Anil Project

UNITED INDIA INSURANCE
A PROJECT REPORT ON
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UNITED
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SUBMITTED BY
konda anilkumar ashok
T.Y.B.B.I. [Semester VI]
PADMASHRI ANNASAHEB JADHAV
BHARTIYA SAMAJ UNNATI MANDALS
B.N.N COLLEGE
DHAMANKAR NAKA, BHIWANDI, 421305

SUBMITTED TO
UNIVERSITY OF MUMBAI
ACADEMIC YEAR
2013 2014
PROJECT GUIDE
ASST. PROF. urvi gada
PROJECT REPORT ON

SUBMITTED BY
Konda
BI
Anilkumar Ashok
B
T.Y T.Y.B.B.I. [Semester VI]
PADMASHRI ANNASAHEB JADHAV
BHARTIYA SAMAJ UNNATI MANDALS
B.N.N COLLEGE
DHAMANKAR NAKA, BHIWANDI, 421305
SUBMITTED TO
UNIVERSITY OF MUMBAI
ACADEMIC YEAR
2013 2014
NAME OF PROJECT GUIDE
ASST. PROF. Urvi Gada
DATE OF SUBMISSION 10/3/2014
DECLARATION
I,Mr Anilkumar Ashok Konda (Roll No.30) of B.N.N COLLEGE, BHIWANDI of TYBBI [Semester VI]
hereby declare that I have compiled this project on UNITED INDIA INSURANCE in the academic year
2013-2014. The information submitted is true and correct to the best of my knowledge.
Anilkumar Ashok Konda

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CERTIFICATE
I, Asst. Prof.Urvi Gada hereby certify that Anilkumar Ashok Konda of B.N.N COLLEGE, BHIWANDI of
TYBBI [Semester VI] has completed project on UNITED INDIA INSURANCE in the academic year
2013-2014. The information submitted is true and correct to the best of my knowledge.
(Prin. U D Kadam) (Dr. Suvarna Rawal) (Asst. Prof. )

Principal Coordinator Project Guide
External Examiner
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ACKNOWLEDGEMENT
I am indebted my project guide prof. Urvi Gada for helping me out the successful
completion of my project report on
I am thankful to my other teacher for provide me the information as and when
required.
I am extremely thankful to my family member for their constant support.
Last, but not least, are my friends who discussed with me the various issuse in my
project. Finally, I want to thank one and all who helped me directly or indirectly
through the project work.
[ANILKUMAR.A.KONDA]
EXECUTIVE SUMMARY
United India Insurance Company Limited was incorporated on 18th February 1938. In 1972
when General Insurance Business in India was nationalized, 12 Indian Insurance Companies, 4
BI
B Indian operations of 5 Foreign Insurers, besides General
Cooperative Insurance Societies and
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Insurance operations of southern region of Life Insurance Corporation of India were merged with
United India Insurance Company Limited to become one of the largest general insurance
company in India. After Nationalization United India has grown by leaps and bounds and has
over 20000 work force spread across 1340 offices across India providing insurance cover to
more than 10 million policy holders. The Company has a variety of insurance products to
provide insurance cover from bullock carts to satellites.
TABLE OF CONTENTS
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Complete Sequence for Project Report

(NOT TO BE PRINTED)
Title Pages
Declaration Page
Acknowledgement
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Company Visit Certificate
Executive Summary
Index
Introduction
Company Profile
Objectives of Study
Research Methodology
Significance of Study
Scope of Study
Data Collection
Literature Review
Data Analysis / Data Interpretation
Conclusion
Recommendation
Bibliography
Annexures
(Note: Page nos. should start from introduction after index)
Ch.1) INSURANCE SECTOR - AN OVERVIEW

The insurance sector has a long history in India. The insurance sector in India has
come a full circle from being an open competitive market to nationalization and back to a
liberalized market again. Tracing the developments in the Indian insurance sector reveals the
360-degree turn witnessed over a period of almost 190 years.
The business of life insurance in India in its existing form started in India in the year
1818 with the establishment of the Oriental Life Insurance Company in Calcutta. The 1st legal
enactment was made in 1870. The 1st BI
Indian Insurance Act was passed in 1938 and amended in
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1950, when it was nationalized.T.However, the sector was once again thrown open to the private
sector on December 1999, followed by the establishment of the Insurance Regulatory and
Development Authority (IRDA) in April 2000.
Though the Insurance Sector is now open for private players as a consequence of the new
liberalization policies of the Government, the existing government owned Insurance companies
will, nevertheless, continue to be in the government sector. These existing companies will,
however, have to strive for better realization of their corporate objectives and goals to meet the
demands and expectations of the public.
Quality of service and product that an industry offers must move forward with progress in
the state of the economy. As the quantum and quality of service change over time, the levels at
which customers continue to remain satisfied with the services provided, also keep on increasing.
Ultimately, the success of any industry depends upon its positioning in the state of economy and
on meeting the expectations of the service users.
With competition, the performance level of individual companies is expected to increase.

Segmentation is taking place within the economy with a need for socially responsive service
sector.
Globalization is the new economic reality, which is here to stay, heralding a new era of
insurance in India. With the opening of the insurance industry, India stands to gain with the
following major advantages:
Globalization will provide improved opportunities to the customer for better products,
with more reasonable and affordable pricing.
The customer will get faster servicing.
It will enhance the savings rate.
Long-term funds for infrastructure development will be available to the Country.
It will secure for India larger inflows of foreign capital needed to sustain our GDP
growth.
So, its clear that the insurance was in private hands before 1971 and was nationalized in
1972 with all private companies merged into General Insurance Corporation of India as
The parent company with 4 subsidiaries as National Insurance Company Ltd. with Head
Office at Calcutta, New India Assurance Company Ltd. with Head Office at Bombay, Oriental
Insurance Company Ltd. with Head B Office
I at New Delhi and United India Insurance Company
Ltd. with Head Office at Madras. B
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In 1993 the need for Private Insurance Companies and Multinational Companies was felt and
beginning of liberalization process started.
History of United India Insurance Company Limited

United India Insurance Company Limited was incorporated as a Company on 18th
February 1938. General Insurance Business in India was nationalized in 1972. 12 Indian
Insurance Companies, 4 Cooperative Insurance Societies and Indian operations of 5 Foreign
Insurers, besides General Insurance operations of southern region of Life Insurance Corporation
of India were merged with United India Insurance Company Limited. After Nationalization
United India has grown by leaps and bounds and has 18300 work force spread across 1340
offices providing insurance cover to more than 1 Crore policy holders. The Company has variety
of insurance products to provide insurance cover from bullock carts to satellites.
United India has been in the forefront of designing and implementing complex covers to
large customers, as in cases of ONGC Ltd , GMR- Hyderabad International Airport Ltd, Mumbai
International Airport Ltd Tirumala-Tirupati Devasthanam etc. We have been also the pioneer in
taking Insurance to rural masses with large level implementation of Universal Health Insurance
Programme of Government of India & Vijaya Raji Janani Kalyan Yojana ( covering 45 lakhs
women in the state of Madhya Pradesh) , Tsunami Jan Bima Yojana (in 4 states covering 4.59
lakhs of families) , National Livestock Insurance and many such schemes.
About United India Insurance Company

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United India Insurance Company Limited was incorporated as a Company on 18th
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February 1938. General Insurance Business in India was nationalized in 1972. 12 Indian
Insurance Companies, 4 Cooperative Insurance Societies and Indian operations of 5 Foreign
Insurers, besides General Insurance operations of southern region of Life Insurance Corporation
of India were merged with United India Insurance Company Limited. After Nationalization
United India has grown by leaps and bounds and has 18300 work force spread across 1340
offices providing insurance cover to more than 1 Crore policy holders. The Company has variety
of insurance products to provide insurance cover from bullock carts to satellites.
large customers, as in cases of ONGC Ltd , GMR- Hyderabad International Airport Ltd, Mumbai
International Airport Ltd Tirumala-Tirupati Devasthanam etc. We have been also the pioneer in
women in the state of Madhya Pradesh) , Tsunami Jan Bima Yojana (in 4 states covering 4.59
lakhs of families) , National Livestock Insurance and many such schemes.
have also made our presence in more than 200 tier II & III towns and villages through
our innovative Micro Offices.
United India Insurance Company Limited
(Wholly owned by Govt. of India) is a public sector General Insurance Company of

India and one of the top General Insurers in Asia. With the net worth of Rs 4,587 crores as on
September 30, 2011, The company has more than three decades of experience in Non-life
Insurance business. It was formed by the merger of 22 companies, consequent to the
nationalisation of General Insurance companies in India.
About the company

