Professional Documents
Culture Documents
Submitted by:
Name of Faculty Guide: Prof. Seemita Bose Chowdhury Name of the Student: Pranita Goyal
Designation: Assistant professor Roll No.: PGDM182054109
Program: IFM
Batch: 2018-20203
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CERTIFICATE FROM THE FACULTY GUIDE
This is to certify that the Project Work titled analysis of life insurance sector is a bonafide work carried
out by Ms. Panita goyal Roll No. PGDM182054109 a student of PGDM program 2018 – 2020 of the
Institute for Technology & Management, Kharghar, Navi Mumbai under my guidance and direction.
Signature of Guide :
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CONTENTS
Sr No. Particulars Page no.
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Chapter 1. INTRODUCTION
1.1 Introduction of the sector
The insurance sector is made up of companies that offer risk management in the form
of insurance contracts. The basic concept of insurance is that one party, the insurer, will
guarantee payment for an uncertain future event. As an industry, insurance is regarded as a
slow-growing, safe sector for investors. The insurance industry of India consists of 57
insurance companies of which 24 are in life insurance business and 33 are non-life insurers.
Among the life insurers, Life Insurance Corporation (LIC) is the sole public sector company.
Apart from that, among the non-life insurers there are six public sector insurers. In addition to
these, there is sole national re-insurer, namely, General Insurance Corporation of India (GIC
Re). Other stakeholders in Indian Insurance market include agents (individual and corporate),
brokers, surveyors and third-party administrators servicing health insurance claims.
• Life Insurance
• General insurance
Types of Insurance
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1.3 Contribution to GDP
Insurance has had a very positive impact on India’s economic development. The sector is
gradually increasing its contribution to the country’s GDP. Due to the healthy performance of
the Indian economy the share of life insurance premium in the gross domestic savings (GDS)
of the household’s sector has increased to 3.1% to the total of GDP. Gross premiums written
in India reached Rs.5.53 trillion with Rs.4.58 trillion from life insurance.
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1.4 Domestic competition & foreign competition
Domestic companies:
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17. Max New York Life Insurance
Foreign companies
3 Lincoln Financial
6 John Hancock
7 Transamerica
8 State Farm
9 MetLife Inc.
11 Pacific Life
13 AXA
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14 Brighthouse Financial Inc.
16 Aflac Inc.
17 Protective
18 Primerica Inc.
21 Torchmark Corp.
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• Over 47.9 million famers were benefitted under Pradhan Mantri Fasal Bima Yojana
(PMFBY) in 2017-18.
• The Insurance Regulatory and Development Authority of India (IRDAI) plans to issue
redesigned initial public offering (IPO) guidelines for insurance companies in India,
which are to be looking to divest equity through the IPO route.
• IRDAI has allowed insurers to invest up to 10 per cent in additional tier 1 (AT1)
bonds that are issued by banks to augment their tier 1 capital, to expand the pool of
eligible investors for the banks.
Government's policy of insuring the uninsured has gradually pushed insurance penetration in
the country and proliferation of insurance schemes. The following are some of the major
investments and developments in the Indian insurance sector.
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1.7 Products, customers & processes
Products of insurance-
Life insurance that pays out a sum of money either on the death of the insured person or
after a set period.
Types of life insurance: -
• Level Term Life Insurance: where the death benefit remains the same throughout the
policy term and the renewal premium is constant.
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• Decreasing Term Life Insurance: where the death benefit under the plan decreases
with time and the renewal premium is constant. For example: Mortgage redemption
policies, credit life insurance.
• Increasing Term Life Insurance: where the coverage and premium increase.
Endowment Policy
An endowment policy is defined as a type of life insurance that is payable to the insured
if he/she is still living on the policy's maturity date, or to a beneficiary otherwise. An
endowment policy provides you with a dual combination of protection and savings. In
an endowment policy, if the insured dies during the term of the policy, the nominee
receives the sum assured plus the bonus or participating profit or guaranteed additions,
if any. The bonus or profit is paid for the number of years that the insured survives in
the policy term.
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Savings & Investment Plans
Savings & Investment Plans provide you the assurance of lump sum funds for you and
your family's future expenses. While providing an excellent savings tool for your short
term and long-term financial goals, these plans also assure your family a certain sum by
way of an insurance cover. This is a broad categorisation which covers both the
traditional and unit linked plans.
Retirement Plans
A savings and investment plan that provides you with income during
retirement is called Retirement Plan. Retirement plans are offered life
insurance companies in India and help you to build a retirement corpus. On
maturity, this corpus is invested for generating a regular income stream
which is referred to as pension or annuity. Retirement plans are further
classified into.
• 'With cover' and 'without cover' plans: 'With cover' pension plans offer an
assured life cover in case of an eventuality and in 'Without cover' pension
plan, the corpus built till is given out to the nominees in case of an
eventuality. There is no life cover in without cover plans.
• Immediate Annuity Plans: In case of immediate annuity plans, the pension
commences within one year of having paid the premium.
• Deferred Annuity Plans: In case of deferred annuity, the pension does not
commence immediately; it is ‘deferred ‘up to a time, which is decided
upon by the policyholder.
