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PGP/SS-09-11

INTERNAL ASSIGNMENT ² EXCOM

TOPIC- INSURANCE SECTOR

NAME OF FACULTY: PROF. Naved Yusufzai

SECTION: SF-3 (2009 - 11)

SUBMITTED BY: SHAILESH KUMAR SINGH

(ROLL NO: 63)

INDIAN INSTITUTE OF PLANNING AND MANAGEMENT

NEW DELHI



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TABLE OF CONTENT

Introduction

Principles of insurance

Types of insurance

Organizational chart of IRDA

Insurance as ³pooling of premium´

Bajaj Allianz life insurance co.ltd.

Bibliography



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INTR ODUCTION

Insurance, in law and economics, is a form of risk management primarily used to hedge against

the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of

a loss, from one entity to another, in exchange for payment. An insurer is a company selling the

insurance; an insured or policyholder is the person or entity buying the insurance policy. The

insurance rate is a factor used to determine the amount to be charged for a certain amount of

insurance coverage, called the premium. Risk management, the practice of appraising and

controlling risk, has evolved as a discrete field of study and practice.

The transaction involves the insured assuming a guaranteed and known relatively small loss in

the form of payment to the insurer in exchange for the insurer's promise to compensate

(indemnify) the insured in the case of a large, possibly devastating loss. The insured receives a

contract called the insurance policy which details the conditions and circumstances under which

the insured will be compensated.

Insurance involves pooling funds from many insured entities (known as exposures) in order to

pay for relatively uncommon but severely devastating losses which can occur to these entities.

The insured entities are therefore protected from risk for a fee, with the fee being dependent

upon the frequency and severity of the event occurring. In order to be insurable, the risk insured

against must meet certain characteristics in order to be an insurable risk. Insurance is a

commercial enterprise and a major part of the financial services industry, but individual entities

can also self-insure through saving money for possible future losses



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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. Insurable losses are ideally independent

and non-catastrophic, meaning that the one losses do not happen all at once and

individual losses are not severe enough to bankrupt the insurer; insurers may 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. Capital constrains insurers' ability to sell earthquake

insurance as well as wind insurance in hurricane zones. In the U.S., flood risk is insured

by the federal government. 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.



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Legal

When a company insures an individual entity, there are basic legal requirements. Several

commonly cited legal principles of insurance include:

1. Indemnity ± the insurance company indemnifies, or compensates the insured in the case

of certain losses only up to the insured's interest

2. Insurable interest ± the insured typically must directly suffer from the loss

3. Utmost good faith ± the insured and the insurer are bound by a good faith bond of

honesty and fairness

4. Contribution ± insurers which have similar obligations to the insured contribute in the

indemnification, according to some method

5.

Subrogation ± the insurance company acquires legal rights to pursue recoveries on

behalf of the insured; for example, the insurer may sue those liable for insured's loss

6. Cause Proxima or Proximate Cause ± the cause of loss (the "peril") must be covered

under the insuring agreement of the policy, and dominant cause must not be excluded

Insurance can influence the probability of losses through moral hazard, insurance fraud, and

preventive steps by the insurance company. Insurance scholars have typically used moral hazard

to refer to the increased loss due to unintentional carelessness and moral hazard to refer to

increased risk due to intentional carelessness or indifference. Insurers attempt to address

carelessness through inspections, policy provisions requiring certain types of maintenance, and

possible discounts for loss mitigation efforts. While in theory insurers could encourage

investment in loss reduction, some commentators have argued that in practice insurers had

historically not aggressively pursued loss control measures - particularly to prevent disaster

losses such as hurricanes - because of concerns over rate reductions and legal battles. However,

beginning around 1996 insurers began to take a more active role in loss mitigation through

building codes



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Claims

Claims and loss handling is the materialized utility of insurance; it is the actual "product" paid

for, though one hopes it will never need to be used. Claims may be filed by insured¶s directly

with the insurer or through brokers or agents. The insurer may require that the claim be filed on

its own proprietary forms, or may accept claims on a standard industry form such as those

produced by ACORD.

