HEALTH INSURANCE AND IT HISTORY (1).pptx

INTRODUCTION OF INSURANCE AND ITS HISTORY

1. UNIT 1 INTRODUCTION OF INSURANCE 1

2. Health insurance is a type of insurance that covers the cost of medical and surgical expenses incurred by an insured person. It provides financial protection against unexpected medical expenses, such as hospitalization, doctor's visits, prescription drugs, and diagnostic tests. Health insurance policies vary widely in terms of coverage, premiums, deductibles, co-payments, and other factors. In many countries, including the United States, health insurance is often provided by employers as a benefit to their employees. In other countries, such as Canada and the United Kingdom, health care is provided by the government through a nationalized health care system. Private health insurance is also available in many countries, which can be purchased by individuals or families to supplement or replace government-provided health care. 2

3. DEFINITION OF HEALTH INSURANCE It is one of the methods of financing the healthcare “The reduction or elimination of the uncertain risk of loss for the individual or the household by combining a larger number of similarly exposed individuals or households who are included in a common fund that makes up the loss caused to any one member” # ILO (International labour organization)- 1996 3

4. EVOLUTION OF INSURANCE SECTOR IN INDIA 1818 – Advent of life insurance business in India. Oriental Life Insurance company setup in Calcutta. It failed in 1834. 1829 – Madras Equitable started life insurance business in Madras Presidency. 1870 – British Insurance Act was enacted. This era was dominated by foreign insurance offices namely Albert life assurance, Royal Insurance, London Globe insurance. 4

5. 1912 – Indian Life Assurance Companies Act 1914 – Government of India started publishing returns of Insurance companies in India . Government started collecting statistical information about both life and non-life business transacted in India by Indian and foreign insurers. 1938 – Insurance Act . The Act had comprehensive provisions for effective control over the activities of insurers 1950 – Insurance Amendment Act which abolished Principal agencies. This era saw huge competition among large number of insurance companies. Also, there were allegations of corrupt practices. Hence, GoI decided to nationalise insurance business. 5

6. 1956- Life Insurance sector nationalised and Life Insurance Corporation (LIC) came into existence. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies -245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s. 1957 – General Insurance Council (GIC) was formed to frame a code of conduct for ensuring fair conduct and sound business practices. 1972 – General Insurance Business( Nationalization) Act 1973 – 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd. , New India Assurance Company Ltd, Oriental Insurance company Ltd and United India Insurance Ltd. 6

7. PROCESS OF RE-OPENING The process of reopening of the sector had begun in the early 1990s. In 1993, The government of India set up a committee under the chairmanship of Mr R N Malhotra, former governor of RBI, to propose recommendations for reforms in the insurance sector. 1994 – Malhotra Committee recommended private sector to enter the insurance industry. They stated that foreign companies be allowed to enter by floating Indian companies, preferably a joint venture with Indian partners 7

8. INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (IRDA) 1999 – IRDA was constituted as an autonomous body to regulate and develop the insurance sector. 2000 – the IRDA was incorporated as a statutory body. The key objective of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums , while ensuring the financial security of the insurance market. 8

9. THE DAWN OF NEW MILLENIUM August 2000 – The IRDA opened the market for foreign companies to register themselves with allowed ownership of up to 26%. December 2000 – the subsidiaries of the GIC of India were restructured as independent companies and at the same time GIC was converted into a national re-insurer. 9