100 marks insurance bbi
TRANSCRIPT
GROUP INSURANCE
GROUP INSURANCE
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GROUP INSURANCE
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GROUP INSURANCE
INTRODUTION
Group insurance is an insurance that covers a group of people,
usually who are the members of societies, employees of a common employer, or
professionals in a common group.
Group coverage can help reduce the problem of adverse
selection by creating a pool of people eligible to purchase insurance who belong
to the group for reasons other than for the purposes of obtaining insurance. In
other words, people belong to the group not because they possess some high-risk
factor which makes them more apt to purchase insurance (thus increasing adverse
selection); instead they are in the group for reasons unrelated to insurance, such as
all working for a particular employer.
A feature which is sometimes common in group insurance is
that the premium cost on an individual basis may not be risk-based. Instead it is
the same amount for all the insured persons in the group. So, for example, in the
United States, often all employees of an employer receiving health insurance
coverage pay the same premium amount for the same coverage regardless of their
age or other factors. In contrast, under private individual health insurance
coverage in the U.S., different insured persons will pay different premium
amounts for the same coverage based on their age, location, pre-existing
conditions, etc.
Another distinctive feature is that under group coverage, a
member of the group is generally eligible to purchase or renew coverage all whilst
he or she is a member of the group subject to certain conditions. Again, using
U.S. health coverage as an example, under group insurance a person will normally
remain covered as long as he or she continues to work for a certain employer and
pays the required insurance premiums, whereas under individual coverage, the
insurance company often has the right to non-renew a person's individual health
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insurance policy when the policy is up for renewal, which it may do if the
person's risk profile changes.In Canada group insurance is usually purchased
through larger brokerage firms such as PACE Consulting because brokers receive
better rates than individual companies or unions.
WHAT IS GROUP INSURANCE?
Group insurance is a health care coverage plan in which individual
employees or members are included under one 'master policy' owned by their
employers. Because the group insurance plan has so many contributors, the policy
often provides coverage for more services at a much lower cost per participant.
Group insurance may be provided by other organizations besides for-profit
companies. Labor unions, churches and other service groups can also obtain
group insurance for recognized members and possibly their dependents.
Individual members of a group insurance plan receive insurance
certificates which demonstrate their eligibility for benefits. If the master policy
held by the employer requires participation in an HMO (health maintenance
organization), then individuals are also registered as members. Other group
insurance policies may be associated with major medical groups such as Blue
Cross/Blue Shield. A major medical policy may or may not restrict an individual's
choice of primary physician and specialists. HMO policies often require a patient
to use a specified physician, who must approve any visits to eligible specialists.
Financing for a group insurance policy is commonly a flexible
payroll deduction, although some companies will absorb the entire cost of the
policy as a benefit for employees. As with many insurance policies, however, the
cost of premiums can rise significantly without warning. If a few participants
receive expensive treatments for serious medical conditions, the rest of the group
may have to absorb the higher premium costs over time. Group insurers don't
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always require physical exams before issuing a master policy, so some
participants may benefit from treatments for pre-existing conditions.
DEFINITIONS OF GROUP INSURANCE:
1. Single insurance policy or contract that covers groups of employees and
their dependents.
2. Collection of individuals who have regular contact and frequent
interaction, mutual influence, common feeling of camaraderie, and who
work together to achieve a common set of goals.
3. Subdivision of a set.
4. Insurance purchased by a group of persons, such as the employees of a
company, often at a reduced individual rate.
ADVANTAGES AND DISADVANTAGES OF GROUP INSURANCE
Group insurance benefits can vary widely from company to
company. Almost all policies cover emergency and routine medical procedures
such as regular doctor's appointments and hospital treatment for accidents. Most
cover extended care in hospitals or rehabilitation centers. However, group
insurance may or may not cover the employee's spouse or dependents. Some offer
assistance for vision care or dental work, but coverage may be limited to specific
procedures. Mental health needs may also be covered under group insurance.
Prescription drug expenses often fall under group insurance benefits, but most
likely with a co-pay provision. Under a co-pay plan, the covered individual must
pay an established price out-of-pocket for name brand and generic medications.
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Group insurance is definitely more affordable than a similar
number of individual policies, but there are a few drawbacks. Some members find
their choices of physicians and treatments very limited under an HMO insurance
plan. Even major medical plans can restrict the list of approved physicians, often
called the PMD (preferred medical doctor) policy. Employers who fear large
increases in premiums may take an unusual interest in their employees' private
health issues. Companies may suddenly implement stringent 'no smoking' policies
or strongly encourage other preventative health care programs. Some may find
this interest in their personal health to be intrusive.
Group members enjoy numerous advantages that add value to a workers’
compensation policy, including:
Cost savings
Convenient service
Safety programs
If you are an individual State Fund policyholder, consider converting to a
group program at renewal and discover the difference
SAVINGS ADVANTAGES
All group policies receive a 6 percent discount. Because this group
discount is combinable with other State Fund discounts, employers save
more on their premiums.
Small employers with low payroll save by paying a reduced group
minimum premium.
Because of a group’s mandatory loss-control threshold, employers have an
added incentive to create safer workplaces and decrease their claims costs
and experience modifications.
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Group policyholders may also benefit from additional claims-management
services, such as the Alternative Dispute Resolution program.
SERVICE BENEFITS
Trade association programs may provide advice on business procedures,
legislative advocacy, and necessary forms and documents. Other group
services may include health and dental plans, legal services, and life
insurance.
Many associations perform claims reviews. Close monitoring of claims
can help resolve them sooner, which can result in reduced experience
modification.
As a group member, you receive an additional layer of service from State
Fund’s staff of group specialists. These resources can help employers
more effectively take advantage of the trusted core of State Fund services.
Membership gives employers a voice for member feedback as well as a
network for contacts and information.
SAFETY ENHANCEMENTS
Group members share a commitment to maintaining a good safety record,
with selective underwriting review to maintain low group losses.
Employers get industry-focused safety services that may include the
interpretation of regulations, emergency-care planning, safety seminars,
and a review of workplace accidents and their costs and trends.
HOW TO QUALIFY
Must be a current member in good standing of a qualifying association.
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Must meet the requirements of having the proper designated governing
class code or schedule.
Must meet the group underwriting criteria for the specific association.
Association group is the group of individuals or companies with
similar occupations such as dentists, lawyers, medical doctors etc. The
association arranges group insurance for its member and individual
member pays all the premiums. The master contract exists between the
association and the insurer and individual member receives a certificate
detailing coverage.
I. Advantages:
a) Provide more economical coverage because of mass purchase and group
discounting.
b) Group insurance is arranged by the Association and only requires payment to
enroll.
c) Provide for larger amounts of life insurance and the right to convert life
insurance for each member in the association within 60 days of termination.
d) Certificate is issued showing coverage.
e) Coverage may be more comprehensive and premium is lower than individual
insurance.
II.Disadvantages:
a) Coverage reduces in later years and premiums can be increased without notice.
b) The group insurance plan amendments, restrictions or termination can be
effected without input of member.
c) Most contracts contain restrictive clauses and a two-year suicide clause.
d) The master policy is held by the association therefore some member may
consider to opt out with an individual policy if they consider that is the best
solution.
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e) Contract and coverages are negotiated between association and insurance
company. Member of association has to no say to it.
ADVANTAGES OF GROUP INSURANCE OVER INDIVIDUAL
INSURANCE?
If your company offered you to become a member of their group insurance then
this may be the one of the best news which ever came your way. It is not only a
golden opportunity to save money for your future medical expenses but it will
also guarantee that you will have less worries in case any accidental health events
happen to your life.
MAIN ADVANTAGES OF GROUP HEALTH INSURANCE:
Cost:
One of the major advantages of group health insurance over individual
health insurance is the cost. Everyone needs to have a health insurance so they
will have a guaranteed savings in the future. Unfortunately, not all of us have the
financial resources to purchase an individual health insurance because of the high
rate of premiums it charges to its applicants. Thankfully, group health insurance
will provide you the basic services offered by individual health insurance with
lesser amount of premium. At times, your company may even take the initiative to
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pay the premium for you in exchange of the wonderful service you are providing
the company or if not the entire payment, portion of it.
