Module 5

Introduction to Insurance

It is a generally acknowledged phenomenon that there are enormous risks in every sphere of life.
For property, there are fire risks; for shipment of goods, there are perils of sea; for human life,
there are risks of death or disability; and so on. The chances of occurrences of the events causing
losses are quite uncertain because these may or may not take place. In other words, our life and
property are not safe and there is always a risk of losing it. A simple way to cover this risk of
loss money-wise is to get life and property insured. In this business, people facing common risks
come together and make their small contributions to the common fund. While it may not be
possible to tell in advance, which person will suffer the losses, it is possible to work out how
many persons on an average out of the group may suffer the losses.

When risk occurs, the loss is made good out of the common fund. In this way, each and everyone
share the risk. In fact, insurance companies bear risk in return for a payment of premium, which
is calculated on the likelihood of loss.

Insurance-Meaning and definition

Insurance is a contract between two parties. One party is the insured and the other party is the
insurer. Insured is the person whose life or property is insured with the insurer. That is, the
person whose risks are insured is called insured. Insurer is the insurance company to whom risk
is transferred by the insured. That is, the person who insures the risk of insured is called insurer.
Thus insurance is a contract between insurer and insured. It is a contract in which the insurance
company undertakes to indemnify the insured on the happening of certain event for a payment of
consideration. It is a contract between the insurer and insured under which the insurer undertakes
to compensate the insured for the loss arising from the risk insured against. Some definitions of
insurance are given below:

According to Gosh and Agarwal, “insurance may be defined as a co-operative form of

distributing a certain risk over a group of persons who are exposed to it‟.

According to Mc Gill, “Insurance is a process in which uncertainties are made certain”.

In the words of Jon Megi, “Insurance is a plan wherein persons collectively share the losses of
risks”.

Thus, insurance is a device by which a loss likely to be caused by uncertain event is spread over
a large number of persons who are exposed to it and who voluntarily join themselves against
such an event. The document which contains all the terms and conditions of insurance (i.e. the
written contract) is called the „insurance policy‟. The amount for which the insurance policy is
taken is called „sum assured‟. The consideration in return for which the insurer agrees to make
good the loss is known as „insurance premium‟. This premium is to be paid regularly by the
insured. It may be paid monthly, quarterly, half yearly or yearly.

Basic terms used in insurance

Different terms are used in the insurance. Important among them are given below

Insured: The party or the individual who seeks protection against a specified task and entitled to
receive payment from the insurer in the event of happening of stated event is known as insured.
An insured is normally in insurance policy holder.
Insurer: The party who promises to pay indemnity the insured on the happening of contingency
is known as insurer. The insurer is an insurance company.
Beneficiaries: The person or the party to whom the policy proceeds will be paid in the event of
the death or happening of any contingency is called beneficiary.
Contract: An agreement binding at law between two or more parties is called contract.
Premium: The amount which is paid to the insurer by the insured in consideration to insurance
contract is known as premium. It may be paid on monthly, quarterly, half yearly, yearly or as
agreed upon it is the price for an insurance policy.
Insured sum: The sum for which the risk is insured is called the insured sum, or the policy
money or the face value of the policy. This is the maximum liability of the insurer towards the
insured.
Peril: A peril is an event that causes a personal or property loss by fire, windstorm, explosion,
collision, premature death, sickness, floods, dishonesty etc.
Hazard: Hazard is a condition that may create, increase or decrease the chances of loss from a
given peril.
Exposure: An exposure is a measure of physical extent of the risk. An individual who owns a
business house may be subjected to economic loss and individual loss because of his business
and personal exposure.
Cover note: An unstamped document issued by or on behalf of insurers as evidence of insurance
pending issue of policy.
Damages: Monetary compensation award at law for a civil wrong or breach of contract.
Indemnity: Compensation for actual loss suffered is call indemnity.
Reinsurance: Reinsurance is a method where by the original insurer transfer all or part of risk he
has assumed to another company or companies with the object of reducing his own commitment
to an reducing his own commitment to an amount that he can bear for his own account
commensurate with his financial resources in the event of loss. It was originally confined to
offers and acceptances on individual risk known as facultative reinsurance transactions.
Double Insurance: Double insurance implies that subject matter is insured in two or more
insurance companies (insurers) and the total sum insured exceeds the actual value of subject
matter. In other words, the same subject matter is insured in more than one insurer.
No claim bonus: The bonus is getting under the policy, if the claim is not reported during the
policy period and after that the time renewal (in time) then as per the policy term no claim bonus
is avail for the vehicle insurance policy and the rate of bonus is different in different general
insurance companies, and the maximum rate should be up to 50% as per the norms.
Nature and Characteristics of Insurance

Insurance follows important characteristics–These are follows

1. Sharing of risk
Insurance is a co-operative device to share the burden of risk, which may fall on happening of
some unforeseen events, such as the death of head of family or on happening of marine perilsor
loss of by fire.
2. Co-operative device
Insurance is a co-operative form of distributing a certain risk over a group of persons who are
exposed to it. A large number of persons share the losses arising from a particular risk.
3. Large number of insured persons
The success of insurance business depends on the large number of persons Insured against
similar risk. This will enable the insurer to spread the losses of risk among large number of
persons, thus keeping the premium rate at the minimum.
4. Evaluation of risk
For the purpose of ascertaining the insurance premium, the volume of risk is evaluated, which
forms the basis of insurance contract.
5. Payment of happening of specified event
On happening of specified event, the insurance company is bound to make payment to the
insured. Happening of specified event is certain in life insurance, but in the case of fire, marine
of accidental insurance, it is not necessary. In such cases, the insurer is not liable for payment of
indemnity.
6. Transfer of risk
Insurance is a plan in which the insured transfers his risk on the insurer. This may be the reason
that may person observes, that insurance is a device to transfer some economic losses would
have been borne by the insured themselves.
7. Spreading of risk
Insurance is a plan which spread the risk & losses of few people among a large number of
people. John Magee writes, “Insurance is a plan by which large number of people associates
themselves and transfers to the shoulders of all, risk attached to Individuals”.
8. Protection against risks
Insurance provides protection against risk involved in life, materials and property. It is a device
to avoid or reduce risks.
9. Insurance is not charity
Charity pays without consideration but in the case of insurance, premium is paid by the insured
to the insurer in consideration of future payment.
10. Insurance is not a gambling
Insurance is not a gambling. Gambling is illegal, which gives gain to one party and loss to other.
Insurance is a valid contact to indemnity against losses. Moreover,Insurable interest is present in
insurance contracts it has the element of investment also.
11. A contract
Insurance is a legal contract between the insurer and insured under which the Insurer promises to
compensate the insured financially within the scope of insurance Policy, the insured promises to
pay a fixed rate of premium to the insurer.
12. Social device
Insurance is a plan of social welfare and protection of interest of the people. Rieged and miller
observe “insurance is of social nature”.
13. Based upon certain principle
Insurance is a contract based upon certain fundamental principles of insurance, which includes
utmost good faith, insurable interest, contribution, indemnity, causa Proxima, subrogation etc,
which are operating in the various fields of insurance.
14. Regulation under the law
The government of every country enacts the law governing insurance business So as to regulate,
and control its activities for the interest of the people. In India General insurance act 1972 and
the life insurance act 1956 are the major enactment in this direction.
15. Insurance is for pure risk only
Pure risks give only losses to the insured, and no profits. Examples of pure Risks are accident,
misfortune, death, fire, injury, etc., which are all the sided risks and the ultimate results in loss.
Insurance companies issue policies against pure risk only, not against speculative risks.
16. Based on mutual goodwill
Insurance is a contract based on good faith between the parties. Therefore, both the parties are
bound to disclose the important facts affecting to the contract before each other. Utmost good
faith is one of the important principles of insurance.
Function of insurance

