The document provides an overview of the insurance sector in India. It discusses the definition of insurance and provides a brief history of insurance in India. It then covers the major policies and laws governing the insurance sector, how insurance business works, and how premiums are determined. It also discusses the two major types of insurance - life insurance and general insurance - and provides details on key products within each type.

1. INSURANCE SECTOR
IN INDIA
BY:
ABRITY BHATTACHARYA
ROLL NO. - 01

2. DEFINITON
• A contract in which an insurer promises to provide a
compensation for specific potential future losses to insured in
exchange for a periodic payment. Insurance is designed to
protect the financial well-being of an individual, company or
other entity who has agreed upon that contract in the case of
unexpected loss which is covered in that contract.
• It is one of the best form of investment that is stable as long as
the premiums are paid.
• Benefit to be gained during claiming by insured or his/her
nominee is called "face value" and the premiums that need to
be paid should surpass its value.

3. HISTORY
• Formal insurance business was started by British in
India during 19th century.
• In 1818, first British firm, Oriental Life Insurance
company was formed in Calcutta. Then many British
company formed throughout India.
• At 1871, Mutual Life Assurance Society was formed
at Bombay of Indian origin, charged normal rates for
Indian lives.

4. • First General Insurance company of British
origin, Triton Insurance Company Ltd.
Established in Calcutta (1850).
• Mercantile Insurance Company Ltd. : First
Indian general insurance to be set up by
Indians. Established at Bombay(1907).

5. POLICIES AND LAWS
• Indian Life Assurance Act, 1912.
• The Insurance Act, 1938.
• Series of amendments: 1950, 1968……, 1999 and
in 2008 till now.
• On 19th January 1956, management of 250 Indian
and foreign Life insurers and provident society
taken over by government.

6. • Nationalization of Life Insurance business in
India: September 1st, 1956.
• Management of non-life insurance businesses
were taken over by Indian Govt. on 13th May
1971.
• By General Insurance Business
(nationalization) Act, 1972: This business was
nationalized with effect from January 1, 1973.

7. HOW INSURANCE BUSINESS WORKS ?
• Risk management to offer policies to segment of
customer to which they suit most and have lower
rate of payouts.
• Coverage selection and rejection.
• Insurance companies do 3 things with Premium
collected from customers.
– Pool the money.
– Meet operational costs.
– Invest in safer investments.
• Underwriting profit and loss.
• Float: Investing premium in safe Govt. bonds, real
estates etc.

8. HOW PREMIUMS ARE DETERMINED
• Basically are dependent on two trends: the
frequency of claims (how many) and the severity
(cost) of each claim.
• Insurer research for two questions then only
launch any new policy premium for a given
segment of customers:
– How likely is it in general terms that someone will
need to make a claim?
– Is the person who wants to take out a policy a bigger
or smaller risk than the ‘average’ policyholder?

9. INSURANCE COMPANY’S CORE VALUES
 Speedy responsiveness
 Employee development
 Customer focus
 Ethical & legal
behavior
 Positive attitude
 Team work
 Profitability
 Innovation
 Continuous process
improvement

10. Principles of insurance
1. Principle of Indemnity
2. Principle of Insurable interest
3. Principle of Utmost good faith
4. Principle of Contribution
5. Principle of Subrogation
6. Principle of Proximate cause

11. 1. Principle of Indemnity
• This means the insured cannot make a profit from an
insurance claim i.e. The value of loss occurred due to
the incident is not compensated back completely.
• For example if you have a four year motorcar and it is
damaged, the insurance company will only give you
the current value not the value when it was new.

12. 2. Principle of insurable Interest
• The insured must have an insurable interest in the
subject matter of insurance, i.e. he/she must be
benefited by its safety or be prejudiced by its loss.
• For example you can insure your own home , but not
your friend’s home.
• In the same way you can take out Assurance on your
wife’s life, but not that of your neighbour.

13. 3. Principle of utmost good faith
• The insured and the insurer are bound with good faith,
honesty and fairness.
• To have transparency in policy coverage as well as degree
of risk, law compels disclosure of information between
parties.
• For examples:
– If the loss occurs, they will check the facts and if in-accurate
details have been given they will not pay damages to incurred.
– If the policy terms does not satisfy the customer they will not
take that policy as insurance.

14. 4. Principle of Contribution
• One can insure the same propriety item with more than one
insurance company, the insured can’t demand more than total
loss from all companies put together
• In sample words there is no advantage insuring the same risk
with two companies.
• Example:
– If a man losses his watch during holiday and has its risk cover under
household policy and also has a travel policy from some other
company then both companies will share the claim amount but not
more than indemnity.

15. 5. Principle of Subrogation
• Insurance company has the legal right to claim compensation
from any other party that caused the accident.
• The policy conditions provide such subrogation rights before
the claim is paid but recovery from third party can only be
received after claim is paid.
• For example :
– An electric goods business man lost some property due to faulty
toaster and claims for compensation from an insurance company. He
will not be allowed to complain and claim compensation from the
manufacturer instead insurance company will do on his behalf and will
get the compensation from manufacturer after it pays off claim to the
business man.

