Chapter1

Introduction
1.1Introduction
Meaning of Risk
>Definition of `risk’ in insurance is the``uncertainty of the of the occurrence of an event that can
cause economic losses.’’

Meaning of Risk Management

Risk management is the practice of identifying and analysing loss exposures and taking steps to
minimize the financial impact of the risks they [Link] management is the process of
identifying , assessing and controlling financial,legal,strategic and security risk to an organization’s
capital and [Link] threats,or risks,could stem from a wide variety of sources, including
financial uncertainty,legal
Liabilities, strategic management errors,accidents and natural disasters

Meaning of Insurance

The literal meaning of insurance would be an assurance against unforeseen and unfortunate [Link]
means, that if you encounter a less than normal course of life, and happen to incur a financial loss
because of it, you can be compensated . For example, you meet with an accident on your way to the
office in your car and the car suffers [Link] insurer can reimburse the repair expenses in this
case. However, the insurer will not reimburse normal wear and tearlike a headlamp stopped working.

Legally insurance has been defined as a contract where the insurer agrees to compensate the insured
against the losses incurred due to any unforeseen contingency. The contract also involves a
consideration which is called a premium. The maximum available benefit amount is called sum
assured or sum insured.

If an unforeseen event catches your organization unaware, the impact could be minor, such as a small
impact on your overhead [Link] reduce risk, an organisation needs to apply resources to
minimize ,monitor and control the impact of negative events while maximising positive events. A
consistent, systematic and integrated approach to risk management can help determine how best to
identify, manage and mitigate significant risks.

Insurance Risk Management is the assessment and quantification of the likelihood and financial
impact of the events that may occur in the customer’s world that require settlement by the insurer; and
the ability to spread the risk of these events occurring across other insurance underwriters in the
market.

1.2 Concepts Related to Risk Management in Insurance

a) IRDA
IRDA- Insurance Regulatory and Development Authority of India is the apex body that monitors and
regulates the insurance sector in India.

b)Risk manager
An individual responsible for managing the risk and minimizing it. Any person who manages risks
can be referred to as a risk manager in a functional senses, regardless of whether they work for the
organisation directly, are an outside consultant,or are an agent or broker. However, as the term is used
in this context, it will refer to a person employed by the organisation who is in charge of the risk
management function.

c)CRO
CRO- A chief risk officer (CRO) is an executive-level individual responsible for an organisation’s
strategies, objectives, and techniques for handling all types of risk facing the enterprise. CRO’s for
leading insurers are playing a critical role in the present risky and uncertain environment.

d) RMIS
A Risk Management information system (RMIS software) is a platform for collecting? Managing,
analysing and reporting risks, claims and safety information. RMIS software does make managing
claims easy, fast, and accurate. Users have one centralized source to track claim status validate data,
and view payment history. You can even compare outcomes of similar claims and analyse the cause of
a loss.

c) ERM
Enterprise risk management (ERM) is a framework for managing organisational risk.

Unlike traditional risk management,ERM deals with all types of risk, such as hazard or event risk,
operational risk, credit risk, and financial risk.

f) AML and CTF

(AML) Anti-Money Laundering has become a serious issue for life insurance firms. Effective Money
Laundering and (CTF) Counter-Terrorist Financing policies need to be implemented.

The Insurance companies must comply with applicable regulations.

g) HLV
Human Life Value(HLV) or Ideal Life Cover is a number that tells the present value of future income
expenses, liabilities and investments. The Human Life Value (HLV).
Calculator helps you identify your life insurance needs on basis of income expenses, liabilities and
investments and secure your family’s future.

h) Insurance Act, 1938

The Insurance Act, 1938 is a law originally passed in 1938 in British India to regulate the insurance
sector. It provides the broad legal framework within which the industry operates.

i)IRDA Act, 1999

Insurance Regulatory and Development Authority of India (IRDAI), is a statutory body formed under
an Act of Parliament , i.e., Insurance Regulatory and Development Authority Act, 1999 (IRDA Act,
1999) for overall supervision and development of the Insurance sector in India.

j)Risk management committee

The Committee has overall responsibility for monitoring and approving the risk policy and associated
practices of the company. The risk management committee is also responsible for reviewing and
approving risk disclosure statements in any public documents or disclosures.

