General insurance in India

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What is INSURANCE

The main function

Benefits


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Insured:The perso known asthe policyholder, a personwith insurance coverage.

Insurer:Acompanylicensedtotransactthe businessofinsurance andissue insurance policies.

Policy:

It'sthe written contract between an insurancecompany anditsinsured. Itdefineswhatthecompany agreestocover for what periodoftimeanddescribesthe obligations and responsibilitiesofthe insured.


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Premium:It'sthe amountofmoney a policyholder paysforinsurance protection.

Claim:It'sthe notice tothe insurance companythatunder the termsof a policy, a lossmaybecovered.

Indemnity:An insuredshould notcollectmore than theactualcash value of a loss butshould be restoredto approximatelythe same financial position asexisted before the loss.


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Agent:

Alicensed person or organization whosellsinsurance andrepresentsthe insurance companytothe policyholder.

Broker:An organization or person paid bythe policyholder tolookfor insurance on their behalf.

Deductible:

It'sthe amountofthe loss, which the insuredis responsible

to pay before the insurance company paysthe benefits.

Expiration Date:

Thisisthe date on which the policy ends.


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Limit:

It'sthe maximum amount paid bythe

insurance companyunder the termsof a

policy.

Underwriting:

The processofclassifying applicantsfor

insurance byidentifying characteristicssuchas age, gender, health, occupation and

hobbies.


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Types o Insurance

Li e insurance

on - Li e Insurance(general insurance)

Types o Insurance

uto insurance

Travel insurance

Health insurance

ssets / property insurance


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Property coverage

iability coverage

Medical coverage


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provides compensation or

damage or destruction o a

home rom disasterssuch as lood and

earthquakes, that require

additional coverage.


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Cover the cost o medical

treatments

coverage or individuals

to protect them against

dental costs.


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TheftAccident

Uncertainty


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Marine insurance was being practicedin India from

the beginning of 19th century

Fire insurance followedin 1825 atMadras

FirstIndian Companywasformedin 1907 Indian

Mercantile Insurance Company

Needtocontrolinsurance businesswasfelt bythe

British governmentwhich introducedthe Insurance

Actin 1938.


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GeneralInsurance businesswas being done by 106companiesincluding LIC (GI)

In 1972 GINationalisation actwas passed allowing theformation ofGIC asthe holding company andwith 4

subsidiaries

The objective of nationalisation wastospreadinsurance tonook andcorner ofthe country andtoutilise peoplesmoneyfor the peoples goodthusuplifting the socio economiccondition ofthe country


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Following globalisation movesMalhotra committee hadbeen formedtolook intothe methodsofliberalisation ofinsurance

Later on the billin the modifiedform asIRDA billwasintroducedin 1999 andthe IRDA actwas passed.

An independentstatutory authority asRegulator for

insurance businesscame into existence in 1999


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Directselling

Corporate agents

Group selling

Brokers andcooperative societies

Banc assurance


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Insurance is an Rs.400 billion businessin

India, andtogether with banking services

adds about 7% toIndiasGDP.

It has been growing by 15 - 20% per annum.

India also hasthe highest number oflife

insurance policiesin force in the world, andtotalinvestible fundswith the LIC are almost

8% ofGDP.


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Type ofbusiness Public Sector Private Sector TotalLife Insurance 1 21 22

GeneralInsurance 6 15 21

Re-insurance 1 0 1

Total 8 36 44

REGISTERED INSURERS IN INDIA


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Insurer Apr-Jun 2008 Apr-Jun 2009Public 9600458 8887123

(8.52) (-7.43)

Private 4971011 5318470

(27.93) (6.99)

Total 14571469 14205593(14.44) (-2.51)

Note: Figure in bracketsindicatesthe growth (in per cent)

over previousyear.


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TotalPremiumNon-Life Rs.30351.84 crore

World premium *

Non-Life USD 1779 billion

Geographical restriction: None for new players

Equity restriction: Foreign promoter can holdup to 26 per centofthe

equity

Source: * SwissRe, (figures pertain tocalendar year 2008)Restofthe

figuresfor the financialyear 2008-09


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MARKET SHARE OF GENARAL INSURANCE INDUSTRY


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General insurance in India

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