Flow of Presentation

Definition
History of growth of General Insurance in India
Growth of general insurance premium
Classes of General Insurance
Prospects of further growth in India
Important terms used in General Insurance
Underwriting and claim procedures
Insurance and Reinsurance
Impact of detariffing rates and products
Role of Regulator
Conclusion
General Insurance
Insurance is classified into Life and General
Any insurance other than human lives comes under the
scope of General Insurance
It is preferable to call this as General Insurance instead
of non-life insurance
There is vast scope and the market is trying to cope up
with the demands of the market
Insurance penetration is improving in India and being
the second largest developing economy in the world the
scope is huge
General Insurance in India
Marine insurance was being practiced in India from the
beginning of 19
th
century
Offices were established in Kolkata which was the centre
for East India Company
Fire insurance followed in 1825 at Madras
Swadeshi movement also had its impact on Insurance and
first Indian Company was formed in 1907 Indian
Mercantile Insurance Company
Need to control insurance business was felt by the British
government which introduced the Insurance Act in 1938
and Insurance Rules in 1939

Development in 1970
Life Insurance business was nationalized in India in the year 1956
General Insurance business was being done by 106 companies
including LIC (GI)
On May 13
th
1971 an ordinance was promulgated taking state control
of general insurance business with custodians in charge
In 1972 GI Nationalization act was passed allowing the formation of
GIC as the holding company and with 4 subsidiaries each having its
Head Office at one metro
1
st
Jan 1973 GIC and 4 companies were formed taking in them 106
companies and the 4 PSUs were taking care of the general insurance
business in the country till 2000 totally. GIC on its own was also
writing aviation and crop business besides becoming the National &
Asian Reinsurer
The objective of nationalization was to spread insurance to nook and
corner of the country and to utilize peoples money for the peoples
good thus uplifting the socio economic condition of the country

Liberalisation
Following globalization moves Malhotra committee
had been formed to look into the methods of
liberalization of insurance
Based on the report IRA bill was introduced but later
on withdrawn without discussions from the floor of
parliament
Later on the bill in the modified form as IRDA bill was
introduced in 1999 and the IRDA act was passed.
An independent statutory authority as Regulator for
insurance business came into existence in 1999
Developments since 2000
Surveyors and loss assessors regulations 2000
Third party administrators regulations 2001
Investment regulations 2001
Policy holders interests regulations 2002
Brokers regulations 2002
Corporate Agents regulations 2002
Manner of receipt of premium 2002
Rural sector 2002
Distribution of surplus 2002
Insurance councils & Institutes
Two councils which had been reconstituted life insurance
council
Insurance ombudsman had been appointed
General insurance council
IIISLA has been formed
IIBA- Brokers association
IIRM- Institute of risk management
Intermediaries now allowed-Agents/ corporate agents/
Brokers
Institutes for educating the agents/Brokers have been
formed and passing the examination has been made
mandatory for carrying out insurance business
Surveyor licensing is being controlled by Regulator
General Insurance business
done
Year In Crores NA;OIC:UI;NA;GIC
1974 219.99 25.3:25.5:25.5:21.5:2.6
1975 253.75 26.6:26.7:26.7:21.1:2.6
1976 286.51 27.1:26.5:23.4:21.0:2.1
1990 2174.43 29.8:22.4:26.7:20.1:1.0
2000 10272 crores
2006 > 20000 crores
2007 > 24000 crores
International comparison
Penetration( premium as
% of GDP)
United states 4.32
Canada 3.31
UK 3.05
Germany 3.55
Japan 2.30
South Korea 2.89
China 0.61
India 0.54
Density ( Premium per
capita) USD
USA 1474.4
Canada 700.6
UK 741.5
Germany 913.5
Japan 805.5
South Korea 262.3
China 5.0
India 2.4

General Insurance
Insurance of property
Insurance of persons
Insurance of liability
Insurance of Interest
Classes of GI Business
Fire Property damage and business
interruption insurance
Marine- Cargo and Hull
Misc - Motor/ Engineering/Liability/
Aviation/ Space/Energy/ Guarantee/ Bonds/
Rural/ Livestock/ weather/ Crop/
All risks/ accident/ Travel/ Baggage/

Insurers now licensed by
IRDA GENERAL INSURERS
1. Bajaj Allianz
2. ICICI Lombard
3. Iffco-Tokio General Insurance
4. National Insurance
5. New India Assurance Company
6. Oriental Insurance
7. Reliance General Insurance
8. Royal Sundaram Alliance
9. TATA-AIG General
10.United India Insurance
11. Cholamandalam MS General
12. HDFC Chubb General
13. Export Credit Guarantee
14. Agriculture Insurance Company
15. Star Health & Allied
16.Sompho/ Shri Ram General/AXA/ Apollo DKV
New Companies licensed
Life

