A Brief Overview of the Insurance Sector

Insurance is a contract which provides financial protection to a person or an entity during the any period of contingency occurs. Insurance policies can act as shelter against the risk such as damages, injuries, loss etc. The main aim is to reduce risk.

Insurance Regulatory and Development Authority of India (IRDAI) is the statutory and authorised body which controlling and promoting insurance activities in India. It is a 10 member organisation established as a result of Insurance Regulatory and Development Act 1999. Subhash Chandra Khuntia is the current Chairman of IRDAI.

An insurance contract is made up of the following parties namely:

• Insured is the person who need the safeguard from the risk or loss. Insured can opt out of different kinds of policies which is best suited to their need.

• Insurer is the company which agrees to reimburse the loss to the insured against the timely payment of premium amount. Insurer introduces different kinds of schemes and its benefits to the customer before signing the contract.

• To whom the claims are paid: Sometimes the insured is not always the person who is benefitted from that policy. In certain cases there will be a beneficiary who is presented as a nominee at the time of signing the contract will be benefitted out of it.

• Internal Stakeholders: These are the persons or an entity which shows interest in particular business or sector is known as stakeholder. There would be people like investors, vendors, advisors, reinsurers, credit rating agency, brokers,… etc. All of them are not equally important in case of a firm but it creates an impact in the functioning of the firm.

• External Stakeholders: There are some parties situating outside the company but have significant effect on the company like Associations, Media, Regulatory bodies etc.

There are different kinds of insurance nowadays based on the consumer’s preference. Some of them are:

• Life insurance

• General Insurance

• Health Insurance

• Term Insurance

• Motor Insurance

• Travel Insurance

• Home insurance

• Fire Insurance

• Pet insurance

• Property insurance

The leading functions of insurance is that is provide safety and security on a future event which is totally unpredictable. So it helps to reduce dependency and improves the self-confidence. It can be considered as a saving as well as an investment.

Insurance is one of the booming industry, along with banking it contributes 7% to the GDP. About 15-20% annual growth has identified for this sector. In India, Insurance sector consist of around 57 companies, of this 24 of them are life insurance and rest of them are non- life insurance. Life Insurance of India is the only public sector insurer in case of life insurance company, and there are 6 companies among non- life insurer. Since insurance has become more popular, competition raised in this sector. Life insurance Corporation of India (LIC), Tata AIG general insurance, Bajaj Allianz General insurance, New India Assurance, ICICI Prudential Life Insurance, Oriental insurance, Birla sun life insurance, HDFC standard life insurance, IFFCO Tokio General insurance, etc. are the major players in this sector.

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Prepared by

Veena Vinod

Faculty

Kairos Institute, Thodupuzha