TABLE OF CONTENTS

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Particulars

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1 Executive Summary 2 Introduction 3 Objectives of the Study 4 Methodology 5 A study on Indian General Insurance Industry- Auto Insurance 6 Suggestions & Findings 7 Conclusion 8 Bibliography

A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY- AUTO INSURANCE

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EXECUTIVE SUMMARY

The project is about the study conducted on Indian General Insurance Industry, in particular with the Auto Insurance segment of general insurance. It studies the current market how the insurance segment is booming in the last few years. How the market has chanced with the new private entrants, what are the major challenges faced by insurance companies, The role played by Government in this industry. The marketing strategies used by the competitors to survive in the market The opportunities available with the company to progress and to overcome the challenges faced by them. The future of this industry is very bright the short term scenario For the general insurance sector appears to be challenging the long term prospects definitely present ample opportunities for growth.

A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY- AUTO INSURANCE

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INTRODUCTION:

This project is about the study conducted on the general insurance industry. In particular with the auto insurance this is a part of general insurance. This is the detailed study on how auto insurance industry sector functions, What are the challenges faced by auto insurance industry currently, Who are the market players in this auto insurance sector? What is the current market situation about of the auto insurance sector What are the various market strategies followed by these industries What are the challenges faced by auto insurance sector How the companies are taking steps in order can overcome the challenges. What are the future prospects of auto insurance industry

OBJECTIVES OF THE STUDY:

A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY- AUTO INSURANCE

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The objective of the thesis is: ―To study the Indian general insurance industry particularly with the auto insurance segment of general insurance , identify areas of excellence and areas needing improvement; and provide suggestions for such improvement‖.

The aim of this Thesis is to successfully study general insurance sector a common platform, analyze their working and performance, marketing

on

strategies highlight their performance , evaluating the various challenges faced by them while providing suggestions and recommendations for improvement.

METHODOLOGY
A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY- AUTO INSURANCE PAGE 4

The data is collected from various articles, documents,

market analysis , published on the internet and also form

booklet of few auto insurance companies

the charts and table are done with the help of MS excel

software

RELIANCE MONEY

A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY- AUTO INSURANCE

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Reliance Money. Portfolio Management Services. providing end-to-end financial solutions (including mobile and web-based services). Investment Banking. Customers can also avail Loans. Offshore Investments. IPOs.000 outlets and 20. Reliance Capital is one of India's leading and fastest growing private sector financial services companies. Money Transfer and Money Changing services. Reliance Money endeavors to change the way investors transact in financial markets and avails financial services. It is a one-stop-shop. Mutual Funds. Credit Card. catering to the diverse needs of over 3 million existing customers. and ranks among the top 3 private sector financial services and banking groups. Equity and Commodity Derivatives. in terms of net worth.AUTO INSURANCE PAGE 6 . Life and General Insurance products and Gold Coins.000 touch points spread across 5. It has the largest non-banking distribution channel with over 10. It provides customers with access to Equity. a Reliance Capital company and part of the Reliance Anil Dhirubhai Ambani Group is a comprehensive financial services and solution provider. Wealth Management Services. RELIANCE GENERAL INSURANCE A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY.165 cities/ towns.

Reliance General Insurance is one of India’s leading private general insurance companies with over 94 customized insurance products catering to the corporate. Reliance General Insurance has an extended network of over 200 offices spread across 173 cities in 22 states. It is also India’s first insurance company to be awarded the ISO 9001:2000 certification across all functions. 24x7 customer service assistance and a full fledged website. products and locations pan-India.AUTO INSURANCE PAGE 7 . SME and individual customers. The Company has launched innovative products like India’s first Over-The-Counter health & home insurance policies. a wide distribution channel network. The various general insurance products offered by the company are      Health Insurance Motor Insurance Home Insurance Travel Insurance Accident Cover WHAT IS INSURANCE? A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. processes.

For a payment (premium). the law requires us to buy liability insurance so that the responsibility of paying the compensation is transferred to an insurance company. Some of these lead to financial losses.We face a lot of risks in our daily lives. Life Insurance 2. The law also requires us to be insured against some liabilities.AUTO INSURANCE PAGE 8 . in case we should cause a loss to another person. That is. Insurance is a way of protecting against these financial losses. General Insurance WHAT IS GENERAL INSURANCE? A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. WHY SHOULD ONE INSURE? One of the main reasons one should insure is to protect one’s belongings and assets against financial loss. that person is entitled to compensation. Insurance is generally categorized into two divisions: 1. protecting it is prudent. To ensure that we can afford to pay that compensation. Insurance provides us with protection against unforeseen incidents along with a felling of security and also keep saving intact for the future. an insurance company will take the responsibility of compensating your financial losses. When one has earned and accumulated property.

