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INSURANCE: AN INTRODUCTION

  
Insurance may be described as a social device to reduce or eliminate risks of lossto life and
properly. It is a provision which a prudent man makes against inevitablecontingencies, loss or
misfortune.O n c e F r a n k H . K n i g h t s a i d " R i s k i s u n c e r t a i n t y a n d u n c e r t a i n t y i s
o n e o f t h e fundamental facts of life." Insurance is the modern method by which men make
theuncertain certain and the unequal; equal. It is the means by which success is
almostguaranteed. Through its operation- the strong contribute to the support of the weak a n d
weak secure, not by favor sent by right duly purchased and paid for,
t h e support of the strong (Calvin Coolidge.)Under the plan of insurance, a large number
of people associate themselves bysharing risks attached to individuals. As in private
life, in business also there aredangers and risks of different kinds. The aim of all
types of insurance is to makeprovision against such dangers. The risks which can be insured
against include fire,t h e p e r i l s o f s e a ( m a r i n e i n s u r a n c e ) , d e a t h ( l i f e i n s u r a n c e )
a n d , a c c i d e n t s a n d burglary. Any risk contingent upon these, may be insured
against at a premium acommensurate with the risk involved. Thus, collective bearing of risks
is insurance.

Definition
Insurance in its basic form is defined as “ A contract between two
p a r t i e s whereby one party called insurer undertakes in exchange for a fixed sum
calledpremiums, to pay the other party called insured a fixed amount of money on
thehappening of a certain event."In simple terms it is a contract between the person who
buys Insurance and anInsurance company who sold the Policy. By entering into
contract the InsuranceCompany agrees to pay the Policy holder or his family members a
predetermineds u m o f m o n e y i n c a s e o f a n y u n f o r t u n a t e e v e n t f o r a
p r e d e t e r m i n e d f i x e d s u m payable which is in normal term called Insurance Premiums.
OBJECTIVE OF THE STUDY

The project deals with the customer survey on medical insurance, detailed study of the general

insurance industry, evaluating prospects of cross sales & selling health insurance & issues

regarding rollover business. It also studies the individual Health Insurance.

The study was to determine present scenario regarding



The awareness about the basic IRDA laid guidelines for medical insurance.
For individual as well as groups.

To design a questionnaire to assess customer behavior.

To have a brief idea about the general insurance
INTRODUCTION

Insurance has a long history in India. Life Insurance in its current form was introduced in 1818

when Oriental Life Insurance Company began its operations in India. General Insurance was

however a comparatively late entrant in 1850 when Triton Insurance company set up its base in

Kolkata.

History of Insurance in India can be broadly bifurcated into three eras: a) Pre Nationalization b)

Nationalization and c) Post Nationalization. Life Insurance Corporation of India was formed by

consolidating the operations of various insurance companies.

General Insurance followed suit and was nationalized in 1973. General Insurance Corporation of

India was set up as the controlling body with New India, United India, National and Oriental as

its subsidiaries. The process of opening up the insurance sector was initiated against the

background of Economic Reform process which commenced from 1991. For this purpose

Malhotra Committee was formed during this year who submitted their report in 1994 and

Insurance Regulatory Development Act (IRDA) was passed in 1999. Resultantly Indian

Insurance was opened for private companies and Private Insurance Company effectively started

operations from 2001.


INSURANCE MARKET –
PRESENT

The insurance sector was opened up for private participation few years ago. For years now, the

private players are active in the liberalized environment. The insurance markets have witnessed

dynamic changes which includes presence of a fairly large number of insurers both life and non-

life segment. Most of the private insurance companies have formed joint venture partnering well

recognized foreign players across the globe.

CAPITAL REQUIREMENTS
&
FOREIGN PARTICIPATION

Minimum capital requirement for direct life and Non-life Insurance company is INR1000 million

and that for reinsurance company is INR2000 million. A maximum 26% foreign equity stake is

allowed in direct insurance and reinsurance companies. In the 2004-05 budgets, the Government

proposed for increasing the foreign equity stake to 49%, this is yet to be effected.

There are currently twenty one non-life insurance companies, out of which two are
specialized Insurance companies viz. Agricultural Insurance Co, who handles Crop
Insurance business and Export Credit Guarantee Corporation, which only transacts
export Credit Insurance
SPECIAL PROVISIONS
PAYMENT OF PREMIUM BY INSURED

Section 64 VB of the Insurance Act 1938 prohibits insurance companies from extending credit so

that in effect all insurance in India is on a “cash before cover” basis.