Insurance company claims departments employ a large number of claims adjusters supported by

a staff of records management and data entry clerks. Incoming claims are classified based on

severity and are assigned to adjusters whose settlement authority varies with their knowledge and

experience. The adjuster undertakes a thorough investigation of each claim, usually in closecooperation with the insured, determines if coverage is available under the terms of the insurance

contract, and if so, the reasonable monetary value of the claim, and authorizes payment.

Adjusting liability insurance claims is particularly difficult because there is a third party

involved, the plaintiff, who is under no contractual obligation to cooperate with the insurer and

may in fact regard the insurer as a deep pocket. The adjuster must obtain legal counsel for the

insured (either inside "house" counsel or outside "panel" counsel), monitor litigation that may

take years to complete, and appear in person or over the telephone with settlement authority at a

mandatory settlement conference when requested by the judge.

If a claims adjuster suspects underinsurance, the condition of average may come into play to

limit the insurance company's exposure.

In managing the claims handling function, insurers seek to balance the elements of customer

satisfaction, administrative handling expenses, and claims overpayment leakages. As part of this

balancing act, fraudulent insurance practices are a major business risk that must be managed and

overcome. Disputes between insurers and insured¶s over the validity of claims or claims handling

practices occasionally escalate into litigation; see insurance bad faith.



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TYPES OF INSUR ANCEBusiness insurance can be any kind of insurance that protects businesses against risks. Some

principal subtypes of business insurance are (a) the various kinds of professional liability

insurance, also called professional indemnity insurance, which are discussed below under that

name; and (b) the business owner's policy (BOP), which bundles into one policy many of the

kinds of coverage that a business owner needs, in a way analogous to how homeowners

insurance bundles the coverage¶s that a homeowner needs

Auto insurance

Auto insurance protects you against financial loss if you have an accident. It is a contract

between you and the insurance company. You agree to pay the premium and the insurance

company agrees to pay your losses as defined in your policy. Auto insurance provides property,

liability and medical coverage:

1. Property coverage pays for damage to or theft of your car.

2. Liability coverage pays for your legal responsibility to others for bodily injury or

property damage.

3. Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost

wages and funeral expenses.

An auto insurance policy comprises six kinds of coverage. Most countries require you to buy

some, but not all, of these coverage¶s. If you're financing a car, your lender may also have

requirements. Most auto policies are for six months to a year.

In the United States, your insurance company should notify you by mail when it¶s time to renew

the policy and to pay your premium.



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Home insurance

Home insurance provides compensation for damage or destruction of a home from disasters. In

some geographical areas, the standard insurances exclude certain types of disasters, such as flood

and earthquakes that require additional coverage. Maintenance-related problems are the

homeowners' responsibility. The policy may include inventory, or this can be bought as a

separate policy, especially for people who rent housing. In some countries, insurers offer a

package which may include liability and legal responsibility for injuries and property damage

caused by members of the household, including pets.

Health

Health insurance policies by the National Health Service in the United Kingdom (NHS) or other publicly-funded health programs will cover the cost of medical treatments. Dental insurance, like

medical insurance, is coverage for individuals to protect them against dental costs. In the U.S.,

dental insurance is often part of an employer's benefits package, along with health insurance.

Accident, Sickness and Unemployment Insurance

y Disability insurance policies provide financial support in the event the policyholder is

unable to work because of disabling illness or injury. It provides monthly support to help

pay such obligations as mortgages and credit cards.

y Disability overhead insurance allows business owners to cover the overhead expenses of

their business while they are unable to work.



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y Total permanent disability insurance provides benefits when a person is permanently

disabled and can no longer work in their profession, often taken as an adjunct to life

insurance.

y Workers' compensation insurance replaces all or part of a worker's wages lost and

accompanying medical expenses incurred because of a job-related injury.

Casualty

Casualty insurance insures against accidents, not necessarily tied to any specific property.

y Crime insurance is a form of casualty insurance that covers the policyholder against

losses arising from the criminal acts of third parties. For example, a company can obtain

crime insurance to cover losses arising from theft or embezzlement.

y Political risk insurance is a form of casualty insurance that can be taken out by businesses

with operations in countries in which there is a risk that revolution or other political

conditions will result in a loss.

