SUMMER TRAINING PROJECT REPORT

ON

Accounts and Finance ProcessAT

Future Generali India

Insurance Company Ltd.DelhiSUBMITTED IN THE PARTIAL FULFILLMENT

TOWARDS THE AWARD

OF

MASTER OF BUSINESS ADMINISTRATION

2009-10

SUBMITTED BY:

MANOJ KUMAR

ROLL NUMBER: 0806370044

G.L.A. INSTITUTE OF TECHNOLOGY AND MANAGEMENT, MATHURA

www.glagroup.org

PROFILE OF THE STUDENT

NAME

: MANOJ KUMARROLL NO.

: 0806370044

PROGRAM MBA

: MBA 2008-10

NAME OF THE FACULTY GUIDE

:

NAME OF THE COMPANY

: FUTURE GENERALI

INDIA INSURANCE CO. LTD.

(Delhi-Zonal Office)ADDRESS OF THE COMPANY

: M-10,DeepsonsBuilding,

NDSE Part-II New Delhi-49NAME OF THE COMPANY GUIDE

: 1. Mr. Manoj Kumar

(Finance Executive)

2. Mr.Medhansh Maathur (Manager-Human capital)

PHONE NO.

: 011-40660300(Ext.234)

E-MAIL

: manoj.kumar5@futuregenerali.in

:medhansh.maathur@futuregenerali.inTABLE OF CONTENT:

PrefaceAcknowledgement

Declaration

Introduction

Introduction about topic

Profile of the Company

Introduction to the Industry

Objectives of the study

Scope and Importance of the study

Research Methodology

Data Analysis and Interpretation

Findings

Conclusion

Recommendations and Suggestions

Bibliography

PREFACE I have pleasure to bring out this document incorporating my views on Finance Management; especially highlighting the General Insurance term base of Accounts and Financial Procedure

FINANCE became a subject of study in almost all universities besides the management institution worldwide. The project consists of comprehensive discussion of the elements that go to make up the Financing Management. This project report is prepared pursing my summer training of MBA. The project is a part of my academic curriculum.

The information provided in this project is derived with reference from various books, internet sites & professional guidance from people related to this field.

I confirm that this particular project is true to best of my knowledge.

ACKNOWLEDGEMENT

I would like to acknowledge with deep gratitude the guidance, help and assistance that I have received during my training period, my project work and the preparation of report.At the outside my sincere thanks to Mr. Manoj Kumar (Finance Executive) for permitting me to work on this project.

I am grateful to him for providing me valuable and detailed insight into the subject matter of the project, encouragement to carry on and complete my project. I m also thankful to him for the time he spared despite his busy schedule.

Last but not the least, my sincere thanks to Mr.Medhansh Maathur (Manager-Human Capital) for her encouragement in the execution of my training and preparation of my report.

DECLARATION

I, Manoj Kumar hereby declare that I have carried out my project in titled Accounts and Finance Process in General Insurance, Delhi.

I further declare that this project is my original work and no part of this report has been published or submitted to anybody or University for award of Degree/Diploma.

Date:

Place:

[MANOJ KUMAR]

Introduction

This project was undertaken for Future Generali India Insurance Company Ltd. (Delhi-Zonal Office) with the topic Accounts and Finance Process in General Insurance Company.In this research study, I have to know the accounting procedure of a general insurance company. Besides this I have to also understand the revenue budget preparation.

The organization with whom I did my training was Future Generali India Insurance Company Ltd. It was a great experience to be associated with such an organization as it helped me to enhance my skills and provided me knowledge about the various tasks I underwent. It gave me a good industry exposure for this period which would definitely prove to be very useful at the time of placements. The project that I had worked upon in my training provided me a lot of scope to learn, right from the basics, about the General Insurance.

The project that I had been working on in my training was titled Accounts and Finance Process in General Insurance Company.

REVENUE ACCOUNTING

THE CHARTERED ACCOUNTANT 12 JUNE 2004 permit an insurer shall prepare Revenue Accounts separately for fire, marine and miscellaneous insurance business and separate schedules shall be prepared for Marine Cargo, Marine- Other than Marine Cargo and the following classes of miscellaneous insurance business under miscellaneous insurance and accordingly application of AS-17 Segment Reporting- shall stand modified.

1. Motor

2. Workmens Compensation/ Employers Liability

3. Public/Product Liability

4. Engineering

5. Aviation

6. Personal Accident

7. Health Insurance

8. Others

The most important accounting and financial functions in a general insurance company are:- Premium Accounting

Commission/Brokerage Accounting

Claims Accounting

Accounting of Expenses of Management

Co-Insurance Accounting

Re-insurance Accounting

Investment Accounting

Accounting of Foreign operations1. Premium Accounting:-

In case of Tariff business such as fire insurance, motor insurance etc., the premium is charged as per tariff.

In case of non-tariff business the premium is charged as per the guideline rates fixed by the respective technical departments of Head Office of the insurer with certain discretion to the operating offices while underwriting such business.

According to section 64VB of the Insurance Act,1938; no risk can be assumed by an insurer unless premium is received in advance Recently, in addition to collection of premium by

CASH DEPOSIT

CHEQUE

DEMAND DRAFT

BANK GUARANTEE

IRDA has permitted to collect the premium by other manner of receipt of premium such as credit card/Debit card/E transfer etc.

However, the same has to be collected before assumption of the risk. Applicable service tax (at present 8%) has to be collected on taxable premium and deposited with the respective excise authorities within prescribed time limit.

Sometimes, same business is shared by more than one insurer as desired by the insured.

The lead insurer has to collect the full premium along with service tax on the full premium.

However, only own share of premium is accounted as premium and the balance is shown as amount due to other co-insurers.

A policy stamp is required to be affixed as per the provisions of the Stamp Act and has to be accounted properly by debiting policy stamp expenses.

A premium register is generated in the system on daily basis. As seen earlier, as per IRDA Regulation, the premium has to be recognized as income over the contract period or the period of risk, whichever is appropriate.

Most of the general insurance policies are annual contracts and hence the earned premium is worked out by 1/365 method. Where the same is not practicable, the same is worked out either 1/24 or 1/12 method.

At the end of the financial year, the unearned premium is compared with the reserve for unexpired risks as required under section 64V (1) (ii) (b) of the Insurance Act, 1938 and the shortfall if any is accounted as unearned premium.

2. ACCOUNTING OF COMMISSION/BROKERAGE: Commission/brokerage is paid at different rates on different classes of insurance business.

No commission/ brokerage is paid on certain classes of business.

Commission/ brokerage becomes payable as soon as business is underwritten. However, the same is paid on monthly basis.

The applicable service tax on commission is deducted by the insurer and paid to the excise authorities.

TDS is deducted as per provisions of Income Tax Act and deposited in Govt. account within prescribed time limit.

In case of cancellation of a policy due to cheque dishonor or any other reason, commission/brokerage payable is reversed or recovered if already paid to the agent/broker.

3.CLAIMS ACCOUNTING:-

Claims outgo is the major outgo of an insurance company.

A claim processing is done by the respective technical department and approved by the competent authority.

The payment and accounting of the claims is done by the accounts department.

In case of claims on policies involving co-insurance arrangements, the full amount of claim is paid by the lead insurer, but only own share of claim is accounted as claims cost and the balance is shown as amount recoverable from the co-insurers.

Where a claim is reported but not settled by the end of the financial year, an adequate provision is made for such outstanding claims.

At the end of each financial year, as required by IRDA the actuarial valuation of the claims liability of an insurer is made by the appointed actuary, and the shortfall, if any is provided as IBNR/IBNER.

4.EXPENSES OF MANAGEMENT

For managing insurance business certain administrative expenses are incurred such as-

Employees remuneration and welfare benefit,

Managerial remuneration, travel & conveyance etc.,

Rent, rate and taxes,

Repairs, printing and stationery,

Communication, legal and professional charges,

Medical fees, auditors fess & expenses,

Advertisement and publicity,

Interest and bank charges, depreciation, and others.

These expenses are first aggregated and then apportioned to each class of business viz. Fire, Marine and Miscellaneous revenue account on a reasonable and equitable basis.

Any major expenses (Rs. 5 lacs or in excess of 1% of net premium, whichever is higher) are required to be shown separately.

Section 40C of the Insurance Act, 1938 prohibits an insurer to spend as expenses of management in excess of the limits prescribed in the Act.

An adequate provision for outstanding expenses is made in the accounts at the end of the financial year.

A provision for leave encashment, gratuity etc. at the end of each financial year is made on actuarial basis.5. CO-INSURANCE:-

As seen earlier, the lead insurer has to collect the full premium along with service tax and pay the same to the respective excise authorities.

