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A PROJECT ON

THE ORIENTAL INSURANCE COMPANY LIMITED

IN THE SUBJECT

Advance Financial Accounting

SUBMITTED BY

Soumeet D. Sarkar

A041

M.Com. Part-I

UNDER THE GUIDANCE OF

Prof. Bharat Patel

TO

UNIVERSITY OF MUMBAI

FOR

MASTER OF COMMERCE PROGRAMME (SEMESTER - II)

In

ADVANCE ACCOUNTANCY

YEAR: 2013-14

SVKMS

NARSEE MONJEE COLLEGE OF COMMERCE &ECONOMICS

VILE PARLE (W), MUMBAI400056.


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EVALUATION CERTIFICATE

This is to certify that the undersigned have assessed and evaluated the

project on THE ORIENTAL INSURANCE COMPANY LIMITED

submitted by Soumeet D. Sarkar student of M.Com. Part - I (SemesterII)

in Advance Accountancy for the academic year 2013-14. This project is

original to the best of our knowledge and has been accepted for Internal

Assessment.

Name & Signature of Internal Examiner

Name & Signature of External Examiner

PRINCIPAL

Shri. Sunil B. Mantri


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DECLARATION BY THE STUDENT

I, Soumeet D. Sarkar student of M.Com.(PartI) in Advance Accountancy, Roll

No.: A041, hereby declare that the project titled THE ORIENTAL

INSURANCE COMPANY LIMITED for the subject Advanced Financial

Accounting submitted by me for Semester II of the academic year 2013-14,

is based on actual work carried out by me under the guidance and supervision

of Prof. Bharat Patel. I further state that this work is original and not

submitted anywhere else for any examination.

Place: Mumbai

Date:

Name & Signature of Student

Name : Soumeet D. Sarkar

Signature : _________________


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ACKNOWLEDGEMENT

This project was a great learning experience and I take this opportunity to

acknowledge all those who gave me their invaluable guidance and inspiration

provided to me during the course of this project by my guide.

I would like to thank Mr. Bharat Patel - Professor of Advanced Financial

Accounting (MCOMNarsee Monjee College).

I would also thank the M.Com Department of Narsee Monjee College of

Commerce & Economics who gave me this opportunity to work on this project

which provided me with a lot of insight and knowledge of my current curriculum

and industry as well as practical knowledge.

I would also like to thank the library staff of Narsee Monjee College of

Commerce & Economics for equipping me with the books, journals and

magazines for this project.


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CONTENT

Sr. No. PARTICULARS Page No.

CHAPTER IINTRODUCTION

1.1 INTRODUCTION to INSURANCE 6

1.2 HISTORY of INSURANCE in INDIA 8

1.3 ROLE of INSURANCE in ECONOMIC

GROWTH and DEVELOPMENT

11

1.4 COMPANY PROFILE 13

1.5 POPULAR POLICIES 15

1.6 S.W.O.T. ANALYSIS 16

1.7 PRODUCT PROFILE 18

CHAPTER IIDATA ANALYSIS & COLLECTION

2.1 BALANCE SHEET 24

2.2 PROFIT AND LOSS ACCOUNT 25

2.3 REVENUE ACCOUNT 27

2.4 COMPARATIVE BALANCE SHEET 28

2.5 COMPARATIVE PROFIT AND LOSS

ACCOUNT

30

2.6 RATIOS & COMMENTS 33

CHAPTER IIICONCLUSION

3.1 CONCLUSION 37

3.2 BIBLOGRAPHY 38


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INTRODUCTION:-

Indian economy is in transition over the last ten years owing to the initiation of major

economic reforms affecting almost all sectors. The paradigm shift from a mixed

economic organization to a market oriented organization has exposed all sectors to an

intense competition. Insurance being one among the players in the financial services

sector. Indian insurance business is the most significant one among them. The industry

covers two dimensions viz. Life insurance and General insurance. While Life Insurance

Corporation of India (LICI) is a financial intermediary which mobilizes peoples savings

and invests large amounts of premiums, the General Insurance Companies (GIC) do not

collect savings, yet they raise crores of rupees from premiums. General insurance deals

with exposure of risks to goods and property, whereas life insurance is a way to meetthe contingencies of physical death and economic death. In case of pre-matured death of

the assured, the proceeds of policy are paid to the beneficiaries and annuities protect the

assured against economic death when he lives too long to arrange for his necessities. In

simple language, insurance promises a compensation of monetary loss sustained by a

particular person, due to the damage or destruction of a particular piece of property

owned by him, provided it happens due to certain courses. In other words, it is perfectly

a simple promise to make good the loss. Indias general insurance industry has

undergone de-tariffing in three phases:-

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

2005-06- marine hull segment,

2007- Fire, engineering and motor own damage.

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

were required to follow the file and use method, whereby they were expected to file acharter of proposed rates, which was then approved by IRDA. The only segment that

remains under a tariff regime is the third party motor business, although there has been

a large upward revision in this areas premium rates by regulators in recent times.

