Professional Documents
Culture Documents
ON
IMPACT ON LIFE INSURANCE CORPORATION DUE
TO GROWTH OF PRIVATE INSURANCE BUSINESS
SUBMITTED TO
UNIVERSITY OF MUMBAI
BY
RUPESH MORESHWAR LASE
ROLL NO 16
T. Y. B.M.S. (SEMESTER V)
YEAR 2017-2018
THROUGH
KIRTI M. DOONGURSEE COLLEGE OF ARTS,
SCIENCE & COMMERCE,
DADAR, MUMBAI – 400 028
1
CERTIFICATE
----------------------------------- ---------------------------------
---------------------------- ------------------------------
2
PROJECT GUIDE CERTIFICATE
Date:
______________________
(Prof. CA Ashish Diwadkar)
3
DECLARATION
Place: MUMBAI
Date:
_______________________
(Rupesh Moreshwar Lase)
4
ACKNOWLEDGEMENT
Further, I would like to thank Prof. CA Ashish Diwadkar for his help
and guidance without which this project would not have reached this
point.
Lastly, I thank all my friends for their support in all the possible ways.
5
CONTENT
Executive Summary....................................................8
1.2 Hypothesis………………………………………..9
1.4 Sample…………………………………………....9
2.3 History………………………………………… 16
5.1 Suggestions………………………………………72
5.2 Conclusions………………………………………73
5.3 Appendix………………………………………..74
5.4 Bibliography……………………………………76
7
Executive summary
Life insurance in its modern form came to India from England in 1818 with the formation of
Oriental Life Insurance Company. The Government of India nationalized the life insurance
industry in January 1956 by merging about 245 life insurance companies and forming Life
Insurance Corporation of India (LIC), which started functioning from 01.09.1956. For years
thereafter, insurance remained a monopoly of the public sector. It was only after seven years
of deliberation and debate that R. N. Malhotra Committee report of 1994 became the first
serious document calling for the re-opening up of the insurance sector to private players. The
sector was finally opened up to private players in 2001.The Insurance Regulatory and
powers to oversee the insurance business and regulate in a manner that will safeguard the
interests of the insured. Insurance is a federal subject in India. There are two legislations that
govern the sector- The Insurance Act-1938 and the IRDA Act- 1999. The insurance sector in
India has come a full circle from being an open competitive market to nationalization and
The objectives of the study are to compare cost efficiency and financial performance of Life
Insurance Corporation of India and private sector life insurance companies in India, to
understand the concept and mechanism of insurance and to predict the volume of new
8
Chapter 1 – Introduction to the study
1.1 Objective of the study
1.2 Hypothesis
Nature of study
Primary data & secondary data taken from IRDA annual reports
Secondary data has been taken from annual reports of LIC & other life
insurance companies.
9
Chapter 2: Introduction to Topic
2.1 Meaning & Evaluation of insurance
Insurance is a means of protection from financial loss. It is a form of risk management
primarily used to hedge against the risk of a contingent, uncertain loss.
The insured receives acontract, called the insurance policy , which details the conditions and
circumstances under which the insured will be financially compensated. The amount of
money charged by the insurer to the insured for the coverage set forth in the insurance policy
is called the premium. If the insured experiences a loss which is potentially covered by the
insurance policy, the insured submits a claim to the insurer for processing by a claims
adjuster
Insurance may be defines as social device to protect the economic value of the life and
other assets. Under the plan of Insurance a group of people are brought together and their
share of money is pooled to manage the loss suffered by any of them.
Insurance is a contract whereby in return of the payment of the premium by the insured
the insurers pay the financial loss suffered by the insured as a result of the loss by the
unforeseen events. The term “risk” is used to define the probability of loss.
Insurance is a pool where large number of people exposed to similar kind of risks makes
contribution to the common fund out of which the losses suffered by the unfortunate few due
to accidental events are made good.Life insurance , is a contract between an insurance holder
and an insurer or assure where the insurer promises to pay a designated beneficiary a sum of
10
money (the benefit) in exchange for a premium, upon the death of an insured person (often
the policy holder). Depending on the contract, other events such as terminal illness
or illness can also trigger payment. The policy holder typically pays a premium, either
regularly or as one lump sum. Other expenses (such as funeral expenses) can also be included
in the benefits.
Life policies are legal contracts and the terms of the contract describe the limitations of the
insured events. Specific exclusions are often written into the contract to limit the liability of
the insurer; common examples are claims relating to suicide, fraud, war, riot, and civil
commotion
11
2.2 Characteristics of Insurance
1. Sharing of Risk:
Insurance is a device to share the financial losses which might befall on an individual or his
family on the happening of a specified event. The event may be death of a bread-winner to
the family in the case of life insurance, marine-perils in marine insurance, fire in fire
insurance and other certain events in general insurance, e.g., theft in burglary insurance,
accident in motor insurance, etc. The loss arising nom these events if insured are shared by all
the insured in the form of premium.
2. Co-operative Device:
The most important feature of every insurance plan is the co-operation of large number of
persons who, in effect, agree to share the financial loss arising due to a particular risk which
is insured. Such a group of persons may be brought together voluntarily or through publicity
or through solicitation of the agents.
An insurer would be unable to compensate all the losses from his own capital. So, by insuring
or underwriting a large number of persons, he is able to pay the amount of loss. Like all co-
operative devices, there is no compulsion here on anybody to purchase the insurance policy.
3. Value of Risk:
The risk is evaluated before insuring to charge the amount of share of an insured, herein
called, consideration or premium. There are several methods of evaluation of risks. If there is
expectation of more loss, higher premium may be charged. So, the probability of loss is
calculated at the time of insurance.
4. Payment at Contingency:
The payment is made at a certain contingency insured. If the contingency occurs, payment is
made. Since the life insurance contract is a contract of certainty, because the contingency, the
death or the expiry of term, will certainly occur, the payment is certain. In other insurance
12
contracts, the contingency is the fire or the marine perils etc., may or may not occur. So, if
the contingency occurs, payment is made, otherwise no amount is given to the policy-holder.
Similarly, in certain types of life policies, payment is not certain due to uncertainty of a
particular contingency within a particular period. For example, in term-insurance then,
payment is made only when death of the assured occurs within the specified term, may be
one or two years. Similarly, in Pure Endowment payment is made only at the survival of the
insured at the expiry of the period.
5. Amount of Payment:
The amount of payment depends upon the value of loss occurred due to the particular insured
risk provided insurance is there up to that amount. In life insurance, the purpose is not to
make good the financial loss suffered. The insurer promises to pay a fixed sum on the
happening of an event.
If the event or the contingency takes place, the payment does fall due if the policy is valid
and in force at the time of the event, like property insurance, the dependents will not be
required to prove the occurring of loss and the amount of loss. It is immaterial in life
insurance what was the amount of loss at the time of contingency. But in the property and
general insurances, the amount of loss as well as the happening of loss, are required to be
proved.
