A well-developed and evolved insurance sector is needed for economic development as it provides long term funds for infrastructure

development and at the same time strengthens the risk taking ability. It is estimated that over the next ten years India would require investments of the order of one trillion US dollar. The Insurance sector, to some extent, can enable investments in infrastructure development to sustain economic growth of the country. ULIPs, insurance-cum-investment, are life insurance plans whose returns are linked to the stock markets. ULIP returns fluctuate with the ups and downs in the stock market. Mutual Fund are collective investment vehicles that pool resources of various investors and invests these resources in a diversified portfolio comprising of stocks, bonds or money market instruments. Although both these products are somewhat different in their working but more or less the fund pooled in both of them are invested similarly. With the advent of Unit Linked Insurance Plans, the life insurance products have changed from being only a life cover product to an investment vehicle with built-in features of life insurance and tax benefits. These days innovative products are flooding the market which offers the features of a traditional insurance policy with added benefits of high return from the market instruments. Bancassurance ,new concept catching up fast in India. One of the more recent examples of financial diversification is Bancassurance, the term given to the distribution of insurance products through branches & other distribution channels of the banks. The concept that originated in France now constitutes the dominant model in a number of European and other countries and the same is fast catching up in India as well. Health Insurance, With proliferation of various health care technologies and general price rise, the cost of care has also become very expensive and unaffordable to large segment of population. The government and people have started exploring various health financing options to manage problems arising out of growing set of complexities of private sector growth, increasing cost of care and changing epidemiological pattern of diseases.

ACKNOWLEDGEMENT Gratitude is the hardest of emotions to express and often does not find adequate words to convey the entire one feels, although it is difficult to mention the nature of all, who gave me their full support and cooperation throughout my dissertation work. I take the opportunity to intent my sincerer gratitude to my mentor ,,,,,,,,,,,,,,,,,,,,,, for his helpful guidance during the research period. This project report result is not only the outcome of the efforts put in by me but also by many helpful hands like the faculty members , my mentor and many of my friends.

Insurance Industry Thought Leaders Speculate on Innovation through 2020 By I&T Staff@insurancetech Technologies that debuted in the 2000s will mature during the next decade, driving ubiquitous computing, the analysis of an increasing number of data sources, and new levels of collaboration, among other areas of innovation, say industry thought leaders. Tags: Innovation, Great American Insurance Companies, Genworth Financial, Aite Group, Novarica, X By 2, mobile, virtualization, business process, , Comments MAY 13, 2011 Related: Go I&T's Top 10 Innovators of the Decade Gallery Piyush Singh, SVP and CIO, Great American Insurance Group (Cincinnati) In my opinion, there are two things that will truly impact the insurance industry in a dramatic way. The first major area will be ubiquity and power of mobile devices, which will replace our traditional fixed set devices. The desktop computer as we have known it will keep getting smaller and the technology that powers these devices will keep getting enriched to the point that companies will succeed in shrinking more power into the capabilities into the new mobile devices. The second prediction is related to the [expanding] accessibility and availability of data on everyone (consumers, businesses, etc.) that will change the way we look at our insured , as well as the ways we settle their claims.

Scott McKay, SVP and CIO, Genworth Financial (Richmond, Va.) The next frontier of innovation for the insurance industry will involve moving beyond simply employing a discreet new technology to instead deploying multiple maturing technologies in an integrated fashion. New capabilities will stem from combining technologies that connect individuals, automate processes and drive better business decisions. Imagine teams of actuaries and underwriters collaborating in real time on pricing for complex risks using deep data sets and sophisticated analytical approaches. Imagine high-touch, simple service experiences delivered for a fraction of today's costs. In both cases, integrated technologies will be the driving force behind the competitive capabilities necessary to deliver next-generation performance for both policy owners and shareowners. Clark Troy, Research Director, Aite Group (Boston)

