- History and Development
- Meaning and Definition
- Objectives of General Insurance Corporation
- Functions of General Insurance Corporation
- Role of the General Insurance Corporation
- General Insurance Corporation’s Activities
- Drawbacks of General Insurance Corporation
The Central Government had established the “General Insurance Corporation of India” under the General Insurance Business (Nationalization) Act 1972 for the operation, supervision and control of the nationalized general insurance business. This corporation was established as a government company. Its headquarter was is in Mumbai.
After nationalization, the general insurance business in our country has progressed very rapidly. Insurance business in our country is governed by the provisions of ‘General Insurance Business (Nationalisation) Act 1972’. With a view to complete the process of nationalization of the general insurance business, the Parliament passed the General Insurance Business (Nationalization) Act, 1972 on 20 September 1972. This Act came into force with effect from 1st January, 1973. The General Insurance Business (Nationalisation) Act, 1972 was passed for the fulfillment of the following objectives:
- To acquire and transfer shares of the undertakings of Indian insurance companies and other existing insurers.
- To regulate and control the general insurance business and matters connected therewith and incidental thereto.
- To develop general insurance business.
- Fulfilling financial needs.
- To work for the benefit of the society.
According to Section 2 of the Insurance Act, 1938 –
“General insurance business means the business of fire, marine or miscellaneous insurance whether carried on singly or in combination with one or more of them.”
It is clear from this definition that life insurance All insurance business other than business, which includes fire insurance, marine insurance, motor, accident, aviation, engineering, guarantee insurance and other miscellaneous insurance, is called general insurance business.
Organization The General Insurance Corporation of India is a government holding company, which is separate and inseparable from its four subsidiaries. The relationship of the corporation is to determine the policies in the context of general insurance business. It is exempted from adding the word ‘Limited’ at the end of its name. It has the following four subsidiaries :-
- The National Insurance Company Limited.
- The New India Insurance Company Limited |
- The United India Insurance Company Limited.
- The Oriental Insurance Company Limited.
These four subsidiaries of the General Insurance Corporation of India have the right to carry on the business of general insurance independently. The four subsidiaries of the Corporation are All India Organization. and are engaged in the general insurance business with mutual competition. These companies have been formed under the Companies Act, 1956. These companies are also doing general insurance business in many other countries. Although all the four subsidiaries sell the same insurance policies, they are completely self reliant in their work and methodology. These companies have independent board of directors and their head offices are located at Calcutta, Mumbai, Chennai and New Delhi respectively. The structure of these subsidiaries is as follows:-
The number of offices of the four subsidiaries depends on the business. Divisional office is very important in the organization structure. They have been given full rights to accept business and settle claims within prescribed limits.
Branch offices are mainly responsible for the development and administration of business and service of agents and customers. The four subsidiaries carry on business through their regional offices, divisional offices and branch offices across India. Every company has to work according to the overall policy laid down by the General Insurance Corporation of India. The head office of General Insurance Corporation of India is in Mumbai. The corporation is licensed to do business in all categories of general insurance, though these subsidiaries have to compulsorily comply with the instructions issued by the corporation.
The main objective of the General Insurance Corporation of India is to conduct general insurance business and to supervise and control the business of its four subsidiary insurance companies. , The objectives of General Insurance Corporation can be divided into two parts :-
- Statutory Objectives – The basic functions or objectives of the General Insurance Corporation have been mentioned in Section 18 of the General Insurance (Nationalisation) Act, 1972. According to this section, the corporation has the following objectives:-
- To do insurance work – The General Insurance Corporation can do any work of general insurance if it thinks fit. At present this corporation is doing the work of aviation insurance, crop insurance, accident insurance.
- Advising – This corporation advises its subsidiaries in setting high standards of conduct and behavior of insurance business and also cooperates when required.
- To give advice – This corporation gives advice to its subsidiaries in relation to controlling their expenses including pension and other expenses and in relation to the appropriation of funds.
- Dissemination of Instructions – This corporation also undertakes to disseminate necessary instructions regarding the conduct of insurance business with the aim of promoting healthy competition among its subsidiaries.
- Other Objectives – There are many other objectives of the General Insurance Corporation which have to be fulfilled according to the time and circumstances. These objectives are as follows:-
- To develop and regulate the general insurance business in the country.
