General insurance
Non-life insurance — cover for property, motor, health, travel and personal accident risks — as against life insurance, which covers loss of life or income.
In plain language
Insurance is not one single product. It splits into two broad families, and the split matters because different rules and different companies handle each.
Life insurance covers the loss of a person's life or income. General insurance, the other family, covers everything else — damage to property, a car accident, a hospital bill, a cancelled trip.
The workbook's own examples of what general insurance covers: loss and damage to property from fire and theft, motor accidents, health costs, travel mishaps, and personal accidents.
How it works
Both life and general insurance sit under one regulator, IRDAI. The life insurance segment was opened to private players in 2001; the workbook treats general insurance as the separate, non-life half of the same market. Within IRDAI's oversight, the Tariff Advisory Committee supervises the rates charged specifically for general insurance products, and also lays down how insurance companies may invest the funds they collect.
On the claims side, general insurance uses specialists the life segment does not: surveyors and loss assessors are used to assess a claim and the quantum of loss, and third party administrators process health insurance claims specifically. An agent, similarly, typically represents one life insurer, one general insurer, and one standalone health insurer — never an unlimited number of each.
A worked example
Mr Nair's household buys three different covers in one year: a life insurance policy for Rs 50,00,000 of cover on his own life, a health insurance policy reimbursing hospital bills, and a motor policy on the family car. Only the health and motor policies are general insurance — the life policy sits in the separate life segment, even though the same insurance company group may sell all three.
When his car is damaged in an accident, a surveyor assesses the loss before the general insurer pays the claim — a role that has no equivalent on the life insurance side, where the payout is simply the sum assured.
Why NISM asks about it
Chapter 1 (Introduction to Personal Financial Planning), section 1.3.3 (Insurance Planning), names general insurance as the cover for property loss and damage. Chapter 5 (Introduction to Indian Financial Markets), section 5.4.3, adds the regulatory detail — the life/general split, the Tariff Advisory Committee, surveyors and third party administrators. Expect a question distinguishing life from general insurance, or naming the entities specific to the general insurance claims process.
Common exam traps
- General insurance means non-life insurance — motor, health, travel, fire, personal accident — not a synonym for insurance in general.
- Surveyors/loss assessors and third party administrators are general-insurance-specific roles. Do not apply them to a life insurance claim, which is simply the sum assured on proof of the insured event.
- The Tariff Advisory Committee regulates rates for general insurance products specifically, not the whole insurance industry.
Check yourself
1.Loss and damage to property and other valuables from fire and theft is covered by:
- a)Life insurance
- b)Health and accident insurance
- c)General insurance
- d)Term insurance
Show the answer
Answer: (c) General insurance
"General insurance can provide covers for loss and damage to PROPERTY AND OTHER VALUABLES FROM FIRE, THEFT and such events." Life insurance covers temporary loss of income from disabilities and permanent loss from death; health and accident insurance deals with events that impair income while increasing health care and recuperation expenses.
Where this is taught
Free preparation for NISM Series X-ARelated terms
- IRDAIThe Insurance Regulatory and Development Authority of India, the regulator of India's insurance sector. It protects policyholders' interests and handles grievances on insurance contracts and ULIPs.
- Health insuranceInsurance that covers an insured person's medical and surgical expenses, regulated in India by the Insurance Regulatory and Development Authority of India (IRDAI).
- Insurance as risk transferThe mechanism by which a household hands its risk of an unexpected loss to an insurance company, in return for a small, certain premium — the basic idea underlying every insurance product.
- Life insuranceThe product family that covers loss of income: temporary loss from disability and permanent loss from death — the first of the three covers in a household insurance plan.