history of insurance(1)

A PROJECT ON TRAVEL INSURANCE

HISTORY OF INSURANCE

GLOBAL HISTORY

History of insurance refers to the development of a modern business in insurance

against risks, especially regarding ships, cargo, and buildings ("property" and

"fire"), death ("life" insurance), automobile accidents ("auto"), and the cost of

medical treatment (health insurance). The industry has been profitable and has

provided attractive employment opportunities for white collar workers. It helps

eliminate risks (as when fire insurance companies demand safe practices and the

availability of fire stations and hydrants), spreads risks from the individual or

single company to the larger community, and provides an important source of

long-term finance for both the public and private sectors.

ANCIENT WORLD

The first methods of transferring or distributing risk were practiced by Chinese and

Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively.

Chinese merchants travelling treacherous river rapids would redistribute their

wares across many vessels to limit the loss due to any single vessel's capsizing.

The Babylonians developed a system which was recorded in the famous Code of

Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing merchants.

If a merchant received a loan to fund his shipment, he would pay the lender an

additional sum in exchange for the lender's guarantee to cancel the loan should the

shipment be stolen.

CHAPTER I


Achaemenian monarchs were the first to insure their people and made it official by

registering the insuring process in governmental notary offices. The insurance

tradition was performed each year in Nowruz (beginning of the Persian New

Year); the heads of different ethnic groups as well as others willing to take part,

presented gifts to the monarch. The most important gift was presented during a

special ceremony. When a gift was worth more than 10,000 Derrik (Achaemenian

gold coin) the issue was registered in a special office. This was advantageous to

those who presented such special gifts. For others, the presents were fairly assessed

by the confidants of the court. Then the assessment was registered in special

offices.

The purpose of registering was that whenever the person who presented the gift

registered by the court was in trouble, the monarch and the court would help him.

Jahez, a historian and writer, writes in one of his books on ancient Iran:

"[W]henever the owner of the present is in trouble or wants to construct a building,

set up a feast, have his children married, etc. the one in charge of this in the court

would check the registration. If the registered amount exceeded 10,000 Derrik, he

or she would receive an amount of twice as much."

A thousand years later, the inhabitants of Rhodes created the 'general average',

which allowed groups of merchants to pay to insure their goods being shipped

together. The collected premiums would be used to reimburse any merchant whose

goods were jettisoned during transport, whether to storm or sinkage.

The ancient Athenian "maritime loan" advanced money for voyages with

repayment being cancelled if the ship was lost. In the 4th century BC, rates for the

loans differed according to safe or dangerous times of year, implying an intuitive

pricing of risk with an effect similar to insurance.


The Greeks and Romans introduced the origins of health and life insurance c. 600

BCE when they created guilds called "benevolent societies" which cared for the

families of deceased members, as well as paying funeral expenses of members.

Guilds in the Middle Ages served a similar purpose. The Talmud deals with

several aspects of insuring goods. Before insurance was established in the late 17th

century, "friendly societies" existed in England, in which people donated amounts

of money to a general sum that could be used for emergencies.

MEDIEVAL AND EARLY MODERN

In 12th Century, after the establishment of Seljuk state in Anatolia, Seljuk Sultan

Ghiyasad-DinKaykhusrawI, introduced a form of state insurance which

reimbursing the traders for their loss from the state treasury, if they would be

robbed within the Seljuk territory.

Separate insurance contracts (i.e., insurance policies not bundled with loans or

other kinds of contracts) were invented in Genoa in the 14th century, as were

insurance pools backed by pledges of landed estates. The first known insurance

contract dates from Genoa in 1347, and in the next century maritime insurance

developed widely and premiums were intuitively varied with risks. These new

insurance contracts allowed insurance to be separated from investment, a

separation of roles that first proved useful in marine insurance. The first printed

book on insurance was the legal treatise On Insurance and Merchants' Bets by

Pedro de Santarém (Santerna), written in 1488 and published in 1552.

Insurance became far more sophisticated in post-Renaissance Europe, and

specialized varieties developed. The will of Robert Hayman, written in 1628, refers

to two policies he has taken out with a wealthy Londoner: one of life insurance and


one of marine insurance. Toward the end of the 17th century, London's growing

importance as a centre for trade increased demand for marine insurance. In the late

1680s, Mr. Edward Lloyd opened a coffee house that became a popular haunt of

ship owners, merchants, and ships’ captains, and thereby a reliable source of the

latest shipping news. It became the meeting place for parties wishing to insure

cargoes and ships, and those willing to underwrite such ventures. Today, Lloyd's of

London remains the leading market (note that it is not an insurance company) for

marine and other specialist types of insurance, but it works rather differently than

the more familiar kinds of insurance.

Insurance as we know it today can be traced to the Great Fire of London, which in

1666 devoured 13,200 houses. In the aftermath of this disaster, Nicholas Barbon

opened an office to insure buildings. In 1680, he established England's first fire

insurance company, "The Fire Office," to insure brick and frame homes.

In the late 19th century, "accident insurance" began to be available, which operated

much like modern disability insurance. This payment model continued until the

start of the 20th century in some jurisdictions (like California), where all laws

regulating health insurance actually referred to disability insurance.

The first insurance company in the United States underwrote fire insurance and

was formed in Charles Town (modern-day Charleston), South Carolina in 1732,

but it provided only fire insurance.


MODERN EUROPE

GERMAN AND BRITISH GOVERNMENT PROGRAMS

Germany built on a tradition of welfare programs in Prussia and Saxony that began

as early as in the 1840s. In the 1880s Chancellor Otto von Bismarck introduced old

age pensions, accident insurance, medical care and unemployment insurance that

formed the basis of the modern European welfare state. His paternalistic programs

won the support of German industry because its goals were to win the support of

the working classes for the Empire and reduce the outflow of immigrants to

America, where wages were higher but welfare did not exist.

After 1905, led by the Liberal Party, the British introduced a system of social

insurance as well. It was greatly expanded after 1944.

AMERICAN HISTORY

COLONIAL

Benjamin Franklin helped to popularize and make standard the practice of

insurance, particularly Property insurance to spread the risk of loss from fire, in the

form of perpetual insurance. In 1752, he founded the Philadelphia Contributionship

for the Insurance of Houses from Loss by Fire. Franklin's company was the first to

make contributions toward fire prevention. Not only did his company warn against

certain fire hazards, it refused to insure certain buildings where the risk of fire was

too great, such as all wooden houses.


The sale of life insurance in the U.S. began in the late 1760s. The Presbyterian

Synods in Philadelphia and New York founded the Corporation for Relief of Poor

and Distressed Widows and Children of Presbyterian Ministers in 1759;

Episcopalian priests created a comparable relief fund in 1769. Between 1787 and

1837 more than two dozen life insurance companies were started, but fewer than

half a dozen survived.

19TH CENTURY

Most insurance companies operated locally.The ambitious ones expanded

geographically in the 1830s, such as the New York Life Insurance and Trust

Company in upstate New York, and the Baltimore Life Insurance Company in the

Mid-Atlantic and Upper South. They built a network of agents to develop markets

in different cities. The goal was to only insure people "of sound health, and of

sober habits, without hereditary disease, and not belonging to families remarked

for short lives."The company had to judge the reliability of agents, who sought out

clients, canceled dubious policies, and judged the health of potential customers.

