motor policy with reference to new india assurance company ltd

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Project on Motor Policy With Reference To New

India Assurance Company Ltd

CHAPTER I

INTRODUCTION

Insurance is a specialized type of a contract. It is agreement between two parties.

One party is insurance company who takes the insurance of other party known as

insured party. Premium is the consideration of the contract of insurance. The

insurer issues document in writing in the name of the insured which is called

policy. The insurer has to pay certain amount of the money to the insured, if

uncertain event takes place after taking the insurance and before the expire of the

policy. Insurance is a method of spreading and transferring of risk. Losses of

unfortunate people are shared by many people who are exposed to the same type ofrisk. Loss of assets for any reason deprives the owner of the expected benefit. Thus

insurance is a mechanism that helps to reduce the adverse consequences due to the

loss of assets.

The new India assurance company to be set up by an Indian was Indian Mercantile

assurance Co. Ltd., which was established in 1907. There emerged many a

assurance player on the Indian scene thereafter .The general assurance business

was nationalized after the promulgation of General Insurance Business

(Nationalization) Act, 1972. The post-nationalization general assurance business

was undertaken by the assurance Corporation of India (GIC) and its 3 subsidiaries

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Legally, no motor vehicle is allowed to be driven on the road without valid

insurance. Hence, it is obligatory to get the vehicle insured. Motor insurance

policies cover against any loss or damage caused to the vehicle or its accessories

due to the following natural and manmade calamities. Motor insurance provides

compulsory personal accident cover for individual owners of the vehicle while

driving. One can also opt for a personal accident cover for passengers and third

party legal liability.

1.1 OBJECTIVES OF THE STUDY

i) To determine and analyze the Market Potential of the New India Assurance Co.

Ltd.

ii) To determine whether the customers are satisfied with the Motor policy of the

company.

iii)To know the customer awareness regarding the New India Assurance Co. Ltd

and its products.

iv)To study and determine the competitor position in the market.

v) To know the future plans of the people for buying the policies.

1.2 REVIEW OF LITERATURES

SUJATADEV (2009):

The report on Indian Insurance Industry Forecast (2007-2009) recently published

by RNCOS it can be concluded that the market of life insurance in India is likely to

reach Rs.1684 billion by the next year. The major factors that determine the status

of life insurance industry are:

changing consumer behavior

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growth rate of GDP

changing socio economy demography

natural calamity

In April 2007, general insurance players were able to manage an increase of16%

whereas new businesses made a remarkable progress with an expansion by 49%.

A survey conducted by Insurance Regulatory & Development Authority reveals

the name of the major organizations and role played by them in shaping the present

status of Indian life insurance industry. The major profit making industries in this

regard are:

SBI Life

ICICI Prudential

LIC

However, agencies like Bajaj Allianz, ING Vysya and Reliance Life were unable

to contribute much to the profit making. Reports published by Business Standard

on 14th June 2007 showed that LIC is at the top of the pyramid by selling almost

15, 89,684 of its policies. There has been a rise of 57% in LIC`s new premium with

a value of Rs.2134 crore.

JACKBURKE (Insurance marketing, July 2004):

CROSS SELLING emphasis that people depend on insurance agents or brokers

for the selection of and buying of policies related to life, health, automobiles etc.

but it has been found that most agents or brokers specialize in selling policies

related only to particular field. The statistics showed that the average American

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had 7.2 insurance policies i.e., selling more than one policy to their client. This can

be specified as cross selling or multiline marketing. More policies per client mean

lower acquisition cost, higher client retention and greater profit.

WALTER DE OUDE AND RAJAGOPALAN KRISHNAMURTHY (health

insurance, Feb 2006):

The health insurance industry in India & its growing potential emphasis that

ensuring public health is the principal responsibility lay down by the Indian

constitution. The central government provides about 15% of the funding needs

mostly for national health programs. The family planning and healthcare initiatives

of the government have so far effective in reducing birthrates and improving

mortality rates. According to the WHO report published in 2002 India ranked 13 th

from the bottom in terms of public spending on health. Although Indias public

spending is low, overall health spending improved due to higher private spending.

Currently less than 15% of the Indian population has some kind of health insurance

cover.

1.3 HYPOTHESIS

i) The new technologies adopted by the New India Assurance Co. Ltd acts as a

tool for improving the performance of the company.

ii) It has reduced the role of other Private sector insurance companys & made the

Motor policy which is effective to the customers.

1.4 RESEARCH METHODOLOGY

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The secondary data are obtained mostly form books, journals, through website

officials reports periodicals brought by the Government of India in addition to

these; efforts would be made to collect as much information from the internet

about the Insurance Industries in India.

1.5 LIMITATION OF STUDY

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

limitations. The most outstanding among them could be listed as follows.

i) Adequate secondary data are not available regarding financial aspects of

New India Assurance Co. Ltd.

ii) This study concentrates more on the role and performance of New India

Assurance Co. Ltd without considering the role played by the company in

life insurance sector.

iii)This study does not analyze the problems faced by the customers.

Study of primary data is not available

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CHAPTER II

MEANING OF INSURANCE

Insurance is a specialized type of a contract. It is agreement between two parties.

One party is insurance company who takes the insurance of other party known as

insured party. Premium is the consideration of the contract of insurance. The

insurer issues document in writing in the name of the insured which is called

policy. The insurer has to pay certain amount of the money to the insured, if

uncertain event takes place after taking the insurance and before the expire of the

policy. In case of life insurance the claims is certain because the insurer has to pay

the policy amount to the insured together bonus at maturity. However, in case of

general insurance the claim is not certain. The insured party can claim he

compensation only if uncertain event takes place and the insured suffers any loss or

damage in monetary terms.

Insurance is a method of spreading and transferring of risk. Losses of unfortunate

people are shared by many people who are exposed to the same type of risk. Loss

of assets for any reason deprives the owner of the expected benefit. Thus insurance

is a mechanism that helps to reduce the adverse consequences due to the loss of

assets.

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Several insurances provide comprehensive coverage with affordable premiums.

Premiums are periodical payment and different insurers offer diverse premium

options. The periodical insurance premiums are calculated according to the total

insurance amount. Mainly insurance is used as an effective tool of risk

management as quantified risks of different volumes can be insured.

2.1 HISTORY

A brief history of the Insurance sector the business of life insurance in India in its existing

form started in India in the year 1818 with the establishment of the Oriental Life

Insurance Company in Calcutta. Some of the important milestones in the life

insurance business in India are:

1912: The Indian Life Assurance Companies Act enacted as the first statute to

regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to

collect statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with the

objective of protecting the interests of the insuring public .In 1956-245 Indian and foreign

insurers and provident societies were taken over by the central government and

nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital

contribution of Rs.5crores from the Government of India. The General insurance

business in India, on the other hand, can trace its roots to the Triton Insurance

Company Ltd., the first general insurance company established in the year 1850 in

Calcutta by the British.

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1907: The Indian Mercantile Insurance Ltd. Set up, the first company to transact all

classes of general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of India,

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

1968: The Insurance Act amended to regulate investments and set minimum

solvency Margins and Tariff advisory committee set up.

1972:The General Insurance Business (Nationalization) Act, 1972nationalized the

General insurance business in India with effect from 1st January 1973. 107 insurers

amalgamated and grouped into four companies viz. the National Insurance

Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance

Company Ltd, and the United India Insurance Company Ltd. GIC incorporated as a

company.

