Insurance Industry Growth and Trends in India

Chapter – 4
PERFORMANCE OF INSURANCE INDUSTRY IN INDIA
The Indian insurance industry has undergone transformational changes since

2000 when the industry was liberalised. The industry has witnessed phases of rapid
growth along with extent of growth moderation and intensifying competition. There
have also been number of product and operational innovations necessitated by
consumer need and increased competition among the players. Changes in the
regulatory environment also had path-breaking impact on the development of the
industry. There was exponential growth in the first decade of insurance industry
liberalization the back of innovative products and aggressive expansion of
distribution, the life insurance industry grew at jet speed. However, this frenzied
growth also brought in its wake issues related to product design, market conduct,
complaints management and the necessity to make course correction for the long term
health of the industry. Several regulatory changes were introduced during the past
years and life insurance companies adopted many new customer centric practices in
this period. Insurance industry in India has now been through a cycle involving high
growth and moderation. The next wave of growth will be of a different nature and
complexity, led by players who change the market dynamics through innovation.
With a decade of experience and learning about customer behavior and business
economics, Indian insurers are well-placed to select and diffuse innovative ideas.
However, this would require that insurers bring about fundamental difference in
mindset on how they perceive the role of innovation in achieving profitable growth.
The insurers will need to align the people strategies to create a culture of generating
new ideas and implementing those using optimal resources.
Penetration and density of insurance in India is shown in Table 4.1. There has
been fluctuating trend in density and penetration of insurance over the period of 2001-
2014. The highest density of insurance was recorded $ 64.4 in 2010 while it declined
to $ 55 in 2014. Penetration of insurance was recorded highest 5.2 per cent in 2009
which declined to 3.3 per cent in 2014. The density of insurance was recorded much
Chapter 4: Performance of Insurance Industry in India
higher in case of life insurance as against of non-life insurance. However, there has
been fluctuating trend in density of life insurance over the period. Penetration of life
insurance was recorded highest 4.6 per cent in 2009 which dropped to 2.6 per cent in
2014. The penetration of non-life insurance was recorded highest 0.8 per cent in 2013
which slightly declined to 0.7 per cent in 2014.
Table: 4.1
Insurance Penetration and Density in India
Year Life Insurance Non-Life Insurance Total
Density Penetration Density Penetration Density Penetration

(USD) % (USD) % (USD) %
2001 9.1 2.15 2.4 0.56 11.5 2.71
2002 11.7 2.59 3 0.67 14.7 3.26
2003 12.9 2.26 3.5 0.62 16.4 2.88
2004 15.7 2.53 4 0.64 19.7 3.17
2005 18.3 2.53 4.4 0.61 22.7 3.14
2006 33.2 4.1 5.2 0.6 38.4 4.8
2007 40.4 4 6.2 0.6 46.6 4.7
2008 41.2 4 6.2 0.6 47.4 4.6
2009 47.7 4.6 6.7 0.6 54.3 5.2
2010 5.7 4.4 8.7 0.71 64.4 5.1
2011 49 3.4 10 0.7 59 4.1
2012 42.7 3.17 10.5 0.78 53.2 3.96
2013 41 3.1 11 0.8 52 3.9
2014 44 2.6 11 0.7 55 3.3

Source: Compiled from Annual reports of IRDAI of different years from 2004-05 to 2013-14
Page | 71
Chart: 4.1
Insurance Penetration in India
4.6
4.4
5
4.1
4
4
3.17
3.4
4
3.1
2.59 0.67
2.53 0.64
2.53
2.6
2.26 0.62
2.15 0.56
3
2
0.78
0.71
0.61
0.8
0.7
0.7
0.6
0.6
0.6
0.6
1
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Life Insurance Non-Life Insurance
State-wise life insurance penetration and density of individual new business is

shown in Table 4.2. There has been declined in penetration and density of life
insurance over the period of 2006-07 to 2011-12. Insurance penetration during 2006-
07 was recorded 1.56 per cent at the national level while it was recorded high in
Himachal Pradesh (2.68 per cent) followed by Kerala (2.54 per cent), Rajasthan (1.89
per cent), Punjab (1.84 per cent), Tamil Nadu (1.81 per cent) and Uttar Pradesh (1.76
per cent). During 2011-12, insurance penetration was recorded 0.78 per cent at the
national level. It was recorded highest in West Bengal (1.07 per cent) and Assam
(1.05 per cent). In the state of Uttar Pradesh, it was recorded 0.86 per cent). Insurance
density during 2006-07 was reported Rs. 552.6 at the national level while it was
recorded highest in Himachal Pradesh followed by Kerala, Punjab, Tamil Nadu,
Maharashtra, Karnataka and Andhra Pradesh. During 2011-12, insurance density was
recorded high in Maharashtra followed by Kerala, Himachal Pradesh, Gujarat and
Uttarakhand.
Page | 72
Table: 4.2
State-wise Life Insurance Penetration and Density of Individual New
Business
State Insurance Penetration Insurance Density (Rs.)
(Percent)
2006-07 2011-12 2006-07 2011-12
Andhra Pradesh 1.71 0.75 641.1 595.5
Assam 1.50 1.05 336.5 387.9
Bihar 1.73 0.85 193.1 214.4
Chhattisgarh 1.51 0.44 438.2 235.2
Gujarat 1.23 NA 631.6 784.5
Haryana 1.21 0.40 672.0 489.5
Himachal Pradesh 2.68 0.80 1255.7 734.7
Jammu and Kashmir 1.49 0.72 439.6 358.5
Jharkhand 1.49 1.01 334.1 364.6
Karnataka 1.63 0.85 651.6 652.6
Kerala 2.54 0.85 1200.2 834.2
Madhya Pradesh 1.62 NA 354.6 352.3
Maharashtra 1.24 NA 689.1 955.8
Odisha 1.28 0.66 331.4 357.5
Punjab 1.84 0.59 901.0 555.4
Rajasthan 1.89 NA 519.9 343.4
Tamil Nadu 1.81 0.77 836.8 676.1
Uttar Pradesh 1.76 0.86 325.2 290.1
Uttarakhand 1.66 0.82 659.9 706.6
West Bengal 1.42 1.07 434.3 644.8
India 1.56 0.78 552.6 535.4
Source: IRDAI, Handbook on Indian Insurance Statistics, 2011-12.
An overview of the life insurance players working in the Indian life insurance
market shows the structure of both public and private sector set-up. An analysis of
the years of the commencement of life insurance business by the private insurers is an
important factor for determining their break-even point. Some insurers have
completed one decade of experience in the market and many of them have reached to
the position of getting profits after recovering the initial high operating costs. Further,
the nature and character of the participation and involvement of the foreign partners
with the domestic players will also influence significantly the life insurance business
perspective of our country. By using their exposure in insurance business globally, the
domestic companies can play a gigantic role in performing their functions and tasks to
the best satisfaction of all the stakeholders of the insurance industry and can in a way
to reach the international business standards.
Page | 73
Registered insurers in India are shown in Table 4.3. During 2014-15, there
were 53 insurers in India. Out of total registered insurers, 45 insurers (84.91 per cent)
were in private sector. In life insurance sector, LIC is dominating in life insurance
business while there were 23 registered insurers in India during the year. In non-life
insurance sector, there were 28 insurers, out of them 22 (78.57 per cent) were in
private sector. There has been increasing trend in the number of registered insurers in
India over the period of 2004-05, 2014-15. During 2004-05, there were 29 insurers
and out of them, 21 insurers were in private sector. In life insurance sector, there were
13 insurers in private sector and in non-life insurance sector, 8 companies were
registered in private sector.
Table: 4.3
Registered Insurers in India
Year Type of Business Life Non-Life Re-insurance Total
Insurance Insurance
2014-15 Public Sector 1 6 1 8
Private Sector 23 22 0 45
Total 24 28 1 53
Total 24 28 1 53
Total 24 27 1 52
Total 24 27 1 52
Total 24 24 1 49
Total 23 24 1 48
Total 22 21 1 44
Total 21 20 1 42
Total 17 17 1 35
Total 16 15 1 32
Total 14 14 1 29
Page | 74
Numbers of life insurance offices are shown in Table 4.4. There has been
increasing trend of number of life insurance offices during the period of 2003-04 to
2009-10. However, there has been decline in number of offices since then. Overall,
there has been growth of 293.75 per cent in number of life insurance offices over the
period of 2003-04 to 2012-13. The number of life insurance offices in private sector
has increased by more than 16 times while number of life insurance offices in public
sector grew by 1.6 times over the corresponding period.
Table: 4.4
Number of Life Insurance Offices
Year Public Private Total Growth (%)
2003-04 2196 416 2612 -
2004-05 2197 804 3001 14.89
2005-06 2220 1645 3865 28.79
2006-07 2301 3072 5373 39.02
2007-08 2522 6391 8913 65.88
2008-09 3030 8785 11815 32.56
2009-10 3250 8768 12018 1.72
2010-11 3371 8175 11546 -3.93
2011-12 3455 7712 11167 -3.28
2012-13 3526 6759 10285 -7.90
Source: IRDAI , Various Annual Reports
Chart: 4.2
Number of Life Insurance Offices
10000
8785
8768
8175
9000
7712
8000
6759
6391
7000
6000
5000
3526
3455
3371
3250
3072
3030
4000
2522
2301
2220
2196
2197
3000
1645
2000
804
416
1000
0
2003-042004-052005-062006-072007-082008-092009-102010-112011-122012-13
Public Private
Page | 75
Distribution of insurance products and efficient service delivery has been an

