A PROJECT REPORT ON RISK MANAGEMENT HOMEOWNERS INSURANCE @ NEW INDIA ASSURANCE

SUBMITTED BY: GROUP-3 SURBHI GOYAL SAGAR TANNA KEVAL THACKER MAITRI THAKAR 12017 12049 12050 12054

SUBMITTED TO: Prof. PRATIBHA NAIR

PGDM PROGRAMME (Batch: 2012 2014) Tolani Institute of Management Studies

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INDEX Contents
INTRODUCTION ................................................................................................................................ 4 HISTORY ........................................................................................................................................... 6 OUR STRENGTHS .............................................................................................................................. 7 PIONEERS ......................................................................................................................................... 7 OUR MISSION ................................................................................................................................... 8 OUR VALUES..................................................................................................................................... 8 THE INDIAN ASSURANCE INDUSTRY IS FEATURED BY THE ATTRIBUTES: ...................................... 14 1. RISK PERCEPTION AND EVALUATION:........................................................................................ 16 2. DESIGNING THE INSURANCE PRODUCT: .................................................................................... 16 3. MARKETING OF THE PRODUCT: ................................................................................................. 17 4. SELLING OF THE PRODUCTS: ...................................................................................................... 17 5. MANAGEMENT OF PORTFOLIO:................................................................................................. 17 PUBLIC SECTOR .............................................................................................................................. 18 PRIVATE SECTOR ............................................................................................................................ 18 Products24 COMMERCIAL................................................................................................................................. 25 INDUSTRIAL .................................................................................................................................... 26 LIABILITY......................................................................................................................................... 26 SOCIAL ............................................................................................................................................ 27

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ACKNOWLEGMENT We would like to thanks Professor. Pratibha Nair Tolani Institute of Management Studies for giving us such an opportunity to have a deep insight of insurance company (HOMEOWNERS). We would also like to thanks Mr.Akhilesh Acharya New India Assurance company Gdham Branch to share his knowledge and experience with us and for giving us his valuable time and making we understand the deep knowledge of homeowners insurance. At last we would like to thank each and every who helped us in making this report.

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ASSURANCE
INTRODUCTION Assurance industry has always been a growth-oriented industry globally. On the Indian scene too, the assurance industry has always recorded noticeable growth vis--vis other Indian industries. It is a system by which the losses suffered by a few are spread over many, exposed to similar risks. Insurance is a protection against financial loss arising on the happening of an unexpected event.

stablished by Sir Dorab Tata in 1919, New India is the first fully Indian owned insurance company in India. Incorporated on July 23rd, 1919 Founded by the House of Tata Founder member - Sir Dorab Tata. Nationalised in 1973 with merger of Indian companies.

New India was a pioneer among the Indian Companies on various fronts, right from insuring the first domestic airlines in 1946 to satellite insurance in 1980. The latest addition to the list of firsts is the insurance of the INSAT-2E. With a wide range of policies New India has become one of the largest non-life insurance companies, not only in India, but also in the Afro-Asian region.

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The new India assurance Co. Ltd. was the first general assurance company to be established in India in 1850, which was a wholly Britishowned company. The new India assurance company to be set up by an Indian was Indian Mercantile assurance Co. Ltd., which was established in 1907. There emerged many a assurance player on the Indian scene thereafter. The general assurance business was nationalized after the promulgation of General Insurance Business (Nationalization) Act, 1972. The post-nationalization general assurance business was undertaken by the assurance Corporation of India (GIC) and its 3 subsidiaries: 1. New India Assurance Company Limited 2. National Insurance Company Limited 3. United India Insurance Company Limited Towards the end of 2000, the relation ceased to exist and the four companies are, at present, operating as independent companies.

