1.1. Introduction 1.2. Definition 1.3. History of Insurance 1.4. Objective of the Study

2.1 Introduction 2.2 Principles of Insurance 2.2.1 Principle of Indemnity 2.2.2 Principle of Insurable interest 2.2.3 Principle of Subrogation 2.2.4 Principle of Utmost 2.3 Insurance Contracts 2.4 Classification of Insurance 2.4.1 Life Insurance 2.4.2 Health Insurance 2.4.3 General Insurance

2.5 Benefits of Insurance 2.5.1 To society 2.5.2 To Business 2.5.3 To Individual

3.1. Introduction 3.2. Pre-Liberalisation Era of Indian Insurance Industry 3.3. Post-Liberalisation Era of Indian Insurance Industry 3.3.1. Malhotra Committee 3.3.2. Establishment of IRDA 3.3.3. Insurance Players 3.3.4. Current scenario

Customer Service Distribution Channel Product Innovation Rural marketing Insurance market and Insurance Mergers and Acquisitions


4.1.1. Life insurance corporation of India 4.1.2. Bajaj Allaianz Life Insurance
4.1.3. Birla Sun Life Insurance

4.1.4. HDFC standard Life Insurance 4.1.5. ICICI Prudential Life Insurance 4.1.6. ING Vysya Life Insurance 4.1.7. Max New York Life Insurance 4.1.8. Met New York Life Insurance 4.1.9. Kotak Mahindra Old Mutual Life Insurance 4.1.10 SBI Life Insurance 4.1.11 Tata AIG Life Insurance 4.1.12 Reliance Life Insurance 4.1.13 Aviva Life Insurance 4.1.14 Sahara India Life Insurance 4.1.15 Shriram Life Insurance 4.1.16 Bharti AXA Life Insurance

4.2 General Insurance Industry Players of Indian Market
4.2.1 General Insurance Corporation of India 4.2.2 National Insurance Company Ltd 4.2.3 Oriental Insurance Company Ltd 4.2.4 New India Assurance Company Ltd 4.2.5 United India Insurance Ltd 4.2.6

5.1. Indian Market vs. Global Market 5.2. Market Share of Indian Insurance Players 5.3. Investment Allocation and Norms 5.4. Growth in Premium 5.4.1. Life Insurance Premium
5.4.2. Non- Life Insurance premium



. from one entity to another. Insurance is defined as the equitable transfer of the risk of a loss. Insurer.1. in exchange for a premium. Insurance. Therefore. Even if we try to control to avoid. control and prevent risk will still exist.what is it? Man has always been in search of security and protection from the beginning of civilization. in law and economics.1 INTRODUCTION Insurance. Insurance provides financial stability and strength to the individuals and organization by the distribution of loss of a few among many by many by building up over a period of time. This urge in him to lead to the concept of insurance. The basis of insurance was the sharing of the losses of a few amongst many. is the company that sells the insurance. is a form of risk management primarily used to hedge against the risk of a contingent loss. in economics. insurance is the most practical method for handling a major risk.

to be charged for a certain amount of insurance coverage. . include fire. called the premium. Under the plan of insurance. Risk management. the practice of appraising and controlling risk. which can be insured against.Insurance rate is a factor used to determine the amount. Thus collective bearing of risk is insurance. in return for the payment of premium by the insured. The risks. which produce a monetary loss. a large number of people associate themselves by sharing risks attached to individuals. Insurance may be described as a social device to ensure protection of economic value of life and other assets. death and accidents and burglary. Any risk contingent upon these. the perils of sea. Insurance is a contract whereby. The term "risk" is used to describe the possibility of adverse results flowing from any occurrence or the accidental happenings. has evolved as a discrete field of study and practice. may be insured against at a premium commensurate with the risk involved. the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events.

Insurance is a pool in which a large number of people exposed to a similar risk make contributions to a common fund out of which the losses suffered by the unfortunate few, due to accidental events, are made good. The sharing of risk among large groups of people is the basis of insurance. The losses of an individual are distributed over a group of individuals.


The legal definition of insurance is that, “it is a contract between the insurer and insured whereby, in consideration of payment of premium by the insured the insurer agrees to make good any financial loss the insured may suffer due to consideration of an insurance peril.”

The financial definition of insurance is that insurance is a social device in which a group of individual (insured) transfer risk to another party (insurer) in order to combine loss experience, which permits statistical prediction of losses and provides for payments of losses from funds contributed (premiums) by all members who transfer risk.

In some sense we can say that insurance appears simultaneously with the appearance of human society. We know of two types of economies in human societies: money economies (with markets, money, financial instruments and so on) and non-money or natural economies (without money, markets, financial instruments and so on). The second type is a more ancient form than the first. In such an economy and community, we can see insurance in the form of people helping each other. For example, if a house burns down, the members of the community help build a new one. Should the same thing happen to one's neighbour, the other neighbours must help. Otherwise, neighbours will not receive help in the future. This type of insurance has survived to the present day in some countries where modern money economy with its financial instruments is not widespread (for example countries in the territory of the former Soviet Union).

Turning to insurance in the modern sense (i.e., insurance in a modern money economy, in which insurance is part of the financial sphere), early methods of transferring or distributing risk were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively. Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel's capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen. Achaemenian monarchs were the first to insure their people and made it official by registering the insuring process in governmental notary offices. The insurance tradition was performed each year in Norouz (beginning of the Iranian New Year); the heads of different ethnic groups as well as others willing to take part, presented gifts to the monarch. The most important gift was presented during a special ceremony.

. the inhabitants of Rhodes invented the concept of the 'general average'. writes in one of his books on ancient Iran: "Whenever the owner of the present is in trouble or wants to construct a building. have his children married. the presents were fairly assessed by the confidants of the court.35-8. This was advantageous to those who presented such special gifts. the one in charge of this in the court would check the registration.42) the issue was registered in a special office.When a gift was worth more than 10. If the registered amount exceeded 10. a historian and writer. Merchants whose goods were being shipped together would pay a proportionally divided premium which would be used to reimburse any merchant whose goods were jettisoned during storm or sinkage. he or she would receive an amount of twice as much.000 Derrik. set up a feast. the monarch and the court would help him." A thousand years later. For others. The purpose of registering was that whenever the person who presented the gift registered by the court was in trouble. Jahez.000 Derrik (Achaemenian gold coin weighing 8. etc. Then the assessment was registered in special offices.