important element of insurance business. The development taken place in the
insurance sector is made possible only with the efficient role played by the
distributors in delivering insurance products. A significant feature of the complete
process of distribution and service delivery of insurance product is that the multiple
distribution channels have yielded many service benefits not only to the company but
also to customers. The process of channel diversification and expansion has
accelerated in India since insurance liberalization. Many insurers have intensified
their efforts for establishing and developing cost-efficient and result-oriented
distribution strategies. Due to the emerging convergence and globalization, the entire
insurance industry is undergoing rapid changes. The lower middle class customers are
more concerned with savings and consequent tax planning and hence rely on
insurance. Brokers, agents, direct agents and bancassurance offer good services to
these customers. The rural and semi-urban customers are generally the average
working class population. They can afford to save a little amount. They have little
knowledge of insurance. Only agents can reach these customers. The corporate
customers and institutional investors are interested in liability insurance, group
insurance and healthcare insurance. They are largely situated in metropolitan centers
and cities. They required altogether a different distribution strategy. Most of these
customers are cost-conscious and well-informed. Corporate agents, brokers and direct
marketing are ideally suitable to attract these customers. Consequently from a single
channel industry i.e., the individual agent, the industry, at present, has embraced a few
well established channels and continues to experiment with a few more. In the light of
severe competition amongst insurers, the new distribution strategies require complete
professionalism and flexibility towards facing marketing challenges.
Distribution of offices of life insurers is shown in Table 4.5. During 2014,

more than 2/3rd offices of life insurers were not indicated as area of location. This
shows the possibility of location of such offices in rural areas. About 1/4th offices
were found located in urban areas while about 9 per cent offices were situated in
metropolitan cities. Out of total offices of life insurers, 56 per cent offices were in
private sector. During 2007, about 2/5th offices were found located in semi-urban
areas while 38 per cent offices were located in urban areas including metropolitan
cities. Thus, about 1/4th offices were found located in rural areas.
Page | 76
Table: 4.5
Distribution of Offices of Life Insurers
Year Insurer Metro Urban Semi Urban Others Total
2014 Private 676 1926 - 3591 6193 (56%)
Public 372 617 - 3850 4839 (44%)
Industry 1048 2543 - 7441 11032 (100%)
2013 Private 703 1519 - 4537 6759 (66%)
Public 368 614 - 2544 3526 (34%)
Industry 1071 2133 - 7081 10185 (100%)
2012 Private 741 1393 3822 1756 7712 (69%)
Public 365 563 970 1557 3455 (31%)
Industry 1106 1956 4792 3313 11167 (100%)
2011 Private 769 1428 3715 2263 8175 (71%)
Public 363 560 953 1495 3371 (29%)
Industry 1132 1988 4668 3758 11546 (100%)
2010 Private 897 1555 3607 2709 8768 (74%)
Public 347 550 923 1430 3250 (26%)

Industry 1244 2105 4530 4139 12018 (100%)
2009 Private 927 1594 3603 2661 8785 (72%)
Public 338 529 910 1253 3030 (28%)

Industry 1265 2123 4513 3914 11815 (100%)
2008 Private 628 1169 2692 1902 6391 (57%)
Public 311 468 848 895 2522 (43%)
Industry 939 1637 3540 2797 8913 (100%)
2007 Private 316 848 1362 546 3072 (57%)
Public 233 499 797 772 2301 (43%)

Industry 549 1347 2159 1318 5373 (100%)
2006 Private - - - - 1645 (43%)
Public - - - - 2220 (47%)
Industry - - - - 3865 (100%)
Source: Compiled from Annual reports of IRDAI of different years
Page | 77
Members of various agents’ club of LIC are shown in Table 4.6. During 2015-
16, 1.93 lakh agents associated with various clubs were reported while the numbers of
LIC agents were reported 2.35 lakh in 2013-14. During 2015-16, about 29 per cent
agents were associated with Branch Manager’s Clubs while about 28 per cent agents
were members of Divisional Manager’ clubs. About 20 per cent agents were
members of Chairman’s Club while about 16 per cent agents were members of Zonal
Manager’s Club. There has been upward trend in the membership of agents as per the
increasing hierarchy of officials.
Table: 4.6
Members of Various Agent’s Club of LIC
Name of Club 2015-16 % 2014-15 % 2013-14 %
Corporate 214 0.11 227 0.10 181 0.07
Galaxy 429 0.22 - -
Chairman 38435 19.91 39554 17.82 40754 17.31
Zonal Manager 31213 16.17 32778 14.77 33919 14.41
Divisional 55029 28.51 59504 26.81 60786 25.82

Manager
Branch Manager 56162 29.10 60130 27.09 78796 33.48
Distinguished 11477 5.94 20697 9.32 20912 8.88

Agents
Total 192959 100.00 221890 100.00 235348 100.00

Source: Annual Report, LIC, 2016.
Total investments of insurance sector are shown in Table 4.7. During 2015,
Rs. 2408236 crores, out of total investments, about 93 per cent investment was
reported in life insurance sector. Again, out of total investments, public sector
constituted about 80 per cent in life insurance and about 64 per cent in life insurance
sector during 2015. Public sector still dominates in total investments of insurance
sector in India.
Page | 78
Table: 4.7
Total Investments of Insurance Sector
(As on 31st March)
(Rs. Crore)
INSURER Life Non-Life Total
2014 2015 2014 2015 2014 2015
Public 1574296 1786312 93785 103561 1668081 1889873
(12.21) (13.37) (12.12) (10.42) (12.21) (13.30)
Private 383169 461210 46025 57153 429194 518363
(12.07) (20.37) (16.97) (24.18) (12.58) (20.78)
Total 1957466 2247522 139809 160714 2097275 2408236
(12.18) (14.82) (13.67) (14.95) (12.28) (14.83)
Source : IRDAI, Various Annual Reports
Investment income of non-life insuers is shown in Table 4.8. There has been
decline in the share of public sector in investment income of non-life insurers in India
during the period of 2005-06 to 2014-15. The share of public sector was recorded 95
per cent in 2005-06, which decline to 70.59 per cent in 2014-15. Similarly, the share
of private sector in investment income of non-life insurers was recorded 5 per cent in
2005-06 which increased to 30 per cent in 2013-14.
Table: 4.8
Investment Income of Non-Life Insurers
Year Public sector Private sector Total
2005-06 5610.63 (95%) 269.47 (5%) 5880.1 (100%)
2006-07 5784.23 (93%) 415.04 (7%) 6199.27 (100%)
2007-08 6241.51 (89%) 742.05 (11%) 6983 .56 (100%)
2008-09 4799.78 (81%) 1091.2 (19%) 5890.98 (100%)
2009-10 6347.27 (83%) 1340.67 (17%) 7687.94 (100%)
2010-11 7842.2 (84%) 1539. 63 (16%) 9381.83 (100%)
2011-12 7424.26 (78%) 2083.65 (22%) 9507.91 (100%)
2012-13 8610.52 (74%) 2991.09 (26%) 11601.6 (100%)
2013-14 9394.63 (70%) 3982.36 (30%) 13376.98 (100%)
2014-15 10725.02 4931.01 16767.00
Page | 79
Borrowing and new policies issued by life insurers are shown in Table 4.9.
There has been fluctuating trend in borrowings and new policies issued by life
insurers in India over the period of 2001-02 to 2013-14. The borrowings were
recorded highest Rs. 3948 lakh in 2008-09 which declined to Rs. 132 lakh in 2012-13.
Similarly, number of new policies issued was recorded high 532.25 lakh in 2009-10
which declined to 408.72 lakh in 2013-14.
Table: 4.9
Borrowing and New Policies Issued by Life Insurers

