Bba 6 Sem Projec.docx

CHAPTER 1 INTRODUCTION

Whenever there is uncertainty there is risk. We do not have any control over uncertainties which involves financi risk may be certain events like death, pension, retirement or uncertain events like theft, fire, accident, etc. Insuran financial service for collecting the savings of the public and providing them with risk coverage. It comes under s and while marketing this service due care is taken in quality product and customer satisfaction. The main functio Insurance is to provide protection against the possible chances of generating losses. The insurance sector in India full circle from being an open competitive market to nationalization and back to a liberalized market again. Traci developments in the Indian insurance sector reveals the 360-degree turn witnessed over a period of almost two ce

In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor R.N. Malhotra was forme the Indian insurance industry and recommend its future, direction. The Malhotra committee was set up with the o complementing the reforms initiated in the financial sector. In 1994, the committee submitted the report and som recommendations included: 1. Government stake in the insurance Companies to be brought down to 50%.

2. Government should take over the holdings of GlC and its subsidiaries so that these subsidiaries can act as inde corporations. 3. All the insurance companies should be given greater freedom to operate. Competition: I. Private Companies with a minimum paid up capital of Rs. 1 bn should be allowed to enter the industry. 2. No Company should deal in both Life and General Insurance through a single entity. 3. Foreign companies may be allowed to enter the industry in collaboration with the

domestic companies.

4. Postal Life Insurance should be allowed to operate in the rural market. 5. Only one State Level Life Insurance Company should be allowed to operate in each state. Regulatory Body: 

The Insurance Act should be changed.

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An Insurance Regulatory body should be set up. Controller of Insurance (Currently a part from the Finance Mini made independent. Investment:

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Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50%.

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GIC and its subsidiaries are not to hold more than 5% in any company (There current holdings to be brought dow over a period of time.) Customer Service:

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Insurance companies must be encouraged to set up unit linked pension plans.

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Computerization of operations and updating of technology to be carried out in the insurance industry.

The committee emphasized that in order to improve the customer Services and increase the coverage of the insu should open up to competition. But at the same time, the committee felt the need to exercise caution as any fail of new players could ruin the public confidence in the industry. Hence, it was decided to allow competition in a l stipulating the minimum capital requirement of Rs. 100 crores. The committee felt the need to provide greate insurance companies in order to improve.

INSURANCE INDUSTRY CLASSIFICATION

SCOPE OF INSURANCE: The industry deals with risk management policies used to provide fence against any kind of uncertain loss or damage. The company which sells the insurance is called insurer and the person buying the policy is termed as insured. A lot of applicants get themselves enrolled in a study called Risk Management in order to qualify under this category. Here are the subcategories under ―Insurance‖ industry: Accident and Health Insurance; Fire, Marine, and Casualty Insurance; Hospital and Medical Service Plans; Insurance Agents, Brokers, and Service; Insurance Carries, NEC; Life Insurance; Pension, Health, and Welfare Funds; Surety Insurance and Title Insurance, to name a few. There are 336 million people and 68 million households in the country that are potential insurance product purchasers and by the year 2018, the size of the insurance premium is likely to be Rs 80,000 crore and the life fund nearly five times that.

OBJECTIVES OF INSURANCE:

Insurance is especially true with car insurance since 49 of the 50 states require car insurance to operate a motor v road. The same can said of other types of insurance in that many people buy health and life insurance without a r understanding of why they do so.

1. Auto Insurance Objectives: Auto insurance, like other forms of insurance, protects people against unexpecte auto insurance, this loss is the loss of property, health or life in the case of an accident. The insured driver agrees minimum out-of-pocket expanse called a deductible in the event that he experiences unexpected loss. The insuran agrees to pay the remainder of the expanses. Motorists carry liability coverage to protect against damage they ma someone else‘s property as well. Some auto insurance to protect the policy owner in the event of hospitalization motor vehicle accident.

2. Health Insurance Objectives: Health insurance, like auto insurance, provides protection in the event of unexp but due to reasons associated with health care costs. Expanses in medical care can include doctor visits, hospitali

prescriptions and expansive diagnostics tests.

3. Life Insurance Objectives: Life insurance is probably one of the more difficult types of insurance to understa its purpose and objectives. Life insurance can provide protection to your family in two primary ways. First, it can family with an inheritance in the event of your unexpected demise. This money can be used to pay off existing bi any financial stress that may be caused by your passing. Term life insurance typically provides the greatest benef premium.

ROLE OF INSURANCE:

The process of insurance has been evolved to safeguard the interest of people from uncertainty by providing payments at a given contingency. Not only does it serves the ends of and individual or special groups of individu pervade and to transform our modern social order too. The process of insurance has been evolved to safeguard th people from uncertainty by providing certainty of payment at a given contingency. The insurance principle come and more used and useful in modern affairs. The role and importance of insurance, here, has been discussed in th 1) uses to individual 2) uses to a special group of individuals i.e., business or industry 3) uses to the society. The uses are of relevance to different peoples as:

Uses to an individual:

1. Insurance affords peace of mind; the security wish is the prime motivating factor. This is the wish which tends for more work.

2. Insurance protects mortgage property; at the death of the owner of the mortgaged property, the property is take lender of money and the lender of money and the family will be deprived of the uses of property.

3. Insurance provides security and safety; it provides security and safety against the loss of a particular event. In insurance payment is made when death occurs or the term of insurance has expired. The loss to the family at a pr and payment in old age are adequately provided by insurance.

4. Insurance provides security and safety the insurance provides safety and security against the loss on a particula case of life insurance payment is made when death occurs or the term of insurance is expired. The loss to the fam premature death and payment in old age are adequately provided by insurance.

In other words, security against premature death and old age sufferings are provided by life insurance. Similarly, of insured is secured against loss on a fire in fire insurance.

5. Insurance provides security and safety the insurance provides safety and security against the loss on a particula case of life insurance payment is made when death occurs or the term of insurance is expired. The loss to the fam premature death and payment in old age are adequately provided by insurance.

In other words, security against premature death and old age sufferings are provided by life insurance. Similarly, of insured is secured against loss on a fire in fire insurance.

6. Insurance protects mortgaged property at the death of the owner of the mortgaged property, the property is tak lender of money and the family will be deprived of the uses of the property. On the other hand, the mortgage wis property insured because at the damage or destruction of the property he will lose his right to get the loan repaye

7. Insurance eliminates dependency at the death of the husband or father, the destruction of family need no elabo Similarly, at destruction of property and goods, the family would suffer a lot. It brings reduced standards of livin suffering may go to any extent of begging from the relatives, neighbours or friends. The economic independence is reduced or, sometimes, lost totally. What can be more pitiable condition than this that the wife and children are others more benevolent than the husband and father, in absence of protection against such dependency. 8. Life insurance encourages saving

I) Systematic saving is possible because regular premiums are required to be compulsorily paid. The saving with voluntary and one can easily omit a month or two and then abandon the program entirely.

ii) In insurance the deposited premium cannot be withdrawn easily before the expiry of the term of the policy. A this, the saving which can be withdrawn at any moment will finish within no time.

iii) The insurance will pay the policy- money irrespective of the premium deposited while in case of bank-deposi deposited amount along with the interest is paid. The insurance, thus, provides the wished amount of insurance a provides only the deposited amount.

iv) The compulsion or force to premium in insurance is so high that if the policy- holder fails to pay premiums w of grace, he subjects his policy to lapsation and may get back only a very nominal portion of the total premiums p policy.

Uses to an business:

1. Uncertainty of business losses is reduced; a business is a sensitive organization and with slight negligence it ca into ashes. So insurance reduces the potential risks.

2. Business efficiency is increased with insurance; as one is completely secured then it makes it easier to work up diligence and dedication. So insurance brings in security in the work place. 3. Catastrophic Loss

Business insurance protects a business from closing due to a catastrophic loss. Fires, floods, hurricanes and torna been the end of many businesses in Texas, as elsewhere. When a company carries insurance against these types o closure and loss are only temporary instead of permanent. Companies schedule always consider business interrup insurance. 4. Liability

If a customer slips and falls while on your business premises or your product has a defect that injures a customer not have insurance, this could spell the end of your business. If a company car is involved in an accident and som injured, that could be disastrous as well. Business liability insurance covers accidents that occur on the business p 5. Theft

A new business is a big target for thieves. New computers, furniture and other office equipment is worth more at a pawn o

than older equipment. Even older businesses that have just undergone renovations and upgrades are a target. Rep insurance protects a business in the event equipment is stolen, replacing the missing items and paying for repairs caused by the invasion. 6. Litigation

We live in a litigious society. Even with the Texas tort reform legislation passed in 2003, which capped judgmen to eliminate frivolous lawsuits, businesses are sued by individuals and other businesses for a variety of reasons, l otherwise. Even the most frivolous lawsuit can be costly to defend; and in the event a business ends up on the los lawsuit, the awarded damages could exceed the business's capabilities to pay. Depending on the business entity s only the business assets, but also the owner's personal assets could be at risk.

7. Personal Injury or Illness

Business owners should have personal insurance as well. Medical insurance will ensure medical bills incurred du or injury will not wipe out a business's assets. Considering Texas has some of the highest medical costs in the co per person are over 24 percent higher than the national average--going uninsured could potentially bankrupt a Te

owner if he were to become ill. 8. Level of Coverage

How much insurance to carry will depend on your industry, the business structure and the amount of assets your The location of the business within Texas, such as coastal or rural, and whether the building is leased or owned w factor. For example, a law firm partnership that owns the building in which it is housed might need more insuran jewelry designer operating out of her home.