Moreover, commercial third party motor business, which has traditionally contributed to

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


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Marine Insurance was the first form of the insurance business. It is said that it

probably began in north Italy by the end of 12th

century. The Italian merchants who

came to England in 12th or 13th century covered their risk of assets with insurance. The

first marine policy called Polliza was issued in Italy in 1300. Charter of Insurance

was also established in 1300 in Belgium. Insurance was similarly developed in other

European countries like Spain, France, Germany and Holland. Insurance sector was

greatly developed in the time of Queen Elizabeth I in England during the 14 and the

15th centuries. Lombards, the ex-communicated businessmen of Italy captured the whole

market of marine insurance business. They ran the business along with other and settled

docent the street of London which was later on famous by the name of Lombard

Street a well-known place for marine insurance transactions. The present form of

marine insurance is developed by the Lloyds Association which was established in 1774

by a man Mr. Edward Lloyds, a coffee merchant with the publication of Lloyds News.

The merchants gathered into the coffee house and took liability in marine insurance

business as per their financial position. Even today, Lloyds Association is one of the

leading firms transacting marine insurance in the whole world. Later on Marine Insurance

Act was passed in 1906 in England. Other countries had also passed the Marine

Insurance Act nearly in the same period. It was passed in 1963 in India.

The evidences of emergence of Fire Insurance can be seen in 16th century in

Germany. There was a scheme made to spread over the fire risk a group of people in

Oldenburg in 1609 by collecting the premium. The market of fire insurance was greatly

developed after the great fire of London in 1666 in which 85% of the houses burnt to

ashes and property worth 10 crores sterling was completely destroyed. The first fire

insurance office was established in London in 1680. Sunlife office was set up in 1710

in London. The industrial revolution gave impetus to develop the fire insurance business

because there was great expansion of machinery used. The market for fire insurance

expanded for protecting the highly cost machinery. Fire insurance started in India with

the establishment of Triton Insurance Company in Calcutta in 1850. The North British

Mercantile Company came into existence in 1861. Fire insurance has very slow trend for

progress in India up to nationalization of general insurance.


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The origin of Life Insurance business was not so earlier. There is no specific

evidence available through which one can consider how the idea of life insurance

developed. The first life insurance policy issued on the life of Mr. William Gybbons on

18th June, 1653 in England. It was issued for one year period. The first registered life

office in England was hand in hand society which was established in 1690. Mutual

Life Insurance Company came into existence later on in 1696. The first mortality table

prepared in the 19th

century gave impetus to the life insurance transactions. Life

Insurance started in India by Europeans with the establishment of Oriental Life Insurance

Company in 1818. Bombay Mutual Life Insurance came into existence in 1871. In 1874,

the third company entered into the same business of life insurance called The Oriental

Government Security Life Assurance. The life insurance Act passed in 1956 in India.

The industrial revolution gave impetus to certain Miscellaneous Insurance like

accident insurance, liability insurance, theft and burglary insurance and fidelity insurance.

There are certain latest forms of insurance like cattle insurance, crop insurance, profit

insurance and consequential loss insurance.

HISTORY of INSURANCE in INDIA:-

In India, insurance has a deep-rooted history. Insurance in various forms has been

mentioned in the writings of Manu (Manusmrithi), Yagnavalkya (Dharmashastra)

and Kautilya (Arthashastra). The fundamental basis of the historical reference to

insurance in these ancient Indian texts is the same, i.e., pooling of resources that could

be re-distributed in times of calamities such as fire, floods, epidemics and famine. The

early references to Insurance in these texts have reference to marine trade loans and

carriers' contracts.

Insurance activity in India is going on for more than 150 years. In India, life insurance

in its modern form was brought for the first time by the British. The Oriental Life

Insurance Company started in 1818 by Anita Bhavsar in Calcutta was the first to be

founded in India by Europeans to help the widows of their community. The general


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insurance business in India, on the other hand, can trace its roots to him Triton

Insurance Company Ltd, the first general insurance company established in the year 1850

in Calcutta by the British. The year 1870, saw the birth of first Indian Insurance

Company named, Bombay Mutual Life Assurance Society. The basic aim of this

company was to insure Indian lives at normal rates since in the earlier period. Indian

lives were treated as subnormal and loaded with an extra premium of 15 to 20 percent.

However, right up to the end of 19th

century, the foreign insurance companies in India

had an upper hand in matters of insurance business. Insuring Indian lives with 10

percent of extra premium was a common practice prevalent in those times. The Indian

Life Assurance Companies were the first to regulate the life insurance business in 1912.

In 1928, the Indian Insurance Companies Act enabled the government to collect

statistical information about both life and non-life insurance business. Later, the Insurance

Act of 1938 was passed and department of insurance under authority of superintendent

of insurance was established for the administration of the Act. In 1939, 199 companies

were working in India. However, the period 1939-55 was marked by:-

1. World War II resulting in hasty premium adjustments by Indian companies.

2. Series of amendments to the Insurance Act, 1938.

3. Appointment of a committee under the Chairmanship of Sir Cowasji Jehanger to

enquire into and to recommend measures to check certain trends and undesirable

features in the management of insurance companies.

4. The findings of the sub-committee on insurance under the National Planning

Commission headed by Pt. Jawaharlal Nehru.

5. Partition of India.

6. De-valuation of rupee on September 18, 1949.

7. The Insurance Amendment Act.

8.

Interest yield sagging to the lowest lend of 3 percent and remaining at that levelover 1947-1949.

9. The rate war and cut throat competition between insurance companies.

10.The recommendation of the ruling political party, the Indian National Congress, to

the government that the life sector insurance be nationalized.


