INDUSTRY PROFILE

OVERVIEW OF CURRENT INSURANCE INDUSTRY

WHAT IS INSURANCE?

Insurance is a means of protection from financial loss. It is a form of risk management,

primarily used to hedge against the risk of a contingent or uncertain loss.

An entity which provides insurance is known as an insurer, insurance company, insurance

carrier or underwriter a person or entity who buys insurance is known as an insured or as a
policyholder. The insurance dealings involves the insured forward a secure and
well- known comparatively tiny loss within the type of payment to the no depository
financial institution in exchange for the insurer's promise to compensate the insured in the
event of a covered loss. The loss may or may not be financial, but it must be reducible to
financial terms, and usually involves something in which the insured has an insurable interest
established by ownership, possession, or preexisting relationship

The insurance industry can accurately trace its formation to the Great Fire of London
In 1666

In the year following the fire, 1667, Dr.Nicholas Barbon was instrumental in forming
the first actual insurance company. It was known as "The Insurance Office" and
worked on providing insurance against fire for houses and was located in a small
office behind London's Royal Exchange.

The great fire of London was a major fire that swept through the central parts of the
English city of London from Sunday, 2 September to Thursday, 6 September 1666.

Oriental Life Insurance Company was the very first insurance company formed in
India in 1818 to provide insurance to Britishers. Indians were excluded from the
cover, until Bombay Mutual Life Assurance Society was formed in 1870 to cater to
Indians.

Both the above mentioned insurers are currently not operating in India. The only
surviving oldest General Insurance Company today in India is National Insurance
Company Limited which came into existence in 1906. In life insurance space, the
oldest surviving entity is Life Insurance Corporation of India. There are 20 insurance
companies in India.
Insurance is not the products for the selling purpose, but servicing customers. It is a system,
by which the losses are being suffered by a few or spread over many, exposed to similar
risks. Insurance is a protection against financial loss arising on the happening of unexpected
events.
 HISTORY OF INSURANCE GLOBAL

For now we know the meaning of insurance, different types of insurance. Now let us know
the history and reasons for and behind different types of insurance.
This project has been made with an objective to give an insight into various facts of General
Insurance sector in India. An attempt has been made to explain the apex body of General
Insurance. I.e. General Insurance Corporation of India,& its structure, products and
subsidiaries.

Also the review of latest entrants into insurance sector viz. private players like TATA AIG
General Insurance Company, Reliance General Insurance Company limited, Bajaj Allianz
General Insurance Company, IFFCO Tokyo General Insurance Company, Royal Sundaram
General Insurance Company limited and ICICI Lombard General Insurance Company have
been described in brief, Due to the growth in the technological sector of the country, the
insurance companies have started utilizing the technologies to it ‘to its optimum level.

The insurance sector orders substantial funds through the sale of insurance products to a large
number of customers. Insurers also create liabilities and undertake to offset losses that occur
to policyholders at a future date. It also plays an important role in the process of capital
formation.

IRDAI Act, 1999 for overall supervision and development of the insurance sector in India.
(IRDAI)INSURANCE REGULATERY AND DEVELOPMENT AUTHORITY OF
INDIA.The IRDA was constituted as an autonomous body to regulate & develop the business
Of insurance and reinsurance in india.The authority was constituted on April19, 2000.

Operation of IRDA

I - The TRDA has developed its internal parameters to assess the promoters credentials.

II -The IRDA is a sole authority for awarding licenses. The new players should
commence business within 15 to 18 months of getting the license. A new applicant has to
pay a registration fee of Rs.50000.At the time of renewal of registration every year, a fee of
0.20 percent of gross premium or Rs.50, 000 whichever is higher, is levied on the insurers
carrying out insurance business in India.

III -All insurance intermediaries such as agents and corporate agents, have to undergo
compulsory training prior to their obtaining a license .The IRDA has also specified the
minimum qualifications for these intermediaries. Conducts examinations and then issues
license to these agents.

IV -The insurance Association and life insurance and general insurance councils have
been revived and they are responsible for setting the norms for market conduct ethical
behavior of the insurers and breach of regulations.

V -The objective of insurance ombudsman is to provide a forum for resolving disputes and
complaints from the aggrieved insured public or their legal heirs against insurance companies
operating in general insurance business and life insurance business in public and private
sector. The insurance ombudsman is empowered to receive and consider written complaints
in respect of insurance contracts on personal lines where the insured amount is less than
Rs.30 lakh.

(a) Origin and Development of the industry.

YEAR PARTICULARS
1818 Business of life insurance in India in its existing firm started in India
with the establishment of the Oriental Life Insurance Company

1850 First general insurance company in India- Triton insurance company

limited-was set up in 1850 under the control of the British.

1907 The Indian Mercantile Insurance Company Limited, launched its

operations in Bombay.

1957 Formation of the General Insurance Council, a wing of the Insurance

Association of India. The General Insurance Council framed a code of
conduct for ensuring fair conduct and sound
business practices.

1973 107 insurers were amalgamated and grouped in to four companies namely
National Insurance Company Ltd., The New India Assurance Company
Ltd., the Oriental Insurance Company Ltd
and the United India Insurance Company Ltd.

