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8/8/2019 Excom Report
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PGP/SS-09-11 Page 1
INTERNAL ASSIGNMENT ² EXCOM
TOPIC- INSURANCE SECTOR
NAME OF FACULTY: PROF. Naved Yusufzai
SECTION: SF-3 (2009 - 11)
SUBMITTED BY: SHAILESH KUMAR SINGH
(ROLL NO: 63)
INDIAN INSTITUTE OF PLANNING AND MANAGEMENT
NEW DELHI
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TABLE OF CONTENT
Introduction
Principles of insurance
Types of insurance
Organizational chart of IRDA
Insurance as ³pooling of premium´
Bajaj Allianz life insurance co.ltd.
Bibliography
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INTR ODUCTION
Insurance, in law and economics, is a form of risk management primarily used to hedge against
the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of
a loss, from one entity to another, in exchange for payment. An insurer is a company selling the
insurance; an insured or policyholder is the person or entity buying the insurance policy. The
insurance rate is a factor used to determine the amount to be charged for a certain amount of
insurance coverage, called the premium. Risk management, the practice of appraising and
controlling risk, has evolved as a discrete field of study and practice.
The transaction involves the insured assuming a guaranteed and known relatively small loss in
the form of payment to the insurer in exchange for the insurer's promise to compensate
(indemnify) the insured in the case of a large, possibly devastating loss. The insured receives a
contract called the insurance policy which details the conditions and circumstances under which
the insured will be compensated.
Insurance involves pooling funds from many insured entities (known as exposures) in order to
pay for relatively uncommon but severely devastating losses which can occur to these entities.
The insured entities are therefore protected from risk for a fee, with the fee being dependent
upon the frequency and severity of the event occurring. In order to be insurable, the risk insured
against must meet certain characteristics in order to be an insurable risk. Insurance is a
commercial enterprise and a major part of the financial services industry, but individual entities
can also self-insure through saving money for possible future losses
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5. Affordable Premium. If the likelihood of an insured event is so high, or the cost of the
event so large, that the resulting premium is large relative to the amount of protection
offered, it is not likely that anyone will buy insurance, even if on offer. Further, as the
accounting profession formally recognizes in financial accounting standards, the
premium cannot be so large that there is not a reasonable chance of a significant loss to
the insurer. If there is no such chance of loss, the transaction may have the form of
insurance, but not the substance
6. Calculable Loss. There are two elements that must be at least estimable, if not formally
calculable: the probability of loss, and the attendant cost. Probability of loss is generally
an empirical exercise, while cost has more to do with the ability of a reasonable person in
possession of a copy of the insurance policy and a proof of loss associated with a claim
presented under that policy to make a reasonably definite and objective evaluation of the
amount of the loss recoverable as a result of the claim.
7. Limited risk of catastrophically large losses. Insurable losses are ideally independent
and non-catastrophic, meaning that the one losses do not happen all at once and
individual losses are not severe enough to bankrupt the insurer; insurers may prefer to
limit their exposure to a loss from a single event to some small portion of their capital
base, on the order of 5 percent. Capital constrains insurers' ability to sell earthquake
insurance as well as wind insurance in hurricane zones. In the U.S., flood risk is insured
by the federal government. In commercial fire insurance it is possible to find single
properties whose total exposed value is well in excess of any individual insurer¶s capital
constraint. Such properties are generally shared among several insurers, or are insured by
a single insurer who syndicates the risk into the reinsurance market.
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Legal
When a company insures an individual entity, there are basic legal requirements. Several
commonly cited legal principles of insurance include:
1. Indemnity ± the insurance company indemnifies, or compensates the insured in the case
of certain losses only up to the insured's interest
2. Insurable interest ± the insured typically must directly suffer from the loss
3. Utmost good faith ± the insured and the insurer are bound by a good faith bond of
honesty and fairness
4. Contribution ± insurers which have similar obligations to the insured contribute in the
indemnification, according to some method
5.
