Upload
thiyam-manisana
View
216
Download
0
Embed Size (px)
Citation preview
7/29/2019 Insurance Policies Offered
1/40
INTRODUCTION TO INSURANCE
INSURANCE
1
7/29/2019 Insurance Policies Offered
2/40
2
Definition
According to the Financial Accounting Standards Board (FASB)
insurance provides indemnification against loss or liability from
specified events and circumstances that may occur or be discovered
during a specified period.
Another definition of Insurance is that it is the benefit provided by a
particular kind of indemnity contract, called an insurance policy, that
is issued by one of several kinds of legal entities (for example, stock
company, mutual company, reciprocal, Lloyds syndicate), any of
which may be called the insurer, in which the insurer promises to pay
on behalf of or to indemnify another party, called a policyholder or
insured; that protects the insured against loss caused by those
perils subject to the indemnity in exchange for consideration known
as an insurance premium
7/29/2019 Insurance Policies Offered
3/40
3
Features of Insurance
A contract of indemnity
A contract which enables the transfer of risk of loss
of assets arising out of the impending perils
The contract is known as insurance policy
Upfront payment of premium
Two parties- insurer and insured
Insurable interest
7/29/2019 Insurance Policies Offered
4/40
4
Principles of Insurance
Large number of units
Definite loss
Accidental loss
The size of loss should be reasonably large to cover
the cost of losses consequent to an event
Affordable premium
The volume of losses can be estimated
Limited risk of catastrophically large losses
7/29/2019 Insurance Policies Offered
5/40
5
Insurance in India
Originated in early 19th Century
The Insurance business in India was started with
establishment of the Oriental Life Insurance
Company in Culcutta in 1818
In 1870, Bombay Mutual Life Assurance Society
was established which provided insurance cover to
Indians at normal rates
In 1912 the Life Insurance Companies Act was
passed to regulate the insurance business In 1928 the Indian Insurance Companies Act was
passed
In 1938 the Insurance Act was passed which was
amended in 1956 and 1968
7/29/2019 Insurance Policies Offered
6/40
6
Insurance in India
The General Insurance business in India was commenced by the
Trinitron Insurance Company Ltd in 1850. In 1907, the Indian Mercantile Insurance Ltd. was established as the
first company to transact all classes of general insurance business
The General Insurance Council was constituted as a wing of the
Insurance Association of India with the responsibility of framing ofcode of conduct for ensuring fair conduct and sound business
practices.
Tariff Advisory Committee set-up in 1968
In 1972 the Government of India nationalised the general insurance
business
In1993, the Government of India appointed Malhotra Committee to
evaluate the Indian insurance industry and to recommend future
direction
7/29/2019 Insurance Policies Offered
7/407
Insurance in India
Malhotra Committee submitted their report in 1994 which
contained important recommendation covering the following
areas:
Structure
Competition
Regulatory Body
Investment
Customer Service
The IRDA Act was passed in 1999 and was amended in 2002
The IRDA was set up under the provisions of the IRDA Act.
7/29/2019 Insurance Policies Offered
8/408
Insurance intermediaries Insurance surveyors
Product pricing
Investment issues
Restrcuturing
Liberalisation
Rural insurance
Regulation
Insurance regulatory authority
Malhotra Committee Recommendations
7/29/2019 Insurance Policies Offered
9/409
Types of Insurance
Life Insurance
Term Life Insurance
Whole Life Insurance
Endowment Policies
Money Back Policies Childrens Assurance Plans
Annuity and Pension Plans
Unit Plans
Special Plans
Group Insurance Schemes
Bancassurance
Key-man Insurance
7/29/2019 Insurance Policies Offered
10/4010
Types of Insurance
Non-Life InsuranceCommercial Policies
Professional Policies
Industrial Insurance
Social Insurance
Credit Insurance
Farmers Insurance
7/29/2019 Insurance Policies Offered
11/4011
Insurance Companies in India
General Insurance Company
The New India Assurance Co. Ltd., - HO in Mumbai,
The United India Insurance Co. Ltd., HO in Chennal,
The Oriental Insurance Co. Ltd, HO in Delhi, and
The National Insurance Co. Ltd. HO in Calcutta.
Deposit Insurance Corporation
Export Credit and Guarantee Corporation of India Ltd Agricultural Insurance Company of India Ltd.
