organizational structure of oriental insurance company ltd

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Project on a Study on Organizational Structure of

Oriental Insurance Company Ltd

CHAPTER - I

INTRODUCTION

1.0 Insurance is a method through which one can just spread over the risk. It

is a way of reducing uncertainty of occurrence of an event. It is co-operative

effort where in the loss occurred by a specific risk in spread over a large number

of persons. Insurance is a solution for reducing risk, large number of people

collect small amount, known as premium and out of this losses are paid to the

suffering persons.

1.1 ORIGIN AND DEVELOPMENTS OF INSURANCE

No one know that when the insurance transactions started? The origin of

insurance is lot in antiquity. However, there are certain evidences on the basis

of which one can say that the earliest form of insurance was marine insurance.

Evidences are also on record that arrangements embodying the ideas of

insurance were being practiced in Babylone and India, centuries ago.

References are also available in Hammurabi Manu (Manav Dharma Shashtra).

The word Yogakshema used in Rig-Veda suggested that some form ofcommunity insurance was being carried on by the Aryans in our country well

over 3000 years ago. The existence of burial society also acknowledge that

insurance played significant role in Buddhist period when it used to help the

family of a deceased person by building a house and protecting the widows.

Marine insurance came earliest than fire insurance and life insurance came and

lastly other forms of insurances were developed in the world.

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1.2 MARINE INSURANCE

Marine insurance was the first form of the insurance business. It is said

that it probably began in north Italy by the end of 12th century. The Italian

merchants who came to England in 12 th or 13th century covered their risk of

assets with insurance. The first marine policy called Polliza was issued in

Italy in 1300. Charter of insurance was also established in 1300 in Belgium.

Insurance was similarly developed in other European countries like Spain,

France, Germany and Holland. Insurance sector was greatly developed in thetime of Queen Elizabeth-I in England during the 14 and the 15th centuries.

Lombards, the ex-communicated businessmen of Italy captured the whole

market of marine insurance business. They run the business along with other

and settled docent the street of London which was later on famous by the name

of Lombard Street a well known place for marine insurance transactions.

The present form of marine insurance is developed by the Lloyds

Association which was established in 1774 by a man Mr. Edward Lloyds, a

coffee merchant with the publication of Lloyds News. The merchants gathered

into the coffee house and took liability in marine insurance business as per their

financial position. Even today, Lloyds Association is one of the leading firms

transacting marine insurance in the whole world. Later on Marine Insurance Act

was passed in 1906 in England. Other countries had also passed the marine

insurance act nearly the same period. It was passed in 1963 in India.

1.3 FIRE INSURANCE

The evidences of emergence of fire insurance can be seen in 16 century in

Germany. There was a scheme made to spread over the fire risk a group of

people in Oldenburg in 1609 by collecting the premium. The market of fire

insurance was greatly developed after the great fire of London in 1666 in 25 th

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which 85% of the houses burnt to ashes and property worth 10 crores sterling

was completely destroyed. The first fire insurance office was established in

London in 1680. Sunlife office was set up in 1710 in London. The industrial

revolution gave impetus to develop the fire insurance business because there

was great expansion of machinery used. The market for fire insurance expanded

for protecting the highly cost machinery. Fire Insurance started in India with

the establishment of Triton Insurance Company in Calcutta in 1850. The North

British Mercantile company came into existence in 1861.Fire insurance has very

slow trend for progress in India up to nationalization of general insurance.

1.4 LIFE INSURANCE

The origin of Life Insurance business was not so earlier. There is no

specific evidence available through which one can consider how the idea of life

insurance developed. The first life insurance policy issued on the life of Mr.

William Gybbons on 18th June, 1653 in England. It was issued for one year

period. The first registered life office in England was hand in hand societywhich was established in 1690. Mutual Life Insurance Company came into

existence later on in 1696. The first mortality table prepared in the 19 th century

gave impetus to the life insurance transactions.

Life Insurance started in India by Europeans with the establishment of

Oriental Life Insurance Company in 1818. Bombay Mutual Life Insurance

came into existence in 1871. In 1874, the third company entered into the same

business of life insurance called The Oriental Government Security Life

Assurance. The life insurance act passed in 1956 in India.

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1.5 MISCELLANEOUS INSURANCE

The Industrial revolution gave impetus to certain miscellaneous

insurance like accident insurance, liability insurance, theft and burglary

insurance and fidelity insurance. There are certain latest forms of insurance like

cattle insurance, crop insurance, profit insurance and consequential loss

insurance.

1.6 ORIGIN OF GENERAL INSURANCE

Insurance was a method of sharing of the losses, embodying the principle

of co-operation existed in the early civilization. Evidences are available that

proves loss of profits in industry was insured by the village co-operatives in

India during the Aryan Civilization. Bottomary Bonds were the first plan,

which considered insurance as a technique of providing protection against the

fortuitous events for a consideration. The medilevaranean merchants as early as

in the fourth century B.C issued the bonds. The Bottomary loan was an advance

of money on a ship during the period of a voyage. It was repayable with the

agreed rate of interest, on the arrival of the ship safely at destination. There

were possibilities of losing the ship during the voyage; the obligation to repay

the loan was extinguished in that case. The interest payable constituted a sort of

premium for the risk of total loss. Similar loans were issued on the security of

cargo and were called Respondentia bonds There are references found in

Manav Dharma Shashtra, code of Manu which contained rules for sea form

contracts observed by the traders from Broach and Surat who set sailed in

Indian built ships with Indian merchandise to Lanka, Egypt and Greece. The

other four-runner of insurance was the marine practice of general average

hereby losses incurred to save the common venture, were shared by

contributions from all the interests ship, freight and cargo all the things saved

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by the general average at. The Rhodians also practiced it in their Mediterranean

trade in 916 B.C.

The earliest transaction of insurance can be traced out to the beginning of

the fourteenth century in Northern Italy. Some Italian merchants were engaged

in the Mediterranean trade with India via Constantinople and with the European

countries by land. It originated the practice of breaking of the botany bonds into

two instruments covering separate transactions.

1) The advance of money, which was to be repaid on the safe arrival of the

ship.

2) A policy of assurance, which paid the amount, stated, in the event of loss

of sea. This was the beginning at marine insurance business.

1.7 HISTORY OF GENERAL INSURANCE IN INDIA

Even though marine insurance practiced today was introduced in U.K in

the 15th

century, it was established only at the beginning of the 19th

century.

There are some evidences about between 1797 and 1810; marine insurance

companies were established in Calcutta. It was the centre of the east India

Companys trade and commerce. Thus, the marine insurance was the earliest

form of insurance in India.

Alliance British and foreign fire insurance company established an

agency office at Madras in 1825 and introduced fire insurance in India. Some

British companies which basically conducted the import export business had

also started the insurance activities as a subsidiary line of activity. The British

company appointed the different managing directors for different fields as like

sugar factories, tea estates, cotton mills, jute mills and the managing directors

controlled the insurance of these fields, which they placed, with British

Insurance Companies.

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Around 50 foreign offices commenced the insurance business through

agency houses in the year 1885. Most of them were British and few of them

were from Australia, New Zealand and the Continent. Some of these insurance

offices were members of the fire offices committee which formed in 1858 in

London. There was no uniformity of rates of premium because all of the

companies were not members of tariff body. The first Indian general insurance

company was formed to transact insurance business in 1850, namely the Triton

Insurance Corporation. By the end of the 19 th century, the Indian Businessmen

had taken active interest in insurance business as brokers in western India. Fire

insurance transacted only in metropolitan cities like Bombay, Calcutta and

Madras during this period. The fire insurance had become popular in other areas

as industries developed outside the metropolitan cities. The Indian broker

commenced their business in western India and gradually captured the control

of the business. There was an institute of brokers placed the business directly

without any intermediary.

