A Study on the challenges faced by Indian Insurance Companies and its

impact on Consumer Perceptions and Awareness of Unconventional

Insurance

Bachelor of Management Studies

Semester V

(2017-2018)

Submitted by

AMEYA AJIT NIGUDKAR

Roll No: 43

M. L. Dahanukar College of Commerce

Dixit Road, Vile Parle (E), Mumbai 400057.

A Study on the challenges faced by Indian Insurance Companies and its
impact on Consumer Perceptions and Awareness of Unconventional
Insurance

Bachelor of Management Studies

Semester V

(2017-2018)

Submitted by

AMEYA AJIT NIGUDKAR

Roll no: 43

M.L .Dahanukar College of commerce

Dixit Road, Vile Parle (E), Mumbai - 400 057

 DECLARATION

I, AMEYA AJIT NIGUDKAR, the student of T.Y.B.M.S. Semester V (2017- 2018)

hereby declare that I have completed the project on A STUDY ON THE
CHALLENGES FACED BY INDIAN INSURANCE COMPANIES AND ITS IMPACT ON
CONSUMER PERCEPTIONS AND AWARENESS OF UNCONVENTIONAL
INSURANCE.

The information submitted is true and original to the best of my knowledge.

_____________________

(Signature of Student)

AMEYA AJIT NIGUDKAR

Roll no: 43

M.L .Dahanukar College of commerce

Dixit Road, Vile Parle (E), Mumbai - 400 057

 CERTIFICATE

This is to certify that Mr. Ameya Ajit Nigudkar, Roll no: 43 of Third Year
B.M.S., Semester V (2017- 2018) has successfully completed the project on 30/11/17
under the guidance of Mrs. Rashmi Ghonge Bendre.

Course Coordinator In- charge Principal

(Mrs. Parveen Nagpal) (Dr. D.M. Doke)

COLLEGE SEAL

___________________ -----------------------------------
Mrs. Rashmi Ghonge Bendre. External Examiner
( Project Guide)
 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the depth is so
enormous.

I would like to acknowledge the following as being idealistic channels and fresh dimensions
in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.

I would like to thank my In-charge Principal - Dr.D.M.Doke for providing the necessary
facilities required for completion of this project.

I take this opportunity to thank our Coordinator Parveen Nagpal, for her moral support
and guidance.

I would also like to express my sincere gratitude towards my project guide Mrs. Rashmi
Ghonge Bendre whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference books and
magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped me in
the completion of the project especially my Parents and Peers who supported me
throughout my project
 INDEX
Content Page no
Research Methodology
1.1 Brief introduction about the study 1
1.2 Objectives of study 1
1.3 Hypothesis 2
1.4 Sample size 2
1.5 Technique 2
1.6 Methods of data collection 2
1.7 Importance of study 3
1.8 Limitations of study 3

Chapter 1
1.1 Definition of Insurance 4
1.2 Introduction 4
1.3 Meaning of Insurance 5
1.4 Evolution of Insurance 7
1.5 Characteristics of Insurance 8
1.6 Functions of Insurance 10
1.7 Principles of Insurance 13

Chapter 2
2.1 Development of laws of insurance in India 19
2.2 Insurance in India 21
2.3 Terms used in Insurance 22
2.4 Elements of Insurance 24
2.5 Need and importance to different sectors of society 26
2.6 Working of Insurance 27
2.7 Classification of Insurance 30

Chapter 3
3.1 Introduction to unconventional insurance 31
3.2 Meaning 31
3.3 Nature of unconventional insurance 32
3.4 Importance of unconventional insurance 33
3.5 Types of unconventional insurance 36
3.6 Examples 46
 List of Tables
Table 4.1 Gender 50
Table 4.2Age 51
Table 4.3 Occupation 52
Table 4.4 Annual Income 53
Table 4.5 Is insurance important 54
Table 4.6 Percentage of income spent on insurance 55
Table 4.7 Purpose of taking insurance 56
Table 4.8 Policy term accordingly 57
Table 4.9 Types of asset insured 58
Table 4.10 Awareness of unconventional insurance 59
Table 4.11 Source of awareness 60
Table 4.12 Awareness of types of unconventional insurance 61
Table 4.13 Is unconventional insurance important 62
Table 4.14 To whom unconventional insurance is important 63
Table 4.15 Would you consider to cover your prized 64
posession / body part which is deemed as an asset to you as a
part of insurance?

List of Chart
50
Chart 4.1 Gender
51
Chart 4.2 Age
52
Chart 4.3 Occupation
53
Chart 4.4 Annual Income
54
Chart 4.5 Is insurance important
55
Chart 4.6 Percentage of income spent on insurance
56
Chart 4.7 Purpose of taking insurance
57
Chart 4.8 Policy term accordingly
58
Chart 4.9 Types of asset insured
59
Chart 4.10Awareness of unconventional insurance
60
Chart 4.11 Source of awareness
61
Chart 4.12 Awareness of types of unconventional insurance
62
Chart 4.13.Is unconventional insurance important
63
Chart 4.14 To whom unconventional insurance is important
Chart 4.15 Would you consider to cover your prized
posession/ body part which is deemed as an asset to you as a
part of insurance?
65
Conclusion
65
Future Trends
Bibliography 66
Annexure 67
 RESEARCH METHODOLOGY

1.1 BRIEF INTRODUCTION ABOUT THE STUDY

This study is done to understand the awareness of unconventional
insurance among the people and also to identify its importance.
Through this study we come to know that there are many types of
unconventional insurance about which people are not yet aware.
For eg Insurance against ghost, alien abstraction insurance, injury
by falling a coconut insurance, etc.
As the life is full of risk, insurance provides protection against risk.
Through this study we can categorise the number of people
investing in unconventional insurance and also to understand the
objectives of each.
It also helps to understand the development of different laws of
insurance in current era in comparison to traditional insurance.
Insurance companies also act as financial intermediaries in that
they invest the premium they collect for providing this service.

1.2 OBJECTIVE OF THE STUDY

To identify the percentage of income that people spend on
insurance.
To study challenges faced by Indian Insurance Company in
relation to Unconventional Insurance.
To identify the awareness of unconventional insurance.
To analyse whether people invest in unconventional
insurance.

1
 To understand different types of unconventional insurance
and its importance.
To study the factors affecting growth of Unconventional
Insurance in India.

1.3 HYPOTHESIS:
H0 There is no significant relationship between the
challenges faced by Indian Insurance Companies and
customer Perception and Awareness of Unconventional
Insurance.
H1 - There is no significant relationship between the
challenges faced by Indian Insurance Companies and
customer Perception and Awareness of Unconventional
Insurance.
1.4 SAMPLE SIZE:
A total size of 80 people belonging to different groups based on
age, gender and income were interviewed.

1.5 TECHNIQUE: Simple random sampling

1.6 METHODS OF DATA COLLECTION:

Primary method of data collection was used to draw inferences
of the research. Questionnaires were undertaken to collect the
relevant information regarding the research. Questionnaires
helped to get accurate information regarding the research.
Secondary method of data collection was also used to collect
information regarding the research.

2
1.7 IMPORTANCE OF THE STUDY:
From this study we can state that insurance is very essential for the
people as it helps to protect their risk. They can protect themselves
from different kinds of risk which occur in their day to day life.
There are various types of insurance such as life insurance, motor
insurance, rural insurance, etc
Also there are some unconventional insurance that people take
such as Insurance against ghost, alien abstraction insurance, injury
by falling a coconut insurance, etc. Insurance protects us all against
unforeseen events that could cause financial hardship
Today's insurance provides protection by reimbursing people when
their property is damaged or they suffer some other loss. Insurance
helps individuals and business owners resume their normal
standard of living and operations, which also benefits society as a
whole.

1.8 LIMITATION OF THE STUDY:

The people interviewed were of middle cadres. The upper cadres
were excluded.
Also, lack of time at the disposal of both the researches and the
respondents might cause a decrease in the qualitative aspect of the
research.
Customers have biased attitude and Geographical limitation

3
 CHAPTER 1
1.1 DEFINITION OF INSURANCE

Insurance may be defined a contract between two parties whereby

one party called insurer undertakes, in exchange for a fixed sum
called premiums, to pay the other party called insured a fixed
amount of money on the happening of a certain event
Commercial insurance is a contract between two parties, insured
and insurer, with the policy, the insurer receives the premium; its
one of the regular sum of paid, in cash or credit, from the insured
and the insurer promises to indemnify all of losses may be suffered
him.
Insurance as a contract whereby one person, called the insurer,
undertakes, in return for agreed consideration, called the premium
to pay to another person, called the insured, a sum of money, or its
equivalent, on the happening of a specified even.

