MODULE 1 ( Ref.

txt princles of India is opening up to the global reinsurers

insurance.B.com) and in fact has already approved set up for 5
reinsurer (Lloyds, Swiss Re, Scor SE,
-INDIAN INSURANCE ENVIRONMENT
Hannover Re and Munich Re), with more in
pipeline. Considering the recent
Indian insurance industry is regulated by
developments, the market is expected to be
Insurance Regulatory and Development
more open and create more competition in
Authority of India (IRDAI). The Indian
the near future.
Insurance industry is partially tariffed till
date. The wordings for most of the asset and
Few of the Major Local Regulation
miscellaneous policies are tariffed and the
requirements are:
premium has fixed (non-discounted)
components pertaining to AOG (Act Of 1. Foreign Direct Investment (FDI) is
God) perils. Insurers are allowed to explore permitted up to 49%. This was increased
premium and wordings for other products from 26% in 2016.
including liability and employee benefits,
2. Cash before cover country. No cover until
though the wordings has to be filed with the
the premium is paid locally to the insurer.
regulator and subsequently approved. There
had been discussions in the past to open up
3. Locally admitted country. Non –
the wordings for Property policies, whereas
admitted and fronting arrangements are not
the same has not been allowed as yet. Going
allowed in India.
by the current scenario of the market, which
is primarily dominated by low premiums 4. Policy wording are partially tariffed,
and low deductible, it seems unlikely that especially Property wordings.
the same should happen in the near future.
5. Regulated commissions. The brokerage
In the last few months, the FDI in the
for Property policies is capped at 12.5%,
insurance industry was increased from 26%
Liability and miscellaneous is capped at
to 49%, thus inviting more foreign players to
17.5%.
venture into India. Additionally recently the
4 public sector general insurers and 1 state
6. Premiums are directly paid to the
owned reinsurer have been asked to list
insurance companies by the clients and
themselves on the Indian stock exchange.
claims are settled directly by insurer to the Insurance and Agriculture Insurance
client. Company Ltd for crop insurance.
Market Size
The insurance industry of India consists of
Government's policy of insuring the
57 insurance companies of which 24 are in
uninsured has gradually pushed insurance
life insurance business and 33 are non-life
penetration in the country and proliferation
insurers. Among the life insurers, Life
of insurance schemes are expected to
Insurance Corporation (LIC) is the sole
catapult this key ratio beyond 4 per cent
public sector company. Apart from that,
mark by the end of this year, reveals
among the non-life insurers there are six
the ASSOCHAM latest paper.
public sector insurers. In addition to these,
The number of lives covered under Health
there is sole national re-insurer, namely,
Insurance policies during 2015-16 was 36
General Insurance Corporation of India
crore which is approximately 30 per cent of
(GIC Re). Other stakeholders in Indian
India's total population. The number has
Insurance market include agents (individual
seen an increase every subsequent year as
and corporate), brokers, surveyors and third
28.80 crore people had the policy in the
party administrators servicing health
previous fiscal.
insurance claims.
Premium income of the life insurance
Out of 33 non-life insurance companies, five
segment had increased 14.04 per cent in
private sector insurers are registered to
FY17 to Rs 4.18 trillion (US$ 64.92 billion).
underwrite policies exclusively in health,
In August 2017, the Life Insurance industry
personal accident and travel insurance
reported a 24 per cent growth in overall
segments. They are Star Health and Allied
annualised premium equivalent with the
Insurance Company Ltd, Apollo Munich
help of both private players and Life
Health Insurance Company Ltd, Max Bupa
Insurance Corporation.
Health Insurance Company Ltd, Religare
Investments
Health Insurance Company Ltd and Cigna
The following are some of the major
TTK Health Insurance Company Ltd. There
investments and developments in the Indian
are two more specialised insurers belonging
insurance sector.
to public sector, namely, Export Credit
Guarantee Corporation of India for Credit
  Pradhan Mantri Fasal Bima Yojana which is expected to bring higher
(PMFBY) covered 50.9 million levels of transparency and
farmers in India in 2016-17. accountability, and enable the
 India's leading bourse Bombay Stock companies to raise resources from
Exchange (BSE) will set up a joint the capital market to meet their fund
venture with Ebix Inc to build a requirements.
robust insurance distribution network  The Insurance Regulatory and
in the country through a new Development Authority of India
distribution exchange platform. (IRDAI) plans to issue redesigned
 Revenues of the healthcare sector are initial public offering (IPO)
projected to grow by 15 per cent guidelines for insurance companies
between FY18-20 on the back of rise in India, which are to looking to
in health insurance coverage through divest equity through the IPO route.
government-sponsored schemes@.  IRDAI has allowed insurers to invest
up to 10 per cent in additional tier 1
Government Initiatives (AT1) bonds that are issued by banks
The Government of India has taken a to augment their tier 1 capital, in
number of initiatives to boost the insurance order to expand the pool of eligible
industry. Some of them are as follows: investors for the banks.

 Government of India launches Road Ahead

Pradhan Mantri Vaya Vandana The future looks promising for the life
Yojana, a pension scheme which will insurance industry with several changes in
provide guaranteed 8 per cent annual regulatory framework which will lead to
return to all the senior citizen above further change in the way the industry
60 years of age for a policy tenure of conducts its business and engages with its
10 years. customers. India with 3.42 per cent
 The Union Cabinet has approved the penetration rate in the insurance sector
public listing of five Government- offers greater penetration potential when
owned general insurance companies compared to global average of 6.2 per cent
and reducing the Government’s stake
to 75 per cent from 100 per cent,
The country’s insurance market is expected – Rates and premiums are
to quadruple in size over the next 10 years determined by an actuary,
from its current size of US$60 billion. using the company’s past loss
Demographic factors such as growing experience and industry
middle class, young insurable population statistics
and growing awareness of the need for
• Underwriting:
protection and retirement planning will
support the growth of Indian life insurance. Underwriting refers to the process of
selecting, classifying, and pricing
Module 2 applicants for insurance

Module 3 (Ref.txt prncpls of Insr) – The objective is to produce a

profitable book of business
Module 4 OPERATIONS OF
INSURANCE COMPANIES. A statement of underwriting policy
establishes policies that are
• Rate making consistent with the company’s

• Underwriting objectives, such as

• Production – Acceptable classes of

business
• Claim settlement
– Amounts of insurance that
• Reinsurance can be written

• Investments A line underwriter makes daily

• Rate making: decisions concerning the acceptance

or rejection of business
• Rate making refers to the pricing of
insurance There are three important principles
of underwriting:
– Total premiums charged must
be adequate for paying all – The underwriter must select

claims and expenses during prospective insureds

the policy period

 according to the company’s After reviewing the information, the
underwriting standards underwriter can:

– Underwriting should achieve – Accept the application

a proper balance within each
– Accept the application
rate classification
subject to restrictions or
• In class underwriting, modifications
exposure units with
– Reject the application
similar loss-producing
characteristics are • Production:
grouped together and
Production refers to the sales and
charged the same rate
marketing activities of insurers
– Underwriting should
– Agents are often referred to
maintain equity among the
as producers
policyholders
– Life insurers have an agency
Underwriting starts with the agent in
or sales department
the field
– Property and liability insurers
Information for underwriting comes
have marketing departments
from:
An agent should be a competent
– The application
professional with a high degree of
– The agent’s report technical knowledge in a particular
area of insurance and who also
– An inspection report
places the needs of his or her clients
– Physical inspection first

– A physical examination and • Claim Settlement:

attending physician’s report
The objectives of claims settlement
– MIB report include:
 – Verification of a covered loss The adjustor decides if the claim
should be paid or denied
– Fair and prompt payment of
claims – Policy provisions address
how disputes may be
– Personal assistance to the
resolved
insured
• Reinsurance:
Some laws prohibit unfair claims
practices, such as: Reinsurance is an arrangement by
which the primary insurer that
– Refusing to pay claims
initially writes the insurance
without conducting a
transfers to another insurer part or all
reasonable investigation
of the potential losses associated
– Not attempting to provide with such insurance
prompt, fair, and equitable
– The primary insurer is the
settlements
ceding company
– Offering lower settlements to
– The insurer that accepts the
compel insureds to institute
insurance from the ceding
lawsuits to recover amounts
company is the reinsurer
due
– The retention limit is the
– Claim Settlement
amount of insurance retained
The claim process begins with a by the ceding company
notice of loss
– The amount of insurance
Next, the claim is investigated ceded to the reinsurer is
known as a cession
– A claims adjustor determines
if a covered loss has occurred Reinsurance is used to:
and the amount of the loss
– Increase underwriting
The adjustor may require a proof of capacity
loss before the claim is paid
 – Stabilize profits cede insurance to the
reinsurer, and the reinsurer
– Reduce the unearned
has agreed to accept the
premium reserve
business
• The unearned
• Under a quota-share
premium reserve
treaty, the ceding
represents the
insurer and the
unearned portion of
reinsurer agree to
gross premiums on all
share premiums and
outstanding policies at
losses based on some
the time of valuation
proportion
– Provide protection against a
• Under a surplus-share
catastrophic loss
treaty, the reinsurer
– Retire from business or from agrees to accept
a line of insurance or territory insurance in excess of
the ceding insurer’s
– Obtain underwriting advice
retention limit, up to
on a line for which the
some maximum
insurer has little experience
amount
There are two principal forms of
• An excess-of-loss
reinsurance:
treaty is designed for
– Facultative reinsurance is an catastrophic
optional, case-by-case protection
method that is used when the
• A reinsurance pool is
ceding company receives an
an organization of
application for insurance that
insurers that
exceeds its retention limit
underwrites insurance
– Treaty reinsurance means the on a joint basis
primary insurer has agreed to
Reinsurance Alternatives
 Some insurers use the capital In contrast to life insurance, property
markets as an alternative to insurance contracts are short-term in
traditional reinsurance nature, and claim payments can vary
widely depending on catastrophic
Securitization of risk means that an
losses, inflation, medical costs, etc
insurable risk is transferred to the
capital markets through the creation Other Insurance Company Functions
of a financial instrument, such as a
The electronic data processing area
futures contract
maintains information on premiums,
Catastrophe bonds are corporate claims, loss ratios, investments, and
bonds that permit the issuer of the underwriting results
bond to skip or reduce the interest
The accounting department prepares
payments if a catastrophic loss
financial statements and develops
occurs
budgets

