Description
This is a PPT explaining about Risk Management and Insurance.
Risk Management & Insurance
History of Insurance History of Insurance
? Though some form of risk-sharing existed among
Chinese and Babylonian traders as early as 5000 BC, the first documented concept of Insurance had its origins in Though some form of risk-sharing existed among Chinese and Babylonian 1668 at the Lloyd’s coffee club in London. traders as early as 5000 BC, the first documented concept of Insurance had its ? Marine Insurance-----the mother origins in 1668 at the Lloyd’s coffee club in London. of all Insurances. Marine Insurance-----the mother of all Insurances. later in the 17th century. ? Life Insurance also originated Life Insurance also originated later inin life InsuranceThethe US started in The first Company the 17th century. in first Company in life Insurance in the 1760 .The in 1760 .The first non-life US started operations in US started first non-life Insurer in Insurer in US started operations in 1732,underwriting fire Insurance. 1732,underwriting fire Insurance. As far as Automobile Insurance is concerned, horse-driven carriages were ? the year 1875. Insured in UK in As far as Automobile Insurance is concerned, horsedriven carriages were Insured in UK in the year 1875.
World Insurance Industry
? ? ? ? ? ? ? ? ? ?
Total Life-Insurance business: $1848688m Total Non-life Ins. Business : $1395218m Leaders in Life Ins. (USA) : $494818m Leaders in Non-life Ins. (USA): $603018m USA’s total share in world mkt : 33.84% Annual per capita premium Life (USA): $1688 Annual per capita premium (non-life) USA: $ 2058 World’s biggest Insured loss : $38100m ( Katrina) World’s biggest Insured loss due to manmade disaster (WTC9/11) : $20053m In Japan, the Life Insurance business is about 4 times the size of non-life Insurance business. But in other developed nations like USA, Germany, Canada & Spain, the size of non-life Insurance business is much higher than Life Insurance business.
Indian Insurance Industry (till Nationalization)
? Origin in 1818 as a means to provide for English widows.
(Higher premium for Indian lives) through Oriental Life Insurance. ? First Indian Life Insurance company, BMLIS started in 1870.(parity in premium for Indian lives) ? First Indian Non-life Insurance company Triton Insurance Co. Ltd established in 1850. ? Several Insurance frauds traced to the 1920’s & 1930’s sullied Industry image, forcing the Government to pass the Insurance Act 1938,and thereafter go in for Nationalization of life sector in 1956,merging 250 private companies into a monolith called LIC. The Non-life sector was Nationalized in 1972,merging the 107 companies, region-wise creating New India Assurance (Mumbai based), Oriental Insurance (Delhi-based), National Insurance (Kolkata based) and United India Insurance (Chennai based) with General Insurance Corporation of India as the holding Company.
Indian Insurance Industry (Post-liberalization)
? Recommendations for reforms in the sector by the Malhotra
?
? ? ?
?
committee (1994) leading to passage of IRDA Act 1999. Norms laid down for entry of new players (paid-up capital of Rs.100 crores with max.26%FDI).Composite Insurers were not allowed. Ushers in 21 players in life and 16 players in non-life sector. The total Life Insurance business today is about Rs.156042 crores, with LIC contributing 127823 crores. The total Non-life Insurance business today is about Rs.25930 crores, with the PSU players contributing 18465 crores. However our country share is only 0.66 % of the world Insurance market Annual per capita premium in life sector is Rs.1560($35) while it is only Rs.271($6) in the non-life sector.
Insurance-concept
? It is a tool to spread the loss of an individual over a large
? ?
?
?
number of persons through a mechanism of cooperation. A form of risk management used to hedge against risk of a contingent loss. It is an equitable transfer of risk of a loss from one entity (Insured) to another (Insurer) in exchange for a consideration called premium. The latter promises to pay him/his nominee a certain or ascertainable sum of money on a specified contingency. Different from wagering. Insurance does not eliminate risks or replace destroyed property, but only compensates for the pecuniary loss.
Utility of Insurance
? Provides financial strength & stability to
?
?
?
?
individuals, organization & society. Better utilization of capital (obviating the need to build up huge contingency reserves) and generates investments. Creates fearless businessmen, improving business efficiency and economic progress. Eliminates stress and provides peace of mind, creating a healthy society. Organizations could recover quickly from an insured loss, with hardly any fluctuation in earnings.
Classification of risks
Pure risks (Insurable) These are risks which operate with only two probable outcomes, i.e (1) either a loss or (2) No loss no profit ? Property risks ? Liability risks ? Life-risks ? Health-risks ? Loss of income risks ? Guarantees
Uninsurable-risks
? There could be two possible outcomes, upon
operation of the risk (1) either a loss or (2) windfall profits. ? Speculative risks: gambling/betting/stockinvestments etc) ? Trade risks : Loss of market-share, increase in raw-material costs, export-rejection etc. ? Financial-risks : Credit-risk/Interest-rate risk etc.
Insurable
? Earth Quakes
? Motor Accidents ? Burglary
? Negligence Liability
? Dog-bite Liability ? Motor(TP) Liability
? Floods
? Tsunami
? Life Insurance
? Loss of Income
? Volcanic Eruptions? Health Insurance
insurance ? Pollution Liability ? Fidelity Insurance
? Terrorist Attacks
Non Insurable
? Horse Racing ? Gambling ? Stock Market Crash
doc_448483988.ppt
This is a PPT explaining about Risk Management and Insurance.