India Insurance Company Limited was incorporated as a Company on 18 February 1938.
General Insurance Business in India was nationalized in 1972. 12 Indian Insurance Companies, 4
Cooperative Insurance Societies and Indian operations of 5 Foreign Insurers, besides General
Insurance operations of southern region of Life Insurance Corporation of India were merged with
United India Insurance Company Limited. After nationalization United India has grown by leaps
and bounds and has 18300 work force spread across 1340 offices providing insurance cover to
more than 1 Crore policy holders. The Company has variety of insurance products to provide
insurance cover from bullock carts to satellites.
large customers, as in cases of ONGC Ltd, GMR- Hyderabad International Airport Ltd, Mumbai
International Airport Ltd Tirumala-Tirupati Devasthanam etc. It has been also the pioneer in
women in the state of Madhya Pradesh), Tsunami Jan Bima Yojana (in 4 states covering 4.59
lakhs of families), National Livestock Insurance and many such schemes.
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Recent developments T.Y
In November 2007, at pune,company's top management launched an enterprised level
transformation project named UNISURGE, under this historic initiative, company identified and
set up 6 themes in order to remain a leader in Indian General Insurance market and also stressed
on the effective use of IT. In Addition, it has been also decided to Create incentive system and
link to rigorous performance management system for the Enhancement of organizational
accountability and to strengthen HR structure of the company.
Recently, on January 11, 2012, The Company (often abberiviated as UIIC), has been
entrusted by The Govt. of Tamil Nadu for implementing the new Comprehensive Health
Insurance Scheme.[1] This scheme would cover 1.34 crore families of Tamil Nadu State and has
an annual outlay of Rs. 750 crore. Tamil Nadu Chief Minister, on the launch, handed over first
quarterly insurance premium installment of Rs. 183.64 crore to 'Milind Kharat, CMD of the
United India Insurance.
Profit and performance

The United India Insurance reported over 50% jump in its profit after tax at Rs 341.07
crore for the first 6 months of the financial year 2011-12. The Chennai-based insurer had
reported a Rs 218 crore profit during the same period last year. Declaring the half-yearly results,
United India Insurance Chairman and Managing Director G Srinivasan told reporters the
company's growth has exceeded that of the industry. He said, "We grew by 27 per cent over the
industry's growth of 23 per cent ... our market share also increased".[2]
During the half-year period ended September 30, 2011, the company collected a total
premium of Rs 4,033 crore, up by 27 per cent from Rs 3,178 crore in the year-ago period.[3] "We
have set a target premium of Rs 8,000 crore this year," he said. On plans for the year 2011-12, he
said the company would focus on retail, micro-small and medium enterprises and rural insurance
segments. "We will focus on agency channel and bancassurance. Agency channel contributed 40
per cent and bancassurance 7 per cent (in the first half of the year). We expect it to increase in the
years to come," he said. Replying to a question, he said the company would bid for the Tamil
Nadu government's health insurance scheme. The investment income of the company for the
first-half of the year stood at over Rs 803 crore as of September 30, 2011.
A steep reduction in management expenses (to 25% from 37%) claims outgo and an
increase in premium income across segments has enabled the company to post 57 percent growth
in net profit for the first half of the current fiscal. United India earned Rs.803 crore from its
investments during the first six months of the 2011-12. The market value of the company's
investments at the end of second quarter stood at Rs.15,803 crore
Future plans
Logging an average business growth of 27 percent in 2011-12, India's leading non-life
insurer United India Insurance Company I Ltd declared that it is targeting a gross premium of
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Rs.10,000 crore in fiscal year 2013-14 and sizeable reduction in underwriting losses - premium
less claims outgo - to Rs.900 crore from last year's figure of Rs.1,760 crore.
The company would focus the retail, and small and medium enterprises (SME) segments
for growth. It is in the process of adding further to its 48,000 agents and also to open around 100
one-man offices across the country. Currently, there are 400 such micro-offices bringing in
around Rs.275 crore premium.
Company is waiting for approval from the insurance regulator IRDA to introduce three
products under the health portfolio
Products
Personal policies
Householder
Personal accident
Mediclaim
Unimedicare
Bhavishya arogya
Commercial policies
Fire insurance
Marine insurance
Motor insurance
Industrial insurance
Liability insurance
Fire insurance in India

Fire insurance business in India is governed by the All India Fire Tariff that lays down the
terms of coverage, the premium rates I the conditions of the fire policy.[16] The fire insurance
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policy has been renamed as "Standard Fire and Special Perils Policy". The risks covered are as
follows:
Dwellings, offices, shops, hospitals:
Industrial, manufacturing risks
Utilities located outside industrial/manufacturing risks
Machinery and accessories
Storage risks outside the compound of industrial risks
Tank farms/gas holders located outside the compound of industrial risks
Perils covered
The following causes of loss are covered:
Fire
Lightning
Explosion, implosion
Aircraft damage
Riot, strike
Terrorism
Marine insurance
covers the loss or damage of ships, cargo, terminals, and any transport or cargo by which
property is transferred, acquired, or held between the points of origin and final destination.
Cargo insurance discussed here is a sub-branch of marine insurance, though Marine

also includes Onshore and Offshore exposed property (container terminals, ports, oil platforms,
pipelines); Hull; Marine Casualty; and Marine Liability.
Vehicle insurance
Vehicle insurance (also known as auto insurance, GAP insurance, car insurance, or
motor insurance) is insurance purchased for cars, trucks, motorcycles, and other road vehicles.
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Its primary use is to provide financial protection against physical damage and/or bodily injury
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resulting from traffic collisions and against liability that could also arise therefrom. The specific
terms of vehicle insurance vary with legal regulations in each region. To a lesser degree vehicle
insurance may additionally offer financial protection against theft of the vehicle and possibly
damage to the vehicle, sustained from things other than traffic collisions.A Sample Vehicle
Insurance Certificate in India
Auto Insurance in India deals with the insurance covers for the loss or damage caused to
the automobile or its parts due to natural and man-made calamities. It provides accident cover
for individual owners of the vehicle while driving and also for passengers and third party legal
liability. There are certain general insurance companies who also offer online insurance service
for the vehicle.
Auto Insurance in India is a compulsory requirement for all new vehicles used whether
for commercial or personal use. The insurance companies have tie-ups with leading automobile
manufacturers. They offer their customers instant auto quotes. Auto premium is determined by a
number of factors and the amount of premium increases with the rise in the price of the vehicle.
The claims of the Auto Insurance in India can be accidental, theft claims or third party claims.
Certain documents are required for claiming Auto Insurance in India, like duly signed claim
form, RC copy of the vehicle, Driving license copy, FIR copy, Original estimate and policy copy.
There are different types of Auto Insurance in India :

Private Car Insurance
In the Auto Insurance in India, Private Car Insurance is the fastest growing sector as it is
compulsory for all the new cars. The amount of premium depends on the make and value of the
car, state where the car is registered and the year of manufacture.
Two Wheeler Insurance
The Two Wheeler Insurance under the Auto Insurance in India covers accidental
insurance for the drivers of the vehicle. The amount of premium depends on the current
showroom price multiplied by the depreciation rate fixed by the Tariff Advisory Committee at
the time of the beginning of policy period.
Commercial Vehicle Insurance
Commercial Vehicle Insurance under the Auto Insurance in India provides cover for all the
vehicles which are not used for personal purposes, like the Trucks and HMVs. The amount of
premium depends on the showroom price of the vehicle at the commencement of the insurance
period, make of the vehicle and the place of registration of the vehicle. The auto insurance
generally includes:
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age by accident, fire, lightning, self ignition, external explosion, burglary, housebreaking
or theft, malicious act.
Liability for third party injury/death, third party property and liability to paid driver
On payment of appropriate additional premium, loss/damage to electrical/electronic

accessories
The auto insurance does not include
Consequential loss, depreciation, mechanical and electrical breakdown, failure or

breakage
When vehicle is used outside the geographical area
War or nuclear perils and drunken driving.
Liability insurance
Liability insurance is a part of the general insurance system of risk financing to protect the
purchaser (the "insured") from the risks of liabilities imposed by lawsuits and similar claims. It protects
the insured in the event he or she is sued for claims that come within the coverage of the insurance policy.
Originally, individuals or companies that faced a common peril, formed a group and created a self-help
fund out of which to pay compensation should any member incur loss (in other words, a mutual insurance
arrangement). The modern system relies on dedicated carriers, usually for-profit, to offer protection
against specified perils in consideration of a premium. Liability insurance is designed to offer specific
protection against third party insurance claims, i.e., payment is not typically made to the insured, but
rather to someone suffering loss who is not a party to the insurance contract. In general, damage caused
intentionally as well as contractual liability are not covered under liability insurance policies. When a
claim is made,[1] the insurance carrier has the duty (and right) to defend the insured. The legal costs of a
defense normally do not affect policy limits unless the policy expressly states otherwise; this default rule
is useful because defense costs tend to soar when cases go to trial.
Corporate Mission
Introducing Ourselves
UI is a leading General Insurance Company.
More than three decades of experience in Non-life Insurance business.

