What is INSURANCE???

Insurance is defined as :1. A promise. 2. future losses. 3. Periodic payments. Designed to protect financial well being. Created by law or optional. E.g. car insurance, health insurance, life insurance, marine insurance, fire insurance.

Insurance sector in India

Commenced with establishment of the Oriental Life Insurance Company in 1818.

Governed by : Insurance Act, 1938. Life Insurance Corporation Act, 1956. General Insurance Business (Nationalisation) Act, 1972. Insurance Regulatory and Development Authority (IRDA) Act, 1999.

 Liberalization began from year 1991. In operation, 29 insurance company

14 private life insurers. nine private non-life insurers. six public sector companies.

life insurance premiums contributes 2.5% of GDP and general insurance premiums contributes 0.65% of GDP. FDI limit of 49%. Only 20% of the population is insured, huge potential to grow.

 Indian insurance companies 1) 2)

Comparison of Insurance sectors

International insurance companies

1) 2)

 Its a joint venture between Bajaj Finserv Limited and Allianz SE. Its vision is to be the first choice insurer for customers. In 2008 its the first company to cross the Rs.100 crores mark in profit after tax by generating Rs.105 crores. Bajaj Allianz Life Insurance has a customer base of more than 2 million customers.

 Its a joint venture between ICICI Bank Prudential Plc. ICICI Prudentials equity base stands at Rs. 2100 corer. ICICI Prudential is also the only private life insurer in India to receive rating of AAA (ind) from Fitch rating. ICICI Bank and Prudential plc has holding of 74% and 26% stake respectively.

 Its is one of the leading insurers and financial service provider world wide. Allianz has global operations and subsidiaries and branches spread across Asia, Europe, pan America, the Middle east and Africa. Allianz is headquartered in Munich, Germany and employs 181,207 peoples.

SWOT Analysis Internal factor Analysis

strength strength

1. Strong Brand Image. 2. Largest distribution network. 3. Value added services

1. Leading provider of insurance service. 2. Strong assets management operations. 3. Excellent rating.

Internal factor analysis

weakness weakness

1. Huge competition with the Government Companies. 2. Weak Customer Relations Management. 3. Centralized Structure.

1. Sub prime exposure. 2. Weak German motor insurance operations. 3. Sub optimal combined ratio in some non-life insurance market.

External factors analysis

opportunities opportunities

1. Large Untapped Market. 2. Distinguishable product (like Parivar Account).

1. Booming Russian insurance sector. 2. Global demand for retirement product.

External factors analysis

Threats Threats

1. Presence of very strong competitors. 2. Aggressive marketing by competitors. 3. Various investment Schemes with high returns.

1. Mounting insurance fraud. 2. Occurrence of natural disaster. 3. New regulation of government in Italy.

Internal factor analysis

strength strength

1. Strong Tie Up. 2. Strong Network. 3. Huge Customer Database

1. Leading financial services company. 2. Multi-network distribution. 3. Complementary yet diversified businesses

Internal factor analysis

weakness weakness

1. Low Customer Awareness. 2. Less Promotion. 3. Untouched Rural Population.

1. Exposure to subprime mortgage. 2. Litigations. 3. High combined ratio.

Internal factor analysis

opportunities opportunities

1. Large uninsured Population. 2. Network Building. 3. Targeting the Rural Segment.

1. Expansion into India. 2. Increasing demand for pension and retirement products. 3. Growing life insurance and pension market.

Internal factor analysis

Threats Threats

1. Competitors. 2. Customers belief in LIC. 3. Faster Turnover of Employees.

1. Volatility in financial markets. 2. Mounting insurance frauds. 3. Consolidation in financial services industry.

Result of SWOT Analysis

Indian insurance sector. International insurance sector.

1. Strong network and Strong brand image. 2. Low customer awareness. 3. Large untapped market. 4. Huge competitors

1. Strong financial strength. 2. Sub prime exposure. 3. Global demand of retirement product. 4. Mounting insurance frauds and market volatility