In the legal department, attorneys are

• Investments: used in advanced underwriting and
estate planning
Because premiums are paid in
advance, they can be invested until Property and liability insurers
needed to pay claims and expenses provide numerous loss control
services
Investment income is extremely
important in reducing the cost of
insurance to policy owners and OPERATIONS OF INTERMEDIARIES
offsetting unfavorable underwriting Insurance intermediaries facilitate the
experience placement and purchase of insurance, and
provide services to insurance companies and
Life insurance contracts are long-
consumers that complement the insurance
term; thus, safety of principal is a
placement process. 
primary consideration
 
Traditionally, insurance intermediaries have Brokers assist clients in the choice of their
been categorized as either insurance agents insurance by presenting them with
or insurance brokers. The distinction alternatives in terms of insurers and
between the two relates to the manner in products.  Acting as “agent” for the buyer,
which they function in the marketplace.  brokers usually work with multiple
  companies to place coverage for their
Insurance agents clients.  Brokers obtain quotes from various
Insurance agents are, in general, licensed to insurers and guide clients in determining the
conduct business on behalf of insurance adequate policy from a range of products. 
companies.  Agents represent the insurer in  In some markets, there are distinctions
the insurance process and usually operate among brokers depending upon the types of
under the terms of an agency agreement insurance they are authorized (licensed) to
with the insurer.  The insurer-agent intermediate – all lines of insurance,
relationship can take a number of different property and casualty or life/health
forms.  coverage.  While most, if not all, brokers are
 In some markets, agents are “independent” active in commercial lines, some also
and work with more than one insurance intermediate personal lines policies.  There
company (usually a small number of are also distinctions between “retail
companies); in others, agents operate brokers,” who negotiate insurance contracts
exclusively – either representing a single directly with consumers, and “wholesale
insurance company in one geographic area brokers,” who negotiate insurance contracts
or selling a single line of business for each with retail brokers and agents, but not
of several companies.  Agents can operate in directly with consumers. 
many different forms – independent,  
exclusive, insurer-employed and self- Reinsurance brokers solicit, negotiate and
employed.  sell reinsurance cessions and retrocessions
  on behalf of ceding insurers seeking
Insurance brokers coverage with reinsurers.  Reinsurance
Insurance brokers typically work for the brokers can also be involved in a reinsurer’s
policyholder in the insurance process and act retrocession of parts of its risk. 
independently in relation to insurers.   
As a technical matter, a broker’s role may  Having said that, determining whether an
change during an insurance transaction and intermediary is legally an agent or broker is
over the course of an on-going relationship not always clear-cut.  An intermediary’s
with a client.  Many brokers sometimes act status is determined by the totality of the
as an “agent” of the insurer and other times facts regarding the specific transaction at
as a “broker” of the client when assisting a issue.  An intermediary might be called a
client with insuring its risk exposures “broker,” but actually represents the
through an insurance contract with a insurance company in a particular
traditional carrier. transaction.  In such situations, the broker is
  actually – and legally – considered the
For example, the broker acts on behalf of the company’s agent, not that of the customer. 
client when negotiating the contract of Although, such an activity-based approach is
insurance and placing the policy.  When the increasingly used around the world, the legal
broker provides services that would status of insurance intermediaries varies
otherwise be handled directly by the throughout the international insurance
insurance company, such as premium market. For purposes of this memorandum,
payments and claims handling, the broker is included within the term “intermediary” are
essentially acting as agent for the company.  insurance agents, brokers, producers,
This unique concept makes the insurance advisors and consultants.  
process more efficient for both the
policyholder and the insurer.  GENERAL INSURANCE
  General insurance or non-life insurance
As a practical matter, regardless of the legal policies, including automobile and
role in which a broker is acting, the manner homeowners policies, provide payments
in which the broker approaches all such depending on the loss from a particular
placements for his clients is as an financial event. General insurance is
intermediary – working on behalf of his typically defined as any insurance that is not
clients to facilitate the consummation of determined to be life insurance. It is
insurance contracts with carriers who have called property and casualty insurance in
the ability and capacity to properly the United States and Canada and non-life
insure his risks. insurance in Continental Europe.
In the United Kingdom, insurance is broadly car), homeowners (household), pet
divided into three areas: personal lines, insurance, creditor insurance and others.
commercial lines and London market. ACORD, which is the insurance industry
The London market insures large global standards organization, has standards
commercial risks such as supermarkets, for personal and commercial lines and has
football players and other very specific been working with the Australian General
risks. It consists of a number of insurers, Insurers to develop those XML standards,
reinsurers, P&I Clubs, brokers and other standard applications for insurance, and
companies that are typically physically certificates of currency.
located in the City of London. Lloyd's of MARKET TRENDS :
London is a big participant in this market. The United States was the largest market for
[1]
 The London market also participates in non-life insurance premiums written in 2005
personal lines and commercial lines, followed by the European Union and
domestic and foreign, through reinsurance. Japan. Zimbabwean insurance industry is
Commercial lines products are usually recovering following dollarization in 2009.
designed for relatively small legal entities. It is one of the better performing sectors of
These would include workers' compensation the economy.
(employers liability), public TYPES OF GENERAL INSR
liability, product liability, commercial fleet General insurance can be categorised in to
and other general insurance products sold in following:
a relatively standard fashion to many
organisations. There are many companies  Motor Insurance: Motor Insurance
that supply comprehensive commercial can be divided into two groups, two and
insurance packages for a wide range of four wheeled vehicle insurance.
different industries, including shops,  Health Insurance: Common types of
restaurants and hotels. health insurance includes: individual

Personal lines products are designed to be health insurance, family floater health

sold in large quantities. This would insurance, comprehensive health

include autos (private insurance and critical illness insurance.

 Travel Insurance: Travel insurance distribution systems and include the
can be broadly grouped into: individual following ;
travel policy, family travel policy, a) Career agents are full –time agents who
student travel insurance, and senior usually represent one insurer and are paid on
citizen health insurance. a commission basis
 Home Insurance: Home insurance b) Multiple Line Exclusive Agency
protects a house and its contents. System, Under this system, agents who sell

 Marine Insurance: Marine cargo primarily property and casualty insurance

insurance covers goods, freight, cargo, also sell individual life and health insurance

and other interests against loss or products.

damage during transit by rail, road, sea c) Independent property and casualty

and/or air. agents are independent contractors who

represent several insurers and sell primarily
 Commercial Insurance: Commercial
property and casualty insurance.
insurance encompasses solutions for all
d) A personal –Producing general agents
sectors of the industry arising out of
(PPGA) is an independent agent who
business operations.
receives special financial considerations for
LIFE INSURANCE MARKETING
meeting minimum sales requirements.
Distribution system for the sale of life
e) Brokers are independent agents who do
insurance have changed dramatically over
not have an exclusive contract with any
time.
single insurer or an obligation to sell the
Major life insurance distribution systems,
insurance products of a single insurer.
 Personal selling systems
2. Financial Institution Distribution
 Financial institution and distribution
Systems : Many insurers today use
systems
commercial banks and other financial
 Direct response systems
institutions as a distribution system to
 Other distribution systems
market life insurance and annuity products.
1.Personal selling systems : The majority 3. Direct Response System: is a marketing
of life insurance policies and annuities sold system by which life and health insurance
today are through personal selling products are sold directly to consumers
without a face to face meetings with an
 agent. Potential customers solicited by  Insurance Agents
television, radio, mail, newspapers, internet.
An insurance agent is defined under the
4. Other Distribution Systems :
Insurance Act (Cap. 142) as a person who is
a) Worksite Marketing: individual sales
or has been carrying on insurance business
interviews on site with employees interested
in Singapore as a registered agent for one or
in purchasing life insurance products.
more insurers, and includes an agent of a
b) Stock brokers are licensed to sell life
foreign insurer carrying on insurance
insurance products.
business in Singapore under a foreign
c) Financial planners provide advice to
insurer scheme under Part IIA of the Act.
clients on investments, estate planning,
Individual agents or corporate agencies can
taxation, wealth mgt, and insurance
employ nominee agents to assist them in
their business transactions.
CHANNEL OF SALES ( DISTRIBUTION
CHANNEL) For the purpose of registration with the ARB

An increasing number of insurers are using as an insurance agent pursuant to the

multiple distribution channels as they mandatory requirements of the Notice No:

continue to balance the needs of different MAS 211, an applicant may be classified

groups of consumers against the cost of under any one of the following:

distributing their products and services.  Individual agents

When it comes to insurance distribution  Corporate agents; i.e. sole
channels, one size does not necessarily fit proprietorship/partnership company
all. registered with the Account and Corporate

Appended below are the various distribution Regulatory Authority, society/cooperative

channels: society registered with the Registrar of

Societies; and
 Insurance Agents
 Trade Specific Agents
 Trade Specific Agents (TSAs)
All the above-mentioned entities may
 Insurance Brokers
appoint nominee agents, including
 Bancassurance
individual agents.
 Online Internet Portals
 
 Direct Marketing
 Trade Specific Agents (TSAs) Before commencing and representing any
insurers in selling insurance, all general
TSAs are engaged in a business of which
insurance agents and Trade Specific Agents
insurance is not their core business, and
(TSAs) must register with the Agents’
usually sell only one type of insurance
Registration Board (ARB) of the General
product (e.g. travel agents selling travel
Insurance Association of Singapore (GIA)
insurance) in the course of their other
through their principal insurers. The ARB
business activities.
will issue each of them with a unique GIA
The list of Trade Specific Agent types are as nominee number. Consumers can
follows: authenticate and confirm if an agent is
 Freight Forwarders registered with the ARB and is authorised to

