Insurance Industry in India. Features, Reforms and Outlook

Insurance Industry in India Features, Reforms and Outlook By Uma Narang Associate Professor, Department of Commerce, Post-graduate Government College, Chändigarh. New Century Publications New Delhi, India

Contents in Brief Part I: Evolution, Significance and Principles of Insurance 1. Nature and Functions of Insurance 1-13 2. Evolution and Public Controi of Insurance Services 14-29 3. Significance of Insurance for Society 30-39 4. Principles of Insurance 40-64 5. Classification of Insurance Services 65-74 Part II: Life Insurance 6. Life Insurance: History and Formation of Life Insurance Corporation (LIC) of India 75-92 7. Life Insurance: Features and Products 93-109 8. Life Insurance: Investment of Funds 110-119 9. Life Insurance: Treatment of Risk, Premium Calculation and Policy Conditions 120-136 10. Private Sector in Life Insurance 137-142 Part III: General (Non-life) Insurance 11. General Insurance: An Introduction 143-156 12. Marine Insurance: History, Definitions and Subject Matter 157-171 13. Marine Insurance: Basic Principles 172-185 14. Marine Insurance: Kinds and Conditions 186-198 15. Marine Insurance: Payment of Premium and Settlement of Claims 199-221

viu Insurance Industry in India 16. Fire Insurance: Basic Principles 222-239 17. Fire Insurance: Main Clauses of Policy 240-251 18. Fire Insurance: Types of Policies and Settlement of Claims 252-263 19. Health Insurance: Evolution and Government Schemes 264-273 20. Health Insurance: Various Types of Policies 274-288 21. Motor Insurance: Law and Procedures 289-304 22. Personal Accident Insurance 305-311 23. Agricultural Insurance: Classification and Types 312-329 24. Micro Insurance: Benefits, Regulations and Kinds 330-347 25. Miscellaneous Insurance 348-356 26. Reinsurance: Meaning, Need and Methods 357-370 Part IV: Globalization and Privatization of Insurance Industry and Summing Up 27. Globalization and Privatization of Insurance Services 371-385 28. Summing Up 386-400 Part V: Appendices, Glossary, Bibliography and Index Appendix 1: Major Recommendations of the Committee on Reforms in the Insurance Sector (Chairman: R.N. Malhotra) 401-406 Appendix 2: Insurance Regulatory and Development Authority Act, 1999 407-410 Glossary of Insurance Terms 411-426 Bibliography 427-430 Index 431-436

Contents in Detail About the Book Author's Profile Contents in Brief. Authör 's Note on the Book. v vi vn-viu xxx-xxxu Part I: Evolution, Significance and Principles of Insurance 1. Nature and Functions of Insurance 1-13 1.1 Definitions of Insurance 1.1.1 Functional Definitions 1.1.2 Contractual Definitions 1.1.3 General Definitions 1.2 Forms of Insurance 1.2.1 Life Insurance 1.2.2 General (Non-life) Insurance 1.3 Nature of Insurance 1.3.1 Sharing of Risks 1.3.2 Cooperative Device 1.3.3 Value of Risk 1.3.4 Payment Made at Contingency 1.3.5 Large Number of Insured Persons 1.3.6 Spreading of Risk 1.3.7 Amount of Payment 1.3.8 Based upon Certain Principles 1.4 Functions of Insurance 1.4.1 Primary Functions 1.4.2 Secondary Functions 1.4.3 Other Functions 1.5 Difference between Assurance and Insurance 2. Evolution and Public Control of Insurance Services 14-29 2.1 Marine Insurance 2.2 Fire Insurance 2.3 Life Insurance