Guilds in the Middle Ages served a similar purpose. Insurance became far more sophisticated in post-Renaissance Europe.e. Toward the end of the seventeenth century. "friendly societies" existed in England. as were insurance pools backed by pledges of landed estates. These new insurance contracts allowed insurance to be separated from investment. in which people donated amounts of money to a general sum that could be used for emergencies. . Before insurance was established in the late 17th century. London's growing importance as a centre for trade increased demand for marine insurance. a separation of roles that first proved useful in marine insurance.The Greeks and Romans introduced the origins of health and life insurance c. and specialized varieties developed. insurance policies not bundled with loans or other kinds of contracts) were invented in Genoa in the 14th century. 600 AD when they organized guilds called "benevolent societies" which cared for the families and paid funeral expenses of members upon death. The Talmud deals with several aspects of insuring goods.. Separate insurance contracts (i.

200 houses. and those willing to underwrite such ventures. In 1680. Edward Lloyd opened a coffee house that became a popular haunt of ship owners. he established England's first fire insurance company. It became the meeting place for parties wishing to insure cargoes and ships." to insure brick and frame homes. Today. South Carolina. In the aftermath of this disaster. Mr. in 1732. . and thereby a reliable source of the latest shipping news. merchants. which in 1666 devoured 13. but it works rather differently than the more familiar kinds of insurance. Insurance as we know it today can be traced to the Great Fire of London. The first insurance company in the United States underwrote fire insurance and was formed in Charles Town (modern-day Charleston). Nicholas Barbon opened an office to insure buildings. Lloyd's of London remains the leading market (note that it is not an insurance company) for marine and other specialist types of insurance. "The Fire Office.In the late 1680s. and ships’ captains.

In the United States. Whereas insurance markets have become centralized nationally and internationally. some have called for a dual state and federal regulatory system for insurance similar to that which oversees state banks and national banks. such as all wooden houses. which has unique laws in keeping with its stature as a global business centre. particularly against fire in the form of perpetual insurance. In 1752. he founded the Philadelphia Contributionship for the Insurance of Houses from Loss by Fire.Benjamin Franklin helped to popularize and make standard the practice of insurance. In recent years. Not only did his company warn against certain fire hazards. though at times in concert through a national insurance commissioners' organization. In the state of New York. regulation of the insurance industry is highly Balkanized. it refused to insure certain buildings where the risk of fire was too great. former New York Attorney General Eliot Spitzer was in a unique position to grapple with major national insurance . state insurance commissioners operate individually. with primary responsibility assumed by individual state insurance departments. Franklin's company was the first to make contributions toward fire prevention.

. Spitzer alleged that Marsh & McLennan steered business to insurance carriers based on the amount of contingent commissions that could be extracted from carriers. Several of the largest commercial insurance brokerages have since stopped accepting contingent commissions and have adopted new business models. rather than basing decisions on whether carriers had the best deals for clients.brokerages.




2. The strong growth in 2003 did not come in isolation. domestic private-sector companies were permitted to enter both life and nonlife insurance business. Firstly. With the introduction of the 1999 IRDA Act. During the 2003 financial year1. the insurance sector joined a set of other economic sectors on the growth march. albeit with a cap on shareholding at 26%. Significantly. various plans to revamp the sector finally resulted in the passage of the Insurance Regulatory and Development Authority (IRDA) Act of 1999. life insurance premiums increased by an estimated 12. . the insurance business was opened on two fronts.3% in real terms to INR 650 billion (USD 14 billion) while non-life insurance premiums rose 12.1 INTRODUCTION Insurance in India used to be tightly regulated and monopolized by state-run insurers. foreign companies were allowed to participate.8 billion).2% to INR 178 billion (USD 3. Following the move towards economic reform in the early 1990s.3% in real terms over the last decade. Secondly. Growth in Insurance premiums have been averaging at 11.

the contract would be a gambling contract and would be against the public interest.2. If an insurable interest is not required.2 PRINCIPLE OF INSURANCE 2. The principle of indemnity states that the insurer agrees to pay no more than the actual amount of loss.The principle of indemnity hence to fundamental purpose . the first purpose is to prevent the insured from profiting from a loss .Second purpose is to reduce moral hazard if a dishonest insured could profit from a loss. if a loss occurs. they might deliberately cause losses with the intention of collecting the insurance. A contract of indemnity doesn’t mean that all covered losses are always paid in full.2. The principle of insurable interest states that the insured must be in a position to lose financially.2 PRINCIPLE OF INSURABLE INTEREST. First. an insurable interest is necessary to prevent gambling. 2.2.1 PRINCIPLE OF INDEMNITY It is one of the most important legal principal in insurance. . Most property and liability insurance contract are contracts of indemnity.

If an insurable interest is not required.Secondly. 2. The insurer is therefore entitled to recover from a negligent third party. a dishonest person can purchase property insurance on someone else’s property and deliberately cause a loss to receive the amount of insurance. the insurer can hold the negligent person responsible for the loss and collect for the loss from him. an insurable interest requirement reduces the incentive to murder the insured for the purpose of collecting the sum assured . subrogation prevents the insured from collecting twice for the same loss is in the absence of subrogation ‘ the insured could collect from the insurer and from the person who causes the loss. First. Second subrogation is used to hold the quality person responsible for the loss by exercising it subrogation rights. In life insurance. an insurable interest reduces moral hazard. Third subrogation is helps to hold down insurance rates. Subrogation recoveries can be reflected in the rate making process.3 PRINCIPLE OF SUBROGATION Subrogation means substitution of the insurer in place of the insured for the purpose of claiming indemnity from a third person for a loss covered by insurance. Subrogation has three basic purposes.2. .

Representation: . The contract is voidable at insurers opinion. This is something as non-disclosure. The insurance contract is voidable at the insurers opinion if the representation is a) Material means that if the insurer knew the true fact. That is the applicant for insurance deliberately withholds material information from the insurer. Concealment: .that is a higher degree of honesty is imposed on both parties to an insurance contract. the policy would not have been issued or it would have been issued on different terms. 1. intentional failure of the applicant for the insurance to reveal a material fact to the insurer. Warranty: .4 PRINCIPLE OF UTMOST GOOD FAITH An insurance contract is based on the principle of utmost good faith. .2. if the insurer is to be liable under the contract.statements made by the applicants for a statement of fact or ca promise made by the insured. which is part of the insurance contract and must be true. This principle is supported by three important legal doctrines. b) False means that the statement isn’t true or is misleading c) Reliance means that the insurer relies on the misrepresentation in issuing the policy at a specified premium 2.

1 OFFER AND ACCEPTANCE: The first requirement of a binding insurance Contract is that there must be an offer and acceptance of its terms.2. If one party to the contact fails to perform its duties without a legal excuse.3 INSURANCE CONTRACT This is a legally binding agreement creating rights and duties for those who are parties to it. The offer and acceptance can be oral or written. If the contract is breached or if disputes arise between the parties about the interpretation of the contract. Insurance contract begins with when one person makes a proposal to exchange something of value with another person. 2. The offer for entering into the contract may generally come from the insured. The agent then accepts the offer on behalf of insurance company . The applicants for insurance fill out the application and pay the first premium. the issues may be settled in court. This step constitutes the offer.3. then the contract is said to be breached.

