The role of technology in life insurance companies of

India

IN PARTIAL FULFILMENT OF THE REQUIREMENT UNDER SEMESTER BASED

CREDIT AND GRADING SYSTEM FOR POST GRADUATE SEMESTER II

Program under faculty of commerce

Master of commerce (morning )

SYDENHAM COLLEGE OF COMMERCE AND ECONOMICS

SUBMITTED BY :

RIDDHIMA PRAMOD SAWANT

ROLL NO: 102

PROJECT GUIDE :
PROF. SMITA KUNTHE
SYDENHAM COLLEGE OF COMMERCE AND ECONOMIC

CONTENT

DECLARATION

I, RIDDHIMA PRAMOD SAWANT , Roll No. 102 student of SYDENHAM

COLLEGE OF COMMERCE AND ECONOMICS in the FIRST year M.COM
in Banking and In FINANCE (Semester II) , hereby declare that I have
completed

the research report on the topic of

THE ROLE OF

TECHNOLOGY IN LIFE INSURANCE COMPANIES OF INDIA in the

academic year 2014-2015. The information submitted is herein is true, to the
best of my knowledge.

Stamp of College
Signature of student

Signature of
Signature of Coordinator
External Examiner

CERTIFICATE

I, RIDDHIMA PRAMOD SAWANT here by certify that the following student

of SYDENHAM COLLEGE OF COMMERCE AND ECONOMICS

of

M.COM (Banking & FINANCE) Semester (II) has completed his research
report on THE ROLE OF TECHNOLOGY IN LIFE INSURANCE
COMPANIES OF INDIA for the academic year 2014-2015. Information
submitted is true & original to the best of my knowledge.

Stamp of college
Professor

Signature of

ACKNOWLEDGEMENT

It gives me immense pleasure in acknowledging the valuable & cooperative assistance extended to me by the various individuals who have
helped me successfully in completing this project.

First of all I would like to show my gratitude to Professor SMITA

KUNTHE for their assistance, encouragement and support on the topic
THE ROLE OF TECHNOLOGY IN LIFE INSURANCE COMPANIES
OF INDIA .

I would like to thank my parents, friends & colleagues who have supported
me during the making of this research report. The information provided by
them has helped me gain practical understanding of the subject.

I would like to thank the Mumbai University for giving

me the opportunity to carry out the research.

It is the encouragement of all these people that has

helped me proceed towards achieving my goals.

INTRODUCTION

NEED OF THE STUDY

OBJECTIVE

RESEARCH METHODOLOGY

RESEARCH METHODOLOGY:
To conduct the market research first of all it is necessary to create a research
design.
A research design is basically a blue print of how a research is to be conducted,
it may include;
1. Choosing the approach
2. Determining the types of data needed.
3. Locating the source of data.
4. Choosing a method of data.

TYPES OF DATA USED:

Both primary and secondary data is used in the research.
Data Collection Methods:
To conduct the market research the data is collected by two sources.
SECONDARY DATA:
Secondary data is one which already exists and is collected from the published
sources. The sources from which secondary data was collected are:
Newspapers and Magazines like Economic Times, Insurance Times, and
Insurance Post.
Internet.

CONCEPT OF INSURANCE
Life has always been an uncertain thing.

To be secure against unpleasant possibilities, always requires the utmost

resourcefulness and foresight on the part of man. To pray or to pay for
protection is the spirit of the humanity. Man has been accustomed to pray God
for protection and security from time immemorial.

In modern days Insurance Companies want him to pay for protection and
security. The insurance man says "God helps those who help themselves";
probably he is correct. Too many people in this country are not in employment;
and work for too many no longer guarantees income security. Several millions
are part-time, self employed and low-earning workers living under pitiable
circumstances where there is no security cover against risk.

Further the inherent changing employment risks, the prospect of continual

change in the work place with its attendant threats of unemployment and low
pay especially after the adoption of New Economic Policy and the imminent life
cycle risks - a new source of insecurity which includes the changing demands of
family life separation, divorce and elderly dependents are tormenting the
society.

Risk has become central to one's life. It is within this background life insurance
policy has been introduced by the insurance companies covering risks at various
levels.

Life insurance coverage is against disablement or in the event of death of the

insured, economic support for the dependents. It is a measure of social security
to livelihood for the insured or dependents.

This is to make the right to life meaningful, worth living and right to livelihood
a means for sustenance. Therefore, it goes without saying that an appropriate
life insurance policy within the paying capacity and means of the insured to pay
premium is one of the social security measures envisaged under the Indian
Constitution.

Hence, right to social security, protection of the family, economic empowerment

to the poor and disadvantaged are integral part of the right to life and dignity of
the person guaranteed in the constitution.

Man finds his security in income (money) which enables him to buy food,
clothing, shelter and other necessities of life. A person has to earn income not
only for himself but also for his dependents, viz., wife and children.

He has to provide legally for his family needs, and so he has to keep aside
something regularly for a rainy day and for his old age. This fundamental need
for security for self and dependents proved to be the mother of invention of the
institution of life insurance.

WHAT IS INSURANCE

The business of insurance is related to the protection of the economic values of

assets. Every asset has a value. The asset would have been created through the
efforts of the owner. The asset is valuable to the owner, because he expects to
get some benefit from it.
The benefit may be an income or some thing else. It is a benefit because it
meets some of his needs. In the case of a factory or a cow, the product
generated by is sold and income generated.
In the case of a motor car, it provides comfort and convenience in
transportation. There is no direct income. Every asset is expected to last for a
certain period of time during which it will perform. After that, the benefit may not
be available. There is a life-time for a machine in a factory or a cow or a motor
car. None of them will last for ever.
The owner is aware of this and he can so manage his affairs that by the end of
that period or life-time, a substitute is made available. Thus, he makes sure that
the value or income is not lost. However, the asset may get lost earlier.

An accident or some other unfortunate event may destroy it or make it non

functional. In that case, the owner and those deriving benefits from there, would
be deprived of the benefit and the planned substitute would not have been
ready. There is an adverse or unpleasant situation. Insurance is a mechanism
that helps to reduce the effect of such adverse situations. Insurance, in law and
economics, is a form of risk management primarily used to hedge against the
risk of a contingent loss.

Insurance is defined as the equitable transfer of the risk of a potential loss, from
one entity to another, in exchange for a premium. Insurer, in economics, is the
company that sells the insurance. Insurance rate is a factor used to determine
the amount, called the premium, to be charged for a certain amount of insurance
coverage. Risk management, the practice of appraising and controlling risk, has
evolved as a discrete field of study and practice.

ORIGIN OF INSURANCE
PRACTICE OF INSURANCE IN INDIA: 1818-1956

It is claimed that insurance was practiced in India even in Vedic times in one
form or the other. The Sanskrit term "Yogakshema" in the Rigveda meant some
kind of insurance, which was practiced by the Aryans in India nearly 3000 years
ago. During the Mughal period insurance took firm roots.
There are even references to the cover against war risks. Losses due to the
passage of royal troops through farms were compensated by the State as a
gesture of goodwill.
The year 1818 is an epoch -making year in the history of our country. The first
Life Insurance Company on India soil appears to have been started in this year.
A group of Europeans pioneered the establishment of the Oriental Life
Insurance Society to afford relief to the distressed relatives of European. The
venture was not quite successful but the company was reformed in 1829.The
renewed Company also got into trouble in 1833 when Agency House of
Calcutta, partners of the same, fell.
Prince Dwarkanath Tagore was the only solvent partner & the sole
responsibility for carrying on the institution developed on him. Meanwhile,
early in Janury1834, the Government made up its mind to establish a Public
Insurance Company & a Committee was set up for this purpose .A number of
foreign Insurance Companies then operating in the country viewed this move
with alarm. They set up Committees of their own enquire into their individual
affairs.
Dwarkanath Tagore, too, had a Committee appointed to look into the affairs of
the Oriental.
As a result, another company was born out of the previous one in the name of
"New Oriental Company"
In the reorganization of the "Oriental" in the year 1834, two other gentlemen
were associated. One was Ramtanu Lahiri and the other Rustamjee Cowasjee.
The latter was another prominent figure of the business world. Rustamjee
entered insurance business in 1828, he was already known to the community
and the Government as a wealthy Parsi merchant.

Rustamjee's connection with insurance also started with "Laudable Societies",

but he was later on associated with Companies like "Sun Life Office (1834) ",
New Oriental (1835),Universal Life (1835) , New Laudable (1840) , and Indian
Laudable (1841) .

