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									                                                                                                Global Reinsurance Solutions

                                                    GIC ReNEWS
                                                                                                                       Newsletter of GIC Re

Your Partner in Risk

                                                                                                           ISSUE 03       VOLUME 01       June 2008
                                                                                                                        For Private Circulation Only

           I S S U E 03    VOLUME 1        Jun e 20 08
                                                          Editor’s Thoughts...
                                                          To keep with the growing times, and sustain the growth rate, change
                                                          and adaptation become a constant feature for an organization.
                                                          Management Consultants Deloitte have recommended a business
                                                          strategy and internal restructuring plan which will help put GIC Re on a
                                                          rapid growth path in near future.
Moscow International Reinsurance Congress March
                                                          GIC Re is reaping the benefits of implementing ERP solutions SAP
                                                          with its inherent best pratices and strong Business Warehouse features.
                                                          Other technology initiatives like DMS will be enabling factors for growth.

                                                          The Indian insurance industry had seen rapid development under the
                                                          leadership of CS Rao who laid down office as Insurance Regulator in
                                                          April. Mr. J Hari Narayan the successor has an onerous task on his
                                                          hand at this juncture when the de-tarification has thrown the market
                                                          players into an intense competition. It is imperative for the players to
                                                          develop “ underwriting “ skills based on empirical and actuarial skills,
                                                          and build up database. GIC Re pledges to strengthen the hands of the
2nd MENA CEO Insurance Summit, Dubai, June 2008           regulator in playing the “development ” role for the industry.

                                                          Readers would be happy to go through write ups on some of the topical
                                                          subjects like oil and petroleum, GIC Re & Hannover Re Tie up on Life
                                                          reinsurance in India, participation of GIC Re in meetings, seminars
                                                          and conferences as also regular features such as Employees Corner
                                                          and Industry News.

                                                          Awaiting your feedback as usual

Exchange of Documents after signing Cooperation           Raghunath
Agreement between GIC Re and Hannover Re

                                                         Editor’s Thoughts            ................ 1     Parliamentary Committee on
                                                                                                             Official Language .....................11
                                                         Co-operation Agreement .............. 2
                                                                                                             Employees Corner ......................12
                                                         Industry News              .................. 4
                                                                                                             Focus                  ..........................13
                                                         India Briefing at Llyod’s London..... 6

                                                                                                             Recipe         ...................................14
                                                         Aviation Underwriting ................... 8         Glossary .....................................15
                                                         Crude Oil              ......................10     Feedback .....................................16
GIC Re meeting with UAE market at Dubai June 2008
GIC Re NEWS                                                                            ISSUE 03       VOLUME 01

                                                                                                                        June 2008

                                                                  GIC Re signs
                                                              Cooperation Agreement
                                                                with Hannover Re
                                                              GIC Re and Hannover Re, the 5th largest global life reinsurance
                                                              company have come together to develop life reinsurance
                           From the CMD’s Desk                business in India. At a glittering ceremony held in Mumbai on
                                                                                                     the 19th of June 2008 in
  Globalisation and diversification are the order of the                                             the presence of the
  day. No longer can an organisation remain bound to
                                                                                                     Hon’ble Union Minister of
  its ancient moorings and aspire to keep pace with the
                                                                                                     State for Finance, Mr.
  fast changing world. Insurance sector in the country
                                                                                                     Pawan Kumar Bansal,
  has also undergone a sea change since liberalisation
  in 2000 and is still evolving.                                                                     the two reinsurers signed
                                                                                                     a          Cooperation
  Subsequently the sector has been witness to several
  reforms. Detariffication, development and marketing
  of new products both in life and non-life areas and         Union Minister of State for Finance
                                                                                                   The goal of the agreement
  reduction of obligatory cessions to GIC Re are some         Mr. Pawan Kumar Bansal addresses the of cooperation, which is
  of them. Adaptation to the changing environment is          gathering.                           initially planned for a
  the key to survival and progress. We, at GIC Re are         period of five years, is to jointly build up a profitable life
  also adapting to the changing environment.                  reinsurance portfolio with strong growth potential in the highly
  The Indian life insurance industry is today on a rapid      promising Indian market. The two organisations will work for
  growth path. Today we have 19 life insurance compa-         joint development, marketing and underwriting of life reinsurance
  nies in the country compared to just one in the pre-        business in India. The agreement signing ceremony was graced
  liberalisation days. The awareness and penetration          by His Excellency Mr. Walter Stechel, Consul-General of
  about life insurance has shown remarkable upswing.          Germany in Mumbai.
  However, life reinsurance is concentrated in the hands
                                                              Mr. M Ramaprasad, General Manager, GIC Re and Mr. Wolf S
  of few reinsurers. To participate in the growing market
  of life reinsurance after our excellent track-record in     Becke, CEO, Hannover Life Re signed the agreement and
  the area of non-life reinsurance, we have signed an         exchanged the documents.
  agreement of cooperation with the German reinsurer,
  Hannover Re for the development of life reinsurance
  in the Indian market.
  The Indian market has large expectations from us for
  life reinsurance support and I have large expectations
  from you, colleagues to do justice to the expectations
  of the industry. Starting with the upgradation of repre-
  sentative offices abroad into full fledged branches, this
  agreement of cooperation with Hannover Re is yet
  another step in our journey of globalisation and diver-
  sification. There will be more such steps in the days
  ahead to enable us to emerge as a preferred reinsurer
  not only in SAARC and Africa but also globally.             Yogesh Lohiya, Chairman cum Managing Director, GIC Re welcomes
                                                              the distinguished gathering. Seated on the dais (L-R) G. Prabhakara,
                                                              Member (Life) IRDA, Union Minister of State for Finance P K Bansal,
  Yogesh Lohiya                                               Walter Stechel, Counsel General of Germany, Wilhelm Zeller, CEO
                                                              Hannover Re, Wolfe S Becke, CEO Hannover Life Re.                                                                                                                    2
GIC Re NEWS                                                                                   ISSUE 03      VOLUME 01

                                                                                                                            June 2008

                                         Earlier Mr. Bansal
                                         addressing             the
                                         distinguished gathering
                                         said that this agreement
                                         was one step further in the
                                         direction of GIC Re
                                         moving on to become a
                                         global      reinsurance
Walter Stechel, Counsel General of
                                  Mr. G. Prabhakara,
Germany addresses the audience
                                  Member (Life), Insurance
Regulatory & Development Authority of India (IRDA) was the
guest of Honour at the agreement signing ceremony. He                  M Ramaprasad, General Manager GIC Re and Wolfe S Becke, CEO
                                                                       Hannover Re sign the Cooperation Agreement.
congratulated GIC Re on reaching this agreement.