INSURANCE DISTRIBUTION CHANNELS


AGENTS

Agency has been the traditional way in which insurance was transacted in the Indian market.

Agents act as the representatives of insurance companies. In the nationalized era, agents were a

very important source of business for the Public Sector Insurance Companies, as broking was not

allowed. Agents still hold a very large book of insurance business mainly in the personal lines.

CORPORATE AGENTS

Corporate Agents are corporate entities who acted as representative of insurance companies and

procured business on their behalf. However this concept of corporate agency was done away

with by the IRDA after broking was introduced in the market

Mediclaim Insurance in India


Mediclaim for family

Everybody is well known the profits of having a mediclaim policy. A sudden sickness or

accident can ruin your financial budget and at this stage mediclaim policy is always helpful.

In the current scenario, medical expenses are very high and its increasing everyday. The latest

family mediclaim insurance is ideal solution to save money and cover entire family under single

sum insured. This means no more multiple premiums and no more financial strain.
This policy is available in two variants - short term and long term and the coverage level is

similar like other traditional mediclaim policies. It provides covers for hospitalization expenses

for illness and diseases. It includes expenses for doctors fees, nursing expenses, medicines,

blood, surgical appliances and other related expenses.

Mediclaim Premium Calculator

Mediclaim policy is a essential for the peoples because it saves financial loss in case of

hospitalization for any sickness, disease or accident. But it costs is much higher than other

insurance and still it is rising.

Mediclaim premium calculator is very useful tool in such a condition because it helps to

calculate the your mediclaim costs. This online service is absolute free and specially designed for

customer convenience.

There are various mediclaim premium calculators are offered by insurance companies and

private websites. You can easily determine the cost of plan that you go for by doing just simple

work on such a calculator. Private websites also allows you to compare various insurance

companies and their plans.

Must-know-the-types-of-coverage-mediclaim

You may have come across many a time with the short forms in mediclaim articles/quotes like

HMO,PPO,POS,HSA, but could not make it, what the abbreviation stands for?

There are many types of health/mediclaim policy.


A) HMO (Health Maintenance Organization).
You go to your family doctor for any health services. If there is an urgency in going to a

specialist, your family care doctor will help you in referring one. Mediclaim companies will not

insure you without the referral from your family doctor and therefore, you will have to pay

yourself for such specialist services

B) PPO (Preferred Provider Organization Plan).

Through this plan you can analysis to any primary, specialist, or medical facility without referral

and get totally covered. It is the Mediclaim companies that covers you when your child breaks a

bone accidentally and you approach directly to the orthopedic doctor, without consulting your

primary doctor.

C) POS (Point of Service).

This plan essentially includes both an HMO and a PPO plan. Mediclaim companies give you the

option from the two plans for every medical case. The plan offers extra covered preventative

programs, however, you may have to pay more from your pocket, if you choose a doctor outside

your plan.

D) HSA (Health Savings Account).

This plan is much more superior than the above mentioned mediclaim plans. The plan covers

eyeglasses, dental, cosmetic procedures, over-the-counter medications, etc. It is a tax-deferred

savings account as long as withdrawals are concern for medical expenses. Funds outstanding at

the end of the year are carried forward into an IRA account.

What does mediclaim policy cover!


Day-care Treatment- The Medical disbursement through serious technologically
advanced day-care surgeries with no 24 hour hospitalisation is required.
Ambulance Charges for shifting the insured patient from home to hospital are been
covered up to the limits mentioned in the policy.
Ayurvedic / Homeopathic system of medicine are covered to the extent of 25% of
Sum Insured provided the treatment is taken in the Government Hospital.
Pre-existing diseases are covered only after 4 continuous and claim free renewals
with our Company.

Exclusions:

1. Diseases contracted within 30 days of insurance.

2. Dental treatment except arising out of accident.

3. Debility and General Run Down Conditions.

4. Sexually transmitted diseases and HIV (AIDS).

5. Circumcision, Cosmetic surgery, Plastic surgery unless required to treat injury or

illness.

6. Vaccination and Inoculation.

7. Pregnancy and child-birth.

8. War, Act of foreign enemy, ionising radiation and nuclear weapon.

9. Treatment outside India.

10. Naturopathy.

11. Domiciliary Treatment.

12. Experimental or unproven treatment.

13. All external equipments such as contact lenses, cochlear implants etc.

Premium:
Mediclaim Premium is based on age of the proposer and geographical area of
treatment.
Features:

1. Discount in premium for family cover.

2. Loyalty Discount.

3. Good Health Discount.

4. Cumulative Bonus.

5. Cost of Health Check up.

6. Income Tax Benefit under Section 80D of IT Act.

Short Term Mediclaim Policy

Mediclaim insurance is a meant to covers all medical expenses in the case of hospitalization due

to certain serious sickness, disease or an accident. For this reason mediclaim insurance is always

advisable for yourself and your family members. But some times you can not require that the

purchase of high cost mediclaim insurance policy. Short term mediclaim insurance have been

formulated for such a conditions to get the considerable medical coverage.

