UNIT 5 – TYPES OF

INSURANCE
 Life and Non Life ( Meaning and Distinction
between Life and Non Life )
• SM = Life
• SM = Property ( both
• Eg of life insurance plans are –
Term, Endowment Pure and
movable and non movable),
Endowment insurance Health,
• Indemnity , Subrogation, • Eg of General insurance
Contribution does not apply. policies are – Marine,
• More than 1 year Motor, Fire, Engineering,
Health , Libaility
• Indemnity , Subrogation and
Contribution does apply.
• Mostly one year eg. Eng
 Life Insurance
• Life Insurance can be defined as a contract between an insurance
policy holder and an insurance company, where the insurer promises
to pay a sum of money in exchange for a premium, upon the death of
an insured person or after a set period.
 Life ( Utility of Life Insurance)

• It provides death benefit (when insured dies

his family members get money) (Living too
short)
• It provides survival benefit (when you survive
a particular number of years , you get money)
(living too long)
• For a premium ,that is paid either in
installments or in full.
Benefits of Life Insurance
• Risk Coverage: Insurance provides risk coverage to the insured family in form of monetary
compensation in lieu of premium paid.
• Difference plans for different uses: Insurance companies offer a different type of plan to the
insured depending on his/her need for insurance. More benefits come with the more premium.
• Cover for Health Expenses: These policies also cover hospitalization expenses and critical illness
treatment.
• Promotes Savings/ Helps in Wealth creation: Insurance policies also come with the saving plan i.e.
they invest your money in profitable ventures.
• Guaranteed Income: Insurance policies come with the guaranteed sum assured amount which is
payable on happening of the event.
• Loan Facility: Insurance companies provide the option to the insured that they can borrow a certain
sum of amount. This option is available on selected policies only.
• Tax Benefits: Insurance premium is tax deductible under section 80C of the income tax Act, 1961.
TERM LIFE INSURANCE
• A term life insurance policy is the simplest, purest form of life
insurance : one pays a premium for a period of time – typically
between 10 and 30 years – and if the person dies during that time a
cash benefit is paid to his/her family (or anyone else named as the
beneficiary).
PURE ENDOWMENT PLAN

• A pure endowment plan is a policy where the insurance company provides a policy payout to the
policyholder at the end of the policy term. The payout is a predetermined amount and is provided
as a lump sum amount at the completion of the policy term.

• The policyholder must survive the policy term to receive the sum assured under a pure
endowment plan. There are no beneficiaries under a pure endowment plan because the plan
does not cover the life of the insured individual. Therefore, no death benefit or payout is provided
to the insured’s family if the insured dies during the policy term.
• You pay the premiums during the policy term and receive a lump sum amount when the policy
term is completed.

• Most life insurance companies combine pure endowment plans with other life insurance products
to ensure protection + savings. For instance, combined with term insurance you get a term plan
with return of premium benefit. As guaranteed returns savings insurance plans, policyholders get
the benefit of life insurance + assured returns + regular payouts.

• A pure endowment plan is a low-risk savings investment plan that helps you achieve various
financial goals at different life stages, such as your child’s education and marriage.
ENDOWMENT ASSURANCE PLANS