Mr. Stechel also spoke on the occasion and said the                    This initiative also augurs well for the Indian life insurance
Agreement of Cooperation was an indication of the growing              industry which has seen an upward growth curve since
relations between Germany and India.                                   liberalization of the sector in 2001 with the new life business
                                                                       premium figure at Rs.93,000 crores, an increase of 23% over
GIC Re Chairman cum Managing Director Mr. Yogesh Lohiya
                                                                       the previous year. This exciting market promises to be more
said the synergy arising from the agreement of cooperation
                                                                       happening in times ahead with the entry of this new partnership.
would provide the Indian life Insurance industry with a competent
global life reinsurance alternative, whilst developing this            The agreement signing ceremony was attended by a large
expertise within the country.                                          number of CEOs, Chairmen and senior officials of life and non-
                                                                       life insurance companies of the country. Media representatives
Mr. Becke said that with this agreement GIC Re - which has
                                                                       from the print and electronic media were also
its roots in non-life reinsurance - will profit from the German
                                                                       present on the occasion. The event received
reinsurer’s long-standing expertise in life reinsurance. The two
                                                                       an excellent coverage in the national and
companies will operate in the Indian market as equal partners
                                                                       international press.
and will underscore their cooperation with joint marketing
activities.                                                                                             ...Anoop Khanna

                                                                         GIC Re and Life Reinsurance
                                                                         GIC Re has been carrying out reinsurance business
                                                                         since its inception in 1972. It has been the dominant
                                                                         reinsurer in the Indian market in the non-life sector.
                                                                         Subsequent to liberalization of the insurance industry in
                                                                         2001, GIC Re was designated as the national reinsurer
                                                                         and now carries on reinsurance business alone. Also,
                                                                         GIC Re had to discontinue its direct business operations
                                                                         in core sectors like Aviation and Agriculture. Hence, new
                                                                         areas were explored and in 2002 a life reinsurance
                                                                         department was set up in GIC Re. The new department
                                                                         began operations in 2003. In the subsequent years, as
                                                                         there were globally more experienced players in the
                                                                         market, significant market share could not be garnered.
                                                                         The reinsurance premium outgo from the life insurance
                                                                         market in the country is around Rs 200 crores for the
Yogesh Lohiya (right) in conversation with Walter Stechel, Counsel
                                                                         year 2006-07 and GIC Re’s share is around 2%.
General of Germany (centre) and Wilhelm Zeller, CEO Hannover Re

GIC Re NEWS                                                                                ISSUE 03      VOLUME 01

                                                                                                 INDUSTRY NEWS
                                                                                                                         June 2008

Indian Insurance Industry - April - June 2008
India Rising Story has taken a beating,       investment cap in insurance should           (IRDA) to operate in the life insurance
or so it seems. Industrial production is      lead to still more significant market        space. The company is a joint venture
on a slide and surging inflation is a         share being captured by private sector.      between Aegon, a global life insurance
cause for concern. Crude oil crossing         Business Written 2007-08-Life                and pension company and Religare, one
USD 140 and heading northwards is not         Insurance:                                   of India’s leading integrated financial
going to make things easy for a country       As regards life insurance business, for      services institutions.
which depends significantly on oil            the year 2007-08, based on unaudited         Market Development:
imports. Nonetheless, it needs to be          results for first year of premium            The insurance penetration in corporate
remembered that the India Story is a          underwritten, premium underwritten grew      segment is already good and unlikely
long-term story and such hiccups can          by 23.3% year on year from INR               to offer significant growth opportunities.
be expected. Index of Industrial              75,406.52 crore to INR 92,988.70 crore.      The insurers’ strategies therefore have
production which fared badly during the       LIC registered a growth of 5.8% with         tended to shift to underserved
first quarter of 2008 appears to have         market share of 63.6% while private          segments. Management guru C K
recovered some ground in April but one        sector grew at 73.6% on a relatively         Prahlad in his popular book, ‘The
has to wait longer to confirm the trend       smaller base with a market share of
either way.                                                                                Fortune at the Bottom of the Pyramid:
                                              36.4%. This compares with previous           Eradicating Poverty Through Profits’
Worldwide consumption patterns in             year market shares of 74.2% and 25.8%
developing and industrialized countries                                                    has pointed out the way for the
                                              respectively for 2006-07. Thus, private
indicate that weight of oil consumption                                                    corporates to grow synergistically. This
                                              sector has captured from LIC a share
in the consumer basket progressively                                                       strategy would however, require
                                              of 10.5% during 2007-08.           This
gets reduced with economic growth.                                                         development of viable distribution
                                              compares with a market share gain of
Thus, while the fear of inflation owing       2.7% year-on-year during 2006-07 by          channels and consumer awareness and
to oil prices is not unreal, quite possibly   LIC and loss of 6.8% during 2005-06          confidence. Given the hierarchy of
it is exaggerated. While growth in            over respective previous years.              financial needs, life insurance can be
agricultural sector remains a matter of                                                    expected to lead this foray before
concern, the service sector apparently        Mr C S Rao completed his tenure as           general insurance in the Indian rural
is more than making up for the shortfall.     Chairman of Insurance Regulatory and
The reforms momentum, if any cannot           Development Authority of India (IRDA), and
                                                                                           Cashless         settlement     systems
                                              supperannuated on 14th May 2008. Mr J
be expected to contribute to growth as                                                     employed by insurance players for
                                              Harinarayan, former Chief Secretary of the
the general elections approach. On the                                                     health and automobile insurance claims
                                              Andhra Pradesh Government has taken
other side, the Central Pay Commission                                                     along with outsourcing of claims
                                              over as the new Chairman of IRDA.
recommendations if implemented                                                             servicing are changing the rules of the
together with reduced income tax rates
                                              Market Entries:                              game.       Brokers and web based
should help boost consumption.
                                              Canara HSBC Life Insurance, a                insurance portals are going to play the
Business Written 2007-08-                                                                  role of aggregators i.e., they aggregate
                                              partnership between Canara Bank,
General Insurance:
                                              Oriental Bank of Commerce and HSBC           quotes from across companies and offer
As per unaudited accounts for non-life
                                              Insurance (Asia Pacific) Holdings            the best rates to individuals. On-line
industry for 2007-08, gross premium
                                              Limited (INAH), Hong Kong has begun          purchase of insurance is on the rise and
underwritten grew by 12.63% year on
year from INR 24,975.35 crore to              operations, making a total of 19 players     premium payment through mobile
INR 28,130.68 crore. Public sector            in life insurance segment.                   phones is now possible. This is going
companies underwrote a gross premium          Shriram General Insurance Company            to lead to commoditization of personal
of INR 16,899.49 crore registering a          Limited, a joint venture between Shriram     lines of insurance products, a trend
growth of 3.94% year on year against          Financial Services Holdings Pvt Ltd.,        which will infect commercial lines
that of INR 11,231.19 crore with a            India and Sanlam Limited, South Africa       shortly thereafter.
growth rate of 28.85% for private sector.     has been registered as a General             With IRDA now allowing participation of
Thus the market share of public sector        Insurer, taking the number of players in     insurance company promoter to float
companies went down from 65% to 60%           non-life insurance segment to 19.            insurance broking operations in line with
and correspondingly, private sector           State Bank of India and Insurance            the prevalent regulation in some
growing in market share from 35% to           Australia Group are in the process of        jurisdictions, despite the stipulation
40%. This compares with 8.3% market           creating a general insurance joint           regarding arm’s length operations and
share lost by public sector companies         venture in India in the later part of this   avoidance of over-concentrated trading
to private sector companies in 2006-07        year. Aegon Religare Life Insurance          relationship, the scenario will become
and 6.3% in 2005-06 over respective           Company has received the initial             more competitive.
previous years. Entry of some new             approval - R1 licence from the Insurance
private players along with de-tariffing                                                                               ...Hitesh Joshi
                                              Regulatory & Development Authority
and impending relaxation in foreign                                                                                                                  4
GIC Re NEWS                                                                                     ISSUE 03       VOLUME 01