Life

Life insurance provides a monetary benefit to a decedent's family or other designated

beneficiary, and may specifically provide for income to an insured person's family, burial,funeral and other final expenses. Life insurance policies often allow the option of having the

proceeds paid to the beneficiary either in a lump sum cash payment or an annuity.

Annuities provide a stream of payments and are generally classified as insurance because they

are issued by insurance companies and regulated as insurance and require the same kinds of

actuarial and investment management expertise that life insurance requires. Annuities and

pensions that pay a benefit for life are sometimes regarded as insurance against the possibility

that a retiree will outlive his or her financial resources. In that sense, they are the complement of

life insurance and, from an underwriting perspective, are the mirror image of life insurance.

Certain life insurance contracts accumulate cash values, which may be taken by the insured if the

policy is surrendered or which may be borrowed against. Some policies, such as annuities and



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endowment policies, are financial instruments to accumulate or liquidate wealth when it is

needed.

In many countries, such as the U.S. and the UK, the tax law provides that the interest on this cash

value is not taxable under certain circumstances. This leads to widespread use of life insurance as

a tax-efficient method of saving as well as protection in the event of early death.

Property

This tornado damage to an Illinois home would be considered an "Act of God" for insurance

purposes

Property insurance provides protection against risks to property, such as fire, theft or weather

damage. This includes specialized forms of insurance such as fire insurance, flood insurance,

earthquake insurance, home insurance, inland marine insurance or boiler insurance.

y Automobile insurance, known in the UK as motor insurance, is probably the most

common form of insurance and may cover both legal liability claims against the driver

and loss of or damage to the insured's vehicle itself. Throughout the United States an auto

insurance policy is required to legally operate a motor vehicle on public roads. In some

jurisdictions, bodily injury compensation for automobile accident victims has been

changed to a no-fault system, which reduces or eliminates the ability to sue for

compensation but provides automatic eligibility for benefits. Credit card companies

insure against damage on rented cars.

o Driving School Insurance provides cover for any authorized driver whilst

undergoing tuition; cover also unlike other motor policies provides cover for



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instructor liability where both the pupil and driving instructor are equally liable in

the event of a claim.

y Aviation insurance insures against hull, spares, deductibles, hull wear and liability risks.

y Boiler insurance (also known as boiler and machinery insurance or equipment breakdown

insurance) insures against accidental physical damage to equipment or machinery.

y Builder's risk insurance insures against the risk of physical loss or damage to property

during construction. Builder's risk insurance is typically written on an "all risk" basis

covering damage due to any cause (including the negligence of the insured) not otherwise

expressly excluded. Builder's risk insurance is coverage that protects a person's or

organization's insurable interest in materials, fixtures and/or equipment being used in the

construction or renovation of a building or structure should those items sustain physical

loss or damage from a covered cause.

y Crop insurance "Farmers use crop insurance to reduce or manage various risks associated

with growing crops. Such risks include crop loss or damage caused by weather, hail,

drought, frost damage, insects, or disease, for instance."

y Earthquake insurance is a form of property insurance that pays the policyholder in the

event of an earthquake that causes damage to the property. Most ordinary homeowners

insurance policies do not cover earthquake damage. Most earthquake insurance policies

feature a high deductible. Rates depend on location and the probability of an earthquake,

as well as the construction of the home.

y A fidelity bond is a form of casualty insurance that covers policyholders for losses that

they incur as a result of fraudulent acts by specified individuals. It usually insures a

business for losses caused by the dishonest acts of its employees.

y Flood insurance protects against property loss due to flooding. Many insurers in the U.S.

do not provide flood insurance in some portions of the country. In response to this, the

federal government created the National Flood Insurance Program which serves as the

insurer of last resort.

y Home insurance or homeowners' insurance

y Landlord insurance is specifically designed for people who own properties which they

rent out. Most house insurance cover in the UK will not be valid if the property is rented

out therefore landlords must take out this specialist form of home insurance.



