history of insurance(1)
TRANSCRIPT
A PROJECT ON TRAVEL INSURANCE
HISTORY OF INSURANCE
GLOBAL HISTORY
History of insurance refers to the development of a modern business in insurance
against risks, especially regarding ships, cargo, and buildings ("property" and
"fire"), death ("life" insurance), automobile accidents ("auto"), and the cost of
medical treatment (health insurance). The industry has been profitable and has
provided attractive employment opportunities for white collar workers. It helps
eliminate risks (as when fire insurance companies demand safe practices and the
availability of fire stations and hydrants), spreads risks from the individual or
single company to the larger community, and provides an important source of
long-term finance for both the public and private sectors.
ANCIENT WORLD
The first methods of transferring or distributing risk were practiced by Chinese and
Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively.
Chinese merchants travelling treacherous river rapids would redistribute their
wares across many vessels to limit the loss due to any single vessel's capsizing.
The Babylonians developed a system which was recorded in the famous Code of
Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing merchants.
If a merchant received a loan to fund his shipment, he would pay the lender an
additional sum in exchange for the lender's guarantee to cancel the loan should the
shipment be stolen.
CHAPTER I
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Achaemenian monarchs were the first to insure their people and made it official by
registering the insuring process in governmental notary offices. The insurance
tradition was performed each year in Nowruz (beginning of the Persian New
Year); the heads of different ethnic groups as well as others willing to take part,
presented gifts to the monarch. The most important gift was presented during a
special ceremony. When a gift was worth more than 10,000 Derrik (Achaemenian
gold coin) the issue was registered in a special office. This was advantageous to
those who presented such special gifts. For others, the presents were fairly assessed
by the confidants of the court. Then the assessment was registered in special
offices.
The purpose of registering was that whenever the person who presented the gift
registered by the court was in trouble, the monarch and the court would help him.
Jahez, a historian and writer, writes in one of his books on ancient Iran:
"[W]henever the owner of the present is in trouble or wants to construct a building,
set up a feast, have his children married, etc. the one in charge of this in the court
would check the registration. If the registered amount exceeded 10,000 Derrik, he
or she would receive an amount of twice as much."
A thousand years later, the inhabitants of Rhodes created the 'general average',
which allowed groups of merchants to pay to insure their goods being shipped
together. The collected premiums would be used to reimburse any merchant whose
goods were jettisoned during transport, whether to storm or sinkage.
The ancient Athenian "maritime loan" advanced money for voyages with
repayment being cancelled if the ship was lost. In the 4th century BC, rates for the
loans differed according to safe or dangerous times of year, implying an intuitive
pricing of risk with an effect similar to insurance.
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The Greeks and Romans introduced the origins of health and life insurance c. 600
BCE when they created guilds called "benevolent societies" which cared for the
families of deceased members, as well as paying funeral expenses of members.
Guilds in the Middle Ages served a similar purpose. The Talmud deals with
several aspects of insuring goods. Before insurance was established in the late 17th
century, "friendly societies" existed in England, in which people donated amounts
of money to a general sum that could be used for emergencies.
MEDIEVAL AND EARLY MODERN
In 12th Century, after the establishment of Seljuk state in Anatolia, Seljuk Sultan
Ghiyasad-DinKaykhusrawI, introduced a form of state insurance which
reimbursing the traders for their loss from the state treasury, if they would be
robbed within the Seljuk territory.
Separate insurance contracts (i.e., insurance policies not bundled with loans or
other kinds of contracts) were invented in Genoa in the 14th century, as were
insurance pools backed by pledges of landed estates. The first known insurance
contract dates from Genoa in 1347, and in the next century maritime insurance
developed widely and premiums were intuitively varied with risks. These new
insurance contracts allowed insurance to be separated from investment, a
separation of roles that first proved useful in marine insurance. The first printed
book on insurance was the legal treatise On Insurance and Merchants' Bets by
Pedro de Santarém (Santerna), written in 1488 and published in 1552.
Insurance became far more sophisticated in post-Renaissance Europe, and
specialized varieties developed. The will of Robert Hayman, written in 1628, refers
to two policies he has taken out with a wealthy Londoner: one of life insurance and
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one of marine insurance. Toward the end of the 17th century, London's growing
importance as a centre for trade increased demand for marine insurance. In the late
1680s, Mr. Edward Lloyd opened a coffee house that became a popular haunt of
ship owners, merchants, and ships’ captains, and thereby a reliable source of the
latest shipping news. It became the meeting place for parties wishing to insure
cargoes and ships, and those willing to underwrite such ventures. Today, Lloyd's of
London remains the leading market (note that it is not an insurance company) for
marine and other specialist types of insurance, but it works rather differently than
the more familiar kinds of insurance.
Insurance as we know it today can be traced to the Great Fire of London, which in
1666 devoured 13,200 houses. In the aftermath of this disaster, Nicholas Barbon
opened an office to insure buildings. In 1680, he established England's first fire
insurance company, "The Fire Office," to insure brick and frame homes.
In the late 19th century, "accident insurance" began to be available, which operated
much like modern disability insurance. This payment model continued until the
start of the 20th century in some jurisdictions (like California), where all laws
regulating health insurance actually referred to disability insurance.
The first insurance company in the United States underwrote fire insurance and
was formed in Charles Town (modern-day Charleston), South Carolina in 1732,
but it provided only fire insurance.
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MODERN EUROPE
GERMAN AND BRITISH GOVERNMENT PROGRAMS
Germany built on a tradition of welfare programs in Prussia and Saxony that began
as early as in the 1840s. In the 1880s Chancellor Otto von Bismarck introduced old
age pensions, accident insurance, medical care and unemployment insurance that
formed the basis of the modern European welfare state. His paternalistic programs
won the support of German industry because its goals were to win the support of
the working classes for the Empire and reduce the outflow of immigrants to
America, where wages were higher but welfare did not exist.
After 1905, led by the Liberal Party, the British introduced a system of social
insurance as well. It was greatly expanded after 1944.
AMERICAN HISTORY
COLONIAL
Benjamin Franklin helped to popularize and make standard the practice of
insurance, particularly Property insurance to spread the risk of loss from fire, in the
form of perpetual insurance. In 1752, he founded the Philadelphia Contributionship
for the Insurance of Houses from Loss by Fire. Franklin's company was the first to
make contributions toward fire prevention. Not only did his company warn against
certain fire hazards, it refused to insure certain buildings where the risk of fire was
too great, such as all wooden houses.
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The sale of life insurance in the U.S. began in the late 1760s. The Presbyterian
Synods in Philadelphia and New York founded the Corporation for Relief of Poor
and Distressed Widows and Children of Presbyterian Ministers in 1759;
Episcopalian priests created a comparable relief fund in 1769. Between 1787 and
1837 more than two dozen life insurance companies were started, but fewer than
half a dozen survived.
19TH CENTURY
Most insurance companies operated locally.The ambitious ones expanded
geographically in the 1830s, such as the New York Life Insurance and Trust
Company in upstate New York, and the Baltimore Life Insurance Company in the
Mid-Atlantic and Upper South. They built a network of agents to develop markets
in different cities. The goal was to only insure people "of sound health, and of
sober habits, without hereditary disease, and not belonging to families remarked
for short lives."The company had to judge the reliability of agents, who sought out
clients, canceled dubious policies, and judged the health of potential customers.