1.2 INTRODUCTION

Human life is full if risks and uncertainties, which result in fear, anxiety
and unpleasantness. Such risks and uncertainties may cause the loss of
life and properties. Nobody knows beforehand when a loss will occur and
how much serious that loss will be. The uncertainties that may cause
losses are known as risks. People always want protection against such
risks. Human being always tries to avoid and reduce the risk. Likewise,
business also face numerous kinds of risks. Hence, they need to have a
good understanding of the causes of risks and the methods of handling
them. Risk cannot be completely eliminated, but there is a device to cover

4
the loss of the financial risk which is known as Insurance. Insurance is a
technique to swap the risk of financial losses.

1.3 MEANING OF INSURANCE

Insurance is a legal contract between two parties which protects people

from risks arising from loss of life, or failure of business, or loss from
other risks. It is the cooperative way of offering security against the
possible risks and losses that may occur in future Insurance is a system
which compensates the insured party by transferring the risks to an
organization known as insurance company.Insurance has become the
most important risk-handling method in modern age. The party doing
insurance business is called insurer. An insurer promises to indemnify the
losses in return for a consideration called premium. Insured is a party
who takes insurance policy against the risk of life and property. Premium
is the expense for the insured and income for the insurer.

Therefore, it can be stated that insurance is a written contract or

agreement between insured and insurer according to which the future
risks of the insured are transferred to the insurance company or insurer.
For shifting the risk, insured pays premium and the insurer agrees to
compensate in lump-sum for losses which may occur in future on account
of risk of fire, accident, earthquake, theft, injury or death. Hence,
insurance is a organized and cooperative device which stands against the
risks and losses of human life and property. Insurance is a form of risk
management in which the insured transfers the cost of potential loss to
another entity in exchange for monetary compensation known as the
premium.

5
Insurance allows individuals, businesses and other entities to protect
themselves against significant potential losses and financial hardship at a
reasonably affordable rate. We say "significant" because if the potential
loss is small, then it doesn't make sense to pay a premium to protect
against the loss. After all, you would not pay a monthly premium to
protect against a small loss because this would not be considered a
financial hardship for most. Insurance is appropriate when you want to
protect against a significant monetary loss. Take life insurance as an
example. If you are the primary breadwinner in your home, the loss of
income that your family would experience as a result of our premature
death is considered a significant loss and hardship that you should protect
them against. It would be very difficult for your family to replace your
income, so the monthly premiums ensure that if you die, your

income will be replaced by the insured amount. The same principle

applies to many other forms of insurance. If the potential loss will have a
detrimental effect on the person or entity, insurance makes sense.
Everyone that wants to protect themselves or someone else against
financial hardship should consider insurance.

This may include:

Protecting family after one's death from loss of income

Ensuring debt repayment after death

Covering contingent liabilities

6
 Protecting against the death of a key employee or person in your
business

Buying out a partner or co-shareholder after his or her death

Protecting your business from business interruption and loss of

income

Protecting yourself against unforeseeable health expenses

Protecting your home against theft, fire, flood and other hazards

Protecting yourself against lawsuits

Protecting yourself in the event of disability

Protecting your car against theft or losses incurred because of

accidents

Thus,Insurance is a contract whereby

1. Certain sum. called premium, is charged in consideration

2. Against the said consideration, a large sum is guaranteed to be paid
by the insurer who received the premium
3. The payment will be made in a certain definite sum. i.e., some loss
or the policy amount whichever may be

1.4 EVOLUTION OF INSURANCE

The insurance has its origin way back in the days of early civilization
when people thought of evolving a distributive manner of bearing losses
whereby the society collectively bears the loss/damage to one
person/family and minimize the adverse effect that loss. There are several
stories where the King provides monetary help to the persons who
suffered loss due to natural calamities and this was nothing but an

7
assurance that the State will look after you at the time of any adversity
and this assurance is a form of insurance where the money collected from
several tax payers has been used to minimize the losses of specific group
which suffered loss. With the passing time the concept of insurance had
been refined and lead to the introduction of documentation to get the
assurance of loss bearing for specified purposes.

In Indian scenario the roots of Insurance in India has their origin in the
era of Sage Manu (Rishi Manu) and later in Maurya Dynasty in the era of
Kautilya( i.e. Chanakya) who has written the rules of Arthshastra
(Economics). Manav Dharma Shastra (Laws of Manu) of Manu
contained rules for Sea-Form contracts which were practised for doing
international trade. In Kautilyas Arthshastra one of the chapters has
mentioned about the protection of State to the people against the any
natural calamity, theft or any act of Anti-Social-Elements. So, in this way
India has the origin of Insurance thousands of years back and later it has
evolved in present codified form in the Influence of English Rule which
was prevailing all over the world at one point of time.

1.5 CHARACTERISTICS OF INSURANCE

1.Sharing of Risk: Insurance is a device to share the financial losses

which might befall on an individual or his family on the happening of a
specified event. The event may be death of a bread-winner to the family
in the case of life insurance, marine-perils in marine insurance, fire in fire
insurance and other certain events in general insurance, e.g., theft in
burglary insurance, accident in motor insurance, etc.

8
2. Co-operative Device:The most important feature of every insurance
plan is the co-operation of large number of persons who, in effect, agree
to share the financial loss arising due to a particular risk which is insured.
Such a group of persons may be brought together voluntarily or through
publicity or through solicitation of the agents.An insurer would be unable
to compensate all the losses from his own capital. So, by insuring or
underwriting a large number of persons, he is able to pay the amount of
loss. Like all co-operative devices, there is no compulsion here on
anybody to purchase the insurance policy.

3. Value of Risk:The risk is evaluated before insuring to charge the

amount of share of an insured, herein called, consideration or premium.
There are several methods of evaluation of risks. If there is expectation of
more loss, higher premium may be charged. So, the probability of loss is
calculated at the time of insurance.

4. Payment at Contingency: The payment is made at a certain

contingency insured. If the contingency occurs, payment is made. Since
the life insurance contract is a contract of certainty, because the
contingency, the death or the expiry of term, will certainly occur, the
payment is certain. In other insurance contracts, the contingency is the
fire or the marine perils etc., may or may not occur. So, if the contingency
occurs, payment is made, otherwise no amount is given to the policy-
holder.

5. Insurance is not Charity: Charity is given without consideration but

insurance is not possible without premium. It provides security and safety
to an individual and to the society although it is a kind of business
because in consideration of premium it guarantees the payment of loss. It

9
is a profession because it provides adequate sources at the time of
disasters only by charging a nominal premium for the service.

6.Insurance is not a gambling: The insurance serves indirectly to increase

the productivity of the community by eliminating worry and increasing
initiative. The uncertainty is changed into certainty by insuring property
and life because the insurer promises to pay a definite sum at damage or
death.

1.6 FUNCTIONS OF INSURANCE

Every risk involves the loss of one or other kind. The function of
insurance is to spread the loss over a large number of persons who are
agreed to co-operate each other at the time of loss. The risk cannot be
averted but loss occurring due to a certain risk can be distributed amongst
the agreed persons. They are agreed to share the loss because the chances
of loss, i.e., the time, amount, to a person are not known.The insurance is
also defined as a social device to accumulate funds to meet the uncertain
losses arising through a certain risk to a person insured against the risk.

The functions of insurance can be studied into two parts (i) Primary
Functions, and (ii) Secondary Functions.

a. Primary Functions:

(i) Insurance provides certainty:

Insurance provides certainty of payment at the uncertainty of

loss. The uncertainty of loss can be reduced by better planning
and administration. But, the insurance relieves the person from

10
 such difficult task. Moreover, if the subject matters are not
adequate, the self-provision may prove costlier. There are
different types of uncertainty in a risk. The risk will occur or
not, when will occur, how much loss will be there? In other
words, there are uncertainty of happening of time and amount of
loss. Insurance removes all these uncertainty and the assured is
given certainty of payment of loss. The insurer charges
premium for providing the said certainty.

(ii) Insurance provides protection:

The main function of the insurance is to provide protection

against the probable chances of loss. The time and amount of
loss are uncertain and at the happening of risk, the person will
suffer loss in absence of insurance. The insurance guarantees
the payment of loss and thus protects the assured from
sufferings. The insurance cannot check the happening of risk
but can provide for losses at the happening of the risk.

(iii) Risk-Sharing:

The risk is uncertain, and therefore, the loss arising from the
risk is also uncertain. When risk takes place, the loss is shared
by all the persons who are exposed to the risk. The risk-sharing
in ancient time was done only at time of damage or death; but
today, on the basis of probability of risk, the share is obtained
from each and every insured in the shape of premium without
which protection is not guaranteed by the insurer.

11
 b. Secondary functions:

Besides the above primary functions, the insurance works for the
following functions:

(i) Prevention of Loss:

The insurance joins hands with those institutions which are

engaged in preventing the losses of the society because the
reduction in loss causes lesser payment to the assured and so
more saving is possible which will assist in reducing the
premium. Lesser premium invites more business and more
business cause lesser share to the assured.

(ii) It Provides Capital:

The insurance provides capital to the society. The accumulated

funds are invested in productive channel. The dearth of capital
of the society is minimised to a greater extent with the help of
investment of insurance. The industry, the business and the
individual are benefited by the investment and loans of the
insurers.