2.2 ORIGIN OF INSURANCE

Whenever there is uncertainty there is risk. We do not have any control over

uncertainties which involves financial losses. The risk may be certain events like

death, pension, retirement or uncertain events like theft, fire, accident; etc

.Insurance is a financial service for collecting the savings of the public and

providing them with risk coverage. It comes under service sector and while

marketing this service due care is taken in quality product and customer

satisfaction. The main function of the Insurance is to provide protection against the

possible chances of generating losses. The insurance sector in India has come a full

circle from being an open competitive market to nationalization and back to a

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liberalized market again. Tracing the developments in the Indian insurance sector

reveals the 360-degree turn witnessed over a period of almost two centuries.

2.3 NEED FOR INSURANCE

The business of insurance is related to the protection of the economic value of

assets. Every asset has value. The asset would have been created through the

efforts of the owner, in the expectation that, either through the income generated

there from or some other output, some of his needs would be met. In the case of a

factory or a cow, the production is sold and income generated. In the case of a

motorcar, it provides comfort and convenience in transportation. There is no direct

income. There is normally expected life time for the asset during which time it is

expected to perform. The owner, aware of this, can so manage his affairs that by

the end of that life time, a substitute is made available to ensure that the value or

income is not lost. However, if the assert gets lost earlier, being destroyed or made

non functional, through an accident or other unfortunate event, the owner and those

deriving benefits there from suffer. Insurance is mechanism that helps to reduce

such adverse consequences.

Assets are insured, because they are likely to be destroyed or made non-functional

through an accidental occurrence. Such possible occurrences are called perils. Fire,

floods, breakdowns, lightning, earthquakes, etc, are perils. The damage that these

perils may cause the asset, is the risk.

A human life is also an income generating asset. This asset also can be lost through

unexpectedly early death or made non-functional through sickness and disabilities

caused by accidents. Accidents may or may not happen. Death will happen, but the

timing is uncertain. If it happens around the time of ones retirement, when it could

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be expected that the income will normally cease, the person concerned could have

made some other arrangements to meet the continuing needs. But if it happens

much earlier when the alternate arrangements are not in place, insurance is

necessary to help those dependent on the income.

In the case of a human being, he may have made arrangements for his needs after

his retirement. Those would have been made on the basis of some expectations like

he may live for another 15 years, or that his children will look after him. If any, of

these expectations do not become true, the original arrangement would become

inadequate and there could be difficulties. Living too long can be as much a

problem as dying too young. These are risks which need to be safeguarded against.

Insurance takes care.

The concept of insurance has been extended beyond the coverage of tangible

assets. Exporters run the risk of the importers in the other country defaulting as

well as losses due to sudden changes in currency exchange rates, economic policies

or political disturbances. These risks are now insured. Doctors run the risk of being

charged with negligence and subsequent liability for damages. The amounts in

question can be fairly large, beyond the capacity of individuals to bear. These are

insured. Thus, insurance is extended to intangibles. In some countries, the voice of

a singer or the legs of a dancer may be insured; even through the advantages of

spread may not be available in these cases. The purpose of insurance is to

safeguard against such misfortunes by making good the losses of the unfortunate

few, through the help of the fortunate many, who were exposed to the same risk

but saved from the misfortune. Thus the essence of insurance is to share losses and

substitute certainty by uncertainty.

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2.4 FUNDAMENTAL PRINCIPLES OF INSURANCE

Insurance is a specialized type of contract. An insurance contract is also a

commercial contract. In India, all contracts are governed by the India Contract Act,

1872. Under this act, an agreement enforced by law is a contract. Such an

agreement must be entered into by two or more parties with intention of creating a

legally binding relationship. There are additional principles in that contract. The

following are the principles of insurances contract:

INSURABLE INTEREST

Insurable interest means that the person opting for insurance must have pecuniary

interest in the property he is going to get insured and will suffer financial loss on

the occurrence of the insured event. This is one of the essential requirements of

any insurance contract. Therefore, a person can go for insurance of only those

properties where he stands to benefit by the safety of the property, and will suffer

loss, damage, injury if any harm takes place to such property.

PRINCIPLE OF UTMOST GOOD FAITH

Like in other contracts, the insurance contract must be based on good faith. If the

insurance contract is obtained by way of fraud or misrepresentation it is void.

PRINCIPLE OF INDEMNITY

The insurance contract should always be a contract of indemnity only and nothing

more. According to this principle, the insurance contract should be such that in

case of loss due to the eventualities mentioned in the contract, the insured should

be neither better off nor worse off after receiving the insured amount. The main

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object of this principle is to ensure that the insured is not able to use this contract

for speculation or gambling.

PRINCIPLE OF SUBROGATION

The doctrine of subrogation is a corollary to the principle of indemnity and

applies only to fire and marine insurance. According to it, when an insured has

received full indemnity in respect of his loss, all rights and remedies which he has

against third person will pass on to the insurer and will be exercised for his benefit

until he (the insurer) recoups the amount he has paid under the policy. It must be

clarified here that the insurer's right of subrogation arises only when he has paidfor the loss for which he is liable under the policy and this right extend only to the

rights and remedies available to the insured in respect of the thing to which the

contract of insurance relates.

PRINCIPLE OFCONTRIBUTION

Where there are two or more insurance on one risk, the principle of contributioncomes into play. The aim of contribution is to distribute the actual amount of loss

among the different insurers who are liable for the same risk under different

policies in respect of the same subject matter. Any one insurer may pay to the

insured the full amount of the loss covered by the policy and then become entitled

to contribution from his co-insurers in proportion to the amount which each has

undertaken to pay in case of loss of the same subject-matter.

PRINCIPLE OFLOSSMINIMIZATION

According to the Principle of Loss Minimization, insured must always try his level

best to minimize the loss of his insured property, in case of uncertain events like a

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fire outbreak or blast, etc. The insured must take all possible measures and

necessary steps to control and reduce the losses in such a scenario. The insured

must not neglect and behave irresponsibly during such events just because the

property is insured. Hence it is a responsibility of the insured to protect his insured

property and avoid further losses.

PRINCIPLE OF CAUSA PROXIMA

Principle of Causa Proxima (a Latin phrase), or in simple English words, the

Principle of Proximate (i.e. Nearest) Cause, means when a loss is caused by more

than one causes, the proximate or the nearest or the closest cause should be taken

into consideration to decide the liability of the insurer. The principle states that to

find out whether the insurer is liable for the loss or not, the proximate (closest) and

not the remote (farest) must be looked into.

FOREXAMPLE: - A cargo ship's base was punctured due to rats and so sea water

entered and cargo was damaged. Here there are two causes for the damage of the

cargo ship - (i) The cargo ship getting punctured because of rats, and (ii) The sea

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

cause is not. The nearest cause of damage is sea water which is insured and

therefore the insurer must pay the compensation.

However, in case of life insurance, the principle of Causa Proxima does not

apply. Whatever may be the reason of death (whether a natural death or an

unnatural death) the insurer is liable to pay the amount of insurance

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2.5 INSURANCE INDUSTRY CLASSIFICATION

1. LIFE INSURANCE

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Life insurance provides a monetary benefit to a decedent's family or other

designated beneficiary, and may specifically provide for income to an insured

person's family, burial, funeral and other final expenses. Life insurance policies

often allow 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

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 will outlive his or her financial resources. In that sense,

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

are the mirror image of life insurance. Certain life insurance contracts accumulate

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

which may be borrowed against. Some policies, such as annuities and endowment

policies, are financial instruments to accumulate or liquidate wealth when it is

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

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

tax deferral may be offset by a low return.