Formed by the merger of 22 companies, consequent to nationalisation of General

Insurance.
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Head Quarters at Chennai.
Corporate Mission
To provide Insurance protection to all.
To ensure customer satisfaction
To function on sound business principles.
To help minimise national waste and to help develop the Indian economy.
United India Insurance Family Medicare Health

Policy
United India Family Medicare health insurance policy takes care of hospitalisation and
medical expenses incurred by individual and family members.
Key Features of United India Insurance Family Medicare Health

Policy
No medical tests required for Sum Insured up to Rs.10 lacs and age up to 45 yrs
Wide cover for treatment against illnesses and accident
Get coverage before, during and after hospitalisation
What is covered in United India Insurance Family Medicare Health

Plan?
Hospital room rent and boarding as well as nursing expenses

Nursing care charges, RMO charges, cost of IV fluids, blood, oxygen, injections and
administration charges BI B
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ICU, diagnostic procedures, operation theatre, anesthesia, blood, oxygen, medicines,
drugs & consumables, surgical appliances, prosthetics, pacemaker and other devices
implanted internally
Expenses of donor (does not cover cost of organ)
All hospitalisation expenses
Also covers many cost of X-ray, Dialysis, Chemotherapy, Radiotherapy, laboratory tests
etc
Cataract, hernia, hysterectomy, cardiac surgery, cancer surgery, brain tumor surgery, hip
replacement, knee joint replacement, sinus syndrome cover restricted to a certain
percentage of sum assured
Pre-hospitalisation for 30 days and post hospitalisation costs for 60 days
Additional Benefits of United India Insurance Family Medicare

Health Plan
No medical up to 45 yrs and Rs. 10 lakh sum assured
Additional cover for Critical illness (optional)
On payment of additional premium, ambulance charges and daily hospital cash benefit
cover available
Eligibility and Restrictions of United India Insurance Family

Medicare Health Policy

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Coverage Amount (in Rs.) 1,00,000 10,00,000
Policy Term (in years) 1 1
Entry Age (in years) 18 80
Family floater policy will cover
An individual and/or his spouse Dependent children
Tax Benefits in United India Insurance Family Medicare Health Policy
Health Insurance premiums paid up to Rs. 15,000 in case of individuals are allowed as a
deduction from the taxable income each year under section 80D of the Income Tax Act. The
exemption is Rs 20,000 for senior citizens.
Exclusions - What is not covered in United India Insurance Family Medicare Health Policy?
Treatments within first 30 days, exceptions accidental case
Pre-existing conditions for first 4 years
Two year exclusion on treatment of cataract, hysterectomy, hernia, hydrocele, benign

prostatic hypertrophy, sinusitis, gall bladder stone removal, age-related osteoarthritis,
osteoporosis etc
HIV, AIDS and related diseases
General weakness, convalescence, self-inflicted or intentional injury
Naturopathy treatment, acupuncture, acupressure and such other therapies
Abuse of drugs, alcohol and intoxicants
Cost of vitamins and tonics unless part of treatment
Non-medical expenses
Cost of contact lens, hearing aids, spectacles, crutches, braces, collars, slings and other
ambulatory devices etc BI
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Conditions caused due to nuclear weapons, war, invasion of foreign army etc
Pregnancy, childbirth-related and voluntary termination of pregnancy
Charges like service charge, admission fees, surcharge levied by hospital
2 yrs exclusion for: cataract, hernia, hysterectomy, Joint Replacement, Hydrocele
Alternate health insurance plans from other insurance companies

HDFC Ergo Health Suraksha
Royal Sundaram Family Health Insurance
New India Assurance Mediclaim
Other Health plans from United India Insurance Family Medicare

Health Policy
United India Gold Health Insurance Plan
United India Platinum Health Insurance Plan
United India Senior Citizen Health Insurance Plan
United India Super Topup Health Insurance Plan
United India Topup Health Insurance Plan
The United India Insurance Company Limited (UIIC) is a general insurance provider. It offers a
range of personal and commercial general insurance products. The company's personal general
insurance product portfolio includes house holders policies, covering building and its contents,
jewelry and valuables, domestic appliances, baggage while on travel, accidental injury causing
death/disability, and liability to third parties; personal accident policies; mediclaim policies; and
uni-Medicare insurance, covering reimbursement of hospitalization expenses of illness/diseases
or injurysu stained.GlobalData's The United India Insurance Company Limited - Strategic
SWOT Analysis Review provides a comprehensive insight into the company's history, corporate
strategy, business structure and operations. The report contains a detailed SWOT analysis,
information on the company's key employees, key competitors and major products and services.
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THE PAST PRESENT AND FUTURES OF

INSURANCE
The Past
The most familiar aspect of employment-based insurances past is its rapid growth in the
first three decades after World War II, the relative stability that followed for about a decade, and
the decline in coverage since the late 1980s. The exemption of employer payments for health
insurance from employees taxable income, combined with substantial efficiency advantages of
group over individual insurance, fueled rapid expansion. By the mid-1950s, 45 percent of the
population had hospital insurance; coverage soared to 77 percent by 1963 Also, by 1963 more
than half of the population had coverage for regular medical expenses, and almost one-fourth had
major medical insurance.
Employment-based coverage reached its peak sometime in the 1980s and has been
declining since then. According to the Employee Benefit Research Institute (EBRI), coverage of
workers ages 1864 fell 2.8 percentage points between 1987 and 1999. Another EBRI series
shows a decline of 3.5 percentage points from 1999 to 2004. Linking the two series indicates a
decline of 6.3 percentage points from 1987 to 2004. Data from the Bureau of Labor Statistics,
derived from establishment surveys, show a decline for full-time workers in the private sector of
fifteen percentage points from 198990 to 2003. Regardless of data source, it appears that the
best days of employment-based insurance are in the past.
More important but somewhat less familiar than the growth and subsequent decline of
employment-based insurance is its transformation from quasi-social insurance to insurance based
on actuarial principles. The latter assumes that insurance is to protect against unpredictable risks
for individuals or subgroups; if risks are predictable, premiums are adjusted for the differential.
Under social insurance, individuals or subgroups who are expected to use more care do not pay a
differential premium; the excess costs are shared collectively. In market terms, those with lower
risks cross-subsidize those with higher risks.
Importance of large U.S. firms.

Employment-based insurance started out as quasi-social insurance. During the early post
World War II period, the principal underwriters were nonprofit Blue Cross and Blue Shield
plans; they typically followed community
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rating in pricing their policies. Thus, there was
considerable cross-subsidization B
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and across workers in the same firm. This cross-subsidization was facilitated by the dominance
of large firms in many of the most important industries of the timefirms such as General
Motors, U.S. Steel, Alcoa, and Dupontthat enjoyed substantial profit opportunities relatively
unconstrained by domestic or foreign competition. In regulated industries, profits were even
more secure, enabling firms such as AT&T, the largest private employer, to offer generous health
insurance benefits to its employees. When health insurance premiums rose, AT&T, a regulated
monopoly with guaranteed profits, could easily pass on the increase to telephone subscribers.
Now AT&T is in a competitive struggle with many other companies, and competition in the auto
industry is driving General Motors close to bankruptcy.
Role of unions.
Strong unions also played a role in the spread of employment-based insurance. In
industries dominated by a few giant firms, unions used their countervailing power to make the
firms share some of their potential profits with workers in the form of high wages and generous
health insurance benefits. In industries comprising many small firms, such as residential
construction or womens clothing manufacturing, unions organized industrywide labor-
management health insurance plans that provided considerable cross-subsidization among firms
and among individual employees within firms by charging uniform premiums regardless of
expected utilization.
Entry of insurance companies.

Large-scale entry of commercial health insurance companies into employment-based
insurance led to a shift from community-rated premiums to those based on actuarial risk. The
quasi-social insurance of community rating could not survive when those groups with below-
average expected utilization were skimmed off by the offer of lower premiums. The actuarial
approach quickly evolved into experience rating, where the premium for a group in any given
year is based on its use of health services in the previous year, adjusted for changes in the cost of
medical care. Larger firms realized that it was cheaper to self-insure, and self-insurance received
an additional boost in 1974 when the Employee Retirement Income Security Act (ERISA)
prohibited states from applying coverage mandates to self-insured plans. The world of
employment-based insurance is now largely one of every firm on its own, and the advent of
health savings accounts (HSAs) reduces cross-subsidization even among employees in the same
firm.
Impact of Medicare and Medicaid.