The lead insurer accounts its own share as premium and balance is shown as payable to other co-insurers.

Similarly in case of claim, the entire claim amount is paid by the lead insurer to the policy holder, but only his own share is accounted as claims expense and the balance is shown as amount due from the coinsurer.

Lead insurer also recovers certain percentage of the co insurers share for managing co-insurance arrangement as a leader.

Coinsurance accounts are settled as per the agreement between the coinsurers.

Usually, there is a provision for charging of interest for delayed settlement of accounts.

At the end of each financial year, provision for outstanding claims, if any is communicated by the lead insurer and balance confirmation certificates are exchanged by all co-insurers.

6.INVESTMENT ACCOUNTING:-

Investments are assets held by an insurer for earning income by way of dividends, rent and interest or for capital appreciation or for other benefits to the insurer.

An insurance company makes investment, apart from earning income, to comply with the statutory requirements and also for meeting any unforeseen contingences and claims.

There are two main sources of investing funds viz., surplus funds arising out of the business and income from interest and dividends on existing investments.

Section 27B, 27C and 27D of the Insurance Act, 1938 lays down certain norms for investment of the funds by an insurance company.

Earlier we have seen the procedure to determine the value of investments as laid down in the IRDAs Regulations for preparation of financial statements.

Further IRDA has also issued detailed guidelines under IRDA (investment) (amendment) Regulations, 2001 for making investments by the insurer.

IRDA prohibits any investment abroad out of policyholders funds.

Accounting entries for investments are involved for buying/selling investments, receipts / accrued and outstanding of interest, dividends, rent, and recording impairments, write off and write down of certain investments.7.FOREIGN OPERATIONS:-

Foreign branch accounts are merged with the Indian operations of an insurer to present global financial position.

In addition to the Indian requirements, these offices have to comply with the local laws for preparation of financial statements and get the accounts audited by the local qualified auditors or the Indian firms of auditors, as the case my be.

These accounts which are prepared in local currencies are converted in Indian currency as per AS11 and merged with Indian accounts.8.CONSOLIDATION:-

The accounts of a large insurance company having number of offices in India and abroad are consolidated at the head office of the company.

The accounts prepared by the operating offices in India are audited by the branch auditors.

These are consolidated at various regional/ zonal offices and the consolidated accounts for the whole region are submitted to head office.

At head office, separate accounts are prepared for the re-insurance and investment operations.

If the company has foreign branches, their accounts audited by the local statutory auditors or the central statutory auditors are converted in Indian currency and merged with the Indian accounts.

Further, following special provisions/ reserves are made only at head office while preparing final accounts-(a) Unexpired Risk Reserve: - Most of the general insurance policies are annual policies, which are issued through out the year. Thus at the financial year end, there is unexpired liability under various policies which may occur during the remaining term of the policy beyond the year end and for which the entire premium is accounted as income.

Section 64V(1)(ii)(b) of the Insurance Act, 1938 has provided certain percentage of net premium as Reserve for unexpired risks, as seen earlier, which is a compulsory minimum requirement.

In addition to this, if unearned premium exceeds such reserve for unexpired risks, calculated as per the provisions of the Act, the difference is to be accounted as unearned premium.

(b) Provision for terminal benefits of the employees:- Every year provision for leave encashment, gratuity etc. payable to the employees on super annuation is made on actuarial basis at the head office.

(c) Reserve for Bad and Doubtful Debts: - After doing age-wise Analysis of the debtors, a suitable provision is made at head office of an insurer.

(d) Provision for taxation: - Tax liability of an insurance company is governed by the special provisions contained in section 44 of the Income tax Act. Adequate provision for tax liability( including wealth tax) is made at head office.

(e) Provision for proposed dividend: - An adequate provision is made for

Proposed dividend as per the board resolution at head office.

(f) IBNR/IBNER provision:-It is made as suggested by the appointed actuary by increasing the outstanding claims reserve.

Thus the central accounts department at head office is responsible for the consolidation of all regional office accounts (where the accounts of various operating offices are consolidated), reinsurance accounts, investment accounts and foreign operation accounts.

The consolidation is done with the help of suitable consolidation software. Fire revenue account, Marine revenue account, Miscellaneous revenue account, Profit and Loss account and Balance Sheet along with 15 schedules is prepared as per formats given in the Part V of the IRDA Regulations for the financial statements.

The final accounts are audited by the statutory auditors appointed by the shareholders (by C&AG in case of a Govt. company) and presented in the Annual General Meeting for approval.ORGANIZATIONAL STRUCTURE- AT FUTURE GENERALI

Departments at the Zonal Office of Future Generali at South Zone

FUNCTIONS OF THE FINANCE DEPARTMENT

1) Management of the financial resources for meeting the corporations programs of operations and capital expenditure including investment of surplus fund if any.

2) Ensuring uniform financial and accounting policies and procedures, to the extent possible, in the division.

3) Establish and maintain a system if financial scrutiny and internal checks and render advice on financial matters, including examining of feasibility studies and detailed project reports.

4) Establish and maintain an appropriate system of Budgetary Control and MIS (Management Information System) for different levels of the Management.

5) Carry out periodical / special studies with a view to control costs, reduce expenditure, economy in administrative expenditure, and improve efficiency to maximize profitability of the corporation.

6) Maintain the revenue accounts, cost accounts and other relevant books and records in accordance with the various statutory and other requirements.

7) Advise on corporate cash planning, investment policy and return to the Company.

8) Ensuring that the Corporation acts in all financial and accounting matters as per approved policies of the companies within the framework of Government policy for public enterprises.

GUIDING PRINCIPLES FOR FINANCIAL CHEQUES AND ACCOUNTING

The Principles for financial checks and accounting to be followed by the Finance Department and by other departments shall among other things include the following:

1) That there is provision of funds for expenditure in accordance with the approved budget of the corporation or by re-appropriation under delegated powers.

2) That any expenditure is committed/incurred or any liability involving expenditure is created only after the proposed expenditure has been sanctioned by general or special approval of an authority to which the power has been duly delegated in this behalf. If the sanction is for a limited period, expenditure beyond that period should be admitted only after obtaining fresh sanction.

3) That all necessary prerequisites before an expenditure is incurred such as preparation of estimates, calling of tenders, acceptance of tenders etc. are observed as per procedures.

4) That the authorities to who power has been delegated to incur expenditure shall be responsible for control of expenditure against the corresponding sanction. That the payments made for work done, supplies made or services rendered shall be as per legal obligations and in accordance with the agreements entered into by the corporation

5) Payments shall be made to proper persons against acknowledgements so that a second claim against the corporation for the same transaction is ruled out.

6) Those proper books of accounts and records shall be maintained in accordance with the statutory requirements in respect of income and expenditure of the company and such income and expenditure shall be classified properly.

7) That all moneys due are regularly recovered and checked against demand and that moneys received are duly bought into the companys books of accounts.

8) Those proper accounts of companys property, assets, stores, spares etc. shall be maintained and any loss or shortage of money or stores or other property caused by theft, pilferage, and defalcation or otherwise shall be promptly brought to the notice of the concerned authorities.

9) That the property and assets of the company whether movable or immovable shall be periodically verified and reconciled with the books of accounts of the company to ensure that the books represent the correct position.

10) That the expenditure conforms to the general principles of financial propriety and is justified on the ground of economical viability or administrative prudence.

11) That the expenditure conforms to the relevant provisions of the Companys Act, Memorandum of Association and the Articles of Association of the company.

12) That the directives issued from time to time by the company regarding financial scrutiny, internal check, economy in the expenditure or any other allied matters shall be fully adhered to.

13) All regulations, orders or instructions which are of financial nature or having financial implications shall be issued only after due scrutiny by the G.M. (Finance) at the Head Office or the Head of Finance at the units concerned.

14) Every employee who is entrusted with the physical custody of the cash, assets, materials, or other valuables belonging to the Corporation shall be responsible to render a proper account of such cash, assets, materials or other valuables as and when required to do so.

Company ProfileFuture Generali = Future Group + Generali GroupFuture Generali is an insurance joint venture headquartered in Mumbai, India between the Italy-based Generali Group and the India-based Future Group. Future Generali, a joint venture between Future Group and Generali Spa, has started operations on Oct. 24, 2007. The commencement of its India operations in the life and non-life insurance business space through Future Generali India Life Insurance company and Future Generali India Insurance Company. Future group holds 74% each in both the companies. With Rs. 115 Crore each, the two companies have a 50:50 representation in both the boards.