This is known as insurable interest. Your liabilities to others arising out of the law can also be insured and is compulsory in some cases like motor third party insurance.AUTO INSURANCE PAGE 9 . To buy a policy the person should be the one who will bear financial losses if they occur. Each one of us can insure our and our dependents’ health and well being through hospitalization and personal accident policies. Injury due to accident or hospitalization for illness and surgery can also be insured. WHO SHOULD BUY GENERAL INSURANCE? Anyone who owns an asset can buy insurance to protect it against losses due to fire or theft and so on.Insuring anything other than human life is called general insurance. RISK COVERED UNDER GENERAL INSURANCE A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. Examples are insuring property like house and belongings against fire and theft or vehicles against accidental damage or theft.

Sometimes the insurers themselves process reimbursement claims. i. Where a property is undervalued for the purposes of insurance. Products offering Personal Accident cover are benefit policies.. The non-life companies also offer policies covering machinery against breakdown. Marine Cargo policy covers goods in transit including by sea. The Third Party Administrators also provide service for reimbursement claims.AUTO INSURANCE PAGE 10 . There are products that cover property against burglary. Health insurance covers offered by non-life insurers are mainly hospitalization covers either on reimbursement or cashless basis. it is important that the cover is taken for the actual value of the property to avoid being imposed a penalty should there be a claim. the insured will have to bear a ratable proportion of the loss A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. theft etc. Insurance of property.Non-life insurance companies have products that cover property against Fire and allied perils. earthquake and so on. there are policies that cover the hull of ships and so on. Health etc. air and road. Further.e. Personal insurance covers include policies for Accident. The cashless service is offered through Third Party Administrators who have arrangements with various service providers. insurance of motor vehicles against damages and theft forms a major chunk of non-life insurance business. flood storm and inundation. hospitals.

IMPORTANCE OF GENERAL INSURANCE A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. Some of the covers such as the foregoing (Motor Third Party and Workmen’s Compensation policy) are compulsory by statute. Liability Insurance not compulsory by statute is also gaining popularity these days.Accident and health insurance policies are available for individuals as well as groups. insurers also offer customized or tailor-made ones. Apart from offering standard covers. For instance. there are package policies available for householders. A group could be a group of employees of an organization or holders of credit cards or deposit holders in a bank etc. The Workmen’s Compensation Act etc. chartered accountants etc. Workmen’s Compensation Policy etc offer cover against legal liabilities that may arise under the respective statutes— Motor Vehicles Act. Many industries insure against Public liability. insurers offer group discounts. There are general insurance products that are in the nature of package policies offering a combination of the covers mentioned above.AUTO INSURANCE PAGE 11 . Normally when a group is covered. shop keepers and also for professionals such as doctors. Liability insurance covers such as Motor Third Party Liability Insurance. There are liability covers available for Products as well.

Property can be covered. there are few products that are long-term HISTORY A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. which one might have acquired from one’s hard earned income. It is important to protect one’s property. They need to cover their liabilities as well. Cyclones etc have left many homeless and penniless. So. Losses created by catastrophes such as the tsunami. Such losses can be devastating but insurance could help mitigate them. machinery. Industries also need to protect themselves by obtaining insurance covers to protect their building. so also the people against Personal Accident. stocks etc. A loss or damage to one’s property can leave one shattered. Financiers insist on insurance.General Insurance covers are necessary for every family.AUTO INSURANCE PAGE 12 . Also organizations or industries that are self-financed should ensure that they are protected by insurance. most industries or businesses that are financed by banks and other institutions do obtain covers. earthquakes. However. A Health Insurance policy can provide financial relief to a person undergoing medical treatment whether due to a disease or an injury. Most general insurance covers are annual contracts. But are they obtaining the right covers? And are they insuring adequately are questions that need to be given some thought.

The general insurance industry in India was nationalized and a government company known as General Insurance Corporation of India (GIC) was formed by the Central Government in November 1972. Fire Insurance 5. Auto Insurance 2. Others PREMIUM UNDERWRITTEN BY GENERAL INSURANCE -SEGMENT WISE A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. THE GENERAL INSURANCE IS BASICALLY DIVIDED INTO FOLLOWING CATEGORIES 1. Marine Insurance 4. Health Insurance 3.AUTO INSURANCE PAGE 13 .

2007-08 6.13 billion in 2007 – but it also has one of the A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. during which the sector was opened to private participation. Big changes have occurred over the last few years.92% 17. India is the 5th largest market in Asia by premium. The country is geographically large and has the world’s 2nd largest population -.47% 17.1.MARKET OVERVIEW The Indian insurance sector is rapidly moving towards international standards of free (risk-based) market pricing and new/innovative product offerings.59% 12. China and Taiwan. along with foreign direct investment (FDI) capped at 26%. following Japan. Korea.AUTO INSURANCE PAGE 14 .59% health others INDIAN GENERAL INSURANCE INDUSTRY .43% fire marine motor 45.