The third important feature, not much discussed and in our judgment underappreciated, is
the extent to which the survival of employment-based insurance in recent decades has depended
upon the existence of Medicare and Medicaid. When these programs were enacted in 1965, job-
based insurance was the nations principal source of health care coverage; it was clear, however,
that it could never come close to covering the entire population. Many advocates of universal
coverage supported Medicare and Medicaid, arguing that this legislation was just the first step
toward national health insurance. Four decades later, it is obvious that this prediction was far off
the mark. Indeed, instead of hastening the coming of national health insurance, a reasonable case
can be made that the existence of Medicare
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and Medicaid has forestalled it.
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To see why, let us suppose there were no Medicare and Medicaid. The percentage of
uninsured people in 2005 would be much greater than the current 16 percent of the population,
probably more than 25 percent. Moreover, a high proportion would be old, sick, or disabled,
whereas today more than 60 percent of the uninsured are under age thirty-five. Intense pressure
to replace employer coverage with some kind of national health insurance would come from the
uninsured and their relatives, state and local governments that bear the brunt of caring for the
uninsured, and providers of care. More than half of all spending on hospital care and more than
one-third of spending on physician and clinical services is in public programs, with Medicare
and Medicaid providing the bulk of these payments. The importance for employment-based
insurance of Medicare and Medicaid in forestalling the enactment of some form of national
health insurance becomes particularly salient as these programs face financial crises in the
decades ahead.
The Present
Employment-based insurance is now showing its many flaws in sharper relief. The
implicit standard by which we analyze job-based insurance is what we believe could be
accomplished by a system of universal health insurance based on tax-financed premium support,
managed competition, and responsible consumer choice of health plans/delivery systems,
broadly resembling the Federal Employees Health Benefits (FEHB) program.
Administrative costs.
First, the administrative costs of employer insurance are very high. The need for more
than 850 health insurance companies to sell and contract with millions of employers,
underwriting each one, adds greatly to administrative overhead costs. Typically, administrative
costs are of the order of 11 percent of premium, and this does not include the costs to employers
to purchase and manage health care spending, including armies of consultants, benefits
managers, and brokers. To understand how this could be different, consider that Kaiser
Permanente signs one annual contract for the coverage of more than 400,000 employees and
dependents with the California Public Employees Retirement System (CalPERS), and CalPERS
administrative costs are on the order of 0.5 percent of premium.
Allocation of costs.
Second, under job-based health insurance, the costs of health care are passed on to
workers in a way that many people believe is inequitable. In competitive markets, employers
contributions to health insurance typically result in lower wages. Despite substantial increases in
productivity, inflation-adjusted hourly wages have not increased in more than thirty years, and
average weekly earnings have declined.10 Before taxes, the cost of $10,000 per year is borne
approximately equally by a worker making
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$30,000 and one whose salary is many times that.
After taxes, higher-paid workers B
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because they are in higher tax brackets. Many people believe that a fairer system would allocate
costs more in proportion to income because much of the demand for health care arises from
reasons beyond the individuals control, such as genetic predisposition to heart attack or cancer.
Coverage of the population.

Third, employer coverage leaves out many people and cannot provide the basis for
comprehensive coverage of the whole population that is not aged, disabled, or poor. Only 60
percent of firms with 3199 workers offered coverage in 2005. About 20 percent of workers in
firms that offer insurance are not eligible. (Another 17 percent are eligible but do not participate.)
Small employers with mostly low-wage workers often do not offer coverage. People lose their
health insurance when they lose their jobs. Just when people need coverage the most, they are
likely to have a hard time paying for it, as when the breadwinner dies or becomes unable to
work, or a marriage breaks up. Job-based insurance leaves out many self-employed, nonpoor,
and pre-Medicare widows and retirees or forces them to pay a very high price for individual
coverage. The economic insecurity associated with employer coverage is greater than what is
measured by the existence of forty-six million uninsured Americans.
Labor-management relationships.
Fourth, employment-based insurance is an important contributor to labor-management
strife and bankruptcies. Such insurance interferes with labor mobility (job lock) and distorts
labor-market decisions by individuals and firms. As employers attempt to pass on insurance costs
to employees, they are forced to do painful things such as reducing coverage or reducing wages.
And employment-based insurance leads to insecure and unstable coverage. Forty-one million
workers (36 percent of the labor force) work for firms of 100 or fewer workers, much too small
for spreading todays risks.
Inefficiencies of fee-for-service.
Fifth, employment-based insurance has assigned to employers the responsibility to
manage health care purchasing for most Americans. But employers have, at best, weak incentives
to act collectively to increase the efficiency of the health care delivery system. Health care
purchasing is not a part of most employers core competencies. As it has evolved, employer
insurance has helped perpetuate the inefficiencies inherent in the fragmented, uncoordinated fee-
for-service (FFS) small-scale practice model that still accounts for most of health care delivery.
FFS contains incentives for overuse, underuse, and misuse; it pays more to providers who cause
complications or are slow to make a diagnosis. FFS pays for volume, not quality. Employers
have not been able to create a market in which efficient models can compete and take market
share from FFS (the same is true of Medicare).
There are alternatives to wide-access

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FFS, including integrated delivery systems (IDSs)
B
with salaried doctors, in group Tpractices, with incentives for quality and efficiency. Such systems
.Y
can set standards, measure and monitor performance, and take corrective action where
appropriate. Such systems can accept responsibility to manage cost and quality. Also, there are
tiered high-performance networks that separate economical from costly physicians and give
patients incentives to choose the former.
Most employers offer a single carrier; their insurance companies give them incentives to
do so or even require it.14 Because, understandably, people want to be able to choose their
doctors, delivery systems that limit patients choice of doctor are not suitable candidates for the
single-carrier role. Many employers who do offer such alternatives contribute much more (like
80100 percent of the difference) on behalf of the more costly, usually FFS, alternatives. When
employers do this, they do not provide an incentive for employees to choose the economical
alternative, and it is not possible for the efficient systems to gain market share by superior
efficiency. Employers are reluctant to expose employees to full cost differences in tiered
networks. In other words, despite appearances, in most of the employer insurance market,
competition over value for money is ruled out.
An alternative.
The federal government, as employer, and a small minority of other employers offer
employees choices that include IDSs and other alternatives to FFS, and fixed-dollar contributions
so that those who choose less costly systems or providers get to keep the savings.15 Typically, in
these groups, market shares of IDSs are very high. Most employers do not offer such choices.
Nor have they been able to sustain a process of cost-reducing innovation in other ways.
Individual employers, understandably, manage health benefits as a tool in the labor

market, not as part of a coordinated strategy to produce an efficient health care system. One
employer acting alone to create competition is not rewarded with the competitive health care
delivery system that would result if most or all did. The great diversity of interests,
circumstances, and views about health insurance among employers has precluded collective
action to create a market open to competition from efficient systems.
Many of the flaws of employer-based insurance discussed here were also present during
the 1950s1970s when the employer system was growing. They became more apparent,
however, toward the end of the twentieth century and even more troublesome in recent years as
the result of the interaction of rapidly increasing costs of insurance relative to incomes; greater
competitive pressures on U.S. firms, making it more important than ever that they pass these
costs on to employees; and low general inflation, which makes it more difficult for them to do so.
As a result, some employers are dropping coverage, others are scaling back in various ways, and
the percentage of workers with employer-based coverage is declining.
The Future
Absent a crystal ball to predict dramatic economic, political, social, or medical changes
that would affect the future of employerI
Y BB coverage, we discuss three possible trajectories: Job-
T.
based health insurance may flourish, may continue to erode, or may be replaced by an entirely
different system. We consider scenarios that might lead to these results and offer our judgment
regarding their probability and desirability.
Scenarios for flourishing.

Employer mandates.
The most plausible scenario for job-based insurance to flourish would be the enactment
of employer mandates by many large states or the federal government. This would stem erosion,
at least for a while, if all or nearly all employees were covered and if employers that failed to
comply were subject to large penalties. The recently enacted Massachusetts health plans
employer mandate of $295 per year per employee is too small to have any major effect.
Moreover, if the mandates exempt part-time and small-firm workers, the coverage increase will
be small and will probably cause some unemployment. Minimum-wage workers will be
particularly vulnerable because their employers cannot pass on the increased labor costs by
reducing wages.
Individual mandates.
Individual mandates, with income-related subsidies, might also increase employer-based
insurance, at least in the short run. If individuals could satisfy the mandate with employer-based
insurance, those currently without insurance but with incomes too high to receive much or any
subsidy (about 1015 million people) might search more aggressively for jobs with health
benefits instead of purchasing insurance in the more costly individual market.
Income subsidies.
An increase in employer-based insurance, however, is not certain. If low-income workers
who currently have insurance through their employer were eligible for an income subsidy, some
might find it economically advantageous to accept the subsidy to buy individual insurance and
take a better-paying job in a firm that does not offer health insurance. Firms that employ mostly
low-wage, subsidy-eligible workers would have an incentive to drop health insurance altogether.
If the government decided to extend the subsidies to low-income workers with employer
insurance as well as to those who purchase individual insurance, the result could be very costly.
Mandate legislation has its best chance for passage when, as in Massachusetts, it does not call for
any new taxes.
Tax shelters.
Another scenario that might breathe new life into employer-based insurance derives from
its tax-shelter advantages. Suppose there were a large expansion of consumer-directed care based
on high-deductible policies and HSAs. The option to roll over unspent HSA balances to
accumulate tax-free income would be very attractive to high-income workers, who usually have
disproportionate influence within firms and in the political arena. Thus, even if employers
insurance function were to be sharply diminished, employer-based insurance might continue to