The agents were not medical men, but they were instructed to ask applicants some
standard questions:
"Is he now in good health, and does he usually enjoy good health, or how
otherwise? . . . Has he at any time been afflicted with gout, asthma, consumption,
scrofula, convulsions, palsy, or any other disease likely to impair his constitution? .
. . Has he been vaccinated, or had the small pox? . . . Is he of a sedentary turn, or
accustomed to much exercise? . . . Do you know of any circumstance which
renders an insurance on his life more than usually hazardous?"
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A better solution came late in the 19th century when the companies employed
doctors who used standardized criteria.
MORAL HAZARDS
An important concern for insurance companies was the moral hazard--people
might set fires to collect property insurance--or even commit suicide or murder
when life insurance was involved. From the opposite angle, religious people
refused to consider insurance against God's decisions. Fraud was also a problem, as
people lied on applications, broke policy restrictions, or falsifyied their own deaths
so their family could collect.Sharon Murphy, "How to Make a Dead Man: Murder,
Fraud and Life Insurance in 19th-century America," Financial History, Spring
2010,
SLAVES
Prior to the Civil War (1861-65), some insurance companies in the South insured
the lives of slaves for their owners. In response to bills passed in California in 2001
and in Illinois in 2003, the companies have been required to search their records
for such policies. New York Life for example reported that Nautilus sold 485
slaveholder life insurance policies during a two-year period in the 1840s; they
added that their trustees voted to end the sale of such policies 15 years before the
Emancipation Proclamation of 1863.
20TH CENTURY
SOCIAL SECURITY
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Until the passage of the Social Security Act in 1935, the federal government had
never mandated any form of insurance upon the nation as a whole, but this
program expanded the concept and acceptance of insurance as a means to achieve
individual financial security that might not otherwise be available. That expansion
experienced its first boom market immediately after the Second World War with
the original VA Home Loan programs that greatly expanded the idea that
affordable housing for veterans was a benefit of having served. The mortgages that
were underwritten by the federal government during this time included an
insurance clause as a means of protecting the banks and lending institutions
involved against avoidable losses. During the 1940s there was also the GI life
insurance policy program that was designed to ease the burden of military losses
on the civilian population and survivors.
During the 1970s and 1980s there was a growth in support for the requirement for
drivers to have insurance as a means of proving financial responsibility since it was
recognized that the automobile, in the case of an accident, could cause significant
collateral damage. It soon
Health insurance in the United States
Accident insurance was first offered in the United States by the Franklin Health
Assurance Company of Massachusetts. This firm, founded in 1850, offered
insurance against injuries arising from railroad and steamboat accidents. Sixty
organizations were offering accident insurance in the US by 1866, but the industry
consolidated rapidly soon thereafter. In 1887, the African American workers in
Muchakinock, Iowa, a company town, organized a mutual protection society.
Members paid fifty cents a month or $1 per family for health insurance and burial
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expenses. In the 1890s, various health plans became more common. group
disability policy was issued in 1911.
Commercial insurance companies began offering accident and sickness insurance
(disability insurance) as early as the mid-19th century.The first group medical plan
was purchased from The Equitable Life Assurance Society of the United States by
the General Tire & Rubber Company in 1934.Before the development of medical
expense insurance, patients were expected to pay all other health care costs out of
their own pockets, under what is known as the fee-for-service business model.
During the middle to late 20th century, traditional disability insurance evolved into
modern health insurance programs. Today, most comprehensive private health
insurance programs cover the cost of routine, preventive, and emergency health
care procedures, and also most prescription drugs, but this was not always the case.
During the 1920s, individual hospitals began offering services to individuals on a
pre-paid basis. The first group pre-payment plan was created at the Baylor
University Hospital in Dallas, Texas.This concept became popular among hospitals
during the Depression, when they were facing declining revenues. The Baylor plan
was a forerunner of later Blue Cross plans. Physician associations began offering
pre-paid surgical/medical benefits in the late 1930s Blue Shield plans. Blue Cross
and Blue Shield plans were non-profit organizations sponsored by local hospitals
(Blue Cross) or physician groups (Blue Shield). As originally structured, Blue
Cross and Blue Shield plans provided benefits in the form of services rendered by
participating hospitals and physicians ("service benefits") rather than
reimbursements or payments to the policyholder.
Hospital and medical expense policies were introduced during the first half of the
20th century. During the 1920s, individual hospitals began offering services to
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individuals on a pre-paid basis, eventually leading to the development of Blue
Cross organizations.The Ross-Loos Clinic, founded in Los Angeles in 1929, is
generally considered to have been the first health maintenance organization
(HMO). Henry J. Kaiser organized hospitals and clinics to provide pre-paid health
benefits to his shipyard workers during World War II. This became the basis for
Kaiser Permanente HMO. Most early HMOs were non-profit organizations. The
development of HMOs was encouraged by the passage of the Health Maintenance
Organization Act of 1973. The first employer-sponsored hospitalization plan was
created by teachers in Dallas, Texas in 1929.Because the plan only covered
members' expenses at a single hospital, it is also the forerunner of today's health
maintenance organizations (HMOs).
Employer-sponsored health insurance plans dramatically expanded as a result of
wage controls during World War II.The labor market was tight because of the
increased demand for goods and decreased supply of workers during the war.
Federally imposed wage and price controls prohibited manufacturers and other
employers raising wages high enough to attract sufficient workers. When the War
Labor Board declared that fringe benefits, such as sick leave and health insurance,
did not count as wages for the purpose of wage controls, employers responded with
significantly increased benefits.
Employer-sponsored health insurance was considered taxable income until 1954.In
the United States, regulation of the insurance industry is highly Balkanized, with
primary responsibility assumed by individual state insurance departments. Whereas
insurance markets have become centralized nationally and internationally, state
insurance commissioners operate individually, though at times in concert through a
national insurance commissioners' organization. In recent years, some have called
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for a dual state and federal regulatory system for insurance similar to that which
oversees state banks and national banks.
INDIAN HISTORY OF INSURANCE
In India, insurance has a deep-rooted history. It finds mention in the writings of
Manu ( Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ).
The writings talk in terms of pooling of resources that could be re-distributed in
times of calamities such as fire, floods, epidemics and famine. This was probably a
pre-cursor to modern day insurance. Ancient Indian history has preserved the
earliest traces of insurance in the form of marine trade loans and carriers’
contracts. Insurance in India has evolved over time heavily drawing from other
countries, England in particular.
1818 saw the advent of life insurance business in India with the establishment of
the Oriental Life Insurance Company in Calcutta. This Company however failed in
1834. In 1829, the Madras Equitable had begun transacting life insurance business
in the Madras Presidency. 1870 saw the enactment of the British Insurance Act and
in the last three decades of the nineteenth century, the Bombay Mutual (1871),
Oriental (1874) and Empire of India (1897) were started in the Bombay Residency.
This era, however, was dominated by foreign insurance offices which did good
business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and
London Globe Insurance and the Indian offices were up for hard competition from
the foreign companies.
In 1914, the Government of India started publishing returns of Insurance
Companies in India. The Indian Life Assurance Companies Act, 1912 was the first
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statutory measure to regulate life business. In 1928, the Indian Insurance
Companies Act was enacted to enable the Government to collect statistical
information about both life and non-life business transacted in India by Indian and
foreign insurers including provident insurance societies. In 1938, with a view to
protecting the interest of the Insurance public, the earlier legislation was
consolidated and amended by the Insurance Act, 1938 with comprehensive
provisions for effective control over the activities of insurers.