The brokers faced the common problems due to the competition and

formed an association of Fire Insurance Agents in 1882 in Bombay. Similar

associations were established in Calcutta in 1888 and in Madras in 1896. In the

year 1894 there was first Indian tariff for fire business formed in India. Then

after the Bombay city and Mofussil Tariff were formed in 1895, which was

followed by the Calcutta Tariff in 1900. The first underwriters association was

established in Bombay in 1872. The association worked in close conjunction

with both the fire offices committee and the accident offices association of

London. Due to the developed industry and commerce, there was an increase of

insurance potential. Many British offices had already made a success of their

business through agency. They began to convert the agency houses into branch

offices or to open new branch offices. The Indian insurance market attracted

few American Offices.

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The Swadeshi movement provided impetus to the development to

insurance in India. On the political and economic ground, the need for purely

Indian insurance companies to cater to the insurance requirements of the

mercantile community was keenly felt. The Indian Mercantile Insurance

Company established in 1907 with the Indian capital. At the end of the First

World War, here were seven largest Indian offices were established. The merely

established companies had faced severe competition from the foreign insurance

companies. The Indian companies had no enough expenses as well as no

technical expertise where as the foreign insurers are superior in both of field

them the Indian companies.

The position of Indian insurance companies was further aggravated by the

fact that exchange banks did not recognize the policies issued by the Indian

Insurance companies except up to the small amount. Thus, it was the

requirement of the government interference by appointing a special officer in

1935.He investigated and presented report on insurance law reports. Thus

according to the suggestions and findings of the report, the Indian insurance act

was passed in 1938 and brought into force in 1939. The act was important

landmark in the history of Indian insurance industry. Then government had

controlled uniformly over all insurance companies whether foreign or Indian.

There were some important provisions made by the insurance act 1938 as

follows.

i) Statutory deposits, registration of insurers

ii) Periodical returns to government

iii)Prohibition of rebating out of commission / premiums

iv) Fixation of commission rates

v) Licensing of agents

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vi) Criteria of the post of superintendent of insurance (later designated

controller of insurance). There was a steady development of Indian

insurance between 1940 and 1950. Indian enterprises set up various

industries like textiles, sugar, paper, cement, paints etc. under the

influence of the Swadeshi Spirit. The industrial development was under

the protective tariffs. Moreover the Second World War as an indirect

result helped rapid expansions of Indian industries in 1939. The share of

insurance business of the Indian insurance companies registered a sharp

increase from 11% in 1929 to 31% in 1939.

The explosion occurred on the board the S.S. fort Stikine in Bombay

Docks on 14th April 1944 had created an extra ordinary situation for the

insurance industry. The government took a sympathetic view and issued the

Bombay Expansion Ordinance 1944. It provides the compensation for losses of

insured property. The compensation also extended to uninsured property and

personal injuries. There was a partition of the country in 1947 between India

and Pakistan. It came with the specific problems for insurance industry in India.

The claim settlement procedures become very complex due to unavailability of

sufficient records which were destroyed during the riots and they were

compulsory required to investigate the reality of the claim. There were some

cases in which the policy number also destroyed due to the same difficulties.

The insurance companies had faced many difficulties. They had to shift their

offices from the area of Pakistan to India. It was done after the considerable

time.

There were a great insurance potential during the Second World War thus,

10 composite offices and 15 general offices were established and some Indian

businessmen had purchased several foreign business houses. Industrial houses,

banks and insurance companies were closely inter-related through common

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owners. It had an unhealthy influence on the insurance market as a whole, for

various reasons. The situation had led to the appointment of Cowasjee Jahangir

Committee, which led to the amendment of the Insurance Act, 1938 in 1950.

The main changes due to the amendment were as follows.

a) Limitation on expenses of management

b) Limitation of commission payable to principal agents and ordinary agents

c) Establishment of the Insurance Association of India.

The insurance companies had to regulate their management expenses

including commission within the prescribe scale. Under the above mentioned

amendments, the scales were in the form of percentage of gross direct premium

on a descending slab system.

The act established a statutory association of insurance companies which

is called as insurance association of India. Indian insurance companies entered

into the association as a member whereas the foreigner companies entered as

associate members. The association had two councils.

i) Life Insurance Council

ii) General Insurance Council

The general insurance council had operated through the executive

committee whose functions are to aid and advise insurance companies in the

matter of rendering efficient service to policy holders and setting up standard of

conduct and sound practices. The general insurance council constituted the

Tariff committee, which controls and regulates the rates, terms and conditions

of the insurance business. The Tariff committee is the committee which controls

and regulates the rates, terms and conditions of the insurance business. The

Tariff committee had operated through the regional councils in Bombay,

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Calcutta, Delhi and Madras. The councils constituted the sectional committees

for fire, marine and miscellaneous business. The whole object of the

organizational structure is to create a collective sense of responsibility among

the Insurance Companies and statutory machinery to advise the government in

the matter of control and supervision of insurance companies. It was a unique

experiment in cooperation between business and government.

The period from 1951 onwards the five year plans initiated the rapid

development of insurance business made possible by large scale economic

development which increased insurance consciousness among the people. The

problem of preserving foreign exchange actually felt in India as a result of drain

on foreign exchange involved. Thus, all the insurance companies both Indian

and foreign companies operating in India formed the Indian reinsurance

cooperation, in 1956 to provide reinsurance facilities. The insurance companies

were obliged to make compulsory cessions to the Corporation at a fixed

percentage. The reinsurance market became more strengthened by the setting up

of another professional insurance company called the Indian Guarantee and

General Insurance Company Ltd. in 1961 which received similar sessions on a

company basis.

Life Insurance Corporation had also entered into the field of general

insurance in the year 1964. There was a requirement to save foreign exchange in

marine hull insurance where the premiums are substantial. All Indian ships were

insured in India in 1953. The capacity of the market was limited, so foreign

reinsurance was required. The rates had to be fixed in consultation with London

reinsures.

With the co-operation of the London Joint Hull Committee in 1965, An

Indian Hull committee was formed under the aegis of the Tariff Committee,

which has the assumed responsibility for rating Indian Hulls. There was a

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demand for nationalization of general insurance to introduce a socialistic pattern

of society. The insurance act further amended and gave wide powers to the

controller of insurance. A Tariff Advisory Committee replaced the general

insurance. The Act had made provisions for licensing of surveyors and loss

assessors. The general insurance business act was passed in 1972. The

government has established the general Corporation of India with effect from 1 st

January 1973. All the 107 insurance companies were merged with one or the

other of the four subsidiaries of the general insurance Corporation.

1.8 INSURANCE IN INDIA

The history of insurance in our country is somewhat darken. The earliest

reference of life insurance was available in the days of East India Company,

when the policies were taken only by the British officers. The policy was issued

by British officers in sterling currency. Oriental was the first foreign insurance

company established in India in 1818. Foreigners, orphans and widows were

become subject matter for the oriental company. The company started acceptingthe Indians in 1934 due to the efforts of Babu Muttylal. Bombay Life, a

company had issued short term policies for 2-3 years in 1823. Raja Ram Mohan

Roy, the man who pleaded for protecting widows through government

insurance Bombay Mutual Life Assurance Society was established by some

prominent citizens of Bombay in 1871. European merchant also started

Bombay Insurance Society in 1893 by voluntary efforts. Mr. Curstjee

Furdoonju was the first insured person of India. This policy was insured in 1848

by royal Insurance which started in 1845. It was the beginning of the Indian

insurance venture.