The next 10 years should be momentous for insurance technology. By the decade's end, as electronic health records (EHRs) and health insurance exchanges drive standardization and transparency of health information, some life and health insurers will begin to price policies by analogy with telematics: customers' premiums will rise and fall with key health indicators, though regulators will constrain this process and fraud will remain a risk. Across all lines, carriers that manage data effectively and embrace and master predictive modelling will price risk better and gain market share. Distribution will splinter between online commodity sales and increasingly bespoke sales to high-net-worth individuals and institutions. Matt Josefowicz, Managing Director, Novarica (New York) It's hard to predict the most important technologies of the coming decade. Who would have predicted in 2001 the mobile revolution? But the watchword for information technology in the 2010s will be ubiquity -- non-traditional devices; behaviour tracking; and data about people, businesses, governments and risk will achieve a level of ubiquity by 2020 that we can't even imagine today. For insurers, this will mean their added value will shift even further away from finding things (customers or information) and toward analytics, risk management and service. Assuming privacy regulations require it, by 2020 underwriting will consist of one question: "Can I look up everything about you?" Frank Petersmark, CIO Advocate, X by 2 (Farmington Hills, Mich.) Two of the most important technology innovations of the next decade already have been invented: information analytics/modelling and mobility/virtualization. The innovation will be in how the industry applies these technologies to future business processes. Today, these technologies don't fit well or easily into long-ingrained business processes. The real innovation will be fundamentally upgrading and rethinking current processes to leverage such technologies. Information analytics has the potential to reshape the industry into a much more effective and predictably profitable world, providing carriers with a view of future risk and reward that they've never had. Likewise, the mobility and virtualization technology has the potential to lead carriers to new products, services and people in a much more efficient and customer-oriented way than currently exists.

The Journal of Risk and Insurance 1970 American Risk and Insurance Association
Abstract: Innovation is an important way to stimulate the growth of a firm or industry, even when, as in the life insurance industry, the innovation cannot be patented or copyrighted. The study analyzes six important life insurance innovations that have received widespread acceptance throughout the industry and concludes that larger firms have a greater tendency to adopt them than do smaller firms. Although some firms use committees to stimulate new policy innovations, about half use no formal methods. Life insurance innovations are adopted at a much faster rate than they were forty

years ago; thus, a monopoly on a sound, new policy or rider today disappears quickly. In analyzing three of the recent innovations, it was found that mutual firms tend to adopt them more quickly than stock firms, and larger firms more quickly than small ones. A firm that is an early adopter of one innovation tends to be an early adopter of another. There is no apparent relation between the recent growth of sales of a firm and the speed with which it adopts an innovation.

Its No Accident- Insurance Industries are Innovating Posted by James Pasmantier at 8:33 AM, April 28, 2011

A recent study by Deloitte, "Insurance Industry Outlook: High Hurdles Loom in 2011 & Beyond," suggests that that with a lagging economic recovery, insurance providers will be hard pressed to find organic growth and profitability. The report states, "For some carriers, the longer interest rates remain at historic lows, the deeper the hole they may find themselves in." But the lagging economy is only one hindrance. New players from other industries, such as retail, are moving into the traditional insurance space. Meanwhile, the consumer market is rapidly changing. Customers are becoming more and more conscious of prices, are looking for specific services, and can easily compare different policies and plans. These external forces are putting ever-increasing pressure on insurance companies to experiment and innovate to streamline processes, win customers and grow.

The Dangers of Playing It Safe

Insurance companies have long lagged behind other industries in responding quickly to consumer trends. In "Insurance 2020: Exploring Initiatives for Innovation," IBM's Institute for Business, states that insurers have "problemsdue to culture, internal politics and the engrained aspects of human nature that resist change." In other words, in an industry where companies minimize risk, they are naturally risk-averse. This leads to reluctance to implement rapid, disruptive innovation.