The Generali Group, founded in 1831 in Trieste, Italy, is one of the most significant participants in the global insurance and financial products market and is ranked as the 30th largest company in the world by Fortune (2007). The Groups Parent and principal operating Company Generali is Assicurazioni Generali, market leader in Italy, founded in 1831 in Trieste. Generali is the largest corporation in Italy.

Characterized from the outset by a strong international outlook and now presence in 40 countries through 315 subsidiaries, 113 insurance companies and 126 financial and real estate companies, Generali has consolidated its position among the world's leading insurance operators, and has grown its importance in western Europe, the Companys principal area of operation, with significant market shares in Germany, France, Austria, Spain and Switzerland. In recent years, the Group has made a remarkable return to central-eastern European markets and has set up offices in the principal markets of the Far East, among which China and India.

In the last decade, the Group has widened its product offerings from only insurance to include the entire range of financial services and asset management. It has more than 350,000 shareholders and over 66,000 employees. It is one of the largest insurance groups and the largest Bancassurer in Europe.

World Wide Operations of GeneraliThe Generali Group has experience dating back over almost two centuries, and with its recognized financial strength and consolidated partnerships with major international reinsurers, operates in all classes of property and casualty insurance, from mass risks (like Auto TPL or Personal Injuries) to highly complex industrial plants, from simple policies for family protection to extensive contracts satisfying multinational companies complex needs.

Generali provides coverage to individuals, protecting their incomes and optimizing their savings, through life insurance products, individual and group pension schemes. In this field Generali can offer highly sophisticated solutions to multinational companies through a specialized structure, namely GEB (Generali Employee Benefits) located in Brussels. Assicurazioni Generali is ranked as AA by Standard & Poor (19.10.2006). The Objectives:- The Group's strategic objectives are as follows: To become leader in Europe in terms of profitability by focusing on core insurance business and through selective expansion in high-potential markets.

To stimulate growth in our client base of retail customers and small and medium-sized business sectors, by utilising multiple brands and a multifaceted distribution strategy that focuses on agent networks.

The Future Group is a diversified conglomerate with presence in multiple consumer-centric businesses like retail, consumer finance, capital, insurance, media, brands and logistics. The groups flagship enterprise, Pantaloon Retail (India) Limited, Indias leading organized retailer, owns and manages multiple retail formats including Pantaloons, Big Bazaar, Central, Food Bazaar, Home Town, among others.

With its width and depth of merchandise, it captures almost the entire consumption basket of the Indian consumer. Headquartered in Mumbai, the company operates over 5 million square feet of retail space, has more than 450 stores in different formats across 40 cities in India and employs over 18,000 employees.

Pantaloons Retail was awarded the International Retailer of the Year 2007 by the worlds largest retail trade association, US-based National Retail Federation (NRF). It was also the recipient of the Emerging Market Retailer of the Year at the World Retail Congress held in Barcelona in March 2007.

Future Capital Holdings, the groups financial arm, focuses on asset management and consumer credit. It manages assets worth over USD1 billion that are being invested in developing retail real estate and consumer-related brands and hotels. The group has recently launched a consumer credit and financial supermarket format, Future Money.

Future Group companies include Indus League Clothing, Galaxy Entertainment, Future Media India Limited, Futurebrands India Limited and its online initiative is led through futurebazaar.com

The groups joint venture partners include Italian insurance major, Generali, French company ETAM group, US-based stationery products retailer, Staples Inc, Middle East based Axiom Communications and UK-based Lee Cooper and Alpha Airports. Its Indian joint venture partners include Talwalkers, Liberty Shoes and Blue Foods.

Future Groups vision is to deliver Everything, Everywhere, Every time to Every Indian Consumer in the most profitable manner. One of the core values at the Future Group is Indian-ness and its corporate credo is Rewrite rules, Retain values.

INTRODUCTION TO INSURANCE

WHAT IS INSURANCE?

The business of insurance is related to the protection of the economic values of the assets. Every asset has a value. The asset would have been created through the efforts of the owner. The asset is valuable to the owner, because he expects to get some benefits from it. The benefit may be an income or some thing else. It is a benefit because it meets some of his needs. In the case of a factory or a cow, the product generated by is sold and income generated. In the case of a motor car, it provides comfort and convenience in transportation. There is no direct income.

Every asset is expected to last for a certain period of time during which it will perform. After that, the benefit may not be available. There is a life-time for a machine in a factory or a cow or a motor car. None of them will last forever. The owner is aware of this and he can so manage his affairs that by the end of that period or life-time, a substitute is made available. Thus, he makes sure that the value or income is not lost. However, the asset may get lost earlier. An accident or some other unfortunate event may destroy it or make it non-functional. In that case, the owner and those deriving benefits there from, would not have been ready. There is an adverse or pleasant situation. Insurance is a mechanism that helps to reduce the effect of such adverse situations.

HISTORY OF INSURANCE

The business of insurance started with marine business. Traders, who used to gather in the Lloyds coffee house in London, agreed to share the losses to their goods while being carried by ships. The losses used to occur because of pirates who robbed on the high seas or because of bad weather spoiling the goods or sinking the ship. The first insurance policy was issued in 1583 in England. In India, insurance began in 1870 with life insurance being transacted by an English company, the European and the Albert. The first Indian insurance company aw the Bombay Mutual Assurance Society Ltd, formed in 1870. This was followed by the Oriental Life Assurance Co. in 1874, the Bharat in 1896 and the Empire of India in 1897.

Later, the Hindustan Co-operative was formed in Calcutta, the United India in Madras, the Bombay Life in Bombay, the National in Calcutta, the New India in Bombay, and the Jupiter in Bombay and the Lakshmi in New Delhi. These were all Indian companies, started as a result of the Swadeshi Movement in the early 1900s by the year 1956, when the life insurance business was nationalized and the Life Insurance Corporation of India (LIC) was formed on 1st September 1956, there were 170 companies and 75 provident fund societies transacting life insurance business in India. After the amendments to the relevant laws in1999, the L.I.C. did not have the exclusive privilege of doing life insurance business in India. By 31/03/2002, eleven new insurers had been registered and had begun to transact life insurance business in India.

In India

The Insurance premium as a % of GDP in 2005 increased to 3.14% and is set to touch 4% in 2006. (Source Lifeline 26th Dec 2006)

The Life Insurance Industry has grown by 27% p.a. over the last 5 years and by about 62% in the first eleven months of 2006 -07 ( April 06 to Feb 2007) LIC has 75.2% of the market share and the Pvt. Players have 24.8 . The Insurance premium as a % of GDP in 2005 increased to 3.14% and is set to touch 4% in 200621 companies operating in India:

13 private sector companies multiline (JV with foreign insurer)

4 public sector companies multiline

2 private sector companies health

2public sector specialty companiesPURPOSE & NEED OF INSURANCEAssets are insured, because they are likely to be destroyed, through accidental occurrences. Such possible occurrences are called perils. Fire, flood, breakdowns, lightning, earthquakes, etc, are perils. If such perils can cause damage to the asset, we say that the asset is exposed to that risk. Perils are the events. Risks are the consequential loses or damages. The risk to an owner of a building, because of the peril of an earthquake, may be a few lakhs or a few crores of rupees, depending on the cost of the building and the contents in it. The risk only means that there is a possibility of loss or damage. The damage may or may not happen. Insurance is done against the contingency that it may happen. There has to be an uncertainty about the risk. Insurance is relevant only if there are uncertainties. If there is no uncertainty about the occurrence of an event, it cannot be insured against. In the case of a human being, death is certain, but the time of death is uncertain. In the case of a person who is terminally ill, the time of death is not uncertain, through not exactly known. He cannot be insured.

Insurance does not protect the asset. It does prevent its loss due to the peril. The peril cannot be avoided through insurance. The peril can sometimes be avoided, through better safety and damage control management. Insurance only tries to reduce the impact of the risk on the owner of the asset and those who depend on that asset. It only compensates the losses- and that too, not fully.

Only economic consequences can be insured. If the loss is not financial, insurance may not be possible. Examples of non-economic losses are love affection of parents, leadership of managers, sentimental attachments to family heirlooms, innovative and creative abilities, etc.

HOW INSURANCE WORKS

The mechanism of insurance is very simple. People who are exposed to the same risks come together and agree that, if anyone of them suffers a loss, the others will share the loss and make good to the person who lost. All people who send goods by ship are exposed to the same risks, which are related to water damage, ship sinking, piracy, etc. those owning factories are not exposed to these risks, but they are exposed to different kinds of risks like, fire, hailstorms, earthquakes, lightning, burglary, etc. like this, different kinds of risks can be identified and separate groups made, including those exposed to such risks. By this method, the heavy loss that anyone of them may suffer (all of them may not suffer such losses at the same time) is divided into bearable small losses by all. In other words, the risk is spread among the community and the likely big impact on one is reduced to smaller manageable impacts on all.