The Insurance Amendment Act of 1950 abolished Principal Agencies. However,
there were a large number of insurance companies and the level of competition was
high. There were also allegations of unfair trade practices. The Government of
India, therefore, decided to nationalize insurance business.
An Ordinance was issued on 19th January, 1956 nationalising the Life
Insurance sector and Life Insurance Corporation came into existence in the same
year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident
societies—245 Indian and foreign insurers in all. The LIC had monopoly till the
late 90s when the Insurance sector was reopened to the private sector.
The history of general insurance dates back to the Industrial Revolution in the
west and the consequent growth of sea-faring trade and commerce in the 17th
century. It came to India as a legacy of British occupation. General Insurance in
India has its roots in the establishment of Triton Insurance Company Ltd., in the
year 1850 in Calcutta by the British. In 1907, the Indian Mercantile Insurance Ltd,
was set up. This was the first company to transact all classes of general insurance
business.
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1957 saw the formation of the General Insurance Council, a wing of the Insurance
Associaton of India. The General Insurance Council framed a code of conduct for
ensuring fair conduct and sound business practices.
In 1968, the Insurance Act was amended to regulate investments and set
minimum solvency margins. The Tariff Advisory Committee was also set up then.
In 1972 with the passing of the General Insurance Business (Nationalisation)
Act, general insurance business was nationalized with effect from 1st January,
1973. 107 insurers were amalgamated and grouped into four companies, namely
National Insurance Company Ltd., the New India Assurance Company Ltd., the
Oriental Insurance Company Ltd and the United India Insurance Company Ltd.
The General Insurance Corporation of India was incorporated as a company in
1971 and it commence business on January 1sst 1973.
This millennium has seen insurance come a full circle in a journey extending to
nearly 200 years. The process of re-opening of the sector had begun in the early
1990s and the last decade and more has seen it been opened up substantially. In
1993, the Government set up a committee under the chairmanship of RN Malhotra,
former Governor of RBI, to propose recommendations for reforms in the insurance
sector.The objective was to complement the reforms initiated in the financial
sector. The committee submitted its report in 1994 wherein , among other things, it
recommended that the private sector be permitted to enter the insurance industry.
They stated that foreign companies be allowed to enter by floating Indian
companies, preferably a joint venture with Indian partners.
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Following the recommendations of the Malhotra Committee report, in 1999, the
Insurance Regulatory and Development Authority (IRDA) was constituted as an
autonomous body to regulate and develop the insurance industry. The IRDA was
incorporated as a statutory body in April, 2000. The key objectives of the IRDA
include promotion of competition so as to enhance customer satisfaction through
increased consumer choice and lower premiums, while ensuring the financial
security of the insurance market.
The IRDA opened up the market in August 2000 with the invitation for
application for registrations. Foreign companies were allowed ownership of up to
26%. The Authority has the power to frame regulations under Section 114A of the
Insurance Act, 1938 and has from 2000 onwards framed various regulations
ranging from registration of companies for carrying on insurance business to
protection of policyholders’ interests.
In December, 2000, the subsidiaries of the General Insurance Corporation of
India were restructured as independent companies and at the same time GIC was
converted into a national re-insurer. Parliament passed a bill de-linking the four
subsidiaries from GIC in July, 2002.
Today there are 24 general insurance companies including the ECGC and
Agriculture Insurance Corporation of India and 23 life insurance companies
operating in the country.
The insurance sector is a colossal one and is growing at a speedy rate of 15-
20%. Together with banking services, insurance services add about 7% to the
country’s GDP. A well-developed and evolved insurance sector is a boon for
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economic development as it provides long- term funds for infrastructure
development at the same time strengthening the risk taking ability of the country.
HISTORY OF TRAVEL INSURANCE
GLOBAL
In some sense we can say that insurance appears simultaneously with the
appearance of human society. We know of two types of economies in human
societies: natural or non-monetary economies (using barter and trade with no
centralized nor standardized set of financial instruments) and more modern
monetary economies (with markets, currency, financial instruments and so on).
The former is more primitive and the insurance in such economies entails
agreements of mutual aid. If one family's house is destroyed the neighbours are
committed to help rebuild. Granaries housed another primitive form of insurance to
indemnify against famines. Often informal or formally intrinsic to local religious
customs, this type of insurance has survived to the present day in some countries
where modern money economy with its financial instruments is not widespread.
CHAPTER II
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Turning to insurance in the modern sense (i.e., insurance in a modern money
economy, in which insurance is part of the financial sphere), early methods of
transferring or distributing risk were practised by Chinese and Babylonian traders
as long ago as the 3rd and 2nd millennia BC, respectively. Chinese merchants
travelling treacherous river rapids would redistribute their wares across many
vessels to limit the loss due to any single vessel's capsizing. The Babylonians
developed a system which was recorded in the famous Code of Hammurabi, c.
1750 BC, and practised by early Mediterranean sailing merchants. If a merchant
received a loan to fund his shipment, he would pay the lender an additional sum in
exchange for the lender's guarantee to cancel the loan should the shipment be
stolen or lost at sea.
Achaemenian monarchs of Ancient Persia were the first to insure their people and
made it official by registering the insuring process in governmental notary offices.
The insurance tradition was performed each year in Norouz (beginning of the
Iranian New Year); the heads of different ethnic groups as well as others willing to
take part, presented gifts to the monarch. The most important gift was presented
during a special ceremony. When a gift was worth more than 10,000 Derrik
(Achaemenian gold coin) the issue was registered in a special office. This was
advantageous to those who presented such special gifts. For others, the presents
were fairly assessed by the confidants of the court. Then the assessment was
registered in special offices.
The purpose of registering was that whenever the person who presented the gift
registered by the court was in trouble, the monarch and the court would help him.
Jahez, a historian and writer, writes in one of his books on ancient Iran:
"[W]henever the owner of the present is in trouble or wants to construct a building,
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set up a feast, have his children married, etc. the one in charge of this in the court
would check the registration. If the registered amount exceeded 10,000 Derrik, he
or she would receive an amount of twice as much."
A thousand years later, the inhabitants of Rhodes invented the concept of the
general average. Merchants whose goods were being shipped together would pay a
proportionally divided premium which would be used to reimburse any merchant
whose goods were deliberately jettisoned in order to lighten the ship and save it
from total loss.
The ancient Athenian "maritime loan" advanced money for voyages with
repayment being cancelled if the ship was lost. In the 4th century BC, rates for the
loans differed according to safe or dangerous times of year, implying an intuitive
pricing of risk with an effect similar to insurance.The Greeks and Romans
introduced the origins of health and life insurance c. 600 BCE when they created
guilds called "benevolent societies" which cared for the families of deceased
members, as well as paying funeral expenses of members. Guilds in the Middle
Ages served a similar purpose. The Talmud deals with several aspects of insuring
goods. Before insurance was established in the late 17th century, "friendly
societies" existed in England, in which people donated amounts of money to a
general sum that could be used for emergencies.
