Title of the Project

IRDA(Insurance Regulatory and Development of India)

-STUDY OF INSURANCE

Name of the Researcher

MS.ANTIMA CHOUBE

Name of Academic Course and Academic Year Details

(Bachelors in Management Studies)

Academic Year- 2021-22

Under the Guidance of

MS.MEGHA BANSAL

University of Mumbai

Alkesh Dinesh Mody Institute For Financial And Management

Studies

1
 University of Mumbai’s
Alkesh Dinesh Mody Institute For Financial and
Management Studies

Certificate

I, Professor MS. MEGHA BANSAL hereby certify that Mr/Ms.ANTIMA CHOUBE,

TYBMS Student of Alkesh Dinesh Mody Institute for Financial and Management Studies,
has completed the project titled IRDA(INSURANCE REGULATORY DEVELOPMENT
OF INDIA-STUDY OF INSURANCE in the area of specialization FINANCE for the
academic year 2021-2022. The work of the student is original and the information included in
the project is true to the best of my knowledge.

BMS Coordinator Director

External Examiner Internal Guide

MS.MEGHA BANSAL

2
 Declaration

I,Mr./Ms ANTIMA CHOUBE TYBMS Student of Alkesh Dinesh Mody Institute for
Financial and Management Studies, hereby declare that I have completed the project-
titled
IRDA(Insurance Regulatory and Development of India)- Study of Insurance
during the academic year2021-2022.

The report work is original and the information/data included in the report is true to
the best of my knowledge. Due credit is extended on the work of
Literature/Secondary Survey by endorsing it in the Bibliography as per prescribed
format.

Signature of the Student with Date

Name of Student

ANTIMA SITARAM CHOUBE

3
 ACKNOWLEDGEMENT

I take this opportunity with great pleasure to present before you this project on
“INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA”
which is a result of co-operation and hard work. I would like to express my deep sense of
gratitude toward all those people without whose guidance and inspiration this project would
never be fulfilled.
I’m grateful to Mumbai University for giving me the opportunity to work on this project. I
would also like to thank our Principal DR. SMITA SHUKLA for giving me such a brilliant
opportunity to present a creative outcome in the form of a project.
Any accomplishment requires the efforts of many people and this project is not different. I
find great pleasure in expressing my deepest sense of gratitude towards my project guide
MS. MEGHA BANSAL , whose guidance & inspiration right from the conceptualization to
the finishing stages proved to be very essential & valuable in the completion of the project.
I would like to thank the library staff, and my classmates for their invaluable suggestions &
guidance for my project work. Last but not the least; I’d like to thank my parents without
whose cooperation and support it would’ve been impossible for me to complete this project.

STUDENT SIGNATURE

4
 INDEX

SR.N TOPIC PAGE

O NO
1 EXECUTIVE SUMMARY 6
2 INTRODUCTION TO IRDA 7
3 RESEARCH AND METHODOLOGY 12
4 OBJECTIVE OF STUDY 13
5 HISTORY OF INSURANCE 14
6 CHAIRMAN OF IRDA 17
7 IMPACT OF NEW IRDA REGULATIONS 19
8 OMBUDSMAN 21
9 TYPES OF INSURANCE 29
10 ADVANTAGES AND DISADVANTAGES OF LIFE 38
INSURANCE
11 ADVANTAGES OF GENERAL INSURANCE 40
12 PRINCIPLE OF INSURANCE 44
13 INSURANCE FRAUD 47
14 ROLE AND RESPONSIBILITY OF ACTURIES 51
15 INSURANCE AGENT 56
16 POLICY HOLDERS 59
17 TOP INSURANCE COMPANIES IN INDIA 60
18 CASE STUDY- 64
19 FINDINGS 65
20 SUGGESTIONS 66
21 CONCLUSIONS 67
22 BIBLIOGRAPHY 68

5
 EXECUTIVE SUMMARY

IRDA was constituted by the Insurance Regulatory and Development Authority

Act 1999 an act of parliament passed by the government of India. The goals of
IRDA includes promoting competition to enhance customer satisfaction through
better choice and lower premiums, while ensuring the financial security of the
insurance marked. Adjudicating dispute between insurers and intermediaries or
insurance intermediaries. It promote speedy and orderly growth of the insurance
for the benefit of the common man, and to provide long term funds for
accelerating economic growth. All insurers are increasingly using outsourcing
as a means of both reducing cost and accessing specialist expertise, not
available internally and achieving strategic aims.

An insurer or its agent or other intermediary shall provide all material

information in respect of a proposed over that would be in his or her interest. An
insured or the claimant shall give notice to the insurer of any loss arising under
contract of insurance at the earliest or within such extend time as my allowed by
the insurer. Low levels of awareness is one of the reasons for subdued
penetration of an insurance in India. Insurance is an intangible product and
actual benefit will only be at the happening of insured contingency by an Act of
Parliament of India called the Insurance Regulatory and Development Authority
Act 1999, IRDA is the watching and controller of the insurance industry in
India and it works to bring better regulation for the welfare of policyholders.

6
 INTRODUCTION

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF

INDIA

Insurance Regulatory and Development Authority of India (IRDAI) is an autonomous

apex statutory body which regulates and develops the insurance industry in India. It was
constituted by a Parliament of India act called Insurance Regulatory and Development
Authority Act, 1999 and duly passed by the Government of India.

The agency operates from its headquarters at Hyderabad, Telangana where it shifted
from Delhi in 2001. IRDA batted for a hike in the foreign direct investment (FDI) limit to 49
percent in the insurance sector from the erstwhile 26 per cent. The FDI limit in insurance
sector was raised to 49% in July 2014.

What We Do

IRDA’s Mission
Insurance Regulatory and Development Authority (IRDA) Act, 1999 spells out the Mission
of IRDA as:“... 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. ”

Background of IRDA

 1991: Government of india begins the economic reforms programme and the financial
sector reforms.
 1993: committee on reforms in the insurance sector headed by Mr. R.N. Malhotra,
(Retired Governor , Reserve Bank Of India) set uo to recommend reforms.
 1994: The Malhotra committee recommends certain reforms having studied the sector
and hearing out the stakeholders.

Some recommended reforms:

 Private sector companies should be allowed to promote insurance companies.

 Foreign promotes should also be allowed
 Government to vest its regulatory powers on an independent regulatory body answerable
to parliament.

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IRDA Activities

 Frames regulations for insurance industry in terms of section 114A of the Insurance act
1938
 Frames the year 2000 has registered new insurance companies in accordance with
regulations.
 Monitors insurance sector activities for healthy development of the industry and
protection of policyholders interests.
Functions and Duties of IRDA
Section 14 of the IRDA Act, 1999 lays down the duties, powers and functions of IRDA.

  Registering and regulating insurance companies

  Protecting policyholders’ interests
  Licensing and establishing norms for insurance intermediaries
  Promoting professional organizations in insurance
  Regulating and overseeing premium rates and terms of non-life insurance covers
  Specifying financial reporting norms of insurance companies
  Regulating investment of policyholders’ funds by insurance companies
  Ensuring the maintenance of solvency margin by insurance companies

Ensuring insurance coverage in rural and of vulnerable sections of society IRDA - Role,
Objectives and function
IRDA - Insurance Regulatory Development and Authority is the statutory, independent and
apex holy that governs and supervise the Insurance in India

It was constituted by Parliament of India Act called Insurance Regulatory and Development
Authority of India (IRDA of India ) after the formal declaration of Insurance Laws
(Amendment) Ordinance 2014, by the President of India Pranab Mukherjee on December on
December 26,2014.

8
Establishment:
 IRDA Act was passed upon the recommendations of Malhotra Committee report (7
Jan,1994),headed by Mr R.N. Malhotra ( Retried Govern , RBI)

 Main Recommendations - Entrance of Private Sector Companies and Foreign promoters

& Air independent regulatory authority for Insurance Sector in India.

 In April 2000, it was set up as statutory body, with its headquarters at New Delhi.

 The headquarters of the agency were shifted to Hyderabad Telangana in 2001.

Objectives of IRDA:
 To promote the interest and rights of policy holders.

 To promote and ensure the growth of insurance industry.

 To ensure speedy settlement of genuine claims and to prevent frauds and malpractices.

 To bring transparency and orderly conduct of in financial markets dealing with

insurance.

Organizational setup of IRDA:

IRDA is a ten member body consists of :

 One chairman ( For 5 years & maximum Age -60 years )

 Five whole-time Members (For 5 years and maximum Age -62 years)

 Four part-time Members (not more than five)

9
The chairman and members of IRDAI are appointed by Government of India.
The present Chairman of IRDAI is Mr. T.S Vijayan.

Functions and Duties of IRDA:

  Section 14 of IRDA Act,1999 lays down the duties and functions of IRDA:

  It issues the registration certificates to insurance companies and regulates them

  It protects the interest of policy holders.

 It provides license to insurance intermediaries such as agents and brokers after
specifying the required qualifications and set norms/code of conduct for them.

 It promotes and regulates the professional organizations related with insurance business
to promote efficiency in insurance sector.

 It regulates and supervises the premium rates and terms of insurance covers.

 It specifies the conditions and manners, according to which the insurance companies and
other intermediaries have to make their financial reports.

 It regulates the investment of policyholder's funds by insurance companies.

 It also ensures the maintenance of solvency margin (company's ability to pay out claims)
by insurance companies.

10
Related News

FDI limit in Insurance Sector has been increased to 49% from 26%, approved by The Union
Cabinet. The proposal was made by Finance Minister Arun Jaitley.

 IRDAI has celebrated 19th April, 2015 as Insurance Awareness Day at Hyderabad.
(came into existence in 2000)

 IRDAI has imposed a fine of Rs.10 lakh on TATA AIA Life Insurance for violation of
excess payment to corporate agents. TATA AIA Life Insurance is joint venture Company
formed by Tata Sons Ltd. and AIA Group Ltd. CEO and MD of the company is
Mr.Naveen Tahilyani.