He was also on the Committee of the Union Insurance Company which was
formed by a group of five persons. This Company was issuing policies covering
river-risks only. He was intimately connected with the Committee of Insurance
Offices in Calcutta.
Rustamjee Cowasjee & Dwarkanath Tagore was probably the first Indians to
join in partnership business with the Europeans & in the field of insurance they
were pioneers on this side of the country.
Apart from Calcutta, several enterprising people in Bombay started in 1823 the
"Bombay Life" Assurance Company. The company went into liquidation soon
and could not revive. In 1829, the "Madras Equitable "was formed. It finally
ceased to function in 1921 due to financial difficulties after the First World War.
The effort to set up a public insurance company at the government level also
went in vain, mainly from objection of private operators. Majority of the early
attempts to form insurance offices were in the province of Bengal. This was due
to its political & economic importance at that time.
The contribution of Raja Ram Mohan Roy, one of the greatest social reformers
of India, to the development of life insurance is very great. He was deeply
concerned about the sad plight of desperate widows and helpless orphans

THE BIRTH OF INDIAN INSURERS

With the advent of the 20th century, the glorious renaissance of swadeshi days
dawned. At the same time, well- to do Indians realized the potentiality of Indian
Insurance business.
The Swadeshi movement of 1905-1907 gave rise to more insurance companies.
The United India in Madras, National Indian and National Insurance in Calcutta
and the Co-operative Assurance at Lahore were established in 1906.
In 1907, Hindustan Co-operative Insurance Company took its birth in one of the
rooms of the Jorasanko House of the great poet Rabindranath Tagore, in
Calcutta. The Indian Mercantile (1907) was started in Bombay.
General Assurance (1908) at Ajmer and the Swadeshi Life (Later Bombay Life)
in Bombay in 1908. The end of the First World War (1914-18) witnessed an
influx of insurance companies in India. Famous Indian business houses started
new insurance companies.
Industrial and Prudential Bombay, Western India, Satara, were floated before
the war, but by 1919, companies like Jupiter General, New India, Vulcan
Insurance Company etc. came into being.
Pandit K.Santhanam with blessing of Lala Lajpat Rai and Pandit Motilal Nehru
started Laxmi Insurance Co. Similarly, Andhra Insurance was started in
Masulipatnam, with the initiative of stalwarts like Dr. Pattabhi Sitaramaiah.
From political platforms also, national leaders supported this cause. It is duty to
every Indian to support only Indian Insurance. The keynote of our Swaraj is in
placing all our insurance with our Indian companies", said Mahatma Gandhi in
his message. "I hope Indians will realize the importance of patriotism only
through Indian insurance institution", stated Pandit Jawaharlal Nehru.
Thus, the cause of Indian insurance became a national issue. The pursuit to
boost Indian insurance represented a crusade to extricate the Indian economy
from foreign domination.

PROGRESS IN INSURANCE BUSINESS

The growth of Life Insurance in concrete terms could be said to being during
the first two decades of twentieth century when most of the major companies
were founded. They grew in terms of rise in the number of companies, in terms
of number of policies and sum assured as well as total life fund. Indian
Insurance Year Book, published for the first time in 1914, gives the figure of the
total business-in -force as 22.44 crore which grew to Rs. 298 crore in 1938.
In 1914, there were only 44companies transacting insurance business in India,
and during the next 25 years their number rose to 176. The total progress on all
the primary heads, viz. Life fund (Rs. 50.50 crore), premium income (Rs. 10.50
crore) and new business (Rs. 43.30 crore) indicate that Indian Insurance
Business had been making a definite headway during this years. The inter-war
-years thus saw rapid growth life insurance in India.
The promotion of new life insurance companies continued to be almost a craze
and insurance companies mushroomed. In this period, 176 insurance companies
were formed and many of them failed. Thus unhealthy growth was harmful to
the interest of the policy holders and insurance business in India. Feeling
concerned about it, the All India Life Assurance Offices'
Association urged upon the Government in 1932 to undertake the insurance
legislation to
(a) Compulsorily register all Life Insurance companies.
(b) Secure a deposit of Rs.2 lakh from all Life Insurance companies.
(c) Compel foreign companies doing business in India to keep sufficient
fundsin India securities to meet their liabilities under all policies issued in India.

INSURANCE ACT, 1938

The Insurance Act, 1938, was the first comprehensive legislation governing not
only life but
also non- life branches of insurance to provide strict state control over insurance
business. In
sub- sections to dealt with provident companies, mutual offices and co-operative
societies as
well.

The silent features of the Act were as follows:

(A) Constitution of a Department of Insurance under a superintendent vested
with wide powers of supervision and control over all kinds of insurance
companies.
(B) Regulation for the compulsory registration of insurance companies and for
filing of returns ofinvestment and financial conditions.
(C) Provisions for deposit, to prevent insurers of inadequate financial resources of
speculative concerns for commencing business.
(D) Provisions that 55% of the net life fund of an Indian or non- Indian insurer
should invested in Indian Government and approved securities with at least 25%
in Indian Government Rupee securities.. All other companies, i.e., foreign
companies must invest 100% of their Indian liabilities in Indian Government and
approved securities, with at least 33.3% Indian Government securities.
(E) Prohibition of rebating, restriction of commission, licensing of agents etc.
Maximum rates of commission were fixed at 40% of the first premiums and 5% of
the renewal premium in respect of life assurance business. The agent must be
licensed, to improve the status of the profession.
(F) Periodical valuation of Indian Insurance business of foreign companies and
the business of Indian companies.
(G) Provision for policyholders' directors, making it possible for the
representatives of policyholders to be on the Board of directors.
(H) Standardization of policy conditions required all companies to file standard
forms and tables of premium approved by an Actuary. Under this requirement,
the initial deposit for life insurance business was raised from Rs. 25000 in
Government securities to Rs. 50000 in cash approved securities, which was
subsequently to be raised by installments to Rs. 2 lakh within a specified time
limit.

Nationalization

THE LIFE INSURANCE CORPORATION OF INDIA: 1956

This was the first step taken towards the nationalization of life insurance
business in India.
On 20th January, 1956 all life insurance companies were taken over by 43
nominated custodians. The custodians were experienced senior executives of
private insurance companies, reporting directly to the Finance Ministry. From
the word go, the complex task of running the industry on a permanent basis and
continuing the services to policy holders without interruption were their major
concerns.
The actual work of integration had to await legislation. The custodians managed
the insurance companies till 1-09-1956, when Life Insurance Corporation was
established under the general direction and control of the Ministry of Finance.
The Ordinance provided for the transfer of the control of 154 Indian insurers, 16
non Indian insurers and 75 provident societies.
These arrangements were designed to ensure that no inconvenience whatsoever
was caused to the policy holders. With the Government take over the
management aimed towards the evolution of a common uniform premium rate,
policy conditions and service and working procedures and above all to help
promote team spirit.
The corporation, a body corporate shall consist of not more than 15 members
appointed by the Central Government, one of them being appointed by the
government as chairman.
The capital of the corporation was at Rs 5 crore provided by the central
government.

INSURANCE SECTOR REFORMS

In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor R.N.
Malhotra was formed to evaluate the Indian Insurance industry and recommended its future
direction.
The Malhotra committee was set up with the objective of complementing the reforms
initiated in the financial sector.
The reforms were aimed at "creating a more efficient and competitive financial system
suitable for the requirements of the economy keeping in mind the structural changes currently
underway and recognizing that insurance is an important part of the over all financial system
where it was necessary to address the need for similar reforms...".
In 1994, the committee submitted the report and some of the key recommendations included:
(1) STRUCTURE
Government
Government

stake in the Insurance Companies to be brought down to 50%.

should take over the holdings of GIC and its subsidiaries so that these
subsidiaries can act as independent corporations.
All the insurance companies should be given greater freedom to operate
(2) COMPETETION
Private

Companies with minimum paid up capital of Rs.1 bn should be allowed to enter the
industry.
No Company should deal in both Life and General Insurance through a single entry.
Foreign Companies may be allowed to enter the industry in collaboration with the domestic
companies.
Postal Life Insurance should be allowed to operate in the rural market.
Only one State Level Life Insurance Company should be allowed to operate in each state.
(3) REGULATORY BODY
The Insurance Act should be changed
An Insurance Regulatory Body should be set up.
Controller of Insurance (Currently a part from the Finance Ministry)should be madeindependent
(4) INVESMENTS
Mandatory Investments of LIC Life Fund in government securities to be reduced from
75% to 50%.
GIC and its subsidiaries are not to hold more than 5% in any company (There current
holdings to be brought down to this level over a period of time).
(5) CUSTOMER SERVICE
LIC should pay interest on delays on payments beyond 30 days.
Insurance Companies must be encouraged to set up unit linked pension plans
Computerization of operations and updating of technology to be carried out in the
insurance industry.

Liberalization
OPENING UP OF INSURANCE SECTOR 1999 THE INSURANCE
REGULATORY AND DEVELOPMENT AUTHORITY

Reforms in the Insurance sector were initiated with the passage of the IRDA
Bill in Parliament in December 1999. The IRDA since its incorporation as a
statutory body in April 2000 has fastidiously stuck to its schedule of framing
regulations and registering the private sector insurance companies.
The other decision taken simultaneously to provide the supporting systems to
the insurance sector and in particular the life insurance companies was the
launch of the IRDA's online service for issue and renewal of licenses to agents.
The approval of institutions for imparting training to agents has also ensured
that the insurance companies would have a trained workforce of insurance
agents in place to sell their products, which are expected to be introduced by
early next year.
Since being set up as an independent statutory body the IRDA has put in a
framework of globally compatible regulations. In the private sector 14 life
insurance companies have been registered.

ENTRY OF PRIVATE COMPANIES

Under the IRDA Act, private companies can now operate in India's insurance
industry. However, they must obtain a license from the IRDA before being
permitted to write business.
To have its license application considered, a domestic private company must be
registered in accordance with the Companies Act of 1956 and have
approximately US$ 20 million of investment capital. The specific licensing
requirements that Private Indian Companies must fulfill are set forth in the
Registration on Indian Insurance Companies Regulations, published by the
IRDA 2000.

LIFTING OF BARRIERS TO FOREIGN INVESTMENT

The IRDA Act also lifts certain barriers to foreign direct investment in Indian
insurance industry.
Global insurers are now permitted to set up and register a domestic company in
order to write business in India. However, regulations stipulate that they have a
capital base of at least US $ 20 million, and their investment in such company is
capped at 26 percent. Thus, to participate in the market, they must form a joint
venture with an Indian partner that is able to invest the remaining funds.
The equity investments limit is the same for global reinsures seeking to write
business in India, but they are required to put up a capital of approximately US$
45 million in order to establish a domestic company.
Since the IRDA first enacted these rules, 13 new life insurance companies have
entered the market.
On the other hand, no global reinsurer has established a domestic company.
Instead, most of the top international reinsurance companies operate from their
overseas offices by sharing the reinsurance risks picked up by the GIC. A recent
proposal has been put forward to increase foreign direct investment to 49
percent.
In addition, global companies are pushing for the right to establish branch
offices in India. These changes are likely to substantially increase the presence
of international insurers, reinsurers, and brokers in India.
The IRDA Insurance Brokers Act in India 2002 permitted overseas insurance
and reinsurance brokers to enter the market, but with the same equity cap as that
governing the operations of foreign insurers and reinsurers.
Thus, foreign brokers must also form a joint venture with an Indian partner in
order to establish an Indian broking house.