To spread the loss immediately, smoothly and cheaply, large number of persons should be
insured. The co-operation of a small number of persons may also be insurance but it will be
limited to smaller area. The cost of insurance to each member may be higher. So, it may be
unmarketable.
Therefore, to make the insurance cheaper, it is essential to insure large number of persons or
property because the lesser would be cost of insurance and so, the lower would be premium.
In past years, tariff associations or mutual fire insurance associations were found to share the
loss at cheaper rate. In order to function successfully, the insurance should be joined by a
large number of persons.
13
7. Insurance is not a gambling:
The insurance serves indirectly to increase the productivity of the community by eliminating
worry and increasing initiative. The uncertainty is changed into certainty by insuring property
and life because the insurer promises to pay a definite sum at damage or death.
From a family and business point of view all lives possess an economic value which may at
any time be snuffed out by death, and it is as reasonable to ensure against the loss of this
value as it is to protect oneself against the loss of property. In the absence of insurance, the
property owners could at best practice only some form of self-insurance, which may not give
Similarly, in absence of life insurance, saving requires time; but death may occur at any time
and the property, and family may remain unprotected. Thus, the family is protected against
From the company's point of view, the life insurance is essentially non-speculative; in fact,
no other business operates with greater certainties. From the insured point of view, too,
insurance is also the antithesis of gambling. Nothing is more uncertain than life and life
insurance offers the only sure method of changing that uncertainty into certainty.
Failure of insurance amounts gambling because the uncertainty of loss is always looming. In
fact, the insurance is just the opposite of gambling. In gambling, by bidding the person
exposes himself to risk of losing, in the insurance; the insured is always opposed to risk, and
By getting insured his life and property, he protects himself against the risk of loss. In fact, if
he does not get his property or life insured he is gambling with his life on property.
14
8. Insurance is not Charity:
Charity is given without consideration but insurance is not possible without premium. It
provides security and safety to an individual and to the society although it is a kind of
profession because it provides adequate sources at the time of disasters only by charging a
15
2.3 History
Origin of insurance
Almost 4500 years ago in the ancient land of babylonia traders used to bear risk of the
caravan trade by giving loans that had to be later repaid with interest when the goods arrived
safely in 2100 BC the code of Hammurabi granted legal status to the practice that perhaps
was how insurance made its beginning
The history of insurance consisted of the development of the modern business of insurance
against risks, especially regarding cargo, property death,automobile accidents , and medical
treatment.
The industry helps to eliminate risks (as when fire insurance companies demand the
implementation of safe practices and the installation of hydrants ), spreads risks from the
individual to the larger community, and provides an important source of long-term finance
for both the public and private sectors. The insurance industry is generally profitable and
provides attractive employment opportunities for white collar worker. Almost 4,500 years
ago, in the ancient land of Babylonia, traders used to bear risk of the caravan trade by giving
loans that had to be later repaid with interest when the goods arrived safely. In 2100 BC, the
Code of Hammurabi granted legal status to the practice. That, perhaps, was how insurance
made its beginning.
Life insurance had its origins in ancient Rome, where citizens formed burial clubs that
would meet the funeral expenses of its members as well as help survivors by making some
payments.
As European civilization progressed, its social institutions and welfare practices also
got more and more refined. With the discovery of new lands, sea routes and the consequent
growth in trade, medieval guilds took it upon themselves to protect their member traders from
loss on account of fire, shipwrecks and the like.
16
EVALUATION OF INSURANCE IN INDIA
Insurance in India can be traced back to the Vedas. For instance, yogakshema, the name
of Life Insurance Corporation of India's corporate headquarters, is Derived from the Rig
Veda. The term suggests that a form of "community insurance" was prevalent around 1000
BC and practiced by the Aryans.
Burial societies of the kind found in ancient Rome were formed in the Buddhist period
to help families build houses, protect widows and children. Bombay Mutual Assurance
Society, the first Indian life assurance society, was formed in 1870. Other companies like
Oriental, Bharat and Empire of India were also set up in the 1870-90s.
It was during the Swadeshi movement in the early 20th century that insurance witnessed a big
boom in India with several more companies being set up.
As these companies grew, the government began to exercise control on them. The Insurance
Act was passed in 1912, followed by a detailed and amended Insurance Act of 1938 that
looked into investments, expenditure and management of these companies' funds.
By the mid-1950s, there were around 170 insurance companies and 80 provident fund
societies in the country's life insurance scene. However, in the absence of regulatory systems,
scams and irregularities were almost a way of life at most of these companies.
As a result, the government decided nationalizes the life assurance business in India.
The Life Insurance Corporation of India was set up in 1956 to take over around 250 life
companies.
For years thereafter, insurance remained a monopoly of the public sector. It was only after
seven years of deliberation and debate - after the RN Malhotra Committee report of 1994
became the first serious document calling for the re-opening up of the insurance sector to
private players -- that the sector was finally opened up to private players in 2001.
17
Some of the important milestones in the life insurance business in India
are:
Year Changes
1870 Bombay Mutual Life Assurance Company. First Indian Insurance company.
1912 The Indian Life Assurance Company enacted the first law to regulate the life
insurance business in India.
1926 The Indian Assurance company act enacted to enable to government to collect the
statistical information about the insurance.
1938 The earlier legislation consolidated and amended the life insurance act with the
objective of protecting the interest of insurance in the public.
1956 245 Indian and foreign players and prudent societies are taken once by Central
govt. and nationalized.
18
2.4 TYPES OF INSURANCE
INSURANCE
COVERING MACHINARY
LOSS OF ASSET AGAINST AGAINST THE
WATER,FIRE,EARTQUAKE BREAKDOWN,MOTOR
ETC VEHICLES AGAINST
DAMAGE & THEFT
19
2.5 About General Insurance:-
Insurance of the non life assets are called general insurance, this includes loss of asset
against water, fire, earthquake etc. With the desertification in the Indian Market in General
Insurance the monopoly of the general Insurance public sector’s companies has been broken.
With the entrance of the new private player market innovative technique has been introduced
to capture the mark Non-life insurance companies have products that cover property against
Fire and allied perils, flood storm and inundation, earthquake and so on. There are products
that cover property against burglary, theft etc. The non-life companies also offer policies
covering machinery against breakdown, there are policies that cover the hull of ships and so
on. A Marine Cargo policy covers goods in transit including by sea, air and road. Further,
insurance of motor vehicles against damages and theft forms a major chunk of non-life
insurance business.
In respect of insurance of property, 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. Where a
property is undervalued for the purposes of insurance, the insured will have to bear a rateable
proportion of the loss.
For instance if the value of a property is Rs.100 and it is insured for Rs.50/-, in the event of a
loss to the extent of say Rs.50/-, the maximum claim amount payable would be Rs.25/- (50%
of the loss being borne by the insured for underinsuring the property by 50%).
General Insurance helps us protect ourselves and the things we value, such as our homes, our
cars and our valuables, from the financial impact of risks, big and small – from fire, flood,
storm and earthquake, to theft, car accidents, travel mishaps – and even from the costs of
legal action against us. And we can choose the types of risks we wish to cover by choosing
the right kind of policy with the features we need.