                                                                                                                                 June 2008

              India Briefing in Lloyd’s at London
    Of late Lloyd’s of London has been evincing a keen interest in opportunities
    available for it in the Indian Insurance Market. Lloyd’s representatives have
    been interacting with a cross section of the market to raise awareness about
    the opportunities available and help understand and refine the strategies. As
    a part of this initiative Lloyd’s India Briefing was held on 16th May, 2008 at the
    Lloyd’s building in London.
    We bring you a report of the event compiled by Mr. Sanjay Mokashi, Deputy
    Manager, GIC Re London office. ............................................Editorial Desk

Mr. Anil Sant, Chief Manager, GIC Re,               first presentation was by Mr. Anil Sant
UK Branch, Mr. Anand Kumar, UK                      of GIC Re.
Representative of ICICI Lombard
                                                    Mr. Sant’s presentation provided the        97,998 million in 2000-2001 and has
General Insurance Company Ltd. and
                                                    reinsurer’s perspective of the current      further increased to INR 281,306
Mr. Mohan Lunawat, Head of the
                                                    trends in the Indian General Insurance      million in 2007-08.
Corporate Division, Life and General
                                                    Market. His presentation elaborated
Insurance Brokers Pvt. Ltd were the                                                             There are currently 18 players in the
                                                    on the Indian economy, the Indian
three speakers at the Lloyd’s India                                                             General Insurance Market in India with
                                                    general insurance market and the
Briefing. They represented the three                                                            two more entrants ready to start their
                                                    current trends in the general insurance
practitioners from the Indian Market –                                                          operations. The share of private
                                                    industry there.
the Reinsurer, the Insurer and the                                                              players has rapidly increased from a
Intermediary. Over fifty participants               Presentation by GIC Re                      modest 14% in 2003-04 to 34% in
comprising underwriters, brokers and                Mr. Sant in his presentation mentioned
the insurance press were present                    about the fast economic growth that is
                                                    resulting in increase in the insurable      The two most significant
during the Briefing.
                                                    assets giving a boost to the country’s      changes in the Indian market
The speakers were introduced to the                 Insurance Industry. The Gross               recently were:
house by Mr. Shrirang Samant, Lloyd’s               General Insurance Premium has risen         1. The detariffing of the motor (OD),
general representative in India. The                from INR 11,244 million in 1985 to INR         fire and engineering classes and
                                                                                                2. The cut of 5% in mandatory
                                                                                                   cessions to GIC by the domestic
                                                                                                   insurers with effect from
                                                                                                The resultant steep fall in the rates
                                                                                                especially in Fire Class, led to
                                                                                                regulatory intervention whereby a cap
                                                                                                of 50% on the discounts was put.
                                                                                                However, this cap has now been
                                                                                                removed. The abolition of Tariff Policy
                                                                                                Wordings which was planned to take
                                                                                                place with effect from 01.04.2008 has
                                                                                                been postponed by the Indian
                                                                                                Regulator          considering            the
                                                                                                (un)preparedness of the market.
                                                                                                However, the mandatory cessions
                                                                                                would continue to be phased out. The
                                                                                                FDI cap of 26% is expected to go up
                                                                                                eventually, but it is difficult to anticipate
                                                                                                the time-frame for this. Health, Motor

GIC Re NEWS                                                                           ISSUE 03     VOLUME 01

                                                                                                                       June 2008

and Pensions would be the major growth    products at reasonable rates.               very cordial and mutually beneficial.
areas in the Indian Market.                                                           While GIC Re’s reinsurance protections
                                          Other Presentations
                                                                                      are placed in the Lloyds, GIC Re
Speaking about GIC Re Mr. Sant            The second speaker Mr. Anand Kumar
                                                                                      participates in the reinsurances of many
mentioned its strong financials and       of ICICI Lombard presented the current      of the syndicates in Lloyds. He said
experienced management team. He           trends in the Indian insurance market
                                                                                      this relationship is expected to get
said that GIC Re is focussing on growth   from an insurer’s perspective His
                                                                                      stronger in the coming years.
of its international business portfolio   presentation was followed by Mr.
with an objective of becoming a major     Lunavat’s talk on the emerging              The Briefing concluded with a vote of
international player and proposes to      scenario. Mr. Lunavat explained the         thanks from Mr. Samant. It was
compete for business on the basis of      regulatory framework and informed that      heartening to witness the keen interest
price, service and expertise.             the Indian insurance market was             shown by the participants in the matters
                                          awaiting second phase of detariffing in     concerning India, its economy and its
Post detariffing, GIC Re looks forward
                                          terms of policy wordings after              general insurance industry. It is
to the market to stabilize soon and
                                          completion of first phase of detariffing.   important to mention that the Lloyds
expects underwriting discipline
                                                                                      have formally communicated to Mr. Sant
especially from the major players.        The presentations were followed by an
                                                                                      the overwhelming feedback received
There is a growing need to utilize        interactive session. There were
                                                                                      from the participants.
actuarial expertise and sophisticated     several queries about various
tools in the areas of rating and Cat      regulations as regards the mediation
Modelling. GIC Re also expects the        activity in India. A question was also
companies to develop technical            raised about the relationship between
expertise in area of risk management.     Lloyds         and      GIC       Re.                    ...Sanjay Mokashi
The market requires innovative            Mr. Sant described the relationship as

Seminar on PML Assessment & PML Underwriting
         at Asian Re Bangkok, Thailand
Asian Re organised a seminar on “PML
Assessment and Underwriting” in
technical collaboration with GIC Re in
Bangkok, Thailand on 23rd April, 2008.

Mr. Abhijit Das, Assistant General
Manager and Mr. N. Saravanabhavan,
Senior Manager (Reinsurance) of
GIC Re Mumbai were the faculty

                                          for the seminar.                            will conduct similar need-based
                                          Asian    Re     ,   Bangkok,          an    seminars on technical subjects of
                                          intergovernmental organization under        topical relevance in South East Asian
                                          the UN-ESCAP was formed with the            markets . This would propel the brand
                                          initiative and support of            the    of GIC Re as a technically sound
                                          Government of India.                        reinsurance solution provider.

                                          GIC Re in collaboration with Asian Re                                                                                                             6
GIC Re NEWS                                                                                  ISSUE 03       VOLUME 01

                                                                                                    AVIATION NEWS
                                                                                                                             June 2008