2 CONSIDERATION: The next requirement of valid insurance contract is consideration.3. 2.3. Premium being the valuable consideration must be given for starting the insurance contract.3 COMPETENT PARTIES: The next requirement is that each party must be legally competent. This is called consideration. This means that both insurer and insured must have legal capacity to enter into a binding contract .2. he must get something in return. When a party to an agreement promises to do something. The insured’s consideration is the payment of premium plus an agreement to abide by the condition specified in the policy.

An insurance contract that encourages or promotes something illegal or immoral is contrary to the public interest and can’t be enforced. An unlawful object of any contract shall make it enforceable at law. When there is no free consent. fraud.5 LAWFUL OBJECT: The contract must be for a legal purpose. and mistake.3. undue influence. . Consent is said to be free when it is not caused by compulsion. except fraud. the contract becomes voidable at the opinion of the party whose consent was so caused.4 FREE CONSENT: Two or more parties are said to be consent when they agree upon something in the same manner.3. 2. As such not only is the consent required but it must also be a free consent. misrepresentation.2.

J. if the insured dies.1LIFE INSURANCE Life insurance.4. The life insurance contract can be described as “contingent contract” because the loss of life cannot be compensated and only a specific sum of money is paid. undertakes to pay an annuity or a certain sum of money either on the death on the insured or on the expiry of a certain number of years.4 CLASSIFICATION OF INSURANCE 2. the life insurance has been defined as “the business of effecting contract upon human life. MAGEE defines life insurance as the “life insurance contract embodies an agreement in which broadly stated. in consideration of a premium paid either in lump sum or in periodic payments.” . usually refer to as “LIFE ASSUARNCE” insures the insured against the happening of certain events such as death. According to section 2 of Indian insurance act.H. the insurer undertakes to pay a stipulated sum upon the death of the insured or at some designated time to a designated beneficiary. 1938.” A life insurance contract is a contract where by insurer.2. that is on maturity.

nurse.2HEALTH INSURANCE A health insurance policy is a safeguard against rising medical costs. It is also known as disability insurance or medical expense insurance. • To protect the patient and his family from financial disaster. . A health insurance is a contract between an insurer and an individual or group. in which the insurer agrees to provide specified health insurance at an agreed upon price (premium). • To eliminate sickness as a cause of poverty. The costs will still go up in case of a serious accident or major illness.4. The cost of health case is increasing day by day. The demand for health insurances also viewed from other perspectives like:• To ensure that no one is deprived of at least the standard former health care. surgon .2..the insured will pay premium to the insurer who in turn will take care of all expenses . say for the doctors.etc. • To simplify mode of payments. For example instead of making separate payments. It is difficult for a typical individual to find financial resources to meet such expenses that some of which may arise suddenly.

3GENERAL INSURANCE 2.” It may cover loss or damage to vessels. including cargos.4.1 MARINE INSURANCE CONTRACT A contract of marine insurance is defined by the Marine Insurance Act. Similar risks in addition or as incidental to such transit and includes any other risks customarily included among the risks insured against in marine insurance policies. cargos etc. and other interests which may be legally insured in or in relation to such vessels. The Insurance Act.2. 1963 as “an agreement where by the insurer under takes to indemnify the assured the manner and to the extent thereby agreed. . cargo or freight. against losses incidental to marine adventure.3. 1938 defines marine insurance as follows:“Marine insurance business” means the business of effecting contracts of insurance upon vessels of any description.4. freights.

2 FIRE INSURANCE A contract of fire insurance is a contract by which the insurer undertakes. to indemnify the insured against the consequences of a fire.4. the insurer is not bound to pay more than the sum assured. Loss or damage which occurs as a result of putting out the fire would also be covered by fire risks.3. for a consideration in the form of a payment of money in lump sum (rarely in installment). The term ‘fire’ in a contract of fire insurance means the production of light l and heat by combustion. When there is one fire in respect of the same subject matter insured. or the loss or injury as arising therefore during an agreed period and up to a certain amount. During the policy life. he can reinstate the insured sum to the original amount by paying a fresh premium which will be determined after the loss amount paid earlier. Combustion occurs only at the actual ignition point. payment of each loss automatically reduces the amount if the policy by the amount so paid.2. . However if the insured is willing to get payment of full loss.

insurance cover almost all the risk relating to agriculture. . commerce and industry. shipping and banking services. by providing sufficient funds for production narrow down the inflationary gap.1 TO SOCIETY Insurance is beneficial to society in the following way-: • IT ACCELERATES THE PRODUCTION CYCLE Adequate capital from the insurance companies accelerates the production cycle in the country.5. import.5 BENEFITS OF INSURANCE 2. First by extracting money in supply to the of premium collected. Moreover. • REDUCTION IN FOREIGN EXCHANGE Insurance reduces the inflationary pressure in two ways. So risk in foreign trade can be minimized through insurance.2. • SOURCE OF FOREIGN EXCHANGE Insurance is a good source of earning foreign exchange as it covers export. Secondly.

• BUSINESS EFFICENCY IS INCREASED WITH INSURANCE . but in both the cases the business and the partner will suffer economically.5. • BUSINESS CONTINUATION In any business particularly partnership business may discontinue at the death of any partner although the surviving partner can restart the business. with the interest thereon will not exceeds the cash value of the policy.2. The insured person are getting more loan due to certainty of payment at their death the amount of loan that can be obtained with such pledging of policy.2TO BUSINESS Insurance is beneficial to business in the following ways -: • ENHANCEMENT OF CREDIT The business can obtain loan by pledging the policy as collateral for the loan.

at destruction of property and goods. The loss to the family at a premature death and payment in old age are adequately provided by insurance. This is the wish which tends to stimulate to more work. he will certainly devote much time to the business. Similarly. it will create a tension which manifests itself to the individual in the form of an unpleasant reaction causing reduction in work.3TO INDIVIDUAL • INSURANCE PROVIDES SECURITY AND SAFETY The insurance provides safety and security against the loss on a particular event.5. The carefree owner can work better for maximization of the profits. • INSURANCE AFFORDS PEACE OF MIND The security wish is the prime motivating factor. if this wish is unsatisfied. • INSURANCE ELEMINATES DEPENDENCY At the death of the husband or father.When the owner of a business is free from the botheration of losses. 2. . the destruction of family needs no elaboration. In case of life insurance payment is made when death occurs or the term of insurance is expired.

it brings reduced standard of living and the suffering may go to any extent of begging from the relatives . Chapter 3 GROWTH OF INSURANCE BUSINESS IN INDIA .the family would suffer a lot. neighbors or friend’s .