Insurance becomes very useful in today‟s life. It plays significant role in this competitive era.
According to Sir William Beveridge the functions of insurance can be divided into three
categories. 1) Primary functions 2) Secondary functions 3) Indirect functions

Primary function

1. To provide protection
The most important function of insurance is to provide protection against risk of loss. It is one
check the reality of the misfortune happening, and pays the cost of damages of losses.
2. To provide certainty
The future is totally uncertain. Any misfortune happening may occur at any stage of life. The
amount of loss and time of losses both are uncertain. Insurance provides certainly towards the
losses. The policy holders pay the premium to get certainty
3. Distribution of risk
It is a co-operative effort where the risk is distributed among the group of People. Thus, no one
have tobear the losses occurred due to uncertainty.
Secondary function

1. Helps in economic progress

Insurance plays an important role in economic progress. It gives fully certainty to the
industrialists towards the risks. The entrepreneurs can more concentrate on innovative and
profitable techniques of the production. They should not require Thinking over the risks. The
industrialists can establish new industries in environment. Thus, industries have got development
in economic and commerce of the nation.
2. Insurance prevents losses
Insurance plays vital role in preventing the losses. The amount of premium is minimized by
using such appliances like the fire extinguisher. If one uses interior Machinery which may be
caused for misfortune, the amount of premium will be high. Thus, indirectly, insurance provides
help to minimize the chances of risks.
Indirect function

1. A forced savings
Life insurance is also a method of savings in India. Income tax act gives relief in payment of
income tax because government wants to habituate general public to save money. It encourages
the habit of thrift and savings among the people. Thus, it becomes compulsory savings to people
of nation.
2. Promote foreign trade
It is compulsory to take marine insurance policy in foreign trade in India. Foreigners can‟t issue
the foreign trade bill unless the cargo is fully insured. Thus Foreign trade is totally depends upon
the insurance sector of the nation. It gives relief to entrepreneurs from the uncertainty of foreign
trade.
3. Others
Insurance provides certainties towards risks in entrepreneurship. It gives Confidence in general
public. It is one of the important source of investment which develops the trade and commerce of
the nation.
Advantages/benefits/uses of insurance

a. Risk transfer- individual or businessman can easily and conveniently transfer the risk of loss
b. Protection- insurance give protection to the property of insured and life insurance provides
financial protection
c. Assured profit- a policy holder can enjoy a normal expected profit say up to 15 to 20% on
their investment
d. Effect on prices (benefit to consumers)- Manufacturers passes on the consumer, the cost of
insurance along with other Production cost. Still it is beneficial to the consumers because without
insurance the Cost would have been much more.
e. Basis of credit- policies act as valuable assets and the policy holders can avail credit or
emergency loan against it
f. Investment- a life insurance contract provides not only protection but also investment, or a
pension in old age.
g. Capital formation- insurance companies as institutional investors can mobilise small national
savings in the form of premium and ensure capital for productive sectors.
h. Insurance encourage saving- life insurance is like a compulsory saving. For people have
limited means of income there is no other better alternative than LIC.
i. Invisible export- Providing insurance service overseas is our invisible export, like export of
material goods and the profit brought in is contribution to the favourable balance of Trade.
j. Reducing cost of social services- No victim or heirs of a deceased victim of motor accidents
now a day‟s goes Without compensation from insurance funds built out of compulsory insurance
of Motor vehicles.
Limitations of Insurance

In spite of number of advantages of insurance, it has certain limitations. On account of such

limitations, the benefits of insurance could not be availed in full.

a. All the risks cannot be insured. Only pure risks can be insured and speculative risks are not
insurable.
b. Insurable interest (financial interest) en the subject matter of insurance either at the time of
insurance or at the time of loss, or at both the times must be present, in the absence of which the
contract of insurance becomes void.
c. In case the loss arises from the happening of the event cannot be valued in terms of money,
such risks are not insurable.
d. Insurance against the risk of a single individual or a small group of persons are not advisable,
since it is not practicable due to higher cost involved.
e. Another important limitation is that the premium rates are higher in our country & as such,
certain category of people cannot avail the advantage of insurance. The main reason for the
higher rate of premiums is the higher operating cost.
f. It becomes difficult to control moral hazards in insurance. There are certain people who may
utilise the insurance plans for their self-interest by claiming false claims
Classification of Insurance

We can classify the insurance as following:

I. On the basis of Risk

a. Personal insurance
b. Property insurance
c. Liability insurance
d. Fidelity guarantee insurance

II. On the basis of nature of business

a. Life insurance
b. General insurance-
1. Fire insurance
2. Marine insurance
3. Social insurance
4. Miscellaneous insurance

Miscellaneous insurance may includes

a) Vehicle insurance
b) Accident insurance
c) Burglary insurance
d) Crop insurance
e) Cattle insurance
f) Engineering insurance etc.
For our sake, we can classify insurance into 2 groups‟ i.e. life insurance and nonlife (general)
insurance.

