Vous êtes sur la page 1sur 9

AN ABSTRACT

PERFORMANCE OF LIFE INSURANCE COMPANIES: A


COMPARATIVE STUDY BETWEEN PUBLIC AND PRIVATE SECTOR

Rajesh Deb Barman

INTRODUCTION:
Insurance is nothing but a contract between two parties, one party called insurer and

the other called insured or assured. Insurer agrees to indemnify the other party from loss

arising from certain specified events and the insured pays an agreed sum of money, called

premium or consideration. The business of insurance is related to the protection of the

economic value of assets. Insurance may be described as a social device to reduce or

eliminate risk of life and property. Under the plan of insurance a large number of people

associate themselves by sharing risk, attached to individual. The insurance sector in India has

come full circle from being an open competitive market to nationalization and back to a

liberalized market again.

STATEMENT OF THE PROBLEM:

Since the establishment of LICI in 1956 it was the only player in the Insurance sector

and was enjoying 100%, market share. This study identifies the enhancement of insurance

industry after the entry of private insurers in the Indian market. In today’s challenging

business environment, profitability and policy holder satisfaction, product awareness, service

quality and maximum number of lives covered are most important. In the above context, it

was felt necessary to make a comparative study between public and private sectors were

engaged in the Life Insurance business.

xxi
RATIONALE OF THE STUDY:

Privatization aims at providing benefits of the growth of the industry to the society by

providing better customer service and variety of quality products at reasonable prices. It

focuses on penetrating the insurance business to the rural and semi-urban areas. Consequently

by the year 2001, 10 private players entered the Life Insurance sector. Hence, it becomes

imperative to evaluate the performance of Public & Private Life Insurance companies. Hence,

the research titled, “Performance of Life Insurance Companies: A Comparative study of

Public & Private Sectors”.

RESEARCH GAP:

In spite of vast literature available on insurance, there still exists a gap which offers

further scope for research. As for example, sufficient studies have been made on marketing of

insurance products, growth of premium; impact of insurance on socio-economic development

of the country, life insurance, productivity of insurance companies, investment portfolios etc.

but only a few studies had compared the performance of public and private sectors. Hence,

the need for the study can be justified.

OBJECTIVES OF THE STUDY:

The study has the following objectives:-

1. To compare the profitability of public and private life Insurance Companies ;

2. To analyze the market share and premium collection by public and private life

insurance companies ;

3. To look the awareness level of customers about various products of public and

private life insurance companies; and

4. To analyze the customer satisfaction level in public and private life insurance

companies

xxii
RESEARCH QUERIES:

The research study is centred on the following research queries:

1. Whether the differences in the profitability ratio of Public and Private Sector

Companies are increased?

2. Whether the gap in market share of public sector insurance company and

market share of private sector insurance companies is enhanced?

3. Whether the customer awareness level in public sector is more than the

private sector?

4. Whether there is significant difference in customer satisfaction level in both

the private and public sector companies?

RESEARCH METHODOLOGY:-

The researcher has evaluated the performance of public and private sector insurance

companies engaged in life insurance business in India in terms of profitability, market share,

and premium collection by the insurer. Besides that, a study on the awareness level of buyer

on life insurance product and customer satisfaction level has also been under taken. The study

has been done into two groups’ i.e. public sector and private sector. The public sector

comprises of Life Insurance Corporation of India. In case of private sector life insurance

companies, the researcher has selected 10 companies out of existing 23(Twenty three) private

sector companies which are operating business in India and registered on or before 2001

under the IRDA 1999. The researcher has applied judgment sampling method in selecting

sample of private companies. In this case the researcher has chosen only those companies

which were registered on or before 2001 under this Act.

Sample units of study: The researcher has selected following private and public sectors

companies for the study:

xxiii
A. Public Sector Companies: As, the Public Sector Insurance Company is only

LICI, therefore the researcher has collected information from LICI and compare

the same with the average performance of all private insurance companies

B. Private Sector Companies: In private sector, up to 31st March’ 2014, there are

twenty three (23) private sectors life insurance companies operating in India. The

researcher has chosen only following ten (10) private companies are as:

1). HDFC Standard Life Insurance Company Limited, w.e.f. 23rd October’2000.