• Endowment assurance plans are a type of life insurance policy that combines protection and
savings. They provide a lump sum payout at the end of the policy term or upon the unfortunate
demise of the policyholder, whichever occurs earlier. These plans are designed to offer financial
security to policyholders and their families, making them an ideal choice for long-term goals such
as education, marriage, or retirement planning.
Types of Life Insurance Policies
1.Term insurance plan - As the name says Term insurance plan are those plan that is
purchased for a fixed period of time, say 10, 20 or 30 years. As these policies don’t carry any
cash value their policies do not carry any maturity benefits, hence their policies are cheaper
as compared to other policies. This policy turns beneficial only on the occurrence of the
event.
2. Endowment policy - The only difference between the term insurance plan and the
endowment policy is that endowment policy comes with the extra benefit that the
policyholder will receive a lump sum amount in case if he survives until the date of maturity.
• 3. Unit Linked Insurance Plan - These plans offer policyholder to build wealth in addition
to life security. Premium paid into this policy is bifurcated into two parts, one for the
purpose of Life insurance and another for the purpose of building wealth. This plan offers
to partially withdraw the amount. A ULIP offers you the opportunity to invest your money
in different fund options, depending on your risk appetite. ULIPs come with a 5-year
lock-in period, and the money can be invested in bonds, equities, hybrid funds, etc. If you
are looking for safer options, bonds can be a good choice. On the other hand, if you are
open to more risk, hybrid funds and equities have the potential to offer better returns.
Since each individual is different, ULIPs allow great flexibility for investment. Your risk
appetite and investment preferences are likely to change with age. ULIPs permit you to take
these factors into consideration and alter your investment strategy accordingly.
4. Money Back Policy - This policy is similar to endowment policy, the only
difference is that this policy provides many survival benefits which are
allotted proportionately over the period of the policy term.
5. Whole Life Policy - Unlike other policies which expire at the end of a
specified period of time, this policy extends up to the whole life of the
insured. This policy also provides the survival benefit to the insured. In this
type of policy, the policyholder has an option to partially withdraw the sum
insured. Policyholder also has the option to borrow sum against the policy.
6. Annuity/Pension Plan - Under this policy, the amount collected in the
form of a premium is accumulated as assets and distributed to the
policyholder in form of income by way of annuity or lump sum depending on
the instruction of insured.
 Fire
• A contract of insurance that indemnifies against loss by fire or other customarily
included perils .
• One must remember, that the Standard Fire and Special perils policy also fondly
known as a Fire Policy , or Standard Fire Policy , covers perils such as Fire, Storm
Typhoon, Tornado, Tempest, Flood , Inundation etc. Therefore, one must not
think that , Fire policy covers only perils related to fire.
• What is the Subject Matter here - Any kind of moveable and immovable
property having pecuniary value such as building, house, Ship , Yacht, Godown
etc. Motor Vehicles are covered under Motor policy for these perils and hence
for Motor Vehicles we take Motor insurance.
• How is the policy value calculated - Financial value of building, furnitre, fixtures
and fittings, household contents , plant , equipment and machinery, stocks and
merchandise in premises or in the open etc.
• Name the perils - Social perils such as riot, strike , Natural perils storm, flood etc
• Miscellenous perils such as aricraft damage, rail road damage.. Short circuit etc.
 Types of fire insurance policies in India
1.Valued Policy- Valued policy is a type of insurance in which the value of the insured item is decided
in advance and gets indemnified accordingly if it suffers damage as per the terms and conditions.In
this type of fire insurance, the value of the sum insured for a valued item will not be changed
regardless of its market value at present. This type of policy is mainly used for items such as jewellery,
paintings, crafts, and articles whose price is subject to change.
• 2. Average Policy- There is an average clause in fire insurance policies. When it is applied, the
normal policy becomes an Average Policy. This type of fire insurance policy is used to penalise the
insured for having a policy with a lesser sum insured as compared to the actual value of the
property. If the insured property suffers damage more than the insured sum, the Average clause is
applied, and the resulting loss due to under-insurance is transferred to the policyholder.
• For example, suppose you have a property worth ₹8,00,000, but you only insure it for ₹5,00,000.
Now, if you suffer damage or loss worth ₹6,00,000 due to a fire accident, the insurance company
will apply an Average clause to decide the reimbursement amount.
• The insurance recovery is calculated as : [(Insured Value)/ (Actual Value) ] * Loss
= [5,00,000 / 8,00,000 ] * 6,00,000
= ₹3,75,000.
• Thus, your insurance company will only pay ₹3,75,000 and not ₹6,00,000. You have to pay the rest
of the amount out of your pocket as a penalty for under insurance.
3.Comprehensive Policy- A comprehensive policy, as the name suggests, is a
fire insurance policy that offers comprehensive coverage for a variety of
perils alongside fire accident.
4.Replacement Policy - As the name suggests, a replacement policy involves
replacing the damaged assets caused by a covered risk. In this type of policy,
the insurance provider pays the replacement value of the insured item,
which is calculated after taking into consideration its current market value
minus the depreciation rate.
5.Specific Policy- Specific policy offers coverage up to a pre-specified
amount, which is usually lower than the actual value of the insured property.
For instance, if you have fire insurance worth ₹50,000 and your property
suffers a loss of ₹80,000, then the insurance company will only offer ₹50,000