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11.The founding of the Jiwanlal Chimanlal Setawad Memorial - The Federation

of Insurance Institutes.

The Government of India issued an Ordinance on 19th

January 1956 nationalizing the

Life Insurance sector and Life Insurance Corporation came into existence in the same

year. The Life Insurance Corporation (LIC) absorbed 154 Indian, 16 non-Indian insurers

as also 75 provident societies - 245 Indian and foreign insurers in all. In 1972 with the

General Insurance Business (Nationalization) Act was passed by the Indian Parliament,

and consequently, General Insurance business was nationalized with effect from 1st

January 1973. 107 insurers were amalgamated and grouped into four companies, namely

National Insurance Company Ltd., The New India Assurance Company Ltd., The Oriental

Insurance Company Ltd and The United India Insurance Company Ltd. The General

Insurance Corporation of India was incorporated as a company in 1971 and it

commenced its business on 1st January 1973.

The LIC had monopoly till the late 90s when the Insurance sector was re-opened to the

private sector. Before that, the industry consisted of only two state insurers:- Life

Insurers (Life Insurance Corporation of India, LIC) and General Insurers (General

Insurance Corporation of India, GIC). GIC had four subsidiary companies. With effect

from December 2000, these subsidiaries have been de-linked from the parent company

and were set up as independent insurance companies:- Oriental Insurance Company

Limited, New India Assurance Company Limited, National Insurance Company Limited

and United India Insurance Company Limited.


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Role of Insurance in Economic Growth and Development

Insurance is an important growing part of the financial sector in virtually all the

developed and developing countries. A resilient and well regulated insurance industry can

significantly contribute to economic growth and efficient resource allocation through

transfer of risk and mobilization of savings. In addition, it can enhance financial system

efficiency by reducing transaction costs, creating liquidity and facilitating economies of

scale in investment.

Ward and Zurbruegg (2000) examine the casual relationship between growth in the

insurance industry and economic development by recognizing that the economic benefits

of insurance are conditioned by national regulations, economic systems and culture.

Further, they argued that an examination of the interrelationship between insurance and

economic growth needs to be conducted on a country-by-country basis. The study is

important because in contrast to the available evidence on the importance of banks

typified by the work of Levine and Zervos (1998) little is known about Insurance.

Philip Kotler has discussed the importance of channels partners. Better the channel

partners better will be the delivery model. Detailed discussion about how to design the

channel structure so that all the requirements could be fulfilled is provided. The various

issues faced by the organization while managing the channels are also given. When an

organization has more than one channel it becomes very important that all the channels

should be integrated in such a way that the organization get the best out of all. At

times due to the conflicting benefit of the different channels the conflict arise so various

strategies to manage these issues is also discussed in the chapter.

Michael J. Etzel has written about the marketing of services. The marketing of services

is different from the goods because of the characteristic of service like intangibility,

inseparability, heterogeneity etc. Brief about pricing strategies is also given in case of

services. The authors have also given the impact of technological development on the

services marketing. The author has also given the importance of brand and after sales

support in case of services as perception of the customers plays an important role. In

other part of the book the authors has described the importance of distribution channels


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and designing of the same. A channel partner should be consider as partner according to

discussion. The legal complications associated with channels are also discussed. These

complications are necessary to take into the consideration while managing the channels.

The conflicting interest of channels both horizontally and vertically are also taken into

the consideration.

Boone has discussed about the importance of personal financial planning. The concept of

time value of money has also been elaborated. The importance of creating and

implementing budget is given under money management. The other important concepts

for financial planning like credit management and understanding taxes are also explained.

In one section the authors have discussed the importance of investment and what should

be the major considerations while making any investment. The considerations include the

risk associated with the investment, return on the investment etc. The importance and

benefits of life insurance has also been given. The discussion also includes various legal

aspects associated with life insurance. The overview of retirement planning is also given

which includes importance and benefit of retirement planning. Various tools for proper

retirement planning are also discussed.


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COMPANY PROFILE:-

The Oriental Insurance Company Limited was incorporated at Bombay on 12th

September 1947. The company was a wholly owned subsidiary of the Oriental

Government Security Life Assurance Company Ltd and was formed to carry out General

Insurance business. The company was a subsidiary of Life Insurance Corporation of India

from 1956 to 1973 (till the General Insurance Business was nationalized in the country).

In 2003 al l shares of our company held by the General Insurance Corporation of India

has been transferred to Central Government. The company is a pioneer in laying down

systems for smooth and orderly conduct of the business. The strength of the company

lies in its highly trained and motivated work force that covers various disciplines and

has vast expertise. Oriental specializes in devising special covers for large projects likepower plants, petrochemical, steel and chemical plants. The company has developed

various types of insurance covers to cater to the needs of both the urban and rural

population of India. The company has a highly technically qualified and competent team

of professionals to render the best customer service. Oriental Insurance made a modest

beginning with a first year premium of Rs.99,946 in 1950. The goal of the company

was Service to clients and achievement thereof was helped by the strong traditions

built up overtime.

Oriental with its head Office at New Delhi has 30 Regional Offices and nearly 900+

operating offices in various cities of the country. The company has overseas operations

in Nepal, Kuwait and Dubai. The company has a total strength of around 15,000+

employees. From less than a lakh at inception, the Gross Premium went up to Rs.58

crores in 1973 and during 2010-11 the figure stood at a mammoth Rs.5569.88 crores.