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• Conservative ULIP‘s which invest up to 20% in equity.
Types of Unit Linked Insurance Plans (according to death benefit)
• Type I ULIP: It gives the higher of the sum assured or fund value as death benefit
• Type II ULIP: This plan pays the policy holder both benefits i.e. sum assured plus
fund value as death benefit.
General insurance is a contract that offers financial compensation on any loss other than
death. It insures everything apart from life. A general insurance compensates you for financial
loss due to liabilities related to your house, car, bike, health, travel, etc. The insurance company
promises to pay you a sum assured to cover damages to your vehicle, medical treatments to
cure health problems, losses due to theft or fire, or even financial problems during travel.
Types of general insurance: -
Motor insurance
Insurance for the damage or theft of your motor vehicle, two-wheeler, three-wheeler or
four-wheeler, is covered under this type of insurance. The damage caused to the vehicle can
be caused natural or man-made circumstances, the extent of which would change from policy
to policy.
Under the Motors Vehicle Act, motor insurance is mandatory in India. New motor vehicles
come with a third-party insurance right from the showroom itself.
Home insurance
Home and household insurance protect your home and the items inside it. A home insurance
policy would also cover natural and man-made circumstances. The contents that are covered
under a home insurance policy would depend on the type of policy you buy.
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Travel insurance
Another popular type of general insurance is travel insurance, which covers your trips abroad.
Travel insurance can be taken to cover loss or theft of your valuables as well as documents.
Some travel insurance policies also cover flight delays and medical emergencies. Travel
insurance can be taken for personal as well as business trips.
Health Insurance
Ill health can result in a major halt in your life and work. Moreover, the escalating price of
health care costs means that you would be shelling out a massive amount of money to bear
the brunt of these costs. This is the reason why you would need health insurance to cover
your medical expenses following hospitalization from sudden illnesses or expenses caused by
accidents. This also includes cashless facility in empanelled hospitals, pre and post
hospitalization expenses, and ambulance charges.
Commercial Insurance
Commercial insurance offers solutions for all sectors of the industry ranging from
automotive, aviation, construction, chemicals, foods and beverages, manufacturing, oil and
gas, pharmaceuticals, power, technology, telecom, textiles, transport and logistics.
Some common types of commercial insurance include:
• Property insurance
• Marine insurance
• Liability insurance
• Financial lines insurance
• Engineering insurance
• Energy insurance
• Employee benefits insurance
• International insurance solutions
1. Compare Quotes – you want to make sure to compare rates with all the
companies to ensure you get the best rate. The easiest and most efficient way to do
this is to work with an independent agency that works with all the companies on the
market (that’s us). This doesn’t cost you a dime but can save you a ton of time.
2. The Application – next is to apply with the company through a short application
process, this usually takes 10 to 20 minutes. It will include some basic information,
health questions, and beneficiary information.
3. The Medical Exam – this will be scheduled while you’re applying at your
convenience. A nurse will come out to your home free of charge, at a place and time
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of your choosing. The nurse will check your blood pressure, weigh you, take a blood
and urine sample and ask you some basic questions. This shouldn’t take more than a
half an hour.
4. Underwriting – the longest portion of the application is the underwriting. The
good news is, it doesn’t require any action on your end. This is the part of the process
where the life insurance company will review your application, access your medical
and personal history to assess your risk and assign you a health/rate class. In
layman terms that means figure out if you qualify and at what cost. This can take 3 to
6 weeks to accomplish unless you opt for a no exam life insurance policy.
5. The Decision – once the underwriting is complete the company will come back to
you with a decision. You will either get the rate you applied for or it will come back
“other than applied.” This means that you got a better, or worse rate than what your
agent qualified you for. This will depend on factors like your health, lifestyle, and
history.
Claim intimation
The nominee needs to inform the insurance company about the death of the insured as soon
as possible. The claim intimation should carry details like date, place and cause of death.
Claim form
Once the death intimation is made to the insurance company, it will record the same and ask
the claimants to fill up a death claim form and submit it along with a list of documents.
Documents
The requisite documents are:
• Death certificate
• Original policy document
• Deed of assignments, if any
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• Discharge form
If no nomination has been made, the claimant is required to attach proof that he is legally
entitled to make the claim.
Process
The insurance company will verify the claim and may ask for additional documents. If the
insurer is satisfied with the genuineness of the claim, it will inform the claimant accordingly
and pay the death claim amount.
Source- https://www.ibef.org/download/Insurance-Report-June-2018.pdf
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1.10 Introduction of the sector
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SWOT analysis
• India’s largest Insurance service provider: LIC currently has pan India
operations with 2048 fully computerized branch offices, 8 zonal offices, around 113
divisional offices, 2,048 branches and 1381 satellite offices and corporate offices. The
entire country is classified under 54 customer zones and 25 metro-area service hubs
based across various cities and towns of India. Currently, LIC has
1,337,064 individual agents, 242 Corporate Agents, 89 Referral Agents, 98 Brokers and
42 Banks for selling life insurance to the general public.
• Brand Image: LIC has a strong branding in India. Its tagline Yogakshemam
Mahamyaham which means welfare for all is well recognized. The Economic Time
Brand Equity Survey of the year 2015 voted LIC as the most trusted Insurance provider
in India.