In general, insurance works by spreading the cost of unexpected risks among a large number
of people in the same region who share similar risks.
When you take out an insurance policy, you pay a monthly or annual premium . That money
joins the premiums of many thousands of other policyholders and goes into a big pool of
funds . For more information on how premiums work
20
Life Insurance is insurance for you and your family's peace of mind. Life insurance is a
policy that people buy from a life insurance company, which can be the basis of protection
and financial stability after one's death. Its function is to help beneficiaries financially after
the owner of the policy dies.
It can also be a form of savings in the long run if you purchase a plan, which offers
the option of contributing regularly. Additionally, a little known function of life insurance is
that it can be tied in with a person's pension plan. A person can make contributions to a
pension that is funded by a life insurance company. These are considered private pension
arrangements. In addition, you should also make a list of what you feel needs to be protected
in your family's way of life. With a life insurance policy in place, you can:
With any luck, you will never need to draw on that pool. But if you happen to be one of the
unlucky ones affected by an unexpected calamity, perhaps through severe weather or
accident, that pool of funds can be used to help you up to the limit you have selected in your
policy.
If things go wrong, your insurer may either repair or replace the items that have been lost or
damaged, depending on the terms of your policy. You may also have the choice of receiving
a cash settlement for the amount of money agreed in your policy.
21
2.6 Products offered by General life Insurance
Personal lines insurers: predominantly deal with personal insurance needs of a family
unit, such as valuables (jewellery, artworks), motor vehicle, home and contents, and personal
liability. Examples of personal lines insurers include NRMA and AAMI..
Domestic insurance: policies are catered towards the protection needs of homeowners.
Domestic insurance products usually cover buildings, contents, personal effects and liability
towards third parties.
Commercial insurance: focuses on the financial protection that a typical manufacturing
business may require. There are different types of cover and options offered by most
insurance providers, which may often include:
Fire
Business interruption
Accidental damage
Machinery breakdown
Glass break
Burglary
Fraud and embezzlement
Public liability insurance : provides cover in the event of a personal injury, property
damage, and financial loss that affect another party.
Product liability insurance : is designed to protect entities that may be liable for the
injury or loss that has resulted from the manufacture, sale, supply or distribution of
defective products.
Professional indemnity insurance : is catered towards individuals whose roles are to
provide advice or a service that may require certain skills and knowledge. It provides
cover against liability for monetary loss, damage, or injury incurred from the
professional’s mistake or failure to exercise a high level of care.
Motor vehicle insurance: comes in two types - compulsory third party (CTP) insurance
that covers against damages to the vehicle as a result of a personal injury or to others, and
vehicle cover to protect against damages that affect the vehicle itself.
22
Personal loss insurance: is a type of general insurance that provides cover for personal
loss, other than to physical assets. There are three types of personal loss insurance on the
market:
Sickness and accident insurance: provides cover in the event that the insured is unable
to work as a result of a sickness or accident and it replaces up to 75% of the insured’s
income. Sickness and accident insurance may also fall under life insurance product category,
however, if issued by a general insurance provider, it will usually have waiting period of 14
days and benefit period of two years.
Travel insurance: is a type of cover that reimburses the costs resulted from:
Trip cancellation, interruption or delay
Illness, accidental death, disability, or any other events that occurred outside the control of
the travel provider
Loss of income
Baggage loss
Theft
Credit card fraud
Emergency medical and hospital expenses
Repatriation
Travel assistance services
23
2.7About life insurance
Life Insurance in India existed from long time. The modern concept of Insurance was
brought by Bruisers in India, and Oriental Insurance Company was the first Insurance
Company who did Insurance for the Indian in 1818 and was established in Calcutta nowadays
Kolkata.
Then due to no interference of government in it, private market players ruled the
market as they want to, that is why government intervened in between to protect the interest
of the mass and to safeguard the money involved in it. Government took the initiative and
banned the private players to involve in Insurance market.
All private companies were took over by Government and Insurance market was
turned to Public sector and Life Insurance Corporation of India was formed in 1956 to make
the Insurance reachable at remote areas and that even by low premiums or better said as
affordable premium so as to secure their life. From the beginning of Insurance in India till
now a lot of changes have been made but the most significant change was in 1999, when
IRDA was formed. IRDA means Insurance Regulatory and Development Authority.
This was formed to rethink upon opening the insurance sector for the Private players
again but along with that to have a check upon those private players an IRDA has to act as a
governing body to safeguard the interest of the public whose money is involved in it From
that time i.e. from the year 2001 insurance sector was opened for the private players too.
Since then Insurance Sector is on the boom and business is flourishing and a lot of private
players are coming into business. Here the private players doesn’t indicate to Indian Private
Companies but also foreign players are also involved in it, but to manage the money flow in
and outside the country IRDA takes care of the contribution of the money by foreign partners
of private insurance companies. To control that IRDA has set a limit of FDI i.e. 26%.
You may not need life insurance if you are single and have no dependents. You may qualify
for a small policy through your employer that will cover the basic burial expenses. Once you
are a parent or you are married, you should consider getting life insurance. The life insurance
will help cover expenses and make sure that your loved ones are taken care of if something
24
happens to you. If you are responsible for someone, you may also want to consider getting
life insurance. For example, if you take on guardianship of your brothers or sisters, it would
make sense to get life insurance to protect them if something were to happen to you.
The amount of life insurance you need depends on your situation in life. If you are single and
childless the amount offered by your employer should cover your burial expenses for your
family.
If you are married or have children, you should increase the amount that you have. Generally,
you want enough insurance so that your family can live off of the interest that amount will
earn in interest. You will need to determine how much your family will need annually and
then work backward to figure out how much life insurance you should take out.
You may also want to add enough to pay off any debts and your mortgage and to fund your
children's education. As your life situation changes, your life insurance needs will change.
You can use term policies to make the adjustments that you need to the amount of insurance
that you carry. This can be part of your long-term family financial plan. Until you are married
or have dependents, you do not need to carry very much life insurance. However, there is no
excuse for not having life insurance if you have people relying on you.
Once you have determined the amount that you need, it is important to choose the best type
of life insurance for your situation. There are two basic types of life insurance: term and
whole life insurance. They offer different benefits.
Term life insurance is a policy that you purchase for a certain number of years. The rates are
significantly lower than whole life insurance. You can purchase this at varying amounts for a
set amount of time.
Common lengths of time include 10, 20 and 30 year policies. If you choose term life, you
should self-insure by the end of the policy or plan on taking out a new policy. This means
25
that you have enough in savings and your family is in a position in which it would not need
life insurance to continue the same standard of living. This is generally the most affordable
option and it may be the best option for your family.
Whole life insurance is a policy that follows you throughout your life. You pay a premium
for this insurance from the day you purchase it for your entire life. Whole life insurance is
often sold as an investment, because you can draw the money out of it, that you have put in.