The 2002 IRDA legislation established four broker categories, one of which
brokers must select when applying for a license:
1. Category 1A : Direct General Insurance Broker
2. Category 1B : Direct Life Insurance Broker
3. Category 2 : Reinsurance Broker
4. Category 3: Composite Broker
5. Category4: Others, for example Insurance Consultants and Risk
Management Consultants.
Each category has different solvency margins and capital adequacy ratios, and
all categories need to carry professional indemnity insurance at different
minimum levels.
In the years since market liberalization was initiated, the insurance sector has
witnessed some impressive changes. The needs of insurance and reinsurance
buyers have grown; the market is introducing new products to address these
needs; and the services of brokers are now seen as critical to making informed
insurance and reinsurance decisions.

Purpose and Need of Insurance :

Assets are insured, because they are likely to be destroyed through accidental
occurrences.
Such possible occurrences are called perils. Fire, floods, breakdowns,
lightening, earthquakes, etc, are perils. If such perils can cause damage to the
asset, we say that the asset is exposed to that risk. Perils are the events. Risks
are the consequential losses or damages.
The risk to a owner of a building, because of the peril of an earthquake, may be
a few lakhs or a few crores of rupees, depending on the cost of the building and
the contents in it.
The risk only means that there is a possibility of loss or damage. The damage
may or may not happen. Insurance is done against the contingency that it may
happen. There has to be an uncertainty about the risk. Insurance is relevant only
if there are uncertainties. If there is no uncertainty about the occurrence of an
event, it cannot be insured against. In the case of human being, death is certain,
but the time of death is uncertain. In the case of person who is terminally ill, the
time of death is not uncertain, though not exactly known. He cannot be insured.
Insured does not protect the asset. It does not prevent its loss due to peril. The
peril cannot be avoided through insurance. The peril can sometimes be avoided
through better safety and damage control management. Insurance only tries to
reduce the impact of the risk on the owner of the asset and those who depend on
that asset. It only compensates the losses and that too, not fully.
Only economic consequences can be insured. If the loss is not financial,
insurance may not be possible.
Example of non-economic losses are love and affection of parents, leadership of
managers, sentimental attachments to family heirlooms, innovative and creative
abilities, etc.

How Insurance Works?

The

mechanism of insurance is very simple.

People who are exposed to the same risks come together and agree that, if any one of them suffers
a loss, the others will share the loss and make good to the person who lost. All people who send
goods by ship are exposed to the same risks, which are related to water damage, ship sinking,
piracy, etc.
Those owning factories are not exposed to these risks, but they are exposed to different kinds of
risks like, fire, hailstorms, earthquake, lightning, burglary, etc. Like this, different kinds of risks
can be identified and separate groups made, including those exposed to such risks. By this
method, the heavy loss that any one of them may suffer (all of them may not suffer such losses at
the same time) is divided into bearable small losses by all. In other words, the risk is spread
among the community and the likely big impact on one is reduced to smaller manageable impacts
on all.
If a Jumbo Jet with more than 350 passengers crashes, the loss would run into several crores
of rupees. No airline would be able to bear such a loss. It is unlikely that many Jumbo Jets
will crash at same time. If 100 airline companies flying Jumbo Jets, come together into an
insurance pool, whenever one of the Jumbo Jets in the pool crashes, the loss to be borne by
each airline would come down to a few lakhs of rupees. Thus, insurance is a business of
sharing.
There are certain principles, which make it possible for insurance to remain a fair
arrangement. The first is that it is difficult for any one individual to bear the consequences of
the risks that he is exposed to. It will become bearable when the community shares the
burden.
The second is that the perils should occur in an accidental manner. Nobody should be
in a position to make the risk happen. In other words, none in the group should set fire to his
assets and ask others to share the costs of damage. This would be taking unfair advantage of
an arrangement put into place to protect people from risks they are exposed to.
The occurrence has to be random, accidental, and not the deliberate creation of the insured
person. The manner in which the loss is to be shared can be determined before-hand. It may be
proportional to the risk that each person is exposed to. This would be indicative of the benefit
he would receive if the peril befell him.
The share could be collected from the members after the loss has occurred or the likely shares
may be collected in advance, at the time of admission to the group. Insurance companies collect
in advance and create a fund from which the losses are paid.
The collection to be made from each person in advance is determined on assumptions. While
it may not be possible to tell beforehand, which person will suffer, it may be possible to tell,
on the basis of past experiences, how many persons, on an average, may suffer losses.

Thefollowing two examples explain the above concept of insurance:

Example 1
In a village, there are 400 houses, each valued at Rs. 20000. Each year, on the
average, 4 houses get burnt, resulting into a total loss of Rs. 80000. If all the
400 owners come together and contribute Rs. 200 each, the common fund
would be Rs. 80000. this is enough to pay Rs. 20000 to each of the 4 owners
whose houses got burnt. Thus, the risk of 4 owners is spread over 400 houseowners of the village.

Example 2
There are 1000 persons who are all aged 50 and are healthy. It is expected that
of these, 10 persons may die during the year. If the economic value of the loss
suffered by the family of each dying person is taken to be Rs. 20000, the total
loss would work out to Rs. 200000. If each person in a group contributed Rs.
200 a year, the common fund would be Rs. 200000.
This would be enough to par Rs. 20000 to the family of each of the ten persons
who die.
Thus, the risks in the case of 10 persons, are shared by 1000 persons.

Insurance of Human Asset

A human being is an income generating asset. Ones manual labour,
professional skills and business acumen are the assets.
This asset also can be lost through unexpectedly early death or through sickness
and disabilities caused by accidents. Accidents may or may not happen.
Death will happen, but the timing is uncertain. If it happens around the time of
ones retirement, when it could be expected that the income will normally cease,
the person concerned could have made some other arrangements to meet the
continuing needs.
But if it happens much earlier when the alternate arrangements are not in place,
there can be losses to the person and dependents. Insurance is necessary to help
those dependent on the income.
A person, who may have made arrangements for his needs after his retirement,
also would need insurance.
This is because the arrangements would have been made on the basis of some
expectations like, likely to live for another 15 years, or that children will look
after him.
If any of these expectations do not become true, the original arrangement would
become inadequate and there could be difficulties. Living too long can be as
much a problem as dying too young.

Both are risks, which need to be safeguarded against. Insurance takes care.

Advantages of Life Insurance

Life insurance has no competition from any other business. Many people think that life insurance
is an investment or a means of saving. This is not a correct view.
When a person saves, the amount of funds available at any time is equal to the amount of money
set aside in the past, plus interest. This is so in a fixed deposit in the bank, in national savings
certificates ,in mutual funds and all other savings instruments. If the money is invested in buying
shares and stocks, there is the risk of the money being lost in the fluctuations of the stock market.
Even if there is no loss, the available money at any time is the amount invested plus
appreciation. In life insurance, however, the fund available is not the total of the savings
already made (premiums paid), but the amount one wished to have at the end of the savings
period (which is the next 20 or 30 years). The final fund is secured from the very beginning.
One is paying for it later, out of the savings. One has to pay for it only as long as one lives or
for a lesser period if so chosen. There is no other scheme which provides this kind of benefit.
Therefore life insurance has no substitute.
Even so, a comparison with other forms of savings will show that life insurance has the
following advantages.
In the event of death, the settlement is easy. The heirs can collect the moneys quicker,
because of the facility of nomination and assignment. The facility of nomination is now
available for some bank accounts.
There is a certain amount of compulsion to go though the plan of savings. In other forms, if
one changes the original plan of savings, there is no loss. In insurance, there is a loss.
Certain cannot claim the life insurance moneys. They can be protected against attachments
by courts.
There are tax benefits, both in income tax and in capital gains.
Marketability and liquidity are better. A life insurance policy is property and can be
transferred or mortgaged. Loans can be raised against the policy.
The following tenets help agents to believe in the benefits of life insurance. Such faith will
enhance their determination to sell and their perseverance.
Life insurance is not only the best possible way for family protection. There is no other
way.
Insurance is the only way to safeguard against the unpredictable risks of the future. It is
unavoidable.
The terms of life are hard. The terms of insurance are easy.
The value of human life is far greater than the value of property. Only insurance can
preserve it.
Life insurance is not surpassed by many other savings or investment instrument, in terms of
security, marketability, stability of value or liquidity.
Insurance, including life insurance, is essential for the conservation of many businesses, just
as it is in the preservation of homes.
Life insurance enhances the existing standards of living.
Life insurance helps people live financially solvent lives.
Life insurance perpetuates life, liberty and the persuit of happiness.
Life insurance is a way of life.

Life insurance

Life Insurance is a contract where insurers have to pay a designated

beneficiary amount of money upon the death of the insured person.
The policy holder has to pay a premium regularly or as a lump-sum
amount. Depending on the contract, various sorts of expenses such as
terminal illness or critical illness or funeral expenses are covered in
the premium. There are various types of insurance policies in the
market, mentioned below are the few amongst them:
Term insurance policy This policy protects the person insured for a
specific period of time.
Whole life policy -The policy covers a policyholder against death,
throughout his life term. Premiums paid under the whole life policies
are tax exempt.
Endowment Policy This is the policy in which the beneficiary gets
the sum assured in case of death or if insurer survives then also
premiums are paid back with other investment returns and benefits.
Universal life coverage - It is a new insurance product that has
permanent insurance coverage as well as wealth creation options.
Money Back Policy -This insurance policy gives periodic payments
during the term of policy.
Retirement and Pension -The policy provides protection against
financial risks and money in the form of pension at regular intervals.