The agents were not medical men, but they were instructed to ask applicants some

standard questions:

"Is he now in good health, and does he usually enjoy good health, or how

otherwise? . . . Has he at any time been afflicted with gout, asthma, consumption,

scrofula, convulsions, palsy, or any other disease likely to impair his constitution? .

. . Has he been vaccinated, or had the small pox? . . . Is he of a sedentary turn, or

accustomed to much exercise? . . . Do you know of any circumstance which

renders an insurance on his life more than usually hazardous?"


A better solution came late in the 19th century when the companies employed

doctors who used standardized criteria.

MORAL HAZARDS

An important concern for insurance companies was the moral hazard--people

might set fires to collect property insurance--or even commit suicide or murder

when life insurance was involved. From the opposite angle, religious people

refused to consider insurance against God's decisions. Fraud was also a problem, as

people lied on applications, broke policy restrictions, or falsifyied their own deaths

so their family could collect.Sharon Murphy, "How to Make a Dead Man: Murder,

Fraud and Life Insurance in 19th-century America," Financial History, Spring

2010,

SLAVES

Prior to the Civil War (1861-65), some insurance companies in the South insured

the lives of slaves for their owners. In response to bills passed in California in 2001

and in Illinois in 2003, the companies have been required to search their records

for such policies. New York Life for example reported that Nautilus sold 485

slaveholder life insurance policies during a two-year period in the 1840s; they

added that their trustees voted to end the sale of such policies 15 years before the

Emancipation Proclamation of 1863.

20TH CENTURY

SOCIAL SECURITY


Until the passage of the Social Security Act in 1935, the federal government had

never mandated any form of insurance upon the nation as a whole, but this

program expanded the concept and acceptance of insurance as a means to achieve

individual financial security that might not otherwise be available. That expansion

experienced its first boom market immediately after the Second World War with

the original VA Home Loan programs that greatly expanded the idea that

affordable housing for veterans was a benefit of having served. The mortgages that

were underwritten by the federal government during this time included an

insurance clause as a means of protecting the banks and lending institutions

involved against avoidable losses. During the 1940s there was also the GI life

insurance policy program that was designed to ease the burden of military losses

on the civilian population and survivors.

During the 1970s and 1980s there was a growth in support for the requirement for

drivers to have insurance as a means of proving financial responsibility since it was

recognized that the automobile, in the case of an accident, could cause significant

collateral damage. It soon

Health insurance in the United States

Accident insurance was first offered in the United States by the Franklin Health

Assurance Company of Massachusetts. This firm, founded in 1850, offered

insurance against injuries arising from railroad and steamboat accidents. Sixty

organizations were offering accident insurance in the US by 1866, but the industry

consolidated rapidly soon thereafter. In 1887, the African American workers in

Muchakinock, Iowa, a company town, organized a mutual protection society.

Members paid fifty cents a month or $1 per family for health insurance and burial


expenses. In the 1890s, various health plans became more common. group

disability policy was issued in 1911.

Commercial insurance companies began offering accident and sickness insurance

(disability insurance) as early as the mid-19th century.The first group medical plan

was purchased from The Equitable Life Assurance Society of the United States by

the General Tire & Rubber Company in 1934.Before the development of medical

expense insurance, patients were expected to pay all other health care costs out of

their own pockets, under what is known as the fee-for-service business model.

During the middle to late 20th century, traditional disability insurance evolved into

modern health insurance programs. Today, most comprehensive private health

insurance programs cover the cost of routine, preventive, and emergency health

care procedures, and also most prescription drugs, but this was not always the case.

During the 1920s, individual hospitals began offering services to individuals on a

pre-paid basis. The first group pre-payment plan was created at the Baylor

University Hospital in Dallas, Texas.This concept became popular among hospitals

during the Depression, when they were facing declining revenues. The Baylor plan

was a forerunner of later Blue Cross plans. Physician associations began offering

pre-paid surgical/medical benefits in the late 1930s Blue Shield plans. Blue Cross

and Blue Shield plans were non-profit organizations sponsored by local hospitals

(Blue Cross) or physician groups (Blue Shield). As originally structured, Blue

Cross and Blue Shield plans provided benefits in the form of services rendered by

participating hospitals and physicians ("service benefits") rather than

reimbursements or payments to the policyholder.

Hospital and medical expense policies were introduced during the first half of the

20th century. During the 1920s, individual hospitals began offering services to


individuals on a pre-paid basis, eventually leading to the development of Blue

Cross organizations.The Ross-Loos Clinic, founded in Los Angeles in 1929, is

generally considered to have been the first health maintenance organization

(HMO). Henry J. Kaiser organized hospitals and clinics to provide pre-paid health

benefits to his shipyard workers during World War II. This became the basis for

Kaiser Permanente HMO. Most early HMOs were non-profit organizations. The

development of HMOs was encouraged by the passage of the Health Maintenance

Organization Act of 1973. The first employer-sponsored hospitalization plan was

created by teachers in Dallas, Texas in 1929.Because the plan only covered

members' expenses at a single hospital, it is also the forerunner of today's health

maintenance organizations (HMOs).

Employer-sponsored health insurance plans dramatically expanded as a result of

wage controls during World War II.The labor market was tight because of the

increased demand for goods and decreased supply of workers during the war.

Federally imposed wage and price controls prohibited manufacturers and other

employers raising wages high enough to attract sufficient workers. When the War

Labor Board declared that fringe benefits, such as sick leave and health insurance,

did not count as wages for the purpose of wage controls, employers responded with

significantly increased benefits.

Employer-sponsored health insurance was considered taxable income until 1954.In

the United States, regulation of the insurance industry is highly Balkanized, with

primary responsibility assumed by individual state insurance departments. Whereas

insurance markets have become centralized nationally and internationally, state

insurance commissioners operate individually, though at times in concert through a

national insurance commissioners' organization. In recent years, some have called


for a dual state and federal regulatory system for insurance similar to that which

oversees state banks and national banks.

INDIAN HISTORY OF INSURANCE

In India, insurance has a deep-rooted history. It finds mention in the writings of

Manu ( Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ).

The writings talk in terms of pooling of resources that could be re-distributed in

times of calamities such as fire, floods, epidemics and famine. This was probably a

pre-cursor to modern day insurance. Ancient Indian history has preserved the

earliest traces of insurance in the form of marine trade loans and carriers’

contracts. Insurance in India has evolved over time heavily drawing from other

countries, England in particular.

1818 saw the advent of life insurance business in India with the establishment of

the Oriental Life Insurance Company in Calcutta. This Company however failed in

1834. In 1829, the Madras Equitable had begun transacting life insurance business

in the Madras Presidency. 1870 saw the enactment of the British Insurance Act and

in the last three decades of the nineteenth century, the Bombay Mutual (1871),

Oriental (1874) and Empire of India (1897) were started in the Bombay Residency.

This era, however, was dominated by foreign insurance offices which did good

business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and

London Globe Insurance and the Indian offices were up for hard competition from

the foreign companies.

In 1914, the Government of India started publishing returns of Insurance

Companies in India. The Indian Life Assurance Companies Act, 1912 was the first


statutory measure to regulate life business. In 1928, the Indian Insurance

Companies Act was enacted to enable the Government to collect statistical

information about both life and non-life business transacted in India by Indian and

foreign insurers including provident insurance societies. In 1938, with a view to

protecting the interest of the Insurance public, the earlier legislation was

consolidated and amended by the Insurance Act, 1938 with comprehensive

provisions for effective control over the activities of insurers.

