Professional Documents
Culture Documents
SUBMITTED TO SUBMITTED BY
LECT. Manpreet kaur kaler Manpreet singh
Roll no E3004A84
Class M.C.A(1STSEM)
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ACKNOWLEDGEMENT
I would like to express my gratitude to all those who gave me helping
them all for their help, support, interest and valuable hints.
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INDEX
SRNO CONTENTS PAGE NO
1. Concept of insurance 4
2. Basic insurance terminologies 4
3. Origin of insurance 5
4. General insurance 6
5. Insurance sector 6
6. Development of general insurance 10
7. De tariffing of general insurance 11
8. Insurance products 12
9. General insurance council 13
10. Investment polcies of GIC 13
11. Current trend in insurance sector 14
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THE CONCEPT OF system by which the losses
INSURANCE
suffered by a few are spread over
Insurance is a contract between
two parties where by one party
many, exposed to similar risks.
called insurer under takes in
Insurance is a mechanism for
exchange for a fixed sum called
transferring risk and reducing risk
premiums, to pay the other party
by having a large number of
called insured a fixed amount of
individuals who share in the
money on the happening of a
financial losses of the group. Risk
certain event.
in hibitsaction and is highly
Insurance is a protection against
subjective on an individual basis.
financial loss arising on the
Insurance objectifies risk. People
happening of an unexpected event.
trade the possibility of financial loss
Insurance companies collect
for the relative certainty of the
premiums to provide for this
premium paid and reimbursement
protection. A loss is paid out of the
for loss. Insurance frees people to
premiums collected from the
take action even in the face of
insuring public and the Insurance
possible financial loss. Thus,
Companies act as trustees to the
insurance provides utility even if no
amount collected. For Example, in
loss ever occurs.
a Life Policy, by paying a premium
Some people believe insurance is
to the Insurer, the family of the
similar to gambling or opening a
insured person receives a fixed
savings account.
compensation on the death of the
insured. Similarly, in a car BASIC INSURANCE
insurance, in the event of the car TERMINOLOGIES
It defines what the company agrees there is risk. We do not have any
to cover for what period of time and control over uncertainties which
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business was concentrated in
degree turn witnessed over a
urban area.
period of almost two centuries.
INSURANCE SECTOR
The opening up of Insurance sector
was a part of theon going
liberalization in the financial sector
GENERAL INSURANCE of India. The changing face of the
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where enormous business potential a better Chance to save as well as
exists. InIndia currently the life insure. The regulatory system in
insurance premium as a India is relatively new and takes
percentage of GDP is 1.3 % some more time to make the
against, 5.2 per centin the US. Insurance sector a perfectly
General Insurance is another
competitive one. Insurance
segment, which has been growing
Regulatory Authority of India issued
at a faster pace. But as per the
regulations on 15 subjects which
current comparative statistics, the
general insurance premium has included appointed. Actuary,
through joint ventures, will speed sector and the Insurance sector is
benefits, which will give consumers this vital sector has generated
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The private sector general
considerable business interests
insurance companies are:
among the foreign Insurance
companies" Their entry wil1 The general Royal sundram
companies are:
HDFC-Chubb general
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Agriculture insurance insurance segment is the most
company of india Ltd. lucrative as fire rate as govern by
tariff.the compitation is maximum in
The minimum paid up capital of the
the segment .bulk of the premium
general insurance companies was
comes from corporate clients with
raised to Rs 100 crore under the
large industrial assets. fire
modified insurance Act.the four
insurance today accounts for a fifth
nationalised general insurance
of business for non-life insurance
companies enhanced their paid up
companies and brings in most of
capital from 40 crore to Rs 100
their profits.
crore.
Comprehensive insurance
Loss of profit, that is,
which insure the owner as
consequently loss.
well as the third party
Fire insurance is comprehensive involved.
policy which covers loss on
In motor insurance, the rates were
account of fire, earthquakes, flodd,
revised upwards twice,once in1982
strike. It can be taken only by
and then in 1990 as the high cost
premises to be insured.fire
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of repairs coupled with third party insurance company in the event of
claims had adversely affected the mis-presentation or mis-declaration
and/or non-disclosure of any
incurred loss ratio.motor insurance material facts.
is mandatory leading to good
2.
amount of premium collection but it
is not financed upon as it could Reasonable care :
The insured shall take all
lead to litigation problem.motor
reasonable steps to safeguard the
insurance is the single largest and property insuredagainst any loss or
the fastest growing business line damage. Insured shall exercise
reasonable care that
for insurance companies .
onlycompetent employees are
employed and shall take all
Marine cargo insurance reasonable precautions toprevent
all accidents and shall comply with
This covers: all statuary or other regulations
Cargo in transit. 3.