 IRDAI has changed the norms related to cancellation and change of name of nominee.
The insurer will charge fee for any such modification. The fee is up to Rs. 50 for policies
obtained online and up to Rs.100 for others.

 IRDAI has imposed a fine of Rs.20 lakh on APPOLO MUNICH HEALTH

INSURANCE COMPANY for selling its policies through non-authorised insurance
selling website makemytrip.com. The CEO of APPOLO MUNICH HEALTH
INSURANCE COMPANY is Antony Jacob and the Chairman and CEO of
makemytrip.com is Deep Kalra.an.

11
 RESEARCH METGODOLOGY

For the purpose of project data is very much required which works as a food for process
which will ultimately give output in the form of information. So before mentioning the source
of data for the project would like to mention that what type of data have collected for the
purpose of project and what it is exactly.

A research method is a systematic plan for conducting research. Methodology is the

systematic, theoretical analysis of the method applied ton a field of study . it comprises the
theoretical analysis of the body of method and principles associated with a branch of
knowledge. Typically it encompasses concepts such as theoretical model, phase and
quantitative or qualitative techniques.

Now this is the descriptive research paper based on secondary data.Data have been collected
through books various websites, newspapers and publication of recent research papers
available in different websites, research articles, journals, E-journals and etc.

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OBJECTIVE OF STUDY
 To understand the procedure of granting of license to companies to start insurance

business.

 To study how the appointment of different insurance intermediary.

 To understand investigation of insurance premium.

 To understand the procedure of getting the license of insurance from IRDA .

 To understand the procedure of get approval of insurance product from IRDA

 To understand types of insurance under IRDA

13
 HISTORY OF INSURANCE IN INDIA

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu
( Manusmrithi ), Yagnavalkya (Dharmasastra) and Kautilya ( Arthasastra ). The writings talk
in terms of pooling of resources that could be re-distributed in times of calamities such as
fire,
floods, epidemics and famine. This was probably a precursor to modern day insurance.
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. This Company however failed in 1834. In 1829, the
Madras Equitable had begun transacting life insurance business in the Madras Presidency.
1870 saw the enactment of the British Insurance Act and in the last three decades of the
nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897)
were started in the Bombay Residency. This era, however, was dominated by foreign
insurance offices which did good business in India, namely Albert Life Assurance, Royal
Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard
competition from the foreign companies.

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.
An Ordinance was issued on 19 January 1956 nationalizing the Life Insurance sector and Life
Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian,
16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all.
The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private
sector.

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. 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.

14
1957 saw the formation of the General Insurance Council, a wing of the Insurance
Association of India. The General Insurance Council framed a code of conduct for ensuring
fair conduct and sound business practices.

In 1968, the Insurance Act was amended to regulate investments and set minimum solvency
margins. The Tariff Advisory Committee was also set up then.In 1972 with the passing of the
General Insurance Business (Nationalizations) Act, general insurance business was
nationalized with effect from 1 January 1973. 107 insurers were amalgamated and grouped
into four companies, namely National Insurance Company Ltd., the New India Assurance
Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance
Company Ltd. The General Insurance Corporation of India was incorporated as a company in
1971 and it commence business on January 1sst 1973.

This millennium has seen insurance come a full circle in a journey extending to nearly 200
years. The process of re-opening of the sector had begun in the early 1990s and the last
decade and more has seen it been opened up substantially. In 1993, the Government set up a
committee under the chairmanship of RN Malhotra, former Governor of RBI, to propose
recommendations for reforms in the insurance sector.The objective was to complement the
reforms initiated in the financial sector. The committee submitted its report in 1994 wherein,
among other things, it recommended that the private sector be permitted to enter the
insurance industry. They stated that foreign companies be allowed to enter by floating Indian
companies, preferably a joint venture with Indian partners.

Following the recommendations of the Malhotra Committee report, in 1999, the Insurance
Regulatory and Development Authority (IRDA) was constituted as an autonomous body to
regulate and develop the insurance industry. The IRDA was incorporated as a statutory body
in April, 2000. The key objectives of the IRDA include promotion of competition so as to
enhance customer satisfaction through increased consumer choice and lower premiums, while
ensuring the financial security of the insurance market.

15
The IRDA opened up the market in August 2000 with the invitation for application for
registrations.
Foreign companies were allowed ownership of up to 26%. The Authority has the power to
frame regulations under Section 114A of the Insurance Act, 1938 and has from 2000 onwards
framed various regulations ranging from registration of companies for carrying on insurance
business to protection of policyholders’ interests.

In December, 2000, the subsidiaries of the General Insurance Corporation of India were
restructured as independent companies and at the same time GIC was converted into a
national re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in July,
2002.

Today there are 28 general insurance companies including the ECGC and Agriculture
Insurance Corporation of India and 24 life insurance companies operating in the country.

Organizational structure
As per the section 4 of IRDA Act 1999, Insurance Regulatory and Development Authority
(IRDA, which was constituted by an act of parliament) specify the composition of
Authority. IRDAI is a ten-member body consisting of:

A Chairman - T.S. Vijayan.

Five whole-time members - R.K. Nair, M. Ram Prasad, S. Roy Chowdhary, D.D. Singh

Four part-time members - Anup Wadhawan, S.B. Mathur, Prof. V.K.Gupta, CA. Subodh Kr.
Agarwal

Note: All members are appointed by the Government of India.

Insurance Repository
Recently the Finance Minister of India announced the setting of insurance repository system.
An Insurance Repository is a facility to help policy holders buy and keep insurance policies
in electronic form, rather than as a paper document. Insurance Repositories, like Share
Depositories or mutual fund Transfer Agencies, will hold electronic records of insurance
policies issued to individuals and such policies are called electronic policies or Policies e.g.
CDSL Insurance Repository Limited ( CDSL IR).

16
 CHAIRMAN OF IRDA

I. DR.SUBHASH C. KHUTIA (2018)

DR. Subhash C. Khutia assumed office of Chairman, Insurance Regulatory and Development
Authority of India in May 2018.
He has had a career in Civil service spanning over 36 years. He has been Chief Secretary
Government of India in ministry of Human Resource Development.
He was appointed to the Indian Administrative Service (IAS) IN 1981 and belomgs to
Karnataka Cadre. In government of karnataka he has served in various capacities in
Departments of Finance, Revenue, Personnel, Urban Development, Rural Development and
Public Works and Ports. In government of if Indai he has served the Ministry of Finance,
Ministry of Human Resource Development and Ministry of Petroleum & Natural gas . He
also served as Government nominee Director on the Boards of Indian Oil Corporation,
ONGC and Hindustan Petroleum Corporation.

II. DEBASISH PANDA (CHIARMAN 2021)

The government on Friday appointed former financial services secretary Debasish Panda as
chairman of the Insurance Regulatory and Development Authority of India (IRDAI). The
Appointments Committee of the Cabinet has approved Panda's appointment as chairperson of
the insurance regulator initially for a period of three years from the assumption of charge,
sources said.

Debasish Panda, a 1987-batch IAS officer of the Uttar Pradesh cadre, retired as financial
services secretary in January this year.

17
III. MR.K.GANESH KRISHNAMURTHY MEMBER ( LIFE) IRDAI

MR.K.GANESH assumed Charge as member (Life) in Insurance Regulatory and

Development Authority of India on 31st July, 2019.
Prior to joining IRDAI, he was Executive Director (corporate communication) in LIC of
India . MR.K.Ganesh joined LIC in 1938 and has worked in the various part of the country.
He was the senior Divisional Manager of LIC of India at Indore and Chennai , Regional
Manager (Marketing) and Zonal Manager of Hyderabad. He has also worked as chief of
Health insurance and Executive Director(Customer Relationship Management) in LIC of
India.

IV. MRS.T.L. ALAMELU , MEMBER (NON-LIFE)

Mrs.  Alamelu T. Lakshmanachari, the Chairman-cum-Managing Director of Agriculture

Insurance has been appointed as whole Time Member (Non-Life) by The Appointment
Committee of Cabinet (ACC) for a period of 03 or until further orders, whichever is earlier. A
direct recruit officer of 1983 batch..
After serving in New India Assurance for over 25 years upon Promotion she joined United
Indian Insurance Co.Ltd ad Deputy General Manager in August 2008 and  subsequently got
promoted to General Manager October 2012.
After serving in the General Insurance Industry for more than 36 years , Mrs. T.L. Alamelu
joined IRDAI as Member (Non - Life ) on July 1st , 2019.

18
 IMPACT OF NEW IRDA REGULATIONS

IRDA is a statutory bod that regulates the insurance sector in India, to protect the interests of
policyholders , while ensuring growth of the insurance industry. Life is unpredictable and
loss of life can negatively affect familiar and everyone involved especially if the deceased
and protection against loss of income that would if the insured passed away.

IRDA was constituted and established by an Act of Parliament of India called the Insurance
Regulation and Development Authority Act 1999. IRDA is the watchdog and controller of
the insurance industry in India and it works to bring better regulation for the welfare of
policyholders.

a. Earlier in the year 2010, IRDA revised the regulation applicable to the Unit-Linked
Insurance policies (ULIP), Important of the regulation were.

b. Lock -in period of the products increased to 5 years from 3 years

c. Minimum premium payment term increased to 5 years

d. Insurance cover made compulsory for all the Insurance products.

e. Maximum limit on expenses was introduced. Prior to the regulations, policyholders were
subjected to huge losses due to heavy expenses.

Some impacts of IRDA regulation are as follows:

A statutory authority as an autonomous body was established under the provision of IRDA by
the government of India with the objective of regulating, directing and scrolling the Insurance
sector for ensuring smooth function of the Insurance sector of india. This authority is called
as Insurance Regulation and Development Authority which came into existence with effect
from 1st April 2000.

1) Impact over Regulation Of Insurance Sector

There is great impact of IRDA in the overall regulation of the Indian Insurance sector.
The IRDA is having close observation over the different activities of insurance sector in India
in order to ensure the proper protection of the policy holder’s interests and scope of
regulation is constantly increasing.

