ch 16 - insurance - ppt

7/31/2019 Ch 16 - Insurance - PPT

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Insurance Services

By : Gaurang Badheka

FSM, Sem - 3


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Risk and Uncertainty:

There is nothing certain in this world

Except the Death and the Tax

yet the death and tax are uncertain

as nobody knows

when will he die or when tax will change

- Benjamin Franklin

Insurance


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Insurance in broad terms may be

described as a method of sharing financial

losses of few from a common fund whoare equally exposed to the same loss.

What is insurance?


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Say 1000 motor cars valued @ 300000/- areobserved over a period of five years. On an

average say per year two are total loss by

accident. Then the total annual loss would be

Rs.600000. If the loss is to shared by all the

thousand owners then they have to contribute

Rs.600/-

The loss experience will be established bytaking the past experience, geographical area in

which the vehicles are used and density of

traffic.

What is insurance?


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Insurance is a contract by whichone party, for a considerationcalled premium, assumes a

particular risk of other party andpromises to pay him or hisnominee a certain or ascertainable

sum of amount on a specifiedcontingency.

What is insurance?


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Insurance is a contract by whichone party, for a considerationcalled premium, assumes a

particular risk of other party andpromises to pay him or hisnominee a certain or ascertainable

sum of amount on a specifiedcontingency.

What is insurance?


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It is a contract

One party (insurer) assumes the risk of

other party (insured)

Promises to certain or ascertainable sumof amount

Specific event

For a consideration called premium.

What is insurance?


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The business of Insurance is related to theprotection of economic value of assets.

The benefits from the asset may be direct or

indirect and Insurance ensures its protection.

Insurance is a mechanism that helps to reduce

the effects of adverse situations and indemnifies

to the extent of loss to the owner of the asset.

Assets are insured because they are likely to bedestroyed or become non functional by certain

events/ occurrences viz, PERILS.

Business of Insurance


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Perils are the events & the RISK is thepossible loss or damage.

Insurance helps in covering the Risk and

not the perils. Insurance is relevant only when there is

uncertainties.

Only economic consequences can beinsured. Non economic losses can not be

insured.

Business of Insurance


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Financial support to family of deceased. Medical Support.

Recovery of loss.

Means of savings.

Provision of Old age.

Facilitates economic development.

Source of employment.

Tax relief. Loans to Policy Holders

Less tension to businessmen

Importance of Insurance


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Basic principles

- Principle of co-operation

- Principle of probability

Principles of Insurance


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Legal principles- Principle of Utmost good faith

- Principle of Insurable interest

- Principle of Indemnity

- Principle of Causa Proxima

- Principle of Subrogation- Principle of contribution

Principles of Insurance


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Primary Providing protection

Collective risk bearing

Evaluating risk

Providing certainty

Secondary Preventing losses

Covering larger risk with small capital

Helps in development of larger industries

Other Saving and investment

Medium of earning foreign investment

Risk free trade

Functions of Insurance


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Life Insurance

General Insurance

- Marine Insurance

- Fire Insurance

- Liability Insurance

- Theft Insurance- Earthquake Insurance

- Flood Insurance

Types of Insurance


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General Insurance- Crop Insurance

- Personal Accident Insurance

- Travel Insurance- Cattle insurance

- Terrorism Insurance

Double Insurance

Reinsuance

Over / Under Insurance

Types of Insurance


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Whole life policy Endowment policy

Annuity policy

Joint life policy

Group insurance policy

Life insurance - types


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Voyage policy Time policy

Mixed policy

Valued policy

Unvalued policy

Floating policy

Block policy

Marine Insurance - types


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Composite policy Fleet policy

Port policy

Marine Insurance - types


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Valuation clause At and From clause

Sue and labour clause

Warehouse to warehouse clause Change of voyage

Touch and stay clause

Inchmaree clause Jettison

Memorandum clause

Marine Insurance - clauses


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Valued policy Specific policy

Average policy

Floating policy

Comprehensive policy

Consequential loss policy

Replacement policy

Fire Insurance - types


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Act only policy Third party policy

Comprehensive policy

Motor insurance


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Started in India in the year 1818 with theestablishment of the Oriental Life Insurance

Company in Calcutta.