Underwriting:
One of the common problems experienced by applicants of health insurance is the
process of underwriting. Although some of them have enough resources to pay
the premiums offered by a particular insurance company, they are still being
denied by these surety companies because of their medical condition (although it
is illegal to deny any application for life insurance of any individual, unless in
cases of fraud and misinformation). With group life insurance, you never have to
worry about it because you will not be assessed individually rather you will be
evaluated based on the performance of the group, particularly the performance of
the company where you belong to.
Availability:
Group health insurance policies are almost always offered by all employers to
their employees. By law, it is the role of the employer to provide health insurance
policies to their employees and the most economical way to do this is through
group health insurance companies. There is nothing to choose from because the
company has done the choosing for you. The only choosing which will be laid on
your shoulder is to accept or deny the offer. Of course, there is no reason why you
should even deny a group health insurance policy offered by your company!
COBRA:
Another exclusive feature of group health insurance policies is the Consolidated
Omnibus Budget Reconciliation Act (COBRA) program. This program allows
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employees to continue with their group policies even after leaving your job at the
company. COBRA program even allows employee to get up to 18 months of their
health insurance plans after they have left the company. But of course, the
payment of your premium will not be shouldered by the company instead you are
the one who will pay the monthly or yearly premium of your group health
insurance policy. This is perfect especially if you are in the middle of a medical
crisis before you left the company.
TYPES OF GROUP INSURANCE
I.GROUP LIFE INSURANCE
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The life insurance coverage provided by most group plans is one-year term. The
plan comes up for renewal each year, and both the insurance company and the
employer have the opportunity to consider whether to continue it. For the
insurance company, it is also an opportunity to revise the rates. The employer is
the policyholder and each covered individual is issued a certificate showing his or
her certificate number.
Some group plans include cash value insurance as an option. For example, some
employers offer group universal life, which the employee can purchase by salary
deduction.
Some companies offer individual (non-group) insurance policies purchased at the
place of employment. A representative of the company that provides the group
insurance coverage is often available at the worksite to answer questions about the
group coverage as well as review other family coverage. Additional personal
insurance to fill gaps in insurance protection can be purchased at the employee’s
option.
Other types of insurance include business-related plans such as split dollar
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insurance where individual policies are purchased. Typically, the employer pays
the premiums, with the benefits to be split between the employee and the
employer.
3 TYPES OF GROUP LIFE INSURANCE:
Group life insurance is a type of life insurance where a single contract (master
plan policy) covers and entire group of people. The employer, or entity such as a
labor union, is the policyholder and the employees or members of the group are
the ones who are covered by the group policy. Such coverage is often part of an
employee benefits package, with the employer picking up the tab. There are three
basic types of group life insurance: group term life, group universal life and
variable group universal life.
1. GROUP TERM LIFE:
A type of insurance coverage offered to a group of people. This
coverage will provide a benefit to the beneficiaries if the covered individual dies
during the defined covered period. As with other types of group benefits, group
term life insurance is generally cheaper than comparable individual policy
coverage. For this reason, group term life insurance is often a key component in
employee benefit packages.
The most common form of group life insurance is group term
life. This is typically provided to the employees by the employer in the form of a
one year annually renewable term insurance policy. Upon renewal, both the
insurance company and the employer can determine whether or not to continue.
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Rates can also increase upon policy renewal.
Costs of the policy are mostly or totally paid for by the employer. Typical
coverage amount for group term life policies is equal to 1 or 2 times the
employee’s annual salary. Often, additional coverage in larger amounts than the
master contract) can be purchased by the employee via payroll
deductions.
Group term life itself has three types: basic group term life, supplemental group
term life, and portable term life.
Basic group term life – This is the most typical coverage, providing basic
coverage and often paid for by the employer. The premiums (up to $50,000) paid
for by the employer are considered to be an employee income tax-free
benefit.
Supplemental group term life – Often offered by employers in conjunction with a
basic group term life policy, this type of coverage provides the flexibility for the
employee to purchase additional amounts of coverage. The employee chooses the
type and amount of coverage to suit personal needs and circumstances and pays
the cost for the premiums.
Portable term life – Employees who lose the employer’s group eligibility (they
either leave the group or retire) can take this coverage with them continue their
insurance protection generally until they reach age 70. They make their payments
directly to the insurer, many times available through electronic funds
transfer.
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2. GROUP UNIVERSAL LIFE :
This type of group life insurance policy combines the benefits of term life and
whole life insurance. You can choose to only pay the life insurance premium or
also make payments that build cash value (above the cost of the premium). The
advantages include affordable group insurance rates and simplified underwriting,
along with the potential for cash accumulation and portability. Features of this
type of group insurance include: group buying power resulting in more affordable
premiums, optional cash value account, coverage that can be extended to age 100,
and dependent coverage that’s generally available as a rider.
3. VARIABLE GROUP UNIVERSAL LIFE :
Often used in executive benefit plans or as to fund retiree life insurance, variable
group universal life provides flexible life insurance, a guaranteed account, and
optional sub-account investment choices. Features include: affordable premiums
due to group buying power, investment option (for tax-deferred accumulation),
coverage that can be extended to age 99, optional dependent coverage available as
a rider, and investment account options (that cover a wide range of investment
styles and risks). This type of group life insurance has expenses and fees such as
mortality and expense charges, fund expenses, management and distribution fees.
GROUP LIFE INSURANCE SCHEMES:
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Group Insurance Scheme is life insurance protection to groups of people. This
scheme is ideal for employers, associations, societies etc. and allows you to enjoy
group benefits at really low costs.
1. GROUP TERM INSURANCE SCHEME
A) NATURE OF THE SCHEME:
Group (term) Insurance Scheme is meant to provide life insurance
protection to groups of people. Administration of the scheme is on group basis
and cost is low. Under Group (Term) Insurance Scheme, life insurance cover is
allowed to all the members of a group subject to some simple insurability
conditions without insisting upon any medical evidence. Scheme offers covers
only on death and there is no maturity value at the end of
the term.
B) PREMIUM CHARGEABLE:
Group (Term) Insurance Scheme is at present offered under One Year Renewable
Group term assurance plan (OYRGTA). Every year on Annual Renewal date LIC
charges the premium depending upon the changes in size and age distribution of
the age group.
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C) DIFFERENT SCHEMES :
Group (term) Insurance Scheme has a number of varieties . The Scheme may
provide for a uniform cover to all members of the group or graded covers for
different categories of members, cover for all amounts of outstanding housing
loans or vehicle advances, or some other benefits (e.g., life cover to supplement
pension or PF benefits in case of death). The schemes may have add-ons like
Double Accident Benefit,Critical Illness Benefit, Disability benefit etc.
D) GENERAL FEATURES OF VARIOUS GROUP INSURANCE
SCHEMES:
1. Premium:
The premium under such scheme may be wholly paid by the
employer or the Nodal Agency. However, the scheme may be contributory
i.e. the members may also contribute.
2. Double Accident Benefit:
Double Accident Benefit, i.e. payment of double the sum
assured on death due to accident (without permanent disability benefit),
may be allowed under Group Insurance Schemes for an extra premium.
3. Eligibility:
For Group Insurance Scheme in lieu of EDLIS the
insurability condition is that should be a member of the Provident Fund
Scheme of the employer. For other GI Schemes of employer-employee
groups the insurability condition is that the member should not be absent
on ground of sickness on the entry date. For all non-employer-employee
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Group Schemes the basic insurability condition is that the member should
be in good health on the date of entry.
4. Administration Of The Scheme:
At the commencement and thereafter on each Annual
Renewal Date, the Group Policyholder will have to send all the member's
data (and particulars of the new entrants from time to time) to the P & GS
unit of LIC. Detailed OYRGTA premium calculation will be made on
each Annual Renewal Date.
