Slide 1

IRDA and INSURANCEINSURANCE IN INDIAHistory:In the year 1818 the Oriental Life Insurance Company was started at Kolkata.In 1912 the Indian Life Assurance Companies Act was enacted as the first statute to regulate the Life Insurance Business.Life Insurance is the fastest growing sector in India since 2000 as Government allowed Private players and FDI up to 26% and recently Cabinet approved a proposal to increase it to 49%. Life Insurance in India was nationalized by incorporating Life Insurance Corporation (LIC) in 1956.IRDAINTRODUCTIONIRDA is Insurance Regulatory and Development Authority, the administrative agency of Government of India for insurance sector supervision and development (both Life and Non-Life Insurance Companies) under the auspices of Government of India, situated at Hyderabad.

HISTORY OF IRDA

IRDA was established by an act enacted in Indian Parliament known as IRDA Act 1999 and was amended in 2002 to in corporate some emerging requirements as well as to over come some deficiencies in the entire process.MISSIONa) To protect the interests of the policyholders

b) To promote, regulate and ensure orderly growth of the insurance industry.

c) Conduction (regulate)of insurance businesses across India in an ethical manner.

InsuranceMeaning- Insurance means indemnity or protection against RISK of loss. Insurance is a popular means in business to protect from uncertainties.

RISK & TYPES OF RISK Risk Means: The uncertainty in the probability distribution of returns.

Thus in order to consider risk generally, for an action and a thing, 3 must be:

a loss associated with itan element of uncertainty or chance andsome choice among alternatives

Involves a situation about which the chances of the possible outcomes is not known.

Types of risks can be classified primarily on the basis of such internal or external forces or influences. Risks

Systematic Risk Unsystematic Risk

1.Systematic Risk: In investments those forces that are uncontrollable , external and broad in their effect are called sources of systematic risk. Economics, Political and Sociological changes are sources of Systematic Risk. 2.Unsystematic Risk:Unsystematic Risk is that portion of total risk that is peculiar (specific) to a firm or an industry and these are internal Factors such as management capability, consumer preferences and labor strikes can cause unsystematic variability of returns for a companys stocks. The Minor Categories of Risk as Follows1.Market Risk:Market risk arises du to changes in demand and Supply pressures in the markets.

2.Credit Risk to Customer

3.Country Risk: This risk arises from the policies of the economic and political

4.Currency Risk

5.Interest Rate Risk

Features of Insurance Is a contract between insurer and insured.

Is a contract of indemnity.

The contract is embodied in a document. This document is know as a policy.

The amount paid by insured to insurer as a consideration is know as premium.Importance

1.insurance protects and safeguards the interest of individuals and businessmen in their business operation.

2.insurance results in diversification of risk among specialized professional agencies called insurance companies. 3.Insurance promotes rate of savings and investment.

4.Insurance provides better security for loans.

5.Insurance brings safety in storage and transportation.