flourish for tax reasons.
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Y Bbe invested, and the income earned is tax free. The account,
The money in the HSAsT.can
with earnings, can be rolled over from year to year until age sixty-five. At that point, the worker
or spouse can use the money (tax free) to pay any medical expenses (broadly defined) or
premiums for Medicare or supplemental insurance. Thus, HSAs could be a magnificent tax
shelter for high-income workers, even though its relevance for meeting the health care needs of
low- and average-income workers is dubious.
Because attempts to remove this tax break will encounter fierce resistance, employer
insurance may linger and delay the change to a more efficient, more equitable financing system.
Also, despite HSAs shortcomings as social policy, they, and the accompanying high-deductible
policies, could be a commercial success. The reason is adverse selection. When high deductibles
and low (or no) deductibles exist side by side in a voluntary system, the high-deductible policy
will attract people with below-average expected utilization. Over time, the low- (or no-)
deductible policies will be driven out of the market, much as community-rated policies were
driven out by actuarial-based insurance.
Regardless of the short-run effect, in the long run the flaws of employer-based insurance
are likely to persist. In particular, the inability of employer coverage in its present form to move
the system toward more cost-effective care would invite continued criticism.
Scenarios for continuing erosion.

Employer insurances most likely trajectory is continuing erosion. This scenario, crisply
described by Don Moran, involves thinning out or rolling back of job-based insurance, a
process that is already under way.16 Employers will seek to limit their health insurance premium
contributions to a fixed percentage of total compensation. They could gradually increase
deductibles and coinsurance and pare back or eliminate coverage for outpatient drugs, hearing,
vision, durable medical equipment, and the like. The changes might not expose most employees
to great risks to health or financial ruin. Employers could pay fixed amounts for various services,
leaving patients liable for the balance, with payments keyed to the charges of low-cost providers.
They could adopt tiered high-performance networks, separating high- and low-cost (per
episode) providers and raising the financial penalty for patients using the former. These models
could make the transition to a form of reference pricing in which insurance pays for the cost of
low-cost providers in each category and each region, or for the low-priced drug in a therapeutic
category. Rates of coinsurance might be adjusted selectively for the degree to which a procedure
was thought to be driven by consumers preferences. High front-end cost sharing is likely to
reduce spending on preventive services. The use of cost sharing is constrained by the necessity
for some annual limit on out-of-pocket spending by patients. Raising cost sharing would shift
costs from the healthy to the sick. This might be accompanied by a message that much illness is
the result of unhealthy lifestyle choices.
The social-welfare implications of this scenario are mixed. To the extent that the tax
exemption granted employer-based insurance encourages too much insurance, which, in turn,
encourages too much use of care, a more parsimonious approach to insurance might make the
system more efficient. On the other hand, it would become less equitable in that the burden of
uninsured costs would be felt more heavily by the sick and the poor. If erosion becomes deep
enough, the pressure to replace employer-sponsored
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insurance with a more comprehensive
approach will increase. B
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Scenarios for replacement by universal health insurance.

For more than half a century, employer-based insurance has been the cornerstone of U.S.
health insurance and, despite recent setbacks, still covers almost three of every five Americans.
Despite shortcomings in efficiency and equity, it will not be easily replaced. Not only are tens of
millions of Americans familiar with and satisfied with this arrangement, but numerous
organizations and individuals derive their incomes from it. However, its internal weaknesses or
seismic shifts in the external political or economic environment could eventually result in its
replacement with some form of universal health insurance.
One factor contributing to weakening support for job-based insurance is the difficulty
employers are finding in passing on to workers the increased cost of health care. When the
average annual cost per employee (for a family plan) was $5,000, a 10 percent increase meant
that the employer had to reduce the rest of total compensation by $500. In an era of high general
inflation, this could be done relatively easily by a slightly smaller increase in nominal wages. A
10 percent increase now means an increase of $1,000$2,000 in the cost of a family plan,
depending on location and generosity of coverage. To pass this on to a low-wage worker in an
era of low general inflation requires a cut in the nominal wage, which workers fiercely resist.
The alternatives are only slightly more palatable: an increase in the employees premium
contribution, a larger deductible, or a higher copayment.
Changes in the financial viability of Medicare and Medicaid also threaten the future of
job-based insurance. For forty years these programs have protected employer coverage; without
them, that coverage would probably already have been replaced by some form of universal
health insurance. Now, even optimistic financial projections indicate that Medicare cannot
continue for long in its present form, and the states are increasingly restive and vocal about
financing Medicaid.
Advocates of universal health insurance have predicted the demise of job-based insurance
many times in the past, only to be disappointed. And it could survive again. Part of the problem
is the unwillingness or inability of national health insurance supporters to unite behind a
particular approach. Some favor comprehensive personal mandates; others prefer single payer;
while still others propose a system of universal vouchers, which is a blend of single payer,
managed competition, and consumer-directed care.
Even if 75 percent of the population wanted universal health insurance, employer

coverage would not be replaced if each approach commanded the support of 25 percent and no
compromise was possible. But some external traumatic eventa major war, a depression, large-
scale civil unrest, bankruptcy of some key industries, or a public health crisiscould trigger a
political upheaval that would increase support for universal health insurance and force a
compromise among alternative proposals.
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Rapid erosion of employer coverage combined with
Y B
financial crises at Medicare andT.Medicaid could also precipitate movement to universal health
insurance.
We think that the most likely trajectory in the near term is continued erosion, but it is
possible that this will be offset by mandates and the use of employment-based insurance as a tax
shelter for HSAs. In the long term, we think that the likely and most desirable outcome is
replacement of job-based insurance with some form of universal health insurance that
encompasses choice, competition, and technology assessment to revitalize social insurance while
making care more cost-effective.
United India Insurance has become the largest profitable

insurer
In the last three years, United India Insurance has moved on to become the largest insurer
by profits, from a distant second. The company has reported larger profits and lowest
underwriting losses among public sector players.
Mr G. Srinivasan took over as the Chairman and Managing Director of United India
Insurance three-and-a-half-years ago. Under the soft-spoken persona is a go-getter attitude. In his
earlier stint he headed the Trinidad and Tobago operations of New India Assurance.
He has brought about lot of changes in the company, in terms of technology adoption,
training and mentoring of employees. He credits the employees for the good performance of the
company. BI
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In 2009-10, United India Insurance posted a net profit of Rs 707 crore on a gross
premium income of Rs 5,239 crore.
Mr Srinivasan talked to Business Line about the year gone by, and expects the current
financial year to be a better one for the general insurance industry. United India Insurance
reported a net profit of Rs 333 crore for nine months ending December 31, 2010, while the other
three public insurers posted a loss in this period.
Excerpts from the interview:

How has the company performed in 2010-11?
We plan to close financial year 2010-11 with a premium income of Rs 6,375 crore, a 22
per cent growth over last year. However, profits would be lower compared with the previous
year. The provisioning for wage revision and motor pool losses are expected to dent our profits.
What would be the quantum of provisioning the company will have to make?
The company has to set aside Rs 450 crore on account of wage revision to the employees,
and about Rs 350 crore provisioning due to motor pool losses.
What will be the impact of provisioning for motor pool losses on solvency margin?
Our solvency margin would go down to 3 per cent from 3.5 per cent. But our solvency
margin is much above the mandated 1.3 per cent by the insurance regulator.
The motor pool that was created to absorb the losses arising from third party claims is
running at a deficit. What are your views on the motor pool?
This is precisely the reason the regulator has asked all general insurers to make a
provisioning. Until the premiums on motor third party are fixed, the motor pool should continue.
Two years ago you had mentioned about bringing down underwriting losses. How
successful have you been?
Motor and health insurance contribute close to 65 per cent of the premium income.
These two segments have the highest loss ratios. The loss ratio from third party motor
pool is over 120 per cent. The regulator has asked us to increase the provisioning to 153 per cent.
Only if the premiums on third party motor
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insurance are hiked, will insurers be able to manage
the loss arising out of insuring Tthis B
.Y segment.
What about health insurance?

We have made progress in bringing down our claims on the health portfolio. The claims
have been reduced to 100 per cent from 140 per cent in the group insurance segment. We have
raised the premium rate on individual policies as the claims ratio was 120 per cent. Therefore, we
have been able to bring down the claims ratio below 100 per cent.
We have been focusing on claims management and, therefore, set up audit of third party
administrators. These administrators are intermediaries who settle the claims of the policyholder
on behalf of the insurance company.
Can you elaborate on your efforts in reducing claims?