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PROFILE

History Present Position International Presence Our Strengths Pioneers Citizens' Charter

HISTORY Incorporated on July 23rd, 1919 Founded by the House of Tata Founder member - Sir Dorab Tata. Nationalised in 1973 with merger of Indian companies. PRESENT POSITION Network of Offices-26 Regional Offices, 393 Divisional Offices, 614 Branches and 34 Direct Agent Branches. Rank No. 1 in the Indian market. Largest Non-Life insurer in Afro-Asia excluding Japan. First Indian non-life company to cross Rs. 5000 crores Gross Premium. Global Re-insurance facilities. Over-seas presence in countries like Japan, U.K, Middle East, Fiji and Australia.

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INTERNATIONAL PRESENCE Overseas operations commenced in 1920. Operations in 24 countries in the year 2004-05. Network of 19 Branches, 12 Agencies, 2 Associate companies and 2 Subsidiary companies in the year 2004-05

OUR STRENGTHS Largest number of Offices - In India and Abroad Trained and technically qualified staff 1068 fully computerised offices across India. "A-" (Excellent) rating by A.M.Best & Co (Europe) First domestic company to be rated by an International Rating Agency Rating based upon following factors: Superior capital position Strong operating performance Strong market position Only company to develop significant International operations, long record of successful trading outside India.

PIONEERS

First company to set up an Aviation Insurance Department in 1946. First company to handle the Hull Insurance requirements of the Indian Shipping Fleet.

First company to establish its own Training School. First company to introduce the concept of 'Model Office Training'. First company to create department in Engineering insurance. Pioneer in Satellite insurance.

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CITIZENS CHARTER

OUR MISSION

To develop general insurance business in the best interest of the community.

To provide financial security to individuals, trade, commerce and all other segments of the society by offering insurance products and services of high quality at affordable cost

OUR VALUES

Highest priority to customer needs. High standards of public conduct. Transparency in operations.

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COMMITMENT TO THE CITIZENS

The company responds to all commercially viable general insurance requirements of the citizens, including products for weaker sections of the society at affordable price within three months from the date on which such a requirement is received.

They ensure issuance of 100% of documents within a period of seven days.

They ensure that prospectus of the various insurance products are provided to the customers and the extent of coverage is explained for his choosing the appropriate product. A written proposal will be obtained from the insured wherever necessary and accordingly the policy will be prepared.

Settlement of all claims within a time schedule envisaged hereunder: A. Personal life insurance claims within 30 days on completion of all requirements. B. Property claims within 30 days on completion of all requirements. C. Liability claims within 30 days on completion of process of law.

They

promote

customer

education

in

general

insurance

products/services by holding workshops in various centers.

The company has opened a customer service cell in all ROs/DOs in addition to the existing 'May I Help You' counters.

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Will set up proper grievance redressal mechanism in every operating office and will educate the clients about the same including the system of grievance redressal thorough ombudsman.

On request to the policy issuing office, company will make available to a customer, the status of his claim and/or claim settlement details within seven working days.

Will adhere to the IRDA guidelines in protecting the policyholders' interest.

The Indian assurance industry saw a new sun when the assurance Development Authority invited the applications for registration as assurors in August, 2000. With the liberalization and opening up of the sector to private players, the industry has presented promising prospects for the coming future. The transition has also resulted into introduction of ample opportunities for the professionals including Chartered Accountants.

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MANAGEMENT
BOARD OF DIRECTORS

1. 2. 3. 4.

NAME Shri M. Ramadoss Shri A. R. Sekar, Shri I S Phukela, Mr. R. Gopalan

Chairman cum Managing Director Director and FA Director I.A.S., Secretary, Department of Financial Services, Ministry of Finance,

5.

Shri M. D. Mallaya

Government of India Chairman & Managing Director, Bank of Baroda

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CORPORATE

CORPORATE HEAD OFFICE ADDRESS: The New India Assurance Co. Ltd. 87, M.G. Road, Fort, Mumbai 400 001.

