general-insurance by romit

7/29/2019 General-Insurance by Romit

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A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY- AUTO INSURANCE

Lala lajpatrai College of commerce PAGE 1

TABLE OF CONTENTS

Sr.No. Particulars Page No.

1

Executive Summary

2

Introduction

3

Objectives of the Study

4

Methodology

5

A study on Indian General Insurance Industry- Auto Insurance

6

Suggestions & Findings

7

Conclusion

8

Bibliography

EXECUTIVE SUMMARY


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The project is about the study conducted on Indian General Insurance Industry, in

particular with the Auto Insurance segment of general insurance.

It studies the current market how the insurance segment is booming in the last few years.

How the market has chanced with the new private entrants, what are the major challenges

faced by insurance companies,

The role played by Government in this industry. The marketing strategies used by the

competitors to survive in the market

The opportunities available with the company to progress and to overcome the challenges

faced by them.

The future of this industry is very bright the short term scenario

For the general insurance sector appears to be challenging the long term prospects

definitely present ample opportunities for growth.

OBJECTIVES OF THE STUDY:

The objective of the thesis is:


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To study the Indian general insurance industryparticularly with the auto insurance

segment of general insurance , identify areas of excellence and areas needing

improvement; and provide suggestions for such improvement.

The aim of this Thesis is to successfully study general insurance sector on a

common platform, analyze their working and performance, marketing strategies

highlight their performance , evaluating the various challenges faced by them while

providing suggestions and recommendations for improvement.

METHODOLOGY

The data is collected from various articles, documents, market analysis , published on the

internet and also form booklet of few auto insurance companies the charts and table are

done with the help of MS excel software

RELIANCE MONEY


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Reliance Money, a Reliance Capital company and part of the Reliance Anil Dhirubhai

Ambani Group is a comprehensive financial services and solution provider. It is a one-

stop-shop, providing end-to-end financial solutions (including mobile and web-based

services). It has the largest non-banking distribution channel with over 10,000 outlets and20,000 touch points spread across 5,165 cities/ towns; catering to the diverse needs of

over 3 million existing customers.

Reliance Money endeavors to change the way investors transact in financial markets and

avails financial services. It provides customers with access to Equity, Equity and

Commodity Derivatives, Offshore Investments, Portfolio Management Services, Wealth

Management Services, Investment Banking, Mutual Funds, IPOs, Life and General

Insurance products and Gold Coins. Customers can also avail Loans, Credit Card, Money

Transfer and Money Changing services.

Reliance Capital is one of India's leading and fastest growing private sector financial

services companies, and ranks among the top 3 private sector financial services and

banking groups, in terms of net worth.

RELIANCE GENERAL INSURANCE

Reliance General Insurance is one of Indias leading private general insurance companies

with over 94 customized insurance products catering to the corporate, SME andindividual customers. The Company has launched innovative products like Indias first

Over-The-Counter health & home insurance policies. Reliance General Insurance has an

extended network of over 200 offices spread across 173 cities in 22 states, a wide

distribution channel network, 24x7 customer service assistance and a full fledged website.

It is also Indias first insurance company to be awarded the ISO 9001:2000 certification

across all functions, processes, products and locations pan-India.

The various general insurance products offered by the company are

Health Insurance

Motor Insurance

Home Insurance

Travel Insurance

Accident Cover


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WHAT IS INSURANCE?

We face a lot of risks in our daily lives. Some of these lead to financial losses. Insurance

is a way of protecting against these financial losses. For a payment (premium), an

insurance company will take the responsibility of compensating your financial losses.

Insurance provides us with protection against unforeseen incidents along with a felling of

security and also keep saving intact for the future.

WHY SHOULD ONE INSURE?

One of the main reasons one should insure is to protect ones belongings and assets

against financial loss. When one has earned and accumulated property, protecting it is

prudent. The law also requires us to be insured against some liabilities. That is, in case we

should cause a loss to another person, that person is entitled to compensation. To ensure

that we can afford to pay that compensation, the law requires us to buy liability insurance

so that the responsibility of paying the compensation is transferred to an insurance

company.

Insurance is generally categorized into two divisions:

Life Insurance

General Insurance

WHAT IS GENERAL INSURANCE?

