Documente Academic
Documente Profesional
Documente Cultură
Training Supervisor :
Shailendra Pratap
Submitted By:
Mohd Shoeb
B.B.A. VIth Sem.
ACKNOWLEDGEMENT
Mohd. Shoeb
TABLE OF CONTENTS
S.No. Chapter
1 Declaration
2 Introduction
3 Life Insurance - A Basic Need
4 Insurance Advisors- Tasks Performed
5 Insurance Advisors -Work Activities
6 Insurance Advisors - Job Description
7 Company Profile
8 Competition Information
9 Annexures -
LIC Policy List
Market Share of Life Insurers
Life Insurance Offices
Distribution of The Offices
List of Private Life Insurance
Companies
10 Bibliography
DECLARATION
Mohd. Shoeb
INTRODUCTION
The
In India, Insurance is a national matter, in which life and general
insurance is yet a booming sector with huge possibilities for different
global companies, as life insurance premiums account to 2.5% and
general insurance premiums account to 0.65% of India's GDP. The
Indian Insurance sector has gone through several phases and
changes, especially after 1999, when the Govt. of India opened up the
insurance sector for private companies to solicit insurance, allowing
FDI up to 26%. Since then, the Insurance sector in India is considered
as a flourishing market amongst global insurance companies.
However, the largest life insurance company in India is still owned by
the government.
Principles of insurance
Commercially insurable risks typically share seven common
characteristics: -
1. A large number of homogeneous exposure units. The vast majority
of insurance policies are provided for individual members of very large
classes. Automobile insurance, for example, covered about 175 million
automobiles in the United States in 2004. The existence of a large
number of homogeneous exposure units allows insurers to benefit from
the so-called “law of large numbers” which in effect states that as the
number of exposure units increases, the actual results are increasingly
likely to become close to expected results. There are exceptions to this
criterion. Lloyd’s of London is famous for insuring the life or health of
actors, actresses and sports figures. Satellite Launch insurance covers
events that are infrequent. Large commercial property policies may insure
exceptional properties for which there are no ‘homogeneous’ exposure
units. Despite failing on this criterion, many exposures like these are
generally considered to be insurable.
2. Definite Loss. The event that gives rise to the loss that is subject to
the insured, at least in principle, take place at a known time, in a known
place, and from a known cause. The classic example is death of an
insured person on a life insurance policy. Fire, automobile accidents, and
worker injuries may all easily meet this criterion. Other types of losses
may only be definite in theory. Occupational disease, for instance, may
involve prolonged exposure to injurious conditions where no specific time,
place or cause is identifiable. Ideally, the time, place and cause of a loss
should be clear enough that a reasonable person, with sufficient
information, could objectively verify all three elements.
3. Accidental Loss. The event that constitutes the trigger of a claim
should be fortuitous, or at least outside the control of the beneficiary of
the insurance. The loss should be ‘pure,’ in the sense that it results from
an event for which there is only the opportunity for cost. Events that
contain speculative elements, such as ordinary business risks, are
generally not considered insurable.
4. Large Loss. The size of the loss must be meaningful from the
perspective of the insured. Insurance premiums need to cover both the
expected cost of losses, plus the cost of issuing and administering the
policy, adjusting losses, and supplying the capital needed to reasonably
assure that the insurer will be able to pay claims. For small losses these
latter costs may be several times the size of the expected cost of losses.
There is little point in paying such costs unless the protection offered has
real value to a buyer.
5. Affordable Premium. If the likelihood of an insured event is so high,
or the cost of the event so large, that the resulting premium is large
relative to the amount of protection offered, it is not likely that anyone will
buy insurance, even if on offer. Further, as the accounting profession
formally recognizes in financial accounting standards, the premium
cannot be so large that there is not a reasonable chance of a significant
loss to the insurer. If there is no such chance of loss, the transaction may
have the form of insurance, but not the substance.
6. Calculable Loss. There are two elements that must be at least
estimable, if not formally calculable: the probability of loss, and the
attendant cost. Probability of loss is generally an empirical exercise, while
cost has more to do with the ability of a reasonable person in possession
of a copy of the insurance policy and a proof of loss associated with a
claim presented under that policy to make a reasonably definite and
objective evaluation of the amount of the loss recoverable as a result of
the claim.
