Insurance industry in India started in 1818 when the first insurance company was formed. Insurance Industry is regulated by the Insurance Regulatory and Development Authority (IRDA). From as early as 1947 to 1972, Insurance industry has gone through tremendous change. With the formation of the regulatory body, passing of the insurance act, and passing of various reforms, this industry has become competitive and continues to attract interest from foreign countries.
Insurance, in general terms refers to the practice of guaranteeing a sum of money to the owner or possessor of a valuable asset for a limited period of time, to cover the cost of any damage to that asset arising out of any contingency.
In the process of insurance there must necessarily be two parties ‘Insurer’ and ‘Insured.’ The insurer is an entity which guarantees to pay in case of any damage to the personal asset, for example the Insurance companies. On the other hand, insured is an individual or an organization whose assets are being covered by the insurer.
The process of insuring any asset comprises of purchasing the insurance policy from any insurance company, agreement on the amount of insurance cover for a particular asset based on its market value and other conditions like usage etc.
Once the asset of an individual or an entity is insured, they are required to pay a nominal amount to the insurance company as an ‘Insurance Premium.’ They are also required to get their insurance policies renewed once they expire after a period of time in order to avail its benefits.
In Insurance industry insurance can be of various types like automobile insurance, fire insurance, life insurance etc. In case of any damage to the life or asset to the insured person due to the reasons mentioned in the policy, he or his representatives are entitled to receive the insurance cover money. This amount is calculated by the insurance agent on the parameters of loss incurred, its type and the amount of premium paid by the insured entity.
Nowadays, insurance is a vital need of the people and organizations to be prepared for any unforeseen and unfortunate event or mishap.
