Second Edition
2013
LIC Short
Notes
For LIC ADO and AAO Preparation
By Appliedjobz
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Short Note on LIC and Insurance Sector by Appliedjobz
1.1 Insurance
Insurance may be described as a social device to reduce or eliminate risk of loss to life and property .Insurance is a collective bearing of risk. Insurance spreads the Risk and the loss of few people among a large number of people as people prefer a small fixed liability instead of big uncertain and changing liability.
Insurance is a scheme of economic cooperation by which members of the community share the unavoidable risk.
Insurance can be defined as a legal contract between two parties whereby one party called insurer undertakes to pay a fixed amount of money on the happening of a particular event, which may be certain or uncertain and the other party called insured pays in exchange a fixed sum known as Premium .The insurer and insured also known as Assured, or underwriter and Assured respectively. The document which embodies the contract is called policy
According To insurance Act , ―the undertaking by one person to identify the other person against loss or liability for loss in respect of certain risk or peril to which the object of the insurance may be exposed ,or pay a sum of money or other thing of value upon the happening of certain event and include the life insurance.‖
General Insurance: Insuring anything other than human life is called general insurance. Examples are insuring property like house and belongings against fire and theft or vehicles against accidental damage or theft. Injury due to accident or hospitalization for illness and surgery can also be insured. Your liabilities to others arising out of the law can also be insured and is compulsory in some cases like motor third party insurance.
1.2 History of Insurance in India
In India, insurance has a deep-rooted history. It finds mention in the writings of Manu ( Manusmrithi ), Yagnavalkya
(Dharmasastra ) and Kautilya
( Arthasastra ). The writings talk in terms of pooling of resources that could be
re-distributed in times of calamities such as fire, floods, epidemics and famine. This was probably a pre-cursor to modern day insurance. Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans and carriers‘ contracts. Insurance in India has evolved over time heavily drawing from other countries, England in particular
.
The Oriental Life Insurance Company, the first corporate entity in India offering life insurance coverage, was established in Calcutta in 1818 by Bipin Bernard Dasgupta and others. Europeans in India where it‘s primary target market, and it charged Indians heftier premiums. This Company however failed in 1834. In 1829, the Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870 saw the enactment of the British
Insurance Act and in the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency. This era, however, was dominated by foreign insurance offices which did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard competition from the foreign companies.
In 1914, the Government of India started publishing returns of Insurance Companies in India. The Indian Life Assurance
Companies Act, 1912 was the first statutory measure to regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life business transacted in India by Indian and foreign insurers including provident insurance societies. In 1938, with a view to protecting
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the interest of the Insurance public, the earlier legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control over the activities of insurers.
1.2.1 Life Insurance
The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large number of insurance companies and the level of competition was high. There were also allegations of unfair trade practices. The Government of India, therefore, decided to nationalize insurance business.
An Ordinance was issued on 19th January,
1956 nationalising the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector.
Some Insurance Company and time of establishment
Bharat Insurance Company (1896) United India (1906) National Indian (1906) National Insurance (1906) Co-operative Assurance (1906) Hindustan Co-operatives (1907) Indian Mercantile General Assurance
Swadeshi Life (later Bombay Life) India‘s first 150 years were marked mostly by turbulent economic conditions. It witnessed, First War of Independence, adverse effects of the World War I and World War II on the economy of India, and in between them the period of worldwide economic crises triggered by the Great depression. The first half of the 20th century also saw a heightened struggle for India's independence. The aggregate effect of these events led to a high rate of
bankruptcies and liquidation of life insurance companies in India. This had adversely affected the faith of the general public in the utility of obtaining life cover.
The Life Insurance Act and the Provident Fund Act were passed in 1912, providing the
1st regulatory mechanisms in the Life
Insurance industry. The Indian Insurance Companies Act of 1928 authorized the government to obtain statistical information from companies operating in both life and nonlife insurance areas. The subsequent Insurance Act of 1938 brought stricter state control over an industry that had seen several financially unsound ventures fail. A bill was also introduced in the Legislative Assembly in 1944 to nationalize the insurance industry. 1.2.2 General Insurance
Triton Insurance Co Ltd was the first general insurance company to be established in India in 1850 whose shares are mainly held by British. The first insurance company setup by the Indians was Indian Mercantile
Insurance Co. Ltd. which was established in 1907.The General insurance business was nationalized after the spread of General insurance business Act 1972 . The post-nationalization General insurance business was undertaken by the General Insurance Corporation of India (GIC) and it has four subsidiaries.
1. Oriental Insurance Company Ltd. 2. New India Assurance Company Ltd 3. National Insurance Company Ltd 4. United India Insurance Company Ltd Towards the end of 2000, the relation ceased to exist and the four subsidiaries are at present, operating as independent company. Today there are 24 general insurance companies including the ECGC and
Agriculture Insurance Corporation of India and 23 life insurance companies operating in the country.
The insurance sector is a colossal one and is growing at a speedy rate of 15-20%.
Together with banking services, insurance services add about 7% to the country‘s GDP. A well-developed and evolved insurance sector is a boon for economic development as it
provides long- term funds for infrastructure development at the same time strengthening the risk taking ability of the country.
1.3 Some of the important
milestones
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1.3.1 In the life insurance business in India
1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning.
1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business.
1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.
1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses.
1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers and provident societies are taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.
1.3.2 In the general insurance
Business in India:
The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British
.
1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. 1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices.
1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up.
1972: The General Insurance Business (Nationalisation) Act, 1972 nationalised the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four company‘s viz. the National Insurance
Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.
