CHAPTER I

INTRODUCTION

The insurance industry in India has come to a full circle from being

an open competitive market to nationalization and back to liberalized

market again. The opening up of Indian Insurance Industry as a part of

economics return happened to October 24, 2000. Due to this, a drastic

change has happened in the insurance service of India in the last 7 years.

These has been aimed at increasing the efficiency by expanding the role

of private sector, which brought about the inflow of investment and

technology. Even though the public sector insurance companies

contributed much in providing awareness about insurance and expanding

the insurance market. It was recognized that their reach was still limited.

This attracted many players to the field of insurance. They entered the

market with wide variety of products and services. The opening has paved

way for innovative products and services. This opening has paved the way

for innovative products new distribution channels etc along with ample

job opportunities. Mean time it calls for certain problems also. The doubts

raised by many are: whether it will lead to destruction of public

corporations. In the light of the above said circumstances the present

study is considered to be very relevant.

1

STATEMENT OF PROBLEM

The insurance industry in India is now having both public and

private players. They offers life and general insurances. Star Health

Insurance is a big health insurance company in India.

The problem to be reviewed in the study is whether the customers

are aware of various mediclaim insurance products offered by Strar Health

Insurance.

2

OBJECTIVES OF THE STUDY

1. To know the awareness of customers with regard to various Health

insurance products.

2. To assess the customer satisfaction regarding the settlement of medical

claims

3. To know the level of customer satisfaction with Star Health Insurance.

4. To analyze the problems and prospectus of Health insurance policies.

3

METHODOLOGY

Present study is designed as a descriptive on survey method. Both

primary and secondary data were collected.

Primary Data

Primary data means first hand information collected from the

customers directly. Primary data required for study are collected from the

beneficiaries of Star Health Insurance in Wayanad district with the help of

a standard questionnaire.

Secondary Data

Secondary data means data collected from secondary source. These

are second hand information. Secondary data for this study are collected

from books, newspaper, journals, magazines and websites.

4

LIMITATIONS OF THE STUDY

The study is limited to Wayanad district only and hence findings

cannot be generalized. Some of the respondents may have given based

opinions.

5

CHAPTER II

AN OVERVIEW OF INSURANCE SECTORS

Life is full of risks. Being a social animal and risk averse, man

always tries to reduce risk. An age old method of sharing of risk through

economic corporation led to the development of the concept of insurance.

Insurance may be described as a social device to reduce or eliminate

risk of loss to life and property. Insurance is a scheme of economic

corporation by which members of the community share the unavoidable

risk. The risk which can be insured against include fire, the perils of sea,

death, accidents and burglary. The members of the community subscribe to

a common pool or fund which is collected by the insurer to indemnify the

losses arising out of risks. Insurance cannot prevent the occurrence of risk

but it provides for the losses of risk. It is a scheme which covers large risks

by paying small amount of capital. Insurance is also a means of savings

and investment.

Definition

Insurance can be defined as a legal contract between two parties

where by one party called insurer undertakes to pay a fixed amount of

money on the happening of a particular event, which may be certain or

6

uncertain. The other party called insured pays in a fixed sum known as

premium. The insurer and the insured are also known as Assurer or

underwriter and Assured respectively. The document which embodies the

contract is called the policy.

An insurance contract is based on some basic principles of insurance

1. Principle of atmost good faith

2. Principle of indemnity

3. Doctrine of subrogation

4. Principle of insurable interest

Principles of Insurance

The principles of insurance can be grouped into two knids.

1. Primary Principles

The following principles are applicable to any type of insurance.

(a)Principles of Cooperation

The insurer collects premium from the insured in a pool and

pays their claims out of the pool. The insurance company is an

association of persons which pays the claims out of its pooled

money.

7

(b)Principles of Probability

The occurrence of risk in each type of insurance is estimated

through the theory of probability for which the insurer follows the

theory of large numbers.

2. Legal principles

The regular fundamental principles are common to all types of

insurance contracts the exception of the principle of indemnity which is

not applicable to personal insurance contracts.

(a)Principle of utmost good faith

Insurance contracts are based upon the mutual trust and

confidence between the insurer and the insured. It means that the

parties to the contract must make a full disclosure of all the material

fact and information relations to the contract.

(b)Principle of insurable interest

Insurable interest means proprietary or monetary interest or

legal right to insure.

(c) Principle of indemnity

It is the controlling principles in insurance contract. Indemnity

simply means making up the loss. Literally it means security against

damage or loss or compensation for loss.

8

(d)Principle of subrogation

Subrogation is a corollary of or supplement to the principle of

indemnity. Subrogation means inheriting the rights available to an

individual.

(e) Principle of causa proxima

The maxim ‘causa’ proxima non remota ‘spectabure’ means

that proximate (nearest) causa and not the remote one is to be taken

notice of at the time of determining the liability of the insurer.

(f) Principle of contribution

Contribution is also a corollary of the principle of indemnity.