                  AVIATION UNDERWRITING -
                       A PERSPECTIVE
Aviation sector continues to hog the           overlooked. These principles are:             ground. Thus reaction time available
headlines in the domestic as well as           adequacy, reasonableness, accuracy            to a helicopter pilot is different from that
international media for right reasons as       (to the extent feasible), equitability for    available to a fixed-wing pilot. Similar
well as wrong. Unprecedented                   policyholder inter se, competitiveness        is the case with offshore operations for
domestic passenger and air traffic             and should appropriately reflect the risk     helicopters. Worldwide offshore
growth has moderated in recent past            getting transferred. Equitability             operations have a significantly higher
while rising fuel prices are likely to shift   incorporated in merit rating                  accident rates as compared to on-
the market share balance in favour of          methodology requires that similar risks       shore operations.
budget airline operators, domestically         attract similar premium while there is
                                                                                             The turbo-prop aircraft are propeller-
as well as internationally. Over a score       no cross-subsidy among policyholders
                                                                                             driven and thus susceptible to
of air carriers has faced bankruptcy in        and minor variations in risk
                                                                                             mechanical failures as compared to
recent past owing to steep increase in         characteristics attract discounts and
                                                                                             turbofan (jet) aircraft which are less
oil prices world-over. In the Indian           loadings, as appropriate. Additionally
                                                                                             prone to mechanical failures. There is
context, as the structural bottlenecks         but no less important are the
like pilot shortage have been mitigated        considerations of catastrophe
to a significant extent, the problem of        component in premium and minimum
pilot shortage has got transformed into        premium requirement to service the
a problem of pilot shortage with type          capital deployed while keeping in mind
rating (type rating is certification           the implications of degree of operation
denoting proficiency on a particular           of law of large numbers (loading for
type of aircraft). New airports at             fluctuation in loss experience), given
Hyderabad and Bangalore have                   the portfolio size.
already become operational. Delhi and
                                               It is observed that in rating increasingly
Mumbai airports are being upgraded
                                               the differentiation between jet aircraft,
but congestion at several other airports
                                               turboprop and helicopters is getting
is stll an irritating factor.
                                               diluted which is not supported by
Indian aviation sector witnessed               accident rate statistics for these
crossing of 1000 mark in recent past           different types of aircraft.
as far as aircraft count is concerned.
                                               Helicopters are a case in point. A
The market has about 200 helicopters
                                               helicopter relies on rotating wings for
and 50 corporate jets part from 300+
                                               the lift and thrust to remain aloft and to
airliners. Aviation sector has been                                                          thus a clear case for differentiating
                                               move forward. Unlike fixed wing turbo-
witnessing significant insurance                                                             between turbofan, turbo-prop and
                                               prop or jet aircraft which would go into
interest over a last couple of years.                                                        helicopters. Turbo-props are known to
                                               glide mode in case of engine failures,
Domestic insurance carriers have                                                             be about four times as likely to get
                                               helicopter cannot glide. With each
created capacities to be able to partake                                                     involved in an accident as a turbo-fan
                                               rotation, the helicopter struggles to
of this growing market.                                                                      aircraft. Similarly, the accident rates
                                               remain in air. With failure of engine,
In Indian market, the aviation insurance       the helicopter starts descending which        of single-engine and twin-engine
rates have been quite competitive, and         is called auto-rotation. Pilots are           aircraft differ by a wide margin (by
are lower than international levels. This      trained for auto-rotation. Not all failures   about half) and cannot be ignored in
is understandable given underwriting           of engine situations however would            any premium rating exercise. While
capacity available in the domestic             allow for safe auto-rotation. Failure at      twin-engine aircraft is more reliable, it
market but what is somewhat                    an altitude of about 500 feet gives the       places higher demands on the pilots
disconcerting is that basic principles of      pilot a time of about 20 seconds in           by way of handling the asymmetric
insurance pricing are grossly                  autorotation before touching the              thrust when one engine fails.

GIC Re NEWS                                                                                ISSUE 03     VOLUME 01

                                                                                                 AVIATION NEWS
                                                                                                                           June 2008

Aircraft accidents have been broadly          be a matter of comfort but to ensure         misconception that good knowledge of
attributed to three categories of             predictability of underwriting results       the going rates and ability to bag the
causation: the pilot, the aircraft and        within acceptable limits would require       business can constitute successful
causes external to the aircraft. In most      that risks be categorized based on risk      business development. The effort thus
aviation accidents, with increasing           characteristics and have sufficient          should be restore a modicum of
redundancies built into aircraft systems      numbers for the law of large numbers         balance based on basic ratemaking
and higher reliability, it is the pilot and   to operate in each such category.            considerations        in     premium
human factors which are responsible           From this perspective, 200 helicopters       determination within the framework of
for a majority of accidents. The pilot        of varying ages, makes and values put        imperatives of a competitive de-tariffed
training thus is of paramount                 to varying uses may not be considered        insurance markets.
importance. It is observed that pilots        a good enough number to enable
                                                                                           Core competence of a risk carrier is a
really 'get comfortable' with an aircraft     insurers to spread their risk effectively.
                                                                                           thorough understanding of the risk
after about 200 hours of flying on a          The same applies to corporate jets
                                                                                           which gets reflected in categorization
given type of aircraft and about 1000         which range in value from USD 5 Mln
                                                                                           and quantification of risks.
hours of total flying time. Statistically     to USD 45 Mln and business jets could
                                                                                           Underwriting discipline is the only
speaking, the incidence of accidents          possibly be worth USD 70 Mln. The
                                                                                           source of sustainable competitive
falls sharply after the pilot achieves        number of such jets in Indian market
                                                                                           advantage for a risk carrier in the
200 hours on the aircraft type. While         is about 50. There is thus apparently
                                                                                           opinion of living legend Warren Buffet.
the shortage of pilot as outlined above       inadequate spread in different
                                                                                           Any such discipline presupposes
is largely addressed in the Indian            categories of aircraft in the Indian
                                                                                           superior perception and insight into the
context, the skill availability with          market which is in line with the nature
                                                                                           nature of risks which would consider
reference to different aircraft types         of aviation risk portfolio worldwide.
                                                                                           varying loss-producing characteristics
remain somewhat scarce. As far as             This thus explains the international
                                                                                           and exposures of individual risks and
helicopter accidents are concerned,           character of the aviation (re)insurance
                                                                                           insureds in the rates. And lest it should
various research studies attribute the        markets.
                                                                                           be overlooked, underwriting discipline
accidents to pilot error in 60-75%
                                              As it happens, the non-life insurance        is required predominantly during soft
cases depending upon classification
                                              market (and reinsurance markets also)        market conditions and would tend to
                                              is driven more by supply side factors        get compromised in the face of
It needs to be understood that today's        in stead of demand side factors which        exigencies of growth aspirations.
sophisticated corporate jets (known as        tend to remain largely inelastic.
                                                                                           Warren Buffett in his letter to the
Technologically Advanced Aircraft) are        Insurance prices are driven by
                                                                                           shareholders of Berkshire Hathaway
matching the commercial airliners in          capacities which take two forms:
                                                                                           Inc. put underwriting discipline at the
their operational complexity, reliability     support for a class of business to direct
                                                                                           centre stage of insurance organization
and functionality and thus, their             writers by capital providers and
                                                                                           and thus a source of competitive
demand on the skills and proficiency          reinsurance treaty capacity provided
                                                                                           advantage. It is worth quoting: "While
of pilots is much higher. More                by reinsurers. Creation of capacities
                                                                                           all concerned may intend to underwrite
sophisticated aircraft while offering         by domestic players is unlikely to
                                                                                           with care, it is nonetheless difficult for
greater safety and dependability also         improve the rating scenario anytime
                                                                                           able, hard-driving professionals to curb
simultaneously create a significant           soon. On the positive side, the market
                                                                                           their urge to prevail over competitors.
increase in information load for the pilot    is growing at a healthy rate with more
                                                                                           If "winning," however, is equated with
which can be a source of distraction.         aircraft coming in.
                                                                                           market share rather than profits,
This thus results in two crew operation
                                              Driven by competition, premium               trouble awaits. "No" must be an
mandated by the manufacturers. With
                                              volume targets and fear of losing            important part of any underwriter's
greater crowding of the Indian skies,
                                              market share apart from growth               vocabulary."
the capability of the pilots to maintain
                                              aspirations and compulsions, it is
higher situational awareness as well
                                              plausible      that    underwriting
as skills like touch and go (for go-
                                              considerations cannot be fully factored
around after aborted landing) cannot
                                              in business acceptances. At the same
be overemphasized.
                                              time, the perils of overlooking the
                                                                                                         ...Hitesh Joshi
Coming to the size of the market, the         fundamentals of ratemaking cannot be
total number of aircraft at 1000 may          overemphasized. There can be a                                                                                                                  8
GIC Re NEWS                                                                                  ISSUE 03        VOLUME 01