2000 3
2001 7
2002 2
2003 1
2004
2005
2006
2007
General

2000 3
2001 3
2002 3
2003
2004
2005
2006
2007
Terminology used in General Insurance
Proposer-Insured-Insurer
Risk- Peril
Proposal form
Sum Insured
Premium ( Consideration)
Excess ( Deductible)
Indemnity
Cover note
Policy document
Endorsement-for effecting changes in the policy
Warranties/ Clauses
Conditions
Underwriting
Renewal
Hazard


Basic Principles of General Insce
Insurance is a legal agreement entered between
Insured and Insurer due to which due to the
consideration, the Insurer agrees to indemnify the
Insured, for the loss or damage or liability created
due an accident which is covered under the policy
subject to the terms and conditions of the contract
All insurance policies are subject to the
warranties, conditions and clauses of the policy
contract and claims will be settled accordingly
Basic principles
Utmost good faith- which is embodied in all insurance
contracts and appears in the conditions of the policy
documents.
Since only the Insured who is the owner/possessing the
property he/she needs to declare the details which are to be
considered by the Underwriter. To obtain the requisite
details the Insurer arranges all questions in order in the
proposal form so that he/she knows where to look for the
required details. Material fact is the detail of the risk which
will influence the mind of the Underwriter to accept/reject;
and if to accept the rate /terms at which the risk is to be
accepted.
Duty of disclosure is on the proposer/Insured and if willful
concealment/ non-disclosure of facts could be established
the claim if any could be denied

Insurable interest
Only the person who has insurable interest can arrange
insurance and seek indemnity due to loss or damage
Insurable interest is defined as legal interest in another
persons life or in the protection of property from
injury, loss, destruction or pecuniary damage
By virtue of ownership
Tenant who had leased property
Employers interest on employees lives
Proximate cause
Insurer is liable for any loss proximately caused by
a peril insured against, but he is not liable for any
loss which is not proximately caused by a peril
insured against-Judge Lumb
Proximate cause means the active, efficient cause
that sets in motion a train of events which brings
about a result, without the intervention of any
force started and working actively from a new and
independent source
Indemnity
Insurance contracts are mostly contracts of indemnity
Insured is entitled to obtain the loss amount suffered
from the insurances he had effected on the property
He is not to be benefited due the loss/damage
If sum insured is on agreed value basis the loss will
be settled on that basis
Extent of indemnity will be based on the market value
of the property at the time of occurrence of the event
which caused the loss/damage or destruction
Subrogation and contribution are the corollaries of
indemnity to ensure that the claim settlement follows
the normal indemnity

Underwriting and claims
Offer and acceptance- Proposal is studied by the Underwriter
who then quotes the premium terms, warranties and conditions
Once accepted by the proposer and premium is paid, the cover
note is issued. Later on policy document is issued.
Alterations/ changes are effected by endorsements
Claim is being processed to take into account the salvage,
under-insurance and excess under the policy and many times
to deduct the additional premium for restoring the sum insured
to the original level by charging the additional premium on the
claim amount paid from the date of loss till the date of expiry.
Claim will be subject to getting the subrogation rights
preserved against the third parties responsible for making good
the loss and transferring the same to Insurers
Changes
Fire insurance; Reinstatement value
(other than stocks) Market value
Marine insurance : Agreed value
Marine hull insurance: Agreed value
Motor insurance: Insured declared value
Engineering insurance: Present day
replacement value
Misc insurance: Market value
Insurances which need to become
popular
Business Interruption insurance
Engineering insurance
Liability insurance- CGL Public /Product
E & O ( PI) liability insurance
D & O liability insurance
PI for Lawyers/CAs/Doctors/ Brokers/Architects/
structural engineers
Overseas travel insurance
Employees benefit policies ( GPA/GMC)
Detariffing
TAC was earlier providing the rates, terms policy wordings
and regulations as to how to conduct the business
Nearly 70% of the business was in the purview of the tariff
After liberalizing the market by allowing new players Tariff
rates had been withdrawn w.e.f 1-1-2007 but with some
limitations
From 1-1-2008 it is expected that the policy wordings will
be withdrawn by IRDA which will allow freedom to the
insurers to come out with their policy design wordings
clauses and warranties.
The beneficiary will be the customers/ insured