X Insurance Industry in India 2.4 Miscellaneous Insurance 2.5 Public Control of Insurance 2.5.1 Rationale for Insurance Control 2.5.2 Weapons of Insurance Control 2.6 Insurance Regulatory and Development Authority (IRDA) of India 2.6.1 Registration/Licensing 2.6.2 Product and its Pricing 2.6.3 Investment of Funds 2.6.4 Solvency Margin 2.6.5 Appointment of Actuary 2.6.6 Appointment to Chief Executive/Managing Director 2.6.7 Power of Investigation and Inspection 2.6.8 Accounts and Balance Sheets 2.6.9 Intermediaries 2.6.10 Surveyors and Loss Assessors 2.6.11 Reinsurance 3. Significance of Insurance for Society 30-39 3.1 Spread of Risk through Co-operation 3.2 Insurance and Business 3.2.1 Removal of Uncertainties 3.2.2 Stimulation for Business Continuation 3.2.3 Promotion of Employees' Weifare 3.2.4 Source of Credit 3.2.5 Growth of Business Competition 3.2.6 Business Stability 3.2.7 Key Man Indemnification 3.2.8 Human Resources Development 3.2.9 Correct Distribution of Cost 3.2.10 Productive Utilization of Fund 3.2.11 Judicious Allocation of Factors of Production 3.3 Insurance and Society 3.3.1 Economic Growth 3.3.2 Educational Advancement 3.3.3 Protection of Wealth 3.3.4 Health Awareness 3.4 Insurance and Economic Development 3.4.1 Capital Formation

Contents xi 3.4.2 Long-term Financial Resources 3.4.3 Complementarity between Insurance and Banking 3.4.4 Promotion of International Trade 3.5 Insurance and the Individual 3.5.1 Promotion of Saving 3.5.2 Elimination of Werries and Fears 3.5.3 Removal of Dependency 3.5.4 Investment Channel 3.5.5 Protection of Mortgaged Property 3.5.6 Flanning for Future 3.5.7 Exemption from Tax Liability 4. Principles of Insurance 40-64 4.1 Uniqueness of Insurance Business 4.2 Insurance as a Contract 4.3 Elements of General Contract 4.3.1 Agreement (Offer and Acceptance) 4.3.2 Free Consent 4.3.3 Parties Competent to Make Contract 4.3.4 Lawful Consideration 4.3.5 Legal Relationship 4.3.6 Legal Object 4.3.7 Certainty and Possibility of Performance 4.4 Fundamental Principles of Insurance Contract 4.4.1 Utmost Good Faith 4.4.2 Insurable Interest 4.4.3 Indemnity 4.4.4 Subrogation 4.4.5 Proximale Cause 4.4.6 Contribution 4.5 Warranties 4.6 Assignment or Transfer of Interest 4.7 Pricing the Insurance (Rate Making) 4.7.1 Adequacy 4.7.2 Equity 4.7.3 Economic Feasibility 4.7.4 Stability 4.7.5 Flexibility 4.8 Designing of Insurance Products

xii Insurance Industry in India 4.8.1 Identifying Needs of the Consumers 4.8.2 Social Dimensions 4.8.3 Adverse Selection 4.8.4 Transparent Disclosure 4.8.5 Pricing 4.9 Insurance and Information Technology (IT) 4.9.1 Database Management Systems 4.9.2 Data Warehousing 4.9.3 Decision Support Systems 4.9.4 Group Linking Software 4.9.5 Imaging and Workflow Technologies 4.9.6 Mapping 4.9.7 Call Centre Technology 4.9.8 Video Linking 4.9.9 Cat Models 4.9.10 Intranet, Extranet, Internet 5. Classification of Insurance Services 5.1 Classification on the Basis of Nature of Insurance 5.1.1 Life Insurance 5.1.2 Fire Insurance 5.1.3 Marine Insurance 5.1.4 Social Insurance 5.1.5 Miscellaneous Insurance 5.2 Classification from Business Point of View 5.2.1 Life Insurance 5.2.2 Non-life or General Insurance 5.3 Classification from Risk Point of View 5.3.1 Personal Insurance 5.3.2 Property Insurance 5.3.3 Liability Insurance 5.3.4 Fidelity Insurance 5.4 Difference between Life and Fire Insurance Part II: Life Insurance 6. Life Insurance: History and Formation of Life Insurance Corporation (LIC) of India 6.1 Life Insurance: An Introduction