- To make the general public aware of general insurance.
- To bring uniformity in the working of various general insurance companies of the country.
- Promotion of non-traditional insurance like animal, agriculture, pumpset etc.
- Developing different types of new insurance papers.
- To provide employment to the educated unemployed and to solve the problem of unemployment.
- To fix reasonable insurance rates and review the existing insurance rates.
- Expansion of insurance service to far flung villages.
- The following are the functions of the General Insurance Corporation –
- To conduct any part of the general insurance business as deemed desirable.
- To contribute and advise subsidiaries in setting high standards of conduct and conduct of general insurance business.
- To issue instructions to subsidiaries regarding the conduct of general insurance business.
- To advise subsidiaries in matters relating to the payment of their commission and control of other expenses.
- To advise subsidiaries in matters relating to the appropriation of their funds.
- To encourage healthy competition among subsidiaries and provide necessary guidance.
- Functions of Subsidiaries – Subsidiaries perform the following functions under the leadership, direction and control of General Insurance Corporation of India:-
- To conduct general insurance business under its Councilor’s Memorandum, Councilor’s Articles and Rules made by the Central Government.
- To develop general insurance business for the best interests of the community.
- To act on the basis of business principles as far as possible and follow the directions issued by the Corporation.
- To enter into reinsurance treaties to protect its interests, if any, made by the Corporation and the Central Government.
The General Insurance Corporation of India has been established to supervise, control, develop and guide the general insurance business. Its role lies in making continuous efforts towards welfare and progress. The role of the corporation can be expressed under the following heads:-
- As an insurer – The corporation has been established to carry on the general insurance business. Section 18 of the General Insurance Business (Nationalization) Act, 1972 recognizes the Corporation as an insurer and empowers it to carry on any part of the general insurance business as deemed desirable. The corporation as an insurer has issued a variety of policies. The following can be included in the corporation’s own insurance plans:-
- Medical insurance plan.
- ospitalization and Medical Insurance Policy.
- Personal accident insurance policy.
- Social Security Scheme.
- Composite Package Insurance Scheme.
- It is clear that the first important role of the corporation is that of an insurer which is playing well. The corporation also carries on reinsurance business as an insurer. Thus the corporation plays an important role of insurer and reinsurer.
- As Controller – General Insurance Corporation is entrusted with the role of controlling the business carried on by the subsidiaries. The corporation can fulfill its controlling role by setting standards related to business conduct for the subsidiaries, taking policy decisions and issuing desired instructions from time to time. The corporation also acts as a controller to maintain healthy competition among its subsidiaries.
- As Guiding Consultant and Coordinator – This corporation gives necessary guidance and advice in the conduct of business of its subsidiaries and works to maintain coordination between them. The provisions of Section 18 of the General Insurance Business (Nationalization) Act, 1972 lay down that the functions of the Corporation are assistance, assistance and advice in matters of rendering efficient services to the holders of general insurance policies, their commission payments to companies, matters relating to control of other expenses and To advise in matters relating to the appropriation of funds.
- As a welfare organization – General Insurance Corporation is helping the insured in the field of general insurance business in the protection of their property. The scope of work of the corporation is becoming very wide. Industrialists, businessmen, farmers etc. are benefiting from the services of the corporation. For the welfare of the villagers, the corporation has started many insurance policies. Thousands of lakhs of people are getting employment due to the works of the corporation.
- As a Development Agency – The General Insurance Corporation of India is the monopoly agency for the development of the general insurance business in the country. It plays an important role in the development of general insurance business as per the policies and directions of the Central Government. The corporation has played an important role in the development of the business of general insurance in rural areas. The Corporation has also made commendable progress in the development of overseas general insurance business.
- As an Investor – Like the Life Insurance Corporation, the General Insurance Corporation is also playing the role of a very big investor. The corporation is investing crores of rupees in the planned development programs of the national government and the plans of nation building. It is also appropriating the amount of Rs.
While the General Insurance Corporation has played an important role in the development of another general insurance business, it has also made a great contribution to the social and economic development of the country. Following are the activities of General Insurance Corporation :-
- Development of Insurance – The General Insurance Corporation with the help of its subsidiaries and business associations has started many new insurances according to the needs of the urban public and business organizations, due to which business organizations have started feeling very safe. The main insured in this is as follows :-
- Some insurance policies have been introduced with new risks in fire insurance. For example, insurance is being issued to protect against the risks of riots and strikes, explosions, earthquakes, storms etc.
