INTRODUCTION TO INSURANCE

With the introduction of globalisation and privatisation, insurance industry in India is grooving more
than 15% per annum. It is second highest after IT industry. The insurance industry is developing in
number, quality and class fiction. The population and per capita income has been instrument for the
growth of the industry. The quality life of people demands distills free lining. Insurance has increased
several quality products to meet the requirement of the different classes of prospects which have
started demanding different types of products.
The insurance intermediation has become a full time qualified profession. Professionally qualified
agents of insurance can earn more than a doctor, engineer, CA and other professional expects. Now,
people are approaching insurance agents for their financial advises rather than business. Insurance in
started to be bought by the people rather than previous thinking of bold. People are seeking now best
publication for their lives, health, property, business and economic activities.
IRDA has asked agents to serve people better. The policyholders are getting more satisfaction today
as compared to past year-experiences. Telecommunication has helped people to develop themselves
through insurance. The business of insurance is expected to grow better in the future.
The insurance sector has a vast potential not only because incomes are increasing and assets are
expanding but also because the volatility in the system is increasing. In a sense, we are living in a
more risky world. Trade is becoming increasingly global. Technologies are changing and getting
replaced at a faster rate. In this more uncertain world, for which enough evidence is available in the
recent period, insurance will have an important role to play in reducing the risk burden individuals
and businesses have to bear.

DEFINITION AND MEANING OF INSURANCE

Insurance can be defined as the act, system, or business of providing financial protection for
property, life, health, etc., against specified contingencies, such as death, loss, or damage, and
involving payment of regular premiums in return for a policy guaranteeing such protection or the
state of having such protection.
Insurance

company

can

be

defined

as

company

that

sells

insurance.

It

is

a company that offers insurance policies to the public, either by selling directly to an individual or
through

another

source

such

as

an employee's benefit plan.

It

usually

comprised

of multiple insurance agents. An insurance company can specialize in one type of insurance, such
as life insurance, health insurance, or auto insurance, or offer multiple types of insurance.
A business that provides coverage in the form of compensation resulting from loss, damage, injury,
treatment

or hardship in exchange for premium payments

is

known

as

insurance

business.

The company calculates the risk of occurrence then determines the cost to replace (pay for) the loss
to determine the premium amount.
A company that offers insurance policies to the public, either by selling directly to an individual or
through another source such as an employee's benefit plan is known as an insurance company.
An insurance company is usually comprised of multiple insurance agents. It can specialize in one
type of insurance, such as life insurance, health insurance, or auto insurance or offer multiple types of
insurance.
Insurance is a contract (policy) in which an individual or entity receives financial protection or
reimbursement against losses from an insurance company. The company pools clients' risks to make
payments more affordable for the insured. It is a means of protection from financial loss and a form
of risk management primarily used to hedge against the risk of a contingent, uncertain loss.
An entity which provides insurance is known as an insurer, insurance company, or insurance carrier.
A person or entity who buys insurance is known as an insured or policyholder.

Insurance means a promise of compensation for any potential future losses. It facilitates financial
protection against by reimbursing losses during crisis. There are different insurance companies that
offer a wide range of insurance options and an insurance purchaser can select as per own
convenience and preference. Several insurances provide comprehensive coverage with affordable
premiums. Premiums are periodical payment and different insurers offer diverse premium options.
The periodical insurance premiums are calculated according to the total insurance amount.
The insurance transaction involves the insured assuming a guaranteed and known relatively small
loss in the form of payment to the insurer in exchange for the insurer's promise to compensate the
insured in the event of a covered loss. The loss may or may not be financial, but it must be reducible
to financial terms, and must involve something in which the insured has an insurable
interest established by ownership, possession, or preexisting relationship. The insured receives
a contract, called the insurance policy, which details the conditions and circumstances under which
the insured will be financially compensated. The amount of money charged by the insurer to the
insured for the coverage set forth in the insurance policy is called the premium. If the insured
experiences a loss which is potentially covered by the insurance policy, the insured submits a claim
to the insurer for processing by a claims adjuster.
Mainly, insurance is used as an effective tool of risk management as quantified risks of different
volumes can be insured.