Contents xiii 6.2 History of Life Insurance 6.2.1 Life Insurance in Modern India 6.3 Nature of Life Insurance 6.3.1 Economic Aspects 6.3.2 Legal Aspects 6.4 Formation of Life Insurance Corporation (LIC) of India 6.4.1 Objectives of Nationalization 6.4.2 Organisational Set up 6.4.3 Functions of LIC 6.4.4 Different Departments of LIC 6.4.5 Structure of LIC 7. Life Insurance: Features and Products 93-109 7.1 Salient Features of Life Insurance 7.2 Advantages of Life Insurance 7.3 Whole-life Policies 7.3.1 Single Premium Whole-life Policy 7.3.2 Continuous Premium Payment Whole-life Policy 7.3.3 Limited Payment Premium Whole-life Policy 7.3.4 Convertible Whole-life Policy 7.4 Term Insurance Policies 7.4.1 Straight Term (Temporary) Insurance 7.4.2 Renewable Term Policies 7.4.3 Convertible Term Policies 7.5 Endowment Policies 7.5.1 Ordinary Endowment Policy 7.5.2 Pure Endowment Policy 7.5.3 Double Endowment Policy 7.5.4 Joint Life Endowment Policy 7.5.5 Marriage Endowment Policy 7.5.6 Educational Annuity Policy 7.5.7 Triple Benefit Policy 7.5.8 Anticipatory Endowment Policy 7.5.9 Money Back Policy 7.5.10 Jeevan Samriddhi 7.5.11 Jeevan Rekha 7.6 Children's Insurance Policy 7.6.1 Jeevan Sukanya 7.6.2 Jeevan Kishore

xiv Insurance Industry in India 7.6.3 Jeevan Chhaya 7.7 Jeevan Suraksha 7.7.1 Annuity for Life 7.8 Jeevan Sneha 7.9 Jeevan Sanchaya 7.10 Unit Linked Insurance Policy (ULIP) 7.10.1 Working of ULIPs 8. Life Insurance: Investment of Funds 110-119 8.1 Reasons for Investment of Funds 8.2 Principles of Investment 8.2.1 Principle of Safety 8.2.2 Principle of Profitability 8.2.3 Principle of Liquidity 8.2.4 Principle of Diversification 8.3 Social Objectives 8.4 Problems of Investment 8.5 Statutory Requirements 8.6 Regulations of Investments 8.6.1 Life Business 8.6.2 Pension and General Annuity Business 8.6.3 Unit Linked Life Insurance Business 8.7 Exposure/Prudential Norms 8.8 Investment Pattern of LIC 8.9 Present Scenario 9. Life Insurance: Treatment of Risk, Premium Calculation and Policy Conditions 120-136 9.1 Concept of Risk 9.2 Purpose of Selection of Risks 9.3 Risk Selection Criteria 9.4 Sources of Risk Information 9.5 Classes of Risk 9.6 Exceptions to the General Rule 9.7 Uninsurable Risks 9.8 Methods of Risk Calculation 9.9 Premium Calculation 9.10 Factors Common to Calculation of Premiums 9.11 Conditions of Life Insurance Policy

Contents xv 9.11.1 Conditions Relating to Commencement of Risk 9.11.2 Conditions Relating to Premium 9.11.3 Conditions Relating to the Continuation of Policy 9.12 Nomination and Assignment 9.12.1 Nomination 9.12.2 Assignment 9.13 Difference between Nomination and Assignment 9.14 Suicide by the Insured 10. Private Sector in Life Insurance 137-142 10.1 Liberalisation of Insurance Markets 10.2 Number of Registered Insurers 10.3 List of Life Insurers (as in September 2012) 10.4 Insurance Business: From State Monopoly to Competition 10.5 Progress of Life Insurance Part III: General (Non-life) Insurance 11. General Insurance: An Introduction 143-156 11.1 History of General Insurance 11.2 General Insurance Corporation (GIC) of India 11.2.1 Domestic Reinsurer 11.2.2 International Reinsurance 11.3 Arguments in Favour of Nationalization of General Insurance 11.4 Arguments against Nationalization of General Insurance 11.5 Role and Functions of GIC 11.5.1 Statutory Roles and Functions 11.5.2 Business-related Roles and Functions 11.6 Role and Functions of Subsidiary Companies 11.7 Investment of Assets 11.8 List of Approved Investments for General Insurance Business 11.9 Progress of Non-life Insurance 12. Marine Insurance: History, Definitions and Subject Matter 157-171 12.1 History of Marine Insurance 12.2 Definition of Marine Insurance 12.3 Marine/Maritime Perils 12.3.1 Insurer's Liability in Respect of General Average Loss