(iii) It Improves Efficiency:

The insurance eliminates worries and miseries of losses at death

and destruction of property. The carefree person can devote his
body and soul together for better achievement. It improves not
only his efficiency, but the efficiencies of the masses are also
advanced.

(iii) It helps Economic Progress:

12
 The insurance by protecting the society from huge losses of
damage, destruction and death, provides an initiative to work
hard for the betterment of the masses. The next factor of
economic progress, the capital, is also immensely provided by
the masses. The property, the valuable assets, the man, the
machine and the society cannot lose much at the disaster.

1.6 PRINCIPLES OF INSURANCE

An insurance is an agreement between the insurer and insured. For the

validity of agreement (contract), certain basic elements should be
considered. These elements of the agreement of insurance are called
principles of insurance. The following fundamental principles are
involved in insurance business.

1.Principle of Utmost Good faith:

Principle of Utmost Good Faith, is a very basic and first primary principle
of insurance. According to this principle, the insurance contract must be
signed by both parties (i.e insurer and insured) in an absolute good faith
or belief or trust.The person getting insured must willingly disclose and
surrender to the insurer his complete true information regarding the
subject matter of insurance. The insurer's liability gets void (i.e legally
revoked or cancelled) if any facts, about the subject matter of insurance
are either omitted, hidden, falsified or presented in a wrong manner by
the insured.

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2. Principle of Insurable interest:

The principle of insurable interest states that the person getting insured
must have insurable interest in the object of insurance. A person has an
insurable interest when the physical existence of the insured object gives
him some gain but its non-existence will give him a loss. In simple
words, the insured person must suffer some financial loss by the damage
of the insured object.

For example:- The owner of a business has insurable interest in the

business because he is getting income from it. But, if he sells it, he will
not have an insurable interest left in it.

Every person has an insurable interest in his own life. A merchant has
insurable interest in his business of trading. Similarly, a creditor has
insurable interest in his debtor.

3.Principle of Indemnity:

Indemnity means security, protection and compensation given against

damage, loss or injury.According to the principle of indemnity, an
insurance contract is signed only for getting protection against
unpredicted financial losses arising due to future uncertainties. Insurance
contract is not made for making profit else its sole purpose is to give
compensation in case of any damage or loss.In an insurance contract, the
amount of compensations paid is in proportion to the incurred losses. The
amount of compensations is limited to the amount assured or the actual
losses, whichever is less. The compensation must not be less or more than
the actual damage. Compensation is not paid if the specified loss does not

14
happen due to a particular reason during a specific time period. Thus,
insurance is only for giving protection against losses and not for making
profit.

However, in case of life insurance, the principle of indemnity does not

apply because the value of human life cannot be measured in terms of
money.

4.Principle of Contribution:

Principle of Contribution is a corollary of the principle of indemnity. It

applies to all contracts of indemnity, if the insured has taken out more
than one policy on the same subject matter. According to this principle,
the insured can claim the compensation only to the extent of actual loss
either from all insurers or from any one insurer. If one insurer pays full
compensation then that insurer can claim proportionate claim from the
other insurers.

For example :-Mr. Ramesh insures his property worth Rs.100,00,000 with
two insurers "AIG Ltd." for Rs 80,00,000 and "MetLife Ltd." for Rs
40,00,000. Ramesh's actual property destroyed is worth Rs 75,00,000,
then Mr. Ramesh can claim the full loss of Rs 75,00,000 either from AIG
Ltd. , or he can claim Rs 35,00,000 from AIG Ltd. and Rs 40,00,000 from
Metlife Ltd.

So, if the insured claims full amount of compensation from one insurer
then he cannot claim the same compensation from other insurer and make
a profit. Secondly, if one insurance company pays the full compensation

15
then it can recover the proportionate contribution from the other
insurance company.

5.Principle of Subrogation:

Subrogation means substituting one creditor for another.Principle of

Subrogation is an extension and another corollary of the principle of
indemnity. It also applies to all contracts of indemnity. According to the
principle of subrogation, when the insured is compensated for the losses
due to damage to his insured property, then the ownership right of such
property shifts to the insurer.This principle is applicable only when the
damaged property has any value after the event causing the damage. The
insurer can benefit out of subrogation rights only to the extent of the
amount he has paid to the insured as compensation.

For example:-Mr. Ramesh insures his house for Rs 1,00,00,000. The

house is totally destroyed by the negligence of his neighbour Mr. Suresh.
The insurance company shall settle the claim of Mr. Ramesh for Rs
1,00,00,000. At the same time, it can file a law suit against Mr. Suresh for
Rs 1,20,00,000, the market value of the house. If insurance company wins
the case and collects Rs 1,20,00,000 from Mr. Suresh, then the insurance
company will retain Rs 1,00,00,000(which it has already paid to Mr.
Ramesh) plus other expenses such as court fees. The balance amount, if
any will be given to Mr. Ramesh, the insured.

16
6. Principle of Loss Minimization:

According to the Principle of Loss Minimization, insured must always try

his level best to minimize the loss of his insured property, in case of
uncertain events like a fire outbreak or blast, etc. The insured must take
all possible measures and necessary steps to control and reduce the losses
in such a scenario. The insured must not neglect and behave irresponsibly
during such events just because the property is insured. Hence it is a
responsibility of the insured to protect his insured property and avoid
further losses.

For example:- Assume, Mr. Ramesh house is set on fire due to an electric
short-circuit. In this tragic scenario, Mr. Ramesh must try his level best to
stop fire by all possible means, like first calling nearest fire department
office, asking neighbours for emergency fire extinguishers, etc. He must
not remain inactive and watch his house burning hoping, "Why should I
worry? I've insured my house."

7. Principle of Proximate cause:

Principle of Causa Proxima in simple english words, the Principle of

Proximate (i.e Nearest) Cause, means when a loss is caused by more than
one causes, the proximate or the nearest or the closest cause should be
taken into consideration to decide the liability of the insurer.The principle
states that to find out whether the insurer is liable for the loss or not, the
proximate (closest) and not the remote (farthest) must be looked into.

For example:- A cargo ship's base was punctured due to rats and so sea
water entered and cargo was damaged. Here there are two causes for the

17
damage of the cargo ship - (i) The cargo ship getting punctured because
of rats, and (ii) The sea water entering ship through puncture. The risk of
sea water is insured but the first cause is not. The nearest cause of
damage is sea water which is insured and therefore the insurer must pay
the compensation.

However, in case of life insurance, the principle of Causa Proxima does

not apply. Whatever may be the reason of death (whether a natural death
or an unnatural death) the insurer is liable to pay the amount of
insurance.

18
 CHAPTER 2

2.1 DEVELOPMENT OF LAWS OF INSURANCE IN

INDIA

To understand the Development of Insurance in India we have to look

into the development of Insurance Laws in India, since it is a necessity
and compulsion on Business Doers to evolve-conceptualize-amend their
policies/strategies in accordance with the Law of the Land to do hassle-
free business.

In the following manner the Indian Insurance Scenario has changed

gradually-1938 This is the year when a comprehensive Act called The
Insurance Act, 1938 has been introduced.

1939 In this year the Insurance Rules were framed for effectuating the
Insurance Act.

1956 This year has witnessed a huge change in the Indian Insurance
Sector since the Government of India took over all life insurance
companies.

1968 In 1968 The Insurance Act, 1938 was amended to provide for
social control, minimum solvency margin and a Tariff Advisory
Committee (TAC) has also been established.

1972 This year witnessed the Nationalization of General Insurance

Companies and for this General Insurance Business (Nationalization)
Act, 1972 was passed.

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1973 The General Insurance Corporation of India (GIC) came into
existence as a Government Company.

1974 A year later 107 insurers practising General Insurance business

were grouped and merged to form four subsidiaries of GICs namely
National Insurance Co. Ltd. The New India Assurance Co. Ltd. The
Oriental Insurance Co. Ltd. United India Insurance Co. Ltd.

1991 The Public Liability Insurance Act 1991 and Public Liability
Insurance Rules 1991 were introduced as another milestone in the series
of Public Welfare Laws in India.1994 The Malhotra Committee
submitted its report in January 1994 (set up by Govt. in 1993 under
Chairmanship of Shri R.N. Malhotra, former Governor of RBI, to
examine potential reforms that could be undertaken in the insurance
sector and complement them with reforms initiated in the other sectors)
submitted its report in January 1994 and recommended establishment of a
strong and effective insuranceregulatory authority.

1998 Insurance Ombudsman Redressal of Public Grievances Rules,

1998 were issued to provide Consumers a Forum with minimal
formalities to get their grievances resolved.

1999 This year has the great relevance in the history of Indian
InsuranceSector since based on the Malhotra Committee Report the
Insurance Regulatory and Development Authority (IRDA) was
established to regulate, promote and ensure orderly growth of the
insurance and reinsurance business in India.

2001 The year of 2001 brought another transformation in the Insurance

Business of India because in addition to the existing Government

20
insurance companies, Private Sector Companies were also licensed by
IRDA to conduct general insurance business in India.

