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INSURANCEINSURANCE

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What Is Insurance ?What Is Insurance ?►It is a tool in the management of It is a tool in the management of

risks – a device through which the risks – a device through which the risks faced by the individuals are risks faced by the individuals are pooled together and thereby all pooled together and thereby all the members of pool will share the the members of pool will share the losses suffered by a few losses suffered by a few individuals.individuals.

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Legal PerspectiveLegal Perspective

► Insurance is an agreement (the insurance Insurance is an agreement (the insurance policy or insurance contracts), by which one policy or insurance contracts), by which one party, called the policy owner, pays a party, called the policy owner, pays a stipulated consideration, called premium, to stipulated consideration, called premium, to the other party called Insurer in return for the other party called Insurer in return for which the insurer agrees to pay a defined which the insurer agrees to pay a defined amount of money or provide a defined amount of money or provide a defined service if a covered event occurs during the service if a covered event occurs during the policy term.policy term.

Evolution and GrowthEvolution and Growth► The business of organized insurance in India The business of organized insurance in India

started with the opening of Oriental Life started with the opening of Oriental Life Assurance Company in 1818.Assurance Company in 1818.

► The Bombay Mutual Life Insurance Society The Bombay Mutual Life Insurance Society started business in India. It was the first started business in India. It was the first company to charge same premium from company to charge same premium from both Indian and non Indian lives.both Indian and non Indian lives.

► The General Insurance business in India was The General Insurance business in India was started by Tritors Insurance company Ltd. started by Tritors Insurance company Ltd. which was established in 1850 in Calcutta which was established in 1850 in Calcutta by the Britishby the British

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► Insurance regulation formally began in India Insurance regulation formally began in India with passing of the Life Insurance with passing of the Life Insurance Companies Act 1912.Companies Act 1912.

► The first comprehensive legislation was The first comprehensive legislation was introduced with the Insurance Act 1938.introduced with the Insurance Act 1938.

► After Independence, although there were After Independence, although there were 245 insurance companies, but they were 245 insurance companies, but they were found serving urban customers.found serving urban customers.

► Emergence of LIC in October 1956 was Emergence of LIC in October 1956 was conformity with the Government’s vision of conformity with the Government’s vision of state led planning and developmentstate led planning and development

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Insurance Sector ReformsInsurance Sector Reforms

►StructureStructure►CompetitionCompetition►Regulatory BodyRegulatory Body► InvestmentsInvestments►Customer ServiceCustomer Service

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IRDAIRDA

►Reforms in the Insurance sector were Reforms in the Insurance sector were initiated with the passage of IRDA Bill initiated with the passage of IRDA Bill in parliament in Dec 1999.in parliament in Dec 1999.

►Accordingly IRDA was established on Accordingly IRDA was established on 19th April 2000 to protect the interest 19th April 2000 to protect the interest of the insurance policy holders.of the insurance policy holders.

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ChallengesChallenges

►Under market penetrationUnder market penetration►Deepening Competitive PressureDeepening Competitive Pressure►Risk ManagementRisk Management►Talent CrunchTalent Crunch►CRMCRM►Fund ManagementFund Management

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