1.4
Characteristics of Insurance
1. Sharing of Risks2. C0-operative Device 3. Risk Assessment
4. Payment made on contingency 5. Amount of Payment
6. Large Number of Insured Persons 7. Insurance is by choice not by chance 8. Insurance is not charity
1.5
Fundamental legal principle of
Insurance
Apart from the principle governing all contract insurance is also governed by its own unique principle. They are as follows:
1. Principle of Indemnity 2. Principle of Contribution 3. Principle of Subrogation 4. Principle of Insurable Interest 5. Doctrine of Utmost Good faith
6. Cause of Loss – Doctrine of Proximate Cause
1. 5.1
Principle of Indemnity
Under this principle, you should collect the amount of your loss; no more, no less. In insurance terminology, that value is called the actual cash value (ACV) of the loss. ACV is computed using the following equation: ACV = Replacement Cost - Applicable Depreciation Calculation of the actual cash value can be illustrated with an example. Assume an insured purchased an asset that cost $600 and insured the asset on an actual cash value basis. The asset was later destroyed by an insured peril. The asset was 40 percent
depreciated at the time of the loss. However, the cost to replace the asset had increased to $700 when the loss occurred. Using the above equation, the insurer would be liable for:
Actual Cash Value = $700 - (40%) x ($700) Actual Cash Value = $420
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There are several exceptions to the principle of indemnity:
1. Valued policies 2. Valued policy laws
3. Replacement cost insurance 4. Life insurance
1. 5.2
Principle of Insurable Interest
The principle of insurable interest states that the insured must stand to lose financially or in some other way if a loss occurs in order to recover from an insurer. This "standing to lose" is called insurable interest. You have an insurable interest in your car in that you are financially harmed if the car is damaged or stolen. A husband or wife has an insurable interest in their spouse based on ties of love and affection as well as financial support. A complete stranger, however, does not have an insurable interest in your property or your life as the stranger does not stand to lose should a loss occur. Insurable interest is necessary to:
(a) Prevent gambling, (b) reduce moral hazard, and (c) measure the loss
1. 5.3
Principle of Subrogation
The principle of subrogationsupports the principle of indemnity. Subrogation means substituting the insurer in place of the insured in order to collect from a third party for a loss covered by insurance. The insurer (e.g., Fireman's Fund or Nationwide) pays the insured (their policy owner) for a loss, and the insured gives up their right of action against the negligent third party. An example will help to clarify this principle. Assume that a driver ran a red light and damaged Susan's car. Further assume that Susan had collision coverage under her auto insurance policy. Susan could collect from the other driver (or the driver's insurer) or from her own insurer. If her insurer paid for Susan's loss, the insurer will then try to
collect from the negligent driver for the loss paid to Susan.
Subrogation accomplishes three things. First, it prevents the insured from collecting twice. It also makes the negligent third party, the person
responsible for the loss; bear the burden of the loss. Finally, subrogation leads to lower insurance rates.
1. 5.3
UtmostGood faith
Insurance contracts are contracts based on the principle of utmost good faith. This tenet means that a high degree of honesty is expected from each party to the contract. When an insurance contract is formed, the applicant has an information advantage–there are some facts that only the applicant knows. The insurer must rely on information the applicant provides when making the decision to write the policy
1.6 Type of Insurance
The Following major categories of insurances are important:
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2.1
Life Insurance Corporation of India
Life Insurance Corporation of India (LIC) (Hindi: भारतीय जीवन बीमा ननगम) is the
largest insurance group and investment company in India. It’s a state-owned where Government of India has 100%stake. LIC also funds close to 24.6% of the Indian Government's expenses. It has assets estimated of 13.25 trillion(
US$240 billion).It was founded in 1956 with the merger of 245 insurance companies and provident societies(154 life insurance companies,16 foreign companies & 75 provident companies).
Headquartered in Mumbai, financial and commercial capital of India, the Life Insurance Corporation of India currently has 8 zonal Offices and 113 divisional offices located in different parts of India, around 3500 servicing offices including 2048 branches, 54 Customer Zones, 25 Metro Area Service Hubs and a number of Satellite Offices located in different cities and towns of India and has a network of 13,37,064 individual agents, 242 Corporate Agents, 79 Referral Agents, 98 Brokers and 42 Banks (as on 31.3.2011) for soliciting life insurance business from the public.
The slogan of LIC is "Yogakshemam
Vahamyaham" which translates from Sanskrit to "Your welfare is our responsibility". The slogan is derived from the Ancient Hindu text,
the Bhagavad Gita's 9th Chapter, 22nd verse. The literal translation from Sanskrit to English is "I carry what you require". The slogan can be seen in the logo, written in Devanagiri script.
2.2 Nationalization
In 1955, parliamentarian Amol Barate raised the matter of insurance fraud by owners of private insurance companies. In the ensuing investigations, one of India's wealthiest businessmen, Ram Kishan Dalmia, owner of the Times of India newspaper, was sent to prison for two years. Eventually,
the Parliament of India passed the Life Insurance of India Act on 1956-06-19, and the Life Insurance Corporation of India was created on 1956-09-01, by consolidating the life insurance business of 245 private life insurers and other entities offering life insurance services. Nationalization of the life insurance business in India was a result of
the Industrial Policy Resolution of 1956, which had created a policy framework for extending state control over at least seventeen sectors of the economy, including the life insurance.
2.3 Current status
Over its existence of around 57 years (up to 2013), Life Insurance Corporation of India, which
commanded a monopoly of soliciting and selling life insurance in India, created huge surpluses, and contributed around 7% of India's GDP in 2006. The Corporation, which started its business with around 300 offices, 5.7 million policies and
a corpus of INR 459 million (US$ 92 million as per the 1959 exchange rate of roughly Rs. 5 for a US $,[
has grown to 25000 servicing around 350 million policies and a corpus of over 8 trillion
(US$150 billion).
2.4
Life insurance in India
Life Insurance is the fastest growing sector
in India since 2000 as Government allowed Private players and FDI up to 26%, and recently
Government increased it to 49%. Life Insurance in India was nationalized by incorporating Life
Insurance Corporation (LIC) in 1956. All private life insurance companies at that time were taken over by LIC.
In 1993, the Government of India appointed RN Malhotra Committee to lay down a road map for privatization of the life insurance sector.
While the committee submitted its report in 1994, it took another six years before the enabling
legislation was passed in the year 2000, legislation amending the Insurance Act of 1938 and legislating the Insurance Regulatory and Development
Authority Act of 2000. The same year the newly appointed insurance regulator - Insurance
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Regulatory and Development Authority IRDA— started issuing licenses to private life insurers.
2.5
Type of Life insurance in India
Following is the list of broad categories of life insurance products:
2.5.1 Term Insurance Policies
The basic premise of a term insurance policy is to secure the immediate needs of nominees or
beneficiaries in the event of sudden or unfortunate demise of the policy holder. The policy holder does not get any monetary benefit at the end of the policy term except for the tax benefits he or she can choose to avail of throughout the tenure of the policy. In the event of death of the policy holder, the sum assured is paid to his or her beneficiaries. Term insurance policies are also relatively cheap to acquire compared to other insurance products 2.5. 2 Endowment Policies
This basically falls into the category of an insurance-cum-investment product. Unlike a regular term insurance policy, an endowment plan provides returns on investment at the end of the policy term. There are several varieties of endowment plans, and the rate of returns and the type of benefits can vary based on the kind of endowment plan an individual has opted for. With an endowment plan, a person can opt for insurance products that provide both the benefit of insurance as well as investment.