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2) Impact over policyholders interests protections

As far as the matter of protection of Policyholders interests is concerned it is the one of the
objective of IRDA and IRDA is also trying its level best in the content.thus, its is clear that
the impact of IRDA over policy holders interest’s protection is significant.

3) Impact over awareness to insurance

IRDA is not only emphasizing over the introduction of different rules and regulation in the
insurance sector in order to protect the interests of policyholders but also it is the insurance
sector in order to protect the interests of policyholders but also it is trying to make the
activities of insurance of the society to the insurance.

4) Impact over customers education

IRDA is attempting to make all the significant and material information associated with
insurance products public and it has also made it has also made mandatory for the insurer to
disclose all the secret information to the customers.

5) Impact over insurance market

The impact of IRDA over the insurance market is not hidden to any one of us.
There is a great change in the insurance market whether market whether with respect to
insurance product, marketing, competition and customers awareness.

6) Impact over insurance objective

The introduction of private players in the insurance sector has made thre insurance sectors
diversified dynamic and competitive which has also brought an amazing change in the trends
of policyholders and as a result insurance objective for the people for the society has been
thoroughly changed.

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 OMBUDSMAN

Settlement of claims on the part of insurance companies in a cost effective, efficient and
effective manner. Any person who has a grievance against an insurer may make a complaint
to an Ombudsman within his jurisdiction, in the manner specified. However, prior to making
a complaint, such person should have made a representation to the insurer and either the
insurer has rejected the complaint or has not replied to it. Further, the complaint should be
made not later than a year from the date of rejection of the complaint by the insurer and
should not be any other proceedings pending in any other court, Consumer Forum or
arbitrator pending on the same subject matter. The Ombudsmen are also empowered to
receive and consider any partial or total repudiation of claims by an insurer, any dispute in
regard to the premium paid in terms of the policy, any dispute on the legal construction of the
policies in as much such a dispute relates to claims, delay in settlement of claims and the non-
issue of any insurance document to customers after receipt of premium. The Ombudsmen act
as a Counsellor and mediator and make recommendations to both parties in the event that the
complaint is settled by agreement between both the parties. However, if the complaint is not
settled by agreement, the Ombudsman may pass an award of compensation within three
months of the complaint, which shall not be in excess of which is necessary to cover the loss
suffered by the complainant as a direct consequence of the insured peril, or for an amount not
exceeding rupees two million (including ex gratia and other expenses), whichever is lower.
Ombudsman within his jurisdiction, in the manner specified. However, prior to making a
complaint, such person should have made a representation to the insurer and either the insurer
has rejected the complaint or has not replied to it. Further, the complaint should be made not
later than a year from the date of rejection of the complaint by the insurer and should not be
any other proceedings pending in any other court, Consumer Forum or arbitrator pending on
the same subject matter. The Ombudsmen are also empowered to receive and consider any
partial or total repudiation of claims by an insurer, any dispute in regard to the premium paid
in terms of the policy, any dispute on the legal construction of the policies in as much such a
dispute relates to claims, delay in settlement of claims and the non-issue of any
insurance document to customers after receipt of premium.

21
The Ombudsman act as a counsellor and mediator and make recommendations to both parties
in the event that the complaint is settled by agreement between both the parties.14 However,
if the complaint is not settled by agreement, the Ombudsman may pass an award of
compensation within three months of the complaint, which shall not be in excess of which is
necessary to cover the loss suffered by the complainant as a direct consequence of the insured
peril, or for an amount not exceeding rupees two million (including ex gratia and other
expenses), whichever is lower.

22
REGISTRATION OF INSURANCE COMPANIES
Every insurer seeking to carry out the business of insurance in India is required to obtain a
certificate of registration from the IRDA prior to commencement of business. The
preconditions for applying for such registration have been set out under the Act of 1938, the
IRD Act and the various regulations prescribed by the Authority.

❖ General Registration Requirements

The following are some of the important general registration requirements that an applicant
would need to fulfill:
(a) The applicant would need to be a company registered under the provisions of the Indian
Companies Act, 1956. Consequently, any person intending to carry on insurance business in
India would need to set up a separate entity in India.
(b) The aggregate equity participation of a foreign company (either by itself or through its
subsidiary companies or its nominees) in the applicant company cannot not exceed twenty six
per cent of the paid up capital of the insurance company. However, the Insurance Act and the
regulations there under provide for the manner of computation of such twenty-six per cent.
(c) The applicant can carry on anyone of life insurance business,
general insurance business or reinsurance business. Separate companies would be needed if
the intent were to conduct more than one business.
(d) The name of the applicant needs to contain the words “insurance company” or “assurance
company”.

❖ Capital Structure Requirements

The applicant would need to meet with the following capital structure requirements:
(a) A minimum paid up equity capital of rupees one billion in case of an applicant which
seeks to carry on the business of life insurance or general insurance.
(b) A minimum paid-up equity capital of rupees two billion, in case of a person carrying on
exclusively the business of reinsurance.
In determining the aforesaid capital requirement, the deposits to be
made and any preliminary expenses incurred in the formation and registration of the
company would be included. A “promoter” of the company is not permitted to hold, at any
time, more than twenty-six per cent of the paid-up capital in any Indian insurance company.
However, an interim measure has been permitted percentages higher than twenty six percent
are permitted if the promoters divest, in a phased manner, over a period of ten years from
the date of commencement of business, the share capital held by them in excess of twenty six
per cent.

❖ Procedure for obtaining a certificate of registration

An applicant desiring to carry on insurance business in India is required to make a requisition

for a registration application to the IRDA in a prescribed format along with all the relevant
documents. The applicant is required to make a separate requisition for registration for each
class of business i.e. life insurance business consisting of linked business, non-linked
business or both, or general insurance business including health insurance business. The
IRDA may accept the requisition on being satisfied of the bona fides of the applicant, the
completeness of the application and that the applicant will carry on all the functions in
respect of the insurance business including management of investments etc.

23
 In the event that the aforesaid requirements are not met with, the Authority may after giving
the applicant a reasonable opportunity of being heard, reject the requisition.
Thereafter, the applicant may apply to the Authority within thirty days of such rejection for
re-consideration of its
decision.

Additionally, an applicant whose requisition for registration has been rejected may approach
the Authority with a fresh request for registration application after a period of two years from
the date of rejection, with a new set of promoters and for a class of insurance business
different than the one originally applied for. In the event that the Authority accepts the
requisition for registration application, it shall direct supply of the application for registration
to the applicant. An applicant, whose requisition has been accepted, may make an application
along with the relevant documents evidencing deposit,

24
 THERE ARE TWO PARTIES IN CONTRACT OF INSURANCE

1. Insured:

The first party in the contract of insurance is the INSURED: Insured is a person who is
looking to hedge his future risk of unforeseen losses or events. There are different types and
costs of insurance policies available nowadays. The choice of the policy type depends on the
insured as to what type of risk he wants a cover for.

The insured, is the person in whose favor, the contract is operative and who is indemnified
against, or is to receive a certain sum upon the happening of a specified contingency or event.
He is the person whose loss is the occasion for the payment of the insurance proceeds by the
insurer.

2. Insurer:

Second party is the INSURER : Insurer or the insurance company agrees to pay for the future
financial losses of the insured against a regular payment of premium. The insurance company
assumes or accepts the risk of loss and undertakes for a consideration to indemnify the
insured or to pay him a certain sum on the happening of

The second party in the contract of Insurance a specified contingency or event.

The business of insurance may be carried on by individuals just as much as by corporations

and associations. The state itself may go into insurance business.

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To whom the proceeds/Claims are paid?

Is it always the case that the proceeds or the claim is paid to the Insured? Not always; the
person paid may be the beneficiary designated in the policy. A common example of this
situation is a life insurance policy where the proceeds are not given to the insured but to a
third party designated by the insured.

Key Stakeholders in Insurance Business:

Any person or entity interested in a particular business is called a stakeholder. They are
affected by the business activity, and they may be part of the core decision-making team.
Many people contribute to the running of an insurance company. Aside from shareholders,
the key stakeholders in the insurance value chain are:
Consumers who buy insurance products are the main constituents of the list of stakeholders
for Insurance Industry. They may be the insured or beneficiaries or persons with insurable
interest.

Investors that support insurance companies by purchasing insurance company stock as they
believe in the industry model and invest their money in the insurance company stock.
Insurance carriers that provide insurance coverage through policies and accept the risks
covered by the policies. These are generally large insurance companies, including direct
insurers and re-insurers.
Partners who couple with insurance companies to share profits and losses. Partners include
Re-insurers, institutional investors, and trade partners. Partners also include the insurance
agencies and brokerages that distribute insurance products.

Internal Stakeholders:
Internal stakeholders are owners, managers, and workers. External stakeholders are the
customers and the suppliers. The community in which the organization does business also is a
stakeholder.

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All the stakeholders are not equal, and different stakeholders will have varying
considerations.
These stakeholders can have direct or indirect stake in the organization and in policy-making.
Given below is a non-exhaustive list of internal stakeholders in insurance industry:
  Insurer Executives
  Product Managers
  Underwriters
  Actuaries
  Distribution Staff
  Claims Assessors
  Claims Managers
  Advisers
  Funds, Master Trusts & Corporates
  Banks & Financial Intermediaries
  Group Fund Members
  Bank Customers
  Alliance Partners
  Third Party Administrators (TPA’s)
  Service Providers
  Reinsurer

External Stakeholders:
External stakeholders are people who are not directly working within the business but are
affected in some way from the decisions of the business. The range of external stakeholders
for the insurance sector is extremely broad, and includes:

  Trade associations
  Professional bodies
  Analysts and Rating agencies
  International regulators and International bodies
  The political community
  Media- Learn more at www.technofunc.com. Your online source for free professional.

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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 hi agriculture, in industry, the factory
premises, machines, boilers and profit insurances provide more confidence to start and
operate the industry welfare of employees create a conducive 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.