k)Policyholder protection committee

Policyholder’s protection committee is responsible for overseeing the interest of policyholders of the
company. The committee is headed by independent director though not mandatory. The other
members are the CEO, Compliance Officer, CFO, Head Customer Service.

l)Insurance ombudsman
The institution of ombudsman Insurance in India was established by the Government of India in
November 1998. The primary objective of the institution is so fasten and systematise the process of
grievance settlement of insurance policyholders.

m)TPA
TPA (Third Party Administrator).TPA is the agent of the health insurance corporation. It acts as a
mediator between the insurance provider & the insured individual. Its primary role is to address all
cashless and insurance claims linked to hospitalisation and medical expenses.

1.3 History of Risk Management

The study of risk management began after World War II. Risk management has long been associated
with the use of market insurance to protect individuals and companies from various losses associated
with accidents.

Other forms of risk management, alternatives to market insurance, surfaced during the 1950s when
market insurance was perceived as very costly and incomplete for protection against pure risk. The
use of derivatives as risk management instruments arose during the 1970s, and expanded rapidly
during the 1980s, as companies intensified their financial risk management.

International risk regulation began in the 1980s, and financial firms developed internal risk
management models and capital calculation formulas to hedge against unanticipated risks and reduce
regulatory capital.

Accordingly, governance of risk management became essential, integrated risk management was
introduced, and the chief risk officer positions were created. Nonetheless, these regulations,
governance rules, and risk management methods failed to prevent the financial crisis that began in
2007.

1.4 Evolution of Insurance in India

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu (Manusmrithi),
Yagnavalkya (Dharmasastra) and Kautilya (Arthasastra).

The writing talk in terms of pooling of resources that could be re-distributed in times of calamities
such as fire, floods, epidemics and famine. This was probably a pre-cursor to modern day insurance.
Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans
and carriers’ contracts. Insurance in India has evolved over time heavily drawing from other countries,
England in particular.

The advent of life insurance business in India

1818
Advent of life insurance business in India

1818 saw the advent of life insurance business in India with the establishment of the oriental life
insurance company in Calcutta. This company however failed in 1834. In 1829, the Madras Equitable
has begun transacting life insurance business in the Madras Presidency. 1870 saw the enactment of the
British Insurance Act and in the last three decades of the nineteenth century, the Bombay mutual
(1871), Oriental (1874) and Empire of India (1897) were started in the Bombay residency. This era,
however, was dominated by foreign insurance offices which did good business in India, namely Albert
Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian offices were
up for hard competition from the foreign companies.

1914
Government of India started publishing returns

In 1914, the Government of India started publishing returns of Insurance Companies in India. The
Indian life Assurance Companies Act, 1912 was the first statutory measure to regulate life business. In
1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical
information about both life and non-life business transacted in India by Indian and foreign insurers
including provident insurance societies. In 1938, with a view to protecting the interest of the
Insurance public, the earlier legislation was consolidated and amended by the Insurance Act. 1938
with comprehensive provisions for effective control over the activities of insurers.

1950
The Insurance Amendment Act of 1950 abolished Principal Agencies

The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large
number of instance companies and the level of competition was high. There were also allegations of
unfair trade practices. The Government of India therefore, decided to nationalise insurance business.

1956
Life Insurance Corporation came into existence.

An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and Life
Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16 non-
Indian insurers as also 75 provident societies— 245 Indian and foreign insurers in all. The LIC had
monopoly till the late 90s when the Insurance sector was reopened to the private sector.

The history of general insurance

The history of general insurance dates back to the Industrial Revolution in the west and the
consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a legacy
of British occupation.

1850
The British establish the Triton Insurance Company Ltd.

General Insurance in India has its roots in the establishment of Triton Insurance Company Ltd., in the
year 1850 in Calcutta by the British.

1907
The Indian Mercantile Insurance Ltd, was set up

In 1907, the Indian Mercantile Insurance Ltd, was set up. This was the first company to transact all
classes of general insurance business.