Short term mediclaim insurance policy is a temporary solution and purchased for only short

period of time that is three months to one year. Generally, it covers all major health problems

like other standard health plans. This gives you freedom to choose doctor or specialist you wish

and the expenses are covered under this policy like doctors fees, hospital charge, surgery,

medicine, diagnostic test and other emergency service.


This short term plan is affordable plan and it doesn’t cover any pre-existing disease, because the

premium costs are considerably ow and paid on monthly basis. It provides only cover for the

conditions stands which itself within the span of the policy.

Short term medical insurance cover is ideal for those under the jobs, temporary
employee, college students or just graduates.

Mediclaim for senior citizens

Special mediclaim policy for senior citizens is specially designed to cater the needs of senior

citizens. It covers all hospitalization and domiciliary hospitalization expenses for illness and

disease. It includes expenses for doctors fees, hospital charge, anesthetist, nursing expenses,

blood, cost of medicine, drugs, oxygen, surgical appliances, etc.

This mediclaim policy is generally issued to peoples between the age of 60 to 80 years. It

provides the benefits of cumulative bonus, no claim bonus, cashless service and also tax benefit

is consider on insurance premium under section 80D of the income tax act.

The four public sector general insurance companies are offering these policies-

1. National Insurance Company (Varishta-Mediclaim for senior citizens)

2. New India Insurance Company ( Mediclaim for senior citizens)

3. Oriental Insurance Company ( Senior Citizen Specified Disease Insurance)

4. Star Health & Allied Insurance ( Red Carpet Health Insurance)

And private sector insurance company Bajaj Allianz General Insurance Company also
offer ‘Silver Health’ product for senior citizens.
Mediclaim Premium Rates

When you have decided to go for mediclaim policy, you will pay the premium on your

mediclaim policy to continue the coverage against any untoward situation. The premium paid is

annually, half annually or monthly.

Generally, the premium rates are vary from company to company and also depends on various

factors like age of the person, sum assured and policy coverage. The insurance companies also

determine the factors like advertising, selling, paying for health care service, investment of

premium payment and profit margin from the insurance policy.

The premium rates are different for smokers, the insurance companies charge
additional premium on their mediclaim policy.
Premium charged on individual plan is much higher compared to group plans due to
adverse selection. Because under group plans, company gets the more customer under
Basic Mediclaim Policy

Basic mediclaim insurance is a different comared to other traditional mediclaim policy. It is a

specified mediclaim policy which provides coverage against medical expenses that are outcome

of the sickness or accident. In this plan, coverage is limited and pays for only one or two

expenses which are specified by the insured. This is the reason, policy is known as basic

mediclaim policy.

This insurance policy is different compared to other comprehensive mediclaim policy.

Because-

1. Doesn’t covers critical illness and surgeries.


2. Low cost insurance cause less coverage.

3. Specified coverage from the list.

Mediclaim protects from the monetary and financial problems when one is hospitalized by

sickness. But choice is yours to choose between comprehensive health coverage and specified

health coverage.

Mediclaim Insurance

Mediclaim Insurance is a policy that covers hospitalisation expenses gathered in


course of illness or accidental injuries.
Benefits:
1. Hospitalization Cover: Overall patient hospital-care expenses for 1Day. Which
Includes room rent and boarding @ 2% of sum insured.
2. Nursing disbursal.
3. Doctor’s fees
4. medicines and drugs charges.
5. Emergency ambulance charges.
No-Claim Discount:
1. 5% to 25% of discount for every claim-free year.
Eligibility:
1. A persons ageing 5 months and 80 years, is a resident of India,can opt this
insurance.

Tax Benefits:
1. Credit card or cheque pay premium for this insurance is eligible for relief
under Section 80D of the Income Tax Act.
Claims Procedure:
1. Inform the ID number to the insurer for easy acknowledgment.
2. In case of getting hospitalized,should inform within 24 hours before getting
admitted into the hospital.
3. If the case is emergency, information to be given within 24 hours after
hospitalization.
Tax benefits on your Mediclaim Policy

There is no way anyone can save themselves from paying tax. But yes we can sure use various

tax-saving instruments to lower down our tax payment burden and get maximum benefit from

these.

