General Insurance

The entire General Insurance business in India was

nationalized by the Government of India through the
General Insurance Business Act 1972. GOI transfer all
the assets & operation of the nationalized General
Insurance Company to GIC and others public sectors
insurance companies.
GIC and its subsidiaries had a monopoly on the
general insurance business in India until the landmark
IRDA Act of 1999 came into effect on 19 April 2000.
Presented by Puneet Oberoi CFP
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G.I.C.
GIC re-organized with four fully owned subsidiary companies :
National Insurance Company Ltd.
New India Assurance Company Ltd.
The Oriental Insurance Company Ltd.
United India Insurance Company Ltd.
Defining Insurance
Insurance in broad terms may be described as a method of
sharing financial losses of few from a common fund who
are equally exposed to the same loss.
Insurance is defined as the equitable transfer of the risk of
a loss, from one entity to another in exchange for a
premium, and can be thought of a guaranteed small loss to
prevent a large, possibly devastating loss.
An insurer is a company selling the insurance. The
insurance rate is a factor used to determine the amount,
called the premium, to be charged for a certain amount of
insurance coverage.
Defining Risk
A Variation in the possible outcome
The degree of uncertainty associated with a particular loss
Greater the accuracy with which the outcome can be
predicted the lower is the risk.
Risk is the possibility of an unfortunate occurrence
Risk is the possibility of loss
The combination of hazards
Uncertainty of loss
The tendency that actual results may differ from predicted
results.
Basic Terminology
Peril: Cause of risk and losses. E.g. Earthquake, Flood,
Fire, Criminal Activities etc.
Basic Terminology
Hazard: Condition that increase the frequency or
severity of loss. E.g. absence of proper security or
fencing, poorly maintained fire alarm system etc.
Basic Terminology
Moral Hazard: It refers to the dishonesty of the insured
person leading to increase probability of loss from given
risk exposure. E.g. setting fire to your own house.
Morale Hazard: This refers to attitude of indifference to
losses the results out of a known fact that the said losses
were insured.
Catastrophic loss: It is a potential loss that is
unpredictable such as flood, but is capable of producing an
extra ordinary large amount of damage related to assets
held in insurance pool. These are generally natural
disasters like earthquake flood etc.
Basic Characteristics of Insurance
Pooling of losses
o Spreading losses incurred by the few over the entire group
o Risk reduction based on the Law of Large Numbers
Payment of fortuitous losses
o Insurance pays for losses that are unforeseen, unexpected, and
occur as a result of chance
Risk transfer
o A pure risk is transferred from the insured to the insurer, who
typically is in a stronger financial position
Indemnification
o The insured is restored to his or her approximate financial
position prior to the occurrence of the loss.
Types of General Insurance
Main Types of general insurance are:
1) Fire
2) Health
3) Marine
4) Motor Vehicle
5) Travel Insurance
6) Liability Insurance
Fire Insurance
Fire Insurance is form of property insurance which
protects people from the costs incurred by fires. When
a structure is covered by fire insurance, the insurance
policy will pay out in the even that the structure is
damaged or destroyed by fire.
Types of Fire Insurance Policies
Specific Policy: In this type of policy, the insurance company is
liable to pay a sum, which may be less than the propertys real
value. The insured is called to bear a part of the loss, as the
actual value of the property is not considered in deciding the
amount of indemnity.
Comprehensive Policy: Known as all-in-one policy, the
insurance company indemnifies the policyholder for loss arising
out of fire, burglary, theft and third party risks. In this type of
profits incurred, due to fire, till the time the business remains
shut.
Replacement or Re-instatement Policy: As per replacement
or re-instatement policy, the insurance company instead of
paying the damaged property / Commodity with a new one.
Fire Insurance Claim Procedure
Individuals/ Corporate must inform insurer as early as
possible, in no case later than 24 hours.
Provide relevant information to the surveyor/ claim
representative appointed by the insurer.
The Surveyor then analyzes the extent/ value of loss or
damage.
The claim process takes anywhere between one to three
weeks.
Need of Fire Insurance
Fire insurance is important because a disaster can
occur at any time. There could be many factors behind
a fire. For example arson, natural elements, faulty
wiring. Etc.
Fire Insurance in India
Fire insurance business in India is Governed by the All
India Fire Tariff that lays down the terms of coverage, the
premium rates and the conditions of the Fire Policy. The
fire insurance policy has been renamed as Standard Fire
and Special Perils Policy. The risks covered are as
follows:
Dwellings, Offices Shops, Hospitals (Located outside the
compounds of industrial/manufacturing risks) Industrial/
Manufacturing Risks Utilities located outside industrial/
manufacturing risks Machinery and Accessories Storage
Risks outside the compound of industrial risks Tank farms/ Gas
holders located outside the compound of industrial risks.
