This document summarizes a presentation on banking and insurance management. It discusses the functions of insurance, including providing security, investment/savings, and collateral for loans. Insurance involves a contract between an insurer and insured where the insurer compensates the insured for specific losses in exchange for regular premium payments. The five 'R's of insurance are defined as risk, return, riders, rewards/value add, and rebate. The primary functions of insurance are providing protection by collectively bearing risks and ensuring certain payment for uncertain losses. Secondary functions include loss prevention, covering larger risks with small capital, and economic development/efficiency. The most important insurance function is spreading risk over many insured persons.

1. A Presentation on The
Banking And Insurance Management (18MS03F5)
4th Unit: Introduction to Insurance
2nd Mid Topic: Functions of Insurance
As a part of 3rd semester Curriculum Submission to
The Department of Management Science
of
Sasi Institute Of Technology & Engineering (Autonomous),
SITE
Submitted by :
Immani.Chandra Shekar
(Reg. No: 19K61E0020)
Under the Guidance of :
Dr.A.Rama Mohan Sir
Professor

2. Why Insurance?
 To provide security
 Old age pensions
 As an investment/ or saving mechanism
 As a collateral for loans
 For tax benefits
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3. • Insurance is a contract entered between two parties, i.e. the company assuring in
the contract of insurance to compensate is known as insurer / assurer.
• While the person to whom such assurance is given is known as insured / assured.
• In this contract, the insurer is liable to compensate for the specific loss to the insured
who has paid regular consideration, i.e. an insurance premium.
Definition of Insurance :
Meaning of Insurance:
According to Insurance Act of 1938, Insurance is defined as follows:
“Insurance is defined as "A provision which prudent man makes against inevitable
contingencies”.
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4. 5 ‘R’s of Insurance:
 Risk
 Return
 Riders
 Rewards Value add
 Rebate
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5. Functions of Insurance:
 Means of saving & investments
 Sources of earning foreign exchange
 Risk free trade
Primary Functions:
 Insurance provides protection
 Collective bearing of risk
 Insurance provides certainty of
payment at the uncertainty of loss.
 Assessment of Risk
 Risk-Sharing
Secondary Functions:
 Provide prevention of losses
 Small capital to cover larger risk
 Contributes towards the developments
of larger industries.
 It Improves Efficiency
 It helps Economic Progress
Other Functions:
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6. Conclusion:
• The most important function of insurance is to spread the risk over a
number of persons who are insured against the risk, share the loss of
each member of the society on the basis of the probability of loss to
their risk and provide security against losses to the insured.
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7. 6

8. Department of Management Science
Thank You Sir
2020-2021