it has the potential to become one of the biggest insurance markets in the region. India abandoned public sector exclusivity in the insurance industry in favour of market-driven competition. rising household wealth and a further improvement in the regulatory framework. The insurance industry in India has come a long way since the time when businesses were tightly regulated and concentrated in the hands of a few public sector insurers.1 INTRODUCTION In 2003. Although it accounts for only 2.5% of premiums in Asia.3. including sound economic fundamentals. This shift has brought about major changes to the industry. The inauguration of a new era of insurance development has . A combination of factors underpins further strong growth in the market. the Indian insurance market ranked 19th globally and was the fifth largest in Asia. Following the passage of the Insurance Regulatory and Development Authority Act in 1999.

there is huge untapped potential in various segments of the market. the proliferation of innovative products and distribution channels. in real terms. . By mid-2004. Major changes in both national economic policies and insurance regulations will highlight the prospects of these Segments going forward. the number of insurers in India had been augmented by the entry of new private sector players to a total of 28. A range of new products had been launched to cater to different segments of the market. Where insurers can play a critical role in bridging demand and supply gaps. up from five before liberalization.1% in non-life premiums Between 1999 and 2003. while other channels including the Internet and bank branches supplemented traditional agents. and the raising of supervisory standards. In particular. While the nation is heavily Exposed to natural catastrophes. These developments were instrumental in propelling business growth.There are good reasons to expect that the growth momentum can be sustained. The same is true for both pension and health insurance. insurance to mitigate the negative financial consequences of these adverse events is underdeveloped. of 19% in life premiums and 11.Seen the entry of international insurers.

In what follows. We study the collective experience of the other countries in Asia already deregulated their markets and have allowed foreign companies to participate. it took a dramatic turn. the life insurance companies were nationalized in 1956. Insurance was nationalized. we describe how and why of regulation and deregulation.3. the . and then the general insurance business was nationalized in 1972. First. The entry of the State Bank of India with its proposal banc assurance brings a new dynamics in the game. If the experience of the other countries is any guide. After the independence.2 Pre-Liberalization Era of Indian Insurance Industry Insurance in India started without any regulation in the Nineteenth Century. It was a typical story of a colonial era: a few British insurance companies dominating the market serving mostly large urban centres. Only in 1999 Private insurance companies have been allowed back into the business of insurance with maximum of 26% of foreign holding.

was established in 1850. they were treated as "substandard” and therefore had to pay an extra premium of 20% or more. Triton Insurance Company Ltd. It was owned and operated by the British.The first general insurance company. Some of the companies that started later did provide insurance for Indians. INSURANCE UNDER THE BRITISH RAJ Life insurance in the modern form was first set up in India through a British Company called the Oriental Life Insurance Company in 1818 followed by the Bombay Assurance Company in 1823 and the Madras Equitable Life Insurance Society in 1829.All of these companies operated in India but did not insure the lives of Indians. They were there insuring the lives of Europeans living in India. But.Dominance of the Life Insurance Corporation and the General Insurance Corporation is not going to disappear any time soon.. The first indigenous general . The first company that had policies that could be bought by Indians with "fair value" was the Bombay Mutual Life Assurance Society starting in 1871.

3.1 MALHOTRA COMMITTEE In 1993. The reforms were aimed at "creating a more efficient and competitive financial system suitable for the requirements of the economy keeping in mind the structural changes currently underway and recognizing that insurance is an important part of the over all financial system where it was necessary to address the need for similar reforms.3 POST-LIBERALIZATION ERA OF INDIAN INSURANCE INDUSTRY 3.. The Malhotra committee was set up with the objective of complementing the reforms initiated in the financial sector. Malhotra Committee headed by former Finance Secretary and RBI Governor company was the Indian Mercantile Insurance Company Limited set up in Bombay in 1907." and non-life). .N. Malhotra was formed to evaluate the Indian Insurance industry and recommended its future direction.

2 COMPETETION Private Companies with minimum paid up capital of Rs.1 bn should be allowed to enter the industry.In 1994. the committee submitted the report and some of the key recommendations included: 3. Only one State Level Life Insurance Company should be allowed to operate in each state.1. Government should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent corporations.3.1.1 STRUCTURE Government stake in the Insurance Companies to be brought down to 50%. . Foreign Companies may be allowed to enter the industry in collaboration with the domestic companies. No Company should deal in both Life and General Insurance through a single entry. All the insurance companies should be given greater freedom to operate 3.3. Postal Life Insurance should be allowed to operate in the rural market. REGULATORY BODY The Insurance Act should be changed An Insurance Regulatory Body should be set up. But at the same time.3. The committee emphasized that in order to improve the customer service and increase the coverage of insurance industry should opened up to competition.3. 3. Insurance Companies must be encouraged to set up unit linked pension plans Computerization of operations and updating of technology to be carried out in the insurance industry. GIC and its subsidiaries are not to hold more than 5% in any company (There current holdings to be brought down to this level over a period of time). Controller of Insurance (Currently a part from the Finance Ministry) should be made independent 3.4 INVESMENTS Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50%.1. the committee felt the need to exercise caution as any failure on the part of new players could ruin the public .5 CUSTOMER SERVICE LIC should pay interest on delays on payments beyond 30 days.

Mission of IRDA as stated in the act is "to protect the interests of the policyholders. 2. To protect the interest of and secure fair treatment to policyholders. 3. .confidence in the industry." Expectations The law of India has following expectations from IRDA 1. for the benefit of the common man. 100 crores. which was amended in 2002 to incorporate some emerging requirements. Hence. It was formed by an act of Indian Parliament known as IRDA Act 1999. promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto. To bring about speedy and orderly growth of the insurance industry (including annuity and superannuation payments). based in Hyderabad. to regulate.4 ESTABLISHMENT OF IRDA The Insurance Regulatory and Development Authority (IRDA) is a national agency of the Government of India. and to provide long term funds for accelerating growth of the economy. it was decided to allow competition in a limited way by stipulating the minimum capital requirement of Rs.

To ensure that insurance customers receive precise. 8. fair dealing and competence of those it regulates. transparency and orderly conduct in financial markets dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players. To promote fairness. To ensure speedy settlement of genuine claims. To bring about optimum amount of self-regulation in day to day working of the industry consistent with the requirements of prudential regulation. . 6. To set. To take action where such standards are inadequate or ineffectively enforced. 5. clear and correct information about products and services and make them aware of their responsibilities and duties in this regard. 4. financial soundness. to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery. 7.3. monitor and enforce high standards of integrity. promote.