Year Borrowings New Polices Issued
(in lakhs) (in lakhs)
2001-02 509 -
2002-03 628 -
2003-04 760 286.27
2004-05 1055 262.11
2005-06 815 354.62
2006-07 861 461.52
2007-08 3605 508.74
2008-09 3948 509.24
2009-10 3278 532.25
2010-11 1609 481.52
2011-12 799 441.93
2012-13 132 441.87
2013-14 - 408.72
Instrument-wise total amount of Life Insurance is shown in Table 4.10. Total

amount of life insurance during 2012-13 was reported Rs. 1744894 crores. Out of
total amount, about 80 per cent amount was in traditional products while the
investment in the non-traditional products was mainly in form of approved
investments (93.97 per cent). Out of total investment in traditional products, 36.52 per
cent investment was in Central Government Securities while about 1/3rd investment
was categorized as approved investments. About 19 per cent investment was in state
government and other approved securities.
Page | 80
Table: 4.10
Instrument-wise Total Amount of Life Insurance
(Rs. Crore)
Investment 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Form
Traditional Amt. Amt. Amt. Amt. Amt. Amt. Amt. Amt. Amt.
Products
Central 201550 238089 275099 296688 316010 360447 420952 468082 512180
Government
Securities
State 51187 58288 60088 85198 107190 137236 173733 214515 265989
Government &
Other
Approved
Securities
Housing & 45521 49639 69837 63262 66673 85675 89181 97320 118878
Infrastructure
Approved 96289 88548 102057 145554 202469 257084 304977 385107 456256
Investments
Other 26378 26699 30049 42191 51260 34477 42159 46262 49084
Investments
Total (A) 420925 461263 537130 632893 743602 874919 1031002 1211286 1402387
ULIP Funds
Approved 6732 23401 57587 111630 151490 311669 371899 346340 325283
Investments
Other 796 2488 9463 21448 21273 25871 27217 23632 17224
Investments
Total (B) 7528 25889 67050 133078 172763 337540 399116 369972 342507
Grand Total 428453 487152 604180 765971 916365 1212459 1430118 1581258 1744894
(A+B)
Source: Compiled from various Annual Reports of IRDAI
A well-developed insurance sector is a pre requisite for economic

development as it generates capital and strengthens the risk taking ability. In India,
insurance sector is growing at the rate of 15-20 percent annually and together with
financing, real estate and business it contributes about 17.9 percent share in the Indian
economy. Presently 49 percent of foreign equity allowed in insurance sector. Prior to
inception of IRDAI, insurance was the monopoly of government with six insurers,
one catering to life insurance and four to non-life and one re-insurance. After
unshackling the government monopoly, in year 2000 this number rose to 12 insurers,
with 4 life insurers, 7 non-life and one re-insurance. Presently there are 54 insurers
Page | 81
with 24 players in life segment, 29 in general segment and one re-insurance. There are
about 36 global companies operating in India in collaboration with Indian companies.
With growth in number of insurers there has been steady increase in number
of offices of life insurers in India. In year 2000-01 there were 2199 offices and in
2012-13 this number stood at 10285 offices throughout India, thus registering an
annual compound rate of growth of 18.8 percent over thirteen years. Growth in
number of agents is essential for business growth, policy persistency and public
perception of the agency channel as a stable career. IRDAI has issued (Licensing of
Agents) Regulations, 2000 for licensing and code of conduct for agents. In 2000-01
there were 115715 individual agents and in year 2012-13 the number of individual
agents increased to 2122757. The compound rate of growth of number of individual
agents during post IRDAI phase was 21.33 percent per year. The first year premium
recorded in 2000-01 was Rs. 9707.43 crore and it increased to Rs. 19857.28 crore in
2001- 02. In year 2002-03 it fell down to Rs. 16942.4 crore. In subsequent years it
followed an upward trend till 2007-08 and stood at Rs. 93712.52 crore. In year 2008-
09 it decreased to Rs. 87441.08 crore. In year 2009-10 and 2010-11 it showed a
increasing trend but in year 2011-12 it decreased to Rs. 113966.03 crore and in 2012-
13 it further decreased to Rs. 107361.08 crore. On the whole the first year single
premium registered the 27.05 percent compound rate of growth during post IRDAI
phase. The total premium underwritten in life segment in 2000-01 was Rs. 34,898.48
crore which increased to Rs. 2, 91,639 crore in 2010-11, but it showed a declining
trend of 1.57 percent in 2011-12 and stood at 2,87,072 crore and which decreased to
Rs. 2,87,202 crores in 2012-13. It registered compound growth rate to the tune of 23
percent per annum (Table 4.11).
IRDAI requires all the insurers to file their products with the Authority and
after its approval the product can be launched in the market so as to ensure that the
insurance products offered by the insurers are of value to the policyholder and that
their pricing is appropriate and fair between the insurer and the insured. In year 2001-
02 there were total 42 products approved by IRDAI of all life insurers. This number
increased to 116 products in year 2002-03 and then started declining and was 55 in
2005-06. In year 2006-07 it had a quantum jump and increased to 208 products for the
Page | 82
year. Subsequently the number of products fluctuated and finally in 2012-13, around
118 products were approved by IRDAI of life insurers. From 2001 to 2013, products
approved grew at a compound rate of growth of 8.64 percent per year. Life Insurance
provides an individual with protection against the risks enlisted in the policy along
with providing an opportunity for investments. In year 2004-05 there were
165358.196 thousand life insurance policies in force in India. The number of policies
in force registered an increasing trend over the years and finally this number stood at
287857.32 thousand in 2012-13. The number of life insurance policies in force
experienced a compound rate of growth of 7.15 percent per annum in post IRDAI
phase.
Table 4.11
Various Indicators of Life Insurance Sector in India
Year Offices Agents First Year Total Premium Products Policies in
(Including Underwritten launched Force
Single (Rupees Crore)
(Policies in
Premium)
000)
(Rupees
Crore)
2000-01 2199 115715 9707.43 34898.47 -- --
2001-02 2306 476902 19857.28 50094.46 94 ---
2002-03 2445 1038785 16942.45 55747.55 116 ---
2003-04 2612 1556817 19788.32 66653.75 94 ---
2004-05 3001 481250 26217.64 82854.80 56 165358.19
2005-06 3865 1423839 38785.54 105875.76 55 183108.83
2006-07 5373 1993199 75649.21 156075.84 208 194164
2007-08 8913 2520492 93712.52 201351.41 168 198168
2008-09 11815 2937435 87331.08 221785.47 196 217684.70
2009-10 12018 2978283 109893.91 265447.25 359 235064.88
2010-11 11546 2639392 126398.18 291638.64 244 253223.79
2011-12 11167 2358885 113966.03 287072.11 143 271273.62
2012-13 10285 2122757 107361.08 287202.49 118 287857.32
Source: Insurance Regulator and Development Authority of India Annual Reports (2000-2013)
Total life insurance premium is shown in Table 4.12. Public sector constituted
70.67 per cent in total life insurance premium during 2011-12 while the share of LIC
was recorded 74.39 per cent in 2007-08. The share of private sector was recorded
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25.61 per cent in 2007-08 which increased to 29.32 per cent in 2011-12. Among the
insurers in private sector, the main players were ICICI Prudential, SBI Life, HDFC
Standard, Max Life, Birla Sunlife, Bajaj Allianz and Reliance Life.
Table: 4.12
Total Life Insurance Premium
Insurer 2007-08 2008-09 2009-10 2010-11 2011-12 %
Aegon Religare - 31,21 165,65 388,61 457.32 0.15
Aviva 1891.88 1992.87 2378.01 2345.17 2415.87 0.84
Bajaj Allianz 9725.31 10624.52 11419.71 9609.95 7483.80 2.60
Bharti Axa 181.41 360.41 669.73 792.02 774.16 0.26
Birla Sun Life 3272,19 4571,80 5505.66 5677.07 5885.36 2.05
Canara HSBC - 296.41 842.45 1531.86 1861.08 0.64
DLF Pramerica - 3.37 38.44 95.04 167.01 0.05
Edelweiss Tokio - - - - 10.88 0.00
Future Generali 2.49 152.60 541.51 726.16 779.58 0.27
HDFC Standard 4858.56 5564.69 7005.10 9004.17 10202.40 3.55
ICICI Prudential 13561.05 15356.22 16528.85 17880.63 14921.58 5.19
IDBI Federal 11.90 318.97 571.12 811.00 736.70 0.25
India First - - 201.60 798.43 1297.93 0.45
ING Vysya 1158.87 1442.28 1642.65 1708.95 1679.98 0.58
Kotak Mahindra 1691.14 2343.19 2868.05 2975.51 2937.43 1.02
Max Life 2714.60 3857.26 4850.54 5812.63 6390.53 2.22
Met Life 1159.54 1996.64 2536.01 2508.17 2677.50 0.93
Reliance Life 3225.44 4932.54 6604.90 6571.15 5497.62 1.91
Sahara 143.49 206.47 250.59 243.41 225.95 0.07
SBI Life 5622.14 7212.10 10104.03 12945.29 13133.74 4.57
Shri Ram 358.05 436.17 611.27 821.52 644.16 0.22
Star Union Dai-ichi - 50.19 530.37 933.31 1271.95 0.44
Tata AIA 2046.35 2747.50 3493.78 3985.22 3630.30 1.26
Private Total 51561.42 64497.43 79369.94 88165.24 84182.83 29.32
LIC 149789.99 157288.04 186977.31 203473.40 202889.28 70.67
Industry Total 201351.41 221785.47 265447.25 291638.64 287072.11 100
Page | 84
Underwriting is the process by which an insurer determines whether or not to

