STUDYONDI

FFERENTTYPEOFI
NSURANCEPOLI
CYAND
I
T'SI
MPACTONECONOMY

Apr
oject
submi
tt
edt
o

Uni
ver
sit
yof
for
par
ti
alcompl
eti
onof
thedegr
ee

of
Bachel
ori
ncommer
ce(
Account
ingandFi
nance)

Undert
hef
aul
tyof

Commer
ceBy

ARCHANANAI
R
Rol
lno-
2005834

Undert
hegui
danceof
Prof
.Adv
oPr
adhny
aGosav
i

K.
J.SOMAI
YACOLLEGEOFSCIENCEANDCOMMERCE
RE-
ACCREDITED“
A”GRADEBYNAAC(
AUTONOMOUS) .
VI
DYANAGARI,
VIDYAVI
HAR(
E).
UNIVERSI
TYOFMUMBAI

Mar
ch,
2021

1
 K.
J.SOMAI
YACOLLEGEOFSCI ENCEANDCOMMERCE
RE-
ACCREDITED“
A”GRADEBYNAAC(
AUTONOMOUS) .
VI
DYANAGARI,
VIDYAVI
HAR(
E).
UNIVERSI
TYOFMUMBAI

Cer
ti
fi
cat
e
Thi
sist
ocer
ti
fyt
hatMs.ARCHANANAI
Rhaswor
kedanddul
ycompl
eted
her
Proj
ectWor
kfort
hedegr
eeofBachel
ori
nCommer
ce(
Account
ing&
Fi
nance)
under
theFacul
tyofCommer
cei
nthesubj
ect
ofCOMMERCEand

herpr
oject
isent
it
l “
ed,St
udy
OnDi
ff
erent
Type
Of
Insur
ancePol
icy
AndI
ts
I
mpact
OnEconomy
”under
mysuper
visi
on.
If
urt
hercer
ti
fyt
hatt
heent
ir
ewor
khasbeendonebyt
hel
ear
nerunder
my
gui
danceandt
hat
nopar
tof
it
hasbeensubmi
tt
edpr
evi
ousl
yfor
any
Degr
eeor
Dipl
omaof
any
Uni
ver
si
ty.

I
ti
sher
ownwor
kandf
act
srepor
tedby
her
per
sonal
fi
ndi
ngsandi
nvest
igat
ions.

Si
gnat
ureof Si
gnat
ureof Si
gnat
ureof
Proj
ec
t
Pr
inci
pal Cour
seCo
Gui
de
or
dinat
or

Nameof
Ext
ernal
Exami
ner Si
gnat
ureof
Ext
ernal
Exami
ner
:

2
Dat
eof
submi
ssi
on:
10t
hMar
ch,
2021

3
Decl
arat
ionby
lear
ner

Itheunder signedMi ssAr chananairhereby ,decl

arethatthe
wor kembodi edint hi
sprojectwor kti
tl
ed“ studyondiffer
ent
typeof i
nsur ancepol icyandi t
'simpactoneconomy "formsmy
owncont ribut i
ont otheresearchwor kcarriedoutundert he
guidanceof pradny Gosaviisaresul
tofmy
ownr esearchwor kandhasnot beenprevi
ousl ysubmit
tedtoany
otherUniv er si
tyforanyot herDegree/Di
plomat o
thisoranyot heruniver
sity
.

Whenev errefer
encehasmade
toprev i
ouswor ksofother
s,i
thasbeenclearl
yindi
catedassuch
andi ncludedi nthebibli
ography.I
herebydeclar
e
thatall
theinformationoft
hisdocument hasbeenobt
ainedand
present edinaccor dancewithacademi crul
es
andet hi
calconduct.

Nameandsi
gnat
ureof
thel
ear
ner
ARCHANANAI
R

4
 Acknowl
edgment

Toli
stwhoal lhavehelpedmei sdif
f i
cultbecauset hey aresonumer ous
andthedept hissoenormous.
Iwoul
dliketoacknowl edget hefol
lowi ngasbei ngidealisti
cchannel sa
ndfr
eshdi mensi onsinthecompl etionof thisproject.
It
akethi
soppor tuni
tytothanktheUni versityof Mumbai forgivi
ngmech
ancetodothispr oj
ect.
Iwoul
dliketot hankmy Princi
pal,
Pr adny aPr abhuf orprov i
dingthenece
ssary
facili
tiesrequir
edf orcompl etionof thisproject.
Iwouldalsoliketoexpressmysi ncer egr atitudetowar dsmy pr
ojectsuccessf
ul.

Iwouldli
keto
thankmy Coll
egeLibrary,forhav
ingprov i
dedvariousr
eferencebo
oksandmagazi nesrelatedt omypr oject.
Lastly
,Iwoul dliket ot hankeachandev erypersonwho
dir
ectly
orindi
rectl
yhelpedmei nthecompl eti
onoftheproject
especiall
y
my ParentsandPeerswhosuppor tedmet hroughoutmy proj
ect.

NameandSignat
ureof
thel
ear
ner
Archananai
r

gui
de“
Pradhny
amamwhosegui
danceandcar
emadet
hepr
oject
.

5
 I
NDEX

Sr
.No Par
ti
cul
ar Pageno.
s

1 Execut
ivesummar
y 6

2 I
ntr
oduct
ion 8-
27

3 Rev
iewof
li
ter
atur
e 29-
31

4 Resear
chmet
hodol
ogy 32-
37

5 Dat
aanal
ysi
sandi
nter
pret
ati
on 38-
79

6 Concl
usi
onandsuggest
ion 80-
82

7 Bi
bli
ogr
aphy 83-
84

8 Annexur
e 85

6
 Execut
ivesummar
y
Thepr
esentr ton”
epor studyondi
ff
erentt
ypeofi
nsur
ancepol
i
cyand
i
t'si
mpactoneconomy 'gi
vesanov erviewondi ff
erenttypeof
i
nsur ancepol i
cyandt heroleperformedbyv ari
ousi nsurance
sectorandi t
sperformanceinnat ionbuildi
ngact i
vi
ties.Financi
al
l
iberl
isat i
onwhi chtookplaceabr oadi nlate80’sandi nthecount ry
i
nt hebegi nningof
themi l
l
enni umwasaccept edithagreatdebat ewithr
egar dt
oitsi
mpl i
ca
ti
onint hecount ry.Howeverin2000t hecount rywi tnessedt he
dawnof Liber l
isat
ion,Pri
vati
sat i
onandGl obalisati
onwhi chpav ed
wayt ot heent ryofprivat
elifeinsurersintot heIndianEconomy
andt heent ir
elandscapeoft heinsurancemar ketint hecount r
y
changedi nt o360degree.

Thepr ivatelif
ei nsurancecompani esboughtwi ththem ahost
ofchangesi nt ermsofpr oductsandser vicesrender ed.Inorder
toevaluat etheirper f
ormancest hepr esentr epor thasmaden
attemptt ohi
ghl i
ghtthedi fferencesamongt hei nsurersforov era
decadef rom2001-
2010. Liberli
sat i
onoftheindust r
ynotonlybrought about achangein
theinsur ancemar ketbuti tservedtopr ov i
deusef ul
economi cact i
vit
ieswhi chi smeasur edt hrought heinsurance
penet rationanddensi tyactsasameasur etodet er minethe
strengt hoft heinsurancemar ketandani ndi catorwhi chrefl
ect s
thenumberofpeopl ehav i
ngcov er
edby i
nsur ancecov er.

Moreoverli
berli
sati
onhasbeenar out
ef orthegenerationof
i
ncreasedsavi
ngsi nthecountrywhichhelpsi ncapi
talformati
on
andlastl
ythefundsgeneratedbytheprivatelifei
nsurersthr
ough
premiums
andsharehol
dersandthei
rut
ili
zati
onfor
thedev el
opment oft
hecount
r
yhasbeenanal
y i
sed.

7
CHAPTER-
1 i
ntr
oduct
iont
oinsur
ance

1.
1Int
roduct
ion

1.
2Def
inat
ion

1.
3Hi
stor
yof
insur
ance

1.
4 Regual
tybody
-IRDAI

1.
5Needandi
mpor
tanceof
insur
ance

1.
6Adv
ant
ageanddi
sadv
ant
ages

1.
7Pr
inci
ple,
l
egal
,
insur
abi
li
ty

1.
8St
ruct
ureofLI
C

8
St
udy
ondi
ff
erent
typeof
insur
ancepol
i
cyandi
t'
si
mpact
oneconomy

1.
1INTRODUCTI
ON

I
nsur anceisameans
ofprotecti
onfromfi
nancial
loss.I
ti
saf
ormof r
iskmanagement
,pr
imar
il
yusedt
o((
hedgea
gainstther
iskofacont
ingentoruncer
tai
nloss.

Anent i
tywhi chpr ovidesinsur anceisknownasani nsur er
,insurancecompany ,
i
nsurancecar ri
erorunder writer.Apersonorent i
tywhobuy sinsuranceisknownas
aninsur edorasapol icy
holder .Theinsurancetransact i
oni nvolv
est heinsured
assumi ngaguar ant eed
andknownr elat
ivelysmal ll
ossintheformofpayment totheinsureri
nexchangef ort
heinsur
er'
spromi setocompensat etheinsuredi
ntheevent
of acov eredloss.
Thelossmay ormay no
tbef
inanci al
,butitmustber educibl
etofinanci
al t
erms, andusual l
yinvolves
somet hingi nwhi chthei nsuredhasani nsurableinterestest abli
shedbyowner ship,
possessi on,orpr e-existi
ngrelationshi
p.

Theinsuredr ecei vesacont ract

,call
edthei nsurancepol icy ,whichdetail
sthe
condit
ionsandci rcumst ancesunderwhi chthei nsurerwi l
l compensat ethei nsured.
Theamountofmoney char gedbyt heinsurertot hepol i
cyhol derforthecov erageset
fort
hintheinsur ancepol icyiscall
edthepr emi um.I ft
hei nsur edexperiencesal oss
whichispotent iallycov er edby
thei
nsurancepol icy,theinsur edsubmitsaclai
mt otheinsurerforpr ocessi
ngbyacl ai
msadju
ster
.Theinsur ermay( (hedgei tsownr i
skbyt akingoutr einsur ance,wherebyanot her
i
nsurancecompanyagr eest ocarrysomeoft her isks,especi all
yiftheprimar yi
nsurer
deemst heriskt ool argef ori
ttocarr
y.
9
 2WHATI
1. SINSURANCE;
It
isacommonl yacknowl edgedphenomenont hattherearecount l
essr i
sksinevery
s
phereoflife.f
orproper t
y,therearefireri
sk;f
or shi
pmentofgoods.Ther eareperil
s
ofsea; forhumanl i
fether ear eriskofdeat hordisabil
ity;andsoon. the
chancesofo5ccur rencesoft heev entscausingl ossesar equiteuncer t
ain
becauset hesemayormaynott akepl ace.Ther efore,witht hisv iew
i
nmi nd,peopl efaci
ngcommonr iskscomet ogether andmaket heirsmal l
contr
ibut
i
ontothecommonf und.Whi leitmaynotbepossi bletot ellinadv ance,which
personwi ll
sufferthelosses, itispossi blet owor kout howmanyper sonson
anav erageoutoft hegroup, maysuf ferlosses.Whenr iskoccur s,thelossis
madegoodoutoft hecommonf und. inthiswayeachandev eryoneshar es
therisk.inf acttheyshar ethel ossby pay mentofpr emium, whi chis
calculat
edont helikel
ihoodofl oss. inoldent i
me,
thecontributionmaket heabov e-statednotionofi
nsur ance

DEFI NITIONOFI NSURANCEI nsurancehasbeendef i

nedt obet hatin,which
asum ofmoneyasapr emi um ispaidbyt heinsuredinconsi derat
ionoft he
i
nsur er’
sbearingst her i
skofpay i
ngal ar gesum uponagi vencont i
ngency .
Thei nsurance
thusisacontractwher eby:a.Certai
nsum, termedaspr emium,ischargedinconsider
ati
on,
b.Agai nstthesai dconsi derati
on,al argeamounti sguaranteedt obepai dby
theinsurerwhor ecei
v edthepr emi um, c.Thecompensat i
onwi l
lbemadei n
certaindefi
nitesum, i.e.
,thel ossort hepol i
cyamountwhi chev ermaybe, and
d.Thepay ment ismadeonl yuponacont i
ngencyMor especi
fically,
i
nsurancemay
bedef i
nedasacont actbetweent wopar ti
es,whereinonepart
y (t
heinsurer)agr
eest
opay totheot herparty(thei nsured)ort hebenef i
ciar
y,acer t
ainsum upona
givencontingency (t
her i
sk) against
whi chinsuranceisr
equired.

10
1.
3 Hi
stor
yof
insur
ance

InIndia,insurancehasadeep-rootedhi stor
y.Itf
indsment i
oni nthewr i
ti
ngs
ofManu(Manusmr i
thi
),Yagnav alkya(Dharmasastr a)andKaut il
ya
(Ar thasastra).Thewri
ti
ngstalkinter msofpool i
ngofresour cest hatcould
ber e-di
st r
ibut
edinti
mesof calamitiessuchasf ir
e,fl
oods, epidemicsand
fami ne.Thi swasprobabl
yapr e-cursortomoder ndayinsur ance.Ancient
Indianhi st
oryhaspreserv
edt heear l
iesttr
acesof i
nsurancei nthef orm of
mar i
net r
adel oansandcarri
ers’contracts.I
nsuranceinIndiahasev olvedover
timeheavil
ydr
awingfr
omot her count
ries,
Engl
andinpar ti
cular.

1818sawt headventofli
feinsurancebusi nessin
I
ndi awitht
heestabli
shment of t
heOri
ent alLifeInsur anceCompanyi nCalcutt
a.
ThisCompanyhowev erfailedin1834. In1829, theMadr asEqui t
ablehad
begunt ransacti
ngl i
feinsur ancebusi nessi nt heMadr asPresidency.1870saw
theenact mentoft heBr i
tishI nsur
anceActandi nt helastthreedecadesoft he
nineteenthcentury,theBombayMut ual (1871) ,Oriental(
1874)andEmpi reof
I
ndi a(1897)wer estar t
edi nt heBombayResi dency .Thisera,however,was
domi natedbyf orei
gni nsuranceof fi
ceswhi chdi dgoodbusi nessinI
ndia,
namel yAlbertLifeAssur ance, RoyalInsur ance, LiverpoolandLondon
GlobeInsuranceandt heIndi anoffi
ceswer eupf orhar dcompet i
ti
onf r
om the
foreigncompani es.

In1914, t
heGov er nmentofI ndiast artedpublishingr et
urnsofI nsur ance
Compani esinI ndia.TheI ndianLi f
eAssur anceCompani esAct ,1912wast he
firststatutorymeasur et oregulatelifebusiness.I n1928, theIndian
InsuranceCompani esAct
wasenact edtoenabl etheGov ernment tocoll
ectstatist
ical
informat i
onabout bothl
i
f eandnon- l
ifebusi nesst ransactedi nIndiabyI ndianandf oreigni nsurers
i
ncl udingprov i
denti nsurancesoci eties.In1938, wit
hav iewt opr otectingthe
i
nt erestoft heInsur ancepubl i
c, t
heear li
erlegislati
onwasconsol i
dat edand
amendedbyt heInsur anceAct ,1938wi t
hcompr ehensivepr ovisi
onsf or
11
ef
fect
ivecont
rol
overt
heact
ivi
ti
esof
insur
ers.

12
 TheInsuranceAmendmentActof1950abol i
shedPri
ncipalAgencies.
However,
therewer
eal argenumberofi nsur
ancecompani esandt helevelof
competi
ti
onwashigh.Ther ewerealsoall
egati
onsofunfairtr
adepr act
ices.
TheGovernmentofIndia,
ther
efore,
decidedtonati
onal
i
zeinsurancebusiness.

AnOr di
nancewasi ssuedon19thJanuar y,1956nat ional
isi
ngtheLife
Insur ancesectorandLif
eInsuranceCorporat
ioncamei ntoexi
stencei
nthesameye
ar.TheLI Cabsorbed154I ndian,16non-Indi
ani nsurersasalso75pr ovi
dent
soci eti
es—245I ndianandf orei
gninsurersi
nal l.TheLIChadmonopol yti
l
lthe
l
at e90swhent heInsur
ancesect orwasreopenedt othepri
vatesect
or.

Thehi st
oryofgener ali
nsurancedat esbacktot heIndustri
alRevoluti
onint
he
west andtheconsequentgr owt hofsea-far
ingtradeandcommer ceinthe
th
17 cent ury
.Itcamet oIndi
aasal egacyofBrit
ishoccupat i
on.Gener al
I
nsur anceinIndiahasi t
srootsintheestabli
shmentofTr i
tonInsurance
CompanyLt d.,i
nt heyear1850i nCalcut
tabytheBr i
tish.I
n1907, theIndi
an
Mer canti
leInsuranceLtd,wassetup.Thi swasthe
fi
rstcompany totransact
all
classesofgenerali
nsurancebusiness.

1957saw theformat i
onoftheGeneralInsur
anceCouncil
,awingofthe
Insur
anceAssoci
atonofI ndi
a.TheGener alI
nsur
anceCouncilframeda
codeofconductforensur
ingf
air
conduct
andsoundbusi
nesspr
acti
ces.

I
n1968,theInsuranceActwasamendedt or
egul
ateinv
estment
sandset
mi
nimumsolvencymargins.
TheTar
if
fAdv
isor
yCommitt
eewasal
soset
upt
hen.

13
Nat
ional
izat
ionof
Insur
anceSect
or

By ear l
y1970s,t
her ewer eabout 100Indiani
nsurers
car r
yingonthegener ali
nsur ancebusi nessinIndia.Mal practi
cesand
mi smanagementhadcr epti ntothemanagementoft hesecompani es.Some
i
nsur ancecompani esei therl i
quidatedorcheatedt hepol i
cyholders.There
wer ecompl aintsoff alsificationanddeni alof
cl
ai ms, i
nter
lockingof f
undsandot hermalpract
icesby many i
nsurancecompani es.
Topr otectpubli
cfunds,thegov ernment star
tedconsideringnati
onali
zat i
onoft
heth
eInsur anceIndustry .

AnOr dinancewasi ssuedon19t hJanuary,1956nationali

zingt heLife
Insurancesect
orandLifeI
nsuranceCorporat
ioncameintoexistenceint
hesamey e
ar.TheLICabsorbed154I ndi
an,16non- I
ndianinsur
ersasal so75pr ovi
dent
societi
es—245Indianandf or
eigninsurersinal
l.TheLIChadmonopol yti
llt
he
l
at e90swhent heInsurancesectorwasreopenedtot
heprivatesector.

In1971,
asaprel
udeto
nati
onal
izat
ionof
thegener
ali
nsurancei
ndustry
,theGov
t.of
Indi
atookov
ert
he
management of
all
pri
vategener
alinsur
ancecompanies

Int
heyear1972Gener
alI
nsur
anceBusi nesswas
nat
ionali
zed.
Themainobj
ect
iveofthi
snat i
onal
i
zati
onwastochannel
i
zet
he
i
nsurancefundsfort
hebenefitofthecommunity
atlar
ge.

WiththeenactmentofGeneralI
nsuranceAct1972,General
Insurance
Cor
porati
onofIndi
a(GI
C)wasset
upasaHoldi
ngCompany .
It
hadfour
subsidi
ari
es:
NewIndi
a,
Oriental
,
Unit
edIndi
aandNational
Insur
anceCompanies.

GICwasr esponsibleforbr oadpoli

cymat t
ersthatcouldaff
ectthegeneral
i
nsuranceindustr
yinIndia.Thecompanydi
dnotoffer
anydi
recti
nsurancepoliciesexcept
theavi
ati
oninsurancepoli
ciesofAirI
ndia,
I
ndianAirl
ines,HindustanAer onauti
csandCropinsurance.

ThusGeneralI
nsur
ancebusinesswaspr i
mar il
yconductedbythefour
subsi
diar
iesof
GIC.Apartf
rom thefoursubsidi
ari
es,GICsetuptheGIC
AssetManagementCompanyt omanaget heGICMut ualFund,
GICHousing
Fi
nance,andExpor
tCredit
GuaranteeCorporati
on.