By creating 20 service hubs, we have been able to reduce the turnaround time to settle
claims to 30 days from 55 days. Currently our claims settlement ratio is about 93 per cent.
How has business re-jigging helped?
We had created verticals large corporate cells which handle big companies' accounts
that bring in close to Rs 600 crore of premium income. We realised reach' is the biggest issue
and focus on strengthening the agency force by giving them training. This channel contributes
nearly 40 per cent of premium income. Banassurance is another channel where we want to tie up
with more banks. We have a tie-up with Vijaya Bank and Tamilnad Mercantile Bank.
How has been the experience of government sponsored insurance schemes?
The claims ratio of Rashtriya Swathya Bima Yojna varies from State to State, the average
loss ratio is 80-90 per cent.
United India Insurance posts 36% growth in 2012-13

United Indian Insurance Company has posted a growth of 36% in profit after tax (PAT) at
Rs 527 core for the fiscal 2012-13, as against Rs 387 crore for the previous year. The company
today announced that the premium has went up 13% to Rs 9,266 crore during the fiscal year,
from Rs 8179 crore during the previous year with an accretion of Rs1087cr.The company was
able to reduce the underwriting losses in the fiscal compared to last fiscal, said Milind Kharat,
Chairman-cum-Managing Director, United India Insurance Co Ltd. The year before last (2011-
12), the underwriting losses were at around Rs 1222 crore while it has came down to Rs 1193
crore in 2012-13.
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B
"We are targeting a premium
T.Y of Rs 11,000 crore with a PAT of Rs 600 crore, in this fiscal
year. We are also looking at starting the second wave of transformation for which the bid to
select consultants has already been floated," said Kharat.He said that the insurance firm has
already implemented recommendations of a first wave of transformation at varioud levels
including the agencies and verticals like motor vehicle claims and bancassurance among
others."We have seen result for the first wave of tranformation, like our market share has gone up
and the growth has become higher than the competitors. Now we have seen that the verticals are
not doing well. So we want to tranform the business," said Kharat.Last time, the transformation
was based on report of global consultant firm Boston consultant for the second wave of
transformation in a month's time.
firms including BCG, Ernst & Young, Deloitte, PricewaterhouseCoopers and McKinsey
are said to be bidding for the consultancy in the second wave, according to sources.The
insurance firm would continue to have focus on retail business through agents and current year it
would add around 530 micro offfices. It would also increase focus on its Information Technology
activities, including expansion of infokiosks and more issuance of policies online.In the total
premium of Rs 9,266 crore, the motor segment consists of 36.58% compared to 36.14% during
the previous fiscal, Health portfolio consists of 28.52% compared to 27.29% and Fire portfolio
of 12.10% as against 11.89%, said S Surenther, director and general manager, United India
Insurance Co Ltd.However, the market share of the company has come down to 13.46% during
2012-13, as against 14.93% during the previous fiscal year.The company is looking at tie up with
vehicle manufacturers and dealers in its motor insurance portfolio, while it would tie up with
banks for the business of small and medium entreprenuers, mainly in fire and engineering
policies.
About the United India Insurance Company Ltd Group

United India Insurance Co. Ltd is a leading public Sector general insurance
company wholly owned by Govt. of India. The United India Insurance company
Ltd. Adjudged one of top three general insurance companies in Asian Region by
Asia insurance review and awarded the best non life insurance company award by
NDTV for the Year 2010. The company is constantly working for achieving the
unique identity in all over India in the General Insurance sector. The company is
posing the strong appearance in theBI
current market buzz
B
T.Y
About United India (UIIC)
UIIC is the second largest General Insurance Company in India.
More than three decades of experience in Non-life Insurance business.
Formed by the merger of 22 companies, consequent to nationalisation of General

Insurance.
Head Quarters at Chennai
Providers of over 100 different types of insurance covers to cater to all sections of
society and economy.
NDTV Profit, a leading English business TV channel, has selected UIIC as the
best in Non-life Insurance Category for their Business Leadership Awards 2010.
UIIC was selected for the award out of the 23 non-life insurers in India.
Having completed Rs 5,239crore (Rs.52 billion) of gross premium in 2009-10, it

plans to cross Rs 6,000 crore (Rs.60 billion) in the current fiscal.
Thousands of ex United Indians are employed in the insurance industry wordwide

especailly middle east
About this Group
This group is for United India Insurance Co employees, alumni and other partners
to share knowledge and experience and get in touch with former colleagues. With
over 20,000 prospective members (current and ex employees) worldwide UIIC is
one of the largest insurance family in the world.
Reinsurance
Reinsurance is insurance that is purchased by an insurance company from
one or more other insurance companies (the "reinsurer") as a means of risk
management, sometimes in practice including tax mitigation and other reasons
described below. The ceding company and the reinsurer enter into a reinsurance
agreement which details the conditions upon which the reinsurer would pay a
share of the claims incurred by the ceding company. The reinsurer is paid a
"reinsurance premium" by the ceding company, which issues insurance policies to

its own policyholders. BI
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The reinsurer may be either a specialist reinsurance company, which only
undertakes reinsurance business, or another insurance company.
For example, assume an insurer sells 1,000 policies, each with a $1 million policy
limit. Theoretically, the insurer could lose $1 million on each policy totaling up to
$1 billion. It may be better to pass some risk to a reinsurer as this will reduce the
ceding company's exposure to risk.
There are two basic methods of reinsurance:

1. Facultative Reinsurance
which is negotiated separately for each insurance policy that is

reinsured. Facultative reinsurance is normally purchased by ceding
companies for individual risks not covered, or insufficiently covered, by
their reinsurance treaties, for amounts in excess of the monetary limits of
their reinsurance treaties and for unusual risks. Underwriting expenses, and
in particular personnel costs, are higher for such business because each risk
is individually underwritten and administered. However as they can
separately evaluate each risk reinsured, the reinsurer's underwriter can price
the contract to more accurately reflect the risks involved. Ultimately, a
facultative certificate is issued by the reinsurance company to the ceding
company reinsuring that one policy.
2. Treaty Reinsurance
Treaty Reinsurance (not to be confused with the Reinsurance Treaty)

means that the ceding company and the reinsurer negotiate and execute a
reinsurance contract. The reinsurer then covers the specified share of more
than one insurance policy issued by the ceding company which come within
the scope of that contract. The reinsurance contract may oblige the reinsurer
to accept reinsurance of all contracts within the scope (known as
"obligatory" reinsurance),BorI it may allow the insurer to choose which risks

it wants to cede, with B
T.Ythe reinsurer obliged to accept such risks (known as
"facultative-obligatory" or "fac oblig" reinsurance). Ultimately, a treaty is
issued by the reinsurance company to the ceding company reinsuring more than
one policy.
There are two main types of treaty reinsurance, proportional and non-
proportional, which are detailed below. Under proportional reinsurance, the
reinsurer's share of the risk is defined for each separate policy, while under non-
proportional reinsurance the reinsurer's liability is based on the aggregate claims
incurred by the ceding office. In the past 30 years there has been a major shift from
proportional to non-proportional reinsurance in the property and casualty fields.
Functions of Reinsurance
Almost all insurance companies have a reinsurance program. The ultimate
goal of that program is to reduce their exposure to loss by passing part of the risk of
loss to a reinsurer or a group of reinsurers. In the United States, insurance is
regulated at the state level, which only allows insurers to issue policies with a
maximum limit of 10% of their surplus (net worth), unless those
policies are reinsured. In other jurisdictions allowance is typically made for

reinsurance when determining statutory required solvency margins.
Risk transfer
With reinsurance, the insurer can issue policies with higher limits than would
otherwise be allowed, thus being able to take on more risk because some of that
risk is now transferred to the reinsurer. The reason for this is the number of insurers
that have suffered significant losses and become financially impaired. Over the
years there has been a tendency for reinsurance to become a science rather than an
art: thus reinsurers have become much more reliant on actuarial models and on
tight review of the companies they are willing to reinsure. They review their
financials closely, examine the experience of the proposed business to be reinsured,
review the underwriters that will write that business, review their rates, and much
more.
Income smoothing
Reinsurance can make an insurance company's results more predictable by
absorbing larger losses and reducing the amount of capital needed to provide
coverage. The risks are diversified, with the reinsurer bearing some of the loss
incurred by the insurance company. The income smoothing comes forward as the
losses of the cedant are essentially limited. This fosters stability in claim payouts
and caps indemnification costs.