accept a risk and, if accepted, what terms and conditions are to be applied to the
acceptance and the level of premium to be charged. The purpose of underwriting is to
ensure that there is value addition to the relationship that develops between the insurer
and the insured. It enables the insurers to be unbiased in their approach and ensures
that the interests of both the insurers and the insured are protected. It is the lifeblood
of insurance business. Knowledgeable underwriting is the key to a gainful future for
an insurance company. Underwriting profits are directly proportional to the skill level
of the underwriters. An underwriter is one who is entrusted with the responsibility to
analyze risk-based information, by using insurance and actuarial applications to
determine how to handle the volatility of the risk characteristic in each risk. His
decision-making is highly subjective. It is based on his specialist technical expertise,
the quality of his past underwriting experience, the degree of his perceptual and
analytical talents for spotting all risk hazards. The underwriting is a function that
encompasses the entire spectrum of assessing the risk in its totality and then arriving
at a decision. An underwriter has to have a ‘sixth sense’ to detect the chances of an
insured committing fraud on the insurer and to take appropriate action to minimize the
chances at the acceptance stage.
Premium underwritten by life insurers is shown in Table 4.13. There has been
increasing trend in premium underwritten by life insurers over the period of 2003-04
to 2014-15. The share of public sector in premium underwritten has declined from 95
per cent in 2003-04 to 73.05 per cent in 2014-15 while the share of private sector in
premium underwritten increased from 5 per cent in 2003-04 to 26.95 per cent in
2014-15.
Table: 4.13
Premium Underwritten by Life Insurers
Year Public Sector Private Sector Total
2003-04 63533.43 (95%) 3120.33 (5%) 66653.75 (100%)
2004-05 75127.29 (91%) 7727.51 (9%) 82854.80 (100%)
2005-06 90792.22 (86%) 15083.53 (14%) 105875.76 (100%)
2006-07 127822.84 (82%) 28218.75 (18%) 156041.59 (100%)
2007-08 149789.99 (74%) 51561.42 (26%) 201351.41 (100%)
2008-09 157288.04 (71%) 64503.22 (29%) 221791.26 (100%)
2009-10 186077.31 (70%) 79369.94 (30%) 265447.25 (100%)
2010-11 203473.40 (70%) 88131.60 (30%) 291604.99 (100%)
2011-12 202889.28 (71%) 84182.83 (29%) 287072.11 (100%)
2012-13 208803.58 (73%) 78398.91 (27%) 287202.49 (100%)
2013-14 236942.30 (75%) 77340.90 (25%) 314283.20 (100%)
2014-15 239667.65 (73%) 88433.49 (27%) 328101.14 (100%)
Page | 85
Gross direct premium income of non-life insurers is shown in Table 4.14.