1957
General Insurance Council is formed.1957 saw the formation of the General Insurance Council, a
wing of the Insurance Association of India. The General Insurance Council framed a code of conduct
for ensuring fair conduct and sound business practices.

1968
Insurance act was amended.

In 1968, the Insurance Act was amended to regulate investment and set minimum solvency margins.
The Tariff Advisory Committee was also set up then.

1973
General insurance business was nationalised

In 1972 with the passing of the General Insurance Business (Nationalisation) Act, general insurance
business was nationalised 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 commence
business on January 1st 1973.

The process of re-opening

This millennium has seen insurance come a full circle in a journey extending to nearly 200 years. The
process of re-opening of the sector had begun in the early 1990s and the last decade and more has
seen it been opened up substantially. In 1993, the Government set up a committee under the
chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations for reforms in
the insurance sector. The objective was to compliment the reforms initiated in the financial sector. The
committee submitted its report in 1994 wherein, among other things, it recommended that the private
sector be permitted to enter the insurance industry. They stated that foreign companies be allowed to
enter by floating Indian companies, perfectly a joint venture with Indian partners.

April, 2000
The IRDA was incorporated as a statutory body.

Following the recommendation of the Malhotra Committee report, in 1999, the Insurance Regulatory
and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop
the insurance industry. The IRDA was incorporated as a statutory body in April, 2000. The key
objectives of the IRDA include promotion of competition so as to enhance customer satisfaction
through increased consumer choice and lower premiums, while ensuring the financial security of the
insurance market.

August, 2000
The IRDA opened up the market

The IRDA opened up the market in August 2000 with the invitation for application for registrations.
Foreign companies were allowed ownership of up to 26%. The Authority has the power to frame
regulations under section 114A of the Insurance Act, 1938 and has from 2000 onwards framed various
regulations ranging from registration of companies for carrying on insurance business to protection of
policyholders’ interests.

December, 2000
The subsidiaries of the General Insurance Corporation of India were restructured as independent
companies.

In December, 2000, the subsidiaries of the General Insurance Corporation of India were restructured
as independent companies and at the same time GIC was converted into a national re-insurer.

July, 2002
Parliament passed a bill de-linking the four subsidiaries from GIC in July, 2002.

Today there are 34 general insurance companies including the ECGC and Agriculture Insurance
Corporation of India and 24 life insurance companies operating in the country.
The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together with
banking services, insurance services add about 7% to the country’s GDP.
A well-developed and evolved insurance sector is a boon for economic development as it provides
long-term fund for infrastructure development at the same time strengthening the risk-taking ability of
the country.

1.5 Features of Risk Management

The concept of risk management is related to business of insurance.

Following are the features of risk management in insurance:

1. Improved Risk Identification

One of the most significant reasons why risk management is a must for insurance companies is its
enhanced risk assessment techniques. Risk management comes with a series of steps with the first one
being rigorous risk assessment. When your company opts for the inception of the risk management
strategy, you will have a frequent and extensive assessment of the entire system within the
organisation. The tests performed are done with the core idea of detecting gaps and finding peaks
within data.

This information is vital considering the fact that having knowledge about what’s going wrong
helps risk management managers to proactively employ measures to deal with them and
mitigate the effects of the risk. In fact, risk assessment helps keep the organisational system
free from theft and threats.

2. Ensures Compliance

The inability to comply with the rules and regulations posed by the government with respect
to security is one reason why insurance companies fail to grab user attention. When opting
for risk management strategies, their infrastructure is then modified to be under intense
scrutiny.

Also, all of the companies are expected to be totally aware of changes occurring at the federal
and state level that might have a direct or indirect impact on the organisation. The risk
managers then need to align their business operations in terms of the rules, turning 100%
complaint.

Certain organisations mandate risk managers to assess their system and find all possible risks
that might occur in the foreseeable future. In case, these affect the ability of the insurer to
map the policyholder obligations, the company needs to take certain steps to curb the same.

There are Risk Maturity Models powered by the NAIC (National Association of Insurance
Commissioners), which determines how well the company is managing risks. These models
generate report’s highlighting what are the weak areas that are prone to thefts so that the
managers could then optimise it for better infrastructure.

