United India Insurance Company LimitedFrom Wikipedia, the free encyclopedia

United India Insurance Company Limited

Type Public

Industry General Insurance

Founded 1938

Headquarters Chennai, India

Employees 17,332

Website Official Website

United India Insurance Company Limited (UIIC) is the one among the 4 public General Insurance

Companies of India and a leading General Insurance player including public and private sector. With

the networth of Rs 4,587 croreas as on September 30, 2011, The company has more than three

decades of experience in Non-life Insurance business. It was formed by the merger of 22 companies,

consequent to the nationalisation of General Insurance companies in India. Its Head Quarters is at 24,

Whites Road, Chennai, India.

Contents

  [hide] 

1   About the company

2   Recent Developments

3   Profit and Performance

4   Future Plans

5   Products

o 5.1   Personal Policies

o 5.2   Commercial Policies

6   Awards and recognitions

7   References

8   External links

[edit]About the company

United India Insurance Company Limited was incorporated as a Company on 18 February 1938.

General Insurance Business in Indiawas nationalized in 1972. 12 Indian Insurance Companies, 4

Cooperative Insurance Societies and Indian operations of 5 Foreign Insurers, besides General

Insurance operations of southern region of Life Insurance Corporation of India were merged with

United India Insurance Company Limited. After nationalization United India has grown by leaps and

bounds and has 18300 work force spread across 1340 offices providing insurance cover to more than

1 Crore policy holders. The Company has variety of insurance products to provide insurance cover

from bullock carts to satellites.

United India has been in the forefront of designing and implementing complex covers to large

customers, as in cases of ONGC Ltd, GMR- Hyderabad International Airport Ltd, Mumbai International

Airport Ltd Tirumala-Tirupati Devasthanam etc. It has been also the pioneer in taking Insurance to

rural masses with large level implementation of Universal Health Insurance Programme of Government

of India & Vijaya Raji Janani Kalyan Yojana ( covering 45 lakhs women in the state of Madhya

Pradesh), Tsunami Jan Bima Yojana (in 4 states covering 4.59 lakhs of families), National Livestock

Insurance and many such schemes. It has also made its presence in more than 200 tier II & II towns

and villages through its innovative Micro Offices.

[edit]Recent Developments

In November 2007, at Hyderabad,company's top management launched an enterprised level

transformation project named UNISERGE, under this historic intiative, company identified and set up 6

themes in order to remain a leader in Indian General Insurance market and also stressed on the

effective use of IT. In Addition, it has been also decided to Create incentive system and link to rigorous

performance management system for the Enhancement of organizational accountability and to

strengthen HR structure of the company.

Recently, on January 11, 2012, The Company (often abberiviated as UIIC), has been entrusted by The

Govt. of Tamil Nadu for implementing the new Comprehensive Health Insurance Scheme...[1] This

scheme would cover 1.34 crore families of Tamil Nadu State and has a annual outlay of Rs. 750 crore.

Tamil Nadu Chief Minister, on the launch, handed over first quarterly insurance premium installment of

Rs. 183.64 crore to Mr. G. Srinivasan, CMD of the United India Insurance.

[edit]Profit and Performance

The United India Insurance reported over 50% jump in its profit after tax at Rs 341.07 crore for the first

6 months of the financial year 2011-12. The Chennai-based insurer had reported a Rs 218 crore profit

during the same period last year.[2] Declaring the half-yearly results, United India Insurance Chairman

and Managing Director G Srinivasan told reporters the company's growth has exceeded that of the

industry. "We grew by 27 per cent over the industry's growth of 23 per cent ... our market share also

increased," he said.

During the half-year period ended September 30, 2011, the company collected a total premium of Rs

4,033 crore, up by 27 per cent from Rs 3,178 crore in the year-ago period.[3] "We have set a target

premium of Rs 8,000 crore this year," he said. On plans for the year 2011-12, he said the company

would focus on retail, micro-small and medium enterprises and rural insurance segments. "We will

focus on agency channel and bancassurance. Agency channel contributed 40 per cent and

bancassurance 7 per cent (in the first half of the year). We expect it to increase in the years to come,"

he said. Replying to a question, he said the company would bid for the Tamil Nadu government's

health insurance scheme. The investment income of the company for the first-half of the year stood at

over Rs 803 crore as of September 30, 2011.

A steep reduction in management expenses(to 25% from 37%) claims outgo and an increase in

premium income across segments has enabled the company to post 57 percent growth in net profit for

the first half of the current fiscal. United India earned Rs.803 crore from its investments during the first

six months of the 2011-12. The market value of the company's investments at the end of second

quarter stood at Rs.15,803 crore

[edit]Future Plans

Logging an average business growth of 27 percent in 2011-12, India's leading non-life insurer United

India Insurance Company Ltd declared that it is targeting a gross premium of Rs.8,000 crore and

sizeable reduction in underwriting losses - premium less claims outgo - to Rs.900 crore from last year's

figure of Rs.1,760 crore.

The company would focus the retail, and small and medium enterprises (SME) segments for growth. It

is in the process of adding further to its 48,000 agents and also to open around 100 one-man offices

across the country. Currently, there are 400 such micro-offices bringing in around Rs.275 crore

premium.