                                                                                                CURRENT AFFAIRS
                                                                                                                              June 2008

              Crude Oil & Petroleum Products
Oil accounts for a large percentage of       nuclear energy hold much promise,                compound containing carbon and
the world’s energy consumption,              none has yet proved an economically              hydrogen, with or without non-metallic
ranging from 32% for Europe and Asia         viable replacement for petroleum                 elements such as oxygen and sulfur.
and of 53% for the Middle East. Other        products.                                        Crude oil varies greatly in appearance
geographic regions’ consumption                                                               depending on its composition. It is
                                             Oil prices soaring high make a major
patterns are: South and Central                                                               usually black or dark brown.
                                             impact on global economy. World is
America- 44%, Africa- 41% and North
                                             going through such a phase and efforts           To extract the maximum value from
America- 40%. Demand for energy is
                                             are being made to resolve this crisis.           crude, it first needs to be refined into
set to continue to grow and oil is
                                             Through the following paragraphs, one            petroleum products. Petroleum’s worth
expected to maintain its leading
                                             can take a peek into the world of crude          as a portable, dense energy source
position in meeting the world’s growing
                                             & petroleum products.                            powering the vast majority of vehicles
energy needs for the foreseeable
                                                                                              and as the base of many industrial
future. Oil is in high demand world over     Oil is a substance that is in a viscous
                                                                                              chemicals makes it one of the world’s
and reserves are barely enough to go         liquid state. Crude oil is a naturally-
                                                                                              most important commodities such as
beyond a certain limit looking at            occurring substance found in certain
                                                                                              gasoline or petrol, liquefied petroleum
growing demand, both by advanced &           rock formations in the earth. It is a dark,
                                                                                              gas (LPG), naphtha, kerosene, gas oil
developing economies. Technology             sticky liquid which is classified as a
                                                                                              and fuel oil. Other useful products which
support and new reserves are the             hydrocarbon. This means, it is a
hopes of future. In 1920, a barrel of
crude oil (42 gallons) yielded 11 gallons                                           FACT FILE
of gasoline, 5.3 gallons of kerosene,               A barrel is 42 US gallons or approximately 159 litres.
20.4 gallons of gas oil and distillates             The Organization of the Petroleum Exporting Countries (OPEC) is a permanent
and 5.3 gallons of heavier distillates.             intergovernmental organization, created at the Baghdad Conference on
Now the yield of a barrel of crude oil              September 10–14, 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
has increased to almost 21 gallons of               The five Founding Members were later joined by nine other Members: Qatar
gasoline, 3 gallons of jet fuel, 9 gallons          (1961); Indonesia (1962); Socialist Peoples Libyan Arab Jamahiriya (1962);
of gas oil and distillates and somewhat             United Arab Emirates (1967); Algeria (1969); Nigeria (1971); Ecuador (1973)
less than 4 gallons of lubricants & 3               — suspended its membership from December 1992-October 2007; Angola
gallons of heavier residues. Although               (2007); and Gabon (1975–1994).
alternative energy sources, such as                 More than three-quarters of the world’s oil reserves are located in OPEC
geothermal energy, solar energy and                 countries. The bulk of OPEC oil reserves is located in the Middle East, with
                                                    Saudi Arabia, Iran and Iraq contributing 56% to the OPEC total.
                                                    Though most of the world wants the oil crisis to end fast, as per some researchers,
                                                    per barrel price is expected to reach as high as $200 a barrel by the end of
                                                    Saudi Arabia is an oil-based economy with strong government controls over
                                                    major economic activities. It possesses both the world’s largest known oil
                                                    reserves, which are 25% of the world’s proven reserves, and produces the
                                                    largest amount of the world’s oil.
                                                    Iraq holds the world’s second-largest proven oil reserves, with increasing
                                                    exploration expected to enlarge them beyond 200 billion barrels
                                                    (32,000,000,000 m³) of “high-grade crude, extraordinarily cheap to produce.”
                                                    The United States, with about 5% of the world’s population, is responsible for
                                                    25% of the world’s oil consumption while only having 3% of the world’s proven
                                                    oil reserves

GIC Re NEWS                                                                                       ISSUE 03      VOLUME 01

                                                                                                    CURRENT AFFAIRS
                                                                                                                                 June 2008

Sr.   Top 15 Oil            Top 15 Oil                Top 15 Oil           Top 15 Oil non-        reserves, Venezuela has larger reserves
No.   Producing Nations     Exporting Nations         Consuming Nations producing consumer        than Saudi Arabia due to crude reserves
                                                                           Nations                derived from bitumen.
  1   Saudi Arabia#         Saudi Arabia #            United States        United States
                                                                                                  The world at large consumes 30 billion
  2   Russia                Russia                    China                Japan
                                                                                                  barrels of oil per year. As of now, 90%
  3   United States         Norway                    Japan                China
                                                                                                  of global vehicular fuel demand is met
  4   Iran #                Iran #                    Russia               Germany
                                                                                                  by petroleum products. The future of
  5   China                 United Arab Emirates      Germany              South Korea
  6   Mexico                Venezuela #               India                France                 petroleum as a fuel, however, remains
  7   Canada                Kuwait #                  Canada               India                  somewhat controversial. Some reports
  8   United Arab Emirates#Nigeria #                  Brazil               Italy                  conclude that there is just about 40
  9   Venezuela #           Algeria #                 South Korea          Spain                  years of petroleum left in the ground.
10    Norway                Mexico                    Saudi Arabia #       Taiwan                 Others claim that technology will
 11   Kuwait #              Libya #                   Mexico               Netherlands            continue to allow for the production of
12    Nigeria #             Iraq #                    France               Singapore              cheap hydrocarbons and that the earth
13    Brazil                Angola #                  United Kingdom       Thailand               has vast sources of unconventional
14    Algeria #             Kazakhstan                Italy                Turkey
                                                                                                  petroleum reserves in the form of tar
15    Iraq #                Canada                    Iran #               Belgium
                                                                                                  sands, bitumen fields and oil shale that
Source: U.S. Energy Information Administration, figures as of 2006, (# denotes OPEC membership)
                                                                                                  will allow for petroleum use to continue
are not fuels can also be manufactured             geographic location it is produced in          in the future. It is said that the Canadian
by refining crude oil such as lubricants           (e.g. West Texas, Brent, or Oman), its         tar sands and United States shale oil
and asphalt used in paving roads. There            API gravity (an oil industry measure of        deposits represent potential reserves
are more than 4,000 different                      density) and by its sulfur content.            matching existing liquid petroleum
petrochemical products, but those                  Crude oil is considered light if it has        deposits worldwide. However, there
which are considered as basic products             low density or heavy if it has high            are factors which may extend or reduce
include ethylene, propylene, butadiene,            density. It is referred to as sweet if it      this estimate, including the rapidly
benzene, ammonia and methanol. The                 contains relatively little sulfur or sour if   increasing demand for petroleum in
main groups of petrochemical end-                  it contains substantial amounts of             China, India and other developing
products are plastics, synthetic fibres,           sulfur.                                        nations; new discoveries; energy
synthetic rubbers, detergents and                  Light crude oil is more desirable than         conservation and use of alternative
chemical fertilisers. Petroleum is also            heavy oil since it produces a higher           energy sources as also new
the raw material for many chemical                 yield of gasoline, while sweet oil             economically viable exploitation of non-
products, including pharmaceuticals,               commands a higher price than sour oil          conventional oil sources.
solvents, fertilizers, pesticides and              because it has fewer environmental             Rapidly rising crude prices have a
plastics. Considering the vast number              problems and requires less refining to         bearing on insurance industry in so far
of products that are derived from it,              meet sulfur standards imposed on               as crude is transported via sea routes
crude oil is a very versatile substance.           fuels in consuming countries. The              and shipments are insured. Sharp rise
On the technical side, three conditions            proportion of hydrocarbons in the              in crude price increases the values at
need to be present for oil reservoirs to           mixture is highly variable and ranges          risk. Some insurers may find capacity
form. source rock rich in organic                  from as much as 97% by weight in the           crunch while others may risk giving
material buried deep enough for                    lighter oils to as little as 50% in the        reduction in rates due to competitive
subterranean heat to cook it into oil; a           heavier oils.                                  forces. In any case, it is going to be
porous and permeable reservoir rock                The top three oil producing countries          challenging times ahead!
for it to accumulate in and a cap rock.            are Saudi Arabia, Russia and the
Fluids typically organize themselves               United States. About 80% of the
like a three-layer cake with a layer of            world’s readily accessible reserves are
water below the oil layer and a layer of           located in the Middle East, with 62.5%                Complied from
gas above it. The petroleum industry               coming from Saudi Arabia, UAE, Iraq,             various sources by
generally classifies crude oil by the              Qatar and Kuwait. Going by the                     ...Deepak Godbole                                                                                                                        10
GIC Re NEWS                                                                               ISSUE 03     VOLUME 01

