WHAT IS GENERAL INSURANCE?

INSURANCE OTHER THAN LIFE INSURANCE FALLS UNDER THE CATEGORY OF GENERAL INSURANCE. GENERAL INSURANCE COMPRISES OF INSURANCE OF PROPERTY AGAINST FIRE, BURGLARY ETC, PERSONAL INSURANCE SUCH AS ACCIDENT AND HEALTH INSURANCE, AND LIABILITY INSURANCE WHICH COVERS LEGAL LIABILITIES. THERE ARE ALSO OTHER COVERS SUCH AS ERRORS AND OMISSIONS INSURANCE FOR PROFESSIONALS, CREDIT INSURANCE ETC.

HISTORY
THE INDIAN LIFE ASSURANCE COS ACT,1912 WAS THE FIRST STATUTORY MEASURE TO REGULATE LIFE BUSINESS. IN 1928 INDIAN INSURANCE CO ACT WAS ENACTED. IN 1938, THE EARLIER LEGISLATION WAS CONSOLIDATED AND AMENDED.

HISTORY CONT`D
THE HISTORY OF GENERAL INSURANCE DATES BACK TO THE INDUSTRIAL REVOLUTION IN THE WEST. GENERAL INSURANCE IN INDIA HAS ITS ROOTS IN THE ESTABLISHMENT OF TRITON INSURANCE CO. LTD, IN THE YEAR 1850 IN CALCUTTA BY THE BRITISH. IN 1907, THE INDIAN MERCANTILE INSURANCE LTD WAS SET UP. IN 1957 GENERAL INSURANCE COUNCIL WAS FORMED.

HISTORY CONT`D
IN 1972 GENERAL INSURANCE BUSINESS WAS NATIONALIZED WEF 1ST JAN 1973. 107 INSURERS WERE AMALGAMATED AND GROUPED INTO 4 COMPANIES VIZ: 1. NATIONAL INSURANCE CO LTD 2. THE NEW INDIA ASSURANCE CO LTD 3. THE ORIENTAL INSURANCE CO LTD 4. THE UNITED INDIA INSURANCE CO LTD

REFORMATION
IN 1993 GOVT SET UP A COMMITTEE UNDER THE CHAIRMANSHIP OF R N MALHOTRA TO PROPOSE RECOMMENDATIONS FOR REFORMS IN THE INSURANCE SECTOR. IN 1999 FOLLOWING THE RECOMMENDATION OF THE MALHOTRA COMMITTEE THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (IRDA) WAS CONSTITUTED. IRDA WAS INCORPORATED IN APRIL 2000.

REFORMATION
IN AUG 2000 IRDA OPENED THE MARKET WITH THE INVITATION FOR APPLICATION FOR REGISTRATIONS. FOREIGN COS WERE ALLOWED OWNERSHIP OF UPTO 26%. IN DEC 2000 THE SUBSIDIARIES OF THE GENERAL INSURANCE CORPORATION OF INDIA WERE RESTURCTURED AS INDEPENDENT CO.

LIST OF INSURERS
1. 2. 3. 4. 5. 6. 7. 8. BAJAJ ALLIANZ GENERAL INSURANCE CO LTD ICICI LOMBARD GENERAL INSURANCE CO LTD IFFCO TOKIO GENERAL INSURANCE CO LTD NATIONAL INSURANCE CO LTD THE NEW INDIA ASSURANCE CO LTD THE ORIENTAL INSURANCE CO LTD RELIANCE GENERAL INSURANCE CO LTD ROYAL SUNDARAM ALLIANCE GENERAL INSURANCE CO LTD 9. TATA AIG GENERAL INSURANCE CO LTD

LIST OF INSURERS
10. UNITED INDIA INSURANCE CO LTD 11. CHOLAMANDALAM MS GENERAL INSURANCE CO LTD 12. HDFC ERGO GENERAL INSURANCE CO LTD 13. EXPORT CREDIT GURANTEE CORPORATION OF INDIA LTD 14. AGRICULTURE INSURANCE CO OF INDIA LTD 15. STAR HEALTH AND ALLIED INSURANCE CO LTD 16. APOLLO MUNICH HEALTH INSURNACE CO LTD 17. FUTURE GENERALI INDIA INSURANCE CO LTD 18. UNIVERSAL SOMPO GENERAL INSURANCE CO LTD

LIST OF INSURERS
19.SHRIRAM GENERAL INSURANCE CO LTD 20.BHARTI AXA GENERAL INSURANCE CO LTD 21.RAHEJA QBE GENERAL INSURANCE CO LTD 22.SBI GENERAL INSURANCE CO LTD 23.MAX BUPA HEALTH INSURANCE CO LTD 24.L & T GENERAL INSURANCE CO LTD