Separate insurance contracts (i.e., insurance policies not bundled with loans or
other kinds of contracts) were invented in Genoa in the 14th century, as were
insurance pools backed by pledges of landed estates. These new insurance
contracts allowed insurance to be separated from investment, a separation of roles
that first proved useful in marine insurance. Insurance became far more
sophisticated in post-Renaissance Europe, and specialized varieties developed.Page 17
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Lloyd's of London, pictured in 1991, is one of the world's leading and most famous
insurance markets
Some forms of insurance had developed in London by the early decades of the
17th century. For example, the will of the English colonist Robert Hayman
mentions two "policies of insurance" taken out with the diocesan Chancellor of
London, Arthur Duck. Of the value of £100 each, one relates to the safe arrival of
Hayman's ship in Guyana and the other is in regard to "one hundred pounds
assured by the said Doctor Arthur Ducke on my life". Hayman's will was signed
and sealed on 17 November 1628 but not proved until 1633. Toward the end of the
seventeenth century, London's growing importance as a centre for trade increased
demand for marine insurance. In the late 1680s, Edward Lloyd opened a coffee
house that became a popular haunt of ship owners, merchants, and ships' captains,
and thereby a reliable source of the latest shipping news. It became the meeting
place for parties wishing to insure cargoes and ships, and those willing to
underwrite such ventures. Today, Lloyd's of London remains the leading market
(note that it is an insurance market rather than a company) for marine and other
specialist types of insurance, but it operates rather differently than the more
familiar kinds of insurance. Insurance as we know it today can be traced to the
Great Fire of London, which in 1666 devoured more than 13,000 houses. The
devastating effects of the fire converted the development of insurance "from a
matter of convenience into one of urgency, a change of opinion reflected in Sir
Christopher Wren's inclusion of a site for 'the Insurance Office' in his new plan for
London in 1667."A number of attempted fire insurance schemes came to nothing,
but in 1681 Nicholas Barbon, and eleven associates, established England's first fire
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insurance company, the 'Insurance Office for Houses', at the back of the Royal
Exchange. Initially, 5,000 homes were insured by Barbon's Insurance Office.
The first insurance company in the United States underwrote fire insurance and
was formed in Charles Town (modern-day Charleston), South Carolina, in 1732.
Benjamin Franklin helped to popularize and make standard the practice of
insurance, particularly against fire in the form of perpetual insurance. In 1752, he
founded the Philadelphia Contributionship for the Insurance of Houses from Loss
by Fire.Franklin's company was the first to make contributions toward fire
prevention. Not only did his company warn against certain fire hazards, it refused
to insure certain buildings where the risk of fire was too great, such as all wooden
houses.
In the United States, regulation of the insurance industry primary resides with
individual state insurance departments. The current state insurance regulatory
framework has its roots in the 19th century, when New Hampshire appointed the
first insurance commissioner in 1851.[Congress adopted the McCarran-Ferguson
Act in 1945, which declared that states should regulate the business of insurance
and to affirm that the continued regulation of the insurance industry by the states is
in the public's best interest.The Financial Modernization Act of 1999, commonly
referred to as "Gramm-Leach-Bliley", established a comprehensive framework to
authorize affiliations between banks, securities firms, and insurers, and once again
acknowledged that states should regulate insurance.
Whereas insurance markets have become centralized nationally and internationally,
state insurance commissioners operate individually, though at times in concert
through the National Association of Insurance Commissioners. In recent years,
some have called for a dual state and federal regulatory system (commonly Page 19
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referred to as the Optional federal charter (OFC)) for insurance similar to the
banking industry.
In 2010, the federal Dodd-Frank Wall Street Reform and Consumer Protection Act
established the Federal Insurance Office ("FIO").FIO is part of the U.S.
Department of the Treasury and it monitors all aspects of the insurance industry,
including identifying issues or gaps in the regulation of insurers that may
contribute to a systemic crisis in the insurance industry or in the U.S. financial
system.FIO coordinates and develops federal policy on prudential aspects of
international insurance matters, including representing the U.S. in the International
Association of Insurance Supervisors.FIO also assists the U.S. Secretary of
Treasury with negotiating certain international agreements.
Moreover, FIO monitors access to affordable insurance by traditionally
underserved communities and consumers, minorities, and low- and moderate-
income persons.The Office also assists the U.S. Secretary of the Treasury with
administering the Terrorism Risk Insurance Program.However, FIO is not a
regulator or supervisor.The regulation of insurance continues to reside with the
states.
The earliest records of insurance dates back to the 3rd century BC, and it was
probably started by the Babylonians and Chinese traders. Life insurance started
long ago too, during the time of the Greeks in 3rd century AD. Comparatively,
travel insurance is a new type of insurance, and it is defined as a kind of insurance
covering financial, medical, and other related losses incurred during travel. Travel
insurance policy generally covers these losses for travel to a domestic location or
foreign country.
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The first modern day travel insurance company was called the Travelers Insurance
Company, and it was launched on the 1st of April, 1864. The company was
founded by James Batterson and the clients of the company were the first travelers
to get insured “for the purpose of insuring travelers against loss of life or personal
injury while journeying by railway or steamboat.” Now, about 150 years after the
company opened its doors, travel insurance has become a huge industry,
comprising of millions of insurance policy holders and premiums crossing $1
billion.
The insurance used by the Chinese and Babylonian traders about two millennia ago
could be regarded as the first ever travel insurance. The Chinese traders used to
reallocate their commodities across many boats, before crossing a treacherous
stretch of water. If one of the boats capsized, it could greatly reduce the quantity of
commodities. On the other hand, the Babylonians had a kind of insurance very
similar to modern travel insurance. To fund their shipments, merchants usually
took loans from moneylenders. Interestingly, the merchants would sometimes pay
extra money to the lender, so the lender would not ask for a repayment of his loan
if the shipment was lost or stolen. There is also a mention of this insurance system
in the Code of Hammurabi.
The travel insurance industry throughout the world, particularly the US, was
growing steadily since the early 20th century, but the growth was rather slow
compared to other types of insurance. The turning point in the history of travel
insurance policy was the 9/11 incident. It was after this horrendous event that the
sale of travel insurance began to shoot up throughout the US and the world. Prior
to the World Trade Center (WTC) attacks, about 10% of Americans had travel
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insurance, but after the incident, the percentage increased to 30% in a span of just a
couple years.
Travel insurance companies of today offer different types of insurance policies for
different people. Some popular travel insurance policies provide coverage for
business travel, student travel, leisure travel, and international travel. Trip
cancellation, accidental death, overseas funeral expenses, medical expenses, theft
of personal possessions, curtailment and legal assistance are some of the typical
risks covered by travel insurance policies.
Many travelers are aware of the advantages of purchasing travel insurance. The
number of global travelers is ever on the increase, and the risks of travel are on the
increase as well. That is why more travelers are purchasing travel insurance. As a
result, the travel insurance industry is expanding at an exponential rate.
THE TRAVEL INSURANCE INDUSTRY
Travel insurance undoubtedly is a flourishing industry. Every insurer today is
working his best to come up with their best plans, keeping in mind 'customer
value'. These plans aim to cover all possible risks related to travel. You always
have the option to select the policy that suits your requirement. Famous companies
have come up with different insurance schemes keeping in mind the changing
needs of people.
HOW DO TRAVEL INSURANCE POLICIES WORK?
In order to avail a plan, you need to choose a policy that fits your purpose with any
established insurance company. Your contract with the company, assures you the
coverage of certain belonging, if something unfortunate happens on your trip. If
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you face any problem that the policy states to cover, you can make a claim. The
insurer does the payment.
DOMESTIC TRAVEL INSURANCE COVERAGE:
This insurance policy covers cancellation costs. If you want to cancel your trip, and
thereby want to cancel hotel booking and associated arrangements, this insurance
can help you to get your money back.
This policy covers personal liability. It covers the policyholder if any accidental
damage takes place to another person's stuff.