Employees State Insurance Corporation
7/29/2019 Insurance Policies Offered
12/4012
CEO (HO)
Sales head (Senr.VP)
Zonal Head(Zonal offices)
Reginal Head 1 Reginal Head 2
Area offices (Area Manager) Area offices (Area Manager)
Sales Training(Manager)
OperationsManager
Branch Offices (Branch manager)
Sales Operations
Training Executives
for Branch offices
Customer service
representatives/
Executives
Organizational Structure
7/29/2019 Insurance Policies Offered
13/4013
Managerial Functions
Functions of Head Office Accounts Department, HR Department, Actuarial Department etc
Product development
Submission of Returns to IRDA
Functions of Zonal Office Controlling office of Regional Offices and Branches
Functions of Regional Office
Monitoring and evaluating the business development of branches
Functions of Area Office/ Branches Acceptance of policy proposals
Issuing policies
Processing claims
7/29/2019 Insurance Policies Offered
14/4014
Marketing Process
Insurance is a risk related instrument, hencemarketing process differs
There are two segments in insurance business
Segment which need customer education and product
awareness
Segment where the insurance is a statutory or mandatory
requirement
Business development through agents/brokers
7/29/2019 Insurance Policies Offered
15/4015
Marketing Process
Functions of a Direct Broker
obtaining detailed information of the client's business and riskmanagement philosophy;
familiarising himself with the client's business and underwritinginformation so that this can be explained to an insurer andothers;
rendering advice on appropriate insurance cover and terms;
maintaining detailed knowledge of available insurance markets,as may be applicable;
submitting quotation received from insurer/s for considerationof a client;
providing requisite underwriting information as required by aninsurer in assessing the risk to decide pricing terms andconditions for cover;
acting promptly on instructions from a client and providing himwritten acknowledgements and progress reports;
assisting clients in paying premium under section 64VB ofInsurance Act, 1938 (4 of 1938);
providing services related to insurance consultancy and riskmanagement;
assisting in the negotiation of the claims; and
maintaining proper records of claims;
7/29/2019 Insurance Policies Offered
16/40
16
Eligibility Criteria for Brokers
Free from disqualifications
Availability of adequate office space and infrastructure
Minimum of two experienced and qualified persons to undertake
insurance broking
Applicant should not have been denied the license on a previous
occasion
Fulfill the following capital requirements Direct Broker Minimum of Rs. 50 lakhs
Reinsurance Broker- Minimum of Rs. 200 lakhs
Composite Broker- Minimum of Rs250 lakhs
Capital should be in the form of equity shares
Capital should be brought by cash Shall do only insurance broking
Non-resident interest should not exceed 26 per cent
Marketing Process
7/29/2019 Insurance Policies Offered
17/40
17
Qualifications of Principal Officer of Broker
Bachelors/ Masters degree in Arts, Science, or Social Sciences or Commerce or its
equivalent from any institution/ university recognized by any State Government or the
Central Government; or
Bachelors degree in engineering or its equivalent from any institution/ university
recognized by any State government or the Central government; or
Bachelors degree in law or its equivalent from any institution/ University recognized by
any State Government or the Central Government; or
Masters in Business Administration or its equivalent from any institution/ universityrecognized by any State Government or the Central Government; or
Associate/ Fellow of the Insurance Institute of India, Mumbai; or
Associate/ Fellow of the Institute of Risk Management, Mumbai; or
any post graduate qualification of the Institute of Insurance and Risk Management,
Hyderabad; or
Associate/ Fellow of the Institute of Chartered Accountants of India , New Delhi; or Associate/ Fellow of the Institute of Cost and Works Accountants of India, Kolkata; or
Associate/ Fellow of the Institute of Company Secretaries of India, New Delhi; or
Associate/ Fellow of the Actuarial Society of India; or
Certified Associateship of the Indian Institute of Bankers, Mumbai; or
any other qualification specified from time to time by the Authority under these
regulations; and
Marketing Process
7/29/2019 Insurance Policies Offered
18/40
18
(ii) the principal officer of the applicant has received at least one
hundred hours of theoretical and practical training from an institution
recognised by the Authority from time to time. The theoretical and practical training from an institution recognised by
the Authority from time to time according to a syllabus approved by the
Authority shall be fifty hours, provided the principal officer of the
applicant :
has been carrying on reinsurance related activity or insurance consultancy
for a continuous period of seven years, preceding the year in which such an
application is made; or
has for a period of, not less than seven years prior to the application made to
the Authority has been a principal underwriter or has held the position of a
Manager in any one of the nationalised insurance companies in India; or
is an Associate/ Fellow of the Insurance Institute of India, Mumbai; or
Associate/ Fellow of the Institute of Risk Management, Mumbai; or Associate/Fellow of the Actuarial Society of India; or any post graduate qualification of
the Institute of Insurance and Risk Management, Hyderabad;
has passed an examination, at the end of the period of training mentioned in
the proviso above, conducted by the National Insurance Academy, Pune or
any other examining body recognised by the Authority.
