Introduction To Insurance Industry

Introduction to Insurance Sector 1

Presented ByDhananjay kumar Jaipuria institute of Management, Noida

Contents: Life

insurance  General insurance  Insurance market scenario  Emerging trends in insurance  Jobs in insurance  Insurance websites  Insurance glossary 2

Learning Insurance

 What

Is Insurance

Insurance is concerned with protection of economic value of assets.Tangible assets are human beings, house, furniture, motor cycle etc.Intangible assets are liabilities

3

History of Insurance

 It

started from Lloyd’s coffee house London  First policy issued in England in 1583  In India first policy issued in 1870

4

History of Insurance  LIC

of India formed in 1956 after nationalization of life insurance Business of 245 private insurance companies  General insurance business of 107 insurance companies was nationalized in 1972 & four public sector General Insurance Companies were formed 5

Classes of Insurance

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

6

Miscellaneous Insurances:-

1.Motor insurance 2.Mediclaim insurance 3.Householders insurance 4.Shopkeepers insurance 5.Engineering insurances etc. 7

Fundamental Principles of Insurance

1.Insurable interest- Means financial interest 2.Utmost good faith- Greater duties of faith on proposer & insurer 3.Indemnity- Actual compensation of loss. not applicable in life policies

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Fundamental Principles of Insurance

4.Subrogation-Transfer of rights of insured to insurer.Not applicable in life policies. 5.Contribution-Sharing of loss by all insurers.Not applicable in life policies.

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Market Scenario before Irda Act 1999 Life insurance company 1. LIC of India General insurance companies 1.National insurance company ltd 2.New India assurance company ltd 3.Oriental insurance company ltd 4.United India insurance company ltd

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Market Scenario after Irda Act 1999

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

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Life Insurance Companies 1.Bajaj Allianz Life Insurance Company Ltd 2.Birla Sun Life Insurance Company Ltd 3.HDFC Standard Life Insurance Company Ltd 4.ICICI Prudential Life Insurance Company Ltd 5.ING Vysya Life Insurance Company Ltd

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Life Insurance Companies 6.Max New York Life Insurance Company Ltd 7.Met Life India Insurance Company Ltd 8.Kotak Mahindra Old Mutual Life Insurance Company Ltd 9.SBI Life Insurance Company Ltd

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Life Insurance Companies 10.Tata AIG Life Insurance Company Ltd 11.Reliance Life Insurance Company Ltd 12.Aviva Life Insurance Company Ltd 13.Sahara India Life Insurance Company Ltd 14

Life Insurance Companies 14.Shriram Life Insurance Company Ltd 15.Bharti Axa Life Insurance Company Ltd 16.Life Insurance Corporation Of India 17.Future Generali India Life Insurance Company Ltd.

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Life Insurance Companies 18. IDBI Fortis Life Insurance Company Ltd. 19.Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd.

20.Aegon Religare Life Insurance Company Limited. 21. DLF Pramerica Life Insurance Co. Ltd.

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General Insurance Companies 1.Bajaj Allianz General Insurance Company Ltd 2.Icici Lombard General Insurance Company Ltd 3.Iffco Tokio General Insurance Company Ltd 4.Reliance General Insurance Company Ltd 5.Royal Sundaram Alliance Insurance Company Ltd 17

General Insurance Companies 6.Tata AIG General Insurance Company Ltd 7.Cholamandalam Ms General Insurance Company Ltd 8.HDFC-Chubb General Insurance Company Ltd 9.Star Health & Allied Insurance Company Ltd

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General Insurance Companies 10.Export Credit Guarantee Corporation Ltd 11.Agriculture Insurance Company Of India Ltd 12.National Insurance Company Ltd 13.New India Assurance Company Ltd 19

General Insurance Companies 14.Oriental Insurance Company Ltd 15.United India Insurance Company Ltd 16. Apollo DKV Insurance Company Ltd

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General Insurance Companies 17.Future General India Insurance Company Ltd 18. Universal Sompo General Insurance Co. Ltd. 19.Shriram General Insurance Company Limited 20.Bharti AXA General Insurance Company ltd. 21

Market Intermediaries Who procure the insurance business: Agents  Corporate agents  Insurance brokers  Banks (Bancassurance)

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Basic Life Insurance Policies Term assurance policy 

  

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Provides death cover only during policy period Premium is low No refund of premium Sum assured paid on death

Whole Life Policy   

 

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Death cover only Period is not specified Premium is low & paid during life time No refund of premium Sum assured paid on death

Endowment Assurance Plan 







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Covers death & survival benefits Sum assured paid on death or on maturity of policy Period of policy at the option of proposer Most common plan

Money Back Policy  Available  Covers  Lump  Full

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for different periods

death & survival benefits

sum paid periodically

sum assured paid on death

Unit Linked Insurance Policies (ULIP)  Each

premium split into units and risk premium for life cover  Units are priced as per current market value  Sum assured & current value of units paid on death as per policy condition  Current value of units paid on maturity 27

Annuity (Pension) Plans  These

are pension plans  Immediate annuity or deferred annuity starts at specified age periodically  Single premium paid for immediate annuity  Premium in installments paid for deferred annuity  Life cover simultaneously 28

Important aspects of Life Insurance Policies  Policies

available with bonus or without

bonus  Death due to accidents can be covered for additional S.A.  Policies available exclusively for women & children  Additional cover for major diseases available  Guaranteed bonus policies available 29

Important aspects of Life Insurance Policies  Policies

available for limited period premium payment & risk for longer policy period  Premium can be paid in monthly, quarterly, half yearly, yearly installments

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Important aspects of Life Insurance Policies

 Loans

are available on policies  Lapsed policies can be revived  Policy can be surrendered after three years  Nomination & assignment can be done

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General Insurance Policies        

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Fire policies Marine policies Motor vehicle policies Personal line policies Health insurances Liability insurances Rural insurance policies Engineering insurances

Fire

Policies

Standard fire policyCommon policy for buildings, shops,offices, Industrial & manufacturing risks

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FIRE POLICIES-SPECIAL POLICIES Industrial & Manufacturing clients      

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Floater policy Declaration policy Floater declaration policy Reinstatement value policy Industrial all risk policy Consequential loss policy

Marine Policy

Marine Cargo Policy 

Policy insures physical loss or damage to the goods in transit by road, rail, air, water caused due to accidents, fire etc.

