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History Of Insurance In India Essay

5349 words - 22 pages

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CHAPTER 2
FORMATION AND GROWTH OF INSURANCE INDUSTRY IN INDIA
* INTRODUCTION
* NATURE AND CHARACTER OF INSURANCE
* NEED FOR INSURANCE
* FUNCTIONS OF INSURANCE
* HISTORICAL BACKGROUND OF INSURANCE
* TYPES OF INSURANCE
* HISTORY OF INSURANCE IN INDIA
* Formation of Insurance Industry in India
* Nationalization of Insurance Business in India
* Privatization of Insurance Industry
* LEGISLATIONS REGULATING THE INSURANCE SECTOR IN INDIA
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CHAPTER 2
FORMATION AND GROWTH OF INSURANCE INDUSTRY IN INDIA
INTRODUCTION
Insurance is a practice by which a company ...view middle of the document...

NATURE AND CHARACTER OF INSURANCE
* Sharing of risk
Insurance is a co-operative device to share the burden of risk. It may fall on happening of some unforeseen events, like- the death of head of the family, or on happening of marine perils or loss of by fire.
* Co-operative device
Insurance is a co-operative form of distributing a certain risk over a large group of persons who are exposed to it. Therefore a large number of persons share the losses arising from a particular risk.
* Evaluation of risk
For the purpose of ascertaining the insurance premium, the volume of risk is evaluated, which forms the basis of insurance contract.
* Payment on happening of specified event
On happening of specified event, the insurance company is bound to make payment to the insured. Happening of the specified event is certain in life insurance, but in the case of fire, marine or accidental insurance, it is not necessary. In such cases, the insurer is not liable for payment of indemnity.
* Amount of payment
The amount of payment in indemnity insurance depends on the nature of losses occurred, subject to a maximum of the sum insured. In life insurance, however, a fixed amount is paid on the happening of some uncertain event or on the maturity of the policy.
* Large number of insured persons
The success of insurance business depends on the large number of persons insured against similar risk. This will enable the insurer to spread the losses of risk among large number of persons, thus keeping the premium rate at the minimum.
* Insurance is not a gambling
Insurance is not a gambling. Gambling is illegal, which gives gain to one party & loss to the other. Insurance is a valid contract to indemnity against losses. Moreover, insurable interest is present in insurance contracts & it has the element of investment also.
* Insurance is not charity
Charity pays without consideration but in the case of insurance, premium is paid by the insured to the insurer in consideration of future payment.
* Protection against risks
Insurance provides protection against risks involved in life, materials & property. It is a device to avoid or reduce risks.
* Spreading of risk
Insurance is a plan, which spread the risks & losses of few people among a large number of people. John Magee writes, "Insurance is a plan by which large number of people associates themselves & transfer to the shoulders of all, risks attached to individuals."
* Transfer of risk
Insurance is a plan in which the insured transfers his risk on the insurer. Insurance is a device to transfer some economic losses to the insurer, and otherwise such losses would have been borne by the insured themselves.
* Ascertaining of losses
By taking a life insurance policy, one can ascertain his future losses in terms of money. This is done by the insurer to determining the rate of premium, which is calculated on the basis of maximum risks.
* A Contract
Insurance is a legal...

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