In reality, you are paying much higher rates for whole life insurance, and you are getting a
poor investment in return. If you went with term insurance instead, and simply invested the
difference in mutual funds, you would be much better off. Universal and variable life
insurance is another form of whole life insurance. Your insurance may contact you
about converting a term policy into a whole life policy, and you should avoid doing that. In
fact you may want to switch your whole life insurance policy into a term life policy .
26
2.8 Product offered by life insurance
Term insurance
Term insurance is the most basic form of life insurance. They provide life cover with no
savings / profits component. They are the most affordable form of insurance as premiums are
cheaper compared to other life insurance plans.
Online term insurance plans provide pure risk cover, which explains the lower premiums. A
fixed sum of money – the sum assured - is paid to the beneficiaries if the policyholder expires
over the policy term. If the policyholder survives, there is no pay out.
Endowment plans
Endowment plans differ from term plants in one critical aspect i.e. maturity benefit. Unlike
term plans which pay out the sum assured, along with profits, only in case of an eventuality
over the policy term, endowment plans payout the sum assured under both scenarios – death
and survival. However, endowment plans charges higher fees / expenses – reflected in
premium – for paying out sum assured along with profits, in either scenario – death or
maturity. The profits are an outcome of premium being invested in asset markets – equities
and debt.
ULIPs are a variant of the traditional endowment plan. They pay out the sum assured (or the
investment portfolio if it is higher) on death / maturity. ULIPs differ from traditional
endowment plans in certain areas. As the name suggests, performance name of ULIP is
linked to the markets. Individuals can choose the allocations for performance in stock / debt
markets. The value of investment portfolio is captured by the NAV (net asset value). To that
end, there are many similarities between ULIPs and the mutual funds. ULIPs differ in one
27
area, they are a combination of investment and insurance, while mutual funds are a pure
investment avenue
A whole life insurance policy covers a policyholder over his life. The main feature of a whole
life policy is that the validity of the policy is not defined so the individual enjoys the life
cover throughout his life. The policyholder pays regular premiums until his death, upon
which the corpus is paid out to the family. The policy expires only in case of an eventuality
as there is no predefined policy tenure
A money policy is a variant of the endowment plan. It gives periodic payments over the
policy term. To that end if the policy holder survives the term, he gets the balance sum
assured. In case of death over the policy term, the beneficiary gets the full sum assured
28
2.9 Principles of life insurance
Principle of utmost good faith is a primary principle of insurance the doctrine of uberrimae
fides – utmost good faith is present in the insurance law of all common law system an
insurance contact is a contract of utmost good faith the most important expression of that
principle under that doctrine as it has been interpreted in england,isthat the prospective
insured must accurately disclose to the insurer everything that he knows and that is or would
be material to the reasonable insurer.
The person getting an insurance policy must have an insurance interest in the property or life
insurance a person is said to have an insurable interest in the property if he is benefited by its
existence and be prejudiced by its destruction the presence of insurable interest is a legal
requirement so an insurance contract without the existence of insurable interest is not legally
valid and cannot be claimed in a court the object of this principle is to prevent insurance from
becoming a gambling contract .
Most common law jurisdictions require the insured to have an insurable interest in the subject
matter of the insurance an insurable interest is that legal or equitable relationship between
the insured and the subject matter of the insurance separate from the existence of the
insurance relationship by which the insured would be prejudiced by the occurrence of the
event insured against or conversely would take a benefit from its non occurrence .
The intent behind this principle is that the insured must be in a position to financially suffer if
a loss occurs this principles helps in preventing gambling by way of taking insurance on a
property and waiting for loss occur in case of life insurance contracts it reduces moral hazard
29
where by a person takes life insurance on a person and prays for his/her death for insurance
proceeds
Principle of indemnity
The essence of insurance is the principle of indemnity that the person who suffers a financial
loss is placed in the same financial position after the loss as before the loss occurred he
neither profits nor is disadvantaged by the loss in practice this is much more difficult to
achieve in life insurance than in property insurance no life insurance company would provide
insurance in an amount clearly exceeding the estimated economic value of covered life
limiting the amount of life insurance sold to reflect economic value gives recognition to the
rule of indemnity additionally only person exposed to the potential loss may legitimately own
the insurance covering the insured life .
The principle of indemnity is applicable to all types of insurance policies expect life
insurance indemnity means security means security protection and compensation given
against damage, loss or injury the insurer promise to help the insured in restoring the
financial position before loss has occurred whenever there is a loss of property the loss is
compensated the compensation payable and the loss suffered should be measurable in term of
money the insured will be compensated only up to the amount of loss suffered by him he will
not earn profit from the contractor the maximum amount of compensation will be up to the
value of the policy which is fixed at the them of contact the courts rely upon the principle of
indemnity to hold that an insured may not recover more than his true loss
Principle of subrogation
30
insurance relates the principles of subrogation is applicable to all insurance other than the life
insurance if the insured party gets a compensation for the loss suffered by him he not claims
the same amount of loss from any other party it prevents the insured being indemnified from
tow source in respects of thee same loss
Hence this principle of subrogation provided for substitution of the insurer in place of the
insured for the purpose of calming indemnity from a third party wrongdoer for a loss paid by
the insurer this helps in preventing collecting twice by the insured to hold the negligent party
responsible and to bring down insurance rates
Principle of contribution
Sometimes a property is insured with more than one company the insured cannot claim more
than total loss from all the insurance companies put together he cannot claim the same loss
from different insurance companies if one insurer pays full compensation then that insurer
can claim proportionate claim from the other insurer a person cannot be restored to a better
position than before the loss occurred the total suffered by the insured will be contributed by
different companies in proportion to the value of polices issued by them
Principle of proximate cause means when a loss is caused by more than one cause the
proximate or the nearest or the closest cause should be taken into consideration to decide the
liability of the insurer this principle is found very useful when the loss occurred due to series
of events the principles states that to find out whether the insurer is liable for the loss or not
the proximate and not the remote must be looked into
31
However in case of life insurance the principle of proximate cause does not apply whatever
may be the reason of death the insurer is liable to pay the amount of insurance
Under this rule in order to determine whether a loss resulted from a cause covered under an
insurance policy a court looks for the predominat cause which sets into motion the chain of
event producing the loss which may not necessarily be the last event that immediately
preceded the loss
According to the principle of loss minimization insured must always try his level best to
minimize the loss of his insured property in case of sudden events like fire etc the insured
must take all necessary steps to control and reduce the losses and to save what is left this
principle makes the insured more careful in respect of this insured property just as any
prudent person would do in those circumstance if he does not do so the insurer can avoid the
payment of loss attributable to his negligence but it must be remembered that though the
insured is bound to do his best for his insurer he is not bound to do so at the risk of his life
The insured must not neglect and behave irresponsibly during such events just because the
property is insured hence it is a responsibility of the insured to protect his insured property
and avoid further losses
32
2.10 The Importance of Life Insurance
An essential part of financial planning is creating provisions for your family and loved ones
following your death. Life insurance can ensure financial security to those who mean the
most to you, such as your spouse, children and dependent parents. A carefully executed life
insurance policy can help prepare for life's uncertainties and give peace of mind knowing that
the future of those who rely on you is secure.