If a Jumbo Jet with more that 350 passengers crashes, the loss would run into several crores of rupees. No airline would be able to bear such loss. It is unlikely that many Jumbo Jets will crash at the same time. If 100 airline companies flying Jumbo Jets, come together into an insurance pool, whenever one of the Jumbo Jets in the pool crashes, the loss to be borne by each airlines would come down to a few lakhs of rupees. Thus, insurance is a business of sharing.

There are certain principles, which make it possible for insurance to remain a fair arrangement. The first is that it is difficult for any one individual to bear the consequences of the risks that he is exposed to.

It will become bearable when the community shares the burden. The second is that the peril should occur in an accidental manner. Nobody should be in a position to make the risk happen. In pother words, none in the group should set fire to his assets and ask others to share the costs of the damage. This would be taking unfair advantage of an arrangement put into place to protect people from the risks they are exposed to. The occurrence has to be random, accidental, and not the deliberate creation of the insured person.

The manner in which the loss is to be shared can be determined before-hand. It may be proportional to the risk that each person is exposed to. This would be indicative of the benefits he would receive if the peril befell him. The share could be collected from the members after the loss has occurred or the likely shares may be collected in advance, at the time of admission to the group. Insurance companies collect in advance and create a fund from which the losses are paid.

The collection to be made from each person in advance is determined on assumptions. While it may not be possible to tell beforehand, which person will suffer, it may be possible to tell, on the basis of past experiences, how many persons, on an average, may suffer losses. The following two examples explain the above concept of insurance.

Example-1

In a village, there are 400 houses, each valued at Rs. 20,000. Every year, on the average, 4 houses get burnt, resulting into a total loss of Rs. 80,000. If all the 400 owners come together and contribute Rs. 200 each, the common fund would be Rs. 80,000. This would be enough to pay Rs. 20,000 to each of the 4 owners whose houses got burnt. Thus, the risk of 4 owners is spread over 400 house-owners in the village.

Example-2

There are 1000 persons who are all aged 50 and are healthy. It is expected that of these, 10 persons may die during the year. If the economic value of the loss suffered by the family of each dying person is taken to be Rs. 20,000, the total loss would work out to Rs. 2,00,000. If each person in the group contributed Rs. 200 a year, the common fund would be Rs. 2,00,000. This would be enough to pay Rs. 20,000 to the family of each of the ten persons who die. Thus the risks in the case of 10 persons are shared by 1000 persons.THE BUSINESS OF INSURANCE

Insurance companies are called insurer. The business of insurance is to (a) bring together persons with common insurance interests (sharing the same risks), (b) collect the share or contribution (called premium) from all of them, and (c) pay out compensations (called claims) to those who suffer. The premium is determined on the same lines as indicated in the examples above, but with some further refinements.

In India, Insurance business is classified primarily as life and non-life or general. Life Insurance includes all risks related to the lives of human beings and general insurance covers the rest. General insurance has three classifications viz., Fire (dealing with all fire related risks), Marine (dealing with all transport related risks and ships) and Miscellaneous (dealing with all others like liability, fidelity, motor, crop, personal accident, etc). Personal accident and sickness insurance, which are related to human beings, is classified as non-life in India, but is classified as life, in many other countries. What is Non-Life in India is termed Property and Casualty in some other countries.

The functions of Insurance can be bifurcated into two parts:

1. Primary Functions2. Secondary Functions3. Other Functions

The primary functions of insurance include the following:

Provide Protection - The primary function of insurance is to provide protection against future risk, accidents and uncertainty. Insurance is actually a protection against economic loss, by sharing the risk with others.

Collective bearing of risk - Insurance is a device to share the financial loss of few among many others. Insurance is a mean by which few losses are shared among larger number of people. All the insured contribute the premiums towards a fund and out of which the persons exposed to a particular risk is paid. Assessment of risk - Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. Risk is the basis for determining the premium rate also Provide Certainty - Insurance is a device, which helps to change from uncertainty to certainty. Insurance is device whereby the uncertain risks may be made more certain.

The secondary functions of insurance include the following: Prevention of Losses - Prevention of losses cause lesser payment to the assured by the insurer and this will encourage for more savings by way of premium. Reduced rate of premiums stimulate for more business and better protection to the insured.

Small capital to cover larger risks - Insurance relieves the businessmen from security investments, by paying small amount of premium against larger risks and uncertainty.

Contributes towards the development of larger industries - Insurance provides development opportunity to those larger industries having more risks in their setting up. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery.

The other functions of insurance include the following: Means of savings and investment - Insurance serves as savings and investment, insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insured's For the purpose of availing income-tax exemptions also, people invest in insurance.

Source of earning foreign exchange - Insurance is an international business. The country can earn foreign exchange by way of issue of marine insurance policies and various other ways.

Risk Free trade - Insurance promotes exports insurance, which makes the foreign trade risk free with the help of different types of policies under marine insurance cover.

Products of Future Generali

Retail

1. Motor -Future Secure Motor Insurance

2. Home -Future Generali Home SurakshaCorporate

1. Fire -Standard Fire and Special Perils Policy

2. Loss Of Profits (Consequential Loss) Policy

3. Industrial All Risk

4. Engineering Insurance

Erection All Risk Insurance

Contractors All Risk Insurance

Boilers and Pressure Plant Insurance

Machinery Breakdown Insurance

Electronic Equipment Insurance

Contractors Plant and Machinery Insurance

Machinery Loss of Profit

5. Marine Cargo Insurance

6. Accident & Health

Group Health Policy

Group Personal Health PolicyRetail MotorFuture Secure Motor InsuranceA Comprehensive Motor Insurance Cover in addition to the mandatory third-party cover also protects the car owner from financial losses, caused by loss or damage or theft of the vehicle.Third party legal liability: protects you against any legal liability arising out of the use of your vehicle, towards third parties resulting in

Any bodily injury/ death of a person

Any damage caused to the property

Loss or damage to your vehicle: The policy covers you against any loss or damage caused to the vehicle or its accessories due to the following natural and man made calamities.Age of the vehicle% of Depreciation

Not exceeding 6 months5%

Exceeding 6 months but not exceeding 1 year15%

Exceeding 1 year but not exceeding 2 years20%

Exceeding 2 years but not exceeding 3 years30%

Exceeding 3 years but not exceeding 4 years40%

Exceeding 4 years but not exceeding 5 years50%

Sum insuredThe vehicles are insured at a fixed value called the Insureds Declared Value (IDV). IDV is calculated on the basis of the manufacturers listed selling price of the vehicle (plus the listed price of any accessories) after deducting the depreciation for every year as per the following rates.

If the price of any electrical and / or electronic item installed in the vehicle is not included in the manufacturers listed selling price, then the actual value (after depreciation) of this item can be added to the sum insured over and above the IDV.Additional covers at extra cost/Discounts-1. Personal accident cover2. Additional Legal liabilities:

3. Bonus and Discounts -

No Claim Bonus: If you do not make a claim during the policy period, a No Claim Bonus (NCB) is offered on renewals. This discount can go as high as 50%. (NCB will only be allowed provided the policy is renewed within 90 days of the expiry date of the previous policy.)

Transfer of NCB: You can transfer full benefits of No Claim Bonus when you shift your motor insurance policy to another company.

Anti theft devices: In case you have installed an ARAI approved anti theft device in your vehicle, you get a discount of 2.5 % on the OD Premium to a maximum of Rs. 500.

Future Generali Home Suraksha

Section I Protection Against Standard Fire & Special Perils

Covers-On the happening of any insured event as provided for hereunder arising during the Policy Period and notified as prescribed, We will make payment as provided for under each Cover but only up to the Sum Assured as specified in the Schedule against each Cover or each sub-limit of the Sum Assured, as the case may be.Protection of Your Contents against Standard Fire & Special Perils

Contents (Excluding Valuables)

We will indemnify you in respect of loss of or damage to the Contents on the first loss basis in the Insured Premises specified in the Schedule against perils mentioned below:

Fire:

Lightning

Explosion / Implosion:

Aircraft Damage: Riot, Strike and Malicious Damage Storm, Cyclone, Typhoon, Tempest, Hurricane Tornado, Flood and Inundation:

Impact Damage: Loss of or visible physical damage or destruction caused to the property insured due to impact by any Rail/ Road vehicle or animal by direct contact not belonging to or owned by:

Subsidence and Landslide including Rock slide: Loss, destruction or damage directly caused by Subsidence of part of the site on which the property stands or Land slide/Rock slide excluding:

The normal cracking, settlement or bedding down of new structures

The settlement or movement of made up ground

Coastal or river erosion

Defective design or workmanship or use of defective materials

Demolition, construction, structural alterations or repair of any property or groundwork or excavations

Bursting and/or overflowing of Water Tanks, Apparatus and Pipes.