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1.9 GENERAL INSURANCE

The general insurance business in India, can trace its roots to the

TRITON INSURANCE COMPANY, the first general insurance company

established in the year 1850 in Calcutta by the Britisher. The INDIAN

MERCHANTILE INSURANCE LTD. set up in 1907. It was the first company

to transact all classes of general insurance business. General insurance council

as a wing of the insurance association of India framed a code of conduct and

count business practices in 1957. During 1968, the Insurance Act amended toregulate investments and set minimum solvency margins and the TARIFF

ADVISORY COMMITTEE set up in 1972 the General Insurance Business

(Nationalization) Act, 1972 nationalized the general insurance business in India

with effect from 1st January 1973. One hundred and seven insurers amalgamated

and grouped into four companies like

1) National Insurance Company Ltd.

2) The New India Assurance Company Ltd.

3) The United India Insurance Co. Ltd.

4) Oriental Insurance Co. Ltd.

General Insurance Company incorporated as a main company which

held the power to control and manage above said four subsidiaries companies.

Bombay Mutual Assurance Society Ltd. Oriental Government Security Life

Assurance Co. Ltd., Bharat and Empire of India were the well organized units in

the field of insurance business established in India. The history can classify on

the basis of following period

a) Before Independence

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b) After independence

c) During globalization

1.10 BEFORE INDEPENDENCE

Indian national congress and other Swadeshi Movement started in earlier

part of twentieth century, which became cause for refused to purchase English

goods and the matter became root for preferring Indian insurance. Thus, many

Indian insurance companies came into existence. Indian insurance businessstimulated through the First World War Indian life, the national, The Hindustan

Co-operative, The Bombay Life, The Asian Life and The General Assurance

were some prominent. Many industrialists started their own insurance

companies during 1919 to 1932 due to the recession in the Indian economy. In

1919, New India was started by the TATA Group. The Jupiter General was

started by Lalaji Narnji in 1919. Both of them were the most prominent results

of that economic recession. LAXMI, VULCAN, THE BRITISH INDIA,

THE ZENITH were other companies which had started their insurance

business from that period.

The transactions of insurance companies were negligible till the end of the

First World War. There after the position began to change, outbreak of Second

World War stimulated the rapid progress of Indian Insurance Business. Thenumber of the Indian Companies transacting in insurance business were only 80

in the year 1920. It was increased up to about 240 during the Second World

War. Speculative business was also involved in the insurance companies by

themselves through such financial irregularities, so that government appointed a

committee under the chairmanship of Sir Cowasjee Jahangir to examine the

insurance structure. The committee was found that the insurance companies

were not working satisfactorily.

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1.11 AFTER INDEPENDENCE

The independence of India followed by the partition it was resulted that

there were 218 head offices in India and 12 in Pakistan in 1946. The network of

insurance sector was drastically changed. The insurance act was passed by

government in 1956. The period 1952 to 1955 was the period of prenationalization of insurance company. The Indian insurer was not in satisfactory

condition due to great depression in Jute, Tea and other cash crops. In 1955 the

last year of pre nationalization, the total business was 2207 crores on 749000

polices. The total investments were 318.9 crores. The government of India took

decision of nationalization of insurance business in 1956 by taking management

and control of all 245 existing companies. All insurance companies continued to

exist as separate entities and the ownership also continued until the life

insurance act, came into existence on 1-9-1956.

India is the first country in the whole world to nationalize the life

insurance business. The objectives of insurance sector were as under.

To establish socialistic pattern of society

To provide complete security to the policy holders.

To avoid mal practices

To protect the interest of citizen.

1.12 DURING GLOBALIZATION PERIOD:

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The insurance sector regulated according to the industrial policy passed

by government industrial policy 1990 was the milestone for globalization as

well as liberalization. In April, 1993 government set up a high power committee

headed by Mr. R. N. Malhotra to suggest reforms in the insurance sector and

make it more efficient and competitive. The committee recommended the

establishment of a strong and effective insurance regulatory authority in the

form of a statutory autonomous board on the lines of SEBI.

In 1999, the insurance sector opened up for private companies in life as

well as Non-life insurance companies. It was followed by the establishment of

IRDA (insurance Regulatory and Development Authority) in April 2000. The

foreign companies looked upon the untapped profit potentials in Indian

insurance industry and rushed over here.

1.13 DEFINITIONS OF INSURANCE

There are many definitions of insurance. We can classified them into two

aspects

I. Functional definitions

II. Contractual definitions

I. Functional Definitions

Insurance has varied aspects. There is emphasis on functions of insurance

in functional definitions. According to this aspect, definition of insurance must

include the following points.

Cooperative effort

Spread risk over a large number of people

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Method to provide security.

There are certain definitions which include above said points as follows

1) Insurance may be defined as a social device providing financial

compensation for the effects of misfortune, the payments being made

from the accumulated contributions of all parties participating in the

scheme.-- D. S. Hansell

2) 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 insurance themselves against the risk.-- R. S. Sharma

3) Insurance may be described as a social device whereby a large group of

individuals, through a system of equitable contribution, may reduce or

eliminate certain measurable risks of economic loss common to all

members of society.

Encyclopedia

II. Contractual definitions

These definitions are quite different. The definition must include

1) An agreement

2) A Consideration and

3) The happening of a particular event.

The following authors have given the contractual definition of the

insurance

1) Insurance is a contract in which a sum of money is paid to the insured in

Consideration of insurance incurring the risk of paying a large sum upon

a given contingency - Justice Tindall

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2) Insurance is a contract by which one party, for a Consideration called

premium, assumes particular risk of the other party and promises to pay

to him or his nominee a certain or ascertainable sum of money on a

specified contingency. -E.W. Patterson

3) Insurance is the process by which a firm (the insurance company) for a

fee (the premium) agrees to pay another firm or individual (the insured) a

sum of money stated in a written contract (the policy), if a loss occurs -

Boon and Kurtz

4) In its legal aspect it is a contract, the insurer agreeing to make good anyfinancial loss the insured may suffer within the scope of the contract and

the insured agreeing to pay a Consideration (the premium) -Riegal and

Miller

After considering these definitions, one can clearly understand the

concept of insurance. Insurance as a whole is a co-operative device to spread the

loss caused by a particular risk over a number of persons who are exposed to it

who agree to insure themselves against that risk.

1.14 SUBJECT MATTER OF INSURANCE

The subject matter of insurance describe in policy itself. There are

various subject matters for example, a person, any asset, property, right,

interest, life or liability. Thus in fire insurance the subject matter may be a caror a shop, in case of life insurance the subject matter of insurance is the life of a

person and in an accident insurance, the matter may be ones liability for body

injuries or damages to the property of a third party. Thus the subject matters are

different depends upon the policy.

1.15 SCOPE OF INSURANCE

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Insurance has very wide scope due to cutthroat competition in every

service section of business. Insurance can do anything except giving back the

life of the dead person. Insurance can restore the loss to the extent if promises to

do. Insurance can make good the less to the extent it promises to do. It can put

the suffered person in the same position as he was in before the loss occurred.

Life insurance provides immediate financial assistance to the family of the

deceased. W.A. Dinsdale considers the scope of insurance as under: There are

very few events against the happening of which insurance is now a days unable

to provide protection. Today life becomes more and more complex. Social

systems are also changing fast, so the scope of insurance becomes wider. One

can purchase insurance on any risk event. Riegal and miller in their book said

Insurance principles and Practices have mentioned the scope of insurance as

under:

Every individual is exposed to innumerable risks connected with life,

physical exertion, business and recreation and most individuals are interested in

escaping, if possible the injurious consequences of such risks.