LIST OF INSURERS

INSURANCE DENSITY IN SELECT COUNTRIES

INSURANCE PENETRATION IN SELECT COUNTRIES

INURANCE PENETRATION AND DENSITY IN INDIA

PRODUCTS
FIRE STANDARD FIRE & SPECIAL PERIL POLICY FIRE LOSS OF PROFIT POLICY HEALTH MOTOR MARINE MARINE CARGO MARINE HULL

PRODUCTS
INDUSTRIAL BOILER AND PRESSURE PLANT POLICY CONTRACTORS PLANT & MACHINERY POLICY DETERIORATION OF STOCKS ELECTRONIC EQUIPMENT POLICY MACHINERY BREAKDOWN POLICY INDUSTRIAL ALL RISK POLICY

PRODUCTS
LIABILITY POLICIES WORKMEN COMPENSATION INSURANCE PUBLIC LIABILTY POLICY PROFESSIONAL INDEMNITY POLICY MOTOR LIABILITY POLICY

PRODUCTS
ACCIDENT & HOSPITALIZATION POLICES PRESONAL ACCIDENT POLICY MEDICLAIM POLICY RURAL POLICIES CATTLE & LIVESTOCK POLICY AGRICULTURAL PUMPSET POLICY POULTRY INSURANCE POLICY GRAMIN ACCIDENT POLICY PLANTATION INSURANCE

PRODUCTS
TRAVEL POLICY BUSINESS POLICY SHOP KEEPERS POLICY BURGLARY POLICY JEWELLERS BLOCK POLICY MONEY IN TRANSIT POLICY MICRO INSURANCE

CURRENT SCENARIO

PREMIUM

MARKET SHARE

SEGMENTWISE PREMIUM

SEGMENTWISE PREMIUM

SEGMENTWISE PREMIUM OVERSEAS

PREMIUM FROM OUTSIDE INDIA

CURRENT BUSINESS

NET INCURRED CLAIM

INCURRED CLAIM RATIO

UNDERWRITING

THE IRDA (THIRD PARTY ADMINISTRATIONS-HEALTH SERVICES) REGULATIONS,2001

"TPA" means a Third Party Administrator who, for the time being, is licensed by the Authority, and is engaged, for a fee or remuneration, by whatever name called as may be specified in the agreement with an insurance company, for the provision of health services;

TPA
CONDITIONS OF AND PROCEDURE FOR LICENSING OF TPA. CODE OF CONDUCT FOR TPA MAINTAINANCE AND CONFIDENTIALITY OF INFORMATION

TPA

TPA

CLAIMS SETTLEMENT IN NON-LIFE INSURANCE SECTOR

THE BUSINESS OF INSURANCE IS ALL ABOUT SETTLING CLAIMS. UNDERWRITING AND CLAIMS SETTLEMENT ARE THE TWO MOST IMPORTANT ASPECT OF THE FUNCTIONING OF AN INSURANCE COMPANY. AROUND 15% OF POLICIES IN NON-LIFE INSURANCE SEGMENT RESULT IN CLAIM.

CLAIMS SETTLEMENT IN NON-LIFE INSURANCE SECTOR

THE CLAIM SETTLEMENT IN NON LIFE INSURANCE, THUS HAS ITS OWN PECULIARITIES AND THEREFORE NEED PROPER HANDLING. THE CLAIMS SETTLEMENT RECORD OF AN INSURER IS THEREFORE THE TOUCHSTONE OF ITS PERFORMANCE.

STATUTORY & REGULATORY PROVISIONS DEALING WITH CLAIMS SETTLEMENT

SECTION 14 OF INSURANCE ACT,1938 STIPULATES THAT EVERY INSURER SHALL MAINTAIN A REGISTER OR RECORD OF CLAIMS. SECTION 64UM OF THE INSURANCE ACT, 1938 STIPULATES THAT NO CLAIM IN RESPECT OF A LOSS EQUAL TO OR EXCEEDING TWENTY THOUSAND RUPEES ON ANY INSURANCE POLICY CAN BE SETTLED BY THE INSURER UNLESS HE HAS OBTAINED A REPORT, ON THE LOSS THAT HAS OCCURRED, FROM A PERSON WHO HOLDS A SURVEYOR OR LOSS ASSESSOR LICENSE.