FEATURES OF INSURANCE

Insurance may be described as a social device whereby a large group of individuals, through a system
of equitable contributions, may reduce or eliminate certain measurable risks of economic loss
common to all members of the group. An insurer is a company selling the insurance; an insured or
policyholder is the person or entity buying the insurance policy.
The insurance has the following characteristics which are, generally, observed in case of life, marine,
fire and general insurances:

Sharing of Risk
Insurance is a device to share the financial losses which might befall on an individual or his family
on the happening of a specified event. The event may be death of a bread-winner to the family in the
case of life insurance, marine-perils in marine insurance, fire in fire insurance and other certain
events in general insurance, e.g., theft in burglary insurance, accident in motor insurance, etc. The
loss arising nom these events if insured are shared by all the insured in the form of premium.

Co-operative Device
The most important feature of every insurance plan is the co-operation of large number of persons
who, in effect, agree to share the financial loss arising due to a particular risk which is insured. Such
a group of persons may be brought together voluntarily or through publicity or through solicitation of
the agents.
An insurer would be unable to compensate all the losses from his own capital. So, by insuring or
underwriting a large number of persons, he is able to pay the amount of loss. Like all cooperative
devices, there is no compulsion here on anybody to purchase the insurance policy.

Value of Risk
The risk is evaluated before insuring to charge the amount of share of an insured, herein called,
consideration or premium. There are several methods of evaluation of risks. If there is expectation of
more loss, higher premium may be charged. So, the probability of loss is calculated at the time of
insurance.

Payment at Contingency
The payment is made at a certain contingency insured. If the contingency occurs, payment is made.
Since the life insurance contract is a contract of certainty, because the contingency, the death or the
expiry of term, will certainly occur, the payment is certain. In other insurance contracts, the
contingency is the fire or the marine perils etc., may or may not occur. So, if the contingency occurs,
payment is made, otherwise no amount is given to the policy-holder.
Similarly, in certain types of life policies, payment is not certain due to uncertainty of a particular
contingency within a particular period. For example, in term-insurance then, payment is made only
when death of the assured occurs within the specified term, may be one or two years. Similarly, in
Pure Endowment payment is made only at the survival of the insured at the expiry of the period.

Amount of Payment
The amount of payment depends upon the value of loss occurred due to the particular insured risk
provided insurance is there up to that amount. In life insurance, the purpose is not to make good the
financial loss suffered. The insurer promises to pay a fixed sum on the happening of an event.
If the event or the contingency takes place, the payment does fall due if the policy is valid and in
force at the time of the event, like property insurance, the dependents will not be required to prove

the occurring of loss and the amount of loss. It is immaterial in life insurance what was the amount of
loss at the time of contingency. But in the property and general insurances, the amount of loss as well
as the happening of loss, are required to be proved.

Large Number of Insured Persons

To spread the loss immediately, smoothly and cheaply, large number of persons should be insured.
The co-operation of a small number of persons may also be insurance but it will be limited to smaller
area. The cost of insurance to each member may be higher. So, it may be unmarketable.
Therefore, to make the insurance cheaper, it is essential to insure large number of persons or property
because the lesser would be cost of insurance and so, the lower would be premium. In past years,
tariff associations or mutual fire insurance associations were found to share the loss at cheaper rate.
In order to function successfully, the insurance should be joined by a large number of persons.