2. EMPLOYEE DEPOSIT LINKED INSURANCE SCHEME
What is EDLI ?
All employees to whom the Employee's Provident Fund and
Miscellaneous Provision Act , 1952 applies, have a Statutory liability to subscribe
to Employee's Deposit Linked Insurance Scheme, 1976 to provide for the benefit
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of Life insurance to all their employees. Under the scheme as amended with effect
from 24th June,2000 the insurance benefit is equal to the average balance to the
credit of the deceased employee in the Provident Fund during the last 12 months,
provided that where such balance exceeds Rs.35,000, insurance cover would be
equal to Rs.35,000 plus 25% of the amount in excess of Rs.35,000 subject to a
maximum of Rs.60,000. Thus if the lenth of service is not adequate and/ or the
salary is low the average balance may be substantially less and such the benefit to
the employee's family is either inadequate or non-existent.
The contribution @ 0.50% of each employee's salary is payable by the Employer
to the Provident Fund Authorities.
The Better Alternative:
However, under Sec. 17(2A) of the act, the employer may be exempted from
contributing to this scheme, if he/she has provided for better insurance benefits
through alternative scheme. LIC's Group Insurance Scheme in lieu of EDLI has
been accepted as one such better alternative.
Advantages To The Employer:
1. The premium payable by the employer is usually less than the total
contribution being paid by the employer to R.P.F.C; particularly when the
salary level is high and average age of the group is low.
2. Settlement of claim is quicker, LIC requires only the death certificate and
the Claim Form from the employer.
3. Premium paid by the employer is treated as normal business expenses for
Income-Tax purpose.
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Advantages To The Employee:
Each employee is covered for a sum assured ranging between 5,000 to
2,00,000 depending upon the current salary and service put in from day one
irrespective of the actual balance in the Provident Fund. Alternatively every
employee/ worker can be covered for a uniform sum assured which will be
decided depending upon the group size.
Accident Benefit:
Double accident benefit can be allowed to the extent of the Sum Assured for an
extra Premium.
Steps To Introduce The Scheme:
1. Put up notice for the knowledge of the employees that you are going in for
LIC's Scheme in lieu of EDLI.
2. Apply to the Regional Provident Fund Commissioner under Sec.17 (2A)
of the E.P.F. and M.P. Act 1952 to exempt you from EDLI Scheme. The
application should be accompanied by the prescribed requirements
including the Rules of the Proposed Group Insurance scheme. Central PF
Commissioner, has authorized the R.P.F.C. to grant exemption from the
1st of the month in which the application for relaxation is submitted. LIC
also offers necessary guidance to the employers for seeking relaxation.
3. GROUP GRATUITY SCHEME
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Life Insurance Corporation of India offers its Group Gratuity
Cash Accumulation scheme to enable employers to meet their gratuity liability in
a very simple and efficient manner. The scheme is formulated in compliance with
Part C of the IV schedule of Income Tax Act and tax benefits are available as
provided in Income Tax rules
The gratuity arrangement with LIC provides the following services to the
company:
Fund management under interest accumulation system
Claim settlement on exit as per company rules/gratuity act
Built in Insurance arrangement for the employees for future service
MIS related to Income Tax and trusts accounts and Actuarial valuation
Fund management: Critical issues :
Liability on account of gratuity experiences sharp increase every year
due to its nature of its computation. Apart from increase in service, increase in
salary also contributes to increase in liability substantially as the benefits are
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payable on last drawn salary. Hence funds have to be invested in a conservative
way with a consistent growth and insulated from market risks
The unique advantage with LIC is the contributions made by the
company and interests credited by LIC are irreversible. This ensures highest level
of safety for the total corpus and consistency in future contributions. As the
gratuity payments are statutory and LIC gratuity scheme being the only
investment tool which enjoys sovereign guarantee, gives a greater comfort to
employer.
Liquidity: Funds available with LIC is a single account for investment and
claim settlement. Hence 100% liquidity is ensured for the purpose of claim
settlement
Yield: LIC has been offering very competitive and consistent interest rates
over the years. For the year 2009-10, LIC has offered 9.00% - 9.65% depending
on fund size. The interest declared is net of administrative expenses incurred,
hence no separate charges are charged after crediting the interest.
Interest rate offered by LIC is on daily balancing method. Hence, there is
no idle time for earning interest, hence effective rate of interest is much higher.
Another significant aspect is interest gets compounded annually, hence no
reinvestment issues and no time lags.
No responsibility on trustees on Investment decisions: Trustees are free
from all investment risks and hassles in cash accumulation system. Advantage of
‘real outsourcing’ can be derived by associating with LIC
No hidden charges: The scheme is focused on a long term association
in compliance with investment regulations and statutory payment obligations and
no charges are levied on the transactions for which the fund is meant for.
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Funding can also be in a staggered pattern during the year, but no charges
at entry level for any number of payments. No charges on withdrawals for
resignation or retirement or death. Total corpus comprising of money contributed
by the company and interest credited by LIC is available for claim settlement up
to 100% subject to availability of funds.
Actuarial recommendations: On annual basis, LIC provides this
information to the trustees and recommends the level of contributions.
Claim settlement: On the exit of an employee due to retirement / death/
resignation, trust may prefer a claim from LIC by sending a claim form. Claim
amount will be made available to trustees. Trustees can have the following
options
Preferring a claim from LIC and paying to employee
Paying the money to employees and seek reimbursement
Paying claims to employees at their end and seeking annual
reimbursement
MIS: LIC provides statement of receipts and payments and actuarial
valuation certificate and certificate of balance for the trust account.
Besides the above said advantages, the scheme also provides for employee
welfare measures with built in insurance cover.
Insurance cover for future service gratuity
Another salient feature of the Gratuity Scheme with LIC is that it provides for
insurance coverage to the employees to the tune of future service gratuity subject
to certain limits. The insurance cover can be flexible depending on the
requirements of the Trust. The Group Insurance premium will be commensurate
to the cover provided.
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Income Tax Benefit on Insurance Premium
The insurance premium paid towards the above said benefits is treated as
deductible business expenses to the company.
The premium is not treated as perks in the hands of the employees.
4. GROUP SUPERANNUATION SCHEME
An organization today, has not only to man the various positions
with competent and trained personnel but also has to create an environment
wherein they can give their best and derive a sense of well-being, a sense of
fulfillment and security and take pride in their continued association with the
organization. Provision of pension may be an attraction for such persons to
continue in the organization and give their best to the organization, as with
continuous improvement in longevity a regular income even after retirement has
become a necessity. To provide the pension benefits to employees, an employer
has two alternatives under the provisions of Rule 89 of Income Tax Rules 1962.
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1. Create a privately managed trust fund and as and when a member retires,
purchase annuity from LIC to provide pension for such retiring member.
2. Entrust the Management of the Pension Fund to an Insurer by purchasing
its Group Superannuation Scheme.
ADVANTAGES OF THE LIC MANAGED PENSION FUND:
The LIC managed Pension fund has the following added and distinct advantages:-
1. An attractive and competitive yield on the fund will be credited to Fund
A/c.
2. The problem of liquidity gets automatically eliminated as soon as the fund
is managed by LIC.
3. We conduct free actuarial valuations of the funds administered by us from
time to time.
4. The Administration of the fund is carried out by us in a scientific manner
and claims are promptly settled.
5. Group Insurance in conjunction with the Group Superannuation Scheme
can be taken by an Organization to provide for an attractive lump sum
payment on the unfortunate death of a member while in service, at very
nominal cost.
SUPERANNUATION SCHEME PROVIDED BY LIC:
The employer contributes a certain fixed percentage of salary of each member.
Such Contributions are accumulated by LIC and the accumulated amount is
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utilized to provide various benefits as mentioned below.
BENEFITS:
1) On Retirement:
On Retirement of a member, the corpus (contributions plus interest) is
utilized to provide the pension as per his choice.
