LIBA 2.Insurance History
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Transcript of LIBA 2.Insurance History
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Liba-IM2-SD 1
INSURANCE HISTORY
HISTORICAL BACKGROUND,
LEGAL ANDREGULATORY FRAMEWORK
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ORIGINS OF INSURANCE
Bottomry bonds-advance of money on a
ship during voyage;if ship completed
journey, loan repaid,if not,no obligation torepay loan
Maritime perils, especially piracy
Burial societies
Great Fire of London
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INSURANCE IN INDIA
British brought both life and general
insurance to India in the 19th century
By 1956, there were 170 companies & 70
provident fund societies transacting life
insurance business in India
107 general insurance companies wereoperating till 1972
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INSURANCE IN INDIA
In 1956, the life insurance business wasnationalized and Life Insurance Corporation ofIndia(LIC) was formed by an Act of Parliamentcalled the LIC Act
The General Insurance Business (Nationalization)Act(GIBNA) of 1972 resulted in all the playersbeing grouped into 4 public sector generalinsurance companies under the holding company,General Insurance Corporation of India (GIC)
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INSURANCE IN INDIA
The 4 general insurance Public Sector
Undertakings (PSUs):
National Insurance Company Ltd.,Kolkata
The New India Assurance Company
Ltd.,Mumbai
Oriental Insurance Company Ltd.,DelhiUnited India Insurance Company
Ltd.,Chennai
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INSURANCE IN INDIA
In 1993, as part of financial sector reforms, a
committee was formed, headed by
Mr.R.N.Malhotra, to evaluate the insurancesector and recommend its future direction
The Malhotra Committee Report was
submitted to the Govt. in 1994
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RECOMMENDATIONS OF
REPORT Reduce Govt. stake in insurance companies
Open up the insurance sector to private
players Invite foreign companies as collaborators
with a FDI cap of 26%
Set up a regulatory body for insurance
Prescribe norms for investment,solvency etc
Improve customer service
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INSURANCE REGULATORY
& DEVELOPMENT
AUTHORITY(IRDA)
IRDA constituted by the IRDA Act of 1999
Act-To provide for the establishment of anauthority to protect the interests of
policyholders,to regulate,promote and
ensure orderly growth of the insuranceindustry and for matters connected
therewith or incidental thereto
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IRDA
Amendments in the Insurance Act,1938,the Life
Insurance Corporation Act,1956 and the General
Insurance Business (Nationalisation) Act,1972 To devise norms for new insurance companies and
issue licences
To regulate all intermediaries like
agents,brokers,surveyors and loss assessors,third
party administrators
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IRDA
Replace Controller of insurance
Control the Tariff Advisory Committee
Check books of accounts
Regulate investment of funds
Regulate solvency margins Adjudicate disputes between insurers and
intermediaries
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CURRENT INDUSTRY
SCENARIO
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NEW LIFE INSURANCE COS.
1. Bajaj Allianz Life Insurance Co. Ltd., Pune
2. Birla Sun Life Insurance Co. Ltd., Mumbai
3. HDFC Life Insurance Co. Ltd., Mumbai4. ICICI Prudential Life Insurance Co.Ltd.,
Mumbai
5. ING Life Insurance Co. Ltd., Bangalore
6. Max Life Insurance Co.Ltd., Gurgaon
7. Metlife India Insurance Co. Pvt. Ltd., Bangalore
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NEW LIFE INSURANCE COS...
8.Kotak Mahindra Old Mutual Life Insurance Co.
Ltd., Mumbai
9.SBI Life Insurance Co. Ltd.,Mumbai10.Tata AIA Life Insurance Co. Ltd., Mumbai
11.Reliance Life Insurance Co.Ltd., Mumbai
12. Aviva Life Insurance Co.Pvt.Ltd.,Gurgaon13.Sahara India Life Insurance Co. Ltd., Lucknow
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NEW LIFE INSURANCE COS...
14.Shriram Life Insurance Co. Ltd.,Hyderabad
15.Bharti Axa Life Insurance Co. Ltd., Mumbai
16.Future Generali India Life Insurance Co.Ltd.,Mumbai
17. IDBI Federal Life Insurance Co.Ltd.,Mumbai
18.Canara HSBC OBC Life Insurance Co.Ltd.19.Aegon Religare Life Insurance Co.Ltd., Delhi
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NEW LIFE INSURANCE COS...
20.DLF Pramerica Life Insurance Co.Ltd., Gurgaon
21.Star Union Dai-ichi Life Insurance Co.Ltd.,
Mumbai22.India First Life Insurance Co.Ltd., Mumbai
23.Edelweiss Tokio Life Insurance Co. Ltd.,Mumbai
23 new + LIC=24 Life insurance companies
currently
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On the General insurance side:1.General Insurance Corporation
(GIC) was de-linked from its
subsidiaries, National, New India,Oriental & United
2.GIC became Indias national re-
insurer3.The 4 PSUs became independent
companies
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NEW GENERAL INS.COS.