The Oriental Insurance Company has been enjoying the highest rating from leading

Indian credit rating agencies CRISIL and ICRA. The Company has also been rated as

B++ (Very Good by AM Best, an international rating agency).


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CORPORATE VISION

To be the most respected & preferred non-life insurer in the markets they operate.

CORPORATE OBJECTIVES

1. Act as a financially sound corporate entity with high business ethics.

2. Implement best human resource development practices to build a highly efficient,

dedicated and motivated workforce with high morale and moral values.

3. Optimally utilize the information technology infrastructure.

4. Provide excellent customer service.

5. Run the business profitably through prudent underwriting and efficient & proper

claim management.

6. Effectively manage our reinsurance operations.

7. Effectively manage our investments for optimizing yield.

8. Have effective risk management systems.

9. Improve the penetration of non-life insurance by proper underwriting, innovation

& marketing.

MANAGEMENT

Oriental Insurance is a professionally managed independent board run company.

Illustrious personalities like Shri T. A. Pai (who later became Cabinet Minister in the

Union Government), Shri K. R. Puri, who rose to be the Governor of RBI and Shri B. D.

Pande, who later became the Governor of West Bengal were among the past Chairmen.

At present Dr. A. K. Saxena is Chairman-Cum-Managing Director of the company. The

Board of Directors of the company include eminent personalities in various fields.


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Popular Policies

A few of our most widely sold and most useful policies are:-

1. PNB - Oriental Royal Medi-claim Policy.

2. Motor Policies - Terms & Conditions.

3. Comprehensive Health Insurance Scheme.

4. Electronic Equipment Insurance Policy.

5. Group Medi-claim Policy.

6. Householders Insurance Policy.

7. Individual Medi-claim Policy.

8. Kissan Package Insurance.

9.

Motor Cycle Package Policy.

Rural Insurance Policies

1. Bhagyasree Child Welfare Policy.

2. Cattle Insurance.

3. Cycle Rickshaw Insurance Policy.

4. Dog Insurance.

5.

Insurance of Fish in Ponds.6. Gramin Accident Insurance.

7. Janata Personal Accident Policy.

8. Khalihan Insurance Package Policy,

9. Kissan Agricultural Pumpset Insurance.

10.Kissan Package Insurance Policy.

11.Poultry Insurance.

12.Rabbit Insurance.

13.Plantation/Horticulture Insurance.

14.Rajrajeshwari Mahila Kalyan Bima Yojna.

15.Sericulture (silkworm) Insurance.

16.Tea Plantation Insurance.

17.Universal Health Insurance Scheme.


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S.W.O.T. ANALYSIS

SWOT Analysis is a tool used for understanding an organization's strengths, weaknesses,

opportunities and threats. The SWOT Analysis tool can be used in identifying an

organization's strengths(S) and weaknesses(W), and examining the opportunities(O) and

threats(T) it is facing. The outcome from a SWOT Analysis enables organizations to

focus on strengths, minimize weaknesses, address threats, and take the greatest possible

advantage of opportunities available.

Strengths:-

1. Their members value the professional designation.

2. They have a lower course fee structure than similar programs.

3. They provide good customer service.

4. Their instructors are highly-regarded in the profession.

5. They have a small staff and low overhead.

Weaknesses:-

1. They are slow to make decisions and adapt to changes that affect the profession.

2. The professional designation is rarely included as a condition of employment.

3. They are overly dependent on key volunteers who developed and teach our

certification courses.

4. They do not have the resources to research the market and promote the

designation.


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Opportunities:-

1. A developing market such as the internet.

2. Mergers, joint ventures or strategic alliances.

3.

Moving into new market segments that offer improved profits.

4. A new international market.

5. A market vacated by an ineffective competiton.

Threats:-

1. A new competitor in the home market.

2. Price wars with competitors.

3. A competitor has a new, innovative product or service.

4. Competitors have superior access to channels of distribution.Taxation is introduced

on your product or service.


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PRODUCT PROFILE

Oriental's vast product portfolio has been specially designed to cater to the needs of

consumers in India. They develop general insurance plans in the best interests of our

customers. Oriental Insurance continues to provide customized insurance products for all

sections of the society at affordable prices. Now policies can be purchased and renewed

online. Buying a new insurance policy, renewing an existing insurance policy or renew

policies bought from any other general insurance company by registering oneself on their

portal and paying online through debit card/credit card or net-banking. The various

insurance product types are given below:-

1. Marine Insurance

Oriental Insurance Company Ltd. brings to India a wide range of marine cargo

products from various international markets. Their products considerably widen the

scope of coverage presently enjoyed by the insured population without necessarily

involving a high premium.

2. Burglary Insurance

Burglary Insurance for machinery, stock in trade, furniture, fixtures & fittings and

for goods held in trust or on commission for the insured is responsible. Burglary

Insurance covers burglary or house breaking accompanied by either forcible orviolent entry into/exit from the premises and hold-up.