2). Max New York Life Insurance Company Limited, w.e.f. 15thrd November’2000.

3). ICICI Prudential Life Insurance Company Limited, w.e.f. 24th November’2000.

4). Kotak Mahindra Old Mutual Life Insurance Company Limited, w.e.f. 10th Jan’2001.

5). Birla Sun Life Insurance Company Limited, w.e.f. 31st January’2001.

6). Tata AIG Life Insurance Company Limited, w.e.f.12th February’2001.

7). SBI Life Insurance Company Limited, w.e.f. 30th March’2001.

8). ING Vysya Life Insurance Company Limited, w.e.f. 2rd August’2001.

9). Bajaj Alliance Life Insurance Company Limited, w.e.f. 3rd August’2001.

10). Met Life India Insurance Company Limited, w.e.f. 6th August’2001.

In case of interpreting information related to performance of the companies the

researcher has collected the national statistics or data regarding profitability, market share,

Premium Collection.

For interpreting the information related to customers awareness for various products

and satisfaction level the researcher has collected primary data from the policy holders of

Public and private life insurance companies located in Guwahati as majority private insurance

xxiv
companies are operating business in Guwahati and their business in entire Assam are

controlled from Guwahati regional offices.

Sources of Primary data: - The researcher has selected the policy holders on basis of

judgment sampling method. The criterion of judgment is educational qualification, gender,

occupation, premium paid, and income level of policy holder. The researcher has selected 50

policy holder from each of 10 select private insurance companies and 500 policy holders

from the LICI residing in Guwahati.

Sample size of Policy Holders: The sample size of policy holder is 1000 (i.e50×10+500).

Besides the policy holders, the researcher has also contacted regional heads of all select

private and public insurance companies for meeting few queries.

Sources of Secondary Data: The researcher has collected secondary data from Annual

Reports of IRDA, LICI, select Private Insurers and other websites.

Tools of analysis: - Some statistical tools like percentage, average, ratio, diagram, pie charts,

tables, trend analysis etc. and management accounting tools & technique have also been used

for interpretation of data and outcomes.

PERIODICITY OF THE STUDY:

This study covers the twelve year period from 2001-02 to 2013-14 for interpreting

secondary data.

LIMITATION OF THE RESEARCH WORK:

General Insurance Companies and Other performance parameter of life insurance

Companies are excluded from this study.

xxv
CHAPTERISATION:

Chapter I: Introduction: It includes meaning, Principles, Function, Importance,

Features, Life Insurance Vs Other Savings, Nationalisation of Life Insurance, and

Framework Research Design.

Chapter II: History & Profile of Life Insurance Companies: The scholar

explains the History of Life Insurance in India, Insurance Industry in India at Present

& Future, Importance Milestone in Life Insurance Regulated in India. IRDA, Profile

of select Life Insurer.

Chapter III: Profitability and Market Share Analysis: These units include

Revenue Account, Profit & Loss Account, Balance Sheet and Premium collection to

analysis the Profitability and Market Share.

Chapter IV: Product Awareness and Customer Satisfaction: In this chapter

scholar explain the life insurance awareness, customer satisfaction and penetration of

insurance business.

Chapter V: Summary of Findings, Suggestion and Conclusion: In this chapter

scholar explain the overall findings, summary, conclusion and scope for future

research.

MAJOR FINDINGS & SUGGESTIONS:

The following are the major findings of the study:

1. In Policy holder account the Surplus and Deficit of LIC of India surplus was worth Rs.

1215685/- lacks in 2001-02 this was the highest surplus and Rs.48810/- lack in 2002-03 was

the lowest surplus over the corresponding period; whereas that of Private life Insurance

companies suffering deficit of Rs.33755/-, 19133/- and Rs.26070/- lacks in 2001-02, 2002-03

xxvi
and 2008-09 beside that others study years earned surplus in the range of Rs. 2382/- to Rs.

622253/- lacks.