Life insurance pays for immediate expenses. Bills can start accumulating fast in the event
of a death. Life insurance can be used to pay for immediate expenses, such as funeral
services, unsettled hospital and medical bills, mortgage payments, business commitments and
meeting college expenses for children.
It's a cash resource. Life insurance gives access to cash to pay for grocery bills and other
daily expenses. It also helps secure your estate by providing tax-free cash to pay estate and
other obligations.
Your family's standard of living can be maintained. With the right coverage, your family's
lifestyle and standard of living can be sustained, adding much needed normalcy during a
difficult time.
You have a wide range of options. There are two basic types of life insurance: Term life and
whole life. Term life policies offer death benefits, so if you die, you will get money back, but
if you live past the pre-determined length of the policy, you get no benefits. Whole life or
permanent insurance is more expensive, but these policies are open-ended and also
accumulate a cash value that the policyholder can earn dividends and borrow against—or
cash-in upon surrendering the policy.
Customize your policy and coverage. If you have dependent children, a spouse and parents
to care for, you'd want a policy that would protect them after death. Typically, policies are
opened for the breadwinner of the family, but a stay-at-home spouse's contributions are often
overlooked. You might consider a policy to cover childcare, carpooling and household chore
expenses in the event of a stay-at-home spouse's death. On the flip side, as you get older and
children or parents are no longer dependent on you for income, you can reduce your coverage
or drop it entirely.
33
Adequate coverage makes a difference. An old school rule of thumb is that your life
insurance policy equals five to ten times your annual income. Nowadays, advisors will look
at the number of dependents you have, how long they will be dependent upon you, and the
lifestyle they expect to live after your death. It's not a simple equation, but in general, you
will need more coverage than a typical plan offered by an employer, which usually totals one
or two years of your gross salary.
You can improve your credit rating. A life insurance policy is considered a financial asset
and may increase your credit score, which could be beneficial when trying to obtain medical
insurance or a home or business loan.
Life insurance may be exempt from bankruptcy. Most life insurance plans will not be
affected by bankruptcy and will remain intact if you claim bankruptcy. However, you'll need
to confer with a bankruptcy expert, as each case is unique.
Life insurance is not a simple product. It's wise to talk to an expert who can walk you
through the pros and cons of available plans and help choose coverage that works best for
your individual situation, now and in the future. Western offers insurance services and free
consultations. For more information, contact
34
2.11 Life Insurance in India
Life Insurance in India existed from long time. The modern concept of Insurance was
brought by Bruisers in India, and Oriental Insurance Company was the first Insurance
Company who did Insurance for the Indian in 1818 and was established in Calcutta nowadays
Kolkata.
Then due to no interference of government in it, private market players ruled the
market as they want to, that is why government intervened in between to protect the interest
of the mass and to safeguard the money involved in it. Government took the initiative and
banned the private players to involve in Insurance market.
All private companies were took over by Government and Insurance market was
turned to Public sector and Life Insurance Corporation of India was formed in 1956 to make
the Insurance reachable at remote areas and that even by low premiums or better said as
affordable premium so as to secure their life. From the beginning of Insurance in India till
now a lot of changes have been made but the most significant change was in 1999, when
IRDA was formed. IRDA means Insurance Regulatory and Development Authority.
This was formed to rethink upon opening the insurance sector for the Private players again
but along with that to have a check upon those private players an IRDA has to act as a
governing body to safeguard the interest of the public whose money is involved in it From
that time i.e. from the year 2001 insurance sector was opened for the private players too.
Since then Insurance Sector is on the boom and business is flourishing and a lot of private
players are coming into business. Here the private players doesn’t indicate to Indian Private
Companies but also foreign players are also involved in it, but to manage the money flow in
and outside the country IRDA takes care of the contribution of the money by foreign partners
of private insurance companies. To control that IRDA has set a limit of FDI i.e. 26%.
35
2.12 List of life insurance companies in India
36
2.13 FUNCTION OF THE INSURANCE
PRIMARY FUNCTION:-
1. Provide protection: - As risks controlling is not in the hands of anyone completely that is
why Insurance Company provides the risk protection.
2. Collective bearing of loss: - Insurance Company would have to accept the loss and give
respective claims as for the sake of contract that has been done between the company and the
insured.
3. Assessment of Risk: - There should be the proper assessment of the risk so as to charge
the correct and legible premium to insure the subject matter of insurance.
4. Provide the certainty: - As the losses appear from the uncertainty so Insurance Company
would have to provide the certainty of absorbing the loss so as to protect the insured under
the risk in which he has been insured.
SECONDARY FUNCTION:-
1. Prevent Loss: - Insurance cautious businessman and individuals to adopt suitable device to
prevent unfortunate consequences of risk by observing safety instructions.
2. Small capital to large risk: - Small capital is demanded to cover the risk of the large
capital.
37
2.14 About Life Insurance Corporation of India (LIC)
On 19th June 1956 the Parliament of India passed the Life Insurance Corporation Act, and the
Life Insurance Corporation of India was created on 1st September, 1956, with the objective
of spreading life insurance much more widely and in particular to the rural areas with a view
to reach all insurable persons in the country, providing them adequate financial cover at a
reasonable cost.
LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate
office in the year 1956. Since life insurance contracts are long term contracts and during the
currency of the policy it requires a variety of services need was felt in the later years to
expand the operations and place a branch office at each district headquarter. Re-organization
of LIC took place and large numbers of new branch offices were opened. As a result of re-
organisation servicing functions were transferred to the branches, and branches were made
accounting units. It worked wonders with the performance of the corporation. It may be seen
that from about 200.00 crores of New Business in 1957 the corporation crossed 1000.00
crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore
mark of new business. But with re-organisation happening in the early eighties, by 1985-86
LIC had already crossed 7000.00 crore Sum Assured on new policies.
Today LIC functions with 2048 fully computerized branch offices, 109 divisional offices, 8
zonal offices, 992 satallite offices and the Corporate office. LIC’s Wide Area Network covers
109 divisional offices and connects all the branches through a Metro Area Network. LIC has
38
tied up with some Banks and Service providers to offer on-line premium collection facility in
selected cities. LIC’s ECS and ATM premium payment facility is an addition to customer
convenience. Apart from on-line Kiosks and IVRS, Info Centres have been commissioned at
Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many
other cities. With a vision of providing easy access to its policyholders, LIC has launched its
SATELLITE SAMPARK offices.
The satellite offices are smaller, leaner and closer to the customer. The digitalized records of
the satellite offices will facilitate anywhere servicing and many other conveniences in the
future.
LIC continues to be the dominant life insurer even in the liberalized scenario of Indian
insurance and is moving fast on a new growth trajectory surpassing its own past records. LIC
has issued over one crore policies during the current year. It has crossed the milestone of
issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67%
over the corresponding period of the previous year.
