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Insurance is a mechanism that ensure an individual to thrive on adverse consequences by

compensating the individual, his/her loss financially. Insurance may be described as a social device to
reduce or eliminate loss to life and property. Under the plan of insurance, a large number of people
associate themselves by sharing risks attached to individuals. The risks, which can be insured against,
include fire, the pearls of sea. Death and accidents and burglary. Any risks contingent upon these may be
insured against at a premium commensurate with the risk involved. Thus collective bearing of risk is
insurance.

Insurance is a financial service for collecting the savings of the public and providing them with
risk coverage. People exposed to same kind of risk are pooled together. People facing the same risks
contribute to a common fund. In case, any individual who is part of the pool suffers a loss, he is
compensated from the common fund. It also provides capital to the society as the funds accumulated are
invested in productive heads.

³Insurance is a co-operative device to spread the loss caused by a particular risk over a number of
persons, who are exposed to it and who agree to insure themselves against risk´
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In the words of john Magee, ³insurance is a plan by which large number of people associate
themselves and transfer to the shoulders of all, risks that attach to individuals.´

   

In the words of D.S. Hansell, ³Insurance may be defined as a social device providing financial
compensation for the effects of misfortune, the payment being made from the acclimated contributions of
all parties participating in the scheme.´


  

In the words of justice Tindall, ³insurance is a contract in which a sum of money is paid to the
assured as consideration of insurer¶s incurring the risk of paying a large sum a given contingency.´

Life insurance, assumption by an insuring organization of the risk of death of policyholder.

Unlike loss in insurance on property, loss in life insurance is certain to occur and total. The element of
uncertainty is when death will occur. Mortality is subject to the laws of probability, however, and life-
insurance premiums can be calculate from mortality tables, which indicate the average number of people
in each age and gender group that will die each year. A person trained to make such calculations, know as
an actuary, demines the amount of premiums to be collected yearly from each group in order for the
principal and its earned interest to equal the benefits to be paid to the policyholder¶s beneficiaries. The
principal payment required annually constitutes the net premium.
 Example: in a town, there are 2000 persons who are aged 60 and are healthy. It is expected that of
these 20 persons may die during the year. If the economic value of the loss suffered by the family of each
dying persons were taken to be Rs. 50,000, the total loss would work out to Rs. 10,00,000. If each person
of the group contributes Rs. 500 a year, the common fund would be Rs. 10,00,000. This would be enough
to pay Rs. 50,000 to the family of each of the 20 drying persons. Thus the risks in case of 20 persons are
shared by 2000 persons.

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The function of insurance is to protect you against losses you cannot afford. Transferring the risks
of a person, business, or organization² (the insured) ± to an insurance company, or ³insurer ³ does this.
The insurer then reimburses the insured for ³covered´ loss --- i.e.. those losses it pays for under the
policy¶s terms.

As the insurance consumer, you pay an amount of money; called a premium, to the insurer to
transfer the risk. The insurer pools all its premiums into a large fund, and when a policyholder has a loss,
the insurer draws funds from the pool to pay for the loss, Life is full of unexpected events that can create
large financial losses For example, whenever you drive, it is possible that you will have a costly
accident.. risks affect you by causing worry about potential loss and how to deal with the consequences.
Insurance reduces anxiety over a possible loss and absorbs the financial brunt of its consequences.
However, while insurance coverage is essential, how much and what type of insurance people need differ
for every individual. You must decide how much risk you are willing to tolerate without insurance. For
example, benefits for disability policies typically begin after a waiting period of one to six months.
Therefore, you should ensure that you have some form of coverage or a financial resources before the
policy period begins.



 
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Î? Sharing of risks.
Î? pooperative device.
Î? Evaluation of risk.
Î? Payment on happening of a special event.
Î? The amount of payment depends on the nature of losses incurred.

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Insurers provide insurance policies, which are legally binding contracts for which the policy
holder pays insurance premium. Under an insurance contract, insurance companies promise to pay
specified sum contingent on the occurrence of future events. Based upon this, the functions of insurance
may be discussed as follows:

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Insurance provides certainty of payment for the risk of loss. There are uncertainty of
happening of time and amount of loss. Insurance removes all these uncertainty of
happening of time and amount of loss. Insurance removes all these uncertainty and the
assured is given certainty of payment of loss. The insurer charges premium for providing
the said certainty.
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The main function of the insurance is to provide protection against the probable chances
of loss. The insurance guarantees the payment of loss and thus protects the assured from
sufferings.

