The document discusses types of pure risk and the difference between pure and speculative risk. It also discusses the underwriting process for life insurance. Key points:
- Pure risks include property risk, personal risk, liability risk, and loss of income risk. Pure risks have only two outcomes - loss or no loss, with no possibility of gain.
- The underwriting process for life insurance involves gathering application information, medical reports, reviewing risk, and writing the policy if accepted. It aims to determine premium rates based on risk profile.
- Changes to the IRDA Investment Amendment Regulations in 2001 included balancing infrastructure and social sector investments that were rated AA or higher. It also set minimum investment grade requirements of AA or A
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Dear students get fully solved SMU MBA Fall 2014 assignments
Send your semester & Specialization name to our mail id :
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Dear students get fully solved assignments by professionals
Send your semester & Specialization name to our mail id :
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Dear students get fully solved assignments
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Dear students get fully solved assignments
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Dear students get fully solved assignments
Send your semester & Specialization name to our mail id :
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Dear students get fully solved SMU MBA Fall 2014 assignments
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The outcome of this session is to understand the fundamentals of insurance, the risk management techniques ,Principles of Insurance contracts & Key Insurance terminologies
Practice and Implication of Principle of Proximate Cause by the Insurance Com...Mohammad Istiaq Hasan
I and my fellow members were assigned to study and prepare a report on the application of Principle of Proximate Cause by insurance companies of Bangladesh. In the introductory part, we briefly described the theoretical overview of proximate cause.
After mentioning the company profile, we described six real cases of Agrani Insurance Company Limited and National Life Insurance Company Limited with their policy implication. We pointed out the proximate causes of loss from the case and explained the reasons payment of a claim or rejection of a claim.
Chapter 6: FINANCIAL OPERATIONS OF I NSURERSMarya Sholevar
1-Liabilities: Loss Reserves
A loss reserve is the estimated cost of settling claims for losses that have already occurred but that have not been paid as of the valuation date . More specifically, the loss reserve is an estimated amount for (1) claims reported and adjusted but not yet paid, (2) claims reported and filed, but not yet adjusted, and (3) claims for losses incurred but not yet reported to the company .
Loss reserves in property and casualty insurance can be classified as case reserves, reserves based on the loss ratio method, and reserves for incurred but not reported claims.
2-Policyholders’ Surplus
Policyholders’ surplus is the difference between an insurance company’s assets and liabilities . It is not calculated directly—it is the “balancing” item on the balance sheet.
If the insurer were to pay all of its liabilities using its assets, the amount remaining would be policyholders’ surplus.
Surplus can be thought of as a cushion that can be drawn upon if liabilities are higher than expected.
Surplus represents the paid-in capital of investors plus retained income from insurance operations and investments over time.
The level of surplus is also an important determinant of the amount of new business that an insurance company can write.
3-Income and Expense Statement
The income and expense statement summarizes revenues received and expenses paid during a specified period of time .
Revenues are cash inflows that the company can claim as income. The two principal sources of revenues for an insurance company are premiums and investment income.
Earned premiums represent the portion of the premiums for which insurance protection has been provided .
Expenses Partially offsetting the company’s revenues were the company’s expenses, which are cash outflows from the business.
The major expenses for an Insurance Company:
Adjusting claims
Paying the insured losses
Underwriting
4-Measuring Profit or Loss
A simple measure that can be used is the insurance company’s loss ratio and expense ratio.
The loss ratio is the ratio of incurred losses and loss adjustment expenses to premiums earned .
Loss ratio= (Incurred losses+Loss adjustment expenses)/Premiums earned
The expense ratio is equal to the company’s underwriting expenses divided by written premiums .
Expense ratio=Underwriting expenses/Premiums written
5-Rate-Making Methods
Insurance law is the practice of law surrounding insurance, including insurance policies and claims. It can be broadly broken into three categories - regulation of the business of insurance; regulation of the content of insurance policies, especially with regard to consumer policies; and regulation of claim handling.
Risk Management in insurance business of Bangladesh.Rizwan Khan
In risk management , a firm tries to minimize the amount of risk and the cost of that risk.
Insurance is a written contract , taken with the insuring company , that transfers the risk of loss to the insurer according to the terms of the contract.
Life Insurance Basics provides an overview of most of the types of life insurance products available today and reviews the basics of policies, contracts, beneficiaries and how to buy life insurance. Part of the continuing series of presentations in the Financial Services Industry Training. Contact us if you need training developed for your organization.