Insuring anything other than human life is called general insurance. Examples are

insuring property like house and belongings against fire and theft or vehicles against

accidental damage or theft. Injury due to accident or hospitalization for illness and

surgery can also be insured. Your liabilities to others arising out of the law can also be

insured and is compulsory in some cases like motor third party insurance.

WHO SHOULD BUY GENERAL INSURANCE?

Anyone who owns an asset can buy insurance to protect it against losses due to fire or

theft and so on. Each one of us can insure our and our dependents health and well being

through hospitalization and personal accident policies. To buy a policy the person should

be the one who will bear financial losses if they occur. This is known as insurable

interest.


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RISK COVERED UNDER GENERAL INSURANCE

Non-life insurance companies have products that cover property against Fire and allied

perils, flood storm and inundation, earthquake and so on. There are products that cover

property against burglary, theft etc. The non-life companies also offer policies covering

machinery against breakdown, there are policies that cover the hull of ships and so on.

Marine Cargo policy covers goods in transit including by sea, air and road. Further,

insurance of motor vehicles against damages and theft forms a major chunk of non-life

insurance business.

Personal insurance covers include policies for Accident, Health etc. Products offering

Personal Accident cover are benefit policies. Health insurance covers offered by non-life

insurers are mainly hospitalization covers either on reimbursement or cashless basis. The

cashless service is offered through Third Party Administrators who have arrangements

with various service providers, i.e., hospitals. The Third Party Administrators also

provide service for reimbursement claims. Sometimes the insurers themselves process

reimbursement claims.

Insurance of property, it is important that the cover is taken for the actual value of the

property to avoid being imposed a penalty should there be a claim. Where a property is

undervalued for the purposes of insurance, the insured will have to bear a ratable

proportion of the loss

Accident and health insurance policies are available for individuals as well as groups. A

group could be a group of employees of an organization or holders of credit cards or

deposit holders in a bank etc. Normally when a group is covered, insurers offer group

discounts.

Liability insurance covers such as Motor Third Party Liability Insurance, Workmens

Compensation Policy etc offer cover against legal liabilities that may arise under the

respective statutesMotor Vehicles Act, The Workmens Compensation Act etc. Some

of the covers such as the foregoing (Motor Third Party and Workmens Compensation

policy) are compulsory by statute. Liability Insurance not compulsory by statute is also

gaining popularity these days. Many industries insure against Public liability. There are

liability covers available for Products as well.

There are general insurance products that are in the nature of package policies offering a

combination of the covers mentioned above. For instance, there are package policies

available for householders, shop keepers and also for professionals such as doctors,

chartered accountants etc. Apart from offering standard covers, insurers also offer

customized or tailor-made ones.


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IMPORTANCE OF GENERAL INSURANCE

General Insurance covers are necessary for every family. It is important to protect ones

property, which one might have acquired from ones hard earned income. A loss or

damage to ones property can leave one shattered. Losses created by catastrophes such as

the tsunami, earthquakes. Cyclones etc have left many homeless and penniless. Such

losses can be devastating but insurance could help mitigate them. Property can be

covered, so also the people against Personal Accident. A Health Insurance policy can

provide financial relief to a person undergoing medical treatment whether due to a disease

or an injury.

Industries also need to protect themselves by obtaining insurance covers to protect their

building, machinery, stocks etc. They need to cover their liabilities as well. Financiers

insist on insurance. So, most industries or businesses that are financed by banks and otherinstitutions do obtain covers. But are they obtaining the right covers? And are they

insuring adequately are questions that need to be given some thought. Also organizations

or industries that are self-financed should ensure that they are protected by insurance.

Most general insurance covers are annual contracts. However, there are few products that

are long-term

HISTORY

The general insurance industry in India was nationalized and a government company

known as General Insurance Corporation of India (GIC) was formed by the Central

Government in November 1972.