Reduction in Inflation:

The insurance reduces the inflationary resource in two ways. First, by extracting money in
supply to the amount of premium collected and secondly, by providing sufficient funds for
production narrow down the inflationary gap.

With reference to Indian context it has been observed that about 5.0 per cent of the money in
supply was collected in form of premium.

The share of premium contributed to the total investment of the country was about 10.0 per
cent.
The two main causes of inflation, namely, increased money in supply and decreased
production are properly controlled by insurance business, Insurance Need and Selling.

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 TYPES OF INSURANCE

 Life insurance

Life insurance is insurance coverage that pays out a certain amount of money to the insured
or their specified beneficiaries upon a certain event as death of the individual who is insured.
The cover period of life insurance is usually more than a year. So this requires periodic
premium payments either monthly, quarterly or annually.

 The risks that are covered by life insurance are:

  Premature death
  Income during retirement
  Illness
  The main products of life insurance include:
  Whole life
  Endowment
  Term
  Investment –link
  Life annuity plan

Medical and health

 General insurance:

General insurance is basically an insurance policy that protects you against losses and
damages other than those covered by life insurance. For more comprehensive coverage, it is
vital for you to know about the risk covered to ensure that you and your family are protected
from unforeseen losses.

  The coverage period for most general insurance are:

  Property loss for example stolen car or burnt houses
  Liability arising from damage caused by yourself to a third party
  Accidental death or injury
  The main products of general insurance includes
  Motor insurance
  Fire/house-owners/householders insurance
  Personal accident insurance
  Medical and health insurance
  Travel insurance

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 WHAT AR VARIOUS TYPES OF LIFE INSURANCE ?

There are two basic types of life insurance policies viz. Traditional Whole Life and Term Life
Insurance. A whole life is a policy you pay till death of the policy holder and term life is a
policy for a fixed amount of time.

The basic types of life insurance policies are:

1. Term insurance

Term plans are the most basic form of life insurance. They provide life cover with no
savings /profits component. They are the most affordable form of life insurance as premiums
are cheaper compared to other life insurance plans.

Online term insurance plans provide pure risk cover, which explains the lower premiums. A
fixed sum of money - the sum assured – is paid to the beneficiaries if the policyholder expires
over the policy term. If the policyholder survives, there is no pay out.

2. Endowment plans

Endowment plans differ from term plans in one critical aspect i.e. maturity benefit. Unlike
term plans which pay out the sum assured, along with profits, only in case of an eventuality
over the policy term, endowment plans pay out the sum assured under both scenarios – death
and survival.
However, endowment plans charge higher fees / expenses – reflected in premiums – for
paying out sum assured, along with profits, in either scenario – death or maturity. The profits
are an outcome of premiums being invested in asset markets – equities and debt.

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3. Unit linked insurance plans (ULIP)

ULIPs are a variant of the traditional endowment plan. They pay out the sum assured (or the
investment portfolio if its higher) on death/maturity.

ULIPs differ from traditional endowment plans in certain areas. As the name suggests,
performance of ULIP is linked to markets. Individuals can choose the allocation for
investments in stock/debt markets.

The value of the investment portfolio is captured by the NAV (net asset value). To that end,
there are many similarities between ULIPs and mutual funds. ULIPs differ in one area, they
are a combination of investment and insurance, while mutual funds are a pure investment
avenue

4. Whole life policy

A whole life insurance policy covers a policyholder over his life. The main feature of a whole
life policy is that the validity of the policy is not defined so the individual enjoys the life
cover throughout his life. The policyholder pays regular premiums until his death, upon
which the corpus is paid out to the family. The policy expire only in case of an eventuality as
there is no pre-defined policy tenure.

5. Money back policy

A money back policy is a variant of the endowment plan. It gives periodic payments over the
policy term. To that end, a portion of the sum assured is paid out at regular intervals. If the
policy holder survives the term, he gets the balance sum assured. In case of death over the
policy term, the beneficiary gets the full sum assured.

Once a goal has been identified and a value for it has been crystallized, an insurance policy is
an excellent vehicle to fund the goal. This is because one can be rest assured that even in the
unfortunate event of death or even critical illness, the sum assured will fund a future goal of
the policyholder.

6. Pension Policies

There are the policies that provide benefits to the insured only upon retirement. If the insured
dies during the terms of the policy, this nominee would receive the benefits either as a lump
sum or as a pension every month. The Premiums are paid over a specified period. In general,
most of the pension plans pay 25% of the cash value of the policy as in mediate income and
the remaining value is invested in an investment fund that pays out a sums at a stipulated
interval.

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7. Annuity Policies

Annuity is a contract that provides an income for a specified period of time. Annuity schemes
are those wherein policyholder’s regular contributions over a period of time accumulate to
form a corpus with Insurer. The corpus is used to yield a regular income that is paid to
policyholders until death starting from the desired retirement age. Some annuity schemes
have the option to pay the survivors a lump sum amount upon the death of insured in addition
to the regular income while the insured is alive.Life insurance contracts in simple form are
different from the annuity contracts in the sense that the insurer pays in the event of the death
of insured in a life insurance contract, while in an annuity contract the insurer stops paying
upon the death of the insurer.

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 HEALTH INSURANCE

These policies provide cover against major health care expenses like hospitalization, surgery,
critical illness, etc. The benefits could be in the form of fixed pay-outs on hospitalization or a
lump sum on diagnosis against some specified critical illnesses.

Accident benefit

This is usually an add-on cover over a basic policy and pays an additional sum assured to the
beneficiary in case of death due to accident. Since accidental death is sudden and unforeseen,
the family could be faced with issues like relocation, debt servicing and other requirement for
funds.

Retirement Planning

Indian life expectancy has improved dramatically over the years due to availability of
advanced medical facilities. However, a longer working life may not really be possible due to
occurrences of life-style induced illness and high burn-out rate. The evolving demographic
balance with plenty of young talent becoming continuously available may also be a deterring
factor to a longer working life unless one is self-employed.

Consequently, our retirement life span could well be as long as our active working life span.
This means that we have to build a solid corpus during our active life to maintain our life
style for the long post retirement life if we are to enjoy the true meaning of the word
"retirement".
Pension Plans help us build up our savings during our earning years and provide us a lump
sum on retirement. This lump sum can then provide us a retirement income by investing in an
annuity.

Provide Post Retirement Income

The worst situation that a retiree can face is to run out of funds late into retirement. Such a
situation may force him to seek help from friends / relatives or liquidate his fixed assets
which essentially are a compromise of self-respect. This is where insurance offers the best
solution in the form of an annuity. Annuities bought from the retirement corpus can either be
used to provide regular post retirement income for a fixed term or for the entire life.

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 GENERAL INSURANCE

General insurance covers insurance of property against fire, burglary, theft; personal
insurance covering health, travel and accidents; and liability insurance covering legal
liabilities. This category of insurance virtually covers all forms of insurance except life.
Other covers may include insurance against errors and omissions for professionals, credit
insurance etc. Common forms of general insurance are motor, fire, home, marine, health,
travel, accident and other miscellaneous forms of non-life insurance.
Unlike life insurance policies, the tenure of general insurance policies is normally not that of
a lifetime. The usual term lasts for the duration of a particular economic activity or for a
given period of time. Most general insurance products are annual contracts. There are
however, a few products which have a long term.

General Insurance Types and Features

 Motor Insurance

You love long drives and speeding on the highways. But have you secured your lovable ride?
Motor insurance, that includes car insurance and two wheeler insurance, covers all damages
and liability to the vehicle. Moreover, according to the Motor Vehicles Act, 1988, driving a
motor vehicle without insurance in a public place is a punishable offense.

A motor vehicle can be covered either by a Liability Only policy which is a statutory
requirement and covers the legal liability for injury, death, and/or property damage caused to
a third party in the event of an accident caused by or arising out of the use of the vehicle, or a
package policy which includes the Liability Only policy and also covers the damage to
owner’s vehicle, usually called O.D. Cover.

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The common motor insurance plans include:

Car insurance: A comprehensive coverage against physical damage and bodily injury to
the car, and also covers against third-party liability.

Two wheeler insurance: A comprehensive two-wheeler insurance policy provides hassle-free

protection to your bike or scooter against physical damage, theft and third party liability.
Commercial vehicle insurance: Commercial vehicle insurance is a Liability Only policy for
commercial vehicles across the various classes of vehicles like goods carrying vehicles –
private and public carrier, passenger carrying vehicles, miscellaneous and special types of
vehicles.

Health Insurance

Ill health can result in a major halt in your life and work. Moreover, the escalating price of
health care costs means that you would be shelling out a massive amount of money to bear
the brunt of these costs. This is the reason why you would need health insurance to cover
your medical expenses following hospitalization from sudden illnesses or expenses caused by
accidents.

This also includes cashless facility in impaneled hospitals, pre and post hospitalization
expenses, and ambulance charges. Here are some of the common types of health insurance
policies:

Individual –A health insurance policy, such as Bajaj Allianz Health Guard Individual policy,
provides cover for an individual with cashless hospitalization and other features. In case you
feel that the sum insured of your existing health insurance plan does not suffice for expenses
due to illness or accidents then opt for a cover such as the Extra Care health insurance policy
to extend your health insurance.

Family Floater Policy – A policy such as the Health Guard Family Floater Option covers
family members under a single plan. The fixed sum insured can be availed by individual
member or as a sum total for treatment of one person.

Surgery Cover – A Surgical Protection Plan provides a fixed benefit amount for specified
surgeries and helps you to take care of the expensive medical treatment in a hospital. This
benefit plan that is used for the surgical treatment of serious illnesses such as cancer, kidney
failure, and heart attack can be availed as a standalone plan or a rider.

Comprehensive Health Insurance – A high value comprehensive health insurance policy,

such as Health Care Supreme with a wide range of sum insured, add-on covers, special
benefit covers such as maternity benefits and dental treatments, fulfills all the healthcare
needs and ensures complete peace of mind, regardless of the situation of life you are in.