Marketing Process
7/29/2019 Insurance Policies Offered
19/40
19
The Principal Officer should not have violated the code of
conduct as per IRDA regulations
The applicant should not be engaged in any other business
The grant of license shall be in the interest of the policy
holders
Marketing Process
7/29/2019 Insurance Policies Offered
20/40
20
Advertisement and Sales Promotion Advertisements in the visual media
Advertisements in print media
Internet Advertisements
Radio Jingles
Hoardings
Moving display
Digital display
Sponsoring of events
Incentive Schemes like Crorepathi,
Membership in Chairmans Club etc.
Marketing Process
7/29/2019 Insurance Policies Offered
21/40
21
Advertisement in Print Media
Marketing Process
7/29/2019 Insurance Policies Offered
22/40
22
IRDA Guidelines on Advertising
The following are considered as advertising under the
provisions of IRDA Act: newspapers, magazines and sales talks;
billboards, hoardings, panels;
radio, television, website, e-mail, portals;
representations by intermediaries;
leaflets; descriptive literature/ circulars;
sales aids flyers;
illustrations form letters;
telephone solicitations;
business cards;
videos;
faxes; or
any other communication with a prospect or a policyholder that
urges him to purchase, renew, increase, retain, or modify a policy
of insurance.
7/29/2019 Insurance Policies Offered
23/40
23
IRDA Guidelines on Advertising
The following are exempted
materials used by an insurance company within its own
organization and not meant for distribution to the public;
communications with policyholders other than materials urging
them to purchase, increase, modify surrender or retain a policy; materials used solely for the training, recruitment, and education
of an insurer's personnel, intermediaries, counselors, and
solicitors, provided they are not used to induce the public to
purchase, increase, modify, or retain a policy of insurance
any general announcement sent by a group policyholder to
members of the eligible group that a policy has been written or
arranged.
7/29/2019 Insurance Policies Offered
24/40
24
Distribution Intermediary
The Insurance Intermediary is defined as:
insurance brokers, reinsurance brokers, insurance consultants,surveyors and loss assessors, or any other person representingor assisting an insurer in one or more of the following :
soliciting, negotiating, procuring, or effectuating an insurancecontract or a renewal of an insurance contract;
disseminating information relating to coverage or rates;
forwarding an insurance application; servicing and delivering an insurance policy or contract;
inspecting a risk;
setting a rate;
investigating or assessing a claim or loss;
transacting a matter after the effectuation of a contract; or representing or assisting an insurer or other person in any other
manner in the transaction of insurance with respect to a subjectof insurance resident, located or to be performed in India.
servicing a policy or contract.