Subrogation ± the insurance company acquires legal rights to pursue recoveries on
behalf of the insured; for example, the insurer may sue those liable for insured's loss
6. Cause Proxima or Proximate Cause ± the cause of loss (the "peril") must be covered
under the insuring agreement of the policy, and dominant cause must not be excluded
Insurance can influence the probability of losses through moral hazard, insurance fraud, and
preventive steps by the insurance company. Insurance scholars have typically used moral hazard
to refer to the increased loss due to unintentional carelessness and moral hazard to refer to
increased risk due to intentional carelessness or indifference. Insurers attempt to address
carelessness through inspections, policy provisions requiring certain types of maintenance, and
possible discounts for loss mitigation efforts. While in theory insurers could encourage
investment in loss reduction, some commentators have argued that in practice insurers had
historically not aggressively pursued loss control measures - particularly to prevent disaster
losses such as hurricanes - because of concerns over rate reductions and legal battles. However,
beginning around 1996 insurers began to take a more active role in loss mitigation through
building codes
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Claims
Claims and loss handling is the materialized utility of insurance; it is the actual "product" paid
for, though one hopes it will never need to be used. Claims may be filed by insured¶s 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 a thorough investigation of each claim, usually in closecooperation 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.
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 underinsurance, 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¶s over the validity of claims or claims handling
practices occasionally escalate into litigation; see insurance bad faith.
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TYPES OF INSUR ANCEBusiness insurance can be any kind of insurance that protects businesses against risks. Some
principal subtypes of business insurance are (a) the various kinds of professional liability
insurance, also called professional indemnity insurance, which are discussed below under that
name; and (b) the business owner's policy (BOP), which bundles into one policy many of the
kinds of coverage that a business owner needs, in a way analogous to how homeowners
insurance bundles the coverage¶s that a homeowner needs
Auto insurance
Auto insurance protects you against financial loss if you have an accident. It is a contract
between you and the insurance company. You agree to pay the premium and the insurance
company agrees to pay your losses as defined in your policy. Auto insurance provides property,
liability and medical coverage:
1. Property coverage pays for damage to or theft of your car.
2. Liability coverage pays for your legal responsibility to others for bodily injury or
property damage.
3. Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost
wages and funeral expenses.
An auto insurance policy comprises six kinds of coverage. Most countries require you to buy
some, but not all, of these coverage¶s. If you're financing a car, your lender may also have
requirements. Most auto policies are for six months to a year.
In the United States, your insurance company should notify you by mail when it¶s time to renew
the policy and to pay your premium.
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Home insurance
Home insurance provides compensation for damage or destruction of a home from disasters. In
some geographical areas, the standard insurances exclude certain types of disasters, such as flood
and earthquakes that require additional coverage. Maintenance-related problems are the
homeowners' responsibility. The policy may include inventory, or this can be bought as a
separate policy, especially for people who rent housing. In some countries, insurers offer a
package which may include liability and legal responsibility for injuries and property damage
caused by members of the household, including pets.
Health
Health insurance policies by the National Health Service in the United Kingdom (NHS) or other publicly-funded health programs will cover the cost of medical treatments. Dental insurance, like
medical insurance, is coverage for individuals to protect them against dental costs. In the U.S.,
dental insurance is often part of an employer's benefits package, along with health insurance.
Accident, Sickness and Unemployment Insurance
y Disability insurance policies provide financial support in the event the policyholder is
unable to work because of disabling illness or injury. It provides monthly support to help
pay such obligations as mortgages and credit cards.
y Disability overhead insurance allows business owners to cover the overhead expenses of
their business while they are unable to work.
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y Total permanent disability insurance provides benefits when a person is permanently
disabled and can no longer work in their profession, often taken as an adjunct to life
insurance.
y Workers' compensation insurance replaces all or part of a worker's wages lost and
accompanying medical expenses incurred because of a job-related injury.
Casualty
Casualty insurance insures against accidents, not necessarily tied to any specific property.
y Crime insurance is a form of casualty insurance that covers the policyholder against
losses arising from the criminal acts of third parties. For example, a company can obtain
crime insurance to cover losses arising from theft or embezzlement.
y Political risk insurance is a form of casualty insurance that can be taken out by businesses
with operations in countries in which there is a risk that revolution or other political
conditions will result in a loss.
Life
Life insurance provides a monetary benefit to a decedent's family or other designated
beneficiary, and may specifically provide for income to an insured person's family, burial,funeral and other final expenses. Life insurance policies often allow the option of having the
proceeds paid to the beneficiary either in a lump sum cash payment or an annuity.
Annuities provide a stream of payments and are generally classified as insurance because they
are issued by insurance companies and regulated as insurance and require the same kinds of
actuarial and investment management expertise that life insurance requires. Annuities and
pensions that pay a benefit for life are sometimes regarded as insurance against the possibility
that a retiree will outlive his or her financial resources. In that sense, they are the complement of
life insurance and, from an underwriting perspective, are the mirror image of life insurance.