I. Life Insurance

It is governed by the LIC act 1956. It is contract in which the insurer, inconsideration of payment
of premium compensate to a person on death or on the expiry of certain period whichever is
earlier. (Life insurance details given in the following module)

II. General Insurance

General Insurance covers a wide range of services. Section 6(b) of the insurance act 1938 defines
General Insurance. It includes all the risks except life. Its classification is:

A. Marine Insurance

Marine insurance is the oldest insurance which was introduced long back to compensate on sea
and to compensate the loss due to various sea perils or loss of the ship etc. In today‟s context,
marine insurance is an important part of trade and commerce and is a significant part of global
insurance business. Marine insurance play a key role in international trade.

Law relating to Marine Insurance Act 1963

According to section 3 of marine insurance act, 1963 defines marine insurance as, a contract
where by an insurer undertakes to indemnify the assured against marine losses that is to say the
losses incidental to marine adventure.

Features of marine insurance contract:

1. Features of a valid contract:

marine insurance is a contract; therefore It should possess the features of a valid contract,
according to Indian contract act. They are;

 The proposal forms called slips are the offer from the merchant. The original slip is
submitted along with the other material information. Thisis proposal from the merchant
or the ship owner is the offer.

Premium is consideration to contract.
 The policy is prepared, stamped and signed and it will be the legal evidence of the
contract
 When slip is presented to the insurer, he checks it and satisfied he puts initial. Now the
proposal is accepted. Once the slip is accepted the offer of the proposer is accepted by the
insurer

2. Insurable interest in marine policy:

 Owner of the goods has insurable interest to the extent of total value of the goods.
 Owner of the ship can insure the ship to its full price
 Buyer of the goods who insured them has insurable interest even he rejects the goods.
 Insurer has an insurable interest in his risk and may reinsure in respect of it.
 The receiver freight can insure up to the amount of freight to be received by him.
 The policy holder has an insurable interest in the charges of any insurance which he may
affect.
 If the subject matter insured is mortgaged, the mortgager has uninsurable interest
3. Disclosure by agent (utmost good faith):

When insurance policy is taken through an agent, disclose to the insurer every fact. The agent is
deemed to know all the details of material information. If the information is false, the insurer can
avoid the policy. If negligence can be held against the broker, he may be liable for breach of
contract.

4. Principle of Indemnity:

Marine insurance is a contract of indemnity. It implies that the policy holder cannot make profit
out of a claim. In the absence of principle of indemnity, the policy holder may make profit out of
claim. The insurance contract implies that it indemnifies only to the extent agreed upon. The
basis of indemnity is always a cash basis.

5. Principle of subrogation:

This principle specifies that the policy holder should not get more than the actual loss. The
insurer has a right to pay the amount of loss after reducing the money received by the policy
holder from the third party. After indemnification the insurer gets all the rights of insured on the
third parties. But he cannot file suit in his name. Therefore he has to take the support of the
support of the policy holder.

6. Average clause:

A marine policy is invariably subject to average clause.

7. Express and implied Warranties:

All marine insurance contracts are subject to certain express and implied warranties.

8. Principle of contribution:

Principle of contribution is also applicable in the case of marine insurance contracts.

Maritime perils

Maritime perils are also called as “Perils of the sea”. It means the perils consequent on, or
incidental to the navigation of the sea, that is to say, war perils, rovers, thieves, captures,
seizures, restraints and detainment etc.

Following losses have been held to be perils of the sea:

a. Loss caused because of collisions against a sunken rock.

b. Loss caused because of collision with another ship
c. Loss caused because of heating due to the closure of ventilators to prevent the immersion of
sea water.
d. Loss caused because rats made a hole in the bottom of a ship and sea water entered into ship
through that hole and damaged the cargo.

Marine Policy

The instrument in which the contract of insurance is affected is known as marine policy or sea
policy. It is a document which incorporates the details of terms and conditions of marine
insurance. Contents of marine policies are:

1. Name of the insured

2. Policy number
3. Sum insured
4. Premium
5. Stamp duty
6. Steamer or other conveyance
7. Voyage or journey.
8. Number and date of bill of lading and other similar document related.
9. Interest to be insured.
10. Subject matter insured and the risk insured.
11. Place where claims are payable
12. Place and date of issue of policy.
13. Authorised signatures.

The coverage under marine insurance policy includes the following:

a) The ship (hull and machinery).

b) The insurable goods and property exposed to maritime perils.
c) Other incidental earnings like freight, commission etc. which will belost along with the
property due to the maritime perils.
d) The third party liabilities incurred by the insurer or other person responsible for or interested
in the property.
e) Expenses incurred to prevent and minimise loss
Types of marine insurance policies:

1. Time policy: If the policy is to insure the subject matter for a definite period of time it is
called time policy. For example: 6 AM of 1st July 2013 to 6 AM of 31 March 2014 or 6 Am of 1st
March 2012 to 6 PM 28th February 2013. Usually time polices are taken for one year. The policy
contains a clause „continuation clause‟, if the ship is till at sea, the policy will continue for some
more time. But the policyholder should take a fresh policy duly stamped for the continuation
period. Time policy is commonly taken for hull insurance.
2. Mixed policy (voyage and time policy): If a policy contains the provision of both time policy
and voyage policy, it is called mixed policy. This policy covers the risk during a particular
voyage for a specified period. Example: from Bombay to London for six months.
3. Valued policy: Valued policy specifies the agreed value of the subject matter insured.
Therefore the value of loss to be compensated by the insurer is fixed and remains constant
throughout. The insurer and the insured agree upon the value at the time of taking the policy.
Thus it is also called insured value or agreed value. The insured value need not be actual value.
4. Unvalued policy: Unvalued policy does not specify the agreed value of the subject matter
insured at the time of taking policy. It left to be valued when the loss takes place. Thus, it is
called as open policy or insurable policy.
5. Floating policies: Floating policies gives the description of insurance in general terms. The
policy just mentions the amounts for which the insurance is taken for each shipment. It leaves
other details such as name of the ship etc., to be given in the declaration. Floating policies are
popular in large scale international trade.
6. Wagering policy: This policy is issued without there being any insurable interest, or a policy
bearing evidence that the insured is willing to dispense with any proof of interest. This policy
contains such words as “Policy proof of Interest”. This is void policy as per Sec.4 of marine
insurance Act.
7. Blanket policy (open cover policy): This policy is issued to cover several different properties
or all assets fixed as well as current of the insured under one insurance. It is the policy which
covers more than one type of property in one location and one more type of property at several
locations.
8. Construction policy or builders risk policy: This policy is designed to cover the risks
incidental to the building of a vessel, usually giving cover from the time of laying keel until the
completion trialsand handing over to the owners.
B. Fire Insurance:

Fire insurance is a recent developed concept in insurance sector. It is covered under the insurance
act 1938.