as compensation.
 Marine
• Marine insurance is divided in to Marine Hull and Marine Cargo
• Hull insures sea vessels such as a yacht , trailer, boat , raft, container
ships, bulk carrier , passenger ships etc. Right from the construction
of these till while they are in operation
• Marine cargo insures all the cargo that is sent from one place to
another through rail, road or sea
• Perils covered are sea perils and others such as earthquake, storm,
fire, improper handling, accidents etc
• A marine policy protects cargo or goods from loss or damage while
being transported from the point of origin to the point of destination.
Marine insurance policies come in a variety of forms, including those
for road, air, rail and sea transportation, as well as courier and postal
services.
• The most prevalent reasons for marine cargo loss during transit are
explosion, fire, hijacking, collisions, accidents, and overturns.
Different types of marine insurance in India
1.Hull & machinery insurance - A vessel's hull is the primary supporting
structure. In the event of a ship disaster, hull insurance covers the insured.
Ship owners frequently adopt this type of marine insurance. Machinery
insurance should be obtained in addition to hull insurance to cover the ship's
machinery. It provides coverage for mechanical, operational and electrical
ship machinery damage. As both sections cover the entire ship, they are
often referred to together as Hull and Machinery Insurance.
2. Marine cargo insurance- Cargo owners incur the risk of cargo mishandling
both at the terminal and on the ship's voyage. Their shipment could possibly
be damaged, misplaced or lost as well. Marine cargo insurance is provided in
return for a reasonable premium payment to protect the cargo owner from
financial losses caused by such accidents. It also includes third-party liability
cover, which compensates for any damage to the port, ship, railway track,
other cargo, or individuals caused by your cargo.
3. Liability insurance- One common form of liability cover in marine
insurance is Protection and Indemnity (P&I) insurance. P&I insurance
provides coverage for a shipowner's or operator's liability for
third-party claims arising from the operation of the insured vessel,
including claims for bodily injury, property damage, pollution, and
cargo damage. This insurance can also provide coverage for legal
defence costs, which can be substantial in maritime disputes. In
addition, this type of marine insurance policy often includes a range of
additional coverages, such as crew liabilities, collision liabilities, and
salvage liabilities.
4. Freight insurance- This type of marine insurance policy can provide
protection for the policyholder in case the shipment is lost or damaged
during transit, resulting in the loss of the freight charges. If the goods
are lost or damaged during transit, and the carrier is not liable for the
loss or damage, the policyholder may still be able to recover the freight
charges under their freight coverage. The coverage is typically tailored
to meet the specific needs of the policyholder and can be adjusted
based on the type of goods being transported, the value of the
shipment, and the mode of transportation.
 Health
• Health Insurance is a type of insurance that offers
financial coverage for medical expenses, in case of
a medical emergency. A health insurance
plan provides insurance coverage to
the insured with multiple benefits, including cashless
hospitalization, day-care facility & coverage for
terminal & critical illness etc. This should not be
confused with Life insurance
 Health Insurance
• Health insurance policy is an assurance which provides immediate financial help in
case when any medical emergency arises. It is a contract between a policyholder
and the insurance company which covers medical expenses that might occur due
to illness, injury or accident. If you have a health insurance policy, then some or all
the medical expenses will be borne by the insurance company, against which an
insured is supposed to pay a certain amount known as premium.
There are two ways by which which the insurance company compensate for your
medical expenses:
• Cashless Treatment: Here, the policyholder is not supposed to pay anything to
the network hospital. As the insurance company pays the hospital directly.
• Reimbursement: Here, the policyholder is supposed to settle their medical
expenses first and later ask for reimbursement from the insurance company.
Types Of Health Insurance Policies
• There are basically two kinds of health insurance policies such as
individual or self-plan and family floater policy. As the name suggests,
individual policy would only provide coverage and benefits to the
main policyholder. On the other hand, in case of a family floater plan,
there is only one plan which provides coverage to your entire family
such as spouse, dependent children, parent and parent-in-laws or
dependent siblings.
• One should select the plan, depending upon the factors such as your
age, family medical history, children’s age, medical history and of
course one’s budget.
• Individual or Self Health Insurance Plan - An individual health insurance
policy is issued under the name of a single policyholder, which means that
the sum insured coverage and the benefits of the policy is totally dedicated
to the insured and covers no one else. Here, the individual purchases the
policy to maintain their own health which in turn provides financial help in
case of their own medical emergency.
• Family Floater Health Insurance Plan- Family floater health insurance is
one policy which aims to provide sum insured coverage to individual and as
well his family members. Rather than taking a single policy for each
member of the family, the family health insurance plan is a better option,
as it acts as an umbrella for the entire family. Here the sum assured
coverage is shared by all the members who have been covered under the
same plan.
However, it is advisable to have a separate plan for your senior citizen parent
or parent-in-laws as it will prove to be a more affordable option. Similarly, if
any member in the family has a huge medical history, then it is also better to
buy a separate plan for them rather than covering them in the family floater
plan.
Benefits of Health Insurance