Certain life insurance contracts accumulate cash values, which may be taken by the insured if the
policy is surrendered or which may be borrowed against. Some policies, such as annuities and
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endowment policies, are financial instruments to accumulate or liquidate wealth when it is
needed.
In many countries, such as the U.S. and the UK, the tax law provides that the interest on this cash
value is not taxable under certain circumstances. This leads to widespread use of life insurance as
a tax-efficient method of saving as well as protection in the event of early death.
Property
This tornado damage to an Illinois home would be considered an "Act of God" for insurance
purposes
Property insurance provides protection against risks to property, such as fire, theft or weather
damage. This includes specialized forms of insurance such as fire insurance, flood insurance,
earthquake insurance, home insurance, inland marine insurance or boiler insurance.
y Automobile insurance, known in the UK as motor insurance, is probably the most
common form of insurance and may cover both legal liability claims against the driver
and loss of or damage to the insured's vehicle itself. Throughout the United States an auto
insurance policy is required to legally operate a motor vehicle on public roads. In some
jurisdictions, bodily injury compensation for automobile accident victims has been
changed to a no-fault system, which reduces or eliminates the ability to sue for
compensation but provides automatic eligibility for benefits. Credit card companies
insure against damage on rented cars.
o Driving School Insurance provides cover for any authorized driver whilst
undergoing tuition; cover also unlike other motor policies provides cover for
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instructor liability where both the pupil and driving instructor are equally liable in
the event of a claim.
y Aviation insurance insures against hull, spares, deductibles, hull wear and liability risks.
y Boiler insurance (also known as boiler and machinery insurance or equipment breakdown
insurance) insures against accidental physical damage to equipment or machinery.
y Builder's risk insurance insures against the risk of physical loss or damage to property
during construction. Builder's risk insurance is typically written on an "all risk" basis
covering damage due to any cause (including the negligence of the insured) not otherwise
expressly excluded. Builder's risk insurance is coverage that protects a person's or
organization's insurable interest in materials, fixtures and/or equipment being used in the
construction or renovation of a building or structure should those items sustain physical
loss or damage from a covered cause.
y Crop insurance "Farmers use crop insurance to reduce or manage various risks associated
with growing crops. Such risks include crop loss or damage caused by weather, hail,
drought, frost damage, insects, or disease, for instance."
y Earthquake insurance is a form of property insurance that pays the policyholder in the
event of an earthquake that causes damage to the property. Most ordinary homeowners
insurance policies do not cover earthquake damage. Most earthquake insurance policies
feature a high deductible. Rates depend on location and the probability of an earthquake,
as well as the construction of the home.
y A fidelity bond is a form of casualty insurance that covers policyholders for losses that
they incur as a result of fraudulent acts by specified individuals. It usually insures a
business for losses caused by the dishonest acts of its employees.
y Flood insurance protects against property loss due to flooding. Many insurers in the U.S.
do not provide flood insurance in some portions of the country. In response to this, the
federal government created the National Flood Insurance Program which serves as the
insurer of last resort.
y Home insurance or homeowners' insurance
y Landlord insurance is specifically designed for people who own properties which they
rent out. Most house insurance cover in the UK will not be valid if the property is rented
out therefore landlords must take out this specialist form of home insurance.
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y Marine insurance and marine cargo insurance cover the loss or damage of ships at sea or
on inland waterways, and of cargo in transit, regardless of the method of transit. When
the owner of the cargo and the carrier are separate corporations, marine cargo insurance
typically compensates the owner of cargo for losses sustained from fire, shipwreck, etc.,
but excludes losses that can be recovered from the carrier or the carrier's insurance. Many
marine insurance underwriters will include "time element" coverage in such policies,
which extends the indemnity to cover loss of profit and other business expenses
attributable to the delay caused by a covered loss.
y Surety bond insurance is a three party insurance guaranteeing the performance of the
principal.
y Terrorism insurance provides protection against any loss or damage caused by terrorist
activities.
y Volcano insurance is an insurance that covers volcano damage in Hawaii.
y Windstorm insurance is an insurance covering the damage that can be caused by
hurricanes and tropical cyclones.
