Insurance Zerodha – In a broader sense, businesses can be in production or services. The previous chapter had to do with the cement production industry. In this chapter we will study how to analyze the insurance sector, the service company.
Insurance is in the simplest statement of risk protection. If your family depends on your regular income, you will better secure your life. Vehicle insurance can pay for damages in the event of an accident. Health insurance can cover your health costs if you have a health -related problem. Events unforeseen event that can cost you is easier to get if you secure it.
Insurance Zerodha
If insurance can make life easier so easy, why not have all insurance? Lack of consciousness and inability to allow premium payments are common. Those who can afford to pay premiums usually use insurance only to save taxes. Even those who understand that insurance is needed does not have to see it as an urgent need. So they are constantly postponing the insurance purchase. For many people, this is a psychological obstacle – how can I give value to my life? Why should I think about what happens if I meet an accident or die? And how to discuss my death with your family? An easy way to go out is not insurance at all.
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To think that psychological obstacles can be more visible among elderly conservative Indians can be lies. About 83% of the millennium has no life insurance. The millennia are now working age and maybe they have dependent. If education and consciousness or any other solution manage to achieve wider insurance, there is a great potential for developing their business for insurance companies. If 83% of the millennium has no life insurance, only 17%. It also means that a five -fold market is waiting for tapping.
If you are an investor, the insurance sector really seems to be a hot and mature investment. However, insurance is a complex business. And is regulated by IRDAI or Regulatory Office and Development for India insurance. Idai is trying to protect the customer’s interests, along with the regulation of sales procedures, risks and financial power of insurance companies.
As an investor in the insurance sector, you need to understand that insurance companies are engaged in rising risks. The risk of securing insurance insurance is the risk that the insurance company is earning. So the question is how the insurance company makes money from these risks?
The answer is double. Insurance companies make money from investment profits and profits. Signature earnings occur when insured insurance insurance exceeds the total amount paid in the claim. The insurance company does not need to immediately need funds from insurance requirements. Until then, it can invest these funds to achieve investment profits, the second flow of money they earn for insurers.
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While earning money is mainly from two sources, insurance companies vary in the type of insurance they offer. This also affects the insurer’s approach to risks. Let them dive deeper.
The industry includes both private and public players. LIC itself orders two -thirds of the life insurance market in India. Also also the sole state ownership insurer. The general insurance segment is filled with private players. The government also promotes six general insurance companies. This is the General Insurance Company of India, Nová India, insurance company Joined Insurance Company, Oriental Insurance Company, National Insurance Agency and Agricultural Dealing Society.
When studying the insurance sector, it is necessary to understand why and how both types of insurance companies (life and generally) are different.
Life insurers are usually forced to have a long -term nature. Let me discuss it. Life insurance has passed years or even decades. People still pay premiums for several years. Thus, there is a considerable abyss between the time of purchasing average policy and when its demand is resolved. Therefore, the long -term nature of tasks.
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During this gap, the premiums are gathered empty. These empty funds are called “float”. A life insurance company can invest a grade to achieve investment. It can also risk another investment risk because the time horizon is long. As you know, a higher risk is taken when looking for higher returns.
General insurers usually have short -term liabilities. Regardless of whether it is medical, vehicles or active, most general insurance contracts have a maximum duration of one year. For example, you have paid a health insurance premium today. This policy will be valuable up to one year from today. Let’s say you have filed a request after six months. The insurer will have to pay you. In the case of general insurance companies, any responsibility for less than one year will arise. Therefore, investments are also short duration and should have a minimal risk. Of course, if insurance was not required, it is a profit for the insurer.
By the way, if you read about the success of Warren Buffett, you have probably heard about the advantage of investing it from FLOAT money. Buffett, Berkshire Hathaway (BH), is a major multinational company. His main business is insurance. Security gives bh a large set of sails. Float is free money – no credit cost or obligation to share investment profits with premium payers. A larger grade provides more room for investment growth. However, if there is a loss in cruise, the insurer will have to pay for him from his capital.
Now let’s stop and think a little. The ability to invest comes only if the premium received is more than the payment for the requirements. As an investor seeking to understand the insurance sector, you must analyze where the rewards come from if they increase or after the settlement of claims, if all investments bring positive returns and how the balance is noted, whether it is a balance and balance and how the balance is increased .
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Insurance mainly relies on sales efforts. If there is a lack of product awareness, marketing and sales are becoming an important force to raise awareness and adoption. And those who do not see insurance because they may require an urgent need for a small peak from insurance traders. Insurance companies use several channels to sell their policies.
The presentation of the fourth trimester of HDFC Life shows various channels used by HDFC Life to sell its life insurance products.
In fact, insurance companies that are part of the banking groups are mostly relying on Bancasurance and have an advantage over other independent insurers. HDFC Bank, SBI, Icici Bank and Kotak Mahindra Bank have accompanied the lives and general insurance companies. These banks are also the largest partners in the bankers for these companies associated.
This concept is similar to the chocolate located near the cashier’s counter in the minority. During the billing you will choose some chocolates impulsively and at the same time do not care for small expenses.
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Tax storage is a strong motive for people to buy insurance. Premiums up to 1.5 lakh paid for life insurance are exempt from taxes under Article 80 (a). C). Foundation plans that come with a certain level of savings along with insurance insurance were fashionable. Taxpayers who choose an old tax regime use these exceptions. However, taxpayers do not need these exceptions if they choose a new tax regime. A considerable number of people choosing a new regime can damage the insurance demand.
Similarly, the exceptions under Article 10 (10D) were removed for an annual payment of premiums of more than 5 lakh. Section 10 (10D) makes the benefits of tax -free maturity if at least ten times a year the premium payment. Budget 2023 and completed this provision. If the annual premium payment is more than 5 lakh, the benefits will become invalid. In essence, this change has received the tax benefits of insurance that the rich can enjoy.
If you are an investor in the insurance sector, you want to know how tax policy affects the insurance business. The scenario can change with an annual budget every year.
As I have already mentioned, insurance is about the dangers. Therefore, it makes business sense to diversify these risks. Diversification should be within geographical areas, age groups, customer profiles, investment assets and a schedule for binding payments. We discuss why each of them is important.
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Geography: The high mortality rate in one region can be offset by low mortality in other areas. Violence or natural disasters tend to increase the number of claims; If the police holders are far from one another, not everyone will suffer the disaster of claims claims.
Age groups: Some age groups may be more vulnerable to disease or pandemics. For example, most cases of pig flu were in children, while coronavirus mostly affected adults. Insurance between the age groups would help life and health insurance companies receive premiums from an uninftrated group while resolving requirements from the affected groups.
Investment Assets: This point is about setting assets. Given the nature of the business risk carried out by the insurer, he must carefully assign the investment assets to achieve optimal returns. This point is similar in the asset assignment chapter we discussed in the poverty module of poverty.