LIST OF LIFE INSURANCE

PLAYERS IN INDIA
PUBLIC SECTOR LIFE INSURANCE COMPANY
LIFE INSURANCE COMPANY (LIC)
PRIVATE SECTOR LIFE INSURANCE COMPANY

Bajaj Allianz Life Insurance Company Ltd.

Birla Sun-Life Insurance Company Ltd.

HDFC Standard Life Insurance Co. Ltd.

ICICI Prudential Life Insurance Co. Ltd.

ING Vysya Life Insurance Company Ltd.

Max New York Life Insurance Co. Ltd.

MetLife Insurance Company Ltd.

Kotak Mahindra Old Mutual Life Ins. Co. Ltd.

SBI Life Insurance Company Limited

TATA AIG Life Insurance Co. Ltd.

Reliance Life Insurance Co. Ltd.

Aviva Life Insurance Co. Pvt. Ltd.

Sahara India Life Insurance Co. Ltd.

Shriram Life Insurance Co. Ltd.

Bharti AXA Life Insurance Co. Ltd.

Future Generali India Life Insurance Co.Ltd.

IDBI Fortis Life Insurance Co. Ltd.

Canara HSBC Oriental Bank of Commernce Life Insurance Corp.ltd.

AEGON Religare Life Insurance company limited.

DLF Pramerica Life Insurance Co.ltd.

Star Union Dai-ichi Life Insurance Co.ltd.

India First Life Insurance Company Limited

Edelweiss Tokio Life Insurance Company Limited

INFORMATION TECHNOLOGY APPLICATION

IN LIFE INSURANCE SECTOR
INTRODUCTION

In the present scenario everyone is using computer one way or the other and
whenever you go to the market for shopping in any departmental store there you
will find billing is computerized. The most common item now a days is a
Mobile phone which uses the information technology to send the data or store
the data like phone numbers or the messages.

In the latest mobile sets songs can also be stored and the mobile phone
instrument can be used as computer. The innovation in the computer field is
taking at very high pace.
We are going to explain how the computer can be useful in the insurance sector.
MEANING OF INFORMATION TECHNOLOGY
The devices and techniques used to store, process, manage transit and
communicate information, encompass various technologies such as computing,
microelectronics and telecommunication is known as Information Technology
There is revolution in the Information Technology after the advent of computers
starting with first Generation Computers to the latest Pentium microprocessor
based Personal computer.

It has been further revolutionized with the development of software packages

for specific area from stand alone personal Computers to Local Area Network
and ~Wide Area Network~ and Main Frame computers. These computers can be
used by many users simultaneously known as Multi-user environment.

You know very well that the volume of transaction is very large in any
insurance organization. The data and information are to be stored for a Longer
period because insurance contracts are long term especially life Insurance
contracts.
The Insurance organizations have the network all over. the countries even in
foreign countries. Moreover, the transactions are of repetitive nature therefore, it
has become necessary to seek the help of machines to process the data. Initially,
the Insurance companies used adrena machines and punch card equipment for
creating, storing and processing data.
But these machines were severely limited in their capacity. These were
mechanical machines or Electra mechanical machines therefore, their speed,
capacity and flexibility was much limited, But even the computers had some
limitations initially, But these difficulties have been overcome with the help of
the recent developments in telecommunication, which are used to aid computer
technology.

INSURANCE RELATED APPLICATIONS

Life Insurance Applications

(a)

Life Administration Module:

Policy Servicing of existing policies: The existing policyholders may

require various services after taking the insurance policy

For eg: Change of Nominee, Change of address, of change in mode of

payment, assignment of the policy, Claims payment etc. These changes or
payment can be made very easily through computers.

Information Technology (IT) Application in Insurance

DIPLOMA IN INSURANCE SERVICES

New Business: As and when the new business is acquired the initial
data of a policyholder is quite large and as stated above the data is to be
maintained for longer period therefore storage of data in computer is useful

Renewal notice/Billing: Renewal notices to be sent for the payment of

the premium and with a no. Of policyholders are very large and the renewal
is on different dates. The computer generates the renewal notice at very high
speed and does it automatically. The inter-mediatory bills are generated very
fast and quickly

Loans: The Policyholders do take loans and the insurer has to maintain
the records as the insurer has to recover the loan from the policyholder
along with the interest. The recovery of loan may be regular or recovery at
the time of payment of claim

(b) Statistics and MIS Claims: As the data in computer can be stored for
longer period the data may be useful for the insurer to prepare the type of
policies are sold in the market and type of claim arisen in the particular
region. These types of data will be useful for management to take any
decision.

(c) Archiving of historical data and imaging Systems: As the past

data is available with life insurer therefore they can design the new products
and price them accordingly.

General Insurance Applications

a) Front Office System

Policy Management and underwriting system
Co-insurance
Reinsurance
Claims Management System
Financial Accounts and Audit
Statistics and MIS

b) Reinsurance System .
Inward insurance
DIPLOMA IN INSURANCE SERVICES

Outward Insurance
Reinsurance Account
MIS.

c) Risk Management System

Other Applications
a) Investment
Term Loan . ..
Money market .
Investment Accounts .
Market Operations
(b) Personnel System.
Payroll system

Performance Appraisals
Attendance and leave system
PF .

(C) Office Services

Purchases
Inventory
Tours and Travels etc
Corporate Accounting System General Insurance Applications
Let us discuss about Front Office System In the General Insurance Industry.These
applications can be written in any language and they may differ from Office to
Office of The different. The software namely
GENESIS~ is being used by General Insurance Companies.
On-line Front Office System is the first step towards computerization of any
insurance Company and a well designed system at the front offices has
following advantages
to the company.
To carry out business transactions efficiently
Easy to handle growing volume of business and variety of Business

(No. of documents processed, Variety of policies issued, Volume of business)

Efficient customer services
Reduction in office expenses
MIS for the Branch Managers .

A good Front Office System should allow Insurer, Underwriters, and agents
to manage the day to day operations of the office. The system should be
capable of administering all stages of policy development from questions to
new business, through adjustments by way of endorsements and renewals of
policies. Coinsurance, Claims re-insurance and all accounting
functions. The main components of the Front office System are given below:
Policy Management including Underwriting
(Policy acceptance and printing and customer services)

co-insurance

Re-insurance.

Claims

Statistics & MIS

Accounts

POLICY MANAGEMENT INCLUDING UNDERWRITING

Policy Management has provisions for policy acceptance, client interaction

window and policy printing. They should be able to store policies and the
system should allow immediate access to a client portfolio. The policy
management system generally has provisions for dealing directly through a
broker or an agent or branch office. Generally in a good Policy Management
system The Policy is able to handle multiple and mixed risks even if these
risks are located at multiple locations. Policy management system has
following additional

features:
User configured screens
Provision for questions
Policy production (including printing)
Renewals
Endorsements
Coinsurance

The front office system should have the facility to handle Coinsurance
policies. The provisions should be such that underwriter simply states
whether the insurer is acting as lead insurer or follower. They should then
automatically pass the retained premium to the relevant reinsurance.
Claims payment should activate co-insurer recoveries wherever necessary.

Reinsurance: The Front Office system generally has facility to handle all
types of proportional reinsurance including Surplus and Quota Share
Treaties: The system should be capable of setting up treaty layers by class of
business with exposure levels varied according to the EML (estimated
maximum ion). The system generally has the provision to incorporate
proportional reinsurance ceding automatically into any claim payments or
recoveries. The reinsurance module automatically produces reinsurance
Bordeaux for each cedant.
Claims
The Front Office System includes an integrated claims system to record,
progress and monitor claims, experience by Policy Clients brokers, Branch
and risk covered.
Some of the features of a claims module are given below
Movement history or duration of claim
Analysis of claims with user defined screens .
Automatic recovery from reinsurers
Incurred but not Reported (IBNR) causation and catastrophe recording
and exception reporting
Other routine enquiries.

Generally the claims system provides all the facilities required to manage
reserves, payments. recovery, accounting, claims history recording,
statistics, various kinds of ratios, and run off. The claims system also
provides claims experience information at the time of renewals and monitors
motor claims in order to accurately manage no claims bonus.
DIPLOMA IN INSURANCE SERVICES

Accounting
Front Office System allows accounting for all transactions, which occur in
the operating office. The accounting is generally integrated to policy
management system and should
automatically produce debit/credit notes, renewals notices, cover notes,
reminders, statements, Bordeaux, remittance advices etc. The system
should be able to handle taxes~ duties, reporting requirements as well as
automatic calculation of midterm adjustments:

Statistics & MIS

The statistics module should allow production of comprehensive statistical,
analytical and management information, Reports should be in any different
formats and should include detailed audits, performance reports for
management, should have provisions for exception reports for underwriting
purposes and cumulative reports for statutory returns.
LIFE INSURANCE APPLICATIONS
The Operational Offices
The Operational Office is engaged in procuring of new business and
servicing of policies, Hence it has to maintain three types of data in respect
of the policies being serviced by it.
Billing
Records containing policy number, name and address, installment premium
etc. for printing receipts and notices.
Premium
Records containing policy number, name and address, agency code number,
instalment premium, commission etc. For preparing commission bills.
Valuation
Master Records containing necessary information for assessing the liability
under a policy at any point of time and providing necessary statistical
information to management.
When, under a policy, some alterations in policy conditions are effected and
the instalment premium consequently gets
altered! all the three files or the Policy Servicing Database have to be
corrected. During mid fifties it was difficult as the only way of correcting a
punched card was to punch a new card, reproducing the unaltered
information from the old card and punching only the altered information.
There was always chance of errors creeping into the systems.
In order to avoid errors creeping into the system, the Insurance Industry
was therefore continuously on the look out for a system wherein the
particulars pertaining to a policy can be

maintained on a single record. So when the electronic computers were

introduced, the Insurance lndustry was in the safeguard of its users, Since
the length of a record on
magnetic media can be fairly large almost all the information pertaining to a
policy could be contained in single record This eliminated the problem of
inter-file consistency and also
simplified the process of making any alterations. After liberalization of
insurance sector there are 29 insurers of life and general insurance and
apart from Public sector undertaking all are using independent computer
software keeping in their marketing strategy. The private players are
controlling centrally therefore their module is quite different from the PSUs
who are in the field for the more than 50 year.