Missile testing operations.Leakage from Automatic Sprinkler Installations, excluding loss, destruction or damage caused by

Repairs or alterations to the buildings or premises

Repairs, Removal or Extension of the Sprinkler Installation

Defects in construction known to the Insured.

Bush Fire, excluding loss, destruction or damage caused by Forest Fire.

Earthquake Fire and Shock

Section II Protection against Burglary & Theft Protection of Your Contents against Burglary and Theft

Contents (Excluding Valuables)

We will indemnify you in respect of loss of or damage to the insured premises and/or the Contents on the first loss basis in the Insured Premises specified in the Schedule caused by actual or attempted Burglary and or Theft.

Burglary, housebreaking, theft, larceny or any such attempt or any omission of any kind of any person in any malicious act.

General Conditions Applicable

Due Observance Reasonable Care Contribution Subrogation Fraud- Policy shall be void and all claims or payments hereunder shall be forfeited in case of making fraud.

Cancellation- This Policy may be cancelled by you at any time by giving at least 14 days written notice to us. We will refund premium on a pro-rata basis by reference to the time cover is provided, subject to a minimum retention of premium of 25%. No refund of premium shall be due on cancellation if the Insured has made a claim under this Policy.

Dispute Resolution -Any and all disputes or differences, which may arise under or in relation to this Policy, shall be referred to arbitration and to a sole arbitrator to be appointed in accordance with Arbitration and Conciliation Act, 1996, within a period of 30 days of either us or you giving notice in this regard. Notices- Any and all notices and declarations for the attention of us shall be submitted in writing and shall be delivered to the address specified in the Schedule .

Governing Law- The construction, interpretation and meaning of the provisions of this Policy shall be determined in accordance with Indian law.

Territorial Limits- Our liability to make any payment shall be to make payment within India and in Indian Rupees only.

Reinstatement after settlement of a claim- All sums which may from time to time be paid by way of indemnity under this Policy in any one Period of Insurance shall be accounted in diminution of the Total Sum Insured so that in case of any subsequent event giving rise to a claim occurring during the same period the total amount payable during that period by the Company shall not in any case exceed the Total Sum Insured.

Renewal Clause- This Policy may be renewed by mutual consent every year and in such event, the renewal premium shall be paid to US on or before the date of expiry of the Policy or of the subsequent renewal thereof.

Standard Fire and Special Perils Policy

Scope of Cover- The Insurance Policy broadly covers losses due to fire, lightning, explosion and implosion, aircraft damage, riot, strike, malicious damage and terrorism, storm, tempest, flood and inundation, impact damage, subsidence and landslide/rockslide, bursting and/or overflowing of water tanks, apparatus and pipes, missile testing, leakage from automatic sprinkler installations and bush fire.Main Exclusions- The Insurance Policy does not cover the first Rs.10,000 (or as applicable) of each and every claim. Losses arising out of war and allied perils, theft, willful act or gross negligence, loss of earnings, loss to bullion, documents, currency etc. for an amount exceeding Rs. 10,000, unless expressly stated.Sum Insured- Property can be insured on depreciated cost (market value) or replacement cost basis. In order to get full protection, insurance on reinstatement (replacement) basis is recommended.Premium-Premium rate depends on various factors such as construction of building, occupancy, protection, claim ratio, etcExcess- 5 % of every claim (subject to minimum of Rs.10,000 ) resulting from Lightning, Storm, Tempest, Flood and Inundation, Subsidence and Landslide.For other perils Rs.10,000/-Main Extensions

Earthquake (Fire & Shock)

Spontaneous Combustion

Deterioration of stocks in cold storage

Impact Damage due to own vehicles

Omission to insure additions

Architect, Surveyors & Consulting engineers fees in excess of 3 % of claim amount Debris removal in excess of 1 % of claim amount.

Loss of Profits (Consequential Loss) Policy

Business Interruption: Fire Loss of Profit

Fire Insurance is concerned with CAPITAL LOSS following destruction of Building, Plant & Machinery, Stock in Process, Finished goods. Fire Loss of Profit insurance is concerned with LOSS OF EARNINGS consequent upon the capital loss as also any increase in cost of working incurred to minimize the loss of earnings. Only with both Fire & Fire Loss of Profit insurance FULL PROTECTION is obtained

Scope of Coverage:-If the building or other property of the business be destroyed or damaged by the perils covered under the Fire Policy and the business carried on by the Insured at the premises in consequences thereof be interrupted or interfered with then the Insurer will pay to the Insured. Amount of loss resulting from such interruption or interference in accordance with the provisions of the policy.Definitions under FLOP:

Turnover - The money paid or payable to the Insured for goods sold and delivered and for services rendered in course of the business at the premises.

Insureds loss - Net Profit and Standing Charges on the Turnover lost. (Termed as Gross profit)

Net Profit - The profit before tax

VARIABLE Charges : These are expenses that vary in proportion with the rise or fall in Turnover

STANDING Charges : These are expenses that remain FIXED IRRESPECTIVE of the rise or fall in Turnover.

Policy Period is the period within which if a indemnifable loss occurs it will be admissible as a claim. It is invariably 12 months.

Indemnity Period - is the maximum period of Interruption for which the Insurers would respond and has to be selected by an Insured.

Basis of arriving at the Sum Insured:-Sum insured represents the annual GROSS PROFIT. This can be arrived at by any one of the following method. Addition MethodGross Profit = Net Profit + Standing ChargesUnder this method standing charges to be insured are to be listed.

Difference MethodGross Profit = Turnover - Variable Expenses

Inadequacy of Sum Insured will proportionately reduce the loss payable.

Industrial All Risk

Eligibility Criteria- Sum Insured should be more than Rs.100 Crores at one location and many locations can be clubbed together.Policy Structure

Section I - Material Damage which includes Fire & Allied perils, theft, Burglary, Machinery Breakdown, Boiler Explosion, Electronic equipment, etc

Section II - Business Interruption - Fire Loss of Profit and Machinery Loss of Profit (MLOP is optional).

Coverage-IAR is an all Risk policy subject to specified exclusions in the policy. Wording is as par with international wordings.Sum Insured- Sum Insured for fixed asset should be Reinstatement value of the property whereas stocks value should be on the market value under material damage section. Under business interruption section sum insured must be equivalent to gross profit. Cover is subject to under insurance. Under insurance block-wise/item-wise up to 15% is ignored.In the event of claim, no depreciation on parts with limited life or Total Loss.

Rating-Follow the rating pattern of Standard fire & special perils, engineering insurance and business interruption cover as per the erstwhile tariff.Excess-Material Damage Section: 5% of the claim amount subject to minimum of Rs.5 lacs for each & every loss. Business Interruption: 3 days gross profit subject to minimum of Rs.5 Lacs. Engineering Insurance

Erection All Risk Policy Boilers and Pressure Plant Insurance Electronic Equipment Insurance Machinery Loss of Profit Insurance (MLOP) Contractors All Risk Insurance Machinery Breakdown Insurance Contractors Plant and Machinery InsuranceErection All Risks Policy -Erection All Risks (EAR) policy provides coverage for Erection of mechanical and Electrical plants. Interest of Suppliers/Manufacturers, Contractors, Subcontractors can be recorded in the policy.Scope of cover-This policy covers risks associated with storage, assembly/erection and testing of Plant and Machinery. EAR insurance provides comprehensive cover. All perils are covered unless specifically excluded. Cover incepts from the time of unloading of the first consignment at the project site and terminates on completion of testing or handing over of the project to the Principal, or the period chosen, whichever is earlier.

Sum Insured-Sum to be insured is the completely erected value of the plant and machinery inclusive of freight, custom duty and cost of erection.Premium-Premium depends on various factors such as type, protection, experience of contractors, duration of the project, period of testing, etc.Main Extension-Policy can be extended on payment of additional premium to cover Escalation

Clearance and Removal of Debris

Third Party Liability

Maintenance

Damage to Owners Surrounding Property

Express Freight

Additional Customs Duty

Holiday and Overtime rates and Wages

Contractors All Risks Insurance

Scope of cover-Contractors all risk Policy covers the risk of accidental physical loss or damage in respect of the contract works, during the execution of a civil project. CAR insurance provides an all risk cover. All perils are covered unless specifically excluded.