Ri k M t
7/29/2019 Insurance Policies Offered
25/40
25
Risk Management
Insurance is a process of risk management
Insurance companies generally reinsure their
business with reinsurers. International reinsurer is
Berne Union
In India General Insurance Corporation provides the
reinsurance service
M t I f ti S t b IRDA
7/29/2019 Insurance Policies Offered
26/40
26
Management Information System by IRDA
IRDA exercises off-site surveillance of insurance companies
through periodical returns
Insurance companies are required to submit 4 copies of
audited financial statements and abstract of report for every
year to IRDA with in 6 months
Insurance companies are also required to submit the following
additional statements:
Statement of assets duly audited by a competent person
Audited revenue account for the financial year
A separate abstract of the valuation report of all business
transacted in India
A declaration regarding the revenue receipts from abroad
M t I f ti S t
7/29/2019 Insurance Policies Offered
27/40
27
Management Information System
The insurance companies are also required to
submit the following returns: Annual statement of investments and Income from
investments
Annual Statement of Prudential Investment Norm
Quarterly Statement of accounts
Quarterly Statement of Investment
A certified copy of every report on the affairs of the concern
which is submitted to the members or policy-holders of the
insurer A certified copy of the minutes of the proceedings of every
general meeting, as entered in the Minutes Book of the
insurer
Mi I
7/29/2019 Insurance Policies Offered
28/40
28
Micro Insurance
Micro insurance is the new initiative of the
Government of India for making available the
insurance products to rural sector through Self Help
Groups
Micro insurance policies are issued under life and
non-life categories
Life insurance policies are issued under various
categories
Mi Lif I S h
7/29/2019 Insurance Policies Offered
29/40
29
Micro Life Insurance Schemes
Type of Cover Minimum
Amount of
Cover
Maximum
Amount of
Cover
Minimum
Term of
Cover
Maximum
Term of
Cover
Minimum
age
at Entry
Maximum
age
at Entry
Term
Insurance
with or
without
Premium
Rs.5000 Rs.50000 5 years 15 years 18 years 60 years
Endowment
InsuranceRs.5000 Rs.30000 5 years 15 years 18 years 60 years
Health
insurance
(Individual)
Rs.5000 Rs.30000 1 year 7 years Insurers
discretion
Insurers
discretion
HealthInsurance
(Family)
Rs.10000 Rs.30000 1 year 7 years Insurersdiscretion
Insurersdiscretion
Accident
Benefit
as rider
Rs.10000 Rs.50000 5 years 15 years 18 years 60 years
Mi N lif I S h
7/29/2019 Insurance Policies Offered
30/40
30
Micro Non-life Insurance Scheme
Covers health insurance, insurance of hut,
livestock, tools and instruments, personal
accident etc.
The terms of insurance is as follows:
Mi N lif I S h T f i
7/29/2019 Insurance Policies Offered
31/40
31
Micro Non-life Insurance Scheme- Terms of insurance
Type of Cover Minimum
Amount of
Cover
Maximum
Amount of
Cover
Minimum
Term of
Cover
Maximum
Term of Cover
Minimum age
at Entry
Maximum age
at Entry
Dwelling&
contents or
livestock or tools
or implements or
other named
assets/ cropinsurance against
all perils
Rs.5000 Rs.50000 1 year 1 year NA NA
Endowment
Insurance
Rs.5000 Rs.30000 5 years 15 years 18 years 60 years
Health insurance
(Individual)
Rs.5000 Rs.30000 1 year 7 years Insurers
discretion
Insurers
discretion
Health Insurance(Family)
Rs.10000 Rs.30000 1 year 7 years Insurersdiscretion
Insurersdiscretion
Accident Benefit
as rider
Rs.10000 Rs.50000 5 years 15 years 18 years 60 years
Mi I A i
7/29/2019 Insurance Policies Offered
32/40
32
Micro Insurance Agencies
Self Help Groups (SHG)
informal groups consisting of ten to twenty or persons
working for at least three years with marginalized groups
proven track record, clearly stated aims and objectives
transparency and accountability as outlined in its memorandum,
rules, bye laws or regulations
demonstrate involvement of committed people
Non-Government Organizations (NGO)
non-profit organizations registered as a society under any law
Micro Finance Institutions (MFI)
institutions or entities or associations registered under any law for
the registration of societies or co-operative societies for
sanctioning of loans/finance to its members
Micro Insurance Agencies
7/29/2019 Insurance Policies Offered
33/40
33
Conditions for Appointment
Deed of agreement specifying the terms of agreement
MIA should confine to one life insurer and one general insurance
The deed of agreement should cover the following functions:
Collection of proposal forms
Collection of self declaration form from the proposer tha he/she is ingood health
Collection and remittance of premium
Distribution of policy documents
Maintenance of register of all those insured and their dependentscovered under the micro insurance scheme, together with details ofname, sex, age, address, nominees and thumb impression/signatureof the policyholder
Assistance in the settlement of claims
Ensuring nomination to be made by the insured Any policy administrative service
Termination clause with a notice period of 3 months
Appointment of persons with the approval of insurer
Termination if the code of conduct and/or advertisement ofdisclosure norms are violated
Micro Insurance Agencies
Code of Conduct for Insurers
7/29/2019 Insurance Policies Offered
34/40
34
Every micro insurer shall be subject to file and use procedure
Every micro insurance product shall carry the caption Micro InsuranceProduct.