THE GENERAL INSURANCE IS BASICALLY DIVIDED INTO FOLLOWING

CATEGORIES

Auto Insurance

Health Insurance

Marine Insurance

Fire Insurance

Others

PREMIUM UNDERWRITTEN BY GENERAL INSURANCE -SEGMENT WISE


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2007-08

fire

marine

motor

health

others

45.59%

17.59%

17.92% 12.43%

6.47%


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INDIAN GENERAL INSURANCE INDUSTRY - MARKET OVERVIEW

The Indian insurance sector is rapidly moving towards international standards of free

(risk-based) market pricing and new/innovative product offerings. Big changes have

occurred over the last few years, during which the sector was opened to private

participation, along with foreign direct investment (FDI) capped at 26%.

India is the 5th largest market in Asia by premium, following Japan, Korea, China and

Taiwan. The country is geographically large and has the worlds 2nd largest population --

1.13 billion in 2007but it also has one of the lowest penetration rates for property and

casualty insurance in Asia in terms of premium as a percentage of GDP.

Indias general insurance market witnessed a variety of changes as deregulation continued

at a hectic pace.

The sector achieved double-digit growth and this trend is expected to persist over the

medium term on the back of greater penetration, due partly in turn to the intense

marketing efforts of private insurers. The removal of pricing controls on fire and

engineering lines in 2007, insurers have discounted their rates by 50% in order to retain or

win market share.

Private players continue to capture market share at the expense of public enterprises on a

mix of aggressive distribution and service. The number of private insurers is growing as

various foreign companies have announced intentions to establish joint ventures.

Rate reductions in the recently de-tariff corporate portfolio (fire & engineering) has

impacted the premium growth, but this is also leading to the greater sales of existing and

new products. With the regulator lifting the ceiling on foreign ownership to 49%, foreign

players participation has increase both volumes and types of products.

With the increasing number of insurers in the private sector. The industry forecasts for a

continuous growth and rise domestic demand.

General Insurance Penetration 0.60% of GDP and the Gross Premium has increased

to(2007-08) is Rs.28130 Crores compared to the Gross Premium (2000-01) of Rs.9620Crores With CAGR: 16.6%

IMPACT OF RECESSION ON GENERAL INSURANCE

The slowdown in economic activities in India has led to a sharp reduction in asset

creation in the Indian industries. This along with rigorous cost cutting measures in all

businesses has directly impacted the general insurance (non-life) industry in the country.


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The 16-players industry together collected Rs 30,601 crore as premium underwritten in

2008-09, up only 9.10 per cent from Rs 28,051 crore in 2007-08. This was the slowest

growth in gross premium underwritten in the last five years. The general insurance

industrys premium collection grew 22 per cent in 2006-07 and 12 per cent in 2007-08.

The most important reason for the drop in business was that many small and medium

businesses either did not buy insurance covers, like fire insurance, or went for lower

cover to save on premium expenditure. Also the sharp drop in sales of commercial

vehicles, tractors and near stagnation in car sales led to a big drop in insurance premium

underwritten

Among the private players IFFCO-Tokio did the best with 22 per cent growth in premium

underwritten in 2008-09. Royal Sudaram, Bajaj Allianz are the other two players tomanage a decent growth. Among the government companies only United India could

manage to grow14 per cent, while the other three grew only by single digit.

One of the major milestones in the Indian general insurance industry has been the

withdrawal of premium pricing restrictions post January 2007.

General insurance companies also made losses because abolition of tariffs has led to a

virtual price war in certain lines of business like Fire and Engineering insurance. This is

evident from the higher claims ratio in both, the fire and motor segment as well as the

higher underwriting losses posted by both the private as well as public sector companies,

On the whole, while short term scenario for the general insurance sector appears to be

challenging the long term prospects definitely present ample opportunities for growth

MAJOR CHALLENGES

Awareness

It is the main problem faced by all the insurance company is lack of awareness about Risk

exposures and about insurance products available to the customers. In India only 20% of

the population is insured. Majority of the populations who are living in the rural areas and

sub urban areas are not aware of the about risk exposures and about insurance products

available in the market

Affordability

In India majority of the population standard of living is low and majority of them belong

to middle class and lower class and they have very little money left after satisfying basic

needs. Uneconomical premium of insurance policy is also a major constrains


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Accessibility

The policies are complex to understand by a layman the procedures are difficult to obtain

policies if done individual .there are a lot of activities and formalities involved in order to

get the insurance policy

Inappropriate / inadequate distribution strategies.