xvi Insurance Industry in India 12.3.2 Insurer's Liability in Respect of Salvage Charges 12.4 Loss by Delay 12.5 Subject Matter of Marine Insurance 12.5.1 Hull/Ship or Vessel Insurance 12.5.2 Cargo Insurance 12.5.3 Freight Insurance 12.5.4 Liability Insurance 12.5.5 Duty Insurance 12.5.6 Increased Value Insurance 12.6 Miscellaneous Matters 12.6.1 Claims 12.6.2 Total Loss 12.6.3 Particular Average 12.6.4 General Average 12.6.5 Salvage Loss 12.6.6 Sue and Labour Charges 12.6.7 Extra Charges 13. Marine Insurance: Basic Principles 172-185 13.1 Features of a Valid Contract 13.1.1 Proposal 13.1.2 Acceptance 13.1.3 Consideration 13.1.4 Issue of Policy 13.2 Insurable Interest 13.2.1 Exceptions 13.2.2 According to Ownership 13.2.3 Insurable Interest in Re-insurance 13.2.4 Insurable Interest in other Cases 13.3 Utmost Good Faith 13.3.1 Exceptions 13.4 Doctrine of Indemnity 13.4.1 Exceptions 13.5 Doctrine of Subrogation 13.6 Warranties 13.6.1 Seaworthiness ofship 13.6.2 Legality of Venture 13.6.3 Other Implied Warranties 13.6.4 Exceptions

Contents 13.7 Proximale Cause 13.8 Assignment 13.9 Lloyd Organisation 13.9.1 Lloyd's Brokers 13.9.2 Lloyd's Agents 14. Marine Insurance: Kinds and Conditions 14.1 Marine Insurance Act, 1963 14.2 Different Types of Marine Policies 14.2.1 Voyage Policy 14.2.2 Time Policy 14.2.3 Mixed Policy 14.2.4 Valued Policy 14.2.5 Unvalued Policy 14.2.6 Floating Policy 14.2.7 Wagering Policy 14.2.8 Block Policy 14.2.9 Single Vessel and Fleet Policy 14.2.10 Ship Construction Policy 14.2.11 Annual Policy 14.2.12 Inland Transit Cargo Policy 14.2.13 Inland Coast Ports Policy 14.2.14 Inland Vessel Policy 14.2.15 Package Policy 14.2.16 Free on Board Policy 14.2.17 Named Policy 14.2.18 Currency Policy 14.2.19 Special Declaration Policy 14.2.20 Sailing Vessels Policy 14.3 Clauses in a Marine Policy 14.3.1 Hull Clauses 14.3.2 Cargo Clauses 14.3.3 Freight Clauses 14.3.4 Assignment Clause 14.3.5 'At and From' Clause 14.3.6 Touch and Stay Clause 14.3.7 Lost ornot Lost Clause 14.3.8 Termination of Risk Clause 14.3.9 Warehouse to Warehouse Clause

t xviii Insurance Industry in India 14.3.10 Negligence or 'Inchmaree' Clause 14.3.11 Valuation Clause 14.3.12 Sue and Labour Clause 14.3.13 Waiver Clause 14.3.14 Running Down Clause 14.3.15 Reinsurance Clause 14.3.16 Continuation Clause 14.3.17 Barratry Clause 14.3.18 Free of Capture and Seizure Clause 14.3.19 Hague Rules 14.3.20 Jettison Clause 14.4 War Clauses 14.4.1 Risks Covered 14.4.2 Risks Covered By Institute Cargo Clauses 15. Marine Insurance: Payment of Premium and Settlement of Claims 199-221 15.1 Payment of Premium 15.1.1 When Premium is Payable 15.1.2 Policy Effected Through Broker 15.1.3 Effect of Receipt of Premium on Policy 15.2 Premium Calculation 15.3 Return of Premium 15.3.1 By Agreement in the Policy 15.3.2 For Reasons of Equity 15.4 Special Premium Rates for Different Purposes and Cargo 15.4.1 Sailing Vessels 15.4.2 Bullion and Speeles 15.5 Major Commodities 15.5.1 Vessel 15.5.2 Voyage 15.5.3 Nature of Cargo 15.5.4 Packing 15.5.5 Insurance Cover 15.6 Procedure of Effecting Marine Insurance 15.7 Difference between Fire Insurance and Marine Insurance 15.8 Difference between Life Insurance and Marine Insurance 15.9 Losses/Claims 15.9.1 Notice of Claim

