Insurance and Capital market in India, Marketing of Insurance Policies

Insurance is a contract in which one party (insurer) ,for a compensation (consideration) called the premium, takes risks of the other party (insured) and promises to pay him or his nominee a certain sum of money on a specified contingency.

WHAT IS INSURANCE?

Insurance Policy Insurer Insured Premium Compensations Insured Amount Contingency

IMPORTANT TERMS USED IN INSURANCE

1. Life Insurance2. General Insurance (a) Marine Insurance (b) Fire insurance (c) Liability Insurance (d) Social Insurance (e) Other Insurance

KINDS OF INSURANCE

This type of insurance provides financial support for the people who depend on you in the event of your untimely death.

There are different types of life insurance policies. Some of these are designed to just provide insurance benefits (term), while others (whole life, variable life, universal life, etc…) are designed to serve as insurance and a type of investment.

LIFE INSURANCE

Marine Insurance covers the loss or damage of ships, cargo, terminals, and any transport or cargo by which property is transferred, acquired, or held between the points of origin and final destination.

Marine also includes Onshore and offshore exposed property, (Container terminals, Ports, Oil Platforms, Pipelines), Hull, Marine Casualty, and Marine Liability. When Goods are transported Shipping Insurance is used.

GENERAL INSURANCE (marine insurance)

A Fire Insurance is contract to indemnify the insured for destruction of or damage to property caused by fire. The insurer undertakes to pay the amount of the Assured’s loss not in excess of the maximum amount stated in the policy.

FIRE INSURANCE

This type of insurance covers the risk of liability against third parties, which an insurer might have to pay under certain circumstances

FOR EXAMPLE - Death of a worker while performing duty.

LIABILITIES INSURANCE

This insurance is aimed at providing social security to the weaker section of the society. It may take the shape of pension plans disability or sickness benefits etc.

SOCIAL INSURANCE

All other type of general insurance can be placed under this category,

like theft insurance, earthquake insurance, flood insurance, crop insurance, personal accident insurance etc.

OTHER INSURANCE

The market where investment instruments like bonds and equities are traded is known as the Capital Market.

The primal role of this market is to make investment from investors who have surplus funds to the ones who are running a deficit.

The capital market offers both long term and overnight funds.

CAPITAL MARKET

The different types of financial instruments that are traded in the Capital Markets are:

>Equity Instruments >Insurance Instruments >Foreign Exchange Instruments, >Hybrid Instruments

It has Two Segments It Deals in Long term Securities It Performs Trade-off function It Creates Dispersion in Business Ownership It helps in Capital Formation It helps in Creating Liquidity

NATURE OF THE CAPITAL MARKET

Primary Capital Secondary Capital

Types of CAPITAL MARKET

It is that market in which shares, debentures and other securities are sold for the first time for collecting long-term capital.

This market is connected with new issues. Therefore, the primary market is also called NEW ISSUE MARKET

PRIMARY CAPITAL

In this market, the flow of funds is from savers to borrowers (industries), hence it helps directly in the capital formation of the country.

The capital collected from this market is generaaly used by the companies and buildings, for extending business, and for setting up new business unit.

It is related with new issues It has no particular place It has various methods of float capital:- (i) Public Offer (ii) Offer For Sale (iii) Private Placement (iv) Right Issue (v) Electronic-initial Public Offer It comes before Secondary Market

FEATURES OF PRIMARY MARKET

The secondary market is that market in which the buying and selling of the previously issued securities is done.

The transactions of the secondary market are generally done through the medium of stock exchange.

The chief purpose of the secondary market to create liquidity in securities.

SECONDARY MARKET

If an individual has bought some security and he now wants to sell it, he can do so through the medium of stock exchange to sell or purchase through the medium of stock exchange requires the services of the broer presently.

It creates liquidity It comes after Primary Market It has a particular place It encourages new Investment

FEAUTURES OF SECONDARY MARKET

TECHNIQUES OF MARKETING OF INSURANCE POLICY

• KNOW THE MARKET• ESTABLISH A PLAN• MEASURE EFFECTIVENESS• GATHER FEEDBACK

Marketing Of Insurance Policies

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