2.5.3 Money-back Policies
Money back policies are basically an extension of endowment plans wherein the policy holder receives a fixed amount at specific intervals throughout the duration of the policy. In the event of the
unfortunate death of the policy holder, the full sum assured is paid to the beneficiaries. The terms again might slightly vary from one insurance company to another.
2.3.4 Unit-linked Insurance Policies (ULIP) Unit linked insurance policies again belong to the insurance-cum-investment category where one gets to enjoy the benefits of both insurance and
investment. While a part of the monthly premium pay-out goes towards the insurance cover, the remaining money is invested in various types of funds that invest in debt and equity instruments. ULIP plans are more or less similar in comparison to mutual funds except for the difference that ULIPs offer the additional benefit of insurance.
2.5.5 Pension Policies
Pension policies let individuals determine a fixed stream of income post retirement. This basically is a retirement planning investment scheme where the sum assured or the monthly pay-out after
retirement entirely depends on the capital invested, the investment timeframe, and the age at which one wishes to retire. There are again several types of pension plans that cater to different investment needs. Now it is recognized as insurance product and being regulated by IRDA.
2.6
List of Life Insurers
Apart from Life Insurance Corporation, the public sector life insurer, there are 23 other private sector life insurers, most of them joint ventures between Indian groups and global insurance giants
.
2.6.1 Life Insurer in Public Sector
1. Life Insurance Corporation of India
2.6.2 Life Insurers in Private Sector
1. SBI Life Insurance
2. PNB Metlife India Life Insurance 3. ICICI Prudential Life Insurance 4. Bajaj Allianz Life
5. Max Life Insurance 6. Sahara Life Insurance 7. Tata AIA Life 8. HDFC Life
9. Birla Sun Life Insurance 10. Kotak Life Insurance 11. Aviva Life Insurance
12. Reliance Life Insurance Company Limited -Formerly known as AMP Sanmar LIC
13. ING Vysya Life Insurance 14. Shriram Life Insurance
15. Bharti AXA Life Insurance Co Ltd 16. Future Generali Life Insurance Co Ltd 17. IDBI Fedaral Life Insurance
18. AEGON Religare Life Insurance 19. DLF Pramerica Life Insurance
20. CANARA HSBC Oriental Bank of Commerce LIFE INSURANCE
21. India First Life Insurance Company 22. Star Union Dia-ichi Life Insurance Co. Ltd 23. Edelweiss Tokio Life Insurance Company Ltd
2.7 Foreign Direct Investment (FDI) Policy in
Insurance Sector
As per the current (March 2006) FDI norms, foreign participation in an Indian insurance company is restricted to 26.0% of its equity / ordinary share capital. The Insurance Regulator has stipulated that foreign investment in Indian Insurance companies be limited to 26% of total equity issued (FDI limit) with the balance being funded by Indian
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promoter entities. The limit to foreign investment includes both direct and indirect investment and has been a cause of significant lobbying by foreign insurance companies for a change in regulations to increase the FDI limit to 49% of equity issued. The Indian government has supported an increase in the FDI limit, which requires a change in the Insurance Act. The Union Budget for fiscal 2005 had recommended that the ceiling on foreign holding be increased to 49.0%.
A change in the Insurance Act requires a passage of the bill in both houses of Parliament. The Indian government has tabled the bill in the Upper House of Parliament in August 2010.
2.8 Initial Public Offer (IPO) rules for Indian
Life Insurance Companies
A key piece of legislation impacting on the Life Insurance industries capital raising abilities is the lock-in period of 10 years for investment to be limited to promoter group equity investments. Under the Insurance Guidelines, Indian Life Insurance companies can opt for a public issue of equity through an Initial Public Offer (IPO) after 10 years of operations.
In October 2010, the securities market regulator, Securities and Exchange Board of India (SEBI), issued disclosure norms for Indian Life Insurance Companies seeking to make an initial public offer for sale of equity shares to the public
.
2.9 Indian life insurance industry overview
All life insurance companies in India have to comply with the strict regulations laid out by Insurance Regulatory and Development Authority of India (IRDA).
Life Insurance Corporation of India (LIC), the state owned behemoth, remains by far the largest player in the market. The private companies have come out with products called ULIPs (Unit Linked
Investment Plans) which offer both life cover as well as scope for savings or investment options as the customer desires. These type of plans are subject to a minimum lock-in period of three years to prevent misuse of the significant tax benefits offered to such plans under the Income Tax Act. Comparison of such products with mutual funds would be erroneous.
2.9.1
Commission / intermediation fees
The maximum commission limits as per statutory provisions are:
Agency commission for retail life insurance business:
7- 25% for 1st year premium if the premium paying term is more than 20 years
7- 10% for 1st year premium if the premium paying term is more than 15 years
7- 10% for 1st year premium if the premium paying term is less than 10 years
7% - yr 2 and 3rd year and 3.5% - thereafter for all premium paying terms.
In case of Mutual fund related - Unit linked policies it varies between 1.5% to 6% on the premium paid. Agency commission for retail pension policies
7.5% for 1st year premium and 2.5% thereafter
Maximum broker commission - 30%
Referral fees to banks – Max 55% for regular premium and 10% for single premium. However in any case this fee cannot be more than the agency commission as filed under the product.
2.10 Awards and recognition
The Economic Times Brand Equity Survey 2012 rated LIC as the No. 6 Service Brand of the Country. Though in the year 2010 is ranked at 4, the organization is
consistently among the top rated service company of the India.
From the year 2006, LIC is continuously winning the Readers' Digest Trusted brand award.
According to The Brand Trust Report 2012, LIC is the 8th most trusted brand of India.
2.11
Golden Jubilee Foundation
LIC Golden Jubilee Foundation was established in 2006 as a charity organization. This entity has the aim of promoting education, alleviation of poverty, and providing better living
conditions for the under privileged. Out of all the activities conducted by the organization, Golden Jubilee Scholarship awards are the best known. Each year, this award is given to the meritorious students in standard XII of school education or equivalent, who wish to continue their studies and have a parental income less than 60,000 Rupees
2.12 OBJECTIVES
Spread Life Insurance widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in the country
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and providing them adequate financial cover against death at a reasonable cost.