Uses to a society:

1. Wealth of the society is protected; loss of a particular wealth can be protected using insurance since it is a very to keep things safe and free from market fluctuations.

2. Economic growth of the country; insurance contributes a lot to the general economic growth of the society as i stability to the functioning of process. 3. Employment:

Insurance creates employment opportunities in the country; an insurance company provides direct employment t business activities, Insurance provides self-employment to various people. Insurance agents are an example.

4. Capital formation: Insurance accumulates small savings in premium. It makes investment for productive purpo leads to capital formation in the country. Insurance companies invest in industries, commerce and shares of listed

5. Economic development: insurance contributes top economic development of country. Insurance creates positiv development climate by providing protection from risks.

6. Capital formation leads to economic development: insurance funds are invested for productive purposes. Taxe insurance company are used for social development by government.

7. Living standards: Insurance helps to improve living standards of society. Payments received from life insuranc improve living standards of individuals and family.

8. The role of insurance is to take risks in the place of their clients. Basically, anything significant (statistically or can and should be used. 9. The role of insurance is to share risks across all of society, reducing the impact risks have an individual‘s, and arbitrary bad luck.

INTRODUCTION TO MOTOR VEHICLE INSURANCE

History of Motor Insurance

Motor-insurance was first started in U.K. the first car appeared in 1894 and the first policy was issued in 1895. It liabilities to third party. In 1899 accidental damage to car, and in 1901 burglary and fire were added. Thus the pr found in comprehensive policy of to-day. In 1903 the car and general insurance corporation limited was started a others followed. After world war number of cars and car-accidents increased. The victims could not get compens third party insurance was made compulsory (the Road Transport Acts 1930 and 1934 and 1960). In India Motor V was passed in 1939. The act was the same as that of U.K. The only difference is that in U.K. tariff is withdrawn b Tariff governs the insurance. The owner or operator of an automobile is subject to the hazard of claims for damag owner, to the hazard of loss to the car itself. Claims of damage may arise out of the ownership, maintenance, or u Loss to the car or its contents or occupants (physical damage) may be caused by: 1. Fire internal or external origin, 2. Theft, 3. Collision or upset, 4. Miscellaneous.

A person is subject to the hazards of injury, death or damage to property arising out of ownership maintenance, o automobile by himself or by others. Object:

Motor-insurance belongs to miscellaneous class of Insurance. But the business is so big that insurance companies maintain a separate department. This is a tariff class of business. So the covers, premium rates and policy farms a standardized or uniform. Everyone who owns an automobile assumes certain risks. Because the property is exposed to damage and law imposes upon owners some responsibility towards the public. Those who drive cars are more responsible to public. The risks are of two types: (1) Legal liability for damages for bodily injuries or damage to property caused other;

(2) damage to or loss of one‘s own automobile. Everyone who owns an automobile assumes a risk because the p subject to damage and the law imposes upon owner‘s responsibility to public.

In the absence of any law also the owner or driver of an automobile is required to use reasonable care with respec vehicles to safeguard public from injury.

Basic Principles:

The basic principles applicable to motor insurance are the same as they are in property and liability insurance. Bu application of these principles to automobile insurance is accepted as a specialized problem requiring a special co However, we recall the principles below in brief. Utmost Good Faith:

The doctrine imposes a legal responsibility on the proposer to disclose material facts to the insurer. The proposal compulsory. The declaration clause given there makes the proposer‘s responsibility a contractual duty of utmost

The answers to questions in form given by proposer become warranties or promises. So the answers must be true language and must be correct. Any incorrect answer on any matter will make the contract voidable. Some examp facts are – the type of vehicle, the geographical area of use, the physical health of driver, the driving history, traff convictions, and past loss experience etc. Many of these provisions are now regulated by Motor Vehicle Act, 193

Insurable interest: This is the legal right to insure. The essentials are: 1. Existence of property exposed to damage or liability; 2. That must be subject matter of insurance;

3. The insured must be in such a position that he shall suffer by loss or damage or benefit by the safety of the pro The parties who are expected to have insurable interest are:

a) Insured. He as owner of vehicle suffers a loss if car is damaged or from a legal liability to third party who suf his negligence.

b) Other than insured. The driver or persons who drive may create a liability for insured. In effect the insured b agent for these persons and insured indemnifies them.

c) Financier. In hire purchase agreement the financier‘s interest is insurable. In case or loss of damage the owne

compensation (owner is financier). d) Motor trader. The garage proprietors as bailees have insurable interest for customer‘s loss or damage. Indemnity

It means, the insured is placed after a loss, as far as possible, in the position as he was before the loss. It ensures n insured out of loss. So the insurer pays the actual value of loss or sum insured whichever is less in case of total lo If old parts are replaced by new a suitable depreciation is charged on new parts. Insurer man repair, or replace or likes. Liability to third party is limited to policy sum. Legal costs are also indemnified. Indemnity is payment of a

Subrogation and Contribution:

Subrogation is transfer of right of insured to insurer. It arises only when the third party is responsible for damage exercise the insured‘s right to recover damage. Generally the right arises after payment of damage. But policy ma transfer before payment (Knock and Knock agreement). Contribution refers to sharing of damage between co-ins done in the proportion the insurer‘s share bears to total sum of all insurers. Proximate Cause:

The insurers shall pay damage only if loss is caused by a peril most proximate or the nearest to damage and if it i against. It is applicable to third party claims also. Types of Motor Vehicles are found in Act as follows: Private Cars 1. Social, domestic & Pleasure purposes. 2. Proffessional or business purposes by insured or his employees means. Motor Cycles 1. Motor cycles with/ without side cars. 2. Auto cycles or mechanically pedalled cycles. 3. Motor Scooters 4. Three wheelers in valid carriage.

Commercial Vehicles

1. Goods carrying (Private carriers permit) 2. Goods carrying (Public carriers permit) 3. Trailers without of self propultion 4. Passenger carriers, buses, hotel omni buses,airline buses 5. Passenger carrying vehicles hire, miscellaneous special type.

Types of Policies: Any vehicle can be insured under the following policies:

1. Act only Policy. This provides the minimum cover for legal liability for injuries to third parties or their proper

2. Third Party Policy. This provides all covers of Act only and allowed higher limits for third party property dam

3. Comprehensive Policy. After providing for damages as contained in above policies it also covers loss of or da vehicle. Two other different covers are available for private cars. 4. Fire and or theft. This covers the risks of fire and or theft to car while in garage and out of use.

5. Third Party and Fire and or Theft Risks. This policy covers risks covered by Act only and third party polic addition covers risks of fire and or theft whilst the vehicle is running and or in garage.

Classification of Vehicles: The vehicles are generally divided in the following four categories for the purpose of insurance: a) Private Cars b) Commercial Vehicles It refers to any type of mechanically driven vehicle used for business or trade purposes: i) Commercial Passenger Vehicle. ii) Commercial Goods Vehicle or traders.

iii) Motor Cycles.

Classification is necessary for fixing the rates of premium. For that vehicles are further classified on the basis of work. The Tariff defines and describes the vehicles in the following ways. Each of the above type vehicles can be carrier or public carrier. a) Private Cars. According to their function or use by owners. i. Vehicles used solely for social, domestic and pleasure purposes.

ii. Cars of private type (including station wagon) used for special, domestic and pleasure purposes and for the bu professional purposes of the insured or insured‘s employees.

iii. Three wheeled cars (including cabin scoters) used for private purposes. Note that cars are classified not by the make but for what purpose they are used or what functions they perform. A car carrying samples to customers is it transports goods it becomes public carrier and falls outside the private car class. Some purposes like giving on reward, racing, pace making, reliability trials, speed testing are not private use. They are trade uses. Motor Cycles This class includes the following different types of vehicles: a) Motor cycle with or without side car. b) Auto cycles or mechanically assisted pedal cycles. c) Motor scooters with or without side car. d) Three wheeler invalid carrier.

b) (I) Commercial Vehicles Owner’s goods. Vehicles carrying goods of the owner or insured. These vehicles a a private carrier‘s permit. The Motor vehicles Act, 1939 defines a Private carrier as an owner of a transport vehic public carrier who uses the vehicles solely for the carriage of goods which are his property or the carriage of nece purpose of his business not being a business of providing transport. The following characteristics make a vehicle private commercial vehicle: 1. It is owned by the insured. 2. It is run under a private carrier‘s permit. 3. It is not public carrier i.e., carriers owner‘s goods only for his business purposes only.

4. It does not run for transporting goods for other than the owner.

(II) Commercial Vehicles General Carriage. These vehicles are used under public carrier‘s permit. The act def carrier as ̳an owner of transport vehicle who transports or undertakes to transport goods or any class of goods, fo person at any time or in any public place for hire of reward, whether in pursuance of the terms of a contract or ag otherwise‘. The following characteristics in a vehicle make it public commercial vehicle. 1. It is run under public carrier‘s permit. 2. Its owner transports goods of all classes of others. 3. It transports any type of goods from any public place at any time. 4. It may carry goods under an agreement or without agreement.

(III) Trailers. Any truck, cart carriage or other vehicle without means of self-propulsion. It includes also agricul implements drawn or hauled by self-propelled vehicles.