India’s general insurance market witnessed a variety of changes as deregulation continued at a hectic pace. insurers have discounted their rates by 50% in order to retain or win market share.lowest penetration rates for property and casualty insurance in Asia in terms of premium as a percentage of GDP. The sector achieved double-digit growth and this trend is expected to persist over the medium term on the back of greater penetration.AUTO INSURANCE . but this is also leading to the greater sales of existing and new products. With the increasing number of insurers in the private sector. PAGE 15 A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. The industry forecasts for a continuous growth and rise domestic demand. foreign players participation has increase both volumes and types of products. Rate reductions in the recently de-tariff corporate portfolio (fire & engineering) has impacted the premium growth. due partly in turn to the intense marketing efforts of private insurers. The removal of pricing controls on fire and engineering lines in 2007. Private players continue to capture market share at the expense of public enterprises on a mix of aggressive distribution and service. With the regulator lifting the ceiling on foreign ownership to 49%. The number of private insurers is growing as various foreign companies have announced intentions to establish joint ventures.

Also the sharp drop in sales of commercial vehicles.AUTO INSURANCE PAGE 16 .10 per cent from Rs 28. up only 9. The 16-players industry together collected Rs 30.General Insurance Penetration 0. The most important reason for the drop in business was that many small and medium businesses either did not buy insurance covers.601 crore as premium underwritten in 2008-09. like fire insurance.28130 Crores compared to the Gross Premium (2000-01) of Rs. or went for lower cover to save on premium expenditure. This was the slowest growth in gross premium underwritten in the last five years.6% IMPACT OF RECESSION ON GENERAL INSURANCE The slowdown in economic activities in India has led to a sharp reduction in asset creation in the Indian industries.9620 Crores With CAGR: 16. tractors and near stagnation in car sales led to a big drop in insurance premium underwritten A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. This along with rigorous cost cutting measures in all businesses has directly impacted the general insurance (non-life) industry in the country. The general insurance industry’s premium collection grew 22 per cent in 2006-07 and 12 per cent in 2007-08.60% of GDP and the Gross Premium has increased to(2007-08) is Rs.051 crore in 2007-08.

Among the government companies only United India could manage to grow14 per cent.AUTO INSURANCE PAGE 17 . This is evident from the higher claims ratio in both. the fire and motor segment as well as the higher underwriting losses posted by both the private as well as public sector companies. Bajaj Allianz are the other two players to manage a decent growth. while short term scenario for the general insurance sector appears to be challenging the long term prospects definitely present ample opportunities for growth MAJOR CHALLENGES Awareness It is the main problem faced by all the insurance company is lack of awareness about Risk exposures and about insurance products available to the A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. On the whole. while the other three grew only by single digit.Among the private players IFFCO-Tokio did the best with 22 per cent growth in premium underwritten in 2008-09. Royal Sudaram. General insurance companies also made losses because abolition of tariffs has led to a virtual price war in certain lines of business like Fire and Engineering insurance. One of the major milestones in the Indian general insurance industry has been the withdrawal of premium pricing restrictions post January 2007.

there are a lot of activities and formalities involved in order to get the insurance policy Inappropriate / inadequate distribution strategies. In India only 20% of the population is insured. Majority of the population is not aware of the benefits that the insurance company provides And they are also not aware of the various schemes which these companies introduce A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY.AUTO INSURANCE PAGE 18 . Majority of the populations who are living in the rural areas and sub urban areas are not aware of the about risk exposures and about insurance products available in the market Affordability In India majority of the population standard of living is low and majority of them belong to middle class and lower class and they have very little money left after satisfying basic needs.customers. Uneconomical premium of insurance policy is also a major constrains Accessibility The policies are complex to understand by a layman the procedures are difficult to obtain policies if done individual .

leading to a near monopolistic environment. New India Assurance Company of India (NIA) United Insurance Company of India (UII). A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. whereas the public sector companies have been constrained by their traditions and inability to innovate. the general insurance sector had only four public sector players.AUTO INSURANCE PAGE 19 . The private insurers enjoy considerable operational flexibility. The public enterprises – Oriental Insurance Company of India (OIC). There are total 12 players in the private sector. formed after the nationalization of 107 general insurers. PRIVATE SECTOR The private sector has been steadily growing market share despite the fact that public sector companies have been around for a lot longer. They primarily focused on their immediate regions and there was little competition. National Insurance Company of India (NIC).MAJOR PLAYERS IN GENERAL INSURANCE INDUSTRY PUBLIC SECTOR Until 2000.

the major players are – IFFCO-TOKIO General insurance Reliance General Insurance Co.General Insurance BAJAJ ALLIANCCE. BHARTI-AXA General insurance CHOLAMANDALAM . ICICI LOMBARDTATA AIG.has allowed them to capture a greater share of large corporate accounts. Ltd.AUTO INSURANCE PAGE 20 . FUTURE GENERALI Royal Sudaram General Insurance Universal Sompo General Insurance Shriram General Insurance The inherent operational flexibility of the private players – such as through aggressive pricing -.In the private sector. PRIVATE SECTOR’S GROWING INFLUENCE Market Share – Redistribution A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY.

fire.AUTO INSURANCE PAGE 21 . Before the removal of tariffs. the market share of the private sector is catching that of the public sector and the two will likely converge over the medium term. Fire and engineering now broadly contribute a similar proportion of overall business for the private and public sectors.Premium and volume public V/s private Due to the effectiveness of private marketing strategies. where good growth is expected. the focus has shifted towards the retail segments of motor and health. Regional Focus A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. Given a faster growth rate. In terms of overall business. engineering and motor own damage (OD) contributed a much greater proportion of business for private players than was the case for public firms. the market share of public insurers has consistently declined.