The Authority is a ten member team consisting of: (a) a Chairman (b) five whole-time members (c) four part-time members (1) Subject to the provisions of Section 14 of IRDA Act. Each ombudsman is empowered to redress customer grievances in respect of insurance contracts on personal lines where the insured amount is less than Rs. Insurance Regulatory & Development Authority (IRDA) duties and powers of IRDA IRDA was constituted by an act of parliament. 1938. The primary legislation that deals with insurance business in India is: Insurance Act. Insurance Industry has ombudsmen in 12 cities. in accordance with the Ombudsmen Scheme. 20 lakhs. and Insurance Regulatory & Development Authority Act. 1999. 1999 and any other .Insurance is a federal subject in India.

the Authority shall have the duty to regulate. promote and ensure orderly growth of the insurance business and reinsurance business. (b) protection of the interests of the policy holders in matters concerning assigning of policy. suspend or cancel such registration. modify. code of conduct and practical training for intermediary or insurance intermediaries and agents. (2) Without prejudice to the generality of the provisions contained in subsection (1). (e) promoting efficiency in the conduct of insurance business. settlement of insurance for the time being in force. the powers and functions of the Authority shall include. - (a) issue to the applicant a certificate of registration. surrender value of policy and other terms and conditions of contracts of insurance. (c) Specifying requisite qualifications. insurable interest. (d) specifying the code of conduct for surveyors and loss assessors. withdraw. (f) promoting and regulating professional organizations connected with the . nomination by policy holders. renew.

1 LIFE INSURANCE PLAYERS • Life insurance Corporation of India • Bajaj Allaianz Life Insurance • Birla Sun Life Insurance • HDFC standard Life Insurance • ICICI Prudential Life Insurance • ING Vysya Life Insurance • Max New York Life Insurance • Met New York Life Insurance • Kotak Mahindra Old Mutual Life Insurance • SBI Life Insurance • Tata AIG Life Insurance • Reliance Life Insurance • Aviva Life Insurance . 3.5 INSURANCE PLAYERS OF INDIA 3. (g) levying fees and other charges for carrying out the purposes of this and re-insurance business.

2 General Insurance Industry Players of Indian Market General Insurance Corporation of India National Insurance Company Ltd Oriental Insurance Company Ltd New India Assurance Company Ltd United India Insurance Ltd .5.• • • Sahara India Life Insurance Shriram Life Insurance Bharti AXA Life Insurance 3.

Computerization of operations and updating of technology has become . After the entry of the foreign players the industry is seeing a lot of competition and thus improvement of the customer service in the industry. Life insurance industry is waiting for a big growth as many Indian and foreign companies are waiting in the line for the green signal to start their operations.3. Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors.3. 3.1 Customer Service Consumers remain the most important centre of the insurance sector.4 CURRENT SCENARIO OF THE INDUSTRY INSURANCE MARKET IN INDIA India with about 200 million middle class household shows a huge untapped potential for players in the insurance industry.3. The Indian consumer should be ready now because the market is going to give them an array of products. different in price. features and benefits.4.

Foreign players are bringing in international best practices in service through use of latest technologies.3. 3. It therefore makes sense to look at well-balanced.2 DISTRIBUTION CHANNELS Till date insurance agents still remain the main source through which insurance products are sold. Therefore they are looking to the diverse areas of distribution channel to have an advantage. The concept is very well established in the country like India but still the increasing use of other sources is imperative. alternative channels of distribution. LIC has already well established and have an extensive distribution channel and Presence.4. At present the distribution channels that are available in the market are:  Direct selling  Corporate agents  Group selling  Brokers and cooperative societies  Bancassurance . New players may find it expensive and time consuming to bring up a distribution network to such standards.imperative in the current scenario.

More customers are buying products and services based on their true needs and not just traditional money-back policies. the expected explosion in job opportunities may not actually happen but for them the catchments area is the opportunities in the rural India.4 RURAL MARKETING Rural India seems to have an appetite for mobile phones.3. In India the insurance business can be . In India with the private players having entered into the insurance industry. Customers have tremendous choice from a large variety of products from pure term (risk) insurance to unit-linked investment products. and cars and to add to it we have insurance.4.3 PRODUCT INNOVATION There has been a plethora of new and innovative products offered by the new players.3. computers.3. which is not considered very appropriate for long-term protection and savings.4. 3. Customers are offered unbundled products with a variety of benefits as riders from which they can choose.

life. .said to be "a marathon.5 INFORMATION TECHNOLOGY AND INSURANCE In the insurance industry today.3. have gained in strength. With merely two years of the industry being Opened. there is dire need to use the data for trend analysis and personalization. Insurance industry is a data-rich industry.4.. the new comers are making losses. The public sector companies. not a sprint". thanks to the deepening of the market consequent to the awareness created by the new companies. This is because of the nature of the business being long term. 3. there is a clear trend away from selling a broad range of products to a large volume of customers in a one –size-fits-all manners. notably the LIC. Instead of focusing on their different products lines as silos (i. and thus. property and casualty etc) insurers are looking for ways to offer highly targeted insurance products that are tailored to the individuals customers with the highest propensity to buy them. There is a evolutionary change in the technology that has revolutionized the entire insurance sector.e. not surprisingly.

they want personalized interactions and they look for more and more features and add ones and better service 3.6 MERGERS AND ACQUISITIONS This is an era of mergers and acquisitions. The private players in the future would have to turn their attention to working in the unorganized and under served markets.4. eight private companies have operated and has the size of the cake expanded. Private companies including MNC’s are amalgamating the world over to get more competitive edge. The insurers are doing enough to raise the level of risk awareness or are they merely content to compete in the markets organized and established. customers are getting increasingly sophisticated and tech-savvy. the general insurance industry has been opened up. service has become a key issue. The question here is that for over two years. Currently. Moreover.3. What is likely to happen is that the private players would continue to skim the profitable segments of the already organized business in the urban areas? . However sooner or later the private sector players will have to put in place strategies aimed not at winning the existing accounts of the public players but at diversifying markets penetration as a whole. People today don’t want to accept the current value propositions.With increased competition among insurers.

CHAPTER 4 INSURANCE PLAYERS OF INDIA .The time has already come for the government of India to evaluate the performance of private companies’ vis-à-vis their declared objective of opening up the industry.

4. LIC has its mission to “Explore and enhance the quality of life of people through financial security by providing products and services of .1936.1.1 LIFE INSURANCE CORPRATION OF INDIA (LIC) The Life Insurance Corporation of India (LIC). LIC had a variety of insurance plans to cater to various categories of people and their diverse needs.7 billion. selling insurance products and related services.2 billion and a total premium income of Rs. By April 2002.1925. LIC had a total asset base of Rs.1 LIFE INSURANCE PLAYERS IF INDIAN INSURANCE MARKET 4. In March 2001. The company offered life insurance and group insurance. the total sum assured fewer than 23.342. a public sector enterprise.2 million policies stood at Rs. is the largest insurance company in India.07 billion.