2002 General Insurance Business (Nationalization) Amendment Act,

2002 was passed in which the important amendment was that the
subsidiaries of GIC were restructured as independent companies and GIC
was converted into National Re-insurer.

2003 This year witnessed the introduction of Broker for first time in
Indian Insurance Market to boost up the business in more widened
manner.

2015 The Insurance Laws (Amendment) Act, 2015 was passed to

increase the Ceiling of 26% FDI to 49% and in this manner the Insurance
Business in India has been widely opened for Foreign Giants of
Insurance.

This is the mode by which Indian Insurance Business has transformed

and now it is waiting for the Insurers of the World, with widely opened
arms, to come up with better ideas of Assuring People that yes in all odd
situations we are here to protect.

2.2 INSURANCE IN INDIA

Insurance in India is a federal subject and foes back to the early 1800s.
The foundation of a formal insurance business was laid by the Europeans
in India by starting the oriental life insurance company in Kolkata in
1818. The pre-independence era in India saw companies distinguishing
between life of foreigners and Indians by charging differential premiums.

21
It was Bombay mutual life assurance society that was the first Indian
company to insure lives of Indians at normal rate.
In 1992, the Life Insurance Companies act and the provident fund act
where passed to regulate the insurance business. The oldest insurance
company in India is National Insurance Co. Ltd formed in 1906 and
exists even today.
Both, life and general insurance arent new to India but unfortunately the
penetration of such policy or products is still extremely low when
compared to the developed nations. The insurance sector was opened by
the government of India in 1999 allowing private sector companies to
venture into insurance business. Business for this companies has grown at
an exponential growth rate of 15 to 20% annually.

2.3 TERMS USED IN INSURANCE

In order to understand the concept of insurance you must be familiar to

the following terms
Bound: Once the insurance has been accepted and is in place, it is
called "bound". The process of being bound is called the binding
process.

Insurer: A person or company that accepts the risk of loss and

compensates the insured in the event of loss in exchange for a
premium or payment. This is usually an insurance company.

Insured: The person or company transferring the risk of loss to a

third party through a contractual agreement (insurance policy).

22
 This is the person or entity who will be compensated for loss by an
insurer under the terms of the insurance contract.

Insurance Umbrella Policy:When insurance coverage is

insufficient, an umbrella policy may be purchased to cover losses
above the limit of an underlying policy or policies, such as
homeowners and auto insurance. While it applies to losses over the
dollar amount in the underlying policies, terms of coverage are
sometimes broader than those of underlying policies.

Insurable Interest:In order to insure something or someone, the

insured must provide proof that the loss will have a genuine
economic impact in the event the loss occurs. Without an insurable
interest, insurers will not cover the loss. It is worth noting that for
property insurance policies, an insurable interest must exist during
the underwriting process and at the time of loss. However, unlike
with property insurance, with life insurance, an insurable interest
must exist at the time of purchase only.

InsuranceRider/Endorsement: An attachment to an insurance

policy that alters the policy's coverage or terms.

Premium: It is the fees paid by the insured to the insurer as the

consideration of the insurance contract for the assurance of the
recovery of financial loss so caused.

Insurance Policy:It is the contract between the insured and the

insurer containing the details of the terms and conditions of certain
insurance.
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2.4 ELEMENTS OF INSURANCE

The elements of an insurance contract are the standard conditions that

must be satisfied or agreed upon by both parties of a contract. In terms of
Insurance, these are the fundamental conditions of the insurance contract
that binds both parties, validates the policy, and makes it enforceable by
the law.

These elements are classified into two broad categories:

The elements of a general contract: offer and acceptance,

consideration, legal capacity, and legal purpose.
The elements of special contract in relation to insurance. This
revolves around insurance principles, such us indemnity, insurable
interest, utmost good faith, subrogation, assignment and
nomination, warranties, proximate cause, and return of premium.

The general elements of the contract can be further elaborated as follows:

1. Offer and Acceptance: The insured makes an offer by submitting

an application to insurance company. The insurer accepts and
confirms the application and issues a policy.
2. Consideration: The premium payable by the insured to the insurer.
It also includes the money paid out by insurance company when
the insured files a claim.
3. Legal Capacity: The insured must be legally competent before
entering into an agreement with the insurer. The insurer must also

24
 be competent and licensed under prevailing laws to provide
insurance.
4. Legal Purpose: The purpose for issuance of the insurance policy
must fall within legal frameworks. An insurance contract
encouraging an illegal activity is invalid.

Other elements of insurance are:

1.Agreement:
Agreement means communication by the parties to one another of their
intentions to create legal relationship. For a valid contract of insurance,
there must be an agreement between the parties, i.e. one making offer or
proposal and another accepting the proposal or signifying his acceptance
upon proposal.

2. Free consent:
There must be free consent between the parties to contract. Consent
means that parties to an agreement must agree on a specific thing in the
same sense or their understanding should be the same. Consent must be
given by the parties thereto in a contract, freely, independently, without
any fear and favour. The consent is known to be free when it is not
caused by, fraud, misrepresentation, mistakes and other undue influences.

3. Components to contract:
The parties in an agreement must be legally competent to enter into the
contract. It means both parties in the insurance contract must be age of
majority, possess sound mind and not disqualified by any law of the
country. It clears that a person who is minor, lunatics, idiot and alike
cannot enter into a insurance contract. The contract entered into by these
will be declared as void.
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4. Compliance with legal formalities:
To make an agreement valid, prescribed legal formalities of writing,
registration, etc. must have been observed. In the contract of insurance,
the agreement between parties must be in written form and dully signed
by both parties, properly attested by witness and registered otherwise, it
may not be enforced by the court.

2.5 NEED AND IMPORTANCE TO DIFFERENT

SECTORS OF SOCIETY

Insurance has now-a-days become a flourishing business and occupies an

important place in every country. The system of insurance provides
safeguard against uncertainties and risks. Insurance has now become the
most important risk-bearing method. Today, we cannot imagine the
smooth operation of economic activities without insurance. Need and
importance of insurance to the different sectors of society are as follows:

1. Importance of insurance to individual and family:

- Insurance provides economic protection
- Insurance increases self-respect
- Insurance may become a profitable investment
- Insurance improves standard of living
- Insurance encourages saving
- Insurance helps for education and marriage of children
- Insurance eliminates dependency
- Income provides income tax holiday

2. Importance of insurance to business:

- Insurance provides financial protection

26
- Insurance provides collateral for loan
- Insurance promotes employees' welfare
- Insurance promotes foreign trade
- Insurance contributes smooth operation of business
- Insurance increases efficiency

3. Importance of insurance to community:

- Insurance safeguards properties
- Insurance creates employment opportunities
- Insurance reduces inflation
- Insurance helps to minimize social problems

4. Importance of insurance to government

- Insurance helps to maintain law and order
- Insurance increases revenue
- Insurance earns foreign currency
- Insurance minimizes financial burden

2.6 WORKING OF INSURANCE:

Insurance works by pooling risk. It simply means that a large group of

people who want to insure against a particular loss pay their premiums
into what we will call the insurance bucket, or pool. Because the number
of insured individuals is so large, insurance companies can use statistical
analysis to project what their actual losses will be within the given class.
They know that not all insured individuals will suffer losses at the same
time or at all. This allows the insurance companies to operate profitably
27
and at the same time pay for claims that may arise. For instance, most
people have auto insurance but only a few actually get into an accident.
You pay for the probability of the loss and for the protection that you will
be paid for losses in the event they occur.

Risks
Life is full of risks - some are preventable or can at least be
minimized, some are avoidable and some are completely
unforeseeable. What's important to know about risk when thinking
about insurance is the type of risk, the effect of that risk, the cost of
the risk and what you can do to mitigate the risk.
RiskControl
There are two ways that risks can be controlled. You can avoid the
risk altogether, or you can choose to reduce your risk.
Risk Financing
If you decide to retain your risk exposures, then you can either
transfer that risk (ie. to an insurance company), or you retain that
risk either voluntarily (ie. you identify and accept the risk) or
involuntarily (you identify the risk, but no insurance is available).
Risk Sharing
Finally, you may also decide to share risk. For example, a business
owner may decide that while he is willing to assume the risk of a
new venture, he may want to share the risk with other owners by
incorporating his business.
The Risk Management Process
After you have determined that you would like to insure against a
loss, the next step is to seek out insurance coverage. Here you have
many options available to you but it's always best to shop around.
You can go directly to the insurer through an agent, who can bind

28
 the policy. The process of binding a policy is simply a written
acknowledgement identifying the main components of your
insurance contract. It is intended to provide temporary insurance
protection to the consumer pending a formal policy being issued by
the insurance company. It should be noted that agents work
exclusively for the insurance company. There are two types of
agents:

Captive Agents: Captive agents represent a single insurance

company and are required to only do business with that one
company.
Independent Agent: Independent agents represent multiple
companies and work on behalf of the client (not the
insurance company) to find the most appropriate policy.