The Insurance Amendment Act of 1950 abolished Principal Agencies. However,

there were a large number of insurance companies and the level of competition was

high. There were also allegations of unfair trade practices. The Government of

India, therefore, decided to nationalize insurance business.

An Ordinance was issued on 19th January, 1956 nationalising the Life

Insurance sector and Life Insurance Corporation came into existence in the same

year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident

societies—245 Indian and foreign insurers in all. The LIC had monopoly till the

late 90s when the Insurance sector was reopened to the private sector.

The history of general insurance dates back to the Industrial Revolution in the

west and the consequent growth of sea-faring trade and commerce in the 17th

century. It came to India as a legacy of British occupation. General Insurance in

India has its roots in the establishment of Triton Insurance Company Ltd., in the

year 1850 in Calcutta by the British. In 1907, the Indian Mercantile Insurance Ltd,

was set up. This was the first company to transact all classes of general insurance

business.


1957 saw the formation of the General Insurance Council, a wing of the Insurance

Associaton of India. The General Insurance Council framed a code of conduct for

ensuring fair conduct and sound business practices.

In 1968, the Insurance Act was amended to regulate investments and set

minimum solvency margins. The Tariff Advisory Committee was also set up then.

In 1972 with the passing of the General Insurance Business (Nationalisation)

Act, general insurance business was nationalized with effect from 1st January,

1973. 107 insurers were amalgamated and grouped into four companies, namely

National Insurance Company Ltd., the New India Assurance Company Ltd., the

Oriental Insurance Company Ltd and the United India Insurance Company Ltd.

The General Insurance Corporation of India was incorporated as a company in

1971 and it commence business on January 1sst 1973.

This millennium has seen insurance come a full circle in a journey extending to

nearly 200 years. The process of re-opening of the sector had begun in the early

1990s and the last decade and more has seen it been opened up substantially. In

1993, the Government set up a committee under the chairmanship of RN Malhotra,

former Governor of RBI, to propose recommendations for reforms in the insurance

sector.The objective was to complement the reforms initiated in the financial

sector. The committee submitted its report in 1994 wherein , among other things, it

recommended that the private sector be permitted to enter the insurance industry.

They stated that foreign companies be allowed to enter by floating Indian

companies, preferably a joint venture with Indian partners.


Following the recommendations of the Malhotra Committee report, in 1999, the

Insurance Regulatory and Development Authority (IRDA) was constituted as an

autonomous body to regulate and develop the insurance industry. The IRDA was

incorporated as a statutory body in April, 2000. The key objectives of the IRDA

include promotion of competition so as to enhance customer satisfaction through

increased consumer choice and lower premiums, while ensuring the financial

security of the insurance market.

The IRDA opened up the market in August 2000 with the invitation for

application for registrations. Foreign companies were allowed ownership of up to

26%. The Authority has the power to frame regulations under Section 114A of the

Insurance Act, 1938 and has from 2000 onwards framed various regulations

ranging from registration of companies for carrying on insurance business to

protection of policyholders’ interests.

In December, 2000, the subsidiaries of the General Insurance Corporation of

India were restructured as independent companies and at the same time GIC was

converted into a national re-insurer. Parliament passed a bill de-linking the four

subsidiaries from GIC in July, 2002.

Today there are 24 general insurance companies including the ECGC and

Agriculture Insurance Corporation of India and 23 life insurance companies

operating in the country.

The insurance sector is a colossal one and is growing at a speedy rate of 15-

20%. Together with banking services, insurance services add about 7% to the

country’s GDP. A well-developed and evolved insurance sector is a boon for


economic development as it provides long- term funds for infrastructure

development at the same time strengthening the risk taking ability of the country.

HISTORY OF TRAVEL INSURANCE

GLOBAL

In some sense we can say that insurance appears simultaneously with the

appearance of human society. We know of two types of economies in human

societies: natural or non-monetary economies (using barter and trade with no

centralized nor standardized set of financial instruments) and more modern

monetary economies (with markets, currency, financial instruments and so on).

The former is more primitive and the insurance in such economies entails

agreements of mutual aid. If one family's house is destroyed the neighbours are

committed to help rebuild. Granaries housed another primitive form of insurance to

indemnify against famines. Often informal or formally intrinsic to local religious

customs, this type of insurance has survived to the present day in some countries

where modern money economy with its financial instruments is not widespread.

CHAPTER II


Turning to insurance in the modern sense (i.e., insurance in a modern money

economy, in which insurance is part of the financial sphere), early methods of

transferring or distributing risk were practised by Chinese and Babylonian traders

as long ago as the 3rd and 2nd millennia BC, respectively. Chinese merchants

travelling treacherous river rapids would redistribute their wares across many

vessels to limit the loss due to any single vessel's capsizing. The Babylonians

developed a system which was recorded in the famous Code of Hammurabi, c.

1750 BC, and practised by early Mediterranean sailing merchants. If a merchant

received a loan to fund his shipment, he would pay the lender an additional sum in

exchange for the lender's guarantee to cancel the loan should the shipment be

stolen or lost at sea.

Achaemenian monarchs of Ancient Persia were the first to insure their people and

made it official by registering the insuring process in governmental notary offices.

The insurance tradition was performed each year in Norouz (beginning of the

Iranian New Year); the heads of different ethnic groups as well as others willing to

take part, presented gifts to the monarch. The most important gift was presented

during a special ceremony. When a gift was worth more than 10,000 Derrik

(Achaemenian gold coin) the issue was registered in a special office. This was

advantageous to those who presented such special gifts. For others, the presents

were fairly assessed by the confidants of the court. Then the assessment was

registered in special offices.

The purpose of registering was that whenever the person who presented the gift

registered by the court was in trouble, the monarch and the court would help him.

Jahez, a historian and writer, writes in one of his books on ancient Iran:

"[W]henever the owner of the present is in trouble or wants to construct a building,


set up a feast, have his children married, etc. the one in charge of this in the court

would check the registration. If the registered amount exceeded 10,000 Derrik, he

or she would receive an amount of twice as much."

A thousand years later, the inhabitants of Rhodes invented the concept of the

general average. Merchants whose goods were being shipped together would pay a

proportionally divided premium which would be used to reimburse any merchant

whose goods were deliberately jettisoned in order to lighten the ship and save it

from total loss.

The ancient Athenian "maritime loan" advanced money for voyages with

repayment being cancelled if the ship was lost. In the 4th century BC, rates for the

loans differed according to safe or dangerous times of year, implying an intuitive

pricing of risk with an effect similar to insurance.The Greeks and Romans

introduced the origins of health and life insurance c. 600 BCE when they created

guilds called "benevolent societies" which cared for the families of deceased

members, as well as paying funeral expenses of members. Guilds in the Middle

Ages served a similar purpose. The Talmud deals with several aspects of insuring

goods. Before insurance was established in the late 17th century, "friendly

societies" existed in England, in which people donated amounts of money to a

general sum that could be used for emergencies.

Separate insurance contracts (i.e., insurance policies not bundled with loans or

other kinds of contracts) were invented in Genoa in the 14th century, as were

insurance pools backed by pledges of landed estates. These new insurance

contracts allowed insurance to be separated from investment, a separation of roles

that first proved useful in marine insurance. Insurance became far more

sophisticated in post-Renaissance Europe, and specialized varieties developed.