This insurance plan offers luggage cover, which includes luggage loss, luggage
damage or theft etc. It also covers credit card and other personal belongings theft.
This policy offers additional costs. When you are on a holiday, not everything may
occur according toy our plans. For this reason, domestic travel insurance is very
necessary.
This policy offers rental vehicle insurance surplus. If you have an accident or
damage any rental car, this policy will cover you.
Generally, domestic travel insurance policies do not cover medical expenses during
your holiday.
DOMESTIC TRAVEL INSURANCE PROVIDERS:
TATA-AIG Domestic Travel Guard Insurance: TATA-AIG is one of the best
insurance service providers in the country. They also offer domestic travel
insurance, which covers flight delays, luggage loss or theft, and ticket loss.Page 23
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ICICI Lombard General Insurance: ICICI Lombard General Insurance along with
Kingfisher Airlines offers domestic travel insurance. This policy includes tour
cancellation, trip disruption due to natural calamities, luggage theft or loss, medical
expenses, and hospitalization.
Bajaj Allianz Domestic Travel Insurance: The domestic insurance policies, offered
by Bajaj Allianz is an all in one package. It includes personal accidental benefits
including hospitalization and associated expenses during a tour.
Bank Of India: Bank Of India offers domestic travel insurance policy for their
individual account holders. Their policy covers an individual for a year or more.
This plan has three sections: personal accidents, hospitalization expenses, and
luggage loss. These plans are accompanied with very low premium, which is
suitable for all classes of people.
Domestic travel insurance policy can make your trip stress free. When you are
roaming around a different city or state, anything can happen. This insurance
covers almost all the possibilities to make your journey less-hazardous.
WHAT DOES A TRAVEL INSURANCE PLAN COVER?
Not all policies provide coverage for the same protection. They vary according to
the insurance companies as well as plans. The basic benefits that you can expect
are listed below
COVERAGE FOR THEFT AND LOSS
This plan helps if you loose any personal belonging or luggage or even if they are
stolen.
COVERAGE ON TRAVEL DELAY
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This policy helps the passenger in case flight miss or delay.
HEALTH AND MEDICAL COVERAGE
This covers the treatment cost and all other medical expenses that might be
required if a passenger falls ill on the trip. The same is applicable if there is an
accident.
COVERAGE FOR PUBLIC LIABILITY
This plan is specially designed to cover the costs in case the holidaymaker is
prosecuted for harming others.
Coverage on Cancellation If you have to cancel a trip due to any illness and any
other personal cause, then this policy is of great help.
TOP TRAVEL INSURANCE PLANS
If you have been wondering how to go about choosing a perfect travel insurance
policy, then you can look at the list below. Names of esteemed brands have been
given with the various insurance products they offer.
1. Reliance General Insurance Co. Ltd.
o Reliance Travel Care Insurance -Student
o Reliance Travel Care Insurance -Individual
o Reliance Travel Care Insurance -Asia
o Pravasi Bhartiya Bima
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2. Bajaj Allianz General Insurance Co. Ltd.
o Swades Yatra
o Travel Asia
o Travel Companion
o Travel Elite
o Travel Assist
3. National Insurance Co. Ltd.
o Overseas Mediclaim
o Baggage Policy
4. IFFCO TOKIO General Insurance Co. Ltd.
o Travel Insurance
5. ICICI Lombard General Insurance Co. Ltd.
o Student mediclaim insurance
o Domestic Travel Insurance
o Overseas Travel Insurance
6. The New India Assurance Co. Ltd
o Overseas Mediclaim Policy
o Baggage Insurance
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7. Royal Sundaram Alliance Insurance Co. Ltd.
o Travel Insurance
8. Star Health & Allied Insurance Company Limited
o Travel Insurance -ICorporate
o Travel Insurance -IFamily
o Travel Insurance -IStudent
o Travel Insurance 'Individual
9. Apollo DKV Insurance Company Limited
o Easy Travel - Senior Citizen
o Easy Travel - Family
o Easy Travel - Individual
o Easy Travel -Annual Multi Trip
10.Cholamandalam MS General Insurance Co. Ltd.
o Chola Travel Insurance- Individual
o Chola Travel insurance- Multi Trip
11.TATA AIG General Insurance Co. Ltd.
o Domestic Travel Guard
o Travel Guard
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o Student Guard
o Asia Travel Guard
12.HDFC ERGO General Insurance Co. Ltd
o Domestic Travel Insurance
o Annual multi-trip Business Travel Policy
o International Business Travel Policy
13.United India Insurance Co. Ltd
o Marga Bandhu Policy
o Suhana Safar Policy
o Baggage Policy
o Overseas Mediclaim Business and Holiday
14.The Oriental Insurance Co. Ltd.
o Suhana Safar Domestic Policy
o Overseas Mediclaim Business and Holiday
o Overseas Mediclaim Employment and Study
THINGS TO CONSIDER
You might consider few things before selecting the best travel insurance plan for
yourself. Some of the important aspects to mull over are the coverage schemes.
There are plan that offer specialist protection and some provide general coverage.
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Once you have analyzed which policy to purchase, its best to compare price before
finalizing the deal.
COVERAGES
Airline
Aviation insurance is insurance coverage geared specifically to the operation
of aircraft and the risks involved in aviation. Aviation insurance policies are
distinctly different from those for other areas of transportation and tend to
incorporate aviation terminology, as well as terminology, limits and clauses
specific to aviation insurance
Aviation Insurance was first introduced in the early years of the 20th
Century. The first aviation insurance policy was written by Lloyd's of
London in 1911. The company stopped writing aviation policies in 1912
after bad weather and the resulting crashes at an air meet caused losses on
many of those first policies.
CHAPTER III
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The first aviation polices were underwritten by the marine insurance
underwriting community.The first specialist aviation insurers emerged in
1924.
In 1929 the Warsaw convention was signed. The convention was an
agreement to establish terms, conditions and limitations of liability for
carriage by air, this was the first recognition of the airline industry as we
know it today.
In 1931, Captain A. G. Lamplugh, the British Aviation Insurance Company's
chief underwriter and principal surveyor, said of the new industry: "Aviation
in itself is not inherently dangerous. But to an even greater degree than the
sea, it is terribly unforgiving of any carelessness, incapacity or neglect."
Realising that there should be a specialist industry sector, the International
Union of Marine Insurance (IUMI) first set up an aviation committee and
later in 1933 created the International Union of Aviation Insurers (IUAI),
made up of eight European aviation insurance companies and pools.[2]
US Airways Flight 1549 was written off after ditching into the Hudson River
The London insurance market is still the largest single centre for aviation
insurance. The market is made up of the traditional Lloyd's of London
syndicates and numerous other traditional insurance markets. Throughout
the rest of the world there are national markets established in various
countries, this is dependent on the aviation activity within each country, the
US has a large percentage of the world's general aviation fleet and has a
large established market.
Types
Public liability insurance
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This coverage, often referred to as third party liability covers aircraft owners
for damage that their aircraft does to third party property, such as houses,
cars, crops, airport facilities and other aircraft struck in a collision. It does
not provide coverage for damage to the insured aircraft itself or coverage for
passengers injured on the insured aircraft. After an accident an insurance
company will compensate victims for their losses, but if a settlement can not
be reached then the case is usually taken to court to decide liability and the
amount of damages. Public liability insurance is mandatory in most
countries and is usually purchased in specified total amounts per incident,
such as $1,000,000 or $5,000,000.