Insurance is Not a Gambling

The insurance serves indirectly to increase the productivity of the community by eliminating worry
and increasing initiative. The uncertainty is changed into certainty by insuring property and life
because the insurer promises to pay a definite sum at damage or death.
From a family and business point of view all lives possess an economic value which may at any time
be snuffed out by death, and it is as reasonable to ensure against the loss of this value as it is to
protect oneself against the loss of property. In the absence of insurance, the property owners could at
best practice only some form of self-insurance, which may not give him absolute certainty.
Similarly, in absence of life insurance, saving requires time; but death may occur at any time and the
property, and family may remain unprotected. Thus, the family is protected against losses on death
and damage with the help of insurance.
From the company's point of view, the life insurance is essentially non-speculative; in fact, no other
business operates with greater certainties. From the insured point of view, too, insurance is also the

antithesis of gambling. Nothing is more uncertain than life and life insurance offers the only sure
method of changing that uncertainty into certainty.
Failure of insurance amounts to gambling because the uncertainty of loss is always looming. In fact,
the insurance is just the opposite of gambling. In gambling, by bidding the person exposes himself to
risk of losing, in the insurance; the insured is always opposed to risk, and will suffer loss if he is not
insured.
By getting insured his life and property, he protects himself against the risk of loss. In fact, if he does
not get his property or life insured he is gambling with his life on property.

Insurance is Not Charity

Charity is given without consideration but insurance is not possible without premium. It provides
security and safety to an individual and to the society although it is a kind of business because in
consideration of premium it guarantees the payment of loss. It is a profession because it provides
adequate sources at the time of disasters only by charging a nominal premium for the service.

TYPES OF INSURANCE
Insurance is a policy from a large financial institution that offers a person, company, or other entity
reimbursement or financial protection against possible future losses or damages. In general, there are
2 major types of insurance - general insurance and life insurance. However, some other types of
insurance are available as well. In India life insurance is the most availed form along with health and
accident based plans. The major types of insurances are as mentioned below:

GENERAL INSURANCE

Personal Insurance
Personal insurance is essentially a plan availed by an individual to take care of various requirements
like health and coverage against death or injury by accident. There are several policies nowadays
where there is an option to cover the family members in an individual policy.

Medical Insurance

Medical or health insurance is taken to cover against the chances of medical costs. These plans
are created with estimates of healthcare expenses a person may face in future and the premiums
are determined on such approximations.
Property Insurance
Property insurance provides coverage against risks to property arising from fire, weather damage,
or theft to name a few. This type of insurance can be further sub divided into fire insurance,
earthquake insurance, flood insurance, and boiler insurance for example. The Standard Fire &
Special Perils policy of SBI General Insurance is one of the major examples of such a policy.

 Vehicle Insurance
Vehicle insurance is also referred to as auto insurance, car insurance, GAP insurance, and motor
insurance. It is primarily bought for securing road vehicles such as cars, motorcycles, and trucks
from physical damage from traffic accidents as well as any liability that may arise thereafter.

Rural Insurance
Rural insurance is meant to cater to the requirements of rurally bases businesses or individuals. These
policies provide a wide range of coverage starting from life and health to protection against natural
disasters that can have a negative effect on business.

Industrial Insurance
The industrial insurance policies are availed by various companies to get protection for important
projects, construction, contracts, and equipment from situations like fire, theft and any form of
damage or loss.

Commercial Insurance
Commercial insurance is availed in order to get security against theft, liability, and property damage.
These

plans

also

help

in

cases

of

employee

injuries

and

business

interruption.

LIFE INSURANCE
Life insurance is taken primarily to secure oneself and/or one's family when the ability to earn is less
or provide for the dependents when the insured is either deceased or unable to earn a livelihood.

Whole Life Insurance

Whole life insurance policies are taken for the entire duration of an insured's life. In these policies
premium has to be paid on a yearly basis as long as the policy lasts.

Endowment Plans
The endowment plans are supposed to provide a lump sum once the policyholder dies or when the
policy matures. Certain endowment policies also provide payment in case of critical illnesses.

Money Back Plans

The money back plans are used as a form of investment that produces good financial returns in future
for using in various purposes, even recreational

Term Life Insurance

The term life insurance plans or term assurance plans are availed to receive a fixed payment rate over
a period of time, which is the term period. Once the period comes to an end the policy owner can
discontinue the policy or extend it.