I
BB
Surplus relief T.Y
An insurance company's writings are limited by its balance sheet (this test is
known as the solvency margin). When that limit is reached, an insurer can do one
of the following: stop writing new business, increase its capital, or (in the United
States) buy "surplus relief".
Arbitrage
The insurance company may be motivated by arbitrage in purchasing
reinsurance coverage at a lower rate than they charge the insured for the underlying
risk, whatever the class of insurance.
In general, the reinsurer may be able to cover the risk at a lower premium than
the insurer because:
The reinsurer may have some intrinsic cost advantage due to economies of scale or
some other efficiency.
Reinsurers may operate under weaker regulation than their clients. This enables
them to use less capital to cover any risk, and to make less prudent assumptions
when valuing the risk.
Reinsurers may operate under a more favourable tax regime than their clients.
Reinsurers will often have better access to underwriting expertise and to claims
experience data, enabling them to assess the risk more accurately and reduce the
need for contingency margins in pricing the risk
Even if the regulatory standards are the same, the reinsurer may be able to hold
smaller actuarial reserves than the cedant if it thinks the premiums charged by the
cedant are excessively prudent.
The reinsurer may have a more diverse portfolio of assets and especially liabilities
than the cedant. This may create opportunities for hedging that the cedant could
not exploit alone. Depending on the regulations imposed on the reinsurer, this may
mean they can hold fewer assets to cover the risk.
The reinsurer may have a greater risk appetite than the insurer.
Reinsurer's expertise
The insurance company may want to avail itself of the expertise of a reinsurer,
or the reinsurer's ability to set an appropriate premium, in regard to a specific
(specialised) risk. The reinsurer will also wish to apply this expertise to the
underwriting in order to protect their
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own interests.
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Creating a manageable and profitable portfolio of
insured risks
By choosing a particular type of reinsurance method, the insurance company
may be able to create a more balanced and homogeneous portfolio of insured risks.
This would lend greater predictability to the portfolio results on net basis (after
reinsurance) and would be reflected in income smoothing. While income smoothing
is one of the objectives of reinsurance arrangements, the mechanism is by way of
balancing the portfolio.
Types of reinsurance
Proportional
Under proportional reinsurance, one or more reinsurers take a stated
percentage share of each policy that an insurer produces ("writes"). This means that
the reinsurer will receive that stated percentage of the premiums and will pay the
same percentage of claims. In addition, the reinsurer will allow a "ceding
commission" to the insurer to cover the costs incurred by the insurer (marketing,
underwriting, claims etc.).
The arrangement may be "quota share" or "surplus reinsurance" (also known as

surplus of line or variable quota share treaty) or a combination of the two. Under a
quota share arrangement, a fixed percentage (say 75%) of each insurance policy is
reinsured. Under a surplus share arrangement, the ceding company decides on a
"retention limit" - say $100,000. The ceding company retains the full amount of
each risk, with a maximum of $100,000 per policy or per risk, and the balance of
the risk is reinsured.
The ceding company may seek a quota share arrangement for several reasons.
First, they may not have sufficient capital to prudently retain all of the business that
it can sell. For example, it may only be able to offer a total of $100 million in
coverage, but by reinsuring 75% of it, it can sell four times as much.
The ceding company may seek surplus reinsurance simply to limit the losses it
might incur from a small number of large claims as a result of random fluctuations
in experience. In a 9 line surplus treaty the reinsurer would then accept up to
$900,000 (9 lines). So if the insurance company issues a policy for $100,000, they
would keep all of the premiums and losses from that policy. If they issue a
$200,000 policy, they would giveB(cede)
I half of the premiums and losses to the
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reinsurer (1 line each). TheTmaximum automatic underwriting capacity of the
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cedant would be $1,000,000 in this example. (Any policy larger than this would
require facultative reinsurance.)
Non-proportional
Under non-proportional reinsurance the reinsurer only pays out if the total
claims suffered by the insurer in a given period exceed a stated amount, which is
called the "retention" or "priority". For instance the insurer may be prepared to
accept a total loss up to $1 million, and purchases a layer of reinsurance of $4
million in excess of this $1 million. If a loss of $3 million were then to occur, the
insurer would bear $1 million of the loss and would recover $2 million from its
reinsurer. In this example, the insured also retains any excess of loss over $5
million unless it has purchased a further excess layer of reinsurance.
The main forms of non-proportional reinsurance are excess of loss and stop loss.
Excess of loss reinsurance can have three forms - "Per Risk XL" (Working
XL), "Per Occurrence or Per Event XL" (Catastrophe or Cat XL), and "Aggregate
XL". In per risk, the cedant's insurance policy limits are greater than the
reinsurance retention. For example, an insurance company might insure
commercial property risks with policy limits up to $10 million, and then buy per
risk reinsurance of $5 million in excess of $5 million. In this case a loss of $6
million on that policy will result in the recovery of $1 million from the reinsurer.
These contracts usually contain event limits to prevent their misuse as a substitute
for Catastrophe XLs.
In catastrophe excess of loss, the cedant's retention is usually a multiple of the

underlying policy limits, and the reinsurance contract usually contains a two risk
warranty (i.e. they are designed to protect the cedant against catastrophic events
that involve more than one policy, usually very many policies). For example, an
insurance company issues homeowners' policies with limits of up to $500,000 and
then buys catastrophe reinsurance of $22,000,000 in excess of $3,000,000. In that
case, the insurance company would only recover from reinsurers in the event of
multiple policy losses in one event (e.g., hurricane, earthquake, flood).
Aggregate XL affords a frequency protection to the reinsured. For instance if

the company retains $1 million net any one vessel, $5 million annual aggregate
limit in excess of $5m annual aggregate deductible, the cover would equate to 5
total losses (or more partial losses) in excess of 5 total losses (or more partial
losses). Aggregate covers can also be linked to the cedant's gross premium income
during a 12-month period, with limit
BI
and deductible expressed as percentages and
amounts. Such covers are then B
T.Y known as "Stop Loss" contracts.
Risks attaching basis

A basis under which reinsurance is provided for claims arising from policies
commencing during the period to which the reinsurance relates. The insurer knows
there is coverage during the whole policy period even if claims are only discovered
or made later on.
All claims from cedant underlying policies incepting during the period of the
reinsurance contract are covered even if they occur after the expiration date of the
reinsurance contract. Any claims from cedant underlying policies incepting outside
the period of the reinsurance contract are not covered even if they occur during the
period of the reinsurance contract.
Losses occurring basis

A Reinsurance treaty under which all claims occurring during the period of the
contract, irrespective of when the underlying policies incepted, are covered. Any
losses occurring after the contract expiration date are not covered.
As opposed to claims-made or risks attaching contracts. Insurance coverage is

provided for losses occurring in the defined period. This is the usual basis of cover
for short tail business.
Claims-made basis
A policy which covers all claims reported to an insurer within the policy period
irrespective of when they occurred.
Contracts
Most of the above examples concern reinsurance contracts that cover more
than one policy (treaty). Reinsurance can also be purchased on a per policy basis, in
which case it is known as facultative reinsurance. Facultative reinsurance can be
written on either a quota share or excess of loss basis. Facultative reinsurance is
commonly used for large or unusual risks that do not fit within standard reinsurance
treaties due to their exclusions. The term of a facultative agreement coincides with
the term of the policy. Facultative reinsurance is usually purchased by the insurance
underwriter who underwrote the B original
I insurance policy, whereas treaty
B
reinsurance is typically purchased by a senior executive at the insurance company.
T.Y
Reinsurance treaties can either be written on a "continuous" or "term" basis. A

continuous contract has no predetermined end date, but generally either party can
give 90 days notice to cancel or amend the treaty. A term agreement has a built-in
expiration date. It is common for insurers and reinsurers to have long term
relationships that span many years.
Fronting
Sometimes insurance companies wish to offer insurance in jurisdictions
where they are not licensed: for example, an insurer may wish to offer an insurance
programme to a multinational company, to cover property and liability risks in
many countries around the world. In such situations, the insurance company may
find a local insurance company which is authorised in the relevant country, arrange
for the local insurer to issue an insurance policy covering the risks in that country,
and enter into a reinsurance contract with the local insurer to transfer the risks. In
the event of a loss, the policyholder would claim against the local insurer under the
local insurance policy, the local insurer would pay the claim and would claim
reimbursement under the reinsurance contract. Such an arrangement is called
"fronting". Fronting is also sometimes used where an insurance buyer requires its
insurers to have a certain financial strength rating and the prospective insurer does
not satisfy that requirement: the prospective insurer may be able to persuade
another insurer, with the requisite credit rating, to provide the coverage to the
insurance buyer, and to take out reinsurance in respect of the risk. An insurer which
acts as a "fronting insurer" receives a fronting fee for this service to cover
administration and the potential default of the reinsurer. The fronting insurer is
taking a risk in such transactions, because it has an obligation to pay its insurance
claims even if the reinsurer becomes insolvent and fails to reimburse the claims.
Markets
Many reinsurance placements are not placed with a single reinsurer but are
shared between a number of reinsurers. For example a $30,000,000 excess of
$20,000,000 layer may be shared by 30 or more reinsurers. The reinsurer who sets
the terms (premium and contract conditions) for the reinsurance contract is called
the lead reinsurer; the other companies subscribing to the contract are called
following reinsurers. Alternatively, one reinsurer can accept the whole of the
reinsurance and then retrocede it (pass it on in a further reinsurance arrangement) to

other companies BI
B
T.Y
About half of all reinsurance is handled by reinsurance brokers who then place
business with reinsurance companies. The other half is with "direct writing"
reinsurers who have their own sales staff and deal with the ceding companies
directly. In Europe reinsurers write both direct and brokered accounts.
Awards and recognitions of UIIC