1.Insurance Coverage for Healthcare emergencies - One of the primary benefits of health insurance
plan is that it provides coverage for various healthcare facilities. It can include regular check-up visits
to the hospital as well as major surgeries. The policy terms lay down the particulars of the health
insurance benefits at the time of purchase. One of the desirable benefits of health insurance is the
cashless treatment facility. In case of emergency hospitalization, you may not have the resources
available for paying the expenses immediately. The health insurance benefits ensure that you receive
proper healthcare without worrying since the hospital can settle the bills directly with the insurer.
2. Safety Against Rising Medical Costs - The rapidly increasing healthcare costs are a matter of grave
concern among people. Research suggests that paying for healthcare out of pocket is one of the
critical causes of impoverishment. Under such conditions, the benefits of health insurance have
become incredibly valuable. When you include a health insurance policy in your financial plan, it can
save you much trouble later. The assurance of safety against continually rising healthcare charges is
among the remarkable advantages of health insurance.
3. Affordable Premium for Young Individuals - A common misconception says that you do not need
health insurance if you are fit and healthy. Contrary to that, the benefits of health insurance can be
immensely helpful if you have planned for it beforehand. By doing so, you give yourself enough time
to spread the premium amount over the years and reduce the financial strain. As we grow older,
health issues become more frequent. If you do not have a plan in place, it may drain your savings.
Hence, it is inadvisable to wait for a medical emergency to purchase a health plan. You may not avail
of the benefits of health insurance efficiently, and it may also cost comparatively higher.
4. Rider Protection for Various Life-related Uncertainties - Riders can be
considered as one of the most valuable benefits of health insurance. Apart from the
fundamental medical insurance benefits, you can enjoy multiple other coverage
options. Such health insurance benefits help in creating a more personalized
financial plan.For example, a critical illness insurance rider can provide coverage
against a list of life-threatening diseases that incur high healthcare costs.
5. Additional Cover Above Employer Health Insurance - Many companies offer
employer health insurance benefits to their employees. While they are useful, you
may not want to rely on it solely for assistance in a time of need. Since the benefits
of health insurance provided by a company are under a master policy, there are
limitations to individual coverage. When you buy an individual plan, you can attain
additional benefits of health insurance, which are more particular to your
requirements.
6. Tax Benefits - While the benefits of health insurance are undeniably useful, they
also help save on tax. The Indian government allows the policyholder to reduce
their tax liability when they purchase a health plan. Under Section 80D, there are
specific tax benefits of health insurance applicable to some conditions.
 Aviation
• The insurance provides coverage for hull losses as well as liability for
passenger injuries, environmental and third-party damage caused by
aircraft accidents.
• So, it covers losses that can result from aviation risks such as damage to
property, loss of cargo, or injury to people. In many countries, aircraft
owners and operators are required by law to purchase insurance for third
party liability.
• In the aviation industry, third party liability usually includes the payment
that aircraft owners and operators have to pay for the medical expenses of
the people injured in an aircraft accident. This insurance may also include
the expenses of search and rescue operation missions, costs incurred on
emergency landings, and injuries received while operating the aircraft.
Types of Aviation Insurance
• Public Liability Insurance - This insurance covers the expenses that
can result from damage occurring to the third party entities and
property, like houses, crops, other aircraft, cars, and airport facilities
caused by the insured aircraft. This insurance is also known as third
party liability. The insurance does not offer coverage to the insured
aircraft or the injured passenger travelling in that aircraft. In most
countries, this insurance is mandatory.
• Passenger Liability Insurance - As the name suggests, this insurance
provides payments for injuries and final expenses in the event of
death of a passenger travelling in the aircraft. This insurance is usually
mandatory by law for commercial or large aircraft.
• Ground Risk Hull Insurance Not in Motion - This type of aviation
insurance provides coverage for damages sustained by the aircraft when it
is on the ground and not in motion. So, the insurance provides coverage for
damages that can be caused by fire, theft, flood, wind or hailstorms,
animals, hangar collapse, and uninsured vehicles or aircraft colliding
against the insured aircraft. The amount of payment to be made is usually
decided at the time of purchasing the insurance.
• Ground Risk Hull Insurance in Motion - This aviation insurance provides
coverage for damages that the aircraft may sustain while in motion.
However, it excludes any damage that might occur while landing and taking
off. This issue led to a lot of disputes between the aircraft owners and
insurance companies, which eventually led many insurance companies to
discontinue this type of coverage.
• In-flight Insurance - In-flight insurance provides coverage for
damages that an aircraft may sustain when it is in motion. This is the
most expensive aviation insurance as most accidents are likely to
occur when the aircraft is in motion.
 Motor
• Motor insurance provides insurance cover in two ways
• – Own damage (When Ramu’s scooter is damaged due to storm, flood, hitting
scooter against a tree its expenses can be claimed under Own Damage . These
damages have either occurred due to his own mistake or Act of god perils)
• - Third party damage (When Ramu’s scooter hits shamu’s scooter is hurt and
Shamu is hurt, then in that case Shamu will be paid by Ramu’s insurance company)

