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Introduction to Insurance Sector

Presented By-Dhananjay kumarJaipuria institute of Management, Noida

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Contents:-

Life insurance General insurance Insurance market scenario Emerging trends in insurance Jobs in insurance Insurance websites Insurance glossary

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Learning Insurance

What Is Insurance

Insurance is concerned with protection of economic value of assets.Tangible assets are human beings, house, furniture, motor cycle etc.Intangible assets are liabilities

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History of Insurance

It started from Lloyd’s coffee house London First policy issued in England in 1583 In India first policy issued in 1870

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History of Insurance

LIC of India formed in 1956 after nationalization of life insurance Business of 245 private insurance companies General insurance business of 107 insurance companies was nationalized in 1972 & four public sector

General Insurance Companies were formed

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Classes of Insurance

A. Life insuranceB. General insurance General insurance is further classified:-1.Fire insurance2.Marine insurance3.Miscellaneous insurance

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Miscellaneous Insurances:-

1.Motor insurance

2.Mediclaim insurance

3.Householders insurance

4.Shopkeepers insurance

5.Engineering insurances

etc.

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1.Insurable interest- Means financial interest

2.Utmost good faith- Greater duties of faith on proposer & insurer 3.Indemnity- Actual compensation of loss. not applicable in life policies

Fundamental Principles of Insurance

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Fundamental Principles of Insurance

4.Subrogation-Transfer of rights of insured to insurer.Not applicable in life policies.

5.Contribution-Sharing of loss by all insurers.Not applicable in life policies.

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Market Scenario before Irda Act 1999

Life insurance company 1. LIC of India General insurance companies 1.National insurance company ltd 2.New India assurance company ltd 3.Oriental insurance company ltd 4.United India insurance company ltd

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Market Scenario after Irda Act 1999

Stage of

Liberalization,

Privatization &

Globalization (Competition between public sector & private sector)

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Life Insurance Companies

1.Bajaj Allianz Life Insurance Company Ltd

2.Birla Sun Life Insurance Company Ltd

3.HDFC Standard Life Insurance Company Ltd

4.ICICI Prudential Life Insurance Company Ltd

5.ING Vysya Life Insurance Company Ltd

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Life Insurance Companies

6.Max New York Life Insurance Company Ltd7.Met Life India Insurance Company Ltd8.Kotak Mahindra Old Mutual Life Insurance

Company Ltd9.SBI Life Insurance Company Ltd

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Life Insurance Companies

10.Tata AIG Life Insurance Company Ltd

11.Reliance Life Insurance Company Ltd 12.Aviva Life Insurance Company Ltd

13.Sahara India Life Insurance Company Ltd

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Life Insurance Companies

14.Shriram Life Insurance Company Ltd15.Bharti Axa Life Insurance Company Ltd16.Life Insurance Corporation Of India

17.Future Generali India Life Insurance Company Ltd.

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Life Insurance Companies

18. IDBI Fortis Life Insurance Company

Ltd.

19.Canara HSBC Oriental Bank of

Commerce Life Insurance Company Ltd.

20.Aegon Religare Life Insurance

Company Limited.

21. DLF Pramerica Life Insurance Co. Ltd.

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General Insurance Companies

1.Bajaj Allianz General Insurance Company Ltd

2.Icici Lombard General Insurance Company Ltd

3.Iffco Tokio General Insurance Company Ltd

4.Reliance General Insurance Company Ltd

5.Royal Sundaram Alliance Insurance Company Ltd

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General Insurance Companies

6.Tata AIG General Insurance Company Ltd7.Cholamandalam Ms General Insurance

Company Ltd8.HDFC-Chubb General Insurance Company

Ltd9.Star Health & Allied Insurance Company Ltd

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General Insurance Companies

10.Export Credit Guarantee Corporation Ltd11.Agriculture Insurance Company Of India Ltd12.National Insurance Company Ltd13.New India Assurance Company Ltd

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General Insurance Companies

14.Oriental Insurance Company Ltd

15.United India Insurance Company Ltd

16. Apollo DKV Insurance Company Ltd

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General Insurance Companies

17.Future General India Insurance Company Ltd18. Universal Sompo General Insurance Co. Ltd. 19.Shriram General Insurance Company

Limited20.Bharti AXA General Insurance Company ltd.

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Market Intermediaries

Who procure the

insurance business:- Agents Corporate agents Insurance brokers Banks (Bancassurance)

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Basic Life Insurance Policies

Term assurance policy Provides death cover only

during policy period Premium is low No refund of premium Sum assured paid on death

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Whole Life Policy

Death cover only Period is not specified Premium is low & paid

during life time No refund of premium Sum assured paid on death

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Endowment Assurance Plan

Covers death & survival

benefits Sum assured paid on death

or on maturity of policy Period of policy at the option

of proposer Most common plan

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Money Back Policy

Available for different periods

Covers death & survival benefits

Lump sum paid periodically

Full sum assured paid on death

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Unit Linked Insurance Policies (ULIP)

Each premium split into units and risk premium for life cover Units are priced as per current market value Sum assured & current value of units paid

on death as per policy condition Current value of units paid on maturity

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Annuity (Pension) Plans

These are pension plans Immediate annuity or deferred annuity starts

at specified age periodically Single premium paid for immediate annuity Premium in installments paid

for deferred annuity Life cover simultaneously

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Important aspects of Life Insurance Policies

Policies available with bonus or without bonus

Death due to accidents can be covered for additional S.A.

