Rashmi Solanki
New member
INTRODUCTION:-
Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual. The risk, which can be insured against include fire, the peril of sea, death, incident, & burglary. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved.
“Insurance is a contract between 2 parties whereby one party called insurer undertakes in exchange for a fixed sum called premium to pay the other party happening of a certain event.”
Insurance is a contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount of money on the happening of a certain event." Insurance is a protection against financial loss arising on the happening of an unexpected event. Insurance companies collect premiums to provide for this protection. A loss is paid out of the premiums collected from the insuring public and the Insurance Companies act as trustees to the amount collected. For Example, in a Life Policy, by paying a premium to the Insurer, the family of the insured person receives a fixed compensation on the death of the insured. Similarly, in car insurance, in the event of the car meeting with an accident, the insured receives the compensation to the extent of damage. It is a system by which the losses suffered by a few are spread over many, exposed to similar risks.
INSURANCE REGULATORY & DEVELOPMENT AUTHORITY:
The Insurance Regulatory and Development Authority (IRDA) were constituted as an autonomous body to regulate and develop the business of insurance and re-insurance in the country in terms of the Insurance Regulatory and Development Authority Act, 1999.
It was setup on interim IRA for monitoring &controlling of the insurance business. IRA was sole authority responsible for awarding of licenses. This Act was passed by Parliament in December 1999 and it received presidential assent in January 2000.
It amended the Insurance Act, 1938, which has been noted above. It also amended the Life Insurance Corporation Act, 1956 and the General Insurance Business (Nationalization) Act, 1972, thus opening up the insurance sector to private participation. The opening of doors to the private sectors was not enough to set back LIC. And this can be seen from the table below;
Market share of the companies in Insurance industry:
Name of the company Market share %
LIC 81.3
ICICI PRUDENTIAL 6.63
BIRLA SUN LIFE 2.56
BAJA ALLIANZ 2.03
SBI LIFE 1.80
HDFC STANDARD 1.36
TATA AIG 1.29
MAX NEW YORK 0.90
AVIVA 0.79
OM KOTAK MAHINDRA 0.51
ING VYASA 0.37
AMP SANMAR 0.26
METLIFE 0.21
From this table it can be seen that LIC are still the market leader with 81.3% shares, and with 6.63% the second private leader is ICICI Prudential.
MISSION STATEMENT of IRDA:-
• To protect the interest of and secure fare treatment to policy holders.
• 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.
• To set, promote, monitor and enforce high standard of integrity, financial soundness, fair dealing and competence of those it regulates.
• To ensure that insurance customers receive precise, clear and correct information about products and services and make them aware of their responsibilities and duties in this regard.
• To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place affective grievance redressed machinery.
• To promote fairness, transparency and orderly conduct in financial market dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players.
DUTIES, POWERS, & FUNCTIONS of IRDA: -
Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA are:
• 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.
With provisions contained in sub-section (1), the powers and functions of the Authority shall include: -
• Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration.
• Protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, Settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance.
• Specifying requisite qualifications, code of conduct and practical training for insurance intermediaries and agents.
• Promoting efficiency in the conduct of insurance business.
• Promoting and regulating professional organizations connected with the insurance and re-insurance business.
• Fees and other charges for carrying out the purposes of this Act.
Calling for information from, undertaking, inspection, conducting enquiries and investigations including audit of the insurers, insurance intermediaries and other organizations connected with the insurance business.
These efforts made it possible to offer protection to more than 100 million policyholders, but even this is only 23 % of the insurable population. This indicates the potential available for expansion of the insurance market, and the fact tempted the 13 private players to enter the market on the opening of the sector. It is envisaged that this will benefit the customer at large different type of products and still better delivery of services will be available. Till recently, insurance has not been appreciated as a basic need but has been looked at more as a saving or investment instrument. With the wider publicity by all players and IRDA, consumer education will be stepped up and his will help the insurance market to grow by at least 15% to 20% every year in numbers and 30% to 40 % in premium.
Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual. The risk, which can be insured against include fire, the peril of sea, death, incident, & burglary. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved.
“Insurance is a contract between 2 parties whereby one party called insurer undertakes in exchange for a fixed sum called premium to pay the other party happening of a certain event.”
Insurance is a contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount of money on the happening of a certain event." Insurance is a protection against financial loss arising on the happening of an unexpected event. Insurance companies collect premiums to provide for this protection. A loss is paid out of the premiums collected from the insuring public and the Insurance Companies act as trustees to the amount collected. For Example, in a Life Policy, by paying a premium to the Insurer, the family of the insured person receives a fixed compensation on the death of the insured. Similarly, in car insurance, in the event of the car meeting with an accident, the insured receives the compensation to the extent of damage. It is a system by which the losses suffered by a few are spread over many, exposed to similar risks.
INSURANCE REGULATORY & DEVELOPMENT AUTHORITY:
The Insurance Regulatory and Development Authority (IRDA) were constituted as an autonomous body to regulate and develop the business of insurance and re-insurance in the country in terms of the Insurance Regulatory and Development Authority Act, 1999.
It was setup on interim IRA for monitoring &controlling of the insurance business. IRA was sole authority responsible for awarding of licenses. This Act was passed by Parliament in December 1999 and it received presidential assent in January 2000.
It amended the Insurance Act, 1938, which has been noted above. It also amended the Life Insurance Corporation Act, 1956 and the General Insurance Business (Nationalization) Act, 1972, thus opening up the insurance sector to private participation. The opening of doors to the private sectors was not enough to set back LIC. And this can be seen from the table below;
Market share of the companies in Insurance industry:
Name of the company Market share %
LIC 81.3
ICICI PRUDENTIAL 6.63
BIRLA SUN LIFE 2.56
BAJA ALLIANZ 2.03
SBI LIFE 1.80
HDFC STANDARD 1.36
TATA AIG 1.29
MAX NEW YORK 0.90
AVIVA 0.79
OM KOTAK MAHINDRA 0.51
ING VYASA 0.37
AMP SANMAR 0.26
METLIFE 0.21
From this table it can be seen that LIC are still the market leader with 81.3% shares, and with 6.63% the second private leader is ICICI Prudential.
MISSION STATEMENT of IRDA:-
• To protect the interest of and secure fare treatment to policy holders.
• 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.
• To set, promote, monitor and enforce high standard of integrity, financial soundness, fair dealing and competence of those it regulates.
• To ensure that insurance customers receive precise, clear and correct information about products and services and make them aware of their responsibilities and duties in this regard.
• To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place affective grievance redressed machinery.
• To promote fairness, transparency and orderly conduct in financial market dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players.
DUTIES, POWERS, & FUNCTIONS of IRDA: -
Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA are:
• 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.
With provisions contained in sub-section (1), the powers and functions of the Authority shall include: -
• Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration.
• Protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, Settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance.
• Specifying requisite qualifications, code of conduct and practical training for insurance intermediaries and agents.
• Promoting efficiency in the conduct of insurance business.
• Promoting and regulating professional organizations connected with the insurance and re-insurance business.
• Fees and other charges for carrying out the purposes of this Act.
Calling for information from, undertaking, inspection, conducting enquiries and investigations including audit of the insurers, insurance intermediaries and other organizations connected with the insurance business.
These efforts made it possible to offer protection to more than 100 million policyholders, but even this is only 23 % of the insurable population. This indicates the potential available for expansion of the insurance market, and the fact tempted the 13 private players to enter the market on the opening of the sector. It is envisaged that this will benefit the customer at large different type of products and still better delivery of services will be available. Till recently, insurance has not been appreciated as a basic need but has been looked at more as a saving or investment instrument. With the wider publicity by all players and IRDA, consumer education will be stepped up and his will help the insurance market to grow by at least 15% to 20% every year in numbers and 30% to 40 % in premium.