Insurance is a service. It answers a human need. It has an
economic aspect and a legal aspect. It is essential we shall have an idea as to
what is understood by ‘service’. Goods and services belong in different logical
categories [Hill (1977)]. This leads us to conclude that unlike goods, services
can not have accumulated stock or inventory. In other words services must be
consumed as they are produced. According to Bhagwati (1984) services could be
of two types, viz. i. those requiring physical proximity of the user and
provider and ii. others. Services that require physical proximity are
categorized as:
i.
Mobile
provider and immobile user, eg. Shifting of labour from one country to another
ii.
Immobile
provider and mobile user, eg. Hospital services, and
iii.
Mobile
provider and mobile user, eg. Lectures, haircut etc.
Services for which physical proximity of the provider and
user is not essential, ie. Long distance services are on the rise due to technical
progress, eg. Banking and Insurance. [Bhagwati(1985)]. Insurance, as a service,
operate through three different sectors, viz. life insurance, general insurance
[also known as non-life insurance] and reinsurance and retrocession. How
insurance is valued for the purpose of computation in to Gross Domestic Product
of the country is explained in chapter 13 and paras 20.5, 20.32, 20.33 of
Chapter 20, ‘Domestic Saving’ of NAS Sources and Methods 1989 [CSO].
The legal aspect is that the Consumer Protection Act, 1986
(of India ) defines insurance
as a service. This law insists that administration of life insurance shall be
without any deficiency. Legal remedies are provided for any deficiency of
service.
-----------------------------------------------------------
Bhagwati, Jagdish,N (1984), ‘Splintering and Disembodiment
of Services in Developing Countries’, World Economy, 7(2), June Pp133-43.
Bhagwati, Jagdish,N (1985), ‘Why are Services cheeper in
Poor Countries?’, Wealth and Poverty, vol I, Cambridge ,MIT
Press , England
Hill,T.P.(1977),’On
Goods and Services’, Review of Income and Wealth, 23(4),Pp315-318
Key words:
Service
Life insurance
Non-life insurance
The Consumer Protection Act, 1986
Key words:
Service
Life insurance
Non-life insurance
The Consumer Protection Act, 1986
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