Policies available exclusively for women & children

Additional cover for major diseases available Guaranteed bonus policies available

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Important aspects of Life Insurance Policies

Policies available for limited period premium payment & risk for longer policy period

Premium can be paid in monthly, quarterly, half yearly, yearly installments

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Important aspects of Life Insurance Policies

Loans are available on policies Lapsed policies can be revived Policy can be surrendered after three years Nomination & assignment can be done

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General Insurance Policies

Fire policies Marine policies Motor vehicle policies Personal line policies Health insurances Liability insurances Rural insurance policies Engineering insurances

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Fire Policies

Standard fire policy- Common policy for buildings, shops,offices,

Industrial & manufacturing risks

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FIRE POLICIES-SPECIAL POLICIES

Industrial & Manufacturing clients Floater policy Declaration policy Floater declaration policy Reinstatement value policy Industrial all risk policy Consequential loss policy

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Marine Policy

Marine Cargo Policy Policy insures physical loss or damage to the goods

in transit by road, rail, air, water caused due to accidents, fire etc.

Marine Hull Policy Policy insures marine ships,steamers etc.

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Special Marine Cargo Policies

For business, industries,

importers and exporters Annual policy Special declaration policy Open cover Open policy

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Motor Vehicle Policies

Liability only motor policy

Mandatory motor vehicle policy

Package motor policy

Motor policy additionally insures loss and damage of the motor vehicle due to theft and accidents along with third party risk is called a package motor policy.

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Personal Line Insurances

House holders policy Shop keepers policy Personal accident policy Group personal accident policy Fidelity guarantee policy

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Health Insurance

Medi claim policy Overseas medi claim policy Videsh yatra mitra policy Corporate frequent travelers policy Employment & study policy Group medi claim policy Cancer policy

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Liability Insurances

Compulsory public liability policy Public liability policy Products liability policy Professional indemnity policy Lift (third party) policy Director’s liability policy Employer’s liability policy

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Rural Insurance Policies

Cattle policy

Poultry policy

Agricultural pump set

policy

Crop insurance

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Engineering Insurances

Machinery Breakdown Insurance Loss of Profits (Machinery Breakdown) Insurance Electronic Equipment Insurance Erection All Risk Insurance (EAR) Storage cum Erection Insurance (SCE)

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Engineering Insurances

Contractors All Risk Insurance (CAR) Contractors Plant and Machinery Insurance (CPM) Boiler and Pressure Plant Insurance Loss of Profits (Boiler Explosion) Insurance Deterioration of Stocks Insurance.

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Insurance Law

The Insurance Act 1938

(amended) Insurance Regulatory & Development

Authority Act 1999

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IRDA

Insurance Regulatory & Development Authority is the controlling and regulatory apex body in the country for insurance sector and its chairman and members are appointed by Government of India. IRDA’s HQ is located at Hyderabad

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Insurance Regulations(powers and functions of IRDA)

issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration.

specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents.

specifying the code of conduct for surveyors and loss assessors.

promoting efficiency in the conduct of insurance business promoting and regulating professional organizations connected

with the insurance and re-insurance business. levying fees and other charges for carrying out the purposes of

this Act.

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Insurance Regulations(powers and functions of IRDA)

specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries.

regulating investment of funds by insurance companies. regulating maintenance of margin of solvency. adjudication of disputes between insurers and intermediaries

or insurance intermediaries supervising the functioning of the Tariff Advisory Committee. Other.

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Economic GrowthGDP 8.7 % in 2007-08

Sector Growth % of GDP

Agriculture 2.6 17.5

Industry 8.9 26.8

Services 10.7 55.7

(Fin.& 11.7 14.7

Insurance)

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Growth of Insurance Business

Life Insurance Premium from Rs.400 crores in 1956 to Rs.156042 crores in 2006-07 with 47 % growth

General Insurance Premium from Rs.200 crores in 1972 to Rs.24905 crores in 2006-07 with 22 % growth

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Emerging Trends

Detariffing in General Insurance from 1.1.2007 leading to greater price war & new products in future

Banks entering insurance market through joint ventures with foreign finance majors

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Emerging Trends

Increasing Role of Insurance Brokers Banc assurance Corporate Agency IT intervention & uses

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Emerging Trends

Greater Job Opportunities For thousands of Insurance

Managers, IT Professionals For lacs of Insurance Advisors For Insurance Professionals For Risk Managers For Underwriters For claim Settlements

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Emerging Trends

Increasing No. of Insurance companies & Intermediaries

Increasing Awareness about Insurance Growth in GDP Increasing No. of Middle Class

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Emerging Trends

Increasing awareness about Health Insurance

Increasing awareness about Personal Line Insurance like House, Shop, Personal Accident

Market flooded with new insurance products

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Jobs

In

Insurance

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Job Opportunities

45 lakh people employed

27 lakh people required by 2012

5 lakh people supply by 2012

3 % constitute executive cadre

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Job Positions

Agency Manager Sales Manager Sales Executive Branch Manager Executive Underwriting Executive Claims Executive Bancassurance

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Job Description

To recruit the insurance agents To train the agents To supervise the agents To develop the business Supervise underwriting Supervise claim settlement Customer relationship management Bancassurance

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Job Specification

Team leader Team driving capability Team management Communication Frustration tolerance Insurance knowledge Contacts

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Job Specification

Knowledge of company Fluency in English & local language Customer service Computer friendly Team goals Financial consultant Networking skills

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THE BUSINESS IDEA

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1st Business Idea

Insurance for the consumer durables Example – TV, refrigerator, washing

machine, air conditioner, cooler (water, air) etc.

Tie up with the companies

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Advantages

To the customer1. Durability of the product2. Long-run cost efficiency3. Better service of the product

To the companies 1. Increase in sales 2. Customer satisfaction3. Strategic advantage4. Automatic removal of local-product competitors5. Revenue

To the Insurance CompanyAll benefits which is lies with any insurance company

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2. Insurance for the EDUCATION LOAN

3. Insurance for lower class people.

Example- small/daily premium insurance