Introduction

to
Insurance Sector
Presented By-
Dhananjay kumar
1 Jaipuria institute of Management, Noida
 Contents:-

 Lifeinsurance
 General insurance
 Insurance market scenario
 Emerging trends in insurance
 Jobs in insurance
 Insurance websites
 Insurance glossary

2
 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

3
 History of Insurance

 Itstarted from Lloyd’s coffee house London

 First policy issued in England in 1583
 In India first policy issued in 1870

4
 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
5
 Classes of
Insurance

A. Life insurance
B. General insurance
General insurance is further
classified:-
1.Fire insurance
2.Marine insurance
3.Miscellaneous insurance

6
 Miscellaneous Insurances:-

1.Motor insurance
2.Mediclaim insurance
3.Householders insurance
4.Shopkeepers insurance
5.Engineering insurances
etc.

7
 Fundamental
Principles of Insurance

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

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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.

9
 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

10
 Market Scenario after Irda Act 1999

Stage of
Liberalization,
Privatization &
Globalization
(Competition between public sector & private sector)

11
 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 Ltd

7.Met Life India Insurance Company Ltd
8.Kotak Mahindra Old Mutual Life Insurance
Company Ltd
9.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

Ltd
15.Bharti Axa Life Insurance Company
Ltd
16.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.

16
 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 Ltd

7.Cholamandalam Ms General Insurance
Company Ltd
8.HDFC-Chubb General Insurance Company
Ltd
9.Star Health & Allied Insurance Company Ltd

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 General Insurance Companies

10.Export Credit Guarantee Corporation Ltd

11.Agriculture Insurance
Company Of India Ltd
12.National Insurance Company
Ltd
13.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

Ltd
18. Universal Sompo General Insurance Co.
Ltd.
19.Shriram General Insurance Company
Limited
20.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.

35
 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 Growth
GDP 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

 LifeInsurance 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

51
 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

52
 Emerging Trends

 Increasing No. of Insurance companies &

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

53
 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 customer
2. Durability of the product
3. Long-run cost efficiency
4. Better service of the product
To the companies
6. Increase in sales
7. Customer satisfaction
8. Strategic advantage
9. Automatic removal of local-product competitors
10. Revenue
To the Insurance Company
All benefits which is lies with any insurance company
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 1. Insurance for the EDUCATION LOAN
2. Insurance for lower class people.
Example- small/daily premium insurance

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