Maximize mobilization of people's savings by making insurance-linked savings adequately attractive.
Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose money it holds in trust, without losing sight of the interest of the community as a whole; the funds to be deployed to the best
advantage of the investors as well as the community as a whole, keeping in view national priorities and obligations of attractive return.
Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders.
Act as trustees of the insured public in their individual and collective capacities.
Meet the various life insurance needs of the community that would arise in the changing social and economic environment. Involve all people working in the
Corporation to the best of their capability in furthering the interests of the insured public by providing efficient service with courtesy.
Promote amongst all agents and employees of the Corporation a sense of participation, pride and job satisfaction through
discharge of their duties with dedication towards achievement of Corporate Objective.
2.12 Investment Pattern of LIC
LIC is essentially an investment institution. Its investment policy has been designed after a thoughtful consideration of the cardinal principles of safety of the principal, the
diversification of investment in terms of type of securities, the number and type of enterprises to be associated, maturities of securities and the development of backward region. The
Corporation acts on business principles, and its investment policy is guided by the
considerations of the interests of its policy holders and the larger interests of the country. The pattern of investment of the LIC was governed by Section 27A of the Insurance Act 1938. According to the provisions of Act, the Corporation was required to invest at least 50% of its controlled funds in central and state Government securities and other approved
securities, 35% in other approved investments, and the remaining 15% in other unapproved investment, as decided by the Corporation‘s investment committee.
The Controlled Fund (all funds of the Corporation pertaining to its life insurance business and capital redemption insurance business) of LIC shall be invested as under: 1. In Central Marketable Securities – Not less
than 25%
2. In Central Government, State Government Securities ,including government
marketable securities and securities in above – Not less than 50%
3. In Socially oriented sector, including the public sector, co-operative, houses built by policy, OYH schemes, plus above– Not less than 75%
In respect of the balance 25% of the accretion to the controlled fund the government has been indicated that:
1. Above 8% would required for loans against policies within the surrender values
2. Above 2% may be invested in the immovable properties.
3. Above 10% may be invested in the private corporate sector
2.13 Criticism of Investment Policy
1. Some people think that LIC is favoring the lager industrial houses while investing in approved securities. Secondly they are of the view that investments in public sector are avoided and priority sectors also not receiving proper attention.
2. LIC has certainly been favoring large and well to do industrial units under the grab of securities. The argument is that investments in such units are safe and return is regular. LIC should divert some funds to the small scale sector. This sector has a great potential for employments and production .If this sector gets adequate fund then its growth will usher an area of all round economic development.
3. The policy holder feels that investment pattern of LIC does not bring higher returns for them. The investment in Government sector should not bring higher returns for them.
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4. LIC should frames its investment policy by keeping in view the presents factors and provision of the Act of 1938 are no more good now and these should be amended.
3.1 Whole life insurance
Whole life insurance, or whole of life assurance (in the Commonwealth of Nations), is a life insurance policy that remains in force for the insured's whole life and requires (in most cases) premiums to be paid every year into the policy.
3.2 History
All life insurance was originally temporary (term) insurance. However, because term life insurance only pays a claim upon early premature death within the stated term, a number of term insurance policy holders became upset over the idea that they would most likely be paying premiums for 20 or 30 years and then wind up with nothing to show for it. Temporary insurance only pays out 2-3% of the time. This has become known as the "Lost Opportunity Cost" called term insurance.
In response to market pressures, actuaries produced an insurance policy with level contributions that would last a lifetime. These contracts would offer a "cash value"that would build up against the fixed claim – the death benefit. These policies would also credit guaranteed interest to the cash value account. The cash value would increase as long as the policyholder lived, gradually approaching the death benefit with time. Upon maturity of the contract (usually at age 95 or 100), the cash value would equal the death benefit. The policyholder could at any time opt out and receive the cash value. By guaranteeing the death benefit, the policy owner was assured that insurance coverage would be in force when the insured died, allowing them to unlock and exploit other assets. Upon the death of the insured, the cash value would be surrendered to the insurance company and the beneficiary would receive the death benefit. If, before the death of the insured, the policy owner wished to take the cash value and forfeit the death benefit, the cash value would be paid back with interest minus dividends paid
3.3
Types of whole Life insurance
Mainly it‘s dividing in two categories 1}. Non-participating 2} Non-participating but It may be classified as given below:
3.3.1 Non-participating
All values related to the policy (death benefits, cash surrender values, premiums) are usually determined at policy issue, for the life of the contract, and usually cannot be altered after issue.
This means that the insurance company assumes all risk of future performance versus the actuaries' estimates. If future claims are underestimated, the insurance company makes up the difference. On the other hand, if the actuaries' estimates on future death claims are high, the insurance company will retain the difference.
3.3.2 Participating
In a participating policy (also par in the USA, and known as a with-profits policy in the Commonwealth), the insurance company shares the excess profits (variously called dividends or refunds in the USA, bonus in the
Commonwealth) with the policyholder. Typically these refunds are not taxable because they are considered an overcharge of premium. Greater the overcharge by the company, the greater the refund/dividend. For a mutual life insurance company, participation also implies a degree of ownership of the mutuality.
3.3.3 Indeterminate premium
Similar to non-participating, except that the premium may vary year to year. However, the premium will never exceed the maximum premium guaranteed in the policy.
3.3.4 Economic
A blending of participating and term life insurance, wherein a part of the dividends is used to purchase additional term insurance. This can generally yield a higher death benefit, at a cost to long term cash value. In some policy years the dividends may be below projections, causing the death benefit in those years to decrease
.
3.3.5 Limited pay
Similar to a participating policy, but instead of paying annual premiums for life, they are only due for a certain number of years, such as 20. The policy may also be set up to be fully paid up at a certain age, such as 65 or 80.The policy
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itself continues for the life of the insured. These policies would typically cost more up front, since the insurance company needs to build up
sufficient cash value within the policy during the payment years to fund the policy for the remainder of the insured's life.
3.3.6 Single premium
A form of limited pay, where the pay period is a single large payment up front. These policies typically have fees during early policy years should the policyholder cash it in
.
3.3.7 Interest sensitive
This type is fairly new, and is also known as either excess interest or current assumption whole life. The policies are a mixture of
traditional whole life and universal life. Instead of using dividends to augment guaranteed cash value accumulation, the interest on the policy's cash value varies with current market
conditions. Like whole life, death benefit
remains constant for life. Like universal life, the premium payment might vary, but not above the maximum premium guaranteed within the policy
4.1 Insurance law and Regulator
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.