Contents xix 15.9.2 Documents Required for Claim 15.9.3 Claims and Causa Proxima 15.9.4 Marine Perils 15.9.5 Total Loss 15.9.6 Partial Loss 15.10 Particular Average Losses 15.10.1 Compensation of Particular Average Loss 15.11 General Average Loss 15.11.1 Elements/Essentials of General Average Contribution 15.11.2 Difference between the General Average Loss and Particular Average Loss 15.11.3 Types of General Average Losses 15.12 General Average Sacrifice 15.12.1 Sacrifice of Ship 15.12.2 Sacrifices of Cargo and Freight 15.13 General Average Expenses 15.14 Salvage Charges 16. Fire Insurance: Basic Principles 222-239 16.1 Whatis Fire? 16.2 Significance of Fire Insurance 16.3 Features of a Fire Insurance Contract 16.4 Duration of Cover 16.4.1 Proposal 16.4.2 Acceptance 16.5 Payment of Consideration and Commencement of Risk 16.5.1 Cover Note 16.5.2 Policy 16.5.3 Who Can Purchase a Fire Insurance Policy? 16.6 Conditions of Fire Policy 16.6.1 Informative Conditions 16.6.2 Policy Conditions 16.7 Principles of Fire Insurance 16.7.1 Insurable Interest 16.7.2 Utmost Good Faith 16.7.3 Contribution 16.7.4 Subrogation 16.7.5 Indemnity 16.8 Fire Insurance Business in India

XX Insurance Industry in India 16.9 Basis of Sum Insured 16.9.1 Market Value Basis (for both current and fixed assets) 16.9.2 Reinstatement Value Basis 16.9.2 Partial Insurance 16.10 Premium Rates 16.10.1 Basis of Indemnity 17. Fire Insurance: Main Clauses of Policy 240-251 17.1 Add on Covers in a Fire Policy 17.1.1 Architects, Surveyor, and Consulting Engineer Fees 17.1.2 Removal of Debris 17.1.3 Deterioration of Stocks in Cold Storage Premises Due to Change in Temperature 17.1.4 Escalation of Sum Insured 17.1.5 Spontaneous Combustion Clause 17.1.6 Omission to Insure Additions, Alterations or Extensions 17.1.7 Start up Expenses 17.1.8 Additional Expenses for Altemate Accommodation 17.1.9 Temporary Removal of Stock 17.1.10 Spoilage Material Damage Clause 17.1.11 Average Clause 17.1.12 Loss of Rent Clause 17.2 Other Terms Used in Fire Insurance 17.2.1 Proximale Cause 17.2.2 Concurrent Causes 17.2.3 Remote Causes 17.3 Perils Relevant to Proximale Cause 17.4 Various Originating Hazards which Cause Fire 17.5 Rules for Cancellation of Fire Insurance Policy 17.6 Mid-term Revision of Sum Insured 17.6.1 Silent Risk 17.6.2 Arbitration Clause 17.6.3 Impact of Fraud on Policy 17.6.4 How Insurance May Cease 17.6.5 Onus of Proof 17.7 Conclusion

Contents xxi 18. Fire Insurance: Types of Policies and Settlement of Claims 252-263 18.1 Standard Fire and Special Perils Policy 18.2 Exclusions in a Fire policy 18.3 Valued Policy 18.4 Floating Policy 18.4.1 Characteristics of a Floating Policy 18.5 Declaration Policy 18.6 Floater Declaration Policy 18.7 Loss of Profit Policy or Consequential Loss Policy 18.7.1 Scope of Cover 18.8 First Loss Policy 18.8.1 First Loss Insurance and the Average Clause 18.9 Long-term Policy for Dwellings 18.10 Settlement of Claims under a Fire Insurance Policy 18.10.1 Express Rights 18.10.2 Appointment of Surveyors 18.10.3 Making Payment and Provision for Replacement 19. Health Insurance: Evolution and Government Schemes 264-273 19.1 Health Insurance Policy 19.2 Need of Health Insurance 19.3 Importance of Health Insurance 19.4 Evolution of Health Insurance in India 19.5 Third Party Administrator (TPA) 19.6 Central Government Health Scheme (CGHS) 19.7 Employees' State Insurance Corporation (ESIC) 19.8 Raj iv Gandhi Shramik Kalyan Yoj ana 19.9 Rashtriya Swasthya Bima Yojana (RSBY) 19.9.1 Genesis of RSBY 19.9.2 What is RSBY? 19.9.3 Unique Features of RSBY 20. Health Insurance: Various Types of Policies 274-288 20.1 Individual Health Insurance Policies 20.1.1 Exclusions under the Policy 20.1.2 Health Insurance Claims Procedure 20.2 Family Floater Health Insurance Policies 20.3 Group Health Insurance Policies

