WHAT IS GENERAL INSURANCE
Man has always been in
search of security and protection from the beginning of civilization. The urge
in him lead to the concept of insurance. The basis of insurance was the sharing
of the losses of a few amongst many. Insurance provides financial stability and
strength to the individuals and organization by the distribution of loss of a
few among many by building up a fund over a period of time.
The general insurance industry in India was nationalised and a
government company known as General Insurance Corporation (GIC) was formed by
Central Government in 1972.
With effect from January 1, 1973, the erstwhile 107 Indian and
foreign insurers who were operating in the country prior to nationalisation,
were grouped into four operating companies, namely, (a) National Insurance
Company Limited; (b) New India Assurance Company Limited; (c) Oriental
Insurance
Company Limited and (d) United Insurance Company Limited. Except
for aviation insurance of national airlines and crop insurance which is handled
by GIC, all the four subsidiaries operate all over the country competing with
one another in underwriting various classes of general insurance.
The four companies have a network of 2699 branch offices, 1360
divisional offices and 92 regional offices spread all over the country. In the
international market, the industry is operating in 16 countries directly
through its agencies and in 14 countries through subsidiary and associate
banks.
Some of the schemes in operation for the benefit of poor are the
Personal Account Insurance Social Security Scheme, Hut Insurance Scheme and Crop
Insurance Scheme for poor families in rural areas. The total assets and net
worth of GIC grew by Rs. 26,424.03 crore and Rs. 4,759.13 crore respectively as
on March 31, 2006.
During the year 2009 10, the net premium income of the
corporation was Rs. 8776.87 crore as against Rs. 7402.33 crore in 2008-09. The
net incurred claims were at Rs. 6,856.39 crore, i.e., 84.9 per cent as against
Rs. 6217.14 crore hi 2008.
ADVANTAGES
OF INSURANCE
1.
INVESTMENT OF FUNDS
In the cource of their business, insurance by
the way of premiums collect vast sums. Especially in life business much of it can
be invested profitably over long periods. This benefits the nation as a whole
because insurers are required by law to invest the major portion in government
securities and other approved investment, out of which nation-building
activities are undertaken.
2.
REDUCTION OF COST INSURANCE
Income earned by investment of accumulated
funds further increases the fund and goes to reduce the cost of insurance for
otherwise the premiums would have to be higher to next extent.
3.
EFFECT ON PRICES
Manufacturers pass on the consumer, the cost
of insurance along with other production cost. Still it is beneficial to the
consumers because without insurance the cost would have been much more.
4.
INVISIBLE EXPORT
Providing insurance service overseas is our
invisible export, like export of material goods and the profit brought in is
contribution to the favorable balance of trade.
5.
REDUCING COST OF SOCIAL SERVICES
No victim or heirs of a deceased victim of
motor accidents now a days goes without compensation from insurance funds built
out of compulsory insurance of motor vehicles and this is no small benefit
social relief.
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