Regulatory Models Governing Investment Policies Of Insurance Companies Essay

business of insurance. But the lack of uniformity, loop holes, blind spots and deficiencies within

Foreign investment is an important part of our economy. There are many benefits to foreign investment in any country. It would be very difficult or impossible today to close the doors to foreign investment. The fact is foreign investment is responsible for providing a great deal of needed capital in this country. This capital is an asset in the continuous modernization and expansion of our manufacturing and other productive facilities. Without investment in our factories and processes we would fall behind in the world market. These investments lead to increased competitiveness within the international community.

In the words of the erstwhile Finance Minister, Morarji Desai: Whereas Life Insurance Corporation will always bear in mind that its primary obligation is to its policy holders whose money it holds in trust, and will never lose sight of the fact that, as a single investor in India, it has to keep before it the investors of the community as a whole. It will, therefore, invest in ventures which further the social advancement of the country. Its funds will, as far as practicable, be invested for the entire good of the country. The following factors are essential for an ideal insurance policy:

Insurance is an arrangement by which a company gives customers financial protection against loss or harm such as theft and illness in return for premium payments. One of the most important ways that external economic factors are affecting insurance industries is by experiencing a slow pattern in the economy. Insurance companies are affected by lower sales and lower rates of returns on their investments. Companies have to sell certain products for which they have the commitment and the

The Insurance industry is very heavily state regulated. According to the Government Accountability Office (GAO) study, the state run regulatory system is Federal verses State Regulation protecting the markets, insurance industry and policy holders and was evidenced during the financial crisis of 2008-09. The insurance business is highly profitable. “Well-run companies can make a lot of money, which breeds competition” from both “inside and outside competitors” (Property, 2013). Insurance companies were well “insulated” from the “severe” financial crisis of 2007-2008 that affected the banks and security firms, because the State regulations have the Insurance Industry “walled off” from Federal Regulations (Property, 2013). During the “Great Depression of the 1930s” “Insurance policy holders were protected by the states’ prudent supervision and regulation” (Property, 2013).

Frequently the media depicts insurance fraud to be most commonly committed by individuals who invest in the insurance firms for promising protection and

Life insurance companies: where the asset is managed in a statutory fund and mostly invested in equities and debt

The insurance industry has long been applying game theory to evaluate whether or not individuals are insurable and determine how much premium to charge them based on their apparent needs. This interaction between the consumer and the insurance company can be characterized as a game because not only are they playing against one another but each party is waging on an outcome more beneficial to them. In a traditional life insurance, there are many variables to consider when utilizing game theory to form a strategy as there are investment components along with complex riders. Thus, in order to keep the game relatively simple, this paper will assume the insurance being considered is term life and use game

It is the top consideration of insurance companies when they underwrite the policy and calculate the rate.

Purchasing life insurance would ensure that beneficiaries can receive indemnity from the death of the insured. For business owners, many of them owe their great success to some key employees in their companies who can discover new segmented markets, create groundbreaking products and maintain close relationships with big customers; therefore, the death of key employees would cause a dramatic profit decrease. To redeem the loss of the firm and search for suitable substitutes, business owners purchase life insurance for key employees. Moreover, for parents and spouses, they purchase insurance to acquire the promise of a financial fresh start after the death of the insured. According to the Capital Needs Worksheet, a large amount of money are needed to cover the expense of a decent funeral and the debt. In that case, life insurance meets the fund demand by providing death proceeds,

In 1974, the Employee Retirement Income Security Act (ERISA) was enacted as a federal law that establishes minimum standards for investment allocation in pension plans. After the establishment of ERISA, asset allocation and modern portfolio theory became standard practice because portfolio managers are required to be in compliance with the ERISA when they allocate investors’ capital in pension plans. In the existing academic literature, Del Guercio (1996) present large amount of evidence in his study that “Prudent-Man” regulations of US pension funds distorts portfolio choice towards high quality and less risky stocks.

There have been a number of proposed and upcoming changes to GAAP and solvency reporting standards in the US, Canada and Europe in recent years. In particular, significant efforts have been made to increase convergence between US GAAP and IFRS. The following report discusses the pros and cons of convergence between standards in different jurisdictions, as well as convergence between GAAP and solvency standards, in relation to insurance contracts. Here, the term ‘GAAP’ refers to financial reporting for investors, shareholders and creditors. Solvency standards refer to the regulatory requirements imposed on insurers. The jurisdictions discussed have been limited to those in which The Greatest Life Insurance Company operates in: namely, the US, Canada and Europe.

In this paper I will discuss and summarize three articles, “Human Capital, Asset Allocation, and Life Insurance” by Peng Chen, Roger G. Ibbotson, Moshe A. Milevsky, and Kevin X. Zhu, “Asset Allocation in a Crisis” by Brian Jacobsen, and “The Pool and the Stream” written by Susan Trammell.

Insurance is a federal subject in India. It is a subject matter of solicitation. The legislations that deal with insurance business in India are Insurance Act, 1938 and Insurance Regulatory & Development Authority Act (IRDA), 1999. Insurance is defined as is a form of risk management primarily used to hedge against unforeseen risks of contingent losses. Another approach to Insurance is as the equitable transfer of risks, or the possibility of occurrence of losses, from one entity to another, by the method of diversification in exchange for a premium. An Insurer is a company designing, promoting and selling insurance products and services amongst the public. An insured or policyholder is the person or entity purchasing these products and services.

In the next five years, increased interest rates and increased investment in new activities will promote the vehicle insurance industrial.