Fire Insurance in India
Peril Covered: Cause of Loss Fire Lightning Explosion/ Implosion Aircraft
damage Riot, Strike Terrorism Storm, Flood, inundation Impact damage
Subsidence, Landslide Bursting or overflowing of tanks Missile Testing
Operations Bush fire etc.
Exclusions:
Loss of damage caused by war, civil war and kindered perils
Loss or damage caused by nuclear activity
Loss of damage to the stocks in cold storage caused by change in temperature
Loss or damage due to over-running of electric and / or electronic machines
Claims: In the event of a fire loss covered under the fire insurance policy, the
Insured shall immediately give notice there of to the insurance company.
Within 15 days of the occurrence of such loss the Insured should submit a claim
in writing giving the details of damages and their estimated values. Details of
other insurance on the same property should also be declared.
What is Health Insurance?
Health insurance, like other form of insurance, is a
from of collectivism by means of which people
collectively pool their risk, in this case the risk of
incurring medical expenses.
Importance of Health
Rising medical costs
Sharing of health related risk
Uncertain hospital bills
Expensive/ quality health care services
Removes some of the burden from the state
Tax benefits
How to improve the access to health care and financial
protection of the poor?
Answer
The most obvious solution will be to improve the health
insurance penetration.
Impediments in Health Insurance
Lack of Data
Moral Hazard/ Adverse Selection
Complex nature of the product
Medical Inflation
New treatments
Unnecessary treatments
Difficulty in pricing
Government provision of health care
Long term nature
Changing life style
Mis-selling/ fraud
Type of Health Insurance Plans
Individual health plan
Family floater plan
Senior Citizens plan
Critical illness plan
Daily hospital cash and
Individual Health Plans
Largely, an individual health insurance plan (IHIP), or
mediclaim would cover expenses if you are
hospitalised for at least 24 hours.
These plans are indemnity policies, that is, they
reimburse the actual expenses incurred up to the
amount of the cover that you buy.
Some of the expenses that are covered are room rent,
doctors fees, anaesthetists fees, cost of blood and
oxygen, and operation theatre charges.
Family Floater Plans
This is a fairly new entrant in the health insurance firmament.
It takes advantage of the fact that the possibility of all members of a
family falling ill at the same time or within the same year is low.
Under a family floater (FF) health plan, the entire sum insured can be
availed by any or all members and is not restricted to one individual
only as is the case in an individual health plan.
Lets look at an example. Say , a family of four has individual covers of
Rs. 1 lakh each. If the cost of treating one person crosses Rs. 1 lakh,
then the rest has to be borne by the family out of its own money. If,
however, the entire family is insured for Rs. 4 lakh through a floater
policy, then any of the members will be covered for the amount in any
year. To the extent of the annual cover, any number of members can
avail the money.
Senior Citizens Plans
Insurance is considered a form of long-term savings for
senior citizens. This money provides financial stability and
also helps them in time of need. Medical insurance
enables senior citizens to pay for health checkups,
emergency medical costs and long-termtreatment.
Products Offered by the Companies
1) The National Insurance Company - Varistha Mediclaim
2) Oriental Insurance Company - Happy Family Floater
3) Star Health Insurance Senior Citizen Red Carpet
Critical Illness Plans
A critical Illness plan means to insure against the risk of
serious illness. It will give the same security of knowing
that a guaranteed cash sum will be paid if the unexpected
happens and one is diagnosed with a critical illness.
Critical Illness cover is an insurance product where the
insurer is contracted to typically make a lump sum cash
payment if the policyholder is diagnosed with one of the
critical illness listed in the insurance policy.
The policy may require the policyholder to survive a
minimum number of days (the survival period) from when
the illness was first diagnosed.
Critical Illness Covered by
Companies
Alzheimers disease
Blindness
Deafness
Kidney failure
A major organ transplant
Multiple sclerosis
Parkinsons disease
Paralysis
Terminal illness
FAQs
1. How much cover one require for health insurance?
2. What is cashless hospitalization?
3. What is reimbursement claims?
4. What about renewal in individual Policy?
5. Do we get tax benefit in Health Insurance?
Marine Insurance
Marine Insurance covers the loss or damage of ships,
cargo, terminals and any transport or cargo by which
property is transferred, acquired or held between the
points of origin and final destination.
Two Broad Categories
Ocean marine insurance
a) Hull
b) Cargo/ Freight
Inland marine insurance
a) Domestic goods in transit
b) Extension of ocean marine insurance
Risks
Two types of risks are covered by ocean marine
insurance.
1. The first type is the perils of the sea that include
both natural calamities and fortuitous accidents.
2. The second type of risks covered is extraneous
risks. These risks include ordinary risks such as
theft, pilferage, rain damage, shortage, breakage, etc
and special risks such as strike, war, failure to deliver,
etc.