The General insurance business in India, on

the other hand, can trace its roots to the

Triton Insurance Company Ltd., the firstgeneral insurance company established in

the year 1850 in Calcutta by the British.

Insurance in India


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44 insurance companies 22 life insurance companies

21 general insurance companies

1 national reinsurer

8 public sector.

36 private sector companies

Insurance players


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Public Sector National Insurance Company Limited www.nationalinsuranceindia.com

New India Assurance Company Limited www.niacl.com

Oriental Insurance Company Limited www.orientalinsurance.nic.in

United India Insurance Company Limited www.uiic.co.in

Private Sector

Bajaj Allianz General Insurance Co. Limited www.bajajallianz.co.in

ICICI Lombard General Insurance Co. Ltd. www.icicilombard.com

IFFCO-Tokio General Insurance Co. Ltd. www.itgi.co.in

Reliance General Insurance Co. Limited www.ril.com Royal Sundaram Alliance Insurance Co. Ltd. www.royalsun.com

TATA AIG General Insurance Co. Limited www.tata-aig.com

Cholamandalam General Insurance Co. Ltd.

Players General Insurance


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1956 - Life Insurance Corporation Act. All245 insurance companies were mergedinto one entity, the LIC.

1972- General Insurance Business Actnationalization of 100 general insurancecompanies, merging them into four

companies. National Insurance, New IndiaAssurance, Oriental Insurance and UnitedIndia Insurance

Insurance in India


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Filling up a proposal form Proof of Age

Medical Examination

Confidential Report of the agent

Acceptance of proposal

Issue of policy

Renewal Notice

Procedure


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Step 1 : Intimation to Insurance Firm.Step 2 : Assessment Of Loss.

Step 3 : Appointment of Surveyor.

Step 4 : Investigation.

Step 5 : Reporting.

Step 6 : Submission of Claim Form

Step 7 : Verification of Claim Proposal.

Step 8 : Appeal and Negotiations.

Settlement of claim- process


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The insurance sector in India dates back to1818when the first insurance company was

established the Oriental Life Insurance

Company , started by Anita Bhavsar at Calcutta.

This was followed in quick succession with the

establishment of Bombay Life Assurance

Company (1823)and Madras Equitable Life

Assurance Company (1829).In the generalinsurance business Triton Insurance Company

(1850) was the first to be established

Insurance in India


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The Indian Life Assurance Companies Act,1912

The Insurance Act, 1938

The Life Insurance Act, 1956

The General Insurance Business Act,

1972

Insurance Regulatory and DevelopmentAuthority Act, 1999

Actuaries Act, 2006

Acts


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To avoid monopolized (by the State run LIC andGICs) market.

Create awareness in urban areas about the needsand benefits of insurance.

To reduce the yawning gap between the needs ofcustomers and products being offered by the stateowned companies.

To mobilize funds from the economy for theinfrastructure development.

To provide multiple innovative products.

To provide better customers service from existingstate owned players.

Privatisation of Insurance sector


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Greater concern for the customer Newer products and services

Competition and quality consciousness

Cost effective Operations Restructuring of the public Sector

Consolidation of domestic insurance markets

Technology driven shift in product design Actual Operations and distribution; and

Convergence of Financial services

Current scenario


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Entries of foreign companies Change in the mindset

Challenges of HR issues

Marketing and distribution challenges

Technological up-gradation

Cost consciousness

Maintaining competitiveness

Operational challanges

Challenges to Insurance sector


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Untapped rural market Product innovation

Scale of operation

Political, environmental, social and legal

changes

Corporate Governance issues

Challenges to Insurance sector

ch 16 - insurance - ppt

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