2. GENERAL INSURANCE

Also known as non-life insurance, general insurance is normally meant for a short-

term period of twelve months or less. General insurance means managing risk against

financial loss arising due to fire, marine or miscellaneous events as a result of

contingencies, which may or may not occur. Recently, longer-term insurance agreements

have made an entry into the business of general insurance but their term does not

exceed five years. General insurance can be classified as follows:

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Fire Insurance

Fire insurance provides protection against damage to property caused by accidents

due to fire, lightening or explosion, whereby the explosion is caused by boilers notbeing used for industrial purposes. Fire insurance is a contract under which the

insurer in return for a consideration (premium) agrees to indemnify the insured for

the financial loss which 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, which

the insured can claim in case of loss. This amount is not , however , 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 without the permission of the insurer

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

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

on account of (i) ownership, (ii) possession, or (iii) contract. A person with a

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

interest but also the interest of others in them.

Marine Insurance

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

The risks which these areas are exposed to are collectively known as "Perils of the

Sea". These perils include theft, fire, collision etc. Marine Cargo: Marine cargo

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

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

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goods by sea as well as transportation of goods by land. Marine Hull: Marine hull

policy provides protection against damage to ship caused due to the perils of the

sea. Marine hull policy covers three-fourth of the liability of the hull owner (ship-

owner) against loss due to collisions at sea. The remaining 1/4th of the liability is

looked after by associations formed by ship-owners for the purpose (P and I clubs).

Miscellaneous

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

insurance are covered under miscellaneous insurance. Some of the examples of

general insurance are motor insurance, theft insurance, health insurance, personal

accident insurance, money insurance, engineering insurance etc. Miscellaneous

Insurance refers to contracts of insurance other than those of Life, Fire and Marine

insurance. It covers a variety of risks, the chief of which are:-

Personal Accident insurance: - Personal Accident insurance is insurance for

individuals or groups of persons against any personal accident or illness. The risk

insured is the bodily injury resulting solely and directly from accident caused by

violent, external and visible means. In India this type of insurance is done by the

General Insurance Corporation. A contract of personal accident insurance is not a

contract of indemnity and the insurer has to pay a fixed sum of money on the death

or total disablement of the insured or provide medical benefits for recovery from

the injury. If risks against certain specified diseases are also covered, the policy is

known as 'Personal Accident and Sickness Insurance.

Motor Vehicle Insurance: - under it, a personal or commercial vehicle is

subjected to combined insurance against the risks of :- (i) loss or damage to the

motor vehicle and its accessories on account of accident or theft; (ii) death of or

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injury to the owner or passenger of the vehicle due to accident; (iii) damages

payable to third parties by the owner of the vehicle for accident. A comprehensive

insurance policy may be taken to cover all these risks. Insurance against the first

two types of risks is optional. But every owner of motor vehicle is required to take

out an insurance policy to cover the third party risks under the Motor Vehicles Act,

1956. Such a policy is known as 'third party insurance or liability insurance'. Under

such a policy, the third party who has suffered any loss can sue the insurer directly

even though he was not a party to the contract of insurance. This policy provides

insurance cover to owners of the vehicle, financiers or lessee, who have insurable

interest in a motor vehicle.

Fidelity Insurance: - Under it, the insurer undertakes to compensate the insured

i.e. the employers against the losses suffered by him due to the employees. The

losses may be due to fraud, dishonesty, and misappropriation of funds, goods or

damages to property caused by the employees. In order to avail the protection

under it, the employer is required to provide all material facts about their

employees to the insurer and also, notify all changes in the condition of their

service.

Credit Insurance: - Credit Insurance is a policy taken to cover the loss which may

arise due to bad debts or non-payment of dues by the debtors. It provides

protection to businessmen, who sell goods on credit terms while substantially

reducing the overall risk of exposure to non-payment. It protects them against

losses arising out of insolvency of their debtors. It thus enables a business to take

advantage of peak and cyclical selling periods and to safely expand into new

product lines or territories.

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Travel insurance: - Travel insurance provides protection cover to all those

individuals travelling outside India against risks such as loss of baggage, travel

related accidents including injuries, illnesses and medical emergencies requiring

hospitalization treatment. In India, this insurance policy has become popular

among International travelers.

2.6 FOUR IS OF INSURANCE SERVICE

The 4 Is refers to the different dimensions/ characteristics of any service. Unlike

pure product, services have its own characteristics and its related problems. So the

service provider needs to deal with these problems accordingly. The serviceprovider has to design different strategies according the varying feature of the

service. These 4 Is not only represent the characteristics of different services but

also the problems and advantages attached to it.

These 4 Is can be broadly classified as:

Intangibility

Insurance is a guarantee against risk and neither the risk nor the guarantee is

tangible. Hence, insurance rightly come under services, which are intangible

.Efforts have been made by the insurance companies to make insurance tangible to

some extent by including letters and forms.

Inconsistency

Service quality is often inconsistent. This is because service personnel have

different capabilities, which vary in performance from day to day. This problem of

inconsistency in service quality can be reduced through standardization, training

and mechanization.

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Inseparability

Services are produced and consumed simultaneously. Consumers cannot and do

not separate the deliverer of the service from the service itself. Interaction between

consumer and the service provider varies based on whether consumer must be

physically present to receive the services.

Inventory

No inventory can be maintained for services. Inventory carrying costs are more

subjective and lead to idle production capacity. When the service is available but

there is no demand, cost rises as, cost of paying the people and overhead remains

constant even though the people are not required to provide services due to lack of

demand.

2.7 ADVANTAGES & DISADVANTAGES OF INSURANCE

ADVANTAGES

REASONABLE PROFIT

The businessmen can earn a reasonable profit for their businesses. The insurance

can help them to earn the same rate of profit if their business fails to generate

income.

SENSE OF SECURITY

There are many chances of losses in a business. But due to insurance, the risk of

losses is transferred to insurance company and it gives the sense of security to

businessman.

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EMPLOYMENT INCREASE

The insurance companies provided the jobs to thousands of people. In this way the

problem of unemployment is reduced.

PROTECTION OF PROPERTY

Due to insurance the personal and business property is protected from natural

losses such as accident, fire, etc.

SOLVE THE SOCIAL PROBLEM

Insurance is useful device for solving the social problems. In cash of death

provides finance to his family compensation is available to overcome the industrial

injuries and road accident.

FAVORABLE BALANCE OF PAYMENT

The insurance of business is an invisible export and it provides sufficient

contribution toward the balance of payment

EQUITABLE PREMIUM

The large policy holders provide large funds and small policy holders pay less

money in common funds. In the way the amount of premium becomes equitable.

RESEARCH FACILITIES

The insurance companies can conduct research about the rate of accidents, death

and losses faced by business units.

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LOW PRICE

The risk of loss is covered by the insurance policy. In the way insurance companies

help the business to sell their products as low prices.

SPREAD OF RISK

A large number of persons get marine, fire, life insurance policies and pay

premiums to the insurance companies whenever a loss occurs, it is compensated

out of the funds of the insurers. The loss is spread among a large number of policy

holders.

PROMOTES ECONOMIC GROWTH

Insurance contributes to the efficiency of the business and promotes economic

growth and development.

GIVES SENSE OF SECURITY

At every moment there is a chance of loss in business. Due to insurance risk is a

transferred to the insurance company and gives the sense of security to

businessman.

PROMOTES BUSINESS COMPETITION

Insurance also protects the small industrial units and also provides credit facility.

So competition with the big firms increase which is very useful the customer.