Underwriting
Underwriting is the process of evaluating the risk to be insured.
This is done by the insurer when determining how likely it is that
the loss will occur, how much the loss could be and then using this
information to determine how much you should pay to insure
against the risk. The underwriting process will enable the insurer to
determine what applicants
Insurance Contract
The insurance contract is a legal document that spells out the
coverage, features, conditions and limitations of an insurance
policy. It is critical that you read the contract and ask questions if
you don't understand the coverage.

29
 2.7 CLASSIFICATION OF INSURANCE

Insurance can be classified as:

CLASSIFICATION OF
INSURANCE

CONVENTIONAL UNCONVENTIONAL

LIFE

GENERAL

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 CHAPTER 3

3.1 INTRODUCTION TO UNCONVENTIONAL

INSURANCE

The word 'insurance' often brings to mind run-of-the-mill products such

as car, term, home and health insurance. But, the industry it seems has not
been as serious as the surface portrays. On deeper research, you can
unearth some really unconventional insurance products that you may
have never imagined existed.

As humans, you have the tendency to insure things that are close to you
and at the same time, prone to damage. However, going beyond the
realms of convention, there are certain unconventional insurance that are
taken for example, noses to smiles and even tongues.

You could just imagine the risk that you may have to face, and an
insurance product would be out there to protect you from it
3.2 MEANING

Unconventional insurance are usually those type of insurance which are

generally taken by celebrities, singers, sports people and also by the
people of high importance. Generally they insure their body parts such as
legs, looks, voice, figure, hands, smile, hair etc.

Unconventional insurance can also be taken by general public such as

alien abstraction insurance, asteroid/meteor insurance, wedding
insurance, cold feet insurance, falling coconut insurance, pet insurance,
kidnap insurance and many more. General public can also take body part
insurance if a particular body part is of higher importance to them.

WHERE THERES A BELIEF THERES AN INSURANCE

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3.3 NATURE OF UNCONVENTIONAL INSURANCE

1 .Risk Cover

Unconventional insurance covers all sort of risk which can affect

income of the person. Unconventional insurance covers risk of
future earnings.
For eg: In case of a singer unconventional insurance covers all sort
of risk which can affect the voice of the singer which can affect his
income.
Thus unconventional insurance covers all sort of risks which can
cause due to happening of a particular event be it a wedding
insurance, kidnap insurance etc.

2. Provides protection

Unconventional insurance provides a protection against your risk.

The main function of the insurance is to provide protection against
the probable chances of loss.
The time and amount of loss are uncertain and at the happening of
risk, the person will suffer loss in absence of insurance.
Unconventional insurance guarantees the payment of loss and thus
protects the assured from sufferings.
Unconventional insurance cannot check the happening of risk but
can provide for losses at the happening of the risk.

3. Security

Unconventional insurance provides security to the family of the

insured person. It provides financial security to the persons family.

32
 For eg: If a football player has insured his legs, any damage to his
legs will affect his game. In case if he is not allowed to play
henceforth his family will get compensation by insurance company
which will not affect his income.
Thus unconventional insurance provides security to the insured
person and his family.

5.Helps in contingencies :

Contingency refers to occurance of certain event which may

happen or not happen. In case of the happening of occurance
unconventional insurance helps us during the contingencies of the
event.
Unconventional insurance helps us to protect against risk.
Unconventional insurance helps us to minimize risk.

6.Moral booster :

Unconventional insurance helps to capitalise asset of the insured

person which in turn boosts the moral of the person.

3.4 IMPORTANCE OF UNCONVENTIONAL

INSURANCE

Insurance contributes a lot to the general economic growth of the society

by provides stability to the functioning of process. The insurance
industries develop financial institutions and reduce uncertainties by
improving financial resources. Unconventional insurance is gaining
importance day by day. Unconventional insurance is generally taken for
unconventional reasons.

33
For eg: Wedding insurance, Pet insurance, Body part insurance etc.

1. Provide safety and security: Unconventional insurance provide

financial support and reduce uncertainties in human life. It provides
safety and security against particular event, body part etc. There is always
a fear of sudden loss. Unconventional insurance provides a cover against
any sudden loss. For example: Wedding insurance can protect you against
a range of unfortunate events like damage to your wedding dress,
wedding cake, ring etc

2. Generates financial resources: Unconventional insurance generate

funds by collecting premium. These funds are invested in government
securities and stock. These funds are gainfully employed in industrial
development of a country for generating more funds and utilised for the
economic development of the country. Employment opportunities are
increased by big investments leading to capital formation.

3. Body part insurance encourages savings: Body part insurance does not
only protect against risks and uncertainties, but also provides an
investment channel for important personalities to whom their body part is
of higher importance. Foreg: sports personalities, actors etc. Body part
insurance enables systematic savings due to payment of regular premium.
It provides a mode of investment. It develops a habit of saving money by
paying premium.

4. Promotes economic growth: Unconventional insurance generates

significant impact on the economy by mobilizing domestic savings. It
turns accumulated capital into productive investments. Unconventional
insurance enables to mitigate loss, financial stability and promotes trade

34
and commerce activities those results into economic growth and
development. Thus, unconventional insurance plays a crucial role in
sustainable growth of an economy.

5. Spreading of risk: Unconventional insurance facilitates spreading of

risk from the insured to the insurer. The basic principle of insurance is to
spread risk among a large number of people. A large number of persons
get insurance policies and pay premium to the insurer. Whenever a loss
occurs, it is compensated out of funds of the insurer.

6. Source of collecting funds: Large funds are collected by the way of

premium. These funds are utilised in the industrial development of a
country, which accelerates the economic growth. Employment
opportunities are increased by such big investments. Thus, insurance has
become an important source of capital formation.

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3.5 TYPES OF UNCONVENTIONAL INSURANCE

1. Alien abduction insurance:

o Policy providing coverage against alien attacks and compensating
them if the policy holder proves that they have been attacked.
o The very first company to offer UFO abduction insurance was the
St. Lawrence Agency in Altamonte Springs, Florida.
o The insurance policy cost $1.5 and gives coverage of $1.5 million.
o More than 20000 people have purchased such policy
o If the attack is on a pregnant women then the claim is doubled
o The insurance is normally purchased by the "feeble-minded"
o It costs about $150 dollars for every $1.5 million dollars in
coverage you want.
o Policy payouts can be as much as $1 million dollars
o There have been two alien abduction payouts, both from the St.
Lawrence Insurance Agency in Florida

2. Asteroid / Meteor insurance:

o Even today, the occasional news show will do a story on the odds
of an asteroid striking the Earth. Yes, its pretty scary stuff. And
because it is, in fact, possible that such an incident could occur
(some scientists say probable), there are insurers that will provide
coverage.
o If a meteorite crashes through your roof, the damage to your house
and belongings would generally be covered by a standard
homeowners insurance policy. Meteorites are classified as a
falling object, one of the many named perils for which insurance
companies cover personal property damage.

36
o If an asteroid slams into the Earth a mile away from your house
and your prized art deco sculptures tumble to the ground and
shatter, insurance isnt likely to cover it.
o If meteorites rocks that form after a meteor burns in the earths
atmosphere or any other space debris or falling objects hit cars
in the United States, auto insurance will cover the damage. But
only if the policy holder has whats called comprehensive
coverage, which is an optional part of auto insurance that isnt
required by states but may be required by a lender or lease
company if you dont own the car.

3. Wedding insurance:
o Wedding insurance can protect you against a range of unfortunate
events and help you make sure you are not out of pocket as a result,
but whether its worth taking out ultimately depends on the cost of
your wedding and how worried you are about things going wrong.
o Wedding insurance can also cover you for loss or damage to
wedding attire, such as the wedding dress, as well as presents, the
wedding cake, rings, flowers and gifts for the guests
o Cover starts a set period before the wedding and finishes a set
period after from seven days before to 24 hours after the wedding
but this will vary depending on the policy.
o For example: Wedding rings are covered against loss or accidental
damage up to 24 hours after the wedding ceremony.
o Even if the wedding venue is at a beach then insurance covers
protection against tsunami occurring on the beach and destroying
the whole wedding venue.

37
o If you need to cancel your wedding due to an unexpected illness or
extreme weather conditions, then having wedding cancellation
insurance will help cover the costs to re-arrange the wedding.
o The wedding insurance could also cover additional unforeseen
expenses such as the photographers last-minute absence or
damage caused due to party revelry!

4. Cold feet insurance:

o What if you really do lose the bride or groom. No problem! The
Firemans Fund policy has an additional policy with what is called
change of heart coverage.
o Yes indeed, if your bride to be (or groom to be) leaves you at the
altar, you wont have to foot the cost for cold feet.
o Additionally, the policy also covers any counselling you will need
to overcome the grief of being embarrassed in front of all your
family and friends.
o For parents concerned about a relationship souring before the
exchange of vows, Fireman's Fund Insurance Co. Offers change of
heart insurance. It's been available since 2007, but the program
administrator said the fraud rate soared in the early years as
policies were bought for couples who were known to be fighting.
o That coverage now applies only if the bride or groom calls off the
wedding more than nine months beforehand. "Coverage does not
exist once you hit the altar," said administrator.