GENERAL INSURANCE
Insurance are allowed to
marginally increase the rates COUNCIL:
for third party insurance.
The function of the general
insurance council include aiding
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and advising the insurer carrying
10. The Associated Chambers of
on general insurance business in
Commerce and Industry of
the matters of setting up standards
Indiahas clocked out the fact that
of conduct and sound practice and
in the matter of rendering efficient during this period, private players in
general insurance. The council has about 140 per cent, owing to the
deliberated on issues relating to de adoption of the aggressive
tariffing of the motor insurance marketing techniques in
business,review of the motor comparison of the growth rate of 35
vehicles Act and structure of
per cent-40 per cent achieved by
compensation/remuneration
the state owned insurance
payable to agents.
companies. The chamber is
expected to poise the business of
INVESTMENT POLICY OF GIC
insurance to reach at
Central Govt. securities being not
Rs.2000billion in coming 2 years
less than20%
from the present level of Rs. 500
State Govt. securities and other
billion. With the result of adoption
government guaranteed securities,
of the intense marketing strategies
including (1) above, being not
by the private players, the
less than
30% declination has been witnessed in
Loans to HUDCO/DDA/GIC-HF
respect of the share of the state
and to state govts. For housing and
firefighting equipment, not owned insurance companies
less than15%
Market sector not more than 55 captured in the market. The market
share fallout has been noticed in
context of such companies like
CURRENT TRENDS IN
GIC, LIC, which have comedown to
INSURANCE SECTOR
nearly 70 per cent in the past 4-5
India's insurance sector is zooming
years from the 97 per cent. The
to show an unprecedented
experts have forecasted the more
progressive growth of more
severe competition in the insurance
than200% by the period of 2009-
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sector likely to be occurred in the people lives. In1870, the Bombay
near future. Till recently, insurance Mutual Life Insurance Society
sector was majority driven by the started its insurance business and
government sector players but now it chargedthe same premium from
many private sector multinational all people irrespective of whether
players have come into the picture. they were Indian or English. In the
Like HDFC, ICICI, Kotak, Mahindra year 1912, insurance regulation
and Birla Sunlife. Insurance sector was started due to the passing of
has been characterized as the the Life Insurance Companies Act
booming sector of the Indian arena, and the Provident Fund Act. By the
which has shown the growth rate of year of 1938, in India there were
more than 15 per cent to 20 total 176 insurance. companies. In
percent. Insurance in India is put the year of 1938, with the passing
under the federal subject and is of Insurance Act, 1938 there was
governed by the Insurance the introduction of the first
Act,1938, the Life Insurance comprehensive legislation. It was
Corporation Act, 1956 and General passed with the aim of providing
Insurance the strict state control over the
Business(Nationalization). Act, insurance business. After the
1972, Insurance Regulatory and independence, insurance sector in
Development Authority(IRDA) Act, India grew at a much higher pace.
1999 and by various other acts. In the year 1956, Indian
The roots of the insurance sector government combined together 245
can be tracked down in the year Indian and foreign insurers and the
1818 in the formation of thelife provident societies under the name
insurance Corporation in Calcutta. of nationalized
The idea was to provide means to monopolycorporation. It was the
the English widows.During that same period when the life
time different premiums were insurance corporation (LIC)came
charged for the Indian and English into theexistence by the passing of
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the Act of Parliament and through business got the India. Due to the
the contribution of capital around amalgamation of 107 private
Rs. 5 crore. Till 1972, private sector insurance companies, 4 new
has enjoyed somehow monopoly in companies, as the subsidiaries of
the general insurance sector. There the General Insurance Company,
were around 107 private came into effect- National
companies in the field. With the Insurance Company, New India
effect of the General Insurance Assurance Company, Oriental
Business (Nationalization) Act, Insurance Company and United
1972, the general insurance India Insurance Company.
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