• Fund Base: LIC has a huge found base of around 150 billion USD and is also India’s
biggest investor making it immensely powerful in the domain of finance in India.
• A network of Agents: LIC has around 1,337,064 individual agents, 242 Corporate
Agents, 89 Referral Agents, 98 Brokers and 42 Banks across India who cover each nook
and corner of the country.
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Weaknesses in the SWOT analysis of LIC:
Weaknesses are used to refer to areas where the business or the brand needs improvement.
Some of the key weaknesses of LIC are:
• Culture: LIC has been strongly associated with the government and thus follows a
very slack and slow-paced work culture. This works as a weakness when compared to
modern-day private insurance players who are adept at strategy.
• Poor advertisement strategy: In comparison to its private counterparts LIC does
not spend too much on advertisement and this shows in the quality of ads that they
release.
• Too many restrictions: The Company has a lot of restriction imposed being a
government entity and there is always red tape challenges. This makes decision makings
low at LIC.
• Labour overheads: LIC has a huge employee’s strength and most of them work from
their own setups. Paying their salaries and managing theme is often a huge challenge for
the company.
• Cybersecurity: There are many cases of information threats and breaches in security
systems. Thus, at an age where cybersecurity is a threat Insurance policies against this
can prove to be a huge opportunity.
• Online Services: As online services grown people have started looking more into
options like insurance and the awareness levels are also higher than the earlier days. This
presents an opportunity for providers like LIC which are labour intensive to cut down
costs by replacing people with technology.
• Shift from protection to prevention: There is a general shift of trend from
protection to prevention which is a pointer for insurance companies who should now be
focusing on risk prevention than risk mitigation policies.
• More disposable income: Insurance today is seen not as a protection but also as a
form of investment. By capitalizing on this new approach insurance companies can
design new products.
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Threats in the SWOT analysis of LIC:
Threats are those factors in the environment which can be detrimental to the growth of
• Competition: With privatization of insurance LIC has lost its older glory and today
faces stiff competition from private insurance players who have brought in more glamour
into the industry.
• Change of governments: With every new government the fiscal and monetary
policy change with the result that policies need to be reworked accordingly. This creates
a lot of hassles.
• Technology: Today most financial services make technology an integral; part of their
business through online banking and financial broking services online. However, LIC
still has a lot to achieve in terms of staying abreast with technology.
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Chapter 2. Literature review
2.1 Presentation of material collected through review of relevant literature
quoting the sources of each material
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Shilpa Agarwal, A.K. Mishra research paper on life insurance of India –
past ,present & future, 4th April,2017
After the reforms in insurance sector, life insurance industries have seen a remarkable growth
moreover; the policies measures provided a favourable environment for insurance companies
to flourish in the country. Till 2013 there were 52 insurance companies operating in India of
which 24 are in life insurance business. The share of the life insurance business in total
insurance business was very high at 80.2% and it is ranked 10th among 88 countries. LIC has
been successfully able to create value for its customers or policy holders. By analysing the
pre and post performances, it is showing a respectable growth in its business. There is
enormous potential for life insurance and no doubt that LIC still enjoys immense goodwill in
our country. But private players are giving cut throat competition, So LIC must make more
efforts to enhance its business in terms of technology distribution network, technological
innovations, client relationship and quality.
Source- http://www.internationaljournalssrg.org/IJEMS/2017/Volume4-Issue4/IJEMS-
V4I4P108.pdf
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general. It is important to study segment wise, may be rural & urban, unit linked, and non-
unit linked etc. Also, the impact on the entire industry needs to be studied in a broader aspect.
By and large, this industry requires more in-depth research to face the challenges and
business sustenance.
Source- https://abhinavjournal.com/journal/index.php/ISSN-2277-1166
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are some of the suggestions provided by the researcher. The research concludes with that
demographic factors of the people play a major and pivotal role in deciding the purchase of
life insurance policies.
Source- https://www.academia.edu
2.2 Identification of the gap or some areas where no substantial work has
been done.
The basic gaps in the above mentioned research papers can be seen as firstly, these studies do
not compare or give a gist of what insurance policies look like in the foreign countries which
can be seen as the crucial area of comparison whereas the second topic of absence is that
these papers do not carry any sort of awareness for the general public mainly the rural
population of India about what are insurance policies, why are they important and so on.
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Chapter 3 RESEARCH METHODOLOGY
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REFERENCES
https://www.irdai.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=PageNo1332&
mid=1.9
https://www.policybazaar.com/insurance-companies/life-insurance/
https://www.ibef.org/industry/insurance-sector-india.aspx
http://indianresearchjournals.com
https://www.researchgate.net
https://www.ibef.org/download/Insurance-Report-June-2018.pdf
https://www.policybazaar.com/life-insurance/articles/types-of-life-insurance/
https://securenow.in/insuropedia/what-are-the-different-types-of-general-insurance-policies
https://www.ibef.org/download/Insurance-Report-June-2018.pdf
https://www.iciciprulife.com
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