UNIVERSITY OF

MYSORE

Futures, Options and Swaps

Topic: Role of insurance and Derivatives

PRESENTING TO,

G.KOTRESHEWAR SIR,

FACULTY ,

DEPARTMENT OF COMMERCE,

MANASA GANGOTRI ,MYSORE.

Insurance

Human beings, his family and properties are

always exposed to different kinds of risks. Risk

involve the losses. Insurance is a tool which

reduces the cost of loss or effect of loss caused

by variety of risk. It accumulates funds to meet

individual losses. It is not device to prevent

unwanted event of happening or cause of loss

but protects them against that loss by

compensating which as lost.

Role of insurance

Insurance provides security

Insurance reduces business risk or losses

Insurance provides peace of mind

Life insurance encourages saving

Insurance accelerates the economic

growth of the country

Insurance provides credit facilities

Insurance helps to reduce inflation

Derivatives

Derivatives are financial instruments

whose value depends on the value of

“underlying assets.”

It is more like a contract of future date in

which two or more parties are involved to

alleviate future risk.

Usually, derivatives enjoy high leverage.

Its value is affected by the volatility in the

rates of the underlying asset.

Role of Derivatives

Price Discovery

Risk Management

They Improve Market Efficiency for the

Underlying Asset

Derivatives Also Help Reduce Market

Transaction Costs

Air India’s insurance contract

up for renewal on October 1 for

an estimated $25 million

Published on 22nd September 2014

The race for getting national carrier Air India's insurance

renewal deal has begun between public and private

sector general insurers. A New India Assurance-led

consortium of public sector insurers has emerged as the

frontrunner, while the private sector has rallied behind a

group led by ICICI Lombard General Insurance.

The insurance contract for Air India's 105-strong fleet comes

up for renewal on October 1 at an estimated premium of

about $25 million.

The New India Assurance-led consortium has United India

Insurance, Oriental Insurance and National Insurance as

co-insurers. While, ICICI Lombard General Insurance-led

group has HDFC Ergo and Reliance General as co-insurers.

Following recent rise in aviation mishaps such as a series of

Malaysian Airlines tragedy, premiums have increased,

pushing up the bill for insurers.

Air India's current insurance policy, issued by New India

Assurance, includes a $9.5-billion hull cover and a

combined single liability of $1.5 billion.

conclusion

Insurance and derivatives are effective tool to

control or minimize the risk factor. In absence of this

tool there is a possibilities of occurring loss is very

high .and these are very essential in financial

market to managing the Varity risks.

Reference

Insurance in risk management/ slide share

Role of insurance / investopedia

Capital market institutions and instruments

Eastern Economic Edition 4TH edition

by,

Frank j.fabozzi and franco

modigliani

Presented By,

Mahadeva prasad.m

2nd MFM

DOS in commerce

Manasa gangotri ,

Myose.

Thank you