Marine Hull Policy 

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Policy insures marine ships,steamers etc.

Special Marine Cargo Policies For business, industries, importers and exporters  Annual policy  Special declaration policy  Open cover  Open policy

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Motor Vehicle Policies Liability

only motor policy

Mandatory motor vehicle policy Package

motor policy

Motor policy additionally insures loss and damage of the motor vehicle due to theft and accidents along with third party risk is called a package motor policy. 37

Personal Line Insurances  House

holders policy  Shop keepers policy  Personal accident policy  Group personal accident policy  Fidelity guarantee policy

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Health Insurance  Medi

claim policy  Overseas medi claim policy  Videsh yatra mitra policy  Corporate frequent travelers policy  Employment & study policy  Group medi claim policy  Cancer policy 39

Liability Insurances  Compulsory

public liability policy  Public liability policy  Products liability policy  Professional indemnity policy  Lift (third party) policy  Director’s liability policy  Employer’s liability policy 40

Rural Insurance Policies 

Cattle policy



Poultry policy





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Agricultural pump set policy Crop insurance

Engineering Insurances

    

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Machinery Breakdown Insurance Loss of Profits (Machinery Breakdown) Insurance Electronic Equipment Insurance Erection All Risk Insurance (EAR) Storage cum Erection Insurance (SCE)

Engineering Insurances

    

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Contractors All Risk Insurance (CAR) Contractors Plant and Machinery Insurance (CPM) Boiler and Pressure Plant Insurance Loss of Profits (Boiler Explosion) Insurance Deterioration of Stocks Insurance.

Insurance Law

 The

Insurance Act 1938 (amended)  Insurance Regulatory & Development Authority Act 1999

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IRDA  Insurance

Regulatory & Development Authority is the controlling and regulatory apex body in the country for insurance sector and its chairman and members are appointed by Government of India. IRDA’s HQ is located at Hyderabad

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Insurance Regulations (powers and functions

IRDA)



issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration.



specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents. specifying the code of conduct for surveyors and loss assessors. promoting efficiency in the conduct of insurance business promoting and regulating professional organizations connected with the insurance and re-insurance business. levying fees and other charges for carrying out the purposes of this Act.

   

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of

Insurance Regulations (powers and functions of IRDA) 

    

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specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries. regulating investment of funds by insurance companies. regulating maintenance of margin of solvency. adjudication of disputes between insurers and intermediaries or insurance intermediaries supervising the functioning of the Tariff Advisory Committee. Other.

Economic Growth GDP 8.7 % in 2007-08 Sector Agriculture Industry Services (Fin.& Insurance)

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Growth 2.6 8.9 10.7 11.7

% of GDP 17.5 26.8 55.7 14.7

Growth of Insurance Business  Life

Insurance Premium from Rs.400 crores in 1956 to Rs.156042 crores in 2006-07 with 47 % growth  General Insurance Premium from Rs.200 crores in 1972 to Rs.24905 crores in 2006-07 with 22 % growth 49

Emerging Trends  Detariffing

in General Insurance from 1.1.2007 leading to greater price war & new products in future  Banks entering insurance market through joint ventures with foreign finance majors

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Emerging Trends Increasing Role of  Insurance Brokers  Banc assurance  Corporate Agency  IT intervention & uses

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Emerging Trends Greater Job Opportunities  For thousands of Insurance Managers, IT Professionals  For lacs of Insurance Advisors  For Insurance Professionals  For Risk Managers  For Underwriters  For claim Settlements

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Emerging Trends

 Increasing

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

53

Emerging Trends  Increasing

awareness about Health

Insurance  Increasing awareness about Personal Line Insurance like House, Shop, Personal Accident  Market flooded with new insurance products

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Jobs In Insurance

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Job Opportunities

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 45

lakh people employed

 27

lakh people required by 2012

5

lakh people supply by 2012

3

% constitute executive cadre

Job Positions  Agency

Manager  Sales Manager  Sales Executive  Branch Manager  Executive Underwriting  Executive Claims  Executive Bancassurance 57

Job Description        

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To recruit the insurance agents To train the agents To supervise the agents To develop the business Supervise underwriting Supervise claim settlement Customer relationship management Bancassurance

Job Specification  Team

leader  Team driving capability  Team management  Communication  Frustration tolerance  Insurance knowledge  Contacts 59

Job Specification  Knowledge

of company  Fluency in English & local language  Customer service  Computer friendly  Team goals  Financial consultant  Networking skills 60

THE BUSINESS IDEA

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1st Business Idea





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Insurance for the consumer durables Example – TV, refrigerator, washing machine, air conditioner, cooler (water, air) etc. Tie up with the companies

Advantages To the customer 2. 3. 4.

Durability of the product Long-run cost efficiency Better service of the product

To the companies 6. 7. 8. 9. 10.

Increase in sales Customer satisfaction Strategic advantage Automatic removal of local-product competitors Revenue

To the Insurance Company 63

All benefits which is lies with any insurance company

1. 2.

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Insurance for the EDUCATION LOAN Insurance for lower class people. Example- small/daily premium insurance