Cover- incepts from the commencement of work or after unloading of first consignment at project site, whichever is earlier and terminates on handing over of works to the principal or expiry of policy, whichever is earlier.Sum Insured-The Sum insured shall be the fully completed value of the contract works inclusive of all materials, wages, freights, and custom duty and materials or items supplied by the principal.

Premium-Premium depends on factors like type, contractors experience, duration of the project, etc.Main Extension-Main policy can be extended on payment of additional premium to cover Third Party Liability.

Owners Surrounding Property.

Escalation.

Maintenance Cover.

Clearance and Removal of Debris.

Contractor's Plant and Machinery.

Boilers and Pressure Plant Insurance

Coverage-Steam Generating Boilers both fixed and unfixed against the risk of Explosion or Collapse.Exclusions

Loss or damage due to fire and allied perils.

War and nuclear risks.

Loss arising out of overload, experiment or test.

Gradual developing flaws, defects, cracks or partial fractures.

Failure of individual tubes.

Explosions/ Collapse due to facts, existing at the time of commencing insurance, known to the insured.

Consequential losses.

Willful Negligence.

Damage by Chemical explosion except in recovery boilers and waste heat boiler.

Machinery Breakdown Insurance

Scope of Cover-The Insurance Policy broadly covers loss due to all kinds of accidental, electrical and mechanical breakdowns due to internal and external causes. Cover is granted during the time the machinery is in operation or rest or in the process of dismantling, overhauls or during subsequent re-erection at the same premises.Significant Exclusions-The Insurance Policy does not cover loss and/or damage from Fire and allied perils, Theft, overloading experiments, wilful acts or gross negligence, gradually developing flaws and deterioration from normal use.Sum Insured-Value proposed for insurance should be equal to new replacement cost including Freight, Erection Cost, Customs Duty, if any.Premium-Rate of premium depends upon the type of machinery and other factors. Discounts are offered in respect of stand-by facility, availability of spares and favourable claims experience, subject to rules laid down in the Tariff.Excess-Policy is subject to a compulsory Excess, which depends upon the value of machinery.Main exclusion:

Faulty Design

Defective material or casting

Bad workmanship

Manufacturing defects

Mechanical / electrical breakdown or derangement of erection machinery & equipment

Consequential losses

Electronic Equipment Insurance

Scope of cover-Cover operates when the insured property is at work or at rest or being dismantled for the purpose of cleaning/overhauling or during subsequent re-erection.The Policy provides coverage for: Material damage to electronic equipment

Cost of external data media, including cost of reconstruction of data under Section II, as also increased cost of working under Section III. While Section I is compulsory, Section II and Section III are optional.

Sum Insured

Section I: New Replacement cost of the insured property including Freight, Erection cost, Customs Duty, if any.

Section II: Cost of restoring the external data media by replacing lost or damaged data media by new material and lost information.Section III: Sum Insured should represent the hiring charges per hour for a substitute equipment for ensuring continued data processing for the period of indemnity specified, including personnel and transportation charges.

Significant Exclusions- Wear & tear, War, willful act or willful negligence, Aesthetic defects and consequential loss. Contractors Plant and Machinery Insurance

Contactors Plant & Machinery policy covers construction equipment like cranes, excavators etc.

Scope of cover-Contactors Plant & Machinery policy covers loss or damage to the contractors property due to any cause that is accidental and external in nature.Sum Insured-Sum Insured of each item of machinery shall be the present day replacement cost. Sum insured is computed from replacement cost including freight, cost of erection and custom duty, if any.Premium-Premium depends on various factors such as type of equipment, location of operation, etc.Main Exclusions

Electrical or mechanical breakdown

Wear and tear, rust, corrosion

Willful act or willful negligence

Loss/damage for which supplier/ manufacturer is responsible

Consequential loss

Policy s subject to deductible excess as stipulated therein

Machinery Loss of Profits (MLOP)

Modern machinery loss of profits insurance is a suitable means of meeting the increasing need on the part of industry for comprehensive tailor made insurance protection from the consequences of business interruption.MLOP insurance provides cover for the actual loss of profits sustained as a result of a business interruption caused by material damage identifiable under machinery insurance.

Sum Insured-The sum insured is made up of the operating profit and the standing charges (fixed) in the course of twelve successive calendar months. (i.e. normally the business year)Scope of Coverage:-Coverages are the same as under machinery breakdown insurance. If the loss is admitted under machinery insurance, MLOP will be triggered subject to availability of cover.Premium rates are broadly determined from the following factors:

The general and the specific technical risk of the machinery to be insured.

The moral and technical hazard relating to the user.

The effect of machinery breakdowns on the operating profit and standing charges (factor of relative importance)

The reserve facilities and spare parts available.

The possibilities of loss minimization

The general economic and political conditions.

Indemnity Period-This represents the maximum time for which an insurer is liable for the loss of profit. Generally period limit is three, six, nine or twelve months.Time Excess-Time excess is a number of days of interruption which has to be borne by the insured in the event of loss and is based on type of machineries, business insured, relative factors, etc.Marine Cargo Insurance

The Marine Cargo Insurance policy covers your goods, freight and other interests against loss or damage to goods whilst being transported by rail, road, sea and/or air under a contract of affreightment.

Different policies are available depending on the type of coverage required ranging from an ALL RISK cover to a restricted Accident only cover whilst the goods are in transit. This policy is freely assignable and is basically an agreed value policy.

Significant Exclusions-This Policy does not cover loss or damage due to willful misconduct, ordinary leakage, insufficient/unsuitable packing, delay, insolvency/financial default of owners, inherent vice, war, strike, riot and civil commotion.Premium-Rate depends on factors like nature of cargo, scope of cover, packing, mode of conveyance, Destination and routes, and past claims experienceTypes of Policies

Specific policy to cover single consignment

Marine Open Policy for frequent dispatches within the country. These arrangements are valid for one year.

Marine Open Cover for frequent dispatches out side the country (imports and exports). These arrangements are valid for one year.

Marine Sales Turnover policy

The following are covered under this policy

Imports + Customs Duty (Actual or Deemed / Contingent) +

Domestic purchase of raw materials, consumables & stores +

Any number of inter factory / inter-depot / to & fro job worker movements +

Exports (FOB/CIF) +

Domestic sales of finished goods

Temporary storage of finished goods

Temporary storage cover at intermediate locations like job workers / C & F premises etc.

Advantages of a sales Turnover policy -

Sizeable saving in premium which is charged only on your sales turnover.

Seamless cover with all movement of goods automatically covered.

No hassles of submitting periodical declaration of movements to the insurer. Only monthly sales figures need to be submitted.

Premium on full annual sales turnover need not be paid in advance. Facility for payment of premium on half-yearly / quarterly basis.

Accident & Health

Group Health Policy Group Personal Accident PolicyGroup Health Policy

Health is wealth. Well being is an overall feeling of being in good health and being in control of yourself, your situation and your finances. There is a lot you can do to ensure your well-being. But life, unfortunately, follows no fixed plan. Sudden illness or bodily injury can sometimes leave you financially hurt and highly stressed. This is where Health Insurance steps in. It is an insurance that takes care of your medical expenses or treatment expenses and ensures quality health care for you. Now is the time to insure yourself and your family against rising health-care costs. In this world of uncertainty nobody is sure when ones dear one will fall victim to diseases and need hospitalization. This policy certainly helps you to get out of the financial trauma caused by hospitalization and protects you and your family in case you need expensive medical care.

Scope of Cover

Medical insurance covers almost everything- from the time you step into the hospital to the time you are discharged. The normal costs that are covered are room and boarding expenses, nursing expenses, fees for the surgeon, anesthetist, medical practitioner and consultant, fees for specialists, charges for anesthesia, blood, oxygen and the operation theatre, charges for surgical appliances, medicines and diagnostic materials and charges for X-rays, dialysis, chemotherapy, medicines and so on.

Cashless facility eliminating the entire trouble of documentation and direct settlement of your bills directly with the hospital.

Related expenses during pre-hospitalization period and post hospitalization period up to 30 days and 60 days respectively.

In case of additional premium paid Maternity Benefit can be availed.

Less than 24 hours hospitalization for specified procedures like Dialysis, Chemotherapy, Radio therapy, Eye Surgery, Dental Surgery, Lithotripsy (Kidney stone removal), D. & C. Tonsillectomy are covered.

Advantages

Family Floater

Cashless Hospitalization facility

Large Hospital Network of more than 4000 Hospitals across India

Innovative covers offered

Fast & Efficient Settlement of claims

Main Exclusions

Any Pre-existing condition or any complication arising from it

Treatment/surgeries for Cataract, Benign Prostatic Hypertrophy, Hysterectomy for Menorrhagia or Fibromyoma, Hernia, Hydrocele, Congenital Internal diseases/defect, Fistula in anus, piles, Sinusitis and related disorders during the first year of the policy.