Company is waiting for approval from the insurance regulator IRDA to introduce three products under

the health portfolio

[edit]Products

[edit]Personal Policies

Householder

Personal Accident

Mediclaim

Unimedicare

Bhavishya Arogya

[edit]Commercial Policies

Fire Insurance

Marine Insurance

Motor Insurance (vehicle insurance)

Industrial Insurance

Liability Insurance

[edit]Awards and recognitions

United India gets Skoch award 2010: United India Insurance Company has won the award for

successful implementation of the financial inclusion initiatives. The company has impleted

the Rashtriya Swasthya Bima Yojana in Kerala. Skoch awards, distributed by Skoch Consultancy

Services, are meant to honour extraordinary achievements in governance, capacity building,

empowerment, inclusive growth, citizen services delivery, technology, academics and change

management. http://www.thehindu.com/todays-paper/tp-business/article1151356.ece

United India Insurance Company has been selected as one among the top three General

Insurance companies in Asia by Asia Insurance Review at the 14th Asia Insurance Industry

Awards held in Bali, Indonesia.

United India Insurance Co. Ltd. has been awarded the Best Non-Life Insurance Company

by NDTV Profit-Business Leadership Awards 2010.

United India Insurance Co. Ltd. has been awarded 'iAAA' rating for its claims paying ability

by ICRA (Investment Information and Credit Rating Agency) for the third successive year. This

rating indicates company's highest claims paying ability, its strong fundamental and its overall

financial strength for meeting the policy holders obligations.

PCQuest, one of India's premier IT magazines has selected MPLS VPN project of UIIC as one

of the best implemented IT projects in the year 2007. The details of the same are published in the

June 2007 issue of the PCQuest magazine. MPLS VPN project of UIIC was selected after a

rigorous screening process in which 250 IT projects of various companies in the country were

evaluated. Subsequently, a jury of eminent personalities selected the top 21 IT projects

implemented in 2007, in which the MPLS project of UIIC figures prominently.

Company Profile

About United India Insurance CompanyUnited India Insurance Company Limited was incorporated as a Company on 18th February 1938. General Insurance Business in India was

nationalized in 1972. 12 Indian Insurance Companies, 4 Cooperative Insurance Societies and Indian operations of 5 Foreign Insurers, besides

General Insurance operations of southern region of Life Insurance Corporation of India were merged with United India Insurance Company Limited.

After Nationalization United India has grown by leaps and bounds and has 18300 work force spread across 1340 offices providing insurance cover to

more than 1 Crore policy holders. The Company has variety of insurance products to provide insurance cover from bullock carts to satellites.

United India has been in the forefront of designing and implementing complex covers to large customers, as in cases of ONGC Ltd , GMR- Hyderabad

International Airport Ltd, Mumbai International Airport Ltd Tirumala-Tirupati Devasthanam etc. We have been also the pioneer in taking Insurance to

rural masses with large level implementation of Universal Health Insurance Programme of Government of India & Vijaya Raji Janani Kalyan Yojana

( covering 45 lakhs women in the state of Madhya Pradesh) , Tsunami Jan Bima Yojana (in 4 states covering 4.59 lakhs of families) , National

Livestock Insurance and many such schemes.

We have also made our presence in more than 200 tier II & III towns and villages through our innovative Micro Offices.

Our vision

We United India will be

The most preferred insurer in India with global footprint & recognition. Trusted brand admired by all stakeholders The best-in-class customer service provider leveraging technology & multiple channels The provider of a broad range of innovative products to meet the needs of all customer segments Great place to work with highly motivated and empowered employees Recognized for its contribution to the society

Top Management

NAMESHRI G.SRINIVASAN(CMD)SHRI MILIND .A. KHARAT(DIR)SHRI V.HARSHAVARDHAN(DIR.& GM)SMT. ASHA NAIR(GM)

SHRI JOSEPH J PLAPPALLIL(GM)SHRI B. KRISHNAMURTHY(GM)SHRI B.M.THAKKAR(GM)SHRI RAJASEKHARAN(CVO)SHRI A. HODA(DGM)SHRI A.BALASUBRAMANIAN(DGM)SHRI M.ELANGO(DGM)SHRI V.EASWARA KAIMAL(DGM)SHRI K GOVINDARAJAN(DGM)SMT. P. HEMAMALINI(DGM)SHRI P. K. MAHAPATRA(DGM)SHRI S.P.NANDA(DGM)SMT. M. SASHIKALA(DGM)SHRI R. SHIVAKUMAR(DGM)

   Management Hierarchy

Shri.G.SrinivasanChairman & Managing Director

Smt. Priya Kumar,Director,Department of Financial services 

Govt of India

Shri T M Bhasin Chairman &

Managing DirectorIndian Bank

Shri A Thrivikraman ThampiDirector

Shri.Milind.A.KharatDirector

 

Shri.V.Harshavardhan

Director & General Manager

Shri. B.M. ThakkarGeneral ManagerFinancial Advisor

   

Shri.Joseph J Plappallil

General Manager

Smt. Asha NairGeneral Manager

Shri. B. Krishnamurthy

General Manager

 

Shri.Rajasekharan Chief Vigilance

OfficerBoard of Directors

Shri. G.Srinivasan Chairman Cum Managing Director Shri. Smt. Priya Kumar Director,Department of Financial services Govt. of India Shri. T. M. Bhasin Chairman & Managing Director Indian Bank Shri. A. Thrivikraman Thampi Director Shri. Milind. A. Kharat Director UIIC Shri. V.Harshavardhan Director & General Manager UIICOrganisational Structure

  Type Of Office   Nos

  Head Office   Chennai

  Regional Offices   26

  Large Corporate & Brokers Unit(LCB)   7

  Divisional Offices   385

  Branch Offices   663

  Micro Offices   360

  Total   1446

 Employee Strength

  CLASS I   CLASS II   CLASS III   CLASS IV   TOTAL

  4885   1873   8158   2416   17332

Insurance in IndiaFrom Wikipedia, the free encyclopedia

Insurance is a subject listed in the concurrent list in the Seventh Schedule to the Constitution of India

where both centre and states can legislate. The insurance sector has gone through a number of

phases by allowing private companies to solicit insurance and also allowing foreign direct

investment of up to 26%, the insurance sector has been a booming market. However, the

largest life-insurance company in India is still owned by the government.