5. Injury by falling coconut:

o In 1984, Dr. Peter Brass published Injury Due to Falling
Coconut. He claimed, without much evidence, that 150 people a

38
 year die from being conked on the head by coconuts in places like
Malaysia.
o After that, the poor old coconut was under siege. Innocent coconut
trees in places like Australia were axed.
o Club Direct, a UK travel company, was so concerned that it took
out injury by falling coconut insurance. When one of their
customers was conked on the head in Sri Lanka, there was an
insurance pay out though the knock wasnt fatal and the girl
survived to spend the money.

6. Body parts insurance:

o Although most commonly associated with celebrities, body part
insurance can offer crucial financial cover, and protect your
livelihood if you rely on a specific part of your body to earn a
living.
o Although uncommon, body part insurance is more popular than
you might assume; performers (including musicians, singers and
actors) as well as artists, surgeons, athletes and other sports people
all commonly require this type of insurance.

7. Taste bud insurance:

o Distinguished food critic and restaurateur Egon Ronay in 1993

insured his palate for 250,000, arguing that without this asset he
would be like a sculptor shorn of his hands. He was known for his
sense of taste.

o Coffee taster Gennaro Pelliccia, who samples products for Costa

Coffee, has had his tongue insured for 10 million with Lloyd's of
London. Costa Coffee, with an annual turnover of more than 216

39
 million, has taken the move as it attempts to buck the recession and
open 100 more of its coffee shops this year.

8. Supernatural attack insurance:

o This insurance provides exactly what youd expect: in the event of
a supernatural attack, such as from a poltergeist, or in the event that
the insured party falls victim to other dangerous paranormal
activity, these insurance policies will cover part or all of the
subsequent medical and legal expenses.
o In 2002, the Royal Falcon Hotel in Lowestoft, England, insured its
staff and customers against death and disability caused by ghosts,
poltergeists and other abnormal phenomena. According to BBC
News, the hotel paid a 500 pound premium per year ($768) for 1
million pounds (roughly $1.5 million) of coverage.

9. Kidnap or Ransom insurance:

o If you consider yourself a worthy target for kidnappers and
ransomers, you could insure yourself and your family members
through a kidnap/ ransom insurance. Also, companies that operate
in areas notorious for kidnapping avail this insurance product for
their employees.
o Your typical kidnap or ransom insurance will cover the ransom
payment, fee of consultants hired for crisis management, medical
and travel related expenses, among others. Some insurers currently
offering this policy in India include Tata AIG, HDFC Ergo, SBI
General Insurance and New India Assurance.

40
10.Pet insurance:
o Pets are considered an extended part of the families they belong to.
As the cost of pet maintenance and healthcare of pet is on the rise,
you would be wise to consider pet health insurance plans. While
loss of a pet can never be compensated but a pet insurance policy
does help you protect yourself financially.
o These pet health insurance plans would provide cover right from
minor expenses such as vaccinations, to bigger ones including
hospitalization.
o Most policies are dog-centric, however some insurers do offer
protection to cats, horses, cows and buffaloes.
o The insured pet is usually covered against death caused by an
accident or by disease contracted during the pet insurance term.
The cover could be extended for risks such as accidental death in
transit, breeding risk, and loss ofdog owing to burglary or break-in.
Some insurers offering pet insurance include New India Assurance,
Oriental Insurance and Bajaj Allianz.

11.Amateur sports person insurance:

o To help you nurture the budding sportsperson in your child without
hesitation, Indian insurers have found a new product the
amateur sports person insurance policy.
o This policy understands the risks that accompany a rigorous
practising schedule of any sport. It covers the policyholders
sporting equipment, personal accident risks, accidental bodily
injury caused when practising or third-party liability arising out of
a sporting accident.

41
12.Dental insurance plans:

o Dental insurance is designed to offer you coverage for common

dental care issues and to help you budget for dental services at all
levels, preventive, basic and major.
o Preventive care like routine cleanings and fluoride treatments
covered with no deductible or waiting period
o Coverage for basic services like fillings or emergency treatment for
dental pain and major services like retainers and root canals, which
are subject to the plans deductible and waiting periods
o Access to an extensive dental network of more than 182,000
dentists
o There is no age restrictions and dental insurance plans offer
coverage for every member of your family and every stage of life.

13.Musical instrument insurance:

o Musical instrument insurance provides comprehensive accidental

damage, loss and theft cover for musical instruments. It is designed
to provide cover to musicians who have instruments valued below
1,500, play in the home or within 30 miles from their home.
o They can select temporary worldwide cover (30 days e.g. for
school trips) and have options on policy and unattended vehicle
cover.

14.Shotgun insurance:

o Shotgun insurance is designed to cover the physical damage to

your gun and equipment.It provides a cover for liability risk of gun.
Shotgun insurance is on an all risks basis for specified shooting and

42
 sporting equipment including shotgun and rifle (physical damage)
sights, binoculars, night vision etc.
o Short gun policy allows you to select on a gun by gun basis the
level of cover you require.

15.Art work insurance:

o Art work insurance provides an insurance for your art work. Things
like pencils going through paintings and red wine glasses flying
onto canvases. Interestingly enough, in each case the art collector
came to the insurer after the incident looking for a restoration
expert and art insurance coverage.
o The problem with getting a painting insured after a pencil rips a
hole through it, is you wont get a dime of reimbursement for the
restoration or the lost value of your piece.

16.Hair insurance:

o A policy has been developed that insures against the loss of chest
hair. Rumor had it that Tom Jones had his oft displayed chest hair
insured for $7 million. Toms camp denied the rumour. But
Lloyds of London does insure Santas Beard. Well, maybe not the
real Santa; rather, the beard of Brady White who is Macys
professional Santa Claus.
o Back in England, the Derbyshire Whiskers Club are insured against
loss of beard by fire or theft. When the Pittsburgh Steelers Strong
Safety Troy Polamalu signed to promote Head and Shoulders
shampoo, his massive three foot curly mane was insured for $1
million by the shampoo people.

17.Lottery winning insurance:

43
o No, not for the winners, but for the companies that employ
them. Picture this; youre a small business with a handful of
employees. Half of them have a pool and play the lottery every
week. What happens if they hit the jackpot and decide to pack in
the day job? Youre down to half strength.
o Lottery Winners Insurance would step in and pay for things like
hiring temps and training new employees. These insurances are
issued in the UK. To claim you have to have lost at least two
employees, both of whom have won at least $150,000 and have left
their jobs within two weeks of the win.

18.Werewolf/Vampire/Zombie Attack insurance:

o While many people believe a zombie apocalypse is imminent,

some people are still concerned over being attacked by classic
creepy creatures like werewolves and vampires.
o Lloyds of London has reportedly sold policies to protect
customers in the event of these types of attacks.

20. Riot Insurance:

o In 2010, the country of Thailand was afraid of losing tourism

dollars due to political upheaval and protests. So it offered up to
$10,000 to anyone experiencing loss or damage due to the turmoil.
o It also offered tourists up to $100 per day for travel delays caused
by demonstrations.

44
21. Insurance against Death by Laughter:

o Lloyd's of London is known for covering a wide range of things,

but the funniest might be the effort to insure a comedy troupe in the
event that an audience member died from laughter.
o According to the BBC, this comedy troupe was so confident in its
humor that it asked Lloyd's for insurance just in case the group was
fatally funny.

22. Essential Employee" Insurance:

o Imagine being so valued by your employer that the company

actually takes out an insurance policy in case you leave or pass
away. Often called "key person" or "keyman" insurance, this policy
offers a lump sum to cover costs like loss of business or training of
successors.
o Usually, these insurance policies are designed to cover the loss of
someone who plays a key role in generating profits, or who has a
unique skill set.

23. Kaun Banega Crorepati Insurance:

o If you thought the makers of Indias favourite game show gave

away crores in prize money just because they were altruistic, you
couldnt have been more wrong. Kaun Banega Crorepati, much
like the show it is adapted from- Who Wants to be a Millionaire,
has its expenditure on prize money covered under insurance.

o So whenever someone like Sushil Kumar wins Rs 5 crores, it is not

the producers who bleed their hearts out while giving away the

45
 cheque, but the shows insurance agency that cries copious
amounts of tears over the money they will have to later give to the
producers.