3. Prioritise Risks

In simple terms, risk management is nothing but assessing and identifying areas within the
organisation that might be vulnerable to hacks. A well-drafted risk management strategy uses
standardize risk assessment programs. These programs are designed to highlight the top
potential areas of risk and further sort them based on their relevancy.

This helps risk managers know which of the risks have the most destructive impact on the
business and then take certain steps to deal with the same.

For instance, be it insurance or any other company, customer service is of paramount

importance. In the absence of risk management methodology, it might so happen that certain
customer complaints go unnoticed. This is fatal for the organisation as customers can make or
break a brand.
When organisations use risk management strategies, the programs detect all possible areas of
risk and surface the ones that are most important at the top. Here, customer complaints would
lead to the charts. So, the managers can identify them and take measures to deal with the
issue at the earliest.

Risk management tactics are very important for insurance companies.

1.6 Brief Profile of the Study

In this research study, the main focus will be on

 The concept of risk and the management of risk in insurance.

 Risks faced by the insurance industry.
 How risk management helps to mitigate the happening of an uncertainty.
 Also, the process of risk management will be understood and how risk is managed in
the insurance sector.
 The different techniques of risk management used by insurance companies for risk
management will be discussed.
 The different committees and how they help in risk management.
 The role, duties of IRDA and actuary will be studied in this research project.

Chapter 2
Research Methodology
2.1 Introduction

Research methodology is a way of explaining how a researcher intends to carry out their
research. It’s a logical, systematic plan to resolve a research problem. A methodology details
a researcher’s approach to the research to ensure reliable, valid results that address their aims
and objectives. It encompasses what data they’re going to collect and where from, as well as
how it’s being collected and analysed.

Research methodology is the specific procedures or techniques used to identify, select,

process, and analyse information about a topic. In a research paper, the methodology section
allows the reader to critically evaluate a study’s overall validity and reliability.

Research is a creative process.

It has its own methods of investigating the problem and issues of the study.
The research process is full of decisions, uncertainties, problem solving, etc.

The methodology section answers two main questions:

 How was the data collected or generated?

 How was it analysed?

2.2 Objectives of the study

The Following are the objectives of the study
1. To study the various types of risks in insurance
2. To study the importance of risk management in insurance
3. To study the process of risk management in insurance
4. To study the different techniques used for risk management in insurance

2.3 Scope of the Study

The scope of the study refers to the boundaries within which your research project will be
performed; this is sometimes also called the scope of research. To define the scope of the
study is to define all aspects that will be considered in your research project. It is also just as
important to make clear what aspects will not be covered: i.e. what is outside of the scope of
the study.

The scope of the study is always considered and agreed upon in the early stages of the
project, before any data collection or experimental work has started. This is important
because it focuses the work of the proposed study down to what is practically achievable
within a given timeframe.

 Risk is inevitable, not only in the insurance sector, but also in other businesses too.
 There are a number of risks involved in the insurance sector like operational risk,
technical risk, risk of fraud, risk of claim settlements, risk of life, etc.
 Hence different ways are used to deal with risks, mitigate the risks.
 Risk management is of vital importance to deal with various types of risks.
 The most crucial risk is the risk of life, hence managing the risk involved related with
an individual’s life is even more important because no one wants their family to suffer
in their absence.

2.4 Limitations of the study

The Limitations are the constraints of the study, that is, the aspects of the study not covered
for different reasons.

It is the shortcomings of the that eventually weakens the research

 Time constraint, limited time

 Lack of experience
 No ready information available
 Lack of previous researches on the topic
This research is mainly for individuals working in insurance sector, students pursuing
education in insurance, anyone and everyone affected by the risks and its management in
insurance

2.5 Significance of the study

Research allows us to pursue our interests, to learn something new, to improve our problem-
solving skills and to challenge ourselves in new ways.

 To help solve the doubts.

  To help future researchers in their research study.
 To enable decision making process.
 To assist in taking necessary measures for risk management.

2.6 Data Collection

Data collection is gathering information and analysing it based on the internet of the
researcher and the research project.

 Primary data- gathered through structured questionnaires, surveys, etc.

 Secondary data- gathered through manuals, journals, books, related reports and
various websites, etc.