When market conditions are good insurance companies get low of business and their profits increase but in the adverse market conditions the companies start facing losses or their profitability reaches to rock bottom.
This is the brief document about Birla Sun Life Group..which include almost all its insurance plans, and policies. This documents also help those students and people how are seeking to get to know about BSLI. I provide all the detailed history about birla group in this documents..:)
The outcome of this session is to understand the fundamentals of insurance, the risk management techniques ,Principles of Insurance contracts & Key Insurance terminologies
Practice and Implication of Principle of Proximate Cause by the Insurance Com...Mohammad Istiaq Hasan
I and my fellow members were assigned to study and prepare a report on the application of Principle of Proximate Cause by insurance companies of Bangladesh. In the introductory part, we briefly described the theoretical overview of proximate cause.
After mentioning the company profile, we described six real cases of Agrani Insurance Company Limited and National Life Insurance Company Limited with their policy implication. We pointed out the proximate causes of loss from the case and explained the reasons payment of a claim or rejection of a claim.
Chapter 6: FINANCIAL OPERATIONS OF I NSURERSMarya Sholevar
1-Liabilities: Loss Reserves
A loss reserve is the estimated cost of settling claims for losses that have already occurred but that have not been paid as of the valuation date . More specifically, the loss reserve is an estimated amount for (1) claims reported and adjusted but not yet paid, (2) claims reported and filed, but not yet adjusted, and (3) claims for losses incurred but not yet reported to the company .
Loss reserves in property and casualty insurance can be classified as case reserves, reserves based on the loss ratio method, and reserves for incurred but not reported claims.
2-Policyholders’ Surplus
Policyholders’ surplus is the difference between an insurance company’s assets and liabilities . It is not calculated directly—it is the “balancing” item on the balance sheet.
If the insurer were to pay all of its liabilities using its assets, the amount remaining would be policyholders’ surplus.
Surplus can be thought of as a cushion that can be drawn upon if liabilities are higher than expected.
Surplus represents the paid-in capital of investors plus retained income from insurance operations and investments over time.
The level of surplus is also an important determinant of the amount of new business that an insurance company can write.
3-Income and Expense Statement
The income and expense statement summarizes revenues received and expenses paid during a specified period of time .
Revenues are cash inflows that the company can claim as income. The two principal sources of revenues for an insurance company are premiums and investment income.
Earned premiums represent the portion of the premiums for which insurance protection has been provided .
Expenses Partially offsetting the company’s revenues were the company’s expenses, which are cash outflows from the business.
The major expenses for an Insurance Company:
Adjusting claims
Paying the insured losses
Underwriting
4-Measuring Profit or Loss
A simple measure that can be used is the insurance company’s loss ratio and expense ratio.
The loss ratio is the ratio of incurred losses and loss adjustment expenses to premiums earned .
Loss ratio= (Incurred losses+Loss adjustment expenses)/Premiums earned
The expense ratio is equal to the company’s underwriting expenses divided by written premiums .
Expense ratio=Underwriting expenses/Premiums written
5-Rate-Making Methods
Insurance law is the practice of law surrounding insurance, including insurance policies and claims. It can be broadly broken into three categories - regulation of the business of insurance; regulation of the content of insurance policies, especially with regard to consumer policies; and regulation of claim handling.
Risk Management in insurance business of Bangladesh.Rizwan Khan
In risk management , a firm tries to minimize the amount of risk and the cost of that risk.
Insurance is a written contract , taken with the insuring company , that transfers the risk of loss to the insurer according to the terms of the contract.
Life Insurance Basics provides an overview of most of the types of life insurance products available today and reviews the basics of policies, contracts, beneficiaries and how to buy life insurance. Part of the continuing series of presentations in the Financial Services Industry Training. Contact us if you need training developed for your organization.
When market conditions are good insurance companies get low of business and their profits increase but in the adverse market conditions the companies start facing losses or their profitability reaches to rock bottom.
This is the brief document about Birla Sun Life Group..which include almost all its insurance plans, and policies. This documents also help those students and people how are seeking to get to know about BSLI. I provide all the detailed history about birla group in this documents..:)
In business, risk management is defined as the process of identifying, monitoring and managing potential risks in order to minimize the negative impact they may have on an organization. Examples of potential risks include security breaches, data loss, cyberattacks, system failures and natural disasters.