" 4. The company received the Insurance Regulatory and Development Authority (IRDA) certificate of Registration (R3) No 116 on 3rd August 2001 to conduct Life Insurance business in India. Ltd. one of the biggest 2 and 3 wheeler manufacturers in the world. Bajaj Allianz Life Insurance Co.aspired attributes with competitive returns. They have a well networked Customer Care Centres (CCCs) with state of art IT systems and also specialised departments for Bancassurance. was incorporated on 12th March 2001. They have a decentralised organisation for faster responses. Corporate Agency and Group Business . and by rendering resources for economic development.Allianz AG.2 BAJAJ ALLIANZ LIFE INSURANCE COMPANY LTD. and Bajaj Auto. one of the world's largest insurance companies.1. is a joint venture between two leading conglomerates. Bajaj Allianz Life Insurance Co. Ltd. The company is growing at a breakneck pace with a strong pan Indian presence Bajaj Allianz Life Insurance has emerged as a strong player in India It is Characterized by global presence with a local focus and driven by customer orientation to establish high earnings potential and financial strength.

Malaysia and Egypt to name a few. 4. The Aditya Birla Group has a turnover close to Rs. 30500 crores (as on 31st March 2005).4. Thailand. Some of the key organisations within the group are Hindalco. a multinational conglomerate has over 75 business units in India and overseas with operations in Canada. Indonesia. Kumar Mangalam Birla. It is led by its Chairman . UK.4 HDFC STANDRAD LIFE INSURANCE COMPANY LTD.Mr. 33000 crores with a market capitalisation of Rs. .1.1. Birla Sun Life Insurance is the coming together of the Aditya Birla group and Sun Life Financial of Canada to enter the Indian insurance sector. It has over 72000 employees across all its units worldwide. USA. Grasim. Philippines. The Aditya Birla Group.3 BIRLA SUN LIFE INSURANCE COMPANY LTD. Indian Rayon.

one of India's foremost financial services companies-and Prudential plc .HDFC i. It is a joint venture between Housing Development Finance Corporation Limited (HDFC Ltd. with ICICI Bank holding a stake of 74% and Prudential plc holding 26%.). The new company. 4. ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank . India's leading housing finance institution and a Group Company of the Standard Life. HDFC Standard Life. HDFC Standard Life is a joint venture between HDFC of India and Standard Life of UK. 29. was one of the first to be awarded a license in the recently deregulated Indian market and one of the first to open its doors for business and issue policies.32 billion. . HDFC as on March 31. is one of India's leading private insurance companies. Total capital infusion stands at Rs. UK.9 per cent of equity in the joint venture. HDFC Standard Life Insurance Company Ltd.5 ICICI PRUDENCIAL LIFE INSURANCE COMPANY LTD.1. which offers a range of individual and group insurance solutions. 2007 holds 81.a leading international financial services group headquartered in the United Kingdom.e HOUSING DEVELOPMENT AND FINANCIAL CORPORATION.

our nationwide team comprises of over 735 offices. It has a dedicated and committed advisor sales force of over 21. and in a span of 5 years has established itself as a distinctive life insurance brand with an innovative.000 people.6 ING VYSYA LIFE INSURANCE COMPANY LTD. attractive and customer friendly product portfolio and a professional advisor sales force. and 22 Bancassurance partners. The .000 advisors. 4.ICICI began its operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA).AC Nielsen ORG Marg Survey of 'Most Trusted Brands'. over 243. by The Economic Times . working from 140 branches located in 74 major cities across the country and over 3.000 employees. It also distributes products in close cooperation with the ING Vysya Bank network. ICICI Prudential has been voted as India's Most Trusted Private Life Insurer. ING Vysya Life Insurance Company Limited (the Company) entered the private life insurance industry in India in September 2001.1. For three years in a row. Today. ICICI Prudential was the first life insurer in India to receive a National Insurer Financial Strength rating of AAA (Ind) from Fitch ratings.

caring. it has developed a strong corporate governance model based on the core values of excellence. one of India's leading multi-business corporations. knowledge. The company has positioned itself on the quality platform.Company has a customer base of over 4.000 & is headquartered at Bangalore. In line with its values of financial responsibility. In 2005. ING Vysya Life earned a total income in excess of Rs. 4.7 MAX NEW YORK LIFE INSURANCE COMPANY LTD. 400 crore and also has a share capital of Rs. Max New York Life has adopted prudent financial practices to ensure safety of policyholder's funds. The . is a joint venture between New York Life. honesty. The strategy is to establish itself as a trusted life insurance specialist through a quality approach to business. a Fortune 100 company and Max India Limited. Max New York Life Insurance Company Ltd. 50. In line with its vision to be the most admired life insurance company in India. integrity and teamwork.1. 440 crore.

automobile and home insurance. Through its affiliates. 807 crore. A leader in group benefits. retail banking and other financial services to individuals. Asia Pacific and Europe.000 employers now offer . reaching more than 70 million customers around the world.S.Company's paid up capital is Rs. Inc. MetLife. is a leading provider of insurance and financial services with operations throughout the Americas. 4. which is more than the norm laid down by IRDA. The MetLife companies offer life insurance. as well as group insurance. MetLife. Inc.8 MET NEW YORK LIFE INSURANCE COMPANY LTD.1.4 More than 61.. is the largest life insurer in the United States 1 with over 139 years of experience. annuities. the MetLife companies serve 88 of the top 100 FORTUNE 500® companies2 and are ranked #1 in group life 3 and #1 in commercial dental in the U. reinsurance and retirement and savings products and services to corporations and other institutions.

SBI LIFE INSURANCE COMPANY LTD. and Old Mutual plc.(KMBL).1. SBI Life Insurance is a joint venture between the State Bank of India and Cardif SA of France. SBI Life Insurance is registered with an authorized capital of Rs . to make them financially independent 4. Kotak Mahindra Old Mutual Life Insurance Ltd. It aims at help customers take important financial decisions at every stage in life by offering them a wide range of innovative life insurance products. At Kotak Life Insurance.MetLife products to their employees. is a joint venture between Kotak Mahindra Bank Ltd.1.10.9 KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE LTD. 4. enabling those employees to provide protection and security for themselves and their families.

Tata AIG Life provides insurance solutions to individuals and corporates. State Bank of India enjoys the largest banking franchise in India. formed by the Tata Group and American International Group. Along with its 7 Associate Banks. Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company. arguably the largest in the world. The Tata Group holds 74 per cent stake in the insurance venture with AIG holding the balance 26 percent. Tata AIG Life combines the Tata Group’s pre-eminent leadership position in India and AIG’s global presence as the world’s leading international insurance and financial services organization. which is the Euro Zone’s leading Bank.1000 crore and a paid up capital of Rs 500 crores. 2001. Inc. . Cardif is a wholly owned subsidiary of BNP Paribas.11 TATA AIG LIFE INSURANCE COMPANY LTD. SBI owns 74% of the total capital and Cardif the remaining 26%. (AIG).1. Tata AIG Life Insurance Company was licensed to operate in India on February 12. 2001 and started operations on April 1. SBI Group has the unrivalled strength of over 14.500 branches across the country. BNP Paribas is one of the oldest foreign banks with a presence in India dating back to 1860 4.

and ranks among the top 3 private sector financial services and banking companies. Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. Reliance Capital is one of India’s leading private sector financial services companies.13 AVIVA LIFE INSURANCE COMPANY LTD. Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India under section 45-IA of the Reserve Bank of India Act. private equity and other activities in financial services.Reliance Capital sees immense potential in the rapidly growing financial services sector in India and aims to become a dominant player in this industry and offer fully integrated financial services.1. .4. in terms of net worth. Reliance Life Insurance is another step forward for Reliance Capital Limited to offer need based Life Insurance solutions to individuals and Corporate. Reliance Capital has interests in asset management and mutual funds. proprietary investments. 1934.1. stock Broking. 4.Anil Dhirubhai Ambani Group. of the Reliance .12RELIANCE LIFE INSURANCE COMPANY LTD. life and general insurance.