(IV) Passenger Carrying Vehicles. The vehicles may be made like buses including tourist buses; hotel or schoo and air-line buses. The passenger carrying vehicles may be used for hire: I) As taxis or private car type vehicles used for public hire;

II) Private type taxis let out on private hire direct from the owner with or without meters and driven by the owner without meters and driven by the owner or an employee of the owner; III) Private type vehicles let out on private hire and driven by the hirer or any driver with his permission; IV) Private car type vehicles owned by hotels and hired by them to their guests.

The private car may be a passenger carrier if: i) It is given on hire, ii) It may have meter or not, iii) May be driven by owner or his driver,

iv) Hired to guests for self-driving.

The use should be by others and for hire charges. Passenger carrying motorized rickshaw comes under this class. Miscellaneous and special types of vehicles carrying passenger also come under this class. Forms of Motor Insurance According to risk covered by an insurance contract different policies are issued. Generally the following types of insurance policies are issued under vehicle policy or motor insurance.

1. Act Only Policy. The name explains the purpose and scope of the policy. It is compulsory. That means all ow vehicles who play the vehicles in public places must abide by motor vehicle act. One important condition is to ha for certain risks. The risks may be many. But the risk of injury to third party‘s body and property is included here. Owner is bound to have this insurance. The amount of by Act. Further, the act compels the insured to cover risk to life and property of the employees engaged in vehicl attender or carried in vehicle. These risks are provided in Workmen‘s Compensation Act, 1923. The amount of c mentioned in this Act. In India both the risks of bodily injury to third party and to employees can be covered und But Act provides for a legal liability of an insured toward third party for injury to his body and property.

2. Third party policy. This policy includes cover for all risks mentioned in Motor Vehicles Act and some things expands or broadens the coverage by increasing the value of property to be covered. That means if one takes the get compensation from insurer up to the value of insurance which may be higher than the minimum amount presc act. Generally the policy covers risks under the total Accident Act 1855 and common law. The insurer pays for a liability, the costs and expenses for which insured liable.

3. Comprehensive. The broadcast available coverage of loss to the automobile is afforded under this heading. It covers all risks except those which are specifically excluded. (i) Third Party Only. Covers all risks except those which are specifically excluded (by deleting own damage to expanses section).

(ii) Third Party fire and or Theft (by amending section – I by endorsement or addition of clauses not found in Insurance is a contract. But the form of content is supplied by the insurer. This is called standard policy form. Th contains the common requirements. But the insured person may want cover for a few or more than the provisions form. So to suit his needs some points are deleted or added. Any addition of new thing is called endorsement. We discuss the different types of policies. We shall find that policy may cover one risk ̳Act only‘ or many risks. Poli minimum cover i.e., the legal liability of insured toward third party. This is the cheapest of all policies i.e. ‘Act o

Comprehensive Policy. This policy covers all risks to insured arising out of legal liability i.e., to third parties un Vehicles Act, Total Accident and common law. It also covers loss or damage to vehicle. The form is provided in Tariff. Comprehensive means all included in one. But in practice all risks are not covered. It excludes many risks standard comprehensive policy form. It covers all risks mentioned in that form and according to the terms of con insurer and insured. The form contains (i) the proposal of insured to take insurance, (ii) the declaration of materia schedule; (iii) consideration, i.e., premium and (iv) promise to pay indemnity during period of insurance by insur We reproduce an extract of recital clause below:

Whereas the insured by a proposal and declaration dated as in the schedule. Which shall be the basis of this contr deemed to be incorporated herein has applied to the company for the insurance hereafter contained and has paid o pay the premium as consideration for such insurance in respect of accident loss or damage occurring during the p insurance.‖ The clause gives the frame of the contract. But the details are given in the schedules. The clause simp the covers are granted on the basis of facts disclosed by insured in the schedules. The important facts in clauses can be divided into three sections: (a) I deals with the loss of or damage to the vehicle, (b) II deals with the liability to third parties, (c) III deals with the medical expanses payable on accidental injury. 1. Loss or Damage to Vehicle The insurance company shall indemnify the insured against loss or damage to Motor car and or its accessories. The causes of loss may be from: (a) External means, (b) Fire, external expulsion, self ignition or lightening or frost, or burglary or theft; (c) Malicious act; (d) While on road, in lift or elevator.

As we know this policy covers all risks to insured arising out of his legal liability under Motor Vehicles Act, Tot Act and common law i.e., it covers damage of bodily injury and property to third parties caused by insured. It cov to the insured‘s car and accessories. It limits the liability to the amount of actual loss. The insured cannot get any Further the damage is compensated if caused by any of the causes mentioned above. The insurer gives it own me definition of different items covered in policy. As, for example, accessory for insurance purpose means those par

bumbers, horns etc. these are directly supplied by the manufacturer along with car. These parts are not essential f car. Accessories which are kept separately or detached from car are excluded from policy coverage. Radios, tape not accessories. But insured may add them by paying extra premium. 2. Tcwing charges: The policy pays up to R protection, removal and delivery and redelivery by insured to repairer for repairing of car meeting an accident. 3. repairs. The company must agree and consent to this expenditure.

Exceptions. The following types of losses are excluded from policy: (i) Indirect or consequential loss. The best example of such a loss is transport expanses for availing alternative tra insured during repair of car which met accident. (ii) Depreciation, wear and tear. The car many normally suffer these losses so they are excluded. (iii) Mechanical failure. This refers to damage of a motor car part. Suppose steering is broken then insurer is not But insurer is responsible to pay for accident caused by broken steering.

(iv) Damage to types. Damage to tires are excluded. But if car is totally damaged with damage to tire then it is co damage to tires is included in the value of car‘s damage.

2. Liability to Third Party. Under this section the policy provides indemnity to the insured if there is an acciden accident may be caused by the motor car or it may arise out of the use of car. The amount of indemnity for this se calculated by adding all expanses of the third party suffering bodily damage or death. It includes the damage to th other occupants of the car. Different types of damages are: a) Death of or bodily injury to any person, to the occupants of the car and compensation to be paid to the driver. b) Damage to the property of the insured. c) Legal costs incurred by insured with consent of the insurer regarding damage.

Exceptions. 1. The occupants of car for hire or for a fare are not covered. Like that if an occupant employee dies accident this is excluded. He will be covered by Workmen‘s Compensation Act.

2. Damage to property of the insured helds in trust or for custody or simply controls is not covered. However, po extended to cover other risks by special clauses in the form for additional premium.

Extension of cover. At insured‘s request and for appropriate premium the following extensions can be made for other drivers and indemnity while driving ̳other cars‘. In the first case any driver driving the car will get indemn with insured‘s order or permission.

1. But the driver should not be entitled to indemnity under any other policy (From Workmen‘s Compensation Ac

2. He must fulfill all conditions and terms of the policy6 as are applicable to insured. This extension is necessary section 24 of Motor Vehicles Act does not allow any driver to drive without insurance. But relatives of owners an may generally use a Motor Car. This section covers all who drive the car with knowledge and consent of the own car owned under hire-purchase terms also. The H.P contract gives ownership to the purchaser only after payment installment. But insurance covers risk from the beginning of price of the hire- purchase contract. Insurer’s Duty.

1. In the event of death of any person, insurer should pay to his legal representatives i.e., indemnity. They must f and conditions of the policy like insured. 2. Insurer must arrange for representation at any Inquest or Total Enquiry in respect of any death. 3. He must defend the proceedings in the court of law regarding insurance. 3. Medical Expenses The insured can get up to Rs.350 for medical expenses relating to an accident.

The conditions for granting expenses to insured are: 1. Expanses must be for bodily injury directly caused by accident. 2. Cause of injury should be a violent accident. 3. Accident must be due to external and visible means. 4. Victim must have insured himself or any occupant of the car. The payment is made on production of bills and

General Exceptions. These exceptions are applicable to all sections discussed above in comprehensive policy.

1. Contractual liability. The comprehensive policy indemnifies all loss to insured. But loss may arise out of Mo Act, Total Accident or common law or form his own contract. Liability from his own contract is not paid by insu 2. Even legal liability is excluded under following conditions: (I) Accident outside the geographical area i.e., India, (II) Accident happening after change in ownership use of motor car:

(a) using for any other purpose than for social, domestic and pleasure or for business purpose; as, for example, fo racing, speed-testing, carrying goods or motor trade, (b) driving the car by a person other than a driver i.e., person without driving license. 3. Accident happening after change in ownership i.e., after selling. 4. Accident during the use by government. Some examples are given below when government requisitions all private motor cars for its own use: (I) Flood, storm, earthquakes etc., (II) strike or riot, (III) war and kindred perils; (IV) nuclear risk. 5. When person driving is drunk or under intoxication. It does not apply to third party liability. Commercial Vehicles This policy is the same as the private car comprehensive policy. But it differs on certain points:

Section I. Damage to Vehicle. Policy excludes the following : damage by frost, damage to accessories by burgla damage by overloading or strain or explosion. Immediate repair authorization is Rs.300. There is a compulsory e Section II. Third party injury. The differences from private policy are given below: 1. Third party liability amount is limited which was unlimited in private car.

2. The driver, conductor and cleaner are all included of in occupants category and will be indemnified. The empl consignor is also covered.

3. The use of vehicle will include ̳loading and unloading‘ when vehicle is standing. This is further limited to carr 4. Injury while mounting or alighting of passengers is included.

5. Damage to property of which it is not owner are excluded. 6. Damage to road of bridge etc. excluded. 7. It covers liability arising out of accident due to damage road. 8. Liability for spark or explosion damage is covered. 9. Liability for driving other vehicles is excluded. The following are excluded from cover:

(i) Consequential loss (indirect loss). This policy covers direct loss caused by an accident. As for example, cost transportation in some other means during repair of a vehicle is consequential and excluded. (ii) Depreciation. Loss due to depreciation is natural. It is not accidental or fortuitous event so excluded.