 Foreign Domestic Worker Agencies transact general insurance business with the

 Foreign Worker Agencies insurer by verifying the agent’s details in the

agent search module on the GIA website
 Motor Dealers 
at https://www.arcm.com.sg/App/UI/Comm
 Travel Agents
on/SearchAgentInfor.aspx?
 Electrical Protection Sellers
strApplicationType=SearchNominee
The General Insurance Agents Registration
Regulations (GIARR) specify that a person All general insurance agents are required to
(individual or entity) shall not arrange, or comply with the following:
hold himself out as entitled to arrange, a  General Insurance Agents
contract of insurance as an agent for an Registration Regulations
insurer, unless and until he has:
 Fit and Proper Criteria
 Been duly registered with the ARB  The Code of Practice for Agents; and
of the GIA (the registered agent being  Continuous Professional
classified as either a "Cash Agent" or Development (CPD) Requirements, except
"Credit Agent"), and is issued with a for Trade Specific Agents.
Certificate of Registration by the ARB; and Under the Code of Practice for Agents, an
 Entered into an agency agreement in agent shall not enter into any agreement or
writing with his principal (the insurer that he arrangement whatsoever for the appointment
is representing). or engagement of any sub-agent.
 In Singapore, under the GIARR, general Reinsurance brokers negotiate reinsurance
insurance agents can represent up to a contracts between the ceding insurers and
maximum of three (3) general insurers, or reinsurers. They generally represent the
principals, at any given time. In addition, it ceding insurers for placing the reinsurance
is a mandatory requirement for general business and perform other necessary
insurers to accept insurance business only services.
from qualified agents registered with the
Unlike an agent, a broker is free to place the
ARB.
client’s insurance business with any number
  of insurers. His duty is to provide
independent expert advice on a wide range
Insurance Brokers
of insurance matters to the client. These
They are registered under the Insurance Act include identifying the best type of cover to
(Cap. 142) to carry on insurance business as meet the client’s insurance needs, and
agents of insureds or intending insureds. providing assistance when an insured makes
They advise individual or corporate buyers a claim. The broker has to exercise due care
of insurance on their insurance needs. They and diligence in understanding and
act on their clients' behalf to negotiate and satisfying the insurance requirements of the
obtain the most appropriate insurance covers client, and take all reasonable steps to act
at competitive premium rates from their fairly in the interests of the client. Although
insurers, exercising care and skill in doing insurance buyers (i.e. ordinary retail
so. consumers) may deal with insurers directly,
Currently, insurance brokers in Singapore the vast majority of commercial businesses
are generally classified under the following (i.e. insurance covers bought by companies)
categories: are usually transacted through registered
brokers. The complexity of many
 Direct insurance brokers
commercial risks and large premiums
 General reinsurance brokers –
involved often render a broker’s services
placement of reinsurance risks for general
invaluable to the insured.
insurers; and
 Life reinsurance brokers – placement As required under the Insurance Act (Cap.

of reinsurance risks for life insurers. 142), an insurance broking company must
have in force a Professional Indemnity Insurance. Some banks even offer travel
Insurance Policy. insurance products through their ATM
networks.
 Bancassurance
 Online Internet Portals
Banks, including finance companies, with
their huge database of customers, sell Company Portals
insurance through a network of branches.
The growth of information on the Internet
Almost all of the local banks in Singapore
has also increased the amount of time people
own or have partnership agreements with
spend on it. This has in turn generated a new
insurance companies.
market for online offering of insurance
Bancassurance is the term used to describe products.
the partnership or relationship between a
In recent years, Singapore has seen the entry
bank and an insurance company, whereby
of direct-to-consumer insurance companies
the insurance company uses the bank sales
selling individual motor, travel, home and
channel in order to sell insurance products,
accident insurance. Its business model
most of which are personal lines.
entails direct underwriting via an online
Bank staff members, rather than insurance platform, supported by a fully staffed
agents, become the point of sales or point of contract centre (operating 24 hours every
contact for customers. Bank staff members day of the week) and a full-fledged claims
are advised and supported by the insurance department.
companies through product information,
In Singapore, online insurance selling is
marketing campaigns and sales training.
limited mostly to personal lines products
They are also required to pass the relevant
covering home, motor, golf, travel, card
licensing examinations before they can sell
protection, personal accident, hospital
insurance or provide insurance-related
income and even domestic maid packages.
advice.
General insurers involved will sell these
Banks also make use of their websites to sell individual products through their own
personal lines products, such as Card informative websites, which can provide for
Protection Insurance, Household Insurance, quotations and accessibility to web
Private Motor Car Insurance and Travel
 brochures, proposal forms and policy Portals not meeting the above-mentioned
wording. criteria will be deemed as insurance
intermediaries by MAS. Such portals have
Independent Portals
to be registered with the ARB as agents, or
Apart from the individual company’s licensed as brokers by MAS.
portals, there are also independent portals.
 Direct Marketing
These are deemed "passive" in nature, i.e.
they are clearly not involved in any sales Rapid technological advancements have
distribution functions, and need not register changed the way in which individual
with the ARB of the GIA. insurance companies can now serve their
customers. At the same time, new
Passive portals are not involved in any sales
technology has allowed for more
distribution functions, namely:
information on individual policyholders,
 They do not provide sales or product which enables their buying habits to be
advice. Provision of static product stored in the IT systems of direct insurers.
information of the respective insurers The build-up of such databases over the
without comments on product features, years is a useful marketing tool to harness
including premiums, is not deemed to be the power of information technology by the
providing product advice; insurers. They can then execute segment
 They are not involved in the marketing to focus on customised products
collection of premiums and proposals; for niche target groups.
 They do not issue policy documents
Insurers have directly marketed personal
on behalf of insurers;.
lines, such as Personal Accident Insurance,
 The fees must not be based on the
Travel Insurance, Private Motor Insurance,
premiums.
Household Insurance, Hospital Income
Note: The remuneration fee for such online
Insurance, Golfer’s Insurance and even
transactions must not in any way be tied to
Domestic Maid Package Insurance, through
the premiums of the products being sold. If a
their informative websites. Intending
fee based on premiums is paid, this will be
insureds self-declare their pertinent
deemed as sales commission and will be
information in the simplified online proposal
seen as being involved in the sales
forms. Insurance product quotations and
distribution process.
policy wording are made available online. make them more tempting. This can range
Payment of premiums is instant, made easy from improving coverage to reducing
through online payment via credit cards. premiums.

Insurers also periodically send out

With competition comes greater challenges.
promotional product brochures (direct
Insurance companies now look beyond the
mailers) to existing policyholders without
local market to acquire customers. In
servicing agents. Telemarketers from call
addition to a comprehensive suite of
centres owned or appointed by insurers also
products, they strive to give their brand an
phone customers to advise and market
international outlook while paying attention
personal lines, as well as help to file claims.
to local context and cultural sensitivities.
Insurers also embark on cross-selling
strategies to serve the needs of their
customers.

 Growth in Opportunities
Challenges of Globalization

The thing about globalization is that it has

 Competition in the Insurance
caused other industries to expand as well.
Markets
This has resulted in a plethora of
First and foremost, local insurance opportunities for insurance companies.
companies started facing more widespread Today, a standard insurance firm doesn’t
competition – not only from within the have to limit itself to a limited number of
country, but also from the region and from products or services.
international conglomerates. Now, this is
With globalization, consumers’ demands
great news for the customer. After all, they
change and their needs become more varied.
now have the opportunity to choose from a
There are also more opportunities for wealth
range of products and services that are best
creation and preservation. For instance,
suited to their individual requirements.
more organized labor means more
To sharpen the competitive edge, insurance healthcare coverage for employees. Wider
firms have also tweaked their offerings to globalization means more opportunities for
overseas investments, and thus more As more and more foreign insurance
investment-linked plans. companies enter a local insurance market,
customers’ awareness tends to grow. Their
Globalization has also caused immigration
knowledge of possible insurance and
numbers to rise. There are more people
investment plans becomes richer. Needless
within the population who will be looking to
to say, this creates a demand for more
sign up for insurance products, and thus
products. Consumers are not willing to make
more opportunities to do business.
do with what was available anymore. They
expect comprehensive coverage plans, low
 New Industry Trends in Insurance
premium rates, and flexible policies.
Insurance companies are also beginning to
Some countries are experiencing higher
experience centralization processes, thanks
economic output due to globalization and
to partnerships with banks and reinsurance
international trade. Economic growth in
companies, and mergers with smaller or
these countries has boosted affordability,
larger competitors.
allowing most consumers to go in for high-
There’s a growth in the type of insurance end insurance and investment-linked plans.
services and products as well. For instance,
 Increased Customer Satisfaction
we are seeing insurance products for newer
risks such as informational risk, political
With globalization, there’s a renewed focus
risk, security risks, and even military risks.
on customer satisfaction and trust. As
customers get savvier and educated about
Just as FinTech is changing the banking
insurance products, the need to gain their
world, InsurTech is transforming the
trust and build strong relationships becomes
industry. As the insurance industry starts
imperative to the top line. In the name of
embracing technological innovation and
competition, insurance firms are putting in
eCommerce, we’re also looking at more
extra effort to provide better products and
insurance products being sold via the
clearer communications driven towards
Internet.
meeting the expectations of both local and
 Increased Consumer Demand for international customers.
Insurance
To borrow the words of Kofi Annan, the not teach the working of the computer or
Former Secretary General of the United any language. We are going to explain how
Nations, “It has been said that arguing the computer can be useful in the insurance
against globalization is like arguing against sector.
the laws of gravity”, globalization has You know very well that the volume of
impacted every aspect of our lives and the transaction is very largein any insurance
insurance industry is not exempt from it. organization. The data and information are
The sooner insurance markets embrace the to be stored for a Longer period because
effects of globalization, the better are their insurance contracts are long term especially
chances in ensuring consistent growth in the life Insurance contracts. The Insurance
face of this unstoppable force. organizations have the network all over. the
countries even in foreign countries.
Moreover, the transactions are of repetitive
nature therefore, it has become necessary to
Business process reengineering (Financial
seek the help of machines to process the
reengineeng) Ref.txt FM(Thakur)
data.
APPLICATION OF IT IN INSRNC Initially, the Insurance companies used
adrena machines and punch card equipment
In the present scenario everyone is using
for creating, storing and processing data. But
computer one wayor the other and whenever
these machines were severely limited in
you go to the market for shopping any
their capacity. These were mechanical
departmental store there you will find billing
machines or Electramechanical machines
is computerized. The most common item
therefore, their speed, capacity and
now a days is a Mobile phone which uses
flexibility was much limited, But even the
the information technology to send the data
computers had some limitations initially,
or store the data like phone numbers or the
But these difficulties have been overcome
messages. In the latest mobile sets songs can
with the help of the recent developments in
also be stored and the mobile phone
telecommunication,
instrument can be used as computer. The
which are used to aid computer technology.
innovation in the computer field is taking at
very high pace. Under this chapter we will
INSURANCE RELATED recovery of loan may be regular or recovery
APPLICATIONS at the time of payment of claim
 Life Insurance Applications: (b) Statistics and MIS Claims: As the data
(a) Life Administration Module: in computer can be stored for longer period
Policy Servicing of existing policies: The the data may be useful for the insurer to
existing policyholders may require various prepare the type of policies are sold in the
services after taking the insurance policy For market and type of claim arisen in the
eg: Change of Nominee, Change of address, particular region. These types of data will be
of change in mode of payment, assignment useful for management to take any decision.
of the policy, Claims payment etc. These (c) Archiving of historical data and
changes or payment can be made very easily imaging Systems: As the past data is
through computers. available with life insurer therefore they can
New Business: As and when the new design the new products and price them
business is acquired the initial data of a accordingly.
policyholder is quite large and as stated  General Insurance Applications
above the data is to be maintained for longer a) Front Office System
period therefore storage of data in  Policy Management and
computeris useful underwriting system
Renewal notice/Billing: Renewal notices to  Co-insurance
be sent for the payment of the premium and  Reinsurance
with a no. of policyholders are very large  Claims Management System
and the renewal is on different dates. The  Financial’ Accounts and Audit
computer generates the renewal notice at
 Statistics and MIS
very high speed and does it automatically.
b) Reinsurance System .
The inter-mediatory bills are generated very
 Inward insurance
fast and quickly
 Outward Insurance
Loans: The Policyholders do take loans and
 Reinsurance Account
the insurer has to maintain the records as the
 MIS.
insurer has to recover the loan from the
c) Risk Management System
policyholder along with the interest. The
 Other Applications
a) Investment
  Term Loan . ..  To carry out business transactions
 Money market . efficiently
 Investment Accounts .  Easy to handle growing volume of
 Market Operations business and variety of business.