1.16 NATURE AND CHARACTERISTICS

The characteristics of Insurance are as under:

A cooperative device

A contract

Consideration

Protection against the risks

Device to spread the risks

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Based upon certain principles

Social device

Regulated by law

It is not a wagering.

1.17 SIGNIFICANCE OF INSURANCE

As the industrial revolution comes with cut throat competition, the

chances of uncertainty are also increasing day by day. Insurance plays

significant role for not only an individual or for a family but it has spread over

the entire nervous system of the nation. According to the famous philosopher J.

Royce, Insurance Principles comes to be more and more used and useful in

modern affairs. Not only does it serve the ends of individuals, it tends more and

more both to pervade and transform our modern social order. It brings into new

synthesis, not merely pure and applied sciences, but private and public interests,

individual prudence and a large regard for the general welfare theft and charity

one famous author named Dinsdale also explains the significance of insurance

as under. No one in the modern world can afford to be without insurance.

Insurance provides various advantages to various fields. One can classify the

significance as under.

Security encourages the habit of forced thrift.

Provides mental peace increase efficiency.

Contribution to the conservation of health.

Cover for legal Liability.

Security to the mortgaged property.

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Foster economic independence.

Encourages savings.

Provision for the future.

Awareness towards losses.

Credit Facility.

Tax exemption.

Traditionally, general insurance includes fire insurance, marine insurance

and miscellaneous insurance. It includes almost all insurance without life

insurance. Insurance act 1938 Section - 2 provides its definition as under.

General Insurance Business means fire, marine or miscellaneous insurance

business, whether carried on singly or in combination with one or more of

them.

Thus, general insurance business does not mean that the businessmen

must transact with all of their plans. It may be carried on single plan or in

combination with one as like fire and marine or more of them like almost

insurance plans. Fire Insurance Business means the business of effecting,

otherwise than incidentally to some other class of insurance business, contracts

of insurance against loss by or incidental to fire or other occurrence customarily

included among the risks insures against in fire insurance policies. Marine

insurance business means the business of effecting contracts of insurance upon

vessels of any description including cargoes, freights and other interests which

may be legally insured in or relation to such vessels, cargoes and freights,

goods, wares merchandise and property of whatsoever description insured for

any transit by land or water, or both, whether or not including ware house risks

or similar risks in addition or as incident to such transit, and includes any other

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risks customarily included among the risks insured against in marine insurance

policies. Thus, marine insurance policies protect the businessmen from the risks

to the vessels, cargoes, freight and other interests during the transportation by

sea.

1.18 ORIENTAL INSURANCE COMPANY LTD

Oriental Insurance Company Ltd, a subsidiary company of

the Genera l Insurance Corporation (GIC) of India, started its operation in

India on 12th September 1947 at Bombay (now in Mumbai) as a public

sector company. The company became a subsidiary of Life InsuranceCorporation of India in 1956 and continued to serve as such till 1973. The

main goal of the company was to set involved in the business of general

insurance thus catering to the needs of all kinds of people and are quite famous

for theircoverage of products associated with steel and chemical plants, petrochemical

and power plants.

In 2002, after the Insurance Amendment bill was passed, the companywas de- linked from GC and all its shares has been transferred to the

Cent ra l Government . The company has evolved in great respects over the

years and slated to become one of the leading insurance companies of the

country. Presently the company has made its presence fe lt in to the other

segment s o f i nsurance a s wel l The company has gone up t o

accomplish a premium of Rs. 4077.90 crores (2008-09) from the premium

of Rs. 99,946 in 1950.

A good life is a beautiful dream. We love building, our house brick by

brick, acquire assets tastefully and aspire to make life comfortable every day. Business security

and personal safety in the present times concern everyone. Measures are taken to prevent things going

out of hand yet and an element of fear keeps dotting us.

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Hard earned assets acquired during life time may be under some threat

due to unforeseen circumstances. An industry or establishment may encounter a

situation that may get out of the hands of human beings. Someone on the road

may be insensitive to the precautions being taken to cross the road. Anything

may happen anytime. Can we offset the uncertainty? Probably not - But this

can be transferred very simply through the means oftaking insurance.

An individual may get insured his property like house and its contents, car etc, against various

perils. Health and Personal Accident Insurance support during hard times. Even liabilities arising from

various situations can also be covered.

A business enterprise can get coverage for its assets against various risks

like fire; flood, earthquake etc. to name a few, at a nominal premium and go on

to insure Business Interruption Many liabilities arising during course of

business are also taken care of.

Likewise industries also find protection through various insurance

policies for fire and allied perils; business interruption and workmen insurance.

The transit of the equipment to the site entails many hazards arising from ocean ,

rail, air or road Acts of God or terrorism may cripple any industry before it starts

up or in operation. All can be covered loans advanced by financial institutions

may get threatened by operation of unforeseen events. Many more situations may emerge

that one may not have even thought of.

The value of the property (sum insured) which is exposed to the risks should be kept almost

equal to the loss one may sustain considering the present state or market value. One may also think of

taking insurance on replacement (re-instatement) value. The costof imperishable may not be taken

into account, e.g. land. The basis of fixing sum insured may vary from property to property or risk to risk

but bottom line remains almost same.

Personal accident insurance can be taken for an individual, family or a

group. The sum insured is based on earning. Health insurance packages are

available for individual, family or group basis.

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Oriental Insurance Company Ltd has a set up of more than 1000

offices. Marketing staff is also always keen to reach you. Our agents are there

to canvas the business. We can also buy selected insurance products on this

Portal as well In addition the Portal enables you to view the policies already

taken by you and the status of any claim which may have been reported What

you really need to do is to identify your requirements where you would need

insurance protections and contact Oriental Insurance Company.

1.19 REVIEW OF LITERATURE

Some studies conducted in context with the performance evaluation of

Insurance Corporations and General Insurance Companies of India. The

Researcher has studied those research works which are as follows:

1) Robi Elenekave has explained in detail why various retirement plans and

pension plans dont give the desired returns. The main difficulty is the

use of incorrect method for calculations done to find out the return on

investment. This is primarily due to wrong assumptions. The study

provides information about the various precautions which need to be

considered before planning so that the desired results can be achieved.

2) Another paper provides insight about how various financial sectors invest

in bond market. The study was how the different players investment

different instruments according to the risk appetite and desired rate of

return. The study shows that life insurance sector mainly invests in

government bond which are low return and low risk instrument. The

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investment in government bond it shows that life insurance companies are

more conservative in investment.

3) K. Subhash has presented the history of Indias life insurance industry in

three stages before independence, after independence and post

liberalization which not only provides information but also help in

analyzing the impact of these major changes. The authors have also

discussed the huge potential which exists in the rural India. The insurance

company must realize the importance of rural sector because the future

lies there. The author commented about the increasing share of private

player in the existing market. This confirms the availability of

opportunity in this sector. The paper also provides the importance of

professional and focused approach which was given no importance.

4) Tapen Sinha has discussed the various challenges and opportunities in the

insurance market. One of the very important factors which have been

discussed in the study is the importance of developing new and betterproducts. As the scenario changes the need of an individual also changes

so any organization must understand and fulfill these needs. The new

product development requires constant research so organization must also

focus on it.

5) Roger G. Ibbotson discusses how financial planners and advisors have

recently started to recognize that human capital must be taken into

account when building optimal portfolios for individual investors. Any

investors human capital has a unique mortality risk. However, life

insurance in its forms can hedge against this mortality risk. Thus, human

capital affects both the optimal asset allocation and the optimal demand

for life insurance. This paper provides a unified framework based on

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human capital in order to enable individual investors to make both

decisions jointly.