Because of this prevailing conservative culture, insurers focused on optimizing their process in order to become more efficienta safe means of generating increased revenue when markets are stable. Advancements in technology and data management were centered on optimizing products and processes. IBM found that this narrow focus on optimization of products and processes resulted in companies putting far less emphasis on innovation, particularly around new business models.

Rapidly shifting consumer trends are making optimization alone unsustainable. The market is becoming increasingly bifurcated, as some consumers are concerned primarily with cost while others concentrate on better service and ease of use. Customers are also shopping for individual features and customizable plans, leading to increased pressure not only to be cheaper, but also more accessible and flexible.

Finally, an uncertain regulatory climate, both in the United States and around the world, makes it difficult to plan ahead. Unforeseen compliance demands and costs, risk shrinking profits or even the viability in certain markets. With all these mounting forces, the insurance industry has little choice but to rethink how it does business.

Innovating the Insurance Industry

While external forces may make the situation look grim, emerging trends are providing an optimistic outlook on the future. According to an IBM Global CEO study, "Over 80 percent of insurance executives ranked the rise of informed and collaborative customers as having a positive impact on their businesses." Insurance companies that have previously lagged behind other industries in adopting these practices are now looking to follow suit and are turning towards their customers, partners and employees to drive innovation. Strengthened by the rise of new technologies such global positioning systems, cellular technologies, the insurance industry is tapping new tools and

data in order to better protect and provide savings to their consumers. In addition, utilizing the opportunities created through cloud computing and social media, the insurance industry is increasingly turning to innovation management software to manage and collaborate on all types of ideas to increase effiencies and better innovate.

Innovation management allows employees to connect and share information, helping in traditional areas such as product and process optimization by finding new efficiencies and sharing knowledge and best practices. Meanwhile, by opening up to customers, insurance companies benefit from direct feedback to identify growing trends and novel business models, locate customer pain-points and develop products that meet underserved needs. Companies can also show their openness and responsiveness to their customers, increasing customer satisfaction and retention.

Bright idea has helped leading insurance and financial services companies such as Nationwide and Travelers to develop new products and services focused on growing revenue by focusing on customers. Most importantly, we have helped insurance companies create a culture shift, away from business-as-usual towards indentifying opportunities to disrupt and take risks. Opening up the innovation process to stakeholders, both inside and out of the organization, will be essential to not only cope during these periods of disruption, but also find new opportunities to grow and thrive.

Case Study: Nationwide Securing the Future through Employee Innovation

As #118 on the Fortune 500 list, Nationwide's workforce exceeds 36,000 employees that maintain more than 16 million insurance policies. With over $148 billion in assets, Nationwide is one of the largest insurance and financial services companies in the world, and offering a diverse set of

products. Nationwide attributes its success to its workforce and focus on employee collaboration, inclusion and diversity. Thus, its upper management firmly believed that employee innovation will be key in securing Nationwide's future as an industry leader.

However, their existing electronic suggestion box was insufficient, with no mechanism for sorting, managing or implementing the thousands of ideas received. Nationwide also required a solution that would properly reflectand enhancethe unique corporate culture, environment and identity it had worked so intently to create. Finally, the solution had to be testable, gradually scalable, and allow easy collaboration across borders, companies, divisions and organizations.

Nationwide turned to Bright idea to deliver a solution that was configured to fit its unique organization. To gauge employee usage levels, the program was phased in to a small group with a simple pay-per-user plan, giving Nationwide the flexibility to test the software with low risk. Dubbed the "The Great Ideas System," it provided employees a low-barrier way to submit, vote and collaborate on ideas while giving administrators the tools they needed to manage ideas, update users and get insight into the company's innovation program.

Now, for over 4 years, Nationwide has been able to take control of its innovation process, accelerating product development, increasing efficiency, improving processes and developing new customer initiatives. Leveraging the diversity of its employees also yielded great results. One particular program, in search of "High Impact" ideasvalued at $5 million or greaterresulted in ideas earmarked for priority implementation and projected to drive $3.5 billion in potential revenue.