Majority of the population is not aware of the benefits that the insurance company

provides

And they are also not aware of the various schemes which these companies introduce

MAJOR PLAYERS IN GENERAL INSURANCE INDUSTRY

PUBLIC SECTOR

Until 2000, the general insurance sector had only four public sector players, formed after

the nationalization of 107 general insurers.

The public enterprises

Oriental Insurance Company of India (OIC),

National Insurance Company of India (NIC),

New India Assurance Company of India (NIA)

United Insurance Company of India (UII).

They primarily focused on their immediate regions and there was little competition,

leading to a near monopolistic environment.

PRIVATE SECTOR

The private sector has been steadily growing market share despite the fact that public

sector companies have been around for a lot longer. The private insurers enjoy

considerable operational flexibility, whereas the public sector companies have beenconstrained by their traditions and inability to innovate. There are total 12 players in the

private sector.

In the private sector, the major players are

IFFCO-TOKIO General insurance

Reliance General Insurance Co. Ltd.

ICICI LOMBARD-
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TATA AIG- General Insurance

BAJAJ ALLIANCCE,

BHARTI-AXA General insurance

CHOLAMANDALAM ,

FUTURE GENERALI

Royal Sudaram General Insurance

Universal Sompo General Insurance

Shriram General Insurance

The inherent operational flexibility of the private playerssuch as through aggressive

pricing -- has allowed them to capture a greater share of large corporate accounts.

PRIVATE SECTORS GROWING INFLUENCE

Market ShareRedistribution


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Premium and volume public V/s private

Due to the effectiveness of private marketing strategies, the market share of public

insurers has consistently declined. Given a faster growth rate, the market share of the

private sector is catching that of the public sector and the two will likely converge over

the medium term.

Before the removal of tariffs, fire, engineering and motor own damage (OD) contributed a

much greater proportion of business for private players than was the case for public firms.

Fire and engineering now broadly contribute a similar proportion of overall business for

the private and public sectors.

In terms of overall business, the focus has shifted towards the retail segments of motor

and health, where good growth is expected.

Regional Focus

Public insurers have traditionally focused at the regional level with one each in north,

east, west and south India. On account of their public charters and the absence of

competitive pressures, these entities did not have to actively market their products and

just wrote whatever business came their way.

Operational Flexibility

In public entities there is lack the operational flexibility enjoyed as compared by the

private players. Their limited capacity to innovate has impacted their ability to tailor and

aggressively price products for large corporations.

The private players by contrast have focused on account-level profitability for large

corporations and have expanded their shares by cross-subsidizing tariffed products.

Client Servicing


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The public insurers have also been hampered in claims servicing by their process-oriented

approach and limited operational flexibility. They have been unable to expedite claim

settlements through out-of-court negotiations since a large proportion of their claims

pertain to the third party motor segment, which is subject to adjudication by the MotorAccident Claim Tribunal. The result is a time-consuming and involved process.

The situation is not the same with the private player as they enjoy more operational

flexibility which in turn saves a lot of time of both parties

Strong Infrastructure and Systems

Private players are not hindered by their charters or legacy systems and have constructed

technologically advanced infrastructure.

They started with large investments in technology, which helped them to build robust datamanagement systems. This characteristic enables in turn quick and effective decision-

making for pricing and claims settlements, attributes vital to building franchises.

On the other hand, public entities have only recently upgraded their systems and have to

grapple with transition issues, such as moving from paper to paper-less systems. They are

encumbered by legacy systems and fragmented databases, and have not fully used their

past claim experiences, something which could give them a strong pricing edge in a de-

tariffed environment

Focused Underwriting Strategy

The private players, especially during their initial years, have selectively targeted the

more profitable lines of the public sector companies for growth. They benefit from the

experiences of the public sector as well as their international joint-venture partners. They

have drawn talent from public sector companies.

Superior Claim Paying/Processing Capability

The combination of superior technology and selective underwriting has allowed the

private sector to set high standards for policyholder services, thereby differentiating

themselves from public sector insurers. The claim settlement performance of the private

sector has also been superior because of the limited amount of third party motor business

that they have underwritten. Such claims normally take a longer time to settle.