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OUR OFFICES

Corporate

Domestic

Overseas

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THE INDIAN ASSURANCE INDUSTRY IS FEATURED BY THE ATTRIBUTES:

LOW MARKET PENETRATION Ever-growing middle class component in population. GROWTH OF CONSUMER Movement with an increasing demand for better assurance products; Inadequate application of information technology for business.

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STRUCTURE OF THE ASSURANCE INDUSTRY

The structure of the assurance industry comprises of the Operating department, Administrative department and the finance department. The Operating Department generally performs the basic functions pertaining to the designing of products, marketing thereof, servicing the insured, the insured, management of portfolio, etc. The Administrative Department looks after the day-to-day affairs of the company. The Finance Department backs the operations and administration of the company by accounting for the transactions, streamlining the flow of funds, materializing the management decisions, etc. The Administration Department as well as the Finance Department, usually, functions through in-house setup. The Finance Department functions in the areas of accounting, financial and management reporting, budgeting and controlling, etc. and thus renders enormous scope for finance professionals.

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BASIC FUNCTIONS OF THE ASSURANCE INDUSTRY

1. RISK PERCEPTION AND EVALUATION: The fundamental function of an insurer is to provide a cover against the loss caused to the insured due to the happening of certain specified and agreed events. Thus, prior to providing such umbrella through a product, the insurer has to assess the risk involved in the transaction. The perception of risk requires the study of variables through various methods including the application of scientific and statistical techniques and correlation thereof with the industry or unit under study in light of their basic environmental and infra-structural characteristics.

2. DESIGNING THE INSURANCE PRODUCT: On the basis of the risks perceived, the insurer develops a product to cover the stipulated risks. While designing an insurance product, an insurer decides its cost to be charged from the insured in the form of premium, reduction thereof in certain cases like not lodging any claim during the previous covered period(s), suggesting the implementation of riskmitigating measures, etc.

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3. MARKETING OF THE PRODUCT: The core function of the marketing force of an insurance company is to generate awareness about the insurance products among the target market. But in the Indian scenario, where the insurance penetration is too low as compared to the other nations, the marketing force needs to perform the pro-active role in developing an insurance culture. It is through the efficiency of the sales force of an insurance company that the desirability and the success of a product are determined. Further, the marketing personnel should be adequately backed by the back-office setup.

4. SELLING OF THE PRODUCTS: The term selling in the context of Assurance industry is the issuance of policies to the applicant proposer.

5. MANAGEMENT OF PORTFOLIO: The management of the portfolio includes the assessment of requirement of funds, identification of various sources of finance, the evaluation of the sources in the light of their cost, availability, timing, etc., reconciling the features of various sources with the needs of the company and the selection of appropriate conjunction of sources. The insurer possesses huge amount of funds, which need proper management. The management of the portfolio of an insurance company requires the identification of investment avenues, evaluation thereof.

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NON-LIFE INSURANCE COMPANIES

PUBLIC SECTOR New India Assurance Co. Ltd. United India Insurance Co. Ltd. Oriental Insurance Co. Ltd. National Insurance Co. Ltd PRIVATE SECTOR ICICI Lombard General Insurance Co. Ltd. Reliance General Insurance Co. Ltd. IFFCO Tokyo General Insurance Co. Ltd. Bajaj Allianz General Insurance Co. Limited TATA AIG General Insurance Co. Limited Cholamandalam General Insurance Co. Ltd. HDFC General Insurance Co. Ltd. Royal Sundaram Alliance Insurance Co. Ltd.

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KUTCH AND NEW INDIA ASSURANCE

26 Jan 2001, the devastating earthquake that hit the land of Kutch (Gujarat) and nearby areas shook many of the homes and lives. No insurance company can insure and return the non-financial losses that people of Kutch faced but financial losses were covered well by insurance company to the people who were having insurance. That time team of number of surveyor was send to Kutch to different areas so that process of claim settlement can be quickly served. New India assurance being part of government was able to recover from this capital shock soon and was one of top player that served the people to best that they can. This was rise of homeowners insurance in this ZONE 5 earthquake prone region of Kutch. Due to capital shock there was rise of premium initially around 2001-2002 year. Following reasons were responsible for rise in premium: Earthquake prone Zone 5 Capital shock recover Increase in risk probability Customer demand

At present situation is stable with average premium price and industry is growing and flourishing.