Liability
Liability insurance is a very broad superset that covers legal claims against the insured. Many
types of insurance include an aspect of liability coverage. For example, a homeowner's insurance
policy will normally include liability coverage which protects the insured in the event of a claim
brought by someone who slips and falls on the property; automobile insurance also includes an
aspect of liability insurance that indemnifies against the harm that a crashing car can cause to
others' lives, health, or property. The protection offered by a liability insurance policy is twofold:
a legal defense in the event of a lawsuit commenced against the policyholder and indemnification
(payment on behalf of the insured) with respect to a settlement or court verdict. Liability policies
typically cover only the negligence of the insured, and will not apply to results of willful or
intentional acts by the insured.
y Public liability insurance covers a business against claims should its operations injure a
member of the public or damage their property in some way.
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y Directors and officers liability insurance protects an organization (usually a corporation)
from costs associated with litigation resulting from mistakes made by directors and
officers for which they are liable. In the industry, it is usually called "D&O" for short.
y Environmental liability insurance protects the insured from bodily injury, property
damage and cleanup costs as a result of the dispersal, release or escape of pollutants.
y Prize indemnity insurance protects the insured from giving away a large prize at a
specific event. Examples would include offering prizes to contestants who can make a
half-court shot at a basketball game, or a hole-in-one at a golf tournament.
y Professional liability insurance, also called professional indemnity insurance, protects
insured professionals such as architectural corporation and medical practice against
potential negligence claims made by their patients/clients. Professional liability insurance
may take on different names depending on the profession. For example, professional
liability insurance in reference to the medical profession may be called malpractice
insurance. Notaries public may take out errors and omissions insurance (E&O). Other
potential E&O policyholders include, for example, real estate brokers, Insurance agents,
home inspectors, appraisers, and website developers.
Credit
Credit insurance repays some or all of a loan when certain things happen to the borrower such as
unemployment, disability, or death.
y Mortgage insurance insures the lender against default by the borrower. Mortgage
insurance is a form of credit insurance, although the name credit insurance more often is
used to refer to policies that cover other kinds of debt.
y Many credit cards offer payment protection plans which are a form of credit insurance.
Other types
y Collateral protection insurance or CPI insures property (primarily vehicles) held as
collateral for loans made by lending institutions.
y Defense Base Act Workers' compensation or DBA Insurance provides coverage for
civilian workers hired by the government to perform contracts outside the U.S. and
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Canada. DBA is required for all U.S. citizens, U.S. residents, U.S. Green Card holders,
and all employees or subcontractors hired on overseas government contracts. Depending
on the country, Foreign Nationals must also be covered under DBA. This coverage
typically includes expenses related to medical treatment and loss of wages, as well as
disability and death benefits.
y Expatriate insurance provides individuals and organizations operating outside of their
home country with protection for automobiles, property, health, liability and business
pursuits.
y Financial loss insurance or Business Interruption Insurance protects individuals and
companies against various financial risks. For example, a business might purchase
coverage to protect it from loss of sales if a fire in a factory prevented it from carrying
out its business for a time. Insurance might also cover the failure of a creditor to pay
money it owes to the insured. This type of insurance is frequently referred to as "business
interruption insurance." Fidelity bonds and surety bonds are included in this category,
although these products provide a benefit to a third party (the "obligee") in the event the
insured party (usually referred to as the "obligor") fails to perform its obligations under a
contract with the obligee.
y Kidnap and ransom insurance
y Legal Expenses Insurance covers policyholders against the potential costs of legal action
against an institution or an individual.
y Locked funds insurance is a little-known hybrid insurance policy jointly issued by
governments and banks. It is used to protect public funds from tamper by unauthorized
parties. In special cases, a government may authorize its use in protecting semi-private
funds which are liable to tamper. The terms of this type of insurance are usually very
strict. Therefore it is used only in extreme cases where maximum security of funds is
required.
y Media Insurance is designed to cover professionals that engage in film, video and TV
production.
y Nuclear incident insurance covers damages resulting from an incident involving
radioactive materials and is generally arranged at the national level. See the Nuclear
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exclusion clause and for the United States the Price-Anderson Nuclear Industries
Indemnity Act)
y Pet insurance insures pets against accidents and illnesses - some companies cover
routine/wellness care and burial, as well.
y Pollution Insurance which consists of first-party coverage for contamination of insured
property either by external or on-site sources. Coverage for liability to third parties
arising from contamination of air, water, or land due to the sudden and accidental release
of hazardous materials from the insured site. The policy usually covers the costs of
cleanup and may include coverage for releases from underground storage tanks.
