CHAPTER - 4 INSURANCE SECTOR

Meaning of Insurance Insurance provides financial protection against a loss arising out of happening of an uncertain event. A person can avail this protection by paying premium to an insurance company. A pool is created through contributions made by persons seeking to protect themselves from common risk. Premium is collected by insurance companies which also act as trustee to the pool. Any loss to the insured in case of happening of an uncertain event is paid out of this pool. Insurance works on the basic principle of risk-sharing. A great advantage of insurance is that it spreads the risk of a few people over a large group of people exposed to risk of similar type. Definition Insurance is a contract between two parties whereby one party agrees to undertake the risk of another in exchange for consideration known as premium and promises to pay a fixed sum of money to the other party on happening of an uncertain event (death) or after the expiry of a certain period in case of life insurance or to indemnify the other party on happening of an uncertain event in case of general insurance. The party bearing the risk is known as the 'insurer' or 'assurer' and the party whose risk is covered is known as the 'insured' or 'assured'. Concept of Insurance / How Insurance Works The concept behind insurance is that a group of people exposed to similar risk come together and make contributions towards formation of a pool of funds. In case a person actually suffers a loss on account of such risk, he is compensated out of the same pool of funds. Contribution to the pool is made by a group of people sharing common risks and collected by the insurance companies in the form of premiums. Lets take some examples to understand how insurance actually works: Example 1 SUPPOSE Houses in a village = 1000 Value of 1 House = Rs. 40,000/Example 2 SUPPOSE Number of Persons = 5000 Age and Physical condition = 50 years &

 Houses burning in a yr = 5 Total annual loss due to fire = Rs. 2,00,000/ Contribution of each house owner = Rs. 300/-

Healthy Number of persons dying in a yr = 50 Economic value of loss suffered by family of each dying person = Rs. 1,00,000/ Total annual loss due to deaths = Rs. 50,00,000/ Contribution per person = Rs. 1,200/UNDERLYING ASSUMPTION All 5000 persons are exposed to common risk, i.e. death PROCEDURE Everybody contributes Rs. 1200/- each as premium to the pool of funds Total value of the fund = Rs. 60,00,000 (i.e. 5000 persons * Rs. 1,200) 50 persons die in a year on an average Insurance company pays Rs. 1,00,000/- out of the pool to the family members of all 50 persons dying in a year EFFECT OF INSURANCE Risk of 50 persons is spread over 5000 people, thus reducing the burden on any one person.

UNDERLYING ASSUMPTION All 1000 house owners are exposed to a common risk, i.e. fire PROCEDURE All owners contribute Rs. 300/- each as premium to the pool of funds Total value of the fund = Rs. 3,00,000 (i.e. 1000 houses * Rs. 300) 5 houses get burnt during the year Insurance company pays Rs. 40,000/- out of the pool to all 5 house owners whose house got burnt EFFECT OF INSURANCE Risk of 5 house owners is spread over 1000 house owners in the village, thus reducing the burden on any one of the owners.

Insurance Regulatory and Development Authority (IRDA)

The Insurance Regulatory and Development Authority (IRDA) is a national agency of the Government of India, based in Hyderabad. It was formed by an act of Indian Parliament known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements. Mission of IRDA as stated in the act is "to protect the interests of the Policyholders, to regulate, promote and ensure orderly growth of the Insurance industry and for matters connected therewith or incidental thereto." In 2010, the Government of India ruled that the Unit Linked Insurance Plans (ULIPs) will be governed by IRDA, and not the market regulator Securities and Exchange Board of India.

Expectations
The law of India has following expectations from IRDA: 1. To protect the interest of and secure fair treatment to policyholders. 2. To bring about speedy and orderly growth of the insurance industry (including Annuity and Superannuation payments), for the benefit of the common man, and to provide long term funds for accelerating growth of the economy. 3. To set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates. 4. To ensure that insurance customers receive precise, clear and correct information about products and services and make them aware of their responsibilities and duties in this regard. 5. To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery. 6. To promote fairness, transparency and orderly conduct in Financial markets dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players. 7. To take action where such standards are inadequate or ineffectively enforced. 8. To bring about optimum amount of Self-regulation in day to day working of the industry consistent with the requirements of prudential regulation.