(iii) Mechanical/Electrical breakdown, failures, breakages. Mechanical damage is the same as depreciation an But subsequent damages due to accident caused by mechanical breakdown are covered. As for example, if steerin cost is not paid but subsequent damage or loss to car is paid.

(iv) Damages to tires. It is subject to damage, so not payable. If the car is damaged and the tires are also damage of the cost of replacement is covered. (a) Comprehensive Policy for Commercial Vehicle: The general framework of the policy is the same as under the private car comprehensive policy.

Some important differences are: (i) Loss or damage by frost is not covered.

(ii) Loss or damage to accessories by burglary, house breaking or theft is not covered unless motor vehicle is stol accessories. (iii) Damage caused by overloading or strain or by explosion of the boiler is not covered. (iv) The limit for immediate authorization of repairs by insured is Rs.300.

(v) There is a compulsory excess is respect of each and every claim in case of taxis, public and passenger buses e in all nine conditions in a commercial vehicle policy. Eight are the same as those of private car policy. But the ce compensation or maximum is Rs. 1 lack so all sorts of limitations are given so that insured cannot get than Rs. 1 any circumstances. General Exceptions. These are excluded from both private and commercial comprehensive policies:

1. Excludes liability accepted by insured by special contract (not coming under legal liability).

2. Accident or liability occurring outside the geographical area (India) and used for prohibited purposes, i.e., by o driver and for purposes not domestic or social or personal. 3. Accident takes place after termination of insured‘s liability in vehicle. Example : he has sold it already. 4. Accident during serving government, flood, storm, strike, war and nuclear risk. 5. Car driver under intoxication or drug. THE MOTOR VEHICLE ACT, 1939

Scope of Insurance: In order to safeguard the interests of pedestrians, the Motor Vehicle Act introduced compul insurance. The insurance of motor vehicle is not compulsory, but the insurance of third party liability arising out motor vehicles in public places, is made compulsory. The Act says that no motor vehicle can play in a public pla insurance. For the purpose of the Act some terms are used in specific sense:

̳ ehicle‘ is any mechanically propelled land vehicle (and its trailer) not running on rails. Third party‘ is anybody V insurer and insured. Property‘ refers to and includes roads, bridges, culverts, cause-ways, trees, posts and milesto Conductor‘ is a person engaged in collecting fares from passengers and regulating their entrance and exit. Stage c motor vehicle adopted to carry more than 6 passengers excluding driver for separate fare per person. Public servi any vehicle adopted to carry passengers for hire. Public carrier‘ is an owner of transport vehicle and used for the other person goods at any time in any public place for hire. Necessity for Third Party Insurance

Section 24 (motor vehicle act) provides that no person shall use(except as a passenger) or allow any other person motor vehicle in a public place, unless the vehicle is covered by a policy of insurance according to the Act. Publi place where public has right to enter including bus stop. Stationary parking in such a place also is a use of public use or driving is prohibited in Act. The purpose is that every motorist must insure certain liabilities that he may in using vehicles in public places. The liabilities which require compulsory insurance are as follows: (a) Liability for death or bodily injury of a third party or damage to his property. (b) Of passengers carried for hire;

(c) Of passengers carried by reason of a contract of employment.

(d) Of an employee under Workmen‘s Compensation Act: (i) who is driving the vehicle; (ii) working as conducto examiner; (iii) carried in vehicle (goods carriage).

Exceptions. The compulsory insurance does not apply to any vehicle owned by the Central/ the State governmen government purpose without any connection with commercial enterprise. Two conditions must be complied with before exceptions are made. (i) Appropriate government authority should order for exception. (ii) Granting authority must be satisfied that a fund is established by owner for meeting liability out of the use of only exception is given.

Requirement of Limits of Liability. A policy is meant to cover only liability incurred of any one accident up to limits. Where the Vehicle is:

(i) A goods vehicle(under Workmen‘s Compensation Rs.1,00,000 in all with less than 6 passengers). Driver, ove this is covered. (ii) A hire passenger vehicle Rs.15,000 to each passenger for contract of employment. (iii) A vehicle of any other type: Rupee value of actual liability. (iv) A vehicle of any class causing damage to property of third party Rs.6,000. Requirement of Commencement and Termination

Insurance takes effect from the time the issues a certificate of insurance to the person by whom policy is taken or prescribed form, and rules will be discussed later.

Period of insurance cover can be terminated or suspected before the end of policy period. The insured has to deli certificate to insurer within 7 days after termination. The insurer may cancel or suspend by notifying the registrat authority within 7 days of that action. For any loss of certificate an affidavit is required as evidence.

Transfer of ownership. When insured proposes to transfer ownership by sale with insurance policy of the vehic apply to insurer for transfer. The transfer is deemed to be allowed if insurer does not refuse within 15 days of rec application. Usually the insurer allows transfer. But in the following cases he may refuse a transfer.

He shall refuse if he feels that refusal will be necessary because of: 1. Previous conduct of the person (i) as driver; (ii) as a policy holder. 2. A condition in the policy providing for refusal, or prohibiting transfer. 3. Any proposal of the transferee for insurance having been rejected earlier.

After sale the insurer has no liability on behalf of the seller. But Act is strict and does not relieve the insurer from toward third party. New owner‘s liability is not covered till old certificate is cancelled and new owner fills in the form. So the insurer gives a notice of 15 days to the insured after receiving his application for transfer. During th seller should surrender his insurance certificate and buyer should take the new policy. Insurer’s Duty to Third Party

Section 96(1) provides the duties of insurer to third party. The third party liability is awarded by court. By the co the third party gets a decree for compensation against the insured. On the strength of this judgment insurer pays m party. This payment includes compensation, costs, and interest. The highest limit is the insured amount. The third get more than insured amount. The insurer is bound to pay the third party. The insurer cannot avoid liability thou have cancelled or avoided the policy. These rights do notapply against third party. Insurer has one right. He must notice of proceedings of the case or appeal against execution of court‘s order. Insurer’s Rights 1. The insurer can plead to be a party in the case and defend his position. The grounds on which he may defend are given below: He may avoid liability if court agrees: (a) If certificates of insurance is surrendered by insured (before the event); or (b) If the person who was issued the certificate has given an affidavit that he lost or destroyed the certificate, or

(c) If insurer has notified for cancellation of certificate before or within 14 days from the date of accident and has fact to registration authority within 7 days of cancellation. 2. The insurer may defend the proceedings if insured has broken any condition of the agreement in policy.

The conditions are:

(i) Insured has broken condition of use of vehicle. If he uses vehicle for purposes not included in permit. As for e private car used for hire; (ii) Insured uses vehicle for racing or speed testing; (iii) Insured misuses permit of routes and purpose in transport vehicle; (iv) Insured allows unlicensed or disqualified persons to drive the vehicle; (v) Policy does not cover war, civil war, riot which caused the damage to third party; (vi) Policy was obtained by misrepresentation or non-disclosure of material facts by insured. Rights of Third Parties

Against Insurer when insured is insolvent. Section 97 provides that if insured is a company and becomes insolven party automatically gets all the insured‘s right against insurer. Insurer will accept all liability of third party as if h insured. Two things may happen:

1. The liability agreed by insurer to insured under policy may exceed the liability of insured to third party. The in for balance is available against insurer under policy. That amount of third party liability the insurer has to pay in damage.

2. If the liability agreed by insurer to insured under policy is less than the liability of insured to third party the thi rights against insured is not affected. That means insured has to pay the balance.

3. If the injured third party gets a decree against an insured, he may get compensation direct from insurers. Injure affected by insolvency law. So he does not become an ordinary creditor and prove his debt to get a share of insur Any settlement of claims between insurer and insured is invalid if it minimizes the third party‘s rights.

4. Section 102 says if the insured dies after incurring third party liability then claims will be recovered from insu i.e., from legal heir or insurer. The company will indemnity the insured‘s personal representative according to po dies.

5. Section 98 casts a duty on person incurring a third party liability to disclose all particulars of his insurance. Th party has a right to get all particulars from insured and may in respect the policy and other documents from insur

6. According to section 109 the registration authority or the officer in-charge of police must give the identificatio vehicle, name and address of the user at the time of accident. This information can be required by third party and

Motor Accidents Claims Tribunal

Section 110 gives power to state governments to constitute such tribunals. This body helps to despite of third par speedily, at minimum cost. The president is equal to the rank of a District judge or High court judge. A nominal f by tribunal for a suit. It has no court fee based on value of suit. All third party claims for personal injury and prop up-to Rs.6,000 have to be filed with tribunal. Claims above Rs.6,000 may be referred to civil court if claimant de Parties Entitled to claim compensation Section 110-A provides the information. It can be filed by (a) person injured, or

(b) in case of death by any or all legal representative of the deceased. Any one of the representatives may represe who are not respondents to the application. Application be made to tribunal which has jurisdiction over the area o should be in proper form with all particulars. It must be made within 6 months of the accident. Tribunal may wai if satisfied on the cause of delay. Appeal against award of tribunal can be made to high court with 90 days of the appeal lies against a dispute of Rs.2,000. Where compensation claim falls under Motor Vehicles and Workmen‘s Compensation Act it can be done under either one but not both. Civil courts has no jurisdiction to accept applicat compensation if tribunal is there in that area. Tribunal has all powers of a civil court of the purpose of taking evid examining witness, and compelling production of documents. It gives an award of compensation which it consid

UNDERWRITING CLAIMS

Importance. It is unprofitable class of business. In credit years the claims experience shows signs of deterioratio proportion of claims to number of insurance is on an increase. The reasons are: 1. Increase in number of vehicles. 2. Traffic density 3. Higher cost of labour, and 4. Spare parts.