Every micro insurer shall issue insurance contracts to the individual
micro insurance policyholders in the vernacular language
Every micro insurer shall issue insurance contracts to the micro
insurance policyholder in an unalterable form along with a schedule
showing the details of individuals covered under the group, and also
issue a separate certificate
No insurer shall authorize any MIA or any other outsider to underwrite
any insurance proposal
Every insurer shall impart at least twenty five hours of training at its
expense
A MIA may be paid remuneration for all functions rendered, including
commission, by the insurer, subject to the following limit
Code of Conduct for Insurers
Code of Conduct for Insurers
7/29/2019 Insurance Policies Offered
35/40
35
Life Insurance Business
Single premium policies: Ten per cent of the single premium
Non-single premium policies: Twenty per cent of the
premium for all the years of the premium paying term
For non-Life Insurance Business: Fifteen per cent of the
premium Where the agreement between the micro insurer and MIA
is terminated for any reason, whatsoever, no future
commission / remuneration shall be payable
For group insurance products the insurer shall decide thecommission subject to the overall limit specified above.
All insurers ensure that all transactions in connection
with the provisions of the Act, the IRDA Act 1999 and the
rules and regulations made thereunder
Code of Conduct for Insurers
Insurance Ombudsman Scheme
7/29/2019 Insurance Policies Offered
36/40
36
Insurance Ombudsman Scheme
A mechanism for redressal of grievances bypolicyholders
Was established in November 1998
Enables speedy disposal of complaints
Protects the interests of the policyholders
Builds confidence in the system among the
policyholders
Simple and costless process
Insurance Ombudsman Scheme
7/29/2019 Insurance Policies Offered
37/40
37
Insurance Ombudsman Scheme
Ombudsman is appointed by the governing body ofinsurance council
Ombudsman is drawn from insurance industry
Appointment is for 3 years
There are 12 Ombudsman across the country
The secretarial staff manages the office
Governing body has the power to remove the
Ombudsman if grave misconduct is observed
Insurance Ombudsman Scheme
7/29/2019 Insurance Policies Offered
38/40
38
Powers of Ombudsman
Conciliation,
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.
any partial or total repudiation of claims by the insurance companies,
dispute with regard to premium paid or payable in terms of the policy,
dispute on the legal construction of the policy wordings in case such
dispute relates to claims;
delay in settlement of claims and
non-issuance of any insurance document to customers after receipt of
premium
The value of the insurance contract is restricted to Rs.20 lakhs
Insurance companies have to honour the awards passed by the
Ombudsman within 3 months
Insurance Ombudsman Scheme
Insurance Ombudsman Scheme
7/29/2019 Insurance Policies Offered
39/40
39
Manner of Lodging Claims
Complaint should be by an aggrieved person and should be in
writing
Complaint should be submitted to the Ombudsman under whose
jurisdiction the insurer falls
Legal heirs of a deceased can also file complaint
The complaint should be either rejection of claims or not
responding to the complaint by the insurer with in one month
The complaint should be made within one year after the insurer
replied
The same complaint should not be pending with any court of law.
Insurance Ombudsman Scheme
Insurance Ombudsman Scheme
7/29/2019 Insurance Policies Offered
40/40
Settlement
When a complaint is settled through mediation by the Ombudsman, hemakes recommendations to the complainant as well as to the insurer
with in one month
If the complainant accept the recommendations, he has to
communicate the same to the Ombudsman with in 15 days
On receipt of the complainants response, the Ombudsman will pass
an award which will be binding on the insurance company
If the complainant is not satisfied with the award, he can approach
other avenues like Consumer Forums or Court of Law
The policies issued should carry the name of the Ombudsman underwhose jurisdiction the insurer falls
The statistics relating to receipt and disposal of complaints at the
Ombudsmans office shows that the policyholders are utilizing the
services of Ombudsman for redressal of their grievances extensively.
Insurance Ombudsman Scheme