Insurance is a system whereby individuals and companies that are concerned about potential hazards pay premiums to an insurance company which reimburses them in the event of a loss. The insurer profits by investing the premiums it receives, and from underwriting gains and losses.
Some common forms of insurance cover business risks, automobiles, homes, boats, worker's compensation, and health. Life insurance guarantees payment to the beneficiaries when the insured person dies.
In a broad economic sense, insurance transfers risk from individuals to a larger group, which is better able to pay for losses.
Insurance in some form is as old as historical society. Bottomry contracts were used by merchants of Babylon in 4000 B.C. in which a supplier of capital for a trade venture agreed to cancel the loan if the merchant was robbed.
An extra charged was added to the usual rate of interest as a premium for the creditor, to whom the risk of loss by robbery was transferred. The Code of Hammurabi legalized this practice. The Code also provided for the indemnification, by the state or the temple, of a person whose home was destroyed by fire, and for murder or robbery.
There are many methods of classifying insurance. Distinctions are often made according to the risks covered (personal, property, and liability), the perils covered (accident, sickness, old age, fire, windstorm, riot and civil commotion, crime, and others), the losses covered (expense reimbursement or income replacement), the property covered (such as dwellings, buildings, contents, and money) or the policy term (one year, ten years, or the whole of life).
Insurance contributes a lot to the general economic growth of the society by provides stability to the functioning of process. The insurance industries develop financial institutions and reduce uncertainties by improving financial resources.
Insurance provide safety and security, generates financial resources, promotes economic growth, medical support and mitigates risk etc.
India accounts for 16 percent of the world population, but accounts for approximately 1.68 percent of the world life insurance market (World Insurance Report). India is also far behind world averages in terms of insurance penetration, and insurance density.
The opening up of the insurance to the private sector by the Insurance Regulatory Development Authority (IRDA) Act 2000 has provided immense opportunities for both the public and the private industry for better utilization of insurance facilities.
With this kind of situation prevailing, there has not been much progress in the coverage of our population within this system of insurance; only meagre per cent coverage has been reported. Whether this is due to lack of awareness on part of the public is to be determined.
The Jammu and Kashmir State has a geographical spread of 2, 22,236 Sq. Kms, (including an area of 1, 20,849 SqKms under Pakistan and China), accounting for 7.02% of total area of the country, making it the 6th largest state of the India. With 101.44 lakh population, as per census 2001, it ranks 19th state in India and constitutes approximately 1% of the country’s population. Density (100 persons per sq.km.) places it to be the 31st populous state among the states/UTs of India. The population of the state in 2011 is projected as 125.11 lakh.
The literacy rate of J&K stood at 55.52% with male literacy of 66.6% and female literacy of 43.00% (census 2001) and as per Literacy survey 2008 the literacy rate of J&K has increased to 65.67% with male literacy of 73.30% and female literacy of 57.11%.
Jammu Kashmir has around 4.8 lakh Government employees. Thinking about their risk management is necessary. It is good to know that the Government of Jammu Kashmir is in the process of formulation and finalization ofGroup Mediclaim Insurance Policy but is this group Mediclaim Insurance Policy, making someone an overnight crorepati? Why government chooses a broker (Who will be fed on commission from insurance company), what if a fraud is committed by this broker company? Who will be responsible?
Why government did not entered directly into MoU with insurance company, and asked for discount on Payment of premiums (PoP’s)?
A/C to govt. Order 102-FD of 2017 dated 6/12/2017 issued under seal and signature of Finance Department through GAD Site, which reads: “The Government is in the process of formulation and finalization of Group Mediclaim Insurance Policy for its employees and pensioners which shall interlia be applicable to the employees of all PSUs Autonomous bodies and Universities of the State Government. The autonomous bodies PSUs & universities shall compile and handover the same to the authorized person of M/s Trinity Reinsurance Brokers Pvt. Ltd. who shall be visiting their offices in due course of time.”
It is pertinent to mention here that previously government declaration regarding each employee of Jammu Kashmir government to get group personal accidental insurance of Rs 10 lakh against payment of an yearly premium of Rs 359.90. The government then accorded sanction to direct tie up for the group insurance policies with Oriental Insurance Company Limited
A notification by the Principal Secretary Finance, Navin K Choudhary, reads the policy shall cover staff of the state government including employees of PSUs, autonomous bodies, local bodies, universities, daily workers, casual workers, consolidated workers, contractual and contingent paid workers, adhoc employees and SPOs and a detailed MoU and agreement indicating the terms and conditions and other details were executed between the Government of Jammu Kashmir and Oriental Insurance Company Limited.
The finance department also has sanctioned advance drawal of Rs 12,59,65,000 at the rate of Rs 359.90 per employee under Major Head 8235 for subsequent release of the amount to the Oriental Insurance Company Ltd as premium for the insurance one year from the date of payment of premium.
The question arises why in the case of Mediclaim Insurance Government Involved Non State Entity broker in between which will earn lacks and crores of money? By which method government chooses this broker company and by which method choose insurance companies for these jobs? Is government asking for discounts on payment of premium from these companies?
Public need an answer please.