We are discussing in brief the module followed by Life Insurance Corporation

(LIC) for the Front End Application for the branches:
1.
2.
3.
4.

NEW BUSINESSMODULE (N B Module).

CASH COUNTER MODULE .
POLICY SERVICING MODULE.
CLAIM MODULE.
1. NB Module:

The NB Module takes care of premium calculation, adherence to policy

terms and conditions such as minimum or maximum age at entry
maximum age at maturity, policy term, sum assured, mode of
payment of premium etc.

The program checks the validity of individual entry and does

consistency checks . date of birth and age, data of commencement
age, term, and date of maturity, plan, mode of payment etc as
expected in the policy conditions end underwriting rules, The
Arithmetical part of the Underwriting process, as referred to above,
having been taken care of in the Module, the underwriter is free to
concentrate on other areas such as Medical Report, Moral Hazard
Report.

Special Report etc, thereby enhancing the quality of Underwriting

Standards. Many jobs manually done previously, such as proposal
review slip typing, writing of proposal register and completion advice,

outstanding deposit schedule etc has been taken over by the

Computer.

2. CASH Module:
The cash module mainly caters to the needs of the cashier and some
of the function of the Accounts Department. The premium receipts,
policy and proposal deposit receipts, 555, Loan and interest receipts,
and Miscellaneous receipts are printed through the use of the
Computers.

The receipts are generated on-line and there is no need to generate

Special Premium receipts (as was the practice earlier). There is no
need to keep the pre printed renewal premium receipts. The Renewal
Premium history file is updated, This eliminates the ledger posting (i.e.
posting of the collection of the premium in the individual ledger, which
is a laborious, time consuming job).

The cash book, cash and cheques collection list policy deposit
schedules etc could now be printed under the CASH MODULE,
thereby eliminating the manual preparation of the cash books and
Outstanding Policy Deposit schedule.

3. Policy Service Module:

This module enables recording of the Change of Address, furnishing Revival
and Surrender Value quotations, Requested File Maintenance (RFM) actions,
displaying Policy Deposit position, displaying premium history refunding
policy deposits etc.
4. Claim Module:
This module mechanizes all the jobs related with claims that are currently
done manually starting from printing discharge voucher, data sheet to the
final printing of various MIS statement.

TECHNOLOGIES FOR INSURANCE

There has never been a time when the effective use of information
technology has been more crucial to the success of the insurance industry.
The insurance markets are being revolutionised by technology at a high
speed pace. IT and software solutions, allowing cross-border trade to
become electronic and paperless, are increasingly on offer to importers,
exporters,

shipping

companies

and

financial

institutions.

Following

technological advancements can really enhance the performance of

insurance companies.
Database Management Systems
The principles of tracking and measuring responses can pay off for the
conventional insurance industry. To find more clients, insurer needs to
consider many factors, including cash value, medium and competition.
But the need to record and study the characteristics of persistency- the
length of time we retain policies, customers and agents is most important
in insurance companies.
In order to find out profitable combinations of households or clients,
products and agents, a database with five to ten years history is of
immense

importance.

Such

historical

retention

was

prohibitively

expensive in the past. But clear advantages of new PC (Personal

computer) and RISC (Reduced Instruction Set Computing) technology
gives companies power to keep tens of millions of policies on a device
with thousands of bytes of data per policy/client/agent. Analyisng a 1Oyear database is cost effective.
Reviewing the database provides information on how many clients have
actually migrated not just how many policies have lapsed or surrendered.
Using

database

technology

companies

can

get

comprehensive,

performance, loyalty, and lost opportunity.

Data Warehouse
Data warehousing technology is based on integrating a number of
information systems into a one stop shopping database to achieve vision

of making company national in scope, but regional in focus. Traditionally,

the sale of policies and the claim settlement are two separate areas for
the insurance companies. Data warehousing allows managing by profit
levels with an integrated approach rather than by limiting losses. Data
mining can be used as a means to control costs and increase revenue
resulting in enormous earning for effective users.
Decision Support Systems
The path of business applications of computers, computer based
information systems (CBIS), encompasses many stages including the very
early applications like transactions processing systems (TPS) followed by
the management information systems (MIS). The computer applications
like decision support systems (DSS), expert systems (ES) and executive
information systems (EIS) are still awaited in insurance business. Office
automation (OAS) happens to be a continuously ongoing, dynamic process
for any business. Such decision support systems will provide the insurance
managers with a tool for customised products and services that are more
in line with what customers want.
Group Linking Software
Group-linking software enables sharing of information arid partieular1v
suits document heavy insurance business. Tracking of policy application
shows how information that is input and accessed from a number of
locations can increase efficiency.
Imaging and Workflow Technologies
The proposal forms may be scanned into an imaging system. Data may be
extracted for update to computer and for automated underwriting
workflow may be implemented.
Mapping
Insurers to meet different needs, such as identifying loss prone areas or
geographic claim analysis, can use Mapping technology. It helps the

insurer to analyse the extent of its network i.e. the insurer can determine
whether it has too many or too few agency force in a particular area.

Call Centre Technology

Good customer service is a crucial element for gaining, maintaining and
retaining profitable customers. Call centre concept based on interactive
voice response services (IVRS) is gaining importance in this aspect.
Video Linking
A video linking facility between two remote units of an insurance company
or between an insurer and a broker allows underwriters at one place and
brokers at other unit to discuss risk inherent in a proposal face to face.
Cat Models
Catastrophic models use data from the recent natural disasters that helps
develop more predictions of insurers property exposures in future
disasters. Using this data curious what-if scenarios of probable
maximum loss (PML) using the best estimate available at an insurers
exposures are tested. Finally an underwriting policy that limits the
companys exposure to catastrophic losses is implemented.
Intranet is the network connecting different offices of the same business
to permit the internal data within the business. Extranet is a network
allowing the business to communicate with business partners like
suppliers, vendors, banners, regulations etc. on the electronic channel.
Internet is a global network of many computer networks. Any user, who
would like to exchange some information with other user at a remote
location, can log into the computer of Internet provider via modem or an
Internet access CPU (IAC). The Internet and online service providers are
providing opportunities to create new forums that can be utilised by
everyone worldwide. Insurers can browse through many useful sites on
the Internet.

Technology & Cyber Insurance in India

The opening up of the Insurance industry in India would boost
competition, facilitate technology transfer and lead to new products,
better customer service, deeper and wider insurance coverage and many
more opportunities for employment. As new private sector entrants enter
into India, opportunities in the insurance industry are up for grabs. One
important aspect of the insurance industry, which is gaining prominence
tile world over, is the development of technology and cyber-insurance
strategies. Cyberspace is a risky place. Companies conducting business
over the internet are exposed to a variety of new, unpredictable and
serious exposures such as servers crashing, computer viruses, destruction
of data, e-mails disappearing and attack from hackers for which there are
few precedents in terms of risk management and even less actual
insurance coverage. Cyberspace presents unique challenges to risk
managers for several reasons; the foremost being that there is no
Standard risk profile.
The wide variety of internet-related businesses, such as ISPs, content
aggregators, certification authorities, online merchants and software
developers, all contribute to the difficulty of developing a single risk
profile. Enacting appropriate insurance policies for ensuring cover for
security issues and intellectual property rights issues is vital.
For safe business transaction, what is needed is a secure legal
environment and while legislation in India is providing this environment
with the enacting of laws dealing with the Internet, Insurance companies
in India should provide comprehensive protection policies for a business
against web-related risks, such as hackers and viruses, credit card and
employee fraud, business interruption losses, and legal action. Essentially,
the policy can fill the gaps in coverage that have opened up between
standard insurance policies due to the fact the way business is done has
changed.

Intellectual property infringements: content providers who use content of

others without permission can trigger these risks.
Errors and Omissions liability: these risks are typically triggered by the
programmers, web hosts & web-designers, who, through negligence in
their work cause injury/damage to a third party.
Personal injury & advertising Liability: As e-commerce grows, these risks
can be triggered by worldwide web sites, and trade publishers who publish
illegal content or content which may be constructed as libel.
Directors liability: Directors and officers often face the risk of litigation
due to numbers of factors, such as consumer protection laws, securities
related laws, and certain provisions in the corporate laws that place
additional responsibilities on directors.
Employee

liability:

These

risks

would

arise

from

the

breach

of

confidentiality and rights of privacy arising out of confidential client

information stored on a particular system or website. In addition,
employee can initiate sexual harassment charges from an employee due
to disturbing e-mail content. Legal fees: Fees incurred for litigation arising
out of various claims, such as intellectual property. Many businesses on
the internet mistakenly think their internet- related exposures are covered
by their existing policies.