2) On Death:
The Pension is payable on the life of the beneficiary. Corpus is utilized
towards the payment of pension of the type the beneficiary may opt and the
benefit so received is tax free. A lump sum payable by way of death besides the
pension, if the employer has taken Group Insurance Scheme in conjunction with
the Group Superannuation Scheme.
3) On Withdrawal:
He can get the equitable interest transferred to the Superannuation
Scheme of the new employer or opt for immediate or deferred pension.
PENSION OPTIONS PROVIDED BY LIC:
1. Life Pension ceasing at death.
2. Life Pension with Return of Capital and Group Pension Terminal Bonus
on death.
3. Life Pension guaranteed for 5,10,15 or 20 years and life thereafter.
4. Joint Life Pension payable on the last survivor of the employee and
spouse.
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5. Joint Life Pension payable to the last survivor of the employee and spouse
with return of capital on the death of the last survivor. If desired , 1/3rd of
the pension can be commuted at vesting.
ELIGIBILITY CONDITION:
It is not obligatory or statutory on the part of the employer to provide for pension
to all employees. It is entirely upto him to decide to which class/ classes of
employees he desires to extends the scheme. The eligibility conditions may be
defined on the basis of designation or salary. (However, after the categories are
specified, employer cannot discriminate between the employees and thus extends
the scheme uniformly).
CONTRIBUTION:
The maximum annual contribution that an employer can make to the Pension
Fund and Provident Fund is restricted by the Income Tax Provisions to 27% of the
annual salary (basic plus D.A.) The annual contributions are treated as deductible
business expenses.
WHO PAYS CONTRIBUTION?
Mostly the employer contributes, but is so desired, both the employer and the
employees may contribute, in which case the scheme is called a Contributory
Pension Fund Scheme.
TAX BENEFITS:
The provisions relating to the approved Superannuation Scheme are set out in Part
'B' of the Fourth Scheme of the Income-Tax Act, 1961 and Part XIII of the
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Income Tax Rules , 1962. The income tax concession will be available only if the
scheme is approved by the CIT.
1. The annual contribution is treated as a deductible business expense in term
of Section 36(1) (iv) of the I.T. Act.
2. In terms of a Notification issued by the Central Board of Direct
Taxes .80% of the contribution (s) towards the past service liability are
treated as deductible business expenses spread over in the subsequent
years of payment.
3. The employee's contribution , in the case of the Contributions scheme
qualifies for exemption under Section 80C of the Income-Tax Act.
GROUP INSURANCE SCHEME IN CONJUNCTION WITH
SUPERANNUATION SCHEME:
The members of the Group Superannuation scheme can be covered under Group
Insurance in conjunction with superannuation scheme so as to provide death risk
cover while in service subject to certain conditions.
5. GROUP SAVINGS LINKED INSURANCE SCHEME
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The people working in the metropolitan cities, occupied as they
are in their day to-day activities where inflation is inevitable, find difficult to
provide adequate security for their families, Individual insurance with high
premium in fact does not provide adequate insurance protection. Their need for
insurance protection during service coupled with adequate savings for carefree
retired life remains unfulfilled. Keeping this in mind, LIC has come out with an
attractive insurance scheme viz. Group Savings Linked Insurance scheme at a
very low cost. Central Government has a similar scheme with minor
modifications. Semi-Government Organizations, Public Sector Organizations and
also Large private business houses and industrial enterprises have introduced this
scheme, the salient features of which are as under:
I) OBJECTIVES OF THE SCHEME:
Protection at low cost without individual evidence of health.
Attractive returns on savings to meet post retirement needs.
Simple procedures for granting life cover to large groups under one
umbrella.
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II) INTRODUCTION OF THE SCHEME:
a) The Scheme can be introduced by employers provided certain percentage of
employees is willing to join the Scheme.
b) For the new entrants to the Company, the membership of the Scheme is
compulsory.
III) PREMIA:
It is decided on the basis of Group size and the occupation of the
group.Premium has two components i.e. Risk Premium and Savings
Premium.Risk Premium is utilized to offer life cover and the Savings Premium is
accumulated in members account.
IV) ACCIDENT BENEFIT:
Double accident benefit can be allowed to the extent of the Sum Assured
for an extra Premium.
V) INTEREST ON SAVINGS:
The present rate of interest allowed on saving portion of premium is 8%
compounding yearly.
VI) ELIGIBILITY TO JOIN THE SCHEME:
Any employee irrespective of his present state of health is eligible to
join the scheme subject to certain conditions. The only insurability condition is
that the employee should not be absent on medical ground on the date of
commencement of the scheme. All employees who have not crossed the
retirement age are eligible to join the scheme. All future employees have to join
the scheme compulsorily.
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GROUP INSURANCE
VII) TAX BENEFITS:
Employees' total contribution, savings as well as risk premium is entitled for
income-tax rebate under Sec. 80C of the Income Tax Act. The entire claim
amount including interest earned payable on retirement or leaving service or on
death is free from income-tax. The premium paid by the employer towards
insurance cover is treated as business expenses.
6.GROUP LEAVE ENCASHMENT SCHEME
pg. 31
GROUP INSURANCE
Many employers are providing Leave Encashment benefit in addition to other
retirement benefits to their employees which is a lumpsum amount payable to the
employees or their dependants on retirement, death, disablement, voluntary
retirement etc.
FUNDING OF LEAVE ENCASHMENT:
End-of-the-year leave encashment facility available to employees,
can be a huge liability to the company. So can be Medical Leave Encashment, if
provided for. To meet this need of entrepreneurs and businesses, LIC has
introduced Group Leave Encashment Scheme. Just pay a yearly premium, fund
your leave encashment liability and let LIC take care of your worries.
NATURE OF LIABILITY:
The amount depends upon the leave to the credit of the employee and
his/ her salary at the time of exit. Liability is of increasing nature as it is linked
with salary as well as leave position.
As per the amended section 209 (3) of the Company's Act 1956 and
Accounting Standard (AS-15) dated January, 1995, the employers have to account
for the liability in respect of leave encashment facility, if any, available to the
employees and to provide for the same in their Annual Accounts. It is, therefore,
necessary for the companies to ascertain liability in respect of Leave Encashment
facilities, if any, available to the employees and provide for the same in the books
of accounts every year. It helps the employers in ascertaining the true cost of their
products and services.
THE FEATURES:
Group Leave Encashment Schemes (GLES) of LIC helps the employers in
funding of their lave encashment liability. The salient features of the scheme are
as follows:-
pg. 32
GROUP INSURANCE
1. The Company will submit the employees' data and rules for Leave
Encashment. LIC will make actuarial valuation and find out the funding
requirements which shall be quoted to the company. The company will
contribute as per the advice of LIC.
2. A uniform life cover per employee or graded cover will be provided under
One Year Renewable Group Term Assurance Plan of LIC. A small term
insurance premium will be charged in addition to contributions for
funding.
3. A Running Account will be maintained under the scheme and the
contributions (excluding term assurance premium) will be credited to this
account and all claims except term assurance cover will be settled out of
the Running Account. Interest at the rate declared by LIC from time to
time will be credited to the Running Account at the end of the financial
year.
BENEFITS:
1. On the exit of an employee or encashment of leaves during the service the
Leave Encashment amount will be paid from the Fund of the scheme
maintained with LIC.
2. On the death of an employee, in addition to his / her leave encashment
benefit, his/her family will be entitled to the amount of Insurance Cover,
which will be tax-free.
3. The Life Insurance Corporation of India will do the Actuarial Valuation
and will provide necessary certificate as per AS-15.
4. The amount of Term Insurance Premium paid for Life Insurance Cover
will be treated as business expenses.
pg. 33
GROUP INSURANCE
UNDER THE SCHEME, THE PREMIUM DEPENDS UPON:
1. Age (nearer Birthday) at entry of the member into the Scheme.
2. Outstanding loan amount at entry date.
3. Term of loan.
4. Schedule of repayment.
5. Rate of interest with which the loan was availed.
Any borrower may become member of this scheme . The minimum term of
assurance is 3 years. Existing Borrowers can join the scheme with certain
conditions within 6 months of the commencement of scheme.