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When risk takes place, the loss is shared by all the persons who are exposed to the risk.
The share is obtained from each and every insured in the shape of premium without
which the insurer does not guarantee protection.

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The insurance provides capital to the society. The scarcity of capital of the society is
minimized to greater extend with the help of investment of insurance.

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The insurance companies assist financially to the health organization, fire brigade,
educational institutions, and other organizations, which are engaged in preventing the
losses of the masses from death or damages. The insurance joins hands with these
institutions in preventing the losses of the society because the reduction in loss causes
lesser payment to the and so, more saving possible which will assist in reducing the
premium Lesser premium invites more business and more causes lesser share to the
assured. The primary function of insurance is to act as a risk transfer mechanism. Under
this function of insurance, an individual can exchange his uncertainty for certainty.

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Following chart explain types of insurance

 
  

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MARINE INSURANpE FIRE INSURANpE MISpELLANEOUS

INSURANpE

AUTOMIBLE pATTLE pROP MApHINERY THIFT FILM

INSURANpE INSURApE INSURANpE INSURANpE INSURANpE INSURANpE

At one time, we in India had no option but the nationalized insurance companies like LIp, GIp,
etc. Now several private players, often foreign tie-ups, are entering the fray, there are now several
companies selling any one type of insurance, each with its own price structures, coverage, and policy
exclusion
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The term Insurance Marketing refers to the marketing of insurance services with the aim
to create customer and generate profit through customer satisfaction. The insurance marketing focuses on
the formulation of an ideal mix for insurance business so that the insurance organization survives and
thrives in the right perspective.

The insurance business deals in selling services and thereof due weight age in the formulation of
marketing mix for the insurance business is needed. The marketing mix includes sub-mixes of marketing
such as the people, the process, and physical attraction.

The public sector insurance organization have not been formulating and innovating the marketing mix to
cater to the changing needs and requirements and level satisfaction of the users.

Majority of the policy- holders are dissatisfied with service-profile and they often complain regarding the
detonating quality of services. Due to this the foreign insurance and private insurance players are
snatching away the business of the public sector insurance organization.

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A service is an act or performance offered by one party to another. Although the process may be
tied to a physical product, the performance is essentially intangible and does not normally result in
ownership of any of the factors of production.
Services are those separately identifiable, essentially intangible activities which provide want-satisfaction,
and that are not necessarily tied to the sale of a product or another service. To produce a service may or
may not require the use of tangible goods. Services include all economic activities whose output is not a
physical product or construction, is generally consumes at the time it is produced, provides added value in
forms (such as convenience, amusement, comfort or health) that are essentially intangible concerns of its
first purchaser.

As it is said that,

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 The term insurance marketing refers to the marketing of insurance services with the motto of
customer orientation and profit generation. A blending of profit generation and customer satisfaction
gives way to development and expansion. The insurance marketing focuses on the formulation of an idea
mix for the insurance business so that the insurance organizations survive and thrive in right perspective.
The organizations can successfully increase the market share, maximize the profitability and keep on the
process of development with the help of marketing.

In Indian perspective where rural orientation needs a prime attention the insurance marketing may
prove to be device for combating regional imbalance by maintaining the sectoral balance. As an
investment institution, the rural development oriented projects make ways for the transformation of rural
society. It is right to mention that the marketing concept in the insurance business is a matter of recent
origin. The marketing concept in the insurance business is concerned with the expansion of insurance
business in the best interest of the society vis-à-vis the insurance organization . the selection of risks
(product planning), policy writing (customer service) rating or actuarial (pricing ) and agency
management strategy. We cant negate that during the yester decades, there have been considerable
developments in the perception of the customer servicing firms like banking and insurance companies.
The marketing concept in the insurance business focuses on the formulation of marketing mix or a control
over the whole marketing activities that make up an integrated marketing strategy.
In view of the above, we observe the following facts regarding the concepts of insurance
marketing.

? It is a managerial process.
? It is conceptualization of marketing principles.
? It is a process of formulating the marketing mix.
? It is an advice to make possible customer orientation.
? It is another name for marketing professionally.
? It is even a social process that paves avenues for social transformation.
? It is to make possible product attractiveness.
? It is to energise the process of quality up gradation