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Insurance: A growing sector

Jobs in Insurance sector
Insurance is nothing but a guarantee of compensation provided by a company if there is a loss of life and/or property. It is a form of risk management. Basically, there are two parties involved in insurance:

(i) The insurer: the party who undertakes to compensate for losses in exchange for a monthly/quarterly/annual premium paid on time;

(ii) The insured: the person or property for which an insurance policy is issued. The insurance policy is the agreement which the insurer gives to the insured. Insurance premium is the amount that the insured agrees to pay the insurer and as long as the premium is paid, on time, the policy is valid. If the unforeseen event happens, then the insured/nominee makes a claim and the insurer processes the claim and if found valid, pays the insured amount.

How Does Insurance Work?
An insurance company reaches out and gets many people to take the insurance and each of them pays a premium. This premium is invested by the insurance company. When one of the insured makes a valid claim, the insurance company pays the claim from the invested amount. In effect, all those who are insured and paying regular premiums are pooling their resources so that this may be re-distributed among them in times of calamities such as fire, floods, epidemics, and famine.

Types of Insurance
There are many types of insurance policies; we list a few of the more popular ones here.

Life Insurance
This insurance is taken on the life of a person. A person insures him/ herself so that in case of death of the policy-holder, the insurance company pays a certain sum to the nominee or the immediate family member. Again, there are various types of life insurance policies and people can choose from the many available options.

Property Insurance
This provides insurance against robbery, loss, or damage of property (for example, fire in a factory). Different policies cover property under different terms and conditions.
Health Insurance
This provides insurance towards any medical expenditure that a person spends on health problems.
Auto Insurance
Any financial loss that occurs to your vehicle due to an accident or theft is covered in this insurance. Third party auto insurance provides compensation to the victim of a road accident.
Travel Insurance
When we travel to different locations, especially to international locations, travel agents always suggest that we get a travel insurance to cover any loss of personal belongings or costs of medical expenses overseas and delays in travel.

Credit Insurance
Sometimes, we purchase assets by taking loans, for example, a housing loan. We need to pay our loans on a regular basis. Sometimes if the policy-holder is not able to pay the loans due to sudden death, then the insurance companies pay off the balance amount of the loan.

History Of Insurance India

History of Life Insurance
Prior to 1947, foreign insurance companies dominated the market. An Ordinance was issued on 19 January 1956, nationalizing the Life Insurance Sector and the Life Insurance Corporation (LIC) came into existence in the same year. The LIC had a monopoly till the late 1990s when the Insurance Sector was reopened to the private sector. Since then over 24 private life insurance companies have entered the Indian market. But LIC continues to be the dominant player with a market share (in 2012–13) of around 73 per cent, leaving the balance of 23 players competing for 27 per cent of the market.

History of Non-life (General) Insurance
In 1972 with the passing of the General Insurance Business (Nationalization) Act, the general insurance business was nationalized with effect from 1 January 1973—107 insurers were amalgamated and grouped into four companies, namely, the National Insurance Company Ltd, the New India Assurance Company Ltd, the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a company in 1971 and it commenced business on 1 January 1973. In 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry.

Privatization of the Insurance Industry
The IRDA opened up the market in August 2000 with the invitation for application for registrations. Foreign companies were allowed ownership of up to 26 per cent (now increased to 49 per cent).

Interesting facts about the insurance market in India

  1. Today there are 28 general insurance companies including the The Export Credit Guarantee Corporation of India
  2. (ECGC) and Agriculture Insurance Corporation of India and 24 life insurance companies operating in the country.
  3. An insurance premium collected by Indian insurers was 3.9 per cent of the GDP in 2013–14.
  4. 4.After witnessing de-growth since 2010, the life insurance industry rebounded in the first quarter of 2015–16 by recording a growth of 20 per cent in new premium incomes.29
  5. 5.The Indian life insurance industry is the biggest in the world in terms of the number of policies sold (360 million policies).
  6. 6.LIC is the market leader in life insurance, with 72.7 per cent share in FY 2013, followed by ICICI Prudential, with 4.7 per cent share.
  7. The non-life or general insurance industry is dominated by motor insurance at 47 per cent share in 2013 followed by health insurance at 22 per cent share in the same year.
  8. Of India’s total population, only 0.2 per cent comes under medical insurance. The Government of India wants every citizen to be covered for health insurance and hence this segment is poised to grow dramatically.

Insurance: A growing sector
India’s growing economy has the potential of developing the Insurance Sector as well as increasing job opportunities. The Life Insurance Sector in particular, is estimated to grow at a compounded average growth rate of 15–20 per cent over the next fifteen to twenty years. The government has targeted life insurance penetration up to 40 per cent, health insurance to 30 per cent, and general insurance to 15 per cent of the total population by 2030.

Job Opportunities In Insurance Sector

Jobs in Public Sector Insurance Companies
Job opportunities have increased because of the many private players who have entered this industry. Even in a nationalized insurance company like LIC, despite reservation policies and the number of exams one has to clear, it is not very difficult to get a job as a Development Officer.

There are over 1 million people working in this sector and over 5 million people are associated as Agents, consultants, brokers, sub-brokers, underwriters, and so on. The Associated Chambers of Commerce and Industry of India (ASSOCHAM) estimated manpower requirements in this sector to be 2 million by 2030.31

Why should anyone join the insurance industry?
There are four reasons.

  1. Huge demand: There is a huge demand for hardworking graduates who have a flair for selling.
  2. Equal opportunity: Everyone is measured by the same yardstick— meeting targets. This helps people who are winners, to climb the ladder very fast.
  3. 3.Graduate advantage: The industry does not prefer MBAs and graduate qualification is adequate to reach the top.
  4. Living in home town: Insurance is expanding in urban and rural areas.

So you can work close to your home.

How Do Insurance Companies Hire?
Public sector companies (PSCs) follow a transparent competitive examination model followed by an interview and medical examination. The private sector prefers to source candidates through advertising, web media, and consultants, and conducts a two-stage interview process.

Before moving on to Section 2 and the entry-level job roles, we would like to highlight a high achiever in the Insurance Sector.

Author: T. Muralidharan
Name of publication: Telangana Today
Date published on: 04/06/2018
published in: Hyderabad
Tags: Employability

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