LIFE INSURANCE -PRODUCT MIX (GENERIC)

 As long as the life insurance business in India remained  a mono poly of LIC the product were internally designed  and launched   by LIC. To enable the Corporation to release commission  to the agents according to the provides of the life insurance Corporation  of India agents  Regulations 1972, a formal notifications  was issued  in the Gazette  of the Government  of India.  With the formation of the insurance regulatory  and development authority , all the companies  a re required to file with the authority a proposal containing the product  profile along with  all the  relevant documents  thirty days before  the launch of a products . The product can be launched by the  after the IRDA  clears   it as a  suitable one for the Indian cousumers.   In the consumer market segment  product or goods are divided  into two  major  groups  namely Branded  products and Generic  products . 

Branded  products  carry the brand  name, whereas  the unbranded  versions of common products like unbrand  apparel shoes, , soaps, washing powders, etc.,  Are called the  Generic products.   Until the middle of the 1980’s in India, life insurance  plans did not bear by  any brand name: they were marketed  as generic products as a  whole Life Assurance  or /Endowment Assurance etc.,  Under the respective  table numbers. The concept of products branding  took from  root in LIC during the 1980’s. All life insurance plans that are marketed  under different brand names  are combinations  of generic product like the Term Assurance  , Whole life and Endowment  type of the plans , including  immediate  and Deferred Annuities.  

  Until the advent of the private  sector insurance companies  majority  of the product  on offer in the Indian  market were pure vanillas  providing for risk cover and savings. The private sector players  have Changed market the rules  of the game. Now the insurance  market was a  has a  plethora of hybrid  insurance products judiciously  and dexterously  mixed to the meet the various new and changing needs to the customers. LIC that was a  vendor  of vanilla  insurance products has also changed  its traditional  out look and is launching  many customer centric products.  For example  Jeevan Rekha of LIC is a whole Life plan that combines  the features  of a Money Back Plan, Birla  Sun Life’s Flexi Life Plan is a unit linked  whole life plan offering benefits like investments  options top up options by way of additional  investments  annual guaranteed  additions and further loan and surrender facility, etc.

Maha Life of Tata -AIG  is a whole life plan that provides  for guaranteed  additions and further tops the additions if the Company’s  bottom line becomes  healthier . Similarly the flexi protection  whole life plan Lige Long of AVIVA is a linked whole life plan that offers  an option to increase  the sum assured subject to conditions.  Shubh life endowment plan by the Tata AIG, apart from offering  guaranteed  additions to the plans at certain percentage  also offers  a number  of options  to the policy holder  . Nirbhay of Tata-AIG is a plan that combines  the advantage  of a limited  premium endowment and attractive features  of money back plan. Sudarshan the endowment  plan of SBI Life offers  two options. The  fixed  Sum assured  plan maintains the predetermined  as the cover for the term , whereas under the increasing  sum assured  plan that the life cover increases  every year.

Health Insurance Issues Challenges And Perspectives

Health care  insurance  or Medi claim,  as it is popularly known in  India is a comparatively new, and at the same time, fast-developing   insurance  segment. Until the time the industry was opened up for private participation  the concept of healthcare   insurance  was alien to a major  segment of then insurable  population  of India. Until the time the nationalized non-life   insurance  sector, represented by the General  insurance  corporation  of India and its four subsidiaries  were transacting health care  insurance  under a single brand Mediclaim, Mediclaim  was a ‘ Reimbursement Plan.  wherein the insured was entitled  for the reimbursement  of hospitalization  charge as per the terms of the contract. 

the concept of  ‘ Cash Plan” under which the contract provides for the payments of a predetermined amount per day of hospitalization irrespective of the actual  expenditure, was popularized by the private  insurance  companies  once they started marketing healthcare products. For want of proper promotions  and creation of awareness  by the public sector companies the health  insurance  sector  had  almost stagnated. After the advent of the private players,  the sector companies, the health  insurance  sector had almost stagnated. After the advent of the private players the sector became more vibrant . During the decade 1992-2002, the premium income had grown phenomenally 

. During  this period , the sector had grown at an average  rate of 125% per year. the premium from a more Rs. 35 Crores in 1980s had touched Rs. 477 Crores as at the end of the fiscal 2002, and had more than doubled during the fiscal 2002-03. According to estimates, the healthcare premium is expected to be around is Rs. 1,753 crores by the year 2005. To harness the huge unexplored  segment of the health sector, many studies have been conduct  . the principles among the them are the CII-McKinsey  Report and the Report on Health  insurance  by the committee  constituted by the Ministry of Health and family welfare. There are many areas where the reports show agreements.  the following are the areas that are common to both reports.  To attract proper and qualified insurers, the Government  should take necessary initiative  to stimulate the growth of private , social and community sector  insurance .