xxii Insurance Industry in India 20.4 Unit Linked Health Plans 20.4.1 Hospital Cash Benefit 20.4.2 Major Surgical Benefit 20.5 Jan Arogya Policy 20.6 Overseas Mediclaim Policy 20.6.1 Sudden and Unforeseen Sickness (Section A) 20.6.2 Personal Accident Cover (Section B) 20.6.3 Loss of Checked Baggage (Section C) 20.6.4 Delay of Checked Baggage (Section D) 20.6.5 Loss of Passport (Section E) 20.6.6 Personal Liability (Section F) 20.6.7 General Exclusions 20.6.8 Premium 20.7 Corporate Frequent Travellers Policy 20.8 Corporate Group Overseas Mediclaim Policy 20.9 Bhavishya Arogya 20.10 Universal Health Insurance Scheine (UHIS) 20.11 Premium Calculation by Health Insurance Companies 20.11.1 Personal History 20.11.2 Mortality Rate 20.11.3 Administration and Marketing Expenses 20.11.4 Savings Component 20.11.5 Medical Underwriting 20.11.6 Adjusted or Modified Community Rating 20.11.7 Rating Bands 20.12 Self-employed Women's Association (SEWA) Health Insurance Scheme 20.13 Current Perspective 21. Motor Insurance: Law and Procedures 289-304 21.1 Introduction 21.2 General Regulations (GR) of India Motor Tariff 21.2.1 GR.3-Types ofpolicies 21.2.2 GR.4-Extension of Geographica! Area 21.2.3 GR.l 1-Period of Insurance 21.2.4 GR. 17-Transfers 21.2.5 GR.18-Change of Vehicle 21.2.6 GR.19-Vehicles Subject to Hire Purchase Agreement 21.2.7 GR.20-Vehicles Subject to Lease Agreement

Contents xxiii 21.2.8 GR.21-Vehicles Subject to Hypothecation Agreement 21.2.9 GR.24-Cancellation of Insurance and Double Insurance 21.2.10 GR.25-Cancellation and Issuance of Fresh Certificate of Insurance 21.2.11 GR.29-Discount for Vintage Cars 21.2.12 GR.30-Discount for Anti-Theft Devices 21.2.13 GR.37-Cover for Vehicles Imported without Customs Duty 21.2.14 GR.38-Vehicles Requisitioned by Government 21.3 Motor Vehicles (MV) Act, 1988 21.3.1 Section 2 (28)-Motor Vehicle or Vehicle 21.3.2 Section 4-Age Limit in Connection with Driving of Motor Vehicles 21.3.3 Section 19-DisqualificationorRevocation of Driving Licence 21.3.4 Section 21-Suspension of Driving Licence in Certain Cases 21.3.5 Section 41(7)-Validity of Certificate of Registration 21.3.6 Section 42-Special Provisions for Registration of Motor Vehicles of Diplomatie Officers 21.3.7 Section 50-Transfer of Ownership 21.3.8 Section 53-Suspension of Registration 21.3.9 Section 55-Cancellation of Registration 21.3.10 Section 140 Liability to Pay Compensation in Certain Cases on the Principle of No Fault 21.3.11 Section 147-Requirements of Policies and Limits of Liability 21.3.12 Section 148-Validity of Policies of Insurance Issued in Reciprocating Countries 21.3.13 Section 15 7-Transferof Certificate of Insurance 21.3.14 Section 163-Scheme for Payment of Compensation in Case of Hit and Run Motor Accidents 21.3.15 Section 168-Award of the Claims Tribunal 21.3.16 Section 184 Driving Dangerously 21.4 Types of Claims 21.4.1 OwnDamage Claims 21.4.2 Third Party Claims 21.5 Lok Adalats

