IMPACT OF GLOBAL FINANCIAL CRISES

ON INSURANCE SECTOR

INTRODUCTION
We strongly believe that as life is different at every stage, life insurance must offer flexibility and choice to go with that stage. Insurance companys, are committed to provide the best possible service to their clients. The companies are keen to achieve top of their goals to build a strong loyal customer base, for that they try to enrich by providing the best services at competitive costs. We had chosen the insurance sector as our topic for the project because now a days people knows about insurance companys but they dont give due importance to insure their lives. As global financial crises are going on so by insuring their lives people could have a sense of security that they had some fund secured for their future uncertainties. And we are aware of the fact that insurance sector is one of the sector which is also affected by the financial crises so through this we can create awareness how it is affecting the various financial sectors.

Objective of the Study

The very first objective of the study is to seek into the sectors which are affected by the financial crises. To know about up to what extent the financial crises will affect the world. Another objective is to know that how the companies are still running. And to know how the employees are tackling the problem of global financial crises.

Financial crisis

Listeners are by now familiar with the tales of woe coming from around the world with respect to collapse of financial institutions, including banks, investment and insurance companies as well as the huge declines in the share prices of many companies quoted in stock exchanges. Many people have lost their homes because of inability to repay loans; others have seen their retirement savings disappear, while hundreds of thousands have lost their jobs. Virtually all countries may eventually be affected and the number of victims of this global crisis may ultimately be in the millions, if not billions.

The problem started in the United States of America where, propelled by sheer greed, financial institutions made loans to people to purchase homes without due regard to the financial circumstances of such people. The loan transactions were implemented through sophisticated but dubious arrangements involving major commercial banks, investment banks, specialized financial institutions and big insurance companies. Millions of people acquired homes whose costs were way beyond their economic situations.

The global financial crisis of 2008-2009 is an ongoing major financial crisis. It became prominently visible in September 2008 with the failure, merger, or conservator ship of several large United States-based financial firms. The causes leading to the crisis had been reported in business journals for many months before September, with commentary about the financial stability of leading U.S. and European investment banks, insurance firms and mortgage banks consequent to the sub prime mortgage crisis.

History
A short list of some major financial crises since 20th century

1910 Shanghai rubber stock market crisis 1930s The Great Depression the largest and most important economic depression in the 20th century 1973 1973 oil crisis oil prices soared, causing the 19731974 stock market crash 1980s Latin American debt crisis beginning in Mexico 1987 Black Monday (1987) the largest one-day percentage decline in stock market history 1989-91 United States Savings & Loan crisis

1990s Japanese asset price bubble collapsed 1992-93 Black Wednesday speculative attacks on currencies in the European Exchange Rate Mechanism 1994-95 1994 economic crisis in Mexico speculative attack and default on Mexican debt 1997-98 1997 Asian Financial Crisis devaluations and banking crises across Asia 2008-09 The American financial crisis of 2007 2009 helped create the global financial crisis of 20082009

Insurance

Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed small loss to prevent a large, possibly devastating loss. An insurer is a company selling the insurance; an insured is the person or entity buying the insurance. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium

Commercially insurable risks typically share seven common characteristics are -:

A large number of homogeneous exposure units Definite Loss Accidental Loss Large Loss Affordable Premium Calculable Loss

History of insurance
The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are:

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.

Types of insurance

Auto insurance Home insurance Health Disability Casualty Life Property Liability Credit

IMPACT OF GLOBAL FINANCIAL CRISES ON INSURANCE SECTOR

Insurance companies impacted by the crisis Insurance companies generally less affected than banks The near term outlook for the industry The lessons can industry draw from the financial crisis Insurer can contribute to a rapidly end the financial crises and economic downturn

CONCLUSION
At the end of the project we can conclude that due to global financial crises, all the countries of the world are severely affected. It had ruined the various sectors of the world which had indirectly affected the income of the people & ultimately lead to downfall in per capita income of the country. Due to this the GDI of the country has also declined. We had also found that the insurance sector is less affected by the crises than that of banking sectors so it is somehow easier to overcome it quickly.