In case of death of the member during the coverage period ,life cover on the
anniversary date preceding the date of death is payable .The claim proceeds are
used to square off the outstanding loan.
7. GROUP CRITICAL ILLNESS RIDER
pg. 34
GROUP INSURANCE
Critical Illness product (accelerated benefit) is basically offered as an optional
Rider benefit to all Employer-Employee group policyholders (both existing and
new schemes) along with Group term insurance schemes i.e. OYRGTA ( One
year renewal group term assurance ) type schemes. Schemes along with which
the rider can be given shall include Group insurance, Group Gratuity (CA),
Group Leave Encashment and Group insurance in conjunction with
Superannuation. The Benefit will not be extended to spouses or dependants.
Only full time permanent employees who are actively at work will be eligible
for Critical Illness cover. The relevant premium is to be paid by the Group
Policyholder.
FEATURES :
1. The Group critical illness rider benefit to employees is given as
an add on benefit to the Group policy which has an element of
life cover.
2. The Group Critical Illness rider allowable for each member shall
be a minimum of 20 % of sum assured under the base plan and
shall not exceed 100% of the sum assured under the base plan
subject to minimum of Rs. 50 Thousands and maximum of Rs 20
lac per member.
3. All members of the attached policy should participate at
inception and all eligible new members should compulsorily
participate.
4. The diseases covered under the rider (subject to certain
exclusions) are:
1. Cancer 2. Coronary Artery (Bye pass) Surgery 3. Heart attack
(Myocardial infarction) 4. Stroke
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GROUP INSURANCE
2. Kidney failure (End stage renal disease) 6. Aorta (Surgery of Aorta) 7.
Heart valve replacement
3. Major Burns.
BENEFITS :
1. The Critical Illness Accelerated benefit is payable upon the first
incidence of any of the 8 specified diseases and evidenced as per
the diagnostic criteria specified. The rider shall terminate on
payment of the Critical Illness benefit.
2. The Group Critical illness (Accelerated) Benefit pays a lump sum
amount as a percentage of Sum assured out of the Sum assured
under the life cover in the event of occurrence of 8 diseases
covered under the rider.
3. No Critical Illness Benefit shall become payable to a member if
the disease occurs within 90 days of the start of the coverage for
that member of the scheme. This period of 90 days shall be
called “Waiting period”.
4. In case of death nothing is payable under this rider. However,
under the base plan (i.e., the scheme on which the rider is opted
for) benefits as under shall become payable :
1. A benefit equal to base sum assured if no critical illness benefit is payable
or has been paid earlier.
2. If critical illness benefit is payable or already paid, the benefit is reduced by
pg. 36
GROUP INSURANCE
the amount of critical illness benefit payable or already paid. In other words, the
difference between the base sum assured and the critical illness benefit already
paid is payable on death.
EXCLUSIONS:
1. Diseases in the presence of an HIV infection.
2. Diseases that have previously occurred in the life of the member of the
scheme i.e. the benefit is payable only if the disease is a first incidence ,
regardless of whether the earlier incidence occurred before the individual
was covered or whether the insured was covered by us or another
insurer.
3. Any disease occurring within 90 days of the start of the coverage for
each member of the scheme. (I.e. during the waiting period).
4. No payment will be made for any claim directly or indirectly caused by,
based on, arising out of, or howsoever, to any Critical Illness for which
care, treatment, or advice was recommended by or received from a
Physician, or which first manifested itself or was contracted before the
start of the policy period, or for which claim has or could have been
made under any earlier policy.
5. Any congenital condition.
6. Alcohol or solvent abuse or taking of drugs, narcotics or psychotropic
substances unless taken in accordance with the lawful directions and
prescription of a registered medical practitioner.
7. Failure to seek or follow medical advice.
8. War, invasion, act of foreign enemy, hostilities(whether war be declared
or not),armed or unarmed truce, civil war ,mutiny, rebellion, revolution,
insurrection, military or usurped power, riot or civil commotion, strikes.
9. Taking part in any naval, military or air force operation during peace
pg. 37
GROUP INSURANCE
time.
10. Participation by the member of the scheme in any flying activity, except
as a bona fide, fare-paying passenger of a recognised airline on regular
routes and on a scheduled timetable.
Additional exclusions may be disease-specific and would be incorporated into
the definition of the disease.
TAX BENEFITS :
1. All benefits under the policy are also subject to the Tax Laws and other
financial enactments as they exist from tome to time.
2. The premium payable are exempted under section 80D of Income Tax
act.
II.GROUP HEALTH INSURANCE
pg. 38
GROUP INSURANCE
Group health insurance makes individual coverages available on a group basis. A primary advantage is the purchasing power of the group that achieves reduced acquisition costs for the insurance company. The insurance company is then able to reduce the rate it charges to provide insurance for each individual member of the group. The Group is in a better position to bargain with the insurance company for additional benefits for its members. There are a variety of types of group health insurance plans, the major distinctions being the mechanism used for purchasing the insurance. Common varieties of group health insurance plans include:
1. Fully Insured Employer Group - The employer contracts directly with the insurance company to provide certificates to covered employees. Typical arrangement is either for major medical or health maintenance organization (HMO) coverages.
2. Small Employer Group - Insurance companies group certain industries together and then gather small employers together to form a larger group. These groupings enable the insurance company to better predict the cost of providing the insurance. The small employers can then get coverages otherwise not available unless charged a much higher rate. All the small employers get the same policy without deviation.
pg. 39
GROUP INSURANCE
3. Large Employer Group - same as a fully insured employer group with direct contract between the insurance company and the employer to provide individual certificates to covered employees.
4. Health Maintenance Organization (HMO) - a group program under which the organization provides a full range of medical services to participants. Participants are either assigned or select from a group of general practitioners, who then refer their patients to specialists when the need arises. Good generalized system of providing medical care which is marked by curtailment in selection by the individual participant of the health care provider who render services. Individual participants insured by an HMO are called “enrollees”.
5. Self-Funded ERISA - available to large groups. The group contracts with an insurance company or third-party administrator to handle the paperwork. The group pays for all costs associated with the operation of the insurance plan itself, along with the added cost for administration.
6. Association Group - similar to a fully insured employer group, the distinction being that instead of an employer, it is a different type of group, such as a credit card company offering insurance as a benefit to its cardholders or a church group offering insurance to its parishioners.
7. Group Managed Care - a long-term health insurance plan offered through the group or association.
8. Preferred Provider Organization – another kind of health care network (doctors, hospitals, and other health care providers) that contracts with health insurance companies.
TYPES OF GROUP HEALTH INSURANCE:
pg. 40
GROUP INSURANCE
Health insurance coverage for an individual can be quite
expensive. Many employers offer health insurance coverage to full-time
employees as a benefit of employment knowing that individual coverage would
be far too expensive otherwise. Employers and other organizations are able to
achieve lower monthly premiums through contracts with insurance companies
because they provide large groups of customers. There are several group plans
used for this goal.
LARGE EMPLOYER GROUPS:
Large employers contract with a single national health insurance
company to provide coverage for employees. Each employee receives coverage
based on certain criteria such as length of employment and hours worked and
cannot generally be turned down for pre-existing conditions due to contractual
obligations between the employer and insurer. Employees have ways to tailor
coverage to meet specific needs such as buying into a dental or eye plan option
along with choosing deductible rates and coverage limits.
pg. 41
GROUP INSURANCE
SMALL EMPLOYER HEALTH GROUPS:
A small employer's group is an insurance plan to cover groups of
employees from multiple employers within the same industry. This enables
insurance companies to get a better feel for the liability issues within certain
industries, according to insurance information website Free Advice. It also allows
small businesses the opportunity to provide insurance for employees that would
otherwise only be available at higher monthly premiums. Unlike large group
health plans, the coverage choice for employees in small employer health plans is
uniform throughout with everyone getting the same coverage.
