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Types of Insurance

There are many insurances for an individual but these are common and important for our life:

  • Health Insurance
  • Motor Insurance
  • Home Insurance
  • Travel Insurance
  • Rural Insurance
  • Marine(cargo) Insurance
  • Commercial Insurance

Let’s Understand One by One:

Health Insurance

Health insurance is very much important for every individual because health care costs are increasing day by day. Modern life style & stress at work affect the health and can result in a critical illness or medical emergency.

Such situation can surely affect one financially due to the massive outlay of money on medical expenditure. Health Insurance policy really helps in optimizing our financial risks. This gives peace of mind in times of crisis and ensures own health and that of one’s family.

Health insurance covers the medical and surgical expenses of the insured individual because of hospitalization from an illness. Additional riders enhance the benefits and scope of the cover.

Health insurance often includes the cashless facility at most of the hospitals, pre and post hospitalization expenses, ambulance charges, daily cash allowance etc.

Health insurance policies include:

  • Individual Policy
  • Family Floater Policy
  • Surgery Cover
  • Comprehensive Health Insurance

Motor Insurance

In today’s life, we are very much dependent on our own vehicle while traveling to any place. This saves our time as well as we get complete time to have fun with family & friends.

While doing that we should keep one thing in mind is motor insurance is very much important nowadays. This covers all damages and liability to a vehicle against various on-road and off-road emergencies. A comprehensive policy even secures against damage caused by natural and man-made calamities, including acts of terrorism.

Motor insurance is mandatory in India as per the Motor Vehicles Act, 1988 and needs to be renewed every year. Driving a motor vehicle without insurance in a public place is a punishable offense.

Motor insurance categories include:

  • Two Wheeler Insurance
  • commercial Vehicle Insurance
  • Car Insurance

Some attractive benefits of motor insurance include roadside assistance, cashless servicing at a nation-wide network of workshops and garages, personal accident cover, towing assistance.

Home Insurance

I believe Home is a most important part of any individual and also the big financial investment for one.

Home insurance covers the house and content in it as per insurance policy. It secures the home against natural calamities and man-made disasters and threats. Home insurance provides protection against risks and damages from fire, burglary, theft, flood, earthquakes etc. covering the physical asset (building structure) and valuables (contents) in it.

It helps in saving your money while any threats to your house.

 

Travel Insurance

Travel insurance is also one of the most important things in our life. This helps us in covering loss of baggage, loss of passport, delay in flight, medical emergency etc. Such eventualities will surely take the fun away from traveling.

Travel insurance policies include:

  • Student Travel Insurance
  • Individual Travel Policy
  • Family Travel Policy
  • Senior Citizens Travel Policy

In addition to the above, some insurance companies offer special plans like a corporate travel policy or comprehensive policy for travel to special destinations like Asia and/or Europe.

Rural Insurance

Rural insurance is basically for rural business and agriculture. IRDA has stipulated annual targets for insurers to provide insurance to the rural and social sector.

As per these regulations, insurers are required to meet year-wise targets:

  • In percentage terms of policies underwritten and percentage of total gross premium income by general insurers under rural obligation
  • In terms of the number of lives under social obligation

Marine (Cargo) Insurance

Cargo insurance is mainly for import export business or while shifting your goods from one to another place. Movement of goods is very risky while moving from one to another place.  This insurance covers substantial losses for both the importers as well as the exporters.

Marine cargo insurance covers goods, freight, cargo and other interests against loss or damage during transit by rail, road, sea and/or air. Maine cargo ensures that your shipment is secure till it reaches to you and if something happens to it like, damaged, stolen, defective ETC.

The party responsible for ensuring the goods is determined by the sales contract. Marine cargo insurance policy can be taken by buyers, sellers, import/export merchants, buying agents, contractors, banks etc. The policy usually covers the cargo, but can also be extended to cover the interest of a third party post transfer of ownership as determined by terms of sale.

 Types of policies can be taken:

  • Specific Voyage Policy
  • Open Cover
  • Open Policy
  • Annual Policy

 

The hull of a ship or boat can be insured under marine hull insurance.

Commercial Insurance

Commercial Insurance is basically for all sectors of the Industry arising out of business insurance. Insurance solutions for automotive, aviation, construction, chemicals, foods and beverages, manufacturing, oil and gas, pharmaceuticals, power, technology, telecom, textiles, transport, and logistics sectors. It covers small and medium scale enterprises, large corporations as well as multinational companies.