16. 6. Principle of Proximate cause
• The damage to the prosperity can take place due to many
causes, the insurer company will look first cause of damage or
the original cause of damage.
• If the original peril is cored in policy then only claim is paid. If
not then rejected.
• Example:
– A man keep his furniture outside during a fire in his house and
the furniture gets rotten due to rain then inspection will be
done by insurer whether-
• Rainfall began just after the fire or after some time of
extinguishing it (then main peril is fire).
• Or, due to keeping it for long outside even after fire was
extinguished and in between rain damaged it (claim would not be
entertained).

17. PORTER’S FIVE FORCES MODEL ANALYSIS

18. 1. Threat of New Entrants. The average entrepreneur
can't come along and start a large insurance company.
2. Power of Suppliers. The suppliers of capital might not
pose a big threat, but the threat of bargaining by suppliers
of human capital is a matter of concern as they have more
options.
3. Power of Buyers. Large corporate clients have a lot
more bargaining power with insurance companies than
individuals.
4. Availability of Substitutes. There are plenty of
substitutes in the insurance industry. Most large insurance
companies offer similar suites of services.
5. Competitive Rivalry. The insurance industry is
becoming highly competitive. The difference between one
insurance company and another is usually not that great.

19. MAJOR TWO TYPES OF INSURANCE
1) Life insurance:
 Own life.
 Family/Household insurance
 Group insurance.
 Medical insurance
 Disability insurance
2) General insurance:
 Automobile & truck Insurance
 Marine insurance.
 Travel insurance
 Property insurance etc.

20. MAIN DIFFERENCE B/W LIFE INSURANCE
& GENERAL INSURANCE
• Life is very long-term in nature — life insurance can
cover risks over many decades.
• General insurance cover risks usually for a shorter
period, such as one year.

21. LIFE INSURANCE
• On periodic basis premium is paid by insured.
• If the insured die within that time period, The
nominee get a specified amount of money.
There are two types of life insurance:
i. Term life insurance.
ii. Whole life insurance.

22. i Term Life Insurance
• The most basic one.
• Least expensive.
• Open ended.
• For example:
• You buy coverage for a certain period of time, such as 10, 15, 20 or
30 years.
• If you die before the term is over, your nominee gets the benefit.
• If you live beyond the term, the policy expires.
• Further coverage can be obtained with different payments or
conditions.

23. ii Whole Life Insurance
• This type of policy never expires.
• As long as premiums are paid, it remains in force.
• Premiums are usually based on your age.
• You'll pay the same amount of premium for the rest of your
life. (Start young and the less expensive the premiums will
be).

24. MARKET TREND FOR LIFE INSURANCE

26. Here the List of Top 10 Life Insurance Companies in
India during 2013.
1. Life Insurance Corporation of India(LIC)
2. ICICI Prudential Life Insurance
3. Reliance Life Insurance
4. Bajaj Allianz Life Insurance
5. Birla Sunlife Insurance
6. SBI Life Insurance
7. Max Life Insurance
8. HDFC Standard Life Insurance
9. Tata AIG Life Insurance
10. ING Vysya Life Insurance

27. GENERAL INSURANCE
• It provides protection against risks to property
and health.
• It include specialized forms of insurance such as:
– Home insurance.
– Automobile insurance
– Marine insurance
– Health insurance
– Travel insurance etc.

28. i Home insurance
It is determined by :
– Where you live (Location).
– Size of your home.
– Structure of your home.
– Property.
– The extent of your protective devices, such as alarms.

29. ii Automobile insurance
Motor insurance is determined by:
– Your living place.
– Type of vehicle.
– Your job.
– Age.
Young drivers pay high premiums because statistics
show that they’re involved in more crashes than
older drivers.

30. iii Marine insurance
It’s two major form of transportation coverage are:
1) Ocean marine:
It cover all losses to the ship &
cargo while port or at sea.
2) Inland marine:
It provide coverage to transportation of goods by rail, truck,
airplane and water ways.

31. iv Health insurance
• Health insurance is insurance against the risk of incurring
medical expenses among individuals.
• It depends on the risk of claim identified by:
– Health condition of insured during taking policy.
– The job he/she does.
– The degree of risk in environment around him/her.

32. v Travel insurance
• For limited time of period.
• It include personal accident,
medical expenses, loss of Luggage.
• The amount of premium is determined
by tour area and time duration.
• Annual trivial policy is also available.

33. MARKET TREND FOR GENERALINSURANCE
IN INDIA
• Fiscal year 2012-2013.

34. • During Q2 of FY 2013-2014.

35. REGULATORY HIERARCHY
• Insurance Regulatory and Development Authority (IRDA)
Established in 1999 under the IRDA Act Responsible for
regulating, promoting and ensuring orderly growth of the
insurance and re-insurance business in India
Ministry of
Finance
(Government
of India)
Insurance
Regulatory
and
Development
Authority
(IRDA)
Life Insurance
(24 players)
Public (1)
Private (23)
Non-Life
Insurance (27
players)
Public(6)
Private (21)
Re-insurance (1
player)
Public (1)

36. ADVANTAGES OF INSURANCE TO
ENSURED
• Income guaranteed through annuities (fixed sum of
money each year).
• Dividends enable growth.
• Risk guard.
• Tax benefits.
• Mortgage recovery.

37. DISADVANTAGES OF INSURANCE TO
INSURED
• Inconsistent premiums.
• Insufficient funds.
• Expiration of term insurance.
• Language of premium.