IT APPLICATIONS IN FUNCTIONAL AREAS

Even though the information technology has wide application in all the
spheres of the insurance business, yet following are the most important
ones in respective functional areas:
Marketing

The scope for use of Information Technology in marketing function is

tremendous. It may start from the consumer acquaintance to an insurance
product to claims settlement or further selling of new products or
developing consumers for the products.
Information technology can be integrated with almost all the Ps of
marketing. It may help in formulation and implementation of various
marketing strategies including pricing, promotion and customisation
strategies. Some of these areas are discussed below:
Consumer Awareness
The use of Information Technology may be path breaking for the insurance
companies since conventionally the awareness of the insurance products
in India is low. With the use of Internet the information about the products
and pricing policies can be made available to the public in few seconds
and much transparency in operations can be established. There are
numerous websites available which can help the prospective customers to
compare the insurance products of various issuers and decide the product
suited to his needs. Also, the information about the new products
changes in the existing ones and of course, the information on various
discounts and incentives can be provided at a much faster rate and lower
cost.
Customer Services
The insurance being a service needs high concerns in terms of services.
Customer service requires maximum attention and should span the entire
gamut of activities in the purchase of a product i.e. right from the
dissemination of information, documentation to policy administration and
claim settlement. The service quality standards of the new private
insurance players have posed a threat to the-then giants viz. the LIC and
GJC.

The investments in the personnel and knowledge systems have helped

private players companies build significant domain expertise. The
emerging areas of IT applications are:
(1) Market Research
(2) Consumers targeting and segmentation
(3) Customisations of products
(4) Easy procedures like premium payments, claims settlements, tracking
of brokers and agents
(5) Complaints management! grievance handling
(6) Intermediary analysis
Finance
Information technology can be effectively used for internal management
viz. Accounting, treasury management, financial performance reporting
etc. and as well as in resource mobilisation, portfolio management,
investment planning etc.
Human Resource Management
Application of IT in Human Resource Management is obvious. It can be
effectively utilised in: (1) recruitment and selection, (2) training, (3)
performance appraisal, (4) promotions, transfers and dismissals, (5)
valuations etc.
Research and Development
R&D has been made an easy task with the increasing use of IT. Surveys
and research on market potential, analysis of markets, tracking with
international norms and developments are the profound areas of IT
applications.

Impact of Technology on Insurers

Any new adoption needs time to get acquainted with the users until they
gain enough confidence & knowledge in that system. Recent studies
reveal that consumers lack passion for insurance because of its
complexity, but despite these push backs, a growing number of insurers
are intrigued by the significant cost saving & customer-retention benefits
to be gained through online self-service. Although carriers think that by
encouraging insurers to do transactions by online services, which would
reduce operational costs vastly, they are very cynical of investing in web
technology with dot-corn collapse.
The trick lies in educating insurers about the concept and benefits of
eservices in this sector. Driving client to initial online self-service
experience into something more interactive by call services that would
involve human interactions will certainly have a greater impact. This
balanced approach is how most insurers are enabling online self-service
that not only make sense for policyholders, but also provides support for
intermediaries and agents. The main challenge for any health companys
website would be bringing all sections of people to view their site.
They should show some positive incentives to bring customers to their
websites. Online services have own advantages like accessibility of
information 24/7, visualization of information, providing interactive plan
finder tools, adding useful links to the websites, live chat technologies etc.
An online activity helps to give necessary knowledge to consumers, which
is very positive, because it implies that when people learn more they
establish a deeper relationship and a broader dialogue with the carrier.
Agents and brokers also enjoy the efficiencies that come with writing new
businesses and servicing their customers on websites. About 55% to 60%
of customers take booklets electronically. In order to enable efficient
online self-service functions, companies typically have to update their
legacy systems.

Despite the current limits to online self-service, as the Internet continues

to gain acceptance, customers probably will become more open for using
it as a conduit for insurance services. In the past year, the portion of
insurers

offering

customers

service

websites

has

been

growing

dramatically.

TECHNICAL CHALLENGES
A host of tech accompanies the task of insurance fraud and abuse
detection. An abusive solution to the problem requires a comprehensive
approach enabled by a variety of technologies that addresses these
technical challenges head-on. Some of these design issues include;
Ongoing reassessment of fraud risk
Because fraud may not exist at the time the claim is submitted, or
because evidence of abuse may not yet be apparent, a system must each
claim over and over on an ongoing basis.
Understanding raw data
The

starting

point

is

the

raw

mountain

of

data.

thorough

understanding of this data requires careful analysis and domain expertise.

Furthermore regardless of what technologies are employed, careful

engineering is required to address issues of data being messy. missing or
standardized
Behavior from ongoing transactional data
Characterizing

claim

activity

involves

the

summarization

of

all

transactional data (e.g. payments or medical service details). This

summarization must not lose key aspects of activity.
Complex pattern in data
Identifying which claims are most suspicious requires a comprehensive
analysis of many different features characterizing the claim and its
activity. A detection system must be able recognize those patterns of
behavior most indicative of fraud.
Limited examples of confirmed fraudulent claims
In many cases, only a small number of known examples of fraud may exist
in the historical data. One must be able to handle such situations when
developing the detection system.

Prioritization of suspects
In order to match work level to staffing constraints, which may be different
for different customers and may vary over time, a detection system must
allow for prioritization of suspects. Scoring models provide a rank ordering
of all suspects so that attention can be focused on those deemed most
suspicious.
Effective use of detection results
In order to effectively use the detection systems results, explanations for
what makes a claim look suspicious should be provided, strategies for
effective workflow assignment should be determined (e.g., match

resources with suspects that are most beneficial to review) and tools to
review the results should be available (these may already exist).
System Maintenance
The system performance must not deteriorate due to changing patterns of
activity overtime. Because neural network models are built from data and
automatically learn complex patterns within the data, they can be
efficiently redeveloped. Indeed, as more examples of abuse become
known, model performance can be expected to improve over time.

INTERNET & INTRANET

The Internet is a worldwide system, accessible through computers.
Information travels through the internet at incredible speeds. It cuts
across national & international boundaries. While the internet allows
access for anybody from anywhere, the internet is an in-house network,
working on the same principle. The difference is similar to the difference
between a national newspaper & in-house newsmagazine, which is for
private circulation.

If an insurer has an intranet system, the information in the intranet will be

available only to its offices & personal. The policyholders will not be able
to access the data in the intranet. Circulars meant for internal circulation
can be posted on the intranet & everybody will have immediate access to
it, however far away he may be located. In the intranet also, it is possible
to restrict some information to certain categories of persons, who will be
identified through passwords.
Both internet & intranet enables users to do the following at any time (24
hours, 365 days)

Send & receive letters, which are called e-mail. Every person will

have an e-mail id, which is his address in the net.

Search, read & retrieve data, files, and pictures.
Buy & sell of policy Benefits to Agents

If the insurer has an intranet, the agent can, sitting at his place of work,
be attending the insurers office, making enquiries about status of
proposals or claims or discussing with any other agent, for clarification or
advice, whenever he wants to do it. The physical distance between the
agent & the office will not be of any consequences at all. The benefits to
agents will be:
He can receive all circulars & instructions issued by any office. All delays
on account of postal transmission, being forwarded from one level to
another, dispatch department absence of peons, wrong addresses,
misplaced through oversight, lost in transit etc., are avoided.

Any doubts with regard to proposal, benefit, premium, taxation, medical

examination, insurability etc., can be discussed & got clarified directly
from the person concerned.
Communications to & from the office will be immediate through e-mail &
at a low cost.
Benefits to PolicyholderslProspects:

Prospects can get benefit through the internet in the following ways- They
can get details of the various policies, the benefits there under, the
premiums payable etc.,
Prospects can get advice on the suitable insurance plan for themselves.
Policyholders can get information with regard to the status of the policy,
the premiums due, the bonuses attached, the surrender values or loans
available, revival possibilities, nearest office for any further transactions.
Premium can be paid without having to go to the office of the insurer, by
direct debit to the policyholder credit card or bank account
The LIC has included in its websites, for the benefit of the prospectus and
the policyholder, information to health issues

KISOKS
Kiosks are unmanned information centers, placed strategically at public
places. They are called Interactive Touch screen kiosks. A kiosk is a selfcontained hardware & software to blend all current media including

graphics, video, text & quality sound. It consists of a touch sensor& a

monitor on which the sensor can be fitted. The user is expected to touch
the relevant sensors, according to the choices offered by the kiosks
visually on the monitor. The kiosks then takes him the required
information or to transact the required business.
The LIC has installed kiosks in more than 100 locations covering its
divisional headquarters. The kiosks provide information on policy status,
product

information

about

all

products

including

group

insurance

products. These can he used by persons, who do not have their own
computers and cannot access the internet. They can be operated 24 hours
a day and do not require any supervision like the ATMs of banks.
The touch-screen kiosks were installed in some of the branch, divisional
and zonal offices of LIC. By this facility the customers can obtain
information about LIC, its performance, schemes and statuses of policies
by the touch of the screen.
The kiosks are interactive and user-friendly. Such kiosks are also to be
installed in bus and railway stations and in busy thoroughfares of major
towns and cities. In due course, payment of premium will also be made by
dropping cheques and DDs in drop-in boxes.

