ASSIGNMENT ON

INSURANCE SECTOR

 SUBMITTED BY
: 

 AKHIL M NAIR
 VIPINKRISHNA C
 JERIN JACOB
Date

 SAJITH S
 17-02-2010  DIVYA U

 OVERVIEW OF
INSURANCE SECTOR
 INTRODUCTION
Insurance = Collective bearing of Risk.
Basic Human trait is to be averse to the idea
of risk taking.
Insurance, whether life or non-life, provides
people with a reasonable degree of
security and assurance that they will be
protected in the event of a calamity or
failure of any sort.
FACTORS EFFECTING SERVICE SECTOR

Customers
Competitors
Government
Technology and
Globalization -are forcing rapid
changes in the service sector.
In addition, there are four factors of
particular importance to service
providers-
change in how quality is perceived
cost control
customer services and
the new definitions of the customer.
ORIGIN AND GROWTH OF INSURANCE SECTOR
Till end of FY 1999-2000, two state-run
insurance companies, namely, Life
Insurance Corporation (LIC) and General
Insurance Corporation (GIC) were the
monopoly insurance providers in India.
Under GIC there were four subsidiaries
National Insurance Company Ltd.
Oriental Insurance Company Ltd.
New India Assurance Company Ltd.
United India Assurance Company Ltd.
ORIGIN AND GROWTH OF INSURANCE SECTOR:
In fiscal 2000-01, the Indian federal
government lifted all entry
restrictions for private sector
investors.
Foreign investment insurance market
was also allowed with 26 percent
cap.
GIC was converted into India's
national reinsure from December,
2000
All the subsidiaries working under the
GIC umbrella were restructured as
DIVISION OF INSURANCE
SECTOR
GENERAL INSURANCE


It means fire, marine / miscellaneous
insurance business whether carried on
singly or in combination with one/more of
them.

Types of General
Insurance
Fire insurance Policies
(a) Specific Policy
(b) Comprehensive Policy
(c) Valued Policy
(d) Floating Policy
e) Replacement or Reinstatement Policy:

GENERAL INSURERS
107 insurers amalgamated and grouped


into four companies viz.:


The National Insurance Company Ltd.
The New India Assurance Company Ltd.
The Oriental Insurance Company Ltd.
The United India Insurance Company Ltd.
The General Insurance Corporation
incorporated as a company.
 LIFE INSURERS


 Allianz Bajaj Life Insurance Co. Ltd.

 AMP Sanmar Assurance Co. Ltd.
 Birla Sun Life Insurance Co. Ltd.
 Dabur CGU Life Insurance Company Pvt.
Ltd.
 HDFC Standard Life Insurance Co. Ltd.
 ICICI Prudential Life Insurance Co. Ltd.
Contributors

 ING Vysya Life Insurance Co. Pvt. Ltd.

 Life Insurance Corporation of India.
 Max New York Life Insurance Co. Ltd.
 Metlife India Insurance Co. Pvt. Ltd.
 Om Kotak Mahindra Life Insurance Co. Ltd.
 SBI Life Insurance Co. Ltd.
 Tata AIG Life Insurance Co. Ltd.
 NON-LIFE INSURERS
 Bajaj Allianz General Insurance Co. Ltd.
 ICICI Lombard General Insurance Co. Ltd.
 IFFCO Tokyo General Insurance Co. Ltd.
 National Insurance Co. Ltd.
 New India Assurance Co. Ltd.
 Oriental Insurance Co. Ltd.
Contributors

 Reliance General Insurance Co. Ltd.

 Royal Sundaram Alliance Insurance Co. Ltd.
 Tata AIG Life Insurance Co. Ltd.
 United India Insurance Co. Ltd
Reinsurers:

 General Insurance Corporation of India.

Other Type of insurance
Property insurance
Automobile insurance
Aviation insurance
Boiler insurance
Builder's risk insurance
Crop insurance
Earthquake insurance

Type of Life Insurance
Polices
Endowment Policy
Whole Life Policy
Limited Payment Life Policy
Joint Life Policy
Convertible Whole Life Policy
Annuities

Type of Life Insurance
Polices
Sinking Fund Policy
Double Accident Indemnity Policy
Janata Policy

COMPANY LOGOS
COMPANY LOGOS
 Development Authority
(IRDA)
 In 1993 Government setup a committee under
chairmanship of RN Malhotra ,former
Governor of RBI for reforms in Insurance
sector.
 Recommendations are :-
 IRDA was constituted as an autonomous body
to regulate and develop the insurance
industry.
 Foreign companies are allowed up to 26% of
paid up capital and can operate with an
Indian company.

