The book provides complete and comprehensive coverage of origin, concept, and operational aspects of life and general insurance business in India. While dealing with concepts and practice we have made reference to Insurance Act 1938, and IRDA regulations, 1999, wherever required. Case studies have been introduced for better understanding and appreciation of technical matters. Specimen forms of insurance proposals and policies have been included to reinforce learning. The presentation is cogent and simple. It will sustain the interest of students and will help them to read with facility. It will also serve as handbook to insurance executives for ready reference.
Additional Info
  • Publisher: Laxmi Publications
  • Language: English
  • ISBN : 978-93-84872-28-1
  • Chapter 1

    Chapter 1 History and Development of Insurance Price 2.99  |  2.99 Rewards Points

    Insurance is perceived by the common man as a risk protection measure. It is an
    arrangement by which individuals exposed to certain contingencies get compensated financially
    when there is a loss.
    In technical terms, insurance, is a means of protection against monetary loss from any
    kinds of peril. Fire, floods, breakdowns, lightning, earthquakes, etc., are called perils. These
    perils though accidental occurrences, affect the value of economic assets. A human life is also
    considered as an income generating asset, exposed to perils like sickness, disabilities or
    early death.

  • Chapter 2

    Chapter 1 Risk Management and the Role of Insurance Price 2.99  |  2.99 Rewards Points

    Our lives are enriched by nature’s bounty all around us. But, along with nature’s gifts, which
    help us lead comfortable and happy lives, risk too is omnipresent. It pervades all aspects of our
    lives, making us uneasy about its occurrence and outcome.
    In fact, we manoeuver through life in a world fraught with manifold risks. The
    pressures of modern living make a risk-free environment seem impossible. The work place,
    particularly the factory, is full of various risk factors. Even well-protected homes are not
    free from risks.
    In insurance and risk management, the challenge is to evaluate the likelihood of risks
    that can befall individuals as well as industrial and commercial concerns, and the probability
    of their adverse financial impact, and then explore ways to either avoid or manage these risks,
    or minimise their effects.

  • Chapter 3

    Chapter 3 The Legal Aspects Price 2.99  |  2.99 Rewards Points

    Insurance is understood as a risk transfer mechanism where persons facing similar insurable
    risks are brought together to protect themselves by pooling the risks and sharing the losses.
    Insurance companies make this possible through insurance contracts. They are governed
    by laws enacted by Government and regulations issued by the Authority which is empowered
    exclusively to do so by legislation.

  • Chapter 4

    Chapter 4 Life Insurance Products Traditional Products Price 2.99  |  2.99 Rewards Points

    The purpose of a business organization is to create value and deliver it to the
    satisfaction of its customers. When the customers buy ‘products’ they are only buying
    benefits and values from the offering made by a company. Life insurance as a service industry,
    offers various sets of value satisfactions in their products. Risk cover and systematic savings
    are the core services combined in different forms and offered to meet the insurance needs of
    the customer.
    Insurance companies differentiate their products by adding auxiliary benefits and
    attributes to these core services, and marketing them. While buying an Endowment Policy
    from an insurance company, the proposer gets not a mere legal contract assuring a sum as it
    is common under the said type of policy but also other attributes accompanying the policy
    like easy facility for payment of premiums, timely reminders, quick withdrawals and loans,
    hassle free settlement of claims and a range of customer services which differentiate it from
    the similar endowment policies offered by other companies.
    The insurance gets more value added when sold by a professional and service minded
    agent, and the buyer perceives it as a better product compared to the same plan from the same
    company sold through another agent.