. The Sahara Pariwar’s latest foray is in the field of Life Insurance. The launch is with an initial paid up capital of 157 crores. The Pariwar’s life insurance company – Sahara India Life Insurance Company Ltd.1. Aviva has a 40 million-customer base worldwide. With this approval Sahara India Life Insurance Company Ltd.has been granted licence by the insurance regulator – the IRDA on 6th February 2004. In accordance with the government regulations Aviva holds a 26 per cent stake in the joint venture and the Dabur group holds the balance 74 per cent share. 4. becomes the first wholly and purely Indian company. The Chairman of the company is Shri Subrata Roy Sahara who is also the Chairman of Sahara Pariwar’s 4.14 SAHARA INDIA LIFE INSURANCE COMPANY LTD. It has more than £377 billion of assets under management.Aviva is UK’s largest and the world’s fifth largest insurance Group.15 SHRIRAM LIFE INSURANCE COMPANY LTD. . With a history dating back to 1696.1. without any foreign collaboration to enter the Indian Life insurance market. It is one of the leading providers of life and pensions products to Europe and has substantial businesses elsewhere around the world.

4. The joint venture company has a 74% stake from Bharti and 26% stake of AXA Asia Pacific Holdings Ltd (APH). The company launched national operations in December 2006.000 agents and distribution network of more than 550 branches. Today.Shriram Life Insurance Company Ltd is a joint venture between the Chennai-based Shriram Group and the South African insurance major Sanlam. and AXA. While focussing largely on the strong network of over 65.16. BHARTI AXA LIFE INSURANCE COMPANY LTD. As we expand our presence across the country to cater to your insurance and . The company launched its operations in India in December 2005.1. we have over 3000 employees across over 12 states in the country. one of India’s leading business groups with interests in telecom. world leader in financial protection and wealth management. agri business and retail. Shriram Life has set a target of achieving a premium income of Rs 110 crore during the first year of operations. Our business philosophy is built around the promise of making people "Life Confident". Bharti AXA Life Insurance is a joint venture between Bharti.

4.General Insurance Corporation of India (GIC) was formed in pursuance of Section 9(1) of GIBNA.1 GENERAL INSURANCE CORPORATION OF INDIA The entire general insurance business in India was nationalised by General Insurance Business (Nationalisation) Act. Whatever your plans in life. we continue to bring 'life confidence' to customers spread across India. GIC was formed for the purpose of superintending. you can be confident that Bharti AXA Life will offer the right financial solutions to help you achieve them.2. 1972 (GIBNA). The Government of India (GOI). 1956 as a private company limited by shares. . through Nationalisation took over the shares of 55 Indian insurance companies and the undertakings of 52 insurers carrying on general insurance business. It was incorporated on 22 November 1972 under the Companies Act.2 GENERAL INSURANCE PLAYERS OF INDIAN INSURANCE MARKET 4.wealth management needs with our product and service offerings.

townships and metropolitan cities. (2) The New India Assurance Company Limited. carrying out non life insurance business. is spread over the length and breadth of the country covering remote rural areas. NIC's network of about 1000 offices. NIC's foreign operations are carried out from its branch offices in Nepal and Hong Kong.controlling and carrying on the business of general insurance . Consequent to passing of the General Insurance Business Nationalisation Act in 1972. 21 Foreign and 11 Indian Companies were amalgamated with it and National became a subsidiary of General Insurance Corporation of India (GIC) which is fully owned by the Government of IndiaNational Insurance Company Ltd (NIC) is one of the leading public sector insurance companies of India. (3) The Oriental Insurance Company Limited. 4. and (4) United India Insurance Company Limited. four companies were left as fully owned subsidiary companies of GIC (1) National Insurance Company Limited. . National Insurance Company Limited was incorporated in 1906 with its Registered office in Kolkata. After a process of mergers among Indian insurance companies.000 skilled personnel. Headquartered in Kolkata.2. manned by more than 16.2 NATIONAL INSUARANCE COMPANY LTD.

The Oriental Insurance Company Ltd.2. 4. Chairman of Oriental Government Security Life Assurance Company Ltd.2. Ltd" was incorporated at Bombay on 12th September. The Company was a wholly owned subsidiary of the Oriental Government Security Life Assurance Company limited and was Formed to carry out General Insurance business. which was transacting life insurance business for nearly 75 years.4 THE NEW INDIA ASSURANCE COMPANY LTD.3 THE ORIENTAL INSURANCE COMPANY LTD. 1947.4. Incorporated on July 23rd.Sir Dorab Tata. " earlier known as " The Oriental Fire & General Insurance Co. 1919 Founded by the House of Tata Founder member . Ltd" was incorporated at Bombay on 12th September. Nationalised in 1973 with merger of Indian . The Oriental Insurance Company Ltd. " earlier known as " The Oriental Fire & General Insurance Co. The Company was a wholly owned subsidiary of the Oriental Government Security Life Assurance Company limited and was formed to carry out General Insurance business. 1947.. The Company was promoted by Sir Purushothamdas Thakurdas.

The latest addition to the list of firsts is the insurance of the INSAT2E. New India is a pioneer among the Indian Companies on various fronts.companies. Established by Sir Dorab Tata in 1919. right from insuring the first domestic airlines in 1946 to satellite insurance in 1990. New India is the first fully Indian owned insurance company in India. CHAPTER 5 AN OVERVIEW OF INSURANCE MARKET IN INDIA .

5% for non-life insurance business. total gross premiums collected amount to USD 17. Similar to the pattern observed in other regional markets. .6 In 2003.INDIAN INSURANCE MARKET IN COMPARISION WITH GLOBAL The Indian insurance market is the 19th largest globally and ranks 5th in Asia. after Japan.3 billion. China and Taiwan. and reflecting the country’s high savings rate.6% of world premiums.5% of total gross premiums collected in the year. against 21. representing just under 0. life insurance business accounted for 78. South Korea.