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Commercial Insurance

Commercial insurance offers solutions for all sectors of the industry ranging from
automotive,
aviation, construction, chemicals, foods and beverages, manufacturing, oil and gas,
pharmaceuticals, power, technology, telecom, textiles, transport and logistics.

Some common types of commercial insurance include:

  Property insurance

  Marine insurance

  Liability insurance

  Financial lines insurance

  Engineering insurance

  Energy insurance

  Employee benefits insurance

 International insurance solutions

Social insurance

The social insurance is to provide protection to the weaker section of the society who i unable
to pay the premium for adequate insurance. Pension plan, disability benefits, sickness.
Insurance and industries are varies forms of social insurance. With the increase of the
socialistic ideas, the social insurance is a nation. The government of a country must provide
social insurance to its masses.

RISK POINT OF VIEW:-

Property Insurance: - Under the property insurance of person/ persons are insured against a
certain specified risk. The risk may be fire or marine perils, theft of property or goods,
damage to property at accident.

Marine Insurance: - Marine insurance provides protection against loss of marine perils. The
marine perils are collision with rock, or ship attacks by enemies, fire, and capture by pirates,
etc. these perils cause damage, destruction or disappearance of the ship and cargo and non-
payment of freight.

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The scope of marine insurance had been divided into two parts: (i) ocean marine
insurance and (ii) inland marine insurance.

Fire Insurance: - Fire insurance covers risks of fire. In the absence of fire insurance, the waste
will increase not only individual but as well. With the help of fire insurance, the losses,
arising due to fire are compensated and society is not losing much. The individual is
protected from such losses and his property or business or industry will.

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 ADVANTAGES OF LIFE INSURANCE

Life insurance offers several advantages not available from any other financial instrument;

yet it also has disadvantages.

Advantages of Life Insurance

1)Life insurance provides an infusion of cash for dealing with the adverse financial

consequences of the insured's death.

2)Life insurance enjoys favorable tax treatment unlike any other financial instrument.

3)Death benefits are generally income-tax-free to the beneficiary.

4)Death benefits may be estate-tax free if the policy is owned properly.

5)Cash values grow tax deferred during the insured's lifetime.

6)Cash value withdrawals are treated on a first-in-first-out (FIFO) basis, therefore cash

value withdrawals up to the total premiums paid are generally income-tax free.

7)Policy loans are income tax free.

8)A life insurance policy may be exchanged for another life insurance policy (or for an

annuity) without incurring current taxation.

Note: All of the above statements are generally true; however the tax benefits of life

insurance have certain limitations which under the wrong set of circumstances can cause the

tax benefits mentioned to be lost. Please discuss with your insurance and tax advisor.

Many life insurance policies are exceptionally flexible in terms of adjusting to the

policyholder’s needs. The death benefit may be decreased at any time and the premiums may

be easily reduced, skipped or increased.

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A cash value life insurance policy may be thought of as a tax-favored repository of easily

accessible funds if the need arises; yet, the assets backing these funds are generally held in

longer-term investments, thereby earning a higher return.

Disadvantages of Life Insurance

Policyholders forego some current expenditure to pay policy premiums. Moreover, life

insurance is typically purchased for the benefit of others and usually only indirectly for the

insured person.

Cash surrender values are usually less than the premiums paid in the first several policy years

and sometimes a policy owner may not recover the premiums paid if the policy is

surrendered.

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 THE ADVANTAGES OF GENERAL INSURANCE

I. Would you believe that insurance goes back to the time of pirates? It was a form of
protection for the traders against pirate attacks that caused them many goods. The idea
behind this insurance is to make sure that the unfortunate traders can carry on with their
lives without the hassle of starting back from scratch. All over the world, insurance is a
language understood by many countries. They all have their different types of insurances
with different meanings and different functions. The bottom line of insurance is to help
each person with their own personal needs in their lives. It is a great way to protect life
from financial constraints after an unfortunate event caused by natural or artificial forces.
II. The advantages of purchasing general insurance are numerous. These advantages vary
according to its type. Generally, this kind of insurance is very beneficial because it adds
value to your life, which keeps you reminded of how precious your body and your
properties are.
III. General insurance is a kind of insurance that is being benefited by millions. It is a non-
life policy that includes the scope of health, property, automobile, and travel. General
insurance has so many advantages. When it comes to property and fire insurance, you
can be protected from spending so much after disasters or damages to your house. Fire
insurance means that you are covered and protected from anything that is caused by fire
or a disaster that resulted to property damage. Many unfortunate events are covered by
these types of insurance like damages caused by falling trees or other objects, lighting,
air craft damage, electrical installations to name a few.
IV. Other properties misfortunes are caused by natural disasters include volcanic eruptions,
earthquakes, storms, floods, lightning, and landslides.
V. Another advantage of buying general insurance is that you can have peace of mind. Auto
insurance is another scope of general insurance that brings one of its greatest advantages.
As a common personal insurance policy, this type is very advantageous because most of its

40
 coverage involve benefit payments to your involved vehicle. This also includes bodily
injury or liability coverage, collision and comprehensive coverage, and property damage.
The advantage of auto insurance is that the policy becomes cheaper if you have a good

driving history. Therefore, by becoming a good driver -you have every advantage of
purchasing a general insurance policy.

VI. Health is a very important aspect to everyone. This is why getting your health insured is
an ideal move. Personal medical plans have become widespread necessities. This scope
of general insurance policy is very advantageous because it can be a worthy safety net
against illness is great about buying health insurance policies is that you can avail of high
degree treatments and facilities in case of illness. If you have good health insurance
coverage, you can even be treated like royalty when confined in the hospital. There are
medical insurance policies that let you choose the hospital you like along with the
opportunity to select a room of your choice

41
 Importance of Insurance in Our Economy
Insurance is a risk transfer mechanism whereby the individual or the business enterprise can
shift some of the uncertainties of life on the shoulder of the other.All the people will desire to
live a cleaner, healthier, comfortable and easy life. To meet this requirement different
enterprises produce and provide goods and services. They make innovation and inventions,
which take great risk. Large responsibility falls on the shoulder of innovators and inventors.
A small error or lapse may cause numerous side effects and cause death or disability. These
types of risks highlight the importance of insurance. If there had not been insurance at the
back of all innovators the world would have never progressed. After assuring this in security
factor the enterprises started looking for new and more high-tech machines, robots and
gadgets, atomic technology, space traveling, computers, deep sea exploration, development
of Concords and Jumbos and medical technology.
All these developments could be possible with the support of insurance. In peace the
insurance provides protection to trade and industry, which ultimately contributes towards
human progress.
Thus insurance is the most lending force contributing towards economics, social and
technological progress of man. Without insurance cover all industrial, economic and social
activity of the world will come to a grinding halt. We may have our life, body or property
insured. The insurance company makes good our losses as we pay the insurance premium
regularly. Insurance is clearly of great advantage and importance. It plays following micro
economics roles: Firstly, insurance, like banking, promotes savings to individuals. Secondly,

42
insurance promotes investment. The insurance company can easily invest its funds in
industry,
agriculture and commerce. Thirdly, the insured person can get loans against the security of
insurance policy from insurance company or from banks. Fourthly, insurance as we all know,
protects against dangers to life and property. If a person has got his life insured, his family
will get enough money on his death. If he had an insurance policy for a shop, he can get
compensation for fire, theft etc. To be aware of the importance of insurance in our economy
one must know roles performed by insurance in macro-economic development.

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 SEVEN INSURANCE PRINCIPLES

1) Principal of Utmost Good Faith

Parties, insurer and insured should enter into contract in good faith
Insured should provide all the information that impacts the subject matter
Insurer should provide all the details regarding insurance contract
For example - John took a health insurance policy. At the time of taking policy, he was a
smoker
and he didn't disclose this fact. He got cancer. Insurance company won't pay anything as John
didn't reveal the important facts.

2) Principle of Insurable Interest

Insured must have the insurable interest on the subject matter
In case of life insurance spouse and dependents have insurable interest in the life of a person.
Corporations also have insurable interests in the life of it's employees

44
In case of life or marine insurance, insured must be the owner both at the time of entering of
entering into the insurance contract and at the time of accident.

3) Principle of Indemnity
Insured can't make any profit from the insurance contract. Insurance contract is meant for
coverage of losses only
Indemnity means a guarantee to put the insured in the position as he was before accident
This principle doesn't apply to life insurance contracts

4) Principle of Contribution
In case the insured took more than one insurance policy for same subject matter, he/she can't
make profit by making claim for same loss more than once
For example - Raj has a property worth Rs.5, 00,000. He took insurance from Company A
worth
Rs.3, 00,000 and from Company B - Rs.1, 00,000.
In case of accident, he incurred a loss of Rs.3, 00,000 to the property. Raj can claim Rs. Rs.3,
00,000 from A but after that he can't make profit by making a claim from Company B. Now
Company A can make a claim from Company B to for proportional loss claim value.

5) Principle of Subrogation
After the insured gets the claim money, the insurer steps into the shoes of insured. After
making
the payment insurance claim, the insurer becomes the owner of subject matter.
For example: - Ram took a insurance policy for his Car. In an accident his car totally
damaged.
Insurer paid the full policy value to insured. Now Ram can't sell the scrap remained after the
scrap.

6) Principle of Loss Minimization

This principle states that the insured must take all the necessary steps to minimize the losses
to inured assets.

45
For example - Ram took insurance policy of his house. In an cylinder blast, his house burnt.
He should have called nearest fire station so that the loss could be minimized.