Composition of Authority
under IRDA Act, 1999
The Authority is a ten member team
consisting of

    (a)    a Chairman;

    (b)    five whole-time members;
    (c)    four part-time members

 Duties, Powers and
Functions of IRDA
qTo regulate, promote and ensure orderly
growth of the insurance business and re-
insurance business.
qIssue to the applicant a certificate of
registration, renew, modify, withdraw,
suspend or cancel such registration .
qProtection of the interests of the policy
holders in matters concerning assigning of
policy, nomination by policy holders,
insurable interest, settlement of insurance
claim, surrender value of policy and other
terms and conditions of contracts of
 Duties, Powers and
Functions of IRDA
Specifying requisite qualifications, code of
conduct and practical training for
intermediary or insurance intermediaries
and agents.
Specifying the code of conduct for surveyors
and loss assessors.
Promoting efficiency in the conduct of
insurance business.
 Duties, Powers and
Functions of IRDA
 Levying fees and other charges for carrying
out the purposes of this Act
 Calling for information from, undertaking
inspection of, conducting enquiries and
investigations including audit of the insurers,
intermediaries.
 Control and regulation of the rates,
advantages, terms and conditions that may
be offered by insurers in respect of general
insurance business .

 CONDITIONS OF IRDA
FOR REGESTRATION

Company is formed and registered under

the Companies Act, 1956;
The aggregate holdings of equity shares
by a foreign company, either by itself or
through its subsidiary companies or its
nominees, do not exceed 26%, paid up
equity capital of such Indian insurance
company;
The company's sole purpose is to carry on
life insurance business or general
insurance business or reinsurance
business.
 CONDITIONS OF IRDA
The minimum paid up equity capital for life or
general insurance business is Rs.100 crores.
The minimum paid up equity capital for
carrying on reinsurance business has been
prescribed as Rs.200 crores.

CONTRIBUTING TO
GROWTH
 Currently, the insurance sector size is
estimated at Rs.500 billion.
 On account of intense marketing strategies
adopted by private insurance players, the
market share of state owned insurance
companies like GIC, LIC and others have
come down to 70% in last 4-5 years from
over 97%.
 The private insurance players despite the
sector is still regulated has been offering
rate of return (RoR) to its policy holders
which is estimated at about 35% as against
20% of domestic insurance companies.
CONTRIBUTING TO
GROWTH
 LIC and GIC have limited number of policies
to offer to their subscribers
 Private insurance companies offer many
policies and the premium amount as well
as the maturity period is much competitive
as against those of government insurance
companies.
 The private sector insurance players have
started exploring the rural markets in
which until recently, the state owned
companies had the monopoly.
 India’s life insurance premium, as a
percentage of GDP is 1.8%
 Future of the Sector:
 Indian insurance sector is likely to register
unprecedented growth of 200% and
attain a size of Rs. 2000 billion by 2009-
10
 A private sector insurance business will
achieve a growth rate of 140% as a
result of aggressive marketing technique
being adopted by them against 35-40%
growth rate of state owned insurance
companies.
 In rural markets, the share of private
insurance players would increase
substantially as these have been able to
generate a faith among their rural
 Insurance Sector -
Emerging Areas:
 Demand for Pension Plans
 Two relatively modern trends affect life
insurance business in India significantly:
– Joint Family System and
– elderly are increasingly having to fend for
themselves
 Separateness of Banking and Insurance
– Bancassurance
 Role of Information Technology
 Using Postal Network
 Creating Insurance awareness
 Innovative Products
 CHANGE IN TRENDS
FROM PRICE POINT OF VIEW


DIFFERENT COMPANIES ARE PROVIDING

POLICES OF INSURANCE AT COMPETETIVE
PRICES
EVEN THE ALLOCATION CHARGES UNDER
POLICIES IS ALSO DECREASED
THE INSURANCE AGENT COMISSION IS ALSO
FIXED AND REDUCED SO THAT THE
CUSTOMER CAN GET THE BEST.
FROM CUSTOMER AND SERVICE
POINT OF VIEW
 Globalization - "The Dynamic Force"
 MNCs - "The New Path Maker"
 More customer oriented
 Mostly better service oriented
 More competitive
 Better satisfaction
 More value addition
 Strategic development
 FROM PROMOTION
POINT OF VIEW
Computerization
Internet
Electronic Clearance Service
(ECS)
Call Centres and SMS services
 INDIAN INSURANCE IN
21ST CENTURY


 2000: IRDA starts giving licenses to private insurers: ICICI

prudential and HDFC Standard Life insurance first private
insurers to sell a policy
 2001: Royal Sundaram Alliance first non life insurer to sell
a policy
 2002: Banks allowed selling insurance plans. As TPAs enter
the scene, insurers start setting non-life claims in the
cashless mode
 2007: First Online Insurance portal, https:/// set up by an
Indian Insurance Broker, Bonsai Insurance Broking Pvt Ltd.
 The Government of India liberalized the insurance sector in
March 2000 with the passage of the Insurance Regulatory
and Development Authority (IRDA) Bill, lifting all entry
restrictions for private players and allowing foreign
players to enter the market with some limits on direct
foreign ownership.
 Minimum capital requirement for direct life and Non-life
Insurance company is INR1000 million and that for
reinsurance company is INR 2000 million. In the 2004-05
budgets, the Government proposed for increasing the
foreign equity stake to 49%, this is yet to be effected.
UNIT LINKED
INSURANCE
POLICIES(ULIP)
Combination of risk cover
and investment



BENEFITS OF ULIPS
TOP UP
SWITCH
PARTIAL WITHDRAWAL

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