AUTO INSURANCE PAGE 22 .Public insurers have traditionally focused at the regional level with one each in north. The result is a time-consuming and involved process. Operational Flexibility In public entities there is lack the operational flexibility enjoyed as compared by the private players. west and south India. which is subject to adjudication by the Motor Accident Claim Tribunal. A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. They have been unable to expedite claim settlements through out-of-court negotiations since a large proportion of their claims pertain to the third party motor segment. The private players by contrast have focused on account-level profitability for large corporations and have expanded their shares by crosssubsidizing tariffed products. east. Their limited capacity to innovate has impacted their ability to tailor and aggressively price products for large corporations. On account of their public charters and the absence of competitive pressures. Client Servicing The public insurers have also been hampered in claims servicing by their process-oriented approach and limited operational flexibility. these entities did not have to actively market their products and just wrote whatever business came their way.

They started with large investments in technology. This characteristic enables in turn quick and effective decision-making for pricing and claims settlements. and have not fully used their past claim experiences. attributes vital to building franchises.The situation is not the same with the private player as they enjoy more operational flexibility which in turn saves a lot of time of both parties Strong Infrastructure and Systems Private players are not hindered by their charters or legacy systems and have constructed technologically advanced infrastructure. such as moving from paper to paper-less systems.AUTO INSURANCE PAGE 23 . especially during their initial years. They benefit from the experiences of the public sector as well as A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. have selectively targeted the more profitable lines of the public sector companies for growth. public entities have only recently upgraded their systems and have to grapple with transition issues. something which could give them a strong pricing edge in a de-tariffed environment . On the other hand. They are encumbered by legacy systems and fragmented databases. Focused Underwriting Strategy The private players. which helped them to build robust data management systems.

are gaining importance.AUTO INSURANCE PAGE 24 . direct marketing and direct sales channels -. Distribution – Rise of Banc assurance The Indian general insurance industry has historically been dominated by the agency channel. through which 75% of total premium income is sourced. The claim settlement performance of the private sector has also been superior because of the limited amount of third party motor business that they have underwritten. thereby differentiating themselves from public sector insurers. They have drawn talent from public sector companies.their international joint-venture partners. A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. Such claims normally take a longer time to settle. bank assurance. corporate agents. Superior Claim Paying/Processing Capability The combination of superior technology and selective underwriting has allowed the private sector to set high standards for policyholder services. But in recent periods other channels – for example. brokers.

Similarly. For example. which contribute a big share of its total premium income. low cost channels like tele-sales and the internet are still not developed in India.AUTO INSURANCE . Bajaj Allianz General Insurance Company Limited (BAIL. REGULATORY ENVIRONMENT Impact of Regulation – Emphasis on Policyholder Protection IRDA was set up with introduction of the IRDA Act in 1999. PAGE 25 A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. At this time. which act as corporate agents and are remunerated on a commission basis. mainly due to relatively poor knowledge about insurance products and low internet penetration. second largest private player) has tie-ups with large number of banks. It is responsible for protecting the interest of policyholders and promoting efficiency in the insurance business. Its initial purpose was to bring about general discipline to the industry.Most insurers now have tie-ups with the banks. ICICI Lombard sources a major portion of its business from a tie-up with ICICI Bank.

AUTO INSURANCE PAGE 26 . Compliance with these relatively restrictive guidelines could limit insurers’ ability to diversify and build optimal portfolios. particularly in relation to capital adequacy and prudent investment policies. General insurers must maintain a solvency ratio (available solvency margin/required solvency margin) of 1. The regulatory environment to date has attracted many insurers whose domestic partners are leaders in their chosen fields and their foreign counterparts are all well-established with considerable experience in developed and emerging markets. calculated based on net premium earned and net claims incurred in various segments. being in a growth phase.5 times. At the moment. transparency and financial strength.To ensure their stability. The guidelines also stipulate a minimum 10% investment in the social and infrastructure sector. The private players. in contrast to some of the more mature markets like the US and Australia. new entrants are subject to rigorous scrutiny and the conduct of their business is closely monitored. The investment in un-approved securities has been limited to 25% of total investment books. which do not have such restrictions. Public sector entities have maintained comfortable solvency margins. A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. may require capital infusions from time to time to maintain their solvency requirements. supported by their strong investment portfolios and capitalizations. insurers have to invest a minimum 30% in government securities. The regulator has laid down investment guidelines that limit exposure in certain class of assets and also sets threshold limits for some assets.