7) Principle of Cause Proxima

Word "Cause Proxima" means "Nearest Cause"
An accident may be caused by more than one cause. In case property insured for only one
cause. In such case nearest cause of the accident is found out.
Insurer pays the claim money only if the nearest cause is insured

46
 INSURANCE FRAUD

Insurance fraud is any act committed with the intent to obtain a fraudulent outcome from an
insurance process. This may occur when a claimant attempts to obtain some benefit or
advantage to which they are not otherwise entitled, or when an insurer knowingly denies
some benefit that is due. According to the United States Federal Bureau of Investigation the
most common schemes include: Premium Diversion, Fee Churning, Asset Diversion, and
Workers Compensation Fraud. The perpetrators in these schemes can be both insurance
company employees and claimants. False insurance claims are insurance claims filed with the
intent to defraud an insurance provider.
Insurance fraud has existed since the beginning of insurance as a commercial
enterprise. Fraudulent claims account for a significant portion of all claims received by
insurers, and cost billions of dollars annually. Types of insurance fraud are diverse, and occur
in all areas of insurance. Insurance crimes also range in severity, from slightly exaggerating
claims to deliberately causing accidents or damage. Fraudulent activities affect the lives of
innocent people, both directly through accidental or intentional injury or damage, and
indirectly a these crimes cause insurance premiums to be higher. Insurance fraud poses a
significant problem, and governments and other organizations make efforts to deter such
activities.
Causes
The “chief motive in all insurance crimes is financial profit. Insurance contracts provide both
the insured and the insurer with opportunities for exploitation.
According to the Coalition Against Insurance Fraud, the causes vary, but are usually centered

47
on greed, and on holes in the protections against fraud. Often, those who commit insurance
fraud view it as a low-risk, lucrative enterprise. For example, drug dealers who have entered
insurance fraud think it’s safer and more profitable than working street corners. Compared to
those for other crimes, court sentences for insurance fraud can be lenient, reducing the risk of
extended punishment.
Though insurers try to fight fraud, some will pay suspicious claims anyway; settling such
claims is often cheaper than legal action.
Another reason for fraud is over-insurance, when the amount insured is greater than the
actual value of the property insured. This condition can be very difficult to avoid, especially
since an insurance provider might sometimes encourage it in order to obtain greater profits.
This allows fraudsters to make profits by destroying their property because the payment they
receive from their insurers is of greater value than the property they destroy. The most
common form of insurance fraud is inflating the value of the loss.
Insurance companies are also susceptible to fraud because it's possible for fraudsters to file
claims for damages that never occurred.
Losses due to insurance fraud
It is hard place an exact value on the money stolen through insurance fraud. Insurance fraud
is deliberately undetectable, unlike visible crimes such as robbery or murder. As such, the
number of cases of insurance fraud that are detected is much lower than the number of acts
that are actually committed. The best that can be done is to provide an estimate for the losses
that insurers suffer due to insurance fraud. The Coalition against Insurance Fraud estimates
that in 2006 a total of about $80 billion was lost in the United States due to insurance fraud.

Hard vs. soft fraud

Insurance fraud can be classified as either hard fraud or soft fraud.
Hard fraud occurs when someone deliberately plans or invents a loss, such as a collision, auto
theft, or fire that is covered by their insurance policy in order to receive payment for
damages.
Criminal rings are sometimes involved in hard fraud schemes that can steal millions of
dollars.
Soft fraud, which is far more common than hard fraud, is sometimes also referred to as
opportunistic fraud. This type of fraud consists of policyholders exaggerating otherwise-
legitimate claims. For example, when involved in an automotive collision an insured person

48
might claim more damage than actually occurred. Soft fraud can also occur when, while
obtaining a new health insurance policy, an individual misreports previous or existing
conditions in order to obtain a lower premium on his or her insurance policy.

LIFE INSURANCE VS GENERAL INSURANCE

Insurance transfers risk from you to another company, called an insurance company. This is
accomplished by you purchasing an insurance contract. For a monthly, quarterly or annual
fee called a "premium," the insurance company takes on a particular risk and ensures that
money is available in the event that the insured event occurs. Two types of insurance
people commonly purchase are life insurance and general insurance.

 Types
Life insurance is a non-personal insurance contract. This means that the policyholder and the
person being insured do not have to be the same person. General insurance is always a
personal contract where the insurance company contracts with you directly for insurance
protection.

 Function

Both life insurance and general insurance accept premiums in exchange for insurance
benefits.
Insurance premiums are invested into bonds or bond-like investments that produce stable and
consistent returns for the insurance company. The investments, plus premium payments, also
ensure that the insurance company can pay the promised benefits that are outlined in the
insurance policy. When you need to file a claim, both types of insurance require a claim form
for you to fill out. The payment of benefits, and the amount of the benefit that is payable, are
always spelled out in your insurance contract.

 Significance

Life insurance insures your life or the life of someone that you have an economic interest in,
like your spouse, children, siblings or business partners. When the insured individual dies, the

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life insurance policy pays a death benefit that is fixed. This is called a valued contract. A
valued contract pays a fixed sum of money, regardless of the nature of the loss insured by the
contract.
General insurance insures homes, automobiles and other personal property. This type of
insurance is sometimes referred to as "property and casualty" insurance. General insurance is
indemnity insurance. Indemnity insurance pays just enough money to you to repair or
replaced the insured property. For example, your homeowner's insurance may cover your
entire home and the contents of it. However,if your roof is damaged in a storm, the policy
only pays enough to repair the damage.

 Benefits

The benefit of life insurance is that it pays off any financial obligations you have left after
you die. It can pay more than that, however, because life insurance pays a fixed amount.
Death benefits can be used to create wealth for the surviving beneficiaries, or they can be
used to replace the primary income earner's salary for a surviving spouse.
General insurance is beneficial in that the insurance ensures that, almost regardless of the
damage done, that the property will be repaired or replaced. While general insurance
generally has a maximum payout determined by the value of your property, it does not pay a
fixed amount, so you won't have to guess at how much insurance you need to purchase.

Expert Insight

Both types of insurance are necessary to protect your life and your property. They each serve
a different function and fill specific roles in your insurance plan. When buying life insurance,
only buy enough insurance to cover your current and expected future financial liabilities.
When purchasing general insurance, the maximum coverage should not extend beyond the
total replacement value of your property.

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 THE ROLE AND RESPONSIBILITY OF ACTURIES

The daily job duties which an actuary must complete are quite vast and varied. This
individual wears many hats and must be adept with completing various tasks on a daily basis.
Although many individuals may be unaware of the responsibilities which an actuary takes on
in their job role, the position of actuary is one of an important nature.

What Is An Actuary?
An actuary deals with the business of insurance and is responsible for many areas under the
broad category of insurance. The actuary is an individual who will analyze important data
such as mortality, sickness, injury and disability rates and use that information to aid those
involved with insurance. An actuary is responsible for collecting the data to forecast future
risks and see how these predictions will affect various aspects of insurance.
General Responsibilities of an Actuary
One who accepts the role of actuary is responsible for a multitude of items. They will review
statistical information relating to rates dealing with mortality, sickness, accidents, disability
and retirement. They will take the information that they obtain from reviewing statistical data
and relay the information to individuals who need such items to successfully pursue
insurance-related interests. The general role of the actuary is to compile the data which they
collect in such a manner that it helps companies deal with payment and coverage issues.

Specific Duties of an Actuary

There are a variety of specific duties which an actuary must carry out on a daily basis. The
first duty which an actuary must undertake in their job role is to review a variety of
documents. These documents relate to statistical information, insurance plans, annuity plans,
pension plans, contracts and company policies. The overall goal in reviewing these various
document is to construct guidelines for which the companies can follow with their customers
and employees.

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Once the actuary has reviewed all of the pertinent documents, the individual must then
construct concise tables evidencing the results of the intense document review. The tables
will diagram the statistical evidence as well as highlight the recommended route to pursue
with regard to disbursements, premiums and retirement funds.

An additional specific duty of an actuary is to determine company policy and explain such
policy and its aspects to those who will benefit from it. The actuary may also work on the
policy so that it adequately works to benefit those affected by the policy.

An actuary may also do consulting work and help various companies with their statistical
needs and company policy construction. One who is an actuary may work for a specific
corporation or many different companies and corporations.

Actuaries may also be asked to testify as expert witnesses in various forms of litigation. Their
testimony most often relates to the lifetime earnings an individual would have seen based on
a variety of factors.

One who fulfills the role of an actuary may also have to testify before public agencies with
regard to new or revised legislation affecting the companies and corporations which it works
for.
This frequently occurs when a new law is about to be passed or the company wishes a
particular piece of legislation to become law.

The actuary is also the go to individual for any questions relating to their job responsibilities
asked by the customers of the company. If the questions are best answered by the actuary,
then he/she will do so in order to present straightforward information to the public.

An actuary must also develop mathematical ideas and formulas so that the proper data can be
assessed. The actuary must use his/her mathematical abilities to format equations which will
aid in the resolution of an issue.

Traits Which All Actuaries Should Possess

There are many beneficial traits which an actuary should possess. First and foremost, an
actuary needs to possess wonderful mathematical skills. Since they will be dealing a great
deal with statistical equations and data, having such mathematical skills will help them to
excel in their job responsibilities.

Good analytical skills are another important trait which an actuary should possess as it will
help them in their job role. As they will need to analyze a variety of documents, having
analytical skills which are more than adequate will greatly benefit them in the long run.

An actuary is an individual who should possess good public speaking skills as well. In their
daily job duties, not only will they need to analyze documents and data but they will also
have to report such data results to company officials and members of the public. Therefore, in
order to best get their opinions and conclusions across in a straightforward, easy to
understand manner, good public speaking skills should be a prerequisite to taking on the role
of actuary.

Creativity is something which actuaries should possess. From time to time, they will need to

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aid company officials in the drafting of company policy and make changes to the policy.
With a little bit of creativity, an actuary will be able to take the documentation and put such a
spin on it that it is formed into a proper and valid policy.

One who is an actuary should also have wonderful research skills. Since many of the
documents that they need to analyze will not just pop into their laps, it is important that
actuaries can do good research and find out what they need to know with regard to statistics
and pertinent documents in an efficient and expedient manner.

An actuary should also have good working computer skills. Since much of their work will
involve computers, it is important that the actuary not only be familiar with computers but
know how to maneuver around with them as well.