Public sector constituted about half of the share in gross direct premium income from
nin-life insurance during 2013-14 and 2014-15. The share of private sector was
recorded about 2/5th while the rest share goes to stand alone health insurance and
specialized insurers. Overall, market share was recorded highest for New India (15.6
per cent) followed National (13.28 per cent), United (12.62 per cent), Oriental (8.75
per cent), ICICI Lombard (7.89 per cent), Bajaj Allianz (6.18 per cent) and HDFC
(3.76 per cent) in 2014-15.
Table: 4.14
Gross Direct Premium Income of Non-Life Insurers
(Rs. Lakh)
Total Premium Market Share (%)
2013-14 2014-15 2013-14 2014-15
Public Sector Insurers
National 1022288 1124189 13.18 13.28
New India 1154006 1320939 14.88 15.60
Oriental 712785 7 40794 9.19 8.75
United 970893 1069026 12.52 12.62
Sub-Total 3859972 4254948 49.77 50.24
Private Sector Insurers
Royal Sundaram 143704 156920 1.85 1.85
Reliance 238882 271584 3.08 3.21
IFFCO-Tokio 293092 332997 3.78 3.93
Tata AIG 236271 271414 3.05 3.21
ICICI Lombard 685616 667780 8.84 7.89
Bajaj Allianz 451645 522985 5.82 6.18
Cholamandalam 185511 189043 2.39 2.23
HDFC Ergo 290699 318221 3.75 3.76
Future Generali 126256 143825 1.63 1.70
Universal Sompo 54045 70111 0.70 0.83
Shriram 151059 149652 1.95 1.77
Bharti Axa 142316 145707 1.84 1.72
Raheja QBE 2324 2163 0.03 0.03
SBI 118757 157690 1.53 1.86
L&T 25378 33171 0.33 0.39
Magma HDI 42493 47360 0.55 0.56
Liberty Videocon 12982 28386 0.17 0.34
Sub-Total 3201030 3509009 41.27 41.44
Standalone Health Insurers
Apollo Munich 69247 80313 0.89 0.95
Cigna TTK 34 2183 0.00 0.03
Max Bupa 30885 37266 0.40 0.44
Religare 15231 27580 0.20 0.33
Star Health 109108 146919 1.41 1.73
Sub-Total 224505 294261 2.89 3.47
Specialized Insurers
ECGC 130373 136240 1.68 1.61
AIC 339501 273970 4.38 3.24
Sub-Total 469874 410210 6.06 4.84
Grand Total 7755381 8468428 100.00 100.00
Page | 86
New life insurance policy issued is shown in Table 4.15. Overall, new life
insurance policies issued by insurers have increased by 54.36 per cent during 2003-04
to 2012-13. The growth of new life insurance in public sector grew by 36.39 per cent
while the growth in private sector was recorded 346.62 per cent in the corresponding
period. However, annual growth rate in new life insurance has shown declining trend
in the recent past.
Table: 4.15
New Life Insurance Policy Issued
(in lakh)
Year Public Growth Private Growth Total Growth
(%) (%) (%)
2003-04 269.68 16.58 286.26
2004-05 239.78 -11.09 22.33 34.68 262.11 -8.44
2005-06 315.90 31.75 38.71 73.35 354.61 35.29
2006-07 382.29 21.02 79.22 104.65 461.51 30.15
2007-08 376.12 -1.61 132.61 67.39 508.73 10.23
2008-09 359.13 -4.52 150.11 13.20 509.24 0.10
2009-10 388.63 8.21 143.62 -4.32 532.25 4.52
2010-11 370.38 -4.70 111.14 -22.62 481.52 -9.53
2011-12 357.51 -3.47 84.42 -24.04 441.93 -8.22
2012-13 367.82 2.88 74.05 -12.28 441.87 -0.01
Source: IRDAI, Various Annual Reports
The agents are very useful in building long-term relationships with the
customers and occupied a major share of the total insurance market. They contribute
significantly to its growth by making the insurance services available to every nook
and corner of the country. With a gigantic strength of agents, the life insurance
industry is the only financial wing to reach a good number of villages in the country.
The insurance agent has been the bedrock in the marketing of life insurance. He/she
has been the link between the insurer and the insured. He/she has the prime duty of
explaining the concepts, terms, conditions and benefits of taking an insurance policy.
He/she has to identify the needs of the customers and select the suitable insurance
products to them. All insurers have recognized the importance of agency network and
they are encouraging professionalism and greater competency among agents. Under
Page | 87
Sec.2(10) of the Insurance Act, 1938, an insurance agent means an agent licensed
under section 42 who receives or agrees to receive payment by way of commission or
other remuneration in consideration of his soliciting or procuring insurance business,
including business relating to the continuance, renewal or revival of policies of
insurance . The code of conduct for agents makes it clear that his/her role is not
confined to soliciting and procuring insurance business for his company. He has to
service the policies sold by him. With many life insurance companies operating in the
market and selling almost similar products, the most distinguishing factor of the
companies is the competency level of the agents.
IRDA has created a new category of agents called brokers in terms of IRDA
(Insurance Brokers) Regulations, 2002. There are three types of brokers. A direct
broker arranges for the placement of insurance of clients with insurers. He/she can be
a composite broker also. A re-insurance broker authorizes to place reinsurance
business of insurers with re-insurer. A composite broker authorizes to handle both
direct and reinsurance business. With the liberalization of the insurance sector, a new
link to the present distribution channel needs to be included i.e., the broker. He/she is
an intermediary who acts as a consultant to the customer in many areas like
identifying the risk needs of the customers, selecting the best product to meet the
needs of the customer, adopting the latest technology available in the market,
facilitating the consumers in the process of concluding the insurance contract.
Broking companies are the institutional agencies. The companies concentrate on the
spread of life insurance policies. They work on similar lines of direct marketing,
mostly depending on the data base from referrals. Brokers are permitted to sell
products of more than one insurer. They play a very important role both in selling life
insurance products and also in servicing of life insurance claims. The brokers are not
merely participating in the price but would need to make quality submissions to the
insurers conveying all the material and nonmaterial aspects of the risk to be covered.
He/ she can contribute more effectively by collecting all the relevant information that
will lead to the underwriter being able to give an appropriate and fair rate. This will
require the broker to understand the clients’ requirement in totality. They help clients
determine their exposures and structure of their insurance programmes.
Page | 88
The role of the broker is to minimize clients’ risks and maximize their
insurance benefits. A broker should be empowered by sharing his pricing strategy and
underwriting requirements. Insurers do it by bringing in rating closer to point of sales
and through co-branded websites. The agent and the broker are different. The agent
acts on behalf of one insurer and can only sell what his insurer has to offer, whereas
broker acts on behalf of his client. Broker is not tied to an insurer and can arrange the
best protection for customer at a competitive price with any insurer. In fact, broker
uses many insurers for the insurance program of his customer. In a way, he gives the
best and more suitable product to the customer. Insurance brokers are professionals
who assess risk on behalf of a prospect, advice on the mitigation of that risk. They
identify the insurance policy structure and bring together the insured and insurers. The
preparatory work to insurance contracts is carried out wherever necessary and
assistance provided in the administration and performance of such contracts when
claims arise. With increased competition, insurance brokers have a greater motivation
to introduce new and innovative products, to be more responsive to consumer needs
and to deliver higher terms of quality services. Insurance brokers introduce best
practices in technical skills and products, training programmes, systems and
technology and managerial techniques. Our country is still in an early stage of
insurance of broking business. The players have just started pushing themselves
aggressively and emphasizing their core strengths. They have been given a wider
array to display their professional expertise in risk management, consultancy and
claims advice to customers. But, the biggest constraint compelling the brokers to die
early is the provision that brokers are not entitled to receive any fee from insurers
other than the prescribed brokerage. The foremost important job of an insurance
broker is to think about the customer and to guide insurers to develop products that
are meaningful and attractive to the target customers. Broking in insurance will
increase range, mobility, integration and above all utmost good faith among parties in
insurance contract. Brokers need their mindset and expertise to become accustomed to
changing requirements.
Corporate agents work on similar lines of broking companies but represent

one life and one non-life companies. The corporate agency, especially a bank seems
to hold much promise. But, the full potential of this distribution channel is yet to be
Page | 89
fully tapped. The corporate agents have the advantage of making use of their vast
network of resources to spread the message of insurance. There is no doubt that the
corporate agents have contributed a great deal to the visibility of insurance in the
country. The number of corporate agents has grown in recent years. With a good
number of locations and wider network of the people assisting them, these entities
have a different structure and purpose. They assist greatly in the spread of insurance
through the greater reach of the institutions.
IRDA has stipulated a minimum tenure of 3 years for corporate agents