Duties, Powers and Functions of IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA: 1. Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business. 2. Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include, 1. issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration; 2. protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of Insurance claim, surrender value of policy and other terms and conditions of contracts of insurance; 3. specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents; 4. specifying the code of conduct for surveyors and loss assessors; 5. promoting efficiency in the conduct of insurance business; 6. promoting and regulating professional organisations connected with the insurance and re-insurance business; 7. levying fees and other charges for carrying out the purposes of this Act;

8. calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organisations connected with the insurance business; 9. control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938); 10. specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries; 11. regulating investment of funds by insurance companies; 12. regulating maintenance of margin of solvency; 13. adjudication of disputes between insurers and intermediaries or insurance intermediaries; 14. supervising the functioning of the Tariff Advisory Committee; 15. specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organisations referred to in clause (f); 16. specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and 17. exercising such other powers as may be prescribed from time to time.

Life & Non-Life InsuranceThe broadest classification of insurance is in terms of Life Insurance and non-Life Insurance (General insurance).

Life InsuranceLife insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money (the "benefits") upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger payment. The policy holder typically pays a premium, either regularly or as a lump sum. Other expenses (such as funeral expenses) are also sometimes included in the premium; however, in Australia the predominant form simply specifies a lump sum to be paid on the policy holder's death.

The advantage for the policy owner is "peace of mind", in knowing that the death of the insured person will not result in financial hardship for loved ones. Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; common examples are claims relating to suicide, fraud, war, riot and civil commotion. Life-based contracts tend to fall into two major categories:

Protection policies designed to provide a benefit in the event of specified event, typically a lump sum payment. A common form of this design is term insurance. Investment policies where the main objective is to facilitate the growth of capital by regular or single premiums. Common forms (in the US) are whole life, universal life and variable life policies.

Parties to contract

There is a difference between the insured and the policy owner, although the owner and the insured are often the same person. For example, if Joe buys a policy on his own life, he is both the owner and the insured. But if Jane, his wife, buys a policy on Joe's life, she is the owner and he is the insured. The policy owner is the guarantor and he will be the person to pay for the policy. The insured is a participant in the contract, but not necessarily a party to it. Also, most companies allow the payer and owner to be different, e. g. a grandparent paying premiums for a policy on a child, owned by a grandchild. The beneficiary receives policy proceeds upon the insured person's death. The owner designates the beneficiary, but the beneficiary is not a party to the policy. The owner can change the beneficiary unless the policy has an irrevocable beneficiary designation. If a policy has an irrevocable beneficiary, any beneficiary changes, policy assignments, or cash value borrowing would require the agreement of the original beneficiary.
Contract terms

Special exclusions may apply, such as suicide clauses, whereby the policy becomes null and void if the insured commits suicide within a specified time (usually two years after the purchase date; some states provide a statutory one-year suicide clause). Any misrepresentations by the insured on the application may also be grounds for nullification. Most US states specify a maximum contestability period, often no more than two years. Only if the insured dies within this period will the insurer have a legal right to contest the claim on the basis of misrepresentation and request additional information before deciding whether to pay or deny the claim. The face amount of the policy is the initial amount that the policy will pay at the death of the insured or when the policy matures, although the actual death benefit can provide for greater or lesser than the face amount. The policy matures when the insured dies or reaches a specified age (such as 100 years old).
Costs, insurability and underwriting

The insurer (the life insurance company) calculates the policy prices with intent to fund claims to be paid and administrative costs, and to make a profit. The cost of insurance is determined using mortality tables calculated by actuaries. Actuaries are professionals who employ actuarial science, which is based on mathematics (primarily probability and statistics). Mortality tables are statistically based tables showing expected annual mortality rates. It is possible to derive life expectancy estimates from these mortality assumptions. Such estimates can be important in taxation regulation.[2][3]

The three main variables in a mortality table are commonly age, gender, and use of tobacco, but more recently in the US, preferred class-specific tables have been introduced. The mortality tables provide a baseline for the cost of insurance, but in practice these mortality tables are used in conjunction with the health and family history of the individual applying for a policy to determine premiums and insurability. Most of the revenue received by insurance companies consists of premiums paid by policy holders, with some additional money being made through the investment of some of the cash raised from premiums. Rates charged for life insurance increase with the insurer's age because, statistically, people are more likely to die as they get older. The insurance company will investigate the health of an applicant for a policy to assess the likelihood of incurring a claim, in the same way that a bank would investigate an applicant for a loan to assess the likelihood of a default. Group Insurance policies are an exception to this. This investigation and resulting evaluation of the risk is termed underwriting. Health and lifestyle questions are asked, with certain responses or revelations possibly meriting further investigation.
Death proceeds

Upon the insured's death, the insurer requires acceptable proof of death before it pays the claim. The normal minimum proof required is a death certificate, and the insurer's claim form completed, signed (and typically notarized). If the insured's death is suspicious and the policy amount is large, the insurer may investigate the circumstances surrounding the death before deciding whether it has an obligation to pay the claim. Payment from the policy may be as a lump sum or as an annuity, which is paid in regular installments for either a specified period or for the beneficiary's lifetime.