The awards for third party claims are also increasing. Under this circumstances control of cost of claims is most i insurer.

Steps in Underwriting. Underwriting means accepting insurance proposals. All proposals are not equally accept process of selection proceeds through several stages. The proposal, therefore, passes through stages mentioned under before finally accepted: 1. Close scrutiny of completed proposal forms; 2. Rating and underwriting decision, i.e., to accept or reject; 3. If accepted what risks are to be covered; and 4. Under what terms and conditions. Factors. It is usual to consider motor underwriting under following heads: 1. The vehicle 2. The use of the vehicle 3. The geographical area of operator 4. The driver of the vehicle 5. The claims experience

Table Showing Fresh Acceptance-Comprehensive cover for Different age of Vehicles Taxi Private carrier Public carrier Motor cycles and scooters Without Inspection Up-to 3 years Up-to 5 years Up-to 5 years Up-to 5 years Subject to Inspection Up-to 5 years (except for earning 30% No claim discount 5-7 years 5-7 years (subject to no claim discount or excess clause) 6-7 years (satisfactory inspection) Inspection w Compulsory Excess Over 5 & up-to 7 years, Excess of Rs. 500 (without discount); over 7 T/P act only cover) 5-10 years Excess Rs.5 years T.P./Fire & theft only Renewal on normal terms Subject to satisfactory claims experience up-to 10years; over 10years T.P./and act only Subject to satisfactory claims experience up-to 12 years; over 12years T.P./Act only .Subject to satisfactory claim up-to 10 years; over 10years T.P./Act only and subject to compulsory excess of Rs.1,000 (without discount) Subj satisfactory claims experience up-to10 years; over 10years renewals for T.P./act only. No Claim Discount This is granted to improve underwriting experience. It is an integral part of rating system. This operates to return a proportion of insurance premium to the insured if the insured has put up no claims for damage over that particular period of insurance. The insurers feel

encourages carefulness among insured and low claims. The factors to be considered are given below:

1. Claims mean paid and outstanding. Claims take 3-5 years to be settled. So the system should effectively estim of future.

2. After estimating claims cost, the ratio of incurred claims to premium in each class is calculated. This is used to underwriting experience and future rates by the insuring company and tariff advisory committee. Statistics for a l required.

3. Past loss experience needs interpretation in the background of changing conditions in motor insurance. Figures to cover the changes in increase of number of vehicles, population road construction, changes in law, and third p 4. The statistics must be correct and quickly available. Old statistics are useless. Loss Minimization: Insurance and Road Safety

On an average 1, 20,000 road accidents are caused and 21,000 are fatal.Several departments are interested in road (police, Public Works Department, Transport Registration Authority, Road Research Laboratories, other organiza India Motor Congress, Road Transport Operators Association. Automobile Manufacturers, Vehicle Owners and u pedestrians). Insurance has an indirect role only in preventing accidents. It can be found out in the:

1. Premium rating to encourage less prevention by paying discount in premium for an accident free record. Incen result in reduced cost of insurance and encourages careful driving.

2. System of underwriting through careful ̳risk selection‘ and ̳risk improvement‘. Bad driver gives penalty rate b ̳compulsory excess‘, older vehicles are accepted after inspection and for restricted cover only. By these measure becomes personally interested in risk reduction.

3. Loss prevention association. This is established by general insurance industry. It creates awareness for the nee prevention in various sectors of the economy. 4. The association has intensive programmes for: a) Awareness of road safety, b) Traffic rules for pedestrians, c) Driver‘s education programme for defensive and children‘s safety.

5. Association collaborates with national safety council and central road research institute, the Automobile Assoc traffic police; and publication of many booklets. All accidents occur for ̳human cause‘, ̳physical cause‘ and ̳env

cause‘. From this we may say there are four primary factors responsible for road accidents-the driver, the vehicle pedestrian and the road. The largest number of accidents is caused by driver.

Some of the recommendations for reducing accidents of the Transport Development Council of Ministry o and Transport are: (i) Strengthening or creating facilities for highway testing (ii) Planning, design and construction of road facilities. (iii) Adequate, proper and systematic maintenance of National Highways and others. (iv) Creation of traffic Engineering Shells. Procedure of Claims Settlement The third party liability claims have to follow the following:

1. Entry of Notice. When notice of claim is received (from any: the insured, the third party or the motor accident Tribunal), it is recorded in claims register. Entries of date of intimation, claim number, policy number, period, da vehicle number.

2. Appointment and Entrustment to advocate immediately the case is given to an advocate maintained or returned

3. If claim is received from MACT a letter is issued to MACT to get details of the claim information necessary fo claim number, police station of report, driver, advocate, number of policy and driver‘s prosecution history. 4. Letter to police station for police report or panchanama statements on accident. 5. Copy own damage ̳claim from insured‘. 6. Quantum of damage 7. Advocate‘s opinion. 8. Motor accident claims tribunal Payment of Claims Payment of motor third party claims depends upon answers to two following questions: i. Is the insured legally liable to third party? (Law of negligence and Nuisance) ii. Is the insurer liable to indemnity the insured under the (terms and conditions) policy? (Motor Vehicles Act). Negligence and Proof of Negligence

Thus insurer has to pay compensation to the insured if he has agreed in the policy. The insured will pay to third p conduct if it is proved to be negligent or a nuisance. Thus we should know the meaning of negligence. Negligenc general duty which every person in a society owed to every other person,. This duty is not to cause bodily injury damage to his property. Legal definition of negligence is ―the omission to do something which a reasonable ma upon those considerations which ordinarily regulate the conduct of human affairs, would do or the doing of some prudent and reasonable man would not do‖. Owner is not reasonable without negligence. As for example a person committing suicide jumps before a car in motion and kills himself. The owner cannot be tied with liability. So ne be proved. It arises out of: a) Dangerous and reckless driving without proper safeguard to pedestrians. b) Non-observation of traffic rules and regulations. c) Leaving motor vehicles unattended on highway without safety. d) Defective vehicle.

Employer is responsible for servant‘s negligence in addition to his. Own particularly in commercial vehicles. But must be really a servant and acting within the scope of his employment. Persons Who Can Claim Persons who can put up claims: 1. Pedestrians: They can use footpath, a part of road and cross and road.

2. Fare paying passengers: In public carriers of passengers. The operate must have roadworthy vehicle and comp Responsibility starts with entry of passenger and ends on his alighting. 3. Non-fare paying passengers: Owner must provide safe mode of conveyance. 4. Persons in other vehicles: Drivers of other vehicles, owners or passengers. 5. Children: Children need extra care. They are not as careful as adults.

Proof of Negligence. Claimant must prove insured’s negligence. There are two exceptions to this rule: a) Res Ipsa Loquitar. Things speak for itself. In this case the defendant must prove that he was careful or not ne presence of vehicle on footpath is quite consistent or fitting to negligence. As for example A car jumps to footpa pedestrians needs no proof of negligence to prove liability.

b) Strict liability. Principle of absolute or strict liability for accidents caused by inherently i.e., things dangerous steam driven engines. Mere proof of escape of fire is sufficient to fix liability. When Negligence is Waived? Under following circumstances negligence is not proved:

1. Volunteer Non-fit Injuries. If a person voluntarily wants to take a risk. Passengers in public service usually t risk of such transport. 2. Act of God. It is a direct, violent, sudden and irresistible act of nature, e.g., storms, lighting, earthquake etc. 3. Inevitable Accident. Accident which occurs inspite of all ordinary care, caution and skill. 4. Emergency. Injury to person who places himself on a imminent situation of danger.

Contributory Negligence. The injured person has contributed to the accident. The damages will be reduced acco degree of blame attaching to each person. The insured may defend his claim.

Damage. It is defined as a monetary compensation recoverable by an injured party by action for breach of contra If negligence is established damages are awarded against insured. Two types of damages: (a) Special Damages. Actual financial loss or expenses resulting from the accident, e.g., Medical, loss of salary, funeral expenses, etc. These are to be specially proved and supported by vehicles.

(b) General Damages. Law presumes that these damages flow from negligence. These are awarded for pain, and mental and nervous shock, loss of amenities in Life, Continuous loss of health, loss of prospective earnings, loss matrimonial prospects. General Damages for Death. In fatal accidents compensation as assessed under two heads: i. Loss of dependents, i.e., for maintenance, ii. Loss to deceased estate i.e., loss of savings. Amount i. First annual amount of dependency i.e., what deceased would have spent on is dependents is estimated. ii. This figure is multiplied by 12 or 15 (multiplier) as the number of years (the years purchase factor)

The fatal cases involve the following claims: a) Special damage upto the date of death. b) Funeral expenses. c) General damages for pain and suffering upto day of death. d) Damages for loss of expectation of life. e) Damages under the fatal Accidents Acts. Principle of award. (house of Lords In West (H) and Sons Ltd. V. Shephared,1964)

a. It is treated as a deprivation, damage varies directly with gravity of deprivation.

b. Three consequences to be considered:- (i) loss of earnings or earning capacity; (ii) expenses to pay others for d work;(iii) loss of enjoyment of life or decrease in full pleasure of living.

c. Gravity and degree of deprivation i.e., loss of one or more limbs, duration of deprivation and degree of awaren High court upheld the principle of restitution of integrum (placing in original financial position). Damage should valuation.