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INTERMEDIARY Third Party Administrators (TPA) Agents Surveyors

New India has tied up with 18 TPAs. Above mentioned are few of persons involved in insurance process. Third party administrators for few of documentation and administrative work, agents for selling policies and surveyor to check and verify about claim by visiting at place of loss and to give report to regional office about claim and actual loss.

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FINANCIAL RATING

For the sixth consecutive year, the Company has been rated as "A-" (Excellent) by M/s. A.M. Best Europe Ltd. The rating reflects Company's excellent risk adjusted capitalization, prospective improvement in underwriting performance and its leading business profile in the direct insurance market in India. A partially off-setting factor is the Company's reliance on investment income which counter balances underwriting losses. But the outlook is stable. A.M. Best believes the Company's risk adjusted capitalization is excellent and anticipates that it will remain sufficient to absorb the likely growth in the net premium. Further it also expects that there will be a reduction in the combined ratio in the years to come. The Company is likely to maintain its leading business position as the largest direct insurer in India, despite increased competition from private players.

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NIA-INDIAN ASSURANCE EVEN IN JAPAN

Japan is the 2nd largest non-life insurance market in the world, after the USA. There are 32 Japanese companies and 21 foreign companies operating in Japan. The market share of 21 foreign companies is just over 4.5%. There is only one company that has kept the flag of the Indian and Asian insurance industry high for more than 5 decades in the highly competitive market- The New India Assurance Co. Ltd. One of the major business operations of the company in Japan is to assist the Indian office in procuring business emanating from Japanese companies that undertake projects in India. New India Japan is approached by not only Japanese companies but also by Japanese insurance companies whose clients are in the process of acquiring interest in India, for guidance. Its gross premium income in 2002-03 was Yen 3.8 billion (Rs.153 crore), which was 15 percent higher than the previous year. The company made a profit around Yen 40 million (Rs.1.64 crore) during the year, all this despite a nearly zero growth and zero interest economy and continuing recession in Japan. New India writes all classes of traditional non-life insurance business and more than 95% of its business is derived from Japanese clients through its agents network.

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NEW INDIA GANDHIDHAM

As per our visit to Gandhidham office where we talked to Mr.Akhilesh Acharya to start and enter in this market as insurance company a deposit of lump sum of Rs.1000 Crs. to IRDA Insurance Regulatory Development Authority. IRDA is central government authority to regulate the premium and policies (product) given to customer. IRDA came into existence after nationalization. In fire insurance/ homeowners insurance dwelling is covered generally. For additional add on like: National calamites like earthquake, cyclone etc, theft, fire and others have to mention in this form. One also have to mention about type that is residence, commercial, nearby surrounding like boundaries and geographical location like our Kutch is in ZONE 5 Earthquake prone zone and as per detail premium is charged. Premium is charged as per different criteria like for earthquake prone zone a premium charged per mille i.e. for example RS 5 per mille. By computer software and data provided by company for every thousand rupees premium is charged. For claim settlement during any damage loss like fire, one have to call fire brigade first and try to save as many goods as one can, call insurance company and then as per reports given by fire brigade, surveyor will give photos and report and forensic department report for cause of damage and stock register or evidence of goods available at place , and then only if loss is caused without personal intention then file is moved further for claim settlement and generally time lag of 1 month after all reports are submitted is given for claim payment. For any additional extension coverage after issue of policy, one have to submit in writing and have to pay premium accordingly in advance.