                                                                                                                        June 2008

               OFFICIAL LANGUAGE
India is a land of diversity with different religions, cultures    members of the committee were Shri Satyanarayan Jatia,
and a rich variety of languages. The founding fathers of our       Shri R. Kusumaria and Shri Matilal Sarkar.
Constitution extensively deliberated on the status to be
                                                                   The Committee also took up the appraisal of implementation
accorded to our different languages after independence.
                                                                   of Official Language Act in Minerals & Metals Trading
It was decided on 14th September, 1949 that Hindi shall be         Corporation of India, (MMTC) and Khadi & Village Industries
the official language of the Centre where as other State           Commission (KVIC). Three separate meetings were held to
Languages were kept in the schedule 8 of the Constitution          discuss the progressive use of official language in each of
giving them the status of State Official languages.                the three Organisations. GIC Re coordinated the entire activity.
Essentially, thus, Official Languages Act, 1963 provides that
                                                                   Mr. Tarun Bajaj, Joint Secretary and Mr. Rameshbabu Aniyeri,
Hindi is the Official Language of Centre and regional languages,
                                                                   Joint Director Financial Services Division, Minsitry of Finance,
covered under schedule 8th are Official languages of the
                                                                   Government of India were also present on the occasion
concerned States.
                                                                   Mr. Yogesh Lohiya, CMD GIC Re, General Managers Mr.
To ensure smooth and effective implementation of Official
                                                                   M.Ramprasad and Mrs. B. Ramani, Shri Praveen Kumar
Language Policy, various Committees are constituted. The
                                                                   Bhagat Deputy General Manager in charge of Official language
apex Committee is the Parliamentary Committee on Official
                                                                   Implementation of GIC Re., Mr. K.V. Pathak, Assistant
Language. It consists of thirty members, of whom twenty
                                                                   General Manager and Mrs. P. G. Manisha, Chief Manager
members belong to the House of the people (Lok Sabha) and
                                                                   participated in the discussions.
ten members are from the Council of States (Rajya Sabha).
                                                                   Mr. Lohiya made a presentation to the committee regarding
It is the duty of the Committee to review periodically the
                                                                   GIC Re’s efforts with reespect to implementation of official
progress made in the use of Hindi for official purposes of the
                                                                   language. Potential for increasing the use of Hindi in day-to-
Union and submit a report to the President of India.The third
                                                                   day work of the organisation further was discussed.
Sub-Committee of Parliamentary Committee on Official
                                                                   Suggestions were made to make the implementation work
Language on 11th April, 2008 reviewed the performance of
                                                                   smoother and more conducive.
General Insurance Corporation of India (GIC Re) on various
aspects related to implementation of Official languages Act        GIC Re’s performance as regards use of official language,
in the organisation.                                               Hindi as also the co-ordination of the activity was appreciated
                                                                   by the committee members. Some valuable suggestions were
Shri Mohan Singh, senior Member of Parliament was the acting
                                                                   also made by the committee to GIC Re Management.
Deputy Chairman of this inspection committee. Other
                                                                                                               M e e t i n g
                                                                                                               concluded with a
                                                                                                               vote of thanks by
                                                                                                               Mr. P. K. Bhagat,
                                                                                                               Deputy General

                                                                                                                 ..Medha Parulkar

GIC Re NEWS                                  ISSUE 03

                                       EMPLOYEES CORNER
                                                          VOLUME 01        June 2008

     GIC Re Employees’ Service Benefits
                      Recently, all the employees of the GIC Re have been given
                      their personal copy of the Service Terms and Benefits Booklet,
                      covering the service conditions applicable, not only from
                      Recruitment to Retirement but also covering the details of
                      post retirement benefits to employees.
                      The employees may be aware that the service conditions of
                      employees in GIC are governed by the Schemes notified by
                      the Central Government under Section 17A of the General
                      Insurance Business (Nationalisation) Act, 1972. There are
                      four notified Schemes as under :
                      1. Rationalisation Scheme, 1974, applicable to Clerical and
                         Subordinate Staff employees.
                      2. Rationalisation Scheme, 1975, applicable to Officers.
                      3. Rationalisation Scheme, 1976, as applicable to Officers
                         providing for rules relating to Termination, Superannuation
                         and Retirement.
                      4. Pension Scheme, 1995, applicable mainly to employees
                         in service upto 31.12.2003.
                      The ‘Service benefits’ covered in the Booklet, provide
                      synopsis of the major benefits, as per the notified Schemes,
                      such as Scales of Pay, Increment/s, Dearness Allowance
“         ”           (DA), House Rent Allowance (HRA), City Compensatory
                      Allowance (CCA), Transport Allowance, Provident Fund /
                      Pension Fund contribution rate, Gratuity, various types of
                      Leave - / Holidays, Hours of Work, Overtime etc.
                      Brief details of the Benefits which are not specifically covered
                      in the above mentioned notified Scheme/s, are given. This
                      part covers benefits such as Festival Advance, Vehicle Loan,
                      Housing Loan, LTC, Tour entitlements, Lease Rent
                      Accommodation, GSLI, GTIS contribution, Medical
                      Benefits etc.
                      Besides, the Service Terms and Benefits Booklets, a copy
                      of General Insurance (Conduct, Discipline and Appeal) Rules,
                      1975 (in short, CDA Rules) is separately provided to all
                      employees giving information in respect of the types of acts
                      / omissions which may be construed as Misconduct and
                      the procedure which will be followed in imposing minor / major
                      penalties and the Competent Authorities for each cadre.
                      All the employees will find these Service
                      Terms and Benefits Booklets and CDA Rules
                      copy book useful and may serve as handy
                      reference material on major service
                                                   ....Santosh Phatak                                                                 12
GIC Re NEWS                                                                               ISSUE 03      VOLUME 01        June 2008