Property Damage. The damage us equal to cost of repair or cost of replacement of the property so that original v estored. In complete destruction value of property on the day of accident. If it is damaged: a. Cost of repairs, b. Depreciation in its value; c. Cost of hiring alternative property.

To sum up, damage is equal to cost of repair or the value whichever is less, ,(b) depreciation,(c) reasonable conse Insurer as a Party to Damage Action

Insurer’s Defense. (SS 2 of Sec.96, M.V.Act. Insurer may be a party to the action started by victim of accid M.V.Act. insurer may say: a) Policy has been cancelled, b) Erasing (repudiating) insurer‘s liability for breach of some conditions, c) Policy is void, e.g. for hiding material facts or material false representation of facts. d) If insurer reserves a right in the policy to defend action in the name of insured, it can raise all the policies that to the insured.

e) The MACT [S.S.2(A) of Section 110(C), M.V.Act,19690] is satisfied that there is collision between the maker and against whom it is made. Then it will record reasons in writing and call insurer to be impleaded as a party. T would be at liberty to avail all defenses open to insured. It has all powers of civil courts. Its procedure is simpler uses application‘ instead of ̳suit‘, ̳awarded‘ in place of ̳judgment‘. It specifies parties who can apply for claim a form. It can consider criminal court‘s judgment. It cannot by-pass a decision because it is a statutory tribunal.

CHAPTER 2 LITERATURE REVIEW

Motor Insurance (Auto Insurance)

Automobile insurance is a contract between the insured and the insurance company that protects against financia policies contain a variety of coverage’s that can be purchased depending upon the needs and wants of the consum agree to pay the premium, and in return, the insurance company agrees to pay for certain expenses as defined in t Having the right insurance coverage may prevent the insured from suffering a large financial loss in the event of accident (Commonwealth of Pennsylvania, 2013).

Risk transfer is a mechanism that allows an insurer to protect its capital and stabilize its results from underwriting motor insurance perspective, this capital is exposed to the risk of an adverse frequency or severity of claims in an Motor insurance is generally measured non-life insurers’ strongest class of business in terms of premium volume

insurance, despite continuous product development, are still in most European countries the predominant group o sold by non-life Insurers. In the countries of Central and Eastern Europe, it accounts 2/3 of the insurance written premiums.There is an active and competitive motor insurance market for people of all ages, with up to seventy p competing for business (Haddrill, 2006). Motor insurance is a difficult class of business to manage but, with the strategies and operations in place, the rewards are there (Ernst & Young, 2011). The environment in motor insura dominated by fierce competition for market share in some developing countries. The lower prices not only increa price sensitivity but have also raised their expectations of service, and it is witnessed that an unprecedented tende part of clients to switch insurers on the basis of such criteria. However, one aspect is affecting everyone concerne expenditure is rising all the time.

The purpose of insurance is to provide sufficient revenue to compensate the minority who suffers loss. Most coun those responsible for death or injury to compensate the victim, or the victim's family. Since few people can afford from their resources, they either choose or are required by legislation to insure against the risk of a claim. Most c require at the very least compulsory third party insurance, although there are wide variations in compliance. In de countries vulnerable road users and public transport passengers account for most road casualties and are the ones benefit most from third party insurance.

Types of Insurance That Intersect With Road Use

Various types of insurance can be utilized by vehicle owners/operators and road users, and often are relied upon in the event of an incident or event causing property damage or injury (Fronsko, 2011). Murcko (2013) defined C as it is an absolute necessity for anyone who drives a car. Even ignoring the fact that some types of car insurance by law, coverage is essential: the potential costs surrounding an accident, whether they be repair/replacement cos or other property, or medical costs of the victims, are simply too huge to exercise the risk of being without adequ There are four types of motor vehicle insurance

. Compulsory Third Party (CTP) Insurance: It does not provide cover for any damage to the vehicle and therefore of motor vehicle insurance should also be purchased.

Comprehensive Insurance: covers damage to vehicles, theft of vehicles, collision, malicious damage and weathe Depending on the policy, it can cover damage caused to other vehicles.

Fire and Theft Only: is a limited form of insurance that only covers for fire damage to, and theft of, vehicles. It d collision damage to vehicles and Third Party Property only: provides cover for vehicles damaged by the policyho It does not provide cover for the policyholder's own vehicle. This product is generally only taken out by consume value vehicle, protecting themselves against damage to other motorists.

Compulsory Third Party Liability Insurance (CTPLI)

Amongst most international jurisdictions, General Insurance is utilized to cover motor vehicle property damage a discretionary purchase. Casualty: Auto Liability or Compulsory Third Party (CTP) Insurance and Workers Comp used is utilized to cover personal injury and is a generally a compulsory form of insurance (Fronsko, 2011). The nature of MTPL insurance provides for a minimum statutory limit, which should, in most countries, be sufficient the insured against loss. It is a financial protection scheme built to thwart any grievance that third parties could fa lack of solvency of first party who caused bodily injury or property damage subsequent to any event related to a It ensures that damage to third party health and property caused by an accident for which driver and/or owner of responsible is covered. In MTPL, classically, guarantee funds are created to compensate persons who suffer bodi caused by hit-and-run drivers and to pay claims for property damage caused by uninsured motorists. Road Traffic Accident (RTA) and Road Safety

Road transportation safety is becoming a critical issue since road accidents directly cause loss of life, personal su property damages. Indirectly, it impacts the efficiency and performance of the transportation network, and affects life of all residents

Rapid urbanization in developing countries presents tremendous challenges to the transport systems of expanding are to meet the access and mobility needs of their communities and provide them with a sustainable, safe and hea environment. According to World Bank (2002), urban populations in developing countries will grow at more tha annum and that, within generation, more than a half of the developing world’s population, and a third of its poor, cities.

With rising motorization and expanding road network, travel risks and traffic exposure grow at a much faster rate growth of registered vehicles always outnumbers population growth and new roads are constructed. Today road t are one of the leading causes of deaths, disabilities and hospitalizations with severe socioeconomic costs across t

Road traffic injuries (RTIs) represent a leading and increasing contributor to regional and global disease burden. projected to become the 3rd largest contributor to global disease burden by 2020 (WHO, 2004). Most of the proje in RTIs will occur in low- and middle-income regions of the world, due to the rapid growth in motor vehicle num increasing exposure to risk factors such as speed and alcohol, and exacerbated by inadequate enforcement of traf regulations and public health infrastructure.

A Road accident is a serious problem throughout the world, in social, health and economic terms. It is said that ro commonly is the second largest cause of deaths for economically energetic people (5 to 44 years) in numerous co considered to be of endemic proportions by the WHO. Between 50 and 200 people are killed each year for each m inhabitants in most developed as well as developing countries.The human suffering for victims and their families traffic related injuries is immense. There are endless repercussions: families break up; high counseling costs for t

relatives; no income for a family if a breadwinner is lost; and thousands of money to care for injured and paralyz (WHO, 2004). Many times, you have seen news of severe road accidents swarming the social media, radio statio channels. In fact, barely a week passes without reading or hearing news of accidents on African roads. No Africa claim immunity to road accidents.Road safety is defined as the absence of crashes, injuries and fatalities. The ter means there are no incidence of accidents. Although undesirable, crashes and fatalities are inevitable incidents of transportation system.

The road transportation is cursed with road accidents. A substantial accident risk is always present in the develo transport facilities. Road crashes are a growing worldwide problem. The road systems all over the world are getti more jam-packed and unsafe day by day. RTA is more often than not defined as “accident which takes place on t between two or more objects, one of which must be any kind of a moving vehicle.” It can be called as perennial d they have claimed far more lives than any of the natural disasters. A common saying in the area of traffic safety i “accidents are not natural but they are caused” (Desai & Patel, 2011). 13 people die every hour due to road accid the world (Desai & Patel, 2011). Road crashes are the second leading cause of death for the 5 to 44 age group in countries and they exact a heavy toll on African economies. It is underscored that the high crash incidence is attr road networks, inadequate road signage, limited knowledge on road safety, poorly enforced.

In absolute numbers, the road-related mortality rate per capita in Africa is the highest in the world at 28.3 deaths an estimated cost of US$ 3.7 billion. Considering, among other factors, that Africa has only 4percent of the world the rate of return on investment to reduce crashes is very high in Africa, and there is clearly a strong justification and implement efficient crash reduction measures (WB, 2011).

The Government alone cannot tackle road safety problems. Active involvement of all stakeholders to promote po and implementation of road safety measures is a must. Addressing road safety in a comprehensive manner necess involvement of multiple agencies/sectors such as health, transport and police. Therefore, a coordinated response is imperative as the experience in developed countries indicates that deaths and injuries can be prevented through action (IMRTH, 2011).