In addition. The life insurance business was nationalised in 1956 with the Life Insurance Corporation of India (LIC) designated the sole provider – its monopolistic status was revoked in 1999 . Most of these policies were centred in the metropolitan areas like Bombay. Calcutta.Life insurance business When the life insurance business was nationalised in 1956. there were 16 non-Indian insurance companies and 75 provident societies also issuing life insurance policies. Delhi and Madras. there were 154 Indian life insurance companies.

GIC .3. Broadly. the first item of “Loans to state and central government and their corporations and boards” has steadily fallen from 42% to around 18% in twenty years. and local government securities” has gone up steadily from 55% in 1980 to 80% in 2000. the LIC (along with the State Bank of India) has become one of the two largest owners of government bonds in India.p-21 table Investment portfolio of the LIC The investment portfolio of LIC over time is summarised in Table 4. Whether it is in government loans or bonds. the share of the second item “Central government. As such. In their place. state government.

p-22 table RECENT PRIVATISATION AND FOREIGN PARTNER Recent privatisation has brought in new players in the market – almost all of them with foreign partners. the LIC has taken a more aggressive stance in boosting its equity investment. There was a substantial injection of equity capital in the private sector in life insurance. however. In non-life business. It can be seen that the companies have so far refrained from investing in equities or overseas. In financial year 2003-2004. the change was marginal. Notice that the equity share capital for LIC was relatively small. p-25 table .400 crore.has steadfastly made available over 95% of its investment to Indian government liabilities.5 below lists the equity share capital of insurance companies in the financial years 2001-02 and 2002-03. Table 4. it recorded equity investment profit of INR 2. both through private placements and secondary market purchases in the stock exchanges. Recently.


4b below.4a and 5.INVESTMENT ALLOCATION AND NORMS The Insurance Act of 1938 required life insurance companies to hold 55% of their assets in government securities or other approved securities (Section 27A of the Insurance Act). Tables both . The actual investment patterns are shown in Tables 5. some life insurance companies used these funds for other enterprises or even for speculation. In the 1940s. many life insurance companies were part of financial conglomerates. The government (both at the federal and state levels) has used the insurance business as a way of raising capital. With a 45% balance To play with.

life insurance penetration remains modest at slightly over 2%. However.GROWTH IN PREMIUM LIFE INSURANCE PREMIUM Along with strong economic growth.1 .1% between 1993 and 2003 (Figure 6. reaching these untapped markets thus holds the key to realising the growth potential of the insurance industry. the life insurance market has also expanded rapidly – direct life insurance premiums grew by an annual real rate of 13. Table 6. Considering that life insurance accounts for more than three-quarters of total insurance business.1).

non-life insurance penetration.7% in 2002.6%. measured as premiums as a share of GDP. In comparison. penetration has increased at afar brisker pace in China.1 .1).NON-LIFE INSURANCE PREMIUM India’s non-life insurance industry received gross premiums of INR 161 billion in 2003. which represented a five-fold increase from INR 28 billion in 1990 and an average 6% growth in real terms over the period (Figure 7. remained at a stable low level of 0. Nonetheless. which points to significant untapped growth potential. from 0.4% in 1998 to 0. It is estimated that 90% of the Indian population are not covered by non-life insurance. Fig 7.


707.LIC).96 crore for the period under . 10.09 crore with the investment of just Rs. The entry of the State Bank of India with its proposal of bank assurance brings a new dynamics in the game.CONCLUSION Insurance in India started without any regulations in the nineteenth century. As per the figures compiled by IRDA. After the independence. The private insurance joint ventures have collected the premium of Rs.e. and then the general insurance business was nationalized in 1972.000 crore in three years of liberalization.3. On July 14. The private insurance players have significantly improving their market share when compared to 50 years Old Corporation (i. It was a typical story of a colonial era: a few British insurance companies dominating the market serving mostly large urban centers. Only in 1999 private insurance companies were allowed back into the business of insurance with a maximum of 26 per cent of foreign holding (World Bank Economic Review 2000). the Life Insurance Industry recorded a total premium underwritten of Rs. the Life Insurance Company was nationalized in 1956. 2000 Insurance Regulatory and Development Authority bill was passed to protect the interest of the policyholders from private and foreign players.1019. The following companies are entitled to do insurance business in India.

170 crore and a market share of 15 percent. registering a .9 crore and a market share of 25 per cent. followed by Birla Sun Life with a premium In case of private non-life insurance players. non-life insurance companies will soon have no choice but to focus on individual buyers. 019.23 per cent share of LIC (The Economic Times. the public sector giant. HDFC Standard with 132.7 crore and Max New York Life with Rs.9. that their market share rose to 14. while the market share of public sector stood at 85.09 crore. Life Insurance Corporation of India (LIC).87 crore.75 per cent on an annual basis.13 per cent. continued to lead with a premium collection of Rs.written Rs. The ICICI Prudential topped among the private players in terms of premium collection.77per cent as compared to 96. private players contributed to Rs. private non-life insurance companies have not yet started addressing the retail market. Of this.76. private sector accounted for only 3. Unlike their counterpart in the life insurance business. accounting for 10 percent.1. translating into a market share of 90 per cent.87 per cent. recording a growth of 70.8 crore with a market share of approximately 15 per cent each. 364. In terms of number of policies and schemes sold. 2004). It recorded a premium of Rs. 21 March. Like in the banking sector. All is set to change in the coming years.688.

whereas New India has registered it as 0.3.38 per cent.25 per cent.6 per cent.27 per cent market share with an annual growth rate of 62.49 crore premium and an annual growth rate of 0. The overall market has recorded a growth of 12. followed by National with a market share of 21. 839. 417.38 per cent. 578. It is obviously reflect the insurance sector has facing the challenges with foreign .32 per cent by the end of January 2004.43 per cent.62 crore in one year period with a market share of 3.marginal growth of 6.47 per cent (Rs.403.49 crore premium and 2. Among the public sector players.86 per cent.17 crore premium and an annual growth rate of 1.20 per cent respectively.83 crore premium) and Oriental with a market share of 18.34 per cent. 229.88 per cent.2.26 per cent and 1101.91 per cent market share and Tata AIG with 300. Rs.38 per cent.11 crore premium and an annual growth rate of 19. Among the private non-life insurance players. If this trend continues.2.05 per cent and with an annual 131. It is significant to note that HDFC Chubb and Cholamandalam have registered annual growth rates of 4030. New India garnered a market share of 24.60 per cent.02 crore and 2.385. Rs.2. United India with a market share of 19. followed by Bajaj Allianz with a premium of Rs. Rs. private insurer would dominate the public sector like New India Insurance Corporation. ICICI Lombard topped the list with a premium collection of Rs.

counter parties as well as private counter parties and lot more opportunities are prevailing to penetrate the insurance business among the uncovered people and area of India. . .

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