                        Stay Safe during Monsoon
Heavy monsoon rains leave you not             reddening of eye, are suspected cases       you live in any such building, it is better
only with roads that have more potholes       of leptospirosis. The good news,            to leave. Nothing is worth losing your
than perhaps the surface of Mars,             however is that leptospirosis can be        life. The civic authorities every year
drains that resemble gurgling mountain        treated and is not fatal.                   declare several old buildings as
rivers, puddles that can be mistaken for                                                  dangerous and unfit for habitation. But
                                              The spirochete Leptospira interrogans
pools and traffic jams that have no                                                       the occupants pay no need and in turn
                                              bacterium causes the disease. These
beginning or end but also with a crop of                                                  pay with their lives.
                                              germs love the humid environment. The
extra hazards and diseases.
                                              infection occurs through contact with       Visibility is generally poor during rains.
Rains do bring much-needed respite            contaminated water or food or soil          A light coloured raincoat with a visored
from the long spell of sultry, scorching      containing urine of rodents and dogs.       cap and proper footwear offers you
summer but it is important that we get        While you are walking through               better protection when compared to an
our safeguards ready before the               contaminated flood water, you can get       umbrella. Unlike an umbrella, it leaves
monsoon in its full fury is upon us.          infected through skin contact, especially   both hands free and does not get into
                                              with mucosal surfaces, such as eyes         anyone else’s way.
Charity begins at home and so does
                                              or nose or broken or bruised skin on
safety. Electricity and water do not go                                                   Children love to splash through
                                              feet. The disease is not spread from
together. It would be wise to give a                                                      waterlogged streets, this could be
                                              person to person.
thorough check-up to the wirings,                                                         dangerous. Water logging conceals a
switches, plugs and positioning of wires      The symptoms can sometimes be               lot of rubbish spilling over from dustbins,
around the house before monsoon.              misleading and therefore could be           drains and manholes. It often contains
Furthermore, do not forget the electrical     mistaken for other diseases. Hence it       glass pieces, stone chips, and slivers
appliances. In case they have any             is best to consult your family physician    of wood and other substances. These
faults, attend to them at the earliest.       in case you experience any of the           can inflict serious injuries on tender bare
                                              symptoms mentioned above, especially        feet. Furthermore there is always an
A stitch in time saves nine. During rains,
                                              during monsoons.                            open manhole lurking somewhere to
many houses, especially the old ones,
                                                                                          gobble up an unwary child.
spring leaks. Make sure the electrical        Dangers of slips and falls also increase
wirings are well clear of these leaks.        during rains. A window left open, a gap     Constant water logging and heavy rains
Water dripping on to live electrical wiring   in the door and the floor level, all can    damage the roads causing cracks,
can cause fatal accidents. Many a times       let rain water seep in. Mop it dry          potholes and rough and uneven
we go barefoot in homes and even              immediately, especially if you have         patches. Power cables snap and hang
outside. This practice needs to be given      toddlers or elders at home. Slipping and    dangerously creating a dangerous
a go by. Take no chances with                 falling on wet patches can cause            scene. The threat of electrocution
electricity. It is a good friend only if      serious injuries.                           becomes alive. Trees are uprooted and
treated with respect. Never handle                                                        block passage. This calls for extra care
                                              You may have expensive furniture in
electricity barefoot or with wet clothes                                                  and extreme caution on part of both
                                              your drawing room. Keep it safe from
and shoes. You could get a nasty                                                          drivers and pedestrians alike. It is a good
                                              moisture and humidity. Rearrange it in
shock. Remember to change damaged                                                         idea to carry a torch with you and to
                                              such a way that it does not get wet.
wiring so that no temporary connections                                                   wear light and bright clothes when you
                                              Give special attention to the upholstery.
are lying anywhere around the house.                                                      plan to venture out of house during rains
                                              Water not only damages the upholstery
                                                                                          whether during the day or night.
If you have waded through flooded             but sitting on damp cushions and
roads during heavy monsoon showers,           mattresses is also unhealthy. Besides,      Be extra alert and safety conscious both
you may be at a risk of getting infected      it requires a herculean effort to dry wet   in and out of the house. Wish you a
with leptospirosis. According to Public       bedding and upholstery on damp and          safe monsoon.
Health Departments, all those who             cloudy days.
complain of abrupt onset of high-grade
                                              Wet months also bring about the                                       ...Anoop Khanna
fever, severe splitting headache, sick
                                              collapse of weak and old buildings. If
look, muscle pain, body ache or

GIC Re NEWS                                                                            ISSUE 03      VOLUME 01

                                                                                                                      June 2008

   Hearty Congratulations & a warm                                                    Hearty Congratulations to Mr.
   welcome to Mr. A.K. Roy & Mr. R.                                                   Joseph Augustine, who was promoted
                                                                                      as a General Manager and took charge
   Raghavan on their promotion and
                                                                                      on 23rd June 2008 in National Insurance
   assuming charge as General                                                         Company Limited, a GIPSA company.
   Managers of GIC Re from 23rd June                                                  He was with GIC Re from 29th June 2001
   2008.                                                                              till 23rd June 2008.
                                                                                      Mr. Avinash Bagul, who joined GIC
                                                                                      Re as an Assistant on 26th May 1988
                                                                                      and rose to become a Senior Manager,
                                                                                      resigned from his services and was
                                                                                      relieved on 24th April 2008.
                                          Mr. R. Raghavan, a direct recruit officer
                                          of the 1981 batch is a Physics graduate     Mrs. Meera K. Sawant,, who joined
                                          and holds an MBA in Finance &               GIC Re as a direct recruit officer in May
                                          Marketing, He is also a Fellow of the       1985 and rose to become an Assistant
                                          Insurance Institute of India and an         General Manager in August 2004,
                                          Associate of the Chartered Insurance        resigned from her services on
  Mr. Ashok Kumar Roy, a direct recruit   Institute of UK.                            06.06.2008 after a fruitful association
  officer of the 1979 batch holds a B.                                                of 23 years.
                                          His tenure in The New India Assurance
  Tech (Hons) degree in Agricultural                                                  GIC ReNEWS wishes
                                          Company Ltd. includes a six and a half
  Engineering. He is also a Fellow of                                                 them all the very best
                                          year stint in New India’s Oman Branch.
  the Insurance Institute of India. He                                                for   their    future
                                          Prior to joining GIC Re, he was heading
  was heading the Oriental Insurance                                                  endeavour.
                                          the Techno-marketing and Engineering
  company’s Jaipur Region, prior to
                                          departments.                                        ...K. Thangaraj
  joining GIC Re

        Dal (Tur)                                                                      For the dough:
                                                                                       Knead wheat flour. Make small balls and
                                                                                       roll into thin chappatis. Cut chappati in
         Dhokli                                                                        diamond shape pieces.