(b) Personnel System. (No. of documents processed,

 Payroll system Variety of policies issued, Volume of

 Performance Appraisals business)

 Efficient customer services
 Attendance and leave system
 Reduction in office expenses
 PF .
(C) Office Services  MIS for the Branch Managers .

 Purchases
A good Front Office System should allow
 Inventory
Insurer, Underwriters, and agents to manage
 Tours and Travels etc
the day to day operations of the office. The
 Corporate Accounting System
system should be capable of administering
General Insurance Applications
all stages of policy development from
questions to new business, through
Let us discuss about Front Office System In
adjustments by way of endorsements and
the General Insurance Industry. These
renewals of policies. Coinsurance, Claims
applications can be written in any language
re-insurance and all accounting functions.
and they may differ from Office to Office of
The main components of the Front office
The
System are given below:
different Insurance Companies. The
software namely GENESIS~ is being used
Policy Management including Underwriting
by General Insurance Companies.
(Policy acceptance and printing and
On-line Front Office System is the first step
customer services)
towards computerization of any insurance
co-insurance
Company and a well designed system at the
Re-insurance.
front offices has following advantages to the
Claims.
company.
Statistics & MIS
Accounts
 the relevant reinsurance. Claims payment
7.4 POLICY MANAGEMENT should activate co-insurer recoveries
INCLUDING UNDERWRITING wherever necessary.
Policy Management has provisions for
policy acceptance, client interaction window Reinsurance: The Front Office system
and policy printing. They should be able to generally has facility to handle all types of
store policies and the system should allow proportional reinsurance including Surplus
immediate access to a client portfolio. The and Quota Share Treaties: The system
policy management system generally has should be capable of setting up treaty layers
provisions for dealing directly through a by class of business with exposure levels
broker or an agent or branch office. varied according to the EML (estimated
Generally in a good Policy Management maximum ion). The system generally has
system The Policy” is able to handle the provision to incorporate proportional
multiple and mixed risks even if these risks reinsurance ceding automatically into any
are located at multiple locations. Policy claim payments or recoveries. The
management system has following reinsurance module automatically produces
additional features: reinsurance Bordeaux for each cedant.
 􀁺 User configured screens Claims The Front Office System includes an
 􀁺 Provision for questions integrated claims system to record, progress

 􀁺 Policy production (including and monitor claims, experience by

printing) PolicyClients brokers, Branch and risk

 􀁺 Renewals covered. Some of the features of a claims

 Endorsements module are given below

􀁺 Movement history or duration of claim
 􀁺 Coinsurance
􀁺 Analysis of claims with user defined
screens .
The front office system should have the
􀁺 Automatic recovery from reinsurers
facility to handle Coinsurance policies. The
􀁺 Incurred but not Reported (IBNR)
provisions should be such that underwriter
causation and catastrophe recording and
simply states whether the insurer is acting as
exception reporting
lead insurer or follower. They should then
􀁺 Other routine enquiries.
automatically pass the retained premium to
Accounting Billing Records containing policy number,
Front Office System allows accounting for name and address,installment premium etc.
all transactions,which occur in the operating for printing receipts and notices.
office. The accounting is generally Premium Records containing policy
integrated to policy management system and number, name and address, agency code
should automatically produce debit/credit number, installment premium, commission
notes, renewals notices, cover notes, etc. For preparing commission bills.
reminders, statements, Bordeaux, remittance Valuation Master Records containing
advices etc. The system should be able to necessary information for assessing the
handle taxes~ duties, reporting requirements liability under a policy at any point of time
as well as automatic calculation of midterm and providing necessary statistical
adjustments: information to management. When, under a
Statistics & MIS policy, some alterations in policy conditions
The statistics module should allow are effected and the installment premium
production of comprehensive statistical, consequently gets
analytical and management information,
APPLICATION OF ERP for Insurance
Reports should be in any different formats
and should include detailed audits,
Prevent your company from the negative
performance reports for management,
consequences of disjointed business-
should have provisions for exception reports
processes 
for underwriting purposes and cumulative
reports for statutory returns. Being one of the economic sectors insurance
industry requires strategic solutions both for
LIFE INSURANCE APPLICATIONS the improvement of the effectiveness of
daily business processes and for the cost-
The Operational Offices The Operational saving of such activity. Insurance companies
Office is engaged in procuring of new need flexible efficient systems for
businessand servicing of policies, Hence it information processing as they work with a
has to maintain three types of data in respect great number of clients, deal with
of the policies being serviced by it. accountable documents including the ones
for governmental entities, go regularly
through check-outs. Thus, shared  Client Database with customers’
information space is a necessity and that is contact information and the services
where an Enterprise Resource Planning they have used sorted.  
(ERP) system is likely to help one’s  Purchasing Data Management that
business start thriving. The integration of a gives access to the history of deals,
specialized application into one’s routine description of existing products and
workflow will greatly transform the working sales plans on each of them what
processes of the existing departments allows control all sales processes.
uniting them and creating an integrated  Contract Accounting
business space.  Management due to which all direct
insuring and reinsuring contracts are
ERP features and functions in insurance
available from one database and
industry
there are no difficulties in finding the

As a rule insurance companies represent a necessary one.

complicated form of business when there is  Contract Follow-up

an administrative centre and numerous Management which contains

departments. Considering the tendency of accurate information on the way

growing interest in insurance among both signed contracts are being fulfilled

juridical and physical entities it is crucial to and whether some of them are put on

provide clients with services of high quality hold or not.

– doing work quickly and efficiently. ERP  Receivables and Credit

solutions are destined to automate insurance Management that stores in one
contract accounting, calculation of insurance place the whole information
payments, preparation of insurance concerning debtors and creditors,
documentary and other necessary their contact data and the history of
procedures.  collaborative engagement with the
company.
For the owners of insurance companies ERP  Billing Management that provides
solutions with the following features: accurate control of financial
accounting for customers and
improves the processes of working
 out pricing models for insurance Highly competitive insurance business
products. requires from its players proactive reaction
 Accounting Transaction to customers’ demands and quick output of
Management which allows to new quality insurance services. Specialized
improve transaction reporting by Enterprise Resource Planning solutions
preventing one’s specialists from the undoubtedly allow to support a complete
processing of time-consuming paper- cycle of insurance production providing
work and from gathering fragmented owners of insurance companies with an
electronic documents. opportunity to:
 Cash Management with the
 Cut down the level of reserve stocks
integration of which one gets full
and increase the efficiency of
control over its cash flow having at
working processes
one’s disposal accurately processed
 Optimize business-processes in the
and analyzed data on the transactions
company by decreasing finance and
made.
time expenses
 Finance Management which
 Improve the efficiency of pricing
simplifies financial planning and
processes and budgeting
improves the level of finance data
accuracy thus strengthening  Regulate the production processes

budgeting capabilities of the according to customer demand

insurance company. changes

 Human Resource  Control the quality of one’s

Management that provides hr- insurance services in real time

managers with a comprehensive set  Make an available database with all

of tools which facilitate efficient the necessary documents sorted

personnel control covering there.

attendance, bonuses and other

Custom ERP for insurance industry
necessary HR functions.
The conditions where modern insurance
Benefits ERP can bring to insurance
companies exist are constantly changing.
industry
That is why this business requires from top-
managers of such organizations flexibility  360-degree view of critical business
and decisiveness. At Elinext Group we are functions enables total performance
sure that an enterprise planning application management
is likely to strengthen one’s positions on  Draws data captured in various
business arena and basing on our experience operational and financial systems
we offer a few variants how to integrate into a comprehensive data warehouse
painlessly an ERP system into a company of and couples it with the right tools,
any size and level of development  Ensures that your organization
outperforms competition in all core
Impact of ERP on Insurance
areas through instant information and
Management
intelligent analyses