Multi -tiered insurers  with better understanding  of the regional requirements  should be  encouraged  to set up shop. Health   insurance  is to be  recognized  as a  separate line of  insurance . The entry  level of Rs. 100 crores  and the solvency norms are discouraging because stringent norms  make it difficult  to break-even within a reasonable  time. Reduction  in the entry norms will improve stability  of the business. A view is emerging that the capital adequacy  should be have a relationship  to the type of business of the insurer and the nature of operations. The IRDA should develop separate  regulations for the health score and make registration with the IRDA mandatory for all health care providers , including  NGO’S All private  employees should be mandated to provide  health care  insurance .

 The government should provide guidelines for social  insurance  and set up  pilot projects to monitor existing  schemes. there should be health care  insurance  products to meet the needs of various segments  of society. Developing  proper underwriting standards, effective, management  of hospitals, effective management of claims and offering  diseases specific covers for cost containment are necessary. Presently  the health care business is not attractive because  health care providers are not able to achieve even the viable margin of 3% for the loss Ratio is more than 120%.  To  streamline health care  insurance  in India , a working group has been constituted under the  aegis of the USAID (United States Agency) for International Development) to assist  to IRDA in developing  future policies on health care  insurance . This committee  is studying  a wide range of references.

GROUP TERM INSURANCE COVER

Group Life insurance is a comprehensive life insurance  cover that is offered collectively to a group. In this scheme life insurance cover is given to a specified number of persons under a  single contract, and the policy issued is a called the Master Policy. These schemes are generally offered to an employers  to enable him to provide life insurance security to his employees at a cheap cost. To cite from  LIC’s  documentation  of achievements  ‘Tryst with Trust’  there are no records to show  whether any group life insurance scheme was sold by a insurance companies in India before the formations of the Corporations. ‘Tryst with Trust’  further goes to record that the first ever group life insurance scheme in India was the one finalized by the Bombay region of the Corporation in 1957. The first group life insurance policy of India was purchased  by Unichem Laboratories fro a total sum assured of Rs. 1, 82, 000 for the benefit of 122 employee. 

Through individual employees  may receive a certificate from the employer mentioning  one’s inclusion  in the group scheme the parties  and professionals such as a doctors, lawyers, chartered  accountants  at all. Certain specified sections f the society   like co-operative  banks, welfare funds, credit societies  and weaker  sections of society  are also offered group insurance scheme providing uniform  cover the to the members. The basic feature of a group scheme is that as the group is considered as a single  unit, there is no individual underwriting  . On the other hand the underwriting is  a group underwriting. For the purpose of group underwriting  the company that offers the cover consider the insurability  of the entire  group and not that of the individual constituents of the group. Because of this, no individual proposal is received from the group members, and medical examinations is also  dispensed  with.

While considering a group for group insurance cover, the insurer considered the following. Movement  of group members new additions and exits to the group. The homogenous  nature of the group. Insurance cover should be incidental and not the main purpose of the group. As employers- employees   groups generally satisfy the above criteria  in a majority  of cases  group cover is offered  to the employees  of a company. To be eligible as a member was in of a group insurance scheme, the insurer may impose certain conditions. This is to ascertain the insurability of the member. The insurability criteria  may  comprise: Ensuring that the member  was in active  service  at the time of commencement  of risk under the scheme. Ascertaining that the member  had completed a stipulated  period of service with the employers.

 Leave on medical  ground had not exceeded  the stipulated number of days. At its discretion  the insurance company may waive any of the  conditions stipulated above. Once the insurer finds the group an acceptable  one, the group underwriting  exercise begins.. The group is not underwriting for any  unlimited sum. The insurer restrict  the sum assured of the risk  viable limit called  the Free Cover limit (FCL)  or No Evidence Limit. (NEL) . FCL is related  to the size of the group and the average  sum assured arrived on the basis of emoluments. 

When the underwriter decides the FCL as Rs. 5,000, it means that the members could be given group  insurance cover  without any medical examination  up to the that sum assured limit. If a cover is to be given group insurance cover without any medical examinations  up to theat sum assured limit. If a cover is to be given for than the FCL, Then the member may have to produce evidence of good health for the excess  of the sum assured ovre the FCL. The insurer may also impose a limit on the FCL for members  who are aged above a prescribed level. As a majority  of the group life insurance  schemes are based on the One-year Renewable  Group Term Assurance  (OYRGTA) plan, the premium charged is very low, thereby making the scheme appealing. The unique  advantage  of a group  scheme is that even persons  who are impaired and could not be considered for life insurance  under moral plans could be included subject to the member satisfying  certain simple tests of the insurability . An example is the group  insurance  scheme for the visually handicapped launched by LIC in 1991, at Nashik in association  with the National Association

 of the Blind. (NAB)

What is the Meaning of Micro insurance

While inaugurating the Sixth Global  Conference of Actuaries organized by the Actuarial Society  of India the International  Actuarial  Association  and the Federations of India Chamber  of Commerce  and industries  (FICCI) at New Delhi in February  2004, C S Rao, Chairman  of the IRDA, mooted   the idea of  reaching  the rural areas and the marginal segments  through the channel of Micro insurance . Micro  insurance is a comparatively  new concept in the Indian market. Micro financing  refers to finances that are made available  to the poor and other marginalised  sections of the community  to whom no financial  support or  insurance security  is available , either from banks or from  insurance companies .