From then to now, LIC has crossed many milestones and has set unprecedented performance
records in various aspects of life insurance business. The same motives which inspired our
forefathers to bring insurance into existence in this country inspire us at LIC to take this
message of protection to light the lamps of security in as many homes as possible and to help
the people in providing security to their families.
39
Objectives of LIC
Spread Life Insurance widely and in particular to the rural areas and to the socially
and economically backward classes with a view to reaching all insurable persons
in the country and providing them adequate financial cover against death at a
reasonable cost.
Conduct business with utmost economy and with the full realization that the
moneys belong to the policyholders.
Act as trustees of the insured public in their individual and collective capacities.
Meet the various life insurance needs of the community that would arise in the
changing social and economic environment.
Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy.
40
Operations of LIC
41
2.15 Top 5 private insurance companies as per their claim settlement
ratio
ICICI Prudential Life Insurance Company Ltd. (ICICI Prudential Life) is a joint venture
betweenICICI Bank Ltd., one of India's largest private sector banks, and Prudential
Corporation Holdings Limited.
ICICI Prudential Life began its operations in fiscal year 2001 and has consistently been the
market leader* amongst private players in the Indian life insurance sector. Our Assets Under
Management (AUM) as on 30th June 2016 were 1092.82 billion.
We offer an array of products across savings, investments and protection categories that
matches the different life stage requirements of our customers and enables them to achieve
their long term financial goals. At ICICI Prudential Life, we operate on the core philosophy
of customer centricity. We have developed and implemented various initiatives to provide
cost-effective products, superior quality services, consistent fund performance and a hassle-
free claim settlement experience to our customers.
ICICI Prudential Life is the first private life insurer to attain assets under management of 1
trillion and In-force sum assured of over 3 trillion. ICICI Prudential Life is also the first
insurance company in India to be listed on NSE and BSE.
42
Fiscal Particulars
Established Subsidiary for the purposes of undertaking pension funds related business
Values
The success of the company will be founded in its unflinching commitment to 5 core values -
Integrity, Customer First, Boundaryless, Humility and Passion. Each of the values describes
what the company stands for, the qualities of our people and the way we work. Every
member of the ICICI Prudential team is committed to the 5 core values and these values shine
forth in all that we do.
43
Boundaryless: I will treat organisation agenda as paramount
*
On a retail weighted received premium basis (RWRP)
44
About Kotak Mahindra Old Mutual Life Insurance Company
Kotak Mahindra Old Mutual Life Insurance Ltd is a 74:26 joint venture between Kotak
Mahindra Bank Ltd., its affiliates and Old Mutual plc. The company started operations in
2001, and strives to offer its customers outstanding value through high customer empathy,
consistent and benchmarked service and a suite of products that leverage the combined
prowess of protection and long term savings. The company covers over 4 million lives and is
one of the fastest growing insurance companies in India.
Established in 1985, the Kotak Mahindra group is one of India's leading financial services
conglomerates. In February 2003, Kotak Mahindra Finance Ltd. (KMFL), the Group's
flagship company, received a banking license from the Reserve Bank of India (RBI). With
this, KMFL became the first non-banking finance company in India to become a bank –
Kotak Mahindra Bank Limited.
The consolidated balance sheet of Kotak Mahindra group is over Rs. 1.17 lakh crore and the
consolidated net worth of the Group stands at Rs. 17,228 crore (approx US$ 2.9 billion) as on
June 30, 2013. The Group offers a wide range of financial services that encompass every
sphere of life. From commercial banking, to stock broking, mutual funds, life insurance and
investment banking, the Group caters to the diverse financial needs of individuals and the
45
corporate sector. The Group has a wide distribution network through branches and
franchisees across India, and international offices in London, New York, Dubai, Abu Dhabi,
Mauritius and Singapore.
Old Mutual
Old Mutual provides life assurance, asset management, banking and general insurance to
more than 14 million customers in Africa, the Americas, Asia and Europe. Originating in
South Africa in 1845, Old Mutual has been listed on the London and Johannesburg Stock
Exchanges, among others, since 1999.
In the year ended 31 December 2012, the Group reported adjusted operating profit before tax
of £1.6 billion (on an IFRS basis) and had £262 billion of funds under management from core
operations.
46
About HDFC Life Insurance Company
HDFC Life has about 398 branches and presence in 980+ cities and towns in India. The
company has also established a liaison office in Dubai.
HDFC Life distributes its products through a multi channel network consisting of Insurance
agent (HDFC bank , saraswat bank , R B L bank ), Direct channel, Insurance Brokers &
Online Insurance Platform.
HDFC Life's products include Protection, Pension, Savings, Investment, Health along with
Children and Women plans. The company also provides an option of customizing the plans,
by adding optional benefits called riders, at an additional price. The company currently has
29 retail and 8 group products, along with 7 optional rider benefits (as on 31st May 2016)
Mohit Karnwal Protection Plans - insurance plans that provide protection and financial
stability to the family in case of any unforeseen events.
47
Click2Protect Plus is their online term plan.
Launched CSC Suraksha to be sold exclusive through the Common Services Centre
network
Click2Invest is their online ULIP investment plan
Health Plan – offers financial security to meet health related contingencies.
Savings & Investment plans - These plans help in investment to achieve financial goals
Retirement plans - financial security for life post retirement
Women’s plans - plans catering to different financial needs of women
Children’s plans – plans meant to secure children’s future
Rural & social Plans – meant specifically for rural customers
Click2Retire completed their Click2 portfolio
Corporate History
The Insurance Regulatory and Development Authority (IRDA) was constituted in 1999 as an
autonomous body to regulate and develop the insurance industry. The IRDA opened up the
market in August 2000 with the invitation for application for registrations. HDFC Life was
established in 2000 becoming the first private sector life insurance company in India
By 2001, the company had its 100th customer, strengthened its employee force to 100 and
had settled its first claim. HDFC Life launched its first TV advertising campaign 'Sar Utha
Ke Jiyo' in 2005. In 2006, a study conducted by the Brand Equity – Economic Times had put
HDFC Life at 29th rank in the most trusted Indian Brands amongst the Top 50 Service
Brands of 2010.
The Insurance Regulatory and Development Authority (IRDA) gave accreditation to HDFC
Life for 149 training centres housed in its branches to cater to the mandatory training required
to be given as well as for other sales training requirements in 2009.
In 2012, it the first private life insurance company to bring back pension plans under the new
regulatory regime, with the launch of two pension plans - HDFC Life Pension Super Plus and
HDFC Life Single Premium Pension Super.
48
About Bajaj Allianz Life Insurance Co. Ltd
Bajaj Allianz General Insurance Company Limited is a joint venture between Allianz SE,
world's leading insurer and Bajaj Finserv Limited. The company began its operations in 2001
and today has a pan-India presence in over 200 towns and cities. The company has been
constantly expanding its operations to reach out to its customers.
As one of the leading general insurer of India, Bajaj Allianz General Insurance caters to
individuals across demographics of the country and the corporate sector with its wide range
of products as well as services that go beyond insurance.