Mediclaim is one way of saving our huge heap of tax burden, we just need to be smart
enough to grab the right opportunity.

1. Insurance premium paybale on health insurance policy is tax deductible under


Section 80 (D) of the Income Tax Act 1961.

2. Rs. 15000 can be claimed to be deducted on health insurance under Section 80 (D) 3. Deduct

premium paid towards a critical illness rider on your life insurance policy under Section 80 (D).

Deductions under Section 80 (D) are over and above the deductions under Section 80(C) of Rs. 1

lakh.

RESEARCH METHODOLOGY

The research undertaken was that of a descriptive type. Descriptive research aims at fact finding

and more often is based on surveys. Its purpose is to describe the present state of affairs of the

topic of study.

It is often referred to aspost-f acto study.


DATA COLLECTION
PRIMARY DATA

In case of primary sources the information was retrieved directly from the customers and sales

consultants. We have done the analysis with the help of the inputs provided by the customers of

the products of the insurance companies. The primary data is collected through conducting a
survey with the help of a questionnaire designed by me. In the Bank, customers were approached

and detailed responses were taken and their future interest in insurance and suggestions for the

company were duly recorded. For the other subsidiary projects, the promotion and sales were

done at the showroom itself while the interaction that took place for filling the questionnaire. The

prospective customers for health insurance were contacted through Tele-calling and thereafter

converting the call into sales.

SECONDARY DATA
Secondary data was collected from books and the internet.

Data collection techniques


SURVEY

By this method of data collection more accurate and reliable information on the subject can be

obtained. In order to get aware of the customer behavior, we designed a questionnaire which

would help us extract maximum information so as to analyze the factors that play a decisive role

in customer’s choice of an insurance company.

CALLING
After getting the customer details from the questionnaires filled them, the
prospective customers for health insurance were called & sales were done.

RESEARCH APPROACH
The product portfolio of IFFCO TOKIO is wide.
Following are some methods, which have been taken in order to complete the
project and make it successful:
Understanding the basics of insurance Business and getting familiar with the
product range of IFFCO TOKIO.
Assessing the present situation of IFFCO TOKIO in motor insurance Business.
COMPARISON OF RATES OF IFFCO TOKIO
WITH OTHER COMPANIES
CONCLUSION :
• Continued strength in the broader economy and gradual reform in the non life
sector are expected to combine to produce strong premium growth in the
Indian market over the next few years.

• Whilst India currently remains a medium sized non -life market, the growth predicted over the

medium to long term is attracting increasing levels of foreign investment and competition. Many

of the world’s largest insurers such as AIG, IFFCO TOKIO & ALLIANZ are present in the

market. The new private insurers are growing fast and have already developed a combined

market share of 40 %.

• As the market is liberalized and becomes more mature the private firms are considered well

placed to capture an even greater share of a fast growing market. The main risk to private

insurers is the high likelihood of sustained price competition as tariffs are removed from some

classes of business such as fire, engineering motor etc.

In the end, notions about exactly what constitutes good customer service are evolving, driven by

increasingly knowledgeable customers who have become empowered by their own willingness

to embrace technology and use it to their benefit. As insurers begin to demonstrate a

commensurate willingness to capitalize on technological advances, advisory, transactional and

informational services will be adapted to deliver service that not only offers higher levels of

customer satisfaction, but delivers opportunities for insurers to grow revenue and profitability.

Self-service may be expected to become the customer’s avenue of first


transactional choice, as Web-based channels provide 24 X 7 availability, security
is tightened and interactions become faster, easier to initiate and more tailored to personal needs
Successful insurers will define good customer service strategically, not tactically. Each customer
service event will be seen as a way to increase loyalty, anticipate related client needs for the
benefit of cross-selling and increase revenue. In addition, insurers will have the ability to
understand a customer’s long-term value and provide personalized service to help realize it.

LIMITATION OF THE STUDY

As each study do we have some benefit and some scope , there is one more thing which is mostly

found in any research work and that is limitation .Limitation are the restricting factor

encountered during the research study , it does have some limitation , which was present during

the course of study and are the following:


Due to some of the customer was not ready to respond.

The degree of brand awareness is not the mark.

Allowances of the and the cost as well.

Reserve nature of customer.

Transparency.

Penetration.
BIBLIOGRAPHY:

www.iffco-tokio.com

www.google.com

The Economic Times

www.gicofindia.in

www.irdaindia.org

www.insuranceage.com

www.itgi.in

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