The company has won the following awards and
recognitions: BB
I
T.Y
ICRA (Investment Information and Credit Rating Agency) has awarded
UIIC Ltd. with the 'iAAA' ranking for its claims paying capacity for the
third consecutive year. This ranking shows the maximum claims paying
capacity of the company, its powerful base, and its overall financial
efficiency for fulfilling the claims of the policyholders.
PCQuest, one of India,s leading Information Technology Magazines in

India, has chosen the MPLS VPN project of UIIC as one of the most
effectively carried out IT projects in 2007. The information of the project
are available in the PCQuest Magazine June 2007 issue. The MPLS VPN
project of UIIC was chosen following a stringent selection method where
250 IT projects of different companies in India were assessed. Later on, a
panel of judges comprising well-known individuals had chosen the best 21
IT projects put into operation in 2007, in which the MPLS project of United
India Insurance Company ranks significantly.
S&P downgrades PSU non-life firms' public info ratings
MUMBAI: Close on the heels of the domestic currency downgrade, Standard and
Poor's has downgraded the ratings assigned to five state-owned non-life insurance
companies. The international rating agency said it has lowered its public
information (pi) ratings on General Insurance Corporation, National Insurance,
New India Assurance, Oriental Insurance and United India Insurance to double
'Bpi' from triple 'Bpi' minus.
Public information ratings are those that are issued on the basis of information
available in the public domain. A 'pi' rating does not reflect in-depth meetings with
an issuer's management or incorporate material non-public information, and is
therefore based on less comprehensive information.
While the downgrade will hit GIC's plans to increase inward reinsurance
business from other developing countries, New India Assurance which does
business in over 23 countries, would also be affected as the ratings would alter
customer perception of the security the company offers.
On Thursday, Standard & Poor's downgraded long-term and short-term local

currency sovereign credit rating on the Republic of India to double-'B'-plus from
triple-'B'-minus, and to 'B' from 'A-3', respectively. The outlook on the ratings on
India is negative. After opening up of the insurance sector, GIC's role has been
limited to that of a national reinsurer.
BI
Till last year, GIC had played the dual role of
being national reinsurer andT.alsoB
Y holding company of the state-owned non-life
insurers.
The corporation had planned to improve its bottomline by taking advantage of

the hardening global reinsurance markets and providing reinsurance cover to
companies in the third world. However, Standard & Poor's has observed the
hardening of reinsurance markets has weakened the financial strength of Indian
insurers. Because India is a net buyer of reinsurance cover, the general insurance
industry here is less well placed to benefit from the general hardening of premium
rates globally.
"Standard & Poor's will continue examining the current performance of all five
public information-rated Indian general insurance companies to assess how well the
companies are coping in the more adverse global environment," the statement said.
While the Standard & Poor's rating action reflects the health of the Indian
economy and industry, both General Insurance Corporation and New India
Assurance have had their 'A' rating reaffirmed by AM Best international rating
agency for insurance companies.
Major achievements owned by United India Insurance

Company Limited:
United India Insurance Company Limited has been awarded 'iAAA' rating. This
award was given for its insurance claims paying ability by ICRA for the third
consecutive year. The full form of ICRA is Investment Information and Credit
Rating Agency.
To know more about the famous United India Insurance company or its products,
you can directly contact this insurance company with the given contact details-
Award and achievement

United India Insurance Company has been selected as one of the top three
General Insurance companies in Asia by Asia Insurance Review at the 14th
Asia Insurance Industry Awards

BI
held in Bali, Indonesia.
B
T.Y
United India Insurance Co. Ltd. has been awarded the Best Non-Life
Insurance Company by NDTV
For the third consecutive year, United India Insurance Co. Ltd. has been
awarded iAAA rating for its claims paying ability by ICRA (Investment
Information and Credit Rating Agency). This rating signifies companys
strong fundamental, highest claims paying ability, and its overall financial
strength.
PCQuest, one of Indias leading IT magazines, selected MPLS VPN project

of UIIC as one of the best implemented IT projects in the year 2007. The
details can be found in the June 2007 issue of the PCQuest magazine. Also,
the MPLS project of UIIC figures outstandingly in the top 21 IT projects
implemented in 2007.
A.M. Best Affirms Ratings of United India Insurance

Company Limited
A.M. Best Asia-Pacific Limited has affirmed the financial strength rating of
B++ (Good) and issuer credit rating of bbb+ of United India Insurance
Company Limited (United India) (India). The outlook for both ratings is
positive.
The ratings reflect United Indias solid risk-adjusted capitalization, improved

operating performance and strong market profile.
United Indias risk-adjusted capitalization level, as measured by Bests Capital

Adequacy Ratio (BCAR), remains solid and supportive of its ratings. The
companys prospective level of capital and surplus is expected to be sufficient
to support its projected growth in premium income.
I
Y BB
T.
CONCLUSION
The above information we have to concluded that the United India Insurance
are play a vital and important role in service to the people and developing the
economic condition of the country.
United India Insurance is knowledge based Insurance Business which requires

huge skills and expertise. In India Insurance scope is wide to minimize the risk and
cut down unexpected risk which is directly and indirectly effecting on the insurer
person.
United India Insurance company provide various types of products in the

market such life insurance, non-life insurance(General Insurance) which is suitable
and requirement needs depend upon the market.
United India Insurance are growing and changing the policy fastly with the
increase the taste and needs of the people
I
Y BB
T.
BIBLIOGRAPHY
United India Insurance

www.managementparadise.com
www.scribed.com
www.uiic.com
www.brupt.com
www.managementdevelopment.com

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UNITED INDIA INSURANCE

PADMASHRI ANNASAHEB JADHAV

BHARTIYA SAMAJ UNNATI MANDALS

DHAMANKAR NAKA, BHIWANDI, 421305

UNITED INDIA INSURANCE

PADMASHRI ANNASAHEB JADHAV

BHARTIYA SAMAJ UNNATI MANDALS

Anilkumar Ashok Konda

(Prin. U D Kadam) (Dr. Suvarna Rawal) (Asst. Prof. )

Complete Sequence for Project Report

(Note: Page nos. should start from introduction after index)

Ch.1) INSURANCE SECTOR - AN OVERVIEW

With competition, the performance level of individual companies is expected to increase.

The customer will get faster servicing.

It will enhance the savings rate.

Long-term funds for infrastructure development will be available to the Country.

History of United India Insurance Company Limited

About United India Insurance Company

United India Insurance Company Limited

(Wholly owned by Govt. of India) is a public sector General Insurance Company of

About the company

Profit and performance

Fire insurance in India

Dwellings, offices, shops, hospitals:

Industrial, manufacturing risks

Utilities located outside industrial/manufacturing risks

Machinery and accessories

Storage risks outside the compound of industrial risks

Tank farms/gas holders located outside the compound of industrial risks

Cargo insurance discussed here is a sub-branch of marine insurance, though Marine

There are different types of Auto Insurance in India :

Two Wheeler Insurance

Commercial Vehicle Insurance

On payment of appropriate additional premium, loss/damage to electrical/electronic

The auto insurance does not include

Consequential loss, depreciation, mechanical and electrical breakdown, failure or

When vehicle is used outside the geographical area

War or nuclear perils and drunken driving.

UI is a leading General Insurance Company.

More than three decades of experience in Non-life Insurance business.

Formed by the merger of 22 companies, consequent to nationalisation of General

To provide Insurance protection to all.

To ensure customer satisfaction

To function on sound business principles.

United India Insurance Family Medicare Health

Key Features of United India Insurance Family Medicare Health

Wide cover for treatment against illnesses and accident

Get coverage before, during and after hospitalisation

What is covered in United India Insurance Family Medicare Health

Hospital room rent and boarding as well as nursing expenses

Expenses of donor (does not cover cost of organ)

All hospitalisation expenses

Pre-hospitalisation for 30 days and post hospitalisation costs for 60 days

Additional Benefits of United India Insurance Family Medicare

No medical up to 45 yrs and Rs. 10 lakh sum assured

Additional cover for Critical illness (optional)

Eligibility and Restrictions of United India Insurance Family

Medicare Health Policy

Family floater policy will cover

An individual and/or his spouse Dependent children

Tax Benefits in United India Insurance Family Medicare Health Policy

Treatments within first 30 days, exceptions accidental case

Pre-existing conditions for first 4 years