2. In share holder account the Profit or Loss after tax, LIC of India profits was Rs. 82179/- lacks

in 2001-02 and increase up to Rs.165668/- lacks in 2013-14 it indicate increase of 2.02 times;

whereas that of Private life Insurance companies suffering loss of (Rs. 22781/-) in 2001-02,

(Rs.38633/)- in 2002-03, (Rs.96637/-) in 2003-04, (Rs.87320/-) in 2004-05, (Rs.108400/-) in

2005-06, (Rs.193322/-) in 2006-07, (Rs.427744/-) in 2007-0, (Rs.584036/-) in 2008-09,

(Rs.204954/-) in 2009-10 and beside that others study years earned profits Rs.117180/- in

2010-11, Rs.466020/- in 2011-12, Rs.551080/- in 2012-13, and Rs.165668/- lacks in 2013-14.

3. In Balance sheet the Reserve & surplus of the LIC of India fluctuated from Rs. 10788/- in

2001-02 to Rs. 43000/- lacks in 2013-14 indicating an increase of 3.99 times; whereas that of

Private Life Insurer Rs.5448/- lacks in 2001-02 to Rs. 1700213/- lacks in 2013-14 it indicating

an increase of 312.08 times.

4. As regards to market share based on total premium collection of life Insurance

companies again we prepare a diagram to make a clear understanding of market share

position of public sector life insurance and private sector life insurance companies

and it is cleared that from the diagram year by year market share of public sector life

insurance deceasing from 2001-12 99.98 percent to up to 69.77 percent in 2010-11

and then increasing up to 75.39 percent in 2013-14 and private sector life insurance

companies are increasing from 0.02 percent in 2000-01 to 30.23 percent in 2010-11

and then decreased up to 24.61 percent in 2013-14

5. As regards to market share based on total policies collection of life Insurance

companies again we prepare a below diagram to make a clear understanding of

market share position based on total policies of public sector life insurance and

private sector life insurance companies and it is cleared that from the diagram year by

xxvii
year market share of public sector life insurance deceasing from 2000-01 99.23

percent up to 70.52 percent in 2008-09 and then increasing up to 84.44 percent in

2013-14 and whereas in private sector life insurance companies are increasing from

0.77 percent in 2000-01 up to 29.48 percent in 2008-09 and then decreased up to

15.56 percent in 2013-14

6. As regards to awareness of insurance products 80% of the population are aware about

insurance products in table & figure no.24,but people are aware only a few products

of the insurer as per table & figure no.25 & 26 says that only 1 to 3 products

knowledge are aware by people 76% of LICI products whereas 78% of Private Insurer

products due to innovative marketing skill of the Pvt. Life Insurer Agents

7. The present research study is an attempt to study the insurance awareness among the

people in Assam. It was found that awareness level of insurance plans of various

insurance companies is high in Guwahati city as compared to other places of Assam.

8. Policyholder satisfaction also depends on customers income level, status, education

qualification are vary from customer to customer in insurance sectors. The middle

income group policyholder is fully satisfied with LICI but the high income group

policyholders are not satisfied with LICI products. They preferred to buy the

insurance products from private insurers in Guwahati city

9. As regards to satisfaction of claims settlement of insurer Table & Fig. No. 12 & 13

revels that, both the Public and Pvt. Insurer provide negative response as compared to

excellent or good responds it shows that LICI provide 34% negative and 14%

excellent response to their customer whereas Pvt. Insurer provide 50% negative and

8% excellent response to their customer it means that LICI customer are more

satisfied compared to Pvt. Insurer customers in terms of Claims settlement.

xxviii
10. Policyholder satisfaction also depends on customer’s income level, status, education

qualification which varies from customer to customer in insurance sectors. The

middle income group policyholders are fully satisfied with LICI but the high income

group policyholders are not satisfied with LICI products. They preferred to buy the

insurance products from private insurers in Guwahati city.

11. Insurance helps people to minimize the risk. Though now-a-days different Insurance

companies have come into the Indian market with different insurance plans, yet large

number of people is not conscious about the new plans of different insurance

companies.

CONCLUSION:

With the opening up of the Indian Insurance sector to private players, a number of

private companies have entered this sector. The market share of almost all private life

insurance companies are increasing significantly, LICI also had crossed many milestones and

has set unprecedented performance records in various aspects of life insurance business. Yet,

the private insurance companies have been able to collect a larger amount of premium from

people. However, in future, private sector life insurance companies may capture a huge

percentage of the insurance market.

xxix