PASSENGER LIABILITY INSURANCE
Passenger liability protects passengers riding in the accident aircraft who are
injured or killed. In many countries this coverage is mandatory only for
commercial or large aircraft. Coverage is often sold on a "per-seat" basis,
with a specified limit for each passenger seat.
COMBINED SINGLE LIMIT (CSL)
CSL coverage combines public liability and passenger liability coverage into
a single coverage with a single overall limit per accident. This type of
coverage provides more flexibility in paying claims for liability, especially if
passengers are injured, but little damage is done to third party property on
the ground.
GROUND RISK HULL INSURANCE NOT IN MOTION
This provides coverage for the insured aircraft against damage when it is on
the ground and not in motion. This would provide protection for the aircraft
for such events as fire, theft, vandalism, flood, mudslides, animal damage,
wind or hailstorms, hangar collapse or for uninsured vehicles or aircraft
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striking the aircraft. The amount of coverage may be a blue book value or an
agreed value that was set when the policy was purchased.
The use of the insurance term "hull" to refer to the insured aircraft betrays
the origins of aviation insurance in marine insurance. Most hull insurance
includes a deductible to discourage small or nuisance claims.
GROUND RISK HULL INSURANCE IN MOTION (TAXIING)
This coverage is similar to ground risk hull insurance not in motion, but
provides coverage while the aircraft is taxiing, but not while taking off or
landing. Normally coverage ceases at the start of the take-off roll and is in
force only once the aircraft has completed its subsequent landing. Due to
disputes between aircraft owners and insurance companies about whether the
accident aircraft was in fact taxiing or attempting to take-off this coverage
has been discontinued by many insurance companies.
IN-FLIGHT INSURANCE
In-flight coverage protects an insured aircraft against damage during all
phases of flight and ground operation, including while parked or stored.
Naturally it is more expensive than not-in-motion coverage since most
aircraft are damaged while in motion.
Annual
Corporate
Domestic
Family
Plans
Buying
Services
Group
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Indian City
Multi Trip
Overseas
Short Term
Right Quote
Tips on purchasing
Pre Travel Arrangements
TRAVEL INSURANCE COVERAGE TYPES
The most common risks that are covered by travel insurance are:
Medical/dental expenses
Emergency evacuation/Medical Air Evacuation/repatriation of remains
Return of a minor child
Trip cancellation/interruption
Accidental death, injury or disablement benefit
Overseas funeral expenses
Curtailment
Delayed departure, missed connection
Lost, stolen or damaged baggage, personal effects or travel documents
Delayed baggage (and emergency replacement of essential items)
Legal assistance
Trip Cancellation
Flight Connection was missed due to airline schedule
Travel Delays due to weather
Medical Emergency and hospital care (Accident or Sickness)
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OPTIONAL COVERAGE
Some travel policies will also provide cover for additional costs, although these
vary widely between providers.
In addition, often separate insurance can be purchased for specific costs such as:
Car rental collision coverage
Pre-existing conditions (e.g. asthma, diabetes)
Sports with an element of risk (e.g. skiing, scuba diving)
Travel to high risk countries (e.g. due to war, natural disasters or acts of
terrorism)
Additional AD&D coverage
Kidnap and ransom insurance
3rd Party Supplier insolvency (e.g. the hotel or airline to which you made
nonrefundable pre-payments has gone into administration)
INSURANCE FINANCING VEHICLES
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Fraternal insurance is provided on a cooperative basis by fraternal benefit
societies or other social organizations.
No-fault insurance is a type of insurance policy (typically automobile
insurance) where insureds are indemnified by their own insurer regardless of
fault in the incident.
Protected self-insurance is an alternative risk financing mechanism in which an
organization retains the mathematically calculated cost of risk within the
organization and transfers the catastrophic risk with specific and aggregate
limits to an insurer so the maximum total cost of the program is known. A
properly designed and underwritten Protected Self-Insurance Program reduces
and stabilizes the cost of insurance and provides valuable risk management
information.
Retrospectively rated insurance is a method of establishing a premium on large
commercial accounts. The final premium is based on the insured's actual loss
experience during the policy term, sometimes subject to a minimum and
maximum premium, with the final premium determined by a formula. Under
this plan, the current year's premium is based partially (or wholly) on the
current year's losses, although the premium adjustments may take months or
years beyond the current year's expiration date. The rating formula is
guaranteed in the insurance contract. Formula: retrospective premium =
converted loss + basic premium × tax multiplier. Numerous variations of this
formula have been developed and are in use.
Formal self insurance is the deliberate decision to pay for otherwise insurable
losses out of one's own money. This can be done on a formal basis by
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establishing a separate fund into which funds are deposited on a periodic basis,
or by simply forgoing the purchase of available insurance and paying out-of-
pocket. Self insurance is usually used to pay for high-frequency, low-severity
losses. Such losses, if covered by conventional insurance, mean having to pay
a premium that includes loadings for the company's general expenses, cost of
putting the policy on the books, acquisition expenses, premium taxes, and
contingencies. While this is true for all insurance, for small, frequent losses the
transaction costs may exceed the benefit of volatility reduction that insurance
otherwise affords.
Reinsurance is a type of insurance purchased by insurance companies or self-
insured employers to protect against unexpected losses. Financial reinsurance
is a form of reinsurance that is primarily used for capital management rather
than to transfer insurance risk.
Social insurance can be many things to many people in many countries. But a
summary of its essence is that it is a collection of insurance coverages
(including components of life insurance, disability income insurance,
unemployment insurance, health insurance, and others), plus retirement
savings, that requires participation by all citizens. By forcing everyone in
society to be a policyholder and pay premiums, it ensures that everyone can
become a claimant when or if he/she needs to. Along the way this inevitably
becomes related to other concepts such as the justice system and the welfare
state. This is a large, complicated topic that engenders tremendous debate,
which can be further studied in the following articles (and others):
o National Insurance
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o Social safety net
o Social security
o Social Security debate (United States)
o Social Security (United States)
o Social welfare provision
Stop-loss insurance provides protection against catastrophic or unpredictable
losses. It is purchased by organizations who do not want to assume 100% of
the liability for losses arising from the plans. Under a stop-loss policy, the
insurance company becomes liable for losses that exceed certain limits called
deductibles.
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INSURANCE COMPANIES
Insurance companies may be classified into two groups:
Life insurance companies, which sell life insurance, annuities and pensions
products.
Non-life, general, or property/casualty insurance companies, which sell other
types of insurance.
General insurance companies can be further divided into these sub categories.
Standard lines
Excess lines
In most countries, life and non-life insurers are subject to different regulatory
regimes and different tax and accounting rules. The main reason for the distinction
between the two types of company is that life, annuity, and pension business is
very long-term in nature — coverage for life assurance or a pension can cover risks
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over many decades. By contrast, non-life insurance cover usually covers a shorter
period, such as one year.
In the United States, standard line insurance companies are insurers that have
received a license or authorization from a state for the purpose of writing specific
kinds of insurance in that state, such as automobile insurance or homeowners'
insurance.They are typically referred to as "admitted" insurers. Generally, such an
insurance company must submit its rates and policy forms to the state's insurance
regulator to receive his or her prior approval, although whether an insurance
company must receive prior approval depends upon the kind of insurance being
written. Standard line insurance companies usually charge lower premiums than
excess line insurers and may sell directly to individual insureds. They are regulated
by state laws, which include restrictions on rates and forms, and which aim to
protect consumers and the public from unfair or abusive practices.These insurers
also are required to contribute to state guarantee funds, which are used to pay for
losses if an insurer becomes insolvent.