Ingredients:                                                                           Seasoning:
Whole Tur (Dried)       - 2 cups                                                       Heat oil in a vessel. Put mustard
Tomato          -1                                                                     seeds, red chilly, two garlic, half on-
                                                                                       ion, hing. Put cumin powder, coriander
Onion                   -1
                                          Garam Masala              - 1 tsp            powder, red chilly powder, garam
Small Garlic pod        -1
                                                                                       masala and add cook tur.
Ginger                  - 2 inch          Oil                       - 2 tsp
                                          Wheat Flour               - 2 Cup            Add two glass of water. Boil for 5 min-
Green Chilly            -3
                                                                                       utes. Add the cut pieces of chappatis
Hing                    - ½ tsp           Salt to taste
                                                                                       and cook for another10 minutes on slow
Mustard seeds           - 1 tsp           Preparation:                                 flame. Garnish with coriander leaves.
                                          Cut tomato, garlic, ginger, green chilly,
Turmeric Powder         - 1 tsp
                                          half onion into small pieces. Put whole
Red Chilly              -2                tur, tomato, garlic, ginger and green
Coriander Powder        - 1 tsp           chilly pieces and salt into pressure
Cummin Powder- 1 tsp                      cooker. Cook till 5 whistles and then
                                          on slow flames for 20 minutes.               ...Jayashree Patel
Red Chilly Powder       - 1 tsp                                                                                                            14
GIC Re NEWS                                                                              ISSUE 03     VOLUME 01

                                                                                                                       June 2008

                                             Glossary                                                       U N E A R N E D
RATIO: the
combination of an
insurer’s (or a
reinsurer’s) loss
                                                of                                                          PREMIUM: the
                                                                                                            proportion of a
                                                                                                            premium which
                                                                                                            relates to the portion
ratio and expense
                                            Insurance                                                       of a risk which has
                                                                                                            not yet expired.

RATIO or TRADE                                                                                              RESERVES:         a
RATIO.                                                                                                      collective term for
                                                                                                            the amounts set
COMMUTATION:                                                                                                aside in respect of
the finalisation of                                                                                         underwriting
an outstanding                                                                                              liabilities: unearned
loss by payment of an agreed figure in      contract. An implied warranty must be        premium reserves, unexpired risk
settlement.                                 strictly complied with and in the event      reserves, claims outstanding and the
                                            of a breach of warranty the insurer is       funds held for three-year and treaty
ENDORSEMENTS: An additional piece           discharged from liability as from the        business.
of paper, not part of the original          breach of the date, but the insurer may
insurance policy, in which certain terms    waive the breach or the breach may be        THIRD PARTY LIABILITY:                the
and conditions, when attached to the        waived by Statute.                           indemnity against all sums which an
original insurance policy, becomes a                                                     insured shall become legally liable to
legal part of that contract.                N O N - P R O P O R T I O N A L              pay to third parties upon injury, loss or
                                            REINSURANCE: reinsurance such as             damage that is accidentally caused.
EXCESS: The first part of the cost of a     excess of loss reinsurance where the
claim which is not covered by a policy.     reinsurer’s liability is not calculated as   SURPLUS           REINSURANCE:
It may be borne by the insured or by        a proportion of the insurers.                reinsurance of amounts over a specified
another party.                                                                           amount of insurance, premiums and
                                            POOL: a pool is created when several         losses being shared proportionately
EXCLUSION: A clause in a policy             insurers agree to share all insurance’s      between insurer and reinsurer.
excluding certain losses e.g. war perils,   of a defined nature in specified
frustration, nuclear weapons, dangerous     proportions.                                 SOFT MARKET: a market in which it
drugs, earthquakes etc.                                                                  is relatively easy to obtain insurance
                                            TOP LAYER: a layer of excess of loss         and therefore is characterised by low
FORTUITOUS LOSS : Unforeseen and            reinsurance arranged to protect the          premiums.
unexpected loss that occurs as a result     reinsured against the occasional
of chance.                                  exceptionally large loss.

is not expressed in the policy              The ratio of the sum of the acquisition
                                                                                               Compiled from various sources by
specifically, but which is understood by    expenses and operational expenses to
                                                                                                                 ...Anoop Khanna
both parties to be incorporated in the      net premiums earned.

GIC Re NEWS                                                                                          ISSUE 03        VOLUME 01

                                                                                                                                        June 2008

      Respect Your Banknotes : RBI appeals to Public
     The Reserve Bank of India has appealed to members of public not to use banknotes for making garlands, decorating
     pandals and places of worship or for showering on personalities in social events, etc. Such actions deface the
     banknotes and shorten their life, the Reserve Bank stated and added that banknotes should be respected as they
     are a symbol of the Sovereign and public should not misuse them so that the life of banknotes is enhanced. The
     Reserve Bank has stated that it has been taking all measures to supply clean banknotes across the country and
     has urged the members of public to contribute their mite to its efforts.

 I thank you very much for sending me a                                                                 Received Issue No. 02, Volume 1 of GIC
 copy of GIC News of March 2008 and                                                                     Re News for March, 2008 and was very
                                                    Thank you for sending GIC Re news.
 was very happy to read and more happy                                                                  happy to read the news about GIC Re
 to see the photographs.                                                                                and its activities. We could also see in
                                                    I am sure it will help me to update
 Also this news letter gives all the
                                                    myself on the happenings in GICRE and               this volume other interesting articles
 corporate news of GIC and it is nice to
                                                    the Indian Market.                                  and would like to congratulate ..........
 keep in touch and also some market
                                                                                                        entire editorial team for bringing out
 news. All articles are good for reading.
                                                    Hope I will continue to receive future              such useful publications.
 Also good to read some recipes.
 Overall good issue and keep it up.
 Thanks again and do sent future                                                                        We wish the publication good popularity
 issues…                                                                                                for the future..........
 With best regards,                                                                                     Bharat J. Boda
                                                    Natarajan Murali
 Achala Nayak                                                                                           Chairman
                                                    Asian Runoff Management
 General Manager                                                                                        J. B. Boda Group of Companies Pvt.
 J B Boda Insurance Services (L) Bhd                                                                    Ltd.
                                                                                                        Mumbai India

                                            An Appeal to GIC RE family members
  We welcome your feedback and also it would be nice if you can send in your contributons by way of write ups for the next issue
  You can send in the material to the mail id :
  Team GIC ReNEWS            Editor               :       K Raghunath
                             Editorial Board :            P. K. Bhagat, Deepak Godbole, Anoop Khanna
                             Correspondents :             Suchita Gupta, Satyajit Tripathy, J Paramsivan, Hitesh Joshi
                                                          Rajesh Khadatare, K. Thangaraj, Santosh Phatak

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                                            General Insurance Corporation of India
     “Suraksha",170, Jamshedji Tata Road,Churchgate, Mumbai - 400 020. India Tel. 91-022-2286 7000 Fax : 91-22-289 9600
       Email : Branch Offices : Dubai, London Representative Office : Moscow
                      For Private and Restricted circulation only. Not for sale. For employees and associates of GIC Re only                                                                                                                               16

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