The company is not only bringing insurance solutions to the customers' doorstep but also
improving insurance penetration, with its advanced digital and mobile applications. Known
for its claim and customer service levels, Bajaj Allianz has received iAAA rating from ICRA
for ten consecutive years, which indicates the company's highest claims paying ability and a
fundamentally strong position. The company has a strong focus on customer centricity and
aims at delivering superior value with an excellent and caring experience for the customer.
49
Bajaj Allianz General Insurance has been chosen as the Best General Insurance Company in
India as well as Asia by organizations such as Asia Insurance industry Awards, Money Today
FPCIL Awards, Vijayvavani BFSI Excellence Awards 2015, etc. The company was adjudged
as the Aon Best Employer 2016 for its healthy work environment and employee friendly
policies. In 2015, the company won the Claims award Asia for the 3rd consecutive year,
highlighting its superior claims management procedures and was recognized as the Economic
Times Best Corporate Brand 2016. Bajaj Allianz General Insurance was ranked 2nd in terms
of having a loyal health insurance customer base in the country, by a survey done by IMRB.
It was also recognized as the Most Admired Health Insurance Company of the Year by
Pharma Leaders Power Brands Awards 2015.
50
About Max Life Insurance Co. Ltd
Max Life Insurance, one of the life insurers, is a joint venture between Max India Ltd. and
Mitsui Sumitomo Insurance Co. Ltd. Max India is a leading Indian multi-business corporate,
while Mitsui Sumitomo Insurance is a member of MS&AD Insurance Group, which is
amongst the top general insurers in the world. Max Life Insurance offers comprehensive life
insurance and retirement solutions for long-term savings and protection to thirty lakh
customers. It has a country-wide diversified distribution model including the country's
leading agent advisors, exclusive arrangement with Axis Bank and several other partners.
In the financial year 2011-12 Max Life Insurance ranked fourth among private life insurers
with a market share of 8.6%. The Company has been one of the fastest growing life insurance
companies with total revenue of Rs.6,391 crore and enterprise profit of Rs.733 crore for the
Financial Year 2011-12. The Company’s share capital of Rs. 2,127 crore with a solvency
margin of 534% is indicative of its financial strength and stability. As on 31 March 2012,
Max Life Insurance had assets under management of Rs.17,215 crore
51
Chapater : 3 Review of the literature
The opening of life insurance companies also witnessed major changes in the insurance
products being offered by life insurance companies and insurance
Covers opted for the customers for example we see a greater shift from traditional life
insurance product to unit linked insurance policies which further justify the changing mind
set to the potential customer in wake of operation of these joint venture foreign companies
with Indian insurance companies and banks
Rakesh shahani in his book financial markets in india indicated about the public sector LIC
has been facing the challenge from private players since 2000 the entry of private players has
transferred the entire markets from a seller’s market to a buyer’s market but still LIC is
leading insurance sector despite competition given by the private players
H. sadhak in his books life insurance in india opportunities challenges and strategic
perspective reported that Indian life insurance changing market structure a competitive
market environment attempts to promote a healthly competition and to protect the consumer
but still more peoples prefer LIC products because of they have more trust on LIC than
private insurance companies
G. Ganesh in his book privatization in india reviewed that insurance sector in india insurance
companies have been playing a vital role to protect or reduced risk in human life open up the
insurance sector and allowing foreign equity has aroused wide spread interest and a number
of domestic and foreign player privatization is playing a vital role insurance sector reform
have been created a competitive edge in an insurance sector in which they have focus on pre
liberalization and post liberalization of insurance sector
L.M bhole in his book financial institution and markets admitted that the general nature of
insurance companies both economic and social purpose and relevance they have concerned to
insurance sector reform which by malhotra committee recommendation in India insurance
sector in which discus the investment pattern and policy investment funds portfolio restriction
and sector wise investment of LIC
R.K. Uppal in his book financial sector in India emerging challenges reviewed that with the
inititation of the deregulation insurance sector the insurance plays a vital role in the economic
development of any company
52
P.K. Biswasray and B.h. venkateswara rao in his book marketing of life insurance business
revealed that about the insurers companies services towards their customers insurer
companies are using latest IT technology for better facilitate to their customers in which they
have emphasis on the public company their diversified activities in various state in india and
global level it has also reveable fund performance of LIC in various sector impact of reform
in insurance sectors on LIC by private players participation they are discus on product
innovation and distribution channel and his operational performance of LIC
53
Chapter : 4 Analysis of the Project
22-30 Yrs 49
31-40 Yrs 16
41-55 Yrs 8
Below-21 Yrs 27
Total
22-30 Yrs 31-40 Yrs 41-55 Yrs Below-21 Yrs
27%
49%
8%
16%
Interpretation
From the above analysis it has been observed that almost 50% of total
sample are fall in 22-30 yrs age group
54
2 .Educational qualification wise analysis of sample
Graduate 34
HSC 8
MBA 31
Student 27
Total
Graduate HSC MBA Student
27%
34%
8%
31%
Interpretation
It has been observed around 34 % samples are graduate & around 31%
samples are MBA i.e more than 70% samples are well educated
55
3 Do you have life insurance policy
YES / NO Sample
YES 100
Total
YES
100%
Interpretation
All the samples are having Life Insurance Policy & none of the sample found who didn’t
have Life Insurance Policy.
Since this was a Random Sampling and all 100% samples are having Life Insurance Policy,
so we can interpret that now people are well aware of Insurance or need of Insurance
56
4 Why you have taken this life insurance policy
Options Sample
for tax benefit 1
Total
1%
33%
6%
Interpretation
There are MIX responses by people, however most of the people had taken Life insurance
policy because of Tax Benefit and Financial Security of there family.
57
5 Life insurance policies is beneficial or not
Yes / no Sample
yes 100
Total
yes
100%
Interpretation
All people have said that Life Insurance Policies are beneficial and no one said that Life
Insurance Policies are not beneficial.
58
6 Have you asked for this product or life advisor has pitched this
product to you
Total
1%
6%
93%
Interpretation
Nowadays most of the people are aware of Insurance but still they are not aware of Various
Insurance products.
May be that’s why 6% of people have taken Life Insurance policy as per Suggested by there Life
Adviser and 93% people have selected there product as per there need and priority
59
7 Are you satisfied with your product
Yes 100
Total
Yes
100%
Interpretation
More than 90% people are satisfied with their Life Insurance Product.
That means there is a 100% satisfaction in people who had taken Life Insurance policy from
LIC.
60
8 Are you aware of free look period
No 63
Yes 37
Total
37%
no
Yes
63%
Interpretation
From the above analysis it is observed that 63% people are still not aware of free look period.
Free look Concept has been introduced by the IRDA where in Customers can return their
policy to the life insurer within 15 days from the receipt of the Contract if they are not
satisfied with the terms & condition of the policy.
61
9 Are you satisfied with customer service of your life insurance
company
Total
0%
8%
no
yes
(blank)
92%
Interpretation
More than 90% people are satisfied with their Life Insurance Product.