4.2 Regulation of insurance
companies
Insurance regulation that governs the business of insurance is typically aimed at assuring the solvency of insurance companies. Thus, this type of regulation governs capitalization, reserve policies, rates and various other "back office" processes.
4.2.1 European Union
Member States of the European Union each have their own insurance regulators. However, the E.U. regulation sets a harmonsied
prudential regime throughout the whole Union. As they are submitted to harmonised prudential regulation, and in consistency with the
European Treaty (according to which any legal or natural person who is a citizen of a Union member State is free to establish him-, her- or itself, or to provide services, anywhere within the European Union), an insurer licensed in and regulated by e.g. the United Kingdom's financial services regulator, the Financial Services Authority, may establish a branch in, and/ or provide cross-border insurance coverage (through a process known as "free provision of services") into, any other of the member States without being regulated by those States' regulators. Provision of cross-border services in this manner is known as "pass porting".
4.2.2 India
The insurance sector went through a full circle of phases from being unregulated to completely regulated and then currently being partly deregulated. It is governed by a number of acts. The first statute in India to regulate the life insurance business was the Indian Life
Assurance Companies Act, 1912. The Insurance Act of 1938 was the first legislation governing all forms of insurance to provide strict state control over insurance business. Life insurance in India was completely nationalized on January 19, 1956, through the Life Insurance
Corporation Act. All 245 insurance companies operating then in the country were merged into one entity, the Life Insurance Corporation of India.
The General Insurance Business Act of 1972 was enacted to nationalize the about 100 general insurance companies then and subsequently merging them into four companies. All the companies were
amalgamated into National Insurance, New India Assurance, Oriental Insurance and United India Insurance, which were headquartered in each of the four metropolitan cities.
Until 1999, there were no private insurance companies in India. The government then introduced the Insurance Regulatory and Development Authority Act in 1999, thereby de-regulating the insurance sector and allowing private companies. Furthermore, foreign
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investment was also allowed and capped at 26% holding in the Indian insurance companies. In 2006, the Actuaries Act was passed by parliament to give the profession statutory status on par with Chartered Accountants, Notaries, Cost & Works Accountants, Advocates, Architects and Company Secretaries. A
minimum capital of US$80 million (Rs.400 Crore) is required by legislation to set up an insurance business.
4.2
Insurance Regulatory and
Development Authority (
बीमा विनियामक
और विकास प्राधिकरण)
Insurance Regulatory and Development Authority (IRDA) is an autonomous apex statutory body which regulates and develops the insurance industry in India. It was
constituted by a Parliament of India act called Insurance Regulatory and Development Authority Act, 1999 and duly passed by the Government of India.
The agency operates its headquarters at Hyderabad, Andhra Pradesh where it shifted from Delhi in 2001.
Headquarters 3rd Floor, Parisrama Bhavan, Basheer Bagh, Hyderabad, Andhra Pradesh Pin Code: 500 004
Location Hyderabad,
Chairman, IRDA T S Vijayan[1]
Website irda.gov.in
4.3.1 History
The IRDA Act, 1999 was passed as per the major recommendation of the Malhotra Committee report (1994) which
recommended establishment of an independent regulatory authority for insurance sector in India. Later, It was incorporated as a
statutory body in April, 2000. The IRDA Act, 1999 also allows private players to enter the insurance sector in India besides a maximum foreign equity of 26 % in a private insurance company having operations in India.(Note- now hiked to 49 %) It serves as an Authority to protect the interests of holders of insurance
policies, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith.
4.3.2 Duties, powers and functions
The duties, powers and functions of IRDA are laid down in section 14 of IRDA Act, 1999 as:- 1. Subject to the provisions of this Act andany other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business.
2. Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include, -
1. issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration; 2. protection of the interests of the policy
holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance;
3. specifying requisite qualifications, code of conduct and practical training for
intermediary or insurance intermediaries and agents
4. specifying the code of conduct for surveyors and loss assessors;
5. promoting efficiency in the conduct of insurance business;
6. promoting and regulating professional organizations connected with the insurance and re-insurance business;
7. levying fees and other charges for carrying out the purposes of this Act;
8. calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organizations connected with the insurance business; 9. control and regulation of the rates,
advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938);
10. specifying the form and manner in which books of account shall be maintained and
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statement of accounts shall be rendered by insurers and other insurance
intermediaries;
11. regulating investment of funds by insurance companies;
12. regulating maintenance of margin of solvency;
13. adjudication of disputes between insurers and intermediaries or insurance
intermediaries;
14. supervising the functioning of the Tariff Advisory Committee;
15. specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organisations referred to in clause (2.6); 16. specifying the percentage of life insurance
business and general insurance business to be undertaken by the insurer in the rural or social sector; and
17. exercising such other powers as may be prescribed
4.3.3 Organizational structure
IRDA is a ten member body consisting of: A Chairman,
Five whole-time members and Four part-time members.
All members are appointed by the Government of India.
5. Some More terms Frequently asked
in Examination
5.1 COMPANIES AND PARTNERSHIPS
COMPARED
The major difference between companies and partnerships may be considered under the following headings :
Formation: A company is created by registration under the Companies Act. A partnership is created by
agreement which may be expressed or implied from the conduct of the partners and is subject to the Indian Contract Act and the Indian Partnership Act. No special form is required , though partnerships articles are usually written.
Status At Law: A company is an artificial legal person with perpetual succession. Thus a company may property , make contracts and sue and be sued. It is an entity distinct from its members. A partnership is not a legal though it may sue and be sued in the firm‘s name. Thus the partners own the property of the firm and are liable for the contracts of the firm jointly as well as severally.
Transfer Of Shares: Shares in a company are freely transferable unless the company‘s constitution otherwise provides; restrictions may, of course, appear in the articles of a private company. A partner can
transfer his shares in the firm , but the assignee does not thereby become a partner and is merely entitled to the assigning partner‘s share of the profits.
Number Of Members: A private company must have at least two members and maximum 50 members. A partnership cannot consist of more than 20 persons (10 persons in case of banking business).
Management: Members of a company are not entitled to take part in the management of the company unless they become directors. Partners are entitled to share in the management of the firm unless the articles provide otherwise.
Agency: A member of a company is not an agent of the company or that of other members, and he cannot bind a company by his acts. Each partner is an agent of the firm and his partners, and nay binds the firm by his acts.