Topic 8 – Risk Management & Insurance
BAFI 1016 Personal Wealth Management
Introduction A financial plan must take into account the possibility of risks such as disability and premature death may occur and aim to:
Eliminate them, or
Minimise their effectA systematic approach should be taken to identify and manage these risks
Risk
Speculative riskArises where there is a chance of a loss or a gainExamples:
Gambling; Once the bet is placed, there can only be a win or a loss
Setting up a business; The business will succeed or fail
Risk continued
Pure riskArises where there is only a
possibility of loss or no lossCategories of pure risk
Personal
Property and (see next slide)
Risk continued
Liability
Common law – e.g. negligence
Statute law – e.g. faulty product
Contract – e.g. construction
Risk Management
Risk management process can be divided into 3 broad steps:
1. Identification and evaluation of potential risks
Identify possible losses and their costs
Risk Management continued
2. Management of identified risks
Seek to avoid and minimise risks
3. Program review
Regularly reassess to ensure ongoing protection
Personal Risk Management
1. Identification
Premature death
Prolonged illness or injury
Medical costs
Business risks
Personal Risk Management continued
2. Evaluation of personal risks
a. Lump sum costs in the event of premature death include:
Burial and associated expenses
Estate administration costs
Final medical and associated care
Debt clearing
Adjustment expenses
Personal Risk Management continued
b. Provision for dependents
The multiple approach
- Relatively simple to calculate
- Ignores individual resources and
commitments
- Assumes constant resources and
inflation
Personal Risk Management continued
The needs approach
- Requires relatively detailed dynamic budgeted information necessitating reassessment from time to time
c. Disablement costs can include:
Medical expenses
Other costs associated with the disability
Provision of an income to support
any dependants
Personal Risk Management continued
3. Control measures
Lifestyle factors such as fitness, diet, smoking and alcohol.
4. Financing measures
Retention: losses met from
individual’s own resources or via insurance excess
Transfer: financial responsibility
passed to another party – typically via insurance
House and Contents Risk Management
1. Identification
e.g. fire, storm, water damage, burglary, impact by vehicles and earthquake
2. Evaluation
Value only considered for building and contents as land will always remain
3. Control measures
Smoke detectors, burglar alarms, deadlocks etc
House and Contents Risk Management continued
4. Financing measures
Adequate insurance
Replacement value
Indemnity value
Consider value of contents
Consider impacts of a ‘co-insurance or average clause’ which seeks to pass on some of the financial impacts of underinsurance to insured
House and Contents Risk Management continuedExa ...
2024.06.01 Introducing a competency framework for languag learning materials ...Sandy Millin
http://sandymillin.wordpress.com/iateflwebinar2024
Published classroom materials form the basis of syllabuses, drive teacher professional development, and have a potentially huge influence on learners, teachers and education systems. All teachers also create their own materials, whether a few sentences on a blackboard, a highly-structured fully-realised online course, or anything in between. Despite this, the knowledge and skills needed to create effective language learning materials are rarely part of teacher training, and are mostly learnt by trial and error.
Knowledge and skills frameworks, generally called competency frameworks, for ELT teachers, trainers and managers have existed for a few years now. However, until I created one for my MA dissertation, there wasn’t one drawing together what we need to know and do to be able to effectively produce language learning materials.
This webinar will introduce you to my framework, highlighting the key competencies I identified from my research. It will also show how anybody involved in language teaching (any language, not just English!), teacher training, managing schools or developing language learning materials can benefit from using the framework.
Instructions for Submissions thorugh G- Classroom.pptxJheel Barad
This presentation provides a briefing on how to upload submissions and documents in Google Classroom. It was prepared as part of an orientation for new Sainik School in-service teacher trainees. As a training officer, my goal is to ensure that you are comfortable and proficient with this essential tool for managing assignments and fostering student engagement.
Palestine last event orientationfvgnh .pptxRaedMohamed3
An EFL lesson about the current events in Palestine. It is intended to be for intermediate students who wish to increase their listening skills through a short lesson in power point.
This is a presentation by Dada Robert in a Your Skill Boost masterclass organised by the Excellence Foundation for South Sudan (EFSS) on Saturday, the 25th and Sunday, the 26th of May 2024.
He discussed the concept of quality improvement, emphasizing its applicability to various aspects of life, including personal, project, and program improvements. He defined quality as doing the right thing at the right time in the right way to achieve the best possible results and discussed the concept of the "gap" between what we know and what we do, and how this gap represents the areas we need to improve. He explained the scientific approach to quality improvement, which involves systematic performance analysis, testing and learning, and implementing change ideas. He also highlighted the importance of client focus and a team approach to quality improvement.