- Marine and construction insurance to provide protection against marine hazards.
- Accident insurance of professional persons.
- Insurance letter for television, cycle etc.
- Foreign travel friend insured.
- Pleasant Travel Insurance .
- Relationship with customers :- Grievance Cells have been established in all the subsidiaries to establish good relationship with the customers. These cells have been set up in the headquarters, regional divisional offices and branch offices of all the companies. The purpose of setting up these cells is to listen and solve the problems of the insured people. The Corporation has made the following efforts to resolve the problems of the customers.
- Simplified forms and claims process for settlement of individual insurance claims.
- Efforts have been made to settle customer disputes through Lok Adalats at the earliest.
- Task Forces have been set up in the field offices which contribute in speedy settlement of claims.
- Customer Service Seminars have been organized for the benefit of the customers.
- Contribution to the growth of general insurance business – Since the formation of the General Insurance Corporation, there has been a growth in the general insurance business in the country. The Corporation has developed new insurance, fixed premium rates on par and developed a spirit of healthy competition. As a result of all this, the general insurance business has grown in the country.
- Contribution to the development of subsidiaries – General Insurance Corporation has made full contribution in the development of its subsidiaries for the development of general insurance business. The corporation keeps giving directions to these four companies as per the need and provides important assistance in issuing new insurance papers, setting uniform insurance premium and arranging for rehabilitation. These companies have achieved many important achievements under the control and direction of the corporation.
- Operation of specific schemes for rural areas – Keeping in mind the need of rural areas of India, General Insurance Corporation of India has operated some specific insurance schemes, some of these major schemes are as follows :-
- Livestock Insurance – The General Insurance Corporation along with its subsidiaries has developed a viable scheme of Livestock Insurance. Under these plans, all the four subsidiary insurance companies have accepted the same premium rates. As a result, livestock insurance is becoming increasingly popular.
- Comprehensive insurance cover – The General Insurance Corporation has implemented such an insurance policy, through which the craftsmen, village and cottage industries have been given protection. Through this insurance, protection is provided against the risks of fire, strike, riots, earthquake etc.
- Insurance cover for primitives and tribes – A new insurance policy has been started for primitive and tribes. Through this insurance, the people of the primitive castes are insured for their huts, cottage industries, personal accident and hospital charges etc.
- Slum Insurance Policy – General Insurance Corporation has started Slum Insurance cover to protect small marginal farmers and poor people. Through this insurance, the security of the hut and the goods kept in the hut has been arranged at concessional rates. This insurance provides protection against the risks of riot, strike, damage, storm, earthquake, etc. of the hut and the goods kept in it.
- Other new insurance cover – Insured has been introduced for the risks arising during re-excavation of wells. An insurance cover has also been started to provide protection against loss of fish. A new insurance cover has been started for liability insurance after Bhopal gas accident. Apart from this, now plantation and floriculture insurance has also been started.
- Investment in social upliftment activities – Insurance Corporation and its subsidiaries have also made great contribution in the work of social upliftment. The corporation has made significant contribution in providing housing facilities, arrangement of roads, drains, water, electricity etc.
- New insurance for urban and rural needs – Now some new types of insurance have also been started which is very useful for meeting urban and rural needs. Prominent among these insurers are: – New insurance policy of medical insurance, insurance against natural calamities, commodity and public liability insurance, cottage insurance etc.
- Special insurance cover for women and girl child – Two insurers have been prepared for women from poor and backward classes. Under the first Raj Rajeshwari Mahila Kalyan Yojna and the second Bhagyashree Child Welfare Scheme Raj Rajeshwari Mahila Kalyan Yojana, there is a provision of financial assistance in case of disability of the insured woman. Apart from this, if the husband of the insured woman dies in an accident, then financial assistance of Rs. 25,000 is given to that woman.
- Joint Venture in Countries – General Insurance Corporation has entered into joint venture agreements with companies of two countries. Joint venture agreement was signed with United Oriental Assurance’ SDNVHD in Malaysia. General Insurance Corporation and its four subsidiaries together have bought 21% shares of this company. This company does all types of insurance business.