Risk Management & Insurance
History of Insurance History of Insurance
? Though some form of risk-sharing existed among
Chinese and Babylonian traders as early as 5000 BC, the first documented concept of Insurance had its origins in Though some form of risk-sharing existed among Chinese and Babylonian 1668 at the Lloyd’s coffee club in London. traders as early as 5000 BC, the first documented concept of Insurance had its ? Marine Insurance-----the mother origins in 1668 at the Lloyd’s coffee club in London. of all Insurances. Marine Insurance-----the mother of all Insurances. later in the 17th century. ? Life Insurance also originated Life Insurance also originated later inin life InsuranceThethe US started in The first Company the 17th century. in first Company in life Insurance in the 1760 .The in 1760 .The first non-life US started operations in US started first non-life Insurer in Insurer in US started operations in 1732,underwriting fire Insurance. 1732,underwriting fire Insurance. As far as Automobile Insurance is concerned, horse-driven carriages were ? the year 1875. Insured in UK in As far as Automobile Insurance is concerned, horsedriven carriages were Insured in UK in the year 1875.
World Insurance Industry
? ? ? ? ? ? ? ? ? ?
Total Life-Insurance business: $1848688m Total Non-life Ins. Business : $1395218m Leaders in Life Ins. (USA) : $494818m Leaders in Non-life Ins. (USA): $603018m USA’s total share in world mkt : 33.84% Annual per capita premium Life (USA): $1688 Annual per capita premium (non-life) USA: $ 2058 World’s biggest Insured loss : $38100m ( Katrina) World’s biggest Insured loss due to manmade disaster (WTC9/11) : $20053m In Japan, the Life Insurance business is about 4 times the size of non-life Insurance business. But in other developed nations like USA, Germany, Canada & Spain, the size of non-life Insurance business is much higher than Life Insurance business.
Indian Insurance Industry (till Nationalization)
? Origin in 1818 as a means to provide for English widows.
(Higher premium for Indian lives) through Oriental Life Insurance. ? First Indian Life Insurance company, BMLIS started in 1870.(parity in premium for Indian lives) ? First Indian Non-life Insurance company Triton Insurance Co. Ltd established in 1850. ? Several Insurance frauds traced to the 1920’s & 1930’s sullied Industry image, forcing the Government to pass the Insurance Act 1938,and thereafter go in for Nationalization of life sector in 1956,merging 250 private companies into a monolith called LIC. The Non-life sector was Nationalized in 1972,merging the 107 companies, region-wise creating New India Assurance (Mumbai based), Oriental Insurance (Delhi-based), National Insurance (Kolkata based) and United India Insurance (Chennai based) with General Insurance Corporation of India as the holding Company.
Indian Insurance Industry (Post-liberalization)
? Recommendations for reforms in the sector by the Malhotra
?
? ? ?
?
committee (1994) leading to passage of IRDA Act 1999. Norms laid down for entry of new players (paid-up capital of Rs.100 crores with max.26%FDI).Composite Insurers were not allowed. Ushers in 21 players in life and 16 players in non-life sector. The total Life Insurance business today is about Rs.156042 crores, with LIC contributing 127823 crores. The total Non-life Insurance business today is about Rs.25930 crores, with the PSU players contributing 18465 crores. However our country share is only 0.66 % of the world Insurance market Annual per capita premium in life sector is Rs.1560($35) while it is only Rs.271($6) in the non-life sector.
Insurance-concept
? It is a tool to spread the loss of an individual over a large
? ?
?
?
number of persons through a mechanism of cooperation. A form of risk management used to hedge against risk of a contingent loss. It is an equitable transfer of risk of a loss from one entity (Insured) to another (Insurer) in exchange for a consideration called premium. The latter promises to pay him/his nominee a certain or ascertainable sum of money on a specified contingency. Different from wagering. Insurance does not eliminate risks or replace destroyed property, but only compensates for the pecuniary loss.
Utility of Insurance
? Provides financial strength & stability to
?
?
?
?
individuals, organization & society. Better utilization of capital (obviating the need to build up huge contingency reserves) and generates investments. Creates fearless businessmen, improving business efficiency and economic progress. Eliminates stress and provides peace of mind, creating a healthy society. Organizations could recover quickly from an insured loss, with hardly any fluctuation in earnings.
Classification of risks
Pure risks (Insurable) These are risks which operate with only two probable outcomes, i.e (1) either a loss or (2) No loss no profit ? Property risks ? Liability risks ? Life-risks ? Health-risks ? Loss of income risks ? Guarantees
Uninsurable-risks
? There could be two possible outcomes, upon
operation of the risk (1) either a loss or (2) windfall profits. ? Speculative risks: gambling/betting/stockinvestments etc) ? Trade risks : Loss of market-share, increase in raw-material costs, export-rejection etc. ? Financial-risks : Credit-risk/Interest-rate risk etc.
Insurable
? Earth Quakes
? Motor Accidents ? Burglary
? Negligence Liability
? Dog-bite Liability ? Motor(TP) Liability
? Floods
? Tsunami
? Life Insurance
? Loss of Income
? Volcanic Eruptions? Health Insurance
insurance ? Pollution Liability ? Fidelity Insurance
? Terrorist Attacks
Non Insurable
? Horse Racing ? Gambling ? Stock Market Crash
doc_448483988.ppt