Definition Classification of Insurance

We can classify the insurance as following:

I. On the basis of Risk

a.Personal insurance
b.Property insurance
c.Liability insurance
d.Fidelity guarantee insurance

II. On the basis of nature of business

a.Life insurance
b.General insurance:

1. Fire insurance
2. Marine insurance
3. Social insurance
4. Miscellaneous insurance
Miscellaneous insurance may includes

a) Vehicle insurance
b) Accident insurance
c) Burglary insurance
d) Crop insurance
e) Cattle insurance
f) Engineering insurance etc.

For our sake, we can classify insurance into 2 groups‟ i.e. life insurance and nonlife (general)
insurance.

I. Life Insurance

It is governed by the LIC act 1956. It is contract in which the insurer, inconsideration of payment
of premium compensate to a person on death or on the expiry of certain period whichever is
earlier.

II. General Insurance

General Insurance covers a wide range of services. Section 6(b) of the insurance act 1938 defines
General Insurance. It includes all the risks except life. Its classification is:

A. Marine Insurance

Marine insurance is the oldest insurance which was introduced long back to compensate on sea
and to compensate the loss due to various sea perils or loss of the ship etc. In today‟s context,
marine insurance is an important part of trade and commerce and is a significant part of global
insurance business. Marine insurance play a key role in international trade.

Law relating to Marine Insurance Act 1963

According to section 3 of marine insurance act, 1963 defines marine insurance as, a contract
where by an insurer undertakes to indemnify the assured against marine losses that is to say the
losses incidental to marine adventure.
Features of marine insurance contract:

2. Features of a valid contract:

Marine insurance is a contract; therefore it should possess the features of a valid contract,
according to Indian contract act. They are;

 The proposal forms called slips are the offer from the merchant. The original slip is
submitted along with the other material information. Thisis proposal from the merchant
or the ship owner is the offer.

Premium is consideration to contract.
 The policy is prepared, stamped and signed and it will be the legal evidence of the
contract
 When slip is presented to the insurer, he checks it and satisfied he puts initial. Now the
proposal is accepted. Once the slip is accepted the offer of the proposer is accepted by the
insurer

2. Insurable interest in marine policy:

 Owner of the goods has insurable interest to the extent of total value of the goods.
 Owner of the ship can insure the ship to its full price
 Buyer of the goods who insured them has insurable interest even he rejects the goods.
 Insurer has an insurable interest in his risk and may reinsure in respect of it.
 The receiver freight can insure up to the amount of freight to be received by him.
 The policy holder has an insurable interest in the charges of any insurance which he may
affect.
 If the subject matter insured is mortgaged, the mortgager has uninsurable interest

3. Disclosure by agent (utmost good faith):

When insurance policy is taken through an agent, disclose to the insurer every fact. The agent is
deemed to know all the details of material information. If the information is false, the insurer can
avoid the policy. If negligence can be held against the broker, he may be liable for breach of
contract.

4. Principle of Indemnity:
Marine insurance is a contract of indemnity. It implies that the policy holder cannot make profit
out of a claim. In the absence of principle of indemnity, the policy holder may make profit out of
claim. The insurance contract implies that it indemnifies only to the extent agreed upon. The
basis of indemnity is always a cash basis.

5. Principle of subrogation:

This principle specifies that the policy holder should not get more than the actual loss. The
insurer has a right to pay the amount of loss after reducing the money received by the policy
holder from the third party. After indemnification the insurer gets all the rights of insured on the
third parties. But he cannot file suit in his name. Therefore he has to take the support of the
support of the policy holder.

6. Average clause:

A marine policy is invariably subject to average clause.

7. Express and implied Warranties:

All marine insurance contracts are subject to certain express and implied warranties.

8. Principle of contribution:

Principle of contribution is also applicable in the case of marine insurance contracts.

Maritime perils

Maritime perils are also called as “Perils of the sea”. It means the perils consequent on, or
incidental to the navigation of the sea, that is to say, war perils, rovers, thieves, captures,
seizures, restraints and detainment etc.

Following losses have been held to be perils of the sea:

a. Loss caused because of collisions against a sunken rock.

b. Loss caused because of collision with another ship
c. Loss caused because of heating due to the closure of ventilators to prevent the immersion of
sea water.
d. Loss caused because rats made a hole in the bottom of a ship and sea water entered into ship
through that hole and damaged the cargo.

Marine Policy

The instrument in which the contract of insurance is affected is known as marine policy or sea
policy. It is a document which incorporates the details of terms and conditions of marine
insurance. Contents of marine policies are:
1. Name of the insured
2. Policy number
3. Sum insured
4. Premium
5. Stamp duty
6. Steamer or other conveyance
7. Voyage or journey.
8. Number and date of bill of lading and other similar document related.
9. Interest to be insured.
10. Subject matter insured and the risk insured.
11. Place where claims are payable
12. Place and date of issue of policy.
13. Authorised signatures.

The coverage under marine insurance policy includes the following:

a) The ship (hull and machinery).

b) The insurable goods and property exposed to maritime perils.
c) Other incidental earnings like freight, commission etc. which will belost along with the
property due to the maritime perils.
d) The third party liabilities incurred by the insurer or other person responsible for or interested
in the property.
e) Expenses incurred to prevent and minimise loss
Types of marine insurance policies:

1. Time policy: If the policy is to insure the subject matter for a definite period of time it is
called time policy. For example: 6 AM of 1st July 2013 to 6 AM of 31 March 2014 or 6 Am of 1st
March 2012 to 6 PM 28th February 2013. Usually time polices are taken for one year. The policy
contains a clause „continuation clause‟, if the ship is till at sea, the policy will continue for some
more time. But the policyholder should take a fresh policy duly stamped for the continuation
period. Time policy is commonly taken for hull insurance.
2. Mixed policy (voyage and time policy): If a policy contains the provision of both time policy
and voyage policy, it is called mixed policy. This policy covers the risk during a particular
voyage for a specified period. Example: from Bombay to London for six months.
3. Valued policy: Valued policy specifies the agreed value of the subject matter insured.
Therefore the value of loss to be compensated by the insurer is fixed and remains constant
throughout. The insurer and the insured agree upon the value at the time of taking the policy.
Thus it is also called insured value or agreed value. The insured value need not be actual value.
4. Unvalued policy: Unvalued policy does not specify the agreed value of the subject matter
insured at the time of taking policy. It left to be valued when the loss takes place. Thus, it is
called as open policy or insurable policy.
5. Floating policies: Floating policies gives the description of insurance in general terms. The
policy just mentions the amounts for which the insurance is taken for each shipment. It leaves
other details such as name of the ship etc., to be given in the declaration. Floating policies are
popular in large scale international trade.
6. Wagering policy: This policy is issued without there being any insurable interest, or a policy
bearing evidence that the insured is willing to dispense with any proof of interest. This policy
contains such words as “Policy proof of Interest”. This is void policy as per Sec.4 of marine
insurance Act.
7. Blanket policy (open cover policy): This policy is issued to cover several different properties
or all assets fixed as well as current of the insured under one insurance. It is the policy which
covers more than one type of property in one location and one more type of property at several
locations.
8. Construction policy or builders risk policy: This policy is designed to cover the risks
incidental to the building of a vessel, usually giving cover from the time of laying keel until the
completion trialsand handing over to the owners.

