to pay the amount of insurance.

TY'ES O# INSURANCE

1. Li-e Insurance

$ife insurance provides a monetary benefit to a decedent!s family or otherdesignated beneficiary, and may specifically provide for income to an insured

person!s family, burial, funeral and other final expenses. $ife insurance policies

often allo the option of having the proceeds paid to the beneficiary either in a

lump sum cash payment or an annuity. Annuities provide a stream of payments and


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are generally classified as insurance because they are issued by insurance

companies, are regulated as insurance, and require the same kinds of actuarial and

investment management expertise that life insurance requires. Annuities and

pensions that pay a benefit for life are sometimes regarded as insurance against the

possibility that a retiree ill outlive his or her financial resources. In that sense,

they are the complement of life insurance and, from an underriting perspective,

are the mirror image of life insurance. /ertain life insurance contracts accumulate

cash values, hich may be taken by the insured if the policy is surrendered or

hich may be borroed against. 5ome policies, such as annuities and endoment

policies, are financial instruments to accumulate or liquidate ealth hen it is

needed. In the 15, the tax on interest income on life insurance policies and

annuities is generally deferred. >oever, in some cases the benefit derived from

tax deferral may be offset by a lo return.

2. "enera* Insurance

Also knon as non


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insurer in return for a consideration "premium# agrees to indemnify the insured for

the financial loss hich the latter may suffer due to destruction of or damage to

property or goods, caused by fire, during a specified period. The contract specifies

the maximum amount, agreed to by the parties at the time of the contract, hich

the insured can claim in case of loss. This amount is not, hoever, the measure of

the loss. The loss can be ascertained only after the fire has occurred. The insurer is

liable to make good the actual amount of loss not exceeding the maximum amount

fixed under the policy.

A fire insurance policy cannot be assigned ithout the permission of the insurer

because the insured must have insurable interest in the property at the time of

contract as ell as at the time of loss. The insurable interest in goods may arise out

on account of "i# onership, "ii# possession, or "iii# contract. A person ith a

limited interest in a property or goods may insure them to cover not only his on

interest but also the interest of others in them.

!arine Insurance

&arine insurance basically covers three risk areas, namely, hull, cargo and freight.

The risks hich these areas are exposed to are collectively knon as '%erils of the

5ea'. These perils include theft, fire, collision etc. &arine /argo &arine cargo

policy provides protection to the goods loaded on a ship against all perils beteen

the departure and arrival arehouse. Therefore, marine cargo covers carriage of

goods by sea as ell as transportation of goods by land. &arine >ull &arine hullpolicy provides protection against damage to ship caused due to the perils of the

sea. &arine hull policy covers three


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!isce**aneous

As per the Insurance Act, all types of general insurance other than fire and marine

insurance are covered under miscellaneous insurance. 5ome of the examples ofgeneral insurance are motor insurance, theft insurance, health insurance, personal

accident insurance, money insurance, engineering insurance etc. &iscellaneous

Insurance refers to contracts of insurance other than those of $ife, Eire and &arine

insurance. It covers a variety of risks, the chief of hich are

a study on auto insurance in new india assurance

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