banker liability and aviation  2005-06 -. A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY.5% Three Phases of De-Tariffing India’s general insurance industry has undergone de-tariffing in three phases:  1994 -.AUTO INSURANCE PAGE 27 .marine cargo. engineering and motor own damage (OD). health.especially the start-ups -. the discounting has been so extreme that the regulator intervened in September 2007 and capped maximum discounts at 52.introduced in January 2007 -.marine hull segment  2007 .The Indian insurance regulator has set the minimum capital required at a level to ensure that all insurers -. In fact. De-tariffing -.has been well accepted and corrections to prices in profitable lines have been dramatic and have noticeably impacted premium growth rates.have enough funds to meet their claim obligations and to limit their overall writings to the amounts supported by their capital bases. The need to manage capital to comply with IRDA’s solvency margin will induce insurers to be more risk conscious when taking on new business To ensure an orderly transition towards a deregulated insurance market and risk-based pricing. IRDA has enacted enabling legislation and issued guidelines to de-tariff various segments.Fire. personal accident.

resulting in loss share OPPORTUNITIES AVAILABLE  The intense competition brought by deregulation has encouraged the industry to innovate in all areas. The restrictions on price discounts during the initial periods were intended to ensure orderly price adjustments. which has traditionally contributed to adverse claims ratios. policy holder servicing to record-keeping  Aggressive marketing strategies by private sector insurers will buy consumer awareness of risk and expand the markets for products A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. although there has been a large upward revision in this area’s premium rates by regulators in recent times.However. The only segment that remains under a tariff regime is the third party motor business. marketing. They were removed in January 2008. commercial third party motor business. from underwriting. whereby they were expected to file a charter of proposed rates. Moreover. Instead.AUTO INSURANCE PAGE 28 . insurers were required to follow the ―file and use‖ method. which was then approved by IRDA. has been moved to a common pool. the de-tariffing did not immediately allow for free pricing.

 Competition in a deregulated environment will allow market forces to set premiums that are appropriate for exposures and push insurers to differentiate their products and services  Innovations in distribution and improvements in market penetration will follow as public and private insurers compete to market their products  Allowing insurers to issue their own policy wordings and set their own rates will enable underwriters to tailor products to meet client needs  The existence of stringent licensing requirements ensure that only adequately capitalized and professionally managed companies are eligible to carry out insurance and reinsurance  The Insurance Regulatory Development Authority of India’s (IRDA) emphasis on quarterly reporting/monitoring of insurer solvency will enhance capital adequacy and transparency.AUTO INSURANCE PAGE 29 . A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY.

literacy.  Huge strides in Health Care opening up huge Health Insurance potential. So the company can conduct mass campaign and educated the people more about the products and also about the risk covered and the various benefits which they can avail .AUTO INSURANCE . disposable income. PAGE 30 A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY.The Company can use various medium to increases the awareness  Increase in standard of living. insurance awareness throws open huge opportunities on insurance.  High growth in Automobile sector.FUTURE PROSPECTS  Huge market largely untapped especially in Rural & Urban regions can be targeted to increase the number of insurer in the market  As high as 70% of population is still not covered by insurance.

FDI is also playing a major role in this industry as government has increased the level of investment by them.AUTO INSURANCE PAGE 31 .  General Insurance would grow at CAGR 17% next 5years.  The Large part of growth is expected to come from come from retail and rural sectors. A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. Self Help Groups are setup who can be the major clients of this industry  The Government initiatives on Mass insurance. In Rural sector large number of Micro finance institutions.000 crores to 1lakh crore by 2015.  The premium is expected to grow from 28.  More and more number of private players entering into this industry and along with foreign companies through joint ventures.

The violation of this act is punishable Auto insurance is divided into three parts  Two wheeler Insurance  Car-Insurance  Commercial Insurance A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. it is mandatory that every vehicle should have a valid Insurance to drive on the road.AUTO INSURANCE Auto Insurance often referred to as Vehicle. Under the provisions of the Motor Vehicles Act. Vehicle Insurance can be purchased from an insurance company or an insurer for the purpose of getting the loss compensated related to automobiles. Any vehicle used for social.AUTO INSURANCE PAGE 32 . The main criteria that the insured wants to get fulfilled by purchasing a Motor insurance are to get compensation against any traffic accident or liability as a result of an accident or theft of the vehicle. domestic and pleasure purpose and for the insurer's business motor purpose should be insured. Motor or Car insurance is categorized under General Insurance.

Liability for death or injuries to third parties . It does not cover any damage to his/her vehicle. occupants of A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY.5 lakhs. Under this policy the insured is treated as the first party. up to a limit.There are two types of Auto Insurance.this means that you are insured against death or injury (caused by your vehicle) to pedestrians. Third Party insurance covers Personal Injury and Property damage. Personal Injury includes 1. This insurance protects the insured from legal liabilities following an accident involving his/her vehicle. ―Motor Policy A -Act Only Risk‖ (also known as third party insurance) "Motor Policy B" (also known as comprehensive insurance policy).THIRD PARTY INSURANCE COVERS Motor Policy A or Third party insurance covers unlimited pay compensation for death or bodily injuries to third Parties and damage to the property of the third parties other than insured. The limit of third party property damage is limited to 7. the insuring company the second party and all others would be third parties.AUTO INSURANCE PAGE 33 . MOTOR POLICY A.