B. Fire Insurance:

Fire insurance is a recent developed concept in insurance sector. It is covered under the insurance
act 1938.

Definition

“Fire insurance is a cover against the risk of loss of property due to fire accident.”Fire Insurance
is a contract where by the insurer undertakes in consideration of the premium paid to make good
any loss cause by the fire during a specific period. The specific amount to be assured or claimed
in case of loss should be mentioned or specified in the contract.

Subject matter of Fire insurance

As per fire insurance, the following are the examples of insurable property:

1. Building
2. Electrical installation in building
3. Contents of building such as machinery, plant and equipment, accessories etc.
4. Goods (finished/WIP) and raw materials in factories and go downs
5. Contents of dwelling, shops, hotels etc.
6. Furniture, fixtures, fitting etc.
7. Pipelines located inside or outside of compound etc.

Features of Fire Insurance: (fundamental principles of fire insurance)

1. It is a General Contract: It is one of the important features of fire insurance; It contains all
the features of a valid contract. This is accepted by the insurer for the consideration of the
premium. The insurer issues the policy with all terms and conditions of the contract.

2. Contact of Indemnity: Fire insurance is a contract of indemnity, in the event of loss the
insured can recover actual amount of loss. Insured is allowed to gain excess amount out of the
loss caused due to fire.

3. Contract of Uberimae fidei: a fire insurance contract is based on absolute good faith and
therefore insured must make full and adequate disclosure of all material facts of subject matter of
insurance.

4. Principles of Insurable interest: insurable interest must exist at the time of affecting the
policy as well as the time of loss.

5. Principles of mitigation of loss and subrogation etc. are applicable in fire insurance.

6. Period of the policy: Fire insurance policy is issued for one year. Therefore they are popular
as Annual insurance

Types of fire policy

Important fire insurance policies are:

1. Valued policy: under this policy, the value of the property to be insured is determined at the
time of the policy is taken. In the event of loss the fixed amount is payable irrespective of the
actual amount of loss.

2. Specific policy: This policy covers the loss up to a specified amount which is less than the
real value of the property. Thus it is an under-insurance policy. The whole of the actual loss is
payable provided it does not exceed the insured amount.

3. Comprehensive policy: Comprehensive policy as the name indicates covers losses against
risks as fire, theft, burglary, riots, civil disturbances etc. Therefore this policy is popular as „all in
one policy‟. It may also cover loss of profits during the period the business remains closed due to
fire.

4. Floating policy: it is a policy which covers property at different places against loss by fire.
Example: goods stored in two different warehouses. It covers goods in two or more localities
under one sum assured for one premium.

5. Average policy: A policy with „average clause‟ is called average policy. The amount of
indemnity. Under this, the insured is penalised for under insurance of the property.
6. Replacement policy: This policy otherwise called reinstatement policy. Under this policy, the
insurer undertakes to pay the cost of replacement of property instead of paying compensation to
the insured for property destroyed.

7. Adjustable policy: this policy is nothing but an ordinary policy on the stock of the
businessman with liberty to the insured to vary at his option. The premium is adjustable pro-rata
according to the variation of the stock.

8. Declaration policy: This policy may be granted only in respect of stock of inventories of the
insured. As per this, insured must declare in writing the stock covered under the policy to the
insurer and at the end premium is adjusted accordingly.

C. Miscellaneous insurance

Health, Motor, property and others come under this category.

1. Health insurance provides for the payment of benefits to cover the loss due to sickness.
2. Motor Insurance provides the benefits in case of, damage or loss due to accident.
3. Deposit insurance provides Insurance against bank deposit. This scheme was introduced
byour government in 1962.
4. Postal insurance was introduced in 2006 by postal department of India. This scheme
provides insurance to postal saving account holders for accidental death.
5. Accidentinsurancepoliciesofferedbyinsurerare personal accident insurance; crackle core
insurance, passenger flight capon insurance, suhana safer policy, kidnap & ransom
insurance, Bhagya shri policy etc.
6. The liability insurance policies offered by insurer are professional indemnity policy,
adhikari suraksha kavach, doctor‟s indemnity policy etc.
7. Burglary insurance policies provide insurance coverage against burglary, theft etc of
valuable goods
8. Baggage insurance policy provides insurance coverage for loss of baggage and luggage
etc in transit.

Some of the important types of insurance are:

1. Property Insurance: The home is most valuable possession for everyone. This particular
policy is specially intended to cover all the risks of your house under a single policy. Property
insurance also provides protection for other valuable properties and other assets that are of
interest for the insured. Property insurance includes fidelity, burglary and insolvency. Property
insurance covers all loss of property by burglary, theft or house breaking by any other act which
is a criminal offence. Types of policies are
 a) Business premises insurance policy
b) Private dwelling insurance policy
c) Jewellery and Valuable insurance policy
d) All risks insurance policy.
2. Health Insurance (Medical insurance)

It covers all medical expenses following hospitalization from sudden illness or expenses from
any kind of accident. It is an Insurance against loss by illness or bodily injury. Health insurance
provides coverage for medicine, visits to the doctor or emergency room, hospital stays and other
medical expenses. Policies differ in what they cover, the size of the deductible and/or co-
payment, limits of coverage and the options for treatment available to the policyholder. Health
insurance can be directly purchased by an individual, or it may be provided through an employer.
Medicare and Medical aid are programs which provide health insurance to elderly, disabled, or
un-insured individuals. There are a number of companies which provide private health insurance,
including BlueCross, United Healthcare, or Star health. Important policies are:

a) Individual Mediclaim policy

b) Group Mediclaim policy
c) Jan Arogya Bhima policy
d) Cancer policy
e) Bhavishya Arogya policy
f) Overseas medical policy
g) Videsh Yatra Mitra policy

3. Personal Accident Insurance: This insurance policy allows full compensation for injury and
even loss of life caused by an accident. It also includes compensation of cost of treatment and the
use of hospital facilities in the process of treatment.

