Page 244 - DMGT303_BANKING_AND_INSURANCE

Unit 12: Insurance

The first kind of formal insurance business was marine insurance. Traders who met in the Notes
Lloyd's coffee house in London agreed to share the losses of their goods carried by ships while
on voyage to various countries. The losses normally occurred due to attack of pirates who
robbed on the high seas or because of bad weather, which spoiled and destroyed the goods or
sinking of the ship. The first insurance policy was issued in England in 1583.

Insurance

Providing Whether

protection to all Big or Small
Risk, as discussed in last chapter, is the uncertainty of a financial risk. Insurance primarily
creates counter part of the risk, which is security.
1. Insurance is defined as a cooperative device to spread the loss caused by a particular risk
over a number of persons who are exposed to it and
2. It does not reduce the risk,
3. It does not alter the probability of risk, but
4. It only reduces/spreads the financial losses.
Insurance may be defined in two ways:

The Risk

The Insured The Insurer

Thus, insurance is a financial arrangement that spreads the costs of losses among the members
of an insurance pool.

12.2 Indian Insurance Industry

India insurance is a flourishing industry, with several national and international players
competing and growing at rapid rates. Thanks to reforms and the easing of policy regulations,
the Indian insurance sector been allowed to flourish, and as Indians become more familiar with
different insurance products, this growth can only increase, with the period from 2010 - 2015
projected to be the 'Golden Age' for the Indian insurance industry.

Indian Insurance Policies at a Glance

Indian insurance companies offer a comprehensive range of insurance plans, a range that is
growing as the economy matures and the wealth of the middle classes increases. The most
common types include: term life policies, endowment policies, joint life policies, whole life
policies, loan cover term assurance policies, unit-linked insurance plans, group insurance policies,
pension plans, and annuities. General insurance plans are also available to cover motor insurance,
home insurance, travel insurance and health insurance.

Due to the growing demand for insurance, more and more insurance companies are now
emerging in the Indian insurance sector. With the opening up of the economy, several

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