Intentional acts are specifically excluded.
y Purchase insurance is aimed at providing protection on the products people purchase.
Purchase insurance can cover individual purchase protection, warranties, guarantees, care
plans and even mobile phone insurance. Such insurance is normally very limited in the
scope of problems that are covered by the policy.
y Title insurance provides a guarantee that title to real property is vested in the purchaser
and/or mortgagee, free and clear of liens or encumbrances. It is usually issued in
conjunction with a search of the public records performed at the time of a real estate
transaction.
y Travel insurance is an insurance cover taken by those who travel abroad, which covers
certain losses such as medical expenses, loss of personal belongings, travel delay, personal liabilities, etc.
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ORGANIZATION CHAR T OF IRDA
Hari Narayan
CHAIRMAN
Members:
Sri K K Srinivasan
Member (Non-Life)
Sri G Prabhakara
Member (Life)
Dr R Kannan
Member (Actuary)
Sri R.K. Nair
Member (F & I)
Part-time Members:
President, Institute of Chartered Accountants of
India, New Delhi ± 110 002
Smt. Ela R Bhatt
Self Employed Women¶s
Association (SEWA)
Ahmedabad ± 380 001
Sri Vijay Mahajan
Managing Director
Bhartiya Samruddhi Finance Limited, Hyderabad
± 500 001
Ms. Loretta Mary Vas
Addl Secretary
Ministry of Finance
Department of Economic
Affairs
North Block
New Delhi ± 110003
P:011-23093183
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Function Name of the Person E-mail I.D
Research and DevelopmentDr. D V S Sastry,
Director [email protected]
ActuaryShri K S Subrahmanyam,
Executive Director [email protected]
Inspections, Consumer Affairs, Accounts,
Administration, Information Technology,
Agents and Agents Training Institutes
Shri A. Giridhar I.A.S,
Executive Director [email protected]
Non-Life, Hindi, Health Insurance, Legal and
Intermediaries
Shri Prabodh Chander
Executive Director [email protected]
Life Insurance
Shri Kunnel Prem,
Consultant & S pecial
Officer
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Insurance as µPooling Of Premium¶
Insurance pooling is a practice wherein a group of small firms join together to secure better
insurance rates and coverage plans by virtue of their increased buying power as a block. This
practice is primarily used for securing health and disability insurance coverage. Those doing
insurance pooling are often referred to as insurance purchasing cooperatives.
Small business enterprises have long complained that insurers hand out discounts to big clients,
who have substantial purchasing power and large numbers of employees, and that those insurers
too often try to make up those discount losses by hiking rates for their smaller clients. Unable to
buy good coverage on their own, smaller companies were forced to rely on pooling plans created
and managed by trade associations or other affiliated business groups, or pass on providing
coverage altogether. In recent years, however, another alternative, in which private businesses
band together and organize their own pools, has emerged. Distinct entities have been created to
address both health and disability coverage needs.
Health Insurance Pools
Health insurance coverage has long been a difficult benefit for many small businesses to
incorporate into their compensation packages. Premiums for even modest health packages
constitute a significant outlay for small businesses, and increases in premiums and deductibles
attributable to employee illness forced many owners with the unpleasant choice of placing their
business at financial risk or ending health insurance for their employees. "Insurers had come to
evaluate small firms separately by such factors as claims experience, worker's health status, and
even type of business," explained N ation's Business. "As a result, many small companies couldn't
buy health insurance at any price. Those that did have coverage lived in fear of a single serious
illness because it could trigger skyrocketing rates or cancellation of coverage."
Health insurance pools, which are also sometimes called insurance purchasing alliances or health
insurance purchasing co-ops, were originally created to address this problem. They provide
group health policies exclusively to small businesses. Rules governing these alliances vary from
state to state, with some states offering eligibility to sole proprietorships and others providing
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coverage to businesses with up to 100 employees. On average, however, these health insurance
pools target employers of three to 50 people.