DISADVANTAGES

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Term insurance provides coverage only for a limited period of time,

although some term policies can be renewed indefinitely.

Premium rates are guaranteed only until the end of the term. Depending on

the policy, premiums may be level for a period of 1, 5, 10, 15, 20, 25, or 30

years and then cease without any renewal option, or offer continual renewals

at a higher premium rate.

Deteriorating health can trap you in a policy with rapidly increasing

premiums.

CHAPTER III

MOTOR INSURANCE - AN ANALYSIS

Vehicle insurance (also known as auto insurance, GAP insurance, car insurance, or

motor insurance) is insurance purchased for cars, trucks, motorcycles, and other

road vehicles. Its primary use is to provide financial protection against physical

damage and/or bodily injury resulting from traffic collisions and against liability

that could also arise there from. The specific terms of vehicle insurance vary with

legal regulations in each region. To a lesser degree vehicle insurance may

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additionally offer financial protection against theft of the vehicle and possibly

damage to the vehicle, sustained from things other than traffic collisions.

Auto Insurance in India deals with the insurance covers for the loss or damage

caused to the automobile or its parts due to natural and man-made calamities. It

provides accident cover for individual owners of the vehicle while driving and also

for passengers and third party legal liability. There are certain general insurance

companies who also offer online insurance service for the vehicle.

Auto Insurance in India is a compulsory requirement for all new vehicles used

whether for commercial or personal use. The insurance companies have tie-upswith leading automobile manufacturers. They offer their customers instant auto

quotes. Auto premium is determined by a number of factors and the amount of

premium increases with the rise in the price of the vehicle. The claims of the Auto

Insurance in India can be accidental, theft claims or third party claims. Certain

documents are required for claiming Auto Insurance in India, like duly signed

claim form, RC copy of the vehicle, Driving license copy, FIR copy, Original

estimate and policy copy.

3.1 NEED FOR MOTOR INSURANCE

We need car insurance because its mandatory its the law. For any vehicle to

drive on Indian roads, it must have a valid insurance policy that at a minimum

covers the cost of damage that you might cause to other people or vehicles.

Rather than have to pay from our own pocket, if we have a valid car insurance

policy, the insurer will assume the liability, as long as the damage is covered under

the terms of the insurance contract and there is no case of fraud.

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Situations where a car insurance policy can cover costs are damages arising from

an accident, theft, fire and any natural calamities like flood, earthquake, or cyclone.

Car insurance policies are valid only for a year and need to be renewed annually.

Even though the law requires every car to have a valid policy, the reality is that

there are still lacs of vehicles in India that are not insured. Even the cost of repairs

would be exorbitant. In case of hospitalization, the cost can even go up. It would

be a great burden for an individual to bear his loss and hence the insurance

company can indemnify against such losses and the financial liability.

This is because people want to save money by not paying insurance and thepolicing system to check if every car is insured is not perfect. Nevertheless, its

worth spending a few thousand rupees to get car insurance, so that we dont put

our self under any out of pocket risk if we are in the unfortunate situation of an

accident or injury.

3.2 IMPORTANCE OF MOTOR INSURANCE

Just as buying car is an inescapable process, getting a motor insurance India plan is

crucial too. We definitely need one to ensure absolute security for our car and

timely financial assistance during emergencies. However, it is important to make

sure that the insurance comes from the right source. Comparing a lot of insurance

quotes online will certainly help us in this respect. The motor insurance plan is an

obligation to all car owners irrespective of the type and age of our vehicle. These

plans are intended towards ensuring security to our car under various emergency

situations. These plans are widely available online these days. Comparing quotes is

the best way to make sure you reach to the most trusted company in India.

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These days, people are leading a busy life. They have to accomplish multiple tasks

in a day and the ever increasing responsibilities related to family, work and society

have left them with no time. They are buying cars to save time during

transportation and feel the comfort while moving around on road. Just as buying

car is inescapable, a motor insurance plan too is an obligation. With rapid increase

in the number of accidents on road and theft of cars, it has become a compulsion

for motor owners to buy a car A Car Insurance as we all know is an arrangement

between the Insurer and the Vehicle Owner wherein, the insurer provides coverage

against any financial loss happening because of damage to the car. This is

applicable in situations where the damage has been caused either through an

accident or because of any natural calamity or any liability that could result as a

part of accident or theft.

Driving a vehicle at the time of stress is seriously not recommended. Nobody even

drives at the time of stress. Here comes the role of insurance company and they

take care of your needs in the perfect manner. To be benefited by such plans we

need to contact the concerned issuer and also you need to understand the steps

involved in the plans.

Theyll be educating us on some of the finer aspects that are very much associated

with any Auto insurance plans. Theyll clear your concept and make you

understand it importance in perfect manner.

If we will pay attention to the history of Automobile insurance and compare it withthe present day, then we will understand that number of people has been increased

manifold having auto insurance. It very much suggests that people have understood

the importance of auto insurance plan.

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One phenomenon that has been very clearly noticed is increase in vehicles

numbers on the road. That surely demands extra attention, and also drivers need to

be highly cautious so that we can reach safely. Single mistake can cost our life or

some serious damage. It could be very much disastrous for both people in the car

as well as for our car. We might be lucky but chances of your car to be lucky are

very less. Then its just the nice insurance plan that can rescue us.

3.3 MOTOR VEHICLE ACT

The motor vehicle act was first introduced in 1939 and was revamped in 1988.

According to the new Act all motor vehicles that ply in public places are to be

compulsorily insured.

The Act covers the following liabilities:

1. Any liability that arises in respect of damage or bodily injury to any person

including the owner of the vehicle or the authorized person in the carriage.

2. Any liability that is insured in respect of damage to any property of a third party.

3. Liability incurred in respect of the death or bodily injury of any passenger of a

public service vehicle.

4. Liability that arises under the Workmens Competition Act, in respect of injury

or death of:

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Workers carried in a goods vehicle.

Conductor or ticket examiner.

A paid driver of the vehicle.

5. Liability for bodily injury or death of passengers who are carried for reward or

hire by reason of a contract of employment.

6. The policy should carry a NO FAULT liability limited to a sum assured rs

50,000 in case of death rs 25,000 in case of permanent disability and rs 6,000 in

case of damage to any property.

3.4 TYPES OF MOTOR INSURANCE

The types of motor insurance are usually two types i.e. Third Party Liability Cover

& Comprehensive Cover policy which are described below:

1. Third Party Liability:

As the name suggests it covers you against any legal liability resulting from

accident of your vehicle. The coverage includes death, injury or property

damage to third party. This cover does not include damage to the vehicle. A

Third Party Liability cover is legally mandatory in India under the Motor

Vehicles Act.

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Coverage's in a Third Party Liability

PolicyGeneral Exclusions

Liability is covered for an unlimited amountwith respect to death or injury and damage to

third party property for up to Rs.7.5 lakhsunder commercial and private car and up to

Rs.1 lakh for two wheelers.

Damage to your personal property

Legal protection for death or injury claimsfrom third parties, including occupants of your

vehicle

Legal protection for damage tothird party property

Personal accident benefits for you, your paiddriver and occupants of your vehicle

Legal costs and expenses

Protection of your legal liability towards yourpaid driver


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2. Comprehensive Cover Policy:

Comprehensive cover is designed to offer protection to you and your vehicle.

