What is Insurance?

What is Insurance?

The business of insurance is related to the protection of the economic values of assets. Every asset has a value, the asset would have been created through the efforts of the owner. The asset is valuable to the owner, because he expects to get some benefits from it. It is a benefit because it meets some of his needs. The benefit may be an income or in some other form. In the case of a factory or a cow, the product generated by it is sold and income is generated. In the case of a motor car, it provides comfort and convenience in transportation. There is no direct income, both are assets and provide benefits.

Every asset is expected to last for a certain period of time during which it will provide the benefits. After that, the benefit may not be available, there is a life time for a machine in a factory or a cow or a motor car. None of them will last for ever. The owner is aware of this and he can so manage his affairs that by the end of that period or life-time, a substitute is made available. Thus, makes sure that the benefit is not lost. However, the asset may get lost earlier. An accident or some other unfortunate event may destroy it or make it incapable of giving the benefits, an epidemic may kill the low suddenly. In that case, the owner and those enjoying the benefits, therefrom, would be deprived of the benefits. There is an adverse or unpleasant situation. Insurance is a mechanism that helps to reduce the effects of such adverse situations. It promises to pay to owner or beneficiary of the asset, a certain sum of the loss occur.

The great fire of London in 1666, in which More than 13000 houses were lost, gave a boost to insurance and the first five insurance company called the fire office, was started in 1680.

In India insurance began in 1818 with life insurance being transacted by an English Company, the oriental life insurance co. Ltd., the first Indian Insurance Company was the Bombay Mutual Assurance Society Limited, by the Bharat Insurance Company. By the year 1956, when the life insurance business was nationalized and the Life Insurance Corporation of India (LIC) was formed on 1^st September 1956, there were 170 companies and 75 provided fund societies transacting Life Insurance business in India.

By 31.08.2007 sixteen new life insurers had been registered and were transacting life insurance business in India.

History of Insurance:

Insurance has been known to exist in some form or other since 3000 BC. The Chinese Traders, traveling treacherous river rapids would distribute their goods among several vessels, so that the loss from any one vessel being lost, would be partial and shared and not total. The baby lonian traders would agree to pay additional sums to lenders, as the price for writing off the loans, in case of the shipment being stolen. The inhabitants of Rhodes adopted the principle of “General average” whereby, if goods are shipped together, the owners would bear the losses in proportion, if loss occurs, due to jettisoning during distress. The Greeks had started benevolent societies in the late 7^th Century A.D., to take care of funeral and families of members who died.

Company Profile

Industry Leaders:

The leading U.S. – based international insurance and financial services organization. The U.S’s largest underwriter of commercial and industrial insurance.

India’s largest forex earner serving India for 123 years. A family of over 90 diversified companies accounting for 1.9% of India’s GDP and trusted by over 3 million shareholders.

Business Sectors:

Property

Casualty

Marine

Life

Financial Services

Asset

Management

Materials

Engineering

Energy

Chemicals

Consumer Product

Communication and Information

Systems Services

World leaders:

The worlds leading international insurance and financial services organization.

Operations in more than 130 countries and jurisdiction.

AIG member companies serve commercial institutional and individual customers through the most extensive worldwide networks of any insurer.

AIG successful and growing global businesses also include financial services, retirement services and asset management.

History: 1919-1939

1919 C.V. Starr Founds American Asiatic Underwriters.

Asia Life Insurance Company is formed in 1921.

In 1926 AAU American International Underwriters.

1939 Head quarter moves to New York.

In 1940’s AIU enters Japan and Germany after world war II foreign life expansion.

1950’s AIU’s presence includes over 75 offices worldwide.

1960’S Acquisitions basic structure in place for DBG.

1967 AIG established as a holding company. M.R. Green Berg becomes president and CEO.

1984 AIG lists its shares on the New York Stock Exchange.

1990’s Expansion in China Latin America, Israel, Russia, Uzbekistan and Eastern Europe.

1990 financial services begins expansion.

1992 American International Assurance Company to receive an operating license from the Chinese Government.

In 1998 reopening of the bund building.

1999 Acquisition of Sun America Inc.

2001 American General Financial Group.

2005 Martin.J.Sullivan becomes President and CEO.

Corporate Culture:

Integrity

Entrepreneurial

Disciplined Risk Taking.

Innovation

Knowledge.

Local Talent

Responsive Leadership

Service.

Core Values:

Talent Development.

Business Acumen

Direction Setting

Customer focus

Service Excellence

Change leadership

Working across boundaries

TATA AIG Life Insurance Company Ltd., and TATA AIG General Insurance Company Ltd. (Collectively “TATA AIG”) are joint venture companies formed from the TATA group and American International Group Inc. (AIG).

TATA AIG combines the strength and integrity of the TATA group with AIG’s international expertise and financial strength.

The TATA group holds 74 percent stake in the two insurance ventures while AIG holds the balance 26 percent stake.