The major source of data used was secondary data. Internet-websites, Research papers,
journals, new articles, etc were referred for research.

2.7 Conclusion

In this Chapter 2 of research methodology in the initial part we have understood the meaning
of research methodology and what does it mean.

Then we understood the objectives of our study which comprises of the main idea and motive
of the research study. The research objective focuses mainly on the study of the process of
risk management, various types of risks, different techniques used for the management of risk
in insurance, the importance of risk management in insurance, research more for knowledge.

The scope includes the different aspects of the research study for instance that risk is
inevitable and necessary measures should be taken in order to mitigate the future losses
which could be either of financial nature or an individual’s life. Claim settlements, frauds, etc
prove to be risky.

Risk management therefore is important in order to deal with the unseen, future threats.

Various techniques are used for the same. Limitations are the constraints of the study.

Biggest limitation faced during this research is the limited time available. Also doing the
research for the first time with no experience in the past too proves to be a disadvantage.

For this particular research, there was no availability of ready information as such. There was
no direct availability of ready information as such. There was no direct availability of the
previous researches.

This research is useful for only students, individuals, research professionals who have keen
interest in this research regarding the risk management in the insurance sector.

Importance of the research allows to focus on the interest of the study, learn something new
and different. The importance of the study helps to solve the doubts, smoothens the decision-
making process and adopt the necessary measures.
Data collection shows the various ways in which the data is collected and the sources of data
used.

This research study is done mainly by using secondary data wherein different websites,
research journals, research articles, etc were referred.

Chapter 3

Review of Literature

3.1 Introduction

A literature review is an analysis of scholarly articles (including books, journal articles and
theses) that are relevant to a given subject or research question.

To place your work in relation to existing knowledge, it is frequently written as part of a

thesis, dissertation, or research paper.

In simple terms, it is a review of the body of literature.

3.2 Review of Literature Related to Risk Management in Insurance

3.2.1 Bhavya Bansal, Aishvarya Bansal , October 2014, “ Better governance leads to better
management.” This paper is useful for increasing the knowledge and awareness of how
critical and crucial corporate governance is especially after the financial crisis that led to a
recession in the worldwide economy. This paper is an insight for corporate governance and
risk management strategies adopted in different insurance industries across the globe.
Because corporate Governance is not only mandatory but also recommended so that
companies adhere to best practices. It will correlate the the theories formulated for corporate
governance and actual practices followed in insurance companies. It is helpful in carrying out
the existing literature on this topic along with the results derived from these studies.
Finally, it will conclude with recommendations and suggestions based on existing studies.

There is investigation done regarding corporate governance norms followed in insurance

companies and it’s scope of improvement. During the last 25 years India’s Insurance industry
witnessed significant consolidation and a strengthened regulatory framework with the
establishment of the IRDA as its regulator.

“ In fact, risk management through insurance is as much an art as a science ”

3.2.2 P.K. Gupta, 2016, The device of insurance has become more popular now a days due
to the increasing dynamism of risk and the growth of professional risk management. The
demand for insurance too has increased tremendously with more demand for the different
types of products. Also, the liberalisation of markets especially in developing countries has
increased the need for risk products. Also, the recent government policy initiatives like crop
insurance, financial guarantee schemes for unemployed, various social security programmes
and raising limits of FDI (Foreign Direct Investment) in insurance has resulted into a sudden
shoot in the demand of insurance professionals. More and more academic institutions all over
the countries are offering highly specialised insurance programmes to cater to this demand.
Recently, the Universities in India and abroad both have introduced insurance as a specialised
study both at graduate and postgraduate level. This has increased the urgency of demand for
the literature on insurance in the Indian context. As per the expectations of the author this
book proves to be useful to the students and as well as the trainers.

3.2.3. Eling, Pankoke, 2016, This article reviews the current research on systemic risk in the
insurance sector and outlines new areas of research in this [Link] has summarised and
classified 48 theoretical and empirical research papers from both academia and practitioner
organisations. The surveys reveals that traditional insurance activity in the life, nonlife , and
reinsurance sectors neither contributes to systemic risk nor increases insurers vulnerability to
impairments of the financial system. However, non- traditional activities (e.g., credit default,
swap underwriting) might increase vulnerability and life insurers might be more vulnerable
than non life insurers due to higher leverage. Whether non-traditional activities also
contribute to systemic risk is not entirely clear; however, the activities with the potential to
contribute to systemic risk include underwriting financial derivatives and providing financial
guarantees. This article is not only likely of interest and helpful to academics but also highly
relevant for the industry, regulators, and policymakers.