Micro financing comprises micro-savings, micro-credit, and  insurance of property and lives as a bundle  of values. The concept of micro financing as an idea to alleviate poverty  was experimented  on a larger scale in our neighbouring  country , Bangladesh. way back in 1974,  during a great famine in the country the idea of forming a bank a for exclusive  micro-credit  to the poor was conceived by the Bangladesh  economist  prof, Muhammad Yunus. 

After protracted correspondence with the  Government  and the Central Bank of Bangladesh the German bank, as an independent bank  was born  in 1983. In Bangladesh  the Associations  fro Social Advancement (ASA)  had development  a micro-level  insurance plan in 1988, with the twin objectives  of insuring the loans of its members  and benefiting  their families in the event of death of the member.  The life  insurance policy that covers only death  is a self administered  scheme by the ASA. As this has  proved to be highly profitable  , the ASA has not tied up with any  other commercial insurer. BRCA, an acronym derived from Bangladesh Rural Advancement  Committee groups its members into a various voluntary groups. 

These members deposit  their savings regularly  with the organizations . The members are eligible for loans . BRAC has been offering  life  insurance cover to its member since 1990, under a micro- insurance scheme with no premium. However the renewal of membership at a nominal annual fee is a compulsory  to have the continued  benefit of  insurance. The  insurance covers  only death.  By the end of the decade of the 1990’s and the beginning  of the present century the phenomenon of micro-financing received global appreciation. Former US President  Bill Clinton pledged  to introduce the programme  in the first destination  towns of the migrants , viz, the inner towns of the US,  many presidential campaigns. In a 1997 global conference on micro-financing  , Us First Lady Hillary Rodham Clinton  described the concept  of micro-credit as a macro-idea . 

The Bangladesh   experiment  came to the notice of the United Nations Commissioner for Refugees, and under the aegis of the UN, many developments were initiated to spread the ‘Grameen , movement . Alternativa Solidaria of Southern mexico is another successful example in micro-financing , I India the efforts of SEWA (Self Employed Women’s Association) in micro credit  is gaining the attention of many.  Credit plus is a policy designed by Aviva Life  insurance company  to meet the requirements  to Micro Finance institutions  that offer financial support and financial security by way of loans to the rural and social sectors Credit plus an annually renewable group term  insurance plan that provides death covers to the group.

PROCEDURE FOR SETTLEMENTS OF CLAIMS UNDER FIRE INSURANCE

 When the subject matter of insurance  is lost or damaged in fire, the insured victim looks towards the insurance company  for rehabilitating himself. Generally  the following procedure  is adopted  while settling the claims under fire insurance. (1) NOTICE OF LOSS: First of all the insured , immediately  after the occurrence of a fire, has to send a notice of loss to the insurance company. This notice enables the insurer to take such measures  to determine the cause of loss, estimate the extent  of loss and deal with the salvage. This notice need not be in writing, it may be verbal i.e by telephone or personal call. The notice need out be given by the insured personally and may be given by on his behalf.

Notice given to agents does not discharge the insured from his duty unless expressly  allowed to do so and the failure  of the agents to transmit the message to  insurers, may give grounds for repudiation of liability.  (2) EVIDENCE OF LOSS: If possible the evidence of loss and other details such as time, place and circumstance under which the loss occurred, may be sent along with the notice of loss to the insurer. Besides  he should send particulars about the preventive measures  taken by the him during fire to mitigate  the loss. The duty of providing  full particulars and proof of loss  rests entirely upon the insured.  (3) POLICE REPORT IN CASE OF ARSON: In case, the loss or damage due to fire   is caused by arson (I e act of setting something on fire intentionally and unlawfully by an unscrupulous person), the matter will have to be brought to the knowledge of the nearby Police Station. Even if there is a slight  suspicion of anybody’s involvement in this arson, the same should be mentioned in the complaint  report submitted  in the police Station. The Police officials  will after making proper  investigation issue  a report. Such report has to be submitted to the insurer. If the fire-brigade was summoned, the brigade records should  also be produced with the insurer .