Small businesses that join one of these pools can typically count on the following benefits:
1. A community premium rate that is significantly lower than any individual rate it could
demand, because the membership gains collective leverage that forces insurance carriers
to modify premium and deductible demands
2. In many cases, premium increases are capped for the first several years of the policy
3. Centralized administration of the policy among all of companies covered under it, which
results in savings in work hours and paperwork
4. Standard rates and benefits that do not fluctuate according to company size or work force
health history
5. Selection of plans from multiple insurers (some plans allocate plan selection power
exclusively with employers, while others allow workers to select from a menu of plans)
First tried in California in the early 1990s, these types of pools could be found in 15 states by the
early 2000s. In addition, several more states are slated to open their doors to such pooling
strategies over the next few years. Analysts warn, however, that the rules and regulations
governing health insurance pools vary considerably from state to state, and note that the laws of a number of states make it unlikely that these alliances will make an appearance within their
borders any time soon. "Because they are usually locally based and privately operated, health co-
ops or alliances have evolved quite differently in the 15 states where they are functioning,"
explained Stephen Blakely in N ation's Business. "For instance, California's co-op plan is run by
an independent state agency that defines the benefits and negotiates with insurers. Florida and
Texas have less state control and permit more autonomy among alliances. In New York and
some other states, local business-sponsored health alliances operate on their own«. Some states
have long-standing laws expressly prohibiting businesses from coming together to obtain
insurance. Other states have not enacted laws that would enable small firms to buy health
insurance regardless of their workers' health status, that would limit insurance-rate variability
between companies of similar size and labor characteristics, and that would prohibit insurers
from canceling small groups' coverage without cause."
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Disability Insurance Pools
Disability insurance pools, also called risk-purchasing groups, operate under the same guiding
principles as health insurance alliances²by joining together into one single negotiating group,
small businesses can increase their bargaining power when dealing with insurers. These groups
are usually composed of companies that hail from the same industry sector, and thus face many
of the same disability risks.
These disability insurance pools arose in the aftermath of the 1986 Risk Retention Act, which
was passed by Congress in an effort to address the growing inability of small business owners to
obtain liability insurance because of its rapidly growing cost. "Risk-retention groups enable
companies in the same industry, such as plastics or chemicals, to cut insurance costs by forming
what are, in effect, mini insurance companies to self-insure against liability claims," explained
Lynn Woods in N ation's Business. "Risk-purchasing groups, on the other hand, permit group
purchasing of liability coverage."
Interestingly, insurance companies have been among the biggest boosters of this new type of
disability coverage arrangement. Woods pointed out that "insurance companies find risk-
purchasing groups attractive prospects because the companies can save costs in two ways²by
using a single agent or broker for multiple states and by tailoring a policy for a group based on a
similar level of risk."
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Bajaj Allianz Life Insurance Co. Ltd
Bajaj Allianz Life Insurance Co Ltd is a unique joint venture among the global giants Allianz
Group (AG) and Bajaj Auto. Allianz AG's world ranking establishes it among the top insurance
companies in the world. Bajaj is the biggest two and three wheeler manufacturer in the world.
Bajaj Allianz Life Insurance Company boasts of a nationwide presence with 876 offices and over
4 million satisfied customers. The various insurance products include
Individuals Plans
Unit Gain Insurances
Term Care Plans
Lifetime Care Insurance Policy
Business Insurance Policies
Savings And Security Policies For You And Your Family
Rural Insurance Plan
Healthcare Insurance
Financial Insurance
Pension Plus
Retirement Plans
Children's Policies
Endowment Plans and many more.
Group Insurance Schemes
Insurance For Employee-Employer Groups
Insurance For Non-Employer - Employee Groups Employees Deposit Linked Insurance
New Group Superannuation Scheme
New Group Gratuity Care Scheme
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Special Insurance Policies for NRI's
Invest gain Endowment Plan
Cash gain Money Back Plan
Child gain KidsS pecial
Plan
Swarna Vishranthi
Bajaj Allianz India offers convenient premium payment and receipt options. The payments can
be direct through cheques, DD's or directly from your accounts or through credit card. The
premiums can also be paid online. The insurance policy holders who also have an account with
Standard Chartered Bank can avail the direct debit mandate facility.
The Bajaj Allianz Life Insurance website offers human life value estimator, child education cost
calculator, retirement solutions and required pension estimator and premium calculator online.
The Bajaj Allianz insurance agents will guide you about the general life insurance policies best
suited to your needs. The insurance agent also briefs you about the insurance quote and the terms
on the policy quotes.