6) Rakesh Niraj study tells how the flow of information in any organization

is important. For any organization to grow, the flow of information must

be good both upwards as well as onwards. The proper flow of

information will also ensure proper flow of goods and services from

organization to customer and proper flow of information from customer

to organization. The information from customers will help the

organization in providing better goods and services to the customer. For

the above purpose, organization must ensure good channel partner who

can provide the organization with correct feedback. Hence it becomes

very important for any organization to acquire good channel partners.

7) Stephen P. Robbins has discussed how group dynamics works in any

organization. The success of any organization depends on the success of

its various teams and how these teams work together. The book providesvarious techniques which can be used by any organization to get result

from the team effort. The conflict resolution is a major task in any group.

Various techniques which the organization can use in conflict resolution

are also discussed. Another important aspect covered is the importance of

leadership in the organization. The various forms of leadership have been

discussed and the kinds of leadership which can be effective in particular

situations are also discussed.

8) R. Wayne Mondy has discussed the importance of training and

development in any organization. The training provides skills to perform

the current job where as the development involve learning beyond present

need. The various type of training are discussed which can be used

according to the requirement. Training and development are not only

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important for better performance of an individual but it also gives

satisfaction. The major factors which influence training and development

are found to be management support, commitment of trainee and trainer,

complexity of the organization. The process of developing good training

plans is also provided. In another part author has discussed the

importance of right man for right job. The compensation strategies are

also given which are very crucial for ant industry.

9) Philip Kotler has discussed the importance of channels partners. Better

the channel partners better will be the delivery model. Detailed discussion

about how to design the channel structure so that all the requirements

could be fulfilled is provided. The various issues faced by the

organization while managing the channels are also given. When an

organization has more than one channel it becomes very important that all

the channels should be integrated in such a way that the organization gets

the best out of all. At times due to the conflicting benefit of the different

channels the conflict arise so various strategies to manage these issues is

also discussed in the chapter.

10) Michael J. Etzel has written about the marketing of services. The

marketing of services is different from the goods because of the

characteristic of service like intangibility, inseparability, heterogeneity

etc. Brief about pricing strategies is also given in case of services. The

authors have also given the impact of technological development on the

services marketing. The author has also given the importance of brand

and after sales support in case of services as perception of the customers

plays an important role. In other part of the book the authors has

described the importance of distribution channels and designing of the

same. A channel partner should be considering as partner according to

discussion. The legal complications associated with channels are also

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discussed. These complications are necessary to take into the

consideration while managing the channels. The conflicting interest of

channels both horizontally and vertically are also taken into the

consideration.

11) Boone has discussed about the importance of personal financial

planning. The concept of time value of money has also been elaborated.

The importance of creating and implementing budget is given under

money management. The other important concepts for financial planning

like credit management and understanding taxes are also explained. In

one section the authors have discussed the importance of investment and

what should be the major considerations while making any investment.

The considerations include the risk associated with the investment, return

on the investment etc. The importance and benefits of life insurance has

also been given. The discussion also includes various legal aspects

associated with life insurance. The overview of retirement planning is

also given which includes importance and benefit of retirement planning.

Various tools for proper retirement planning are also discussed.

12) Dr. P. Pariasamy has written a book, Principles and Practices of

Insurance, published by Himalaya Publishing House. The book provides

a detail coverage of risk management, general insurance, life Insurance,

Fire insurance and Marine insurance in a comprehensive way.

13) February 2004, IRDA Journal, an article written by Mr. Sandeep

Batra, titled Need for Change . In this article, he has focused on

proposed amendments and progress of life insurance in India. He has

covered the effects of the changes in the Law on Insurance industry.

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14) The researcher has collected information from the site named,

www.indiaspace.com It has an article on Privatization of Insurance

Industry in India

15) Chartered financial analyst February-2003, has a special survey

of insurance sector. An issue covers many articles such as A High

Growth Market, New distribution Channels, Customer focus, Legal

Issues.

16) Shri G. V. Rao, a retired Chief Managing Director, The Oriental

Insurance Company Ltd. has evaluated general insurance companiesunderwritten gross premium up to January 2004 and written an article in

IRDA Journal, March, 2004.

1.20 PLAN OF THE STUDY

The first chapter embodies a comprehensive introduction about the

Oriental Insurance Company Ltd in India and also gives some important

Review of Literature.

The second chapter explains the Research Methodology.

The Organizational Structure of Oriental Insurance Company Ltd in India

and its various schemes are explained in the third chapter.

The last chapter would provide a required findings and valid suggestions

for further improvement in Oriental Insurance Companies Ltd in India.

CHAPTER II

RESEARCH METHODOLOGY

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2.0 Insurance is an important growing part of the financial sector in virtually

all the developed and developing countries. A resilient and well regulated

insurance industry can significantly contribute to economic growth and efficient

resource allocation through transfer of risk and mobilization of savings. In

addition, it can enhance financial system efficiency by reducing transaction

costs, creating liquidity and facilitating economies of scale in investment. The

objective with which this study is taken up and the methods by which the

secondary data is required to be collected are discussed in this chapter.

2.1 OBJECTIVES OF THE STUDY

The aim of this study is to know about various functional departments in

the organization.

To make an awareness of the general insurance industry.

To know the roles of managers in various departments.

To understand the different products and their position on the

market in terms circulation and reader ship.

To analyze the performance of the organization.

2.2 HYPOTHESIS

The two hypothesis which are proposed to be verified are

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i) The organizational structure of Oriental Insurance Company Ltd in India

is effective in improving the performance of Oriental Insurance Company

Ltd in India.

ii) The Oriental Insurance Company Ltd has been successful in providing

insurance facilities to the public in various areas.

2.3 METHODS OF STUDY

Though this study is purely fact finding in nature, a lot of secondarydata are required for its successful completion hence it is necessary to explain in

details the methods by which these data are sought to be collected.

2.4 COLLECTION OF SECONDARY DATA

This research study is purely relied on the secondary data. Thesecondary data required for the study could be obtained mostly form books,

journals, officials reports; periodicals brought by the Government of India in

addition to these, efforts would be made to collect as much information from the

internet about the organizational structure of Oriental Insurance Company Ltd

in India. These information would make the analysis exhaustive and through

going in every respect.

2.5 THE USE OF THE STUDY

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Though this study is apparently elementary in nature, it would be of

numerous uses for the researchers in the days ahead.

1) It would be of very great use to understand the role played by Oriental

Insurance Company Ltd for overall development of the economy by

mobilizing the funds.

2) The study would give any casual reader of the project an exposure to the

ways and means of enhancing various insurance policies of Oriental

Insurance Company Ltd.

3) Numerous innovative studies would speak off in the days ahead about the

performance of Oriental Insurance Company Ltd.

2.6 SCOPE OF THE STUDY

The organization study will help to attain a firsthand experience of

overall functioning of the organization. It provides a chance to interact with the authorities and

employees in the organization. It helps to understand the practical problems faced by the managers fordecision making and other organizational activities.

Though this study is purely explorative in nature, it cannot be denied

that it could be of numerous uses to researchers and enthusiasts. This study has

a wider scope among the insurance sector. The study which focuses on various

aspects such as competitive position of Oriental Insurance Company Ltd,

strengths and weaknesses of insurance covers, customers perception, etc alsoholds good for other companies in the life and non-life insurance segment.

The outcome of the study, which are based on the above aspects can be

utilized by the marketing department of both life and non-life insurance

companies.

2.7 NEED OF THE STUDY

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This study helps the company to identify its competitive position among

its industrial competitors by which the company can further improve its

performance to enjoy high reputation among clients. This study also helps in

making necessary changes in the attributes of the insurance cover offered by the

company so that the customers can enjoy the benefits of the insurance cover.