STATUTORY & REGULATORY PROVISIONS DEALING WITH CLAIMS SETTLEMENT

REGULATION 8 OF THE IRDA (PROTECTION OF POLICY HOLDERS INTEREST) REGULATIONS, 2002 LAYS DOWN THE GUIDELINES ON CLAIM PROCEDURE

INVESTMENT INCOME

PROFITS

NUMBER OF OFFICES

NUMBER OF OFFICES

SPECIALISED INSTITUTIONS
EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LTD. (ECGC) AGRICULTURAL INSURANCE CO OF INDIA LTD (AICL)

REGULATORY BODY IRDA

MISSION STATEMENT OF THE AUTHORITY TO PROTECT THE INTEREST OF AND SECURE FAIR TREATMENT TO POLICYHOLDERS; TO BRING ABOUT SPEEDY AND ORDERLY GROWTH OF THE INSURANCE INDUSTRY (INCLUDING ANNUITY AND SUPERANNUATION PAYMENTS), FOR THE BENEFIT OF THE COMMON MAN, AND TO PROVIDE LONG TERM FUNDS FOR ACCELERATING GROWTH OF THE ECONOMY;

IRDA
TO SET, PROMOTE, MONITOR AND ENFORCE HIGH STANDARDS OF INTEGRITY, FINANCIAL SOUNDNESS, FAIR DEALING AND COMPETENCE OF THOSE IT REGULATES; TO ENSURE SPEEDY SETTLEMENT OF GENUINE CLAIMS, TO PREVENT INSURANCE FRAUDS AND OTHER MALPRACTICES AND PUT IN PLACE EFFECTIVE GRIEVANCE REDRESSAL MACHINERY; TO TAKE ACTION WHERE SUCH STANDARDS ARE INADEQUATE OR INEFFECTIVELY ENFORCED;

IRDA
TO PROMOTE FAIRNESS, TRANSPARENCY AND ORDERLY CONDUCT IN FINANCIAL MARKETS DEALING WITH INSURANCE AND BUILD A RELIABLE MANAGEMENT INFORMATION SYSTEM TO ENFORCE HIGH STANDARDS OF FINANCIAL SOUNDNESS AMONGST MARKET PLAYERS; TO BRING ABOUT OPTIMUM AMOUNT OF SELFREGULATION IN DAY-TO-DAY WORKING OF THE INDUSTRY CONSISTENT WITH THE REQUIREMENTS OF PRUDENTIAL REGULATION.

IRDA
ONE OF THE RECENT INITIATIVES OF IRDA, TO ENSURE THAT CLEAR INFORMATION REGARDING PRODUCTS IS GIVEN TO THE PROSPECT/ POLICYHOLDER IN A WAY HE/SHE CAN UNDERSTAND IS THE PROPOSAL FOR INTRODUCTION OF KEY FEATURES DOCUMENT IN A SIMPLE LANGUAGE. NEEDS ANALYSIS IS ANOTHER INITIATIVE IDENTIFIED BY IRDA AS A STEP IN CURBING WRONG ADVICE AND MIS-SELLING.

MICRO INSURANCE
AS A FIRST STEP IN THIS DIRECTION, THE AUTHORITY HAD COME OUT WITH IRDA (OBLIGATIONS OF INSURERS TO RURAL OR SOCIAL SECTORS) REGULATIONS, 2002. THESE REGULATIONS REQUIRE INSURERS TO SELL A SPECIFIED PERCENTAGE OF POLICIES TO RURAL PUBLIC AND TO COVER A SPECIFIED NUMBER OF LIVES/ASSETS BELONGING TO PEOPLE BELOW POVERTY LINE OR THOSE PURSUING CERTAIN TRADITIONAL OCCUPATIONS.

COMPOSITION OF AUTHORITY
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. THE AUTHORITY IS A TEN MEMBER TEAM CONSISTING OF: 1. A CHAIRMAN 2. FIVE WHOLE-TIME MEMBERS 3. FOUR PART-TIME MEMBERS (ALL APPOINTED BY GOVT OF INDIA)

DUTIES, POWERS & FUNCTIONS

SECTION 14 OF IRDA ACT, 1999 LAYS DOWN THE DUTIES, POWERS AND FUNCTIONS OF IRDA. SUBJECT TO THE PROVISIONS OF THIS ACT AND ANY OTHER LAW FOR THE TIME BEING IN FORCE, THE AUTHORITY SHALL HAVE THE DUTY TO REGULATE, PROMOTE AND ENSURE ORDERLY GROWTH OF THE INSURANCE BUSINESS AND RE-INSURANCE BUSINESS.

