Insurance may be defined as a contract in writing under which one party agrees to indemnify the other party against a loss or damage suffered by it on account of an uncertain future, in return for a consideration called 'premium'. The person/business who gets its life/property insured is called 'Insured/Assured'. The agency which helps in entering into an insurance arrangement is called 'Insurer' or 'Insurance company'. The agreement or contract which is put in writing, is called a 'policy'.
Insurance cover for the employees of a company is an important aspect of social security benefits package. It includes insurance policies relating to medical benefits, compensation to worker's as well as provident funds. Accordingly, many insurance companies have designed certain policies which provide such insurance cover to the employees. For example:-
- Workmen's Compensation Insurance by United India Insurance Company Limited. :- Under it an employer is required to pay compensation to his workers who receive injuries or contract occupational diseases during the course of their work. Such compensation is payable under the Workmen's Compensation Act. An employer may obtain an insurance policy to cover such liability. The premiums are payable usually on the basis of wages. It is also known as 'Employers' Liability Insurance'. This policy provides insurance against the following risks:-
- Indemnity to insured against his liability as an ‘employer' to accidental injuries (including fatal) sustained by the ‘workman' whilst at work.
- On extra premium-medical, surgical, and hospital expenses including the cost of transport to hospital for accidental employment injuries.
- Liability in respect of diseases mentioned under the Workmen's Compensation Act , on additional premium, which arise out of and in the course of employment.
Similarly, Employers' Liability Policy is provided by the New India Assurance Company Limited . Their policy covers statutory liability of an employer for the death of or bodily injuries or occupational diseases sustained by the workmen arising out of and in course of employment.
The Government of India has enacted the Employees' State Insurance Act, 1948 (ESI Act) which relates to employee insurance. The Act envisages an integrated need based social insurance scheme that would protect the interest of workers in contingencies such as sickness, maternity, temporary or permanent physical disablement, death due to employment injury resulting in loss of wages or earning capacity. The Act also guarantees reasonably good medical care to workers and their immediate dependants. The Act provides several social security benefits which include medical benefits, maternity benefits,etc. The Act further absolved the employers of their obligations under the Maternity Benefit Act,1961 and Workmen's Compensation Act 1923. The insurance scheme under the Act is tailored to suit the health insurance requirements of workers providing full medical facilities to the insured persons and their dependants.
The Central Government has set up the Employees' State Insurance Corporation (ESIC) to administer the schemes under the ESI Act. It is the premier Social Security Organization in the country. The corporation comprises members representing Central and State Governments, Employers, Employees, Parliament and the medical profession. The functions of the Corporation are to provide medical care and treatment, cash benefits during sickness, maternity and employment injury and pension for dependents on the death of the workers due to employment injury.
There is also an important Central Government Employees' Group Insurance Scheme (CGEGIS) which provides the Central Government employees with the two fold benefit:- (i) insurance cover to help their families and (ii) lump sum payment to augment their resources on retirement. All the employees' who had entered Central Government Service after 1st November,1980 are compulsorily covered under the scheme from the date it came into force i.e. from 1st January,1982.
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