14
Li
ber
ali
zat
ioni
nInsur
anceSect
or

AlthoughIndi
anEconomyst ar
tedopeningupbotht
opr i
vat
esect
orandt
o
for
eigni
nvestment
intheyear
1991,I
nsur
ancesectorst
il
lr
emai
nedthedomainof
Govt
.of
Indi
a.

Howev ertheGov ernmentreali

zedt hatther
ewasaneed
tobri
ngreformsintheI
nsuranceSect ori
ncasethissector
hastoevol
v e.
Withavi
ewt obri
ngreformsintheInsuranceSectort heCentr
al Government
formedMal hot
raCommi t
teeheaded
byformerFinanceSecretar
y andRBIGov ernor
R.N.Malhotrai
ntheyear1993.

Thust heMal hotracommi tteewassetupwi ththeobjecti

v eof
complementingt herefor
msi nit
iat
edi nthefinanci
alsector.Thereforms
wereaimedatcr eatingamor eeff
icientandcompet i
ti
vefinancial
sy st
em
sui
tablefort
her equirement softheeconomykeepi nginmi ndthest r
uctural
changescurrentl
yunder wayandr ecognizi
ngthati
nsurancei sanimpor t
ant
partoftheoverallfi
nancialsystem wher ei
t
wasnecessarytoaddresstheneedforsimil
arr
eforms.

In1994,
thecommi t
teesubmit
tedt
her
epor
tandsomeoft
hekey
r
ecommendationsi
ncluded:

Str
ucture
aGov
ernmentst
akei
nthei
nsur
anceCompani
est
obebr
ought
downt
o50%.

b.Governmentshouldtakeovert
heholdingsofGICandi t
ssubsi
diar
iesso
t
hatthesesubsi
diar
iescanact
asindependentcor
porat
ions.

c.
All
thei
nsur
ancecompani
esshoul
dbegi
vengr
eat
erf
reedomt
ooper
ate.

B.Compet
it
ion

a.Pr
ivat
eCompanieswit
hami
nimum pai
dupcapi
tal
ofRs.
1bnshoul
dbe
al
l
owedt oent
ert
hesect
or.

b.NoCompany
shoul
ddeal
i
nbot
hLi
feandGener
alI
nsur
ancet
hroughasi
ngl
e
ent
it
y.

c.
For
eigncompani
esmaybeall
owedt
oent
ert
hei
ndust
ryi
ncol
l
abor
ati
on
wi
tht
hedomesti
ccompani
es.

d.
Post
alLi
feI
nsur
anceshoul
dbeal
l
owedt
ooper
atei
nther
ural
mar
ket
.

e.OnlyoneStateLevel
Lif
eInsur
anceCompanyshoul
dbeal
l
owedt
o
oper
ateineachst
ate.

C.Regul
ator
yBody

a.
TheI
nsur
anceAct
shoul
dbechanged.

b.
AnI
nsur
anceRegul
ator
ybody
shoul
dbeset
up.
15
c.Control
lerofI
nsur
ance-apar
toft
heFi
nanceMi
nist
ry-shoul
dbe
madeindependent

D.I
nvest
ment
s

a.Mandator
yInv
estment
sofLI
CLi
feFundi
ngov
ernmentsecur
it
iest
obe
r
educedf
rom75%to50%.

b.GI
Canditssubsidi
ari
esar
enottohol
dmorethan5%inanycompany
(t
her
ecur
renthol
dingst
obebr
ought
downt
othi
sl
evel
over
aper
iodof
ti
me)

E.Cust
omer
Ser
vice

a.
LICshoul
dpay
int
erestondel
aysi
npay
ment
sbey
ond30day
s

.b.
Insur
ancecompani
esmust
beencour
agedt
oset
upuni
tl
inkedpensi
onpl
ans.

c.
Computeri
zat
ionof
oper
ati
onsandupdat
ingof
technol
ogy
tobecar
ri
edout
int
h
ei
nsur
ancei
ndustr
y.

Thecommi tt
eeemphasi zedthatinordertoi mprov ethecustomerservices
andincreasethecov erageofinsurancepol i
cies,industr
yshouldbeopened
uptocompet it
ion.Butatt hesamet ime,thecommi t
teefel
ttheneedto
exerci
secaut i
on
asanyfail
ureonthepart
of newplayer
scouldruinthepubli
cconfi
dencei
ntheindustr
y.Hence,itwasdecidedt oal
lowcompet it
ioni nal i
mitedwaybyst i
pulating
theminimumcapi tal
requirementofRs.
100cr ores.

Thecommi tt
eef elttheneedt oprovi
degreaterautonomyt oinsur
ance
companies
i
norder
toimprovetheirperfor
manceandenablethemtoactasi
ndependent
compa
ni
eswit
heconomi cmot i
ves.Forthi
spurpose,ithadproposedsetti
ngupan
i
ndependentregulatorybody-
TheI
nsuranceRegul atory
andDev el
opmentAuthorit
y

16
 4Regul
1. ator
yBody
for
Insur
anceSect
or

I
nsuranceRegulator
yandDev
elopmentAut
hor
it
yofI
ndi
a
(
IRDAI),
isast
atut
orybody

FormedunderanActofPar l
iament
,i.
e.,
Insurance
Regulator
yandDevel
opmentAuthori
tyAct,1999( I
RDAIAct
1999)for
overal
lsuper
visi
onanddev
elopment
oftheInsurancesect
ori
nI
ndia.

Thepower sandf uncti

onsof theAuthori
tyarel
aiddowni
nthe
IRDAIAct, 1999andI nsur anceAct ,1938.Thekeyobj ect
ivesoftheIRDAIinclude
promotionofcompet it
ionsoast oenhancecust omersati
sfact
ionthroughincreased
consumerchoi ceandfairpremiums,whileensuring
thef
inancialsecurit
yoftheInsurancemar ket.

Composi
ti
onof
IRDAI
:

Asper
Sec.
4of
IRDAI
Act
,1999,
thecomposi
ti
onof
theAut
hor
it
yis:

a)
Chai
rman;

b)Fi
vewhol
e-t
imemember
s;

c)
Four
par
t-
ti
memember
s,

(
appoi
ntedby
theGov
ernment
ofI
ndi
a)

I
RDAI
’
sHeadOf
fi
cei
sat
Hyder
abad

Allt
hemajoract
ivi
ti
esofIRDAIincl
udingensuri
ngfi
nanci
alstabil
it
yofinsurer
s
andmoni
tori
ngmarketconduct
ofvar
iousr
egulat
edent
it
iesi
scar
riedoutf
romtheHeadOf
f
i
ce.

I
RDAI
’
sRegi
onal
Off
icesar
eat
NewDel
hi&Mumbai

TheRegi onalOffi
ce, NewDel hifocusesonspr eadingconsumerawar enessand
handli
ngof I
nsurancegr ievancesbesi desprovidingrequiredsupportf
orinspect
ion
ofInsurancecompani esandot herr egulat
edent it
ieslocatedintheNorther
nRegion.
Thisoffi
ceisfunctionall
yr esponsiblef orl
icensingofSur veyor
sandLossAssessor s.
RegionalOffi
ce
atMumbai handlessimil
ar acti
v i
ti
es,asinRegionalOffi
ceDelhi,
pert
aini
ngt
oWest er
nRegi
on.

TheInsur
anceAct,1938istheprinci
palActgov erni
ngt heInsur
ancesectori
nIndia.
It
provi
desthepowerstoIRDAItof r
amer egulat
ionswhi chlaydowntheregulat
ory
fr
amewor kf
orsuperv
isi
onoftheent i
ti
esoper at
ingint hesector
.Furt
her,
thereare
cert
ainot
herActswhichgover
nspeci f
icl
inesofI nsurancebusinessandfuncti
ons
suchasMar i
neInsur
anceAct,1963andPublicLi
abili
tyInsur
anceAct,
1991.

17
I
RDAI
adopt
edaMi
ssi
onf
ori
tsel
fwhi
chi
sasf
oll
ows:

 Toprot ectt hei nterest ofandsecur efairtr

eat ment topol i
cyholder s;
 Tobr ingaboutspeedyandor der lygr owt hoft heI nsurancei ndustry
(i
ncludi ngannui tyandsuper annuat i
onpay ment s),
for
thebenef i
tofthecommonman, andt opr ovidel ong
termf undsf oraccel eratinggrowt hof theeconomy ;
 Toset ,promot e,moni torandenf orcehi ghst andar dsof i
ntegrit
y ,
fi
nanci a
l
soundness, fairdeal ingandcompet enceof t
hosei tregulates;
 Toensur espeedy settlement ofgenui necl aims, toprev entI
nsur ancefraudsan
dother mal pract icesandput inplaceef fectivegr i
evancer edressal machi nery;
 Topr omot ef airness,t ranspar encyandor derlyconducti nf i
nanci almar ket
s
dealingwi thInsur anceandbui l
dar eli
abl emanagement i
nformat i
onsy stemt oenf
orcehi ghstandar dsof fi
nancialsoundnessamongst mar ketplayers;
 Totakeact i
onwher esuchst andar dsar einadequat eori neffectivel
yenf orced;
 Tobr i
ng about optimumamount ofself-regulationinday-to-daywor king
oftheindust ryconsi stent wi
thther equi rement sofprudent i
al r
egul at
ion.

Super
visor
yRol
e:

 1.Theobjecti
veofsupervisi
onasst atedi
nt hepreambl etotheI RDAIAct i
s“t
opr
otectthei
nter
estsofholdersofInsurancepol i
cies,t
oregulat e,promot eand
ensure orderl
ygr owth oft he Insurance i ndustry”,bot hI nsurance and
Reinsurancebusiness.
Thepower sandfunctionsoftheAuthorit
y arelai
ddowni ntheI RDAIAct ,
1999and
InsuranceAct,
1938t oenabletheAuthori
ty toachievei
tsobj ect i
ves.

 2.Section25ofI RDAIAct1999pr ov i
desf orest ablishmentofI nsur ance
Adv i
soryCommi t
teewhi chhasRepr esentativesf rom commer ce,industry,
transport,
agri
culture,
consumef ora, survey orsagent s,i
ntermedi aries,
organizati
onsengagedi nsaf etyandl osspr ev ention, r
esearchbodi esand
empl oyees’associati
oni ntheInsur ancesect orarer epresent ed.All ther
ules,
regulati
ons,guideli
nest hatareappl icabletot hei ndust r
yar ehost edont he
websi t
eoft hesuper vi
sorandar eav ail
ableinthepubl icdomai n.

 3.Sect
ion14oft
heIRDAI
Act,
1999specif
iest
heDut
ies,
Power
sandf
unct
ionsof
theAut
horit
y.Thesei
ncl
udet
hefol
lowing:

 Togr
ant
li
censest
o(r
e)I
nsur
ancecompani
esandI
nsur
ancei
nter
medi
ari
es

 Topr
otect
int
erest
sof
pol
i
cyhol
der
s,

18
  Tor egul ateinvest
mentoff undsbyI nsurancecompani es,professional
organi sati
onsconnect edwiththe(re)
Insurancebusiness;maintenanceof margin
ofsolv ency;
 Tocal l
fori
nf ormat i
onfrom,undertakinginspecti
onof ,
conductingenquiriesandinves
ti
gationsof theenti
ti
esconnect edwit
htheInsurancebusiness;
 Tospeci fyrequisi
tequal i
fi
cat i
ons,codeofconductandpr acti
cal tr
aining
fori
nt ermedi ar
yorI
nsur anceintermediari
es,agentsandsurveyorsandlossasse
ssors
 Topr escr i
beformandmanner inwhichbooksof accountshall
bemai ntai
nedandstatementofaccount sshal lberenderedbyi nsurersand
otherI nsuranceint
ermedi ari
es;

Pr
udent
ial
appr
oach:
Repor
ti
ng,
Riskmoni
tor
ingandi
nter
vent
ion:

1.
Repor
ti
ngRequi
rement
s:

Insurersarer equiredtosubmi tv
ariousr eturnslikefi
nancial stat
ement sonan
annual basisdulyaccompani edbyt heAudi t
ors’opini
onstat ementont heannual
account s;reports
ofvaluati
onof assets,val
uati
onof l
iabili
ti
esandsol vencymargin;actuarialr
eport
andabstr
actandannual valuati
onr et
ur nsgivinginformat i
onaboutt hef inancialcondi
t i
onfor
l
ifeInsurancebusi ness;IncurredButNotRepor tedclai
msi ncaseofgener al
Insurancebusi ness;Reinsurancepl ansonanannual basi
s; andmont hl
ystatement
onunder writ
ingofl ar
ger i
sksincaseofgener alInsur
ancecompani es;detai
lsof
capitalmar ketexposur eonamont hlybasis;
Investmentpolicy,Quarterly
andannual
returnsoninvestment s.

Sol
vency
ofI
nsur
ers:

Inordertomoni torandcont rolsolvencyr equirement

s,ithasbeenmademandat ory
tothei
nsurerstosubmi tsolv
ency repor t
onquarter
lybasis.I
ncaseofany deviati
on,theSupervi
sori
nit
iat
esnecessar
yandsuitable
stepssoast oensur ethattheI nsurert akes
i
mmedi atecorrecti
veactiontorest
or ethesolvencyposi
ti
onatthemi
nimumstat
utor
ylevel
.

Asset
-Li
abi
li
tyManagement
:

UnderAsset-Liabil
i
tyManagementr epor t
ing,Insurermustpr ovi
det heyearwise
proj
ect
edcashf l
ows, i
nr espectofbot hassetsandl i
abili
ti
es.Insurersmustmai ntai
n
mismatchingreservesincaseofanymi smat chbetweenasset sandli
abili
ti
es
asapar
toft
hegl obalr
eser ves.
Furt
her, Lifeinsurersarer equiredtosubmi tareporton
sensi
ti
vit
yandscenar iotesti
ngexerci seinthepr escribedf ormat.Non-li
fei
nsurers
mustsubmi tar eporton‘ Fi
nancial
Condi t
ion’coveringt hesensiti
vi
tyanalysisofthe
fi
nanci
alsoundnessi nmeet ingthepol i
cyholders’l
iabilit
ies.

Cor
por
ateGov
ernance:

Inordert
oprotectlong-
termsinter
estsofpoli
cyholders,
theI
RDAIhasout
li
nedappropri
ategover
nance
practi
cesappl i
cabletoInsurancecompani esf
ormaintenanceofsolvency
,
soundlong-ter
mi nvestmentpol i
cyandassumptionofunderwrit
ingri
sksona
prudential
basisfromt i
met ot i
me.TheIRDAIhasissuedcompr ehensi
veguidel
i
nes

19
foradopt
ionbyI nsur
ancecompaniesont hegovernanceresponsibi
li
ti
esoft
he
Boardinthemanagementoft heInsur
ancef uncti
ons.Theseguideli
nesarei
n
addit
iont
opr ovi
sionsoftheCompani es
Act,
1956,
InsuranceAct,
1938andother
applicabl
elawsl
aws.

Onandof
fsi
teSuper
visi
on:

20
Onsi
teI
nspect
ions:

TheAut hori
tyhasthepowertocal
lforanyi
nfor
mati
onfrom ent
it
iesr
elat
edt
o
i
nsurancebusiness– I
nsur
ancecompaniesandthei
nter
mediari
es,asmaybe
requi
redfrom ti
metot
ime.

Onsiteinspecti
onisnormal lycar
riedoutonanannualbasiswhichincludes
i
nspecti
on
ofcor
porateoff
icesandbranchoffi
cesoft
hecompanies.
Theseinspect
ionsareconduct
ed
withv
iewt ocheckcompl iancewiththeprovi
sionsofI
nsuranceAct,Rulesand
regul
ati
onsf r
amedt her
eunder .

Of
f-si
teI
nspect
ion:

Theprimaryobject
iveofoff-
sit
esurvei
l
lanceistomonitorthefi
nanci
al healt
hof
I
nsurancecompanies,i
denti
fyi
ngcompanieswhichshowf
inanci
aldet
eri
orationandwoul
dbeasourcef
orsupervi
sory
concerns.
Thisact
sasatri
gger
fort
imelyr
emedialaction.

Theof f-
sitei
nspect i
onconduct edby analy
zingperiodi
cstatements,
returns,
reports,
poli
ciesand
compl iancecer t
ifi
catesmandat edundert hedirecti
onsissuedbyt heAut hori
ty
fromt i
met ot i
me.Theper iodici
tyoft hesefil
i
ngsi sgeneral
lyannual,half
-yearly
,
quar t
erlyandmont hlyandar erelat
edt obusinessper f
ormance, i
nvestmentoff unds,
remuner ati
ondet ai
ls,expensesofmanagement ,busi
nessst at
ist
ics,audit
or
cer t
if
icatesrelat
edt ov ar
iouscompl iancerequir
ement s.

ofsuppor t.
Themostcommont ypesofl i
feinsurancear ewholel i
fe
i
nsurance
andtermli
feinsurance.Wholel
if
einsuranceprovi
desal i
fet
imeofprotecti
onaslon
gasyoupayt hepremi umstokeept hepolicyactive.Theyalsoaccr ueacash
val
ue
andthusofferasavingscomponent.Termlif
einsuranceprovidesprotect
iononly
d
uri
ngthetermof t
hepolicyandt
hepol i
ciesar
eusual l
yrenewableatt
he
endoftheterm

21
 5Ne
1. edf
orI
nsur
ance

Thebasi cfunctionofI nsuranceistopr ovideprotecti

onagainstafinanci
al
l
ossresulti
ngfrom t heoccur r
enceofanev ent.Thisfunct
ionisgenerall
y
carr
iedoutbyaI nsur anceCompany .TheI nsuranceCompanypr ov
idesfor
vari
oust y
pes
ofI
nsurancestodifferentpeopl
einconsiderati
onofapremium.Thesepremiumsar
ecol
lectedbytheI nsur anceCompani esandar euti
li
zedtoprovide
compensat i
ont othosewhohav esufferedtheloss.

Thebenef
it
sor
adv
ant
agesof
Insur
ancecanbeout
li
nedasf
oll
ows:

A.Peaceof MindWhent heconsumer st

ake
aninsurancepoli
cytheycanachi evepeaceof
mind.They wouldhaveacomf ortl
eveli
ftheyknow
thatincaseofhappeningofanunt owardinci
dent;
atleastthefi
nancial
lossincur
redbythemwouldbe
compensat ed.

B.AssetPr otecti
onTheobj ectiv
eoft akinga
poli
cyinrespectofapropert
yoranasset
istoprotect
thesame.
Thiswoul dbeappl i
cableinrespectofasset s
suchashomes, vehicl
es,jewel r
yandot hervaluabletangibl
eitems.I ncase
an
i
nsurancepol
icy
istakentheInsurerwil
l
r epl
aceorrepair
theseassetsi
ftheyaredam
aged,
lost
ordest
roy ed.

C.PhysicalProtecti
onCertai
nt ypeofInsurancePoli
ciesi
sdesignatedin
suchamannert hattheyprot
ectt hebody.Int heeventthatapersoni s
i
njur
ed, di
sabled
orot
her
wi sephysical
l
yharmedtheseinsur
anceswill
compensatef
ort
hoseda
mages.

D.IncomePr otect
ionCertainInsurancepol i
ciesaredesi gnedinsucha
mannert hatt
heypr ot
ectani ndi
vidual’
sabili
tyt oearnal i
ving.I
fforsome
reasontheper sonisnolongerablet ocontinuewi thgainfulemployment
thesepolici
escanbest ructuredtoreplaceamaj ori
tyof
l
ostincomeofthesaidper
son.

E.Lif
est y
leProtecti
onIntheeventof
deathofaper
son,hi
snext
ofki
nsuffer
themostespecial
lyift
heper sonwhodi edwasthesol
eorthemaj
or
i
ncomeear ner
.InsuchacaseaLi feInsurancePolicywoul
dprov
idef
undst
othe
nextofthekinwhowoul dbeabl etomai ntai
npar
tl
y ,
if
notf
ull
y,
thelif
estyl
eor
atl
eastmeet t
heirbasi
cneeds.