Liability Of Members: The liability of a member of a company may be limited by shares or by guarantee. The liability of a partner is unlimited.
Powers: The affairs of accompany are closely controlled by the Companies Act, 1956 and the company can only operate within the objects laid down in the
memorandum of association, though these can be altered to some extent by special resolution. Partners may carry on any business as they please so long as it is not illegal and make whatever arrangements they wish with regard to the running of the firm from time to time. Termination: No one member of a company can wind up the company, and the death, bankruptcy or insanity of a member does not mean that the company must be wound up. A partnership may be dissolved by any partner at any time unless the partnership is entered into for a fixed period of time. A partnership is also dissolved by the death or bankruptcy of a partner.
5.2 Life Insurance: Claim Pending Ratio Life insurance policies provide financial
protection to your loved ones in case you are not available. That is the prime reason for buying life insurance. Also since you feel your case is genuine, there‘s no probability of the claim getting rejected. However there have been cases where claims remain pending for long period. It‘s already tough with the dependents suffering from the loss and if proceedings are delayed it will only worsen the situation.
Claim Pending ratio provides the percentage of the claims which have been left pending to be solved later. Claims Pending ratio of 70% means 70 claims out of 100 are still to be settled either way.
5.2.1Reasons for high Claim Pending ratio: - New insurer typically has high claim pending ratio because it implies early death claims
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which could be fraudulent in nature. Say, an insurer operating in its first year gets 60 death claims out of 100 policies. So many early death claims means there is probability of fraud which would make insurer carry thorough
investigation. The investigation takes time and hence the delay.
- The total number of policies also makes a difference in claim pending ratio. Lower number of claims might not reflect the true scenario. - Non disclosure of information on the insured part can also delay settlement of claims - Slow turnaround time of the insurer can also postpone settlement of claim.
- Claim pending ratio also depends on products. Typically term life products have higher
pending ratios than investment products. Claims pending ratio of insurers for period ending Dec31, 2010 is given below:
Insurer % Claim Pending
AEGON Religare 33%
Aviva Life 0%
Bajaj Allianz 25%
Bharti AXA 45%
Birla Sun Life 3%
Canara HSBC 58% Future Generali 8% HDFC Life 16% ICICI Prudential 17% IDBI Federal 46% ING Vysya 23% Kotak Mahindra 37%
Max New York Life 27%
MetLife 14%
Reliance Life 29%
SBI life 14%
Tata AIG 6%
LIC 22%
No one wants to keep the claims pending and make it harder for the people involved. However insurers carry thorough investigation to make sure that the concerned persons are legitimate and there is no scam involved. Considering the amount involved there has been number of fraud cases which have made insurers to be patient in their approach.
The insured should consider claims pending ratio as only assistance to make the purchase. A genuine case will be settled positively whatever be the circumstances.
5.3 Life Insurance: Death Claim Repudiation Ratio (CRR)
At present, insurance claims are the biggest concern for the customers. A person buys life insurance so that he can secure his loved ones in case he is not available for them in the coming years. But if the claim gets rejected, not only all the premiums paid go waste, the financial security for his family is at stake.
Claim repudiation ratio provides us with the percentage of total claims rejected by the
insurer. A claim repudiation of 45% would imply that 45 out of every 100 claims have been rejected by the insurer.
One should always check CRR as it tell us about the overall process quality of the insurers. Even though genuine cases are never rejected, CRR does provide insight into the insurer‘s
probability to reject the claim.
5.3.1 Reasons for high Claim repudiation ratio: - New insurer typically has high repudiation ratio because it implies early death claims which could be fraudulent in nature. Say, an
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insurer operating in its first year gets 80 death claims out of 100 policies. So many early death claims means there is probability of fraud which would make insurer carry thorough
investigation.
- The total number of policies also makes a difference in claim repudiation ratio. Lower number of claims might not reflect the true scenario.
- Better insurer practices while accepting the policies also lowers claim repudiation ratio. The insurer also carries extensive investigation at claim time to reveal discrepancies which may result in rejection of claim.
- Low standards of insurer‘s underwriting by accepting policies without careful examination also increases claim repudiation ratio.
- Non disclosure of information on the insured part is the major reason behind claim rejection. If the policyholder withholds information while filling the proposal form, then claim might be rejected by insurer.
The claim repudiation ratio of insurers for period ending Dec 31, 2010 is given below in the following table:
Insurer % Claim Repudiated
AEGON Religare 41% Aviva Life 12% Bajaj Allianz 5%
Bharti AXA 7% Birla Sun Life 4% Canara HSBC 8% Future Generali 22% HDFC Life 3% ICICI Prudential 3% IDBI Federal 11% ING Vysya 0% Kotak Mahindra 3% Max New York Life 9%
MetLife 3%
Reliance Life 5%
SBI Life 14%
Tata AIG 17%
LIC 0%
CRR mostly happens in two cases-(a) while filling policy form some important
information was hidden intentionally (b) fraudulent cases. The point of insurance is to pool risks, the insurer will make sure that no honest person is deprived of his rightful claim and as such reviews the cases which are fraudulent and rejects them.
CRR is definitely not a foolproof method to choose your insurer. CRR gives you an idea and assists you in making final decision. CRR considers all the claims, it cannot tell which cases were legitimate and which were not.
Apart from CRR, other things like company history, product details, and quote should be considered before buying life insurance policy.
6.1 LIC insurance Products/Plan:
Insurance plan
Pension plan
Unit plan
Special plan
Health plan
6.1.1 Insurance plan
Each individual's insurance needs and requirements are different from that of the others. LIC's Insurance Plans are policies that talk to you individually and give you the most suitable options that can fit your requirement.