International experience shows that two aspects of road safety make it difficult to manage road safety effectively first, road safety involves a great number and variety of organizations to cover all aspects of road safety issues. S different organizations do not usually have road safety as their primary objective. Hence, road safety activities of neglected. In order to overcome these difficulties, local authorities should make maximum use of their influence their influence in support of road safety promotion. Therefore, they should ensure co-ordination between the vari disciplines, institutions and organizations involved. It is possible to reduce RTAs rate and severity by adopting an proper safety measures. Stringent implementation of road safety measures reduces road accident injuries and fata Patel, 2011). The success of any road safety action program is dependent on ‘Shared Responsibility’. Small contr many different areas can offer significant reductions to motorcycle crashes, injuries and deaths (Hardy, 2009). Ro everyone’s responsibility. All need to take responsibility and pride in how to behave on the road as pedestrians, m cyclists, drivers and passengers. Stabilization and reduction of Africa's acute road safety problems can be achieve development and implementation of focused, pragmatic, bold and cost-effective mitigation

Strategies. Role of Motor Insurance Industry in Road Safety

The UN estimates that the economic cost of road trauma to developing countries alone is at least $100 billion per emotional cost is not viable to calculate approximately, yet road trauma is preventable (Fronsko, 2011). The deve insurance products that help reduce the finance burden of injury; providing education and incentives to encourag user behavior; pooling of data to help inform decision making and consumer choice; and, seeking to embrace col efforts within competitive environments to provide mutual benefit to stakeholders and society are the areas in wh can play its imperative role (Fronsko, 2011).

Insurance companies should be encouraged to invest directly in road safety interventions. They should also be he promote and propagate research on road safety. If properly targeted, such spending will reduce their direct costs a indirect social benefits through reduced injury and death. Since insurance premiums are generally related to road motor vehicle insurers have a motivation to reduce road crashes to help reduce claims and hence the premiums ch can also reinforce policies by their actions, for example by increasing premiums for those with drunk driving or s convictions. However, there is always a risk that such actions will tend to increase non-compliance without a com enforcement activity (Rizavi, 2011). The key components for successful involvement of the insurance industry in road safety are:

1) Legislation: requires mandatory third party motor insurance on all drivers with about 5- 10% of the premium ( road safety; 2) Enforcement: road safety funds based on insurance premiums will need enforcement of motor veh regulations; 3) Promotion: active partnerships should be sought to involve the industry in promoting road safety i policies and the direct organization of safety campaigns (APEC, 2004) and (ADB, 2003). In the best position of t per ADB (2003) insurance companies can also involve in enforcement of road safety management strategies. A r fund based on insurance premiums will require the enforcement of motor vehicle insurance regulations in order t full potential earnings. One way of ensuring motor vehicle insurance regulation compliance is to have proof of in requirement of the periodic roadworthiness vehicle inspection. This approach works best if there is also a legal re that a valid roadworthiness sticker or certificate must be displayed and clearly visible on the windscreen of the ve Kazakhstan, in order to promote compliance with the new insurance regulations, motor vehicle insurance can be the vehicle inspection centers Compensation

Cost-recovery by public bodies which bear some of the costs of crashes, typically by claims against the insurer, c impact on premiums and encourage insurance companies to take road safety issues more seriously. Examples inc Health Service hospitals in the UK recovering treatment costs from victims or guilty parties insurance, and State highway departments in the USA recovering the cost of repairing damaged street furniture and other infrastructur 2011).

Promotion and Sponsorship

Promotion concerns the sustained communication of road safety as a core business for government and society an the shared societal responsibility to support the delivery of the interventions required to achieve the desired focus This function goes beyond the understanding of promotion as road safety advertising supporting particular interv addresses the overall level of ambition set by government and society for road safety performance (Bliss & Breen

The role of the insurance industry should not be limited to a passive funding source for road safety. A more activ should be sought between the insurance industry and the government. The insurance industry’s support and comm road safety will be greater if it is involved in the organization of road safety and is able to help determine the use Accordingly, the insurance industry should be represented on the finance subcommittee, if not the main body of t The insurance industry can do much to promote road safety in its insurance policies, as well as by sharing data an direct organization of road safety campaigns (ADB, 2013). Insurers are always looking for new ways to reduce th severity of collisions on the road, both as part of their commitment to social responsibility and of their efforts to l rates. By analyzing claims data, insurers identify groups of high-risk drivers and isolate the factors that contribut as a group. Where feasible, they then tailor their products to address some of these factors. In some markets this i incentivizing safer behavior through initiatives such as no-claims discounts, discounts for driver training or telem have been a powerful voice in promoting road safety at national and European level (CEA, 2009). There are man in developing and transition countries and industrialized ones, of the private sector directly sponsoring road safet Four main areas of sponsorship have been identified: (i) road safety education and knowledge transfer, (ii) public

awareness campaigns, (iii) enforcement, and (iv) driver’s training. Whilst these four groups are the main areas of involvement in sponsorship, it should be noted that this is not an exclusive list (Rizavi, 2011).

The motor insurance industry plays an important role in road safety. Not only do most motor insurance companie creation of awareness through advertisements and circulars to clients, but they also provide the platform and solu damaged vehicles. This also helps the driver of the vehicle; peace of mind (Arrive Alive, 2013).

Road safety spending will only produce value for money if it is well targeted and the impacts are properly evalua past expenditure by insurers has focused on road safety publicity campaigns. Spending by insurers is likely to ha impact if it is planned and implemented in collaboration with other organizations in line with national road safety (Rizavi, 2011). Incentives

Road safety policies and automobile insurance contracts often use incentive mechanisms based on traffic violatio accidents to promote safe driving (Bliss & Breen, 2009). In many European and Asian countries, as well as in No states or provinces, insurers’ use experience rating in order to relate premium amounts to individual past claims e motor insurance. Such systems penalize insured drivers responsible for one or more accidents by premium surcha maluses) and reward claim-free policyholders by awarding them a discounts (or bonuses) and are called no-claim

experience rating, merit rating, or bonus-malus systems. If a bonus-malus system is in force, all policies in the sa are partitioned according to the level they occupy in the bonus-malus scale. In this respect, the bonus-malus mec considered as a refinement of a priori risk evaluation splitting each risk class into a number of subcategories acco individual past claims histories (Denui et al, 2007). Financing Road Safety

Funding and resource allocation concerns the financing of interventions and related institutional management fun sustainable basis using a rational evaluation and programming framework to allocate resources to achieve the des results. This is to ensure sufficient and sustainable road safety funding mechanisms. As part of this a rational fram resource allocation supports the building of strong business cases for road safety investments based on cost-effec cost-benefit analyses. To achieve more ambitious performance targets countries may need to establish new fundi and mechanisms (Bliss & Breen, 2009). No serious road safety measures can be implemented or sustainably succ sound financing mechanisms. Thus, identifying and securing sustainable funding is a fundamental element in all initiatives (APEC, 2004). The major funding sources are: budget lines for road safety in the relevant ministries, d general tax re venues, levies added to insurance premiums, traffic lines dedicated to road safety activities, a certa of road user charges and private sponsorship. The local authorities should seek to maximize funding contribution parties who benefit from the measures within the plan, primarily road user (Lacroix & Silcock, 2004). In pursuit goals, expenditure on improving safety on the nation’s roads should be seen and treated as an investment rather t expense (TMID, 2009). Motor vehicle insurance begins to receive more priority in road safety management from government.

Insurance companies and other private sector organizations begin sponsoring one-off events, such as conferences publications after the representation of insurance industry on the NRSC in Asia. A closer association between ins road safety is developed with new legislation requiring that a levy be imposed on insurance premiums. Insurance begin to be enforced by the police and inspection authorities. At this time, policy issues such as premium rates, p restrictions, maximum coverage limits, hit and run drivers, and processing times are reviewed. In addition to the the insurance industry assumes a more active role in supporting road safety. Insurance companies’ databases are be of use in analyzing road safety problems and are made accessible to researchers (ADB, 2013). Vehicle Insurance Levies

Insurance levies are a form of road user safety fee providing an ongoing, predictable source of revenues. They ar adding a levy or surcharge to compulsory insurance premiums to fund road safety initiatives thereby act as a fina incentive to drive safely. Since the increasing costs of medical bills and auto repair is beyond the control of insur companies, investing money to reduce crashes and subsequent claims costs became their best interest. Insurance also offer the potential to share business and marketing skills, besides funding, to assist in addressing road safety example, different countries like Canada, Australia and Finland found momentous advantage from investing in ro because the benefits in terms of reduced claims (fewer crashes) often outweigh the amounts invested (APEC, 201 to Silcock (2011), a number of countries have introduced legislative requirements for insurers of compulsory thir

liability, to invest in road safety. Vehicle owners are required by law to have insurance for their vehicles and, in a to pay a further tax. This surcharge can therefore be considered as a road user safety fee. Insurance and premium accident costs and the use of part of the premium to provide road safety measures to reduce accidents and their se

CHAPTER 3 RESEARCH METHODOLOGY

Methodology:

Marketing research is one of the most effective tools that help organizations excel in the marketplace. Obtaining information about customer‘s tastes and preferences is the key to business success. Methodology is usually a gui for solving a problem, with specific components such as phases, tasks, methods, techniques and tools. It can be d follows: 1. "the analysis of the principles of methods, rules, and postulates employed by a discipline" 2. "the systematic study of methods that are, can be, or have been applied within a discipline" 3. "the study or description of methods".

RESEARCH DESIGN

Research design is the plan, structure to answer whom, when, where and how the subject is under investigati is an outline of the research scheme & which the researcher has to work. The structure of the research is a m outline and the strategy out, specifying the methods to be used in the connection & analysis of the data.

DATA COLLECTION:Primary data

The primary data are those which are originally collected for first time by the researcher in view of objective are in raw from. This requires refinement through statistical methods in order to arrive at conclusions. It was from the customer of motor insurance, and experts & advisors.

Secondary data

The secondary data means data that are already available they refer to data which have already been collecte else and which have already been passed through the statistical process. The sources Books, articles, magazi

periodicals, internet source.