Types
Life insurance may be divided into two basic classes: temporary and permanent; or the following subclasses: term, universal, whole life and endowment life insurance.
Permanent life insurance

Permanent life insurance is life insurance that remains active until the policy matures, unless the owner fails to pay the premium when due. The policy cannot be cancelled by the insurer for any reason except fraudulent application, and any such cancellation must occur within a period of time defined by law (usually two years). A permanent insurance policy accumulates a cash value, reducing the risk to which the insurance company is exposed, and thus the insurance expense over time. This means that a policy with a million dollar face value can be relatively expensive to a 70-year-old. The owner can access the money in the cash value by withdrawing money, borrowing the cash value, or surrendering the policy and receiving the surrender value. The four basic types of permanent insurance are whole life, universal life, limited pay and endowment

Whole life coverage

Whole life insurance provides lifetime death benefit coverage for a level premium in most cases. Premiums are much higher than term insurance at younger ages, but as term insurance premiums rise with age at each renewal, the cumulative value of all premiums paid across a life time are roughly equal if policies are maintained until average life expectancy. Part of the insurance contract stipulates that the policyholder is entitled to a cash value reserve, which is part of the policy and guaranteed by the company. This cash value can be accessed at any time through policy loans and are received income tax free. Policy loans are available until the insured's death. If there are any unpaid loans upon death, the insurer subtracts the loan amount from the death benefit and pays the remainder to the beneficiary named in the policy.
Universal life coverage

Universal life insurance (UL) is a relatively new insurance product, intended to combine permanent insurance coverage with greater flexibility in premium payment, along with the potential for greater growth of cash values. There are several types of universal life insurance policies which include interest sensitive (also known as "traditional fixed universal life insurance"), variable universal life (VUL), guaranteed death benefit, and equity indexed universal life insurance. A universal life insurance policy includes a cash value. Premiums increase the cash values, but the cost of insurance (along with any other charges assessed by the insurance company) reduces cash values. However, with the exception of VUL, interest is paid at a rate specified by the company, further increasing cash values. With VUL, cash values will be and flow relative to the performance of the investment sub-accounts the policy owner has chosen. The surrender value of the policy is the amount payable to the policy owner after applicable surrender charges, if any. Universal life insurance addresses the perceived disadvantages of whole life namely that premiums and death benefit are fixed. With universal life, both the premiums and death benefit are flexible. Except with regards to guaranteed death benefit universal life, this flexibility comes with the disadvantage of reduced guarantees.
Limited-pay

Another type of permanent insurance is Limited-pay life insurance, in which all the premiums are paid over a specified period after which no additional premiums are due to the policy in force. Common limited pay periods include 10-year, 20-year, and are paid out at the age of 65.
Endowments

Endowments are policies in which the cumulative cash value of the policy equals the death benefit at a certain age. The age at which this condition is reached is known as the endowment age. Endowments are considerably more expensive (in terms of annual premiums) than either whole life or universal life because the premium paying period is shortened and the endowment date is earlier.

Accidental death

Accidental death is a limited life insurance designed to cover the insured should they pass away due to an accident. Accidents include anything from an injury and upwards, but do not typically cover deaths resulting from health problems or suicide. Because they only cover accidents, these policies are much less expensive than other life insurance policies.

Non-Life InsuranceA non-life insurance contract is different from a life insurance contract. A life insurance contract is a long term contract, while general insurance contract is a one-year renewable contract. The risk namely death is certain in life insurance. The only uncertainty is as to when it will take place, whereas in general insurance, the insured event may or may not take place. It is difficult to determine the economic value of life, whereas the financial value of any asset to be insured under a general insurance policy can be determined. Because of these peculiar features, a non life insurance contract is different from a life insurance contract. In this lesson we will learn in detail the treatment of each type of non-life insurance. Section 2(6B) of the Insurance Act 1938, defines general insurance business. According to this general insurance business means fire, marine, or miscellaneous insurance whether carried separately or in combination. General Insurance Corporation of India (GIC) was set up with exclusive privilege for transacting General Insurance business. After the passage of IRDA Act 1999, GIC has been delinked from its subsidiaries and has been assigned the role of Indian reinsurer.