Synthetic Fiber Construction in lab .pptxPavel ( NSTU)
Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
Students, digital devices and success - Andreas Schleicher - 27 May 2024..pptxEduSkills OECD
Andreas Schleicher presents at the OECD webinar ‘Digital devices in schools: detrimental distraction or secret to success?’ on 27 May 2024. The presentation was based on findings from PISA 2022 results and the webinar helped launch the PISA in Focus ‘Managing screen time: How to protect and equip students against distraction’ https://www.oecd-ilibrary.org/education/managing-screen-time_7c225af4-en and the OECD Education Policy Perspective ‘Students, digital devices and success’ can be found here - https://oe.cd/il/5yV
The Art Pastor's Guide to Sabbath | Steve ThomasonSteve Thomason
What is the purpose of the Sabbath Law in the Torah. It is interesting to compare how the context of the law shifts from Exodus to Deuteronomy. Who gets to rest, and why?
How to Split Bills in the Odoo 17 POS ModuleCeline George
Bills have a main role in point of sale procedure. It will help to track sales, handling payments and giving receipts to customers. Bill splitting also has an important role in POS. For example, If some friends come together for dinner and if they want to divide the bill then it is possible by POS bill splitting. This slide will show how to split bills in odoo 17 POS.
1. MF0018 –Insurance and Risk Management
Q1. Explain the different types of pure risk and the difference between pure and speculative risk.
Ans. Pure risks are defined as situation in which there are only two outcomes that is the possibility of
loss or no loss to an organization but no gain. The event either happens or does not happen. When this
risk happens, the chance of making any profit is very badly low.
Pure risks is broadly classified into four categories:
a) Property risk: This is a risk to a person in possession of the property which faces loss because
of some unforeseen events. Property includes both movable and immovable possessions.
Property risk is further divided into direct loss and indirect loss.
b) Personal risk: Personal risk are risks that directly affect the individual’s income. This may
either be loss of earned income or extra expenditure or depletion of financial assets. There are
four major types of personal risks.
Risk of premature death—Premature death occurs when the bread earner of a family dies with
unfulfilled financial obligations. Therefore, this can cause financial problems only if the
deceased has dependents to support.
Risk of insufficient income during old age—The risk arises when retired people do not have
sufficient income after their retirement and it leads to social insecurity.
Risk of poor health—The sudden disability of a person to earn income for living happens to be
a disadvantage or sudden risk to that person. The risk of poor health includes payment of
medical bills and the loss of earned income. This loss of income is a financial insecurity if the
disability is severe.
Risk of unemployment--- This risk is due to socio economic factors resulting in financial
insecurity.
c) Liability risk: This risk arises to a person when there is a possibility of an unintentional damage
caused by him to another person because of negligence. Therefore, this risk arises when one’s
activity causes adversity to another person. This risk arises due to government regulations and
acts.
d) Loss of income risk: This risk is due to an indirect loss from a certain given risk. Therefore in
this period, production stoppage will lead to loss of income.
The distinguishing features of pure risk and speculative risk are as following:
Pure risks are out of the person's control, in that people, do not intentionally put themselves in a
situation that is all downside and no upside in it.
Speculative risks, on the other hand, are gambles. Speculative risks are the downside of choices one
knowingly and sometimes intentionally makes that also have upside.
2. Speculative risk may profit the society but the same does not apply to pure risk.
Playing poker is a speculative risk. You risk losing some or all of the money you bring to the game. But
it's not a pure risk because you could also win.
The contract of insurance is usually applicable only to pure risks but not to speculative risks.
Q2. What are voluntary and involuntary insurances?
Ans. Insurance coverages are classified as voluntary and involuntary coverages.
Voluntary insurance is an optional insurance which is taken by an individual or a
company by their own wish. Private insurance is usually a voluntary insurance which
includes automobile insurance, workers compensation insurance, etc. Only 3% of India’s
population is covered under voluntary health insurance and there is lot of scope for
expansion.
Involuntary insurance comes under public sector where the individual is liable to take up
insurance by law. It is usually taken for social development, unemployment or for the
protection of particular class of people in the society.
Q3. Explain the steps in underwriting process.
Ans. The underwriting of life-insurance falls under a category that is different
from all other forms of insurances. When the underwriter measures risk at
beginning, the company assures a cover for 30 years or throughout life. Life
assurance underwriting must consider factors, like, medical history, family details,
occupational hazards, and person’s lifestyle.