4. Travel Insurance: This policy covers the insured against various events and misfortunes
while travelling abroad. Travel insurance covers the insured against any kind personal accidents,
medical expenses and even loss of checked luggage, passport etc.

5. Liability Insurance: This policy indemnifies the officers or other professional employees
against loss of their jobs arising from claims made against them by reason of any wrongful Act
in their terms of service.

6. Fidelity guarantee insurance: In this insurance, the insurer undertakes to indemnify the
insured (employer) in consideration of certain premium, up to certain specified amount insured
against for loss arising through the fraud, or embezzlement on the part of the employees. This
kind of insurance frequently adopted as a precautionary measures in cases where new and untried
employees are given position of trust.
Important types of policies are:

a) Individual policy
b) Collective policy
c) Floating or Floater policy
d) Positions policy
e) Blanket policy

7. Motor Vehicle Insurance: According to Motor Vehicles Act, every motor vehicle running on
the road has to be insured, if not with at least a liability policy. Generally, there are two types of
motor insurance policy; one covers the act of liability while the other covers all liability and
damages caused to the vehicles. As per the provisions of the MV Act1938 (amended in 1988), it
was made compulsory for motorists to insure against the risk of liability to third parties. In other
words, the insurance of motor vehicle against risk is not mandatory but insurance of third party
liability arising out of use of motor vehicle in public places is mandatory. Important types of
policies are:

a) Act liability only policy (Form A policy)

b) Third party only policy
c) Comprehensive policy
d) Garage insurance policy
e) Collision insurance policy

8. Cattle insurance: This insurance provides cover against death of animals occurring during
any period and if the animal is pregnant for less than four months, the indemnity will be
restricted to 50% of the sum assured or market value, whichever is less. This policy is also
extended to cover the risk of permanent total disability on payment of extra premium.

9. Engineering insurance: This insurance is designed to protect the interest of contractors and
principals in respect of civil engineering projects, like building, bridges, tunnel etc. this policy
provides an “All Risks” cover. Important policies are:

a) Boiler insurance policy

b) Engine insurance policy
c) Electrical Plant insurance policy
d) Lifting machinery insurance policy

10. Public liability insurance: Under Public liability Insurance Act, 1991, all the companies,
individuals and persons owing and dealing hazardous good are required to take insurance policy
satisfying the limits specified in the Act. For the purpose of insurance, public liability risk
insurance is classified into;

a) Industrial risks insurance

b) Industrial All risks insurance
c) Non-industrial risk insurance

11. Crop Insurance: This insurance is designed to provide a measure of financial support to
farmers in the event of crop failure due to drought, flood etc. and to restore credit eligibility for
farmers after a crop failure, for the next crop season and to support and stimulate production of
pulses and oil seeds. Crop insurance scheme is also known as Rashtriya Krishi Bhima Yojana

12. Social insurance: Social insurance is a government-run insurance programme operated

soundly using actuarial techniques but funded primarily by current contributions while relying on
the taxing power of the government to guarantee solvency. Social security is a part of social
insurance system. This insurance system is not popular in India. The social insurance
programmes of countries are drawn up based on their specific Needs. In the United States the
following are the characteristics of social insurance:

1. Compulsory programmes
2. Floor of income-The main aim of social insurance is to provide minimum required benefit to
meet the needs.
3. Social adequacy rather than individual equity
4. Benefits loosely related to earnings
5. Benefits prescribed by the law
6. No means test: These benefits are given as a right. No formal test is needed.
7. Full funding unnecessary
8. Financially self-supporting
9. Medicare support

Life insurance-concept

Life insurance is a contract under which the insurer (Insurance Company) inconsideration of a
premium paid undertakes to pay a fixed sum of money on the death of the insured or on the
expiry of a specified period of time whichever is earlier. In case of life insurance, the payment
for life insurance policy is certain. The event insured against is sure to happen only the time of
its happening is not known. So life insurance is known as „Life Assurance‟. The subject matter of
insurance is life of human being. Life insurance provides risk coverage to the life of a person. On
death of the person insurance offers protection against loss of income and compensate the
titleholders of the policy.
Basic Principles of Life Insurance Contract

1. Insurable interest

The insured must have insurable interest in the life assured. In absence of insurable interest,
Contract of insurance is void. Insurable interest must be present at the time of entering into
contract with insurance company for life insurance. It is not necessary that the assured should
have insurable interest at the time of maturity also.

2. Utmost good faith

The contract of life insurance is a contract of utmost good faith. The insured should be open and
truthful and should not conceal any material fact in giving information to the insurance company,
while entering into a contract with insurance company. Misrepresentation or concealment of any
fact will entitle the insurer to repudiate the contract if he wishes to do so.

3. Not a contract of indemnity

The life insurance contract is not a contract of indemnity. A Contract of life insurance is not a
contract of indemnity. The loss of life cannot be compensated and only a fixed sum of money is
paid in the event of death of the insured. So, the life insurance contract is not a contract of
indemnity. The loss resulting from the death of life assured cannot be calculated in terms of
money.

Features of life insurance

Following are the important features of valid contract of life insurance

1. Elements of a valid contract

2. Insurable interest
3. Utmost good faith
4. Warranties
5. Assignment and Nomination
6. Cause is certain
7. Premium (consideration)
8. Term of policy
9. Return of premium (surrender)

Importance of Life Insurance

Life Insurance is of great importance to individuals, groups, business community and general
public. Some of the main benefits of life insurance are given below.

i) Protection against untimely death

Life insurance provides protection to the dependents of the life insured and the family of the
assured in case of his untimely death. The dependents or family members get a fixed sum of
money in case of death of the assured.

ii) Saving for old age

After retirement the earning capacity of a person reduces. Life insurance enables a person to
enjoy peace of mind and a sense of security in his/her old age.

iii) Promotion of savings

Life insurance encourages people to save money compulsorily. When a life policy is taken, the
assured is to pay premiums regularly to keep the policy in force and he cannot get back the
premiums, only surrender value can be returned to him. In case of surrender of policy, the
policyholder gets the surrendered value only after the expiry of duration of the policy.

iv) Initiates investment

Life Insurance Corporation encourages and mobilizes the public savings and channelizes the
same in various investments for the economic development of the country. Life insurance is an
important tool for the mobilization and investment of small savings.

v) Credit worthiness

Life insurance policy can be used as a security to raise loans. It improves the credit worthiness of
business.

vi) Social security

Life insurance is important for the society as a whole also. Life insurance enables a person to
provide for education and marriage of children and for construction of house. It helps a person to
make financial base for future.

vii) Tax Benefit

Under the Income Tax Act, premium paid is allowed as a deduction from the total income under
section 80C.