2000 In April 2000 – The IRDA was incorporated as a statutory body objective is
to promotion of competition. And the IRDA opened up to the market with
the invitation to Foreign companies were allowed
Ownership of up to 26%.
 Nature of Insurance
The main characteristics of the insurance that apply to all types of insurance (life, fire, shipping
and general insurance) are detailed below.

1.Risk Sharing:

Insurance is a device for sharing financial losses that may occur to a person or his family during
certain events.

2.Cooperative device:

Insurance is a cooperative device to separate the loss caused by a particular risk from a high risk
caused by a particular risk for a large number of people who are exposed to it and who agree to
insure against the risk.

3.Value of risk:

the risk is assessed at the time of insurance. There are several methods for assessing risk. The
greater the risk, the greater the premium

4.Payment in case of contingency:

in case of emergency, payment is made; payment is made only for insured coverage. If there are no
contingencies, no payment is made. In the life insurance contract, payment is secure because the
death or expiration of the term will certainly occur. In another insurance contract such as fire,
maritime, contingency may or may not occur.

5.Amount of credit payment:

the amount of payment depends on the value of the loss that occurred due to the particular risk
insured. Insurance is there up to that amount. In life insurance, the insurer pays a fixed amount due
to the fact that an event occurs or within a certain period of time. Example: in fire insurance, if a
fire occurs and half of the property is destroyed, but all property is insured, then the payment of
the claim will be made only for that building half that is destroyed, not the total amount of the
property 'assured.

6. The insurance is different from the charity:

In charity, there is no fee, but the insurance is not guaranteed without a premium

7. Large number of insured persons:

Insurance is extending the loss to a large number of people. The greater the number of people, the
lower the cost of the insurance and the amount of the premium, and in the event that the number of
people is lower, the greater the cost of the insurance and the amount of the premium.
 Semantics
1. Risk: defined as an uncertainty of a financial loss. It is the involuntary decrease or
disappearance of the value that emerges from the contingency.

2. Allow the Policy: this is the document that incorporates the insurance contract

3. Life insurance policy: it is the policy according to which the amount of the policy will
be paid only upon the death of the insured. Prizes can be payable for life or for a limited
period.

4. Endowment policy: the endowment policies insured to receive the amount of the policy
when he reaches a certain age and even the premiums cease. If death occurs earlier, the
amount of the policy will be paid at that time and the payment of the premium will also be
canceled at that time.

5. Complaint: this is the amount that an insurer must pay against a policy.

6. Reinsurance: refers to the placement of part of the risk by an insurer with another
insurer. The objective is to reduce any loss to the original insurer, who pays premiums at
the normal rate to the reinsurer. Reinsurance must pay the commission to the original
insurer.

7. Prize: a periodic payment made in an insurance policy.

8. Insurance penetration: defined as the insurance premium as part of the gross domestic
product.

9. Density of the insurance: the density of the insurance is defined as the per capita
expenditure on the insurance premium, i.e. the per capita premium.

10. Actuary: the actuary is a specialist who combines a risk understanding and a
mathematical technique to develop financial products to manage these risks, evaluate these
products. It helps to plan insurance plans and then assesses the financial risk of the
company it takes when it sells an insurance policy.
 ABOUT MAJOR COMAPANIES IN THE INDUSTRY

LIST OF INSURANCE

LIFE INSURANCE COMPANIES GENERAL INSURANCE COMPANIES

Public sector General Insurance Companies

Private sector Life Insurance Companies

Private Players

Public sector Life Insurance Companies

  List Of Life Insurance Companies
Following is the list of the Life Insurance Companies:

Public Sector Life Insurance Company:

 Life Insurance Corporation Of India

Private Sector Life Insurance Company:

 Bajaj Allianz Life Insurance Co.Ltd

 Birla Sun-Life Insurance Co.Ltd
 HDFC Standard Life Insurance Co.Ltd
 ICICI Prudential Life Insurance Co.Ltd
 ING Vysya Life Insurance Co.Ltd
 Max New York Life Insurance Co.Ltd
 MetLife Insurance Co.Ltd
 Kotak Mahindra Old Mutual Life Ins.Co.Ltd
 SBI Life Insurance Co.Ltd
 TATA AIG Life Insurance Co.Ltd
 Reliance Life Insurance Co.Ltd.
  List Of General Insurance Companies
Following are the list of the General Insurance Companies:

Public Sector:

 New India Assurance Company Limited

 National Insurance Company Limited
 The Oriental Insurance Co. Ltd
 United India Insurance Co.Ltd
 Agriculture Insurance Company Of India Ltd

Private Players:

 Bajaj Allianz General Insurance Co.Ltd

 ICICI Lombard General Insurance Co.L.td
 IFFCO-Tokio General Insurance Co.Ltd
 Reliance General Insurance Co.Ltd
 Royal Sundaram Alliance Insurance Co.Ltd
 TATA AIG General Insurance Co. Ltd
 Cholamandalam General Insurance Co.Ltd