Excess line insurance companies (also known as Excess and Surplus) typically
insure risks not covered by the standard lines insurance market, due to a variety of
reasons (e.g., new entity or an entity that does not have an adequate loss history, an
entity with unique risk characteristics, or an entity that has a loss history that does
not fit the underwriting requirements of the standard lines insurance market). They
are typically referred to as non-admitted or unlicensed insurers.Non-admitted
insurers are generally not licensed or authorized in the states in which they write
business, although they must be licensed or authorized in the state in which they
are domiciled. These companies have more flexibility and can react faster than
standard line insurance companies because they are not required to file rates and
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forms.However, they still have substantial regulatory requirements placed upon
them.
Most states require that excess line insurers submit financial information, articles
of incorporation, a list of officers, and other general information.[27] They also
may not write insurance that is typically available in the admitted market, do not
participate in state guarantee funds (and therefore policyholders do not have any
recourse through these funds if an insurer becomes insolvent and cannot pay
claims), may pay higher taxes, only may write coverage for a risk if it has been
rejected by three different admitted insurers, and only when the insurance producer
placing the business has a surplus lines license.Generally, when an excess line
insurer writes a policy, it must, pursuant to state laws, provide disclosure to the
policyholder that the policyholder's policy is being written by an excess line
insurer.
On July 21, 2010, President Barack Obama signed into law the Nonadmitted and
Reinsurance Reform Act of 2010 ("NRRA"), which took effect on July 21, 2011
and was part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The NRRA changed the regulatory paradigm for excess line insurance. Generally,
under the NRRA, only the insured's home state may regulate and tax the excess
line transaction.
Insurance companies are generally classified as either mutual or stock companies.
Mutual companies are owned by the policyholders, while stockholders (who may
or may not own policies) own stock insurance companies.
Demutualization of mutual insurers to form stock companies, as well as the
formation of a hybrid known as a mutual holding company, became common in
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some countries, such as the United States, in the late 20th century. However, not
all states permit mutual holding companies.
Other possible forms for an insurance company include reciprocals, in which
policyholders reciprocate in sharing risks, and Lloyd's organizations.
Insurance companies are rated by various agencies such as A. M. Best. The ratings
include the company's financial strength, which measures its ability to pay claims.
It also rates financial instruments issued by the insurance company, such as bonds,
notes, and securitization products.
Reinsurance companies are insurance companies that sell policies to other
insurance companies, allowing them to reduce their risks and protect themselves
from very large losses. The reinsurance market is dominated by a few very large
companies, with huge reserves. A reinsurer may also be a direct writer of insurance
risks as well.
Captive insurance companies may be defined as limited-purpose insurance
companies established with the specific objective of financing risks emanating
from their parent group or groups. This definition can sometimes be extended to
include some of the risks of the parent company's customers. In short, it is an in-
house self-insurance vehicle. Captives may take the form of a "pure" entity (which
is a 100% subsidiary of the self-insured parent company); of a "mutual" captive
(which insures the collective risks of members of an industry); and of an
"association" captive (which self-insures individual risks of the members of a
professional, commercial or industrial association). Captives represent commercial,
economic and tax advantages to their sponsors because of the reductions in costs
they help create and for the ease of insurance risk management and the flexibility
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for cash flows they generate. Additionally, they may provide coverage of risks
which is neither available nor offered in the traditional insurance market at
reasonable prices.
The types of risk that a captive can underwrite for their parents include property
damage, public and product liability, professional indemnity, employee benefits,
employers' liability, motor and medical aid expenses. The captive's exposure to
such risks may be limited by the use of reinsurance.
Captives are becoming an increasingly important component of the risk
management and risk financing strategy of their parent. This can be understood
against the following background:
o Heavy and increasing premium costs in almost every line of coverage;
o Difficulties in insuring certain types of fortuitous risk;
o Differential coverage standards in various parts of the world;
Rating structures which reflect market trends rather than individual loss
experience; Insufficient credit for deductibles and/or loss control efforts.
There are also companies known as 'insurance consultants'. Like a mortgage
broker, these companies are paid a fee by the customer to shop around for the best
insurance policy amongst many companies. Similar to an insurance consultant, an
'insurance broker' also shops around for the best insurance policy amongst many
companies. However, with insurance brokers, the fee is usually paid in the form of
commission from the insurer that is selected rather than directly from the client.
Neither insurance consultants nor insurance brokers are insurance companies and
no risks are transferred to them in insurance transactions. Third party
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administrators are companies that perform underwriting and sometimes claims
handling services for insurance companies. These companies often have special
expertise that the insurance companies do not have.
The financial stability and strength of an insurance company should be a major
consideration when buying an insurance contract. An insurance premium paid
currently provides coverage for losses that might arise many years in the future.
For that reason, the viability of the insurance carrier is very important. In recent
years, a number of insurance companies have become insolvent, leaving their
policyholders with no coverage (or coverage only from a government-backed
insurance pool or other arrangement with less attractive payouts for losses). A
number of independent rating agencies provide information and rate the financial
viability of insurance companies.
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The Oriental Insurance Company Ltd
The Oriental Insurance Company Ltd was incorporated at Bombay on 12th
September 1947. The Company was a wholly owned subsidiary of the Oriental
Government Security Life Assurance Company Ltd and was formed to carry out
General Insurance business. The Company was a subsidiary of Life Insurance
Corporation of India from 1956 to 1973 (till the General Insurance Business was
nationalized in the country). In 2003 all shares of our company held by the General
Insurance Corporation of India has been transferred to Central Government.
The Company is a pioneer in laying down systems for smooth and orderly conduct
of the business. The strength of the company lies in its highly trained and
motivated work force that covers various disciplines and has vast expertise.
Oriental specializes in devising special covers for large projects like power plants,
petrochemical, steel and chemical plants. The company has developed various
types of insurance covers to cater to the needs of both the urban and rural
CHAPTER IV
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population of India. The Company has a highly technically qualified and
competent team of professionals to render the best customer service.
Oriental Insurance made a modest beginning with a first year premium of
Rs.99,946 in 1950. The goal of the Company was “Service to clients” and
achievement thereof was helped by the strong traditions built up overtime.
ORIENTAL with its head Office at New Delhi has 30 Regional Offices and nearly
900+ operating Offices in various cities of the country. The Company has overseas
operations in Nepal, Kuwait and Dubai. The Company has a total strength of
around 15,000+ employees. From less than a lakh at inception, the Gross Premium
went up to Rs.58 crores in 1973 and during 2010-11 the figure stood at a mammoth
Rs. 5569.88 crores.
CORPORATE VISION
“TO BE THE MOST RESPECTED & PREFERRED NON-LIFE INSURER IN
THE MARKETS WE OPERATE”.