22
 1.
6Adv
ant
ageanddi
sadv
ant
agesof
insur
ance

Thei
nsur
ancehasbecomeani
ntegr
alpar
tofbusi
nessandhumanl
i
fe.‘
The
fear
ofloss’
hasbeenaconst
raint
ont
hegrowthofbusi
nessandtr
ade.
Anuncert
ainfutur
eof
busines
sandofindivi
dualhasalwaysbeenhaunti
nghim.Insurancehasbeenhelpfuli
nsolv
ing
manypr oblemsofbusi
nessandpri
vatel
if
e.
Thef
oll
owi
ngar
etheadv
ant
agesof
insur
ance:

1.
Prov
idi
ngSecur
it
y:

Thereisal waysaf earofsuddenl oss.Theremaybeaf i

rei
nthefactory
,
stormi ntheseaorl ossofal i
fe.Inallthesecasesitbecomesdiff
icul
ttobear
theloss.
Insuranceprovi
desacov er
against anysuddenl
oss.I
ncaseofmari
neandfi
rei
nsur
a
ncethelosssuff
eredby t
heinsuredis
full
ycompensat edandheisrestoredtohisear
li
erposit
ion.

Inthesameway ,i
fabr ead-br
ingi
ngmemberoft hef amilydiespremat ur
ely
,
thefamilyisprovi
dedwi t
hmoneyt ocont i
nuewi t
hitslivel
ihood.So,
i
nsur ancegivessecuri
tyt obothindivi
dual andbusiness-man.Theseday s
i
nsur ancecov er
sv ari
oussocialwelfareschemesal so.Ther ear eschemes
providi
ngf or
unempl oyment ,
si
ckness,accident,
healthandoldageinsurances.Thesescheme
sarehelpful
forpoorpeopleandhelpinestabli
shingsocial
justi
ce.

2.
Spr
eadi
ngof
Risk:

Thebasi
cpri
ncipl
eofinsuranceist
ospreadr
iskamongalargenumber of
peopl
e.
Alar
genumberofpersonsgetinsur
ancepoli
ciesandpay
premi umtothei
nsur
er.
Wheneveral
ossoccurs,i
ti
scompensatedoutof f
undsof
theinsurer
.Thel
ossi
sspr
e
adamongalar
genumber ofpoli
cy-
hol
ders.

Insur
ancecover
sthel
ossofanindivi
dualbutt
hesoci
all
osscannot
beeli
minat
ed.
Ift
hepropert
yofaper sonislostbyfir
e,hewi l
lbecompensatedbythe
i
nsurancecompany.Thelossofgoodswi l
lremai
nasasoci al
loss.I
nsur
ance
cannoteli
minat
elossbuti
tcanreducet
her i
sktot
hei
ndivi
dual
.

3.
Sour
cef
orCol
lect
ingFunds:

I
nli
euofani
nsurancecover,t
heinsur
edpayspremium totheinsurer
.The
pr
emiumi
srecei
vedregular
lyini
nstal
l
ments.Largefundsarecoll
ectedby
wayofpr
emium.Thesefundscanbegainf
ull
yempl oyedinindust
ri
al
23
devel
opmentofacount ry.Lif
einsur
ancepoli
ciesar
epur
chasedbyper
sons
fr
om all
walksofli
fe.Ithelps
i
ncoll
ecti
ngsav
ingsfr
omal argenumberof
persons.

24
4.
Encour
ageSav
ings:

I
nsur ancedoesnotonlyprotectr
isksbutitprov
idesaninv estmentchannel
too.Lifei
nsurancepr
ovidesamodeofi nvestment.Theinsur ancedevelopsa
habitofsav i
ngmoneybypay i
ngpr emi
um.Theamountofpol icyispaidtothe
i
nsur edort ohi
snominees.I
ncaseoff i
xedtimepolici
es,thei nsuredgetsa
l
ump- sum amountaf
terthematuri
tyof
thepoli
cy.

5.
Encour
ageI
nter
nat
ional
Trade:

Int
ernationalt
radeinvolvesmanyr i
sksi ntransporti
nggoodsf rom one
countrytoanother.
Int
heabsenceof i
nsurancethetr
aderswil
lalway sbewor r
iedfort
hesaf earr
ival
o
fgoods.Thequantumof t
radewillbel
i
mitedbecauseof uncertai
ntiesandr i
sk
i
nv ol
veddur i
ngt r
ansit
.Insuranceprovi
despr otect
ionagai nstal l
typesof
sea-r
isks.I
thashel
pedthedevelopmentofinternati
onaltradeonalargescale.

Di
sadv
ant
ages

1.
Canbeexpensi
ve.

Amaj or
fear
ofinsurancebuyersi
sthepricethey
hav etopay
.Someti
mes,dependi
ngonthep
ol
icyandcer t
ainf act
orsthataff
ectt hecost,suchascr edi
tscoreandotherpot
ential
ri
skstotheinsurancecompany ,buyingi nsur
ancecanbeexpensi ve.Buti
fboughtat
arightti
me,withtheri
ghtr
easonandrightamount ofcover
age,
youmightact
uall
yget
the
ri
ghtpri
ce.

2.
Risi
ngpr
emi
ums.

Mostt ypesofi nsuranceshav evaryi

ngratesofpremiums, andyoushoul dbev ery
careful
abouti t
.Bef orebuyingapol icy,
makesur eyouknowf rom t
hebegi nni
ngi fyou
haveaguar anteedpr emium t hroughoutthepol
icy,ori
fitchangesf r
om timetot ime
i
nr elat
iontoinflat
ion.Youshoul dweighoutifyoupreferafixedpremium ory ou’€™d
l
iket otakethe
ri
sk,andmor ei
mpor t
antl
y,determinetheamountyoucanaffor
dtospareonthecontract.

3. Tr
icky
ter
msandcondi
ti
ons:

Whiletaki
ngani
nsurancepol
i
cy ,
someof
theter
msandcondit
ionscoul
dbetr
icky
that
you
maynotgetcompensat ionforal
lthel
osses.I
tisi
mportanttoreadthr
oughthe
condit
ionsbef
orebuyi
ngit
.
25
4. Lengt
hyl
egal
for
mal
it
ies

26
:
Thoughyou
mayhaveoptedforagoodplan,cl
aimi
ngthei
nsurancemoneycoul
dtakeal
ongt
imeduet
oi
t
slengt
hylegalprocedurestobecarr
iedout
byt
hecompany .

5. Pot
ent
ial
cri
mei
nci
dent
s:

Lif
einsur
ancepol
i
ciescoul
dleadtopot
ent
ial
cri
mei
nci
dentsast
hebenef
ici
ari
esof
thepo
l
i
cymi ght
gett
emptedtor
esorttowrongwayst
oget
obt
aint
heinsur
edamount.

6. AddsExpense

Businessowner sareconstantl
yexami ni
ngbudget sandl ookingforway stosav e
money .
Insur ancecanbeexpensi ve,especial
lyincert
ainindustri
eswher ewor ker
s'
compensat i
oninj
uriesarecommon.Const ructi
onbusinesspol i
ciesaremor e
expensiv ethanpolici
esforaccounti
ngoffi
ces.
Asabusi nessgrows,it
shoul
dreviewit
spoli
ciestomakesuretheycovertheexist
ingneeds.
Otherwise, t
hepolicymaynotcov eralosscompl etel
y,l
eaving
thebusinessunderinsured

27
 7 Pr
1. inci
ples
Insuranceinv olvespoolingfundsfrommany i
nsured
entit
ies(knownasexposur es)t
opayf orthelossest hatsomemayi ncur.The
i
nsur edent it
iesar ether ef
oreprotectedfr
om r i
skf orafee,withthefeebeing
dependentupont hefrequencyandsev er
ityoftheev entoccurri
ng.Inorderto
beani nsur abler i
sk,ther i
skinsuredagainstmust meetcertain
characteristics.Insur
anceasaf i
nancialint
ermedi aryisa
commer cialenterpri
seandamaj orpartoft hefinancialser
vicesindustr
y,but
i
ndividual ent i
ti
escanal soself
-i
nsurethroughsav ingmoney f
orpossiblef
utur
e
l
osses

I
nsur
abi
l
ity

Ri
skwhichcanbei nsur
edby
pri
vat
ecompani
est
ypi
cal
l
yshar
essev
encommonch
[19]
ar
acter
isti
cs:

Largenumberofsi mil
arexposur eunits:Sinceinsuranceoper ates
throughpool ingr esources, themaj ori
tyofinsurancepol i
ciescov er
i
ndi vidualmember soflargecl asses,all
owinginsurerstobenef itfrom
thel awofl argenumber s
i
nwhi chpredictedlossesar esimilar
totheactuall
osses.Excepti
onsi nclud
eLl oy d'
sofLondon, whichi sfamousf orensuri
ngt heli
feorheal t
h
ofact ors,sportsf i
gures,andot herfamousi ndivi
duals.Howev er, al
l
exposur eswil
lhav epart
iculardiff
erences,whichmay l
eadtodiff
erentprem
i
umr ates.

Definit
el oss:Thel osstakespl aceataknownt i
me, i
naknownpl ace,
andfrom aknowncause.Thecl assi cexampl einvolvesthedeathof
aninsur edpersononal ife-i
nsur ancepol i
cy.Fir
e, aut
omobi l
e
accidents, andwor keri
njuriesmayal l
easilymeett hi
scr i
ter
ion.Other
typesofl ossesmayonl y
bedef i
nitei
ntheory.Occupat i
onal disease,f
orinst
ance,may i
nvolvepr
olon
gedexposur etoinjuri
ouscondi ti
onswher enospeci fict
ime,place,or
causei sidentif
iabl
e.Ideal l
y,thet i
me, place,andcauseofal oss
shouldbe
cl
ear enought hatareasonabl eperson,withsuffi
cienti
nformati
on,couldo
bjecti
vely v
erif
yallt
hreeelement s.

Accidentalloss:Theev entt hatconstit

utest het
riggerofacl ai
m
shouldbef ortuit
ous,oratl eastout si
det hecontrolofthebenefici
aryof
theinsurance. Thelossshoul dbepur e,i
nt hesenset hatitr
esult
sfrom
anev entforwhi chthereisonlytheopportunity
for
cost.Eventsthatcontainspecul at
iveel
ement ssuchasor dinarybusi
ness
ri
sksorev enpur chasingal otteryti
cket
aregenerally
not consideredinsurable.

Largeloss:Thesizeofthelossmustbemeaningful
from t
he
perspect
iveoftheinsur
ed.Insur
ancepr
emiumsneedt ocoverboth
theexpectedcost
ofl
osses,pl
usthecostof
issui
ngandadmi
nist
eri
ngt
hepoli
cy,
adjust
ing
28
l
osses,andsupplyi
ngthecapitalneededt oreasonably
assuret
hat
thei
nsurerwi
llbeabletopaycl aims.Forsmal ll
osses,thesel
att
er
costsmaybesev eral
timesthesi zeoftheexpect edcostofl
osses.
Thereishardl
yanypoi ntinpay ingsuchcostsunl
essthe
prot
ectionof
feredhasreal
val
uet oabuyer.

Affordablepremium:
Ifthel
i
kelihoodofaninsuredev enti
s
sohigh,ort
hecostoftheev entsol ar
ge, t
hatther esulti
ngpr emi
um i
s
l
arger elat
iveto
theamount ofpr
otect
ionoff
ered,theni
tisnotl
i
kelythatinsurancewi
l
lbe

29
purchased, eveni fonoffer.Fur t
hermor e,astheaccounti
ng
professionformal l
yrecogni
zes
i
nfinancialaccount i
ngstandards,thepremi umcannotbesolar
get hat
thereisnotar easonablechanceofasi gnifi
cantl
osstotheinsurer.I
f
thereisnosuchchanceofl oss,thent het r
ansact
ionmayhav e
theform ofinsur ance,butnott hesubst ance(seetheU.S.Financial
Account ingStandardsBoardpr onouncement number
113:"Account i
ngandRepor tingforReinsuranceofShort-
DurationandLong- Durati
onCont r
acts").

Cal culablel
oss: Therear
etwoel ementsthatmust beatl
eastest
imable,
i
fno
tformal l
ycalculabl e:
theprobabi l
it
yofloss,andt heattendantcost.
Pr obabili
tyoflossi sgenerall
yanempi r
icalexercise,whil
ecosthas
mor etodowi t htheabil
ityofar easonableper soninpossessionofa
copyoft heinsur ancepol i
cyandapr oofoflossassoci at
edwitha
claim presentedundert hatpol i
cytomakear easonablydefi
niteand
obj ecti
veev al
uat ionoftheamountoft helossr ecoverabl
easa
resul t
oftheclaim.

Limitedr iskofcat astr

ophical l
ylargel osses: I
nsur abl elossesar e
i
deal l
y((independentandnon- catastrophic, meani ngt hatthelossesdo
nothappenal latonceandi ndi vi
dual lossesar enotsev ereenought o
bankruptt heinsur er
;i
nsurersmaypr efert olimitthei rexposur etoa
l
ossf rom asi ngleev enttosomesmal l porti
onoft hei rcapitalbase.
((Capital const rai
nsi nsurer
s' abil
it
ytosel l earthquakei nsuranceas
wellaswi ndi nsurancei nhurricanezones.I ntheUni tedSt ates,the
federal gov ernmenti nsuresfloodr i
sk.I ncommer cial fi
reinsurance,it
i
spossi blet ofindsingleproper ti
eswhoset otalexposedv alueiswel l
i
nexcessofanyi ndi vi
dualinsurer'
scapi talconst r
ai nt.Suchpr opert
ies
aregener al l
yshar edamongsev eral i
nsur ersorar ei nsur edby
asingleinsur erwhichsyndicatestheriskintot hereinsur ancemar ket.

30
Legal

Whenacompanyi
nsuresani
ndi
vi
dualenti
ty,
therear
ebasicl
egalrequir
ementsan
[
20]
dr
egulat
ions.
Sev
eral
commonlyci
tedlegal
principl
esof
insuranceincl
ude:

Indemni
ty–thei
nsurancecompanyindemnifi
esorcompensates,
thei
nsur
edint
hecaseofcer
tainl
ossesonl
yuptothei
nsured'
sint
erest
.

Benefiti
nsur ance–asi ti
sstatedi nthestudybooksof The
CharteredInsur anceInsti
tute,thei nsurancecompanydoesnothav ethe
ri
ghtofr ecov eryfrom thepar tywhocausedt heinj
uryandist
o
compensat etheI nsuredregar dlessoft hefactthatI
nsuredhadal
ready
suedt henegl igentpartyfort hedamages
(f
orexampl e,per sonal
accident insurance)

Insurableint
erest–t heinsuredt y
picall
ymustdi rectlysufferfrom t
he
l
oss. I
nsurableinterestmustexi stwhet herpropertyinsuranceor
i
nsur anceonaper sonisinvolved.
Theconcept r
equi r
est hatt
heinsuredhavea"stake"i
nthelossordamage
tothel i
feorproper tyinsured.Whatt hat"stake"iswillbedetermined
byt hekindofinsur anceinv ol
vedandt henat ureofthe
proper t
yownershiporr el
ati
onshipbet weent hepersons.The
requirementof
aninsurablei
nterestiswhatdisti
nguishesinsurancefr
omgambl ing.

(
(Ut
mostgoodf
ait
h–(
Uber
ri
maf
ides)t
hei
nsur
edandt
hei
nsur
erar
e
boundby
agoodf
ait
hbondof
honest
yandf
air
ness.
Mat
eri
alf
act
smust
bedi
s
cl
osed.

Contri
buti
on–insur
erswhichhavesi
mi l
ar
obli
gati
onstot
hei
nsuredcontr
ibut
eintheindemni
fi
cat
ion,
accor
ding
tosomemethod.

Subrogation–t hei nsurancecompanyacquiresl

egalri
ghtsto
pursuer
ecov eri
esonbehal foftheinsur
ed;f
orexample,t
heinsurermay
suethoseliabl
efortheinsured's
l
oss.TheInsurerscanwai vethei
rsubr
ogati
onr
ight
sbyusi
ngthespeci
alcl
au
ses.

Causaproxima,orproximatecause–t hecauseofl
oss(t
heperi
l)
mustbecoveredundertheinsuri
ngagr
eementofthepol
i
cy,andt
he
dominantcausemust
notbeexcluded

Mit
igat
ion–I ncaseofanyl
ossorcasual
ty,t
heassetownermust
at
tempttokeepl
osst
oami
nimum,
asi
ft
heasset
wasnoti
nsur
ed.

31
 1.
8Or
gani
zat
ional
SetUp
Theinsurancei ndustryofIndiaconsistsof52insurancecompaniesof which24arei
nli
fe
i
nsur ancebusi nessand28ar enon-
l
ifeinsurer s.
Amongt hel i
fei
nsur ers,
LifeI
nsur anceCor porati
on(LIC)isthesolepublicsector
company .Accordinglythere23Compani esinPr i
vat eSect
orthatar
ecarr
yingoutLif
e
Insur anceBusiness.
LifeInsuranceCor porationofI
ndi a,thesolePublicSector
Company carry
ingoutLifeInsuranceBusi nessinIndia,
wasest abli
shedbyaspecialActof
Parl
ia
ment onthe19thofJune1956

.Themai nobjecti
veofsettingupLi f
eInsuranceCor porati
onwast ospr
ead
themessageofLi f
eInsuranceint heCount r
yandt omobi li
zeandchannel
ize
the
savingsofPubl
icat
Largewhichcouldbeusedfornati
onbuil
ding.
It
wasaimedatspr
e
adingawarenessofLi
feI
nsuranceinrural
areassothatmaximumlivesmay
beinsuredatar
easonablecost.

 Or
gani
zat
ional
Str
uct
ureof
LIC

Li
feI nsur
anceCorporat
ionhasi t
sCentralOffi
cei
nMumbaiand8Zonal
Of
ficesindif
fer
entpar
tsoft hecountr
y.UnderZonalOf
fi
cesar
eDi
vi
sional
of
fi
cesf ol
lowedbyBr
anchesandsat
ell
i
teof
fices.

LICal
sohasthreebranchesinter
ri
tor
iesout
sideI
ndi
a.Apar
tfr
om t
heabov
e
LI
Chasthr
eeI
nternat
ional
Branchesasf
oll
ows:

 Maur
it
ius

 Uni
tedki

ngdom

 Fi
j
i

Li
feInsuranceCorporat
ional
sooper
atesi
nOv
erseasI
nsur
anceMar
ket
thr
oughJ
oi
ntVenturesasf
ollows

 Li
feI
nsuranceCorpor
ati
onI
nter
nati
onal
BSC(C)r
egi
ster
edi
nBahar
inKe
nI
ndiaAssuranceCompanyr
egist
eredi
nNai
robi
.

 Li
feInsur anceCor
por
ati
on(Nepal)LimitedregisteredinKat
hmandu.
Li
feI
nsur anceCorpor
ati
on(Lanka)Limi tedregisteredinColombo.
SaudiIndiaCompanyf
orCooper
ati
oninInsuranceregister
edi
nRiyadh.