CHAPTER-4 DATA COLLECTION AND INFERENCES

In the present study both primary and secondary data has been collected from various sources. The present chapt the data analysis interpretations of the study. The first part analyses the demographic characteristic of the respond other parts provides a descriptive analysis of data collected. A pilot survey has been conducted before drafting th questionnaire that provides useful insights to the final draft of the questionnaire. The analysis provides a compari the satisfaction level of customers of New India Assurance Company Limited and ICICI Lombard General Insur Company Limited.

1) DEMOGRAPHIC ANALYSIS:-

Gender Interpretation Out of 160 , 112 respondents were Male and 48 were Female in New India Assurance Company Limited

Lombard General Insurance Company Limited 103 respondents were male and 57 were Female that means majority of resp

male in both the companies but in ICICI Lombard General Insurance Company Limited.

Interpretation

In NIACL 56.87 % of respondents were married and 43.12 % were single and in ICICI 55 % respondents were m % were single, in both the companies large number of respondents were married.

Interpretation

In context of age the primary information indicates that the majority of respondents were in the age group of 48-5 NIACL, (28.12 %) respondents were in the age-group of 48-58 years and in case of ICICI, (32.50 %) respondent age-group of48- 58 years. Lowest frequency of respondents were in NIACL (16) and in ICICI (19). The collecte reflect that there is the highest frequency of motor insurance policyholders were in the age group of 48-58 which at this age there is positive perception towards motor insurance and risk coverage.

Interpretation

In respect to educational qualification of the respondents the primary information reveals that in NIACL, 8.75 % intermediate education level, 44.37 % were graduate, 32.50 % were Post graduate, 9.30 % were professionl and 5 others category In ICICI, 6.87 % acquired intermediate education level, 33.12 % were graduate, 25.62 % were Po 31.87 % were professionl and 2.50 % were in others category. From the above it can be analyzed that the majorit respondents were graduate in both the companies.In other category respondents were matric pass and high schoo

Interpretation

In respect of occupational pattern the primary information indicates that in NIACL 32.50 % were employed, 20.6 businessmen, 41.87 were professionals and 5% were in other category. In ICICI 23.75% were employed, 35% we businessmen, 30.62 % were professionals and 10.62 % were in other category. Majority of the respondents in bo

were professional, in other category some respondents were students and some were unemployed.

Interpretation

Regarding the annual income of the respondents, the primary information revealed that in NIACL, 16.87 % of th had annual income below Rs. 300000, 40 % between Rs.300000-600000, 33.12 % had between Rs.600000-9000

had annual income above 900000. In ICICI, 19.37 % of the respondents had annual income below Rs. 300000, 2 between Rs.300000-600000, 24.37 % had between Rs.600000-900000 and 32.50 % had annual income above 90 the table it can be deducted that in NIACL majority of the respondents were in (33.12 %) 600000- 900000 group majority of the respondents were in (32.50 %) above 900000 group.

Interpretation

Respondents were equal in both the companies that is in NIACL 160 respondents and in ICICI 160 respondents w the purpose of the study.

Interpretation

In NIACL out of 160 respondents 47.50 % purchased motor insurace policy on the basis of brand image, 18.75 % of low premium, 5% on the basis of benefits, 12.50% on the basis of risk coverage and 16.25 % on the basis of se ICICI out of 160, 22.50 % respondents were purchasing motor insurace policy on the basis of brand image, 7.50 of low premium, 23.75 % on the basis of benefits, 8.75 % on the basis of risk coverage and 37.50 % on the basis can be said that in NIACL majority of the respondents were purchasing insurance policy due to brand image and to services.

Interpretation

In respect of motor insurance policy the primary data indicates that in NIACL 70.62 % were purchasing third par liability policy and 29.37 % were purchasing comprehensive/ package policy. In ICICI 41.25 % were purchasing legal liability policy and 58.75 % were purchasing comprehensive/ package policy, which means large number o in NIACL were purchasing third party policy and in ICICI majority of them purchasing comprehensive pool.

Interpretation Regarding policy coverage in NIACL 31.87 % respondents were purchasing motor insurance policy for two wheeler, 41.87 % were opting for three wheeler, 15.62 % for four wheeler and 10.62 % were purchasing for others. In ICICI 30.62 % respondents were purchasing motor insurance policy for two wheeler, 26.25 % were opting for three wheeler, 35 % for four wheeler and 8.12 % were purchasing for others. Others includes buses ,trucks and rest of the vehicles.It was revealed that majority of the vehicle covered under motor insurance in NIACL were three wheeler and in ICICI large number of vehicles were under the category of four wheeler.

Interpretation

Out of 160, 83.12 % respondents from NIACL and 88.12 % from ICICI were renewing their motor insurance pol but still 16.87 % from NIACL and 11.87 % from ICICI were not renewing their motor insurance policy on time. to NIACL respondents ICICI respondents were more responsible in renual of motor insurance policy.

Interpretation

In respect of awareness of all the terms and conditions of motor insurance policy 88.22 % in NIACL and in ICICI 93.12 % respondents about all the terms and conditions, reason behind it was that some of them were responsible and some met accident and got claim, those aware were 11.87 % in NIACL and 6.87 % in ICICI reason behind it was just to fulfill the formality of compulsory motor insurance as

Interpretation Regarding damage of motor vehicle due to accident in NIACL 10 % and in ICICI 16.25 % respondents vehicle got damage, 90 % in NIACL and 83.75 % were not having these issues.that means ratio of accident was less in both the companies which is good for society.

Problems during claim settlement

Interpretation The primary data of the respondents indicates that out of 16 and 26, in NIACL 7 and in ICICI 9 respondents were having problems during claim settlement respectively and the rest that is 9 in NIACL and 17 in ICICI were not having such issues.

CHAPTER-5

FINDINGS

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80% of the respondents have vehicles and 20% of respondents do not have vehicle. By this general insurance companies knows potential customers for their products.

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65% of respondents are take the only for vehicle it means that package insurance policy of vehicle. 35% of respondents are take the both the vehicle and man holding the vehicle and also third party insurance is considered.

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The charged value of Insurance is sufficient 30% exactly is use to this one. 45% respondents are charged Average value is sufficient. 25% respondents are charged value is high in the value.

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Mainly the respondents are 100% no accident.

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Main problem is arises claim the Insurance amount 95% respondents are not much in claiming the Insurance.

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55% of the vehicle owned for two categories one is male respondents are 40% and female respondents are 15% of having two-wheeler.

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And 20% male‘s respondents are having four-wheeler and 5% females respondents are having four-wheeler.

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Majority of the respondents (i.e.54%), who has taken Motor Insurance Policy are private sector employees.

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It is inferred that there is a higher percentage (34%) of respondents in the income category of 1.5 to 3 lakhs and comparatively a very lower percentage (10%) of respondents in the income category of 5 to 10 lakhs.

 It is evident from the study conducted that majority (64%) of the respondents holds at least 1 Insurance Policy.

CHAPTER-6 SUGGESTIONS , LIMITATIONS , CONCLUSIONS SUGGESTIONS:-

The suggestions I would like to make are: 

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There is a necessity to make more advertising and promotions by the Insurance Company through TV, newspapers, magazines and pamphlets to make aware the customers about the insurance provided by them. Need for proper channel to reach to the customer. Marketing executives and agents should maintain good communication with the customers to create the awareness of the policies like Mediclaim, GPA(Group personnel accidental) burglary, and other insurance policies provided by the company. The employees should be given incentives and bonus to motivate to accomplish their targets. Motor Insurance is concentrating only urban areas it should concentrate on semi urban and rural areas also. As it was found that customers preparing only Government companies for their office insurance so create trust in costumers about private insurance companies by rendering good services like proper claims, good response to costumer queries and maintaining good relationship with costumers. Building internal technical expertise requiring well –stacked library resource by way of settled cases of claims at every zonal office is an immediate necessity. The staff of the insurers should be encouraged to refer to these references often with a view to bring about early settlement to the satisfaction of claimants. People are satisfied with value added service like through message, telephone customer told about new product and they have to do next payment of policy more service should provided to them on screen alert for new product. Generally people of services doesn‘t go for investment but at year end they go for big investment to save taxes let makes them aware from starting of year to save more tax. Well service people have good idea about the product but business people don‘t have as they are not aware about so there should some type of meeting to held on holiday on which they given information in those. People should give those which can fulfill by company only. As we see that most of investor are from service as want to save tax so better product can be offer to them in get good return. As people are more interested to invest in life time super plan as it give good return so new product should launched taking basis of it.

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As we can see people are satisfy with relationship manager as they suggest good plan to invest so that they should provide better advice to them. People are dissatisfied with the fund charges as they don‘t know how charges made so there should be transparency so that they can know it. They have to make it more transparent. They have to publish their portfolio more frequently. More collaboration with banks. Personnel assistance to client

LIMITATIONS:     

 The survey restricted to only motor insurance only The survey is limited to Delhi city only It was difficult to get the dealers to respond at times The information supplied by the respondents may be biased It is difficult to get response from more information during morning times from the policy holders Time is limited.

CONCLUSION:-

It is concluded from the survey that all respondents are aware about office insurance and they think they need insurance for their offices. It is concluded from the survey that customers preparing only Government companies for their office insurance so create trust in costumers about private insurance companies by rendering good services like proper claims, good response to costumer queries and maintaining good relationship with costumers. Most of customers are using only Fire and electronic equipment insurance policies so marketing executives and agents maintain good communication with the customers to create the awareness of the policies like Mediclaim, burglary and GPA.