3. Engineering Insurance

a. Erection All Risks Insurance:- The Erection All Risks policy is a

comprehensive insurance, which provides complete protection against all types

of risks associated with erection, testing, commissioning of machinery, plant

and equipment during constructional stage.

b. Boiler & Pressure Plant Insurance:- It covers the risk of explosion and

collapse of any boiler or other pressure plant in the course of ordinary

working.

c. Contractor's All Risks Insurance:- All types of civil engineering works,

ranging from small buildings to massive dams are exposed to damage from a

wide range of causes such as fire, lightning, flood, inundation, storm, cyclone


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and other accidental damages. It is a comprehensive insurance which provides

complete protection against all types of civil construction risks.

d. Machinery Breakdown Insurance:- Oriental Insurance Company Ltd extend

its hand offering Machinery Breakdown Insurance Cover ably supported by

most capable technocrats to throw more light about the mechanical side of all

machines.

e. Marine-Cum-Erection Insurance:- It is developed as a comprehensive product

to manage the risk and insurance needs in course of erection as well as

during transit. It is a combination of Erection All Risks and Marine Insurance

to cater to the needs of the client where Marine/Transit insurance is connected

with Erection All Risks Insurance of any project.

f.

Contractor's Plant & Machinery:- Contractor's Plant & Machinery is an

exclusive all risks policy covering the plant & machinery used by the

contractors at the site for various projects. It covers the property whether they

are at work or at rest or being dismantled for the purpose of cleaning or

overhauling, or in the course of operations or when being shifted within the

premises or during subsequent re-erection, but in any case only after successful

commissioning.

4. Liability Insurance

a. Product Liability Insurance:- Liability arises from a civil wrong or breach of

personal duty imposed by law on a person and owed to his/her fellow

citizens. In some countries legal rights and duties are framed in a Civil Code.

In others they are not codified but drawn from the precedent of decisions

handed down in the courts over the centuries; this is known as "Common

Law".

b. Workmen's Compensation Insurance:- It provides insurance against

occupational accident or disease to an employee whilst in course of his

employment.


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c. Public Liability Act:- It provides indemnity against the insured's liability at

law to the public in general (excluding employees) for bodily injury and loss

of or damage to property due to the business activities carried on in insured's

premises.

5. Business Solutions

a. Industrial All Risks Policy:- Its a wide and comprehensive cover for the

large sized business where the assets at all locations of the insured exceed

Rs.100 crores. It is an All Risks Policy covering a wide range of perils such

as fire and allied perils, burglary, accidental damage, breakdown as well as

business interruption.

b. Office Shield:- A flexible policy specifically designed to meet the insurance

needs of your modern office, irrespective of the number of locations.

c. Hotel Shield:- Tailor-made cover designed to suit the specific needs of the

Hotel Industry.

d. Enterprise Shield:- It is a newly devised package providing total insurance

solutions for industries. You do not need to analyze and evaluate a large

number of insurance policies to insure your business completely.

e. Education Shield:- Tailor-made cover designed to suit the specific needs of

Education Industry.

f. Traders Shield:- It is an attractive policy that provides shopkeepers with a

basic insurance package and a further range of optional covers.

g. All Risks Policy for Portable Equipment:- It offers an overall solution to

cover portable items like laptops, mobiles, cameras and projectors.

h. Standard Fire and Special Perils Policy:- It offers cover against fire and

allied perils and the perils of nature. The policy can cover building (including

plinth and foundation), plant and machinery, stocks, furniture, fixtures and

fittings and other contents.

i. Consequential Loss (Fire) Insurance:- It provides protection against loss of

profits in business due to an interruption in business consequent upon an

insured peril covered under the material damage policy.


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6. Employee Solutions

a. Group Personal Accident Policy:- It is a worldwide cover providing

protection for the employees against any accidental injuries sustained by the

individuals resulting in death and disablement.

b. Group Health:- Health Premium Platinum is a comprehensive health insurance

package, designed for the employees of company and their family members.

c. Workmen's Compensation:- Workmen's Compensation provides cover to target

clients as required by law in support to project insurances or property

insurances.

7. Travel Insurance

Oriental Overseas Travel Medi-claim Insurance is available to Indian citizen

between 6 months and 70 years of age who are undertaking bonafide trips outside

India which will not involve any form of manual work and do not exceed 180

days duration unless specifically extended. The overseas medi-claim policy

provides indemnity for expenses necessarily incurred for immediate treatment of

illness, diseases contracted or injury first sustained(during the period of insurance

of overseas travel subject to policy terms and conditions) and in addition also

personal accident, total loss of checked baggage, delay of checked baggage, loss

of passport and personal liability covers(during the period of insurance of overseas

travel subject to policy terms and conditions).

8. Home Insurance

The House holder's Insurance Policy is a comprehensive shelter that protects your

house and the various contents in it against a variety of risks. It is a single

policy that takes care of a number of contingencies. The policy is divided into 10

sections. Sec 1(B) and a minimum of any 2 other sections are compulsory.

Section 1: Fire and Allied Perils.

Section 2: Burglary.

Section 3: All Risks.

Section 4: Plate Glass.

Section 5: Breakdown of Domestic Appliances.

Section 6: T.V. Set.


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Section 7: Pedal Cycles.

Section 8: Baggage Insurance.

Section 9: Personal Accident.

Section 10: Public Liability.

9. Family Floater

a. Features

This is a Health Insurance Policy.

Floater implies single Sum Insured for entire family.