CORPORATE OBJECTIVES
TO ENSURE THAT WE –
ACT AS A FINANCIALLY SOUND CORPORATE ENTITY WITH HIGH
BUSINESS ETHICS
IMPLEMENT BEST HUMAN RESOURCE DEVELOPMENT PRACTICES
TO BUILD A HIGHLY EFFICIENT, DEDICATED AND MOTIVATED
WORKFORCE WITH HIGH MORALE AND MORAL VALUES
OPTIMALY UTILIZE THE INFORMATION TECHNOLOGY
INFRASTRUCTURE
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PROVIDE EXCELLENCENT CUSTOMER SERVICE
RUN THE BUSINESS PROFITABLY THROUGH PRUDENT
UNDERWRITING AND EFFICIENT & PROPER CLAIM MANAGEMENT
EFFECTIVELY MANAGE OUR REINSURANCE OPERATIONS
EFFECTIVELY MANAGE OUR INVESTMENTS FOR OPTIMISING
YIELD
HAVE EFFECTIVE RISK MANAGEMENT SYSTEMS
IMPROVE THE PENETRATION OF NON-LIFE INSURANCE BY PROPER
UNDERWRITING, INNOVATION & MARKETING
MANAGEMENT
Oriental Insurance is a professionally managed independent Board-run Company.
Illustrious personalities like Shri T.A.Pai ( who later became Cabinet Minister in
the Union Government ), Shri K. R. Puri, who rose to be the Governor of RBI and
Shri B.D.Pande (who later became the Governor of West Bengal) were among our
past Chairmen.
At present Dr. R.K.Kaul is Chairman-Cum-Managing Director of our Company.
The Board of Directors of our Company include eminent personalities in various
fields.
Chairman-Cum-Managing Director
Dr. R.K.Kaul
Directors
Dr. R.K.Kaul
K.R.Kamath
Lalit Kumar
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S. K. Chanana
General Managers
S. K. Chanana
S. Surenther
Niraj Kumar
K. Saxena
N. K. Singh
K. K. Rao
H. G. Rokade
Financial Adviser
S. Surenther
Chief Vigilance Officer
Nawang Tobdan, GM
Company Secretary
Mrs. Rashmi Bajpai
The Company's Gross Direct Premium Income in India during the year
2010-11 (Audited) was Rs.5457.33 crores and the Premium Income outside
India was Rs.112.55 crores. The Gross Direct Premium in India & abroad
showed a growth of 14.73%. The Net Premium Income (Domestic and
Foreign), on the other hand grew by 16.38% from Rs3962.52 crores in 2009-
10 to Rs. 4611.58 crores in 2010-11.
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The company's operations in Nepal, Dubai and Kuwait yielded a Gross
Direct Premium of Rs. 112.55 crores during the year 2010-11 as against Rs
117.99 crores during the previous year. The net premium on foreign
operations stood at Rs. 106.14 crores as against this, the Net Incurred Claims
during this year in respect of foreign operations were Rs.52.98 crores at
49.91%. The foreign operations have resulted in an overall surplus of Rs.
27.09 crores.
After taking into account the income from Interest, Dividend & Rent of Rs
732.43 crores and Profit on sale of Investments of Rs 561.92, we have
posted a pre-tax profit of Rs 180.40 crores & post-tax profit of Rs. 54.61
crores for the year 2010-11.
As against the desirable Solvency Margin mandated by the Indian regulatory
body, IRDA, the available Solvency Margin is 1.34 as at 31st March 2011.
The Company had issued 1,10,34,999 documents in the year 2010-11. The
claims disposal ratio for non-suit claims settlement ratio was 85.70%.
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The Company is not only 'IT friendly' but also 'Technology Savvy'. We have
our own website in place. An integrated Non-Life Insurance Application
Software (INLIAS) has been implemented in all the offices. This will ensure
that our Customer Service parameters grow by leaps and bounds.
No wonder, The Oriental Insurance Company has been enjoying the highest
rating from leading Indian credit rating agencies CRISIL and ICRA. The
Company has also been rated as B+
+(Very Good by AM Best, an international rating agency.
PRODUCTS
Oriental's vast product portfolio has been specially designed to cater to the
needs of consumers in India. We develop general insurance plans in the best
interests of our customers. Oriental Insurance continues to provide
customized insurance products for all sections of the society at affordable
prices.
Now you can buy and renew policies Online. Buy a new Insurance policy,
Renew an existing Oriental Insurance policy or renew policies bought from
any other general insurance company by registering yourself on our Portal
and paying online through your debit card / credit card or Net-banking. To
check out various online facilities available, you may login on the Portal.
The various insurance product types are given below:
Motor Policies - Terms & Conditions
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Happy family Floater Presentation
Happy Family Floater Prospectus
Happy family proposal form IRDA
Individuals/Family
Health-- Mediclaim/Overseas Mediclaim/Personal Accident
Professionals
Business/Office/Traders/
Engineering/Industry
Motor Vehicle -- Private/Commercial
Agriculture/Sericulture/Poultry
Animals/Birds
Aviation
CLAIMS
Claims and loss handling is the materialized utility of insurance; it is the
actual "product" paid for. Claims may be filed by insured directly with the
insurer or through brokers or agents. The insurer may require that the claim
be filed on its own proprietary forms, or may accept claims on a standard
industry form, such as those produced by ACORD.
Insurance company claims departments employ a large number of claims
adjusters supported by a staff of records management and data entry clerks.
Incoming claims are classified based on severity and are assigned to
adjusters whose settlement authority varies with their knowledge and
experience. The adjuster undertakes an investigation of each claim, usually
in close cooperation with the insured, determines if coverage is available
under the terms of the insurance contract, and if so, the reasonable monetary
value of the claim, and authorizes payment.
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The policyholder may hire their own public adjuster to negotiate the
settlement with the insurance company on their behalf. For policies that are
complicated, where claims may be complex, the insured may take out a
separate insurance policy add on, called loss recovery insurance, which
covers the cost of a public adjuster in the case of a claim.
Adjusting liability insurance claims is particularly difficult because there is a
third party involved, the plaintiff, who is under no contractual obligation to
cooperate with the insurer and may in fact regard the insurer as a deep
pocket. The adjuster must obtain legal counsel for the insured (either inside
"house" counsel or outside "panel" counsel), monitor litigation that may take
years to complete, and appear in person or over the telephone with
settlement authority at a mandatory settlement conference when requested
by the judge.
If a claims adjuster suspects under-insurance, the condition of average may
come into play to limit the insurance company's exposure.
In managing the claims handling function, insurers seek to balance the
elements of customer satisfaction, administrative handling expenses, and
claims overpayment leakages. As part of this balancing act, fraudulent
insurance practices are a major business risk that must be managed and
overcome. Disputes between insurers and insured over the validity of claims
or claims handling practices occasionally escalate into litigation
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CONCULSION AND RECOMMENDATIONS
The insurance sector has a vast potential not only because incomes are
increasing and assets are expanding but also because the volatility in the
system is increasing. In a sense, we are living in a more risky world. Trade
is becoming increasingly global. Technologies are changing and getting
replaced at a faster rate. In this Smore uncertain world, for which enough
evidence is available in the recent period, insurance will have an important
role to play in reducing the risk burden individuals and businesses have to
bear. In the emerging scenario, the insurance industry must pay attention to
(a) product innovation, (b) appropriate pricing, and (c) speedy settlement of
claims. The approach to insurance must be in tune with the changing times.
The mission of the insurance sector in India should be to extend the
insurance coverage over a larger section of the population and a wider
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segment of activities. The three guiding principles of the industry must be to
charge premium no higher than what is warranted by strict actuarial
considerations, to invest the funds for obtaining maximum yield for the
policy holders consistent with the safety of capital and to render efficient
and prompt service to policy holders. With imaginative corporate planning
and an abiding commitment to improved service, the mission of widening
the spread of insurance can be achieved. As I said at the beginning, you who
are graduating today have an important role in fulfilling this mission.
BIBLIOGRAPHY AND WEBLIOGRAPHY
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