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Life
Insurance
The
insurance company receives the premiums from the policy
owner and invests them to create a pool of money from
which it can pay claims and finance the insurance
company's operations.
Personal Insurance
In terms
of being rated for financial strength like international
players, only "ICICI" Prudential is rated by Fitch India
at National Insurer Financial Strength Rating of AAA(Ind)
with stable outlook indicating the highest claims paying
ability rating.
Insurance Companies
All
life insurance companies in India have to comply with
the strict regulations laid out by Insurance Regulatory
and Development Authority of India (IRDA). Therefore
there is no risk in going in for private insurance
players.
Insurance brokerage in the United States is also a
regulated industry, with almost all states
individually issuing brokerage licenses. Most states
have reciprocity agreements whereby brokers from one
state can become easily licensed in another.
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Commercially
insurable risks typically share seven common characteristics
:
Definite Loss :
The event that gives rise to
the loss that is subject to insurance should, at least in
principle, take place at a known time, in a known place, and
from a known cause. The classic example is death of an insured
on a life insurance policy. Fire, automobile accidents, and
worker injuries may all easily meet this criterion. Other types
of losses may only be definite in theory. Occupational disease,
for instance, may involve prolonged exposure to injurious
conditions where no specific time, place or cause is
identifiable. Ideally, the time, place and cause of a loss
should be clear enough that a reasonable person, with sufficient
information, could objectively verify all three elements.
Accidental Loss : The
event that constitutes the trigger of a claim should be
fortuitous, or at least outside the control of the beneficiary
of the insurance. The loss should be ‘pure,’ in the sense that
it results from an event for which there is only the opportunity
for cost. Events that contain speculative elements, such as
ordinary business risks, are generally not considered insurable.
Large Loss :
The size of the loss must be meaningful from the perspective of
the insured. Insurance premiums need to cover both the expected
cost of losses, plus the cost of issuing and administering the
policy, adjusting losses, and supplying the capital needed to
reasonably assure that the insurer will be able to pay claims.
For small losses these latter costs may be several times the
size of the expected cost of losses. There is little point in
paying such costs unless the protection offered has real value
to a buyer. |
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