Insurance companies across the globe are  Uncovers trends, patterns and key

passing through a phase of increased comparisons to give you complete

regulatory intervention, volatile market understanding of your best markets

conditions, falling organic growth rate and and target them for growth

fast changing customer preferences. Each of  Delivers interactive business

these factors significantly impact both the intelligence to your digital devices,
top and bottom line of insurance businesses. fostering paperless reviews and
monitoring .
Being an industry which works on the
principle - ‘Law of Large numbers’, the 1. Agent Management
Insurance Industry today has to grapple with
Big data to arrive at meaningful information.
The Agent Management module of The ERP
With the rapid changes facing the industry, a
helps you compare new businesses achieved
good business intelligence tool can provide
as across geographies, channels and
you with deeper and more incisive insights
products. This helps you to achieve the
into the multiple facets of the insurance
planned profitability as you will be able to
business.
identify and analyze trends across channels,
leading to mid-year corrective measures.
  Understand the sales behavior of  Monitor trends in lapsation, in terms
agents, managers and channel of products, premium modes,
partners, leading to better reward channels and geographies
programs, relationship maintenance  Aid in devising suitable policy
matrix and key partner retention revival strategies
strategies  Connect with customers directly and
 Compare the performance of various pave the way for up selling and cross
distribution channels and provide selling with a close monitoring of
drill down capability to the level of High Value premium
individual agents and products  Improve customer retention by
 Assess the effectiveness of helping insurer address the
developmental actions initiated underlying causes of lapsation
through periodical measurement of
performance. 3. Claims Management

2. Policy Management Claims module helps in constant tracking

This module provides analytical reports to help and reporting on registered claims and their
you assess inter alia the operational efficiency of progress in terms of settlement, thus
the policy issuance primarily. A ‘Cause avoiding unnecessary delays in claim
analysis’ can help in understanding the delay in payment and leading to higher customer
processing across channels, geographies and satisfaction and compliances.
product lines and help in quick follow up and ,
leading to least proposal withdrawals.  Understand the trends in claims in
terms of products, channels and
The ERP - Insurance allows you to analyze
geographies and provide insight into
the leakages in the new business like
product profitability and pricing
Cheque Bounces, Proposal Withdrawals and
 Analyzing trends in claims and loss
Not Taken Up (NTU) by customers across
patterns across channels, products,
geographies and channels, thus helping in
and geographies, thus helping to
early identification of wrong sales practices.
spot fraud and optimize reserve
requirement
  In respect of health insurance, any product or product line by
abuse by medical practitioners can geography, and by distribution
be easily identified through analysis channel
of patterns of payouts.  Assess the productivity and
profitability of each product,
4. Customer Management
geography and distribution channel
The Customer Management module
supports detailed analysis of product wise CRM (Customer Relationship
customer demographics and throws light on Management)
the customer segment across product lines.
Customer relationship management (CRM)
 Help devise strategies for furthering is a term that refers to practices, strategies
the business and technologies that companies use to
 Customer segmentation can be used manage and analyze customer interactions
for devising the most appropriate and data throughout the customer lifecycle,
customer engagement activities like with the goal of improving customer service
communication and performance relationships and assisting in customer
updates to ensure retention and retention and driving sales growth. Tim
upsell to customers. Ehrens

5. Profitability Management CRM systems compile customer data across

The Profitability Management module different channels -- or points of contact
provides a periodical analysis of key ratios between the customer and the company --
like Retention Ratio, Conservation Ratio and which could include the company's website,
Expenses Ratio, which can throw light on telephone, live chat, direct mail, marketing
the profitability of the business and help materials and social media. CRM systems
avoid costs and underwriting over runs. can also give customer-facing staff detailed
These key ratios are presented in a information on customers' personal
dashboard format. information, purchase history, buying
preferences and concerns.
 Premium analysis allows you to
closely track the performance of a Components of CRM
At the most basic level, CRM software  Sales force automation. Sales force
consolidates customer information and automation tools track customer
documents into a single CRM database so interactions and automate certain
business users can more easily access and business functions of the sales cycle
manage it. that are necessary to follow leads and
attract and obtain new customers.
Over time, many additional functions have
 Contact center automation.
been added to CRM systems to make them
Designed to reduce tedious aspects
more useful. Some of these functions
of a contact center agent's
include recording various customer
job, contact center automation might
interactions over email, phone, social media
include prerecorded audio that assists
or other channels; depending on system
in customer problem-solving and
capabilities, automating various workflow
information dissemination. Various
automation processes, such as tasks,
software tools that integrate with the
calendars and alerts; and giving managers
agent's desktop tools can handle
the ability to track performance and
customer requests in order to cut
productivity based on information logged
down on the time of calls and to
within the system.
simplify customer service processes.

 Marketing automation. CRM tools  Geolocation technology, or

with marketing location-based services. Some CRM

automation capabilities can automate systems include technology that can

repetitive tasks to enhance marketing create geographic marketing

efforts at different points in the campaigns based on customers'

lifecycle. For example, as sales physical locations, sometimes

prospects come into the system, it integrating with popular location-

might automatically send the based GPS apps. Geolocation

prospects marketing materials, technology can also be used as a

typically via email or social media, networking or contact management

with the goal of turning a sales lead tool in order to find sales prospects

into a full-fledged customer. based on a location.

 Einstein, have been built into CRM
CRM tools specifically for social media platforms to automate repetitive
platforms help companies foster customer tasks, identify customer buying
relationships and monitor customer patterns to predict future customer
sentiments around their brands. behaviors and more.

 Workflow automation. CRM Types of CRM technology

systems help businesses optimize
The four main vendors of CRM systems
processes by streamlining mundane
are Salesforce, Microsoft, SAP and Oracle.
workloads, enabling employees to
Other providers are popular among small- to
focus on creative and more high-
midmarket businesses, but these four tend to
level tasks.
be the choice for large corporations. The
 Lead management. Sales leads can
types of CRM technology offered are as
be tracked through CRM, enabling
follows:
sales teams to input, track and
analyze data for leads in one place.
 On-premises CRM. This
 Human resource management. system puts the onus of
CRM systems help track employee administration, control, security and
information, such as contact maintenance of the database and
information, performance reviews information on the company using
and benefits within a company. This the CRM software. With this
enables the human resource approach, the company purchases
department to more effectively licenses upfront instead of buying
manage the internal workforce. yearly subscriptions from a cloud
 Analytics. Analytics in CRM help CRM provider. The software resides
create better customer satisfaction on the company's own servers and
rates by analyzing user data and the user assumes the cost of any
helping create targeted marketing upgrades. It also usually requires a
campaigns. prolonged installation process to
 AI in CRM. Artificial intelligence fully integrate a company's data.
technologies, such as Salesforce Companies with complex CRM
 needs might benefit from an on- acquired by another company, an
premises deployment. enterprise's data can be compromised
or lost. Compatibility issues can also
 Cloud-based CRM. With cloud- arise when data is initially migrated
based CRM -- also known from a company's internal system to
as SaaS (software as a service) or on- the cloud.
demand CRM -- data is stored on an
external, remote network that Finally, cost may be a concern, since
employees can access anytime, paying subscription fees for software
anywhere there is can be more costly over time than
an internet connection, sometimes on-premises models.
with a third-party service provider
overseeing installation and
CRM systems have moved far beyond
maintenance. The cloud's quick,
traditional customer profiling functions.
relatively easy deployment
capabilities appeal to companies with
 Open source CRM. An Open
limited technological expertise or
source CRM system make source
resources.
code available to the public, enabling
companies to make alterations at no
Companies might consider cloud
cost to the company employing the
CRM as a more cost-effective
system. Open source CRM systems
option. Vendors such as Salesforce
also enable the addition and
charge by the user on a subscription
customization of data links on social
basis and offer the option of monthly
media channels, assisting companies
or yearly payments.
looking to improve social
Data security is a primary concern CRM practices.
for companies using cloud-based
Open Source CRM platforms such as
systems, as the company doesn't
OroCRM, SuiteCRM and
physically control the storage and
SugarCRM offer alternatives to the
maintenance of its data. If the cloud
proprietary platforms from
provider goes out of business or is
 Salesforce, Microsoft and other To add value to customer
vendors. interactions on social media,
businesses use various social CRM
Adoption of any of these CRM
tools that monitor social media
deployment methods depends on a
conversations -- from specific
company's business needs, resources
mentions of a brand to the frequency
and goals, as each has different costs
of keywords used -- to determine
associated with it.
their target audience and which
platforms they use. Other tools are
CRM examples in practice
designed to analyze social media
 Contact center. Traditionally, data feedback and address customer
intake practices for CRM systems queries and issues.
have been the responsibility of sales
Companies are interested in
and marketing departments, as well
capturing customer sentiments, such
as contact center agents. Sales and
as the likelihood they will
marketing teams procure leads and
recommend products and their
update the system with information
overall customer satisfaction, to
throughout the customer lifecycle,
develop marketing and service
and contact centers gather data and
strategies. Companies try to integrate
revise customer history records
social CRM data with other customer
through service calls and technical
data obtained from sales or
support interactions.
marketing departments to get a
 Social CRM. Social media in CRM
single view of the customer.
involves businesses engaging
customers directly through social Another way in which social CRM
media platforms, such adds value for companies and
as Facebook, Twitterand LinkedIn. customers is through customer
Social media presents an open forum communities, where customers post
for customers to share experiences reviews of products and can engage
with a brand, whether they're airing with other customers to troubleshoot
grievances or promoting products. issues or research products in real
 time. Customer communities can into leads and, therefore, increase
provide low-level customer service efficiency throughout the sales
for certain kinds of problems and process.
reduce the number of contact center
CRM challenges
calls. Customer communities can
also provide new product ideas or
For all of the advancements in CRM
feedback that companies can use in
technology, without the proper management,
lieu of feedback groups.
a CRM system can become little more than a
glorified database in which customer
 Mobile CRM. CRM applications
information is stored. Data sets need to be
built for smartphones and tablets
connected, distributed and organized so that
have become a must-have for sales
users can easily access the information they
representatives and marketing
need.
professionals who want to access
customer information and perform
What are the three most important things
tasks when they are not physically in
to consider when choosing a CRM system
their offices. Mobile CRM apps take
for your company?
advantage of features that are unique
to mobile devices, such as GPS and Companies may struggle to achieve a single
voice-recognition capabilities, to view of the customer if their data sets aren't
give sales and marketing employees connected and organized in a single
access to customer information from dashboard or interface. Challenges also arise
anywhere. when systems contain duplicate customer
 Business-to-business (B2B) data or outdated information. These
practices. A CRM system in a B2B problems can lead to a decline in customer
environment helps monitor sales as experience due to long wait times during
they move through the sales funnel, phone calls, improper handling of technical
enabling a business to address any support cases and other issues.
issues that might come up during the
CRM systems work best when companies
process. CRM systems in the B2B
spend time cleaning up their existing
market help create more visibility
customer data to eliminate duplicate and
incomplete records before they supplement An insurer is also regulated by the states in
CRM data with external sources of which it does business. The states expect the
information. insurer to establish reasonable, non-
discriminatory standards for accepting
insured. Rate for any types of insurance
MODULE 5
must be approved by the states in which the
insurer does business. Regulation is another
UNDERWRITING AND SETTLEMENT
important factor in the underwriting process.
OF CLAIM

