Insurance in India

There are two major divisions of insurance: one is life insurance and the other is non-life insurance. Non life insurance is also known as general insurance. Life insurance deals with insurance of human life. Life Insurance Corporation of India is a statutory corporation dealing in life insurance. There are over twenty private sector life insurance companies operating in India with foreign capital participation. They are known as ‘Indian Insurance Companies’.

Non-life insurance deals with insurance of everything else and accident insurance on human life. Non life insurance is available in the form of agricultural insurance, deposit insurance, health insurance, credit insurance, fire, marine, miscellaneous insurance etc. The National Insurance Company, The Oriental Insurance Company, The New India insurance Company, The United India Insurance Company, The Agriculture insurance Company and the Export Credit Guarantee Corporation are general insurance companies in the public sector. There are over twenty private sector general insurance companies operating in India with foreign capital participation. They are known as ‘Indian Insurance Companies.’

Then there is reinsurance (which is insurance of insurance) and retrocession (which is insurance of reinsurance). The General Insurance Corporation of India, which is a government company, is the national re-insurer of India.

The industry in India is regulated and developed by the Insurance Regulatory and Development Authority (‘Authority’ for short) established by the IRDA Act,1999.

A person can purchase a life insurance policy for covering his expected future savings, say, that of 20 years. This expected saving is called the sum assured.

The person whose life risk is covered by the insurance policy is called the life assured. He is given the ‘assurance’ by the life insurance company that his expected saving will be made available to him when the policy matures or in the event of his untimely death the same will be made available to his nominee / legal heirs, provided all premiums are paid till death / maturity. 

The consideration being paid for getting the expected savings covered (guaranteed) is called the premium. If the life assured is alive at the end of the term of the policy, the life insurance Company pays his expected savings to him then. Here the actual savings is equal to the expected saving. On his death within the term of the policy the amount or claim is paid to his` nominee.                                                                                                                                                                      
Key    words: 

Life insurance
General insurance 
Re-insurance
Retrocession
Indian insurance companies