Lloyd's of London, pictured in 1991, is one of the world's leading and most famous

insurance markets

Some forms of insurance had developed in London by the early decades of the

17th century. For example, the will of the English colonist Robert Hayman

mentions two "policies of insurance" taken out with the diocesan Chancellor of

London, Arthur Duck. Of the value of £100 each, one relates to the safe arrival of

Hayman's ship in Guyana and the other is in regard to "one hundred pounds

assured by the said Doctor Arthur Ducke on my life". Hayman's will was signed

and sealed on 17 November 1628 but not proved until 1633. Toward the end of the

seventeenth century, London's growing importance as a centre for trade increased

demand for marine insurance. In the late 1680s, Edward Lloyd opened a coffee

house that became a popular haunt of ship owners, merchants, and ships' captains,

and thereby a reliable source of the latest shipping news. It became the meeting

place for parties wishing to insure cargoes and ships, and those willing to

underwrite such ventures. Today, Lloyd's of London remains the leading market

(note that it is an insurance market rather than a company) for marine and other

specialist types of insurance, but it operates rather differently than the more

familiar kinds of insurance. Insurance as we know it today can be traced to the

Great Fire of London, which in 1666 devoured more than 13,000 houses. The

devastating effects of the fire converted the development of insurance "from a

matter of convenience into one of urgency, a change of opinion reflected in Sir

Christopher Wren's inclusion of a site for 'the Insurance Office' in his new plan for

London in 1667."A number of attempted fire insurance schemes came to nothing,

but in 1681 Nicholas Barbon, and eleven associates, established England's first fire


insurance company, the 'Insurance Office for Houses', at the back of the Royal

Exchange. Initially, 5,000 homes were insured by Barbon's Insurance Office.

The first insurance company in the United States underwrote fire insurance and

was formed in Charles Town (modern-day Charleston), South Carolina, in 1732.

Benjamin Franklin helped to popularize and make standard the practice of

insurance, particularly against fire in the form of perpetual insurance. In 1752, he

founded the Philadelphia Contributionship for the Insurance of Houses from Loss

by Fire.Franklin's company was the first to make contributions toward fire

prevention. Not only did his company warn against certain fire hazards, it refused

to insure certain buildings where the risk of fire was too great, such as all wooden

houses.

In the United States, regulation of the insurance industry primary resides with

individual state insurance departments. The current state insurance regulatory

framework has its roots in the 19th century, when New Hampshire appointed the

first insurance commissioner in 1851.[Congress adopted the McCarran-Ferguson

Act in 1945, which declared that states should regulate the business of insurance

and to affirm that the continued regulation of the insurance industry by the states is

in the public's best interest.The Financial Modernization Act of 1999, commonly

referred to as "Gramm-Leach-Bliley", established a comprehensive framework to

authorize affiliations between banks, securities firms, and insurers, and once again

acknowledged that states should regulate insurance.

Whereas insurance markets have become centralized nationally and internationally,

state insurance commissioners operate individually, though at times in concert

through the National Association of Insurance Commissioners. In recent years,

some have called for a dual state and federal regulatory system (commonly


referred to as the Optional federal charter (OFC)) for insurance similar to the

banking industry.

In 2010, the federal Dodd-Frank Wall Street Reform and Consumer Protection Act

established the Federal Insurance Office ("FIO").FIO is part of the U.S.

Department of the Treasury and it monitors all aspects of the insurance industry,

including identifying issues or gaps in the regulation of insurers that may

contribute to a systemic crisis in the insurance industry or in the U.S. financial

system.FIO coordinates and develops federal policy on prudential aspects of

international insurance matters, including representing the U.S. in the International

Association of Insurance Supervisors.FIO also assists the U.S. Secretary of

Treasury with negotiating certain international agreements.

Moreover, FIO monitors access to affordable insurance by traditionally

underserved communities and consumers, minorities, and low- and moderate-

income persons.The Office also assists the U.S. Secretary of the Treasury with

administering the Terrorism Risk Insurance Program.However, FIO is not a

regulator or supervisor.The regulation of insurance continues to reside with the

states.

The earliest records of insurance dates back to the 3rd century BC, and it was

probably started by the Babylonians and Chinese traders. Life insurance started

long ago too, during the time of the Greeks in 3rd century AD. Comparatively,

travel insurance is a new type of insurance, and it is defined as a kind of insurance

covering financial, medical, and other related losses incurred during travel. Travel

insurance policy generally covers these losses for travel to a domestic location or

foreign country.


The first modern day travel insurance company was called the Travelers Insurance

Company, and it was launched on the 1st of April, 1864. The company was

founded by James Batterson and the clients of the company were the first travelers

to get insured “for the purpose of insuring travelers against loss of life or personal

injury while journeying by railway or steamboat.” Now, about 150 years after the

company opened its doors, travel insurance has become a huge industry,

comprising of millions of insurance policy holders and premiums crossing $1

billion.

The insurance used by the Chinese and Babylonian traders about two millennia ago

could be regarded as the first ever travel insurance. The Chinese traders used to

reallocate their commodities across many boats, before crossing a treacherous

stretch of water. If one of the boats capsized, it could greatly reduce the quantity of

commodities. On the other hand, the Babylonians had a kind of insurance very

similar to modern travel insurance. To fund their shipments, merchants usually

took loans from moneylenders. Interestingly, the merchants would sometimes pay

extra money to the lender, so the lender would not ask for a repayment of his loan

if the shipment was lost or stolen. There is also a mention of this insurance system

in the Code of Hammurabi.

The travel insurance industry throughout the world, particularly the US, was

growing steadily since the early 20th century, but the growth was rather slow

compared to other types of insurance. The turning point in the history of travel

insurance policy was the 9/11 incident. It was after this horrendous event that the

sale of travel insurance began to shoot up throughout the US and the world. Prior

to the World Trade Center (WTC) attacks, about 10% of Americans had travel


insurance, but after the incident, the percentage increased to 30% in a span of just a

couple years.

Travel insurance companies of today offer different types of insurance policies for

different people. Some popular travel insurance policies provide coverage for

business travel, student travel, leisure travel, and international travel. Trip

cancellation, accidental death, overseas funeral expenses, medical expenses, theft

of personal possessions, curtailment and legal assistance are some of the typical

risks covered by travel insurance policies.

Many travelers are aware of the advantages of purchasing travel insurance. The

number of global travelers is ever on the increase, and the risks of travel are on the

increase as well. That is why more travelers are purchasing travel insurance. As a

result, the travel insurance industry is expanding at an exponential rate.

THE TRAVEL INSURANCE INDUSTRY

Travel insurance undoubtedly is a flourishing industry. Every insurer today is

working his best to come up with their best plans, keeping in mind 'customer

value'. These plans aim to cover all possible risks related to travel. You always

have the option to select the policy that suits your requirement. Famous companies

have come up with different insurance schemes keeping in mind the changing

needs of people.

HOW DO TRAVEL INSURANCE POLICIES WORK?

In order to avail a plan, you need to choose a policy that fits your purpose with any

established insurance company. Your contract with the company, assures you the

coverage of certain belonging, if something unfortunate happens on your trip. If


you face any problem that the policy states to cover, you can make a claim. The

insurer does the payment.

DOMESTIC TRAVEL INSURANCE COVERAGE:

This insurance policy covers cancellation costs. If you want to cancel your trip, and

thereby want to cancel hotel booking and associated arrangements, this insurance

can help you to get your money back.

