PREFACE 1. OBJECTIVES: To find out general insurance and which are the companies involved in it. To know what are the trends in General Insurance. To find out the developments in the General Insurance. To find out the Procedure of Claims. 2. METHODOLOGY: The study was carried out in Mumbai. Extensive Library Research was carried out. Various Websites were referred. Primary data was collected through interviews. Various books, magazines and newspapers have been referred.
IRA, not exceeding seven in number of whom not more than three shall serve full time, shall be nominated by the central government. INSURERS: Insurance industry, as on 1. 4. 2000, comprised mainly two players: the state insurers: Life Insures: • Life Insurance Corporation of India (LIC) General Insurers • General Insurance Corporation of India (GIC) (with effect from Dec ‘2000, a national reinsurer) 7 INSURANCE INDUSTRY: CLASSIFICATION INSURANCE LIFE INSURANCE GENERAL INSURANCE Fire Insurance Marine Insurance Mediclaim Motor Vehicle 8 SOME PLAYERS IN THE INDUSTRY:
Life Insurance Life Insurance Corporation of India. General Insurance General Insurance Corporation of India. 1. 2. 3. 4. Oriental Insurance Company Ltd. New India Assurance Company Ltd. National Insurance Company Ltd. United India Insurance Company Ltd. New Entrants ICICI Prudential Life Insurance Ltd. Tata AIG Life Insurance Corporation Ltd. ING Vysya Life Insurance Corporation Ltd. Om Kotak Mahindra Life Bajaj Alliaz General Insurance Company Ltd. Reliance General Insurance Company Ltd. Tata AIG General Insurance Company Ltd. Insurance Royal Sundaram Alliance Insurance Company Ltd. Corporation Ltd. 4 I’s of Insurance Service The 4 I’s refers to the different dimensions/ characteristics of any service. Unlike pure product, services have its own characteristics and its related problems. So the service provider needs to deal with these problems accordingly. The service provider has to design different strategies according the varying feature of the service. These 4 I’s not only represent the characteristics of different services but also the problems and advantages attached to it. These 4 I’s can be broadly classified as: • Intangibility • Inconsistency • Inseparability • Inventory Intangibility: Insurance is a guarantee against risk and neither the risk nor the guarantee is tangible. Hence, insurance rightly come under services, which are intangible. Efforts have been made by the insurance companies to make insurance tangible to some extent by including letters and forms 10 • Inconsistency Service quality is often inconsistent. This is because service personnel have different capabilities, which vary in performance from day to day. This problem of inconsistency in service quality can be reduced through standardization, training and mechanization. • Inseparability
Services are produced and consumed simultaneously. Consumers cannot and do not separate the deliverer of the service from the service itself. Interaction between consumer and the service provider varies based on whether consumer must be physically present to receive the service. • Inventory No inventory can be maintained for services. Inventory carrying costs are more subjective and lead to idle production capacity. When the service is available but there is no demand, cost rises as, cost of paying the people and overhead remains constant even though the people are not required to provide services due to lack of demand.
• • Motor Insurance Public liability (for corporate class) Other policies include: Fire insurance o Building or flat o Furniture fixtures & other content’s o Loss of profit that is consequential loss Miscellaneous insurance o Personal insurance o Burglary ,theft o Workmen’s compensation o Fidelity guarantee o Cancer o Mediclaim o Comprehensive Package Policy for jewelry, T. V, V. C. R, Furniture etc… 45 Marine Cargo Insurance Cargo In Transit o Cargo Declaration Policy Marine Hull Insurance Inland vessels ocean going vessels, fishing & sailing vessels, freight at risk, construction of ships, voyage insurance of various vessels, ship breaking , insurance Awaiting break up, insurance Oil & energy in respect of onshore & offshore risks including construction risk. Non – Traditional / Rural o Cattle / Hens o Crop o Water Pump for agriculture o Hut o Other Livestock o Motor Insurance Motor insurance is mandatory for all types of vehicles in India. There are two types of motor insurance viz Third party, which only insures the party / parties other than the owner in an accident o Comprehensive, which insures the owner as well as the third party involved. 46 The premium for motor vehicles is decided on the following factors: o Value of the vehicle o Location where it is to registered . places having higher claim rates (like Mumbai) are likely to have higher premium The premium for heavy commercial o Value of the vehicle o Gross laden weight, that is, the carrying capacity of the vehicle. For HCV’s the driver is also insured along with the vehicle. A charge of rs. 5/- is made as premium for the driver. For all sorts of vehicles insured, the policy would not cover the use on hire , reward or organized racing ,speed reliability trails and speed testing. There is (NCB) No Claim Bonus applicable for each year an insured person does not claim . It is accrued as a 5% deduction from the premium amount for the next year, subject to maximum 50%. Property Insurance Property insurance covers land, buildings and the contents of building. There are several types of Property insurance packages, but the most common are the Fire Insurance and burglary Insurance 7 Fire Insurance Fire insurance is a comprehensive policy, which goes beyond only fire accidents. The policy, besides covering loss on account of fire, also covers loss on account of the following o Earthquake o Riots o Strikes o Malicious Intent o Floods Fire insurance only can be taken by the owner of the premises to be insured. A tenant cannot insure rented premises since he does not have insurable interest. But the tenant has the option of insuring the contents of the premises. The premium is based on “Good faith” and depends on the value of property being insured.