ULIPs
The ULIPs or Unit Linked Insurance Plans are one where the financial worth of a policy is dependent
on the present net asset value of the core investment assets related to it. These policies are both
flexible and protective, which is a unique feature. The premiums of these policies are used to buy
investment asset units selected by the policy owners.

OTHER FORMS OF INSURANCE

Home Insurance
Home insurance is also referred to as homeowner's insurance or hazard insurance and is primarily
taken to cover private homes against various forms of losses and liabilities

Travel Insurance
Travel insurance policies can be availed to cover both long and short trips as well as trips within the
country as well as outside it. These plans cover medical and non medical expenses.

10

HISTORY, NEED AND FUNCTIONS OF LIFE INSURANCE

HISTORY OF LIFE INSURANCE IN INDIA

Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans
and carriers contracts. Insurance in India has evolved over time heavily drawing from other
countries, England in particular. 1818 saw the advent of life insurance business in India with the
establishment of the Oriental Life Insurance Company in Calcutta. In 1914, the Government of India
started publishing returns of Insurance Companies in India. The Indian Life Assurance Companies
Act, 1912 was the first statutory measure to regulate life business. In 1928, the Indian Insurance
Companies Act was enacted to enable the Government to collect statistical information about both
life and non-life business transacted in India by Indian and foreign insurers including provident
insurance societies. In 1938, with a view to protecting the interest of the Insurance public, the earlier
legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions
for effective control over the activities of insurers. The Insurance Amendment Act of 1950 abolished
Principal Agencies. However, there were a large number of insurance companies and the level of
competition was high. There were also allegations of unfair trade practices. The Government of
India, therefore, decided to nationalize insurance business. Today, 23 life insurance companies
operating in the country, including LIC which is a Public Sector company and 22 other Private Sector
Life Insurance Companies competing with LIC for Life Insurance Business from the Customers in
India.

11

NEED FOR LIFE INSURANCE

Insurance Provides Security and Safety

The insurance provides safety and security against the loss on a particular event. In case of life
insurance, payment is made when death occurs or the term of insurance is expired. The loss to the
family at a premature death and payment in old age are adequately provided by insurance. In other
words, security against premature death and old age sufferings are provided by life insurance.

Insurance Affords Peace of Mind

Death is beyond the control human agency and in occurrence of any of these events may frustrate or
weaken the human mind. The security wish is the prime motivating factor. This is the wish which
tends to stimulate to more work, if this wish is unsatisfied, it will create a tension which manifests
itself to the individual in the form of an unpleasant reaction causing reduction in work.

Insurance Eliminates Dependency

At the death of the husband or father, the destruction of family needs no elaboration. It brings
reduced standards of living and the suffering may go to any extent of begging from the relatives,
neighbors or friends. The economic independence of the family is reduced or, sometimes, lost totally.
The insurance is thus assists them and provides adequate amount at the time of sufferings.

Life Insurance Encourages Saving

12

The elements of protection and investment are present only in case of life insurance. In most of the
life policies elements of saving predominates. These policies combine the programs of insurance and
savings.

Life Insurance Provides Profitable Investment

Individuals unwilling or unable to handle their own funds have been pleased to find an outlet for
their investment in life insurance policies. The elements of investment i.e., regular saving, capital
formation and return of the capital along with certain additional return are perfectly observed in life
insurance. In India, the insurance policies carry a special exemption from income-tax, wealth tax, and
gift tax and estate duty. An individual from his own capacity cannot invest regularly with enough of
security and profitability.

Life Insurance fulfils the needs of a person

The needs of a person may be divided into the following:
Family Needs
Death is certain, but the time is uncertain. So, there is uncertainty of the time when the sufferings
and financial stringencies may be fall on the family. Therefore, the provision for children up to
their reaching earning period and for widow up to long life should he made. Any other provision
except life insurance will not adequately meet this financial requirement of the family.
Old-Age Needs
The provision for old-age is required where the person is surviving more than his earning period.
The reduction of income in old-age is serious to the person and his family. If no other family
member starts earning, they will be left with nothing and if there is no property, it would be more
piteous state. The life insurance provides old age funds along with the protection of the family by
issuing various policies.