• Own Damage (OD) helps you stay covered against damage caused to your vehicle
due to accidents like fire, theft, etc. In case of an accident, an own damage cover
compensates you for expense to repair or replace parts of your car damaged in
the accident.
• Third party damage cover helps an insured to cover expenses of the opposite party
including hospitalization etc and motor repair. In india TP is compulsory
 Personal Accident
“Personal accident insurance is a policy that can reimburse your
medical costs, provide compensation in case of disability or
death caused by accidents. Accidental death, Permanent
total disability in an accident: Permanent partial disability,
Transportation benefit employment benefits, and funeral
expenses. You also get coverage for hospital charges,
including ambulance costs.
 Liability
• Liability insurance is a policy that offers protection to businesses and individuals
from risk that they may be held legally or sued for negligence, malpractice or
injury. This insurance policy protects the insured from legal payouts and costs for
which the policyholder is deemed to be responsible.
• Public Liability Insurance policy is compulsory for all companies registered under
Factories act.
• Professional liability insurance policy, and Product liability insurance are examples
of liability policies
Engineering Projects
• Contractor's All Risk Policy It covers comprehensive cover for
loss and damage which may happen during construction of
projects.
• Contractor's Plant and Machinery Policy - Covers all P&M
across different projects
 Meaning of Reinsurance
• Reinsurance is the practice whereby insurers transfer
portions of their risk portfolios to other parties by
some form of agreement to reduce the likelihood of
paying a large obligation resulting from an insurance
claim.
• The party that diversifies its insurance portfolio is
known as the ceding party. The party that accepts a
portion of the potential obligation in exchange for a
share of the insurance premium is known as the
reinsurer.
 Double insurance
• Double insurance arises where the same party
is insured with two or more insurers in
respect of the same interest on the same
subject matter against the same risk and for
the same period of time.
• Same subject matter, same peril is insured,
same time
 Meaning of Bankassurance
• Bancassurance means selling insurance product through banks. Banks and
insurance company come up in a partnership wherein the bank sells the
tied insurance company's insurance products to its clients.
• Bancassurance arrangement benefits both the firms. On the one hand, the
bank earns fee amount (non interest income) from the insurance company
apart from the interest income whereas on the other hand, the insurance
firm increases its market reach and customers. The bank acts as an
intermediary, helping insurance firm reach its target customer in order to
increase its market share.
 Meaning and Importance of Underwriting
• Evaluation of the proposal in terms of
- How much is the risk (What will be the max claim)
- How much we can insure /What risks can we insure( What can be the cover)
- Should we accept the proposal or decline it
- If we should accept, how much should be premium
Importance –
Keeps an insurance company away from unknown risks,
Fetches the right consideration (in the form of right premium )
Puts a cap to the claim , there by insurer knows from the client how much claim can arise
and parks funds aside to take care of future claims
Draws exclusions and conditions so as to carefully alienate those risks which are
exponential in nature or very risky in nature and any acceptance of such risks would put
insurers in a deep loss.
 Process of underwriting
• Each insurance company has its own set of underwriting guidelines to help the underwriter
determine whether or not the company should accept the risk. The information used to
evaluate the risk of an applicant for insurance will depend on the type of coverage involved.
For example, in underwriting automobile coverage, an individual's driving record is critical.
However, the type of automobile is actually far more critical. As part of the underwriting
process for lifeEach insurance company has its own set of underwriting guidelines to help the
underwriter determine whether or not the company should accept the risk. The information
used to evaluate the risk of an applicant for insurance will depend on the type of coverage
involved. For example, in underwriting automobile coverage, an individual's driving record is
critical. However, the type of automobile is actually far more critical. As part of the
underwriting process for life or health insuranceEach insurance company has its own set of
underwriting guidelines to help the underwriter determine whether or not the company
should accept the risk. The information used to evaluate the risk of an applicant for insurance
will depend on the type of coverage involved. For example, in underwriting automobile
coverage, an individual's driving record is critical. However, the type of automobile is actually
far more critical. As part of the underwriting process for life or health insurance, medical
underwriting may be used to examine the applicant's health status (other factors may be
considered as well, such as age & occupation).
Process can be put as below –
• Getting personal details of client- age ,gender , address proof / Case of
General – about property construction and hazards
• Checking past history and heriditary diseases / Past accidents
• Looking at the current factors such as employmement, daily activities,
medical records , habits / What type of usage it is, what is manufactured in
factory, what type of labourers work, what machines are there.
• Finding which classification category does it fall – Preffered risk, Standard
risk, Sub standard risk , uninsurable risk
• Checking if policy can be given depending on the classification of risk and
then Calculating premium according to the risk classification
Examples of New Insurance Products in Market