32
 Li
feI
nsuranceCor
porati
on(Mauri
ti
us)Of
fshoreLtd.
regi
steredinPor
tLou
i
Maurit
iusisaJointVentur
eCompanybet weenLICofI ndiaandGI C
of
Indi
a.Forei
gnDi
rectI
nvestment
upto49%isall
owedinI
nsur ance

33
 Compani
es.

LI
C'sCont
ri
buti
ontothef
ivey
ear
plansover
they
ear
sPl
anYear
invest
ment2 1956-
1961 ₹18400Cr

3 1961-
1966 ₹285Cr

4 1969-
1974 ₹1,
530Cr

5 1974-
1979 ₹2,
942Cr

6 1980-
1985 ₹7,
140Cr

7 1985-
1990 ₹12,
969Cr

8 1992-
1997 ₹56,
097Cr

9 1997-
2002 ₹1,
70,
929Cr

10 2002-
2007 ₹3,
94,
779Cr

11 2007-
2012 ₹7,
04,
720Cr

12 2012-
2017 ₹14,
23,
055Cr

13 2017-
2022 ₹28,
01,
483Cr

Gr
owt
hasamonopol
y Edi
t

From it
screati
on,theLif
eInsuranceCorpor
ati
onofIndi
a,whichcommanded
amonopolyofsol i
cit
ingandsel
lingl
ifei
nsur
ancei
nIndia,cr
eatedhuge
surpl
usesandby 2006wascontr
ibuti
ngar
ound7%of
India'
s
GDP.[ci
tat
ionneeded]

Thecor porati
on,whichstart
edit
sbusinesswi t
haround300of f
ices,5.7
mill
ionpoli
ciesanda
corpusof₹45.9cror
es(US$92mil
li
onasperthe1959exchangerateofroughly₹5
forUS$1) ,
[
11]hadgr ownt o25,
000servicingar
ound350mi l
li
on
poli
ciesandacorpusofover
₹800,
000crore(US$110bil
li
on)by
theendof t
he20thce
ntury.

34
CHAPTER-
2

35
Chapt
er2
Li
ter
atur
erev
iew
Rev
iewof
li
ter
atur
e
Ref
erence

36
Agar wal1
(1959)I nhi sPhdt hesi
shasst udiedt heinv estmentpoli
cyofI ndianl i
fe
insurancecompani espriornati
onalizati
onof245l if
einsurers.The
compani esf ol
lowedindependentinv est
mentpol i
ciespriortoNat i
onal i
sati
on.
Howev er
orientali
feinsurerf
oll
owedsaf etypr
incipl
efirstand90%oftheli
fei
nsur ersfundwa
sinvestedi ngov er
nmentappr ovedsecur i
t i
es. Bombaymut ualinsurermade
subst antiali
nvestmentinIndiancompani esasi twasint hehandsofBombay
indust r
iali
stsandmadeasi gnifi
cantcontri
but ion
intheadv ancement ofI
ndianindustr
ies.

Pat
ri
ck3

(1966)expl ainedaboutt wot y pesofcoexi st

ingrelationshipsbet ween
thefi
nancialsect orandeconomi cgr owth.Firstl
y,hestatedthattheresuppl yl
eadin
grel
ationshipwhi chst at est hatt hedev elopmentoff i
nancial i
nsti
tutions
l
eadingt oeconomi cgr owt hthr ought hesuppl yoff inancial ser
v i
ces, secondl
y
thereisdemandl eadi ngrelationshi p;wheredemandf orfinancialserv i
ces
i
nducesgr owt hoff inanci ali
nst itutionsandt heirasset s.Inhisstudyhe
observedt hatdev el
opi ngcount riesshowedsuppl y-l
eadingpat ternsshowi ng
fi
nancialsect ordev elopmentl eadi ngt oeconomi cgr owt h.I
tconsi dered
l
ocallyincor poratedi nsurancei nstituti
onsorSt ate-ownedmonopol i
esas
anessentialelement of economi cdev elopment .

Dwi
vedi
Raj
Kishor
e6

(1977)inhisPhdthesis“InvestmentofLi
feInsuranceFundsandIndustrial
Gr owthinI
ndia”,r
emar kedt hatLif
eInsuranceCor porati
onofI ndiahasmadea
sizeablecont ri
buti
ont ot hedevel
opmentofcapi t
almar ketswhent hecount r
ywasin
thedev elopingstage.Consumer fi
nancingbecameapopul artoolduringtheti
ght
moneysi tuati
on.Financecompani estookmaxi mum adv antageby out-st
ri
ppi
ngall
otherav ail
ableyieldsandt herebychannel i
sed
asizableproductionofinvestabl
efundsi
ntoconsumer f
inanceattheexpenseofi
nvest
men
tsini
ndust ry.

37
Bodl aB.S.,
M.C. GargandK. P.Si
ngh19
(2003)i nhi sst udyhighlightedther oleofi nsur ancei ndev elopi
ngeconomi es.Low
l
ev el
ofcapi t
alformat ionwast hemainreasoni dent i
fiedf or
theunder developmentofaneconom
y.Heconcl udedt hatf i
nancialint
ermedi ariespl ayrelati
v elylargerrol
einsuppl ying
thef undsf orcapi t
alfor mationandi nsur ancepl ayani mpor tantrol
e.Hel ai
ddown
thet hreeessent i
alstepsi ntheprocessofcapi t
al f
ormat ionv i
z:Realsavings
mobi l
i
z ati
onandchannel i
zati
onof savingst hr oughf inanci alandnon-financial
i
nt ermedi ariesandbei ngplacedatt hedi sposal ofinvest orsandl astl
ytheactof
i
nv estment .Insurancepr omot esef f
iciencyi nt he
fi
nanci alsyst emby mobi l
izati
onofscatteredr esour ces,creat i
onof l
i
quidi
tyandeconomi e
sof scale.

Ar
ena,
M24

(2008)madeanempi r
ical studyoncausal relati
onshipbet weeni nsurancemar ket
activi
tyandeconomi cgr owt hi ncluded56count r
ies(bothdev elopedanddev eloping
ones)i ntheperi
odf r
om 1976t o2004.I nsurancepr emiumswer eusedaspr oxi esof
totalli
feandnon-
l
ifeinsuranceact
ivi
tysepar ately.Asanesti
mat ionmet hod,t
heaut hor usedthegeneralized
met hodofmomentf ordy nami cmodelsofpanel data.Ther esultsshowedaposi ti
ve
andsignifi
canteff
ectoftotal,li
feandnon-
l
ifeinsurancemarketactivi
ty oneconomi cgrowt h.
Impactofl if
einsuranceoneconomi cgr owthi sdri
venbyhi gh-incomecount r
ies
only.Inthecaseofnon- li
fei nsur ance,i
tsimpactwasdr i
venbybot hdev el
opedand
dev el
opingcountri
es,buti
twasl argeri
ndevelopedcount r
iesthani nthedevelopi
ngones.

Theauthoralsoexaminedt
hepossi
bil
i
tyofnon-
li
neareff
ect
sofli
feandnon-
li
fe
i
nsur
ancevariabl
esoneconomi
cgrowth,butt
heresul
tsdi
dnotshowthenon-
l
i
neari
tyintherel
ati
onshi
p.

Wadl
amannat
i.
K.C25

(2008)exami nedt heef f

ectsofi nsurancegr owthandr efor
msal ongwi t
hot her
rel
ev antcontrolvariablesoneconomi cdevelopment i
nIndiaint
heperiodfr
om1980t o
2006.
Growt hofi nsurancepenet r
ation(li
fe,non-li
feandt otal)wereusedaspr oxiesof
i
nsur ancesect orgr owt h.Theaut horappl i
edor di
naryl eastsquares,coi
ntegr ati
on
analysisander r
or correctionmodel s.Thestudyconfi
rmedposi ti
vecontri
bution
ofi
nsur ancesect ortoeconomi cdevelopmentandal ongr unequil
ibri
um relationshi
p
betweent hev ar
iabl es.Whi l
ether eformsint heinsurancesect ordidnotshowany
effectoneconomi cact i
vi
ty,thei
rgrowt hhadpositi
vei mpactoneconomi cdev elopment.

38
 Chapt
er-
3

Resear
chmethodol
o
gy

39
Chapt
er-
3

 Resear
chmet
hodol
ogy
 I
ntr
oduct
iont
oresear
chmet
hodol
ogy
 obj
ect
ivesof
resear
ch
 dat
acol
lect
ion
 l
imi
tat
ions

40
Resear
chmet
hodol
ogy

Researchisascienti
fi
candsy stemati
csear chforrel
evantinfor
mationona
speci
fi
ctopic.Or
Itisacarefuli
nvesti
gationorinqui
ryspeciall
yforexplor
ing
i
deas
andsearchi
ngnewfactsaboutany
kindofknowledge.I
ti
sinf
actanart
ofi
nv est
igat
io
n.

Resear chMet hodologyItisawayt osyst emati

call
ysolvear esearchprobl
em.
Itmay beunder stoodasasci enceofstudy i
nghowar esear
chi sscienti
fi
cal
ly
done, howwef i
ndoutaboutthings,andhowknowl edgeisgained.Initwe
studyt hevari
ousst epswhicharegener all
yadoptedbyt heresearcherswhil
e
studyingar esearchproblemalongwi t
hl ogi
cbehindthem.Inot herwor ds,
met hodologyisaboutt hepri
nciplest
hat gui
deourr
esearchpracti
ces.

Ty
pesof

Resear
chDescr
ipt
ivean

danal
yti
cal

Descripti
veandanalyti
cal
Descript
iveresear
chAlsoknownasst ati
stical
research.Thedescr
ipti
veresear
chinvolvest
hesurveysandfact
findingsenqui
ri
esofdifferentki
nd.Forexample,•f i
ndingthemostf requentdiseasethat
affect
sthechildr
enofatown.

Appli
edandFundament al
Appli
edresearch Ai mst ofi
ndt heimmedi atesolut
ionforapr obl
em
faci
ng
asociety
andindustr
ial
organizati
on.example,appl
iedr
esearchersmayinvest
i
gatewaysto:I
mproveagricul
tural
cropproduction•
Treator
cureaspecif
icdi
sea
se
•Impr ovet
heenergyef
fi
ciencyofhomes,offi
ces,ormodesoftr
ansportati
on

Quant i
tati
veandQual itativeThi
ski ndofr esearchi
susedt oquanti
fythe
problembyway ofgeneratingnumer icaldataordatathatcanbetransformed
i
ntouseabl estati
sti
cs.
Quant i
tati
ve data coll
ection met hodsi nclude var
iousf or
msofsur veys,
l
ongi t
udinalst
udies,
andsy stematicobservations.
Quali
tati
veQual
i
tati
veresear
chisusedtogainan under standi
ng of under lyi
ng reasons,opini
ons,and
mot i
vations.Thesampl esi zei
sty
pically
smal l
,
and

Concept
ual
andEmpi
ri
cal

Concept
ual
resear
chf
ocusesont
heconcept
ort
heor
ythat
expl
ainsor
descr
ibest
h
41
ephenomenonbei
ngst
udi
ed.

42
 Pr
imar
yresear
ch

Pri
maryr
esear
chisr
esear chyouconducty
oursel
f(or
hir
esomeonetodofor
you.)
It
in
vol
vesgoi
ngdirect
lytoasour ce–usual l
ycustomersandprospecti
ve
cust
omersiny
ourtargetmar ket–t oaskquesti
onsandgatherinf
ormation.
Exampl
esofprimaryresearchare:

 Sur
vey
s(onl
i
neor
mai
l
)

 Quest
ionnai
res

(
onl
i
neor
mai
l
)

 Focusgr
oups

Secondar
yresear
ch

Secondaryresear chi
sat ypeofr esear
chthathasal readybeencompi l
ed,
gathered,
organizedandpubl ishedbyother
s.Itincludesr eportsandst udiesby
governmentagenci es,t
radeassociati
onsorotherbusi nessesi ny ouri
ndust r
y.For
smallbusinesseswi t
hl i
mitedbudgets,mostresearchi stypicall
ysecondar y,
becauseitcanbeobt ai
nedf asterandmoreaffordablythanprimary r
esearch.

Obj
ect
ivesof
Resear
ch

Eachresearchstudy hasit
sownspeci fi
cobjectiv
eswhil
esomeof
thegener
alo
bj
ectivesofresearcharement ionedbelow
 Toknowabout t
hedi f
ferentty
peof i
nsurancepolicy
 Toknowabout i
t'
sef f
ectoneconomy
 Thedev el
opment sandpr ogressbyinsurancesector
 Their
contributi
ont oeconomy
 Thepreferenceofpeopl etot
akeinsurancepolicy
 Toknowabout t
hepr i
vateplayersi
ninsurancesecror

43
 Dat
acol
lect
ion

Sampl
esi
ze:
Thesampl
esi
zeofmyr
esear
chwor
kis71i
nsur
ancehol
der
sof
pr
ivat
eor
publ
i
cinsur
ancecompany
.

quest
ionnai
resampl
esi
zedet
ermi
nat
ion

Asimpler
andomsampl i
ngmethodwereusedt
osel
ect
therespondent
sfor
thest
udy.
Thesimplerandom sampli
ngensurest
hateachmemberoft hepopul
ati
on
getsanequaloppor
tunit
yfor
thesel
ect
ion.

Dat
acol
lect
ionmet
hod:

Datacol
lecti
onmethodswerefocusedon
thepr
imaryandsecondarymethod.Themaintool
for
gaini
ng
pri
mar y
infor
mationi
npracti
calresearchi
squest
ionnair
es.

Secondar
ydat
awi
tht
hehel
pof
onl
i
nef
alt
for
mli
kegoogl
es,
yahoo.

44
Adv
ant
age:

1.
Peopl
ewer
ewel
lawar
eaboutt
hei
nsur
ance

pol
i
cy2.
Ther
ewasagoodcooper
ati
onf
romr
espon

dent

3.
Mobi
l
eappl
i
cat
ionf
ormaki
ngquest
ionnai
rewasqui
teeasy

Andr
espondentwer
efr
indl
ywi
tht
hist
ypeofquest
ionnai
ret
hrought
het
he
mobi
l
eappli
cati
on

Li
mit
ati
ons

1.
Duet
ocov
id19i
twasdi
ff
icul
tt
ohav
efacet
ofacei
nter
viewwi
thpeopl
elocat
edf
araway
.2.
D

at
asampl
ewasl
i
mit
edt
o49peopl
eof
apar
ti
cul
arr
egi
on.

3Theundertakenr
esearchisconfi
nedtopoli
cyhol
derofl
i
fei
nsurancesect
orin
ThaneandThaneRegionOnl y
,thustheresul
tsmayonlybeabl
et odefi
net hi
s
preci
sear
eaundert
hestudyandnot
tot
heent
ir
euni
ver
se.

4.
agedgrpabove50we'
renot
well
awareabout
themobil
eappli
cat
iont
orespondt
hequest
ionnai
resent
thr
ought
hemobi
l
ed
evi
ce.

45
CHAPTER-
4

46
 Dat
aanal
ysi
sandi
nter
pret
ati
on

1Ageofr
espondent

Age Noof
respondent

0-
18 3 15.
21

18-
25 51 71.
5

25-
50 15 21.
5

Abov
e50 2 10.
14

Fr
omt
heabov
etabl
eout
of71r
espondent
,3r
espondent
areI
n

bet
weent
heageof0-
18,
51r
espondentar
ebet
ween

t
heAgeof
18-
25,
15r
espondent
arei
nbet
weent
heageof

25-
30,
and2r
espondent
areabov
etheageof
50.

+-

From theabovegr aphi

calrepresent
ati
on,itseemsthatmaxi mum respondenti
nthe
ageof18-
25yearsarei
nvesti
ngmor ei
ntheinsur
anceascomparedtoother
agegroup.Thi
sseemstha
ti
ntodaysseneri
otherei
sanlotofawar
enessabouti
nsurancesector
int
heini
ti
alst
ageof
inv
estment.

47
 Occupat
ionof
respondent

Occupat
ion Noof
respondent %of
respondent

St
udent 43 66.
6

Empl
oyed 23 32.
4

Ret
ir
ed 3 15.
2

Ot
her
s 2 10.
14

Ont
hebasi
sof
abov
etabl
e,
out
of71r
espondent
,43r
espondent
areS

t
udent
,23r
espondentar
eempl
yed,3r
espondentar
eret
ir
ed,2

ar
eFr
omot
her
cat
egor
y.

Fromtheabovegraphi
calr
epresent
ation,
it
indi
cates
themostoft
herespondentar
efromstudentcategor
ywhomay
hav
e
i
nsurancepoli
cy.

48
Doy
ouhav
eani
nsur
ancepol
icy

Reponse Noof
respondent %of
respondent

Yes 58 82.
9

No 12 17.
1

Tot
al 71 100%

Onthebasisoft
heabovetabl
e,outof71respondent
,58respondent
hav
einsur
ancepoli
cywhi
l
e12respondent
arenot
insur
edthr
oughinsur
ance.

For
mtheabov
egr
aphi
cal
repr
esent
ati
on,
i
tshowst
hat
out
of100r
espondent
,

82.
9%ar
einsur
edbyi
nvest
ingt
hei
rmoneyi
ninsur
ancef
orsecur
ingt
he

r
iskof
li
feandr
emai
ning17.
7%ar
enot
hav
ingof
thei
nsur
ancepol
i
cy

49
What
typeof
insur
ancepol
icy
doy
ouhav
e?

Sector No %
ofi
nsura ofr
espond ofr
espond
nce ent ent
Pri
vate 33 52.
4

Publ
i
c 30 47.
6

Consideri
ngonl
ytherespondent
hav
inganinsurancepoli
cyi
tcanbest
atedfr
omthe
abovetabl
ethat
33respondentar
ehavingpubli
csectorwhil
e30arepr
ivat
esect
or.

Respondent
frompr
ivat
esect
orar
emor
eascompar
edt
opubl
i
csect
or.

Fr
otheabov
e
gr
aphi
cal
repr
esent
ati
on,
respondent
ofpr
ivat
esect
or

For
ms53.
4andof
publ
i
csect
ori
tf
orms47.
6ther
eisav
ery
thi
nli
neof
dif
fer
ence

bet
weenpr
ivat
eandpubl
i
csect
or.

50
 Whoi
nfl
uencedy
out
oget
ani
nsur
ance?

I
nfl
uencedtoget No Per
cent
age
ani
nsurance ofr
espond
ent
Medi
a 2 3.
2

Agent
s 21 33.
9

Family, 34 54.
8
fr
iends,
col
l
ag
ues
Others 5 8.
1

Fr
om t he abovet abl
e outoft otal62 r espondent
s,2 r
espondents are
i
nfl
uenced bymedi a,21 arei nf
luenced by agents,34 r
espondents are
i
nfl
uenced by fami
ly, fr
iends,
col
leagues
whi
let
herestar
einf
luencedby
othermediaum.

Fromt heabovegrap
hi
calrepresent
ati
on i
t'
s shows thatthe respondents ar
ei nf
luenced byv ar
ious
medi
umt ogetinsur
edI,e54.8%areinsuredbyfri
ends,famil
y,coll
eagues, 33.
9%ar e
i
nsur
edbui nsur
anceagent
s3. 2%areinsuredbymedi awhil
ether emaining8.1%ar e
i
nsur
edbyot hermedi
um.

51
Howmany
insur
ancepol
icy
doy
oucur
rent
lyhav
e

Opt
ions No Per
cent
age
ofr
espond
ent
1, 46 75.
4%

2 2 23%

3 1 1.
6

4 - -

Mor
ethan4 - -

Fromtheabovetabl
eoutof
tot
alr
espondent
s,46r
espondent
sarehav
ing1insur
ancepoli
cya
tatime,2respondentsarehavi
ng2insurancepol
icyatati
me3r espondentsAre
havi
ng1insurancepol
icy.

Fr
om theabov
egr aphical
repr
esent
ati
on,maxi
mum respondentsI,
e,75.4%
i
shav
ing1i
nsurancepoli
cy,
23%ofr
espondent
sar
ehav
ing2insur
ancepoli
cywhi
le
1.
6%ishavi
ng3insurancepoli
cy.

52
What
kindof
insur
ancepol
icy
doy
ouhav
e?

Pol
i
cies No Per
cent
age
ofr
espond
ent
Whole 17 27.
9%
l
ifei
nsura
nce
Money bac 12 19.
7%
kpoli
cy

Pensi
on 6 9.
8%
pl
anpoli
cy

Propert
yi 5 8.
2%
nsuranc
e
Others 21 34.
4

From theabovetabl
eoutoftotal
61r espondents,
17respondent sarehav i
ngwhole
l
ifei
nsurancepoli
cy,
12respondentsarehav i
ngmoneybackpol i
cy,6respondent
s
arehav i
ngpensi
onpl
anpol
icy
,5r
espondent sar
ehavi
ngpropertyi
nsuranceand21
respondentsar
e
havingother
typeofinsur
anc
epolicy
.