Family includes Self, Spouse, Children, Parents and Parents in Laws.

b. Plans

Plan Silver Plan Gold

Basic

Plan

10% compulsory co-pay, Sum

Insured choice Rs-1-5 lakhs

Without co-pay. Sum Insured

choice Rs-6-10 lakhs.

Inbuilt Cash Allowance for the days

admitted.

Attendance allowance-If a child

between 3m to 10 years is admitted

Add on Personal Accident cover for self

and dependents

Personal Accident cover for self

and dependents

Add on NIL Life Hardship (Survival Benefit),

diseases like cancer IV stage, End

stage Renal Disease, Stroke leading

to Paralysis or paraplegia

c. New Features

Daily Hospital Cash

-Benefit in Gold Scheme.

-Limit 0.1% of Sum Insured Max. 10 days.


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Attendant Allowance

-Benefit in Gold Scheme, if child below 10 years admitted.

-Rs.500 per day max. 10 days.

d. Other Features

Ambulance Charges

-Rs.1000 or 1% of S.I. in Silver Plan.

-Rs.2000 or 1% of S.I in Gold Plan.

Discount on OMP Premium

-Discount of 15% on OMP policy.

-Family Floater Policy is suspended, if OMP taken.

TPA

-Option to avail services or not.

-5% discount if opted out.

e. New Features with Extra Premium

Personal Accident

-Available in Silver and Gold plans.

-In Silver up to Rs.5 lakhs.

-In Gold up to Rs.10 lakhs.

Life Hardship

-Benefit in Gold scheme with Extra Premium.

-Plan-A with 15% of Sum Insured.

-Plan-B with 25% of Sum Insured.

-Benefit given, if insured person survives for 180 days or 270 days

after discharge.


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DATA COLLECTION AND ANALYSIS

The Oriental Insurance Company Ltd. Annual Report 2012-13

BALANCE SHEET

(Rs. in Lakhs)

Particulars 31/03/2013 31/03/2012

SOURCES OF FUNDS

Share Capital 15000 10000

Reserves & Surplus 243780 207852

Fair Value Change Account 784545 771530

Borrowings 0 0

TOTAL 1043325 989382

APPLICATION OF FUNDS

Investments 1733350 1573603

Loans 21175 22586

Fixed Assets (including CWP) 10549 10780

Current Assets

Cash & Bank Balances 200949 198604

Advances & Other Assets 221914 191549

Sub-Total (A) 422863 390152

Current Liabilities 781313 681939

Provisions 369242 334714

Sub-Total (B) 1150555 1016653

Net Current Assets (C) = (AB) -727692 -626504

Miscellaneous Expenditure (to the extent not

written off or adjusted)

5943 8914

Debit Balance in Profit & Loss Account 0 0

TOTAL 1043325 989382


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25


PROFIT AND LOSS ACCOUNT

(Rs. in Lakhs)

Particulars 31/03/2013 31/03/2012

OPERATING PROFIT / (LOSS)

(a) Fire Insurance 11435 -6447

(b)Marine Insurance 3535 931

(c)

Miscellaneous Insurance 25471 7123INCOME FROM INVESTMENTS

(a) Interest, Dividend & RentGross 19720 18606

(b)Profit on Sale of Investment 18965 16282

Less: Loss on Investment 0 0

Other Income 616 2594

TOTAL (A) 79742 39089

PROVISIONS (Other than Taxation)

(a)For Diminutions in the Value of

Investments

32 49

(b)For Bad & Doubtful Debts 0 2661

(c)Others (Amortisation Expenses) 206 225

OTHER EXPENSES

(a)Expenses other than those related to

Insurance Business

0 0

(b)

Old / Irrevocable balances written off 5 2

(c)Others

NPA -60 -564

Investments written off (Net) 85 82

TOTAL (B) 268 2455


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Profit Before Tax 79474 36634

Less:

Prior Period Items (Net) -45 394

Provision for Taxation (Current Year) 23852 8877

Taxation relating to earlier years 2279 2024

Profit After Tax 53388 25339

APPROPRIATIONS

(a) Interim Dividends Paid During the Year 0 0

(b)Proposed Final Dividend 10650 5067

(c)Dividend Distribution Tax 1810 822

(d)Transfer to General Reserve 40928 19450

(e)

Transfer to Contingency Reserve for

unexpired Risks

0 0

Balance of Profit / Loss brought forward from last

year

0 0

Balance carried forward to Balance Sheet 0 0


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27


REVENUE ACCOUNTS

Rs. in Lakhs

Particulars 31/03/2013 31/03/2012

Fire Marine Misc. Fire Marine Misc.

