Page 241 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Insurance Laws and Practices

Notes
Example: Is it wiser to take a pension of $2,500/month at age 65 as a life annuity, or take
$2,200 at age 62 with 50% going to your spouse at death? Here, actuaries are called upon to help
make these decisions.

Calculate the value of lost income in event of disability or death. Frequently this value is
needed by the court in a wrongful injury or death case.
Assistance with financial forecasts that involve expected mortality or longevity. Actuaries
work for the Social Security system to make long-range financial forecasts for the system.
Other problems relating to life, death, retirement, remarriage, or other demographic
events. Actuaries are skilled professionals who merge knowledge of the economy, interest
rates, and demography. If you ever think you might need the help of an actuary.

Task Name ten such organizations which provide actuary services.

Self Assessment

Fill in the blanks:
1. ………………………………. use mathematical and statistical models to evaluate risk in the
insurance and finance industries.
2. Actuarial science is used to evaluate and predict future …………………………………
3. Actuarial services forecast risk and uncertainty and help firms plan for future
……………………………. and ……………………………….

14.2 Recent Trends in Insurance Sector

In this section, we will learn about the recent trends in insurance sector. Before liberalization the
Insurance sector was controlled by Controller of Insurance but now the corporate body known
as Insurance Regulatory & Development Authority (IRDA) has been formed under IRDA Act
1999. IRDA has taken the following steps to develop the Insurance sector in India keeping in
view of the following key indicators.

Policies and Measures to Develop Insurance Market

The Authority has taken a pro-active role in the establishment of a vibrant Insurance market in
the country by taking the following steps:

1. The market regulation by prudential norms,
2. The registration of players who have the necessary financial strength to withstand the
demands of a growing and nascent market,

3. The necessity to have “fit and proper” person in-charge of businesses,
4. The implementation of a solvency regime that ensures continuous financial stability, and
above all,

5. The presence of an adequate number of insurance companies to provide competition and
choice to customers all these steps lead to the establishment of a regime committed to an
overall development of the market in normal times.

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