• Go Girl: GoGirl is a woman-only drivers insurance, that rewards good drivers with lower
premiums. The insurance cover also includes a free courtesy car when your car is in for
repairs, legal cover, child car seat, personal accident and windscreen cover. The company
also insures your handbag and its content if it is stolen from the car.
• Vlot: The Vlot platform provides life risk analysis and coverage solutions that smoothly adjust
to your changing life situations. If you meet unexpected changes in your life, such as moving
to a new city, getting married, or loss of a job
• Apart from others –
• Body parts insurance,
• Infertility insurance cover
 Meaning of Insurance Intermediaries

• Insurance intermediaries facilitate the

placement and purchase of insurance, and
provide services to insurance companies and
consumers that complement
the insurance placement process.
Traditionally, insurance intermediaries have
been categorized as either insurance agents
or insurance brokers.
 Types of insurance Intermediaries

• Difference between an agent and underwriter

• Agent is the one who sells policies, receives a
commission and serves the client throughout
the tenure of the policy.
• Underwriter refer to the previous slides.
IRDA
 Role
of IRDA In promoting and regulating the
insurance sector in india
• Insurance in India dates back to the year 1850 with the first General Insurance company
established in Calcutta. Soon, with the passage of years the market became competitive as
many insurers started emerging both in life and non-life sectors.
• Each company practised business on its rates and rules. It made customers’ insecure which
brought the credibility of the insurance market at stake. As early as the government realized
this fact, they thought of securing the customer’s interest first and hence established an
independent regulatory body called IRDA.
• Over time, new demands rolled and the market got flooded with several insurance products.
Like a responsible head of the family would act to prevent the family from any damage, IRDA
monitors the development of the insurance industry and other related activities.
 Role of IRDA in……
• To protect the interest of policyholders at the time of claims, issuance of the policy, and cancellation of
the policy is the ultimate motive. Hence, it monitors that no insurance company can deny the claim on
their free will unless it falls b
• IRDA clearly states the code of conduct for all insurance companies, surveyors, and loss assessors.
• To prevent any misdeed, it calls for both annual or need-based audit, conduct investigation,
call for information from either the insurance companies or intermediaries
• Regulate the rates and terms offered by the insurance companies to bring equality for the
customers.
If there arises any dispute between the insurer and the policyholder, then IRDA will step in to
provide a resolution.
• Keeping in mind the development of both the urban and the rural sector, IRDA bounds the
insurers with a minimum percentage to carry both life and non -life business.
• Promote high standards of integrity and fair dealings in the market.
 Powers and functions
of IRDA
• issue to the applicant a certificate of registration , renew, modify, withdraw, suspend or cancel such
registration;
• specifying requisite qualifications, code of conduct and practical training for intermediary or insurance
intermediaries and agents
• specifying the code of conduct for surveyors and loss assessors;
• calling for information from, undertaking inspection of, conducting enquiries and investigations
including audit of the insurers, intermediaries, insurance intermediaries and other organisations
connected with the insurance business;
• control and regulation of the rates, advantages, terms and conditions that may be offered by insurers
• specifying the form and manner in which books of account shall be maintained and statement of
accounts shall be rendered by insurers and other insurance intermediaries;
• regulating investment of funds by insurance companies;
• regulating maintenance of margin of solvency;
