Services Of Insurance Sector.

Introduction

The Insurance sector in India governed by Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and General Insurance Business (Nationalisation) Act, 1972, Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related Acts. Two types of insurances are: General Insurance Life Insurance. Basic functions of Insurance 1.Primary Functions 2.Secondary Functions 3.Other Functions Primary functions of insurance Providing protection The elementary purpose of insurance is to allow security against future risk, accidents and uncertainty. Insurance cannot arrest the risk from taking place, but can for sure allow for the losses arising with the risk. Insurance is in reality a protective cover against economic loss, by apportioning the risk with others.

Collective risk bearing Insurance is an instrument to share the financial loss. It is a medium through which few losses are divided among larger number of people. All the insured add the premiums towards a fund and out of which the persons facing a specific risk is paid. Evaluating risk Insurance fixes the likely volume of risk by assessing diverse factors that give rise to risk. Risk is the basis for ascertaining the premium rate as well. Provide Certainty Insurance is a device, which assists in changing uncertainty to certainty.
Secondary functions of insurance

Preventing losses Insurance warns individuals and businessmen to embrace appropriate device to prevent unfortunate aftermaths of risk by observing safety instructions; installation of automatic sparkler or alarm systems, etc.

Covering larger risks with small capital Insurance assuages the businessmen from security investments. This is done by paying small amount of premium against larger risks and dubiety. Helps in the development of larger industries Insurance provides an opportunity to develop to those larger industries which have more risks in their setting up.

Other functions of insurance Is a savings and investment tool Insurance is the best savings and investment option, restricting unnecessary expenses by the insured. Also to take the benefit of income tax exemptions, people take up insurance as a good investment option.

Medium of earning foreign exchange Being an international business, any country can earn foreign exchange by way of issue of marine insurance policies and a different other ways. Risk Free trade Insurance boosts exports insurance, making foreign trade risk free with the help of different types of policies under marine insurance cover.

Business Environment
India with about 200 million middle class household shows a huge untapped potential for players in the insurance industry. Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors. The insurance sector in India has come to a position of very high potential and competitiveness in the market. Indians, have always seen life insurance as a tax saving device, are now suddenly turning to the private sector that are providing them new products and variety for their choice.

The insurance agents still remain the main source through which insurance products are sold. The concept is very well established in the country like India but still the increasing use of other sources is imperative. At present the distribution channels that are available in the market are listed below. Direct selling Corporate agents Group selling Brokers and cooperative societies Banc assurance The rural consumer is now exhibiting an increasing propensity for insurance products. A research conducted exhibited that the rural consumers are willing to dole out anything between Rs 3,500 and Rs 2,900 as premium each year. In the insurance the awareness level for life insurance is the highest in rural India, but the consumers are also aware about motor, accidents and cattle insurance. In a study conducted by MART the results showed that nearly one third said that they had purchased some kind of insurance with the maximum penetration skewed in favor of life insurance. The study also pointed out the private companies have huge task to play in creating awareness and credibility among the rural populace. The perceived benefits of buying a life policy range from security of income bulk return in future, daughter's marriage,

Competitive Scenario

Customers have tremendous choice from a large variety of products from pure term (risk) insurance to unit-linked investment products. Customers are offered unbundled products with a variety of benefits as riders from which they can choose. More customers are buying products and services based on their true needs and not just traditional money back policies, which is not considered very appropriate for long-term protection and savings. There is lots of saving and investment plans in the market. However, there are still some key new products yet to be introduced - e.g. health products.

1. Bajaj Allianz - 77.26 crore 2. ING Vyasa - 2.58 crore 3. Reliance Life - 80.26 crore 4. SBI life - 248.54 crore 5. Tata AIG - 14.02 crore 6. HDFC standard - 136.72 crore 7. ICICI prudential - 251.97 crore 8. Birla Sun life - 9.73 crore 9. Aviva - 21.57 crore 10. Max New York - 25.15 crore 11. Met Life - 33.86 crore 12. Shriram Life - 44.90 crore 13. IDBI federal - 21.11 crore 14. Star Union Dai-chi - 44.98 crore 15. LIC - 1774.43 crore Data released by insurance sector regulator IRDA shows that the first year premium of the life insurers for the period of December, 2010 is again predominantly in favour of LIC. Herein mentioned are some statistics given by IRDA regarding the individual single premium of several life insurers in December 2010

Challenges:

Competition Rural Insurance Liquidity Issues Geographic catastrophic Issues Lack of HealthCare Awareness High Dependence On Auto Sector.

LIC

Life Insurance Corporation (LIC) of India is the only public sector Life Insurance Company in India. The company was formed in September 1956. Formed with more than 200 insurance companies and provident societies. Since then they have been among the most trusted brands in India providing insurance solutions to even the remotest corners of India through their huge network of agents and distributors. It was only in 2001 that the private sector was allowed into the insurance sector in India. LIC has maintained its dominant leadership status even with the presence of 22 other life insurance companies.

Products:

1. 2. 3. 4. 5.

Life Insurance Corporation of India provides number of products to its costumers.LIC differentiated their policies into five different types which are: Insurance Plans Pension Plans Unit Plans Special Plans Group Scheme

Pricing:
Pricing of LIC is not much concerned, as it carries the brand name & is the only Public Sector Organization In the sector. It depends Upon the type of Policy Required by the client or options available to the Clients. Major pricing are on the basis of Rural & Urban sectors, Or Commercial & Self Used. Comparatively to other insurance providers LIC has minimum costing & charges as per the products offered in comparison to other players.

Place
Rural Areas Commercial Scale. Urban Areas Co-operative sector.

Promotion
Government support for Financial Inclusion in Rural Areas. Special Schemes for agricultural Purpose Preference to Healthcare/ Life Insurance. Tie ups/ Collaboration

People:
LIC has training programs for their agents on relevance of how to deal with clients, Products Knowledge is also the priority to be delivered. LIC has attached training programs with every regional offices so as to be updated in their services & offerings. Regular meets of the agents & clients are conducted in order to solve various issues related to business.

Physical Evidence:
Policy Bond Agreement/ Documents/Photos Money Receipt Claim Check

Demand & Capacity Management:

Demand is high But conversion is low. Awareness about the Insurance & their benefits are being explained to the customers through several channels of promotion

Service Recovery Mechanism:

Proper Documentation to avoid Frauds. Clearance & Settlement of claim In lesser time. High Documentation which is not available with rural customers so supportive documents of their farms or etc can be accepted.

Dimension Of Service Quality:

Tangibility: physical facility, personnel behavior, equipments(channels) Reliability: to deliver promised services accurately Assurance: employees ability to gain trust & confidence of customers Empathy: Caring, individualized or relation building services to the customers Responsiveness: willingness to help promptly to the needs of the

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