CLAIM SETTLEMENT
Underwriting is the process of determining
Payment of claim is the ultimate objective of
whether an insured is an acceptable risk, and
life insurance and the policyholder has
if so, at what rate the insured will be
waited for it for a quite long time and in
accepted. Insurers cannot accept every
some cases for the entire life time literally
applicant. An insurer has a responsibility to
for the payment. It is the final obligation of
its current policyholders to make sure that it
the insurer in terms of the insurance
will be able to meet all the contractual
contract, as the policyholder has already
obligations of its existing policies. If the
carried out his obligation of paying the
insurance company issues policies on
premium regularly as per the conditions
applicants that represent risks that are
mentioned in the schedule of the policy
uninsurable or risks that require premiums
document.
higher than the insurer may charge can
The policy document also mentions in the
cover, the insurer’s ability to meet its
schedule the event or events on the
contractual obligations is jeopardized. On
happening of which the insurer shall be
the other hand, a for-profit insurer wants to
paying a predetermined amount of money.
make money and to increase its number of
policyholders. No insurer wants to reject
There may be three types of claim in life
applicants unnecessarily. All these factors
insurance policies–
must be taken into consideration in the
1. Survival Benefit Claim
underwriting process.
2. Maturity Benfit Claim
3. Death Benefit Claim
We shall discuss hereunder the details of sent in advance with the instruction to return
each category ofclaims. it immediately.
Survival Benefit : If the life assured dies after the maturity
Survival benefit is not payable under all date, but before receiving the claim, there
types of plans. It is payable in endowment or arises a typical problem as to who is entitled
money back plans after a lapse of a fixed to receive the money. As the policyholder
period say 4 or 5 years, provided firstly the was surviving till the date of maturity, the
policy is inforce and secondly the nominee is not entitled to receive the
policyholder is alive. As the insurer sends claim.The policy under such conditions is
out premium notices to the policyholder for treated as a death claim where the policy
payment of due premium, so it sends out does not have a nomination. The insurer in
intimation also to the policyholder if and such a case shall ask for a will or a
when a survival benefit falls due. The letter succession certificate, before it can get a
of intimation of survival benefit carries with valid discharge for payment of this maturity
it a claim.
discharge voucher mentioning the amount
payable. The policyholder has merely to Death Claim
return the discharge voucher duly signed If the life assured dies during the term of the
along with the policy document. The policy policy, the death claim arises. If the death
document is necessary for endorsement to has taken place within the first two years of
the effect that the survival benefit which was the commencement of the policy, it is called
due has been paid. an early death claim and if the death has
The survival benefit can take different forms taken after 2 years, it is called a non early
under different types of policies. death claim.
Maturity Claim
It is a final payment under the policy as per CLAIM DOCUMENTS & FORMS AND
the terms of the contract. Any insurer is SETTLEMENT PROCEDURE
under obligation to pay the amount on the The documents required for payment of
due date. Therefore the intimation of maturity claim :
maturity claim and discharge voucher are (i) Age proof, if age is not admitted.
(ii) Original policy document for In other cases, the satisfactory evidence of
cancellation title to the estate of the deceased is required
(iii) In case assignment is executed on a from competent court of law.
separate paper, that document has to be
surrendered.
(iv) Discharge form duly executed. eg:
(v) Indemnity bond in case the policy (i) A probate of the will, if a will has been
document is lost order duly executed by the executed by the deceased life assured.
policyholder and a surety of sound financial (ii) A succession certificate if no will has
standing. been left.
The documents required for payment of (iii) A certificate from the Administrator
a death claim. General, if the total amount of the estate left
(i) An intimation of death by the nominee or does not exceed Rs. 2,000/-.
a near relative. In case there is a rival claim court’s
(ii) Proof of age if not already admitted. prohibitory order may be required to prevent
(iii) Proof of death. the insurer from making the payment to the
(iv) Doctor’s certificate who attended the nominee as mentioned in the policy
deceased during his last illness. document.
(v) Identity certificate from a reputable
Life insurance claim settlement: Filling &
person who saw the body of the deceased
documentation. Selection of a proper life
life assured.
insurance policy is a basic requirement of
(vi) Certificate of cremation or burial from a
individual’s risk management policy. At the
reputable person who attended the funeral.
same time proper claim settlement is also an
(vii) An employer certificate if any, of the
important part of the risk management
deceased.
system. A claim is the payment made by the
If the policy has been assigned validly or if
insurer to the insured or claimant on the
there is a valid nomination in the policy
occurrence of the event specified in the
document, no further proof of title to the
contract, in return for the premiums paid for
policy money is necessary.
the insured. The easy and timely settlement
of a valid claim is an important function of
an insurance company.
 In this article we have discussed different
Claim Settlement Process: Death Claim
types of life insurance claims the settlement
process of that.
Step One: Intimation of Claim The
claimant must submit the written intimation
A claim may arise in three basic
as soon as possible to enable the insurance
company to initiate the claim processing.
The claim intimation should consist of basic
information such as policy number, name of
the insured, date of death, cause of death,
place of death, name of the claimant etc
.Claim intimation form can be availed from
nearest branch of the insurance company
or/and by downloading it from the company
website.

Step Two: Documentation The claimant

will be required to provide the following
conditions: documents along with a claimant's
statement:

I.
Certificate of Death
  II. Proof of age of the life assured (if not
already given)
III. Deeds of assignment / reassignments (if

  required)
IV. Policy document
V. Any other document as per requirement
of the insurer
 
For early death Claim, (If the claim has After receiving the required documents the
accrued within three years from the company calculates the amount payable
beginning of the policy), the following under the policy. For this purpose, a form is
additional requirements may be called for: filled in which the particulars of the policy,
bonus, nomination, assignment etc. should
I. Statement from the hospital if the
be entered by reference to the Policy Ledger
deceased had been admitted to hospital
Sheet. If a loan exists under the policy, then
II. Certificate of medical attendant of the
the section dealing with loan is contacted to
deceased giving details of his/her last illness
give the details of outstanding loan and
III. Certificate of cremation or burial to be
interest amount, which is deducted from the
given by a person of known character and
gross policy amount to calculate net payable
responsibility present at the cremation or
claim amount. Generally all claim payments
burial of the body of the deceased
would be made through the electronic fund
IV. Certificate by employer if the deceased
transfer.
was an employee
Maturity & Survival Claims:
Step Three: Submission of required
Documents for Claim Processing For The payment by the insurer to the insured on
faster claim processing, it is essential that the date of maturity is called maturity
the claimant submits complete payment. The amount payable at the time of
documentation as early as possible. the maturity includes a sum assured and
bonus/incentives, if any. The insurer sends
Step Four: Settlement of Claim As per the
in advance them intimation to the insured
regulation 8 of the IRDA (Policy holder's
with a blank discharge form for filling
Interest) Regulations, 2002, the insurer is
various details in it. It is to be returned to the
required to settle a claim within 30 days of
office along with Original Policy document,
receipt of all documents including
ID proof, Age proof if age is not already
clarification sought by the insurer. If the
submitted, Assignment /reassignment, if any
claim requires further investigation, the
and Copy of claimant’s Bank Passbook &
insurer has to complete its procedures within
Cancelled Cheque. Settlement procedure for
six months from receiving the written
maturity claim is simple after receipt of
intimation of claim.
completed and stamped discharge form from
the person entitled to the policy money Office and obtain a copy of the
along with policy documents, claim amount maturity intimation.
will be paid by account payee cheque.   Policy Document (if not in the
custody of LICI as security for loan):
PROCEDURE FOR SETTLEMENT OF
On receipt of the maturity intimation,
MATURITY CLAIMS
the policyholder should send the
original policy document along with
Settlement of maturity claims:
the last receipt of insurance premium
Under LICI, claims can arise on the
paid. The policy document needs to
maturity of the policy of the policy
be submitted in original unless it is
holder. The processing of claims by
in custody of LICI as security for the
maturity is normally undertaken by
loan.
the Divisional Office of LIC about
two months before the date of  Age proof document (if age has not

maturity. . The LICI sends intimation been admitted earlier): The

before the maturity date. If the notice policyholder should also submit

of maturity is not received and the  his age proof to the Corporation in

date of maturity is known to the case it has not already been

policyholder, then the policyholder submitted. In case, the policyholder

can take the necessary steps to get has already submitted his age proof

the due Maturity amount. The to LICI, the form of Discharge

Corporation sends Maturity (Form No. 3825) to be executed by

Intimation along with the discharge the policyholder, is also sent along

forms to the policyholder informing with the Maturity Intimation.

