Introduction to Insurance Industry[1]

8/4/2019 Introduction to Insurance Industry[1]

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1

Introductionto

Insurance SectorPresented By-Dhananjay kumar

Jaipuria institute of Management, Noida


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2

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 ofeconomic value of assets.Tangible assets are

human beings, house, furniture, motor cycleetc.Intangible assets are liabilities


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History of Insurance

It started from Lloyds 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 insuranceBusiness of 245 private insurance

companies

General insurance business of 107

insurance companies was

nationalized in 1972 & four public sectorGeneral Insurance Companies were formed


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Classes of

Insurance

A. Life insurance

B. General insurance

General insurance is further

classified:-

1.Fire insurance

2.Marine insurance

3.Miscellaneous insurance


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Miscellaneous Insurances:-

1.Motor insurance2.Mediclaim insurance

3.Householders insurance

4.Shopkeepers insurance5.Engineering insurances

etc.


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1.Insurable interest- Means financial interest

2.Utmost good faith- Greater duties of faithon 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 toinsurer.Not applicable in life policies.

5.Contribution-Sharing of loss by allinsurers.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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6.Max New York Life Insurance Company Ltd

7.Met Life India Insurance Company Ltd8.Kotak Mahindra Old Mutual Life Insurance

Company Ltd9.SBI Life Insurance Company Ltd


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10.Tata AIG Life Insurance Company Ltd

11.Reliance Life Insurance Company Ltd

12.Aviva Life Insurance Company Ltd

13.Sahara India Life InsuranceCompany Ltd


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14.Shriram Life Insurance CompanyLtd

15.Bharti Axa Life Insurance CompanyLtd

16.Life Insurance Corporation OfIndia

17.Future Generali India Life InsuranceCompany Ltd.


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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 CompanyLtd

3.Iffco Tokio General Insurance Company Ltd

4.Reliance General Insurance Company Ltd5.Royal Sundaram Alliance Insurance

Company Ltd


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6.Tata AIG General Insurance Company Ltd

7.Cholamandalam Ms General InsuranceCompany Ltd8.HDFC-Chubb General Insurance Company

Ltd9.Star Health & Allied Insurance Company Ltd


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10.Export Credit Guarantee Corporation Ltd

11.Agriculture Insurance

Company Of India Ltd

12.National Insurance Company

Ltd13.New India Assurance Company

Ltd


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14.Oriental Insurance CompanyLtd

15.United India Insurance CompanyLtd

16. Apollo DKV Insurance Company Ltd


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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 onlyduring 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 optionof 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 startsat 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 dueto 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 policyMotor policy additionally insures loss and

damage of the motor vehicle due to theft andaccidents along with third party risk is calleda 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

Directors liability policy

Employers 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 & DevelopmentAuthority Act 1999


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IRDA

Insurance Regulatory & DevelopmentAuthority is the controlling and regulatoryapex body in the country for insurance sectorand its chairman and members areappointed by Government of India. IRDAs

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 practicaltraining for intermediary or insurance intermediaries andagents.

specifying the code of conduct for surveyors and lossassessors.

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 ofthis Act.


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Insurance Regulations

(powers and functions of IRDA)

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

regulating investment of funds by insurance companies. regulating maintenance of margin of solvency.

adjudication of disputes between insurers and intermediariesor insurance intermediaries

supervising the functioning of the Tariff Advisory Committee.

Other.


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Economic Growth

GDP 8.7 % in 2007-08

Sector Growth % of GDP

Agriculture 2.6 17.5Industry 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 croresin 1956 to Rs.156042 crores in 2006-07 with47 % growth

General Insurance Premium from Rs.200

crores in 1972 to Rs.24905 crores in 2006-07with 22 % growth


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Emerging Trends

Detariffing in General Insurance from

1.1.2007 leading to greater price war & newproducts in future

Banks entering insurance market throughjoint 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 HealthInsurance

Increasing awareness about Personal LineInsurance like House, Shop, PersonalAccident

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

Tie up with the companies


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Advantages

To the customer1. Durability of the product

2. Long-run cost efficiency3. Better service of the product

To the companies1. Increase in sales2. Customer satisfaction

3. 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 LOAN3. Insurance for lower class people.

Example- small/daily premium insurance

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Introduction to Insurance Industry[1]

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