7. Limited risk of catastrophically large losses. The essential risk is
often aggregation. If the same event can cause losses to numerous
policyholders of the same insurer, the ability of that insurer to issue
policies becomes constrained, not by factors surrounding the individual
characteristics of a given policyholder, but by the factors surrounding the
sum of all policyholders so exposed. Typically, insurers prefer to limit their
exposure to a loss from a single event to some small portion of their
capital base, on the order of 5 percent. Where the loss can be
aggregated, or an individual policy could produce exceptionally large
claims, the capital constraint will restrict an insurer's appetite for
additional policyholders. The classic example is earthquake insurance,
where the ability of an underwriter to issue a new policy depends on the
number and size of the policies that it has already underwritten. Wind
insurance in hurricane zones, particularly along coast lines, is another
example of this phenomenon. In extreme cases, the aggregation can
affect the entire industry, since the combined capital of insurers and
reinsurers can be small compared to the needs of potential policyholders
in areas exposed to aggregation risk. In commercial fire insurance it is
possible to find single properties whose total exposed value is well in
excess of any individual insurer’s capital constraint. Such properties are
generally shared among several insurers, or are insured by a single
insurer who syndicates the risk into the reinsurance market.
Types of insurance
Any risk that can be quantified can potentially be insured. Specific kinds
of risk that may give rise to claims are known as "perils". An insurance
policy will set out in detail which perils are covered by the policy and
which are not. Below are (non-exhaustive) lists of the many different
types of insurance that exist. A single policy may cover risks in one or
more of the categories set out below. For example, auto insurance would
typically cover both property risk (covering the risk of theft or damage to
the car) and liability risk (covering legal claims from causing an accident).
1. Business Insurance: -
2. Auto Insurance:
3. Home Insurance: -
4. Health Insurance
5. Disability Insurance
6. Casualty Insurance
7. Property Insurance
8. Liability insurance
9. Life Insurance.
10. Other Types: -
Collateral protection insurance or CPI, insures property (primarily
vehicles) held as collateral for loans made by lending institutions.
Defense Base Act Workers' compensation or DBA Insurance provides
coverage for civilian workers hired by the government to perform
contracts outside the U.S. and Canada. DBA is required for all U.S.
citizens, U.S. residents, U.S. Green Card holders, and all employees or
subcontractors hired on overseas government contracts. Depending on
the country, Foreign Nationals must also be covered under DBA. This
coverage typically includes expenses related to medical treatment and
loss of wages, as well as disability and death benefits.
Expatriate insurance provides individuals and organizations operating
outside of their home country with protection for automobiles, property,
health, liability and business pursuits.
Financial loss insurance protects individuals and companies against
various financial risks. For example, a business might purchase coverage
to protect it from loss of sales if a fire in a factory prevented it from
carrying out its business for a time. Insurance might also cover the failure
of a creditor to pay money it owes to the insured. This type of insurance is
frequently referred to as "business interruption insurance." Fidelity bonds
and surety bonds are included in this category, although these products
provide a benefit to a third party (the "obligee") in the event the insured
party (usually referred to as the "obligor") fails to perform its obligations
under a contract with the obligee.
Locked funds insurance is a little-known hybrid insurance policy jointly
issued by governments and banks. It is used to protect public funds from
tamper by unauthorized parties. In special cases, a government may
authorize its use in protecting semi-private funds which are liable to
tamper. The terms of this type of insurance are usually very strict.
Therefore it is used only in extreme cases where maximum security of
funds is required.
Nuclear incident insurance covers damages resulting from an incident
involving radioactive materials and is generally arranged at the national
level.
Pet insurance insures pets against accidents and illnesses - some
companies cover routine/wellness care and burial, as well.
Pollution Insurance, which consists of first-party coverage for
contamination of insured property either by external or on-site sources.
Coverage for liability to third parties arising from contamination of air,
water, or land due to the sudden and accidental release of hazardous
materials from the insured site. The policy usually covers the costs of
cleanup and may include coverage for releases from underground
storage tanks. Intentional acts are specifically excluded.
Purchase insurance is aimed at providing protection on the products
people purchase. It can cover individual purchase protection, warranties,
guarantees, care plans and even mobile phone insurance. Such
insurance is normally very limited in the scope of problems that are
covered by the policy.
Title insurance provides a guarantee that title to real property is vested in
the purchaser and/or mortgagee, free and clear of liens or
encumbrances. It is usually issued in conjunction with a search of the
public records performed at the time of a real estate transaction.
Travel insurance is an insurance cover taken by those who travel abroad,
which covers certain losses such as medical expenses, loss of personal
belongings, travel delay, personal liabilities, etc.
Life Insurance a Basic Need
A family is generally dependent for its food, clothing and shelter on the
income brought in at regular intervals by the bread winner of the family.
So long as the he lives and the income is received steadily, that family is
secure; but should death suddenly intervene the family may be left in a
very difficult situation and sometimes, in stark poverty.
6. Tax relief:
For computing income tax (especially in India the Indian income tax act)
follows deduction from income tax payable, a certain percentage of a
portion of the taxable income of individuals which is diverted to payment
of insurance premiums. When this tax relief is taken into account it will be
found that the assured is n effect paying a lower premium for his
insurance.