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y Marine insurance and marine cargo insurance cover the loss or damage of ships at sea or

on inland waterways, and of cargo in transit, regardless of the method of transit. When

the owner of the cargo and the carrier are separate corporations, marine cargo insurance

typically compensates the owner of cargo for losses sustained from fire, shipwreck, etc.,

but excludes losses that can be recovered from the carrier or the carrier's insurance. Many

marine insurance underwriters will include "time element" coverage in such policies,

which extends the indemnity to cover loss of profit and other business expenses

attributable to the delay caused by a covered loss.

y Surety bond insurance is a three party insurance guaranteeing the performance of the

principal.

y Terrorism insurance provides protection against any loss or damage caused by terrorist

activities.

y Volcano insurance is an insurance that covers volcano damage in Hawaii.

y Windstorm insurance is an insurance covering the damage that can be caused by

hurricanes and tropical cyclones.

Liability

Liability insurance is a very broad superset that covers legal claims against the insured. Many

types of insurance include an aspect of liability coverage. For example, a homeowner's insurance

policy will normally include liability coverage which protects the insured in the event of a claim

brought by someone who slips and falls on the property; automobile insurance also includes an

aspect of liability insurance that indemnifies against the harm that a crashing car can cause to

others' lives, health, or property. The protection offered by a liability insurance policy is twofold:

a legal defense in the event of a lawsuit commenced against the policyholder and indemnification

(payment on behalf of the insured) with respect to a settlement or court verdict. Liability policies

typically cover only the negligence of the insured, and will not apply to results of willful or

intentional acts by the insured.

y Public liability insurance covers a business against claims should its operations injure a

member of the public or damage their property in some way.



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y Directors and officers liability insurance protects an organization (usually a corporation)

from costs associated with litigation resulting from mistakes made by directors and

officers for which they are liable. In the industry, it is usually called "D&O" for short.

y Environmental liability insurance protects the insured from bodily injury, property

damage and cleanup costs as a result of the dispersal, release or escape of pollutants.

y Prize indemnity insurance protects the insured from giving away a large prize at a

specific event. Examples would include offering prizes to contestants who can make a

half-court shot at a basketball game, or a hole-in-one at a golf tournament.

y Professional liability insurance, also called professional indemnity insurance, protects

insured professionals such as architectural corporation and medical practice against

potential negligence claims made by their patients/clients. Professional liability insurance

may take on different names depending on the profession. For example, professional

liability insurance in reference to the medical profession may be called malpractice

insurance. Notaries public may take out errors and omissions insurance (E&O). Other

potential E&O policyholders include, for example, real estate brokers, Insurance agents,

home inspectors, appraisers, and website developers.

Credit

Credit insurance repays some or all of a loan when certain things happen to the borrower such as

unemployment, disability, or death.

y Mortgage insurance insures the lender against default by the borrower. Mortgage

insurance is a form of credit insurance, although the name credit insurance more often is

used to refer to policies that cover other kinds of debt.

y Many credit cards offer payment protection plans which are a form of credit insurance.

Other types

y Collateral protection insurance or CPI insures property (primarily vehicles) held as

collateral for loans made by lending institutions.

y 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



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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.

y Expatriate insurance provides individuals and organizations operating outside of their

home country with protection for automobiles, property, health, liability and business

pursuits.

y Financial loss insurance or Business Interruption 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.

y Kidnap and ransom insurance

y Legal Expenses Insurance covers policyholders against the potential costs of legal action

against an institution or an individual.

y 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.

y Media Insurance is designed to cover professionals that engage in film, video and TV

production.

y Nuclear incident insurance covers damages resulting from an incident involving

radioactive materials and is generally arranged at the national level. See the Nuclear



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exclusion clause and for the United States the Price-Anderson Nuclear Industries

Indemnity Act)

y Pet insurance insures pets against accidents and illnesses - some companies cover

routine/wellness care and burial, as well.

y 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.

y Purchase insurance is aimed at providing protection on the products people purchase.

Purchase insurance 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.

y 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.

y 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.