Bajaj Allianz Insurance started its journey on May 2, 2001 when it received the certificate of
Registration from Insurance Regulatory and Development Authority (IRDA) for conducting
General Insurance business in India including Health Insurance. As on the end of March 2009,
the income of Bajaj Allianz Insurance went up to Rs. 2,866 crore with a growth of 11% over the
previous year. It also registered a net profit of Rs. 95 crore, highest by any private insurer, in the
last financial year.
Owners: Bajaj Auto (India) and Alliaz AG (Germany) Head Office: Pune
CEO: Mr. Kamesh Goyal
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CHANNEL PAR TNER S
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Bajaj Allianz Life chalks out expansion strategy
In order to strengthen its position further in India, Bajaj Allianz Life Insurance Co has chalked
out aggressive strategies including introducing new products and tapping the rural market.
Besides tying up with seven regional rural banks (RR Bs) sponsored by Syndicate Bank to tap the
rural market, the company also proposes to introduce micro-insurance products and come out
with a new capital guarantee product.
Mr Heinz Dollberg, Executive Vice-President Asia Pacific, Allianz, told Business Line that the
company had already applied to the Insurance Regulatory and Development Authority for a
capital guarantee and pension product.
Pension sector
"We see the pension market as a big opportunity. Except for government employees, there are no
old-age security schemes for those over 60 years," he said. There are certain apprehensions, but
the company is hopeful that the market would be opened up for the private insurance players.
" As for the rural market, he said the company had recently tied up with `Godrej Aadhaar' retail
chain and also with seven RR Bs sponsored by Syndicate Bank. "Besides this, we have tied up
with numerous district co-op banks and NGOs to tap the rural market. We are also filing for
micro-insurance products as well,"
Reiterating that India was a core market for Bajaj Allianz, Mr Dollberg said, "We see a lot of
potential. Our performance in India has been better than expected. Generally, a life insurance
company takes about seven years to break even while a non-life insurance company takes about
five years. As far as we are concerned, our life insurance venture has achieved breakeven in five
years, while the non-life insurance has done it in just three years."
In the private life insurance segment, Bajaj Allianz has a market share of 7.6 per cent and 6.4 per
cent in the non-life insurance segment. As per the latest IRDA results up till July 2006 the
company has achieved a 207 per cent growth rate.
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Vision
y To be the first choice insurer for customers
y To be the preferred employer for staff in the insurance industry.
y To be the number one insurer for creating shareholder value
Mission
As a responsible, customer focused market leader, we will strive to understand the insurance
needs of the consumers and translate it into affordable products that deliver value for money.
A Partnership Based on Synergy
Bajaj Allianz General Insurance offers technical excellence in all areas of General and Health
Insurance as well as Risk Management. This partnership successfully combines Bajaj Finserv's
in-depth understanding of the local market and extensive distribution network with the global
experience and technical expertise of the Allianz Group. As a registered Indian Insurance
Company and a capital base of Rs. 110 crores, the company is fully licensed to underwrite all
lines of general insurance business including health insurance.
Our Achievements Bajaj Allianz has received "iAAA rating, from ICRA Limited, an associate of Moody's Investors
Services, for Claims Paying Ability.This rating indicates highest claims paying ability and a
fundamentally strong position
Bajaj Allianz General Insurance has received the prestigious ³Business Leader in General
Insurance´, awarded by NDTV Profit Business Leadership Awards 2008. The company was one
of the top three finalists for the year 2007 and 2008 in the General Insurance Company of the
Year award by Asia Insurance Review.
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WORKING OF THE COMPANY:-
The premiums paid are invested in fund/funds of your choice (depending on the allocation rate)
& units are allocated depending on the price of units for the fund/funds. The value of your policy
is the total value of units that you hold in the fund/funds. The insurance cover charges arededucted through monthly cancellation of units. The fund Administration Charge and Fund
Management Charge is priced in the unit value.
BENEFITS
DEATH BENEFIT: In case of unfortunate death the beneficiaries are entitled to the Sum
Assured less withdrawals or the bid price of units, whichever is higher? If the age of the life
assured is less than 7 or above 70, then the bid price of the units is paid.
LIQUIDITY OPTION: There is no maturity date for this plan. . Anytime after payment of 3
full years¶ premiums, you may withdraw the money, depending on your requirements, through
partial or complete surrender of units.
OPTIONS
a. Choice of investment plan:
Bajaj Allianz offers you a choice of 4 funds. You can choose to invest fully in any one fund or
allocate your premiums into the various funds in a proportion that suits your investments needs.