3.6 EXAMPLES

1. In 2008, Lloyds insured Dutch winemaker Ilja Gorts nose for

5m against any incident that could threaten his livelihood. If you
are curious as to why the nose and not the tongue, then here it is:
Gort says that his nose can distinguish millions of different scents
and is very crucial to his profession.
2. Star of American comedy-drama TV series Ugly Betty, America
Ferreras smile was insured was by Lloyds for a whopping $10
million. This was in 2007. Ferreras character in the show, Betty
Suarez, was that of a quirky, clumsy and braces-wearing girl who
had an appalling sense of fashion.
3. In 2009, Costa Coffee taster GennaroPelliccia had his tongue
insured with Lloyds for 10 million. Pelliccia personally tastes
every single coffee bean at Costas London roastery, which makes
his tongue his most valuable asset. It can not tell one flavour from
the other but also help him identify defects.
4. In 2004, SpaceShipOne, an air-launched spaceplane, became the
first manned private aircraft to reach space. Given the risks
involved, Lloyds insured it for $100 million
5. In 1991, Lloyds had insured an artwork bought by Charles Saatchi
(of Saatchi & Saatchi). Titled Self, the sculpture made by artist
Marc Quinn was a life-size cast of his own head and was made
using his blood. It was a frozen sculpture that Saatchi had

46
 reportedly kept in a freezer. The story goes that some years later,
during a renovation work, the freezer was accidentally unplugged
causing the artwork, made of blood, to melt.
6. Australias cricket player Merv Hughes walrus insured his
moustache for $ 370,000
7. $6 million covering Bruce Springsteen's voice.
8. $5 million for German super model Claudia Schiffer's face.

9. Akshay Kumar. The actor oft known as Khiladi, signed up for Rs

35-crore personal accident insurance cover when shooting for the
movie Holiday.
10.Troy Polamalu is readily recognized on the field by his luxuriant
hair which cascades down his back.After Procter & Gamble signed
on Polamalu in 2010 to endorse its Head & Shoulders shampoo,
the company took out a one million dollar insurance policy with
Lloyds to protect against hair loss. The policy, which will pay out
if Polamalu sustains losses to more than 60% of his hair in an
accident, specifies that the football player cannot engage in fire
breathing or climb Mount Everest.
11.MariahCarey singer is known for her great legs. In 2006, womens
razor brand, Gillette Venus named Carey the first Celebrity Legs
of a Goddess as part of a nationwide promotion. Following this
designation, Gillette reportedly insured Careys legs for $1 billion.
12.In 2006, Soccer great David Beckhams legs were insured for 100
million (equal to about $195 million at the time). The policy was
considered to be the largest personal insurance policy for a sports
figure in history, and due to its size, was reportedly was taken out
by several companies. The policy protected not only Beckhams
legs, feet and toes, but also his good looks. Beckham, after all,

47
 earned his keep not just by being an iconic soccer hero, but also
through various commercial deals. The policy would reportedly
pay in the event Beckham was unable to play soccer or in the event
of disfigurement.
13.Dolly Parton insured her breasts and legs for $600,000. In the
1980s Madonnas cone encrusted breasts were insured for $2
million. When Mariah Carey signed with Gillette for their Legs
of a Goddess campaign, they insured her legs for $1
billion. Rihanna was signed for the same campaign and her legs
were insured for a paltry $1 million. Michael Flatleys $40 million
policy on his dancing feet.

14.In 1999, Lloyds insured a woman named Mary Murphy against a

virgin birth triggered by the coming of Millennium.
15.Twentieth Century Fox once insured Betty Grables' legs for a
staggering $1 million each. This was during the 1940's, and a
million dollars was equivalent to about a billion dollars in today's
money.
16.The most expensive insurance policy issued for a cigar was written
by Lloyd's of London. The cigar in question in over 12 feet long
and was made from more than 15,000 tobacco leaves. In case you
are wondering, the cigar holds the world record for the longest
cigar.
17.Keith Richards, the guitarist for the hit rock band, The Rolling
Stones, has his middle guitar finger insured for more than $1.5
million dollars. Not the whole hand, either, just a single finger.
18.Harvey Lowe insured his hands for $150,000 during the 1930's.
The reason for such a large policy, because that was a lot of money
when the policy was written, is because Harvey was the world yo-

48
 yo champion and his hands had taken him there. He first began
using a yo-yo when he was in his early teens and continued to do
so for many decades.
19.After winning his Olympic bronze in 2008, boxer Vijender Singh
stated his intention of getting his hands insured with Bajaj Allianz.
20.The James Bond actor's bod was reportedly insured for 5 million
pounds back in 2008, when he was shooting for Quantum of
Solace. It is believed that Craig insisted on doing his own stunts
and suffered several injuries, so producers decided to keep their
star covered
21.The Nightingale of India has insured her voice too, for an
undisclosed sum. No sweat for her insurance providers though -- at
81, she's still singing away and shows no signs of slowing down.
22. Aishwarya Rai Bacchan has also insured her eyes.

49
 CHAPTER 4

DATA ANALYSIS

1. GENDER

Answer Choices GENDER

Male 60%
Female 40%
Table No. 1.1

GENDER

Female Male Female

40%

Male
60%

Chart No 1.2

Interpretation:

It is found that 60% of the respondents are male and 40% of the
respondents are female. Thus, Chart 1.2 has majority of the male
respondents.

50
 2. AGE

Answer Choices AGE

Below 25 23.80%
26-35 38.80%
36-45 15.00%
Above 45 22.50%
Table No. 2.1

AGE (IN YEARS)

Below 25
Above 45 Below 25
22% 24%
25-35

36-45 36-45
15%
25-35 Above 45
39%

Chart No 2.2

Interpretation:

The above pie chart shows various age groups of the respondents. Thus,
maximum respondents are from age of 25-35 yrs and second are below
25 yrs group which includes youth . The minimum number of response is
from the age group of 36-45 years

51
 3. OCCUPATION

Answer choices Occupation

Student 16.3%
Business 8.8%
Service 43.8%
Private 20%
Others 11.3%
Table No. 3.1

Occupation
50.00%
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Student Business Service Private Others

Chart No. 3.2

Interpretation:

From the above pie chart we can see that the majority of respondents
have Service as an occupation ie 43.8% and the least number of
respondents have Business as their Occupation ie merely 8.8%

52
4. ANNUAL INCOME

Answer Choices ANNUAL INCOME

Below 2 lakh 27.50%

2 to 5 lakh 26.30%
5 to 10 lakh 32.50%
10 lakh and above 13.70%

Table No. 4.1

ANNUAL INCOME
35.00%

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
Below 2 lakh 2 to 5 lakh 5 to 10 lakh 10 lakh and above

Chart No 4.2
Interpretation:

From the above pie chart we can see that the majority of respondents
have their Annual Income in range of 5 lakhs to 10 lakhs ie 32.5% and
the least number of respondents have their Annual Income in range of
above 10 lakhs of Upper Class of only 13.70%

53
5. DO YOU THINK INSURANCE IS IMPORTANT?

Answer DO YOU THINK INSURANCE IS

Choices IMPORTANT
Yes 96%
No 4%

Table No. 5.1

DO YOU THINK INSURANCE IS IMPORTANT

No
4%
Yes No

Yes
96%

Chart No 5.2

Interpretation of Data:

As from the above statistical data we can see that majority of the people
think that insurance is important. Insurance is equally very important as it
provides risk cover and protects our risk. 96% of the people agree that
insurance is important and 4% of the people think that insurance is not
important. Hence, from the above observation we can see that insurance
is important.

54
 6. HOW MUCH PERCENT OF YOUR INCOME
WOULD YOU LIKE TO SPEND ON INSURANCE?

PERCENT OF INCOME YOU

Answer
WOULD LIKE TO SPEND ON
Choices
INSURANCE
5 to 10% 47.50%

10 to 15% 28.70%

15 to 20% 10.00%

More than 20% 13.70%

Table No.6.1

PERCENT OF INCOME YOU WOULD LIKE TO SPEND

ON INSURANCE
50.00%

40.00%

30.00%

20.00%

10.00%

0.00%
5 to 10% 10 to 15% 15 to 20% More than 20%

Chart No 6.2

Interpretation of Data:

From the above table we can see that people do not spend a major part of
their income on insurance. Most of the people prefer spending 5 to 10%
of their income on insurance i.e around 48%, this can also be to reduction
in savings due to increase in standard of living of the people.

55
 7. FOR WHAT PURPOSE DO YOU TAKE
INSURANCE?

FOR WHAT PURPOSE DO YOU

Answer Choices
TAKE INSURANCE
Protection 68
Recommended by
Financial advisor 9
Risk cover 44
Other 6
Table No. 7.1

FOR WHAT PURPOSE DO YOU TAKE INSURANCE

80
70
60
50
40
30
20
10
0
Protection Recommended by Risk cover Other
Financial advisor

Chart No 7.2

Interpretation of Data:

As from the above data we can see that most of the people take
insurance as it provides protection and risk cover. Only 9 respondents
from the total respondents take insurance due to recommendation given
by financial advisor. From this we can understand that people generally
take insurance for protection and risk cover.

56
 8. WHAT ACCORDING TO YOU MUST BE THE IDEAL
POLICY TERM?