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ORGANIZATION CHAR T OF IRDA

Hari Narayan

CHAIRMAN

[email protected]

Members:

Sri K K Srinivasan

Member (Non-Life)

[email protected]

Sri G Prabhakara

Member (Life)

[email protected]

Dr R Kannan

Member (Actuary)

[email protected]

Sri R.K. Nair

Member (F & I)

[email protected]

Part-time Members:

President, Institute of Chartered Accountants of

India, New Delhi ± 110 002

[email protected];

Smt. Ela R Bhatt

Self Employed Women¶s

Association (SEWA)

Ahmedabad ± 380 001

Sri Vijay Mahajan

Managing Director

Bhartiya Samruddhi Finance Limited, Hyderabad

± 500 001

[email protected];

Ms. Loretta Mary Vas

Addl Secretary

Ministry of Finance

Department of Economic

Affairs

North Block

New Delhi ± 110003

P:011-23093183



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Function Name of the Person E-mail I.D

Research and DevelopmentDr. D V S Sastry,

Director [email protected]

ActuaryShri K S Subrahmanyam,

Executive Director [email protected]

Inspections, Consumer Affairs, Accounts,

Administration, Information Technology,

Agents and Agents Training Institutes

Shri A. Giridhar I.A.S,


Non-Life, Hindi, Health Insurance, Legal and

Intermediaries

Shri Prabodh Chander


Life Insurance

Shri Kunnel Prem,

Consultant & S pecial

Officer

[email protected]



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Insurance as µPooling Of Premium¶

Insurance pooling is a practice wherein a group of small firms join together to secure better

insurance rates and coverage plans by virtue of their increased buying power as a block. This

practice is primarily used for securing health and disability insurance coverage. Those doing

insurance pooling are often referred to as insurance purchasing cooperatives.

Small business enterprises have long complained that insurers hand out discounts to big clients,

who have substantial purchasing power and large numbers of employees, and that those insurers

too often try to make up those discount losses by hiking rates for their smaller clients. Unable to

buy good coverage on their own, smaller companies were forced to rely on pooling plans created

and managed by trade associations or other affiliated business groups, or pass on providing

coverage altogether. In recent years, however, another alternative, in which private businesses

band together and organize their own pools, has emerged. Distinct entities have been created to

address both health and disability coverage needs.

Health Insurance Pools

Health insurance coverage has long been a difficult benefit for many small businesses to

incorporate into their compensation packages. Premiums for even modest health packages

constitute a significant outlay for small businesses, and increases in premiums and deductibles

attributable to employee illness forced many owners with the unpleasant choice of placing their

business at financial risk or ending health insurance for their employees. "Insurers had come to

evaluate small firms separately by such factors as claims experience, worker's health status, and

even type of business," explained N ation's Business. "As a result, many small companies couldn't

buy health insurance at any price. Those that did have coverage lived in fear of a single serious

illness because it could trigger skyrocketing rates or cancellation of coverage."

Health insurance pools, which are also sometimes called insurance purchasing alliances or health

insurance purchasing co-ops, were originally created to address this problem. They provide

group health policies exclusively to small businesses. Rules governing these alliances vary from

state to state, with some states offering eligibility to sole proprietorships and others providing



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coverage to businesses with up to 100 employees. On average, however, these health insurance

pools target employers of three to 50 people.

Small businesses that join one of these pools can typically count on the following benefits:

1. A community premium rate that is significantly lower than any individual rate it could

demand, because the membership gains collective leverage that forces insurance carriers

to modify premium and deductible demands

2. In many cases, premium increases are capped for the first several years of the policy

3. Centralized administration of the policy among all of companies covered under it, which

results in savings in work hours and paperwork

4. Standard rates and benefits that do not fluctuate according to company size or work force

health history

5. Selection of plans from multiple insurers (some plans allocate plan selection power

exclusively with employers, while others allow workers to select from a menu of plans)

First tried in California in the early 1990s, these types of pools could be found in 15 states by the

early 2000s. In addition, several more states are slated to open their doors to such pooling

strategies over the next few years. Analysts warn, however, that the rules and regulations

governing health insurance pools vary considerably from state to state, and note that the laws of a number of states make it unlikely that these alliances will make an appearance within their

borders any time soon. "Because they are usually locally based and privately operated, health co-

ops or alliances have evolved quite differently in the 15 states where they are functioning,"

explained Stephen Blakely in N ation's Business. "For instance, California's co-op plan is run by

an independent state agency that defines the benefits and negotiates with insurers. Florida and

Texas have less state control and permit more autonomy among alliances. In New York and

some other states, local business-sponsored health alliances operate on their own«. Some states

have long-standing laws expressly prohibiting businesses from coming together to obtain

insurance. Other states have not enacted laws that would enable small firms to buy health

insurance regardless of their workers' health status, that would limit insurance-rate variability

between companies of similar size and labor characteristics, and that would prohibit insurers

from canceling small groups' coverage without cause."