agreements with the right to either party to terminate the arrangement based on a few
pre-determined criteria. The bank terminating the relationship would need to put an
alternative system in place to service the insured customer to the satisfaction of the
IRDA. Some corporate agents are utilizing the services of a large number of
unqualified people without requisite license or certificate to procure insurance
business by passing on varying levels of commission to them. The IRDA gets tough
with corporate agents and insurers to carryout inspection on their corporate agents to
curb irregularities. Banking sector serves as the most important corporate insurance
agency for distribution of insurance products. This is called as bankinsurance. Banks
are in tie up with insurance companies for selling insurance using their own network.
Banks provide immense opportunities of employment. In 2014-15, the banks
contributed to nearly 20.84 per cent in life insurance new business.
New Micro Insurance Regulations of 2015 has widened the network of Micro
Insurance Agents. As on March, 2016, there are around 27000 micro insurance agents
servicing insurance sector. Common Services Centres (CSC) under E-Governance
Services India Limited has been granted license by IRDAI to market specific products
through RAP (Rural Authorized Persons) or VLE (Village Level Entrepreneurs) to
market insurance products. Under this system, there is a huge scope for employment
to rural people. Web Aggregators compile and provide information about insurance
policies of various companies on a website. Web aggregators are licensed to provide
information pertaining to insurance products, comparison of similar products offered
by different insurers and have linkages to websites of various insurance companies
from where customers can select and purchase policies on-line. Insurance
Page | 90
Repositories have been introduced to hold insurance policies in electronic form. They
handle insurance accounts of policy holders electronically all over India.
Referrals are a new concept very similar to getting a prospecting list and lead
to affect sales with customers. It is evident that in addition to bank, there could be
other entities which could act as a referral provider due to the large database of the
number of clients. The referral provider is not a licensed intermediary but can be
regulated by the IRDA through approval of the terms of the agreement between the
insurer and the referral provider. A referral tie-up is an agreement between a bank and
an insurer wherein the bank gives a reference of prospective customers to the insurer.
It is part of the bancassurance.
The insurer would not be allowed to enter into a referral arrangement with any
bank which has been licensed by the IRDA to act as an agent or an insurance
intermediary. The arrangement between bank and insurer should not be construed to
have resulted into an agent-principal relationship between the bank and insurer. The
referral fee paid by the insurer to the bank should be treated as acquisition cost and
should be decided between the parties under a written agreement. Referral providers
promote the penetration of insurance through provision of good prospecting list and
the huge database. A successful and intelligent insurer has a good number of referrals
under his ambience. The foundation and base for developing referrals are to like and
help people. Sustaining trustworthy relationships with the existing customers and also
potentials influence significantly in creating a good referral base. Thus, building and
developing relationships are very important in almost all steps developing referral
arrangements. The cost effectiveness and conversion efficiency are also crucial in
ensuring the success of referral arrangements.
Channel-wise individual new business performance of life insurance is shown

in Table 4.16. During 2011-12, about 89 per cent policies were issued by individual
agents. However, the share of individual agents in the amount of premium was
recorded 78.69 per cent in the year.
Page | 91
Table: 4.16
Channel-wise Individual New Business Performance of Life
Insurance
Channel Number of Policies Issued Amount of Premium
(Rs. Crore)
2006-07 2011-12 2006-07 2011-12
Individual Agents 42301907 39193141 54605.30 50972.32
93.15 88.55 90.46 78.69
Corporate Agents – Banks 1426919 2180018 3363.17 9692.90
3.14 3.94 5.57 14.96
Corporate Agents – Others 1284785 1588650 1825.89 1749.78
2.83 3.60 3.02 2.70
Brokers 259177 476054 331.63 1134.64
0.57 1.08 0.55 1.75
Direct Selling 139077 812478 235.33 1222.61
0.31 1.84 0.39 1.89
Total 45411865 44160341 60361.32 64772.24
100.00 100.00 100.00 100.00
Referrals 715933 12274 1256.51 34.90
1.55 0.03 2.04 0.05

Group insurance products are emerging as a business segment with

considerable potential. The cost effectiveness, tax benefits and the increasing need for
organizations to retain their skilled manpower and provide financial security drive this
business. Group plans are cost-effective as the premiums are calculated for a group of
people in the organization and it is bulk business. Moreover, the employers’
contribution is not treated as a perquisite in the hands of the employee. The
organization is also allowed to deduct the premium paid as business expenses. Thus, it
Page | 92
is a win-win situation for all the parties concerned, the employee, the employer and
also the insurance company which has gained an expanded market. In group insurance
plans, the organization will be the policyholder who wishes to provide cover to its
employees. In case an employee covered under the plan dies, the sum assured is paid
out to the beneficiaries. The critical illness rider, accidental death benefit rider and
accidental disability riders are also applicable to these policies by paying higher
amount of premium. Group superannuation schemes offered by insurance companies
can be a good option for organizations to plan systematically for the increasingly
crucial post-retirement days of their employees. A well-designed plan can give a
sizeable corpus in the hands of an employee. This corpus can be used by the retiring
employee to take an annuity which will provide a revenue stream post-retirement. The
annuity can be taken either on the entire corpus or a portion can be commuted and an
annuity taken with the remaining amount. Group insurance providers bring high-end
technological interface. This interface is used to service on an individual member with
customized billing and easy policy administration. Group insurance is a cover
provided to a congregation of individuals who have commonality of purpose. The
growth in group insurance business has also been impressive. The superannuation and
gratuity business has grown on the strength of professional fund management and a
host of value-added services.
Channel-wise group new business performance of life insurance is shown in

Table 4.17. There has been phenomena increase in number of schemes channelized by
individual agents, corporate agents and brokers over the period of 2006-07 to 2011-
12. However, there has been an increase of 36.48 per cent in number of schemes over
the corresponding period. During 2006-07, direct selling accounted for 97.50 per cent
however, this decreased to 67.51 per cent. The share of individual agents in new
business performance has significantly increased from 0.18 per cent in 2006-07 to
22.59 per cent in 2011-12. Similarly, out of total lives cover, about 78 per cent lives
was covered by direct selling in 2011-12. Individual agents also covered about 13 per
cent individual lives in the year. Amount of premium has also shown 251.20 per cent
increase during the period of 2006-07 to 2011-12. Out of total premium earn, about 87
per cent premium was earned from direct selling.
Page | 93
Table: 4.17
Channel-wise Group New Business Performance of Life Insurance

Number of Amount of Premium
Number of Lives Covered
Schemes (Rs. Crore)
Channel
2006-07 2011-12 2006-07 2011-12 % 2006-07 2011-12 %
49 7122 27384 8703095 13.04 5.63 2140.40 4.35

Individual
Agents 0.18 22.59 0.13 13.05 1.95 0.04 4.36 0.00
Corporate 275 936 1479025 2618616 3.92 326.98 3117.71 6.35

Agents –
Banks 1.19 2.97 7.40 3.93 5.89 2.33 6.35 0.01
Corporate 8 666 467838 1143544 1.71 3.17 572.45 1.16

Agents –
Others 0.03 2.11 2.34 1.71 2.56 0.02 1.17 0.00
261 1519 492044 2370781 3.55 31.01 325.57 0.66

Brokers
1.09 4.82 2.46 3.55 5.32 0.21 0.66 0.00
22597 21286 17358013 51877235 77.76 13611.19 42933.92 87.44

Direct
Selling 97.50 67.51 87.36 77.76 0.00 97.39 87.46 0.17
23102 31529 19824304 66713271 100 13979.49 49096.06 100

Total
100.00 100.00 100.00 100.00 100.00 100.00
2 - 62913 841 1.50 0.26

Referrals
0.01 - 0.31 0.00 0.01 0.00
Channel-wise individual new business procured by LIC during 2-15-16 is

shown in Table 4.18. During 2015-16, 205.17 lakh policies were procured by LIC
with the first year premium income of Rs. 32838.06 crores. Out of total premium
income, 87.56 per cent premium income was earned from conventional sources while
8.94 per cent premium income was earned through Chief Insurance Advisor. Thus,
conventional approaches in new business development are important.
Page | 94
Table: 4.18
Channel-wise Individual New Business Procured by LIC during
2015-16
Business Number of Policies First Year Premium Income
(Lakh) (Rs. Crore)
Conventional 176.84 28752.26
Banking and Alternate 2.92 766.73
Channels
Chief Life Insurance 20.29 2936.14
Advisor
Direct Marketing 0.60 363.40
Micro Insurance 4.52 19.54
Total 205.17 32838.06
New business premium of life insurers for 2014-15 is shown in

Table 4.19. The share of individual agents in business premium of life insurance
accounted for 71.42 per cent while corporate agents including banks accounted for
22.28 per cent share. Direct selling also accounted for significant share (4.42 per cent)
while brokers had a share of 1.84 per cent. Individual agents accounted for 95.97 per
cent in business premium earned by LIC. However, about half of business premium
was earned by corporate agents in private sector. Direct selling also accounted for
significant share in private sector.
Table: 4.19
New Business Premium of Life Insurers for 2014-15
(In percent)
Insurer Individual Corporate Brokers Direct Micro Common Referrals
Agents Agents Selling Insurance Service
Agents (CSCs)
Banks Others Centers
Private 35.73 47.37 3.35 4.49 9.06 0.003 0.0001 0.04
LIC 95.97 2.60 0.12 0.02 1.24 0.05 0.00 0.00
Industry 71.42 20.84 1.44 1.84 4.42 0.03 0.001 0.01