From theabovegraphicalrepresentati
on,majori
tyofrespondentsI
, e34.
4%
i
shav i
ngdiff
erenttypeofinsurancepol i
cywhiletheleastnoofrespondents
I
,e
8.
2%r espondentsi
shavingpropert
yinsurance,
9.8%ishavi
ngpensi
onplanpol
icy
,
27.9%ishavi
ngwhol el
if
epolicy,
19.7%ishavingmoney backpol
i
cy.
53
Fr
What
ist
heav
eraget
ermof
pol
i
cy

Ter
mof t
hepol
i No Per
cent
age
cy of
responde
nt
s
Upto5y
rs 18 29

5-
10y
rs 8 12.
9

10-
20 10 16.
1

Abov
e20 26 41.
9

From theabovetableoutof62respondents,18respondentshadchosen
term upt
o5y r
s,8respondentshadchosent hepoli
cytermfrom 5-10y
rs,10
respondentshadchosent
heir
term10-
20yrswhil
e26respondent
shavechosent
heterm of
thepoli
cyabove20.

From t
heabov egraphi
calr
epresent
ation,maximum r
espondent
shad
chosenthei
rter
m above20y r
s.It'
salsoseemst hati
nIndi
aTodayworl
dar
e
will
i
ngtoinvestforl
ongt
ermtosecur
etheir
li
feandpr
opert
y.

54
Hav
eyouev
err
ecei
vedt
hebenef
it
sfr
omt
hepol
icy
youcur
rent
lyhav
e?

Response No Per
cent
age
of
responde
nt
s
Yes 33 54.
1

No 28 45.
9

Fromtheabovetabl
eout
of61respondents,
33respondent
shaver
ecei
vedbenef
it
s
fr
om i
nsur ancepoli
cywhil
e28r espondentshavenotrecei
vedbenefi
ts
fr
ominsurancepoli
cy

From t heabov egraphi

calrepresent
ati
on,maximum respondentshave
receivedbenef i
tsfr
om i
nsur ancepoli
cythi
scanincreasetheconfident
ial
i
tyof
i
nsur ed
persont herest
54.1%havenotrecei
vedbenefi
tsmaybet
heirpol
icy
havenotmatur
ed
orofany otherr
eason.

55
Howr
egul
arl
ydoy
oupay
premi
ums?

Payment
o No Per
cent
age
fpr
emium of
responde
nt
s
Quar
ter
ly 21 34.
4

Hal
fyear
ly 13 21.
3

Year
ly 14 23

Mont
hly 13 21.
3

From theabovetabl
eoutof61r espondents,21r
espondentspay
premiumsquarter
ly,
13respondentspaypremiumshal
fyear
ly,
14r
espondent
spa
ypremiumsyearl
y,
13respondentspay premiumsmonthly.

Fr
om theabovegr
aphicalr
epresent
ation.21.3% pr
efert
opaypr emi
ums
mont
hly,
34.
4%pay pr
emiums on quar ter
ly basi
s,21.3% pr
eferto pay
pr
emiumshalfy
ear
ly,
23%onyearl
ybasis.

56
Hasany
oft
hepol
ici
esev
erl
apsedduet
ononpay
ment
ofpr
emi
ums?

Response No Per
cent
age
of
responde
nt
s
Yes 51 82.
3

No 11 17.
7

Fromtheabovetableout
of62respondent
s,51respondentsstat
esthat
therepoli
cy
havenotlapsedduet ononpay mentofpr emium 11r espondentsstat
est hat
ther
epoli
cyhavelapsedduetononpaymentofpremiums.

Fromt
heabovegraphi
cal
repr
esent
ati
on,
82.
3%respondent
spoli
cyhav
enotl
apse
ddueto non paymentofpr emi
umswhi l
e17. 7respondentspoli
cyhave
l
apsedduetononpaymentof
premiums.

57
Ar
eyouawar
eof
any
insur
ancebonusesof
your
pol
ici
es?

Response No Per
cent
age
of
responde
nt
s
Yes 43 69.
4

No 19 30.
6

Fromtheabovetabl
eoutof
62respondents,
43respondentsar
eawareofi
nsurancebonuseswhi
le19r
espondent
sar
eawar
e
ofi
nsurancebonuses.

From theabovegraphi
calrepresent
ati
on.Maxi
mum r espondent
sI, e
69.4%respondentsar
eawar eofbonusesoninsur
ancepol i
cywhilethe
l
eastin
number of
respondent
sI,
e30.6%respondent
sar
eawareofbonusesonInsur
anc
epoli
cy.

58
Accor
dingt
oyout
aki
ngi
nsur
ancei
s?

Respondent
s No Per
cent
age
of
responde
nt
s
Prof
it 63 91.
3

Loss 6 8.
7

From theabov etabl

eoutof69r espondents,
63respondentsconsider
taki
nginsurancepoli
cyaspr
ofi
twhil
e6respondent
sconsi
dertaki
nginsurancep
oli
cyasloss.

From theabov egraphi

calrepresentati
on,91.
3%oftherespondent
s
considertaki
nginsur
ancepoli
cyisprofi
tandar
ound8.
7%insur
ancepol
icy
consi
deri
tasloss.

59
I
spr
ivat
isat
ionof
LICagooddeci
sionby
thegov
ernment
?

Response No Per
cent
age
of
responde
nt
s
Agr
ee 29 42

Di
sagr
ee 9 13

Neut
ral 31 44.
9

Fromtheabov etableout
of69respondents29respondentsagreewitht
hedeci
si
onofprivat
isat i
on,9disagreewiththedecisionofpri
v at
isation,
31respondent sareneut
ral
regardi
ngthedecisionofpr
ivati
sation.

Fromtheabovegraphi
calr
epresent
ati
on44.9%ar
eneutralr
egar
dingthedeci
siono
fpri
vat
isat
ion13%r espondentsdi
sagreewitht
hedeci si
onofpriv
atisat
ion,
42%respondentsagreewit
hthedeci
sionof
pri
vat
isat
ion.

60
Ar
eyouawar
eof
dif
fer
ent
typeof
insur
ancepol
ici
es?

Response No Per
cent
age
of
responde
nt
s
Yes 59 86.
8

No 9 13.
2

Fromtheabov
etabl
eoutof68respondents,59respondent
sareawareofi
nsur
ance
poli
cywhil
e9r
espondentsarenotawareofdif
ferentt
ypeof
insurancepol
i
cy.

Fromt
heabovegr
aphi
calr
epresentati
on,
86.
8%areawar
eof
dif
fer
ent
typei
nsur
an
cepol
i
cywhil
e13.
2%arenot
awar eofi
nsur
ancepol
icy
.

61
What
aret
heaspect
thaty
ouconsi
derbef
oret
aki
ngi
nsur
ancepol
icy
?

Aspect
sthat
tobeconsi
der
ed Noof
respondent
s Per
cent
age

Rat
eof
int
erest 26 37.
7%

Pr
emi
ums 20 29

Reput
ati
onof
thecompany 4 5.
7

Ter
msandcondi
ti
on 29 27.
5

Fr
om theabov etabl
eoutof69respondents,26respondentsconsiderr
ateof
i
nter
est20respondent
sconsi
der
premiums,4respondentsconsiderr
eput
ati
onof
theco
mpanyand29respondent
sconsi
dert
ermsandconditions,
beforetaki
ng
i
nsurancepoli
cy.

Fr
om t
heabove
graphi
calr
epresentat
ion,
37.
7%of
respondent
sconsi
der
rateof
int
erest
29%
respondent
sconsiderpremi
umsamount t
obepai
d,

62
I
nfor
mat
ioncol
lect
edt
hroughsecondar
ysour
ce

Ty
pesof
insur
ancepol
icy
Inlif
e,unplannedexpensesar eabit
tertrut
h.Evenwheny outhinkthatyou
arefi
nanciall
ysecur
e,asuddenorunf
oreseenexpendi
turecansi
gnif
icantl
yhamp
erthi
ssecurit
y.Dependingont heextentoftheemergency,suchinstances
mayal soleaveyoudebt-r
idden.
Whileyoucannotpl
anaheadf
orcont
ingenci
esar
isingf
romsuchi
ncidents,
i
nsuranc
epoli
ciesofferasemblanceofsupporttominimisefi
nanci
all
iabil
it
yfrom
unforeseenoccurr
ences.
Ther
eisawi
derangeofi
nsurancepol
i
cies,
eachai
medat
saf
eguar
dingcer
tai
nasp
ect
sofyour
healt
horasset
s.
Br
oadl
y,
ther
ear
e8t
ypesof
insur
ance,
namel
y:
 Li
feI
nsur
ance
 Mot
ori
nsur
ance
 Heal
thi
nsur
ance
 Tr
avel
i
nsur
ance
 Pr
oper
tyi
nsur
ance
 Mobi
l
einsur
ance
 Cy
clei
nsur
ance
 Fi
rei
nsur
ance

 Mar
inei
nsur
ance
Si
mplyknowingt
hev ar
iousi
nsur
ancepoli
ciesdoesnothel
p.I
nst
ead,
you
mustknowhoweachoft
hesepl
answork.
Withoutadequat
eknowledgeabouteachoft hem,youmaynotbeabl eto
protectyour
fi
nances,as wel
las the f
inancialwel
l-
bei
ng ofyourfamil
y
member s.Read on tol ear
nal
ly
ouneedtoknowabout
the v
ari
ousi
nsur
ance
poli
cies.

63
 1.
Lif
eInsur
ance

LifeInsurancer eferstoapolicyor
cov er
wher ebyt hepolicyhol
dercan
ensur ef
inanci
al f
reedom forhis/
her
fami l
ymember safterdeath.
Suppose
you
arethesoleearningmember i
nyourf
amil
y,supporti
ngyour spouseandchi l
dren.

Insuchanev ent,yourdeat h
woul dfinancial
lydevastat ethewhole
family .
Lifei
nsurancepoliciesensuret
h
atsuchat hing
doesnot happenbyprov i
dingfinanci
al
assistancet oy ourfami l
yin
theev entofyourpassing.

Ty
pesof
Lif
eInsur
ancePol
ici
es

Ther
ear
eprimar
il
ysevendi
ff
erent
ty
pesof
insur
ancepol
i
cieswhenit
comest
oli
fei
nsur
ance.
Thesear
e:

TermPlan
-Thedeathbenefi
tfr
om ater
m planisonlyavai
labl
eforaspeci
fi
edper
iod,
for
inst
ance,
40year
sfr
omthedateofpol
icy
purchase.

Endowment Pl
an-
Endowmentpl ansarelif
einsurancepoli
cieswhereaporti
onofy our
premiumsgotowardthedeat hbenefit
,whil
etheremai
ningisinvest
edby
theinsur
anceprovi
der.Matur
itybenefi
ts,deat
hbenefi
tandper i
odic
bonusesaresomet ypesofassistancefr
omendowment pol
ici
es.

Unit
LinkedInsurancePlansor ULIPs
Simil
ar t
oendowment plans,apar
tofyouri
nsur
ancepr
emiumsgotowar
dmut
ual
f
undi
nv est
ment s,
whilether emaininggoest
owardt
hedeathbenef
it
.

WholeLi
feInsurance-
Asthenamesuggest s,
suchpoli
ci
esofferl
i
fecoverf
ort
hewholel
ifeofan
i
ndiv
idual,
inst
eadofaspecifi
edterm.Someinsur
ersmayrest
ri
ctt
hewhole
l
if
einsurancetenuret
o100year
s.

Chi
l
d’sPl
an

64
-Investmentcum insurancepoli
cy,whi
chpr
ovi
desfi
nanci
alai
dforyour
chil
drenthr
oughouttheirli
ves.Thedeat
hbenef
iti
savai
l
ableasalump-sum
paymentaf t
erthedeathofparent
s.

Money -
Back-
Suchpolici
espay
acert
ainper
centageof
thepl
an’
ssumassur
edaf
ter
regul
ari
nter
val
s.Thi
sisknownassurvi
val
benefit
.

Reti
rementPl an-Alsoknownaspensi onplans,thesepoli
ciesareafusi
on
ofi
nvestmentandi nsurance.Aporti
onofthepremi umsgoest owar
d
cr
eatingareti
rementcor pusforthepol
i
cyholder
.Thi si
savailabl
easa
l
ump- sum ormont hly
pay mentaf
tert
hepoli
cyholderret
ir
es.
Benefit
sof
LifeInsurance

I
fyoupossessal
i
fei
nsur
ancepl
an,
youcanenj
oyt
hef
oll
owi
ngadv
ant
agesf
romt
he
poli
cy.

TaxBenef
1. it
s-

Ifyoupaylif
einsur
ancepr
emi ums,youareel
igi
blefortaxbenefi
tsi
nIndi
a,
under
Secti
on80(C)and10(10D)oftheIncomeTaxAct .Thus,youcansav
e
asubstant
ial
sumofmoneyastaxesby
opti
ngfor
ali
fei
nsurancepl
an.

Encour
2. agesSav
ingHabi
t-

Si
ncey
ouneedtopaypoli
cypremiums,buy
ingsuchani
nsur
ancepol
i
cy
pr
omot
est
hehabi
tof
sav
ingmoney.

Secur
3. esFami
ly
’sFi
nanci
alFut
ure-

Thepol
icyensuresyourf
ami
l
y’sf
inanci
ali
ndependencei
smai
ntai
ned
evenaf
tery
ourdemise.

Hel
4. psPl
anYour
Ret
ir
ement
-

Certainl
ifeinsur
ancepol
ici
esalsoact
asi
nvest
ment
opti
ons.Fori
nst
ance,
pensi
o
nplansof feralump-sum payoutassoonasyour
eti
re,hel
pingyoutof
und
yourreti
rement .

65
 Mot
orI
nsur
ance

Mot orinsurancereferstopolici
esthat
offerf
inancialassistanceintheeventof
accidentsinvolv
ingyourcaror
bike.Motorinsurancecanbeavail
edfort
hree
categoriesofmot ori
sedvehicl
es,i
ncl
uding:

CarInsur
ance-Per
sonall
yownedfour
-wheel
erv
ehicl
esar
ecover
edunder
suchapol
icy
.

Two-wheelerInsurance-Personal
ly
ownedt
wo-
wheel
erv
ehi
cles,
i
ncl
udi
ngbi
kesandscoot
ers,
arecoveredundert
heseplans.

Commer ci
alVehi
cleI
nsur
ance-I
fyouownav ehi
clet
hati
sused
commercial
ly,
youneedt oavailinsuranceforthesame.Thesepol icies
ensur
e that your
busi
nessaut
omobi l
esst
ayi
nthebestofshapes,
reduci
nglossessi
gni
fi
cantly.

Ty
pesof
Mot
orI
nsur
ancePol
ici
es

Based on t
heext entofcoverorpr
otect
ion of
fer
ed,mot
ori
nsur
ance
pol
ici
esareoft
hreetypes,
namel
y:

Third-Part
yLi abil
it
y-Thisisthemost basictypeofmot orinsur ancecoveri
nIndi
a.I
t
i
st hemi nimum mandat oryr equir
ementf orallmot orisedv ehicl
eowner s,as
pertheMot orVehi clesActof1988.Duet ot helimitedf inancialassi
stance,
premi umsf orsuchpoliciesalsotend
tobelow.Thesei nsurancepl ansonlypaythef i
nancial
liabilit
yt othethir
d-part
y
affectedinthesai dmi shap, ensuri
ngt haty oudonotf acelegalhassledueto
theaccident .They,howev er,donotof feranyf inancial
assistancetor epai
rt
hepol icyholder’
sv ehicleaf
teraccident s.

Compr ehensi veCov er-Compar edt othet hir

d-par t
yliabi l
i
tyopt i
on,
compr ehensiveinsur ancepl ansof ferbet terprotectionandsecur ity.Apar t
from coveri
ngt hirdpar tyli
abili
ti
es, thesepl ansal socov ertheexpenses
i
ncur r
edf orrepai r
ingt hedamages
tothepoli
cyholder ’
sownv ehicl
eduet oanacci dent.Addi t
ional l
y,
compr ehensi vepl
ansalsoof f
erapay outincasey ourv ehiclesust ainsdamageduet of ire,man-
madeandnat ural calamities,ri
otsandot herssuchi nst ances.Last l
y ,
y oucan
recoveryourbi ke’scost i
fit
getsstolen,
wheny ouhaveacompr ehensi v
ecov erinplace.Onecanal soopt forsev eral add-
onswi ththeircompr ehensi vemot ori nsurancepol i
cyt hatcanmakei t
bet t
er-
rounded.Someoft heseadd- onsi ncludezer odepr eciationcov er,engi ne
andgear -
boxprot ectioncov er,
consumabl ecov er
,breakdownassi stance, etc.
66
OwnDamageCov er-
Thisi
saspeci
ali
sedformofmotori
nsurance,
whichi
nsurancecompani
esof
fer
toconsumers.
Further
,youar
eeli
gibl
etoavai
lsuchapl
anonlyi
f

67
youpurchasedt hetwo-wheel erorcaraf t
erSeptember2018.Thev ehi
cle
mustbebr andnewandnot asecond-handone.Youshouldalsoremember
t
hatyoucanav ail
thisstandaloneowndamagecov er
onlyifyoual
readyhavea
t
hirdpartyli
abi l
i
t y
mot ori
nsur ancepolicyinplace.Wit
howndamagecov er,
youbasicall
yr eceivethesamebenef i
tsasacompr ehensiv
epolicywit
hout
t
het hi
rd-
par t
yl i
abili
typorti
onof thepolicy.

Benef
it
sof
Mot
orI
nsur
ancePol
ici
es

Carsandbikesar ei
ncreasi nglymoreexpensi vewitheachpassi
ngday
.At
suchatime,stayi
ngwithoutpr oper
insurancecanleadt
o
sever
emonet aryl
ossesfortheowner .
Li
stedbel
owar esomeadv antagesofpurchasingsuchapl
an.

Prevent
sLegal
Hassle
-
Helpsyouavoi
dany
traf
fi
cfi
nesandot
her
legal
i
tiest
hat
youwouldot
herwi
seneedt
obear.

MeetsAll
Thir
d-Part
yLi
abil
it
y
Ifyouinj
ureapersonordamagesomeone’
sproper
tyduringavehicul
ar
acci
dent,t
hei
nsurancepol
icyhel
psy
oumeet
themonetar
ylosses,
eff
ecti
vel
y.

Financial
AssistancetoRepairYourownVehicl
e
-
After
accident
s,youneedtospendconsi
der
ablesumsonr
epair
ingy
ourownvehi
cle.
I
nsuranceplansl i
mitsuchoutofpocketexpenses,
all
owingyoutoundert
ake
repair
simmedi atel
y.

Theft
/ l
osscov er
-Ify
ourv ehi
cl
ei sst
olen, y
ourinsurancepoli
cywillhelpyour
eclaim aportion
of thecar/bi
ke’
son-roadpr
ice.Youcanexpect
similar assistancei
fyour
vehi
cleisdamagedbey ondrepai
rduetoacci
dents.

Addi
ti
onall
y,i
ndi
vi
dualswhoownacommerci
alcar/
two-
wheel
ercanal
soavai
l
taxbenef
it
sif
they
pay
premi umsfor
that
vehi
cle.

68
 Heal
thI
nsur
ance

Healthi
nsurancer efersto
atypeofgenerali
nsur ance,whi
chpr ovides
fi
nancialassistancet o
poli
cyholderswhent hey ar
eadmi t
tedtohospit
alsf
o
rt
reatment.
Additi
onally
, somepl ansalsocov erthecost
oft
reatment under t
akenathome, prior
toahospi
tal
i
sationorafterdischargefromthesame.

Withtherisi
ngmedi cali
nflat
ioninIndia,buyi
nghealt
hinsur
ancehasbecome
anecessit
y.However,bef
oreproceedingwithy
ourpur
chase,
consi
der
thevar
ioust
y
pesofheal
thinsur
anceplansavail
ableinI
ndia.

Ty
pesof
Heal
thI
nsur
ancepol
ici
es

Ther
ear
eei
ght
mai
nty
pesof
heal
thi
nsur
ancepol
i
ciesav
ail
abl
einI
ndi
a.They
are:

I
ndivi
dualHeal
thI
nsur
ance-
Thesear
ehealt
hcar
epl
ansthat
off
ermedi
cal
cov
ert
ojust
onepol
i
cyhol
der
.