MEANING AND IMPORTANCE OF NON-LIFE INSURANCE

Non-life insurance refers to the property and liability insurance. Fire insurance covers stationary property. Marine insurance covers mobile property. Bonding is a special coverage that guarantees the performance of the contract by one party to another. Casualty coverage includes accident and health insurance besides the above mentioned categories. Miscellaneous Insurance business means all other general insurance contracts including therein motor insurance. The role of insurance is two fold. Insurance achieves both risk transfer and risk reduction. The insurer collects the premium from a group of business firms who wants to protect their property against the damage caused by fire. Insurer will then indemnify the firm that suffers a loss to property due to fire out of the premium so collected. So the collective contributions of this entire group of the insured have been utilized to pay for the losses of the unfortunate few who sustain losses.

KINDS OF NON-LIFE INSURANCEThere are various kinds of non-life insurance.

1.FIRE INSURANCE-

Fire is hazardous to human life as well as property. Loss of life by fire is covered under Life insurance and loss of property by fire is covered under fire insurance. Fire causes enormous damage by physically reducing the materials to ashes. A fire insurance policy provides protection strictly against fire. A contract of fire insurance can be defined as a contract under which one party ( the insurer) agrees for consideration (premium) to indemnify the other party (The insured) for the financial loss which the latter may suffer due to damage to the property insured by fire during a specified period of time and up to an agreed amount. The document containing the terms and conditions of the contract is known as Fire Insurance Policy. A fire policy contains the name of the parties, description of the insured property, the sum for which the property is insured,amount of premium payable and the period insured against. The premium may be paid either in single instalment or by way of instalments. The insurer is liable to make good the loss only when loss is caused by actual fire. The phrase loss or damage by fire also includes the loss or damage caused by efforts to extinguish fire. Scope of cover Standard Fire and special perils policy usually cover loss due to the following perils: 1. 2. 3. 4. 5. 6. 7. 8. Fire Lightning Explosion Storm, cyclone, typhoon, hurricane, tornado, landslide Bush fire Riot, strike, malicious, and terrorism damages Aircraft damage Overflowing of water tanks and pipes etc.

2.MARINE INSURANCEInsurance on the risks of transportation of goods is one of the oldest and most vital forms of insurance. The value of goods shipped by business firms each year cost millions of rupees. These goods are exposed to damage or loss from numerous transportation perils. The goods can be protected by marine insurance contracts. It is an important element of general insurance. It essentially provides cover from loss suffered due to marine perils. In India the marine insurance is regulated by the Indian Maritime Insurance Act 1963, which is based on the original English Act. Marine insurance is a contract under which, the insurer undertakes to indemnify the insured in the manner and to the extent thereby agreed, against marine losses, incidental to marine adventures. It may be defined as a form of insurance covering loss or damage to vessels or to cargo during transportation to the high seas. It follows from the above discussion the marine insurance is a contract between the insured and the insurer. The insured may be a cargo owner or a ship owner or a freight receiver. The insurer is known as the underwriter. The document in which the contract is incorporated is called Marine policy. The insured pays a particular sum, which is called premium, in exchange for an undertaking from the insurer to indemnify the insured against loss or damage caused by certain specified perils.

Subject Matters of Marine InsuranceThe insured may be the owner of the ship, owner of the cargo or the person interested in freight. (a) Hull InsuranceHull refers to the ocean going vessels (ships trawlers etc.) as well as its machinery. The hull insurance also covers the construction risk when the vessel is under construction. A vessel is exposed to many dangers or risks at sea during the voyage. An insurance effected to indemnify the insured for such losses is known as Hull insurance. (b) Cargo Insurance Cargo refers to the goods and commodities carried in the ship from one place to another. The cargo transported by sea is also subject to manifold risks at the port and during the voyage. Cargo insurance covers the shipper of the goods if the goods are damaged or lost. The cargo policy covers the risks associated with the transshipment of goods. The policy can be written to cover a single shipment. If regular shipments are made, an open cargo policy can be used that insures the goods automatically when a shipment is made. (c) Freight Insurance Freight refers to the fee received for the carriage of goods in the ship. Usually the ship owner and the freight receiver are the same person. Freight can be received in two ways- in advance or after the goods reach the destination. In the former case, freight is secure. In the latter the marine laws say that the freight is payable only when the goods reach the destination port safely. Hence if the ship is destroyed on the way the ship owner will loose the freight along with the ship. That is why, the ship owners purchase freight insurance policy along with the hull policy. (d) Liability Insurance It is usually written as a separate contract that provides comprehensive liability insurance for property damage or bodily injury to third parties. It is also known as protection and indemnity insurance which protects the ship owner for damage caused by the ship to docks, cargo, illness or injury to the passengers or crew, and fines and penalties.