13

 Re-adjustment Needs
At the time of reduction in income whether by loss of unemployment, disability, or death,
adjustment in the standard of living of family is required. The family members will have to be
satisfied with meager income and they have to settle down to lower income and social
obligations. Life insurance helps to accumulate adequate funds.
Special Needs
After death, ritual ceremonies, payment of wealth taxes and income taxes are certain
requirements which decrease the amount of funds of the family member. Insurance comes to help
for meeting these requirements. Multipurpose policy, education and marriage policies, capital
redemption policies are the better policies for the special needs.
With diverse kinds of options, insurance policies are today not just meant for insurance purposes but
are also attractive investment options. From childhood to old age, there are various options for
everybody.

FUNCTIONS OF LIFE INSURANCE IN INDIA

Stockholder Protection
Corporations with stockholders have life insurance agreements in place so any unexpected transition
goes smoothly. Both large and small companies insure the life of key employees, whose loss would
affect business operations.

14

Small Business Operations

The sole proprietor of a business needs life insurance to protect the ability to continue operations
when he dies, at least until there is time to arrange for future management. In a partnership, life
insurance with an assigned beneficiary agreement will prevent half the business going to a
disinterested heir of the deceased partner.

15

Retirement Supplement
Some life insurance policies can be converted into an annuity that will pay dividends to the holder
after retirement. These usually are more expensive policies, and many financial planners urge buyers
to make their investment programs separate from their insurance.

Family Support
One of the most important functions of life insurance in family life is to provide dependent survivors
with a financial cushion in their bereavement. It may enable the family to maintain the same standard
of living. Many homeowners carry life insurance that will pay off the mortgage, letting the family
remain in their home. A life insurance policy on a non-working spouse is considered an integral part
of a sound family life insurance plan since it would provide income for a surviving parent with
children at home.

16

Final Expenses
Many people carry enough life insurance to cover funeral costs and other end-of-life expenses of the
insured, and to pay off outstanding debt. Since funerals cost thousands of dollars, this life insurance
meets an immediate need.

17

Gifts and Special Bequests

Another function of life insurance is to enable special bequests such as a major gift to a church or
charity. A special provision in life insurance can be directed to fund education for a child. Parents of
a child with a disability may want to set aside a portion of their life insurance in a special fund to
care for the child.

18

HISTORY, NEED & FUNCTIONS OF GENERAL INSURANCE

HISTORY OF GENERAL INSURANCE IN INDIA

The history of general insurance dates back to the Industrial Revolution in the west and the
consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a legacy
of British occupation. In 1968, the Insurance Act was amended to regulate investments and set
minimum solvency margins. General Insurance in India has its roots in the establishment of Triton
Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the Indian Mercantile
Insurance Ltd. was set up. This was the first company to transact all classes of general insurance
business. 1957 saw the formation of the General Insurance Council, a wing of the Insurance
Associaton of India. The General Insurance Council framed a code of conduct for ensuring fair
conduct and sound business practices. In 1972 with the passing of the General Insurance Business
(Nationalisation) Act, general insurance business was nationalized with effect from 1st January,
1973. The General Insurance Corporation of India was incorporated as a company in 1971 and it
commenced business on January 1st 1973. The foreign companies were allowed to enter by floating
Indian companies and preferred a joint venture with Indian partners.

NEED FOR GENERAL INSURANCE

Insurance Protects Mortgaged Property

At the death of the owner of the mortgaged property, the property is taken over by the lender of
money and the family will be deprived of the uses of the property. On the other hand, the mortgagee
wishes to get the property insured because at the damage or destruction of the property he will lose
his right to get the loan replayed.

19

The insurance will provide adequate amount to the dependents at the early death of the propertyowner to pay off the unpaid loans. Similarly, the mortgagee gets adequate amount at the destruction
of the property.
Overcome Risks
A suitable general insurance cover is an absolute essential for every family. This is a necessity to
overcome uncertainties and risks prevalent in life. It is also necessary to protect ones property
against risks as a loss or damage to ones property can leave one in doldrums.