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Bima Account 1 Bima Account 2 Endowment Plus JeevanAnurag Komal Jeevan CDA Endowment Vesting At 21 Marriage Endowment Or Educational Annuity Plan CDA Endowment Vesting At 18 Jeevan
Kishore Jeevan Chhaya Child Career
Plan Child Future Plan Jeevan
Ankur
Jeevan Aadhar Jeevan Vishwas
The Endowment Assurance Policy
The Endowment Assurance Policy-Limited Payment Jeevan Mitra(Double Cover Endowment Plan)
Jeevan Mitra(Triple Cover Endowment Plan)
Jeevan Anand
New Janaraksha Plan Jeevan Amrit
Jeevan Shree-I Jeevan Pramukh
The Money Back Policy-20 Years
The Money Back Policy-25 Years
Jeevan Surabhi-15 Years Jeevan Surabhi-20 Years Jeevan Surabhi-25 Years Bima Bachat
Jeevan Bharati - I
The Whole Life Policy The Whole Life Policy- Limited Payment The Whole Life Policy- Single Premium
Jeevan Anand Jeevan Tarang
Two Year Temporary Assurance Policy The Convertible Term Assurance Policy Anmol Jeevan-I Amulya Jeevan-I Jeevan Saathi
6.1.2 Pension Plans
Pension Plans are Individual Plans that gaze into your future and foresee financial stability during your old age. These policies are most suited for senior citizens and those planning a
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secure future, so that you never give up on the best things in life.
Jeevan Akshay-VI New Jeevan Nidhi
6.2.
Unit Plans
Unit plans are investment plans for those who realise the worth of hard-earned money. These plans help you see your savings yield rich benefits and help you save tax even if you don't have consistent income.
Endowment Plus Flexi Plus
6.2.4 Health Plans
Health Protection Plus Jeevan Arogya
6.2.4 Special Plans
LIC‘s Special Plans are not plans but
opportunities that knock on your door once in a lifetime. These plans are a perfect blend of insurance, investment and a lifetime of happiness!
6.2.4.1 Golden jubilee plan
New Bima Gold6.2.4.2 Micro insurance plan
Jeevan Madhur Jeevan Mangal Jeevan Deep6.2.4.3 Special Plans
Bima Nivesh 2005 Jeevan Saral7 General Insurance Corporation Of
India (GICI / Now (
GIC Re) )
GIC of India (GIC Re) is the sole reinsurance company in the Indian insurance market with over three decades of experience.
GIC has its registered office and headquarters in Mumbai.
107 insurers including branches of foreign companies operating in India, were amalgamated and grouped into four companies , namely, The National Insurance
Company Limited, The New India Assurance Company Limited, The Oriental Insurance
Company Limited and The United India Insurance Company Limited with the head office at Kolkata ,Mumbai ,Delhi and Chennai.
The entire general insurance business in India was nationalised by the Government of India (GOI) through the General Insurance Business (Nationalisation) Act (GIBNA) of 1972. 55 Indian insurance companies and 52 other general insurance operations of other
companies were nationalized through the act.
The General Insurance Corporation of India (GIC) was incorporated as holding company of these 4 general insurance companies in 1972. The GOI subscribed to the capital of GIC which in turn, subscribed to capital of these four companies. All the Four general insurance companies are government companies are registered under The Company Act
GIC and its subsidiaries had a monopoly on the general insurance business in India until the landmark
Insurance Regulatory and Development Authority Act (IRDA Act) of 1999 came into effect on 19 April 2000. This act also amended the GIBNA Act and Insurance Act of 1938. The act along with the amendments ended the monopoly of GIC and its subsidiaries and liberalized the insurance business in India.
In November 2000, GIC was renotified as India's Reinsurer, but its supervisory role over its subsidiaries was ended. This was followed by the General Insurance Business (Nationalization) Amendment Act of 2002. Coming into effect from 21 March 2003, this
amendment ended GIC's role as a holding company of its subsidiaries. The ownership of the subsidiaries was transferred to the Government of India, which in turn divested its stake in the companies through listings on Indian stock exchanges.
As a result of these reforms, GIC became the sole Re-Insurer in India, and is now called GIC Re. Indian insurance companies are required by law to cede 5% of every policy value to GIC Re w.e.f. 1st April 2013, subject to some limitations and exceptions. GIC Re has diversified its operations and is now emerging as an important Re-Insurer in SAARC countries, Southeast Asia, Middle East and Africa. GIC Re has also expanded its international operations through branches in London and Moscow.
GIC Re has a rating of A- (Excellent) from A. M. Best for its financial strength
Type
Public-sector undertaking
Industry
Insurance
Founded
Nov 22 1972
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MD
Headquarter
Mumbai India
Owner
Government of India
Website
www.gicofindia.com
8 National Insurance Company
Limited (NICL)
8.1 Overview
National Insurance Company Limited (NICL) is one of the largest and fastest growing general insurance companies in
India. The company headquartered at Kolkata was established in 1906, and nationalized in 1972.
National Insurance Company Limited was incorporated in December 5, 1906 with its Registered office in Kolkata. Consequent to passing of the General Insurance Business Nationalisation Act in 1972, 21 Foreign and 11 Indian Companies were amalgamated with it and National became a subsidiary of General Insurance Corporation of India (GIC) which is fully owned by the Government of India. After the notification of the General Insurance Business (Nationalisation) Amendment Act, on 7th August 2002, National has been de-linked from its holding company GIC and presently operating as an independant insurance company wholly owned by Govt of India. National
Insurance Company Ltd (NIC) is one of the leading public sector insurance companies of India, carrying out non life insurance business. Headquartered in Kolkata, NIC's network of about 1000 offices, manned by more than 16,000 skilled personnel, is spread over the length and breadth of the country covering remote rural areas, townships and metropolitan cities. NIC's foreign operations are carried out from its branch offices in Nepal.
Befittingly, the product ranges, of more than 200 policies offered by NIC cater to the diverse insurance requiremekjnts of its 14 million policyholders. Innovative and customized policies ensure that even specialized insurance requirements are fully taken care of.
The paid-up share capital of National is Rs.100 crores. Starting off with a premium base of 500 million rupees (50 crores rupees) in 1974, NIC's gross direct premium income has steadily grown to about 9000 crores rupees in the financial year 2012-13.
National transacts general insurance business of Fire, Marine and Miscellaneous insurance. The Company offers protection against a wide range of risks to its customers. The Company is privileged to cater its services to almost every sector or industry in the Indian Economy viz. Banking, Telecom, Aviation, Shipping,
Information Technology, Power, Oil & Energy, Agronomy, Plantations, Foreign Trade,
Healthcare, Tea, Automobile, Education, Environment, Space Research etc.
As of 2010, NICL has a AAA rating from Indian rating agency, CRISIL, a subsidiary of Standard
and Poor's Company.
The gross premiums from underwriting by the company grew by 32.22% to over INR 61 Billion during the Financial Year 2010-2011.With this, the company was ranked third among general insurance companies operating in India, behind New India Assurance and United India
Insurance Company Limited, at the end of the 2011 Financial Year.