  • Chapter 5

    Chapter 5 Life Insurance Products Market Related Plans Price 2.99  |  2.99 Rewards Points

    Life insurance covers mainly the risk of death. It does not cover the effect of inflation
    and fall in currency value of the sum assured which is promised at the outset of the contract.
    Mostly, Life Insurance contracts are for the long term, and the claim amount when payable
    may become inadequate to meet the needs, due to erosion in money value. This is the major
    criticism against Life Insurance Plans.
    The premiums in life funds, when invested collectively, as per regulation norms, normally
    get a yield of 5 to 6% per year. This is because of the cautious approach of the insurers and also
    the mandatory provisions in investing the fund. Life insurers holding the money in trust for
    the benefit of the policyholders hesitate to invest in speculative ventures. Investment norms
    stipulate a significant portion to be invested in development of infrastructure and Government
    securities. Safety rather than yield is the guiding factor in their investment pattern. Hence the
    insurers are not able to offer high return to the policyholders.
    The buyers of insurance who were confident of investing elsewhere and getting better
    return started feeling it would be ideal to go for Term Insurance only with the insurers and invest the balance in the capital market. Buy Term Assurance—Invest the Difference
    (BTID) became the trend. Yet, the common people with their limited knowledge about investment
    avenues and aversion to risk, could not reach the capital market and their dissatisfaction with
    the insurers continued.

  • Chapter 6

    Chapter 6 Life Insurance Products Annuities-Pension Plans Riders-Business Insurance Price 2.99  |  2.99 Rewards Points

    The overall objective of life insurance as a personal financial planning tool is to
    provide future income security. When a person reaches old age, he may cease to be employed
    or get less engaged in his work for wage or compensation. Yet the need for income is there so
    long as he is living. Annuity, recognised as a life insurance product, takes care of this need.

  • Chapter 7

    Chapter 7 Group Insurance Reaching Out to the Masses Price 2.99  |  2.99 Rewards Points

    Group insurance works at the mass level: It extends beneficial coverage to a group of
    persons at a moderate cost. The advance of the economy and the consequential development
    of the organised sector has led to its significant growth in the recent years. It is also an
    effective channel to reach out to the unorganised sector where life insurance is needed most
    for its unique value as risk cover. Besides it serves as an instrument to implement the social
    security measures of the government. Group insurance now forms an important portion of
    the life insurance business.

  • Chapter 8

    Chapter 8 Underwriting Selection of Lives Price 2.99  |  2.99 Rewards Points

    The process of selecting and classifying applicants for insurance, charging appropriate
    premium and documenting the contract is referred as underwriting.
    Underwriting is one of the primary functions of an insurer. It involves activities of
    processing the new applications received, called new business. Every application is evaluated
    according to the established guidelines. This essential function through fair and consistent
    risk selection ensures that the insurer remains financially strong to meet the legitimate
    claims.
    In the early days when Life Insurance was in its embryonic stage, selection of lives
    was made by interviewing the applicant by the Board of Directors of the Insurers. The person
    seeking for insurance has to appear before the Board and the selection is made by judging the
    health of the person by mere appearance. In latter years, a physician was invited to sit in the Board to advise the Directors. Mere declaration by the proposer and his appearance were the
    criteria for selection.

  • Chapter 9

    Chapter 9 Pricing in Life Insurance Premium Setting Price 2.99  |  2.99 Rewards Points

    The Premium is the price paid for the risk undertaken by the Insurers. Legally
    speaking, it is the consideration that moves from the proposer to the insurer in exchange
    for their promise to pay the Sum Assured on the happening of the contingent event. It has
    been defined as ‘price paid adequate to the risk’ in a court case (Lucena vs Crawfurd).
    From the underwriter’s point of view, it is the contribution which should be equitable and
    commensurate with the risk the insured brings into the pool of risk. IRDA stipulates that it
    should be fair, to be certified so by the Actuary who designs the insurance product. No doubt,
    the consumer thinks that the premium is the cost he pays which should be commensurate
    with the value received.

  • Chapter 10

    Chapter 10 Privileges and Conditions Legal and Contractual Provisions Price 2.99  |  2.99 Rewards Points

    Life Insurance is a conditional contract. When the insured has paid the risk premium (in
    the first installment or as single premium) the contract becomes effective. Now the insurer can
    be prevailed to perform as promised but if only the insured satisfies certain other conditions
    contained in the contract.