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 the members
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
risk 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, earthquakes, lightening, 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 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 passenger’s 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 the 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 ‘sharing’.
Role of Insurance in Economic Development
For economic development, investments are necessary.
Investments are made out of savings. A life insurance company is a
major instrument for the mobilization of savings of people,
particularly from the middle and lower income groups. These
savings are channeled into investments for economic growth.
An insurance company’s strength lies in the fact that huge amounts
come by way of premiums. Every premium represents a risk that is
covered by that premium. In effect, therefore, these vast amounts
represent pooling of risks. The funds are collected and held in trust
for the benefit of the policyholders.
The management of insurance companies is required to keep this
aspect in mind and make all its decisions in ways that benefit the
community. This applies also to its investments. This is why
successful insurance companies would not be found investing in
speculative ventures. Their investments benefit the society at large.
The system of insurance provides numerous direct and indirect
benefits to the individual and his family as well as to industry and
commerce and to the community and the nation as a whole. Those
who insure, both individuals and corporate, are directly benefited
because they are protected from the consequences of the loss that
may be caused by the accident or fortuitous event. Insurance, thus,
in a sense protects the capital in industry and releases the capital
for further expansion and development of business and industry.
The every existence of risk that is, uncertainty concerning the
future, is a severe handicaps in economic activities. Insurance
removes the fear, worry and anxiety associated with this future
uncertainty and thus encourages free investment of capital in
business enterprises and promotes efficient use of existing
resources.
Thus insurance encourages commercial and industrial development
and there by contributes to a vigorous economy and increased
national productivity.
Present day organization of industry, commerce and trade depend
entirely on insurance for their operation, banks and financial
institutions lend money to industrial and commercial undertakings
only on the basis of the collateral security of insurance. No bank or
financial institution would advance loans on property unless it is
insured against loss or damage by insurable perils.
Insurers are closely associated with several agencies and
institutions engaged in fire loss prevention, cargo loss prevention,
cargo loss prevention, industrial safety and road safety. Before
acceptance of a risk, insurers arrange survey and inspection of the
property to be insured, by qualified engineers and other experts.
The object of these surveys is not only to assess the risk for rating
purposes but also to suggest and recommend to the insured,
various improvements in the risk, which will attract lower rates of
premium and what is more important , reduce the loss potential. For
example, burglary surveyors make recommendation in regard to
security measures such as better locking system, appointment of
Watchman, etc. Engineering surveys play a most useful part in
accident prevention as valuable technical advice is provided in
respect of plant and machinery.
Insurance ranks with export trade, shipping and banking services as
earner of foreign exchange to the country. It helps to earn foreign
exchange and represent invisible exports.
Insurance Advisors- Tasks Performed
Attend meetings, seminars and programs to learn about new products
and services, learn new skills, and receive technical assistance in
developing new accounts.
Confer with clients to obtain and provide information when claims are
made on a policy.
Monitor insurance claims to ensure they are settled equitably for both the
client and the insurer.
Seek out new clients and develop clientele by networking to find new
customers and generate lists of prospective clients.
Inspect property
Interview customers
Make decisions
Make presentations
Motivate people
Insurance companies hire people with college degrees but high school
graduates who have a proven sales track record are also considered.
Those candidates who are multi-lingual, with a strong knowledge of
subjects related to insurance are mostly preferred. Agents have to clear
an exam conducted by licensing authorities of different states, who
provide licenses to insurance agents before they can start their work.
Agents have to obtain separate licenses to sell different types of
insurance such as life, health, property and casualty insurance. The
agents require a separate license from the state authority to sell financial
products, like, mutual funds, securities, etc. which are related to
insurance. Insurance companies also provide the opportunity of higher
education so that the agents can advance their career along with the
evolving industry.
The Life Insurance Corporation of India (LIC) is the largest life insurance
company in India and also the country's largest investor. It is fully owned
by the government of India. It also funds close to 24.6% of the Indian
Government's expenses. It was founded in 1956.
History
The Oriental Life Insurance Company, the first corporate entity in India
offering life insurance coverage, was established in Calcutta in 1818 by
Bipin Behari Dasgupta and others. Europeans in India were its primary
target market, and it charged Indians heftier premiums. The Bombay
Mutual Life Assurance Society, formed in 1870, was the first native
insurance provider. Other insurance companies established in the pre-
independence era included
• Indian Mercantile
• General Assurance
The first 150 years were marked mostly by turbulent economic conditions.
It witnessed, India's First War of Independence, adverse effects of the
World War I and World War II on the economy of India, and in between
them the period of world wide economic crises triggered by the Great
depression. The first half of the 20th century also saw a heightened
struggle for India's independence. The aggregate effect of these events
led to a high rate of bankruptcies and liquidation of life insurance
companies in India. This had adversely affected the faith of the general
public in the utility of obtaining life cover.