Protection against Natural Calamities

Losses created by catastrophes such as the tsunami, earthquakes, cyclones, floods, volcano eruptions
or landslides have left many penniless and shelter-less. Such losses have the potential to shatter lives
but

availing

suitable

insurance

cover

could

help

mitigate

the

unforeseen

risks.

Economic Growth of the Country

For the economic growth of the country, insurance provides strong hand and mind, protection against
loss of property and adequate capital to produce more wealth. The agriculture will experience
protection against losses of cattle, machines, tools and crop.
This sort of protection stimulates more production in agriculture, industry, factory premises and
profit insurances provide more confidence to start and operate the industry welfare of employees &
create a productive atmosphere to work: Adequate capital from insurers accelerate the production
cycle.
Similarly in business, too, the property and human material are protected against certain losses;
capital and credit are expanded with the help of insurance. Thus, the insurance meets all the
requirements of the economic growth of a country.

20

 Growing Level of Awareness

One of the major reasons for an increasing number of people availing insurance policies in India is
the growing level of awareness. People nowadays value their lives, their health, and their families
even more than before given the tough economic circumstances and so want to make sure that
everything is fine even if they are not there.

Lucrative Returns
Yet another reason for the growing popularity of insurance policies is the benefit of tax exemption
that is provided to family oriented and individual plans. Majority of the private insurers also provide
lucrative returns and are now being availed by a section of the Indian society with greater disposable
earnings.

21

FUNCTIONS OF GENERAL INSURANCE

Assures for financial compensation

Insurance provides financial security to the insured. It gives guarantee of compensation against large
financial losses in return of small premium.

Reduction of risks
Human beings are exposed to different kinds of financial risks, which may cause large financial
losses. It is not possible to eliminate the risks but it can be forecasted and reduced by applying some
precautionary measures. General insurance helps in reducing such unpredictable risks like sudden
illness, fire, theft, marine threats, etc.

Promotes business activities

Business sector is more risky sector. The chances of fire in the go down, loss of stocks by theft,
explosion in the ship, train or plane etc. are more frequent in this sector. General insurance takes
away these risks and promotes and develops business activities in consideration to a nominal charge
i.e. premium.

Basis of credit
An insured can easily get loan by pledging insurance policy as a security from the insurance
company itself. Besides, financial institutions grant credit facilities on the pledge of the properties
which are being insured.

22

Mobilization of capital
General Insurance accumulates fund in terms of insurance premium from the parties willing to get
secured from the financial losses. Compensation is made to the insured who actually suffered and
productive sectors. Hence, general insurance accumulates fun and mobilized into different areas.

Maintains economic stability

Financial risks and uncertainties push the entire economy into instability. It is a very bad sign to total
business and social sectors. Insurance assures the compensation of the financial losses caused by the
specified future events and considerably helps in maintaining economic stability.

23

24

25

TATA GROUP
Tata Group is an Indian multinational conglomerate holding company headquartered in Mumbai,
Maharashtra, India. It was founded in 1868 by Jamshetji Tata and gained international recognition
after purchasing several global companies. It is one of India's largest conglomerates. These
companies collectively employ over 600,000 people. Each Tata company or enterprise operates
independently under the guidance and supervision of its own board of directors and shareholders.
The Tata Groups core purpose is to improve the quality of life of the communities it serves globally,
through long-term stakeholder value creation based on leadership & trust. It is a global enterprise
headquartered in India, and comprises over 100 operating companies, with operations in more than
100 countries across 6 continents, exporting products & services to over 150 countries.
Good corporate citizenship is a part of Tata Groups DNA. Sixty percent of the equity of Tata Sons,
the promoter holding company, is held by philanthropic trusts, thereby returning wealth to society. As
a result of this unique ownership structure & ethos of serving the community, the name Tata has been
respected for more than 140 years and is trusted for its adherence to strong values 7 business ethics.
Each Tata company or enterprise operates independently & has its own board of directors &
shareholders, to whom it is answerable. Tata companies with significant scale include Tata Steel, Tata
Motors, Tata Consultancy Services, Tata Power, Tata Chemicals, Tata global Beverages, Tata
Teleservices, Titan, Tata Communication & Indian hotels.