- Reinsurance – The Corporation has arranged reinsurance for all the four subsidiaries together. As a result, the reinsurance potential available in India is being fully utilized, as well as the facility of reinsurance is also being made available at low rates and good terms from the international market due to the four companies contracting together.
- Employment – General insurance business has also played an important role in providing employment. Thousands of lakhs of people have got direct employment from the general insurance business of the country. Simultaneously, the Insurance Corporation pays a huge amount every year as taxes and contributes to the national treasury.
- Contribution to Insurance Education and Training – The General Insurance Corporation has established the National Insurance Academy to expand and develop education in the country. This academy has been established to perform the following functions –
- To organize training programs for senior officers of Life Insurance Corporation, General Insurance Corporation and its subsidiaries.
- To organize training programs to deal with specific managerial problems arising in the insurance industry.
- To conduct research in selected areas. General Insurance Corporation and its subsidiaries together organize training programs in collaboration with other institutions. Training is also arranged for inspectors and administrative officers.
- Sahyog Nidhi – Corporation and its subsidiaries together have created GIC. Sahayog Nidhi has been established which has been registered under the Indian Repatriation Act. So far many schemes have been made in this fund. With this cooperation fund, many small investors of the country are getting the facility to invest their money. It is clear from the above discussion that there are various activities of the General Insurance Corporation of India which have great importance in the personal social and economic life of the general public.
There are various activities of the General Insurance Corporation of India which have great importance in life. The Corporation has satisfactorily conducted and controlled the general insurance business. In fulfilling the objectives of nationalization of insurance business, the Corporation has achieved immense success. The interests of the insured are protected. Insurance facilities have been made available on a large scale in rural areas also. But still the following shortcomings have been visible in the functioning of the corporation:-
- Difficulties to the customers – The corporation has established a large number of divisional and branch offices and is trying to provide general insurance services at door-to-door. But with the opening of new offices, sufficient number of employees have not been appointed. As a result the customers are facing lot of difficulties. Insurance letters are not being issued on time. Tables are being submitted with delay, and sometimes remain unverified even till the expiry of the policy period.
- Non-adjustment of premiums promptly – The Corporation has failed to make prompt adjustment of premiums even after the declarations have been submitted by the insured.
- Conflict of interest – The critics are of the view that the Corporation is focusing on its own interests and neglecting the interests of the Corporation’s employees, policy holders and society.
- Absence of Standard Policies – In motor insurance, the standard policy is published in advance. But standard insurance letters have not been introduced for insurance letters in fire, marine and miscellaneous insurance, which delays the issuance of insurers.
The efficiency and net profit of the corporation and its subsidiaries are continuously decreasing, that is why the government has taken many steps for the privatization of general insurance business. If the corporation and its subsidiaries are not successful in fulfilling their objectives in time, then the corporation and its subsidiaries may face difficulty in standing in front of the competition of the private sector, so its shortcomings should be removed for the success of the corporation.
- Appointment of Adequate Staff – The Corporation has established a large number of Divisional and Branch Offices and is striving to provide door-to-door general insurance services. appointments should be made. To solve the problems of the customers.
- Preparation of Standard Letters of Insurance – The Corporation should introduce Standard Certificates of Insurance for insurance in fire, marine and miscellaneous insurances. The corporation should prepare and publish the standard insurance letter for all types of general insurances in advance.
- Troubleshooting – In order to remove the difficulties faced by the customers, the Corporation should take computer services for issuance of policies. Only then the policies issued by the corporation can be issued in time. Tables can also be submitted on time by computer services and will not remain unverified.
- Recovery of premiums – The corporation should focus on timely recovery of premiums so that there is no economic loss.
- Customer Cell – Customer cells should be opened to help the insurance holders to get all the essential services.
- Prompt Redressal of Grievances – Redressal of the grievances of the insured should be given immediate attention and the process of payment of insurance claims should be made more convenient and faster.
- Other Suggestions –
- Special efforts should be made to expand insurance in rural areas.
- The premium rates should be optimum to attract the insured.
- The corporation should take appropriate steps to prevent moral hazards.
- Suitable insurance cover should be prepared for the economically weaker sections.
- The corporation should allow free and fair commercial competition among its four subsidiaries.
- Must be interested in research work.
- Social security insurance schemes should be implemented more effectively.