The Life Insurance Act and the Provident Fund Act were passed in 1912,
providing the first regulatory mechanisms in the Life Insurance industry.
The Indian Insurance Companies Act of 1928 authorized the government
to obtain statistical information from companies operating in both life and
non-life insurance areas. The subsequent Insurance Act of 1938 brought
stricter state control over an industry that had seen several financially
unsound ventures fail. A bill was also introduced in the Legislative
Assembly in 1944 to nationalize the insurance industry.
Nationalization
Current status
The Corporation, which started its business with around 300 offices, 5.6
million policies and a corpus of INR 459 million (US$ 92 million as per the
1959 exchange rate of roughly Rs. 5 for a US $
http://data.un.org/Data.aspx?d=CDB&f=srID:6080), has grown to 25000
servicing around 180 million policies and a corpus of over Rs. 8 trillion
(US$ 170.4 billion).
With the change in the India's economic philosophy from the early 1990s,
and the subsequent relaxation of state control over several sectors of the
economy, the monopolistic position of the Life Insurance Corporation of
India was diluted, and it has had to compete with a number of other
corporate entities, Indian as well as transnational Life Insurance brands.
However, it still manages to be the largest player in the Indian market,
with the lion's share of 55%.
The recent Economic Times Brand Equity Survey rated LIC as the No. 1
Service Brand of the Country.
• LIC Nepal: A joint venture company formed in 2001 with the Vishal
Group of Industries, Nepal.
People
• The Chairman assumes authority of the CEO and chairs the board
while the Managing Directors are allotted the three main categories
of the organization's functioning.
• Spread Life Insurance widely and in particular to the rural areas and
to the socially and economically backward classes with a view to
reaching all insurable persons in the country and providing them
adequate financial cover against death at a reasonable cost.
• Conduct business with utmost economy and with the full realization
that the moneys belong to the policyholders.
• Meet the various life insurance needs of the community that would
arise in the changing social and economic environment.
OVERVIEW
LIC has assets estimated of 8 Trillion Rupees (or about $170 Billion
dollars) and has a network of around 1.2 million of its agents for soliciting
life insurance business from the public.
LIC has more than 2048 branches and offices in various cities and towns
of India.
Life Insurance Corporation of India (LIC) is a Government of India
enterprise, and is said to be the largest life insurance company and
also the largest investor of the country. LIC had been established on
the 1st of September, 1956, after the Life Insurance Corporation Act
had been passed by the Parliament of India in the same year. The
corporation is aimed at providing life insurance services primarily to
the rural masses and the socially & economically backward sections
of the Indian society. It also aims at promoting the people for saving
their money, and offers attractive savings features along with various
insurance policies.
Vital Details
Subsidiaries
Life Insurance Corporation of India has a number of subsidiaries
which help it in leveraging its potential to the maximum, providing an
enhanced set of diversified services to its customers. These
subsidiaries include LIC International, LIC Nepal, LIC Lanka, LIC
Housing Finance and LICHFL Care Homes.
Head Office
2 Max New York Life Insurance Co. Ltd. New York Life, USA 2000-01
4 Om Kotak Life Insurance Co. Ltd. Old Mutual, South Africa 2001-02
5 Birla Sun Life Insurance Co. Ltd. Sun Life, Canada 2000-01
6 Tata-AIG Life Insurance Co. Ltd. American International Assurance Co. 2000-01
7 SBI Life Insurance Co. Ltd. BNP Paribas Assurance SA, France 2001-02
8 ING Vysya Life Insurance Co. Ltd. ING Insurance International, B.V., 2001-02
Netherlands
10 Metlife India Insurance Co. Ltd. Metlife International Holdings Ltd., 2001-02
USA
15 Bharti AXA Life Insurance Co. Ltd. AXA Holdings, France 2006-07
16 Future Generali India Life Insurance Pantaloon Retail Ltd; Sain Marketing 2007-08
Company Ltd. Network Pvt. Ltd.; Generali, Italy
Websites:-
www.Wikipedia.org
http://www.buzzle.com
http://www.insurancejobs.com
http://careerplanning.about.com
www.licindia.com
www.wikipedia.org
www.icallinsurance.com
www.bimaonline.com
www.irdaindia.org
www.censusofindia.org
Books:-
Insurance Fundamentals, Environment and
Procedures by B S Bodla, M C Garg, K P Singh.
Life insurance and General Insurance from ICMR.
Others:-
T.S. Ramakrishna Rau, Insurance Chronicle,
January 2009
Endowment plans now, Business India, March
2009
Niraj Bajaj , ‘insuring a bright future’ ,business
India, April2008
Articles related to insurance from various news
papers like The Times of India, The Hindu,
Economic Times, Business Standard etc.
IRDA Journal