The need for the study also arises to identify and offer additional insurance

products according to the expectations of the customers.

2.8 LIMITATIONS OF THE STUDY

There were certain limitations in undertaking this research work. As it

is understood that the limitations are a part of the project, they have been

overshadowed by the benefits of the study.

1) Adequate secondary data are not available regarding the various

insurance policies of Oriental Insurance Company Ltd.

2) The study mainly based on secondary data.

3) Time is a major constraint.

Till date, no systematic research project study has been made on the

organizational structure on Oriental Insurance Company Ltd in India. Therefore

a study on the organizational structure on Oriental Insurance Company Ltd in

India becomes worthwhile to promote the overall performance of Oriental

Insurance Company Ltd in India.

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CHAPTER III

ORGANISATIONAL STRUCTURE OF ORIENTAL

INSURANCE COMPANY LTD

3.0 The Oriental Insurance Company Ltd was incorporated at Bombay on 12

September 1947. The Company was a wholly owned subsidiary of the Oriental

Government Security Life Assurance Company Ltd and was formed to carry out

General Insurance business. The Company was a subsidiary of Life Insurance

Corporation of India from 1956 to 1973 (till the General Insurance Business

was nationalized in the country). In 2003 all shares of the company held by the

General Insurance Corporation of India were transferred to Central

Government.

Oriental Insurance with its head Office at New Delhi, India has 23

Regional Offices and nearly 1000 operating Offices in various cities of the

country. The Company has overseas operations in Nepal, Kuwait and Dubai.

The Company has a total strength of around 16, 000 employees. From less than

a lakh at inception, the Gross Premium went up to Rs.58 crores in 1973 and

during 2006-07 the figure stood at a mammoth Rs. 4020 crores.

3.1 CORPORATE OBJECTIVES

1) Act as a financially sound corporate entity with high business ethics.

2) Implement best human resource development practices to build a highly

efficient, dedicated and motivated workforce with high morale and moral

values.

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3) Optimally utilize the information technology infrastructure.

4) Provide excellent customer service.

5) Run the business profitably through prudent underwriting and efficient &

proper claim management.

6) Effectively manage our reinsurance operations.

7) Effectively manage our investments for optimizing yield.

8) Have effective risk management systems.

9) Improve the penetration of non-life insurance by proper underwriting,

innovation & marketing.

3.2 VALUES

Highest priority to customer needs.

High standards of public conduct

Transparency in operations

3.3COMMITMENT

a) In areas coming within competence of GIC respond to all

commercially viable general insurance requirements of the citizens, not hitherto

available within three months from the date on which such a demand is received

b) In areas covered by tariff appropriate proposals will be submitted

to the TariffAdvisory Committee with appropriate comments within two months.

c) Continue to provide customized insurance products for weaker

sections of the society at affordable price within six months of receipt of a request

for a specif ic type of cover.

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d) Establish customer information counters at all regional centers by

December, 1997 and computerize these centers by March, 1998. These

computeri zed centers will be extended to divisional offices in stages by December, 1999.

e) Establish 'May I Help You' facility to cater to customers information

requirements at the Headquarters of the insurance companies by 15th August, 1997

f) Ensure issuance of 90% of documents within a period of 30 days from

15th August, 1997 and progressively reduce the period to 15 days by August, 1998

and to 7 days by August, 1999.

g)Prepare booklets on standard policy covers setting out essentialinformation and make such booklets readily available for purchase at suitable places.

h) Set up Zonal Advisory Committees at the four metropolitan cities by

December, 1997 to interact with customers and get feedback on insurance services

i) Promote customer education in general insurance service by holding workshops in important

regional centers.

j) Make available to a customer, on request to the policy issuing office, the status of his claim

settlement details within 7 working days.

k) Settle all claims within a times schedule envisaged hereunder :-

Personal life insurance claims within 30 days on completion of all

requirements.

Proper ty c l a ims wi th in 60 days on comple t ion of a l l

requirements.

Liability claims within 30 days on completion of process of law.

l) Endeavour to set up a system of Ombudsman at the four

metropolitan cities to conciliate disputes on personal life insurance

claims.

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3.4 MANAGEMENT

Oriental Insurance is a professionally managed independent Board-run

Company. Illustrious personalities like Shri T. A. Pai ( who later became

Cabinet Minister in the Union Government ), Shri K. R. Puri, who rose to be the

Governor of RBI and Shri B. D. Pande (who later became the Governor of West

Bengal) were among our past Chairmen. At present Dr. A. K. Saxena is

Chairman-Cum-Managing Director of our Company. The Board of Directors of

our Company includes eminent personalities in various fields.

3.5 ABSTRACT OF ORIENTAL INSURANCE COMPANY LTD

To keep the focus on customer and serve their insurance requirements.

To offer high quality service being customer friendly.

To invest funds for optimum grant and engage in profitable business.

To optimize the retentively of Indian business and carry on

reinsurance policies and foreign operations.

To establish Risk management Technologies and minimize the losses

3.6 GROWTH OF ORIENTAL INSURANCE COMPANY LTD

Oriental Insurance Company Ltd. has its head office at New Delhi

and 26 regional offices all over the country Apart from this the company

also has over 900operating offices and overseas operation, mainly in Kuwait,

Dubai and Nepal. The company presently has around 15,000 technically

qualified, effective, committed and highly trained workforce covering various

segments. The Solvency Margin as of 31st March, 2009 is 1.66 in

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comparison to the desired Solvency Mar6ri of 1.5 made compulsory by the

Indian Regulatory Body, IRDA

A pre-tax loss of Rs 82.66 crores & post-tax loss of Rs. 52.66 crores

for the year 2008- 09 was recorded after considering the income

from the dividend, interest and rent of Rs 60823,crores and Profit on

sale of Investments of Rs387.39.

The company recorded the gross premium income in India during the

year 2008-09 at Rs. 396426 and abroad at Rs. 113.64 crores in

comparison to Rs. 92, 07 in the previous year re6stering a growth

of 4.55%. On the other hand the net premium income both in

domestic and foreign operations recorded a rise of 12.38% from

Rs.2878.67 crores in 2007-.08 to Rs. 3235.10 crores in 2008-09. An

overall surplus of Rs. 15.27 crores was registered in the company's

foreign operations.

The company has gone ahead to make itself more technolo6cally

updated and IT friendly and have their very own websites. The implementation

of Integrated Non- Life Insurance Application Software (INLIAS) in their company

has ascerta ined a better customer service. Furthermore, the company has been credited

with the highest rating by leading Indian Credit Rating Agenciagency, rated the

company as B++ (Very Good).

3.7 CORPORATE MISSION

Contribute to the socio economic objectives of the nation by

being a vibrant and viable organization catering to the moving

insurance needs of the community. Towards this end we mill strive for

effective management of business operations.

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3.8 GOAL SETTING FLOW

3.9 PRODUCT PROFILE

Oriental's vast product portfolio has been specially designed to cater to the

needs of consumers in India. We develop general insurance plans in the best

interests of our customers. Oriental Insurance continues to provide customized

insurance products for all sections of the society at affordable prices.

Now we can buy and renew policies Online. Buy a new Insurance policy,

Renew an existing Oriental Insurance policy or renew policies bought from any

other general insurance company by registering yourself on our Portal and

paying online through your debit card / credit card or Net-banking. To check out

various online facilities available, you may login on the Portal.