Types of commercial insurance:

  • Engineering Insurance
  • Property Insurance
  • Marine Insurance
  • Liability Insurance
  • Financial Lines Insurance
  • International Insurance Solutions
  • Energy Insurance
  • Employee Benefits Insurance

Other Types of General Insurance:

  • Shopkeeper
  • Property Insurance
  • Personal Accident
  • Householder
  • Corporate Insurance
  • Commercial Insurance
  • Crop Insurance
  • Fire Insurance

To be continued with other policies……..

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History of Insurance in Incredible India

Begining of Insurance in India

Insurance began in India around 1800 AD. In 1818 the first life insurance company on Indian Soil started functioning. Company Name was “Oriental Life Insurance”.

In 1870, the first Indian life insurance company started its business. Bombay Mutual Life Assurance Society.

In 1912 the Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.

In 1928 the Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and Non-life insurance businesses.

In 1938 earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the Insuring public.

In 1956 nationalization of life insurance: Life insurance business was nationalized on 1st September 1956 and the Life Insurance Corporation of India (LIC) was formed through LIC Act, 1956.  A capital contribution of 5Cr from the Government of India was also made. There were 170 companies and 75 provident fund societies doing life insurance business in India at that time. From 1956 to 1999, the LIC held exclusive rights to do life insurance business in India.

In 1972 nationalization of non-life insurance: With the enactment of General Insurance Business Nationalization Act (GIBNA) in 1972, the non-life insurance business was also nationalized and the General Insurance Corporation of India (GIC) and its four subsidiaries were set up. At that point of time, 106 insurers in India doing non-life insurance business were amalgamated with the formation of four subsidiaries of the GIC of India.

Indian Insurance Sector moved ahead

The formation of the Malhotra Committee in 1993 initiated reforms in the Indian insurance sector and is considered as one of the milestones in the history of Insurance in India.

The aim of the Malhotra Committee was to assess the functionality of the Indian insurance sector. This committee was also in charge of recommending the future path of insurance in India.

The Malhotra Committee attempted to improve various aspects of the insurance sector, making them more appropriate and effective for the Indian market.

The Insurance Regulatory and Development Authority Act of 1999 brought about several crucial policy changes in the insurance sector of India. It led to the formation of the Insurance Regulatory and Development Authority (IRDA) in 2000.

The goals of the IRDA are to safeguard the interests of insurance policyholders, as well as to initiate different policy measures to help sustain growth in the Indian insurance sector.

Important Milestones in the history of Indian Insurance industry

1993 Malhotra Committee established.

1994 Recommendations of Malhotra Committee published.

1995 Mukherjee Committee established.

1996 Setting up of (interim) Insurance Regulatory Authority (IRA) Recommendations of the IRA.

1997 Mukherjee Committee Report submitted but not made public.

1997 The government gives greater autonomy to Life Insurance Corporation, General Insurance Corporation, and its subsidiaries with regard to the restructuring of boards and flexibility in investment norms aimed at channeling funds to the infrastructure sector.

1998 The cabinet decides to allow 40 percent foreign equity in private insurance companies—26 percent of foreign companies and 14 percent of non-resident Indians and Foreign Institutional Investors.

1999 The Standing Committee headed by Murali Deora decides that foreign equity in private insurance should be limited to 26 percent. The IRA bill is renamed the Insurance Regulatory and Development Authority Bill.

1999 Cabinet clears Insurance Regulatory and Development Authority Bill.

2000 President Gives assent to the Insurance Regulatory and Development Authority Bill.

Life insurance industry today

Currently, 24 life insurance companies and 29 non-life insurance companies in the Indian market compete with each other on price and service to attract customers. Out of the 24 life insurance companies, Life Insurance Corporation of India (LIC) is the sole public sector company fully owned by Government of India. All the policies issued by LIC of India enjoys the Sovereign guarantee of Indian Parliament.

The country’s insurance market is expected to quadruple in size over the next 10 years from its current size of US$ 60 billion. During this period, the life insurance market is slated to cross US$ 160 billion.

The general insurance business in India is currently at Rs 78,000 crore (US$ 11.7 billion) premium per annum industry and is growing at a healthy rate of 17 per cent.

India’s insurance market lags behind other economies in the baseline measure of insurance penetration. At only 3.9 percent, India is well behind the 11.9 percent for Korea, 11.5 percent for the UK, 11.1 percent for Japan, and 7.5 percent for the US. Indian Insurance Industry is expected to grow to US $ 280 billion by Financial Year 2020.

The Indian insurance market is considered to have a huge business opportunity waiting to be harnessed. India currently accounts for less than 1.5 per cent of the world’s total insurance premiums and about 2 per cent of the world’s life insurance premiums despite being the second most populous nation.