AUTO INSURANCE PAGE 34 .. theft etc and some other specified risks. cleaners. Accident A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. Normally it is advisable to get the Comprehensive insurance Policy because it covers insured.this means that as owner of a taxi. Property damage covers the vehicle itself and you are insured against various damages that occurs to your vehicle on account of accidents and other instances. for unlimited amounts. 2. Liability to passengers carried in the vehicle for hire or reward . Liability to employees connected with operation of the vehicle.COMPREHENSIVE INSURANCE Comprehensive insurance covers third party liability as well as loss or damage to the insured vehicle itself by the way of accident. 3. you are insured against death or injury (caused by your vehicle) to the passengers. Passengers of private vehicles and pillion riders are also deemed covered.employees used in the operation of the vehicle. and outsiders other than passengers. and coolies. conductors.. MOTOR POLICY B . bus or auto-rickshaw.this means you are insured against death or injury (caused by your vehicle) to the vehicle's drivers.other vehicles. vehicle and third party with a single policy. A Comprehensive Auto Insurance Policy Includes 1.

hurricane. Fire. Flood.2. lightning 3.AUTO INSURANCE PAGE 35 . typhoon. Transit by rail/road. air. Malicious acts 8. Earthquakes 6. Riots & strikes 5. storm. waterways A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. theft 4. Explosion. Terrorism 9. self-ignition. house-breaking. Burglary. cyclones 7.

A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY.1.2. 500/. 500/. IDV is based on the exshowroom cost of the vehicle. Within this period the insurance company issue policy and which is known as Certificate of Motor Policy.10. Also included is the towing charge (up to Rs.for private vehicles and Rs. all the vehicles are insured at a fixed value called the Insured's Declared Value (IDV).AUTO INSURANCE PAGE 36 . PREMIUM As per the Indian Motor Tariff. HOW THE POLICY CAN BE OBTAINED Approach the insurance company directly Apply through business partners of insurance companies The Insurance Policy can be obtained through an insurance agent or development officer of the insurance company. While giving insurance premium the insurer has to obtain a cover note from the insurance company and which is having the validity of 60 days only. published by IRDA. Duplicate Certificate instead of defaced. mutilated or lost certificates can be obtained on payment of a prescribed fee and after production of an affidavit to that effect.for commercial vehicles) incurred due to accident to the vehicle.

Presently there is a provision for the Insuring Company to give some discounts of their own.On every renewal of policy the IDV is calculated after deducting the prescribed depreciation. along with the usual norms of calculation. accessories etc by paying an additional premium. From April 2007 onwards the Insurance Industry in India is also under de tariff scenario.AUTO INSURANCE PAGE 37 . For every renewal a fresh certificate should be obtained NO CLAIM BONUS The Policy holders who have not made any claim in the previous years will be rewarded by the insurers by giving a discount of a comprehensive insurance on a reducing balance basis in the future years. RENEWAL Usually the Insurance policy is valid for one year. according to a new resolution passed by the IRDA. So the insured must renew the policy before the expiry date. If you are carrying forward a no-claim A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. the calculation of IDV will take into account the gender of the owner and their age also. But by the end of September 2007. Any delay in the renewal will make the policy invalid. One can extend the coverage for Personal Accident. It becomes active soon after the payment of premium is received by the insurance company and will end exactly a year later.

The documents to be submitted are A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. Even if you wish to retain your old vehicle. you can transfer the existing insurance policy to your name.bonus on any vehicle. The only condition to avail of this discount is that you have to sell off your old vehicle. you must inform the insuring company within 2 weeks of purchasing the vehicle. you can get it transferred to a new vehicle of the same type (four wheeler to four wheeler ). But. CLAIMING PROCEDURE Comprehensive Insurance Claim If an accident takes place. you must report to the insurance company as soon as possible and submit the claim forms. TRANSFER OF INSURANCE POLICY If you purchase a used vehicle. An estimate for repairs /replacements should also be submitted.AUTO INSURANCE PAGE 38 . you can get around this clause by gifting the old vehicle to a family member.

a final bill of the repair and replacements and the stamped receipt for payment from the work shop should be submitted to the company to settle the claim. or a criminal offence. If you A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. or if it caused third-party damage or resulted in injuries Fire brigade report. file a police complaint and inform the insurer. Only after the inspection of the repaired vehicle that you are allowed to take the vehicle home. a case must be filed immediately with the police and at the same time a report should also be sent to the insurance company. such damaged vehicle or parts thence belongs to the insurance company. According to the rule of some companies. payment be done either directly to the repairer in the form of a cheque or the companies may recommend preferred auto shops for repair. After repair. the Insurance company will direct a person to inspect the value of damage/replacement and genuineness of estimate submitted and according to his report the claim will be settled. a third party is involved in the accident.AUTO INSURANCE PAGE 39 . will In case. If your vehicle has been stolen. In case of settlement of claim either for total loss of the vehicle or for replacement of certain items.Claim form Original / Copy of the insurance policy Copy of registration certificate of vehicle and driving license of the driver Copy of the estimated cost of repair given by the garage FIR or a police report if the accident is major. if the loss is due to a fire Submission of relevant documents.