The doctrine of contribution applies when there is more than one

policy covering the same subject matter against the same peril for

the same period and for the same insured. Principle contribution is

not applicable to personal insurances.

History of Insurance

The concept of insurance is believed to have emerged almost 4500

years ago in the ancient land of Babylonia where traders used to bear risk

of caravan by giving loans which were later repaid with interest when the

goods arrived when the goods arrived safely. In order to protect against the

risk of loss of goods in transit, piracy and natural calamities like storm and

9

so on. Medieval Guides Grade Association formed a common pool of

funds which was used as support in times of sickness and death and

sometimes even offered as ransom for members held captive by pirates.

The first insurance contract was entered into by European Maritime

Nations in 1347 to accept marine insurance as a practice.

The concept of insurance as we known today took shape in 1688 at a

place called Lioyds. Coffee House in London where risk bearers used to

meet to transact business. This Coffee House became so popular that

Lioyds became the one of the first modern insurance companies by the end

of the eighteenth century.

Marine Insurance Companies came into existence by the end of the

eighteenth century. These companies where empowered to write fire and

life insurance as well as marine. The great fire of Landon in 1966 caused

huge loss of property and life. With a view to provide fire insurance

facilities Dr. Nicholas Barbon setup in 1967 the first fire insurance

company known as the Fire office. The infamous Newyork fire and the

great Chicago fire in 1835 and 1871 respectively created awareness and

need for insurance.

10

Regulatory Body

The Insurance Regulatory and Development Authority (IRDA) were

constituted as an autonomous body to regulate and develop the business of

insurance and re-insurance in India. The authority was constituted on April

19 2000 vide government of India’s notification No. 277.

The Insurance Regulatory and Development Act 1999 was enacted

by parliament in the 15th year of the Republic of India for the establishment

of an Authority to protect the interest of holders of insurance policy, to

regulate, promote and ensure orderly growth of the insurance industry and

for matters connected therewith or incidental thereto and further to amend

the Insurance Act 1938, the Life Insurance Corporation Act 1956, and the

General Insurance Business (Nationalization) Act 1972. The act was

approved in the Parliament in December 1999 and the insurance sector was

thrown open for private licensees on August 5, 2000. IRDA was

constituted in terms of the Insurance Regulatory and Development

Authority Act 1999, as the regulator of Indian insurance industry.

IRDA was setup in 1996 but it was formally constituted as a regular

of the insurance industry in April 2000. The regulator was initially known

as the Insurance Regulatory Authority but was subsequently rechristened

as IRDA as it was provided that it has a broader role to perform in the

11

Indian Insurance Market. It had not only to frame and issue statutory and

regulatory stipulations; guidelines; and clarifications but it has also to

perform a development and promotional role. The development and

promotional role of the regulator include facilitating the growth of the

market by attracting large number of players, integrating of the insurance

market with the domestic financial service market; and synchronizing the

Indian Insurance market with that of global insurance. Thus the objective

of IRDA are two fold: Policy holder protection and healthy growing of the

insurance market.

IRDA has a chairman and four part whole-time members. IRDA has

constituted the insurance adversary committee and in consultation with this

committee has bought out seventeen regulations. A leading consumer

activist has also been inducted into the insurance adversary committee. In

addition, representatives of consumers, industry, insurance agents,

women’s organizations and other interest groups are a part of this

committee. It has formed a consumer advisory committee and a surveyor

and less assessors committee. It has a panel of eligible chartered

accountants to carryout investigation inspection and so on.

IRDA has till not issued seventeen regulations in the area of

registration on insurers, their conduct of business, solvency margins,

12

conduct of reinsurance business. Licensing and code of conduct

intermediaries. It follows the practice of prior consultation and discussion

with various interest groups better issuing regulations and guidelines.

1. In India the life insurance was started on 1870.

2. India’s first insurance institution was Bombay Mutual Life

Insurance Society.

3. The founder of Bombay Mutual fund was the assistant of Bombay

High court Mrs Summer and his 6 friends.

4. The Insurance Act was framed in India was 1938.

5. The Life Insurance Corporation was formed in 1956.

Various Insurance Policies

Insurance are of two types

1- Life Insurance 2- General Insurance

Life Insurance

This type of the insurance is to insure the person itself. The basic of

life insurance is the amount will refund after the death of person or after a

maturity period.

13

General Insurance

It will protect all the things under the fund and the accidents and

illness happened to man, agricultural products, vehicles, institutions

animals, birds, service etc.

The general insurance company are:-

1. United India General Insurance Company

2. The New India Assurance

3. National Insurance Company

4. Oriental Assurance

Among the general insurance companies product is mediclaim.

There are different types of policies in the general insurance.

Accidental Insurance

These are the main policies given in the accidental insurance

Motor Insurance – The protection for the motor vehicle are 3 types:-

Accidents happens in vehicle through fire, theft and accidents

The difficulties caused by personality for this.

Death and injuries for person caused by vehicle sould take the

responsibility. This type of policy is called common policy.