Contents

  [hide] 

1   History

2   Industry structure

o 2.1   Specialisation

3   Acts

4   Authorities

5   Insurance Education

6   See also

7   References

8   External links

[edit]History

In India, insurance has a deep-rooted history. Insurance in various forms has been mentioned in the

writings of Manu (Manusmrithi), Yagnavalkya (Dharmashastra) and Kautilya (Arthashastra). The

fundamental basis of the historical reference to insurance in these ancient Indian texts is the same i.e.

pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics

and famine. The early references to Insurance in these texts have reference to marine trade loans and

carriers' contracts.

Insurance in its current form has its history dating back until 1818, when Oriental Life Insurance

Company was started by Anita Bhavsar in Kolkata to cater to the needs of European community. The

pre-independence era in India saw discrimination between the lives of foreigners (English) and Indians

with higher premiums being charged for the latter. In 1870, Bombay Mutual Life Assurance Society

became the first Indian insurer.

At the dawn of the twentieth century, many insurance companies were founded. In the year 1912, the

Life Insurance Companies Act and the Provident Fund Act were passed to regulate the insurance

business. The Life Insurance Companies Act, 1912 made it necessary that the premium-rate tables

and periodical valuations of companies should be certified by an actuary. However, the disparity still

existed as discrimination between Indian and foreign companies. The oldest existing insurance

company in India is the National Insurance Company Ltd., which was founded in 1906. It is in

business.

The Government of India issued an Ordinance on 19th January, 1956 nationalising the Life Insurance

sector and Life Insurance Corporation came into existence in the same year. The Life Insurance

Corporation (LIC) absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245

Indian and foreign insurers in all. In 1972 with the General Insurance Business (Nationalisation) Act

was passed by the Indian Parliament, and consequently, General Insurance business was nationalized

with effect from 1st January, 1973. 107 insurers were amalgamated and grouped into four companies,

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

Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance

Corporation of India was incorporated as a company in 1971 and it commence business on January

1st 1973.

The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector.

Before that, the industry consisted of only two state insurers: Life Insurers (Life Insurance Corporation

of India, LIC) and General Insurers (General Insurance Corporation of India, GIC). GIC had four

subsidiary companies.

With effect from December 2000, these subsidiaries have been de-linked from the parent company

and were set up as independent insurance companies: Oriental Insurance Company Limited, New

India Assurance Company Limited, National Insurance Company Limited and United India Insurance

Company Limited.

[edit]Industry structure

Currently India is a US$41 billion industry. Currently, in India only two million people (0.2 % of the total

population of 1 billion) are covered under Mediclaim, whereas in developed nations like USA about

75 % of the total population are covered under some insurance scheme. With more and more private

companies in the sector, the situation may change soon.

[edit]Specialisation

ECGC, ESIC and AIC provide insurance services for niche markets. So, their scope is limited by

legislation but enjoy some special powers.

[edit]Acts

The insurance sector went through a full circle of phases from being unregulated to completely

regulated and then currently being partly deregulated. It is governed by a number of acts.

The Insurance Act of 1938[1] was the first legislation governing all forms of insurance to provide strict

state control over insurance business.

Life insurance in India was completely nationalized on January 19, 1956, through the Life Insurance

Corporation Act. All 245 insurance companies operating then in the country were merged into one

entity, the Life Insurance Corporation of India.

The General Insurance Business Act of 1972 was enacted to nationalise the about 100 general

insurance companies then and subsequently merging them into four companies. All the companies

were amalgamated into National Insurance, New India Assurance, Oriental Insurance and United India

Insurance, which were headquartered in each of the four metropolitan cities.

Until 1999, there were no private insurance companies in India. The government then introduced the

Insurance Regulatory and Development Authority Act in 1999, thereby de-regulating the insurance

sector and allowing private companies. Furthermore, foreign investment was also allowed and capped

at 26% holding in the Indian insurance companies.

In 2006, the Actuaries Act was passed by parliament to give the profession statutory status on par with

Chartered Accountants, Notaries, Cost & Works Accountants, Advocates, Architects and Company

Secretaries.

A minimum capital of US$80 million(Rs.400 Crore) is required by legislation to set up an insurance

business.

[edit]Authorities

The industry recognises examinations conducted by IAI (for actuaries), III (for agents, brokers

and third-party administrators) and IIISLA (for surveyors and loss assessors). TAC is the sole data

repository for the non-life industry.

IBAI gives voice for brokers while GI Council and LI Council are platforms for insurers.

AIGIEA, AIIEA, AIIEF, AILICEF, AILIEA, FLICOA, GIEAIA, GIEU and NFIFWI cater to the employees

of the insurers.

In addition, there are a dozen Ombudsman offices to address client grievances.