The various insurance product types are given below:

3.9.1 Marine Insurance

38

Vision, Mission,

Business Goals

Strategy Budget

Individual

Objectives

CompanyObjectives

Regional/

Departmental/

Functional

Business Plan

AnnualBusiness plan


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Oriental insurance company ltd brings to India a wide range of marine

cargo products from various international markets. Their products considerably

widen the scope of coverage presently enjoyed by the insured population

without necessarily involving a high premium.

3.9.2 Burglary insurance

Burglary Insurance for machinery, stock in trade, furniture, fixtures &

fittings and for goods held in trust or on commission for the insured is

responsible. Burglary Insurance covers burglary or housebreaking accompanied

by either forcible or violent entry into/exit from the premises and hold-up.

3.9.3 Engineering Insurance:

Erection All Risks Insurance

The Erection All Risks policy is a comprehensive insurance, which

provides complete protection against all types of risks associated with

erection, testing, commissioning of machinery, plant and equipment

during constructional stage.

Boiler & Pressure Plant Insurance

It covers the risk of explosion and collapse of any boiler or other pressure

plant in the course of ordinary working.

Contractor's All Risks Insurance

All types of civil engineering works, ranging from small buildings to

massive dams are exposed to damage from a wide range of causes such as

fire, lightning, flood, inundation, storm, cyclone and other accidental

damages. It is a comprehensive insurance which provides complete

protection against all types of civil construction risks.

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Machinery Breakdown Insurance

Oriental insurance company ltd extend its hand offering Machinery

Breakdown Insurance Cover ably supported by most capable technocrats

to throw more light about the mechanical side of all machines.

Marine-Cum-Erection Insurance

It is developed as a comprehensive product to manage the risk and

insurance needs in course of erection as well as during transit. It is acombination of Erection-All-Risks and Marine Insurance to cater to the

needs of the client where Marine/Transit insurance is connected with

Erection All Risks Insurance of any project.

Contractor's Plant & Machinery

Contractor's Plant & Machinery is an exclusive all risks policy covering

the plant & machinery used by the contractors at the site for various

projects. It covers the property whether they are at work or at rest or

being dismantled for the purpose of cleaning or overhauling, or in the

course of operations or when being shifted within the premises or during

subsequent re-erection, but in any case only after successful

commissioning.

3.9.4 Liability Insurance:

Product Liability Insurance

Liability arises from a civil wrong or breach of personal duty imposed by

law on a person and owed to his/her fellow citizens. In some countries

legal rights and duties are framed in a Civil Code. In others they are not

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codified but drawn from the precedent of decisions handed down in the

courts over the centuries; this is known as "Common Law".

Workmen's Compensation Insurance

It provides Insurance against occupational accident or disease to an

employee whilst in course of his employment.

Public Liability Act

It provides indemnity against the Insured's liability at law to the public in

general (excluding employees) for bodily injury and loss of or damage toproperty due to the business activities carried on in insured's premises.

3.9.5 Business solutions:

Industrial All Risks Policy

Its a wide and comprehensive cover for the large sized business where

the assets at all locations of the insured exceed Rs.100 Corers. It is an All

Risks Policy covering a wide range of perils such as fire and allied perils,

burglary, accidental damage, breakdown as well as business interruption.

Office Shield

A flexible policy specifically designed to meet the insurance needs of

your modern office, irrespective of the number of locations.

Hotel Shield

Tailor-made cover designed to suit the specific needs of the Hotel

Industry.

Enterprise Shield

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It is a newly devised package providing total insurance solutions for

industries. You do not need to analyze and evaluate a large number of

insurance policies to insure your business completely.

Education Shield

Tailor-made cover designed to suit the specific needs of Education

Industry.

Traders Shield

It is an attractive policy that provides shopkeepers with a basic insurancepackage and a further range of optional covers.

All Risks Policy for Portable Equipments

It offers an overall solution to cover portable items like laptops, mobiles,

cameras and projectors.

Standard Fire and Special Perils Policy

It offers cover against fire and allied perils and the perils of nature. The

policy can cover building (including plinth and foundation), plant and

machinery, stocks, furniture, fixtures and fittings and other contents.

Consequential Loss (Fire) Insurance

It provides protection against loss of profits in business due to an

interruption in business consequent upon an insured peril covered under

the material damage policy.

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3.9.6 Employee solutions:

Group Personal Accident Policy

It is a worldwide cover providing protection for the employees against

any accidental injuries sustained by the individuals resulting in death and

disablement.

Group Health

Health Premium Platinum is a comprehensive health insurance package,

designed for the employees of company and their family members.

Workmen's Compensation

Workmen's Compensation provides cover to target clients as required by

law in support to project insurances or property insurances.

3.10 ORIENTAL TRAVEL INSURANCE

Oriental Overseas Travel Mediclaim Insurance is available to Indian

Citizen between 6 months and 70 years of age who are undertaking bonafide

trips outside India which will not involve any form of manual work and do not

exceed 180 days duration unless specifically extended.

The overseas mediclaim policy provides indemnity for expenses

necessarily incurred for immediate treatment of illness, diseases contracted orinjury first sustained (during the period of insurance of overseas travel subject

to policy terms and conditions.) and in addition also personal accident, total loss

of checked baggage, delay of checked baggage, loss of passport and personal

liability covers. (During the period of insurance of overseas travel subject to

policy terms and conditions)

3.11 HEALTH INSURANCE

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Oriental health insurance family floater policy is issued for a period of

one year and it offers two plans - Silver plan Sum insured in multiples of

Rs.1,00,000/- and upto Rs.5,00,000/- per person aged 18 years and above. Gold

plan Sum Insured in multiples of Rs. 2, 00,000/-, and upto Rs.10, 00,000/- per

person aged 18 years and above. 50% of this limit for persons less than 18 years

3.12 HOME INSURANCE

The House holder's Insurance Policy is a comprehensive shelter that

protects your house and the various contents in it against a variety of risks. It is

a single policy that takes care of a number of contingencies. The policy isdivided into 10 sections. Sec 1(B) and a minimum of any 2 other sections are

compulsory. Section 1: Fire and Allied Perils. Section 2: Burglary. Section 3:

All risks. Section 4: Plate Glass. Section 5: Breakdown of domestic appliances.

Section 6: T.V. Set. Section 7: Pedal Cycles. Section 8: Baggage Insurance.

Section 9: Personal Accident. Section 10: Public Liability.

3.13 APPLYING FOR HEALTH INSURANCE

With rising medical costs, it has now become imperative for everybody

to get Health Insurance coverage. Here are the Top 6 factors to keep in mind:

3.13.1 Adequate Coverage Amount

Take an adequate cover to protect yourself and everyone who is

dependent on your income - e.g. your family members. Hospitalization costs are

higher in metros; people living in metros typically should opt for a higher

coverage amount.

3.13.2 Re-imbursement or Cash Allowance?

Health Insurance comes in various flavors. It is imperative that you

understand the difference between re-imbursement plan and a cash allowance

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plan. A cash allowance plan cannot replace a re-imbursement plan (often

referred to as "Mediclaim" - because here the amount you get is based on the

actual amount of expense incurred whereas in a cash allowance you get a fixed

lump sum for every day you spend in the hospital - no matter how expensive the

treatment might be.

3.13.3 Cashless Facility

Imagine having to run around to arrange for cash in an emergency

situation for getting admitted to the hospital of your choice! Most insurance

companies had launched cashless cards for re-imbursement based plans - so thatyou could simply present the card at the time of admission and an administrator

would take care of settling your hospital bills directly from the insurance

company. However in mid-2010, several public sector insurers withdrew

support for the cashless facility. Before buying your Health Insurance, you may

want to check with your insurer how many hospitals does he offer support for

the cashless facility and especially about the hospitals in your area. But pleaseremember that just because a hospital is in the cashless network at the time of

taking your first policy it may not remain in the cashless network when your

claim arises. So this cannot be the sole factor for deciding about the health

insurance company.