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Disability Insurance Pools

Disability insurance pools, also called risk-purchasing groups, operate under the same guiding

principles as health insurance alliances²by joining together into one single negotiating group,

small businesses can increase their bargaining power when dealing with insurers. These groups

are usually composed of companies that hail from the same industry sector, and thus face many

of the same disability risks.

These disability insurance pools arose in the aftermath of the 1986 Risk Retention Act, which

was passed by Congress in an effort to address the growing inability of small business owners to

obtain liability insurance because of its rapidly growing cost. "Risk-retention groups enable

companies in the same industry, such as plastics or chemicals, to cut insurance costs by forming

what are, in effect, mini insurance companies to self-insure against liability claims," explained

Lynn Woods in N ation's Business. "Risk-purchasing groups, on the other hand, permit group

purchasing of liability coverage."

Interestingly, insurance companies have been among the biggest boosters of this new type of

disability coverage arrangement. Woods pointed out that "insurance companies find risk-

purchasing groups attractive prospects because the companies can save costs in two ways²by

using a single agent or broker for multiple states and by tailoring a policy for a group based on a

similar level of risk."



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Bajaj Allianz Life Insurance Co. Ltd

Bajaj Allianz Life Insurance Co Ltd is a unique joint venture among the global giants Allianz

Group (AG) and Bajaj Auto. Allianz AG's world ranking establishes it among the top insurance

companies in the world. Bajaj is the biggest two and three wheeler manufacturer in the world.

Bajaj Allianz Life Insurance Company boasts of a nationwide presence with 876 offices and over

4 million satisfied customers. The various insurance products include

Individuals Plans

Unit Gain Insurances

Term Care Plans

Lifetime Care Insurance Policy

Business Insurance Policies

Savings And Security Policies For You And Your Family

Rural Insurance Plan

Healthcare Insurance

Financial Insurance

Pension Plus

Retirement Plans

Children's Policies

Endowment Plans and many more.

Group Insurance Schemes

Insurance For Employee-Employer Groups

Insurance For Non-Employer - Employee Groups Employees Deposit Linked Insurance

New Group Superannuation Scheme

New Group Gratuity Care Scheme



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Special Insurance Policies for NRI's

Invest gain Endowment Plan

Cash gain Money Back Plan

Child gain KidsS pecial

Plan

Swarna Vishranthi

Bajaj Allianz India offers convenient premium payment and receipt options. The payments can

be direct through cheques, DD's or directly from your accounts or through credit card. The

premiums can also be paid online. The insurance policy holders who also have an account with

Standard Chartered Bank can avail the direct debit mandate facility.

The Bajaj Allianz Life Insurance website offers human life value estimator, child education cost

calculator, retirement solutions and required pension estimator and premium calculator online.

The Bajaj Allianz insurance agents will guide you about the general life insurance policies best

suited to your needs. The insurance agent also briefs you about the insurance quote and the terms

on the policy quotes.

Bajaj Allianz Insurance started its journey on May 2, 2001 when it received the certificate of

Registration from Insurance Regulatory and Development Authority (IRDA) for conducting

General Insurance business in India including Health Insurance. As on the end of March 2009,

the income of Bajaj Allianz Insurance went up to Rs. 2,866 crore with a growth of 11% over the

previous year. It also registered a net profit of Rs. 95 crore, highest by any private insurer, in the

last financial year.

Owners: Bajaj Auto (India) and Alliaz AG (Germany) Head Office: Pune

CEO: Mr. Kamesh Goyal



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CHANNEL PAR TNER S



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Bajaj Allianz Life chalks out expansion strategy

In order to strengthen its position further in India, Bajaj Allianz Life Insurance Co has chalked

out aggressive strategies including introducing new products and tapping the rural market.