[edit]Insurance Education

National Insurance Academy, Pune is apex education and capacity builder institute in India and only

one in Africa & Asia. NIA was founded as Ministry of Finance initiative with capital support from the

then public insurance companies, both Life (LIC) and Non-Life (GIC, National, Oriental, United & New

India). NIA has 32 acre campus & 30+ faculty member imparting training, conducting research and

providing consulting services in insurance sector. NIA run 2 year PGDM (Insurance) to mould youth in

insurance specialisation.

Birla Institute of Management Technology is a graduate business school located in Greater Noida, an

education hub in the National Capital Region NCR of India. It was established in the year 1988.

Among others,it offers PGDM-IBM (Insurance Business Management).This course was launched in

2000 by the Centre for Insurance and Risk Management. It is accredited by the Insurance Regulatory

and Development Authority, Govt of India.

Life Office Management Association (LOMA),USA is BIMTECH's educational partner and BIMTECH is

an approved centre for LOMA examination.

The Chartered Insurance Institute(CII), UK has accorded recognition (by way of credits) to the PGDM-

IBM(Insurance Business management) course.This Two year PGDM (Insurance Business) has been

recognized as equivalent to the Associate level of theInsurance Institute of India, Mumbai.

[edit]See also

List of insurance companies in India

IRDA controls all the Insurance business in India. They are setting structure and boundaries for the

insurance companies to act upon. Starting from licensing to approving the products, IRDA directs the

companies in India. They also protect customer interests in the country.

Insurance Institute of India

As per current guidelines issued by IRDA, Insurance Companies are not permitted to invest in

Indian Depository Receipts ( IDR), while they are permitted to invest in Equity shares/ Bonds/

Debentures. IRDA needs to remove this disparity to open up investment opportunity by Ins

Companies and thereby also enhance the liquidity of IDRs ( Contributed by Sanjay Banka, FCA

FCS)

[edit]References

Lesson 18InsuranceYou must have seen shops in the market. In these shops many articles are stored for sale. Someof you might have seen factories where machines are installed to manufacture products. You mayalso be knowing about train, trucks, ships, etc. that carry goods from one place to anothers. Allthese involve lot of money and there is always a risk of loss on their way. For example, storinggoods in the shop for sale involves lot of money spent on buying those products and there isalways a risk that the products may get damaged before they are sold. The damage may be dueto accidents like fire, natural calamities or even riot or theft.Similarly in factories the machinesmay break down causing heavy loss. During transportation the goods may get damaged ordestroyed due to accident. Under all these circumstances there is always a loss incurred by thebusinessman. Not only the assets or properties of businessman, he himself is also not out ofdanger on his day-to-day life. He may suffer any disease or face accident which may cause agreat loss to his family.Can these risks be avoided or minimised? Is there anything to take care of these risks? Let uslearn all about it in this lesson.18.1 ObjectivesAfter studying this lesson, you will be able to: explain the nature of business risks; define insurance; explain the importance of insurance;Business Studies42 identify different types of insurance; describe the salient feature of life insurance, fire insurance, marine insurance and othertypes of insurance; and state the principles applicable to insurance contract.18.2 Nature of Business RisksIf you decide to engage yourself in any business activity your main objective will naturally be toearn profit. It is the most important objective of every business because without profit yourcapital will get reduced and may be totally lost. So you will do your best to manage your businessefficiently. Sometimes you may find that sale of goods produced in your factory is declining.That is a warning signal. You may then try to find out the reasons behind it. If you can identify thereasons, you may find some remedies. Suppose you find that imported goods of the samequality are being sold by competing traders at a much lower price. You have to face the loss asa result of the change in market conditions. There are other reasons, which may also result in lossof income or profit. Goods may be lost in course of transportation. There may be accidental firein the godown, workers of the factory may go on strike. You may not be able to anticipate orcontrol some of these possibilities. This is the concept of risk. Risk is the possibility of loss ordamage due to factors over which the businessman has little or no control.All business activities are subject to uncertain events or happenings and may suffer loss or damage.Timely precaution can be taken to avoid some of the losses. But certain losses and damageshave either to be borne by the businessman himself, or if possible, shared with others.The possibility of loss or damage can be divided into two broad categories: uncertainties andrisks. Uncertainties are the events, which cannot be foreseen. But risks can be anticipated in thelight of past experience. The chances of fire in the factory or godown depend upon precautionstaken to prevent its occurrence, or having necessary preparedness to keep the resulting loss at a

