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Overview of Insurance Sector Dynamics

The document outlines the insurance sector, detailing types of insurance such as life and general insurance, and explains the income sources of insurance companies, which include underwriting and investments. It describes underwriting as managing risk through a pool of premiums and calculating the loss ratio, while investments involve generating returns from the collected premiums. Additionally, it highlights the major expenses incurred by insurance companies, including marketing, agent commissions, and operational costs.

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5 views5 pages

Overview of Insurance Sector Dynamics

The document outlines the insurance sector, detailing types of insurance such as life and general insurance, and explains the income sources of insurance companies, which include underwriting and investments. It describes underwriting as managing risk through a pool of premiums and calculating the loss ratio, while investments involve generating returns from the collected premiums. Additionally, it highlights the major expenses incurred by insurance companies, including marketing, agent commissions, and operational costs.

Uploaded by

apurvsomvanshi10
Copyright
© All Rights Reserved
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

Insurance Sector

Protection against risk by taking premium


Types of Insurance - 2
• Life Insurance – also many types – Term Life, Money Back Policy, Unit
Linked, Pension Plans
• General Insurance – motor , home, health and fire etc
• The claim amt is often more than the premium
• Two ways of earning income – Underwriting and Investments
Underwriting
• Insurance cos give protection against loss
• From a pool of premiums – give claims
• Biggest Expenses – claim (statistically calculate through past and
present data)
• Decide premium
• Premium to claim ratio – Loss Ratio
Investments
• A portfolio of premiums is invested in the market
• Good returns
• Manage risk in case claims are high
• Ex 500 people invested a premium of 2000 rs
• 500 X 2000 = 10 lacs
• If sum Insured – 1 lac
• Out of 500, 9 people asked for claim, expense is 9 lakh
• Premium profit – 1 lac
• Also the total amt 10 lac would have been invested; assume if 12% return so on 10 lac
return is 12 lacs
• So total profit 2lac 20 thousand
Expenses
• Marketing
• Agent commission
• Operational expenses

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