Covered Perils
Perils of the sea, such as loss due to bad weather, high
waves, collision and other navigable waters
Fire, enemies, pirates, thieves, jettison
Barratry or fraud by crew members
All risks
Further Cover
War and Strikes clause
Bursting boilers or breaking shafts
Accident or negligence of a third party
Common Exclusions
Loss, damage or expenses attributable to willful
misconduct of the assured
Ordinary or inevitable losses
Loss/ damage due to insufficient, unsuitable or defective
packing (including storage)
Loss proximately caused by delay
Loss damage or expenses arising from insolvency of the
owners
Loss damage due to un seaworthiness of the vessel or craft
Wars, strikes and civil commotions unless covered under
separate endorsements.
Hull Insurance
Covers physical damage to ship or vessel
Always written with a deductible
Contains collision liability clause
Covers owners legal liability
Cargo Insurance
Covers the loss to the shipper if the goods are damaged
or lost
Policy can be single or open cargo policy
Salvage loss- follows forced sale of badly damaged
cargo
Types of Policies
Specific
Policy
Open Policy
Sales
turnover
Policy
Auto Insurance
Auto insurance (also known as vehicle insurance, car
insurance or motor insurance) is insurance purchased
for cars, trucks and other vehicles. Its primary use is to
provide protection against losses incurred as a result of
traffic accidents and against liability that could be
incurred in an accident.
Auto Insurance Coverage
Auto insurance provides property liability and medical
coverage:
Property coverage pays for damage or theft of the car
Liability pays for the legal responsibility to others for
bodily injury or property damage
Medical coverage pays for the cost of treating injuries,
rehabilitation and sometimes lost wages.
Coverage levels
Vehicle insurance can cover some or all the following
items:
The insured party
The insured vehicle
Third parties (car & people)
Third party fire and theft
Types of Auto insurances
A. Private car insurance
B. Two wheeler insurance
C. Commercial vehicle insurance
What it covers?
Loss or damage by accident, fire, lightning, self ignition,
external explosion, burglary, housebreaking or theft,
malicious act.
Liability for third party injury/ death, third party
property and liability paid driver.
On payment of appropriate additional premium, loss or
damage to electrical/ electronic accessories.
Exclusion
Typically the motor insurance plan does not provide for:
Normal wear and tear or general ageing of the vehicle
Mechanical/ electrical breakdown
Depreciation, wear and tear of consumable like tubes
and tires.
Damage that occur while a person is driving with invalid
driving license / influence of drugs or liquor.
Damage due to war or nuclear risk.
Travel Insurance
Despite all your planning, a trip abroad can go wrong
due to medical eventualities, and non-medical
contingencies such as loss of baggage, trip delay and
other incidental expenses. Travel insurance covers the
insured against these misfortunes while traveling.
Catering to people from all walks of life, Bajaj Allianz
offers three different plans Travel Companion, Travel
Elite and Student Travel. Choose a basic plan or go for
extended covers as per your requirements.
Travel Insurance
The different travel insurance policies include:
Individual travel policy
Family travel policy
Senior citizens travel policy
Student travel insurance
In addition, there are insurance companies that offer special
plans such as a corporate travel policy or a comprehensive
policy for travel to a special place such as Asia.
GENERAL INSURANCE CO.S IN INDIA
1.
Aegon Religare Life Insurance Co. Ltd.
2.
Aviva Life Insurance Co. India Ltd.
3.
Bajaj Allianz Life Insurance Co. Ltd.
4.
Bharti AXA Life Insurance Co. Ltd.
5.
Birla Sun Life Insurance Co. Ltd.
6.
Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd.
7.
DHFL Pramerica Life Insurance Co. Ltd.
8.
Edelweiss Tokio Life Insurance Co. Ltd
9.
Exide Life Insurance Co. Ltd.
10.
Future Generali India Life Insurance Co. Ltd.
GENERAL INSURANCE CO.S IN INDIA
HDFC Standard Life Insurance Co. Ltd.
12.
ICICI Prudential Life Insurance Co. Ltd.
13.
IDBI Federal Life Insurance Co. Ltd.
14.
IndiaFirst Life Insurance Co. Ltd
15.
Kotak Mahindra Old Mutual Life Insurance Ltd.
16.
Life Insurance Corporation of India
17.
Max Life Insurance Co. Ltd.
18.
PNB MetLife India Insurance Co. Ltd.
19.
Reliance Life Insurance Co. Ltd.
20.
Sahara India Life Insurance Co. Ltd.
21.
SBI Life Insurance Co. Ltd.
22.
ShriramLife Insurance Co. Ltd.
23
Star Union Dai-Ichi Life Insurance Co. Ltd.
24.
Tata AIA Life Insurance Co. Ltd.