This policy covers personal liability. It covers the policyholder if any accidental

damage takes place to another person's stuff.

This insurance plan offers luggage cover, which includes luggage loss, luggage

damage or theft etc. It also covers credit card and other personal belongings theft.

This policy offers additional costs. When you are on a holiday, not everything may

occur according toy our plans. For this reason, domestic travel insurance is very

necessary.

This policy offers rental vehicle insurance surplus. If you have an accident or

damage any rental car, this policy will cover you.

Generally, domestic travel insurance policies do not cover medical expenses during

your holiday.

DOMESTIC TRAVEL INSURANCE PROVIDERS:

TATA-AIG Domestic Travel Guard Insurance: TATA-AIG is one of the best

insurance service providers in the country. They also offer domestic travel

insurance, which covers flight delays, luggage loss or theft, and ticket loss.


ICICI Lombard General Insurance: ICICI Lombard General Insurance along with

Kingfisher Airlines offers domestic travel insurance. This policy includes tour

cancellation, trip disruption due to natural calamities, luggage theft or loss, medical

expenses, and hospitalization.

Bajaj Allianz Domestic Travel Insurance: The domestic insurance policies, offered

by Bajaj Allianz is an all in one package. It includes personal accidental benefits

including hospitalization and associated expenses during a tour.

Bank Of India: Bank Of India offers domestic travel insurance policy for their

individual account holders. Their policy covers an individual for a year or more.

This plan has three sections: personal accidents, hospitalization expenses, and

luggage loss. These plans are accompanied with very low premium, which is

suitable for all classes of people.

Domestic travel insurance policy can make your trip stress free. When you are

roaming around a different city or state, anything can happen. This insurance

covers almost all the possibilities to make your journey less-hazardous.

WHAT DOES A TRAVEL INSURANCE PLAN COVER?

Not all policies provide coverage for the same protection. They vary according to

the insurance companies as well as plans. The basic benefits that you can expect

are listed below

COVERAGE FOR THEFT AND LOSS

This plan helps if you loose any personal belonging or luggage or even if they are

stolen.

COVERAGE ON TRAVEL DELAY


This policy helps the passenger in case flight miss or delay.

HEALTH AND MEDICAL COVERAGE

This covers the treatment cost and all other medical expenses that might be

required if a passenger falls ill on the trip. The same is applicable if there is an

accident.

COVERAGE FOR PUBLIC LIABILITY

This plan is specially designed to cover the costs in case the holidaymaker is

prosecuted for harming others.

Coverage on Cancellation If you have to cancel a trip due to any illness and any

other personal cause, then this policy is of great help.

TOP TRAVEL INSURANCE PLANS

If you have been wondering how to go about choosing a perfect travel insurance

policy, then you can look at the list below. Names of esteemed brands have been

given with the various insurance products they offer.

1. Reliance General Insurance Co. Ltd.

o Reliance Travel Care Insurance -Student

o Reliance Travel Care Insurance -Individual

o Reliance Travel Care Insurance -Asia

o Pravasi Bhartiya Bima


2. Bajaj Allianz General Insurance Co. Ltd.

o Swades Yatra

o Travel Asia

o Travel Companion

o Travel Elite

o Travel Assist

3. National Insurance Co. Ltd.

o Overseas Mediclaim

o Baggage Policy

4. IFFCO TOKIO General Insurance Co. Ltd.

o Travel Insurance

5. ICICI Lombard General Insurance Co. Ltd.

o Student mediclaim insurance

o Domestic Travel Insurance

o Overseas Travel Insurance

6. The New India Assurance Co. Ltd

o Overseas Mediclaim Policy

o Baggage Insurance


7. Royal Sundaram Alliance Insurance Co. Ltd.

o Travel Insurance

8. Star Health & Allied Insurance Company Limited

o Travel Insurance -ICorporate

o Travel Insurance -IFamily

o Travel Insurance -IStudent

o Travel Insurance 'Individual

9. Apollo DKV Insurance Company Limited

o Easy Travel - Senior Citizen

o Easy Travel - Family

o Easy Travel - Individual

o Easy Travel -Annual Multi Trip

10.Cholamandalam MS General Insurance Co. Ltd.

o Chola Travel Insurance- Individual

o Chola Travel insurance- Multi Trip

11.TATA AIG General Insurance Co. Ltd.

o Domestic Travel Guard

o Travel Guard


o Student Guard

o Asia Travel Guard

12.HDFC ERGO General Insurance Co. Ltd

o Domestic Travel Insurance

o Annual multi-trip Business Travel Policy

o International Business Travel Policy

13.United India Insurance Co. Ltd

o Marga Bandhu Policy

o Suhana Safar Policy

o Baggage Policy

o Overseas Mediclaim Business and Holiday

14.The Oriental Insurance Co. Ltd.

o Suhana Safar Domestic Policy

o Overseas Mediclaim Business and Holiday

o Overseas Mediclaim Employment and Study

THINGS TO CONSIDER

You might consider few things before selecting the best travel insurance plan for

yourself. Some of the important aspects to mull over are the coverage schemes.

There are plan that offer specialist protection and some provide general coverage.


Once you have analyzed which policy to purchase, its best to compare price before

finalizing the deal.

COVERAGES

Airline

Aviation insurance is insurance coverage geared specifically to the operation

of aircraft and the risks involved in aviation. Aviation insurance policies are

distinctly different from those for other areas of transportation and tend to

incorporate aviation terminology, as well as terminology, limits and clauses

specific to aviation insurance

Aviation Insurance was first introduced in the early years of the 20th

Century. The first aviation insurance policy was written by Lloyd's of

London in 1911. The company stopped writing aviation policies in 1912

after bad weather and the resulting crashes at an air meet caused losses on

many of those first policies.

CHAPTER III


The first aviation polices were underwritten by the marine insurance

underwriting community.The first specialist aviation insurers emerged in

1924.

In 1929 the Warsaw convention was signed. The convention was an

agreement to establish terms, conditions and limitations of liability for

carriage by air, this was the first recognition of the airline industry as we

know it today.

In 1931, Captain A. G. Lamplugh, the British Aviation Insurance Company's

chief underwriter and principal surveyor, said of the new industry: "Aviation

in itself is not inherently dangerous. But to an even greater degree than the

sea, it is terribly unforgiving of any carelessness, incapacity or neglect."

Realising that there should be a specialist industry sector, the International

Union of Marine Insurance (IUMI) first set up an aviation committee and

later in 1933 created the International Union of Aviation Insurers (IUAI),

made up of eight European aviation insurance companies and pools.[2]

US Airways Flight 1549 was written off after ditching into the Hudson River

The London insurance market is still the largest single centre for aviation

insurance. The market is made up of the traditional Lloyd's of London

syndicates and numerous other traditional insurance markets. Throughout

the rest of the world there are national markets established in various

countries, this is dependent on the aviation activity within each country, the

US has a large percentage of the world's general aviation fleet and has a

large established market.

Types

Public liability insurance


This coverage, often referred to as third party liability covers aircraft owners

for damage that their aircraft does to third party property, such as houses,

cars, crops, airport facilities and other aircraft struck in a collision. It does

not provide coverage for damage to the insured aircraft itself or coverage for

passengers injured on the insured aircraft. After an accident an insurance

company will compensate victims for their losses, but if a settlement can not

be reached then the case is usually taken to court to decide liability and the

amount of damages. Public liability insurance is mandatory in most

countries and is usually purchased in specified total amounts per incident,

such as $1,000,000 or $5,000,000.