1. Bajaj Allianz General Insurance Co. Ltd., Pune
2. ICICI Lombard General Ins. Co.Ltd.,Mumbai
3. IFFCO Tokio General Ins. Co. Ltd., Gurgaon4. Reliance General Insurance Co. Ltd., Mumbai
5. Royal Sundaram Alliance Insurance Co.Ltd.,Chennai
6. Tata AIG General Insurance Co. Ltd.,Mumbai
7. Chola M S General Ins. Co. Ltd., Chennai
8. HDFC Ergo General Ins. Co. Ltd., Mumbai
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NEW GENERAL INS.COS
9. Future Generali India Ins. Co.Ltd., Mumbai
10. Universal Sompo General Ins. Co.Ltd., Mumbai
11. Shriram General Insurance Co.Ltd.,Jaipur
12.Bharti Axa General Insurance Co. Ltd., Gurgaon
13.Raheja QBE General Insurance Co.Ltd., Mumbai
14.SBI General Insurance Co.Ltd., Mumbai
15. L&T General Insurance Co. Ltd., Mumbai16.Magma HDI Gen.Ins.Co.Ltd., Kolkata
17.Liberty Videocon Gen.Ins.Co.Ltd., Mumbai
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NEW SPECIALIZED
GENERAL INS.COS18. Export Credit Guarantee Corporation Ltd.,
(ECGC)Mumbai-credit insurance only
19. Agriculture Insurance Co. of India Ltd.,
New Delhi-crop insurance only20. Star Health & Allied Ins Co. Ltd., Chennai
21.Apollo Munich Health Ins.Co, Gurgaon
22.Max Bupa Health Ins. Co. Ltd., New Delhi23.Religare Health Ins.Co.Ltd., New Delhi
(20 to 23 - Personal & health insurance only)
17 new+4 PSUs+6 special=27 Gen. Ins. Cos.
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IRDA REGULATIONS
Registration of Indian insurance companies
Assets,liabilities and solvency margins of
insurers Investments(life and general)
Statements of accounts, preparation of
financial statements and auditors report ofinsurance companies
Distribution of surplus
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IRDA REGULATIONS
Actuaries-appointment and actuarial report
Reinsurance-life and general
Obligations of insurers to rural and social
sectors
Manner of receipt of premium
Insurance advertisements and disclosures
Protection of policyholders interests
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IRDA REGULATIONS
For intermediaries for sales & distribution,
licencing of:
Insurance agents including corporate agents
Insurance broker
For intermediaries for claims, licencing of:
Third party administrators
Surveyors and loss assessors
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SALES INTERMEDIARIES
Types of agents:
Direct-An individual who is licenced by
IRDA to sell insurance policies of oneinsurer only, either life or general
Composite-An individual who is licenced
by IRDA to sell insurance policies of twoinsurers only, one life insurer & one general
insurer
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SALES INTERMEDIARIES
Types of agents:
Corporate-A firm or a corporate who is
licenced to sell insurance policies; could becorporate direct or corporate composite
Bancassurance-A corporate agency issued
to a bank. For eg. Citibank being acorporate agent of Royal Sundaram
All types of agents earn commissionLiba-IM2-SD 24
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SALES INTERMEDIARIES A broker is an intermediary licenced by
IRDA to sell insurance policies of all
insurance companies in India, both life &
general, & who earns brokerage
Types of brokers:
Direct-arranges insurance
Reinsurance-arranges reinsurance
Composite-arranges both insurance &
reinsuranceLiba-IM2-SD 25
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CLAIMS INTERMEDIARIES
Surveyor:
Could be an individual or a firm
Job is to visit site of loss & assess losses
Is used only in property claims of general
insurers
Prepares a survey report for insurers
Gets paid survey fees
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CLAIMS INTERMEDIARIES
Third Party Administrators (TPAs):
Used in health insurance only
Is a firm or a corporate
Settle claims on behalf of insurer with
insured/hospital
Arrange cashless hospitalization
Gets paid TPA Fee
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THE LEGAL ENVIRONMENT
There are several other Acts that have
a bearing on both life and generalinsurance in India
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INSURANCE ACT,1938-
IMPORTANT PROVISIONS Formed to consolidate laws relating to
business of insurance
Registration norms
Accounts,returns,investments,limitations on
management expenses
Licensing of agents and surveyors
Tariff Advisory Committee
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OTHER IMPORTANT ACTS
Indian Contracts Act,1872
Motor Vehicles (MV) Act
Marine Insurance Act,1963
Workmens Compensation(WC) Act,1923
Indian Stamp Act,1899
Consumer Protection (COPRA)Act,1986
Income Tax (IT) Act
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OTHER IMPORTANT ACTS..
Employees State Insurance(ESI) Act,1948
Public Liability Insurance(PLI) Act,1991
Foreign Exchange MaintenanceAct(FEMA)
Arbitration and Conciliation Act,1996
M V Act-Lok Adalats Public Grievances Rule of Insurance Act-
Insurance Ombudsman