A typical comprehensive cover comprises of- firstly, damage to your vehicle,

i.e., any loss or damage caused to your vehicle or its accessories due to natural

and manmade calamities as defined in the scope of coverage; Secondly, a third

party legal liability cover and lastly; A personal accident cover to driver

(owner) of the vehicle for up to Rs.2 lakhs for a premium of Rs.100.

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Coverage's in a

Comprehensive PolicyGeneral Exclusions

Accidents & external damage Wear & tear, depreciation,mechanical or electrical breakdown

Damage due to Fire &explosion, Storm and Flood

Driving without valid driving license

Burglary / Theft Damaged caused consequential loss

Damage in Transit A voluntary excess (if opted)

Malicious act including Riots& strikes

Loss due to vehicle being driven by aperson under the influence of alcohol

or drugs at the time of the loss

Natural calamities likeEarthquake


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3.5 BENEFITS OF MOTOR INSURANCE

It is important to get motor insurance India. This will works towards protecting our

car from all kinds of perils. The motor insurance facility is also available these

days. We can get the cheapest car insurance plan via comparing quotes.

Motor insurance is extensively known as vehicle or motor assurance. It is projected

towards the repayment of expenditures sustained by the insured individual towards

the following:

Repairs

Theft

Accidents

Normal wear and tear

Emergencies

Many other problems

KEY BENEFITS OF CAR INSURANCE

Car insurance offers multiple benefits:

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Coverage against loss of or damage to the vehicle insured

Coverage against loss or damage to your vehicle caused by

Theft

Fire, Explosion, Self Ignition, Lightning

Riots, Strikes or act of terrorism

Any Natural Calamity

Liability to Third Parties, arising out of an Injury or Death of a third party

and Property Damage

Personal Accident Cover For Driver.

3.6 VEHICLE CLASSIFICATION

Two of the most important factors that go into determining the underwriting riskon motorized vehicles are: performance capability and retail cost. The most

commonly available providers of auto insurance have underwriting restrictions

against vehicles that are either designed to be capable of higher speeds and

performance levels, or vehicles that retail above a certain dollar amount. Vehicles

that are commonly considered luxury automobiles usually carry more expensive

physical damage premiums because they are more expensive to replace. Vehicles

that can be classified as high performance autos will carry higher premiums

generally because there is greater opportunity for risky driving behavior.

Motorcycle insurance may carry lower property-damage premiums because the

risk of damage to other vehicles is minimal, yet have higher liability or personal-

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injury premiums, because motorcycle riders face different physical risks while on

the road. Risk classification on automobiles also takes into account the statistical

analysis of reported theft, accidents, and mechanical malfunction on every given

year, make, and model of auto.

3.7 COMPREHENSIVE MOTOR INSURANCE COVER

This type of insurance covers all the risks covered in the Motor Vehicles Act (as

above), plus loss or damage caused to the vehicle due to:

Accident

Fire, Explosion, self-ignition, lightning

Burglary, house-breaking, theft

Riots & strikes

Earthquakes

Flood, typhoon, hurricane, storm, cyclones

Malicious acts

Terrorism

Transit by rail/road. air, waterways

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Also included is the Towing charge (up to Rs.1, 500/- for private vehicles and

Rs.2, 500/- for commercial vehicles) incurred due to accident to the vehicle.

Exclusions to the Comprehensive Insurance Cover

this insurance does not cover loss or damage caused due to:

(a) Driver being under intoxication

(b) Vehicle being driven by a person not holding an effective, valid license.

It also does not cover:

(a) Damage to tyres (unless the vehicle is also damaged).

(b) Wear & tear, mechanical breakdown

3.8 SELECTION OF SUM INSURED

The sum insured of a vehicle in a Motor Policy is referred to as the I.D.V., which

stands for Insured's declared Value.

In case of theft of vehicle or if the vehicle is totally damaged and beyond repairs in

an accident, the claim amount payable will be determined on the basis of the IDV

The IDV of the vehicle is to be fixed on the basis of manufacturer's listed selling

price of the brand and model of the vehicle proposed for insurance at the

commencement of insurance / renewal and adjusted for depreciation as per

schedule.

IDV of vehicle which is beyond 5 years of age and of obsolete models of the

vehicles (i.e. models which the manufacturers have discontinued to manufacture) is

to be determined on the basis of an understanding between insurers and insured.

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PREMIUM CHARGES

Depending on the jurisdiction, the insurance premium can be either mandated by

the government or determined by the insurance company, in accordance with a

framework of regulations set by the government. Often, the insurer will have more

freedom to set the price on physical damage coverages than on mandatory liability

coverages.

When the premium is not mandated by the government, it is usually derived from

the calculations of an actuary, based on statistical data. The premium can vary

depending on many factors that are believed to have an impact on the expectedcost of future claims. Those factors can include the car characteristics, the

coverage selected (deductible, limit, covered perils), the profile of the driver (age,

gender, driving history) and the usage of the car (commute to work or not,

predicted annual distance driven).

Factors Affecting Car Insurance Premium in India

Cars and two wheelers have become a necessity in todays lifestyle. It has multiple

utility. It can be used for business which you have set up after years of hard work.

Therefore it is important to make an informed choice when you are buying one.

This section deals with the information you need regarding vehicle insurance. It

helps you choose the car insurance that is just perfect for you. It provides tips

which can be referred to while buying low cost car insurance.

At times car insurance can be confusing and difficult to understand. One has to

follow certain guidelines while buying an insurance policy. Always shop around

for the lowest car insurance quote. If you are unable to find one, then use our state

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of the art comparing system. Our Comparison system gives you the best way to

shop for cheapest car insurance.

There are innumerable car insurances available in the market with different cost

and benefits. But how do you figure out which is the most suitable one for you.

Well it all depends on your requirements. What all you wish to cover under the

benefit? It is advisable to go for a policy which covers almost every aspect that

might incur loss of a huge sum. There are many other factors which help in

determining the exact insurance that youre car needs and the premium you have to

pay.

Let us view what these factors are, that determine the insurance needs and the

premium.

1. Car information:

Make of the Car like Hyundai, Mercedes, Honda, etc.

Class of the car like SUV, Sedan, Family car, etc.

Model of the car like Escort, Fiesta, Fusion, Hyundai, 7 series

Car by Fuel type such as petrol, diesel, LPG, etc.

Year of manufacturing of car

Place of registration of car

Current showroom price of the car.

Number of Kilometers used.

Modifications done on a car.

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2. Drivers age and experience affects the premium amount of the car insurance

policy.

3. Higher voluntary excess also reduces the Insurance premium. Its the amount the

insured volunteers have to pay in case of any claim.

4. Coverage level of the insurance is a major factor in determining the premium

you may have to pay out. The more coverage you opt for higher will be the

premium and vice versa.

Typical Ways to Reduce Your Car Insurance Premium

Save big bucks by shopping around for cheap car insurance. Our analysis shows a

big gap between the most expensive and cheapest policies in India. However,

people often pay according to the amount of cover that they get. Other than

shopping around, there are ways to get cheap auto insurance. Following are top 10

ways to get cheap car/auto insurance:

1. Car insurance premium increases depending on the number of luxury

gadgets we add to like night vision, ultrasound sensors, etc.

2. Facilities like immediate assistance from the insurer in case of car

breakdown will add to your premium cost.

3. The amount of voluntary excesses us to choose the pay also determines thecost of your policy to some extent. This refers to the amount that you will

have to pay in case of an accident. Thus, higher the voluntary excess, the

lower will be the insurance premium.

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4. Insurance for loss of personal belongings, car locks, etc. adds to the

premium cost.