minimum level. So is the case with loss or damage by theft or accidents.Now take another type of situation. Every person has to think of his futureneeds when he is not able to work or suffers from old age and illness. This isnot an uncertain occurrence. Illness is bound to be there for living beingssometime or the other and more likely after a certain age. It is also necessaryto consider that death may strike at a time when there will be a family to belooked after and provided with a means of living.There are also risks, which have a significant place in business. While goodsare transported from place to place, there may be accidents causing, damageor loss of goods. Trains may be derailed, bridges may collapse, or airplanemay crash due to engine trouble. Trucks may be looted on their way toanother city. Damage may be caused to goods sent by ship at the time ofloading or unloading at sea ports. Can such damages or losses be sharedwith any other party? Let us note how these can be shared by means ofinsurance. Types of risksSpeculative Risk Risks relating to businessjudgment based onspeculation. Change infashion, govt. policy etc.Pure Risk Risks where the chance ofloss is predictable.Property Risk Related to Loss ofproperty.Personnel Risk Related to life or health ofthe people.Financial Risk Related to financialtransactions of thebusiness.Marketing Risk Risk associated withmarketing of goods.Insurance4318.3 What is meant by InsuranceSimply speaking, insurance is the means by which risks of loss or damage can be shifted toanother party (the insurers) on payment of a charge known as premium. The party whose risk isshifted to the insurer is known as the insured. Obviously insurer is generally an organisation(Insurance Company), which is willing to share the loss or damage and it is also qualified to doso.Insurance is a contract between the insurer and insured whereby the insurer undertakes topay the insured a fixed amount, in exchange for a fixed sum (premium), on the happening ofa certain event (like at a certain age or on death), or compensate the actual loss when it takesplace, due to the risk insured.If you think about the basis of insurance, you will realise that it is a form of co-operation throughwhich all the insured, who are subject to a risk, pay premium and only one or few among themwho actually suffer the loss or damage is/are compensated. Actually, the number of partiesexposed to a risk is very large and only a few of them might actually suffer loss during a certainperiod. The insurer (company) acts as an agency to spread the actual loss suffered by a fewinsured parties among a large number of parties.Intext Questions 18.1Which of the following statements are true and which are false?(i) The possibility of loss or damage to goods or human beings is known as risk.(ii) Change of fashion is a personnel risk.(iii) Losses caused by uncertain events have to be borne by businessmen themselves.(iv) Some risks can be taken care of by precautions such as risk of breakdown of machinery.(v) Insurance is the means of shifting risks of loss to a party willing and qualified to share theloss.

(vi) The amount paid by the insured to the insurer is known as premium.____________________________________________________________________________18.4 Importance of InsuranceTo appreciate the importance of insurance we have to discuss the benefits that we derive from it.As explained in the previous section, insurance serves as a very useful means of spreading theeffects of personal as well as business risks by way of loss or damage among many. Thus, theinsured have a sense of security. Individuals who pay premium periodically out of current incomecan look forward to an assurance of receiving a fixed amount on retirement or his family beingsecured in the event of his death. Businessmen also pay premium for insurance of risk of losswithout constant worry about the possibility of loss or damage.Business Studies44Insurance plays a significant role particularly in view of the large-scale production and distributionof goods in national and international market. It is an aid to both trading and industrial enterprises,which involve huge investments in properties and plants as well as inventories of raw materials,components and finished goods. The members of business community feel secured by means ofinsurance as they get assurance that by contributing a token amount they will be compensatedagainst a loss that may take place in future.From the national economic point of view, insurance enables savings of individuals to accumulatewith the insurance companies by way of premium received. These funds are invested in securitiesissued by big companies as well as Government.Individuals who insure their lives to cover the risks of old age and death are induced to save apart of their current income, which is by itself of great importance.Insurance is also a source of employment for the people. The people get employed directly in itsoffices spread over the country and it also provides opportunities to the people to earn theirlivelihood by working as agent of the insurance companies.Intext Questions 18.2Fill in the blanks with suitable words given in brackets.(i) Insurance is a means of spreading the ________ of a few among many. (loss, expense)(ii) The members of the business community feel ________ because of insurance. (secured,unsecured)(iii) Insurance companies invest their funds in corporate and Government ______ (loans,securities)(iv) Insurance is an aid to ________ as well as commerce. (industry, trade)________________________________________________________________________18.5 Types of InsuranceInsurance, which is based on a contract, may be broadly classified into the following types.(i) Life Insurance(ii) Fire Insurance(iii)Marine Insurance, and(iv)Other types such as burglary insurance, motor vehicle insurance, etc.Until recently Life Insurance Corporation of India (LIC) and General Insurance Corporationwith its subsidiaries happened to be the only organizations engaged in life and general insurancebusiness in India. Now a number of other private companies have entered this service sector.Let us consider the salient feature of each of these types.S u b s i d i a r i e s o f G e n e r a lI n s u r a n c e Co r p o r a t i o nof India• National Insurance Co.Ltd.• New India AssuranceCo. Ltd.• Oriental GeneralInsurance Co. Ltd.• United India InsuranceCo. Ltd.Insurance45