  • Chapter 11

    Chapter 11 Life Insurance Policy – A Privileged Property Assignment Nomination MWP Act Price 2.99  |  2.99 Rewards Points

    Life insurance, today, is recognized not only for economic protection but also as a
    valuable form of investment. The systematic and semi compulsory way of savings through
    life insurance enables a policy holder to build a big fund for the future. With this investment
    element in insurance, a life policy appreciates in financial value with the payment of premium.
    Thus life insurance contracts are similar to other types of property rights, like stock certificates,
    property bonds and other actionable claims.

  • Chapter 12

    Chapter 12 Claims Settlement Fulfilling the Promise Price 2.99  |  2.99 Rewards Points

    In life insurance a promise is made when the proposal is solicited and the product is
    sold. The promise is that insurer shall pay the assured an amount called Sum Assured on the
    happening of the event insured against. When the event happens the insurer has to keep
    up the promise by prompt settlement of claim.

  • Chapter 13

    Chapter 13 Customer Services Grievance Handling Price 2.99  |  2.99 Rewards Points

    The basic mission of a service organisation like insurance will be to achieve long term
    profits through customer satisfaction. When a proposal becomes a policy, a relationship
    with a customer begins. During the term of the policy, the customer may have occasions to
    contact the insurer on simple matters like change of address for communication or other
    services like reviving the lapsed policy, altering the mode or the term of the contract, changing
    the nomination, raising loan on the policy, etc. The ‘moments of truth’ he experience on those
    occasions would build up his confidence that the insurer will keep the promise of settling the
    claim when it arises.

  • Chapter 14

    Chapter 14 Marketing Life Insurance The Three Dimensions Price 2.99  |  2.99 Rewards Points

    Marketing is a set of activities ranging from identifying the potential buyers to the
    delivery of the benefits as promised. It includes feedback from the users to enable the
    company to innovate on the products and render better service to the customer.
    Insurance is an unsought product. Except in Motor Insurance, where it is legally
    compulsory and in Fire or Marine Insurance where the financiers insist for it, insurance is not
    sought after by the buyers. In the case of life insurance the need is not felt immediately or people
    are rather unwilling to think about it. The feeling is always to defer the decision. Generally,
    even after convincing the person, gentle pressure has to be applied to close the sale.

  • Chapter 15

    Chapter 15 Distribution Channel Marketing Intermediaries Price 2.99  |  2.99 Rewards Points

    The world over, insurance is sold and not bought. Insurance which are compulsory under
    law are few exceptions. Between the insurer and the buyers there are a number of intermediaries
    performing the functions of spreading the awareness about insurance and bringing large sections
    of people under insurance coverage. As distribution is the ‘key’ to insurance penetration, IRDA
    has introduced a variety of intermediaries to work as per their regulations and guidelines. They
    are called Agents, Corporate Agents and Brokers. The list is expanding. This set of marketing
    intermediaries, helping the insurers in fulfilling their objectives of reaching out to various
    market segments, is called the distribution channel.

  • Chapter 16

    Chapter 16 Regulation and Supervision Twin Objectives Price 2.99  |  2.99 Rewards Points

    Insurance policy is taken to provide protection from the adverse effects of the
    unpredictable events. In life insurance, it is also a long-term financial planning to provide
    fund for future needs. Insurance is an intangible product and the insurer makes only a promise
    to pay the secured amount on the happening of the event. If at the time of the claim the promise
    is not fulfilled, the insured has to face the adverse consequences that he thought he had insured
    against.