Suicide, attempted suicide

Cosmetic surgeries for aesthetic purpose, circumcision unless medically required.

Under the influence of drugs, alcohol & other intoxicants

Participation in felony, riots, war etc.

Exposure to nuclear, radioactive materials

HIV or sexually transmitted diseases

Sum Insured- The sum insured is based on the Age, Plan opted.Premium-Based on age, sum insured opted, plan and Risk Class. Premium inclusive of service tax as applicable.Age Group- for Self & Spouse 21yr. to 70 yr.

Children Birth to 21 yr.Group Personal Accident Policy

Accidents can happen to anyone anywhere. They come unasked for and leave an imprint on our lives for years to come. The Value of Human Life and Sufferings can not be measured with money, but with a view to provide some relief to the injured person or members of his family in the event of an unfortunate accident, we have designed an insurance cover, known as Personal Accident Insurance.

Scope of Cover-The plan covers the risks of Accidental Death

Permanent Total Disablement

Permanent Partial Disability

Temporary Total Disablement.

Additional Benefits include

Accidental Medical Expenses: In case of accidental hospitalization the compensation is reimbursed up to 40% of the valid Personal Accident claim max up to 5, 00,000.

Hospital cash allowance: A daily allowance of Rs 1000 for each completed day of hospitalization maximum up to 30 days during the policy period.

Child Education Support: In case of Accidental Death and permanent total disability, 1% of sum insured is paid towards your childrens education benefit.

Funeral Expenses: An amount of 1% of the sum insured up to maximum of Rs 10000 is reimbursed for Funeral expenses.

Main Exclusions Any existing disablement prior to the inception of the policy

Suicide, attempted suicide

Serving in military, armed forces

Under the influence of drugs, alcohol & other intoxicants

Participation in felony, riots, war etc.

Exposure to nuclear, radioactive materials

Self exposure to needless perils

Loss due to child birth or pregnancy

Act of terrorism.

Sum Insured- The sum insured is based on the monthly income and the occupation.Premium- Based on age, occupation (class), sum insured & benefits opted. Premium inclusive of service tax as applicable.Age Group- for Self & Spouse -21 yr. to 70 yr.

Children 1yr to 21 yr.

Occupation considered is Class I and II

Occupational Classes-

Class I: - Accountants, Doctors, Lawyers, Architects, Consulting Engineers, Teachers, Bankers, Persons engaged in administrative functions, Persons primarily engaged in occupations of similar hazard.Class II: - Builders, Contractors and Engineers engaged in superintending functions only. Veterinary Doctors, paid drivers of motor cars and light motor vehicles and persons engaged in occupations of similar hazard and not engaged in manual labour. All persons engaged in manual labour (Except those falling under Group III) Cash Carrying Employees, Garage and Motor Mechanics, Machine Operators, Drivers of trucks or lorries and other heavy vehicles, Professional Athletics and Sportsmen, Woodworking Machinists and persons engaged in occupations of similar hazard. Class III:- Persons Working in underground mines, explosives, magazines, workers involved in electrical installation with high tension supply, Jockeys, Circus personnel, Persons engaged in activities like racing on wheels or horseback, big game hunting, mountaineering, winter sports, skiing, ice hockey, ballooning, hand gliding, river rafting, polo and persons engaged in occupations/activities of similar hazard.

Disclaimer- This is only a summary of the product features. The actual benefits available are as described in the policy, and will be subject to the policy terms, conditions and exclusions. Please seek the advice of your insurance advisor if you require any further information or clarification.

Objectives of the study

To understand the accounts and finance process in general insurance company.

To improve the accounting process if required.

SCOPE:

In the General Insurance, Accounting concept is not limited to the activities of finance department. Cooperation with the Marketing department, Operation department and Claim Department in Accounting of Insurance policies.IMPORTANCE:

Maximum utilization of the existing facilities for improving efficiency and increasing effectiveness, Earn a reasonable rate of return. Helps in developing long-term corporate plan. To prepare the revenue budget for short-term period.

RESEARCH METHODOLOGY ADOPTEDResearch can be defined as the careful investigation or inquiry especially through search for new facts in any branch of knowledgeResearch Methodology is a way to systematically solve the research problem. In it we study the various steps that are generally adopted in studying the research problem STUDY OF ACCOUNTING AND FINANCE PROCESS This research study has to be undertaken to know because for the proper and efficient working of an organization it is necessary that the employees be also of the same potential.

Research Approach:Information obtained from differentdepartmentType of Research Design-Descriptive Research

The research study is descriptive in nature. To study the accounts and finance process in a general insurance company there was no primary data available to study.

Types of Data-Secondary Data

Secondary data was also collected through various sources like newspapers, books, magazines, Internet, annual report of company ,websites (both published & unpublished) etc. and used for certain aspects of the research like current working scenario, pros and cons of the working and other information.

SOURCES OF SECONDARY DATA1. Software used by the company

Regional/Branch Offices :

FG Connect

Policy Asia

Head Office :

Sun System

2. Literature provide by Finance Department of Future Generali

3. Internet

4. Text books

5. Intranet of the Future Generali

Research instrument-The Observation Method : Under the observation method, the information is sought by way of Investigator s own direct observation without asking for the respondent hence data are collected on the banks of observation no talk take placeGEOGRAPHICAL AREA COVERED

The geographical area covered is:

1. Future Generali Delhi Zonal Office.

2. Branches connected with the Zonal Office.

Accounting Process in Future Generali Receipting of Premium Amount

Creation of end of Day Report

Cash Management System

Cheque Dishonor

Float Accounts

Claims Accounting

Commission & Brokerage

Refunds

Payments

Maintain Petty Cash

Capital Expenditure Accounting

Receipting of Premium Amount:- Type of collection. Client Suspense: This account will be used to update money received towards proposals from the clients.

Agent Float: This account will be used to update money received from an Intermediary towards replenishment of the account float.

Cash Deposit: This account will be used to update money received to replenish an existing cash deposit account created in the BE with the applicable CD number.

Policy Suspense-Co-insurance/Re-insurance

Bank guarantee

General ledger account/ othersDissection: - This option is used when the payment is received for more than one type of collection..

Receipting can be done through

Front end (FG Connect)

Back end (Policy Asia).

Except some cases receipting should ideally be done in the front end.

As per IRDA Regulation, the premium has to be recognized as income over the contract period or the period of risk, whichever is appropriate.

Creation of End of the Day Report:-

The day end process consists of two steps-

1. Generation of the Day end reconciliation report-

This report gives a detail of the receipts created for a particular branch for that day from the time the last report was created to the time of generation of report.

The details generated in the report are

Receipt no.,

Receipt Date,

Name,

Branch Name,

Customers/Policy Holders no.

Status,

Client/Agent code

App. No./Policy no.,

Product Code,

Intermediary code/Name.

To generate the report check the date for which the report is being generated. The default date will be todays date.

Once generated the day end reconciliation report cannot be generated again. Hence generate the report if and only if responsible to do so and keep a back up of the copy.

All receipting sites are responsible to generate the day end reconciliation report and reconcile with the physical instruments.

This report is to be send to the Zonal accountant and the head office after generation.

2. Generation of the CAFU file:

This report gives details of the collections made during the day in different forms.

It gives different reports for

1. High value local cheques,

2. Local Cheques,

3. High value outstation cheques,

4. Outstation cheques cash and demand drafts.

Note that credit card receipting does not come in any kind of CAFU report.

This report will be amended for the new or cancelled receipts made in the back end. This will also be amended for any extra payment made cheque representation case where the cheque is presented again with the bank. Proper explanation should given along with the additions.

Once generated the CAFU report cannot be generated again for the period. Hence generate the report if and only if responsible to do so and keep a back up of the copy.

This report is to be send to the Zonal accountant and the head office after amendment.

All the amended CAFU files must be checked with the physical instruments.

Two copies of the CAFUs are to be printed and signed by the cashier after reconciliation.

Cash Management System (CMS):-CMS AGREEMENT - The cash management system is an agreement made with the bank for collections across the country.

Coordination with Bank- Head office will arrange for the pick up facility. A co-ordination person will be traced by the bank for that branch and provided to the head office, regional accountant and the branch contact person.

Cash pickup and cheques pickup- the cash pick up or cheque pick up facility can happen in two frequencies

On a daily basis

On a call basis.

CMS Charges- The basis of charge will be monthly on daily pick up and for call basis it will be on the number of calls. Ideally the pick facility should be availed first hour in the morning.