(i) Life InsuranceA contract of life insurance (also known as ‘life assurance’) is a contract whereby the insurerundertakes to pay a certain sum either on the death of the insured or on the expiry of a certainnumber of years. In return, the insured agrees to pay an amount as premium either in a lump sumor in periodical instalments, annually or half-yearly. The risk insured against in this case is certainto happen. Hence, life insurance is also referred to as life assurance. The written form ofcontract is known as life insurance policy. It provides for the payment of a fixed sum to theinsured either on a fixed date or on the happening of an event, which is certain. Businessmen canprovide for life insurance of all their employees by way of group insurance. It also developsloyalty among employees and can be used as a security for raising loans.There are two basic types of life assurance policies (a) Whole-life policy, and (b) EndowmentPolicy. A whole life policy runs for the whole life of the insured and premium is payable all along.The sum assured becomes due for payment to the heirs of the insured only after his death. Anendowment policy on the other hand, runs for a limited period or upto a certain age of theinsured. The sum assured becomes due for payment at the end of the specified period or on thedeath of the insured, if it occurs earlier.(ii) Fire InsuranceA contract of fire insurance is a contract whereby the insurer, on payment of premium by theinsured, undertakes to compensate the insured for the loss or damage suffered by reason ofcertain defined subject matter being damaged or destroyed by fire. It is a contract of indemnity,that is, the insured cannot claim anything more than the value of property lost or damaged by fireor the amount of policy, whichever is lower. The claim for loss by fire is payable subject to twoconditions, viz; (a) there must have been actual fire; and (b) fire must have been accidental, notintentional; the cause of fire being immaterial. The basic principle applied with regard to claim isthe principle of indemnity. The insured is entitled to be compensated for the amount of actual losssuffered subject to a maximum amount for which he had taken the policy. He cannot make aprofit through insurance. For example, if a person takes a fire insurance policy of Rs. 20,000/-on certain goods. Out of these, goods worth Rs. 15,000/- are destroyed by fire. The insured canonly claim an amount to the extent of loss i.e., Rs. 15,000/- (and not Rs. 20, 000/-) for thedamage from the insurance company.(iii) Marine InsuranceMarine insurance is an agreement (contract) by which the insurance company (also known asunderwriter) agrees to indemnify the owner of a ship or cargo against risks, which are incidentalto marine adventures. It also includes insurance of the risk of loss of freight due on the cargo.Marine insurance that covers the risk of loss of cargo by storm known as cargo insurance. Theowner of the ship may insure it against loss on account of perils of the sea. When the ship is thesubject matter of insurance, it is known as hull insurance. Further, where freight is payable by theowner of cargo on safe delivery at the port of destination, the shipping company may insure therisk of loss of freight if the cargo is damaged or lost. Such a marine insurance is known as freightinsurance. All marine insurance contracts are contracts of indemnity.Pr ivat e Se c tor Insuranc eC o m p a n i e s• ICICI Prudential Life Insurance• Birla Sun Life Insurance• HDFC Standard Life Insurance• Max New York Life Insurance• Tata AIG• Om Kotak Mahindra LifeInsurance• Bajaj Allianz• SBI Life Insurance• MetLife India Insurance• ING Vysya Life Insurance• AVIVA Life• AMP SanmarBusiness Studies46

The followings are the different types of marine insurance policies(a) Time Policy – This policy insures the subject matter for specified period of time, usuallyfor one year. It is generally used for hull insurance or for cargo when small quantities areinsured.(b) Voyage Policy - This is intended for a particular voyage, without any consideration fortime. It is used mostly for cargo insurance.(c) Mixed Policy – Under this policy the subject matter (hull, for example) is insured on aparticular voyage for a specified period of time. Thus, a ship may be insured for a voyagebetween Mumbai and Colombo for a period of 6 months under a mixed policy.(d) Floating Policy - Under this policy, a cargo policy may be taken for a round sum andwhenever some cargo is shipped the insurance company declares its value and the totalvalue of the policy is reduced by that amount. Such shipments may continue until the totalvalue of the policy is exhausted.(iv) Other types of InsuranceApart from life, fire and marine insurance, general insurance companies can insure a variety ofother risks through different policies. Some of these risks and the different policies are outlinedbelow.(a) Motor vehicles Insurance: Insurance of all types of motor vehicles- passenger cars,vans, commercial vehicles, motor cycles, scooters, etc., covers the risks of damage of thevehicle by accident or loss by theft, as also risks of liability arising out of injury or death ofthird party involved in an accident. Third party risk insurance is compulsory under theMotor Vehicles Act.(b) Burglary Insurance: Under this insurance the insurance company undertakes to indemnifythe insured against losses from burglary i.e., loss of moveable goods by robbery and theftby breaking the house.(c) Fidelity Insurance: As a protection against the risks of loss on account of embezzlementor defalcation of cash or misappropriation of goods by employees, businessmen may getpolicies issued covering the risks of loss on account of fraud and dishonesty on the part ofemployees handling cash or in charge of stores. This is called fidelity insurance policy. Theemployees may also be required to sign a fidelity guarantee Bond.Intext Questions 18.3Which of the following statements are true and which are false?(i) Marine insurance contracts are ordinary contracts while life insurance is a contract ofindemnity.(ii) Fire insurance covers the risk of loss by fire where the cause of fire is immaterial for makinga claim from the insurance company(iii) A ship may be insured against loss by perils of sea.Insurance47(iv) For an endowment policy, the insured has to continue paying premium for the whole life.(v) In life insurance, premium may be paid in a lump sum or in annual instalments.(vi) In marine insurance, time policy is often used for hull insurance.(vii) Fidelity insurance is not compulsory for owners of business.(viii) The principle underlying the contract of indemnity is to ensure that the insured cannot makeprofit out of insurance.___________________________________________________________________________18.6 Principles of InsuranceThere are certain principles that may apply to the contracts of insurance between insurer andinsured, which are as follows.i. Utmost goods faithInsurance contracts are the contract of mutual trust and confidence. Both parties to thecontract i.e., the insurer and the insured must disclose all relevant information to each other.For example, while entering into a contract of life insurance, the insured must declare to theinsurance company if he is suffering from any disease that may be life threatening.ii. Insurable interestIt means financial or pecuniary interest in the subject matter of insurance. A person hasinsurable interest in the property or life insured if he stands to gain from its existence or