him about the requirements of the  L.I.C. accepts following documents

settlement of claims. as valid age proofs:

 In case the maturity intimation is  Horoscope of the assured

not received by the policyholder till  Certificate relating to the baptism

around 2 months before the date on ceremony among Christians
which the policy matures, he should  Birth certificate from the Municipal
contact the concerned Divisional Corporation
 High School Certificate
  Service book death Rider etc). But in some other cases
different documents can be required for
For Survival Benefit claim, Policy bond and along with the duly filled Claim form &
discharge voucher is required. Policy Copy:

Regarding maturity claims certain points

 For Critical Illness Rider, necessary
are to be remembered.
medical documents such as first
investigation report, Doctor’s
 If the life assured is reported to have
prescription, Discharge Summery etc
died after the date of maturity but
are required
before the receipt is discharged, the
 For Accidental disability rider,
claim is to be treated as the maturity
Attested copy of FIR, Doctor
claim and paid to the legal heirs. In
Certificate of disability, Photograph
this case death certificate and
of the injured with reflecting
evidence of title is required.
disablement, Original Medical bills
 Where the assured is known to be
with prescriptions/ treatment papers
mentally deranged, a certificate from
etc are required.
the court of law under the Indian
 For Hospital cash rider medical
Lunacy Act appointing a person to
documents are required such as
act as guardian to manage the
Medical & Investigation report,
properties of the lunatic should be
Prescriptions, Medical and
called.
Investigation Bills, Discharge Card
Rider Claims: etc.

The life insurance policy can be attached The Insurance Regulatory and
with different riders like accidental rider, Development Authority has issued the
Critical illness Rider, Hospital cash Rider, Protection of Policyholders’ Interests
waiver of Premium Rider etc. For different Regulations2002. This regulation states
Riders different proceedings can be opted the matters to be stated in the life
for claim settlement. In some cases the claim insurance policy for the protection of
may proceed as well as with the death Claim policyholders interests. It also lays down
(Like Waiver of premium rider, accidental the procedure to be adopted toward the
settlement of claim under a life earliest, in any case not later than 6
insurance policy. months from the time of lodging the
claim.
Claims procedure in respect of a life (iv) Subject to the provisions of Section
insurance policy 47 of the Act, where a claim is ready for
(i) A life insurance policy shall state the payment but the payment cannot be
primary documents which are normally made due to any reasons of a proper
required to be submitted by a claimant in identification of the payee, the life
support of a claim. insurer shall hold the amount for the
(ii) A life insurance company, upon benefit of the payee and such an amount
receiving a claim, shall process the claim shall earn interest at the rate applicable
without delay. Any queries or to a savings bank account with a
requirement of additional documents, to scheduled bank (effective from 30 days
the extent possible shall be raised all at following the submission of all papers
once and not in a piecemeal manner, and information).
within a period of 15 days of the receipt (v) Where there is a delay on the part of
of the claim. the insurer in processing a claim for a
(iii) A claim under a life policy shall be reason other than the one covered by
paid or be disputed giving all the sub-regulation (4), the life insurance
relevant reasons, within 30 days from company shall pay interest on the claim
the date of receipt of all relevant papers amount at a rate which is 2%above the
and clarifications required. However, bank rate prevalent at the beginning of
where the circumstances of a claim the financial year in which the claim is
warrant an investigation in the opinion reviewed by it.
of the insurance company, it shall PROPOSAL FORMS
initiate and complete such investigation
Definition of 'Proposal Form'
at the earliest. Where in the opinion of
the insurance company the
Definition: Proposal form is the most
circumstances of a claim warrant an
important and basic document required for
investigation, it shall initiate and
life insurance contract between the insured
complete such investigation at the
and insurance company. It includes the
insured's fundamental information like to the insurance policy and hence deciding
address, age, name, education, occupation the premium amount.
etc. It also includes the person's
medicalhistory. ELEMENTS OF PROPOSAL FORMS

1. Name
Description: A life insurance company
offers a policy on the basis of a proposal
Name of proposer is very important for
form. The form is the most basic
identification. It should be correctly and
requirement for the functioning of the life
accurately written so that the policy can
insurance contract between you and the life
incorporate the correct name and identity.
insurance company. It needs to be
completed by the proposer who may seek 2. Address
the assistance of a life insurance advisor to
Address should be accurately given because
fill it up.
of several reasons, such as, identity and
communication, and sometimes this is
A proposal form seeks basic information of
important for rating purpose, e, g., motor,
the proposer and the life assured. This
burglary etc.
includes the name, age, address, education
and employment details of the proposer. The
3. Occupation
proposal form also gathers information on
the medical history of the life to be assured. Information as to occupation is particularly
There are questions pertaining to the health important in case of life insurance, personal
status of family members of the life to be accident insurance and liability insurance as
assured. The proposer and the life to be this will influence the rate or decision of an
assured have to mention their incomes in the underwriter.
proposal form to satisfy the insurer about
their ability to pay for the insurance and the 4. Subject-matter

need for insurance, respectively.

This is the subject-matter of insurance and,
therefore, should be properly described so
Proposal form helps the insurance company
that correct insertion can be made on the
to calculate all the potential risks in relation
policy.
5. Sum-insured 8. Declinature

The amount for which insurance cover is The insurer would like to know whether any
required should be adequately mentioned. insurance of this proposer was previously
This is the limit of the insurer’s liability. It declined by any other insurers. This
must represent the actual value of the information would enable the insurer to find
property or the subject-matter of insurance. out from other insurers the cause of
declinature.
6. Claims History
9. Declaration
This has an influence on underwriter’s
decision and must, therefore, be truthfully Every proposal form contains a declaration
answered. Details of all previous related to the effect that;
losses, whether insured or not, must be
1. The answers given in the proposal
correctly given.
form are true and nothing has been
7. Other Insurances concealed or misrepresented.
2. The proposer agrees to pay the
Information as to other past or present
premium and accept a policy that is
related insurances is required to be given.
usually issued by the insurer for that
This is important for applying contribution
class of business.
amongst various policies wherever
3. The proposal form and the
applicable.
declaration shall form the basis of
the contract.
This is also important for assessing the
moral hazard of the proposer since it might
10. Signature
indicate the reason of effecting numbers of
policies. Information as to other insurances The proposal is required to be signed by the
also enables the insurer to make necessary proposer or by the authorized person when
queries with other insurers about the the proposer is not an individual.
proposer.
11. Date

The signature is to be dated.

COVER NOTES company or broker verifying the existence of an
insurance policy and summarizing key aspects
A cover note is a temporary document and conditions of the policy. For example, a
issued by an insurance company that standard certificate of insurance lists the
provides proof of insurance coverage until a policyholder's name, policy effective date, the
final insurance policy can be issued. A cover type of coverage, policy limits, as well as other

note is different from a certificate of important details of the policy. 

insurance or an insurance policy document.

Importance of Certificate of Insurance
A cover note features the name of the
insured, the insurer, the coverage and what A certificate of insurance is often required
is being covered by the insurance. for business owners and contractors to win
contracts. Because many companies and
Insurance companies issue a cover note in
individuals hire contractors, the client needs
order to provide an individual with proof of
to know that a business owner or contractor
insurance before all the insurance paperwork
has liability insurance and that they may not
has been processed. During this time, the
be held liable for damages, injuries, or
insurer may continue to evaluate the risks
substandard work.
associated with insuring the holder of the
cover note, and the cover note will continue Validating a Certificate of Insurance
to serve as the insured’s proof that he or she
has purchased coverage until the insurer Typically, a client will request a certificate

issues the policy documents and certificate directly from the insurance company, rather

of insurance. In general, the cover note than through the business owner or

provides the same level of coverage as the contractor. The client should confirm the

full insurance policy, though insurers may name of the insured on the certificate is an

place some restrictions while they make any exact match for the company or contractor

final determinations on the risks associated they are considering. Also, the client should

with the insurance policy. check the policy coverage dates to ensure
the effective date of the policy is current.