DistributionRise of Banc assurance

The Indian general insurance industry has historically been dominated by the agency

channel, through which 75% of total premium income is sourced. But in recent periods

other channelsfor example, bank assurance, brokers, corporate agents, direct marketing

and direct sales channels -- are gaining importance.


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Most insurers now have tie-ups with the banks, which act as corporate agents and are

remunerated on a commission basis. For example, ICICI Lombard sources a major

portion of its business from a tie-up with ICICI Bank. Similarly, Bajaj Allianz General

Insurance Company Limited (BAIL, second largest private player) has tie-ups with largenumber of banks, which contribute a big share of its total premium income.

At this time, low cost channels like tele-sales and the internet are still not developed in

India, mainly due to relatively poor knowledge about insurance products and low internet

penetration.

REGULATORY ENVIRONMENT

Impact of RegulationEmphasis on Policyholder Protection

IRDA was set up with introduction of the IRDA Act in 1999. Its initial purpose was to

bring about general discipline to the industry. It is responsible for protecting the interest

of policyholders and promoting efficiency in the insurance business.

To ensure their stability, transparency and financial strength, new entrants are subject to

rigorous scrutiny and the conduct of their business is closely monitored, particularly in

relation to capital adequacy and prudent investment policies. The regulatory environment

to date has attracted many insurers whose domestic partners are leaders in their chosen

fields and their foreign counterparts are all well-established with considerable experiencein developed and emerging markets.

The regulator has laid down investment guidelines that limit exposure in certain class of

assets and also sets threshold limits for some assets. At the moment, insurers have to

invest a minimum 30% in government securities, in contrast to some of the more mature

markets like the US and Australia, which do not have such restrictions. Compliance with

these relatively restrictive guidelines could limit insurers ability to diversify and build

optimal portfolios.

The guidelines also stipulate a minimum 10% investment in the social and infrastructuresector. The investment in un-approved securities has been limited to 25% of total

investment books.

General insurers must maintain a solvency ratio (available solvency margin/required

solvency margin) of 1.5 times, calculated based on net premium earned and net claims

incurred in various segments. Public sector entities have maintained comfortable solvency

margins, supported by their strong investment portfolios and capitalizations. The private

players, being in a growth phase, may require capital infusions from time to time to

maintain their solvency requirements.


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The Indian insurance regulator has set the minimum capital required at a level to ensure

that all insurers -- especially the start-ups -- have enough funds to meet their claim

obligations and to limit their overall writings to the amounts supported by their capital

bases. The need to manage capital to comply with IRDAs solvency margin will induceinsurers to be more risk conscious when taking on new business

To ensure an orderly transition towards a deregulated insurance market and risk-based

pricing, IRDA has enacted enabling legislation and issued guidelines to de-tariff various

segments. De-tariffing -- introduced in January 2007 -- has been well accepted and

corrections to prices in profitable lines have been dramatic and have noticeably impacted

premium growth rates. In fact, the discounting has been so extreme that the regulator

intervened in September 2007 and capped maximum discounts at 52.5%

Three Phases of De-Tariffing

Indias general insurance industry has undergone de-tariffing in three phases:

1994 -- marine cargo, personal accident, health, banker liability and aviation

2005-06 -- marine hull segment

2007 - Fire, engineering and motor own damage (OD).

However, the de-tariffing did not immediately allow for free pricing. Instead, insurers

were required to follow the file and use method, whereby they were expected to file a

charter of proposed rates, which was then approved by IRDA.

The restrictions on price discounts during the initial periods were intended to ensure

orderly price adjustments. They were removed in January 2008.