HEALTH MAINTENANCE ORGANIZATIONS:
Health Maintenance Organizations, or HMO's, are contracted by
large employers to provide a full array of health options for employees. Those
insured through an HMO are assigned specific doctors they are required to visit in
order for medical expenses to be covered. They may choose from a roster of
approved doctors/physicians. A referral from an HMO-approved doctor is
generally required in order to see a specialist when the need arises.
HEALTH ASSOCIATION GROUPS:
A health association group is not insurance through an employer or
directly through a health insurance provider, but rather through a third party such
as a credit card company or special interest group. In order to participate in these
group plans, you must be a member of the organization offering the plan. Spouses
and dependents are sometimes eligible for these health insurance plans, but you
should check with the specific plan to see if these people can be added.
pg. 42
GROUP INSURANCE
III.FARMERS INSURANCE GROUP
The Farmers Insurance Group of Companies is a personal lines property and
casualty insurance group providing homeowners insurance, auto insurance, life
insurance, and financial services in the United States. It is the third largest
insurance group in the US servicing over 10 million households in 41 states.[5]
Farmers Group Inc. is headquartered in Los Angeles, California but is 100%
owned by Zurich Financial Services based in Zurich, Switzerland.
STRUCTURE:
Farmers Insurance Group of Companies is composed of a holding company and
the various underwriters, reciprocal inter-insurance exchanges, and smaller
companies associated with it.
Farmers Group, Inc. is the holding company and provides insurance
management services. It acts under the dba Farmers Underwriters
Association. Together with its wholly owned subsidiaries, Truck
Underwriters Association and Fire Underwriters Association, they act as
the attorneys-in-fact for three reciprocal inter-insurance exchanges —
Farmers Insurance Exchange, Truck Insurance Exchange, and Fire
Insurance Exchange. However, the Farmers Group, Inc. management
company is not an owner of these reciprocal inter-insurance exchanges.[5]
The exchanges own several other insurance companies and insurance
holding companies, including Mid-Century Insurance Company, Foremost
Insurance Company, and Bristol West Insurance Group, as well as
Farmers Financial Solutions, LLC, a registered broker-dealer. In this
structure, the exchanges hold the insurance risk, while Farmers Group,
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GROUP INSURANCE
Inc. earns management fees by running the exchanges' affairs. The only
exception is Farmers New World Life Insurance Company, a life insurer
owned directly by Farmers Group, Inc.[1][5][6]
Farmers New World Life Insurance Company started as New World Life
Insurance Company in 1910. It was acquired by Farmers in 1953 and
provides insurance products including flexible universal life insurance,
traditional term life insurance, whole life insurance, and annuities.[1][5]
Farmers Financial Solutions, LLC. was created by Farmers in 2000 to
provide financial products to customers.[7]
Foremost Insurance Company was acquired in March 2000 and provides
specialty insurance including mobile homes, motor homes, travel trailers
and specialty dwellings.[1][5]
Bristol West Insurance Group, based in Davie, Florida, was acquired in
July 2007. In 1973, it began providing private passenger auto insurance to
residents in Florida and now provides liability and physical damage
insurance - focusing exclusively on private passenger vehicles across the
United States.[1]
21st Century Insurance, based in Woodland Hills, California, was acquired
on July 1, 2009.
PRODUCTS:
Auto insurance - Farmers provides auto insurance coverage for autos and
collective automobiles.
Motorcycle insurance - Farmers provides motorcycle insurance coverage
through their Foremost Insurance Group.
Home insurance - Farmers provides insurance for homes, condominiums,
and mobile/manufactured homes. Farmers also provides special coverage
for renters, earthquakes, floods, and identity theft.
pg. 44
GROUP INSURANCE
Life insurance - Farmers provides term, whole, and universal life
insurance. Life annuities are also issued by their Farmers New World Life
Insurance Company.
Recreational insurance - Farmers provides insurance coverage for boats,
ATVs, RVs, and travel trailers.
Financial services - Farmers provides mutual funds, variable annuities,
and variable universal life insurance through Farmers Financial Solutions,
LLC.
Business insurance - Farmers provides business insurance coverage for
landlords and commercial property owners, contractors, condominium
homeowner associations, and businesses in the manufacturing, service,
restaurant, retail, wholesale, and auto service & repair industry.
IV.EMPLOYEES GROUP INSURANCE
Employees normally work with utmost commitment when they believe their
organization sincerely cares for their future and wellbeing. Max New York Life
offers a suite of Group Insurance plans, which would provide you and your
employees with a multitude of benefits.
Max New York Life's Group Term Insurance Scheme is a unique, simple and
flexible scheme, which is considered a better alternative to the Employee Deposit
Linked Insurance Scheme (EDLI) because of the benefits it offers to both the
employer and the employees.
FEATURES:
pg. 45
GROUP INSURANCE
Under Section 17 (2-A) of the Provident Fund Act, the Central Provident Fund
Commissioner may, if requested to do so by the employer, by notification in the
Official Gazette, exempt, whether prospectively or retrospectively, any
establishment from the provisions of the EDLI scheme, if he is satisfied that the
employees of such establishment, without making any separate contribution or
payment of premium, enjoy life insurance benefits more favaorable than the
benefits under the EDLI scheme.
Max New York Life Insurance Co. Ltd offers Group Term Insurance Scheme, a
unique, simple and flexible scheme, which is a far better alternative to the
Employee Deposit Linked Insurance Scheme (EDLI) because of the benefits it
offers to both the employer and the employee. The Employees Provident Fund
organization has approved this scheme as an alternative to EDLI scheme.
BENEFITS:
The organization will enjoy the following advantages by subscribing to the Max
New York Life Group Term Insurance as compared to the EDLI scheme:
The premium payable by the employer under the Max New York Life
Group Term Insurance Scheme will be usually less than the total
contribution being paid by the employer to Regional Provident Fund
Commissioner, particularly when average age of the group is low and
the employer is in a low-risk industry.
Flexibility to opt for either a uniform flat cover for all employees or a
graded cover as per notional PF balance.
Well defined and simplified claim process will ensure quicker and
hassle-free claim settlement.
Administrative convenience for additions and deletions of members
with no elaborate paperwork.
pg. 46
GROUP INSURANCE
SWOT ANALYSIS
Strength:
a) Money power, which makes them ignorant about the gestation
period.
b)Brand image, business expenditure & innovative products.
c)The employees are very selective chosen have excellent
communication skills,
d) Service quality,, which is the crux of their mission.
e) Large network branch which is helped to curt for the payer.
Weakness:
a) High market is literally untapped, out of high target for financial
advisors & for the sales department.
b) Many competitors in the market offer same products
the title different in the premium & offer.
c) Sustainabie to risk associated with invest in market.
d) Try to catch middle lower level
Opportunity:
a) Huge market is literally out of 320 millions insurable markets only
20 percent of the population insured.
pg. 47
GROUP INSURANCE
b) health insurance & pension schemes, an estimated market potential
of approximately $15 billion,
c) Group insurance give insurance coverage both to the ppersons &
child so, that like would be conversation both cases.
Threats:
a) Players like BAJAJ & BIRLA Sun life with low-premium for the
similar plan.
b) Entry of many other private company with equally strong expense
& financial strength of employers making the competition different &
saturating the urban market.
c) Current government policies do not encourage domestic saving. If
tax liable.
TOP 10 PLAYERS IN INSURANCE COMPANIES IN INDIA
1. Life Insurance Corporation of India:
Life Insurance Corporation (LIC) came into existence on 1st September 1956
through the amalgamation of 154 Indian insurance companies, 16 non-Indian
companies and 75 provident. The amalgamation was achieved with the help of
Life Insurance Act passed by the Parliament in the same year. The LIC was
pg. 48
GROUP INSURANCE
created with the goal of reaching all the insurable people in the country and
providing them financial coverage at a reasonable price. In the year 1956, LIC
had 5 zonal offices, 33 divisional offices and 212 branch offices. With time there
was a need for a branch office at every district headquarter and many branches
were opened, which raised the pace of the organization.