CERTIFICATEOFINSURANCE Secure a new certificate if the policy is set to

A certificate of insurance (COI) is a non- expire before the contracted work is

negotiable document issued by an insurance complete.
Details of a Certificate of Insurance limits the policy offers by category and
indicates whether coverage applies on a per
A certificate of insurance contains separate
claim or per occurrence basis. Because state
sections for different types of liability
laws determine the benefits provided to
coverage listed as general, auto, umbrella,
injured workers, the worker’s compensation
and workers' compensation. “Insured” refers
coverage will show no limit.
to the policyholder, the person or company
However, employer’s liability
who appears on the certificate as being
coverage limits should be listed.
covered by the insurance.
ENDORSEMENTS
In addition to coverage levels, the certificate
includes the policyholder's name, mailing An insurance endorsement is an amendment
address, and describes the operations the or addition to an existing insurance contract
insured performs. The address of the which changes the terms or scope of the
issuing insurance company is listed, along original policy. Endorsements may also be
with contact information for the insurance referred to as riders. An insurance
agent or the insurance agency’s contact endorsement may be used to add, delete,
person. If several insurance companies are exclude or otherwise alter coverage. An
involved, all names and contact information insurance endorsement may be issued mid-
are listed.  term, at the time of purchase, or at
renewal. The insurance endorsement is a
When a client requests a COI, they become
legally binding amendment to the insurance
a certificate holder. Name and contact
contract. 
information appears in the bottom left-hand
corner along with statements showing the purpose of an insurance endorsement The
insurer's obligation, if any, to notify of purpose of an endorsement is a policy
policy cancellations. change. Insurance companies create
endorsements to offer options to insureds to
The certificate briefly describes the
add coverage or increase coverage limits,
insured’s policies and limits provided for
but insurers may also issue special
each type of coverage. For example, the
endorsements to limit or restrict coverage.
general liability section summarizes the six
Insurance endorsements are used in property
and casualty insurance. You may have It forms part of your insurance agreement
endorsements issued on home, renters, and you should always keep a copy of it
condo, automobile and watercraft insurance with your original policy documents.
policies, among others. 
Example: Sometimes it may be stated that
How long is an insurance endorsement the endorsement replaces the previous
valid? An endorsement alters the policy and version of your contract, for example in the
becomes part of your legal insurance case where you change address, the previous
contract. It remains in force until the expiry policy contract with the old address is no
of the policy and may renew under the same longer valid. In a case like that, the
terms and conditions as the rest of your endorsement replaces the original contract
policy. The exception to this is if the document.
endorsement specifies a specific term which
2.The insurance endorsement may also
the endorsement is valid.
refer to a clause or rider
Example of an insurance endorsement
When an endorsement adds coverage to your
with a limited term
policy, lists additional conditions to the
An endorsement that reads: "It is understood contract, adds coverage such as an insurance
and agreed that liability will be extended to rider, or adds restrictions on coverage or
an additional location at X address from limitations following underwriting by the
June 1, 2017, to June 30, 2017."  contains a insurance company, then it may be done as
specified date range for the endorsement or an endorsement. The entire policy wording
agreement to the policy amendment. or contract is not affected, only the specified
new terms, therefore the endorsement
Two Kinds of Insurance Endorsements
becomes an add-on to the policy and should
be kept with the original document.
1. The insurance endorsement is the new
document that you receive after making a
Basics of an Insurance Endorsement
policy change
An insurance endorsement is a policy
change that may
 1. Add to the coverage of an insurance In every risk, an element of moral hazard
policy may be to some degree, always present.
2. Limits or deletes coverage of a
 Examples of Moral Hazard:
policy
3. Adds or deletes people and locations
1. An employer’s indifference to Health
on an insurance policy
and Safety regulations increases the
4. May be added mid-term
chances of claims and is an example
5. Premiums may be adjusted as a
of poor moral hazard.
result of an insurance endorsement  
2. A moral hazard exists when a person
wants to take out a policy with the
intent to make a profit – fraud.
3. Shabby maintenance of a property
MORAL AND PHYSICAL HAZARDS 
and bad administration is an example
Hazard is a condition or situation that of poor moral hazard. This can also
increases the chance of loss in an insured be considered a physical hazard as an
risk. There are two elements to hazard that untidy premises is a sign of bad
an insurers needs to carefully consider, that maintenance and can lead to claims.
is, the physical hazard and the moral hazard. 4. Excessive over insurance is another
Both contribute to the chance of a loss poor moral hazard.

Moral Hazards are concerned with the  

attitude and conduct of people. They
Physical Hazards are physical conditions
indicate those dangers which relate to
that increase the possibility of a loss. They
character, integrity and mental attitude of
indicate the dangers of the subject of
the insured. They are losses that result from
insurance which can be identified by
dishonesty or indifference. Insurance
inspection of the risk.
Companies suffer losses because of
fraudulent or inflated claims. These are not
 Examples of Physical Hazard:
visible and cannot be identified by mere
inspection of the risk or subject of insurance.
Fire policy – nature and construction of the Physical hazard can be seen, assessed and rated
building and whether materials used are of a accordingly whereas moral hazards are not

combustible or non-combustible nature. visible and cannot be assessed.

Nature of occupation of the premises – storage  Physical hazards can be dealt with by
of hazardous materials etc. applying excesses, loadings, cover
exclusions or other conditions. Moral
Maintenance and upkeep of the premises. hazards cannot be easily checked or
controlled by such methods so these are
System of heating and lighting – electrical
dealt with by cautious and selective
wiring checked on a regular basis and up to
underwriting at the outset.
date.

2. Burglary policy – construction,

TPAs
security, nature of contents,
A third-party administrator (TPA) is an
reputation of area etc. are all
organization that processes insurance claims or
examples of physical hazard.
certain aspects of employee benefit plans for a
3. Liability policy – nature of separate entity.[1] It is also a term used to define
construction, occupation of premises, organizations within the insurance industry
history of past liabilities, health and which administer other services such as
safety awareness, properly underwriting, customer service. This can be
maintained plant and equipment, viewed as outsourcing the administration of the

untidy and poorly controlled or over- claims processing, since the TPA is performing

congested premises. a task traditionally handled by the company

providing the insurance or the company itself.
Distinction between Physical and Moral Often, in the case of insurance claims, a TPA
Hazards: handles the claims processing for an employer
that self-insures its employees. Thus, the
Physical hazard relates to the subject-matter of employer is acting as an insurance company and
insurance whereas moral hazard relates to the underwrites the risk. The risk of loss remains
character, integrity and mental attitude of the with the employer, and not with the TPA. An
insured. insurance company may also use a TPA to
manage its claims processing, provider
networks, utilization review, or membership
functions. While some third-party administrators system. The institution has helped to
may operate as units of insurance companies, generate and sustain the faith and confidence
[citation needed]
they are often independent. amongst the consumers and insurers.

Third-party administrators also handle many

Appointments of Insurance Ombudsman
aspects of other employee benefit plans such
The governing body of insurance council
as the processing of retirement plans and
issues orders of appointment of the
flexible spending accounts. Many employee
insurance Ombudsman on the
benefit plans have highly technical aspects
recommendations of the committee
and difficult administration that can make
comprising of Chairman, IRDA, Chairman,
using a specialized entity such as a TPA
LIC, Chairman, GIC and a representative of
more cost effective than doing the same
the Central Government. Insurance council
processing in house.
comprises of members of the Life Insurance
Arbitration council and general insurance council
formed under Section 40 C of the Insurance
Procedure in which an insurance company Act, 1938. The governing body of insurance
and the insured or a vendor agree to settle a council consists of representatives of
claim dispute by accepting a decision made insurance companies.
by a third party.

Eligibility
INSURANCE OMBUDSMAN
Ombudsman are drawn from Insurance
The institution of Insurance Ombudsman Industry, Civil Services and Judicial
was created by a Government of India Services.
Notification dated 11th November, 1998
Terms of office
with the purpose of quick disposal of the
grievances of the insured customers and to
An insurance Ombudsman is appointed for a
mitigate their problems involved in redressal
term of three years or till the incumbent
of those grievances. This institution is of
attains the age of sixty five years, whichever
great importance and relevance for the
is earlier. Re-appointment is not permitted..
protection of interests of policy holders and
also in building their confidence in the
Territorial jurisdiction ofOmbudsman An Ombudsman may be removed from
service for gross misconduct committed by
he governing body has appointed twelve him during his term of office. The governing
Ombudsman across the country allotting body may appoint such person as it thinks fit
them different geographical areas as their to conduct enquiry in relation to misconduct
areas of jurisdiction. The Ombudsman may of the Ombudsman. All enquiries on
hold sitting at various places within their misconduct will be sent to Insurance
area of jurisdiction in order to expedite Regulatory and Development Authority
disposal of complaints. The offices of the which may take a decision as to the
twelve insurance Ombudsmans are located proposed action to be taken against the
at (1) Bhopal, (2) Bhubaneswar, (3) Cochin, Ombudsman. On recommendations of the
(4) Guwahati, (5) Chandigarh, (6) New IRDA, the Governing Body may terminate
Delhi, (7) Chennai, (8) Kolkata, (9) his services, in case he is found guilty.
Ahmedabad, (10) Lucknow, (11) Mumbai,
(12) Hyderabad. The areas of jurisdiction of Power of Ombudsman
each Ombudsman has been mentioned in the
list of Ombudsman. Insurance Ombudsman has two types of
functions to perform (1) conciliation, (2)
Office Management Award making. The insurance Ombudsman
is empowered to receive and consider
The Ombudsman has a secretarial staff complaints in respect of personal lines of
provided to him by the insurance council to insurance from any person who has any
assist him in discharging his duties. The grievance against an insurer. The complaint
total expenses on Ombudsman and his staff may relate to any grievance against the
are incurred by the insurance companies insurer i.e.
who are members of the insurance council in
(a) any partial or total repudiation of claims
such proportion as may be decided by the
by the insurance companies, (b) dispute with
governing body.
regard to premium paid or payable in terms
of the policy, (c) dispute on the legal
Removal from office
construction of the policy wordings in case should not be pending with before any court,
such dispute relates to claims; consumer forum or arbitrator.

(d) delay in settlement of claims and (e)

Recommendations of the Ombudsman
non-issuance of any insurance document to
When a complaint is settled through the
customers after receipt of premium.
mediation of the Ombudsman, he shall make
the recommendations which he thinks fair in
Ombudsman's powers are restricted to
the circumstances of the case. Such a
insurance contracts of value not exceeding
recommendation shall be made not later than
Rs. 20 lakhs. The insurance companies are
one month and copies of the same sent to
required to honour the awards passed by an
complainant and the insurance company
Insurance Ombudsman within three months.
concerned. If the complainant accepts
recommendations, he will send a
Manner of lodging complaint
communication in writing within 15 days of
The complaint by an aggrieved person has to
the date of receipt accepting the settlement.
be in writing, and addressed to the insurance
Ombudsman of the jurisdiction under which
Award
the office of the insurer falls. The complaint
can also be lodged through the legal heirs of
The ombudsman shall pass an award within
the insured. Before lodging a complaint:
a period of three months from the receipt of
i) the complainant should have made a
the complaint. The awards are binding upon
representation to the insurer named in the
the insurance companies.
complaint and the insurer either should have
rejected the complaint or the complainant
If the policy holder is not satisfied with the
have not received any reply within a period
award of the Ombudsman he can approach
of one month after the concerned insurer has
other venues like Consumer Forums and
received his complaint or he is not satisfied
Courts of law for redressal of his grievances.
with the reply of the insurer.
ii) The complaint is not made later than one
As per the policy-holder's protection
year after the insurer had replied.
regulations, every insurer shall inform the
iii) The same complaint on the subject
policy holder along with the policy
document in respect of the insurance
Ombudsman in whose jurisdiction his office
falls for the purpose of grievances redressal
arising if any subsequently. Steady increase
in number of complaints received by various
Ombudsman shows that the policy-holders
are reposing their confidence in the
institution of Insurance Ombudsman.