5. A No Claim Bonus can also fetch us with some good amount of discount.

These discounts increase as the NCB years increase. Obviously, there is an

upper limit to NCB.

6. Nominating drivers or restricting the use of your car to drivers of certain age

will also help you reduce the premium.

7. The safety and anti-theft features our car has like airbags, antilock brakes

and immobilizers should help us to get a better premium because these are

used for safety reasons.

8. Insurance companies may offer discounts to the insured owning more than

one policy with the same company.

9. Avoid lapses of the policy; it might disqualify the discounts you otherwise

have benefited from.

10.If you have a garage, then start sheltering the car in the garage, such vehicles

attract discount.

The job is not yet over, we might have managed to get a good reduced premium

this year but what happens next year? Well, just remember few things and observe

it as measures to control your insurance premiums. Let us list them below.

1. First and foremost drive safe!

2. If we are changing your vehicle, consider a more traditional car. It will not

only save you a fortune on fuel but a ton on your insurance premiums!

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3. Dont add younger or inexperienced drivers to your insurance, it may let

your premiums go sky high!

CLAIMS

In the event of an incident giving rise to a claim under the policy, the following

steps should be taken:

In case of accidental damage to the vehicle:

1. Immediate intimation to the nearest office, which will issue a Claim Form.

2. Claim Form duly filled in to be submitted along with copy of Registration

Certificate and driving license of the driver of the vehicle at the time of

accident as also estimate of repairs.

3. Vehicle will be surveyed by a Surveyor, appointed by the insurance

company, who shall submit his report to the company. In case of a major

damage to the vehicle, a spot survey, at the site of accident, would also be

arranged by the company.

4. Final bills/cash memos are to be submitted duly signed by the insured.

5. Salvage of the damaged parts may be required to be deposited with the

insurance company after approval of the claim.

In case of theft of the vehicle:

1. Lodge an F.I.R. with the police immediately.

2. Inform the policy issuing office with a copy of FIR.

3. Submit the Final Police Report as soon as it is received.

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4. Extend full cooperation to the surveyor and/or investigator appointed by the

company.

5. After approval of the claim by the company, get the Registration Certificate

transferred in the name of the company, hand over the keys of the vehicle,

and submit a letter of Subrogation and Indemnity on stamp paper duly

notarized.

In case of liability claim:

1. Inform insurance company immediately of any incident likely to give rise to

liability claim.

2. On receipt of summons from Court, the same should be sent to the company

immediately.

Claim Form duly filled in along-with copies of Registration Certificate, Diving

License, FIR are to be submitted.

Fraud Car claims and Auto Insurance Fraud in India

Insurance fraud has been in existence since the beginning of insurance as a

commercial enterprise. Insurance crimes range in severity, from slightly

exaggerating claims to deliberately causing accidents or damages. Insurance fraud

poses a significant problem and the government is making efforts to deter such

activities. Fraud car claims cost the insurance industry a huge sum every year.

About 90 percent of auto insurance fraud is the result of claims padding (which

means to add damages, injuries and fictitious passengers to insurance claims). The

other 10 percent of insurance fraud comes from organized accident-staging.

Innocent victims like private motorists, truck drivers, etc. are targeted by organized

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auto-accident rings. These rings make an accident happen by setting up innocent

people for a rear-end collision. Reporting that your car has been stolen when you

really hid it in the woods is a good example of false claim. Even if one never files a

claim, lying on the application for insurance is still accountable for fraud case.

Using forged documents for claiming is also a fraud case.

Here are a few tips on how to deal with potential scammers and other enemies of

insurance claims:

1. Get a police report even for a minor accident. This makes it difficult for

cheaters to file a false claim if they have to deal with the facts of an officersreport.

2. It is advisable to keep a camera in your glove box. A picture is worth a

thousand lies and can stop a scammer from making fraud claims.

3. Call your own tow truck and avoid business with crooked repair shops.

Motor Insurance Claim Is Rejected

It is common for motor insurance companies to reject large number of car

insurance claims or to reduce their payment values. Generally they would do this,

only if they have genuine reasons. Filing claims and receiving the monetary

benefits could be a difficult task. There are several factors that can result in claims

rejection:

1. The insurer may come to the conclusion that driver was largely or entirely at

fault in case the claim is related to theft from the vehicle or of the vehicle

itself. The car insurance policy may contain a clause which invalidates the

claim.

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2. The insurer may call off the claim if the information provided during

application was inaccurate or false.

3. Another reason why a claim may get rejected is that the customer may have

taken an insurance policy for a normal private car while it was actually used

for commercial purposes. When a customer has a taxi, he should use a policy

which is designed for taxis.

4. In case of partial damages, which occur as a result of accidents, a customer

often gets claims lesser than demanded because of the depreciation of the

vehicle. So, an insurance company puts a car back in the same position as it

was prior to the damage of the vehicle. For example, if the engine of a five-

year old Maruti car is damaged, the insurance company is liable to pay the

customer equivalent to five year old engine. If it is replaced with the new

one, then the depreciation is deducted as per the tariffs so as to bridge the

gap between the cost of the new engine and five-year old engine.

5. If you are unable to provide receipts to backup claims of theft of items from

your vehicle.

6. If the value of the car is considerably less than the money you've invested in

restoration or enhancements.

In any insurance policy your insurer expects you to disclose all the information that

could be of importance to them. You are obliged to do this even if the detail is not

requested. This process is known as utmost good faith. Insurance companies

often use this extremely wooly approach to sharing information to justify rejecting

or downscaling claims. If such situations arise with your car insurance claim, there

are certain important points to remember:

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o The small print of your policy carries a lot of weight, read it thoroughly

before, during and after your claim.

o Keep the accurate records of conversations and correspondence along with

all the receipts backing up your claim.

The payout figure announced by your insurance company is not a set in stone.

Rather than just accepting the amount on offer you are perfectly entitled and

rightful to question the payout. And you can put forward your case for why it

should be increased.

Road Traffic Accident Claims

Accident is inevitable and anyone of us can be its victim. Car accident can be of

different nature, it can be due to collision or non collision. An accident can bring

life to an end. If you find yourself in such circumstances, do the following. Firstly

calm down, secondly get medical attention or help if necessary, thirdly respect the

police and their efforts. Do not make an immediate statement to the police or to

any insurance company. Let the police know that you will speak to them later after

you have calmed down and sought medical attention. Lastly contact a professional

to make sure before proceeding with your matter further.

It means that if the party who injured you can show that you were in some way at

fault in causing the accident, then your claim can be denied. Speed can be used as

contributing factors to deny an injury claim. Even if the other party is more at fault

than you, it can jeopardize your claim. Most people are not looking at their

speedometer at impact. Therefore, mostly people guess at their speed. At the scene

of an accident, you may be confused and shocked, be in pain and you may be

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angry. Mostly you may not be accurate and the insurance company will rely on that

statement to evaluate your case. Just avoid making any statement at such a painful

time. Visit the closest hospital and get a thorough check up done. Make your

statement at a later date mainly after you have had time to calm down and reflect.

During this course get in touch with your insurer and confirm the coverage and the

claim.

Our small statement can reduce our chances of getting the claim processed. Keep

the steps mentioned below in mind to avoid complexities in case of car accident.

1. Do not give any statement immediately after the accident.

2. Do not sign anything unless you fully understand what it is.

3. Do not accept the blame if we think it is not our fault.

4. Do not lose our temper.

5. Do not use bad language.

6. Do not behave aggressively.

3.9 CAR INSURANCE GLOSSARY

Like all other industries, insurance industry also use specific terms that is often

difficult for a layman to understand the meaning. In the following we have tried to

simplify the terms as much as possible.