Out of 8% who are not satisfied with their Life Insurance Product had taken Life Insurance
from Private Life Insurer.
That means there is a 100% satisfaction in people who had taken Life Insurance policy from
LIC.
62
10 How you rate customer service of your life insurance company
Good 52
Not satisfactory 4
Outstanding 7
Satisfactory 37
Total
37%
good
not satisfactory
52% outstanding
satisfactory
7%
4%
Interpretation
Around 7% people have rated Customer Service by their Life Insurance Company as
“Outstanding”, 52% have rated as “Good”, 37% have rated as “Satisfactory and only 4%
people are not satisfied with Customer Service by their Life Insurance Company.
63
11 Did you find difficulties while taking life insurance policy
Total
0%
no
(blank)
100%
Interpretation
64
12 According to you who is the most trusted LIC or private life insurance
LIC 86
Private insurance 14
Total
14%
LIC
private insurance
86%
Interpretation
86% peoples are saying LIC is the Most trusted in Life Insurance as Compared to Private Life
Insurers.
65
13 According to you do you think LIC has monopoly in life insurance
industry till now
Total
14%
no
yes
86%
Interpretation
Around 86% are agreeing with the statement “LIC has a Monopoly in Indian Insurance
Industry”.
Yes, as per LIC has the Highest Market share in Indian Insurance Industry since inception
66
14 If yes, then do you think LIC can retain its monopoly in this cut throat
competition
no 14
yes 86
Total
14%
no
yes
86%
Interpretation
Around 86% were agreed that “LIC has a Monopoly in Indian Insurance Industry” but when
we had asked them “Do you think LIC can retain its Monopoly in this Cut throat
Competition?” the answer was YES
67
15 According to you which is the most customer service oriented
companies
LIC 85
Private Insurance 15
Total
15%
LIC
private insurance
85%
Interpretation
When we talked about Customer Service always Private Sectors are the best, but in Insurance
85 % peoples are believe that LIC (Public Limited Company) is the Most Customer Oriented
Company as Compared to Private Life insurers.
68
4.1 Finding & observations
Life insurance industry is growing since year 2000
Ignition of the deregulation insurance sector the insurance sector plays a vital role in
the process of the economic development of any economy
Life insurance is very crucial in today’s fast moving life and uncertain conditions like
natural calamities & terrorist attracts
Insurance companies have been playing a vital role to protect or reduced risk in the
human life
LIC has been facing the challenge from private players since 2000 but despite of
having tough competition LIC still No.1
The entry of private players has transferred the entire market from a seller market to a
buyer market but still LIC is leading insurance sector
Indian life insurance changing market structure a competitive market environment
attempts to promote a healthy competition and to protect the consumers but still more
peoples prefer LIC products
Since we have conducted a random sampling survey and all 100% samples are having
life insurance policy so we can interpret that now people are well aware of insurance
or need of insurance
When people had asked if you want to take new life insurance policy then which
company you would prefer than 84% people would prefer LIC and only 14% people
would like to take new life insurance policy from private life insurer
Nowadays most of the people are aware of insurance but still they are not aware o
various insurance products
Free look concept has been introduced by IRDA where in customers can return their
policy to the life insurer within 15 days from the receipt of the contract if they are not
satisfied with the terms & condition of the policy
Around 86% are agreeing with the statement LIC has monopoly in Indian insurance
industry
More than 80% peoples believe that LIC is most trusted in life insurance as compared
to private life insurance
So in all terms LIC is the No .1 or better than private life insurers as per the survey
Around 85% peoples are believe that LIC is the most customer oriented company as
compared to private life insurers
69
Even after 15 years in life insurance industry private life insurance has only 29.32%
of market share even though there are 23 private life insurance sector
It clearly indicates that there is NO impact on LIC due to entry of private sector
Still LIC has market share of more than 70% which is highest in any sector where 24
companies are competing with each other
This proves that Despite competition from private companies LIC is still
growing
70
4.2 Limitation of the study
71
Chapter : 5 Suggestions & conclusions
5.1 Suggestions
Also the exclusive distribution network LIC prevents market from competition
knowingly or unknowingly.
Having a large number of agents cannot be said to be an anti competitive practice but
such a regulation has given an advantage to LIC as it has over 11 lakhs agents in a
comparison to other players is far more .
People invest more with a faith that their investment is guaranteed to come back if not
by LIC than by government .
Similarly, private insurance companies also adopt this strategy from LIC because a
agent plays an important role in insurance industry.
And they have to create trust factor for the insurance investor which is helpful for the
growth of their business
72
5.2 Conclusions
Private sector companies are entered in life insurance industry in the year
2000
As we can see all the samples are having Life Insurance Policy & none of the sample found
who didn’t have Life Insurance Policy
Secondly there is MIX responses by people, however most of the people had taken Life
insurance policy because of Tax Benefit and Financial Security of there family
Then All people have said that Life Insurance Policies are beneficial and no one said that
Life Insurance Policies are not beneficial
More than 90% people are satisfied with their Life Insurance Product.That means there is a
100% satisfaction in people who had taken Life Insurance policy from LIC
At the time of taking life insurance policy Nobody has faced any difficulty
86% peoples are saying LIC is the Most trusted in Life Insurance as Compared to Private Life
Insurers.
When we talked about Customer Service always Private Sectors are the best, but in Insurance
85 % peoples are believe that LIC (Public Limited Company) is the Most Customer Oriented
Company as Compared to Private Life insurers
Life insurance industry private life insurance has only 29.32% of market share even though
there are 23 private life insurance companies
It clearly indicates that there is NO impact on LIC due to entry of private sector
Still LIC has market share of more than 70% which is highest in any sector where 24
companies are competing with each other
73
5.3 Appendix
PROJECT QUESTIONNAIRE
Name :______________________________________________
Email id :______________________________________________
I am the student of BMS ( bachelor of management studies ) in the above mention college
and presently doing a project on Impact on life insurance corporation due to growth of
private insurance business I request you to kindly fill the questionnaire given below and
assure you that the data generated shall be kept confidential
74
3. Are life insurance policies is beneficial or not?
YES
NO
4. Have you asked for this product or life advisor has pitched this product to
you?
Yes, I have selected this product
No, my life advisor has advise this product
5. Are you satisfied with your product ?
YES
NO
6. If No, then are you aware of free look period?
YES
NO
7. Are you satisfied with customer service of your life insurance company?
YES
NO
8. How will you rate customer service of your life insurance company?
Not satisfactory
satisfactory
Good
Outstanding
9. Did you find any difficulties while taking life insurance policy?
YES
NO
10. According to you who is most trusted LIC or private life insurance
company?
LIC
Private life insurance companies
11. According to you do you think LIC has monopoly in life insurance
industry till now?
YES
NO
12. If yes, then do you think LIC can retain its monopoly in this cut throat
competition?
YES
NO
13. According to you which is the most customer service oriented companies?
LIC
Private insurance
75
5.4 Bibliography
Books
Websites :-
1) www.irda.gov.in
2) www.investopedia.com
3) www.Wikipedia.com
76