Comprehension skills are also a necessary component for all actuaries to possess. The actuary
is an individual who in their job role will need to analyze and interpret often-complex
documents and laws as well. If one has excellent comprehension skills they will be able to do
their job that much better.

Conclusion

An actuary is an individual who has many duties and responsibilities concomitant to their
position. If one in this job role has excellent analytical, comprehension, mathematical and
public speaking skills, they will most likely be individuals who excel at their job and produce
the highest quality work product possible. If one has all of these aforementioned skills, the
position of actuary may be the perfect one to fill.

The Importance of Actuaries

This brief article attempts to outline why actuaries could have made the difference and why
actuaries can make the difference in today’s complex financial world. It is an effort to explain
why the use of actuarial knowledge, techniques and expertise could have helped avoid or at
least mitigate the effects of the recent financial crisis.
Our profession can offer so much, yet it is understood by so few people and appreciated by
even fewer. I strongly believe that actuaries could be instrumental in helping many financial
institutions avoid serious mishaps, but more than anything else they could really add value to
an organization.
Most of what follows has been borrowed from an excellent article, “Actuaries would have
made a difference”, that was written by James Macginnitie, an actuary. It really covers all the
things that went through my mind as far as the recent financial crisis is concerned.
Personally, I strongly believe that if Banks had strong actuarial teams that were as vital and
integral to their structure as they are in insurance companies, things could have been a lot
different?

We, Actuaries, would have made a difference because:

We are used to taking a long-term view. Although this used to be a prerogative for the life
and pension actuaries, at least in our market, it is increasingly changing and becoming an
integral part of the job description of non – life actuaries as well. We learn to think how
things can possibly be over the long – term with life benefits becoming payable possibly over
several or tens of years in to the future, pension obligations extending for decades, and also
long-tailed casualty covers.

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We understand that choosing the right model is very important, but it’s even more important
to test it and calibrate it appropriately. We have been taught not to exclude extreme events
because “such a loss will never happen or cannot reappear.” In fact, in certain lines of
business the most important aspect of the risk assessment is the fat tail that we model to cater
for those extreme events.

We understand that the distribution function for most risks is not the nice symmetric bell
curve or normal distribution that most analysts were using, but rather one of several
distribution functions that have longer, fatter tails.

The emphasis of risk analysis in capital markets on the value-at-risk (V@R or VAR)
concept, which is based on the normal distribution, was one of the problems in the recent
financial crisis. This is because the Normal Distribution usually understates the chances of
bad outcomes, both in frequency and in amount.

We, on the other hand, understand that large but infrequent events need to be included in any
model. In fact, our understanding of the latter has been a frequent cause of debate between
our profession and marketing people or executives eager to introduce a new product or show
better results by discounting the possibility of an infrequent larger risk materializing.

We understand and we know that when underwriting standards are lowered the result will be
worse experience, and these should be reflected in the price, and in any reserves set aside to
pay losses. In the recent financial crisis the problematic mortgages did not perform as
modelled because underwriting standards deteriorated (in certain cases they were not even
there). We have learned to question changes in underwriting and other aspects of operations
that might have an impact on developing experience. Our insistence on our basic actuarial
principles and our investigative approach is not always appreciated, but in many cases it was
what made a difference between saving an operation or breaking it.

Generally we do not like derivatives unless these are used for hedging purposes. We consider
derivatives on derivatives that are part of the current problems as a proxy for gambling and
not as genuine investments. In fact, we are not comfortable with any complex financially
engineered structures that seek to manipulate certain inefficiencies in the regulatory or
business environment and which depend on the presumption that we are smarter than the
others. We have been taught that whatever we do could come back and haunt us, unless
appropriate actuarial principles are followed.

We have been trained to value liabilities even in the absence of deep liquid market for them,
such as pension obligations, outstanding casualty losses and life insurance benefits. We have
been taught how to produce reasonably accurate estimates for claims that have not yet been
reported to the insurer. Similar techniques would be useful for many of the assets that are
currently being marked to nonexistent market values.

We are required and expected to model expectations, then measure actual results and use
those measurements to recalibrate our modelling. If only this was used in the capital markets
in a similar way?

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We are accustomed to transparency. Our professional standards require an actuarial report to
back our opinion which must contain sufficient detail so that another actuary can appraise the
conclusions.

We have professional standards and we only do work for which we are qualified. We follow
professional guidance from our accrediting organizations. Our professional associations
invest a lot of time and effort to keep up to date and we must continue our professional
education throughout our careers.

We take it upon us that we have a responsibility to protect the public. The pension plans and
insurance companies promise to deliver several years into the future, benefits to survivors and
retirees and we understand that they have an obligation to do their best to make sure that
those benefits will be paid when they are needed. We aren’t perfect. There are examples of
insurers and pension plans that failed, but the frequency is relatively small, and in many cases
it was in spite of the actuary’s advice.

As regulators, legislators and central banks seek to design a better future; it would be helpful
to include more actuarial training and thinking.

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 INSURANCE AGENT

An insurance agent is a person or an entity that represents the interest of the insurer.
According to the the current rules, an agent or corporate agent such as a bank can’t represent
more than one insurance company.
Since the insurer, also called the principal, can’t reach out to all customers individually, he
hires agents to do this job. Agents are trained and licenced entities, so it’s expected they
understand financial needs of customers and sell products that best suits customer interest.
Often that’s not the case. And one of the main factors contributing to this misguided advice is
the lack of accountability. As agents they are not accountable for the advice they give you,
but the principal or the insurance company is. So you can take the insurance company to
court or to Insurance Regulatory and Development Authority (Irda) for wrong advice but not
the agent. The insurer in turn can reprimand the agent by cancelling his licence.

INSURANCE BROKERS

But you can drag an insurance broker to court. That’s because a broker is the customer’s
agent. A broker is also a licensed and trained entity but with a different mandate. The job of
the broker is not to represent the insurer but customers. Brokers have a fiduciary
responsibility towards the customer. A fiduciary responsibility is a legal relationship of trust
and confidence between two parties. Brokers as fiduciary legally promise you to keep your
interest paramount. So as brokers they understand your needs and browse through several

56
insurers to get you the best-fit product. You can take your broker to the court in case he fails
to do his duties. You can also approach Irda who can cancel the broker’s licence if found
guilty. The idea behind making banks insurance brokers is to enforce accountability. As
brokers they will have a fiduciary responsibility towards you and will also be able to offer
products from multiple insurers at the same time.

 What Are the Duties of Insurance Agents?

Lead Generation
As a salesperson, normally paid on commission, the insurance agent has the duty of
generating leads for insurance. This may include placing ads in a local newspaper or website,
going to community events, making cold calls and buying contact lists. Once he gets names
and numbers of prospects, he makes an initial call to talk about policy needs or to set up a
face-to-face meeting with the prospect.

 Interview

During an initial phone conversation or meeting with a prospect, an insurance agent asks
questions and listens to information on the prospect's needs. He tries to assess the buyer's
situation to figure out which types of insurances and policy terms make the most sense.
Coverage needs, amounts, payment preferences and budget are among the basic items
discussed during this initial meeting.

 Sales

Like other sales professionals, insurance agents must be skilled in the art of persuasion. Once
he understands the needs of a prospect, he can look over product options to see what is the
best match. He then makes a recommendation to the prospect. While trying to influence the
prospect, it is important to take a long-term orientation. Many insurance agents sell a lot of
policies and hope to get continued business from new customers, including annual policy
renewals. This requires honesty and a customer-centered approach.

 Service

Larger insurance providers often have call centers or support teams that deal with basic
customer service questions and claims. However, independent agents and even those in
offices with larger providers typically function as the first point of service contact. If a
customer has a question about coverage or a claim, he often calls his agent to discuss options
or to get information. He may also call to cancel policies or to make additions or revisions to
coverage.

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Insurance Regulatory and Development Authority of India said one that insurance
companies can appoint individual agents on their own from April 1.
Under the current mechanism the insurance regulator grants license to a person to become an
agent of an insurance company. "Now the appointment of agents is given to the insurance
companies. So the whole licensing system will go," IRDAI chairman T S Vijayan said.
Speaking to reporters on the sidelines of an event organized by the Confederation of Indian
Industry (CII) on Thursday, Vijayan said the new system pertaining to the appointment of
insurance agents will come into effect from the next financial year.
According to Vijayan, the regulator has also been planning to treat health insurance, which is
a part of non-life insurance activity, as a stand-alone segment. "Currently there are two lines
of business--life and non-life. Health comes under non-life. We would like to frame a
separate regulation for health insurance," he said. Earlier he released a CII report titled 'India
Insurance Vision 2015: Building a $ 250 billion customer centric and value creating industry
Replying to a question he said a move to allow the foreign reinsurance companies to do
business in India by just opening a branch here without getting incorporated is also on the
cards.

The CII report suggested steps that are expected to help Life Insurance industry to grow at
12% CAGR over the next decade to reach $ 160 to $175 billion while the Non-Life to grow
at 22% CAGR to reach a Gross Written Premium of $ 80 billion.

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 POLICY HOLDERS

Entity that owns an insurance policy and has the right to exercise all privileges under the
contract of insurance, except where restricted by the rights of an assignee (see assignment). A
policyholder may or may not be the insured, or the sole or one of the beneficiaries of the
policy.
Also called policy owner.

Five rights you have as an insurance policy holder

1. Policy holders can cancel the insurance policy within 15 days from the date of receipt of
the policy documents if they do not agree with the terms and conditions stated in the policy.

2. Ulip (unit-linked plan) holders have the right to withdraw their investment partially. They
can also switch funds in an Ulip from one plan to another without any restriction or additional
costs.

3. A policy can be surrendered after the end of the prescribed lock-in period from the date of
commencement of the policy.

4. Term of the policy can be increased or decreased by the policy holder. The sum assured
can also be increased. However, these changes may impact the amount of premium payable.

5. Policy holders can modify the mode of premium payment and switch from cheques to
direct debit or through ECS instructions to their banks.