26

TATA AIA LIFE INSURANCE

Tata AIA Life Insurance Company (Tata AIA Life) is a joint venture company formed by Tata Sons
and the AIA Group (AIA). Tata AIA Life combines Tata's pre-eminent leadership position in India
and AIA's presence as the largest, independent listed pan-Asia life insurance group in the world,
spanning 17 markets in Asia Pacific. Tata AIG Life Insurance has been rechristened as Tata AIA Life
Insurance Company following the exit of American International Group (AIG) from the Hong Kongbased insurer AIA Group. Tata Sons has 74 per cent stake in the JV, while the remaining 26 per cent
share is held by AIA, in which AIG had a controlling stake earlier. Tata AIA Life started operations
on April 1, 2001. Mr. Naveen Tahilyani has been named managing director of Tata AIG Life. TataAIG plans to provide broad array of life insurance plans to cover to both individuals and groups.
The company is headquartered in Mumbai, with branch operations in Delhi, Chennai, Hyderabad,
Bangalore Calcutta, Pune and Chandigarh.

Let us compare financial year 2014-15 with financial year 2009-10. (Rs. In 000)

Total number of policies sold in FY 2014-15 is 71,815 which is a collapse as compared to the

number of policies sold in FY 2009-10 which is 6,89,195.

Similarly, premium earned in FY 2014-15 is Rs. 2,10,55,896 which is a downfall as compared to

the premium earned FY 2009-10 which is Rs. 3,48,15,564.

On the contrary, surplus earned during FY 2014-15 is Rs. 27,65,126 is much higher than as

compared to the premium earned in FY 2009-10 which is Rs. 1,26,792.

Likewise, profit earned (before tax) in FY 2014-15 is Rs. 31,20,789 whereas a loss of
Rs. 40,00,123 is incurred in FY 2009-10.

Thus, we can conclude that Tata AIA Life Insurance took a great start as compared to the current
situation. However, let us not forget that the word Tata is synonymous with security and success.
There is ample of room for improvement and the Tatas are not easily discouraged.

FINAL ACCOUNTS OF TATA AIA LIFE INSURANCE

27

The following is the Profit and Loss Account as well as the Balance Sheet for the year ending on 31 st
March, 2015.

28

29

30

31

TATA AIG GENERAL INSURANCE

Tata AIG General Insurance Company Limited (Tata AIG General) is a business Collaboration of
the Tata Group and American International Group, Inc. (AIG). Tata AIG General merges two major
finance organizations i.e. the Tata Group's prominent headship place in India and AIG's global
presence as the world's leading international insurance and financial services Organization. This joint
venture has started its operations in India from 22nd January 2001. The company offers a range of
general insurance covers for businesses and individuals and has a comprehensive range of general
insurance products for Liability, Marine Cargo, Personal Accident, Travel, Rural-Agriculture
Insurance, Extended Warranty etc. Each product offering is backed by professional expertise. The
organization offers an array of general insurance covers which are well thought-out under
commercial and consumer demands. The company has made the availability for its services from end
to end channels of distribution like agents, banks (through bancassurance tie ups), brokers and direct
channels like tele-marketing, e-commerce, website, etc. The headquarters of the company is situated
in Mumbai. The company has provided the employment to more than 2000 qualified professionals
across the country in more than 160 locations. Tata AIG General Insurance Company Limited is
proud towards making a progress in going the digital route. The company recently launched a
strategic initiative called Go Digital that facilitates the process of sales, till policy issuance.
Let us compare financial year 2014-15 with financial year 2009-10 in order to understand the
progress made by Tata AIG General Insurance.