xxiv Insurance Industry in India 22. Personal Accident Insurance 305-311 22.1 Need for Personal Accident Insurance 22.2 Definitions of Certain Terms 22.3 Benefits and Features of Personal Accident Insurance 22.4 Policy Coverage and Exclusions 22.5 Types of Personal Accident Insurance Policies 22.6 Compensation Payable 22.6.1 Additional Benefits at No Extra Premium 22.7 Rating 22.8 Group Personal Accident Insurance Policy 22.8.1 Salient Features of Group Personal Accident (PA) Policy 23. Agricultural Insurance: Classification and Types 312-329 23.1 Need for Insurance in Agricultural Sector 23.2 Classification of Agricultural Sector for Insurance Purpose 23.2.1 Traditional or Subsistence Agriculture 23.2.2 Semi-commercial and Emerging Sector 23.2.3 Commercial Farming Sector 23.2.4 Specialised Production Systems 23.3 Advent and Development of Agricultural Insurance in India 23.4 Comprehensive Crop Insurance Scheme (CCIS): Scope and Contents 23.4.1 Drawbacks of CCIS 23.4.2 Experimental Crop Insurance Scheme (ECIS) 23.5 National Agriculture Insurance Scheme (NAIS) 23.5.1 Operational Modalities 23.5.2 Modified National Agricultural Insurance Scheme (MNAIS) 23.5.3 Critical Appraisal 23.6 Rainfall Insurance Scheme (Varsha Bima) 23.7 Pilot Scheme on Seed Crop Insurance 23.8 Farm Income Insurance Scheme (FIIS) 23.9 Livestock Insurance 23.10 Non-crop Insurance Scheines 23.11 Agriculture Insurance Corporation 24. Micro Insurance: Benefits, Regulations and Kinds 330-347 24.1 Definition and Significance of Micro Insurance

Contents 24.2 Benefits of Micro Insurance 24.2.1 Simplicity 24.2.2 Basket Coverage 24.2.3 Benefit in Cash or in Kind 24.2.4 Cash-back Benefits 24.3 Disadvantages of Micro Insurance 24.4 Regulations Regarding Micro Insurance 24.5 Micro Insurance Products of LIC 24.6 Private Sector in Micro Insurance 24.7 Various Types of Micro Insurance 24.7.1 Janata Personal Accident (Individual) 24.7.2 Janata Personal Accident (Group) 24.7.3 Gramin Personal Accident (Individual) 24.7.4 Gramin Personal Accident (Group) 24.7.5 Agricultural Pump Set 24.7.6 Animal Driven Carts Insurance 24.7.7 Hut Insurance 24.7.8 Gobar Gas Insurance 24.7.9 New Well Insurance 24.7.10 Horse/Pony/Mule Insurance 24.7.11 Pig Insurance 24.7.12 Camel Insurance 24.7.13 Rabbit Insurance 24.7.14 Elephant Insurance 24.7.15 Dog Insurance 24.7.16 Livestock Insurance Master Policy 24.7.17 Poultry Insurance 24.7.18 Duck Insurance 24.7.19 Brackish Water Prawn Insurance 24.7.20 Inland Fish Insurance Policy 24.7.21 Silk Worms Insurance 24.7.22 Honey Bee Insurance 24.8 Prospects of Micro Insurance in India 25. Miscellaneous Insurance 25.1 Fidelity Insurance 25.2 Burglary Insurance 25.2.1 Burglary Business Premises Insurance Policies 25.2.2 Burglary Private Dwellings Insurance Policies

xxvi Insurance Industry in India 25.2.3 All Risk Policies 25.2.4 Baggage Insurance Policy 25.2.5 Jewellery and Yaluable Insurance Policy 25.3 Credit Insurance 25.3.1 Period of Guarantee 25.3.2 Counter Guarantees and Tangible Security 25.4 Money in Transit Policy 25.4.1 Salient Features 25.4.2 Benefits 25.4.3 Exclusions 25.5 Workmen's Compensation Insurance 25.6 Travel Insurance 26. Reinsurance: Meaning, Need and Methods 357-370 26.1 Reinsurance: Meaning and Need 26.1.1 What Reinsurance Does? 26.1.2 What it Does not Do? 26.1.3 Why There is a Need for Reinsurance? 26.2 How Reinsurance Works? 26.2.1 Risk Transfer 26.2.2 Income Smoothing 26.2.3 Surplus Relief 26.2.4 Product Development 26.2.5 Source of Profit 26.2.6 Arbitrage 26.2.7 Reinsurer's Expertise 26.2.8 Managing Cost of Capital for Insurance Company 26.3 Methods of Reinsurance 26.3.1 Shopping or Street Reinsurance 26.3.2 Facultative Reinsurance 26.3.3 Automatic or Treaty Reinsurance 26.3.4 Pool or Syndicate Method 26.4 Types/Forms of Reinsurance 26.4.1 Proportional Reinsurance 26.4.2 Non-proportional Reinsurance 26.5 Reinsurance Brokers 26.6 Reinsurance Corporation of India Limited 26.7 Global Reinsurance Market 26.8 What India Needs to Do?

