Types

of insurance

Life Insurance
* Life insurance is a contract between an insurer and
policyholder specifying a sum to be paid to a beneciary
upon the insureds death

* The contract is a policy which states the amount to be paid
to the beneciary upon the insured persons death

Life Insurance

* A beneciary is the recipient of any policy proceeds if

the insured person dies
* A dependent is a person who relies on someone else
nancially

Life Insurance

* Whole life policy

* Endowment policy
* Money back policy
* Annuity/pension policy
* Unit linked policies
* Jeevan saathi policy/joint life policy

General insurance
Marine (perils of sea, damages to ship, cargo & passengers)
Fire
Automobile
Personal accident (Risk to life or disability due to accident)
Medical/Health (sickness & hospitalisation, yearly policy)
Crop/Cattle (loss due to natural calamities, pests, death of
cattle)
* Fidelity guarantee (loss due to employees dishonesty)
* Burglary
*
*
*
*
*
*

Types of marine insurance

* Voyage policy: For an entire voyage irrespective of time
taken
* Time policy: Compensation only if loss occurs during said
time frame
* Mixed policy: Voyage cum time policy
* Valued policy: : Amount payable is xed while taking policy.
Irrespective of actual amount of loss, the value will be paid

* Unvalued/open policy: Loss examined and

compensation paid accordingly
* Blanket policy: Amount is xed while taking policy
and entire premium is paid at the start
* Floating policy/Open cover policy: For all ships on all
journeys

Types of re insurance
* Specic policy: Insurance of a specic amount which is less
than the value of property; under-insurance
* Comprehensive policy: Also covers risks like theft, third
party risk and loss while business is closed down due to re
* Valued policy: Amount payable is xed while taking policy.
Irrespective of actual amount of loss, the value will be paid
* Floating policy: Property at dierent places; eg. Goods in
dierent warehouses

LIC - Objectives

* Provide life insurance at reasonable cost

* Invest appropriately to distribute high returns to
policy holders
* Make changes in social and economic environment of
the country

Services by LIC

* Long term investments of premiums collected

* Underwriting of securities
* Giving loans industrial, agricultural, housing and to
government
* Purchase of debentures and bonds to nance banks
like IDBI and ICICI
* Social orientation

LIC invested more than 11,630 crores, in infrastructure

sector is Rs.56,691 crores

In socially oriented sector like water, drainage & housing
etc, LIC has invested Rs.5,635 crores during 2007-08
Total investment in this sector is Rs.32,321 crores


Total investment in Nation Building Activities is 5,76,000
Crs.

Private players
*
*
*
*
*
*
*
*
*
*
*

Birla Sun life Insurance Company Limited

Bajaj Allianz General Insurance
Bharti AXA General Insurance
Future Generali India Insurance
ICICI Lombard
Royal Sundaram
Aegon Religare
Tata AIG General Insurance
Apollo Munich Health Insurance
Max Bupa Health Insurance
Religare Health Insurance Company Ltd

Dierence between life insurance

and general insurance

Reasons for slow growth of

insurance in India
* Pre independence, local residents were charged a
dierential premium
* In 1956, life insurance companies were nationalised
and consolidated into LIC
* The SLR was high at 56% at that time
* LIC was unable to reduce the premiums and hence
increase participation
* Laid back attitude of LIC during monopoly upto 1999

* During monopoly, LIC did not develop adequate products

for changing needs
* Till 1980, large population lived below poverty line and did
not nd investment in insurance attractive
* Due to high ination, targeted sum assured lost its
purchasing power
* Post privatisation, the sector is growing slowly but surely
* FDI permit in insurance sector increased from 26% to 49% in
July 2014, is an encouraging step

Bancassurance

The concept

* Bancassurance, i.e., banc + assurance, refers to banks

selling insurance products
* Bancassurance term rst appeared in France in 1980
* Banks are being used as an eective alternate channel
to distribute insurance products either as stand-alone
insurance products or add-ons to the bank products

* The strategy of bancassurance has been highly

successful in Europe
* France and Portugal are most successful in
bancassurance wherein as much as 70 % of the
insurance products are sold through the banking
channel alone
* In Spain, about 59 % of the insurance products are
sold through the banks

Pros
* Banking services have saturated
* Bancassurance helps diversify the banks activity
* Helps to retain customer loyalty
* Increased revenue, but no issue of increase NPAs
* Helps insurance rms with additional distribution channel
at lower cost

Initial slow growth

* Some insurance products resembled term deposit

oerings of bank perceived as a threat by banking
sector (competition)
* Resistance from insurance agents/brokers due to
apprehension of loss of business

Scope in India?
* 284 scheduled banks, of which 88 were commercial banks and
196 were Regional Rural Banks (RRBs)
* T70,324 bank oces
* 70% of the branches in rural and semi urban areas
* 30% are in urban and metropolitan areas.
* The population served by a bank branch = 16000
* A survey conducted by FICCI revealed that 93 per cent of the
respondents have preferred banks selling insurance products

Types
* Referral model Only references shared, lesser
commission
* Corporate agency bank sta trained to sell
insurance, higher commissions, bank goodwill at
stake
* Joint ventures counters selling insurance within the
bank, bank has stakes in insurance business E.g. ICICI