Answer Choices WHAT MUST BE THE IDEAL POLICY TERM

3 to 5 years 10.00%
6 to 9 years 10.00%
10 to 15 years 35.00%
16 to 20 years 16.20%
21 to 25 years 6.30%
More than 25 years 12.50%
Whole life policy 10.00%
Table No 8.1

WHAT MUST BE THE IDEAL POLICY TERM

40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
3 to 5 years6 to 9 years 10 to 15 16 to 20 21 to 25 More than Whole life
years years years 25 years policy

Chart No 8.2

Interpretation of Data:

From the above data we can state that major percent of the people want
their insurance policy term to be for medium term of 10 to 15 years.
Generally people want to take insurance either upto 10 to 15 years or for
less than 20 years.

57
 9. WHICH TYPE OF ASSETS DO YOU INSURE?

Answer WHICH TYPE ASSETS DO YOU

Choices INSURE
Life 75
Car 27
House
Property 34
Other 11
Table No. 9.1

WHICH TYPE ASSETS DO YOU INSURE

80

70

60

50

40

30

20

10

0
Life Car House Property Other
Chart No 9.2

From the above data people would generally like to take insurance for
their life as it will help their family in caseof any uncertain
circumstances. Life insurance is very important in comparison to other
types of insurance be it car or house property etc. Most of the people have
insured their life.

58
10. ARE YOU AWARE OF UNCONVENTIONAL
INSURANCE?

Answer ARE YOU AWARE OF

Choices UNCONVENTIONAL INSURANCE
Yes 79.00%
No 21.00%
Table No. 10.1

AWARENESS OF UNCONVENTIONAL
INSURANCE

No
21%
Yes No

Yes
79%

Chart No 10.2

As from the above table we can see that 79% of the people are
aware about unconventional insurance and 21% of the people are
unaware of the term unconventional insurance. From this we can
state that people are known to unconventional insurance but in
comparison there are people who are yet unaware about it.

59
 11.FROM WHERE HAVE YOU HEARD ABOUT
UNCONVENTIONAL INSURANCE?

FROM WHERE HAVE YOU HEARD

Answer Choices ABOUT UNCONVENTIONAL
INSURANCE

Newspapers 26
Internet 44
Financial advisor 10
Other 22

Table No. 11.1

FROM WHERE HAVE YOU HEARD ABOUT

UNCONVENTIONAL INSURANCE
50
45
40
35
30
25
20
15
10
5
0
Newspapers Internet Financial advisor Other

Chart No 11.2

As from above large number of people have become aware of

unconventional insurance through internet, as internet provides us huge
information about unconventional insurance and even states us the
examples who has insured for it. Less number of people have gained its
awareness from financial advisor in comparison to other.

60
 12.WHICH TYPE OF UNCONVENTIONAL INSURANCE ARE
YOU AWARE?

WHICH TYPE OF UNCONVENTIONAL

Answer Choices
INSURANCE ARE YOU AWARE
Bodypart insurance 54
Kidnap insurance 9
Pet insurance 15
Wedding insurance 22
Sport insurance 27
Dental insurance 20
Hair insurance 23
Smile insurance 8
Nose insurance 14
Other 30
Table No. 12.1

Types of Unconventional Insurance

60 you are aware of
50
40
30
Types of
20 Unconventional
10 Insurance you
0

Chart No12.2
Generally there is an awareness about Body part insurance as it is
taken by actors, sports person for their body part which is of higher
importance to them. People are not that aware about other

61
unconventional insurance like kidnap insurance, pet insurance,
wedding insurance etc.

13. DO YOU THINK UNCONVENTIONAL

INSURANCE IS IMPORTANT?

DO YOU THINK
Answer
UNCONVENTIONAL INSURANCE IS
Choices
IMPORTANT
Yes 76.00%
No 24.00%
Table No. 13.1

DO YOU THINK UNCONVENTIONAL

INSURANCE IS USEFUL

No Yes No
24%

Yes
76%

Chart No 13.2

From the above table we can see that majority of the people ie 76%
of the people think that unconventional insurance is importance.
From this we can state that people think that unconventional
insurance is important and even the awareness regarding
importance of unconventional insurance is increasing.

62
 14. TO WHOM UNCONVENTIONAL INSURANCE IS
USEFUL?

TO WHOM UNCONVENTIONAL
Answer Choices
INSURANCE IS USEFUL
Sports personalities 42
Artists 21
Singers 33
Other 37

Table No. 14.1

TO WHOM UNCONVENTIONAL INSURANCE IS

50
USEFUL
40

30

20

10

0
Sports personalities Artists Singers Other

Chart No 14.2

From the above table we can see that majority of the people think
that unconventional insurance is important to Sports personalities
as to them particular body part which is needed in sport is of
importance and need to be insured. Most of the people think that
unconventional insurance is important to Sports personalities. Only
few people think that unconventional insurance is important to
artists. From this we can state that unconventional insurance is very
important to sports personalities.

63
15. WOULD YOU CONSIDER TO COVER YOUR
PRIZED POSESSION / BODY PART WHICH IS
DEEMED AS AN ASSET TO YOU AS A PART OF
INSURANCE?

Would you consider to cover your

prized possession /Body part which is
Answer choices deemed as an asset to you?
Yes 54
No 26
Table No. 15.1

WOULD YOU CONSIDER TO COVER YOUR

PRIZED POSSESION /BODY PART WHICH IS
DEEMED AS AN ASSET TO YOU?

No
33% Yes No

Yes
67%

Chart No 15.2

Interpretation of Data:

It is found that majority of 67% of the respondents would insure/cover

their prized possession/Body part which is deemed to be an asset to them
and 33% of the respondents are not interested in covering their special
gifts..

64
 CONCLUSION

After doing the survey about scope of unconventional insurance we

hereby conclude that:
Insurance is popular among the people as it provides protection
to risk.
Unconventional insurance is popular to high extent among the
people as this type of insurance are generally taken for
unconventional reasons and it is generally taken by artists, sports
person etc for whom the particular asset say as their body part is
of high importance to them and they are completely dependent
on it.
Unconventional insurance is also taken by general public to
protect their pet. They also take unconventional insurance to
protect themselves from alien, virgin birth, lottery etc. It is also
taken by organisations to protect the key person of the
organisation.
From this we can suggest that unconventional insurance
can be taken by any person. There is no limitations.
Unconventional insurance can be taken to protect the risk
occurring due to unconventional reasons. But, unconventional
insurance is of high importance to sports person, artists etc as it
eliminates the risk of uncertain event to both the person and
his/her family.

FUTURE TRENDS

Unconventional Insurance can also be used by Common People to cover

their prized possession or body part which is very important to them in
future.

65
 BIBLIOGRAPHY

http://www.investopedia.com/university/insurance/insurance1.asp

https://www.policybazaar.com/life-insurance/general-info/articles/5-
unconventional-insurance-policies-that-you-have-never-heard-of/

http://insuranceblog.asia/evolution-and-development-of-insurance-in-
india/

https://www.insuranceinstituteofindia.com/documents/10156/c3e1b0b5-
4c5c-4707-8b24-85001a8688f5

https://iedunote.com/insurance-contract-element

https://www.insuranceopedia.com/definition/1679/elements-of-an-
insurance-contract

http://marketinglord.blogspot.in/2012/08/importance-of-insurance.html

http://www.yourarticlelibrary.com/insurance/the-role-and-importance-of-
insurance-explained/7540/

http://www.preservearticles.com/2012040529915/what-are-the-primary-
and-secondary-functions-of-insurance.html

66
 ANNEXURE
1. Name :

2. Gender
o Male
o Female

3. Age :
o Below 25
o 26-35
o 35-45
o Above 45

4. Occupation
o Student
o Business
o Service
o Private.

5. Annual Income :
o Below 2 Lakh
o 2 -5 Lakh
o 5 -10 Lakh
o Above 10Lakh

6. Do you think insurance is important?

o Yes
o No

7. How much percent of your income would you like to spend on

insurance?
o 5-10%
o 10-15%
o 15-20%
o More than 20%

67
8. For what purpose do you take insurance?
o Protection
o Recommended by financial advisor
o Risk cover
o Other

9. What according to you must be an ideal policy term?

o 3-5yrs
o 6-9yrs
o 10-15yrs
o 16-20yrs
o 21-25yrs
o More than 25yrs
o Whole Life Policy

10.Which types of assets do you insure?

o Life
o Car
o House Property
o Others

11.Are you aware of unconventional insurance?

o Yes
o No

12.From where have you heard about unconventional insurance?

o Newspaper
o Internet
o Financial Advisor
o Other

68
13.Which type of unconventional insurance are you aware?
o Body Part Insurance
o Kidnap Insurance
o Pet Insurance
o Wedding Insurance
o Sport Insurance
o Dental Insurance
o Hair Insurance
o Smile Insurance
o Nose Insurance
o Other

14.Do you think unconventional insurance is useful?

o Yes
o No

15.If yes to whom?

o Sports Personalities
o Artists
o Singers
o Other

16. Would you consider to cover your priced possession or body part
which is deemed as an asset t o you as a part of insurance?
o Yes
o No

THANK YOU.

69