Contents xxvii Part IV: Globalization and Privatization of Insurance Industry and Summing Up 27. Globalization and Privatization of Insurance Services 371-385 27.1 Globalization and Insurance Industry 27.2 Liberalization of Indian Insurance Sector 27.2.1 Setting up of Malhotra Committee 27.2.2 Why Liberalization of Insurance Sector? 27.3 Entry of Private Sector in Insurance Business 27.4 Increasing Market Share of Private Sector Players 27.4.1 Leverage 27.4.2 Operational Flexibility 27.4.3 Innovations 27.4.4 Strong Infrastructure and Systems 27.4.5 Claims Settlement 27.4.6 Distribution 27.5 Opportunities for Insurance Industry 27.5.1 Untapped Market 27.5.2 Mandatory Insurance 27.5.3 More Products Offered 27.5.4 Growth of Economy 27.5.5 Opportunity for Banks 27.5.6 Better Customer Services 27.6 Challenges before the Insurance Industry 27.6.1 New Insurers 27.6.2 Expectation of the Consumers 27.6.3 Premium on Customer Service 27.6.4 Distribution Channels 27.6.5 Consumer Education 27.6.6 Consumer Grievance Redressal 27.6.7 Positioning of Insurance Products 27.6.8 Tapping of Rural Areas 27.6.9 Information Technology 27.7 Strategies to be Adopted 27.7.1 Environmental Analysis 27.7.2 Restructuring Organisation 27.7.3 Speed, Cost-effectiveness and Innovations 27.7.4 Human Resource Development

xxviii Insurance Industiy in India 27.7.5 Efficiency in Distribution 27.7.6 Risk Management 27.7.7 Ethical Issues 27.8 Factors for the Success of Insurance Industry 27.8.1 Change in the Attitüde of the Population 27.8.2 Open and Transparent Environment Created under the IRDA 27.8.3 Well-established Distribution Network 27.8.4 Trained Professionals to Build and Seil the Product 27.8.5 Rationale Approach to the Investment Criteria 27.8.6 Stringent Accounting Practice to Prevent Failures amongst the Insurers 27.8.7 Level Playing Field 28. Summing Up 386-400 28.1 Nationalisation of Insurance Business in India after Independence 28.1.1 Nationalisation of Life Insurance (1956) 28.1.2 Nationalisation of General Insurance Business 28.1.3 Reinsurance Business 28.2 Weaknesses of Insurance Industry Prior to Reforms of Late 1990s 28.2.1 Low Productivity 28.2.2 Lack of Information Technology 28.2.3 Limited Availability of Insurance Products 28.2.4 Poor Quality of Insurance Services 28.3 Committee on Reforms in Insurance Sector, 1994 28.4 Regulations and Controls 28.5 Post-liberalisation Developments in Insurance Business 28.5.1 Changes in the Nature and Structure of Products 28.5.2 Broad-based Marketing of Insurance Products 28.5.3 Rising Service Levels 28.5.4 Increased Penetration in the Rural and Social Sectors 28.5.5 Investment in Infrastructure and Social Sectors 28.5.6 Health Insurance 28.5.7 Micro Insurance 28.5.8 Deposit Insurance System 28.6 FDI in the Insurance Sector

Contents xxix Part V: Appendices, Glossary, Bibliography and Index Appendix 1: Major Recommendations of the Committee on Reforms in the Insurance Sector (Chairman: R.N. Malhotra) 401-406 Appendix 2: Insurance Regulatory and Development Authority Act, 1999 Glossary of Insurance Terms Bibliography Index 407-410 411-426 427-430 431-436