Premiums Earned (Net) 59485 26915 452310 51432 25455 412419

Profit / Loss on Sale / Redemption

of Investments

8811 3497 60058 6660 2932 49244

Exchange Gain(+) / Loss(-) 70 -233 -96 30 -61 -110

Interest, Dividend & Rent

Gross

9162 3635 62451 7611 3351 56276

TOTAL (A) 77528 33814 574723 65733 31677 517829

Claims Incurred (Net) 35756 17579 385950 51634 20859 373989

Commission 2212 2664 25591 2937 2380 27136

Operating Expenses Related to

Insurance Business

28003 9988 136879 17693 7544 110209

Premium Deficiency 0 0 0 0 0 0

Expenses relating to Investments 122 48 832 -84 -37 -628

TOTAL (B) 66093 30279 549252 72180 30746 510706

Operating Profit / (Loss)

C = (AB)

11435 3535 25471 -6447 931 7123

APPROPRIATIONS

Transfer to Shareholders Account 11435 3535 25471 -6447 931 7123

Transfer to Catastrophe Reserve 0 0 0 0 0 0Transfer to Other Reserves

(to be specified)

0 0 0 0 0 0

TOTAL (C) 11435 3535 25471 -6447 931 7123


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COMPARATIVE BALANCE SHEET

Rs. in Lakhs

Particulars 31/03/2013 31/03/2012 Absolute

Increase

or

Decrease

%

Increase

or

Decrease

SOURCES OF FUNDS

Share Capital 15000 10000 5000 50

Reserves & Surplus 243780 207852 35928 17.29

Fair Value Change Account 784545 771530 13015 1.69

Borrowings 0 0 0 0

TOTAL 1043325 989382 53943 5.45

APPLICATION OF FUNDS

Investments 1733350 1573603 159747 10.15

Loans 21175 22586 (1411) (6.25)

Fixed Assets (including CWP) 10549 10780 (231) (2.14)

Current Assets

Cash & Bank Balances 200949 198604 2345 1.18

Advances & Other Assets 221914 191549 30365 15.85

Sub-Total (A) 422863 390152 32711 8.38

Current Liabilities 781313 681939 99374 14.57

Provisions 369242 334714 34528 10.32

Sub-Total (B) 1150555 1016653 133902 13.17


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Net Current Assets

(C) = (AB)

-727692 -626504 (101188) (16.15)

Miscellaneous Expenditure (to

the extent not written off or

adjusted)

5943 8914 (2971) (33.33)

Debit Balance in Profit &

Loss Account

0 0 0 0

TOTAL 1043325 989382 53943 5.45


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30


COMPARATIVE PROFIT AND LOSS ACCOUNT

(Rs. in Lakhs)

Particulars 31/03/2013 31/03/2012 Absolute

Increase

or

Decrease

%

Increase

or

Decrease

OPERATING PROFIT / (LOSS)

(a) Fire Insurance 11435 -6447 17882 277.37

(b)Marine Insurance 3535 931 2604 279.70

(c)Miscellaneous Insurance 25471 7123 18348 257.59

INCOME FROM

INVESTMENTS

(a) Interest, Dividend & Rent

Gross

19720 18606 1114 5.99

(b)Profit on Sale of

Investment

18965 16282 2683 16.48

Less: Loss on Investment 0 0 0 0

Other Income 616 2594 (1978) (76.25)

TOTAL (A) 79742 39089 40653 104

PROVISIONS (Other than

Taxation)

(a)For Diminutions in the

Value of Investments

32 49 (17) (34.69)


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(b)For Bad & Doubtful

Debts

0 2661 (2661) (100)

(c)Others (Amortisation

Expenses)

206 225 (19) (8.44)

OTHER EXPENSES

(a)Expenses other than those

related to Insurance

Business

0 0 0 0

(b)Old / Irrevocable balances

written off

5 2 3 150

(c)Others 0 0 0 0

NPA -60 -564 504 89.36

Investments written off (Net) 85 82 3 3.66

TOTAL (B) 268 2455 (2187) (89.08)

Profit Before Tax 79474 36634 42840 116.94

Less:

Prior Period Items (Net) -45 394 (439) (111.42)

Provision for Taxation (Current

Year)

23852 8877 14975 168.69

Taxation relating to earlier years 2279 2024 255 12.60

Profit After Tax 53388 25339 28049 110.69

APPROPRIATIONS

(a) Interim Dividends

Paid During the Year

0 0 0 0

(b)Proposed Final

Dividend

10650 5067 5583 110.18

(c)Dividend Distribution

Tax

1810 822 988 120.19

(d)Transfer to General

Reserve

40928 19450 21478 110.43


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(e)Transfer to

Contingency Reserve

for unexpired Risks

0 0 0 0

Balance of Profit / Loss brought

forward from last year

0 0 0 0

Balance carried forward to

Balance Sheet

0 0 0 0


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33

RATIOS AND COMMENTS

Combined Ratio:-

Combined Ratio = Incurred Losses + Expenses 100

Earned Premium

It is a measure of profitability used by an insurance company to indicate how well it is

performing in its daily operations. A ratio below 100% indicates that the company is

making underwriting profit while a ratio above 100% means that it is paying out more

money in claims that it is receiving from premiums. Lower combined ratios signal that

the company is more profitable than competitors with higher combined ratios.

The combined ratio of Oriental Insurance Company Ltd. is 98.52%. It has increased by

0.67% which shows that the company is paying more claims in the current year compared

to last year.

Net Retention Ratio:-

Retention Ratio = Net IncomeDividends 100

Net Income

The percent of earnings credited to retained earnings. In other words, the proportion of

net income that is not paid out as dividends. The retention ratio is the opposite of the

dividend payout ratio. In fact, it can also be calculated as one minus the dividend

payout ratio.

The net retention ratio of Oriental Insurance Company Ltd. is 82.30%. It has reduced by

2.24% which shows that the company is paying more dividends in the current year

compared to last year.