REPRESENTATIVE

An insurance sales person; Independent representative who works for or on behalf

of an insurance company; Broker is an insurance sales person who deals with

agents and companies to find the right insurance policy for the customer. Claim -

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An insurance owner requests the insurer to pay the loss covered under a policy.

Your claims to your company are "first-party claims. When a person claims against

the other person's insurance company it is called "third-party claims."

COLLISION COVERAGE

Optional insurance covers the damage to our car caused by collision with another

car or object. Is frequently required if we have a car loan.

COMPREHENSIVE PHYSICAL DAMAGE COVERAGE

Optional insurance covering damage to your car caused by something other than a

collision or the car rolling over, such as fire, theft, vandalism, flood or hail Is

frequently required if you have a car loan. Conditions - These are part of an

insurance policy that states the obligations of the insurance owner and those of the

insurance company in order for the policy to be in effect.

INSURED DECLARED VALUE (IDV)

The premium is calculated on the basis of the IDV of the vehicle, which is

basically the depreciated value of the vehicle agreed upon by the insurer and the

policyholder. The IDV of a vehicle reduces with age.

LIABILITY COVERAGE

Offers you and any other party involved in an accident a significant sum to cover

mainly the medical expenses Normally these figures are divided into three parts,

first one represents the maximum your insurance will pay an individual, second

represents a cover to all individuals and third one covers damage to another car or

property at the time of collision.

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NO CLAIM BONUS (NCB)

If we do not make a claim during the policy period, a No Claim Bonus is offered

on renewals. Insurers reward policyholders by giving them substantial discounts on

the Own Damage Premium. However the NCB is applicable only if the policy is

renewed within 90 days of the expiry date of the previous policy.

OWN DAMAGE PREMIUM (OD)

Payment of OD premium entitles to claim compensation in case of theft or damage

of your vehicle due to fire, earthquake, etc.

PERSONAL ACCIDENT COVER

It covers us not only against Accidental Death and Permanent Total Disablement

(PTD), but also against terrorism and acts of terrorism.

POLICY PERIOD-

It is the period when the policy is in force.

POLICY HOLDER

Owner of the policy

PREMIUM

The amount a policy holder agrees to pay the insurer for covering the risk.

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PROOF OF LOSS

Documents we provide to the insurer to support our request for payment of losses.

The company uses these documents to determine whether and how much it will

pay. For example written repair estimates from auto body shops, police reports,

etc.

UNINSURED MOTORIST COVERAGE

Uninsured motorist coverage can pay for the injuries caused to us and damage to

our property following an accident and the driver at fault does not own a valid

insurance.

3.10 CAR INSURANCE OVERVIEW

Motor Insurance or vehicle Insurance is all about protecting against financial losses

arising out of vehicle usage. With the multifold rise in usage of four wheelers,

motor Insurance is also termed as Car Insurance or Auto Insurance. Auto Insurance

is one of the most common types of general insurance products. Car Insurance is

mandatory by law and protects us and the people riding in our car from any legal

claim or penalty made by a third party. Family members who may drive car can

also be covered through auto insurance.

Car insurance rates have been steadily rising in India over the past few years.

Therefore it becomes very important that to get best insurance rates for our car. So

that we can compare car insurance quotes to get best deal on our vehicle insurance

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CHAPTER IV

NEW INDIA ASSURANCE COMPANY LTD

INTRODUCTION

Assurance industry has always been a growth-oriented industry globally. On the

Indian scene too, the assurance industry has always recorded noticeable growth

vis--vis other Indian industries. The new India assurance Co. Ltd. was the first

general assurance company to be established in India in 1850, which was a wholly

British-owned company. The new India assurance company to be set up by an

Indian was Indian Mercantile assurance Co. Ltd., which was established in 1907.

There emerged many a assurance player on the Indian scene thereafter .The general

assurance business was nationalized after the promulgation of General Insurance

Business (Nationalization) Act, 1972. The post-nationalization general assurancebusiness was undertaken by the assurance Corporation of India (GIC) and its 3

subsidiaries:

1. New India Assurance Company Limited.

2. United India Insurance Company Limited.

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3. National Insurance Company Limited.

Towards the end of 2000, the relation ceased to exist and the four companies are, at

present, operating as independent companies. The Life assurance Corporation

(AIC) was established on 01.09.1956 and had been the sole corporation to write the

life assurance business in India. The Indian assurance industry saw a new sun

when the assurance Development Authority invited the applications for registration

as assurors in August, 2000. With the liberalization and opening up of the sector to

private players, the industry has presented promising prospects for the coming

future. The transition has also resulted into introduction of ample opportunities for

the professionals including Chartered Accountants.

The Indian assurance industry is featured by the attributes:

Low market penetration;

Ever-growing middle class component in population. Growth of consumer

Movement with an increasing demand for better assurance products

Inadequate application of information technology for business .Adequate

Fillip from the Government in the form of tax incentives to the assured, etc.

The industry formations need to keep vigil on these characteristics of the Indian

market and formulate their strategies to entail maximum contribution to the output

of the sector. The Indian life and non-life assurance business accounted for

merely0.42 percent of the world's life and non-life business in 1997. The figures

of the basic parameters of the industry's performance viz. assurance Density and

assurance Penetration also are evident of the hitherto existing low-yield Indian

market conditions. The term "assurance Penetration" broadly measures the

contribution of the assurance industry in relation to a nation's entire economic

productivity. The figure of premium vis--vis the GDP of 1999 stood at 0.54

percent for non-life assurance business and 1.39 percent for the life assurance

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business. The term "assurance Density" reflects the assurance purchasing power.

The premium per capita in India amounted to US $ 2.40 for assurance and US

$6.10 for life assurance in 1999 but with the deregulation of the sector, a sea

Change in the scene is most likely. The assurance sector in India has come a full

circle from being an open competitive market to Nationalization and back to a

liberalized market again. Tracing the developments in the Indian assurance sector

reveals the 360-degree turn witnessed over a period of almost two centuries.

4.1 COMPANY PROFILE

New India Assurance Company is a leading global insurance group, with offices

and branches throughout India and various countries abroad. The company services

the Indian subcontinent with a network of 1068 offices, comprising 26 Regional

offices, 393 Divisional offices and 648 branches. With approximately 21000

employees, New India has the largest number of special stand technically qualified

personnel at all levels of management, who are empowered to underwrite and settle

claims of high magnitude .New India has been rated "A-" (Excellent) by A.M .Best

Co., making it the only Indian insurance company to have been rated by an

international rating agency. Rating based on following factors:

Superior Capital Position

Strong Operating Performance

Only Company to develop significant International operations, long record of

successful trading outside India

Shri M. D. Mallaya, Chairman & Managing Director, Bank of Baroda, has been

appointed as Director The New India Assurance Company limited. Since its

inception in 1994, has emerged as TATA Financial Services Inc. One of India's

leading financial managing assets of a large investor base. The fund offers a range

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of investment options, which include diversified and sector specific equity

schemes, fund of fund schemes, hybrid and monthly income funds, a wide range of

debt and treasury products and offshore funds.