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PRODUCTS

PERSONAL

SOCIAL

PRODUCTS

COMMERCIAL

INDUSTRIAL

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COMMERCIAL

Jewelers Block Policy Bankers Indemnity Policy Shopkeepers Policy Marine Cargo Policy Plate Glass Insurance Special Contingency Policy Neon Sign Insurance MultiPeril Policy for L.P.G. Dealers Fidelity Guarantee Insurance Policy Marine Hull Policy Aviation Insurance

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INDUSTRIAL Fire Policy Burglary Policy Machinery Breakdown Policy Electronics Equipment Policy Consequential Loss Policy Contractors All Risk Policy Marine cum Erection / Storage cum Erection Policy Advanced Loss of Profit / Delay in Startup Policy Contractor Plant and Machinery Policy Mega Package Policies

LIABILITY Public Liability Policy Products Liability Policy Professional Indemnity Policy Directors and Officers Liability Policy Lift (Third Party) Insurance Employers' Liability Policy Carrier's Liability Insurance Liability Insurance Act Policy Golfers Indemnity Insurance

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SOCIAL Universal Health Insurance Scheme Jan Arogya Bima Policy Raj Rajeshwari Mahila Kalyan Yojana Bhagyashree Child Welfare Policy Janata Personal Accident Insurance Student Safety Insurance Ashrya Bima Yojana Rural Insurance

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CATEGORIES OF PRODUCTS WITH CUSTOMER SEGMENTS IN NEW INDIA ASSURANCE

CUSTOMER SEGMENTS PERSONAL BUSINESS INDUSTRI AL LIABILITY SOCIAL

Categories of Products

Accident House holders Motor policy Money insurance Road Safety TV/VCR/VC P Mobile

Jewelers Shop Marine Aviation

Fire Machine breakdow n Burglary

Electronic equipment

Public liability policy Products Directors & Officers Employers

Rural Student safety Women welfare Child welfare

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PERSONAL
1. HOUSEHOLDERS POLICY

This is a package policy specially designed to meet the insurance requirements of a householder. HIGHLIGHTS This is a package policy specially designed to meet the insurance requirements of a householder by combining under a single policy, a number of our standard policies usually taken by householders. Discount in premium is offered depending upon the number of sections of the policy, opted for, by the proposer.

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SCOPE AND PREMIUM CHARGES:

The policy comprises of 10 sections as given here under

SECTION I - FIRE & ALLIED PERILS (PREMIUM: 0.65 PER MILE) A - Coverage for building B - Covers contents of the dwelling belonging to the proposer and his/her family members permanently residing with him/her. ALLIED PERILS: a. Fire, Lightening, Explosion of gas in domestic appliances b. Bursting and overflowing of water tanks, apparatus or pipes. c. Damage caused by Aircraft d. Riot, Strike, Malicious or Terrorist Act e. Earthquake, Fire and/or Shock, subsidence and Landslide (including Rockslide) damage f. Flood, Inundation, Storm, Tempest, Typhoon, Hurricane, Tomado or Cyclone. g. Impact damage

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SECTION II - BURGLARY & HOUSE BREAKING INCLUDING LARCENY AND THEFT. (PREMIUM: 2.40 PER MILE) Covers contents of the dwelling against loss due to burglary, house breaking, larceny or theft.

SECTION III - ALL RISKS (JEWELLERY & VALUABLES) (PREMIUM: 10.05 PER MILE) Covers loss or damage to your jewelry and valuables by accident or misfortune whilst kept, worn or carried anywhere in India subject to the value declared in the schedule.

SECTION IV - PLATE GLASS (PREMIUM: 10.05 PER MILE) Loss or damage to fixed plate glass in the insured premises by accidental breakage subject to limit of sum insured

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SECTION V - BREAKDOWN OF DOMESTIC APPLIANCES (PREMIUM: 2.50 PER MILE) Covers domestic appliances against unforeseen and sudden physical damage due to mechanical or electrical breakdown.