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34

Operating Profit Ratio:-

Operating Profit Ratio = Operating Profit 100

Net Sales

Operating Profit ratio indicates the relationship between operating profit and the sales. It

is a ratio used to measure a company's pricing strategy and operating efficiency. It is a

measurement of what proportion of a company's revenue is left over after paying for

variable costs of production such as wages, raw materials, etc. A healthy operating profit

ratio is required for a company to be able to pay for its fixed costs, such as interest on

debt. Operating profit ratio gives analysts an idea of how much a company makes

(before interest and taxes) on each rupee of sales.

Operating Profit Ratio of Oriental Insurance Company Ltd. is 14.27%. The figures have

doubled compared to last year. There is an increase by 7.23%. It shows that the

company profits have doubled.

Current Ratio:-

Current Ratio = Current Assets

Current Liabilities

Current ratio is a liquidity ratio that measures a company's ability to pay short term

obligations. The ratio is mainly used to give an idea of the company's ability to pay

back its short-term liabilities (debt and payables) with its short-term assets (cash,

inventory, receivables). The higher the current ratio, the more capable the company is of

paying its obligations. A ratio under 1 suggests that the company would be unable to

pay off its obligations if they came due at that point. While this shows the company is

not in good financial health, it does not necessarily mean that it will go bankrupt - as

there are many ways to access financing - but it is definitely not a good sign.


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35

Current Ratio of Oriental Insurance Company Ltd. is 0.54. This figures are constant for

past two years. The ratio is not satisfactory as the company only has Rs.0.54 of current

asset for every Re.1 of current liability.

Return on Equity:-

Return on Equity = Net Income 100

Shareholders Equity

Return on Equity(ROE) is the amount of net income returned as a percentage of

shareholders equity. Return on equity measures a corporation's profitability by revealinghow much profit a company generates with the money shareholders have invested. The

ROE is useful for comparing the profitability of a company to that of other firms in the

same industry.

ROE of Oriental Insurance Company Ltd. is 5.12%. Last year it was 2.56%. It has

doubled in the current year. The company makes 5.12% of profit from shareholders

funds. The company is performing well compared to last year.

Gross NPA Ratio:-

Gross NPA Ratio = Gross NPA 100

Gross Advances

Gross NPA ratio indicates the quality of credit portfolio of the company. High gross

NPA ratio indicates low credit portfolio of the company and vice-versa.

Gross NPA Ratio of Oriental Insurance Company Ltd. is 0.54%. The company has low

gross NPA ratio which indicates high credit portfolio.


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Dividend Payout Ratio:-

Dividend Payout Ratio = 100Retention Ratio

Dividend Payout Ratio shows the relationship between the dividend paid to equity

shareholders out of profits available to the equity shareholders. A company having high

dividend payout ratio will be beneficial to the shareholders as they will get good prices

for their shares in the market. A company having low dividend payout ratio will be

beneficial for the company itself as their will be good scope to attract fresh funds from

long term investors.

Dividend Payout Ratio of Oriental Insurance Company Ltd. is 17.70%. The company has

paid 2.24% more dividend compared to last year. The company has a low dividend

payout ratio.


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CONCLUSION

Insurance covers many risks and uncertainties in the world of business and act as a

boon to the industrial or commercial concerns and general public. Businessman can

easily and confidently transfer the risk of loss of insurance. It also safeguards the

interest of individual and public. Businessman does not have to worry about losses or

damage when the risk of loss to their property is duly insured. They will receive

compensation against actual loss takes place. In life insurance, life policy gives financial

protection to the dependents to the extent of the assured who may be the only

breadwinner initially. An insured businessman or policyholder can enjoy normal expected

profits. As the property of the businessman is duly insured and he can get a normal

profit margin, he can change lower prices to consumers. Insurance has the effect ofimproving credit standing of businessman, commercial banks and financial institutions

insisted for insurance of articles, which are kept as security for loans.

Despite Indias vast population, rural poverty and lack of awareness about insurance

products have constrained the growth of insurance business in the past. This is expected

to change with the recent deregulation and liberalization of the insurance sector. The

Indian insurance industry undoubtedly displays great potential. Indias high saving rate,

customary lack of social security nets and a tradition of frugality are expected to be keygrowth drivers. Improved nutrition and medical standards have improved the life

expectancy necessitating the provision comfortable standard of living to the retires.

Another factor closely related is the rising middle class that will encourage increased

insurance spending and their growing risk awareness.

India is poised to experience major changes in its insurance market. Insurers will operate

in an increasingly deregulated and liberalized environment. However, in spite of the

liberalization, Oriental Insurance Company Ltd. will continue to maintain their dominant

position in the market, at least in the foreseeable future. However given the enormous

potential of the Indian market, it is for the insurers to come out with new product,

better packaging and improved customer service. Product innovation and channel

diversification will gain momentum, in line with global trend of financial service

convergence.


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BIBLOGRAPHY

1. www.orientalinsurance.org.in

2. Insurance Institute of India, General insurance Institute of India,

Bombay.

3. Insurance Institute of India Principals of General Insurance, Bombay.

4. JournalInsurance Institute of India.

5.http://www.investopedia.com
http://www.orientalinsurance.org.in/http://www.orientalinsurance.org.in/http://www.investopedia.com/http://www.investopedia.com/http://www.investopedia.com/http://www.investopedia.com/http://www.orientalinsurance.org.in/

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