loose financially from its damage or destruction. In case of life insurance, a person takingthe policy must have insurable interest at the time of taking the policy. For example, a mancan take life insurance policy on the name of his wife and if later they get divorced this willnot affect the insurance contract because the man had insurable interest in the life of his wifeat the time of entering into the contract.In case of marine insurance insurable interest must exist at the time of loss or damage to theproperty. In contract of fire insurance, it must exist both at the time of taking the policy aswell as at the time of loss or damage to the property.iii. IndemnityThe word indemnity means to restore someone to the same position that he/she was inbefore the event concerned took place. This principle is applicable to the fire and marineinsurance. It is not applicable to life insurance, because the loss of life cannot be restored.The purpose of this principle is that the insured is not allowed to make any profit from theinsurance contract on the happening of the event that is insured against. Compensation ispaid on the basis of amount of actual loss or the sum insured, which ever is less.iv. ContributionThe same subject matter may be insured with more than one insurer. In such a case, theinsurance claim to be paid to the insured must be shared or contributed by all insurers.Business Studies48v. SubrogationIn the contract of insurance subrogation means that after the insurer has compensated theinsured, the insurer gets all the rights of the insured with regard to the subject matter of theinsurance. For example, suppose goods worth Rs. 20,000/- are partially destroyed by fireand the insurance company pays the compensation to the insured, then the insurancecompany can take even these partially destroyed goods and sell them in the market.vi. MitigationIn case of a mishap the insured must take all possible steps to reduce or mitigate the loss ordamage to the subject matter of insurance. This principle ensures that the insured does notbecome negligent about the safety of the subject matter after taking an insurance policy.The insured is expected to act in a manner as if the subject matter has not been insured.vii. Causa-proxima (nearest cause)According to this principle the insured can claim compensation for a loss only if it caused bythe risk insured against. The risk insured should be nearest cause (not a remote cause) forthe loss. Then only the insurance company is liable to pay the compensation. For examplea ship carrying orange was insured against losses arising form accident. The ship reachedthe port safely and there was a delay in unloading the oranges from the ship. As a result theoranges got spoilt. The insurer did not pay any compensation for the loss because theproximate cause of loss was delay in unloading and not any accident during voyage. Intext Questions 18.4Fill in the blanks using appropriate word(s).i. The principle of utmost good faith is based on ____________ between insurer and insured.ii. In life insurance contract the insurer must have insurable interest at the time of ___________.iii. The purpose behind the principle of ___________ is that, the insured does not allow tomake profit from the insurance contract.iv. If there are two or more insurers and the insurance claim is paid by one of them, otherinsurers have to contribute ____________ to the insurer who has paid the claim.________________________________________________________________________18.7 What You Have Learnt Risk is the possibility of loss or damage due to causes over which we have little or nocontrol. All business activities have to face the risks of loss or damage due to uncertainevents or happenings. Insurance is a means by which the risks of loss or damage can be shifted to another party(the insurer) on payment of a charge known as premium. The party whose risk is shifted tothe insurer is known as the insured.Insurance49 Insurance is based on a contract between the insurer and insured whereby the insurer, in

exchange for a fixed sum (premium), undertakes to pay the insured a specified amount onthe happening of a certain event (like the insured reaching old age), or pay the amount ofactual loss when it takes place due to the risk insured. Importance: Insurance is a simple means of sharing the burden of loss or damage amongmany people. It plays a significant role in business in view of the large-scale production anddistribution of goods in national and international markets. It is an aid to both commercialand industrial enterprises. It enables the accumulated premium receive to be invested insecurities which in turn are utilised for national development. Insurance is also a source ofemployment for many people. Types: Insurance as a service activity may be classified into four broad types:Whole-life policyLife InsuranceEndowment policyFire InsuranceTime policyMarine Insurance Voyage policyMixed policyFloating policyOthers Motor-vehicles insuranceBurglary insuranceFidelity insurance18.8 Terminal Exercise1. What is meant by ‘business risk’?2. Define Insurance.3. Why is insurance considered important? List any two reasons.4. What does ‘Endowment’ life policy mean?5. What is a ‘Voyage Policy’?6. What is meant by ‘Hull’ insurance?7. Explain how insurance is important as an aid to trade and industry.8. How does whole life policy differ from endowment life policy? Why is life insurance alsocalled life assurance?9. Explain the types of risks which are covered by (i) Motor Vehicles insurance; (ii) Fidelityinsurance.10. What purpose does Marine Insurance Policy serve? Explain the different types of marinepolicies, which may be of use to exporters and importers.11. A person suffering from cancer did not disclose this fact while taking a life insurance policy.Business Studies50Name the principle he violated and explain it about 50 words.12. At what time there be insurable interest in, a) Life insurance; b) fire insurance; and c)Marine insurance.18.9 Key to Intext Questions18.1 i. Trueii. Falseiii.Falseiv. Truev. Truevi.True18.2 i. Lossii. Securediii.Securitiesiv. Industry18.3 i. Falseii. Trueiii. Trueiv. False

v. Truevi.Truevii. Trueviii. True18.4 i. Mutual trust and confidenceii. Contractiii.Indemnityiv. Proportionately Activity For You Students may be prepared to make enquiry about the number of shopkeepers in theirlocalities who have got insurance cover against loss by fire. Students may be required to enquire from the neighbours about the number of persons whohave taken life insurance policy. And whether those having life insurance p