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 TOP INSURANCE COMPANIES IN INDIA (IRDA)

LIFE INSURANCE CORPORATION

When it’s about life insurance companies in India, then Life

Insurance Corporation (LIC) is a leader among all the companies in this sector. Founded in
the year 1956, LIC is a dominant player in Life Insurance Sector in India and holds a major
share of this segment. Some of the key products of LIC are Insurance Plans, Pension Plans
and Special Plans.
Winner of Multiple Awards for exceptional products and services, LIC has a strong network
of more than 2000 branches and 109 divisional offices across the country. Some of the key
policies of LIC are Jeevan Rakshak, Jeevan Sangam, Jeevan Lakshya, Bima Bachat and
Jeevan Sangam.

MAX LIFE INSURANCE

Max Life Insurance is a private sector life insurance company founded in the
year 2000 by a collaboration of Max India Limited and Mitsui Sumitomo Insurance Co. Ltd.
Winner of Global Finance Best Life Insurance Company 2014 Award, Max Life Insurance
Company has a workforce of more than 8,000 employees and over 200 offices across the
country. Super Term Plan, Whole Life Super, Maxis Super and Fast Track Super Plan are
some of the insurance plans offered by the company.
Some of the products offered by this company are Online Term Plan, Savings Plan, Child
Plan and Protection Plan.

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RELIANCE LIFE INSURANCE

Reliance Life Insurance occupies the third position in the list of top
10 best life insurance companies in India. Headquartered in New Mumbai, the company
offers feature packed plans like Protection Plan, Retirement Plan, Unit Linked Plan, etc.
A part of Reliance Capital, Reliance Life Insurance stands among the leading life insurance
companies in India and accounts for a significant share in this sector. The company has a
wide network across the country with more than 900 branches.

KOTAK LIFE INSURANCE

Next on this list is Kotak Life Insurance (Kotak Mahindra Old

Mutual Life Insurance Limited), a private insurance company came into existence in the year
2001. Kotak Life Insurance is known for its feature packed products and its product line
consist of Insurance Plans and Group Plans.
Some of the life insurance plans offered by the company are Saral Suraksha, Platinum, Invest
Maxima and Assured Savings Plan.

SBI LIFE INSURANCE

SBI Life Insurance is next on this list, which is a collaboration of the India’s largest bank,
State Bank of India and BNP Paribas Cardif. Incorporated in the year 2001, SBI Life
Insurance’s products include Individual Plans and Group Plans. Smart Shield, Grameen
Bima, Saral Maha Anand and Smart Elite are some of the life insurance plans offered by the
company.
Winner of Best Private Life Insurance Provider Award, SBI Life Insurance is a fast growing
company and in the financial year 2013-2014, the company generated a profit of more
than Rs 700 Cr.

BAJAJ ALLIANZ LIFE INSURANCE

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Bajaj Allianz Life Insurance came into existence in the year 2001 in
the form of a joint venture between Bajaj Finserv Limited and Allianz SE. The company
offers various products that include Term Insurance, Saving Plans, Investment Plans, ULIP,
Retirement Plans, etc. Some of its insurance plans are iSecure, Save Assure, Fortune Gain,
Invest Assure and Secure more.
Winner of Best Life Insurance Company in the Private Sector Award, Bajaj Allianz Life
Insurance has a wide network with more than 750 offices across the country.

BIRLA SUN LIFE INSURANCE

Birla Sun Life Insurance is the next company on this list, which came
into existence in the year 2000, when Aditya Birla Group and Sun Life Financial Inc. formed
a joint venture. Headquartered in Mumbai, Birla Sun Life Insurance Company offers products
that are rich in features and some of its products are Protection, Savings with Protection and
Health & Wellness.Protector Plus, Vision Star, Wealth Max and Fortune Elite are some of the
plans offered by Birla Sun Life Insurance Company. The company has a strong presence in
the country with more than 550 branches in over 500 towns and cities.

ICICI PRUDENTIAL LIFE INSURANCE

A joint venture between ICICI bank and Prudential plc

gave rise to ICICI Prudential Life Insurance Company, incorporated in the year 2000. ICICI
Prudential Life Insurance Company holds a decent share of this sector and in the financial
year 2013-2014, the company generated a total premium of more than Rs 120 Cr. Some of
the key products of the company are Term Plans, Wealth Plans, Group Plans and Retirement
Plans. Apart from offering feature packed life insurance plans, the company also performs the
Corporate Social Responsibility by contributing in the fields of Education, Health Care and
Skill Development.

TATA AIA LIFE INSURANCE

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Tata AIA Life Insurance Company came into existence in the year 2001.
It is a joint venture between Tata Sons Limited and AIA Group Limited. Products offered by
this company include Protection Solutions, Wealth Solutions and Savings Solutions.
Some of its key plans are Maha Raksha Supreme, MahaLife Supreme, MahaLife Magic and
Money Maxima.

EXIDE LIFE INSURANCE

Exide Life Insurance Company is last on this list, which was established in the year 2001 and
presently has presence across the country with more than 200 offices.
Products offered by the company are Protection Plans, Retirement & Pension Plans and
Savings & Investment Plans. It is a fast growing insurance company and its growth can be
traced from the fact that in the financial year 2013-2014, the company generated a total
premium of more than Rs 1,800 Cr.

HDFC LIFE INSURANCE

HDFC life insurance company ltd is long term life insurance provider with its headquarters
in Mumbai offering individual and group insurance services and incorporated on 14 August
2000. The company is a joint venture between Housing Development Finance Corporation
Ltd (HDFC), one of India’s leading housing finance institutions and a global investment
company.

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Case study

Here are some typical cases where policyholders made complaints to Ombudsman and the
judgements in those cases. The reasons for the complaints, the findings of the cases and the
basis for the judgements all throw light on the various aspects of such cases and underline the
importance of documentation and declaration of material facts on the part of the policyholder.

GFHDJTJHGK
1.OMBUDSMAN :Bhubaneswar
Reference case no 21-002-0217

Insurer alleging suppression of material fact concerning health and preexisting illnesses by
the life assured .
Decision :
Insurer was directed to settle the claim within one month from the receipt of the consent
letter.

2.OMBUDSMAN :Ahmedabad
Reference case no :21-001-0314

While taking the policy the life assured had informed in great detail the state of his health and
habits due to which several special reports were called for and the proposals was accepted
with extra premium.

Decision:
The respondent the insurer was directed to pay the full claim amount.

3.OMBUDSMAN: Bhopal
Reference case no 1025-21/09/07/

The deceased life assured had produced voter I.D. card as age proof and the agent filled up
the proposal form. It was early claim . Date of birth mentioned was 1-1-1950. his actual date
was 1-8-1943 and was postman in postal department had he declared his correct age the
proposal would not have been accepted. He had deliberately understand his age.

Decision :

The decision taken by the respondent (insurer) in repudiating the claim is just and fair and
hence does not require any interference. Therefore the complaint is dismissed without any
relief.

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 FINDINGS

Insurer could not prove beyond doubt that the life assured suffered from serious
illnesses before taking the policy

The life assured died within ten months from the date of proposal. The claim
was repudiated on the grounds of suppression of material facts on basis of
certificate of treatment, prescription, letters of doctors and hospital. It was
observed that all the diagnosis/treatment commenced after 7 days from the date
of acceptance of risk. All the documents proved that the deceased was not aware
of his aliment at the time of taking the proposals.

The deceased was a government servant and deliberately understated his age to
defraud the respondent (Insurer) in order to accept the proposal and there by
misled the respondent in taking proper underwriting decision.

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 SUGGESTIONS

Understanding hidden clause of insurance policies government, non government organization

(NGO)should come forward to guide the people about the hidden clauses of the insurance
policies which if not understood can play have with the hard earned money of people.

Prompt disposal cases- Number of consumer forums at the district level should be increased
and proper staff strength be provided to facilitate prompt disposal of the cases.

Punishment for Faulting Intermediaries - There should be severe punishment to the faulting
insurance agent selling defective policies by misrepresenting the facts.

Formulation of Policyholders Charters- Government should make laws fixing time schedules
for payment of the policy amount in the event of death/disability and even in general cases 0f
maturity of the policy.

Shift in Emphasis - The emphasis should be shifted away from recovery of money from
defaulting borrowers to risks to the capital markets and raising capital for them.

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 CONCLUSION

IRDA needs to improve the distribution and design of products as well as enhance
communication within the sector Since the entry of private sector, the Indian insurance sector
has changed dramatically to offer a variety of insurance solutions through a distribution
network spread across the country. The Insurance Regulatory and Development Authority
(IRDA) has played an important role in providing direction to the industry.
The initial phase of the insurance industry experienced high growth fulled by a buoyant
economy. As the industry moved from its infancy towards maturity, the regulatory
architecture played an important role by guiding and steering the industry on the right track.
It has helped in building a robust insurance industry and made favourable initiatives to give
the industry an additional boost.
However, as the industry moved into the second decade, and post the global financial turmoil,
the expectations from IRDA changed. This is the phase where the industry can grow
exponentially if presented with a favorable policy framework to assist the development of
insurance in India.
There was an opportunity to develop a road map for the industry in consultation with all
stakeholders, including insurers and industry bodies. However, in its quest to drive stability
and improve systems and processes in the industry, the regulator came out with stringent
regulations in quick succession over the last few years that have had a negative impact on the
growth of the insurance sector.

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 BIBLIOGRAPHY

 IRDA Principles and protocol- Charles D. Khatson

 Banking and Insurance (kalyani Publications)

WEBSITES:

a) www.wikipedia.org/wiki/insurance regulatory and development authority

b) www.irdai.gov.in

c) www.policyholder.gov.in

d) www.google.co.in

e) http://www.financialexpress.com/news/regulating-insurance-for-growth/947546/0

f) http://www.myinsuranceclub.com/glossary/irda

g) http://www.irda.gov.in

h) http://www.mediaindia.net/insurance/insuranceconcepts

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