  • Chapter 17

    Chapter 17 Principles and Practice of General Insurance Price 2.99  |  2.99 Rewards Points

    Insurable Risk
    Insurance is meant to protect a person or property from insurable risk. The term risk connotes
    uncertainty about the occurrence of an event (peril) that may cause loss. In insurance parlance,
    the subject matter of insurance is called risk. A building with a good deal of wood and woodwork
    is a bad risk and a concrete building is a good risk. Hazard means conditions which create
    or increase the chance of loss by a peril. Hazard may either be physical or moral. Physical
    hazard relates to property insured and moral hazard relates to the insured person’s character.
    A contract of insurance has four dimensions, viz., subject matter of insurance, peril that causes
    the damage (say fire), the unfortunate happenings and the resultant financial loss. Some of the
    concepts dealt with in the earlier chapters are repeated here more specifically in the context of
    marine, fire and motor insurances with appropriate examples.

  • Chapter 18

    Chapter 18 Marine Insurance Price 2.99  |  2.99 Rewards Points

    Marine insurance is the oldest branch of insurance. It comprises
    • Cargo Insurance
    • Hull Insurance
    Marine insurance as practised today has its origin from London where Lloyds underwriters
    evolved ‘Ship and Goods Policy’ (S&G policy). As the name indicates, it was used to insure
    marine adventures and meant to cover the ship, cargo and freight depending on the needs of
    different clients.

  • Chapter 19

    Chapter 19 Fire Insurance Price 2.99  |  2.99 Rewards Points

    Fire insurance activity originated in Germany to cover properties located in municipal towns. But
    it was after the great fire in London that regular fire insurance was introduced by the insurance
    companies. In India, fire insurance was introduced in the early eighteenth century. Initially it
    covered only fire risk and in due course for practical considerations and other compulsions, fire
    policy covered explosion, riot, strike, flood, etc.

  • Chapter 20

    Chapter 20 Motor Insurance Price 2.99  |  2.99 Rewards Points

    It is the fore-thought and vision of the underwriters that a motor insurance policy was designed
    by an insurance company as early as 1895. An act was passed in 1930 by the government of
    U.K. to cover third party liability. A similar act was passed in India by 1939 and later on a
    new act was substituted in 1988. At that time the number of vehicles in India was less and
    the accidents were few. Today the number of vehicles on the road is staggeringly large and
    the traffic has grown in menacing proportions. The Motor Vehicle Act 1988 (M.V. ACT) in the
    present day context, is an absolute necessity, and without compulsory insurance the position
    would have been precarious for motor accident victims. The necessity for motor insurance
    is felt by everyone, with the advent of large and powerful automobiles, and numerous road
    accidents. Motor insurance was devised to protect the owners’ interest on automobiles against
    unforeseen loss or damage and also meet the liability for compensation to third party, in
    case of death or injury, or damage to third party property. The later part was called ‘liability
    insurance’ when it was introduced. The government brought in legislation making motor
    insurance compulsory, as the victims of road accidents were not able to get compensation,
    because of refutation of the claims on flimsy grounds, as well as the weak financial position
    of the persons liable.

  • Chapter 21

    Chapter 21 Engineering Insurance Price 2.99  |  2.99 Rewards Points

    Construction companies, more particularly, engineering constructions and heavy industries,
    who manufacture and install machines, use huge plants and equipments, which are expensive.
    The loss arising out of machinery breakdown, damage to machines caused by unforeseen
    circumstances will cost the company heavily. The branch of Engineering Insurance was evolved
    recent times to protect the engineering companies against heavy loss. In Engineering Insurance,
    the insurer will indemnify the loss or damage to mechanical, electrical and electronic machines
    caused by insured perils and also consequential loss. This is a growing branch of insurance
    triggered by the increased pace of industrialization of our country. In the backdrop of economic
    liberalisation, privatisation and globalisation scope of coverage is large and varied.

  • Chapter 22

    Chapter 22 Health Insurance and Accident Insurance Price 2.99  |  2.99 Rewards Points

    Various healthcare programmes operating in India are as follows:
    • State-run schemes for government and public sector employees
    • Corporate sector health care programmes
    • Hospitals run by govt./local bodies for the public
    • Private health care schemes
    • Community-based and self-financing programmes
    • Micro-credit linked health insurance schemes
    They take care of only a small section of the population that too in a perfunctory manner.
    A large majority are left without satisfactory arrangement. It is in this context that health
    Insurance becomes important.