• adjudication of disputes between insurers and intermediaries or insurance intermediaries
• specifying the percentage of life insurance business and general insurance business to be undertaken by
the insurer in the rural or social sector;
Insurance Ombudsman
 Meaning /Role and their Function of Insurance
Ombudsman
• Ombudsman are drawn from Insurance Industry, Civil Services and Judicial Services.
• An insurance Ombudsman is appointed for a term of three years or till the incumbent attains the age of sixty five years,
whichever is earlier. Re-appointment is not permitted..
• he governing body has appointed twelve Ombudsman across the country allotting them different geographical areas as their
areas of jurisdiction. The Ombudsman may hold sitting at various places within their area of jurisdiction in order to expedite
disposal of complaints. The offices of the twelve insurance Ombudsmans are located at (1) Bhopal, (2) Bhubaneswar, (3)
Cochin, (4) Guwahati, (5) Chandigarh, (6) New Delhi, (7) Chennai, (8) Kolkata, (9) Ahmedabad, (10) Lucknow, (11) Mumbai,
(12) Hyderabad. The areas of jurisdiction of each Ombudsman has been mentioned in the list of Ombudsman.
• The Ombudsman has a secretarial staff provided to him by the insurance council to assist him in discharging his duties. The
total expenses on Ombudsman and his staff are incurred by the insurance companies who are members of the insurance
council in such proportion as may be decided by the governing body.

• If the policy holder is not satisfied with the award of the Ombudsman he can approach other venues like Consumer Forums
and Courts of law for redressal of his grievances.

As per the policy-holder's protection regulations, every insurer shall inform the policy holder along with the policy
document in respect of the insurance Ombudsman in whose jurisdiction his office falls for the purpose of grievances
redressal arising if any subsequently.
• Insurance Ombudsman has two types of functions to perform (1) conciliation, (2)
Award making. The insurance Ombudsman is empowered to receive and consider
complaints in respect of personal lines of insurance from any person who has any
grievance against an insurer. The complaint may relate to any grievance against
the insurer i.e. (a) any partial or total repudiation of claims by the insurance
companies, (b) dispute with regard to premium paid or payable in terms of the
policy, (c) dispute on the legal construction of the policy wordings in case such
dispute relates to claims; (d) delay in settlement of claims and (e) non-issuance of
any insurance document to customers after receipt of premium.

Ombudsman's powers are restricted to insurance contracts of value not exceeding

Rs. 20 lakhs. The insurance companies are required to honour the awards passed
by an Insurance Ombudsman within three months.
 Developments in Insurance
Industry in India –
Problems ,Opportunities Trends
 Recent trends
• Two insurance schmes floated by Govt-
• Ayushman Bharat , Pradhan Mantri Jeevan Jyoti Bima Yojana(PMJJBY), PMFBY
• The Government of India has taken a number of initiatives to boost the insurance industry.
Some of them are as follows:
• As per Union Budget 2019-20, 100 per cent foreign direct investment (FDI) permitted for
insurance intermediaries.
• In September 2018, National Health Protection Scheme was launched under Ayushman
Bharat to provide coverage of up to Rs 500,000 (US$ 7,723) to more than 100 million
vulnerable families. The scheme is expected to increase penetration of health insurance in
India from 34 per cent to 50 per cent.
• Over 47.9 million famers were benefitted under Pradhan Mantri Fasal Bima Yojana (PMFBY)
in 2017-18.
• The Insurance Regulatory and Development Authority of India (IRDAI) plans to issue
redesigned initial public offering (IPO) guidelines for insurance companies in India, which are
to looking to divest equity through the IPO route.
• IRDAI has allowed insurers to invest up to 10 per cent in additional tier 1 bonds that are
issued by banks to augment their tier 1 capital, in order to expand the pool of eligible
investors for the banks.
 Problem areas in Insurance