DATA COMPROMISE COVERAGE

The breach of personal data stored in business files and computers is a
serious risk for any company that controls the information. Customers and
employees may become the victims of identity theft and fraud. With so
many incidents of data loss being reported, companies are looking for
solutions that include new insurance protection.
All companies are responsible for personal information. Even a small
business may have data on a large number of customers, clients and
vendors. That information can be lost, stolen, or inadvertently disclosed.
But the result is the sameanxious victims, unexpected business costs
and damage to a companys brand and reputation.
Laptop Thefts Increase Risks
The breach of personal information is a serious problem in the US. In the
past two years alonc, data breaches have affected approximately 100
million Americans, a consumer watch group reports. Some people may
have been affected more than once and not all of them were victims of
identity fraud, of course, but the growing number of data losses points out
the continuing exposure to consumers and businesses.
Personal data may be stolen from physical records, or obtained by fraud
such as the sale of information to a sham company It might be hacked
from computers, mistakenly released or published, even posted to a
website. A key factor in many of the recent high profile data breaches has
been the theft or loss of laptop computers. ln fact, about a quarter of all
reported data breaches may involve missing laptops.
Its not surprising since laptops are a target of thieves. Cyber Angel
Security Solutions, a national security technology firm, reports that 10% of
all laptops are stolen in the first 12 months and 90% of those computers
are never recovered. Half of the companies in the US had their laptops
stolen in the last year and almost 90% of all corporate crimes are linked to
stolen laptops.

Smaller Companies Can Be Vulnerable

Small businesses can find it most difficult to respond to the breach of
personal information. Yet it is particularly challenging to offer broad and
affordable coverage for smaller businesses. Unlike larger companies, they
may not have the knowledge, staff and resources to inform and protect
potential victims. Smaller businesses might not recover as easily from the
extra expense and had publicity. They should look for data compromise
coverage that will arrange and pay for:
The cost of notifying individuals;
Legal reviews and forensic information technology exercises;
Personal services for eligible insured such as a helpline, credit checks
and case managers for the victims of ID fraud.
Treating Claim Data Carefully
Data

compromise

coverage

raises

sensitive

issues

for

insurance

professionals as well. One is the extreme sensitivity of claim data. How

will a claim be adjusted? How much information do you need? The
personal information of potential identity theft victims cant simply be
faxed and dropped inside an inbox. It requires special handling and careful
security procedures so that insurers are part of the solution, and not the
problem.
Another issue is for the insurance industry to take action so that we are
not fooled ourselves. It can and does happen that insurance companies
issue policies to people who are not who they claim to be. Worse yet,
insurers may claim payments to imposters. Identity verification is not

always easy, but our industry must take steps to protect personal
information and prevent claim-related identity fraud.
Insurance Professionals Can Help
It is difficult enough to keep up with developments. As technology
continues to advance, personal information becomes increasingly exposed
and new coverage options for data breaches are evolving. The pain of
being an identity theft victim is driving public reaction to data breach
incidents. The insurance industry can help by taking good care of the data
in its own control, offering high quality services to ID theft victims and
developing new insurance programs for data breach exposures.

INSURANCE AND ELECTRONIC COMMERCE -

E-

INSURANCE
On a global basis, there is mad rush of companies willing to enable their
business. E-insurance is one of the growth areas in India. Enormous
opportunities are being created by the Internets new connectivity such as
improving customers service, reducing cycle time, becoming more cost
effective, and selling goods, services, or information to an expanded
global customer base. As entire industries are being reshaped and rules
for competition are changing, enterprises need to rethink the strategic
fundamentals of their business in order to be successful. Globally,
insurance on the net has lagged behind other financial service products
such as banking and brokerage. Of the total online users only 5% used
insurance service online.
This lag was due to lack of relevant and adequate content. Traditional
insurers, while leveraging on new information technologies, have been
slow to utilise the Internet as an alternative distribution channel. All the
largest insurers have been focused on static marketing presence online,
encompassing product information, FAQs and quotes. Only a few insurers
have added the ability to submit applications online. This lack of

participation in the e-business revolution is seen across lines. The

insurance companies attribute two factors for the slow take off. First and
foremost, insurance is a product that is sold and not bought. The Internet
is perceived to be a buyers medium, with online customers able to search
quickly and for the most competitive prices and variety of products.
Insurance is one product that cannot be easily commoditized. The more
personal the selling process, the greater the difficulty in using the net as a
medium for selling. Insurance is one product, which involves personalised
selling. The process of insurance sales requires a series of face-to-face
interactions.

International Trends
The convergence effect of IT is being felt by the insurance industry as well
in developed countries. The insurance industry is expected to lose market
share to banking and other financial institutions. Customers today expect
enhance levels of service due to increased competition. This customer
demand is likely to result in non-traditional access to specific information.
The global online insurance market is expected to achieve an exponential
growth in the near future.
The Gartner Group in a study conducted by them says that in a year 25%
of all customer contacts and enquiries for enterprises will come via the
internet, e-mail and online forms. Bancassurance customer service, which
has been almost exclusively done via the telephone (96% of all
transactions), will become increasingly e-mail based in the next four
years; decreasing telephone related service by 28%.
In response to these trends in customer preference, insurers are
mobilising

their

online

sales

and

customer

account

management

capabilities. This move towards building Internet based business solutions

benefits the insured by providing greater flexibility, greater customisation

of information and improved customer service for the insurance company.

This drastically reduces the costs involved. Similarly, by essentially
outsourcing administrative and cost intensive processes such as policy
administration to customers, the cost of administration and servicing the
insurance policy also decreases sharply.
E-Insurance in India
The intriguing question before all associated with the insurance industry is
that will it be possible for private companies or even public sector
monoliths to sell insurance online in India in the near future? Insurance
companies will probably have to wait for Internet penetration to increase
and the still ambiguous e-commerce rules to take concrete form. However,
what is not debatable is that new private entrants will change the rules of
the game for the Indian insurance business, both in the life and the nonlife

segment,

unfolding

opportunities

for

software

engineers

and

professional agents.
To peep into the possibilities and opportunities emerging out of the
integration of insurance and information technology, various organisations
have organised seminars and conferences in the recent past to explore
the possibilities of selling insurance on the Net and gauge the
opportunities for the growing Indian software industry.

According to T. Ramanan of Assocham, life insurers were among the first

to go online with informative content and features like actuarial
calculators. However, according to him, they have been relatively slow to
embrace online commerce, which currently makes up about 1 per cent of
the total term life market. Only 12 per cent of insurance companies
globally sell policies online. Experts expect the percentage of term life
sold over the Internet to increase from I per cent to 15 per cent by 2003,
which in monetary terms works out to $21 billion. Although traditionally
term life insurance has been sold through independent agents, the big
shift will become manifest sooner than later. And more importantly Indians

cannot watch from the sidelines as this paradigm shift in the insurance
sector takes place. In the non-life sector, automobile policies are popular
over the Internet. Premium income, points out the paper, is expected to
rise to $18 billion from about $1 billion currently. The growth of global
online insurance business augurs well for the Indian IT sector. The
exponential growth in the online insurance business will unfold significant
business

opportunities

for

software

companies/consultants.

The

opportunities that rise out of this will be both global and local, because
new entrants will have to either fine tune or prepare customized packages
for the Indian market.
Online insurance will also help companies reduce costs and keep
premiums low, a prerequisite in a price sensitive market like India. The
government,

however,

will

have

to

address

problems

relating

to

bandwidth on an urgent basis to make online insurance a reality in India.

Other major challenges to face Indian insurers will be to design and
develop strategies for delivering services to well segmented customers.
The third challenge lies in developing the right combination of customer
segments and applicable distribution channel strategies.
Most Web sites offer contact numbers of their branch officers where we
can get further details of the products on offer. The Agent locator feature,
available on maxnewyorklife.com, iciciprulife.com and on bimaonline.com
help one locate an insurance agent most accessible to you based on a
search facility. One would expect downloadable proposal forms on
insurance web sites, but these are missing in most cases. Only
Iicindia.com seems to offer downloadable proposal and claim forms for a
few of the schemes.
Benefits of Electronic Insurance
E-insurance provides multiple benefits to the insurer and the existing and
prospective insured:
Information collected is better and cheaper

 Speed of response Issuance of policy and settlement of claims is

faster
Provides new ways of doing business in competitive market
Flexible pricing and customised services
Global accessibility i.e. lapse of physical boundaries
Increased sales without additional sales force
Immediate premium collection and funds transfer
Reduced cost per transaction
24x7 availability i.e. round the clock availability of information
Real time knowledge base building

Major Factors Affecting E-insurance

Growth of net: it is estimated that India would have about 150 million
net users by 2010. These figures represent a huge buying potential.
Competition pressures: insurance companies because of competitive
pressures would be driven into Internet rather than a clear ROT
justification.
Customer: the availability of net-based services will be a huge factor for
customer retention.
Cross sells: when linked with other financial products, a portfolio
approach to investment, savings and risk coverage will increase cross sells
and customer loyalty and retention.
Costs: in the beginning c-insurance will be a cost factor rather than a
profit driver, but in the long run it will be a cost reducing factor.

E-Insurance Business Challenges

Electronic insurance will not only provide many benefits but will also pose
business and technological changes.
Business Challenges

 Disintermediation increases business: Study has shown that the cost of

distribution decreases with the increased value of connection. Products
with relatively high fixed costs and low value such as travel, credit or
burial insurance are relatively expensive to produce. Customers pay a
high price per dollar of coverage for these products. The Internet allows
the disintermediation of this relatively high overhead for these low face
value products. This means that prices can be lowered and more
insurance can be sold by reducing the transaction costs of the exchange.
Reorganisation of companies-Virtual Companies: Many insurers will be
prompted by the opportunities presented by E-commerce to restructure
the packaging of insurance services. Insurance companies using ccommerce

may

re-engineer,

outsource,

and/or

streamline

their

management functions, or marketing and distribution arms. To more

efficiently deliver these services, some insurers will be able to reduce their
significant investments in physical facilities and certain personnel. Ecommerce will enable independent agency insurers to more easily adapt
their distribution mechanism to market competition and expedite their
transactions with intermediaries.
Insurance customers what do they want: Customers could get better
and different service through the Internet. It is possible to obtain quotes
from a number of companies. In some cases, the Internet provides rating
agencies evaluation of insurers. The Internet and outsourcing can provide
additional cost savings to the consumer. Technology can bring the
customer closer to the insurance contract, by removing layers of
inefficiencies. Consumers will also obtain price comparisons for relatively
generic contracts, such as life insurance and rates for a standard set of
auto insurance coverage for given vehicle and driver characteristics.
Consumers also could have access to internal records to see where their
claims are in terms of payment, when their next annuity payment is due,
and how their mutual fund is performing. This can be done without calling
a burdensome voicemail system, being put on hold, or finding a person
who can give them the desired information efficiently.