LIC now has 2048 fully computerized branch offices, 100 divisional offices, 7
zonal offices and the corporate office. At present, online premium collection
facility is being offered in selected cities as LIC has tied up with some banks and
service providers. For providing customer satisfaction the organization has
introduced various schemes such as ECS, ATM premium payment facility, IVRS,
Info centers which are set up in various cities including Mumbai, Bangalore,
Chennai, Kolkata, New Delhi, Pune and many more. It has also come up with
SATELLITE SAMPARK offices providing easy access to policyholders. LIC has
crossed many milestones and set standards for itself fostering unmatched
performance.
Objectives:
Holding the money with obligation and using it in the best possible
manner in the interests of the policyholder and the community.
Bringing attractive savings plans and making them easily accessible to the
policyholders.
Giving attractive returns to the people and keeping in mind national
priorities.
Being trustworthy to the customers and develop the spirit of corporate
social responsibility.
Spreading insurance in both rural and urban areas and covering all the
insurable persons at a reasonable cost.
Bringing in plans and policies favorable to the changing environment.
pg. 49
GROUP INSURANCE
Providing efficient service and involving people in the organization for
their satisfaction.
3. Bajaj Allianz General Insurance Company Limited :
Bajaj Allianz General Insurance Company Limited is a joint venture
between Bajaj Auto Limited and Allianz AG of Germany.
Bajaj Allianz General Insurance came into existence on 2nd May 2001,
when it got certification of Registration from the Insurance and Regulatory
Development Authority. Bajaj Auto has a share of 74%, whereas Allianz
has the remaining 26%. In the very first year, the company made a strong
position for itself in the industry and was reckoned amongst the top private
insurers. The premium income of the company as on 31st March 2006 was
Rs. 1285 crores, whereas the profit after tax made was Rs. 52 crores. Bajaj
Allianz has a Pan India network covering over 100 towns from Jammu to
Thiruvananthapuram and aims to spread its operations in many other
cities.
The vision of the organization is to be the first choice for customers, and
provide job satisfaction to the employees and create shareholder value.
The organization strives to excel in its products and services, providing
total customer satisfaction.
Bajaj Allianz serves customers in all areas of General and Health
Insurance as well as Risk Management. It has in-depth knowledge of the
local market and extensive distribution network with expertise, stability
and experience. It has a capital base of Rs. 147 crores, and is allowed to
serve both the General and Health insurance.
It has achieved iAAA rating, by ICRA Limited and has the highest claims-
paying ability and a stable position in the market. In a 2006 survey,
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GROUP INSURANCE
Business World has rated it among the Most Respected Companies,
putting it at No.2 position in Insurance sector.
4. The Company provides the following products under general insurance:
Travel Insurance
Asset Insurance
Health Insurance
Corporate Insurance
3. ICICI Prudential Life Insurance Company:
ICICI Prudential is a joint venture between ICICI bank and Prudential plc, both
having strong operations in their respective countries. ICICI bank is one of the
leading banks in India providing quality financial services and Prudential is an
international financial service provider headquartered at United Kingdom. ICICI
and Prudential have respective shares of 74% and 26%. The Company started
operating in December 2000. Currently, total capital with the company is Rs.
18.15 billion.
ICICI Prudential was the first insurance company in India to receive a National
Insurer Financial Strength rating of AAA (Ind.) from Fitch ratings. It has been
given the honour of being among the Most Trusted Brands in the industry by
Economic Times for 3 consecutive years. It has a network of 450 branches, over
1,50,000 insurance advisors and 18 bancassurance partners.
As the organization grows and develops, it keeps introducing new range of
products and services and enhancing the quality of plans and solutions given to
the customers. The distribution network is one of the best, and is spreading across
the length and breadth of the country. As on December 31, 2006, it had made
imprints in over 360 cities and towns in India. It has over 1,75,000 advisors across
pg. 51
GROUP INSURANCE
the country, serving clients with full commitment. It has tied up with ICICI Bank,
Bank of India, Federal Bank, Lord Krishna Bank, some co-operative banks,
NGOs, MFIs and corporates for making inroads into the rural areas.
4. ICICI Lombard General Insurance:
ICICI Lombard General Insurance Company Limited is a joint venture between
ICICI Bank Limited and Fairfax Financial Holdings Limited. ICICI bank is
India's second largest bank; Fairfax is Canada-based, engaged in general
insurance, reinsurance, insurance claims management and investment
management. ICICI Lombard General Insurance Company commenced its
operations in general insurance business in August 2001.
ICICI Lombard is India's number one private insurance company; it is also the
first general insurance company to be given certification of ISO 9001:2000. The
company provides simple and fast documentation, fast claims settlement, online
policy issuance, and comprehensive product line.
It has also been given iAAA rating by ICRA for having highest claims paying
ability. In the very first year of operations, it was able to reach financial
breakeven and achieve underwriting breakeven in the second year. Security is
provided through encryption and it is the first company to provide digitally signed
documents. It has been honored as the most Customer Responsive Company by
the Economic Times. Times of India has designated it as the Best Housing
Insurance in the Smart Living Awards by 360 degrees. It has also been awarded
Gold Shield for "Excellence in Financial Reporting". It is among the top three
companies to be awarded the "General Insurance Company of the Year" at the
10th Asia Insurance Industry Awards.
5. Birla Sun Life Insurance Company Limited:
Birla Sun Life Insurance Company Limited (BSLI) is a joint venture between
pg. 52
GROUP INSURANCE
Aditya Birla Group and Sun Life Financial Inc. BSLI started functioning in
March 2001 after getting the certificate of registration from IRDA.
Birla Sun Life Insurance Company Limited introduced unit Linked Life Insurance
Solutions in India. Within a short span of time it was able to establish itself as a
leading player in the Private Life Insurance Industry. It has been innovative and
come up with customer-centric products to provide safety and services. The
company has web-enabled IT systems for better customer services and a strong
distribution channel which is easily approachable. The company shows corporate
governance and a high degree of transparency in all business practices. It has
professional knowledge and global expertise of Aditya Birla Group.
Birla Sunlife Insurance has been providing first class financial solutions to its
customers and has been amongst the top three private sector life insurance
companies.
Its mission is to be amongst the top players in the eyes of customers and the first
choice of insurance and retirement solutions to individuals and groups. These
innovative solutions are linked with global and technical expertise and are
deployed by a multi channel distribution network and enhanced technology.
The company aims at keeping all people associated with it - customers, clients,
stakeholders and employees- happy and fully satisfied. It wants to provide value
added products and services to the customers, job satisfaction to employees and
highest returns to the shareholders.
Qualities like integrity, commitment, passion, and speed are the core values of the
company. The products offered by the company are:
pg. 53
GROUP INSURANCE
6.TATA AIG General Insurance:
Tata AIG General Insurance Company Ltd. is a joint venture between Tata
Sons and American International Group, Inc. (AIG). The Tata Group is
holding 74 per cent stake and the rest 26 percent is held by AIG. The company
has got the expertise, knowledge and strength of both the organizations.
Tata AIG General Insurance Company was founded on January 22, 2001. It
offers general insurance in various categories, such as automobile, home,
personal accident, travel, energy, marine, property and casualty and
specialized financial solutions.
Jamsetji Tata founded Tata Group in 1860s. It has an estimated turnover of
around US $ 14.25 billion. It has spread its operations in various fields such as
steel, power, hotels, airlines, software services, communications, etc. Some of
its major projects have been Tata Tea, Tata Steel, Tata Chemicals, Titan,
Tanishq, Voltas, Westside and Tata Motors. Its imprints are made on the
telecommunication and technology sector. Regarding telecommunications, it
is the largest international long distance service provider. Approximately two-
third of the equity of Tata Sons is held by a host of national institutions in
science and technology, medical services and performing arts. By combining
the ethical values with business acumen and fulfilling its commitment to the
nation, it has become one of the largest groups in India.
