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Insurance 08

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Insurance 08 Presentation Transcript

  • 1. INSURANCE SERVICES
  • 2.
    • INSURANCE SERVICES
    • Insurance is a contract in which the insurer (insurance co.)
    • agrees / undertakes,
    • in considerations of a sum of money (premium),
    • to make good the loss suffered by the insured
    • against a specified risk such as fire and any other similar contingency or compensate the insured / beneficiaries on the specified risk such as fire and other similar contingency or compensate the insured / beneficiaries on the happening of a specified event such as accident or death.
  • 3.
    • INSURANCE ACT ,1938
    • Any type of insurance business in India can be carried out only by :
    • A public company
    • A cooperative society
    • An insurance cooperative society ,
    • Having paid up capital of Rs 1000 crores,
    • In which no body corporate holds more than 26 % of its paid up capital and
    • Whose sole purpose is to carry on insurance business in India.
    • After the enactment of IRDA Act 1999 ,only Indian insurance companies are permitted to carry on business.
  • 4.
    • An Indian Insurance Company
    • It is a company formed and registered under the Companies Act in which the aggregate holding of equity shares by a foreign company ,either by itself or through subsidiaries / nominees, does not exceed 26% paid –up equity capital and whose sole purpose is to carry on life / general / reinsurance business.
  • 5.
    • Registration [ Sec 3 , IRDA 1999 ]
    • Registration with IRDA is mandatory.
    • The application should be accompanied by the following:
    • A certified copy of MOA and AOA
    • Name , address and occupation of directors
    • A statement of class (es) - of insurance business done / to be done
    • Statement of deposit with RBI on behalf of the government .The deposit can be in cash / approved securities. The deposits would be deemed to be part of the assets of the insurer , but not be susceptible to any assignment / charge.
    • If any part of the deposit is used in the discharge of any liability of the insurer , the deficiency should be supplied within 2 months to make up the amount so used. If an insurer ceases to carry on in India all classes of insurance business and all his liabilities have been satisfied / provided for , the court may order the return of the deposit .
    • The certificate showing the amount deposited .
  • 6.
    • A declaration verified by an affidavit by the principal officer of the insurer that the requirement of paid-up capital :
    • Rs 100 cr : for life / general and
    • Rs 200 cr : for reinsurance business
    • A certified copy of
    • (i) published prospectus , if any
    • (ii) standard policy form of the insurer and
    • (iii) statement of assured rates, advantages, terms and conditions to be offered in connection with insurance policies.
    • The receipt showing payment of fee (as determined by IRDA regulations) not exceeding Rs 50,000 for each class of business
    • Any other document as specified by IRDA
  • 7.
    • Renewal of Registration
    • Certificate of registration should be renewed every year
    • Application for which should be made to IRDA before Dec.31 of the preceding year
    • Cancellation of Registration
    • The IRDA will cancel registration of an insurer if he :
    • fails to comply with the requirement of deposits with RBI
    • fails to comply with the requirement relating to sufficiency of assets
    • has transferred his business to another person
    • defaults in complying with directions as per IRDA / Companies Act / FEMA / GIC Act / LIC Act
    • carries on any other business
  • 8.
    • Investment of Assets
    • The assets of insurers should (under Sec.27 of the Insurance Act) be invested in the following manner :
    • 25 % in govt securities
    • Not less than 25 % in govt / other approved securities
    • The balance in approved investments as specified in Sec 27-A (1) :
    • **Securities of, or guaranteed by the Govt of UK
    • **Debentures or other securities issued with the
    • permission of central govt, state govt, Act of state
    • legislature
    • **Immovable property situated in India
    • **Preference share of any company which has paid
    • dividends on its ordinary shares for the 5 years
    • immediately preceding to the current year.
    • The funds of the policy-holders are prohibited from being directly / indirectly invested outside India .
  • 9.
    • Insurance Business in Rural / Social Sector
    • [ Sec. 32 – B ]
    • Every insurer would have to undertake such percentage
    • of life / general insurance business in the rural / social
    • sectors as may be specified by the IRDA in this behalf .
  • 10.
    • Rural Sector
    • A place with population not more than 5,000
    • Density of population not more than 400 per sq. km.
    • More than 25% of male working population is engaged in agricultural pursuits as :
    • Cultivators
    • Agricultural laborers
    • Workers in live stock , forestry ,plantation , orchards etc
  • 11.
    • Life Insurer :
    • Of the total policies written in that year :
    • I st fin.al year : 7 %
    • 2 nd fin.al year : 9 %
    • 3 rd fin.al year : 12 %
    • 4 rth Fin.al year : 14 %
    • 5 th Fin.al year : 16 %
    • General Insurer :
    • First 2 years should be 2 % and 3 % respectively and
    • Thereafter 3% of total gross premium income direct in that year.
  • 12.
    • Social Sector
    • Unorganized sector
    • Informal sector ;
    • Economically vulnerable sector / backward classes
    • Other categories of workers
    • Guardians who need insurance to protect persons with disability
    • Bidi workers , carpenters , cobblers , artisans , physically disabled self employed persons , washer men , person running a repairs outlet , rickshaw puller , vegetable vendors etc.
    • All insurers are obliged to insure 5,7,10,15, and 20 thousand lives in the first 5 fin.al years respectively.
  • 13.
    • Insurance Agents
    • An insurance agent is a licensed agent with the IRDA who receives / agrees to receive payment by way of commission / other remuneration in consideration of his soliciting / procuring insurance business, including continuance, renewal or revival of policies .