The only segment that remains under a tariff regime is the third party motor business,

although there has been a large upward revision in this areaspremium rates by regulators

in recent times. Moreover, commercial third party motor business, which has traditionally

contributed to adverse claims ratios, has been moved to a common pool, resulting in loss

share

OPPORTUNITIES AVAILABLE

The intense competition brought by deregulation has encouraged the industry to innovate

in all areas; from underwriting, marketing, policy holder servicing to record-keeping

Aggressive marketing strategies by private sector insurers will buy consumer awareness

of risk and expand the markets for products

Competition in a deregulated environment will allow market forces to set premiums that

are appropriate for exposures and push insurers to differentiate their products and services


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Innovations in distribution and improvements in market penetration will follow as public

and private insurers compete to market their products

Allowing insurers to issue their own policy wordings and set their own rates will enable

underwriters to tailor products to meet client needs

The existence of stringent licensing requirements ensure that only adequately capitalized

and professionally managed companies are eligible to carry out insurance and reinsurance

The Insurance Regulatory Development Authority of Indias (IRDA) emphasis on

quarterly reporting/monitoring of insurer solvency will enhance capital adequacy and

transparency.


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FUTURE PROSPECTS

Huge market largely untapped especially in Rural & Urban regions can be targeted to

increase the number of insurer in the market

As high as 70% of population is still not covered by insurance. So the company can

conduct mass campaign and educated the people more about the products and also about

the risk covered and the various benefits which they can avail .The Company can use

various medium to increases the awareness

Increase in standard of living, disposable income, literacy, insurance awareness throws

open huge opportunities on insurance.

High growth in Automobile sector.

Huge strides in Health Care opening up huge Health Insurance potential.

In Rural sector large number of Micro finance institutions, Self Help Groups are setup

who can be the major clients of this industry

The Government initiatives on Mass insurance.

General Insurance would grow at CAGR 17% next 5years.

The premium is expected to grow from 28,000 crores to 1lakh crore by 2015.

The Large part of growth is expected to come from come from retail and rural sectors.

More and more number of private players entering into this industry and along with

foreign companies through joint ventures.FDI is also playing a major role in this industryas government has increased the level of investment by them.


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AUTO INSURANCE

Auto Insurance often referred to as Vehicle, Motor or Car insurance is categorized under

General Insurance. Vehicle Insurance can be purchased from an insurance company or aninsurer for the purpose of getting the loss compensated related to automobiles. The main

criteria that the insured wants to get fulfilled by purchasing a Motor insurance are to get

compensation against any traffic accident or liability as a result of an accident or theft of

the vehicle.

Under the provisions of the Motor Vehicles Act, it is mandatory that every vehicle should

have a valid Insurance to drive on the road. Any vehicle used for social, domestic and

pleasure purpose and for the insurer's business motor purpose should be insured. The

violation of this act is punishable

Auto insurance is divided into three parts

Two wheeler Insurance

Car-Insurance

Commercial Insurance

There are two types of Auto Insurance,

Motor Policy A -Act Only Risk (also known as third party insurance)

"Motor Policy B" (also known as comprehensive insurance policy).

MOTOR POLICY A- THIRD PARTY INSURANCE COVERS

Motor Policy A or Third party insurance covers unlimited pay compensation for death or

bodily injuries to third Parties and damage to the property of the third parties other than

insured, up to a limit. Under this policy the insured is treated as the first party, the
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insuring company the second party and all others would be third parties. This insurance

protects the insured from legal liabilities following an accident involving his/her vehicle.

It does not cover any damage to his/her vehicle.

The limit of third party property damage is limited to 7.5 lakhs.

Third Party insurance covers Personal Injury and Property damage. Personal Injury

includes

1. Liability for death or injuries to third parties - this means that you are insured against

death or injury (caused by your vehicle) to pedestrians, occupants of other vehicles, and

outsiders other than passengers, for unlimited amounts. Passengers of private vehicles and

pillion riders are also deemed covered.

2. Liability to employees connected with operation of the vehicle- this means you are

insured against death or injury (caused by your vehicle) to the vehicle's drivers, cleaners,

conductors, and coolies...employees used in the operation of the vehicle.

3. Liability to passengers carried in the vehicle for hire or reward - this means that as

owner of a taxi, bus or auto-rickshaw, you are insured against death or injury (caused byyour vehicle) to the passengers.

Property damage covers the vehicle itself and you are insured against various damages

that occurs to your vehicle on account of accidents and other instances.

MOTOR POLICY B - COMPREHENSIVE INSURANCE

Comprehensive insurance covers third party liability as well as loss or damage to the

insured vehicle itself by the way of accident, theft etc and some other specified risks.