Life insurance Policies

Life insurance policies can be grouped into the following categories:

1. Term Policy
In case of Term assurance plans, insurance company promises the insured for a nominal
premium to pay the face value mentioned in the policy in case he is no longer alive during the
term of the policy.

Term assurance policy has the following features:

1. It provides a risk cover only for a prescribed period. Usually these policies are short-term
plans and the term ranges from one year onwards. If the policyholder survives till the end
of this period, the risk cover lapses and no insurance benefit payment is made to him.
2. The amount of premium to be paid for these policies is lower than all other life insurance
policies. As savings and reserves are not accumulated under this policy, it has no
surrender value and loan or paid-up values are not allowed on these policies.
3. This plan is most suitable for those who are initially unable to pay high premium
4. When income is low as required for Whole Life or Endowment policies, but requires life
cover for a high amount.

2. Whole Life Policy

This policy runs for the whole life of the assured. The sum assured becomes payable to the legal
heir only after the death of the assured. The whole life policy can be of three types.

(1) Ordinary whole life policy–In this case premium is payable periodically throughout the life
of the assured.

(2) Limited payment whole life policy–In this case premium is payable for a specified period
(Say 20 Years or 25 Years) Only.

(3) Single Premium whole life policy–In this type of policy the entire premium is payable in
one single payment.

3. Endowment Life Policy

In this policy the insurer agrees to pay the assured or his nominees a specified sum of money on
his death or on the maturity of the policy whichever is earlier. The premium for endowment
policy is comparatively higher than that of the whole life policy. The premium is payable till the
maturity of the policy or until the death of the assured whichever is earlier. It provides protection
to the family against the untimely death of the assured.

4. Health insurance schemes

An individual is subject to uncertainty regarding his health. He may suffer from ailments,
diseases, disability caused by stroke or accident, etc. For serious cases the person may have to be
hospitalized and intensive medical care has to be provided which can be very expensive. It is
here that medical insurance is helpful in reducing the financial burden. These days the
vulnerability to lifestyle diseases such as heart, cancer, neurotic, and pollution based, etc are on
the increase. So it makes sense for an individual to go for medical insurance cover.

5. Joint Life Policy

This policy is taken on the lives of two or more persons simultaneously. Under this policy the
sum assured becomes payable on the death of any one of those who have taken the joint life
policy. The sum assured will be paid to the survivor(s). For example, a joint life policy may be
taken on the lives of husband and wife, sum assured will be payable to the survivor on the death
of the spouse.

6. With Profit and Without Profit Policy

Under with profit policy the assured is paid, in addition to the sum assured, a share in the profits
of the insurer in the form of bonus. Without profit policy is a policy under which the assured
does not get any share in the profits earned by the insurer and gets only the sum assured on the
maturity of the policy. With profit and without profit policies are also known as participating and
non–participating policies respectively.

7. Double Accident Benefit Policy

This policy provides that if the insured person dies of any accident, his beneficiaries will get
double the amount of the sum assured.

8. Annuity Policy

Under this policy, the sum assured is payable not in one lump sum payment but in monthly,
quarterly and half-yearly or yearly installments after the assured attains a certain age. This policy
is useful to those who want to have a regular income after the expiry of a certain period e.g. after
retirement. Annuity is paid so long as the assured survives. In annuity policy medical check-up is
not required. Annuity is paid so long as the assured survives.

9. Policies for Women

Women, now a days are free to take life assurance policies. However, some specially designed
policies suit their needs in a unique manner; important policies for women are

A. Jeevan Sathi is also known a Life Partner plan where the husband and wife are covered under
this endowment policy

B. Jeevan Sukanya

10. Group Insurance

Group life insurance is a plan of insurance under which the lives of many persons are covered
under one life insurance policy. However, the insurance on each life is independent of that on the
other lives. Usually, in group insurance, the employer secures a group policy for the benefit of
his employees. Insurer provides coverage for many people under single contract.

11. Policies for Children

Policies for children are meant for the various needs of the children such as education, marriage,
security of life etc. Some of the major children policies are:

(1) Children‟s deferred assurances

(2) Marriage endowment and educational annuity plans
(3) Children endowment policy

12. Money Back Policy

In this case policy money is paid to the insured in a number of separate cash payments. Insurer
gives periodic payments of survival benefit at fixed intervals during the term of policy as long as
the policyholder is alive.

The contract for the life insurance starts with the proposal made by the proposer in standard
application form available with insurance company and then various other documents are
prepared.

Differences between Assurance (life insurance) and Insurance (general insurance / non-life
insurances)

1. Scope– the term “Assurance” is used only in life insurance and therefore the scope is
comparatively limited. The term insurance is used for all other types of risk coverage and
therefore, the scope is wider.

2. Renewal of Policy- The life insurance contract is a continuing contract and it will not lapse
unless the premium is regularly paid. It is not certain that the event insured against may happen
or not. Most of the general insurance policies are annual policies, so renewal of policy is
required.

3. Element of investment- the element of investment is present in assurance since there is

certainly of receiving payment either on death or on maturity of the policy. General insurance
lacks the element of investment since there is no certainty of receiving payment.

4. Assurance– in life insurance, the insurer gives assurance to the insured to pay the claim in any
case, either on maturity or death. In general insurance, the insurer only promises to secure the
property in case of actual loss.
5. Amount of Claim- In LI, the policy amount is paid to the assured in full on the maturity or on
death along with bonus, etc. announced by the insurance company from time to time. In GI, The
payment of claim is subjected to the element of actual loss but not more than the insured sum.

6. Insurable Interest- In a life policy, the insurable interest is one that required by law and such
interest is not measurable in terms of money. In GIs, the insured is required to have an insurable
interest in terms of money.

7. Principle of indemnity- Principle of indemnity does not apply in life assurance. The sum
assured is payable unrespectable of any profit or loss and the full extent of the amount insured.
Principle of indemnity is the basis of general insurance contracts.

8. Certainty of event– in LIs, the event (death or reaching maturity) is bounded to happen
sooner or later. It is not certain that the event insured against may happen or not in the case of
GIs.

9. Insured Sum- Insurance policy for any amount or any number of policies can be taken in LIs.
In general insurance, the policy amount is restricted to market value of assets; not more than that.
This is because that indemnity cannot be more than the value of asset.