3.13.4 Age until Renewals allowed

Most of us will certainly fall ill at some point of our lives - and the

chances are that we will fall ill when we are older. Entering into a new Health

Insurance plan is significantly cheaper and easier when one is young & healthy.

The chances of having any major pre-existing disease is lower so most plans are

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available and also the insurance company must disclose today the premiums

applicable today as well as the premiums applicable at an older age Ensure that

your health insurance plan is renewable after 65 - because at that age, you don't

want to discover that health insurance is difficult to get when you need it the

most.

3.13.5 Co-pay

One of the fears insurance companies nurse is that the customer might

opt for unusually expensive hospital rooms or procedures than are warranted.

To overcome this, some insurance companies introduce a co-pay or sub-limits.In a co-pay you are required to share some of the expenses incurred-regardless

of the amount covered.

E.g. say you have a 3 lac cover and the bill you want to be re-imbursed

amounts to Rs. 2 lacs. With a plan that has a 20% co-pay, you will only get 80%

of the bill re-imbursed by the insurer - i.e. Rs. 1.6 lacs and you will have to bear

the rest). For the same coverage amount, a plan with a co-pay should come with

a much lower premium than one without a co-pay. Sub-limits simply restrict the

amount of re-imbursement for individual bill items - e.g. even a Rs 1 lac bill

may not be fully re-imbursed for a Rs 3 lac coverage amount, if say the sub-

limits set on room rentals/ doctors fees/ OT charges - or even a specific

procedure (e.g. cataract/ knee replacement) is exceeded. Again a plan with sub-

limits should have a lower premium for it to be worth considering.

3.13.6 Temporary and Permanent exclusions

Normally most policies provide coverage for pre-existing diseases only

after a waiting period. Remember pre-existing disease is not just the disease you

are suffering from at the time you took the first policy but also any other disease

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that is caused due to such pre-existing disease. A common example is that heart

illness will also be treated as pre-existing (even though at the time you took the

first policy you had no heart disease) if you had diabetes when you took the first

policy since the heart illnesses is caused by Diabetes. This single item is

responsible for most of the disputes between insurance companies and

consumers. So make sure you disclose everything that is required in the form.

Please do not sign a blank form and leave it to the agent to fill the form later.

This will ensure that at least at the end of the waiting period you will get the

disease covered. If you do not disclose the disease then you run the risk of your

policy being cancelled or a renewal being denied if this fact is discovered later.

Apart from the above illness contracted during the first 30-90 days of the

first policy is normally not covered. Some specific diseases/treatment such as

cataract, knee replacement, etc. may also be covered only after a waiting period.

There are permanent exclusions as well such as beauty treatment, sexually

contracted diseases, non allopathic hospitalization expenses, etc. Always readthe policy brochure carefully and also look at the section dealing with

permanent exclusions in the policy document. Keep a copy of all documents

submitted to the insurance company for your future reference. Any promise

made by the agent or even an official of the insurance company has no value

unless it is in writing or at least on email. So if you are basing your decision on

any such promise make sure you get it in record in some form.

CHAPTER IV

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SUMMARY, FINDINGS AND CONCLUSION

4.0 Oriental Insurance is a professionally managed independent Board-run

Company. Insurance was a method of sharing of the losses, embodying the

principle of co-operation existed in the early civilization. Insurance covers

many risks and uncertainties in the world of business and act as a boon to the

industrial or commercial concerns and general public. Businessman can easily

and confidently transfer the risk of loss of insurance. It also safeguards the

interest of individual and public. Businessman does not have to worry about

losses or damage when the risk of loss to their property is duly insured. They

will receive compensation against actual loss takes place. In life insurance, life

policy gives financial protection to the dependents to the extent of the assured

who may be the only breadwinner initially. An insured businessman or

policyholder can enjoy normal expected profits. As the property of the

businessman is duly insured and he can get a normal profit margin, he canchange lower prices to consumers. Insurance has the effect of improving credit

standing of businessman, commercial banks and financial institutions insisted

for insurance of articles, which are kept as security for loans.

4.1 FINDINGS

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1) Introduction chapter explained the history, review of literature,

fundamental principles of Oriental Insurance Company Ltd in India and

the methods by which the study sought to be undertaken are discussed in

this chapter.

2) The methodology chapter gave the essential hypotheses, objective and

techniques which are used to prove the statement of the research study

and also analyzed in detail about the Organizational Structure of Oriental

Insurance Company Ltd in India.

3) The third chapter gives the essential of organizational structure andvarious insurance products introduced by Oriental Insurance Company

Ltd in India to provide immediate financial assistance to the insurers.

4.2 SUGGESTIONS

1) The Oriental Insurance Company Ltd should pay more attention to meet

the present scenario demands almost all the customers to have a general

insurance cover in order to protect from future uncertainty.

2) Oriental Insurance Company Ltd should simplify the procedure for the

convenience of customer.

3) Oriental Insurance Company Ltd should offer insurance cover at

reasonable premium rates to the customers.

4) To create goodwill through good customer satisfaction.

5) The company has to focus more on the auto/car insurance segment and

health insurance segment. Majority of the respondents have preference

towards auto/car insurance as it is a must to have insurance for their

vehicles by law. Therefore, the company has got enough opportunities to

earn huge profits from both these segments.

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6) The company can create more awareness about its products among

potential customers by means of advertisements and efficient insurance

agents, which in turn will help in increasing its customer base.

4.3 CONCLUSION

The Indian insurance industry undoubtedly displays great potential.

Indias high saving rate, customary lack of social security nets and a tradition of

frugality are expected to be key growth drivers. Despite Indias vast population,

rural poverty and lack of awareness about insurance products have constrained

the growth of insurance business in the past. This is expected to change with therecent deregulation and liberalization of the insurance sector. Improved

nutrition and medical standards have improved the life expectancy necessitating

the provision comfortable standard of living to the retires. Another factor

closely related is the rising middle class that will encourage increased insurance

spending and their growing risk awareness.

India is poised to experience major changes in its insurance market.

Insurers will operate in an increasingly deregulated and liberalized environment.

However, in spite of the liberalization, Oriental Insurance Company Ltd will

continue to maintain their dominant position in the market, at least in the

foreseeable future. However given the enormous potential of the Indian market,

it is for the insurers to come out with new product, better packaging and

improved customer service. Product innovation and channel diversification will

gain momentum, in line with global trend of financial service convergence.

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BIBLIOGRAPHY

1) Mishra M. N. (2004), Insurance Principles & Practice, S. Chand &

Company Limited, New Delhi.

2) Agrawal Raj and Diwan, Parag, Business Environment, First Edition,

Excel Books, Delhi 2000.

3) Insurance Institute of India Principals of General insurance, Bombay.

4) Insurance Institute of India, General insurance Institute of India, Bombay.

5) Agrawal Raj, Business Environment, Excel Books, New Delhi, Second

Edition 2002

6) Periasamy P. (2008) Principles and Practice of Insurance Himalaya

Publishing House, Mumbai

7) Ravichandran K. (2007) Recent Trends in Insurance Sector in India,

Abhijeet Publications, Delhi

JOURNALS AND PERIODICALS

1) Insurance watch

2) Fortune India

3) Business today

4) Journal IRDA

5) Journal Insurance Institute of India

WEB SITES

1) www.irda.org

2) www.bimaonline.com

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3) www.indiaiinfoline.com

4) www.insuranceinstituteofindia.com

organizational structure of oriental insurance company ltd

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