  

FORMAL CLAIM FROM: After having received the notice of fire loss a claim from is issued by the insurer to the insured and he is a requested  to return it after completing  and giving therein all the information about the loss. The claim form contains  the following information. (a) Name of the insured, Policy number and address. (b) Date, time cause and circumstances of the fire.  ( C ) Details of damaged property.  (d) Sound value of the property at the time of fire, where the insurance consists  of several  items, a declaration is required  of the values of each item under which the claim is made.  (e) Amount claimed after deduction  of salvage value. (f) Situation  and occupancy  of the premises in which the fire occurred. (g) Capacity in which the insured claims whether  as owner mortgage the like.  (h) If any others person is the interested in the property damaged, and. (I) If

any other insurance is in force upon such property. In case the amount of the loss is small and the claim issimple and straight  forward,. the insurer will admit the claim and send the cheque  in full settlement without  further enquiry.  (5) INSPECTION OF LOSS: If the loss is know or expected to be large and serious the  insurer will depute a independent loss surveyor  to ascertain the cause and extent  of loss. the surveyor, would inspect the damaged property or goods at the scene of fire and contact the insured his neighbours, employees and other persons connected with the fire and collect  the desired information .

This investigation  enables the surveyor  to have an idea of the nature and a extent of loss and origin and cause of fire. The surveyor  also prepares a detailed item wise list of the property or goods left at the scene of fire and get it attested by the insured  in order to avoid any attempt of exaggerated claim by the insured at  some large  stage. Besides the surveyor also carry out salvage  operations. I. e , the wreckage of the property or goods having some scrap value, will be taken into  the account to reduce the net cost of the claim. If the insured  wants to retain the salvage an appropriate amount is subtracted  from the amount of the claim. The damage and undamaged goods have to be separated in order to avoid   any further loss due to fire.

PRINCIPLE OF FIRE INSURANCE

 A fire insurance  contract just like any other contract is governed by the Indian Contract Act. In order to be valid it must posses the usual elements namely, offer and acceptance, competent  parties,  free consent and legal object and so forth. But in addition  to these essentials  it must also posses additional characteristics  of fundamental principles: The fundamental  principles of fire insurance are : (1) Insurable  Interest: (2) Utmost good faith: (3) Indemnity: (4) Causa proxima : (5) Doctrine of Subrogation : (6) Warranties and   (7) Contribution.

  (II)  INSURABLE INTEREST: An insurable  interest of such a nature that the possessor would be that financially  injured by the occurrence of fire and would be benefitted by its existence. The insured is not the property but the interest of the insured in the property. Thus what is insured in a fire policy is not the bricks wood, steel, cement, lintel  and other material used in a building  the house but the  interest  of the  assured  in the subject matter  house of insurance: not to the legal interest but the beneficial  interest. Without insurable  interest the contract  will be regarded as a gambling  policy and therefore void. A sentimental interest is not sufficient to maintain a contract of fire insurance. In short three essential conditions  must be fulfilled to constitute an insurable interest in the property viz., (a) There should be a physical object  capable of being damaged or destroyed by fire: (b) The object must be the subject matter of insurance:

 ( C )  The insured must stand in such relationship  as recognized by the insured is benefitted by the safety of the subject matter or be prejudiced by its loss.  The insurable interest in fire insurance must be a present at the time of offecting  contract and the at the time of loss . But exceptions are there. A businessman expect a consignment of goods. The time of arrival is not known. If they goods on arrival are under his risk, he can be insurer the goods. He can arrange insurance in advance . If the goods are lost before arrival are lost before arrival there is a no liability of insurer at all because the insured no insurable interest in the goods. Insurable interest is a  personal right of insured so it does not pass automatically with the property which means the buyer of insured goods does not get cover secured by the original  owner.

 But the legal heirs of insured get the insured’s right automatically . Insurable interest in fire insurance may aries as follow: (a) OWNERSHIP: Obviously this is the most common from but in additional as full ownership joint   ownership gives the right to insurer: (b) AGENTS: An agent may effect an  insurance on behalf  of his principal if he possesses an insurable interest. ( C ) ADMINISTRATORS: Executors and Trustees: They have a  right to insurer the property entrusted to them: (d) BAILEES: Bailees  are person  legally in possession of goods belonging  to other as for example repairman of a television  set while awaiting payment for his service charges or launderers  cobblers, pawn broken etc., They have insurable interest in goods left in their care and custody.  (e) 

HUSBAND AND WIFE:  Wife and husband have a mutual insurable interest in each other’s  property: (f) MORTGAGEE:  A mortgagee has an insurable interest in the property pledged as security for the debt.  (g) PARTNER:  A partner has an insurable interest in the firm’s property.  (h)  OFFICIAL RECEIVER OR ASSIGNEE: A official receiver or assignee has an insurable interest in case of insolvency of an individual or firm and.