3.HEALTH INSURANCEA systematic plan for financing medical expenses is an important and integral part of a risk management plan. With rising health care costs, it was no longer possible for an individual to meet the heavy cost of treatment involving hospitalization. The reasons for rise in health care costs are: (a) Increase in medical treatment costs. (b) Technological advancements in medical equipment. (c) High labour costs. Health insurance is an insurance, which covers the financial loss arising out of poor health condition or due to permanent disability, which results in loss of income. A health insurance policy is a contract between an insurer and an individual or group, in which the insurer agrees to provide specified health insurance at an agreed upon price (premium). It usually provides either direct payment or reimbursement for expenses associated

with illness and injuries. The cost and range of protection provided by health insurance depends on the insurance provider and the policy purchased. The health insurance policies available in India are: (a) Mediclaim policy (individuals and groups) (b) Overseas mediclaim policy (c) Raj Rajeshwari Mahila Kalyan Yojna (d) Bhagyashree Child Welfare Policy (e) Cancer Insurance Policy (f) Jan Arogya Bima Policy During the last 50 years, India has made considerable progress in improving its health status. Still it is in a developing stage. The increasing health care costs in the country are likely to contribute to the development of more health insurance products. Health insurance is not at the present recognized as a separate segment in Indian insurance industry. Privatization of insurance industry is likely to encourage the development of this segment. Health insurance in India has indeed a long way to go.

MOTOR INSURANCEThere has been a sudden rise in the motor accidents in the last few years. Much of these are attributable to increase in the number of vehicles. Every vehicle before being driven on roads has to be compulsorily insured. The motor insurance policy represents a combined coverage of the vehicles including accessories, loss or damage to his property or life and the third party coverage. Persons driving vehicles may cause losses and injuries to other persons. Every individual who owns a motor vehicle is also exposed to certain other risks. These include damage to his vehicle due to accidents, theft, fire, collision and natural disasters and also injuries to himself. In 1939, motor vehicle act came into force in India. Compulsory insurance was introduced by motor vehicle act to protect the pedestrians and other third parties. Claims for damages may arise due to possession of car, usage and maintenance of car. Motor insurance policy will pay the financial liability arising out of these risks to the insured person. Motor insurance policy is a contract between the insured and the insurer in which the insurer promises to indemnify the financial liability in event of loss to the insured. Motor Vehicles Act in 1939 was passed to mainly safeguard the interests of pedestrians. According to the Act, a vehicle cannot be used in a public place without insuring the third part liability. According to Section 24 of Motor Vehicles Act, No person shall use or allow any other person to use a motor vehicle in a public place, unless the vehicle is covered by a policy of insurance.

4.MISCELLANEOUS INSURANCES
In addition to life, fire and marine Insurance, several other general types of insurances are available today. The nationalized general insurance companies have also been offering special schemes meant for rural areas such as crop insurance, cattle insurance, insurance for huts, poultry etc. There is also a social security group accident scheme covering weaker sections of the society. Some of these are described below

1. PERSONAL ACCIDENT INSURANCE.

All of us are exposed to the risk of accident, which is a threat to our financial security, and therefore it is prudent to have adequate personal accident cover to manage this contingency. For handling accident risks, personal accident policy, Janata personal accident policy and Gramin personal accident policies are available in India. Scope of cover Personal accident policy pays compensation to the insured in the event of happening of one or more of the following listed below which may be selected by insured at the time of taking policy: _ On death _ On permanent total and partial disability and _ On temporary total disability In case of accident death during the policy period, the policy in addition covers funeral expenses of the insured person.

2. FIDELITY INSURANCE-

Under this type of insurance contract the insurer undertakes to compensate the insured against the loss caused by misappropriation of funds or goods or damage to the property caused by his employees. Such a policy is useful to the employers who fear embezzlement, forgery, fraud and dishonesty on the part of their employees. Under it the insured is required to furnish all material facts about the employees and also to notify any change in the condition of their service. The policy can be taken for specific positions rather than names, e.g., accountant, cashier etc. Blanket cover is also available for entire staff or group of employees.