It should be noted that thought fire insurance is not compulsory, in case of corporate availing of loans, the lending institution may insist on equipment or relevant property to be insured against fire. This trend is now also being followed by housing finance companies, some of which are insisting that the premises be insured against fire 48 Burglary Burglary insurance covers all losses arisen out of burglary committed in one’s premises. The only condition for lodging a claim on the insurance party is that there should be a “forced entry” in to the premises.
A forced entry may in the form of physical damage to the entry area, or to a person or entry gained through coercion. In this case too, the policy has no limitations and it is the right of the insured to decide upon the value of the insurance cover Overseas Mediclaim Policy – Travel Insurance Policies issued in India under Overseas Mediclaim Scheme, as approved by Reserve Bank Of Indian residents traveling abroad for any approved visits viz. Business, Study Tour, Specialized training conferences, Employment or higher studies. Premium on such policies may be collected in rupees but for employment in foreign currency.
This policy was originally introduced in 1984, to provide for payment of medical expenses in respect of illness suffered or accident sustained by Indian residents during their overseas trips for official or holiday purposes. In. 1998, a new policy known as VIDESH YATRA MITRA, was made available for Business and Holiday Travelers. Cover for corporate frequent travelers were also introduced. 49 The policy provides for following Sections:1) Medical Cover 2) Repatriation Of Remains 3) Checked Baggage Loss / Baggage Delay 4) Passport Loss 5) Personal Accident – Overseas 6) Personal Liability 7) Hijack Relief Benefit
very modern. But we are trying to rectify both these (Technology and Marketing) areas. The problems faced by Indian Insurance Sector Today: The main problems are: [Lack of awareness for insurance needs. [Lack of penetration due to inadequate marketing/delivery system. [Total computerization still in the process of implementation. [Sophisticated covers do not have adequate demands because of General attitude to insurance in India. 52 The Schemes Recognizing its organizational strengths, the Govt. f India has also entrusted the corporation with the administration of various schemes for social melioration and public welfare. Social security schemes benefiting millions of Citizens below the poverty line. Personal Accident Insurance and Hut Insurance are operated all over the country for which the premiums are paid by the Government. The GIC administers on behalf of Government, the crop Insurance scheme for areas and crops notified under the crop Insurance Scheme. Various low cost mass insurance policies have been evolved over a period of time, e. . ‘Jan Arogya Bima Policy’. Role General Insurance Industry is playing in the growth of economy of the country: The General Insurance Industry has an enviable track record among public sector units. It has a consistent profit and dividend paying record accompanied by a steady growth in its financial resources. Through investments in the- Government sector and: socially – oriented Sectors the Industry has contributed immensely to the nation’s development. The industry is recognized as one of the largest financial’ Institutions in the Country.
The ventures initiated by the industry in the areas of Mutual Fund, Housing Finance have done exceedingly well in recent years. To protect the country’s foreign exchange reserves, the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders. The GIC’S inwards reinsurance wing, called the SWIFT, maximizes the foreign exchange balance by acting as an international insurer-accepting risk from all over the globe. 53 GIC’S International operation:
GIC’S international operations span over 31 countries around the globe. The reinsurance expertise built over a long period has made the Indian Insurance Industry a globally acknowledged reinsurer of repute GIC’S risk management skill has been backed by specialists with a vast insurance experience. Thus, the technical and underwriting skills have been acknowledged in the international market. The corporation operates in 17 countries through branches and agencies, whereas in another 14 countries, it has subsidiaries and associate companies. The GIC has a subsidiary company known as ‘India International Pvt, Ltd. ‘ operating in Singapore and a joint-venture company, Kenindia Insurance co. Ltd. The impact of liberalization of economy in the activities of GlC. With the liberalization of economy, General Insurance in India is poised for a quantum jump, both in quality and quantity. Vision for the future: It is estimated that the industry will outstrip the present rate of growth and reach a premium value of over Rs. l,20,000 millions by taking advantage of the extra-large megarisk and social awareness of insurance in general, even as . a developing country turns into a developed country.
The task before the industry to service the growing number of policy-holders would equally see a quantum jump in issuance of documents and settlement of claims. Matching reserves and consequent investment will be a natural corollary. 54 It is expected that the investment portfolio will touch around Rs. 2,50,000 millions by the end of the next decade, with the strength built up over the years since nationalization, GIC new looks to the future with confidence and optimism, takes on global chal1enge with its high standard of service, innovative initiative and a compelling social perspective.
GIC’s plan – in new business areas: The two new areas that GIC is getting into are the areas of health care and crop insurance. For the health care business, the corporation has received permission to set up a separate management services company. GIC has plans to increase the scope of cover in health care, personal accident and crop insurance and will require expertise in pricing the products. The Research & Development activities: They have just entered these areas and for the coming five years we are investing approximately 500 crores. GIC’S R & D cell is created backed up market research data.
The subsidiaries of GIC are becoming an autonomous body. Privatization in the insurance sector of India – Is it in the right direction It’s purely a government decision and the nationalized sect