• The biggest challenge faced by Insurance sector is in reaching its target market. Lets take the
example of life insurance. - Low financial literacy and poor access to financial services in India
pose a problem in penetration of the right kinds of life insurance products - more in terms of
the right mix of savings and protection. This is combined with the fact that consumers and
distributors both lack understanding of the true purpose of life insurance. Consumers are not
clued in about their life stage needs, and the product solutions suitable for such needs. The
distributor, armed with an array of products is also unable to give proper insurance guidance
to the consumer due to limited knowledge of the true purpose of each financial instrument.
This leads to mis-selling, which is a huge negative factor for the life insurance industry.
 ..Contd…Problem areas in
Insurance
• Competition kills the business , with every insurer giving the bare minimum rates so as to
retain their clients but ends up with a bleeding portfolio
• India has now the lowest commission rates for agent advisors. Another big challenge is
attracting committed and quality talent to the industry. It is important to have good quality
sales managers and agent advisors to ensure need-based selling and right-selling
• It is important for media and third-party influencers to look at the bigger picture on life
insurance. They must understand that life insurance products should not be compared to any
other financial products on calculated returns alone.
 Opportunities in Insurance sector
• Businesses keen on buying products such as liability insurance to be able to curtail
their risks.
• The overall insurance industry is expected to reach US$ 280 billion by 2020. Life
insurance industry in the country is expected grow by 14-15 per cent annually for
the next three to five years.
• Demographic factors such as growing middle class, young insurable population and
growing awareness of the need for protection and retirement planning will
support the growth of Indian life insurance.
• Technological advancements is making Insurance companies reach out to target
market and issuing of policy process and claim settlement is becoming easier.
 Impact of IT on Banking (Any four
points from this slide use it )
• To the Individuals:
• Anytime banking- e banking providers 24 hours,
• all days service to the customers for cash
• withdrawal from any branch.
• Anywhere banking – no matter wherever the
• customer is in this world, on line banking is
used to
• get the services.
• Online purchase of goods and services and
• payment can be arranged for various purposes
• through cards.
• Customer can also make some permitted
• transactions from his office or house or while
• traveling via mobile phone.
• Customers can receive relevant and detailed
• information in seconds, rather than days or
weeks.
• B
• To the Merchants, Traders etc .
• Assured immediate settlement and payment to
the
• various transactions made by the traders.
• Providing various services to the businessmen
at
• par with the international standards with low
• transaction cost.
• Avoid all the cost and risk problems involved in
• handling cash, which are very high in business
• transactions.
• Development of global and local clients’ base
can
• be possible with the development of the IT in
• Banking.
• Other benefits include improved image,
improved
• customer service, eliminating paper, reduced
• waiting costs and increased flexibility.
 Impact of IT on Banking (Any six
points from this slide use it)
• C. To the Banks • . To the Nation
• E-banking provides competitive advantage with • Globalization of trade can be achieved
• unlimited network to the banks. effectively
• Online banking – an effectiveness medium of • though e-banking.
• promotion of various schemes of the bank, and • Provision of global market to the domestic
• indeed acts as a marketing tool. • products and services is easy with the
• By connecting ATM and PO terminals, risk of development
• over-drawl of cash can be eliminated in case of • of e-banking.
• ATM credit and debit cards. • E-banking promotes more exports so that the
flow
• E-Banking site can act as a revenue earner
through • of foreign exchange increases.
• promotional activity by the consumer • E-banking provides more transparency in
corporate. business
• Help in establishing better customer • transactions and creates good business
relationships, relations
• attracting and retaining the customers. • among nations.
• D • E-banking enabled more individuals to work
from
• home and to do less traveling for banking,
resulting