3. BURGLARY INSURANCE

Such a policy provides protection against loss or damage caused by housebreaking, robbery or theft. It is also known as robbery, theft or larceny insurance. For this purpose a comprehensive policy may be taken or each risk may be separately insured. Full details of the article insured are given in the policy. Insured items include gold and gold ornaments and other assets including household items such as TV, fridge, air conditioner etc. A burglary policy for business premises would provide cover against loss to damage by house breaking and burglary of stock-in -trade, goodsin- transit, cash-in-safe, fixture and fittings etc. 4. CREDIT INSURANCECredit insurance policy is taken to cover the loss which may arise due to bad debts or nonpayment of dues by the debtors. This insurance is very useful to businessmen who sell goods on credit. It protects them from loss arising out of insolvency of their debtors. In India, Export Credit and Guarantee Corporation (ECGC) provides credit insurance to exporters.

5.WORKMENS COMPENSATION INSURANCEIn India, Workmens Compensation Act was passed in 1934 and 1946. According to this act, an employer is required to pay compensation to his workers who receive injuries or contract occupational diseases during the course of their work. An employer may obtain an insurance policy to cover such liability. The premiums are payable usually on the basis of wages. It is also known as Employers Liability Insurance. This policy is essential to every employer who employs workmen as defined under the Workmens Compensation Act in order to protect himself against the legal liabilities arising out of death or bodily injury to this workman. It also extends coverage through reimbursement of medical, surgical and hospitalization expenses including transportation costs on the payment of additional premium.

6.TRAVEL INSURANCETravel insurance covers travel related accidents also. While traveling outside India, individuals face risks such as loss of baggage, accidents involving injuries, illnesses and medical emergencies requiring hospitalization treatment. All this can pose serious consequences to the overseas travellers. A rational person should therefore secure the required coverage before leaving his home country. In India travel insurance has become popular among International travelers. 7.WEDDING INSURANCEThese days, weddings have become quite an expensive and elaborate affair. People do take care to make this once-in-a-lifetime event a memorable one. In case of any postponement or cancellation, there is a certain risk of monetary loss. The wedding insurance package can compensate for the monetary loss. This unique product covers the specific risks related to weddings. This Policycan protect you against certain types of financial losses you may incur in the event of unpredictable situations during the period leading up to and including your wedding day. The period of insurance will be 24 hours prior to the start of the customary functions or rituals or programmes of events mentioned in the printed invitations till the end of the function or five days from the beginning whichever occurs earlier. This policy provides cover for expenses actually and already incurred or advances paid in connection with marriage hall, catering, pandit, guests, music parties, photos and videography, loss on cancellation of travel tickets etc. Liability is restricted only when such cancellation arises out of cancellation or postponement of marriage. The policy does not cover any loss arises when marriage is cancelled or postponed because of dispute between marriage parties, willful negligence and criminal misconduct of the bride, bridegroom or their parents. 8.EMPLOYEE STATE INSURANCE SCHEME The Employee State Insurance Scheme (ESIS) is an insurance system which provides both the cash and medical benefits. It is managed by the Employee State Insurance Corporation (ESIC), a wholly government-owned enterprise. It was conceived as a compulsory social security benefit for workers in the formal sector. The original legislation creating the scheme allowed it to

cover only factories which has been using power and employing 10 or more workers. However, since 1989 the scheme has been expanded, and it now includes all such factories which are not using power and employing 20 or more persons. Mines and plantations are explicitly excluded from coverage under the ESIS Act. 9.UNEMPLOYMENT INSURANCE Unemployment insurance is designed to provide short term protection for regularly employed persons who lose their jobs and who are willing and able to work. Unemployment insurance has several basic objectives: 1) Provide cash income during involuntary unemployment. 2) Help unemployed workers find jobs. 3) Encourage employees to stabilize employment. 4) Help stabilize economy. Unemployment insurance is a popular concept in developed countries like U.S. where they have well defined laws and regulations. However in India it will take a long time to come. 10.PERSONAL LIABILITY INSURANCE Personal liability insurance provides protection against the legal liability, which arises due to insureds personal acts. The insurance company will pay for legal defense to third party damages or injuries up to policy limit. Except legal liability, which arises due to automobile accidents and professional liability, most other personal acts are covered under personal liability insurance. The personal liability insurance covers damages caused to properties and injuries to other people due to the negligence of the insured. Under this policy, the insurance company is bound to defend the insured, should the matter go to court of law. It can also settle the matter out of court by negotiating with parties for a settlement within the policy limit. Personal liability policy offers very wide coverage. Exam.- Accidental fire to neighbors house as a result of insureds Negligence or Injuring another person while riding a bicycle.