Fami l
yFloaterInsurance-Thesepol iciesall
owyout oavai
lhealt
hinsur
ance
for
your
enti
refamil
ywithoutneedingtobuyseparatepl
ansf
oreachmember .
General
l
y,hus
band,wifeandt wooft heirchil
drenareal l
owedhealthcoverunderone
suchfamily
floaterpol
icy.

Cri
tical
Ill
nessCov er-
Thesearespecialisedhealthplansthatprov
ideext
ensivefi
nancialassist
ance
whent hepol i
cyhol deri
sdi agnosedwi thspecif
ic,chronici
l
lnesses.These
pl
anspr ov i
deal ump- sum pay outaf t
ersuchadi agnosis,
unl
iketypical
healthinsurancepolicies.

SeniorCit
izenHealthInsurance-Asthenamesuggest
s,t
hesepol
i
cies
specif
ical
l
y cat
ert
oindi
vidualsaged60y
ear
sandbey
ond.

GroupHeal thInsur
ance-Suchpolici
esaregeneral
l
yoffer
edt
oempl oy
eesof
anorganisat
ionorcompany .Theyaredesi
gnedinsuchawaythatol
der
benefi
ciari
escanber emoved,andfreshbenef
ici
ari
escanbeadded,
asperthe
company ’semployeeret
enti
oncapabil
it
y.

Mat
ernit
yHealt
hI nsur
ance-Thesepol
i
ciescovermedicalexpensesduri
ngpr
e
-
nat
al,
post-
nat
alanddel
iver
yst
ages.
It
cover
sbotht
hemotheraswellasher
newbor
n.

Personal
AccidentI
nsurance-
Thesemedicali
nsur
ancepoli
ciesonl
ycov
erf
inanci
all
i
abi
l
ity
fromi
njur
ies,
di
sabi
l
ity
orde
69
at
har
isi
ngduet
oacci
dent
s.

Preventi
veHealt
hcarePlan-Suchpoli
ciescovert
hecostoft
reat
ment
concernedwi
thpr
eventi
ngaseveredi
seaseorcondi
ti
on.

70
Benef
it
sof
Heal
thI
nsur
ance

Aft
erassessi
ngthev ar
iouskindsofheal
thinsuranceavai
l
able,you
mustbewonderi
ngwhyav ail
ingsuchaplanisessenti
alf
ory ouandyourl
oved
ones.Lookat
thereasonsli
stedbel
owtounderstandwhy.

Medical
Cover-
Thepri
marybenef
it
ofsuchi
nsur
ancei
sthat
it
off
ersf
inanci
alcov
erage
agai
nstmedical
expendi
tur
e.

CashlessClai
m -Ifyouseekt reatmentatoneoft hehospital
sthathaveti
e-
upswi t
hyouri
nsurancepr ovi
der,youcanavailcashlessclai
m benefi
t.Thi
s
feat
ureensurest
hatallmedical
bil
lsar
edirect
lyset
tl
edbet ween
youri
nsurer
andhospital.

TaxBenef it
s-Thosewhopayheal t
hinsurancepr
emiumscanenj oyincome
taxbenefi
ts.UnderSect
ion80DoftheIncomeTaxActonecanav ailatax
benefitofuptoRs.
1Lakhont
hepremiumpay ment
oft
hei
rheal
thi
nsurance
poli
cies.

Ther
emay
beaddi
ti
onal
adv
ant
ages,
dependi
ngont
hei
nsur
ancepr
ovi
der
inquest
ion.

Feat
uresof
heal
thi
nsur
ance

Healt
hinsurancepoli
ciesgener
all
ycont
aincer
tai
nwi
thr
espectt
ocov
erageand
cl
aims,t
hesearel
ist
edbelowbri
efl
y:

A)Minimumperi
odofstay
inHospit
alI
norder
t obecomeel i
gibl
e
tomakeacl
aimundert
hepoli
cy,mini
mum st ayintheHospi t
ali
snecessar yfora
cert
ainnumberofhours.Usual
lythest
ipul
at eddurati
oni s24hour s.Thisti
melimi
t
maynotapplyfortr
eatmentofaccidental
i
nj ur
iesandforcert
ainspecif
iedtr
eatment
s.

B)
Cashl
essFaci
l
ityI
nsur
ancecompani
eshav
eti
e-upar
rangement
swi
thanet
wor
k
ofhospi
tal
sinthecount
ry.
Ift
hepolicy
holdert
akestreatmenti
nanyoft
henetworkhospi
tal
s,
therei
snoneedf ortheinsuredpersontopayhospi tal
bill
s.TheInsur
ance
Company ,
throughitsThir
dPar tyAdminist
rat
or( TPA)willar
rangefordi
rect
paymenttot heHospital
.Thisi
sknownascashlessfacil
i
ty.

C)Cumul ati
veBonus(CB)Heal t
hInsurancepoliciesmayof fer
“
Cumulat
iveBonus”whereinf
orever
ycl
aimfreeyear(i
.e.ay
earinwhichnocl
aimi
smade)
;
theSum Insuredisi
ncreasedbyacertainpercentageatt hetimeof
renewal
subjectt
oamaximumper centage(generall
y50%)

71
 Tr
avel
Insur
ance

Whent alki
ngaboutt hedif
ferenttypesof
i
nsurancepol i
cies,
onemust notfor
get t
olear
nmor eabouttrav
el
i
nsurancepl ans.Suchpol i
ciesensur e
thef
inancialsafetyofatravell
erduringat ri
p.
Therefor
e,whencompar edt ootherinsurance
poli
cies,
t r
aveli
nsuranceisashort-
termcov er
.

Depending
ontheprovi
deryouchoose,t
rav
elinsurancemayof
fer
financi
alai
datvar
iousti
mes,
suchasdur
inglossof4baggage,tri
pcancell
ationandmuchmor e.Hereisa
l
ookatsomeoft
hedif
fer
entty
pesof tr
avel
i
nsuranceplansavai
lablei
nthecountr
y:

Domest icTrav elI

nsurance-Thisisthekindoftrav
elinsur
ancepol
i
cy
that
safeguar dsyourfi
nancesduri
ngtravel
swit
hinI
ndia.
Howev er
,
i
fyouplantostepoutsi
det hecountr
yforavacat
ion,
sucha
poli
cywoul dnotoff
eranyaid.

InternationalTravel
Insurance-
I
f y
ouar esteppingoutofthecountry
,ensurey
oupickaninter
nat
ional
trav
el
i
nsur ancepl an.Ital
lowsy outocov erthe
unf oreseenexpensest hatcanar
iseduri
ngy ourt
ri
pli
ke
medi calemer gencies,
baggagel oss,l
ossofpasspor
t,
etc.

HomeHol i
dayI nsurance-Wheny ouaretravell
i
ngwi t
hf ami l
y,yourhome
remai nsunguardedandunpr ot
ected.Chancesofbur gl
aryar ealway s
signifi
cant,whichmay l
eadtosignifi
cantlosses.Thankfully
,withhome
holidayinsuranceplans, whi
chareof t
enincludedwithi
nt ravelpoli
ci
es,youar
e
fi
nanci al
lyprotectedfrom suchev ent
saswel l
.

Benef
it
sof
Trav
elI
nsur
ance

Thef
oll
owi
ngaspect
sar
ecov
eredunder
trav
eli
nsur
ancepl
ans:

CoverFli
ghtDelay-
Fli
ghtdel
aysorcancel
l
ationscanl
eadt
osigni
fi
cantl
ossesfor
the passenger
.If
you buyt r
avelinsurance,you can cl
aim such f
inanci
allossesf r
omthe
i
nsurer.

BaggageLoss/ Delay-Tr
av eli
nsuranceletsyouclai
m monet
aryassist
ancei
f
ther
ei sadelay
oryouhappentol
osey our
luggagedur
ingt
het
ri
p.Witht
hisamount
,
youcanpurchasesomeofthenecessaryi
tems.

Reclai
m LostTravel
Documents-Visaandpassportareessenti
aldocument
s
duri
nganinter
nati
onalt
ri
p.Opti
ngforint
ernat
ionalt
rav
elinsuranceensur
es
thatyouhavet
henecessaryf
inanci
albacki
ngtoreappl
yforinteri
m or
72
r
epl
acementdocument
sasandwhennecessar
y.

73
Tri
pCancel l
ati
onCov er-Asuddendeat hinthefamilyoramedi cal
emer gencymaypl ayspoil
sportwithyourtrav
el ar
rangements.Thankful
l
y,
i
nternationaltr
aveli
nsuranceplanssuppor tt
ripcancell
ati
onsinsuch
events.Youcancl aim
fi
nancialassi
stancetopaypenal
tiesandcancel
lati
oncharges

.
.Pr
oper
tyI
nsur
ance

Anybuildi
ngorimmov ablestructurecanbei nsuredt
hroughproperty
i
nsuranceplans.
Thiscanbeeit heryourr
esidenceorcommer ci
alspace.I
fany
damagebef all
ssuchaproperty,youcanclai
mf i
nanci
alassi
stancef
rom
thei
nsuranceprovi
der.
Keepinmindthat
suchapl
analsof i
nanci
all
ysafeguardst
hecontenti
nsi
dethepr
oper
ty.

Ty
pesof
Proper
tyI
nsur
ancei
nIndi
a

Herear esomet ypesofpropert

yinsur
ancepoliciesav ai
l
ablei
n
India:
HomeI nsurance-
Wi t
hsuchapolicy
,youremai
nfr
eefr
omallf
inanci
all
iabil
it
iest
hatmayar
isef
rom
damaget oyourhomeorcont entsi
nsi
deduet of ir
es,burgl
ari
es,
storms,eart
hquakes,expl
osi
onsandotherevent
s.

ShopInsurance-Ify ouownashop, whichactsasasour ceofincomef ory

ou,
i
tisi
ntegralt
opr otectyoursel
ffr
om fi
nancialli
abil
it
yar i
singf
rom thesame.
Whetherthel
iabil
it
y occur
sduetonatur
alcalamiti
esordueto
acci
dents,wi
ththeseplans,
youcanimmedi atel
yundertaker
epai
rstotheshop.

Of f
iceInsurance-Anot herty peofpr opert
yi nsur
ancepol icy
,of
fi
ce
i
nsur anceensuresthattheof ficebuildi
ngandal lt
heequi pmenti
nsideare
signif
icantl
yprotect
edint heev entofunforeseenev ents.Gener
all
y,of
fice
spaces
i
ncludeex pensiv
eequipment ,suchascomput ers,
server
sandmuchmor e.Thus,
a
vail
ingtheseplansisessential.

Bui
ldingI
nsurance-I
fyouownacompl etebui
l
ding,
opti
ngfor
homeinsurancemaynotbesuff
icient.
I
nstead,y
oucanpurchasebuil
dinginsurancet
ocovert
heenti
repr
emi
ses.

Benef
it
sof
Proper
tyI
nsur
ance

I
fyousti
ll
thinkthatpr
oper t
ycoverisnotoneofthety
pesofi
nsur
ance
pl
ansyouneedtoavai
l,
takeal
ookatsomeoft
headvant
agesf
romt
hesame.

74
Pr
otect
ionagainstFi
res-Whi l
ethei
nsurancepol
icycannotpr
eventf
ir
es,
i
tcanpr
eventf
inanci
all
iabi
l
iti
esfr
omsuchanevent
.

75
Burgl
ari
es-Ifyourproper
tyexi
stsinanareapr
onet
othef
tandbur
glar
ies,
suchapoli
cyi
svi
tal
toensur
efi
nancial
secur
it
y.

Floods-Incertai
npartsofIndi
a,fl
oodsarecommon.Thesefl
oodscan
ravageyour
proper
tyleadi
ngtosubst
anti
all
osses.Pr
oper
tyi
nsur
anceal
so
protect
sagai
nstsuchevent
s.

NaturalCal
ami t
ies-
Thepl
anal
sooff
ersfi
nancial
aidagainstdamagear i
singfr
omearthquakes,st
orms
andmore.
Rebui
ldingorrenovationofapr opertyisimmenselyexpensiv
e.Thus,
pr
opert
yinsurancepol i
ciesarethebestopt iontoensurelong-
termfinanci
alhealt
h.

Mobi
l
eInsur
ance

Owi ngtot heri

singpr i
ceofmobi lephonesandt heir
sev er
alappli
cati
onst oday,
ithasbecomei mper
ativ
et oi
nsu
rethedevice.Mobi l
einsuranceallowsy outorecl
aim
money
thatyouspendonr epair
ingyourphoneint
heeventof
acciden
tal
damage.

Furt
her
,youcanalsocl
aimthesameincaseof
phonet
heft
,maki
ngit
easi
ert
orepl
acet
hehandset
wit
phone. hanew

Benef
it
sof
Mobi
leI
nsur
ance

Mobi
lei
nsur
ancepoli
ci
esar
eext
remel
ybenef
ici
al,
especi
all
yfor
thosewhoownap
r
emiumsmartphone.

Compr ehensi
veprotect
ionfornewdev i
ces-Theval
ueofphonestendto
decl
inewithti
me.Thus,whent hehandseti
snew,phonei
nsurancecan
hel
psaf eguar
dit
ssignif
icant
value.

CoverageagainstDamaget oScreen-Ifyouacci
dent
all
ydamaget he
smart
phonescr een,
whichi
soneoft
hemostimpor
tant
par
tsofsuchdev
ices,
your
i
nsur
anceplanwill
payfor
ther
epair
expenses.
76
TheftorRobberyofSmar tphone-Not hi
ngiswor sethanbuyi
ngy
our
dreamsmartphoneandlosi
ngit
duetotheft
orburgl
ary.
Well,
phone
i
nsurancewi
llhel
pyouaffor
da
repl
acementhandseti
fsuchanunfor
tunatethi
nghappens.

77
Somei
nsur
ersmaynot
all
owyoutobuyinsur
ancefor
thesmar
tphoneaf
ter
amont
hort
wopassesf
romthepurchaseoft
hehandset.

7.
Cycl
eInsur
ance

Bicycl
esarevaluableproper
ties
i
nIndiaassomepeopl e
rel
yonthesevehi cl
esfort
hei
rdaily
commut e.Acy clei
nsurancepoli
cy
ensuresthaty ouhav eaccess
tonecessaryfundsshouldyourbi
cycl
eun
dergoaccidentaldamageortheft
.I
t
savesyourout
ofpocketex
penses,
whi
l
eal
soensur
ingi
mmedi
ater
epai
rst
othev
ehi
cle.

Benef
it
sof
Cycl
eInsur
ance

Theadv
ant
agesof
avai
l
ingsuchani
nsur
ancepol
i
cyar
e:

WorldwideCov erage-Dependi ngont hei

nsuranceprovi
der,
cycle
i
nsurancepoli
ciespr ovi
definanci
alassist
anceregardl
essofwherey our
bi
cycle
undergoesdamage. Eveni
fyoumeetwithacycl
i
ngaccident
inadi
ff
erentcount
ry,
s
uchaplanwil
l
offerai
d.

Protect
ionagainstFir
esandRi ot
s-I fyourbicyclesust
ainsdamagedue
toacci
dentalf
ir
esand/ orri
oti
ng,i
nsurancepol i
cieswil
lprovi
dethe
necessaryfi
nancial
assist
ancetorepair
orundothedamage.

Acci dentalDeat
hBenef i
t-Ifyoupassawayduetobi
cycl
eacci
dent
s,
theinsurancepol
icy
fort
hecyclewoul
doff
eral
ump-
sumpayout
t
oy oursurvivi
ngf
amily
member s.

Regar
dlessofyour
cycl
e’
spr
ice,
opt
ingf
ori
nsur
ancecanr
educey
our
fi
nanci
all
i
abi
l
i
ti
essignif
icantl
y.

78
 Fi
rei
nsur
ance

What
aret
heRi
sksCov
eredUnder
aFi
reI
nsur
ancePol
i
cy

Fir
einsur ancepolicyi
sbasicall
yacontractbet
weenthebuy
era
ndtheinsur er,
wher et
heinsurer
guarant eest
opayfor
the
damageor
losscausedtothepropertyof thei
nsurer
foraparti
cular
timeperiod.
Thepol
icy
i
si
nit
ial
l
yboughtforaperi
odofoney ear andit
canberenewedev ery
y ear.

Fi
r einsurancesaf eguardsproper tyagainstunexpect edriskswher etheval
ueof
asset si
sanal yzedaccordingtot heirmar ketval
ue, consideringfactor
sli
ke
depr eci
ationandal soappreci
ationi ncaseofi nf
lation.Fireinsurancecover
age
i
ncl udesmi shapscausedduet oacci dentalfi
re,
lightning,implosionorexpl
osi
on,
etc.Andal so,man-madeper i
lssuch
asbur st
ingof water
tanksandpipelinesoroverfl
owing,leakagesf r
omwat er
spri
nkl
es,
and
soon.

Ri
skcov
eredunder
fi
rei
nsur
ancepol
icy

Thefi
rei
nsurancepoli
cycover
ing
awidear
rayofi
nclusi
onsandhencer
enamedasst
andar
dfi
reandspeci
alper
il
spol
i
cycov
er
st
hebelow-mentionedri
sks-

Fi
1. r
e:

Thepol i
cydeliv erscoveragainstanyki ndofdamagecausedduet oaf i
re-
rel
ated
accident;
howev er,i
tdoesnotcov erfordamagesordest ructioncausedtothe
propertyi
nsur edby ownnaturalheating, f
ermentati
on,spontaneous
combust i
on.Al so,damagescausedt ot hepropertyduetodry i
ngandheatingprocess
cannotbet reat edasdamageduet ot hefir
e.Pl
us,t
heburni
ng
ofpropert
yinsur edbyor
derofany PublicAut hor
ity
ist
akenoutfromthecover
.

Li
2. ght
ning:

Fi
reoranyotherdamagecausedbyl
i
ghti
ngi
scoveredby
thepol
i
cy.
Forexample,l
ighti
ngcancauseafir
eorothert
ypesofdamageli
kecr
acksi
nther
oof
orbuil
dingwhi chfir
einsur
ancewi
l
lcover
.

79
 Expl
3. osi
onor
Impl
osi
on:

Thepoli
cycoversfi
redamagedcausedduet oexplosi
onori
mpl osi
on.
Thepoli
cy,
howev er,
doesnotcov erdamageordest ruct
ioncausedt otheboil
ers,
economizers,orothervesselst
hatreleasesteam andappar at
usormachi nerythat
uti
li
zescentri
fugalforcetofuncti
on.Pressure&Boi
lerPl
anInsurancePoli
cywil
l
basical
l
ycovertheseri
sks.

Ai
rcr
aft
Damage:

Bothfir
eandotherdamagetothepropert
ycauseddir
ectl
ybyair
craftoranyaeri
al
devi
ce,al
sodamagescausedbyt hi
ngsdroppedbyaircr
aftar
ecov er
edi nthefi
re
poli
cy.However,
damagesduet opressur
ewav escausedbyaircr
afttravel
ingat
supersoni
cspeedaret
akenout
fromthepol
i
cy.

I
mpact
Damage:

I
mpactbyanani mal,avehi
cle,orbyanof f
-t
rackrai
ltothepropert
yiscovered,
del
iver
edbythev ehicl
eortheani malshoul
dnotbelongt otheowneroftheproperty
oranyother
occupi eroft
hepr emise.Moreover,
theimpactcausedbyt hevehi
cleby
anyoftheemployeeswhi l
eact i
nginthecourseoftheiremploymentisnotcovered.
I
nthepolicy
damagesoccur r
ingt otheboundarywallofinsur
edpropert
yarealso
i
ncludedinthecoverage.

