Scribd
Upload
9 views11 pages

Introduction to Insurance and Risk Management

This document provides an introduction to insurance and risk management. It defines risk as the uncertainty concerning the occurrence of a loss. Insurance is described as a cooperative device to spread the loss caused by a particular risk over a large number of exposed persons in exchange for small premium payments. The concept of pooling and sharing of losses is explained. A brief history of insurance is also provided, along with key events in the development of the insurance sector in India such as the establishment of the first life and non-life insurers and the opening up of the industry to private players.

Uploaded by

Mahesh Satapathy
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
9 views11 pages

Introduction to Insurance and Risk Management

This document provides an introduction to insurance and risk management. It defines risk as the uncertainty concerning the occurrence of a loss. Insurance is described as a cooperative device to spread the loss caused by a particular risk over a large number of exposed persons in exchange for small premium payments. The concept of pooling and sharing of losses is explained. A brief history of insurance is also provided, along with key events in the development of the insurance sector in India such as the establishment of the first life and non-life insurers and the opening up of the industry to private players.

Uploaded by

Mahesh Satapathy
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Session 1

Introduction to Insurance & Risk Management

Introduction to Insurance & Risk Management

The Concept of

Risk

Introduction to Insurance & Risk Management


The uncertainty concerning the occurrence of a loss. Chance of a loss: probability that an event will occur.

Risk

Introduction to Insurance & Risk Management

What is

Insurance?

Introduction to Insurance & Risk Management

INSURANCE
A co-operative device to spread the loss caused by a particular risk over a large number of persons who are exposed to it, in exchange for a small sum of money (premium).

Introduction to Insurance & Risk Management

Insurance

Risk

How

Insurance Works?

Concept of pooling Sharing of losses Intermediary: Insurer Premium Compensation from common pool

Origin of Insurance Business


History of insurance is as old as human civilization.

Over 5000 years back: Chinese traders used insurance as preventive measure against piracy. 1680: Fire Office (1st fire insurance company) started its operations following Great London Fire (1666) that destroyed 13000 houses in London. 1688: Lloyd's Coffee House opened by Edward Lloyd originally on Tower street. It was a popular place for sailors and merchants, to discuss insurance deals among themselves. The dealing that took place led to the establishment of the insurance market. Later it was relocated to Lombard Street.

Origin & History of Insurance Business in India


YEAR 1818 1850 1938 1956 1973 EVENT Oriental Life Insurance Company (1st life insurer) established in Calcutta (Kolkata) Triton Insurance Company Limited, Calcutta (1st non-life insurer) started its operations Insurance Act, 1938 enacted Nationalization of life insurance business with the formation of Life Insurance Corporation of India on 1st September Nationalization of general insurance business with the formation of General Insurance Corporation of India and its 4 subsidiaries (National, New India, Oriental and United India) Insurance industry opened for private players with the enactment of IRDA Act, 1999 Union Cabinet approved increase of FDI limit in the insurance sector from the present 26% to 49 % (pending parliament approval)

1999 2012

Insurance Sector Reforms


1993: Malhotra Committee headed by Dr. R N Malhotra, former Finance secretary and RBI Governor, formed to evaluate the industry and recommend future directions.

Purpose:
To assess the strengths and weaknesses of Indian insurance industry Creation of an efficient and viable insurance sector To suggest regarding the improved functioning of LIC and GIC To make recommendations on regulation and supervision of insurance sector

Insurance Sector Reforms


Recommendations
Structure Govt. stake in insurance companies to be reduced to 50% Subsidiaries of GIC to function as independent corporations Competition Private companies to be allowed No company to have life and non-life business through a single entity Foreign companies may be allowed to enter into the industry in collaboration with domestic industries An insurance regulatory body to be set up

You might also like