Besides tying up with seven regional rural banks (RR Bs) sponsored by Syndicate Bank to tap the

rural market, the company also proposes to introduce micro-insurance products and come out

with a new capital guarantee product.

Mr Heinz Dollberg, Executive Vice-President Asia Pacific, Allianz, told Business Line that the

company had already applied to the Insurance Regulatory and Development Authority for a

capital guarantee and pension product.

Pension sector

"We see the pension market as a big opportunity. Except for government employees, there are no

old-age security schemes for those over 60 years," he said. There are certain apprehensions, but

the company is hopeful that the market would be opened up for the private insurance players.

" As for the rural market, he said the company had recently tied up with `Godrej Aadhaar' retail

chain and also with seven RR Bs sponsored by Syndicate Bank. "Besides this, we have tied up

with numerous district co-op banks and NGOs to tap the rural market. We are also filing for

micro-insurance products as well,"

Reiterating that India was a core market for Bajaj Allianz, Mr Dollberg said, "We see a lot of

potential. Our performance in India has been better than expected. Generally, a life insurance

company takes about seven years to break even while a non-life insurance company takes about

five years. As far as we are concerned, our life insurance venture has achieved breakeven in five

years, while the non-life insurance has done it in just three years."

In the private life insurance segment, Bajaj Allianz has a market share of 7.6 per cent and 6.4 per

cent in the non-life insurance segment. As per the latest IRDA results up till July 2006 the

company has achieved a 207 per cent growth rate.



PGP/SS-09-11

Vision

y To be the first choice insurer for customers

y To be the preferred employer for staff in the insurance industry.

y To be the number one insurer for creating shareholder value

Mission

As a responsible, customer focused market leader, we will strive to understand the insurance

needs of the consumers and translate it into affordable products that deliver value for money.

A Partnership Based on Synergy

Bajaj Allianz General Insurance offers technical excellence in all areas of General and Health

Insurance as well as Risk Management. This partnership successfully combines Bajaj Finserv's

in-depth understanding of the local market and extensive distribution network with the global

experience and technical expertise of the Allianz Group. As a registered Indian Insurance

Company and a capital base of Rs. 110 crores, the company is fully licensed to underwrite all

lines of general insurance business including health insurance.

Our Achievements Bajaj Allianz has received "iAAA rating, from ICRA Limited, an associate of Moody's Investors

Services, for Claims Paying Ability.This rating indicates highest claims paying ability and a

fundamentally strong position

Bajaj Allianz General Insurance has received the prestigious ³Business Leader in General

Insurance´, awarded by NDTV Profit Business Leadership Awards 2008. The company was one

of the top three finalists for the year 2007 and 2008 in the General Insurance Company of the

Year award by Asia Insurance Review.



PGP/SS-09-11

WORKING OF THE COMPANY:-

The premiums paid are invested in fund/funds of your choice (depending on the allocation rate)

& units are allocated depending on the price of units for the fund/funds. The value of your policy

is the total value of units that you hold in the fund/funds. The insurance cover charges arededucted through monthly cancellation of units. The fund Administration Charge and Fund

Management Charge is priced in the unit value.

BENEFITS

DEATH BENEFIT: In case of unfortunate death the beneficiaries are entitled to the Sum

Assured less withdrawals or the bid price of units, whichever is higher? If the age of the life

assured is less than 7 or above 70, then the bid price of the units is paid.

LIQUIDITY OPTION: There is no maturity date for this plan. . Anytime after payment of 3

full years¶ premiums, you may withdraw the money, depending on your requirements, through

partial or complete surrender of units.

OPTIONS

a. Choice of investment plan:

Bajaj Allianz offers you a choice of 4 funds. You can choose to invest fully in any one fund or

allocate your premiums into the various funds in a proportion that suits your investments needs.

All the funds will be managed by the asset managers of Bajaj Allianz.

EQUITY FUND: This fund provides the scope of high appreciation over a long term. The

fund will primarily invest in equities and is expected to match returns given by NSE NIFTY.