 The Death of Insurance Agent: One of the reasons why insurers have
been slow to use electronic commerce could be the fear of swallowing up
the agents business. The Internet does not necessarily imply the death of
the agent. Many insurers are examining their agents role in the process
and arc also developing direct contacts with the insured through their web
presence. Agents could enhance their advisory role to consumers as their
paper and money processing functions diminish.
Technological Challenges
One of the most prominent challenges of e-commerce is security. It is very
evident that many users are reluctant to do business on the Internet due
to security reasons:
Database Security: The business database security is utmost important.
This has to be monitored by security of the web server and web access.
Web Server Security: Security policies should be defined as who is allowed
access, nature of the access and who authorises such access, etc.
Password sniffing: Protection against password sniffing is to avoid using
plain text user names and reusable passwords.
Network Scanning Programs: Automated tools should be used to scan your
network. These tools check for well-known security related bugs in
network programs such as send mail and FTPD.
Physical Security: One can ensure physical security by having an alarm
system that calls the police, having a key-lock on the computer power
supply.

Web Access Security: Host based restrictions can be implemented using a

firewall to block incoming HTTP connections to a particular web server.

Transmission

Security:

Encryption

is

key

technology

to

ensure

transaction security.
Privacy: Privacy is likely to be a growing concern as internet-based
communications and commerce increase, Designers and operators of web
sites who disregard the privacy of users do so at their own peril.

INFORMATION TECHNOLOGY AND LIC

LIC has been one of the pioneering organisations in India who introduced
the leverage of Information Technology in servicing and in their business.
Data pertaining to almost 10 crone policies is being held on computers in
LIC. The computers were introduced in 1964 in LIC. Unit Record Machines
introduced in late 1950s were phased out in 1980s and replaced by
Microprocessors based computers in Branch and Divisional Offices for
Back Office Computerisation. Standardisation of Hardware and Software
commenced in 1990s. Standard Computer Packages were developed and
implemented for Ordinary and Salary Savings Scheme (SSS) Policies.
Front End Operations
With a view to enhancing customer responsiveness and services, in July
1995, LIC started a drive of On-line Service to policyholders and agents
through computers which enables policyholders to receive immediate
policy status report, prompt acceptance of their premium and get Revival
Quotation, Loan Quotation on demand. Incorporating change of address
can be done on line. Quicker completion of proposals and dispatch of
policy documents have become a reality. All 2148 branches across the
country have been covered under front-end operations. So LIC claims that
all its 100 divisional offices have achieved the distinction of 100% branch
computerisation. New payment related Modules pertaining to both
ordinary and SSS policies have been added to the Front End Package
catering to Loan, Claims and Development Officers Appraisal to reduce
time lag and ensure accuracy.
Metro Area Network
A Metropolitan Area Network, connecting 74 branches in Mumbai was
commissioned in November, 1997, enabling policyholders in Mumbai to
pay their Premium or get their Status Report. Surrender Value Quotation,
Loan Quotation etc. from any branch in the city. The System has been
working successfully. More than 10,000 transactions are carried out over
this Network on any given working day. Such Networks have been
implemented in other cities also.

Wide Area Network

All 7 Zonal Offices and all the VLN centres are connected through a Wide
Area Network WAN). This enables the customer to view his policy data and
pay premium from cur branch of an MAN city. As at May 2002, there were
91 centres in India with more than 1200 branches networked under WAN.
Interactive Voice Response Systems (WRS)
IVRS, functional in 58 centres all over the country, enables customers to
ring up LIC and receive information (e.g. next premium due, Status, Loan
Amount, Maturity payment due, Accumulated Bonus etc.) about their
policies on the telephone. This information could also be faxed on demand
to the customer.
Website
LICs website, www.licindia.com, displays information about LIC and its
subsidiaries. LIC (International) E.C., LIC (Nepal) Ltd., LIC Mutual Fund, LIC
Housing Finance and their products. The addresses/e-mail IDs of its Zonal
Offices, Zonal Training Centres, Management Development Centre,
Overseas Branches, Divisional Offices and also all Branch Offices are also
provided. LIC has given its policyholders a unique facility to pay premiums
through Internet absolutely free and view their policy details on Internet
premium payments.
Information Kiosks
LIC has set up Interactive Touch screen based Multimedia KIOSKS in prime
locations in metros and some major cities for dissemination information to
general public on various products and services offered. These KIOSKS,
enable the users to provide policy details and accept premium payments.
Info Centres

It has also set up call centres to provide information about our Products,
Policy Services, Branch addresses and other organisational information.

INSURANCE APPLICATIONS WITH ADOBE

Break free of paper-based processes
Insurance companies tell us that they are hindered by slow, paper-based
processes. Agents waste time and money shuffling forms, instead of
closing business and prospecting for new customers. Back-office burdens,
such as re-keying data and handling huge volumes of mail, further
increase costs. As a result, customers are put off by frequent poor service,
causing them to look for other alternatives or abandon the process
altogether.
The challenge is to find a way to streamline the application process
driving down costs while helping to drive additional revenues and profits
but it hasnt been easy.
Restricted by system silos and patchwork processes
If your company is like most carriers, you have legacy system silos and
patchwork processes for various product lines. This lack of integration
creates islands of information, which necessitates extensive manual
handling and staff paperwork.
The resulting inefficiencies dramatically impact your organizations ability
to put the customer first and efficiently meet the needs of policyholders
and agents.
Applications for new insurance take an hour or more to complete.
Customers have to supply the same information repeatedly
A seemingly endless stream of paper flows from desk to desk and
department to department, often back stepping more than once.

 Frequent data errors and broken process steps require timetime

that costs you money.
Studies have shown that paper-based processes are expensiveup to an
estimated $150 to print, scan, fax, copy mail, and process each insurance
application. In addition, growing regulatory requirements add to the
burdens that your headquarters faces, forcing you to update systems and
disclosures to remain in compliance. All this leads to slower service,
unhappy customers, and dissatisfied agents and brokerswho just may
decide to take their business elsewhere.
Adobe can help remedy the situation. The Adobe solution for insurance
application helps you improve service while reducing costs, meeting
policyholder needs, and increasing agent loyaltyso you can dose more
business.
Get faster, more accurate processing
The Adobe Intelligent Document Platform accommodates both paper
forms and electronic documents, simplifying the collection and sharing of
information, and minimizing time-cons tuning back-office tasks.
Agents, customers, and call center representatives need to enter
data only once.
Renewal forms

and

other

documents

can

be

automatically

populated, dramatically reducing time-consuming and error-prone

re-keying.
Adobe Document Services simplify underwriting and risk appraisal
by allowing ratings and not to be made right on the form for review
by all partieswithout altering the original document.
Electronic distribution eliminates postal delays and costs, and
improves response times by eliminating back-office handling.
Agents and brokers can present intelligent forms to clientsin an
offline modeby using the free Adobe Reader.
When wet signatures are required, you can print forms out and then
easily revert back to an intelligent, automated process while
maintaining full integrity of the original form data.

Build data validation and calculations into all application processes.

Support for eXtensible Markup Language (XML) and ACORD XML standards
helps

efficiently

integrate

this

information

into

your

enterprise

applications. Adobe Document Services also offer a flexible front end, so

you can adapt easily to the latest regulatory policies, to minimize the
business disruption and expense of compliance.
Beyond the wide range of benefits delivered by the solution, Adobe also
partners with industry leaders such as IBM and Documentum, so that you
can extend Adobe supported insurance solutions throughout your
enterprise.

Conclusion
Back to of How well is the life insurance industry keeping pace with rapidly
changing technology? It seems to me that the industry is not keeping pace but
rather falling behind.
There needs to be a real sense of urgency behind the seriousness of the situation
and the amount of change not just technological but organizational that is
required to get back in the game.
The technology itself is no longer the main challenge, nor is just getting a new
service online. These are hygiene factors in todays world.
The real challenge is how do life insurance companies organise themselves
differently to deliver a culture of constant change and evolution in order to
attract customers and keep them engaged.
As we have studied above how the IT is playing important role in insurance
sector and not only this, the developments in telecommunication, have
enabled networking of various
computer systems.
The computers have been interlinked same office through Local Area
Network (LAN). As the company has many offices all over the country and to

facilitate the customers, in network called Metro Area Network (MAN) is

installed. Through this networking all the branches located in large cities
have been interlinked.
It is generally done through a central computer, which keeps the data of all
the branches. This system has enabled the data for policies to be available at
any branch terminal for any policy irrespective of the branch where the
policy is underwritten.
In this way policyholder is enable to make the payment of premium in any
branch to get the receipt immediately.

As the technology is developing very fast the crime rate IT is also increasing
and to protect the public interest the Govt. has implemented Indian
Information Technology Act 2000 toavoid any crime in IT sector.

BIBLIOGRAPHY
Books:
Insurance & Risk Management Dr. P.K. Gupta
Technology & Insurance ICFAI
Magazines:
The Windows Magazine
Insurance Journal
Websites:
Insurance & Technology http://www.insurancetech.com

 Network Magazine India

http://www.networkmagazineindia.com
Microsoft Corporation http://www.mircosoft.com
Adobe Systems Incorporated http://www.adobe.com
Wikipedia http://www.wikipedia.com
How Stuff Works http://www.howstuffworks.com