Total
Source: IRDAI Annual Reports 2013-14
Page | 95
The rural and social sector obligations and the micro-insurance regulations of
the IRDA is expected to help promote financial inclusion and protection of the larger
segment of the society. The insurance products are also specifically designed to serve
the oppressed sections of the society who are not affordable to pay for an insurance
cover because of their lower levels of income. The specific challenges of both urban
and rural population relating to their uncertainty in life are to be met adequately by
the newly designed insurance products. Formatting the rural and social sector
obligations as stipulated by the IRDA, the life insurers have to expend lots of amount
for setting up of the suitable infrastructure base. The insurance companies have not
got rural business in any significant way. While some private insurers have managed
to bring rural business as per the IRDA mandate, others have failed and paid fine. In
order to reach out to the social sector, the insurers have developed a wide range of
products. But the question remains as what proportion of the business is done in
respect of the social sector. LIC is better placed in this regard as they operate from
many urban and semi-urban centers of the country and have been doing a great job in
providing low-cost group insurance cover to the social sector.
Compliance of obligations by insurers is shown in Table 4.20. During 2013-14

t0 2014-15, LIC had compliance rural policies as per mandated norms. However,
private sector has lesser degree of compliance in rural sector. Similarly, compliance in
non-life insurance was reported higher against the mandatory provision in both public
sector and private sector. There has been higher number of policies as against
mandatory provision in social sector both in life insurance and non-life insurance
sector.
Table: 4.20
Compliance of Obligations by Insurers
Life Insurers Rural Sector Social Sector
(Mandated No of Policies as a (Mandated 20 Lakh lives)
percent of Total Policies 25%)
2013-14 2014 – 15 2013-14 2014 – 15
Public Sector (LIC) 25.4 25.65 118.87 205.96
Private Sector (23) 25.6 23.09 109.07 97.40
Non-Life Insurers (Mandated Gross Direct (Mandated 5.50 Lakh lives)
Premium as a percent of Total
Premium 7%)
Public Sector (4) 12.39 11.96% 2,167.08 lakh 2570.53 lakh
Private Sector ( 22) 11.83 11.98% 300.17 lakh 262.03 lakh
Source: IRDAI Annual Report 2013-15
Page | 96
Market share of Life Insurance Companies is shown in Table 4.21. There has
been decreasing trend in the share of public sector in life insurance business over the
period of 2003-4 to 2012-13. LIC accounted or 95.32 per cent in life insurance
business in 2003-04 which decline to 72.70 per cent in 2012-13. This is because of the
fact that the policy of globalization and economic liberalization which allowed entry
of private sector in life insurance business. The share of private sector increased from
4.68 per cent in 2003-04 to 27.30 per cent in 2012-13 in life insurance business in
India. Even share of private sector was recorded significantly high in 2010-11 and
2009-10.
Table: 4.21
Market Share of Life Insurance Companies

(in Percentage)
Year
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Public 95.32 90.67 85.75 81.90 74.39 70.92 70.10 69.77 70.68 72.70
(LIC)
Private 4.68 9.33 14.25 18.10 25.61 29.08 29.90 30.23 29.32 27.30
Source: IRDAI, Various Annual Reports
Market share of life insurers is shown in Table 4.22. There ha been fluctuating
trend in market share of life insurers over the period of 2003-04 to 2014-15. LIC
accounted for 73.05 per cent in total premium earned in 2014-15 while private sector
companies earned business about 26.95 per cent in the year. There has been
phenomena growth in the total premium earned by private sector companies in life
insurance over the corresponding period. Private sector accounted for higher share in
regular premium as compared to public sector units. However, public sector unit
accounted for about half of the share in regular premium of life insurance during
2014-15. The share of LIC was accounted significantly higher in single premium
followed by renewal premium.
Page | 97
Table: 4.22
Market Share of Life Insurers
Year Regular Single First Year Renewal Total Premium
Premium Premium Premium Premium
PSU PS PSU PS PSU PS PSU PS LIC PS
2003-04 NA NA 87.67 12.33 87.67 12.33 98.55 1.45 95.32 4.68
2004-05 NA NA 78.78 21.22 78.78 21.22 96.18 3.82 90.67 9.33
2005-06 64.59 35.41 84.45 15.55 64.52 35.48 92.82 7.18 85.75 14.25
2006-07 65.89 34.11 87.04 12.96 74.35 25.65 89.03 10.97 81.92 18.08
2007-08 47.77 52.23 86.99 13.01 64.02 35.98 83.42 16.58 74.39 25.61
2008-09 38.43 61.57 90.7 9.3 60.89 39.11 77.43 22.57 70.92 29.08
2009-10 43.13 56.87 92.19 7.81 65.08 34.92 73.64 26.36 70.1 29.9
2010-11 56.73 43.27 81.26 18.74 68.85 31.15 70.49 29.51 69.78 30.22
2011-12 64.58 35.42 80.58 19.42 71.85 28.15 69.91 30.09 70.68 29.32
2012-13 58.08 41.92 83.92 16.08 71.36 28.64 73.5 26.5 72.7 27.3
2013-14 60.56 39.44 87.09 12.91 75.47 24.53 75.34 24.66 75.39 24.61
2014-15 49.12 50.88 83.58 16.42 69.27 30.73 85.04 24.96 73.05 26.95
Note: PSU refers to public sector insurance company (LIC) and PS refers to Private sector
Number of life policies issued by non-life insurers is shown in

Table 4.23. There has been an increase of 105.49 per cent in number of policies
issued by non-life insurers in India during the period of 2003-04 to 2011-12. The
growth of policies issued by private sector was recorded 898.18 per cent while
policies issued by public sector increased by 37.44 per cent over the corresponding
period. Thus, during the globalization and economic liberalization era, the
performance of non-life insurers in private sector has shown higher as compared to
public sector.
Table: 4.23
Number of Policies Issued by Non-Life Insurers
(In Lakh)
Year Private Sector Public Sector Total
2003-04 32.99 384.27 417.26
2004-05 51.45 446.34 497.79
2005-06 89.48 421.93 411.41
2006-07 126.92 339.72 466.64
2007-08 187.03 385.47 572.50
2008-09 219.23 451.37 670.60
2009-10 240.84 434.04 67488
2010-11 287.65 505.76 793.41
2011-12 329.30 528.14 857.44
Page | 98
New policies issued by life insurers and non-life insurers are shown in Table
4.24. There has been decline in share of public sector both in life insurance and non-
life insurance sector during the period of 2003-04 to 2014-15. The share of public
sector in life insurance was recorded 94 per cent in 2003-04 which declined to 77.86
per cent in 2014-15. Similarly, the share of public sector declined from 92 per cent in
2003-04 to 56.46 per cent in 2014-15. The share of private sector in life insurance
increased from 6 per cent in 2003-04 to 22.14 per cent in 2014-15. Similarly, the
share of private sector in non-life insurance significantly increased from 8 per cent in
2003-04 to 43.54 pre cent in 2014-15.
Table: 4.24
New Policies Issued by Life Insurers and Non-life Insurers
Year Life Insurers Non-life Insurers
Public Private Total Public Private Total
2003-04 269.68 16.59 286.27 384.27 32.99 417.26
(94%) (6 %) (100%) (92%) (8%) (100%)
2004-05 239.78 22.33 262.11 421.42 51.07 472.49
(91%) (9 %) (100%) (89%) (11%) (100%)
2005-06 315.91 38.71 354.62 439.45 89.47 528.92
(89%) (11%) (100%) (83%) (17%) (100%)
2006-07 382.29 79.22 461.52 412.42 135.54 547.95
(83%) (17%) (100%) (75%) (25%) (100%)
2007-08 376.13 132.62 508.74 385.47 187.03 572.50
(74%) (26 %) (100%) (67%) (33%) (100%)
2008-09 359.13 150.11 509.24 451.37 219.23 670.60
(71%) (29 %) (100%) (67%) (33%) (100%)
2009-10 388.63 143.62 532.25 434.04 240.84 674.88
(73%) (27 %) (100%) (64%) (36%) (100%)
2010-11 370.38 111.14 481.52 505.78 287.65 793.41
(77%) (23 %) (100%) (64%) (36%) (100%)
2011-12 357.51 84.42 441.93 528.14 329.30 857.44
(81%) (19%) (100%) (62%) (38%) (100%)
2012-13 367.82 74.05 441.87 689.68 380.56 1070.24
(83%) (17%) (100%) (64%) (36%) (100%)
2013-14 345.12 63.60 408.72 600.06 424.47 1024.52
(84%) (16%) (100%) (59%) (41%) (100%)
2014-15 201.71 57.37 259.08 667.82 504.97 1182.79
Page | 99
Gross underwritten of non-life insurance is shown in Table 4.25. There has