PASSENGER LIABILITY INSURANCE

Passenger liability protects passengers riding in the accident aircraft who are

injured or killed. In many countries this coverage is mandatory only for

commercial or large aircraft. Coverage is often sold on a "per-seat" basis,

with a specified limit for each passenger seat.

COMBINED SINGLE LIMIT (CSL)

CSL coverage combines public liability and passenger liability coverage into

a single coverage with a single overall limit per accident. This type of

coverage provides more flexibility in paying claims for liability, especially if

passengers are injured, but little damage is done to third party property on

the ground.

GROUND RISK HULL INSURANCE NOT IN MOTION

This provides coverage for the insured aircraft against damage when it is on

the ground and not in motion. This would provide protection for the aircraft

for such events as fire, theft, vandalism, flood, mudslides, animal damage,

wind or hailstorms, hangar collapse or for uninsured vehicles or aircraft


striking the aircraft. The amount of coverage may be a blue book value or an

agreed value that was set when the policy was purchased.

The use of the insurance term "hull" to refer to the insured aircraft betrays

the origins of aviation insurance in marine insurance. Most hull insurance

includes a deductible to discourage small or nuisance claims.

GROUND RISK HULL INSURANCE IN MOTION (TAXIING)

This coverage is similar to ground risk hull insurance not in motion, but

provides coverage while the aircraft is taxiing, but not while taking off or

landing. Normally coverage ceases at the start of the take-off roll and is in

force only once the aircraft has completed its subsequent landing. Due to

disputes between aircraft owners and insurance companies about whether the

accident aircraft was in fact taxiing or attempting to take-off this coverage

has been discontinued by many insurance companies.

IN-FLIGHT INSURANCE

In-flight coverage protects an insured aircraft against damage during all

phases of flight and ground operation, including while parked or stored.

Naturally it is more expensive than not-in-motion coverage since most

aircraft are damaged while in motion.

Annual

Corporate

Domestic

Family

Plans

Buying

Services

Group


Indian City

Multi Trip

Overseas

Short Term

Right Quote

Tips on purchasing

Pre Travel Arrangements

TRAVEL INSURANCE COVERAGE TYPES

The most common risks that are covered by travel insurance are:

Medical/dental expenses

Emergency evacuation/Medical Air Evacuation/repatriation of remains

Return of a minor child

Trip cancellation/interruption

Accidental death, injury or disablement benefit

Overseas funeral expenses

Curtailment

Delayed departure, missed connection

Lost, stolen or damaged baggage, personal effects or travel documents

Delayed baggage (and emergency replacement of essential items)

Legal assistance

Trip Cancellation

Flight Connection was missed due to airline schedule

Travel Delays due to weather

Medical Emergency and hospital care (Accident or Sickness)


OPTIONAL COVERAGE

Some travel policies will also provide cover for additional costs, although these

vary widely between providers.

In addition, often separate insurance can be purchased for specific costs such as:

Car rental collision coverage

Pre-existing conditions (e.g. asthma, diabetes)

Sports with an element of risk (e.g. skiing, scuba diving)

Travel to high risk countries (e.g. due to war, natural disasters or acts of

terrorism)

Additional AD&D coverage

Kidnap and ransom insurance

3rd Party Supplier insolvency (e.g. the hotel or airline to which you made

nonrefundable pre-payments has gone into administration)

INSURANCE FINANCING VEHICLES


Fraternal insurance is provided on a cooperative basis by fraternal benefit

societies or other social organizations.

No-fault insurance is a type of insurance policy (typically automobile

insurance) where insureds are indemnified by their own insurer regardless of

fault in the incident.

Protected self-insurance is an alternative risk financing mechanism in which an

organization retains the mathematically calculated cost of risk within the

organization and transfers the catastrophic risk with specific and aggregate

limits to an insurer so the maximum total cost of the program is known. A

properly designed and underwritten Protected Self-Insurance Program reduces

and stabilizes the cost of insurance and provides valuable risk management

information.

Retrospectively rated insurance is a method of establishing a premium on large

commercial accounts. The final premium is based on the insured's actual loss

experience during the policy term, sometimes subject to a minimum and

maximum premium, with the final premium determined by a formula. Under

this plan, the current year's premium is based partially (or wholly) on the

current year's losses, although the premium adjustments may take months or

years beyond the current year's expiration date. The rating formula is

guaranteed in the insurance contract. Formula: retrospective premium =

converted loss + basic premium × tax multiplier. Numerous variations of this

formula have been developed and are in use.

Formal self insurance is the deliberate decision to pay for otherwise insurable

losses out of one's own money. This can be done on a formal basis by

http://en.wikipedia.org/wiki/Self_insurance

http://en.wikipedia.org/wiki/No-fault_insurance

http://en.wikipedia.org/wiki/Benefit_society

http://en.wikipedia.org/wiki/Benefit_society


establishing a separate fund into which funds are deposited on a periodic basis,

or by simply forgoing the purchase of available insurance and paying out-of-

pocket. Self insurance is usually used to pay for high-frequency, low-severity

losses. Such losses, if covered by conventional insurance, mean having to pay

a premium that includes loadings for the company's general expenses, cost of

putting the policy on the books, acquisition expenses, premium taxes, and

contingencies. While this is true for all insurance, for small, frequent losses the

transaction costs may exceed the benefit of volatility reduction that insurance

otherwise affords.

Reinsurance is a type of insurance purchased by insurance companies or self-

insured employers to protect against unexpected losses. Financial reinsurance

is a form of reinsurance that is primarily used for capital management rather

than to transfer insurance risk.

Social insurance can be many things to many people in many countries. But a

summary of its essence is that it is a collection of insurance coverages

(including components of life insurance, disability income insurance,

unemployment insurance, health insurance, and others), plus retirement

savings, that requires participation by all citizens. By forcing everyone in

society to be a policyholder and pay premiums, it ensures that everyone can

become a claimant when or if he/she needs to. Along the way this inevitably

becomes related to other concepts such as the justice system and the welfare

state. This is a large, complicated topic that engenders tremendous debate,

which can be further studied in the following articles (and others):

o National Insurance

http://en.wikipedia.org/wiki/National_Insurance

http://en.wikipedia.org/wiki/Welfare_state

http://en.wikipedia.org/wiki/Welfare_state

http://en.wikipedia.org/wiki/Social_insurance

http://en.wikipedia.org/wiki/Financial_reinsurance

http://en.wikipedia.org/wiki/Reinsurance


o Social safety net

o Social security

o Social Security debate (United States)

o Social Security (United States)

o Social welfare provision

Stop-loss insurance provides protection against catastrophic or unpredictable

losses. It is purchased by organizations who do not want to assume 100% of

the liability for losses arising from the plans. Under a stop-loss policy, the

insurance company becomes liable for losses that exceed certain limits called

deductibles.

http://en.wikipedia.org/wiki/Social_welfare_provision

http://en.wikipedia.org/wiki/Social_Security_(United_States)

http://en.wikipedia.org/wiki/Social_Security_debate_(United_States)

http://en.wikipedia.org/wiki/Social_security

http://en.wikipedia.org/wiki/Social_safety_net


INSURANCE COMPANIES

Insurance companies may be classified into two groups:

Life insurance companies, which sell life insurance, annuities and pensions

products.