All the funds will be managed by the asset managers of Bajaj Allianz.
EQUITY FUND: This fund provides the scope of high appreciation over a long term. The
fund will primarily invest in equities and is expected to match returns given by NSE NIFTY.
This fund will invest at least 90% in equities and maximum 10% in cash. This Fund Investment
is in NSE (National Stock Exchange) NIFTY i.e. top 50 companies.
DEBT FUND: This fund provides the scope for steady returns at low risk through
investments in high quality fixed income securities. This fund will be invested fully in debt
instruments. This Fund Investment is in Govt. Bonds for e.g. IDBI Bonds, Mutual Funds etc.
BALANCED FUND: The balanced is primarily for those who prefer mix of steady returns
and growth. The balanced fund will invest 30% to 50% in the equity fund and 50% to 70% in the
Debt fund. This Fund Investment is in Govt. and Private Companies.
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CASH FUND: The cash fund will invest conservatively in money market & short term
investments to ensure that return on investments shall never be negative. 100% of this fund will
be invested in money market instruments. The price of the units in this fund will never to go
down. This Fund Investment is in Call Money Market (operates on the need for cash on hourly
basis).
b. Choice to switch between investment options:
Policyholder can switch units from one fund to another. The amount switched should be in
multiples of 1000, and the minimum switching amount is Rs. 5000 or the fund value which ever
is lower. Three free switches would be allowed every year. Subsequent switches would be
Charged @ 1% of the switch amount or Rs. 100 whichever is higher?
c. Choice of a Top-up:
The policyholder will have the option to increase the regular premium amount at any time. The
additional single premium would be treated as a single premium top-up every year. The
policyholder will also have the option to increase the amount invested through top-ups.
FLEXIBILITIES
a. Increase the death benefit:
The death benefit may be increased without any underwriting every 3rd year upto 4 times. The
increase will be allowed upto 25% of the original sum assured or Rs. 1,00,000. Whichever is
lower, each time? However, the maximum age till which this option will be allowed is the
attained age of 45yrs of the policy holder. Apart from the increase in death benefit every 3rd year
without underwriting, the policyholder may choose to increase the death benefit subject to the
maximum of Comprehensive Accidental Protection, depending on his/her changing needs. This
increase will be subject to underwriting and the cost of underwriting shall be deducted through
cancellation of units. The option to increase the death benefit with underwriting ceases at age 60.
b. Decrease the death benefit:
Decrease in the death benefit will be allowed any time, subject to the minimum death benefit
being maintained. The death benefit once reduced can be increased subsequently only subject to
underwriting.
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c. Premium holiday option:
Customers can opt to pay premiums at their convenience after payment of full 3years premiums.
Thereafter, when premium due are not paid, the policy will stay in force with full benefits so
long as there is enough units available for charging the cost of insurance and additional benefits
after deducting all applicable charges.
d. Flexible Contribution: The person can increase/decrease the annual contribution. The maximum decrease in the
contributions can be up to 20% of the initial contribution chosen by the person at the time of
inception of the policy. However, in no circumstances can the contribution be reduced to below
the minimum premium allowed under the plan at that time, or 80% of the initial chosen
contribution, whichever is higher. The person has the flexibiltity to increase his/her contribution
without any limits. Any such increase or decrease in contribution will only be allowed on policy
anniversaries.
OTHER BENEFITS
a. Additional Protection for You and Your Family:
You have the option to add the following four additional benefits, Providing total protection
against uncertainties.
Accidental Death Benefit.
Accidental Permanent Total/Partial Disablement Benefit.
Critical Illness Benefit (CI).
Hospital Cash Benefit (HC).
b. Surrender value
This policy acquires a surrender value after 3 complete years of the policy, provided the 1st 3
years¶ premiums are paid. The Surrender Value is 100% of the value of investments.
c. Tax Benefits
Value of Units cancelled for Critical Illness and Hospital Cash Benefit is eligible for tax relief
under Section 80(D). Death Benefit and Withdrawals (partial or full) is tax free under section
10(10) D of the Income Tax Act, if the premiums paid in any year does not exceed 20% of the
Sum Assured or Fund Value, whichever is higher.
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BIBLOGRAPHY
Wikipedia.com
The business line
Bajaj Allianz official site
The Hindu
Annual report of 08-09