    • Code of Conduct
    • Identify himself with an insurance company
    • Disseminate the requisite information in respect of insurance products offered for sale by his insurer and take into account the needs of the prospects while recommending a specific insurance plan
    • Indicate the premium to be charged by the insurer for the insurance product offered for sale
    • Explain to the prospect the nature of information required in the proposal form by the insurer and also the importance of disclosure of material information
  • 14.
    • Bring to the notice of the insurer any adverse habit or income inconsistency of the prospect , in the form of a report
    • Inform promptly the prospect about the acceptance or rejection of the proposal by the insurer
    • Obtain the required documents at the time of filing the proposal form
    • Render the necessary assistance to the policyholders or claimants or beneficiaries in complying with the requirements for the settlement of claims by the insurers
    • Advise every individual policyholder to effect nomination
  • 15.
    • INSURANCE BROKERS
    • Direct Brokers
    • Carries out the functions specified below in the field of general /
    • life insurance :
    • Obtain detailed information of the client's business and risk mgt philosophy
    • Rendering advice on appropriate insurance cover and terms
    • Detailed knowledge about the insurance market
    • Submitting quotations to the client for consideration
    • Acting promptly on instruction of clients
    • Assisting client in paying premiums
    • Providing services related to insurance consultancy and risk management
    • Assisting in the settling of claims
    • Maintaining proper record of claims
  • 16.
    • Re- Insurance Brokers
    • Is one who arranges reinsurance for direct insurers with
    • insurance and reinsurance companies. His function includes
    • the following :
    • Familiarizing himself with the client's business and risk retention philosophy
    • Maintaining record of the insurer's business to assist the re-insurer
    • Rendering advice based on technical data on the re-insurance covers available in the international insurance and re-insurance markets
    • Maintaining data base of available reinsurance markets , including solvency rating of individual re-insurers
  • 17.
    • Rendering consultancy and risk management services for reinsurance
    • Selecting and recommending a re-insurer or a group of re-insurers
    • Negotiating with a re-insurer on the client's behalf
    • Assisting in finalizing the reinsurance contract ,payment of premium and settlement of claims if any
  • 18.
    • Composite Brokers
    • An insurance broker who arranges insurance for the clients with the insurance companies and / or reinsurance for his clients.
    • He performs the function of both the direct broker as well as the re-insurance broker
  • 19.
    • Surveyors and Loss Assessors
    • Claims of loss amounting to Rs 20,000 or more can be admitted by an insurer payment or settled only after obtaining a report from an approved surveyor / loss assessor holding a license from IRDA.
    • In case of a claim of less than Rs 20,000 in value on any policy of insurance , an insurer can employ a surveyor / loss assessor other than an approved one for surveying such loss on payment of remuneration as thought fit .
  • 20.
    • DUTIES AND RESPONSIBILITIES
    • Estimate , measure and determine the quantum and description of the subject under loss nature of ownership and insurable interest.
    • Conduct spot and final survey , as and when necessary ,and comment upon excess / under insurance and any other related matter
    • Examine , inquire , investigate , verify and check upon the causes and the circumstances of the loss in question also the extent of loss .
    • Advise the insurer and the insured about the loss minimization , loss control , security and safety measures , wherever appropriate , to avoid further losses
  • 21.
    • Comment on the admissibility of the loss as also observance of warranty conditions under the policy contract
    • Assess the loss on behalf of the insurer
    • Give reasons for denial of claim , incase the claim is not covered by policy terms and conditions
    • Comment on its disposal and salvage value
    • A surveyor / loss assessor should submit his report to the insurer as expeditiously as possible , but not later than 30 days of his appointment.
  • 22.
    • DUTIES AND OBLIGATIONS of an Actuary
    • In the interest of the insurance industry and the policy–holders , the duties and obligations of an appointed actuary of an insurer include :
    • Render advice regarding product design , pricing , insurance contract wording , investments and re-insurance
    • Ensure the solvency of the insurer at all times
    • Comply with provisions of Insurance Act regarding maintenance of required solvency margins
    • Comply with provisions of Insurance Act regarding certification of the assets and liabilities
    • Draw attention of the management towards important issues to avoid (i) any contravention of the Insurance Act (ii) prejudice to the interests of the policyholders
    • Comply with IRDA directions from time to time
  • 23.
    • Ensure that all requisite records have been made available to him/ her for the purpose of conducting actuarial valuation of assets and liabilities
    • Ensure that the premium rates of the insurance products are fair
    • To certify that necessary reserves have been determined as per the norms of Actuarial society of India and IRDA
    • Ensure that the policyholders` reasonable expectations have been considered in the matter of valuation of liabilities and distribution of surplus to the participating policyholders , who are entitled to a share of the surplus
  • 24.
    • INVESTMENT COMMITTEE
    • Every insurer should constitute an investment committee consisting of a minimum of 2 non-executive directors of the insurer , chief of finance and investment divisions and the appointed actuary.
    • The decision taken by the investment committee should be properly recorded and be open to the inspection by IRDA.
  • 25.
    • Every insurer should draw up annually an investment policy , their major considerations being :
    • Issues relating to liquidity , prudential norms , exposure limits , stop loss limits in securities trading , management of all investment and market risks / asset liability mismatch , investment audit / statistics and so on and provision of Insurance act and IRDA regulation
    • Ensuring an adequate return on policy-holders/shareholders funds consistent with the protection , safety and liquidity of such funds
    • The funds of the insurer should be invested in shares and instruments which enjoy investment grade rating.
  • 26.
    • Thank you