OMBUDSMAN
THE INSTITUTION OF INSURANCE OMBUDSMAN WAS CREATED BY A GOVERNMENT OF INDIA NOTIFICATION DATED 11TH NOVEMBER, 1998 WITH THE PURPOSE OF QUICK DISPOSAL OF THE GRIEVANCES OF THE INSURED CUSTOMERS AND TO MITIGATE THEIR PROBLEMS INVOLVED IN REDRESSAL OF THOSE GRIEVANCES. THIS INSTITUTION IS OF GREAT IMPORTANCE AND RELEVANCE FOR THE PROTECTION OF INTERESTS OF POLICY HOLDERS AND ALSO IN BUILDING THEIR CONFIDENCE IN THE SYSTEM. THE INSTITUTION HAS HELPED TO GENERATE AND SUSTAIN THE FAITH AND CONFIDENCE AMONGST THE CONSUMERS AND INSURERS.

OMBUDSMAN
APPOINTMENT OF INSURANCE OMBUDSMAN ELIGIBILITY TERMS OF OFFICE TERRITORIAL JURISDICTION OF OMBUDSMAN OFFICE MANAGEMENT POWER OF OMBUDSMAN

PORTABILITY OF HEALTH INSURANCE PRODUCT

DURING 2008-09, THE AUTHORITY ESTABLISHED A DATA REPOSITORY SO THAT INSURERS COULD BE EQUIPPED WITH AUTHENTIC, ROBUST GRANULAR DATA ON HEALTH INSURANCE. AS AN OBVIOUS STEP FORWARD, IRDA AND THE INDUSTRY DELIBERATED ON THE ISSUE OF HEALTH INSURANCE PORTABILITY. SUBSEQUENTLY, GENERAL INSURANCE COUNCIL (GI) DEVELOPED A HEALTH INSURANCE POLICY THAT COULD BE A STANDARD ACROSS ALL INSURERS AND TO SOME EXTENT WOULD GIVE POLICYHOLDERS THE FREEDOM TO CHANGE INSURANCE PROVIDERS WHILE RETAINING THE BONUSES GAINED.

INSURANCE POOLS
TERRORISM POOL During 2010-11, the total premium ceded to the pool was `389 crore and claims paid were `76.18 crore.In the previous year 2009-10, the Pools premium was `306 crore with claims paid being `214 crore.

INDIAN TERRORISM POOL

INDIAN MOTOR THIRD PARTY INSURANCE POOL

THE POOL CAME INTO OPERATION FROM 1ST APRIL, 2007 EXCLUSIVELY FOR COMMERCIAL VEHICLES. ALL INSURERS REGISTERED TO CARRY ON NON-LIFE INSURANCE BUSINESS INCLUDING MOTOR BUSINESS ARE AUTOMATICALLY REQUIRED TO PARTICIPATE IN THE POOLING ARRANGEMENT TO PROVIDE COVER AT THE RATES NOTIFIED BY THE AUTHORITY.

INVESTMENT BY NON LIFE INSURER

INTERNATIONAL ASSOCIATION OF INSURANCE SEPERVISORS (IAIS)

THE INTERNATIONAL ASSOCIATION OF INSURANCE SUPERVISORS (IAIS) ESTABLISHED IN 1994 IS A GLOBAL STANDARD SETTING BODY WHOSE OBJECTIVES ARE TO PROMOTE EFFECTIVE AND GLOBALLY CONSISTENT REGULATION AND SUPERVISION OF THE INSURANCE INDUSTRY IN ORDER TO DEVELOP AND MAINTAIN FAIR, SAFE AND STABLE INSURANCE MARKETS FOR THE BENEFIT AND PROTECTION OF POLICYHOLDERS; AND TO CONTRIBUTE TO GLOBAL FINANCIAL STABILITY.

EQUITY SHARE CAPITAL

P&L OF GIC

B/S OF GIC

P&L OF PUBLIC INSURER

B/S OF PUBLIC INSURER

P&L IN PRIVATE INSURER

B/S OF PVT INSURER

PRICING
THE MOST IMPORTANT FACTOR FOR THE SUCCESS OF A PRODUCT IN THE LONG RUN IS THE PRICE AT WHICH IT CAN BE OBTAINED. WHILE THIS IS A UNIVERSAL TRUTH, IT APPLIES IN PARTICULAR TO DEVELOPING ECONOMIES. THE LOW PENETRATION LEVELS OF INSURANCE; AND THE SENSE OF COMPULSION THAT IS ATTACHED TO PURCHASE OF INSURANCE MAKES THE PROBLEM ALL THE MORE INTRIGUING IN ARRIVING AT THE RIGHT PRICE. IN ANY CASE, INSURERS SHOULD BE GUIDED BY THE BASIC INPUTS IN PRICING THE PRODUCT.