3.2.4. Dietmar, Volume 6, Number 4, 2013, This study surveys the current affairs of
operational risk management in insurance companies with respect to strategies followed,
processes implemented and instruments used. Moreover, it provides insights into necessary
risk managers views on current and future regulation of the risk management process. The
findings contribute to current discussions regarding the national implementation and
interpretation of the instructions by highlighting similarities and differences in dealing with
operational risk within the insurance sector. In particular, the results may be useful to risk
managers as a point of reference when evaluating the fairness of their own company’s risk
management strategies, instruments and processes.

3.2.5. Skipper, 2007. This research article provides detailed understanding of risk
management in insurance at a global level. It provides an international perspective from the
beginning, fulfilling the need to address risk issues globally. Also provides knowledge
regarding the presence of risks in the insurance sector at the international level and how they
manage the risks,

3.2.6. J.D Cummins, Mary A Weiss, 2014, This article examines the potential of the
insurance to cause systemic risk events that occur in other segments of the economy. The
primary indicator too are examined that determine whether the institution are risky
systematically as well as do they contribute factors that worsen the exposure to systemic
events. The evaluation of systematic risk is based on a well-defined analysis of the insurance
industry, role in economy and the link between the insurer. The conclusion is that the
important activities do not have systematic risk. However, the life insurers are vulnerable to
reinsurance risk arising from credit exposure.

3.2.7 Shane Magee, Cornelia Schilling, Elizabeth Sheedy, 2019, The article states the
relationship between risk governance, risk, and performance measures for a global sample of
107 insurance companies from 2004 to 2012. Our risk governance index (RGI) covers several
solvency II provisions and includes the existence of chief risk officer on the executive
committee, risk committee characteristics, and board industry experience. It is found that in
the crisis period 2008-2009, firms with a higher RGI generally had lower expected default
frequency. These findings therefore support the role of risk governance as a business enabler.
Insurance companies typically upgrade their risk governance following a negative shock,
especially in countries that are well regulated and have weaker shareholder rights.
3.2.8 Nadine Gatzert, Michael Martin, 2015, The development of an enterprise risk
management (ERM) program enables companies to manage corporate risks in a totally
different manner as compared to the silo-based (independent) perspective in traditional risk
management frameworks. One main question in this regard is what factors drive the
implementation of an ERM system in companies and whether ERM programs can actually
create value once implemented. This article addresses these questions by conducting a
comparative assessment of empirical evidence from the literature regarding the determinants
of ERM and its value once implemented. In doing so we are able to illustrate differences in
model specifications and the underlying data.

3.2.9 Kristina Dahlstrom, Jim Skea, Walter R Stahel, 2003. This article is about the
interplay between three key concepts; the insurability of risk; innovation and the broader
framework of sustainable development. It is based on the recent interest rate project which
addressed the role the insurance sector and insurance based mechanisms might play in
relation to innovation which promotes or challenges, sustainable development. The project
cast light on three issues: opportunities for promoting sustainable development through
innovative by adjusting or sharing the responsibilities of private sector actors, regulators and
policymakers; promoting sustainable development innovation by using risk management
mechanisms from insurance in other specific areas or by the insurance sector using a wider
set of tools to manage novel risks and policy options for the complementary use of insurance-
related and other risk management systems.

3.2.10 Howard Kunreuther and Jason Schupp June 2021, The COVID-19 has
demonstrated the challenges that policymakers, insurers, businesses, and employees face
when disaster assistance programs are developed after the pandemic has already started.
There is now an opportunity to design and implement effective and efficient solutions to
manage the financial risks of a future pandemic. This paper suggests a practical framework
informed by the recent experience with COVID-19 for defining a meaningful role for
insurance in managing business interruption and other risks from future pandemics.
Policymakers, regulators, businesses, and other stakeholders interacting with representatives
from the insurance industry can assist in defining its role in providing protection against the
financial consequences of future pandemics. This framework while designed for dealing with
future pandemics, may be applied to other unsuccessful and systemic risks.