80
 Mar
inei
nsur
ance

Mar ineI nsur ancei sat ypeofi nsur ance

thatcov er scargol ossesordamagecaused
toshi ps, cargov essel s, t
erminal s, andany
transpor t
i
nwhi chgoodsar etransf erredoracqui redbet we
endi ff
er entpoi ntsofor igi
nandt hei r
fi
nal dest inati
on.Pr ov idingpr otect ion
agai nsttranspor t-r
elat edlosses, thisv oyage
policy prov i
desahav enf orshi pping
compani esandcour ier sbecausei tpr otects
wat
er. them f r
om
cost lypot enti
allosseswhi l
etranspor tinggoods
by

Despitefoll
owi nglawsandsaf etyr
egul ati
ons,t
ransport
erscan’tcont rol
naturaloccurrenc
esthatmi ghtdi sruptthecar goorv essel.Thingsli
keweat herhazar ds,encount ers
wit
hpi rates,andcr ossborderconflictsareverycommoni nwat ert r
anspor t
ationand
the
damagesassoci atedwit
hthesesituationscancauseasignifi
cantfinancialhardshipforshi
powner s.
Thisiswher eamar i
neinsurancepol icycomest other escue, protecti
ngt he
i
nterestsof shippingcor porati
onsandt ransport
ersbypr ov i
dingt hem wi t
h
i
nsurancecov er ageneededt odefendagai nst
possibl
elosses.

HullI
nsurance–of fersprotecti
onforphy sicaldamagest otheboatorvesselal
ong
wit
hitsoperatingequipment,incl
udi
ngmachi nery.Thispoli
cyisappli
cabl
eforall
watervesselsandli
mi tedt
ocommer cial-
basedoceancr af
ts.
Barges,t
ugboats,
oilri
gslocatedoff
shore,
float
ingequi
pment,
andothe
rsi
milar
inst
allati
onscanbenefitf
romthist
ypeof i
nsurance.

CargoInsurance–provi
descover
ageforphysicaldamagetocar gothati
sconv ey
ed
ort
ravel
ledaspartoftheshi
pmentprocess.Dependingonthechosencov erage,
some
pol
ici
esoffert
heft
prot
ecti
onor
cover
ageforot
herfor
msof l
ossesbesidesphy
sical
damag
e.

Mar ineLi
abili
tyI
nsurance–alsocall
edP&Iorpr
otecti
onandindemni ty
,thi
scov erageof
fer
sprot ect
ionforthir
d-part
yli
abili
ti
esthatowner sandcorporationsar eexposedt o
duringwat eroperat
ions.Iti
ncludescoverageforinj
uri
es,il
lnesses,orev enlossof
l
ifecausedby vesseloperat
ion.Medicalexpendit
ures,damaget ootherv esselsand
cargo,
81
col
l
isi
oni
nci
dent
s,andr
elat
edexpensesasar
esul
tof
quar
ant
inemay
alsobecov
ered.

Pr
ivat
eandpubl
i
ccompany
inl
i
fei
nsur
ancecompani
es

82
Sr
.No Nameof Nameof
i
nsur
ancecompa i
nsurancecompa
ni
es(
pvt) ni
es(publi
c)
1 HDFCstandard Li
fe
l
if
einsur
anceco.
L i
nsurancecor
por
at
t
d i
onofindi
a
2 Maxli
fei
nsur
anceco
.
Ltd

3 I
CICIpresidenti
al
l
i
feinsuranceco.Lt
d

4 KotakMahi ndra
l
if
einsuranceco.Lt
d
5 Adi
tyabi r
la
l
if
einsur
ancecoLt
d
6 TATAAI Alife
i
nsurancecoltd

Pr
ivat
eandpubl
iccompany
innonl
if
einsur
ancecompani
es

Sr
.No Nameoft he Nameof t
heinsuranc
i
nsurancecomp ecompanies(publ
i
anies c)
1 Acko Agr
icul
tur
einsur
ancecompanyof
Indi
gener al
ins a
urance
2 Adi
tyabirl
ahealth Expor
tcr
edi
tgur
anteecor
por
ati
ono
insurance f
indua

3 Baj
ajall
iance Nat
ional
insur
ancecompany
general
insur
a
nce
4 Ci
gnaTTK Theor
ient
ali
nsur
ancecompany

5 DHFLi
nsur
anc
e
6 ICI
CIl
ombard

I
mpact
ofi
nsur
anceoneconomy
83
Somesur v eyshavepr
edict
edthatI
ndiaandChinawil
lpl
ayav er
yv i
tal
rol
ein
theyearstocome.Indi
aneconomycanbet
ermedasanemer
gingeconomy
asit
isdoublingi
tsGDPi
n3

84
 I
mpact
ofi
nsur
anceoneconomy

Somesur vey
shavepredi
ctedthatI
ndi
aandChi nawi
llpl
ayav eryv
ital
rol
ein
they
earstocome.
I
ndianeconomycanbet
ermedasanemer
gingeconomyasit
isdoubl
i
ngit
sGDPin3
to5yearsandmoreoveri
ti
snotdependentonanypart
icul
arsect
orfor
it
sGDP.Ifwelookatt
he
GDPoft heIndi
aneconomyv er
yclosel
yov ertheyear
s, wecaneasi
lycomet oknow
thechangingstr
uctureoftheeconomy .Wecanal socomet oknowt hechanging
contri
butionoft
hevari
oussectorsl
i
keagricul
ture,
manufactur
ingandtheser
vicesector
.

TheI ndianeconomyhasshownsi gnsofst r

ongper formancedespi t
ear iseinoil
pri
ces, highinf
lati
onr at
eandabnor malrai
nsi nmanypar tsofthecountr
y.Theov eral
l
growt hoft heI
ndianeconomyhasbeenequal lysuppor tedbyal l
thethr
eesect or
sof
theeconomy ,
i.
e.theagricul
ture,manufacturi
ngandt heservicesector
.I
nsurance,
togetherwi ththe
bankingsect or,
contri
butestoabout7.3%oft
hetotalGDPof Indi
a,
andthegrosspremiumco
l
lectedcont ri
butestoabout2%of t
hetotal
GDPof thecountry

I
nsur
ancesect
or'
sshar
eof
GDP(
2015-
2019)

Year Tot
algdp GDP Per
cent
oft
otal

GDP

2015 $18224.
8 $552.
3 3%

2016 18715.
0 569.
1 3.
0%

2017 19519 558.

8 2.
9%

2018 20580.
2 609.
2 3.
0%

2019 21427.
7 629.
7 2.
9%

85
 Cont
ri
but
ionOf
Insur
anceToGr
owt
hAndDev
elopment

Insurancehashadav er
yposi tiveimpactonI ndia‘seconomi cdev el
opment .The
sectorisgraduall
yincreasingitscont ri
butiont ot hecountry‘sGDP.I naddi ti
on,
i
nsur anceisdrivi
ngtheinfrastructuresectorbyi ncreasinginvestment seachy ear
.
Fur t
her,i
nsurancehasboost edt heempl oymentscenar ioinIndiabypr ovi
ding
directaswel l
asindirectempl oymentoppor tuniti
es.Duet otheheal t
hy
per f
ormanceoft heIndianeconomy ,theshareofl i
feinsurancepr emi umsi nthe
grossdomest i
csav i
ngs( GDS)oft hehousehol dssect orhasi ncreased.The
i
ncr easedcontri
butionoft hei nsuranceindust ryf r
om
thehouseholdGDShasbeenpl oughedbacki ntotheeconomy ,generatinghighergrowth.

I
1.nsur
ancepr
ovi
desi
ncr
easi
ngempl
oymenti
neconomy
:Oneoft
hemai
n
probl
emsineconomyisunemploy ment.Manycount riessuf f
erf r
om thisproblem
nowadays.
Thenumberof
unemployedpeopl
eisincr
easingi ndev elopingcount ri
esusual l
y.
Butinsu
rance
system hel pst osolvet hisproblem in
economy .
So, insurancecompani es
providesi ncr easi
ngempl oymentwi t
hhiri
ng
newwor kers.Asweknow, i
nfluenti
al
i
nsur ancecompani essuchasAXA, Ll
oyds,
All
ianz, Aighav ebigbr anches
i
ndev elopedanddev elopingcount ri
es.

I
2.nsur
ancepr
ovi
desi
ncr
easi
ngGDP:
Oneoft
hemai
nmacr
oeconomi
cindi
cat
ors
of
eachcountr
yisGDP.Alot
ofmacroeconomi ci
ndicatorsareusually
consi der edasdetermin
antsof
profi
tabil
i
ty.Thedevel
opmentl ev elofeachcount ryismeasur edwi t
hv ol
ume
ofGDP.
Inmodernperi
odinsur
ancecompani esof ferdi
fferentinsuranceproductst opeople.When
peopl euset hesei nsurancepr oduct st heypay
insur ancepr emiumst oi
nsurancecompani es.
Insuran
cecompani esuset hesepremiumsi nfinanci al
andinves
tment activ
itiesofeconomy .So, t
hispr ocess
increasesGDPi neconomy .

86
 I
3.nsur
anceef
fect
stoeconomi
cgr
owt
hposi
ti
vel
y:
Thei
nsur
ancesect
orpl
aysani
mpor
tant
roleint hef inancialservicesindust r
y,
cont ribut i
ngt oeconomi cgr owth,effi
cient
resour ceal l
ocat ion,
reductionoft ransacti
on
cost s, creationof
l
iquidi ty,facili
tati
onofeconomi csofscalei
ninv
est
ment ,andspr eadoff i
nanci al.
Itisknownt hat,
i
nsur ancepr ovidesempl oy menti neconomy
andi tpr ovidesincreasingGDP.Wi ththese
adv ant ages
i
nsur anceal soef fect
seconomi cgrowthpositi
vel
y.

I
4.nsur
anceef
fect
sst
abi
li
tyoff
inanci
al
systemposi ti
v ely:Insuranceisoneoft hemai n
fieldsofser vicesect or.Insurancecompani esare
pr i
mar ypar toff inancialsyst
em.Besi dest hat
,
insur ancecompani esplaygreatroleinforming
stat ebudget .Becausetheyar ebi
gtax
pay ersoft hest ate.Asweknowt hebi gpar tof
thest atebudgeti sf ormedbyt axes.Fort his
reason, insurancesect orplaysgreatr olein
prov idingst abil
ityoftaxandf i
nancial
sy stem.

Cont
5. ri
but
ionof
insur
ancet
oinf
rast
ruct
ure
Generall
y,count r
ieswi thstrong
i
nsuranceindustri
eshav earobustinfr
astructureandst r
ongcapi tal
f
ormation.Insurancegenerat
eslong-
t
ermcapital,
whichisrequi
redt
obuildi
nfr
astructureprojectsthathavealonggesta
t
ionperi
od.Concur r
ently,
i
nsuranceprot
ectsindiv
idualsand
businessesf rom suddenunf avor
able
events.Awel ldev el
opedandev olv
ed
insurancesectori sneededf oreconomic
development asi tprovidesl ong-t
erm
fundsf ori
nfrastructuredev elopment
87
 andsimul
taneousl
yst
rengt
henst
her
isk
taki
ngabi
l
ity.

88
 Cont
4. ri
but
ionof
insur
ancet
oFDI
Theimpor tanceofFDIi
nthedev elopment of acapi taldefi
cientcount r
ysuchasIndia
cannotbeunder mined.Thi siswher et hehi gh-growt hsect orsofaneconomy
play
animpor tantr
olebyatt
ractingsubst ant i
alforei gninvestment s.Theinsurancesect
or,byvi
rtueofat t
racti
ngl ong-termf unds, isbestpl acedt ochannel izelong-
termf undstowar dt
heproduct ivesector s
oftheeconomy .Therefore,t
hegr owt hintheir
premi um col lect ionsisexpect edtot r
anslate
i
nt ohigheri nv est ment sinotherkeysect orsof
theeconomy .Ther ef
ore,t
heliber al
i
zationofFDIno
rmsf orinsurancewoul dnotonly benefi
tthesector
,
but severalother cri
ti
calsectorsof theeconomy .
5.I
nsuranceal
soeff
ectstobalanceofpaymentsofth
ecountryposi
ti
vel
y.Forexampl ewhenone
i
nsurancecompanyinsurelargescaleri
sk,this
companyt r
ansfer
ssomepar tofr i
sktoanother
i
nsurancecompany .I
tiscal
ledrei
nsuranceprocess.

Reinsur
ancehel pst oinsurancecompani esreducerisksanditalsoprev
ent
appeari
ngfinancial
loss.Reinsuranceal
soknownasinsurancefor
insurer
sorst
op-
l
ossinsurance,i
sthepracti
ceofi nsurerstr
ansfer
ingpor t
ionsofri
skprotf
oli
osto
otherparti
esbysomef orm ofagreementtor
educetheli
keli
hoodofhavi
ng
topayal
argeobli
gationresulti
ngf r
oman
i
nsuranceclai
m

Reinsurancel etsinsurerscoverthei
rrisksbyr ecov er
ing
someoral loft heamount stheypayt oclai mants.I
n
reinsurancepr ocessinsurercantransferr i
skalsoto
foreigninsur ancecompani essit
uatedinot hercountry.I
t
effectscooper at
ionof i
nsurancecompani esandal so
count ri
es.Besi des
thatreinsur
anceef fectstr
adeoperati
onsof thecountryposi
ti
vely.
Wi ththesef actorswecansayt hat,i
nsur ance
pr
ovi
desi
ncr
easi
ngbal
anceofpay mentsof t
hecount ry
.

I
6.nsur
ancepr
ovi
despr
osper
it
yofpeopl
e:Av
ail
abi
l
ityi
nsur
ancei
nthewor
ldi
sthe
bestadv antage.Nowaday speoplefrom di ffer
entcount r
iescanusedi fferenttypes
ofinsurance. Forexampl einmoder nper iodpeopl eusesuchasmot orinsurance,
propertyinsur ance,li
fei
nsurance,medi cal i
nsurance,tr
av elinsur
ance.Al lthese
i
nsur ancet ypespr ovi
despeopl e’
ssafetyandsecur it
y.Av ai
l
abi l
it
yinsurancei nt he
worldal sopr ovidespeople’sguarantee.
I
teffectstheirl
ifesty
leposit
ivel
y.
Iti
sknownt hat,i
nsuranceincreasessav i
ngsof people.
Especiallywecansayt hatli
feinsuranceef fectspositi
velytopeopl e’ssav i
ngs.
89
Whenpeopl
euseinsur
ancetheirpr
opert
y,al
sot
hei
rli
fei
sunderguar
ant
ee.These
goodadv
antagespr
ovi
deprosperi
tyof
peopl
e.

90
Di
sinv
est
ment
ofLI
Cagr
eat
stepby
thegov
ernment
tot
ackl
ewi
thf
iscal
def
ici
t:

Fromitscreat
ion,
theLif
eInsuranceCorporati
onofI
ndia,
whi
chcommandedamonopoly
of
soli
cit
ingandsel l
ingli
feinsuranceinIndia,cr
eatedhugesur
plusesandby2006
wascont r
ibut
ingaround7%ofIndia'
sGDP.

Thecor por
ati
on,whichstart
editsbusinesswitharound300offi
ces,
5.7mill
ion
poli
ciesandacorpusof₹45. 9cr
ores( US$92mi l
li
onasperthe1959exchangerat
e
ofroughly₹5forUS$1),
[11]
hadgrownto25,000servi
cing
around350mill
i
onpolici
esandacorpusofover
₹800,000cr
ore(US$110bil
li
on)byt
heendofthe20thcentury
.

LI
Cal sohasalotofinvestmentsinvari
ousli
stedcompaniesanditisint
oinsur
ance
busi
nesswhichisearni
ngat opl i
neofapproximatelyRs5.61lakhcrorewit
habout
60% comingfromindiv
idualinsur
anceandgr oupi nsur
anceschemes( Rs2.3lakh
cror
eandRs0. 98Lakhcr or
efori
ndiv
idual
andgroupr
especti
vel
y).

ThisI
POshoul deff
ecti
velyattr
act
FPIsandinternational
i
nvestorswhichdidn'
thappenwell
incaseofsi mi larbigI
POAramcogl obal
ly.I
fthat
happenstheni twil
lbequi teasuccessfulstr
ategyoft hegov
ernmentt oaddaf r
esh
i
nfusionoffundsi ntheeconomybyget ti
ngfor eigni
nvest
mentsasagai
nstt
aking
awayliqui
dit
yf r
om theIndianmarket
s

LICearnedsigni
ficantincomef r
om thedividendofaboutRs1. 76lakhcroreinFY18.
Theeconomicimpact andgovernmental
decisiontomonet
iseandall
ocatet
hisresourcet
o
freshi
nfr
ast
ructuredev el
opmentandf i
llbudgetarydefi
citcanbeahi st
oricdecision
takenforal
ongtimeaddr essi
ngmul t
ipl
easpect s.

Thiswillhelpthegov ernmenteaseal otofeconomi cpar ameterswhi chitis

str
ugglingt oachi
ev eandt argetprimarycri
teri
abeingf i
scaldefici
t.LICasa
perfor
manceandbr andissoat t
racti
veatthisstagethatitcanat t
ractstrong
contendersf ordivestment
subscri
ption,especiallywhenthei
nsurancesectori
sslowlyopeni
ngupi nIndi
a,movi
ngf
rom
monopol ytomul t
ipleplayer
sandtherefor
etountapit
svalueti
mingissoright.

Itwillal
soprovi
delotofr
etai
linvestorstoparti
cipateinwealthcr
eati
onjourneyof
such abi ginst
it
uti
on which gener at
es wealtht hr
ough insur
ance premiums,
i
nv estmentsi
ncomesandappr
eciationsofsubsi
diaryandi
nvest
ments.

Thegoodaspecti sthatthegov ernmentisv

erycl
earabouttheownershi
pand
control
overt
hei nst
it
uti
onwhi chi
twi
ll
retainhencet
her
ewouldnot
bemuchchangeint
hefunct
ioni
ngoft heorgani
sationandper f
or manceofLICwil
lbeuntouchedduetothi
s
corpor at
eevent(
IPO).

91
Asagai nstotherPSUbusinesseswhichcannotmai ntainasteadybusinessdue
tocompet i
tion,
disr
upti
on,managementi
ssues,
arenotabl et
oupdateobsolet
etechnol
o
gyandar efacedwi t
halackofproductdemand-t hesei ssuesarenotfacedbyLI C
anditcontinuest
ohavearobust
demandandenjoyst
hel argestmar
ketshare.

I
twil
lalsomakest ockexchangesquit
ebroad-
basedandwil
lchangeI
ndi
a'
s
wei
ghtageandrat
ingacrossvari
ousgl
obal
indi
cesi
ncl
uding
MSCIwhichi
shi
ghlytr
ackedglobal
ly.

Devel
opmentofcapitalmar ket
sthr oughthei
nvestmentofli
feinsurance
compani
esSavi
ngsgener atedt
hroughpremiumspaidby
poli
cyhol
dersandinvest
ment
madebyt
heshar
eholderistr
ansmittedint
othewi
der
economy t
hroughinv
estments.

Capitalmarketisamechani sm t
hroughwhi cht histransmi ssionoff undstakespl ace
.Theextent of dev elopment of t he capit
almar ket det ermines t he range of
i
nv estments in whi chan i nsurancecompany can i nvest i t
sfunds. Savi
ngs t hat
arepooledandinv est
edint hecapi
talmarketbyt helifeinsurancecompani esactsasan
i
mpor tantsti
mul ustot hegrowthofthecapi t
almar ketit
self.Howev ertherelat
ionship
betweent helevelofsav inggeneratedthroughlifeinsuranceandt hedev el
opmentofa
domest iccapi
talmarketisat wo-
way process.

Thisissobecausesav ingsdonei nlif

einsurancei susuall
yav oluntar
ydeci sionon
the part
ofcustomers.Customer swouldsav eonlyi
ft
heinvestmentopportuni
t i
esthatar
emadeav ai
l
ablet ot hem byt hei nsurancecompani esi nt hecapitalmar ketareat tractive.
Therefor
etherei sady nami cpr ocessatwor kwi ththeinteract
ionofsav i
ngt hr ough
l
ife i
nsurance andthedev el
opment oft
hecapit
al marketbothevol vi
ng
together
,withonehel
pingt heother.