PRE-REQUISITE OF PRICING
DATA IT SYSTEMS, DATA WAREHOUSING & DATA MINING.

PRICING
ANY INSURANCE PRICING EXERCISE IS EXPECTED TO GIVE A PRICE THAT WILL BE ABLE TO COVER THE COST OF ALL LIKELY CLAIMS, MORE POPULARLY KNOWN AS "PURE PREMIUM".

PRICING
OFFICE PREMIUM FORMULA FOR CALCULATING OFFICE PREMIUM
WHERE GP=Gross Premium

CF =Expected Claims Frequency CA =Expected average claim cost c =Commission % f =Fixed expenses, % of GP v =Other variable expenses, % of GP VE =Other policy variable expenses h =Claims handling expenses p =Profit & contingencies, % of GP r =Reinsurance premium i =Monthly Investment income rate

HEALTH INSURANCE PREMIUM

7 Principles of General Insurance

Objective - The main objective of every insurance contract is to give financial security and protection to the insured from any future uncertainties. Insured must never ever try to misuse this safe financial cover. The Underlying Principles of General Insurance :

1) Principle of Uberrimae fidei (Utmost Good Faith) 2) Principle of Insurable Interest 3) Principle of Indemnity

7 Principles of General Insurance

4) Principle of Contribution 5) Principle of Subrogation

6) Principle of Loss Minimization

7) Principle of Causa Proxima (Nearest Cause).

The Reinsurance Concept

Reinsurance is an insurance coverage that is purchased by an insurance company (Cedent) from another insurance company (reinsurer) as a means of risk management.
The reinsurer is paid a reinsurance premium by the insurer, and the insurer issues insurance policies to its own policyholders. This Helps to limit the total loss to the original insurer in case of a disaster. Insurers buy reinsurance is to transfer risk from the insurer to the reinsurer Clients whose coverage would be too great of a burden for the single insurance company to handle alone go in for this option, where the premium paid by the insured is typically shared by all of the insurance companies involved.

Reinsurance Objectives
Risk Transfer Arbitrage

Capital Management
Solvency Margins Expertise

Worlds Top Reinsurance companies

Net premiums written

1) Munich Re Group $24,218,951,4001 2) Swiss Re Group $23,202,134,1002 3) Berkshire Hathaway $11,577,000,000 4) Hannover Re Group $8,907,121,7731 5) Lloyd's of London $7,950,584,2004 6) SCOR5 $6,948,811,1061 7) Everest Re Group Ltd. $3,875,714,000 8) Partner Re Ltd. $3,689,548,000 9) Transatlantic Holdings Inc. $3,633,440,000 10) ACE Tempest Reinsurance Ltd.7 $3,405,006,000 . . 25) General Insurance Corporation ( India) $ 1,480,400,000

General Insurance Corporation - Reinsurer

State-owned GIC is a reinsurance company which has been designated national reinsurer by the government. Reinsurance companies provide wholesale cover to insurance companies. By virtue of this cover, insurers are able to protect their balance sheet if claims in any portfolio exceed a certain level. Regulations require that all general insurance companies compulsorily reinsure a portion of their risks with GIC. Insurance companies have a choice in accepting or rejecting insurance proposals However GIC has no choice and has to accept the risks that are passed on.

Case Study - WTC

The terrorist attack on WTC has thrown the insurance industry worldwide out of gear. As a majority of the reinsurers refused to cover risks associated with terrorist attacks Straight away the reinsurers refused to provide cover for terrorist attacks. Insurance players were clueless as to how to react to this situation.

The All India Insurance Council stepped in and held a conference inviting all the players in the insurance industry to come together to find a solution to this problem They Had several meetings to discuss the impact of the WTC attack and the refusal of reinsurers to reinsure certain Risks.

Case Study - WTC

Here is where the Idea of Terrorism Pool was generated and got maximum consent. All players in the industry will contribute a certain amount as reserve based on Total business, book Size, Net Worth of the Insurer. The Initial amt to be pooled up was Rs 200 crore with the Public sector co's contributing the bulk including General Insurance Corporation. Hence the following contributions were received
GIC - 40 cr New India Assurance - 40 cr United India -30 cr Oriental -30 cr National Insurance -30 cr Other 6 private players - 5 Cr each

Case Study - WTC

GIC was made to manage this pool.

Independent Insurers do not feel the pressure carrying

terrorism cover. The RISK got divided The Pool would not Cede any reinsurance commission to the direct insurer. The concept of compulsory cession came in.

Thank You