THIRD PARTY INSURANCE CLAIM In case.don't get your vehicle within 90 days. Your Insurance Company will pay you Documents Required for Auto Insurance Claim For Accident Claims Claim form duly signed RC copy of the vehicle Driving license copy FIR on a case-to-case basis Original estimate A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. a third party is involved in the accident. a case must be filed immediately in the police station and a report also should be sent to the insurance company at the same time.AUTO INSURANCE PAGE 40 . obtain a "non-traceable report’ from the police and submit to the insuring company to start the claiming process.

A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. mentioning that the vehicle cannot be located directly.AUTO INSURANCE PAGE 41 . payment receipt from the service center For Third Party Claims Claim form duly signed RC copy of the vehicle Driving license copy Original policy copy Original FIR copy RTO transfer papers duly signed.Original repair invoice.

AUTO INSURANCE . Promote a globally competitive automotive industry and emerge as a global source for auto components.AUTO POLICY OF GOVERNMENT OF INDIA VISION TO ESTABLISH A GLOBALLY COMPETITIVE AUTOMOTIVE INDUSTRY IN INDIA AND TO DOUBLE ITS CONTRIBUTION TO THE ECONOMY BY 2010 Policy Objectives This policy aims to promote integrated. affordable passenger cars and a key center for manufacturing Tractors and Twowheelers in the world. Ensure a balanced transition to open trade at a minimal risk to the Indian economy and local industry. Establish an international hub for manufacturing small. phased. The objectives are to:- Exalt the sector as a lever of industrial growth and employment and to achieve a high degree of value addition in the country. Conduce incessant modernization of the industry and facilitate indigenous PAGE 42 A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. enduring and self-sustained growth of the Indian automotive industry.

and feels that the policy would serve as a reference document for all stake holders and other interested parties. The Auto Policy has spelt out the direction of growth for the auto sector in India and addresses most concerns of the automobile sector. Emphasis on low emission fuel auto technologies and availability of appropriate auto fuels and encouragement to construction of safer bus/truck bodies .subjecting unorganised OEMs sector also to 16% excise duty on body building activity as in case of The policy has rightly recognised the need for modernising the parc profile of vehicles A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. research and development. building better designing capacities to remain competitive. including- Promotion of R&D in the automotive sector to ensure continuous technology up gradation. Development of domestic safety and environmental standards at par with international standards.design. SIAM welcomed the announcement of Auto Policy.AUTO INSURANCE PAGE 43 . Impetus to Alternative Fuel Vehicles through appropriate long term fiscal structure to facilitate their acceptance. Assist development of vehicles propelled by alternate energy sources. Steer India's software industry into automotive technology.

this aspect has not been fully addressed. with the Auto Policy in place. However. SIAM has always been advocating encouragement of value addition within the country against mere trading activity. The recommendation of promoting passenger cars of length upto 3. are steps in the right direction. the automotive industry would get further fillig to become vibrant and globally competitive. However. A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY.to arrest degradation of air quality. The terminal life policy for commercial vehicles and move toward international taxing policies linked to age of vehicles. The industry would get the required support from other Ministries and departments of Government of India in achieving the goals laid down in the auto policy. The Auto Policy allows automatic approval for foreign equity investment upto 100% in the automotive sector and does not lay down any minimum investment criteria.AUTO INSURANCE PAGE 44 .8 meters through excise benefits is not in line with the free market concept and may lead to market distortion.

CHALLENGES Premiums rates remain under pressure due to intense competition on the more profitable lines Falling premium income without a corresponding reduction in claims -. otherwise growth could be constrained since reliance on reinsurance for capital relief is not always viable or available Traditional distribution channels. need to be improved to match the new product offerings There is general lack of transparency as financial and operational data for insurers are not readily available as none of India’s insurers are directly listed on stock exchanges A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. especially tied agents.is likely to drive down profits Public and private sector insurers’ greater reliance on their investment portfolios to generate sufficient income and gains for net profits would subject them to the volatility of the financial markets Private insurers need to raise more capital.AUTO INSURANCE PAGE 45 .

market pricing and new/innovative product offerings. with a GDP of $1. the shortage of trained insurance professionals and technicians at all levels cannot be remedied in the short term INDIAN AUTO INSURANCE INDUSTRY . including national holidays. Check A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. Auto insurance has started special services like 24/7 service by phone and provides online assistance on all days. Big changes have occurred over the last decade.Like all developing economies on a fast track. With factors like a stable 8-9 per cent annual growth. it is on the fulcrum of an ever increasing growth Most auto insurance companies in India have comprehensive policies to help their customers.AUTO INSURANCE PAGE 46 . rising foreign exchange reserves. a booming capital market and a rapidly expanding FDI inflows.MARKET OVERVIEW The Indian auto insurance sector is rapidly moving towards international standards.25 trillion and 3rd largest in terms of purchasing power parity. The major part of the revenue earned by general insurance is from auto insurance sector Indian economy is the 12thlargest in the world. Some of them have also tied up with top automobile manufacturers for a fast insurance process.