With about 1000 offices and 16,000 employees and agents, the company operates in all of India, and neighboring Nepal.
Type
Public-sector undertaking
Industry
Financial services
Founded
1906
Headquarters
Kolkata, India
CMD
Shri N S R Chandraprasad
Total assets
INR 88.67 Billion
Owner(s)
Government of India
Website
www.nationalinsuranceindia.com
8.2 Products and services
NICL has a range of coverage policies targeting different sectors:
Personal Insurance policies include medical insurance, accident, property and auto insurance coverage
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Rural Insurance policies provide protection against natural and climatic disasters for agriculture and rural businesses
Industrial Insurance policies provide coverage for project, construction, contracts, fire, equipment loss, theft, etc.
Commercial Insurance policies provide protection against loss and damage of property during transportation, transactions, etc.
8.3 Awards
The company received the Best Auto Insurer 2010 award from J. D. Power and Associates in the Asia Pacific for customer satisfaction. The criteria evaluated for the award included interaction, claims, product/policy offerings, renewal/purchase process, billing/payment process and
premium/price.
9 Oriental Insurance-General
Insurance Company of India
The Oriental Insurance Company Ltd was incorporated at Bombay on 12th September 1947. The Company was a wholly owned subsidiary of the Oriental Government Security Life Assurance Company Ltd and was formed to carry out General Insurance business. The Company was a subsidiary of Life Insurance Corporation of India from 1956 to 1973 ( till the General Insurance Business was nationalized in the country). In 2003 all shares of our company held by the General Insurance Corporation of India has been transferred to Central
Government.
The Company is a pioneer in laying down systems for smooth and orderly conduct of the business. The strength of the company lies in its highly trained and motivated work force that covers various disciplines and has vast expertise. Oriental specializes in devising special covers for large projects like power plants, petrochemical, steel and chemical plants. The company has developed various types of insurance covers to cater to the needs of both the urban and rural population of India. The Company has a highly technically qualified and competent team of professionals to render the best customer service.
Oriental Insurance made a modest beginning with a first year premium of Rs.99,946 in 1950. The goal of the Company was ―Service to clients‖
and achievement thereof was helped by the strong traditions built up overtime.
ORIENTAL with its head Office at New Delhi has 30 Regional Offices and nearly 900+
operating Offices in various cities of the country. The Company has overseas operations in Nepal, Kuwait and Dubai. The Company has a total strength of around 15,000+ employees. From less than a lakh at inception, the Gross Premium went up to Rs.58 crores in 1973 and during 2010-11 the figure stood at a mammoth Rs. 5569.88 crores
Type
Public-sector undertaking
Founded Bombay on 12th September 1947. Headquarters Delhi, India
CMD Dr.A.K.Saxena
Owner(s) Government of India
Website
www.orientalinsurance.org.in
10 The New India Assurance Co. Ltd.
The New India Assurance Co. Ltd., based in Mumbai, is one of the five public sector insurance companies in India. It is the "largest general insurance company of India on the basis of gross premium collection inclusive of foreign operations‖. It was founded by Dorab Tata in 1919, and nationalized in 1973.
Previously it was a subsidiary of the General Insurance Corporation of India (GIC). But when GIC became an reinsurance company as per the IRDA Act 1999, its four primary insurance subsidiaries New India Assurance, United India Insurance, Oriental Insurance
and National Insurance got autonomy.
New India Assurance operates both in India and foreign countries. In the recent past it has succeeded in forging tie-ups with some of the leading public sector banks in India such as State Bank of India, Central Bank of
India, Corporation Bank and United Western Bank to increase its distribution network.
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The company with its corporate office in Mumbai has about 28 regional offices, 397 divisional offices, 588 branches, 27 direct agent branches and 23 extension counters in the year 2012. Its overseas offices for the year 2011-2012 consisted of 19 branches, seven agencies, four associate companies and three subsidiary companies spread over 23 countries.
Type
Public-sector undertaking
Industry Financial services
Founded 1919
Headquarters Mumbai, India Chairman cum
Managing Director
G.Srinivasan
Products General insurance which include health
Owner(s) Government of India Website www.nationalinsuranceindi
a.com
10.2 Premium earned
The domestic gross premium procured for the period from April 2012 to September 2012 was Rs.5100.19 crores with a growth of 16.91%, when compared to the same corresponding period pertaining to previous financial year. In the previous financial year 2011-2012, the company's global gross premium stood at Rs.10,073.87 crores, in which, domestic gross premium alone accounted for Rs.8542.86 crores.
10.3 Awards
J.D Power Asia Pacific part of McGraw Hill Companies has ranked New India Assurance Company Ltd, the highest in satisfying auto insurance customers. The award relates to 2011 India Auto Insurance Customer Satisfaction Index Study wherein out of a 1000 point scale, the company scored 804.
11 United India Insurance Company
Limited
United India Insurance Company Limited (UIIC) is the one among the 4 public General Insurance Companies of India and a leading General Insurance player including public and private sector. With the net worth of Rs 4,587 crore as on September 30, 2011, The Company has more than three decades of experience in Non-life Insurance business. It was formed by the merger of 22 companies, consequent to the nationalisation of General Insurance companies in India. Its Head Quarters is at 24, Whites Road, Chennai, India.
United India Insurance Company Limited was incorporated as a Company on 18 February 1938. General Insurance Business in India was nationalized in 1972. 12 Indian Insurance Companies, 4 Cooperative Insurance Societies and Indian operations of 5 Foreign Insurers, besides General Insurance operations of
southern region of Life Insurance Corporation of India were merged with United India Insurance Company Limited. After nationalization United India has grown by leaps and bounds and has 18300 work forces spread across 1340 offices providing insurance cover to more than 1 Crore policy holders. The Company has variety of insurance products to provide insurance cover from bullock carts to satellites.
United India has been in the forefront of designing and implementing complex covers to large customers, as in cases of ONGC Ltd, GMR- Hyderabad International
Airport Ltd, Mumbai International Airport Ltd Tirumala-Tirupati Devasthanam etc. It has been also the pioneer in taking Insurance to rural masses with large level implementation of Universal Health Insurance Programme
of Government of India & Vijaya Raji Janani Kalyan Yojana ( covering 45 lakhs women in the state of Madhya Pradesh), Tsunami Jan Bima Yojana (in 4 states covering 4.59 lakhs of families), National Livestock Insurance and many such schemes. It has also made its
presence in more than 200 tier II & II towns and villages through its innovative Micro Offices.
