What is insurance?

The definition of insurance can be made from two points:

1. Functional definition.

2. Contractual definition. • FUNCTIONAL DEFINITION Insurance is a

co-operative device to spread the loss caused by a particular risk over a number of persons who are exposed to it and who agree to insure themselves against the risk.

• Contractual Definition In the words of justice Tindall, “Insurance is a contract in which a sum of money is paid to the assured as consideration of insurer’s incurring the risk of paying a large sum upon a given contingency.”

TYPE OF INSURANCE• LIFE INSURANCE -

Life insurance is a written contract between the insured and the insurer, that provides for the payment of the insured sum on the date of the maturity of the contract or on the unfortunate death of the insured, whichever occurs earlier.

• GENERAL INSURANCE-

General insurance or non-life insurance policies, including automobile and homeowners policies, provide payments depending on the loss from a particular financial event. General insurance typically comprises any insurance that is not determined to be life insurance

TYPES OF GENERAL INSURANCE 1. Health insurance

2. Business insurance

3. Automobile insurance

4. Fire insurance etc. • HEALTH INSURANCE-

Just like one looks to safeguard ones wealth, these policies ensure guarding the insurer's health against any calamities that may cause long term harm to ones life and even hamper ones earning ability for a lifetime. Some examples of this type of policy are mediclaim policy, personal accident, group accident, traffic accident, etc.

Continue……….• BUSINESS INSURANCE-

Risks of loss of profits/business, goods, plant and machinery are most profound in case of business. Under this head they cover the most widely used policies that cover a business from any loss of the above kind. Some of these policies are burglary insurance, shopkeepers insurance, key-man insurance, marine insurance, public liability insurance, workmen compensation insurance, air transit insurance, fidelity guarantee insurance etc.

Continue………..

• AUTOMOBILE INSURANCE-

Auto Policy is required to be taken to cover the risks that arise to the owner, vehicle and third party. This includes the Compulsory Vehicle Policy (In India, by the Motor Vehicles Act, every car owner is required to covered against Act risks) and the Comprehensive Vehicle Policy.

• FIRE INSURANCE- This policy is required to be taken to prevent any loss of profits / property from incidental fire. Eg: fire insurance and fire consequential loss policy.

Chart-

All insurance company in India

Marketing Mix of InsuranceIndustry

LIFE INSURANCE• Whole life and term policies• Endowment policies: A lump

sum amount in case of death/expiry of the policy

• Money back policies: Periodic payments during the term of the policy itself; In case of death, payment of full sum assured

• Annuity / Pension policies: Premium is paid as a single lump sum or  through installments to get regular income after the retirement

GENERAL INSURANCE

•Auto Insurance

•Health Care Insurance

•Travel Insurance

•Home Insurance

•Fire Insurance

•Marine Insurance

•Accident Insurance

Price• In an insurance business, the pricing decisions are

concerned with:– The premium charged against the policies, – Interest charged for defaulting the payment of

premium and credit facilities– Commission charged for underwriting and consultancy

services• For general insurance (Auto) the premium depends on– Make of the vehicle– Year of manufacture– Place of registration– Current showroom price of the vehicle

Price• For life insurance the premium depends on three factors– Costs: Fixed percentage of insurer’s office expenses,

salaries, computers, and maintenance of buildings, commissions to be paid to the agents

– Mortality: Mortality tables allow the insurer to calculate the average chance of someone dying within one year

– Interest: The insurance firm receives interest on the premium payment, from the time of policy taken, up to the maturity/death. When the period is longer , the effects on interest income is more

• Discounts may be offered for existing clients renewing the policy

Place - Channels of distribution

Direct Selling• Agents• Financial

Advisors• Call Centres

Partner Selling• Bancassuran

ce• Postal

Department• Selling

through Corporates

• Tie – ups with financial institutions

Electronic Channel• Internet• Information

Kiosks• SMS

PromotionAdvertising & Publicity

Tie ups with

banks,

financial

service

providers

Sales promotion

Word of mouth

Personal

selling

Telemarketing

People

People

External

Customers

Internal Customer

s

Agents

External Customer

sInsurer

i.e. Customers

Internal

Employees

On Desk Employee

s

Back - end

employees

Market Segmentation (External Customers)

Household•Salaried Class•Self – Employed•Retired

Industrial •Public Sector•Private Sector

Trade •Big Business•Small Business

Institutional•Universities•Colleges•Schools

Market Segmentation(External Customers)

Region Wise• Central• Eastern• Northern• Southern

Gender • Males• Females

Age• Children• Adults• Senior Citizens

Rural • Depending on location, income & population

Physical Evidence

Policy Documents

Brochures

Periodic Statements

Renewal NoticesBusiness Cards

Stationary

Calendar, Diaries

Process

• Customer friendly

• Speed and accuracy of payment is of great importance

• Installment schemes should be streamlined to cater to the ever growing demands of the consumers