Normally it is advisable to get the Comprehensive insurance Policy because it covers

insured, vehicle and third party with a single policy.

A Comprehensive Auto Insurance Policy Includes

Accident

Fire, Explosion, self-ignition, lightning


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Burglary, house-breaking, theft

Riots & strikes

Earthquakes

Flood, typhoon, hurricane, storm, cyclones

Malicious acts

Terrorism

Transit by rail/road, air, waterways

Also included is the towing charge (up to Rs.1, 500/- for private vehicles and Rs.2, 500/-

for commercial vehicles) incurred due to accident to the vehicle.

HOW THE POLICY CAN BE OBTAINED

Approach the insurance company directly

Apply through business partners of insurance companies

The Insurance Policy can be obtained through an insurance agent or development officer

of the insurance company. While giving insurance premium the insurer has to obtain a

cover note from the insurance company and which is having the validity of 60 days only.

Within this period the insurance company issue policy and which is known as Certificate

of Motor Policy. Duplicate Certificate instead of defaced, mutilated or lost certificates can

be obtained on payment of a prescribed fee and after production of an affidavit to that

effect.

PREMIUM

As per the Indian Motor Tariff, published by IRDA, all the vehicles are insured at a fixed

value called the Insured's Declared Value (IDV). IDV is based on the ex-showroom cost

of the vehicle.

On every renewal of policy the IDV is calculated after deducting the prescribed

depreciation. One can extend the coverage for Personal Accident, accessories etc by

paying an additional premium. Presently there is a provision for the Insuring Company to

give some discounts of their own. But by the end of September 2007, according to a new

resolution passed by the IRDA, the calculation of IDV will take into account the gender

of the owner and their age also, along with the usual norms of calculation. From April

2007 onwards the Insurance Industry in India is also under de tariff scenario.
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RENEWAL

Usually the Insurance policy is valid for one year. It becomes active soon after the

payment of premium is received by the insurance company and will end exactly a year

later. So the insured must renew the policy before the expiry date. Any delay in therenewal will make the policy invalid. For every renewal a fresh certificate should be

obtained

NO CLAIM BONUS

The Policy holders who have not made any claim in the previous years will be rewarded

by the insurers by giving a discount of a comprehensive insurance on a reducing balance

basis in the future years. If you are carrying forward a no-claim bonus on any vehicle, you

can get it transferred to a new vehicle of the same type (four wheeler to four wheeler).

The only condition to avail of this discount is that you have to sell off your old vehicle.

Even if you wish to retain your old vehicle, you can get around this clause by gifting the

old vehicle to a family member.

TRANSFER OF INSURANCE POLICY

If you purchase a used vehicle, you can transfer the existing insurance policy to your

name. But, you must inform the insuring company within 2 weeks of purchasing the

vehicle.

CLAIMING PROCEDURE

Comprehensive Insurance Claim

If an accident takes place, you must report to the insurance company as soon as possible

and submit the claim forms. An estimate for repairs /replacements should also be

submitted.
http://auto.webindia123.com/insurance/auto_insurance.asphttp://auto.webindia123.com/insurance/auto_insurance.asp


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BIBLIOGRAPHY

Indian Insurance: The Way Forward- G Srinivasan,

India: The Next Insurance Giant India by PRwire Pvt. Ltd.

www.tourindia.com -Insurance in India
http://www.tourindia.com/http://www.tourindia.com/


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www.moody.comIndian General insurance outlook

www.IRDA,com

annual report 2007-08 www.automobileindia.com - Auto Insurance Companies

www.auto.webindia123.com- auto insurance in India

www.generalinsuranceindia .com

www.siam.com - auto policy govt of India

www.reliancegeral.co.in
http://www.moody.com/http://www.irda%2Ccom/http://www.automobileindia.com/http://www.auto.webindia123.com-/http://www.generalinsuranceindia/http://www.siam.com/http://www.reliancegeral.co.in/http://www.reliancegeral.co.in/http://www.siam.com/http://www.generalinsuranceindia/http://www.auto.webindia123.com-/http://www.automobileindia.com/http://www.irda%2Ccom/http://www.moody.com/

general-insurance by romit

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