This fund will invest at least 90% in equities and maximum 10% in cash. This Fund Investment

is in NSE (National Stock Exchange) NIFTY i.e. top 50 companies.

DEBT FUND: This fund provides the scope for steady returns at low risk through

investments in high quality fixed income securities. This fund will be invested fully in debt

instruments. This Fund Investment is in Govt. Bonds for e.g. IDBI Bonds, Mutual Funds etc.

BALANCED FUND: The balanced is primarily for those who prefer mix of steady returns

and growth. The balanced fund will invest 30% to 50% in the equity fund and 50% to 70% in the

Debt fund. This Fund Investment is in Govt. and Private Companies.



PGP/SS-09-11

CASH FUND: The cash fund will invest conservatively in money market & short term

investments to ensure that return on investments shall never be negative. 100% of this fund will

be invested in money market instruments. The price of the units in this fund will never to go

down. This Fund Investment is in Call Money Market (operates on the need for cash on hourly

basis).

b. Choice to switch between investment options:

Policyholder can switch units from one fund to another. The amount switched should be in

multiples of 1000, and the minimum switching amount is Rs. 5000 or the fund value which ever

is lower. Three free switches would be allowed every year. Subsequent switches would be

Charged @ 1% of the switch amount or Rs. 100 whichever is higher?

c. Choice of a Top-up:

The policyholder will have the option to increase the regular premium amount at any time. The

additional single premium would be treated as a single premium top-up every year. The

policyholder will also have the option to increase the amount invested through top-ups.

FLEXIBILITIES

a. Increase the death benefit:

The death benefit may be increased without any underwriting every 3rd year upto 4 times. The

increase will be allowed upto 25% of the original sum assured or Rs. 1,00,000. Whichever is

lower, each time? However, the maximum age till which this option will be allowed is the

attained age of 45yrs of the policy holder. Apart from the increase in death benefit every 3rd year

without underwriting, the policyholder may choose to increase the death benefit subject to the

maximum of Comprehensive Accidental Protection, depending on his/her changing needs. This

increase will be subject to underwriting and the cost of underwriting shall be deducted through

cancellation of units. The option to increase the death benefit with underwriting ceases at age 60.

b. Decrease the death benefit:

Decrease in the death benefit will be allowed any time, subject to the minimum death benefit

being maintained. The death benefit once reduced can be increased subsequently only subject to

underwriting.



PGP/SS-09-11

c. Premium holiday option:

Customers can opt to pay premiums at their convenience after payment of full 3years premiums.

Thereafter, when premium due are not paid, the policy will stay in force with full benefits so

long as there is enough units available for charging the cost of insurance and additional benefits

after deducting all applicable charges.

d. Flexible Contribution: The person can increase/decrease the annual contribution. The maximum decrease in the

contributions can be up to 20% of the initial contribution chosen by the person at the time of

inception of the policy. However, in no circumstances can the contribution be reduced to below

the minimum premium allowed under the plan at that time, or 80% of the initial chosen

contribution, whichever is higher. The person has the flexibiltity to increase his/her contribution

without any limits. Any such increase or decrease in contribution will only be allowed on policy

anniversaries.

OTHER BENEFITS

a. Additional Protection for You and Your Family:

You have the option to add the following four additional benefits, Providing total protection

against uncertainties.

Accidental Death Benefit.

Accidental Permanent Total/Partial Disablement Benefit.

Critical Illness Benefit (CI).

Hospital Cash Benefit (HC).

b. Surrender value

This policy acquires a surrender value after 3 complete years of the policy, provided the 1st 3

years¶ premiums are paid. The Surrender Value is 100% of the value of investments.

c. Tax Benefits

Value of Units cancelled for Critical Illness and Hospital Cash Benefit is eligible for tax relief

under Section 80(D). Death Benefit and Withdrawals (partial or full) is tax free under section

10(10) D of the Income Tax Act, if the premiums paid in any year does not exceed 20% of the

Sum Assured or Fund Value, whichever is higher.



BIBLOGRAPHY

Wikipedia.com

The business line

Bajaj Allianz official site

The Hindu

Annual report of 08-09

excom report

Documents