New India Assurance Company Limited follows a long-term, fundamental

research based approach to investment. The approach is to identify companies,

which have excellent growth prospects and strong fundamentals. The fundamentals

include the quality of the company's management, sustainability of its business

model and its competitive position, amongst other factors TATA Financial

Services Inc. Company has one of the largest team of research analysts in the

industry, dedicated to tracking down the best companies to investing. TATA

Financial Services Inc. Strives to provide transparent, ethical and research-based

investments and wealth management service and 2 Subsidiary companies in the

year 2004-05. Overseas Premium of Rs.892.35 cores in the year 2004-05, which

accounts for more than 80% of total overseas premium in India

Company Strengths-

Largest number of Offices - In India and Abroad Trained and technically qualified

staff 1068 fully computerized offices across India. "A-" (Excellent) rating by A.M

Best & Co (Europe) First domestic company to be rated by an International Rating

Agency Rating based upon following factors: Superior capital position Strong

operating performance Strong market position Only company to develop

significant International operations, long record of successful trading outside India

Pioneers

First company to set up an Aviation Insurance Department in 1946.

First company to handle the Hull Insurance requirements of the Indian

Shipping Fleet.

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First company to establish its own Training School.

First company to introduce the concept of 'Model Office Training'.

First company to create department in Engineering insurance.

Vision

To be the most trusted name in investment and wealth management, to be the

preferred employer in the industry and to be a catalyst for growth and excellence of

the asset management business in India. The vision is to make assurance Company

the dominant new insurer in the life insurance industry. This it hopes to achieve

through our commitment to excellence, focus on service, speed and innovation,

and leveraging our technological expertise. The success of this organization will be

founded on its strong focus on values and clarity of purpose. These include:

Understanding the needs of customers and offering them superior products and

To be the first choice insurer for customers

To be the preferred employer for staff in the insurance industry

To be the number one insurer for creating shareholder value.

Leveraging technology to service customers quickly, efficiently andconveniently.

Mission

GOAL

The assurance Company collects money in the form of premium from individuals

(A, B, C & D). The money collected from people is used to meet one person's

calamity.

The assurance Company enters into the process of canalizing by disbursing the

amount collected into the command economy. Thus a significant part of the

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activities of the insurance industry of an economy entails mobilization of domestic

savings and its subsequent disbursal to investors.

The main risk faced by the assurance company is when all the Assurors claim for

the reimbursement at the same time. This situation is very rare to occur, and is one

of the major threat that the assurance company faces in its business operations.

To provide financial security to individuals, trade, commerce and all

other segments of the society by offering insurance products and services of high

quality at affordable. To consistently pursue investor's wealth optimization by

achieving superior and consistent investment results. To develop general insurance

Business in the best interest

Creating a conducive environment to hone and retain talent.

Providing customer delight.

Institutionalizing system-approach in all aspects of functioning.

Upholding highest standards of ethical values at all times.

Values

Highest priority to customer needs

High standards of public conduct

Transparency in operations.

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4.2 AGGREGATE PERFORMANCE OF THE COMPANY in cores

The company has seen a remarkable rise in its Gross Premium from Rs 5508.82

crores in 2008-2009 to Gross Premium of Rs 8542.86 cores in the year 2011-2012.

The company has acquired total assets of Rs42162.74 cores as on 31st March,

2011. With its 26 regional offices, 395 divisional offices, 591 branches, 27 direct

agent branches and 23 extension counters, the company is ranked as number one in

the Indian market. It feels proud to call the company as the largest Non-Life

Insurer in Afro-Asia including Japan which is also the first Indian Non-Life

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insurance company to cross Rs 7000 cores Gross Premium and in providing Global

Re-Insurance facilities to a number of overseas countries.

4.3 OVERVIEW OF COMPANY

New India is a leading global insurance group, with offices and branches

throughout India and various countries abroad. The company services the Indian

subcontinent with a network of 1068 offices, comprising 28 Regional offices, 393

Divisional offices and 648 branches. With approximately 21000 employees, New

India has the largest number of specialist and technically qualified personnel at all

levels of management, who are empowered to underwrite and settle claims of high

magnitude.

New India has been rated "A-" (Excellent) by A.M.Best Co., making it the only

Indian insurance company to have been rated by an international rating agency.

Rating based on following factors:

Superior Capital Position

Strong Operating Performance

Only Company to develop significant International operations, long record

of successful trading outside India

The new India assurance company provides flexibility stability consistency great

leadership with trust in their service towards customers corporate sector. The

company offers a wide range of services to assist investors have a fulfilling and

rewarding financial planning experience with us. We have designed our services

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keeping in mind the needs of our investors, giving them a smooth and hassle-free

financial planning process.

4.4 NEW INDIA ASSURANCE MOTOR POLICY

The motor insurance plan provided by the company covers scooters, motorcycles,

private cars and all types of commercial vehicles. The policy is available under two

variants- liability only policy and package policy. Liability only policy covers third

party liability for bodily injury, death and property damage, personal accident

cover for driver is also included under the liability variant while package policy

covers loss or damage to the vehicle plus everything covered under liability policy.

The package policy also covers loss arising from fire, explosion, earthquake, flood,

riot, strike and any damage from terrorist activity. Various add on covers like

damage or loss to electrical and other accessories, legal liability to employees can

be added by paying extra premium.

The New India Assurance car insurance claim is settled with the help of trained

surveyors and by filling up forms. The New India Assurance car insurance

premium and New India Assurance car insurance quotes can be compared online in

order to understand details of the policy. The New India Assurance car insurance

renewal can be done by visiting companys network branch as it has extensive

network across India. Further, New India Assurance car insurance plans can be

compared online with the plans provided by other general insurance providers that

will help you to buy the policy fulfilling your requirements.

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HIGHLIGHTS

This policy covers all types of vehicles plying on public roads such as:-

Scooters & Motorcycles

Private cars

All types of commercial vehicles

Motor Trade (vehicles in show rooms and garages)

As per the Motor Vehicles Act, 1988 it is mandatory for every owner of a vehicle

plying on public roads, to take an insurance policy, to cover the amount, which the

owner becomes legally liable to pay as damages to third parties as a result of

accidental death, bodily injury or damage to property. A Certificate of Insurance

must be carried in the vehicle as a proof of such insurance.

Two types of covers are available:

1. Liability only policy. This covers third party liability for bodily injury

liability and / or death and property damage. Personal Accident cover for

Owner-driver is also included.

2. Package policy. This cover loss or damage to the vehicle insured in addition

to (1) above.

No- claim discounts are available on renewal of policy, ranging from 20% to 50%,

depending upon the type of vehicle and the number of years for which no claim has

been made.

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SCOPE

Liability Only policies:

The policy covers the vehicle owner's legal liability to pay compensation for:

1. Death or bodily injury to a third party person.

2. Damage to third party property.

Liability is covered for an unlimited amount in respect of death or injury and

damage to third party property for Rs.7.5 lacs under Commercial vehicle and

private and Rs. 1 lacs for Scooters / Motor Cycles.

Package Policy

In addition to the coverage under liability only, this policy covers loss or damage

to the insured vehicle and its accessories due to:

1. Fire, explosion, self-ignition or lightning.

2. Burglary, housebreaking or theft.

3. Riot and Strike.

4. Malicious Act.

5. Terrorist Act.

6. Earthquake (Fire and Shock) Damage.

7. Flood, Typhoon, Hurricane, Storm, Tempest, Inundation, Cyclone and

Hailstorm.

8. Accidental external means.

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9. Whilst in transit by road, inland waterway, lift, elevator or air.

10.By landslide/Rockslide

The policy also pays for towing charges from the place of accident to the workshop

up to a maximum limit of Rs.300/- for Scooters/Motorcycles and Rs.1500/- for

cars and commercial vehicles. It is also permi