The underwriting process for life insurance involves the following steps:
a) Execution of field underwriting.
b) Renewing the application in the office.
c) Gathering additional information, if required.
d) Taking and underwriting decisions.
Additional information is always essential for the underwriter in order to take a
decision. This additional information may be in the form of questionnaires, a detail
medical report from proposal’s own doctor (Medical Attendant’s Report), and an
examination by an independent doctor (Medical Examiner’s report).
The general steps followed by Underwriters are:
3. 1) Getting applications -The application for insurance is the main source of
insurability information that the underwriter of the life insurance company
evaluates first. Applications are generally collected by the field officers or the
agents. A typical life insurance consists of:
a) General information – The general information consists of general aspects like
name, age, address, date of birth, sex, income, marital status and occupation of the
applicant. It also includes the details of requested insurance cover like type of
policy, amount of insurance, name and relationship of the nominee, other
insurance policies that the customer owns and the pending insurance applications
as on date.
b) Medical information – The medical information consists of consumer’s health
condition and several queries about health history and family history. The medical
section of the application is comprehensive and it is mandatory to fill it completely
with relevant information. Information is also collected through a medical
examination, depending on age and face value of the policy.
2) The medical report – An average medical test is compulsory (which is free of
cost to the applicant except in case of revivals). Depending on the information
filed in the application, an insurance company may ask the physician of the
consumer for further information. Gathering information is a standard method used
in all domestic insurance companies. Basically, life insurance companies have
several sources of medical and financial information to assist them in the
underwriting process. These include personal medical records and physicians, the
medical information department, inspection reports and credit records.
3) Underwriting review – After collecting all the relevant information about the
applicant, an underwriter from the insurance company evaluates the information.
During this evaluation, the underwriter will organise the risk offered to the
company and also determines the premium for the policy depending upon the
primary and secondary factors influencing the premium. The premium rates are set
by the company’s registrars depending upon the applicants risk profile. During
each step of the underwriting process, the life insurance agent usually provides
details, and is well-informed about the insured status in the process. If the
applicant offers more risk than the insurance company standards, then the
underwriter rejects the application.
4) Policy writing – A special department writes the policy, whose main function is
to issue written contracts according to the instructions from the underwriting
departments. A register must be maintained as most policies are long-term.
Insurance companies generally use computerised systems to maintain the records
of the customers, premium payments, and they to verify that all the requirements
4. of underwriting have been met.
Q4. Describe factors affecting claim management, and the importance of time
element in claims payment.
Ans: The factors that affect claim settlement are:
a) The risk and cause of event covered in the policy.
b) The cause of event is directly related to the loss, a remote cause cannot be
placed in the settlement.
c)The policy should be valid on the date of event.
d) If conditions and warranties are not fulfilled according to the cover of the
policy, the cover of insurance does not come into effect even though premium is
paid.
e) The loss occurred should not be intentional in order to make profit.
f) Without the presence of the insurable interest for the property insured at the
time of loss, the benefit or compensation cannot be availed.
g) The assured has to make gains out of the insurance contract, as the contract is
indemnity in nature as it makes good the loss suffered.
h) Documentary evidence must support the claim.
The time value is very important in the settlement of a claim. Insurer should
submit the claim details within the specific period mentioned in the policy
document. In few cases, either the policyholder or the claimant or the claimant
representative, has to intimate the death of a person or the accident of vehicle,
either orally or in person, immediately.
The reasons for the importance of time element in the claims payment are as:
a) The delay in the claim settlement causes an unfavourable opinion about the
insurer.
b) The extension of time increases the cost of claims.
c) The delay may result in the insurer having to pay interest on the due insurance
amount, or insurers may have to pay the case costs to the assured, as per the
direction of the court, which increases the costs.
d) The delay in payment, may lead to legal action, which is costly.
5. e)The delay may cause extra burden to the insurer due to the unproductive use
of manpower to defend, expenses incurred and waste of time on legal actions.
f) Legal actions will affect on the productive areas of the business mainly in the
marketing of the insurance business.
g) The delay may increase the number of cases with consumer protection
councils.
Q.5. What do you understand by marketing of insurance products? Write down
the issues in insurance marketing.
Ans: Marketing of insurance products is an important tool in the insurance
business. The marketing of insurance is possible in both the life insurance and
the non-life insurance departments.
The type of advertisement and marketing suitable for insurance business must be
decided. The insurers must consider their budget, and plan their marketing
strategy according to their budget. They must also consider their target market.