Howev eri
nvest
mentoff undsininsurancecompanyisguidedbyr
egulat
oryauthori
ty
ofthecountrywhich ai
ms atr educing t
he ri
sk ofinsolv
ency.Hence a proper
coordi
nati
on betweeni
nsurancecompani es,regul
ator
ybodyand t hegovernment
shouldbemaintai
nedforthedevelopmentoft
hecapi
tal
market

Economi
cbenef
it
sof
ady
nami
cli
fei
nsur
ancesect
or

Lif
ei nsurance has wi dereconomi cr i
pple effectsi n an economy .Itact s as
complement ary tothe banki ng system by pr ovidi
ng l ong term finance t o
manuf actur
ing,energygener ati
ngcompanies,t r
ading,agricult
ureandf i
nancingof
i
ndustries int he form ofequi ty ordebt capit
alsi
ncebankscanonly
provideshort
-
ter
mfinancet omanufact
uringandotherent
erpr
ises,becauseoftheshor
t-
ter
m
natur
eof t
heirdeposi
ts.

Li
fei
nsur
ersal
somakesf
undav
ail
abl
etot
hegov
ernmenti
nfundi
ngi
mpr
ovement
s

92
i
nthei
nfr
ast
ruct
ure.
InI
ndi
a15%of
li
fef
undi
nvest
ment
ini
nfr
ast
ruct
urei
smademandat
ory

93
accordi
ngtosecti
on27(A)ofli
feinsur
ancer
egul
ati
onactof1938whi
chhasbeen
subject
edt
ochangeswi
thamendments.

These capi talexpendi tur

e deci sions,made by t he private sectorand by the
gov ernment leadst oriseinthel evelofempl oymentandi ncreasesthest andardof
l
iving acr osst heeconomy.Ast heeconomi cbaseoft hecount r
yi mproves,the
expor tpotentialofthecount r
yincreasesthereisariseintheexpor tsofthosegoods
whi chwashi thert
oimpor t
ed.Thesmal lsavi
ngscoll
ectedthroughl i
feinsurancealso
play sav eryi mpor t
antroleinr educingthei
nfl
ati
onaryli
kesituationsincesav i
ngsin
l
ife insur ance reduces t
he pur
chasing power of
thepeopl eandconsumpt i
onofconspicuousgoodswill
besqueezedout .

94
I
NDI
ANSCENARI
OINDI
ANI
NSURANCEI
NDUSTRYLI
FENONLI
FEI
NSURANCEI
NSURANCE.

LIFEINSURANCEAf t
ertheentr
yofnewplayer
sandi
ncreasei
nthepenetrat
ionl
evel
s,
could
seetheinsur
ancesectorcrosstheRs2, 00,
000-
coremar kinbusinessby2010.The
curr
entsizeoft
hesectorisesti
mat edt
obeatRs50, 000cr ore,
whichhasseena
compoundannualgrowthrate(
CAGR) of
around175percent
inthel
astf
ewy ear
s.

.Thei nsurancesector ,bothl

i
f eandnonl ife,
isl
ikel
ytogrowbyov er200
percent,andprivat
einsur er
sareex pectedtoachieveagrowthrateof140percentas
a
result
ofaggr essiv
emar keti
ngtechnique.I
taddedt
hatst
ateownedinsur
ancecompanies
arel
ikelytobe35-40percent.

Onaccountofi nt
ensemar ket
ingst
rategi
esadoptedbythepri
vat
einsurancepl
ayers,
themarket
shareofst
ate-
ownedinsur
ancecompani esli
keGIC,
LICandother
shascomedownt
o70percentinl
ast
4-
5year
sfromover97percent.Despi
ter
egulati
on,

Mar
ket
Size

I
nIndi
a,
theov
eral
l
mar
ket
sizeof
thei
nsur
ancesect
ori
sexpect
edt
oUS$280bi
l
li
oni
n2020

Grosspr emium col

l
ectedbyl if
einsurancecompani esi
nIndiaincr
easedf r
om Rs.
2.
56t ri
l
lion(
US$39. 7bi
ll
ion)inFY12t oRs.7. 31tri
l
li
on(US$94. 7bi
ll
i
on)inFY20.
DuringFY12-
FY20,premiumfromnewbusi nessof
li
feinsurancecompani
esinI
ndiai
ncreasedat
aCAGR
of15%toreachRs.2.
13tri
l
lion(US$37bill
ion)
inFY20.

Themar ketshareofpriv
atesectorcompaniesi
nthenon-l
i
feinsurancemar
ketr
ose
fr
om15%i nFY04to
56%inFY21(ti
l
lApri
l2020).
Inl
i
fei
nsurancesegment
,pr
ivat
epl
ayershadamar
ket
shar
eof
31.3%i
nnewbusinessinFY20.

95
I
nvest
ment
sandRecent
Dev
elopment
s

Thef
oll
owingaresomeoft
hemaj
ori
nvest
ment
sanddev
elopment
sint
heI
ndi
an
i
nsur
ancesect
or.

Compani
esar
etr
yingt
olev
eragest
rat
egi
cpar
tner
shi
ptoof
fer
var
iousser
vicesasf
oll
ows:

I
nDecember 2020,SBI
General
Insurancepartner
edwi thI
ntrCi
tyRail
Yatri
tooff
er bust
ravel
lerswith
domestictravelinsur
ance.SBIGener alInsurance,underthi
spartnershi
p,wi
l
l
i
ncludeawi der angeofcov erage,i
ncludingaccidental
death,
permanent completedisabil
i
tyandemer gencyev acuat
ion.

InDecember2020, I
CICILombardGeneralInsurancehaspart
neredwi t
h
Plum,I
ndia'sfastestgrowingemployeehealthinsurancest
art
-up,to
rei
magineandco-
creat
eIndia'
sfir
sttechnologi
cal
l
ybackedgroupofhealthi
nsur
anceproducts

InNovember2020, Baj
ajAll
ianzGener alInsurancej oinedforceswit
h
MuthootFinancetoof f
eri
nsur anceongol djewel lery
.Thi sschemeispl
anned
to
provi
dei
nsur ancecover
ageforgoldjewel l
erypiecesf or
thelatt
er’
scust
omersat
th
eti
meofclosingoft
hegoldl
oanandr eleaseof goldornament s

I
nNov ember2020,HDFCERGOGener alInsuranceCompanyandNSDL
Payment sBankLimited,NationalSecuri
ti
esDeposi toryLtd(NSDL)
Subsidiar
y ,
coll
abor
at ed
toof
fercustomersafull
rangeofgeneral
insuranceproducts.
Thispar
tner
shi
pint
e
ndstointegrat
eNSDLPay ment sBank'sbr oaddistr
ibuti
onnetworkand
HDFCERGO' swidei
nnov at
ionpipel
inet
ocont ri
butet
ofinanci
al
i
nclusionint
hecountry

I
nNov ember 2020,Li
feInsuranceCorporat
ionofIndi
alaunchedi
tsf
ir
stsof
twarea
ppli
cation,ANANDA, anacr ony
mf or‘AtmanirbharAgentsNewBusi ness
Digi
talApp’ortheon- boardingprocesswiththeaidoft heagent/
brokert
o
getli
feinsurancepol
icythroughpaperl
essmodul e

96
 Gov
ernment
Ini
ti
ati
ves

TheGovernment of
Indiahastakennumberof
i
nit
iat
ivestoboostt
heinsuranceindust
ry.
Someof
them ar
easf
oll
ows:

AsperUni
onBudget2019-
20,
100%f orei
gndi
recti
nvest
ment(
FDI
)was
per
mitt
edf
ori
nsur
ancei
nter
mediar
ies.

I
nDecember2020,Utt
arakhandannouncedit
splantooffer‘
COVID-19
I
nsur
ancePol
i
cy’t
oint
ernati
onalt
ouri
sts.
Apr
oposalr
equest
hasbeensubmit
tedt
o
t
heUni
onTour
ism Mini
ster
, Mr.Pr
ahladPat
el,
toint
roducespeci
alli
fe
i
nsur
ancepol
ici
esforf
oreignt
ouri
sts.

OnDecember03, 2020,asaone-timemeasur e,
IRDAIannouncedthati
t
hasauthor
isedupt o5%oft heexisti
ngpremium rat
estochangethebase
premium.Thi smovewast oensureviabi
l
ityandlongev
ityf
orsmoot h
tr
ansformationoftheexist
inggoods.

I
nNov ember2020,i
ncollaborati
onwit
hPNBMet Lif
eIndiaInsurance
Company,I
ndi
aPostPay ment sBank(I
PPB)announcedthelaunchof
PradhanMantr
iJeevanJyotiBimaYoj
ana(
PMJJBY) f
orcust
omer s.

TheI
nsuranceRegul
ator
yandDevelopmentAuthori
tyofIndia(
IRDAI)
planst
oissu
er
edesi
gnedi ni
ti
alpubl
i
cof f
eri
ng( I
PO)guideli
nesf orinsurancecompanies
i
nIndi
a,whichar
etol
ooki
ngtodivestequi
tyt
hroughtheIPOrout e.

I
RDAI hasal
lowedi
nsurerst
oinvestupt
o10%inaddi
ti
onal
ti
er1(
AT1)bondsthat
ar
eissuedbybankst oaugmentt heirt
ier1capi
tal
,i
nordertoexpandthepool
of
eligi
blei
nvestor
sfor
thebanks.

InOctober
2020,t
heAndhraPr
adeshr
olledout
freeof
costcropi
nsur
anceschemefort
hest
atefarmers.

RoadAhead
Thefutur
elookspromisi
ngforthelifei
nsuranceindustrywit
hseveral
changesinr
egul
atoryfr
amewor kwhichwi l
ll
eadt ofurt
herchangeinthe
waytheindust
ryconduct
sit
sbusinessandengageswithi
tscust
omers.

Theoveral
l
i
nsurancei
ndustryi
sexpectedtoreachUS$280bil
li
onbytheendof2020.Li
fe
i
nsuranceindustr
yinthecount ryisexpectedtoincr
easeby14-
15%annuall
yfort
henextt
hreetofiveyear
s.
Li
terat
urer
eviewrel
ati
ngtoInsuranceservi
cesandthei
rcontr
ibut
iontodev
elopm
ent

97
Chapt
er-
5

98
 Concl
usi
on

Insur
ance,beingpartoft hefi
nancialsystem,per
form si
xbasi cf
uncti
ons
such
aspooli
ngofresour
ces,facil
it
atecapi
talt
ransfor
mation,
eff
ici
entpri
cing,
ri
skhed
ging,
faci
li
tat
et r
adeandcommer ce,andactingasanagentt odeal wi
ththe
asymmet r
ici
nformationissuestoi
mpr ovet
heeconomicwell-
being.

All
ofthesesixf
unct i
onsofinsurancecouldbecat egorisedunder
i
ntermedi
ati
on,r
isktr
ansfer
andindemni f
icat
ion.
Insuranceholds
apromi
nentposi
tionamongot her
financi
al i
nsti
tut
ionsduet ostabi
l
ityand
i
ndemnifi
cati
onf eat
uresofinsurancecontract
s.

Insurancesectoroff
ersa
l
ot of
differ
enttypeofi
nsurancepol
icycov
eri
ngdi
ff
erent
type ofrisk and i
tis
alway sbenefi
cialtohaveinsurancepoli
cyandcover
sf i
nanci
alri
skat
thet
ime
ofemer gencyoruncert
ainty.

I
nsurancei
ndustrynotonl
yhelpsi
nthedevel
opment of
financialsect
or(
competit
ive
pr
ici
ngandef fi
cientall
ocati
onoff unds)butital
sopr omot eseconomic
gr
owt hi
ndi
rectl
y.Howev er,
ther ol
eofinsurancevari
esf ordi f
fer
enteconomic
l
evel
sandlargely
dependsont heproxyusedtomeasureinsuranceacti
vi
ty

Thegr owthoftheI
ndianeconomy hasbeendimini
shingduetov
ari
ousreasons,
but
t
heIndi angrowthstoryisstil
lali
veasI ndi
anshasahabi tofmov i
ngslowly
butsteadil
yandi ntheendwewi nt herace.Curr
entlyThesit
uati
onsarenotin
ourfavourbutassoont heaboveproblemssettl
esdown, wemaybackontr
ack.

Att
hesamet i
memany sectorsaresupporti
ngtothegr
owthoft
heIndi
aneconomy ,
a
mong t hat i
nsurance sect or‘
s contribut
ion isv er
y high.The gr owth
perfor
manceof t
heinsurancei ndustr
yhasi ncreasedtr
emendouslysincethe
establ
ishment of I
RDAinI
ndia,
which
superviseandcont
roll
edtheent i
rei
nsuranceindustr
y.

Theincreaseinnumberofi nsurerbothinl
ifeandnon- l
ife,growthin
i
nsurancepenetrat
ionanddensit
y,i
ncreasei
nnumber ofpoli
cies
i
ssuedandincreaseint
hespeedofcl ai
msset t
lementandt heinmanymor e
aspectstheIRDAi splay
ingapromi nent
rol
eintheI
ndianinsurancesect
or.

99
 Inmoder nperiodpeopleusel i
feandnon- l
i
feinsuranceproductssuchas
motor i
nsurance,
tr
aveli
nsurance,pr
opert
yinsur
ance,medicali
nsurance,
lif
einsur
ance.All
li
feandnon- l
if
einsurancetypesalwayssav epeopleproperty
, l
if
eand
heal
t h.All
i
nsurancetypesprotectpeoplefrom dangerandloss.Insurance
sectorplaysgreatr
olei
nincr
easingGDP.

Allpr
emi umscoll
ecti
ngbyi nsurancecompanieseffecteconomic
devel
opmentposit
ivel
y .
Besi
desthati
nsuranceef
fect
stobalanceof
payment
s,f
i
nanci
alst
abil
it
yposit
ivel
yandi tal
soincreasesemploymentineconomy.
Thesefactor
salsoacceler
ateeconomicgrowth.

Suggest
ion

Hav i
ngani nsurancepol i
cyisalway sbenef i
cial,
asatthet i
me
ofunexpectedi ncidentanddur i
ngasuddenl ossi
t safeguardtheper
so
nwi t
hthehelpof f
inanceandcr eateasavinghabitamongt hepeople.
Astherearemany insurancepolicywherethepremi umamount
islowerAnditisaffordabletoal owerincomegr oupst oo.
Today therearedifferentinsur
ancewhi chcov er
edi f
ferentr
iskandare
Framedasperneedoft hecust omer ,
taki
ngani nsurancepol i
cy
i
sPr ofi
tabl
easper resear ch.

10
10
Ref
erences

Adams,M.,
Andersson,
J.,
Ander
sson,
L.-
F.
,andLi
ndmark,
M. (
2009).
Commercial
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ng,
i
nsur
anceandeconomi
cgr
owt
h
i
nSwedenbetween1830and1998.

Accounti
ng,Busi
nessandFi nancialHistory,19,21-38.Al
hassan,A.L.,and
Fi
ador,V.(2014)
.Insur
ance-growth nex us in Ghana:An aut oregressiv
e
di
stri
buted l
ag boundscointegrat
ionapproach. Review
ofDevel
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nance,
4(2)
,83-96.

Ansari
,S.J.,andRehmani ,A.(2016)
.Economicref
ormsandits(si
c)impact
on
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nsuranceindust
ryi
nIndia.
Int
ernat
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Jour
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Arena,M.( 2008).Doesinsurancemar ketact

ivi
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ali
zedanddevel
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nal
ofRisk
andInsurance,75(4)
,921-946.Ar
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,andJai
n,
M. (
2013).

Ananal
ysi
soncont
ri
buti
onofBancassuranceonfi
nanci
alperf
ormanceof
Bankof
I
ndia.
Jour
nalof
EconomicsandSustai
nableDevel
opment ,4(
6),
24-
35.

Arti
ki
s,P.
G.,
Mutenga,
S.,
andStaikour
as,
S.K.
(2008)
.Corporatebancassur
ancest
ruct
ures:
Thecaseof
Greece.RiskManagement,
10(2)
,85-103.

Bansal,J.,
andKanwal,
A.(2018).Quali
tati
veresear
chonissuesandtr
endsi
n
thebancassur
ancemodeli
nIndi
a:Ani
nter
v i
ewreport
.I
nter
nat
ional
Jour
nal
ofBan
king,
RiskandI
nsur
ance,
6(2),
67.

BCGandFI
CCI.
(2017)
.Thechangingf
ace of
Indi
an
i
nsur
ance:
Bigger,
bet
ter
,f
aster.
BCG-FICCI
.

Chakr
abor
ty,
J.,
andSengupt
a,P.(
2016)
.Indi
anl
i
f ei
nsurancemarket
andcor
porat
eper
for
mances:Astudyofselectedf
ir
ms.Internat
ionalJour
nalofBanki
ng,
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skandI
nsur
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4(1)
,26.

10
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Chandrapal,J.
D.(2019).I
mpactofliberal
izat
iononIndi
anli
fei
nsurance
i
ndustry:Atr
ulymult
ivar
iat
eapproach.I
IMBManagement Revi
ew.31(
3),
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297.Chen,S.
,
andFishbaum,D.
(2019).Ri
sk-basedcapi
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devel
opmenti
nIndi
a.
Oli
verWyman.

Ret
ri
evedf
rom

ht
tps:
//www.
oli
ver
wyman.
com/
cont
ent
/dam/
oli
ver
-

wy
man/
v2/
publ
i
cat
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jul
y/r
isk-
based-
capi
tal
.pdf

Chen,Z.,
andTan,J.(2011).
Doesbancassuranceaddval
uef
or
banks?Evidencefrommer ger
sandacquisi
tionsbet
weenEuropean
banksandinsurancecompanies.
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nternational
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112.
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your
art
icl
eli
brar
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bimabazaar.
com
.
www.academi
a.edu/

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cewat
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ani
nsuranceindust
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10
10
 Annexur
e

Sur
veyr
elat
edt
oinsur
ancepol
icy
1.
Nameofther
espondent

2.
ageofther
espondent
s
A)0-18 B)18-
25 C)25-50 D)abov
e50

3.
occupat
ion
A)st
udentB)empl
oyedC)r
eti
redD)ot
her
s

4.
doyouhav
eani
nsur
ancepol
icy
?
Yes
No

5.
Whattypeofi
nsur
ancedoy
ouhav
e?
1.pri
vate
2.publi
c

6.
whoi nfl
uencedyoutogetaninsur
ancepol
icy
?
1.medi a
2.insuranceagents
3.fri
ends,famil
y,col
leagues
4.others

7.
howmanyi nsur
ancepol
icydoy
oucur
rent
lyhav
e?
1.1
2. 2
3.3
4.4
Morethan4

8.
whatkindofinsur ancepol
icydoy
ouhav
e?
1.wholeli
fepolicy
2.moneybackpol icy
3. pr
opertyi
nsur ance
4.other
s

9.
whatist
heaver
aget
erm oft
hepol
icy
?
1.upto5yrs
2. 5-
10
3.Above10

10.
hav
eyouev
err
ecei
vedt
hebenef
it
sfr
om t
hepol
ici
esy
oucur
rent
lyhav
e?
10
10
No
Yes
11.
howregular
lydoy
oupayy
ourpr
emi
ums?
1.Monthly
2.Quart
erly
3.Halfyear
ly
4.Yearl
y

12.
hasanyoft
hepol
icyl
apsedduet
ononpay
mentofi
nsur
ancepr
emi
ums?

1.Yes
2.No

13.
Areyouawar
eofdi
ff
erentt
ypeofi
nsur
ancepol
icy
?
1.yes
2.
no

14.ar
eyouawar
eofi
nsur
ancebonusesony
ourpol
icy
?
1.Yes
2.No

15.accordi
ngt
oyout
aki
ngi
nsur
ancei
s
1.profi
t
2loss

16.
Ispr
ivati
sat
ionofLI
Cagooddeci
sionbyt
hegov
ernment
?
1. Neut r
al
2.Agree
3.Disagree

17.
whatar easpect
st haty
ouconsi
derbef
oret
aki
ngani
nsur
ancepol
icy
?
1.
premium
2rateofint
erest
3reputat
ionofthecompany
4termsandcondi ti
ons

10
10