SECTION VI - T.V. SET INCLUDING VCP/VCR (ALL RISKS) (PREMIUM: 10.05 PER MILE) Covers loss or damage to T.V.Set including VCP/VCR by fire and allied perils, burglary, house breaking or theft, breakage due to accidental external means, mechanical or electrical breakdown. Any legal liability arising out of bodily injury or accidental death of any person other than insured's family members or employee as also damage to property not belonging to or in the custody of insured , caused by use of the T.V. Set is also covered upto a limit of Rs.25,000/-.

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HOW TO CLAIM
In case of any incident leading to a valid claim under the policy, following steps should be taken: 1. Take necessary steps to minimize the loss/damage. 2. In case of fire, inform fire brigade immediately. 3. In case of theft, larceny or burglary inform the police immediately along with a list of items stolen and their approximate value. 4. Inform insurance company by phone or fax and in writing. 5. Extend full co-operation to the surveyor appointed by the insurance Co. and provide necessary documents to substantiate the loss. A claim form issued by the company is also to be submitted. 6. In case any rights of recovery exist against any other party responsible for the loss, your rights of recovery have to be subrogated to the insurance company on payment of claim.

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BRANDS ACROSS THE COMPANIES

CUSTOMER SEGMENTS PERSONAL BUSINESS/ INDUSTRIAL/ LIABILITY Fire insurance: Fire and special perils policy (material damage) Consequential Loss (Fire) Insurance Policy Marine insurance: Marine Import Transit Insurance Policy Marine Export Transit Insurance Policy Marine Inland Transit Insurance RURAL/ SOCIAL

ICICI Lombard

Motor Insurance: Car insurance Two wheeler insurance Home insurance

Rural insurance: Tractor insurance Weather insurance

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New India Assurance

Motor Insurance: All type of vehicle Home insurance: Householder s policy

Fire insurance: Fire policy (One policy covering destruction or damage to insured property) Marine insurance: Marine cum Erection / Storage cum Erection Policy Marine Cargo Policy

Rural insurance: Lift Irrigation Insurance Farmers Package Insurance Scheme

Reliance General Insurance

Motor Insurance: Two wheeler comprehens ive Private car comprehens ive Home Insurance: Reliance home

Fire insurance: Reliance Standard Fire and Special Perils Policy Reliance Consequential Loss Policy Marine insurance: Reliance Cargo Marine Insurance

N .A

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protect House holders package

Policy

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DISTRIBUTION CHANNEL OF COMPANIES

Customer segments ICICI Lombard Personal Business NRI Rural SME Industri al Social

Retail Telesales Online Bank

Retail Telesales Online bank

Retail Telesal es Online Bank

Retail Bank

New India Assurance

Retail Telesales Online Bank

Retail Telesales Online Bank

Retail Telesale s Online Bank

Retail Telesal es Online Bank

Reliance General Insurance

Retail Telesales Online Bank

Retail Telesales Online Bank

Retai l Teles ales Onlin e Bank

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DOCUMENTS REQUIRED IN NEW INDIA ASSURANCE

CUSTOMER SEGMENTS PERSONAL BUSINESS/ INDUSTRIAL/ LIABILITY Document s required Two/ four wheeler RC Old insurance (if available) photograph of vehicle Health insurance Age proof Medical certificate Photograph Home insurance List of accessiors Copy registry of Fire Kisan Policy Residence proof inspection RURAL

Proposal Address proof Last insurance policy Jewelery number Marine

Builty Bill of lading Receipt

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CONCLUSION
Each and every individual faces risk and on basis of this risk insurance companies survive. Home or dwelling is one of basic necessity and so each and every individual desire to protect its shelter but due to lack of knowledge and misbelieve of high premium they dont go for insurance. Here comes the role of marketing department of insurance companies and that to in Indian market they have to aware people for this policy to get protected their home from calamities like earthquake, cyclone, theft, fire etc. Overall market of this sector is growing and developing after 2001 earthquake in Kutch region and now is expanding at high frequency.

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