3.2.11 Carolyn Kousky, Howard Kunreuther, 2018, Insurance is an essential component of

household and community resilience. It protects the insured’s finally against disaster losses, it
can encourage investments in cost-effective mitigation measures through premium reductions
and facilities the rebuilding of property and long-term recovery. The Private insurers faces
challenges in providing full protection against disasters. This has lead governments around
the world to create a variety of public insurance companies often designed as public-private
partnerships. At a November 2016 workshop, “Improving Disaster Financing: Evaluating
Policy Interventions in Disaster Insurance Markets,” participants evaluated disaster insurance
programs for flood, earthquake, and terrorism losses. This article combines six papers and
findings from the workshop and suggests ways to improve public-private partnerships for
disaster financing in three interrelated areas:

 Risk communication
 Risk education and
  Risk transfer
3.2.12 Debabrata Jana, 2020, In the present era insurance sector plays a vital role in both
developed and developing countries. Insurance markets working as a financial
intermediary to contribute economic growth of the country as well as risk management
more efficiently. Actually, the economic growth of any country depends of the
involvement of financial intermediaries. This involvement includes the provision for
reimbursement and settling payments to facilitate the exchange of goods and services,
resource allocation by mobilizing surplus fund to deficit sectors, risk management, price
information to the general pupils for proper decision making in various sectors of the
economy. Insurance sector not only provides the risk management of any human life it
also covers various non-life sectors of the economy like industrial, health, fire,
transportation, agricultural, mining, marine, etc. Insurance sector generally divided as life
insurance, non-life insurance and reinsurance. Life insurance represents the long-term
contract in the form of investment on the other hand the non-life insurance represents
short-term contract in the form of indemnity.

Reinsurance means to mitigation the risk by transfer to other parties with some agreements
for collection of losses

3.2.13 Khan, M., 1978, honghor makes an effort to understand the potential and prospects in
the life insurance industry. He defines a successful job and how one should have one when
selling life insurance products. There is no age restriction and no prior professional
experience necessary, but one must be a professional and able to create possibilities for
character development. The life insurance agent's relationship with their clients is long-
lasting, and there is no substitute for the service they provide. Additionally, he notes that a
life insurance agent serves clients in a rather permanent capacity.

3.2.14 Ramesh Jain, 1980, Use the saved money to fund national-building initiatives. About
30% of the individual assurance business for Life Insurance Companies originated from the
rural sector, according to the study's analysis of the process of insurance business
procurement and administration at the branch level. This adds to the benefit of Life Insurance
Companies' ability to invest in many important projects and programmes covered by the 20-
point programmes. According to the study's conclusions, servicing centres should be set out
so that policyholders can continue to contact with them, and the Sagar branch should be
expanded more into rural areas.

3.2.15 Achamma Samuel, 2000, The author has made an effort to create a summary of India's
insurance system. As the insurance industry supports economic growth, the author attempts to
assess insurance penetration and compares it to global norms. The analysis shows that in
2000, India's insurance penetration rate was only 2.3%, compared to the global average of
7.8%. The tremendous potential for the development of insurance markets in India is
reflected in the low insurance penetration. During 1981-1982 and 2000-2001, the share of
insurance as a percentage of actual Gross Domestic Product was less than 1%. The country's
Gross Domestic Product has only a minimal contribution from the insurance sector. One of
the causes of this might be the public sector's lack of effective competition (resulting from its
monopoly position). The growth in income from the insurance sector may be supported by
opening up the industry.
3.2.16 Gidwani, S.J, 1996, The writer tries to come up with an acceptable explanation for
why human life is valued financially after death and how much a person needs life insurance.
He uses three approaches to analyse the situation. .

 The capacity to assess one's finances and determine how much can be set aside in
order to buy the most life insurance possible..

 Compute each person's average earnings from future hard work during the remaining
years of their productive lives, and

 Determine their total lifetime expenses as the cost of acquiring an item that will be
productive the next year