Bank account statements- Bank account statements for the different bank accounts are received by the Head office at month end. It can also be downloaded from the website. The bank sends the following reports on a daily basis to the regional accountants:-

Deposit Report/Pick up report.

Cheque outstanding report.

Collection report or debit credit report.

MPR report (Credit card collection report).

Reverse upload into system- The process for upload of the cheque clearance status received from the Bank on a daily basis into the Policy Asia system is called as the reverse upload.

This will enable the easy verification of the clearance status of the cheque deposited as cleared, dishonored or pending, which shall be useful for giving 64VB clearance for claims and refund payments

Daily reconciliation- After generation of day end reports from front end and amending them if required the reconciliation processes are undertaker.

The daily reconciliation processes are as follows-

Reconciliation between collection register from PASIA and CAFU from front end- This process will bring out instances like duplicate receipting.

Reconciliation between physical instrument and CAFU- A reconciliation between instruments.

Reconciliation between deposit report and CAFU of previous day.

Reconciliation between the Dr/Cr report and the collections register.

Monthly reconciliation- This is the reconciliation between the Bank balance as per books and the bank balance as per bank. The entries from our back end system flows into our general ledger system called Sun systems. The bank reconciliation will be carried out on a monthly basis in the head office between the balance as per the Sun systems and the bank statements. The daily reconciliations will help the bank reconciliations on a monthly basis.

Cheque Dishonour

Physical instruments- The bank is required to return all the physical instruments to the respective pick up location in case of cheque dishonoured. the respective location should keep the custody of these returned instruments since the same is the property of the Company and have to be produced in case of any legal cases as evidence. In no case should the dishonoured instrument be returned to the client/agent. Any request for such return should be referred to the HO for the intervention of the GM Finance/CFO. Intimation of cheque dishonor- The accountant in the branch through the cheque return report e-mailed by the zonal accountant can identify the cheque against a particular receipt is dishonored.

He/She will inform the agent, the concerned marketing staff and the operations department for the necessary action.

Receipt cancellation-

1. Once the operations department cancels the policy the branch accountant should be send in the prescribed format a request to the zonal accountant to cancel the receipt at the back end.

2. A receipt once created in the front end and appeared in the day end reconciliation report cannot be cancelled in the front end.

3. In case where the cheque has been dishonored for an agent float/cash deposit the receipt should be cancelled immediately. Cheque Dishonor Table- The cheque dishonor table is updated by the accountant on daily basis, which is send by the head office to the branch office.Float Accounts

First time creation of floats: -

First time agent floats will be created at the back end only by the head office. The branch accountant will forward the request in the prescribed format approved and signed by the channel head or zone head to the head office.

A scanned cheque copy if received and the agent code will be given to the head office.

The receipt at back end (PASIA) is created. The receipt in soft copy is sent to the branch accountant.

Since the receipt is issued for this purpose by the HO from the ID of the respective location, the same has to be added to the CAFU and the cheque to be deposited along with the other collections for the day.Replenishment of floats: - Replenishment of floats for agents should happen in the same process as any other receipt and the same shall be issued under the respective Agent float account. Such a request for receipting might come through marketing department also.Cash receipts:-

If cash is received for replenishment of agent float the receipting will be done in the same manner as any other receipt in Front End.

If cash above Rs. 50000/- is received for replenishment of agent float the receipting will be done at head office under float account. The process for exception for issue of receipts above the Rs. 50000/- limit has been made by operations and circulated separately.

In this case the exception has been provided in the process where the agent/service provider collects multiple payments against various cover notes or policies from various customers and deposits the same together with the Company with details of all such individual collections. It should be ensured that in no case the total collections from a single customer in a month exceeds the limit of Rs.50000/-.

An approval note signed by the branch head and the branch accountant confirming the above, will be sent by the operations department to head office for receipting. The soft copy of the receipt will be sent to the operations to confirm receipting.

The depositing of the cash shall take place in the normal manner from the location only for the cash collected and the same has to form part of the daily reconciliation as well.

It is important that cash above Rs.50000/- shall not be received for a single proposal or for a single customer during a month.

Cheque dishonor monitoring:-

As discussed earlier incase of cheque dishonor for any receipt against the agent float the accountant must reverse the receipt immediately.

She/he must then inform the operations department and the branch manager of the same for replenishment of such amount.

She/he should send a report for all the cheques dishonored against agent floats monthly to the branch/Zonal manager for the same.

Wherever the cheque dishonoured instance in a particular agent float account exceeds the facility of float should be stopped for such an agent.

Balance monitoring:- The local accountant sends a report monthly for balances against agent floats to the branch manager for his review. He/She must highlight all the balances that run in negative at the end of the month.

Bank Guarantee Accounts

Creation of BG master:-

The corporate/regional finance department will create a receipt for the bank guarantee in PASIA on the basis of the details provided by the operations department.

The receipt will not be created unless the original copy of the bank guarantee paper is available with the accountant.

The custody of the Bank Guarantee document shall be with the Accountant and shall be kept safely.

Bank Guarantee cannot be created by the branch accountants in front end. The same should forwarded by the branch accountant to the corporate/regional finance department for receipting.

Any replenishment of the same BG can be done through the FE (FG Connect) by the branch accountant.

BG Format and BG Instrument:-

While creating the BG master the following must be available and entered:-

1. BG Account Number

2. BG limit

3. BG validity for policy issuance

4. BG recovery period

5. BG claim period

6. Bank Name/branch

7. Client name

8. Whether BG is for a particular product type or for generally all products.

There may be multiple BGs for the same client whether the same is for one product or for multiple products.

Relevant dates for BG

Start date is the date of inception of BG

Expiry date is the last date upto which the policies can e issued under the BG.

Recovery date is the last date before which the client should make the payment against policies issued against the BG.

Claim date is the 15 days after the recovery date.

Notice date is the date ten days before the claim date where the client is requested to make the payment to avoid invoking the BG.

Collections against BG

A BG unique no. is created by the system at the time of generation of the BG master.

A receipt in the same manner as discussed earlier is issued from FE/BE against the BG unique no. once the client has made the payment.

Invocation of BG -: if the client is unable to make the payment in the specified time the BG will be invoked by the finance/operations department

Custody of BG:-A copy of the original BG and the original BG is documented for future reference. The original papers must be kept in safe custody and the copy should not be kept along with the originals.Cash Deposit Accounts

Creation of Cash Deposit Master:- The corporate/regional finance department will create a receipt for the Cash Deposit master in PASIA on the basis of the details provided by the operations department. Cash Deposit cannot be created by the branch accountants in front end. The same should forwarded by the branch accountant to the corporate/regional finance department for receipting.

Any replenishment of the same CD can be done through the Front End by the Branch accountant.

A Corporate client may request for multiple CD accounts for various products.

Multiple CD accounts may be created under a single client number and a single product type or for multiple product types or even for policy specific deposit

Relevant dates for collections against CD account

Start Date

Expiry Date

Recovery Date

Collections against CD:- A CD unique no. is created by the system at the time of generation of the CD master.

A receipt in the same manner as discussed earlier is issued from FE/BE against the BG unique no. once the client has made the paymentSet off of dues against CD: - If the replenishment is not made within the due date CD the amount to be transferred from the deposit maintained and the CD account to be suspended. A flag to suspend the CD account must be passed in the system which is to be done by CD/BG maintenance menu.

The amount will be recovered from such CD

Closure of CD account: - Once the payment is received the CD account will be closed or deactivated.Claims

Claims approval in the system- To confirm the receipt of premiums on policies for which the claims have been raised (in order with section 64VB) the claims department should raise queries with the Zonal accountant.

The claims department raises the request in the Polisy Asia after processing the claim and receiving the confirmation.

The claims department will approve the same is PASIA and then send the claims not with the signature of the approving authority, through e-mail or hard copy to the finance department for authorization.

Authorizing of claim payments- The process of authorizing by the finance department is done once the cheques have come. This process is a re-check on the claim amount, the payee name and the amount on the cheque.

Documentation for payments-This should be kept documented along with the acknowledged copy of claim not of receipt of cheque.Payment Process- Once the cheques have been received and the authorizations have been done the cheques are send along with the claim notes to the claim department.

The claim department signs on the claim note and dispatches the same to the respective recipients.

Service Tax on claim related payments- The claim department while entering the claim in the system will insure to input the service tax against the correct heading.

Outstanding claims are accounted automatically as per the figures reserved under the system and no separate entry is required for the purpose.

Commission and BrokerageBooking of Commission rates in the system- the agent and brokerage commission rates are updated in the system. These rates usually do not change.

Agency Commission/ Brokerage from system-