Vehicle Accident Insurance

Fire Insurance

Marine Insurance

14

Goods Insurance and Ship Insurance

LIC

Life insurance is one of the most common form of insurance. It has

acquired a top position all over the most. Since the nationalism of life

insurance companies in 1956 the entire life insurance business is helping

transacted by the life insurance corporation of India.

Life insurance is a contract whereby the insured promises to pay a

uniform rate of premium at fixed intervals of time against which the

insurer agrees to pay a fixed amount on the happening of the event which

may be the death of the insured or by the expiry of a certain number of

years.

If the payment is to be made on the death of the insured, the insured

may nominate a person to receive the amount. If the amount is to be paid

on the expiry of a certain number of years, then insure may himself receive

it if he is alive on the expiry date; otherwise his nominees will receive it.

The former type of insurance is called the whole life insurance and the

latter the endowment life insurance.

There is only one nationalize life insurance company and eighteen

private sector life insurance companies. The only nationalized life

insurance company in India is the Life Insurance Corporation of India.

15

Life Insurance Products

There are four broad types of insurance policies to choose from

Endowment plan

Money-back policy

Whole life policy

Term insurance policy

Benefits of life insurance

Life insurance:

safeguards the insured family against an ultimately death and

provides for a secured income.

is means of compulsory savings

is a source of income during old age.

helps in meeting certain periodic financial needs, either for childs

education or marriage.

improves the life style of the insured and his family

take care of disabilities and certain future adversities of life

brings in tax benefit under section 88 of the income tax act 20% of

the contribution made towards life insurance premium quality for

deductions from total tax payable.

Mediclaim :-

16

Medicliam scheme protects the members of a family against every

disease including hospitalization expenses, in one policy at a moderate

premium. Similar schemes have also been formulated to protect employers

who provide different medical schemes. For the benefit of their employees

instead of cash payment against medical expenses.

The mediclaim is given by the general insurance company for the

treatment of illness or accidents. Mediclaim is more important than food,

air and shelter. About 50 year is over this started by the government. But

unfortunately GIC agents are concentrated to give insurance to vehicles

because it is compulsory for the vehicles therefore the government and the

agents are failed to bring the benefit for the people.

About 50 lakh life insurance agents are working in India. They did

not bring mediclaim to the people because they get only commission

moreover policy has 1000 persons. About 500 persons had happen illness

or accidents in this phase they want to go to the insurance office. Many

times so they could happen time loss and they compelled to spend more

money than they got. Because of the agents getting less commission is the

main problem to bring the benefits of the people that is the reality.

Importance of Mediclaim

17

Spreading diseases

1. life atmosphere and surroundings

2. pollution, air, water and food

3. fever, dengue fever, viral fever – tetanus, pneumonia, typhus, malaria

etc..

- about 1.50 lakhs peoples were died in 2008 due to road accidents

- about 625 were injured badly and now under treatment

- in Kerala 6536 were died

- everyday about 280 people were dying in India due to road accidents

Natural Calamities

Earthquake, flood, tsunami, thunder and lightning, sea attacks,

heavy heat etc..

- so many persons died due to heavy heat in India

- more than 2 lakh people were killed by Tsunami

Here we want to realize that the death is sure one. Every human

being will die once. Deaths are in two types – illness and accidents. It will

happen at any time at any age and any situations.

The benefits that given to the members of mediclaim.

1- Fees of the doctor

2- Room rent

3- Price of the medicines

18

4- Expenses of the X-ray and ECG.

5- Expenses of the operation

Cholera, stomach problems, rat fever from the urinal of rats. Dengue

fever, malaria, japan fever from mosquitoes, Typhus from small creations,

bird flue from the waste of the birds. The non care diseases. Cancer, heart

problems, kidney problems etc.

Cancer :- every year about 5 lakh people were dying because of cancer

Every year the number of cancer patients will increase about 300.

Smoking, pesticides, the smoke that comes outside the vehicles, impure air

are the reasons of cancer. It is more happening in ladies and children. In

case of ladies they are affected by breast cancer, tumor etc.

Heart diseases :- It will happen any person after 30 years. The old foods,

foods that contains mere fat, and fast food culture are the reasons

increasing the number of kidney diseases.

Road accidents :- bad roads, increasing of vehicles absent minded driving.

The documents want to produce for getting the claims.

(1) claim form (2) medical report (3) discharge card (4) the bills of

medicines (5) original reports and bills of x-ray, ECG, scanning, laboratory

tests, operation (6) the bills of room rent and fees of doctor

Anyway the health policy is more essential for the time increased

expenses of medicines. We want decide the nature of the policy. Better are

19

century there is no chance for selecting different health policies. On that

time we had the standard mediclaim policy only.

Life insurance companies and the non life insurance companies are

selling the policies when the claim will happen they give only their pre-

planned claim but the policy is non-life. Insurance company give the

expenses of the treatment. This may be cash or reimbursement. If the

person have the policies he can use the first for the other purpose on the

time of the illness and the coverage of non life policy can use for the

medical treatment.

20