Non-life, general, or property/casualty insurance companies, which sell other

types of insurance.

General insurance companies can be further divided into these sub categories.

Standard lines

Excess lines

In most countries, life and non-life insurers are subject to different regulatory

regimes and different tax and accounting rules. The main reason for the distinction

between the two types of company is that life, annuity, and pension business is

very long-term in nature — coverage for life assurance or a pension can cover risks


over many decades. By contrast, non-life insurance cover usually covers a shorter

period, such as one year.

In the United States, standard line insurance companies are insurers that have

received a license or authorization from a state for the purpose of writing specific

kinds of insurance in that state, such as automobile insurance or homeowners'

insurance.They are typically referred to as "admitted" insurers. Generally, such an

insurance company must submit its rates and policy forms to the state's insurance

regulator to receive his or her prior approval, although whether an insurance

company must receive prior approval depends upon the kind of insurance being

written. Standard line insurance companies usually charge lower premiums than

excess line insurers and may sell directly to individual insureds. They are regulated

by state laws, which include restrictions on rates and forms, and which aim to

protect consumers and the public from unfair or abusive practices.These insurers

also are required to contribute to state guarantee funds, which are used to pay for

losses if an insurer becomes insolvent.

Excess line insurance companies (also known as Excess and Surplus) typically

insure risks not covered by the standard lines insurance market, due to a variety of

reasons (e.g., new entity or an entity that does not have an adequate loss history, an

entity with unique risk characteristics, or an entity that has a loss history that does

not fit the underwriting requirements of the standard lines insurance market). They

are typically referred to as non-admitted or unlicensed insurers.Non-admitted

insurers are generally not licensed or authorized in the states in which they write

business, although they must be licensed or authorized in the state in which they

are domiciled. These companies have more flexibility and can react faster than

standard line insurance companies because they are not required to file rates and


forms.However, they still have substantial regulatory requirements placed upon

them.

Most states require that excess line insurers submit financial information, articles

of incorporation, a list of officers, and other general information.[27] They also

may not write insurance that is typically available in the admitted market, do not

participate in state guarantee funds (and therefore policyholders do not have any

recourse through these funds if an insurer becomes insolvent and cannot pay

claims), may pay higher taxes, only may write coverage for a risk if it has been

rejected by three different admitted insurers, and only when the insurance producer

placing the business has a surplus lines license.Generally, when an excess line

insurer writes a policy, it must, pursuant to state laws, provide disclosure to the

policyholder that the policyholder's policy is being written by an excess line

insurer.

On July 21, 2010, President Barack Obama signed into law the Nonadmitted and

Reinsurance Reform Act of 2010 ("NRRA"), which took effect on July 21, 2011

and was part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The NRRA changed the regulatory paradigm for excess line insurance. Generally,

under the NRRA, only the insured's home state may regulate and tax the excess

line transaction.

Insurance companies are generally classified as either mutual or stock companies.

Mutual companies are owned by the policyholders, while stockholders (who may

or may not own policies) own stock insurance companies.

Demutualization of mutual insurers to form stock companies, as well as the

formation of a hybrid known as a mutual holding company, became common in


some countries, such as the United States, in the late 20th century. However, not

all states permit mutual holding companies.

Other possible forms for an insurance company include reciprocals, in which

policyholders reciprocate in sharing risks, and Lloyd's organizations.

Insurance companies are rated by various agencies such as A. M. Best. The ratings

include the company's financial strength, which measures its ability to pay claims.

It also rates financial instruments issued by the insurance company, such as bonds,

notes, and securitization products.

Reinsurance companies are insurance companies that sell policies to other

insurance companies, allowing them to reduce their risks and protect themselves

from very large losses. The reinsurance market is dominated by a few very large

companies, with huge reserves. A reinsurer may also be a direct writer of insurance

risks as well.

Captive insurance companies may be defined as limited-purpose insurance

companies established with the specific objective of financing risks emanating

from their parent group or groups. This definition can sometimes be extended to

include some of the risks of the parent company's customers. In short, it is an in-

house self-insurance vehicle. Captives may take the form of a "pure" entity (which

is a 100% subsidiary of the self-insured parent company); of a "mutual" captive

(which insures the collective risks of members of an industry); and of an

"association" captive (which self-insures individual risks of the members of a

professional, commercial or industrial association). Captives represent commercial,

economic and tax advantages to their sponsors because of the reductions in costs

they help create and for the ease of insurance risk management and the flexibility


for cash flows they generate. Additionally, they may provide coverage of risks

which is neither available nor offered in the traditional insurance market at

reasonable prices.

The types of risk that a captive can underwrite for their parents include property

damage, public and product liability, professional indemnity, employee benefits,

employers' liability, motor and medical aid expenses. The captive's exposure to

such risks may be limited by the use of reinsurance.

Captives are becoming an increasingly important component of the risk

management and risk financing strategy of their parent. This can be understood

against the following background:

o Heavy and increasing premium costs in almost every line of coverage;

o Difficulties in insuring certain types of fortuitous risk;

o Differential coverage standards in various parts of the world;

Rating structures which reflect market trends rather than individual loss

experience; Insufficient credit for deductibles and/or loss control efforts.

There are also companies known as 'insurance consultants'. Like a mortgage

broker, these companies are paid a fee by the customer to shop around for the best

insurance policy amongst many companies. Similar to an insurance consultant, an

'insurance broker' also shops around for the best insurance policy amongst many

companies. However, with insurance brokers, the fee is usually paid in the form of

commission from the insurer that is selected rather than directly from the client.

Neither insurance consultants nor insurance brokers are insurance companies and

no risks are transferred to them in insurance transactions. Third party


administrators are companies that perform underwriting and sometimes claims

handling services for insurance companies. These companies often have special

expertise that the insurance companies do not have.

The financial stability and strength of an insurance company should be a major

consideration when buying an insurance contract. An insurance premium paid

currently provides coverage for losses that might arise many years in the future.

For that reason, the viability of the insurance carrier is very important. In recent

years, a number of insurance companies have become insolvent, leaving their

policyholders with no coverage (or coverage only from a government-backed

insurance pool or other arrangement with less attractive payouts for losses). A

number of independent rating agencies provide information and rate the financial

viability of insurance companies.


The Oriental Insurance Company Ltd

The Oriental Insurance Company Ltd was incorporated at Bombay on 12th

September 1947. The Company was a wholly owned subsidiary of the Oriental

Government Security Life Assurance Company Ltd and was formed to carry out

General Insurance business. The Company was a subsidiary of Life Insurance

Corporation of India from 1956 to 1973 (till the General Insurance Business was

nationalized in the country). In 2003 all shares of our company held by the General

Insurance Corporation of India has been transferred to Central Government.

The Company is a pioneer in laying down systems for smooth and orderly conduct

of the business. The strength of the company lies in its highly trained and

motivated work force that covers various disciplines and has vast expertise.

Oriental specializes in devising special covers for large projects like power plants,

petrochemical, steel and chemical plants. The company has developed various

types of insurance covers to cater to the needs of both the urban and rural

CHAPTER IV


population of India. The Company has a highly technically qualified and

competent team of professionals to render the best customer service.

Oriental Insurance made a modest beginning with a first year premium of

Rs.99,946 in 1950. The goal of the Company was “Service to clients” and

achievement thereof was helped by the strong traditions built up overtime.

