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Unit 1: Evolution and Meaning of Insurance
the Indian insurance sector. This committee was also in charge of recommending the future path Notes
of insurance in India.
The Malhotra Committee attempted to improve various aspects of the insurance sector, making
them more appropriate and effective for the Indian market.
Task Visit an old insurance firm and collect some data on the changes it has seen since its
infancy and prepare a slideshow on the same.
The recommendations of the committee put stress on offering operational autonomy to the
insurance service providers and also suggested forming an independent regulatory body.
The Insurance Regulatory and Development Authority Act of 1999 brought about several crucial
policy changes in the insurance sector of India. It led to the formation of the Insurance Regulatory
and Development Authority (IRDA) in 2000.
The goals of the IRDA are to safeguard the interests of insurance policyholders, as well as to
initiate different policy measures to help sustain growth in the Indian insurance sector.
The Authority has notified 27 Regulations on various issues which include Registration of
Insurers, Regulation on insurance agents, Solvency Margin, Reinsurance, Obligation of Insurers
to Rural and Social sector, Investment and Accounting Procedure, Protection of policy holders’
interest etc. Applications were invited by the Authority with effect from 15th August, 2000 for
issue of the Certificate of Registration to both life and non-life insurers. The Authority has its
Head Quarter at Hyderabad.
Caselet Insurance Companies introduce Premium
Payment Plans
imited premium payment policies seem to be the rage currently. Many insurance
companies have already introduced limited premium payment products, while
Lmany more are on the anvil, according to industry sources.
Conventional life insurance policies require investors to pay their premiums till the year
of maturity, whereas in limited premium payment products, the premium is paid for a far
shorter period of time. Of course, the amount paid would be far higher in the latter case
than in the former. For investors, there is also the matter of falling value of the currency
in the future years that needs to be kept in mind while shelving out such huge amounts.
SBI Life Insurance announced a new limited premium payment product last week, named
Sanjeevan Supreme. This product comes with the twin aspects of limited premium payment
and money back. Investors pay a premium for a period of 6 to 10 years. In return, they get
guaranteed money back in equal instalments at regular intervals and accumulated bonuses
while remaining fully covered for life insurance during the policy term. The policy is
open to persons from the age of 18 to 75. The sum assured (SA) begins from a minimum of
` 50,000 to a maximum of ` 5 crore.
There are four options to the plan. Under Plan A, the term of the policy is 15 years. For the
first 6 years of the policy, investors pay the premium. Then there is a 4-year period when
investors do not pay any premium (technically known as growth/deferment period).
Contd....
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