  • Chapter 23

    Chapter 23 Miscellaneous Insurance Price 2.99  |  2.99 Rewards Points

    This insurance is intended for industrial, manufacturing and business concerns which
    periodically draw from banks and other sources large sums of money for payment of salaries
    and for day-to-day requirements and also money in transit from one place to the other as is
    necessary for any client.

  • Chapter 24

    Chapter 24 Workmen Compensation Insurance Price 2.99  |  2.99 Rewards Points

    Workmen compensation insurance is designed for the benefit of
    • Industries/factories
    • Commercial establishments
    • Contractors in construction, mining, quarrying, repairs, maintenance, etc.
    Workmen compensation (WC) insurance policy is a liability insurance policy. It protects
    the assured (employer) against the legal liabilities to employees arising out of the work done
    during the course of employment. The workmen compensation insurance covers the employer’s
    liability, if injury is caused to a workman by accident arising out of and in the course of his
    employment.

  • Chapter 25

    Chapter 25 Rural and Social Sector Insurance Price 2.99  |  2.99 Rewards Points

    Statutory Requirements
    1. Under the provisions of sections 32B and 32C of the Insurance Act, 1938, insurers
    are obliged to provide such percentages of business as may be specified by the IRDA,
    for persons from the rural and social sectors.

  • Chapter 26

    Chapter 26 Aviation Insurance Price 2.99  |  2.99 Rewards Points

    Aviation insurance is done by a pool of underwriters with the help of aviation experts. One of
    the underwriters takes the lead role in assuming major responsibilities and co-ordinates the
    pool members. However, the liabilities of the underwriters are not joint and several, but each
    one is responsible only for its commitment. In view of the complex nature of risk, specialised
    brokers play an important role in the business. The standard hull liability policy covers loss or
    damage to aircraft, disappearance of aircraft, repair or replacement due to accidental damage,
    liability to passengers and their property arising out of accident or otherwise. It may be death
    or injury to passengers, and loss or damage to their properties.

  • Chapter 27

    Chapter 27 Reinsurance Price 2.99  |  2.99 Rewards Points

    The purpose and scope of insurance is based on the principle of spreading the risk and sharing
    the losses. The insurance companies underwrite numerous risks during the course of conducting
    their business. Occurrence of losses, frequency of losses, and the aggregate quantum of loss
    arising out of various insurance contracts are unpredictable.

  • Chapter 28

    Chapter 28 Credit Insurance Price 2.99  |  2.99 Rewards Points

    The Insurance companies in India, both old and new, have not ventured into credit insurance.
    The Government of India has therefore taken steps to establish guarantee corporations to protect
    the lender or creditor against the default risk of the borrower or debtor in respect of special
    groups such as exporters, small scale industries etc. There are at present three corporations
    for these purposes.

  • Chapter 29

    Chapter 29 Insurance Marketing A Journey from Tariff Regime to Free Market Price 2.99  |  2.99 Rewards Points

    Marketing of general insurance products is not much different from that of life products or
    for that matter even marketing of any other financial service products. The basic principles
    of marketing will apply to a large extent to insurance marketing too.

  • Chapter 30

    Annexures Price 2.99  |  2.99 Rewards Points

    General insurance companies operating in India are governed by the Insurance Act 1938 and
    the Insurance Regulatory and Development Authority Act 1999. Those who deal with insurance
    should be conversant with these two pieces of legislation. In addition there are several other
    acts, knowledge of which is important and relevant in the insurance business, more particularly
    non-life business. Brief details of those acts are furnished below.

  • Chapter 31

    Glossary Price 2.99  |  2.99 Rewards Points

    Glossary

  • Chapter 32

    Index Price 2.99  |  2.99 Rewards Points

    Index

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