ORIENTAL with its head Office at New Delhi has 30 Regional Offices and nearly

900+ operating Offices in various cities of the country. The Company has overseas

operations in Nepal, Kuwait and Dubai. The Company has a total strength of

around 15,000+ employees. From less than a lakh at inception, the Gross Premium

went up to Rs.58 crores in 1973 and during 2010-11 the figure stood at a mammoth

Rs. 5569.88 crores.

CORPORATE VISION

“TO BE THE MOST RESPECTED & PREFERRED NON-LIFE INSURER IN

THE MARKETS WE OPERATE”.

CORPORATE OBJECTIVES

TO ENSURE THAT WE –

ACT AS A FINANCIALLY SOUND CORPORATE ENTITY WITH HIGH

BUSINESS ETHICS

IMPLEMENT BEST HUMAN RESOURCE DEVELOPMENT PRACTICES

TO BUILD A HIGHLY EFFICIENT, DEDICATED AND MOTIVATED

WORKFORCE WITH HIGH MORALE AND MORAL VALUES

OPTIMALY UTILIZE THE INFORMATION TECHNOLOGY

INFRASTRUCTURE


PROVIDE EXCELLENCENT CUSTOMER SERVICE

RUN THE BUSINESS PROFITABLY THROUGH PRUDENT

UNDERWRITING AND EFFICIENT & PROPER CLAIM MANAGEMENT

EFFECTIVELY MANAGE OUR REINSURANCE OPERATIONS

EFFECTIVELY MANAGE OUR INVESTMENTS FOR OPTIMISING

YIELD

HAVE EFFECTIVE RISK MANAGEMENT SYSTEMS

IMPROVE THE PENETRATION OF NON-LIFE INSURANCE BY PROPER

UNDERWRITING, INNOVATION & MARKETING

MANAGEMENT

Oriental Insurance is a professionally managed independent Board-run Company.

Illustrious personalities like Shri T.A.Pai ( who later became Cabinet Minister in

the Union Government ), Shri K. R. Puri, who rose to be the Governor of RBI and

Shri B.D.Pande (who later became the Governor of West Bengal) were among our

past Chairmen.

At present Dr. R.K.Kaul is Chairman-Cum-Managing Director of our Company.

The Board of Directors of our Company include eminent personalities in various

fields.

Chairman-Cum-Managing Director

Dr. R.K.Kaul

Directors

Dr. R.K.Kaul

K.R.Kamath

Lalit Kumar


S. K. Chanana

General Managers

S. K. Chanana

S. Surenther

Niraj Kumar

K. Saxena

N. K. Singh

K. K. Rao

H. G. Rokade

Financial Adviser

S. Surenther

Chief Vigilance Officer

Nawang Tobdan, GM

Company Secretary

Mrs. Rashmi Bajpai

The Company's Gross Direct Premium Income in India during the year

2010-11 (Audited) was Rs.5457.33 crores and the Premium Income outside

India was Rs.112.55 crores. The Gross Direct Premium in India & abroad

showed a growth of 14.73%. The Net Premium Income (Domestic and

Foreign), on the other hand grew by 16.38% from Rs3962.52 crores in 2009-

10 to Rs. 4611.58 crores in 2010-11.


The company's operations in Nepal, Dubai and Kuwait yielded a Gross

Direct Premium of Rs. 112.55 crores during the year 2010-11 as against Rs

117.99 crores during the previous year. The net premium on foreign

operations stood at Rs. 106.14 crores as against this, the Net Incurred Claims

during this year in respect of foreign operations were Rs.52.98 crores at

49.91%. The foreign operations have resulted in an overall surplus of Rs.

27.09 crores.

After taking into account the income from Interest, Dividend & Rent of Rs

732.43 crores and Profit on sale of Investments of Rs 561.92, we have

posted a pre-tax profit of Rs 180.40 crores & post-tax profit of Rs. 54.61

crores for the year 2010-11.

As against the desirable Solvency Margin mandated by the Indian regulatory

body, IRDA, the available Solvency Margin is 1.34 as at 31st March 2011.

The Company had issued 1,10,34,999 documents in the year 2010-11. The

claims disposal ratio for non-suit claims settlement ratio was 85.70%.


The Company is not only 'IT friendly' but also 'Technology Savvy'. We have

our own website in place. An integrated Non-Life Insurance Application

Software (INLIAS) has been implemented in all the offices. This will ensure

that our Customer Service parameters grow by leaps and bounds.

No wonder, The Oriental Insurance Company has been enjoying the highest

rating from leading Indian credit rating agencies CRISIL and ICRA. The

Company has also been rated as B+

+(Very Good by AM Best, an international rating agency.

PRODUCTS

Oriental's vast product portfolio has been specially designed to cater to the

needs of consumers in India. We develop general insurance plans in the best

interests of our customers. Oriental Insurance continues to provide

customized insurance products for all sections of the society at affordable

prices.

Now you can buy and renew policies Online. Buy a new Insurance policy,

Renew an existing Oriental Insurance policy or renew policies bought from

any other general insurance company by registering yourself on our Portal

and paying online through your debit card / credit card or Net-banking. To

check out various online facilities available, you may login on the Portal.

The various insurance product types are given below:

Motor Policies - Terms & Conditions


Happy family Floater Presentation

Happy Family Floater Prospectus

Happy family proposal form IRDA

Individuals/Family

Health-- Mediclaim/Overseas Mediclaim/Personal Accident

Professionals

Business/Office/Traders/

Engineering/Industry

Motor Vehicle -- Private/Commercial

Agriculture/Sericulture/Poultry

Animals/Birds

Aviation

CLAIMS

Claims and loss handling is the materialized utility of insurance; it is the

actual "product" paid for. Claims may be filed by insured 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 an investigation of each claim, usually

in close cooperation 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.


The policyholder may hire their own public adjuster to negotiate the

settlement with the insurance company on their behalf. For policies that are

complicated, where claims may be complex, the insured may take out a

separate insurance policy add on, called loss recovery insurance, which

covers the cost of a public adjuster in the case of a claim.

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 under-insurance, 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 over the validity of claims

or claims handling practices occasionally escalate into litigation


CONCULSION AND RECOMMENDATIONS

The insurance sector has a vast potential not only because incomes are

increasing and assets are expanding but also because the volatility in the

system is increasing. In a sense, we are living in a more risky world. Trade

is becoming increasingly global. Technologies are changing and getting

replaced at a faster rate. In this Smore uncertain world, for which enough

evidence is available in the recent period, insurance will have an important

role to play in reducing the risk burden individuals and businesses have to

bear. In the emerging scenario, the insurance industry must pay attention to

(a) product innovation, (b) appropriate pricing, and (c) speedy settlement of

claims. The approach to insurance must be in tune with the changing times.

The mission of the insurance sector in India should be to extend the

insurance coverage over a larger section of the population and a wider


segment of activities. The three guiding principles of the industry must be to

charge premium no higher than what is warranted by strict actuarial

considerations, to invest the funds for obtaining maximum yield for the

policy holders consistent with the safety of capital and to render efficient

and prompt service to policy holders. With imaginative corporate planning

and an abiding commitment to improved service, the mission of widening

the spread of insurance can be achieved. As I said at the beginning, you who

are graduating today have an important role in fulfilling this mission.

BIBLIOGRAPHY AND WEBLIOGRAPHY

history of insurance(1)

Documents

latest shipping

2nd millennia

achaemenian

4th century

governmental

specialized

trade increased

middle ages