offers towing facility in case of a breakdown or accident. Companies are also using Information/communication technology extensively and appropriately to reach out to the whole population MAJOR PLAYERS IN AUTO INSURANCE INDUSTRY A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. Competition in this market is increasing with private companies entering into this business Due continuous competition companies are making effort to lure the customers with new product offerings. Indian Auto insurance market has become more vibrant. has created huge opportunity for the auto insurance With the entry of private sector players backed by foreign expertise. Auto Insurance is one major sector which has been on a continuous growth curve since the revival of Indian economy.AUTO INSURANCE PAGE 47 .instant updates of their claim status through mobile messaging. The huge population and growing per capita income besides several other driving factors.

General Insurance OPPORTUNITIES A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY.AUTO INSURANCE PAGE 48 . PRIVATE SECTOR HDFC Insurance Kodak Mahindra General Insurance Bajaj Allianz General Insurance company Reliance General Insurance company SBI General Insurance IFFCO-TOKIO General insurance ICICI Lombard General insurance BHARTI-AXA General insurance TATA AIG.PUBLIC SECTOR Oriental Insurance Company of India (OIC). New India Assurance Company of India (NIA) United Insurance Company of India (UII) . National Insurance Company of India (NIC).

Continuous growth in Auto industry Growing demand from semi-urban population Entry of private players following the deregulation Rising demand for retirement provision in the ageing population Rising per capita incomes among the strong middle class. FUTURE PROSPECTS A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY.AUTO INSURANCE PAGE 49 . and spreading affluence Growing consumer class and increase in spending & saving capacity Public private partnerships infrastructure development Dearth of innovative & buyer-friendly insurance products New players entering into this sector along with FDI investment in this sector.

literacy.AUTO INSURANCE PAGE 50 . Increase in disposable income of population of middle class society More and more number of private players entering into this industry and along with foreign companies through joint ventures. and insurance awareness throws open huge opportunities on insurance.High growth in Automobile sector. FDI is also playing a major role in this industry as government has opened up investment upto 49% from 26% FINDINGS A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. Increase in standard of living.

The number of private insurers is growing and they continue to capture market share at the expense of public enterprises on a mix of aggressive distribution and service. along with foreign direct investment. during which the sector was opened to private participation. but this is also leading to the greater sales of existing and new products. Rate reductions in the recently de-tariff corporate portfolio (fire & engineering) has impacted the premium growth. With the increasing number of insurers in the private sector. Big changes have occurred over the last few years. Majority of the revenue is earned by the motor vehicle segment of the general insurance A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY.The Indian insurance sector is rapidly growing for last few years. The industry forecasts for a continuous growth and rise domestic demand. India’s general insurance market witnessed a variety of changes as deregulation continued at a hectic pace.AUTO INSURANCE PAGE 51 . It also has one of the lowest penetration rates for property and casualty insurance in Asia in terms of premium as a percentage of GDP.

SUGGESTIONS  Create awareness among the people of the various insurance products available in the market  Capture the untapped population residing in the rural and sub urban parts of the country   Spread the message of benefits of insurance through mass campaign The industry needs innovative low cost distribution and servicing Strategies  The company should hire more agents with more knowledge about the products with proper training  The company can have an effective Bancassurance /NBFC tie ups so that the entire Banking infrastructure is utilized for distribution of insurance products  The insurance policies should be simple & less legalistic. The ability to price effectively will also imply an increased focus on risk management A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY.AUTO INSURANCE PAGE 52 . with reasonable price. hassle free policy issuance and claim process more package policies  The companies should also introduce short term policies CONCLUSION Considering the high level of underwriting losses. going forward adjustment in premium rates would occur when the industry matures and consolidation takes place.

the untapped market potential holds the opportunity to grow faster.G Srinivasan. while short term scenario for the general insurance sector appears to be challenging the long term prospects definitely present ample opportunities for growth. The continual entry of new private players coupled with the intense competition sparked off by the detariffication of general insurance sector has also resulted in strengthening the bargaining power of the customer and development of customer centric insurance products. A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY. On the whole.by the insurance companies.AUTO INSURANCE PAGE 53 . While the government’s plan to raise FDI cap in insurance companies from 26 to 49 per cent will lead to more capital flowing in. BIBLIOGRAPHY “Indian Insurance: The Way Forward”.

co.Auto Insurance Companies www.com -Insurance in India www.IRDA.com annual report 2007-08 – www.generalinsuranceindia .tourindia.India: The Next Insurance Giant India by PRwire Pvt.siam. www.in A STUDY ON INDIAN GENERAL INSURANCE INDUSTRY.com –Indian General insurance outlook www.auto insurance in India www.com .com.webindia123. Ltd.AUTO INSURANCE PAGE 54 .auto.automobileindia.moody.com www.reliancegeral.com .auto policy govt of India www.