INSURANCE

(Governed by Insurance Act -1938,Now By –

IRDA act-1999)

History:-Methods of transferring or distributing risk were

practiced by Chinese and Babylonian traders as long ago as
the 3rd and 2nd millennia BC.
The Greeks and Romans introduced the origins of health
and life insurance c. 600 AD.
India:- First Indian insurance company was Calcutta
Insurance Company which setup in 1798 exclusively for
Europeans. The Bombay Life Assurance Society formed in
1870 Insured Indians first time.
.Indian life assurance companies act ,1912
was first statutory act to regulate life
business.
In 1928 the indian insurance companies act
enacted.
In 1938 insurance act amended to consolidate
legislation and effective control over the
activities of insurer.
19th Jan.1956 LIC is formed by absorbing 154
Indian,16 non-indian insurer and 75 provident
societies.
.GIC was Incorporated as a company in Year
1971 . In 1972 General Insurance
Business(Nationalization) Act passed with
effect from 1st Jan 1973 GIC is formed by
amalgamation of 107 insurer and 4 company
formed named as…
National Insurance Co. Ltd.
The New India Assurance Co. Ltd.
The Oriental Insurance Co. Ltd.
The United India insurance co. Ltd.
Cont…
In Dec. 2000 subsidiaries of GIC were
restructured as independent company. And in
July 2002 parliament passed a bill of De-
linking of four subsidiaries of GIC.
Today there are 14 General insurance
companies including ECGC & Agricultural
insurance corporation of India and 14 life
Insurance company operating in India.
Definition:-
Insurance is pooling of risks. In contract of
insurance ,the insurer (insurance company)
agree/undertakes, in consideration of a sum of
money (premium) , to make good the loss
suffered by the insured against a specified
risk such as fire , accident etc or any
contingency.
Indian Insurance
company
a company defined and registered under the
companies act in which aggregate holding of
equity shares by a foreign company either by
itself or by nominees/subsidiaries ,does not
exceed 26% paid up equity capital and whose
sole purpose is to carry on
life/general/reinsurance business
Insurer
• (a) any individual or unincorporated body of
individuals or body corporate incorporated
under the law of any country carrying on
insurance business which–
• (i) carries on that business in or
• (ii) has his or its principal place of business or
is domiciled in
• (iii) with the object of obtaining insurance
business, employs a representative, or
maintains a place of business, in India
CONTINUED….
(b) Any body corporate carrying on the
business of insurance, which is a body
corporate incorporated under any law for the
time being in force in or stands to any such
body corporate in the relation of a subsidiary
company within the meaning of the Indian
Companies Act, 1913
Insurance agent
Means an insurance agent licensed under
section 42 who receives or agrees to receive
payment by way of commission or other
remuneration in consideration of his soliciting
or procuring.
Life insurance
business
Business of effecting contracts of insurance
upon human life, including any contract
whereby the payment of money is assured on
death (except death by accident only) or the
happening of any contingency dependent on
human life.
Parties :- There are two parties to an
Insurance contracts as:-
Insurer/assurer/underwriter,
Insured/assured/beneficiary
Policy :- The document laying down the
term of contract is called (insurance) policy.
Principal Agent
A person who is in consideration of any
commission,--
(i) performs any administrative and organising
functions for the insurer, and
(ii) procures general insurance business
whether wholly or in part by employing or
causing to be employed insurance agents on
behalf of the insurer.
Special agent
A person who is consideration of any
commission, procures life insurance business
for the insurer whether wholly or in part by
employing or causing to be employed .
Restriction on name of insurer

An insurer shall not be registered by a name

identical with that by which an insurer in
existence is already registered, or so nearly
resembling that name .
Fundamental principals

Principle of Insurable
interest.
Principle of Utmost good.
Principle of Indemnity .
Principle of Subrogation.
Principle of Contribution.
Type of Insurance
Life insurance
Grant of disability and double/triple indemnity
accident benefits,
Grant of annuities upon human life and
Grant of superannuation allowance/ annuities
payable out of any fund applicable solely to
the relief and maintenance of person
engaged.
Type of Life Insurance
Polices
Endowment Policy
Whole Life Policy
Limited Payment Life Policy
Joint Life Policy
Convertible Whole Life Policy
Annuities
Contin…
Sinking Fund Policy
Double Accident Indemnity Policy
Janata Policy
General insurance
It means fire, marine / miscellaneous
insurance business whether carried on
singly or in combination with one/more of
them
Types of General
Insurance
Fire insurance Policies
(a) Specific Policy
(b) Comprehensive Policy
(c) Valued Policy
(d) Floating Policy
e) Replacement or Reinstatement Policy:
Marine Insurance
Policies
(a) Voyage Policy
(b) Time Policy
(c) Mixed Policy
(d) Valued Policy:
(e) Open and Unvalued Policy
(f) Floating Policy
Other Type of insurance
Property insurance
Automobile insurance
Aviation insurance
Boiler insurance
Builder's risk insurance
Crop insurance
Earthquake insurance
Cont…
A fidelity bond
Flood insurance
Home insurance
Landlord insurance
Marine insurance
Surety bond insurance
Terrorism insurance etc.
Health/ medical insurance:

This cover only two type of benefits

 Re-imbursement of medical expenses related

to specific diseases and
 Hospitalization
Some of policies are as
Individual/Group Mediclaim policy
Bhavishya Arogya policy
Jan Arogya Bima
Overseas medical cover
Liability
insurance/indemnity policies
—
Employee liabilities
Employee state insurance liabilities
Non-industrial risk
Professional liabilities
Product liabilities
IRDA
In 1993 Government setup a committee under
chairmanship of RN Malhotra ,former Governor of RBI
for reforms in Insurance sector.
Recommendations are :-
IRDA was constituted as an autonomous body to
regulate and develop the insurance industry.
Foreign companies are allowed up to 26% of paid up
capital and can operate with an Indian company.
Composition of Authority under
IRDA Act, 1999

The Authority is a ten member team

consisting of

    (a)    a Chairman;

    (b)    five whole-time members;
    (c)    four part-time members
Duties, Powers and Functions of
IRDA

To regulate, promote and ensure orderly growth of

the insurance business and re-insurance business.
 Issue to the applicant a certificate of registration,
renew, modify, withdraw, suspend or cancel such
registration .
 Protection of the interests of the policy holders in
matters concerning assigning of policy, nomination by
policy holders, insurable interest, settlement of
insurance claim, surrender value of policy and other
terms and conditions of contracts of insurance;
Cont….
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.
Cont..
 Levying fees and other charges for carrying
out the purposes of this Act
 Calling for information from, undertaking
inspection of, conducting enquiries and
investigations including audit of the insurers,
intermediaries.
Control and regulation of the rates,
advantages, terms and conditions that may
be offered by insurers in respect of general
insurance business .
Cont…
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.
Registration under
IRDA
The application accompanied by:-
A certified copy of memorandum and article
of association.
Name, address and occupation of Directors.
A statement of the classes of insurance
business done/to be done along with a
statement of deposits with the Reserve Bank
of India.
Cont…
For life business , a sum equivalent to 1% of
total gross premium not exceeding 10 crore
written in India in any Financial year.
For General business 3% of total gross
premium not exceeding 10 crore.
Reinsurance business Rs.20 crore;
Rs.100,000.
For cooperative life insurance business /
assurance companies should be Rs.2 lakh.
Cont…
A declaration verified by an affidavit by the principal officer of the
insurer that the requirement of paid up capital (Rs. 100 crore and
Rs.200 crore for life/general and reinsurance business, respectively)
Rs. 250 crore for reinsurance business or working capital.
A certified copy of the Published prospectus if any and,
Standard policy forms of the insurer and statements of the insurer
and statements of the assured rates, advantages, terms and
conditions to be offered in connection with insurance policies,
together with a certificate in connection with life business by an
actuary.
Cont…
The receipt showing payment of fee (as
determined by IRDA regulation) not exceeding
Rs.50,000 for each class of business.
Such other document as may be specified by
IRDA.
Cancellation of
Registration
He fails to comply with the requirement of
deposit with the RBI.
He fails to comply with the requirement
relating to sufficiency of assets(assets-
liabilities)
The whole of his deposit has been refunded
to him on court order when he cease to carry
on business and all liabilities has been
satisfied/provided for.
Cont…
He defaults in complying with or contravenes
any requirement of insurance act/any
rule/order made or direction issued there
under,
The IRDA has reason to believe that any claim
are unpaid for 3 month after final court order
in India.
He carries on any other business,
Cont…
His business has been transferred to any
other person/amalgamated with any other
insurer.
He defaults in complying with any directions
issued/order maid by IRDA .
He default in complying with or contravenes
any requirement of Companies Act/LIC Act/GIC
Act/FEMA etc
List of Life Insurers..
Bajaj Allianz Life Insurance Company
Limited
Birla Sun Life Insurance Co. Ltd
HDFC Standard life Insurance Co. Ltd
ICICI Prudential Life Insurance Co. Ltd.
ING Vysya Life Insurance Company Ltd.
Life Insurance Corporation of India
Max New York Life Insurance Co. Ltd
Met Life India Insurance Company Ltd.
Cont…
• Kotak Mahindra Old Mutual Life Insurance
Limited
• SBI Life Insurance Co. Ltd
• Tata AIG Life Insurance Company Limited
• Reliance Life Insurance Company Limited.
• Aviva Life Insurance Co. India Pvt. Ltd.
• Shriram Life Insurance Co, Ltd.
• Sahara India Life Insurance
• Bharti AXA Life Insurance
• Future Generali Life Insurance
• IDBI Fortis Life Insurance
Cont…
• Canara HSBC Oriental Bank of Commerce
Life Insurance
• Religare Life Insurance
• DLF Pramerica Life Insurance
• Star Union Dai-ichi Life Insurance
• Agriculture Insurance Company of India
• Apollo DKV Insurance
• Cholamandalam MS General Insurance
• HDFC Ergo General Insurance Company
• ICICI Lombard General Insurance
• IFFCO Tokio General Insurance
Cont…
National Insurance Company Ltd
New India Assurance
Oriental Insurance Company
Reliance General Insurance
Royal Sundaram Alliance Insurance
Shriram General Insurance Company Limited
Tata AIG General Insurance
United India Insurance
Universal Sompo General Insurance Co. Ltd