American International Group, Inc. (AIG) is the leading international
player in insurance and financial services. Its network spreads across 130
nations. AIG member companies serve all types of customers, be it
commercial or individual. AIG is among the leading insurers and the
largest underwriter of insurance. Aircraft leasing, financial products and
trading are some of the services offered by AIG. AIG has a global
pg. 54
GROUP INSURANCE
expertise of fulfilling the customer-centric needs. It has specialized
investment management capabilities in equities, fixed income, alternative
investments and real estate. AIG's stock has been listed in the New York
Stock Exchange as well as stock exchanges in London, Paris, Switzerland
and Tokyo.
The organization caters to individuals, small businesses and corporates.
Individual plans include motor, home, accident & health and travel
insurance, whereas corporate plans include accident & health, travel,
energy, property, marine and liability plans.
7. New India Assurance Company:
Sir Dorab Tata founded New India Assurance Company on 23rd July 1919. It has
1068 offices comprising of 26 regional offices, 393 divisional offices and 648
branches with more than 21,000 employees.It is one of the largest Non- Life
insurers in Afro- Asia and the first one to cross Rs. 5,000 crores of Gross
Premium. It has a global network expanding in countries like Japan, U.K., Middle
East, Fiji and Australia. Its international operations started in 1920 and have
spread across 24 countries having a network of 19 branches, 12 agencies, 2
associate companies and 2 subsidiary companies. The company contributes 80%
of total overseas premium in India.The company has a highly qualified staff,
which excel in both expertise and knowledge and are trained to provide
satisfaction to the customers. It is the only company able to establish strong
relationships overseas and has a record of successful trading outside India. The
performance has been outstanding and the company has been able to maintain a
strong position in the market.
It has been the pioneer in various fields such as:
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GROUP INSURANCE
Setting up an Aviation Insurance Department in 1946.
Handling the complete insurance requirements of the Indian Shipping
Fleet.
Introduced its own Training School.
Pioneering the concept of 'Model Office Training'.
Creating department in Engineering insurance.
Satellite insurance.
The company wants to develop itself as the best general insurance company in the
industry. It is concerned about the society and community, and provides financial
security at reasonable prices. The company gives utmost importance to customer
needs and there is transparency in its operations. Some of the policies and
schemes introduced by the company are:
Public Liability Policy
Jewellers Block Policy
Pravasi Bharatiya Bima Yojana Policy
Universal Health Insurance Scheme
Fire Policy
8. IFFCO Tokio General Insurance:
IFFCO Tokio General Insurance is a customer-centric company aiming to be
easily accessible and approachable to all sections of society. It offers products
and services that provide quality at reasonable cost. The organization has the
deep knowledge of IFFCO and thus developed a business plan that has both
stability and integrity.
It has set global standards for itself and is the only private general insurance
company in India to make 5 consecutive years of experience. ITGI has been
one of the few companies to show underwriting profits within four years of
operations.The company focuses on delivering creative solutions to its
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GROUP INSURANCE
customers. IFFCO Tokio General Insurance has 273 employees present in 68
cities, dedicated to give full satisfaction to the customers. It is the first
company to underwrite mega policies for a fertilizer and automobile client.
9. The Oriental Insurance Company Ltd.:
The Oriental Insurance Company Ltd. (OICL) is one of the general insurance
companies under the support of the General Insurance Corporation (GIC) of
India. It came into existence in the year 1947 and is one of the oldest
organizations in India. It caters to all sections and sectors ranging from MNCs
to rural sector. The headquarters of the company are situated at Delhi and it
has 21 Regional Offices, 311 Divisional Offices and 635 Branch offices.
It has a team of hard working employees, having the talent to take the
company to new heights. Also the company shows concern for both the
employees and customers. It provides special covers for large projects like
power plants, steel plants and chemical plants.
It believes in actively participating in economic growth by being a dynamic
organization catering to the society with full commitment and efficiency. The
main objectives of the company are to serve the insurance needs of the entire
community, provide services at reasonable cost, make optimum utilization of
the funds, maintaining global standards, minimization of losses and retention
of business.
10. HDFC Standard Life Insurance Company Limited:
HDFC Standard Life Insurance Company Limited is one of the first
companies to be licensed by IRDA to operate in the Insurance sector. The
company came into existence on 14th August 2000. Both Crisil and ICRA
have honored it with AAA Ratings. Similarly Moody's and Standard and
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Poors have also honoured it AAA ratings. HDFC holds 81.4% share in HDFC
and the remaining 18.6% stake is with Standard Life. It integrates the strong
expertise and stability of Standard Life and HDFC.
It is one of the most trusted companies; it is easily accessible and
approachable, offering value services to its customers.
The company aims to provide:
Innovative products to cater to different needs of different customers
Customer service of the highest order
Use of technology to improve service standards
Value for money for customers
Increasing market share
Professionalism in carrying out business
The values ingrained in the company are to provide financial security to
policyholders, maintain trust and keep innovating to establish it as a unique
player.
RECOMMENDATION
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The insurance company should now trying to identify the gap between current
level of customer services & customer expectation some of the strategies being
recommended are as follows;
1. Product differentiation: Offering a product that
I is distinctly different from other product available j
in market.
2. Innovativeness: Identifying means of a delightful customer experience,
3. Riders: These are additional the main product,
4. Flexibility: The company product flexible for the convenience of their
customer.
5. Hassle free services: All customer interaction should be eliminated.
6. Proper policy documentation: Wrong interpretation non-awareness of
policy documents by the customer may have serious implication the long term &
the possibility of the same should be alternated by the insurance company.
CONCLUSION
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This project was a great experience for me I really learnt a lot of things from this
project. This project gave us the knowledge and information about GROUP
INSURANCE
I have found,
Group insurance is an insurance that covers a group of people, usually
who are the members of societies, employees of a common employer, or
professionals in a common group.
Group coverage can help reduce the problem of adverse selection by
creating a pool of people eligible to purchase insurance who belong to the
group for reasons other than for the purposes of obtaining insurance.
A feature which is sometimes common in group insurance is that
the premium cost on an individual may not be risk-based.
Another distinctive feature is that under group
coverage, a member of the group is generally eligible to purchase or
renew coverage all whilst he or is a member of the group subject to certain
conditions.
Group health insurance is an insurance policy that provides health
coverage for a group of people. Here instead of an individual poiicy,
people to enrol! in a group plan to get health insurance coverage.
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GROUP INSURANCE
Provide more economical coverage because of mass purchase and group
discounting. Group insurance is arranged by the Association and only
requires payment to enroll.
Provide for larger amounts of life insurance and the right to convert life
insurance for each member in the association within 60 days of
termination.
Group life insurance gives you very little control over
the conditions of the coverage.
LIC offers life insurance protection under group policies to various groups
such as employees, professionals, co-operatives, weaker sections of
society, etc. The main features of the schemes are low premium simple
insurability condition and easy administration.
The Group Supperannuation scheme is designed to provide pension to
employees on their retirement from service.
Few employers have introduced voluntary retirement scheme (VRS) in
their establishments for the benefit of their employees.
Group Insurance refers to the policy taken on the lives usually of the
employees of a business concern. A' policy is taken for insuring a group of
people generally employees.
BIBLIOGRAPHY
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GROUP INSURANCE
Text Book: LIC of India Author: Sumninder Kaur Bawa
Text Book: Insurance Law & Practices Author: Madhu
Tyagi & C.L.Tyagi
Text Book: Modern Concept of Insurance Author:
M.N.Sharma
Text Book: Insurance Operation
Author: Institute of Certified Risk & Insurance
Managers (ICRIM)
WEBLIOGRAPHY
www.iicofindia.com
www.iciciprudentiai.com
www.newresuitsinqroupinsurance.com
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