Operating Profit/Loss
Particulars/Financial Year
Fire
Marine
Miscellaneous
Total

Premium Earned

(Rs. In 000)
2009-10
2,18,356
(70,342)
(2,99,736)
(1,51,722)

2014-15
3,63,045
1,09,733
7,72,790
12,45,568
(Rs. In 000)

32

Particulars/Financial Year
Fire
Marine
Miscellaneous
Total

2009-10
2,01,051
6,16,927
50, 79,305
58,97,283

2014-15
2,42,346
21,08,778
1,56,71,323
1,80,22,447

Likewise, profit earned (before tax) in FY 2014-15 is Rs. 21,01,472 whereas the same earned in FY

2009-10 is Rs. 1,17,812.

Similarly, number of branches (urban) at the end of FY 2014-15 is 98 which is slightly lesser than

fifty percent increase in comparison to FY 2009-10, which was 48.

The number of policies sold up to 31st March, 2015 is 39,50,421
Hence, we can conclude that, the profitability of Tata Aig General Insurance has taken off since FY
2014-15 which has currently landed in the top five. Continuous efforts will undoubtedly acquire the
goal of being number one.

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FINAL ACCOUNTS OF TATA AIG GENERAL INSURANCE

The following is the Profit and Loss Account as well as the Balance Sheet for the year ending on 31 st
March, 2015.

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Profit & Loss Account for the year ended on 31st March, 2015

35

Balance Sheet as at 31st March, 2015

36

Contingent Liabilities

37

CONCLUSION
Insurance as an industry has secured a vital position in the development of the nations economy. An
efficient insurance market is essential to achieve integration into the global economy and sustainable
strong economic growth. Success for Indian insurance players will hinge on achieving excellence in
distribution by raising agency productivity while simultaneously exploring new models in nonagency distribution.
The infamous Tata Group is one of the most trusted group of companies not only in India but all
around the world. Tata has penetrated into the insurance sector as well, winning trust of its
customers, as always. In the present scenario in India, Life Corporation of India (LIC) is synonymous
with the term life insurance where it comprises of more than fifty percent of the total life insurance in
India. This, however, proves to be an encouraging factor for Tata AIA Life Insurance even though it
comprises of only two percent of the total life insurance in India because it clearly shows that Tata is
always up for a challenge. It took a terrific flight in the start as compared to the current situation.
Even then, it is believed that there is still tremendous scope and capacity and plenty of room for
improvement and success. It has come a long way till today right from its inception. Tata AIG
General Insurance, on the other hand, is considered as one of the top five general insurance
companies in India. It consists of all insurances under the sun, excluding life insurance. Right from
its inception, it has absorbed majority of the general insurance in India to make its way to top five.
With its current success pace, it can definitely win the title of being the number one general
insurance company. Prioritizing customer satisfaction is the key to success of the Tata Insurance
Companies.
Insurance must be mandate in most of the social and political gatherings and it must be the priority in
economic development during parliamentary sessions. The regulatory framework should be more
open to technology, compliance and global competition. The insurance penetration will certainly
increase if people of India can be made aware of the various risks associated with their life, business
and the internal and external environment. Nevertheless, insurance business is the art of selling
promise and providing economic security which is the need of the hour to every individual is being
cautiously provided through insurance, thereby strengthening the Nations economy and growth.

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REFERENCE

https://en.wikipedia.org/wiki/TATA_AIG
https://en.wikipedia.org/wiki/Insurance
http://www.investopedia.com/university/insurance/
http://www.investopedia.com/terms/i/insurance.asp
http://www.investopedia.com/university/insurance/insurance1.asp
http://www.ehow.com/list_7186245_functions-life-insurance_.html
http://www.tataaiginsurance.in/about-us/tata-aig/
http://www.medindia.net/patients/insurance/tata-aig-general-insurance.htm
http://economictimes.indiatimes.com/wealth/personal-finance-news/aia-group-to-increase-its-

stake-in-indian-life-insurance-venture-with-tata-sons-to-49-per-cent/articleshow/50070057.cms
http://business.mapsofindia.com/insurance/

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