Glossary of Insurance Terms Adjuster. A person who settles insurance claims. An adjuster may be an insurance company employee or an independent operator. Adjustment. The settlement of a claim; financial premium determination. Agent's authority. The authority placed in an agent by the insurance company; the extent to which the agent may act on behalf of the company. This authority is defined by a contract between the agent and the company. All-risk. A term commonly used to describe broad forms of property or liability coverage. It is misleading because no property or liability policy truly provides an all-risk coverage -- a policy will invariably contain some exclusions. Appraisal. An estimate of value loss or damage. Assigned risk. A risk that has been declined by one or more companies. Such a risk may be assigned to designated companies by a recognized authority. The operation is called an assigned risk plan. Assured. The insured; the one for whom insurance is written. Basic benefits. Generally all benefits offered by a group health plan except major medical. Basic benefits may include hospital surgical physician care diagnostic lab and X-ray radiation therapy dental expenses and supplemental accident coverage. Beneficiary. A person who will receive policy benefits. Benefit formula. Defines the amounts of life insurance that may be purchased for employees in a specific classification (e.g. salary occupation length of service etc.). Benefit. That amount payable under an insurance policy because of an accident injury or illness. Binder. An agreement usually written whereby one party agrees to insure another party pending receipt of a final action upon the application. Business interruption. Insurance covering the loss of earnings resulting from the destruction of property; called use and occupancy insurance. Cancellation. The termination of an insurance contract by either the insurance company or the insured. Carrier. An insurance company. Cash deductible. The amount of money the insured must pay for covered expenses before certain benefits can begin. Cash value. The value in cash of a life insurance policy. Casualty. An accident occurrence or event or the person to whom it happens; the general term applied to insurance coverages for an accident occurrence or event. Certlet. A booklet describing the benefits and all the provisions of a group policy that affect the insured. The certlet becomes a certification of insurance when the person is eligible for the insurance. It is then the legal document that proves the person is actually insured. Claim. A request by the insured for benefits under an insurance policy. Coinsurance. Two or more entities providing insurance protection and sharing in losses. Compensation. Wages salaries awards fees or commissions; any return in payment for a financial loss. Comprehensive. A loosely used term signifying broad or extensive insurance coverage. Contributory. A group insurance plan paid partly by employees and partly by the employer. Contributory negligence. Partial responsibility for one's own injury or damage.

Coverage. The insurance protection provided by the policy. Declarations. That part of an insurance policy containing the information about the applicant listed on the insurance application. Deductible. An amount the insured must pay before insurance benefits will be paid. Discount. A reduction applied to an insurance premium. Draft. A financial instrument similar to a check frequently used by insurance companies to pay losses. Effective date. The date a policy is put in force; the inception date. Endorsement. A written amendment affecting the declaration insuring agreements exclusions or conditions of an insurance policy; a rider. Evidence of insurability. Medical proof from either a questionnaire or a physical examination that an applicant employee or dependent is healthy and therefore insurable. Examiner. An individual who reviews evaluates and processes claims. Exclusion. That which is expressly eliminated from the coverage under an insurance policy. Expiration date. The date an insurance policy terminates. Exposure. Person or property to whom injury or damage will cause an economic loss. Face amount. In life insurance the amount of basic coverage stated on the face of the policy. Grace period. A period beyond the premium due date during which the premium may be paid and the insurance will be continued in force. Group insurance. Insurance covering a group of employees. Hazards. A condition that creates or increases the probability of a loss. Health insurance. Commonly called accident and health insurance protection against financial loss from a personal accident or illness. Incurred loss. A loss that while not yet paid has been sustained and for which reserves have been established to pay in the future. Indemnity. Insurance protection that will place the insured in the same financial position as before a loss was sustained. Inspection. An examination by those having authority. An insurance company usually reserves the right to inspect any property it insures. Insurance. Protection against loss. The insured sacrifices a small certain loss (the premium) for protection against a large uncertain loss (e.g. an accident fire or death). The insurance company assumes the risk by employing the law of large numbers and the principle of risk spreading. Insured. The entity whose life or property is protected by the insurance. The one for whom insurance is written. Lapse. To fail to continue an insurance policy; to cease to provide insurance protection. Liability. Being bound by law and justice to do something that may be enforced by the courts. Limits. The value or amount of a policy; the greatest amount that can be collected under the policy. Loss. In insurance the amount the insurer is required to pay because of the insured's loss. Multi-peril insurance. An insurance policy that provides coverage against many perils. Sometimes called a package policy. Occurrence. A continuance of a repeated exposure to conditions that result in injury. Peril. Anything that may cause a loss. Policy. A legal contract of insurance. Policyholder. The owner of the policy; the one who purchases the policy and pays the premiums. Policy period. The term for which insurance remains in force sometimes definite sometimes not. Premium. The cost of an insurance policy; the charge the policyholder pays for the insurance protection. Property. The thing owned; real property is real estate and things attached to it; anything else is personal property. Property damage. Physical damage to property. Provisions. The terms or conditions of an insurance policy. Rate. Cost per unit of insurance. Reinstate. To restore coverage after it has been canceled or suspended. Reinsurance. Insurance placed by an underwriter in another company to reduce the amount of the risk his or her company has assumed. U.S. Small Business Administration Renew. To continue; to replace as with a new policy. Rider. An endorsement. Schedule of benefits. The amount of insurance for which each classification of employee is eligible.

(Classifications can be based on salary wage occupation or length of service.) Self-insurance. An arrangement whereby instead of purchasing an insurance policy a party maintains a reserve fund for self-protection against a loss. Settlement option. The way in which money for the death benefit of an insurance policy will be paid to a beneficiary. Surety. A guarantee that a person normally called the principal will perform according to a statute or a contract. Surety offers protection to a third party normally called an obligee. Underwriter. The insurance company; a party assuming risk; the person performing the underwriting function. Void. Of no force; null. Waiting period. A period immediately after the inception of the policy during which no benefits will be paid even if a loss occurs. Pertains to health insurance. Waiver of premium. In life insurance a provision that states that if the insured becomes disabled and the disability appears total and permanent the insurance policy will continue in full force without further payment or premium.