The marketing tools that help in advertising the company’s insurance policies
are:
a) Online advertisement – It is one of the insurance marketing tools. Online
advertisement helps the insurance marketers to get noticed. Through studies it is
found that 75 percent of households have access to computers and internet
resources. Thus, online advertisements plays very important role in advertising
the company’s insurance policy.
b) Block line advertisement – It is another marketing tool used in trade
journals, industry publications and periodicals. This insurance marketing tool is
useful with the perspective of industry professionals who read these
publications.
c) Television advertisements and print advertisements – These advertisements
are the excellent forms of insurance marketing as they have a greater impact and
reach. However, the only drawback is that both are very expensive. These may
affect the insurance company’s advertising budget.
Marketing issues for young growth-oriented insurance companies as well as
other insurance companies are as follows:
a. Initial marketing focus issues – A potential initiator of an insurance marketing
6. business is needed, because, without support, the insurance company cannot
succeed. Thus, if the insurer or the insurance company does not have potential to
do marketing may have to face lot of difficulties in insurance marketing.
b. Marketing the company vs. sponsoring products issues – A new or young
unknown insurance company has to be accepted within the market place before
marketing effectively to the end-users (consumers). These companies must be
what they are. Every prospect will not value innovation and dexterity; instead
the correct ones will value it. Thus, young insurance companies might face
issues while finding out the correct prospect of policies.
c. Marketing programs issues – Once after a young insurance company is
positioned in the market, if its marketing program is not designed specifically to
accomplish their current insurance program’s objectives, then the whole effort is
almost worthless. Thus, it should re-evaluate its marketing program to acquire
good marketing.
d. Exit strategy issues – It is also one of the marketing issues. Right at the
beginning, an insurer or a founder must understand, and be able to explain how
they can exit. Even though they had given their expectation about company’s
growth and prosperity, if they fail to describe which type of customers would
ultimately want to purchase into it, they are said to be facing a marketing issue.
Thus, they must plan for organising the company, provisioning of funds, and
positioning of company in the market for the ultimate exit opportunity.
e. Pricing issues – The desired price or premium at which an insurer seeks to sell
their policy can impact on the distribution of the same. Since all the insurers
wants to make profit for their contributions, their distribution schemes may
affect the insurance products’ pricing. If too many competitors are involved,
then ultimate selling price may become barrier to meet sales targets, in such
cases an insurer may go for alternative distribution options.
f. Target market issues – An insurance marketing is said to be effective, only if
customers obtain the policies. The insurers must determine the level of
distribution coverage needed that effectively meet customer’s requirements to
reach their target market.
Q.6. List the changes made in the Third and Fourth Regulations in the IRDA
Investment Amendment Regulations 2001.
Ans: IRDA investment regulations of 2001 were amended by the Insurance
Advisory Committee to update the investment regulations for insurance
companies in India.
7. To implement the powers granted by sections 27A, 27B, 27D and 114A of
the Insurance Act, 1938 (4 of 1938), the Authority, in consultation with the
Insurance Advisory Committee, made the following regulations to modify
the Insurance Regulatory and Development Authority (Investment)
Regulations, 2000.
There were totally 14 modifications made to the Insurance Regulatory and
Development Authority (Investment) Regulations, 2000. The modifications
made for the third and fourth regulations are as given below:
a) The insurers should make an effort to keep a balance between
infrastructure sector investments and social sector investments. The bonds
provided for these sectors were rated ―AA‖ and guaranteed by the
government and other reputed rating agencies.
b) All investment of funds in assets, which are rated as per market practice
will be based on rating of such assets. The rating should be by an
independent, reputed and recognised Indian or foreign rating agency.
c) All the assets for investment shall be have an investment grade ―AA‖ and
not less than that. If the investment grade is not up to the mark to meet the
investment requirements of the insurance company but the investment
committee is fully satisfied about the same, then the investment of the asset
is approved for not less than +A rating.
d) All the debt assets issued by all India financial institutions are given an
AAA rating and are recognised as such by RBI. If the investment grade is not
up to the mark to meet the investment requirements of the insurance
company but the investment committee is fully satisfied about the same, then
the investment of the asset is approved for not less than AA rating from a
reputed Indian or foreign rating agency.
e) If any asset is capable of being rated only on the basis of market practice,
then the asset shall not be invested.
f) Investments in equity shares should be made in liquid instruments in a
recognised stock exchange. The investment trade volume should not be
below ten thousand units in the last 12 months.