10. Certainly of payment of claim- In LIs, Payment of claim either on maturity of the policy or
on death of the assured is certain. There is no certainly to receive payment since it is paid only in
case of loss of the property insured in GIs.

11. Insurable interest on the date of the policy or the policy fall due- In life insurance
insurable interest is to be proved at the date of the contract and it is not necessarily be present at
the time, when the policy falls due for claim. In marine insurance, the insured must be having
insurable interest on the subject matter at the time of loss, but not necessarily be present at the
time of affecting the policy.

12. Subject matter- Human life is subject matter of life insurance. Goods and properties are
subject matter of general insurance.

13. Principle of subrogation– This is not applicable in life insurance. This principle is
applicable in general insurance.

14. Surrender of policy- in life insurance, the policy can surrender before maturity period. In
the case of fire and marine insurance, policy cannot be surrendered before maturity.

Life Insurance Corporation of India (LIC)

The LIC of India was set up under the LIC Act, 1956 under which the life insurance was
nationalised. As a result, business of 243 insurance companies was taken over by LIC on 1-9-
1956.
It is basically an investment institution, in as much as the funds of policy holders are invested
and dispersed over different classes of securities, industries and regions, to safeguard their
maximum interest on long term basis. LIC is required to invest not less than 75% of its funds in
Central and State Government securities, the government guaranteed marketable securities and in
the socially-oriented sectors. At present, it is the largest institutional investor. It provides long
term finance to industries. Besides, it extends resource support to other term lending institutions
by way of subscription to their shares and bonds and also by way of term loans.

LIC which has entered into its 57th year has emerged as the world‟s largest insurance co. in
terms of number of policies covered. The LIC‟s total coverage of policies including individual,
group and social schemes has crossed the 11 crore.

Objectives of LIC of India

The LIC was established with the following objectives:

1. Spread life insurance widely and in particular to the rural areas, to the socially and
economically backward claries with a view to reaching all insurable persons in the country and
providing them adequate financial cover against death at a reasonable cost

2. Maximisation of mobilisation of people‟s savings for nation building activities.

3. Provide complete security and promote efficient service to the policy-holders at economic
premium rates.

4. Conduct business with utmost economy and with the full realisation that the money belong to
the policy holders.

5. Act as trustees of the insured public in their individual and collective capacities.

6. Meet the various life insurance needs of the community that would arise in the changing social
and economic environment

7. Involve all people working in the corporation to the best of their capability in furthering the
interest of the insured public by providing efficient service with courtesy.

Role and Functions of LIC

The role and functions of LIC may be summarised as below:

1. It collects the savings of the people through life policies and invests the fund in a variety of
investments.
2. It invests the funds in profitable investments so as to get good return. Hence the policy holders
get benefits in the form of lower rates of premium and increased bonus. In short, LIC is
answerable to the policy holders.

3. It subscribes to the shares of companies and corporations. It is a major shareholder in a large

number of blue chip companies.

4. It provides direct loans to industries at a lower rate of interest. It is giving loans to industrial
enterprises to the extent of 12% of its total commitment.

5. It provides refinancing activities through SFCs in different states and other industrial loan
giving institutions.

6. It has provided indirect support to industry through subscriptions to shares and bonds of
financial institutions such as IDBI, IFCI, ICICI, SFCs etc. at the time when they required initial
capital. It also directly subscribed to the shares of Agricultural Refinance Corporation and SBI.
7. It gives loans to those projects which are important for national economic welfare. The
socially oriented projects such as electrification, sewage and water channelising are given
priority by the LIC.

8. It nominates directors on the boards of companies in which it makes its investments.

9. It gives housing loans at reasonable rates of interest.

10. It acts as a link between the saving and the investing process. It generates the savings of the
small savers, middle income group and the rich through several schemes.

Formerly LIC has played a major role in the Indian capital market. To stabilise the capital market
it has underwritten capital issues. But recently it has moved to other avenues of financing. Now it
has become very selective in its underwriting pattern.

General Insurance Corporation of India (GIC)

General insurance industry in India was nationalised and a government company known as
General Insurance Corporation of India was formed by the central government in November,
1972. General insurance companies have willingly catered to these increasing demands and have
offered a plethora of insurance covers that almost cover anything under the sun.

Objective of the GIC are:

1. To carry on the general insurance business other than life, such as accident, fire etc.
2. To aid and achieve the subsidiaries to conduct the insurance business and,

3. To help the conduct of investment strategies of the subsidiaries in an efficient and productive
manner.

Role and Functions of GIC

a. Carrying on of any part of the general insurance, if it thinks it is desirable to do so.

b. Aiding, assisting and advising the acquiring companies in the matter of setting up of standards
of conduct and sound practice in general insurance business.

c. Rendering efficient services to policy holders of general insurance.

d. Advising the acquiring companies in the matter of controlling their expenses including the
payment of commission and other expenses.

e. Advising the acquiring companies in the matter of investing their fund.

f. Issuing directives to the acquiring companies in relation to the conduct of general insurance
business.

g. Issuing directions and encouraging competition among the acquiring companies in order to
render their services more efficiently.

Classification of Indian General Insurance Industry

General Insurance is also known as Non-Life Insurance in India. There are totally 16 General
Insurance (Non-Life) Companies in India. These 16 General Insurance companies have been
classified into two broad categories namely:

a) PSUs (Public Sector Undertakings)

b) Private Insurance Companies

a) PSUs (Public Sector Undertakings):

These insurance companies are wholly owned by the Government of India (subsidiaries of GIC).
There are totally 4 PSUs in India namely:

1. National Insurance Company Ltd-Head Office-Kolkata

2. Oriental Insurance Company Ltd-Head Office-New Delhi
3. The New India Assurance Company Ltd-Head Office-Mumbai
4. United India Insurance Company Ltd-Head Office-Chennai

b) Private Insurance Companies:

There are totally 12 private General Insurance companies in India namely:

1. Apollo DKV Health Insurance Ltd

2. BajajAllianz General Insurance Co. Ltd
3. Cholamandalam MS General Insurance Co. Ltd
4. Future General Insurance Company Ltd
5. HDFC Ergo General Insurance Co Ltd
6. ICICI Lombard General Insurance Ltd
7. Iffco Tokio General Insurance Pvt Ltd
8. Reliance General Insurance Ltd
9. Royal Sundaram General Insurance Co Ltd
10. Star Health and Allied Insurance
11. Tata AIG General Insurance Co Ltd
12. Universal Sompo General Insurance Pvt Ltd