GK - Banking & Insurance - SPLessons

Future of Insurance Sector

SPLessons 5 Steps, 3 Clicks
5 Steps - 3 Clicks

Future of Insurance Sector

shape Introduction

The future looks good for in Insurance sector. The sector has a strong potential to grow from US $ 72 billion in 2012 to US $ 280 billion by 2020. India’s favorable regulatory environment which guarantees stability and fair play will be the primary driver for this growth. Foreign investors want to tap into the sector’s massive potential.

Since the government liberalized the insurance sector in 2000 by opening the doors for private participation, the Indian insurance sector has gotten stronger.

Competition has provided the consumer with an unforeseen range of products, providers and enhanced service levels. The health of the insurance sector reflects a country’s economy. Insurance sector generates long-term funds for infrastructure development and also increases a country’s risk- taking capacity.

India’s economic growth since the turn of the century is viewed as a significant development in the global economy. This view is helped in no small part by a booming insurance industry.

shape Sector

Selected Terms related to Insurance Sector

Actuary: Actuary is a business professional who analyzes probabilities of risk and risk management including calculation of premiums, dividends and other applicable insurance industry standards.

Annuity: Annuity refers to a contract providing income for a specified period of time, or duration of life for a person or persons.

Collateralize Mortgage Obligations (CMOs): CMOs are a type of mortgage-backed security (MBS) with separate pools of pass-through security mortgages that contain varying classes of holders and maturities (tranches) with the advantage of predictable cash flow patterns.

Policy lapse: Policy lapse refers to termination of a policy due to failure to pay the required renewal premium.

Micro Insurance : A micro-insurance policy is a general or life insurance ploy with a sum assured of ₹ 50000 or less. IRDA has created this special category under the micro-insurance regulations, 2005, to promote insurance coverage among the economically vulnerable sections of society.

Morbidity Risk: Morbidity Risk is the potential for a person to experience illness, injury, or other physical or psychological impairment, whether temporary or permanent. Morbidity risk excludes the potential for an individual’s death, but includes the potential for an illness or injury that results in death.

Mortgage Insurance Mortgage Insurance is a form of life insurance coverage payable to a third party lender/mortgagee upon the death of the insured/mortgagor for loss of loan payments.

Package Policy: When two or more distinct policies combined into a single contract, it is known as Package Policy.

Premium : Premium is the money charged for the insurance coverage reflecting expectation of loss.

Underwriter: Underwriter is a person who identifies, examines and classifies the degree of risk represented by a proposed insured in order to determine whether or not coverage should be provided and, if so, at what rate.