been an increase of 13.37 per cent in gross underwritten of non-life insurance during
2014-15 to 2015-16. The share of public sector was reported 55.24 per cent in 2015-
16 while private sector accounted for 44.75 per cent in the year. In the private sector,
insurers having significant share were reported to be ICICI Lombard, Bajaj Allianz,
IFFCO Tokio, Tata-AIG, Reliance, HDFC-ERGO General, Chola Mandalam and
AIC. In the public sector, New India, United India and National Insurance accounted
for significant share.
Table: 4.25
Gross Underwritten of Non-Life Insurance
(Rs. Crore)
Insurer 2015-16 % 2014-15 %
Royal Sundaram 1211.12 1.73 1150.19 1.86
Tata-AIG 2222.75 3.18 1973.46 3.20
Reliance General 2151.69 3.07 2065.97 3.35
IFFCO –Tokio 2653.27 3.79 2369.80 3.84
ICICI-Lombard 6021.96 8.61 5000.47 8.11
Bajaj Allianz 4112.10 5.88 3780.67 6.13
HDFC –ERGO General 2407.85 3.44 2328.83 3.77
Cholamandalam 1698.04 2.42 1377.80 2.23
Future Generali 1118.27 1.60 1126.30 1.82
Universal Sompo 597.68 0.85 467.20 0.75
Shriram General 1204.83 1.72 1070.28 1.73
Bharti Axa General 976.24 1.39 1109.82 1.80
Raheja QBE 18.87 0.02 16.24 0.02
SBI General 1327.01 1.89 1031.41 1.67
L&T General 321.76 0.46 225.89 0.36
Magma HDI 288.53 0.41 335.29 0.54
Liberty 300.93 0.43 201.50 0.32
Star Health and Allied Insurance 1302.49 1.86 961.63 1.55
Apolio Munich 578.99 0.82 438.80 0.71
Max – BUPA 325.27 0.46 249.12 0.40
Religare 342.68 0.49 172.69 0.28
Cigna – TTK 96.65 0.13 9.60 0.01
New India 11133.80 15.93 9658.07 15.66
National 8829.73 12.63 8168.30 13.25
United India 8838.22 12.64 7877.49 12.77
Oriental 6176.43 8.83 5529.78 8.97
ECGC 935.96 1.33 964.53 1.56
AIC 2691.40 3.85 1982.55 3.21
Private Total 31279.10 44.75 27462.95 44.55
Public Total 38605.54 55.24 34180.72 55.44
Grand Total 69884.64 100 61643.67 100
Source: IRDAI, Journal, 2016.
Page | 100
Premium underwritten by non-life insurers is shown in Table 4.26. There has

been significant increase in premium underwritten by non-life insurance in India
during the period of 2013-14 to 2014-15. During 2014-15, 44.14 per cent premium
accounted for motor vehicle while more than 1/4th premium comprised of health
insurance. Fire insurance accounted for less than 10 per cent share in premium
underwritten by non-life insurance.
Table: 4.26
Premium Underwritten By Non-Life Insurers
Department 2013-14 2014-15
Fire 7363 8057
(9.49) (9.51)
Marine 3162 3020
(4.08) (3.57)
Motor 33823 37379
(43.61) (44.14)
Health 19634 22636
(25.32) (26.73)
Others 13572 13592
(17.50) (16.05)
Total Premium 77554 84684
(100.00) (100.00)
State-wise coverage of National Agriculture Insurance Scheme is shown in

Table 4.27. Uttar Pradesh, Maharashtra, Madhya Pradesh, Rajasthan and Andhra
Pradesh accounted for larger coverage of farmers under National Agriculture
Insurance Scheme. However, average number of farmers covered was recorded high
in the state of Maharashtra followed by Madhya Pradesh and Andhra Pradesh.
Average sum insured under National Agriculture Insurance Scheme was also recorded
high in Gujarat followed by Andhra Pradesh, Madhya Pradesh and Odisha.
Page | 101
Table: 4.27
State-wise Coverage of National Agriculture Insurance Scheme
State Total Farmers Average Farmers Average Sum

(Million) Covered (Million) Ensured (Rs.)
Maharashtra 11.5 1.2 6609
Madhya Pradesh 8.2 1.1 17678
Andhra Pradesh 6.1 1.0 20760
Uttar Pradesh 15.6 0.8 14316
Odisha 3.3 0.5 14513
Rajasthan 9.8 0.5 10760
Gujarat 4.7 0.5 28936
Karnataka 6.0 0.5 12485
West Bengal 4.2 0.4 11469
Chhattisgarh 3.0 0.4 11042

Source: IRDAI Journal, 2016.
Crop insurance performance in India is shown in Table 4.28. There are mainly
three National Schemes for crop insurance viz., National Agriculture Insurance
Scheme, Modified National Agriculture Insurance Scheme, and Weather Based Crop
Insurance Scheme. The performance of these schemes over the period of 2011-12 to
2013-14 demonstrates that farmers are more intended to get insurance for Kharif crop
as compared to Rabi crop. However, the coverage of farmers was reported high under
Weather Based Crop Insurance Scheme for Rabi Crop as compared to Kharif crop.
Claims were also reported higher for Kharif crop as compared to Rabi crop. Claims
were reported higher for Weather Based Crop Insurance Scheme as compared to
Modified National Agriculture Insurance Scheme.
Page | 102
Table: 4.28
Crop Insurance Performance in India
Particulars
Rabi (2011-12)
Rabi (2012-13)
Rabi (2013-14)
Kharif (2012)
Kharif (2013)
Kharif (2014)
Number of Farmers Insured (%)
National Agriculture Insurance 58 67 58 60 54 67
Scheme
Modified National Agriculture 7 10 8 9 29 16
Insurance Scheme
Weather Based Crop Insurance 35 22 35 31 17 17
Scheme
Total 100 100 100 100 100 100
Sum Insured (%)
Scheme
Insurance Scheme
Scheme
Total 100 100 100 100 100 100
Gross Premium (%)
Scheme
Insurance Scheme
Scheme
Total 100 100 100 100 100 100
Claims Reported (%)
Scheme
Insurance Scheme
Scheme
Total 100 100 100 100 100 100
Source: IRDAI Journal, 2016.
Page | 103
Weather Based Crop Insurance Scheme is shown in Table 4.29. There has
been significant performance of Weather Based Crop Insurance Scheme in India.
However, coverage of farmers, area of insurance, sum insured, gross premium and
number of farmer beneficiaries was reported significantly higher for the Rabi crop as
compared to Kharif crop over the period of 2007 to 2015.
Table: 4.29
Weather Based Crop Insurance Scheme
(Rs. in Lakh)
Season Farmers Area Sum Gross Claims Farmers
Insured Insured Insured Premium Reported Benefitted
(ha)
Kharif 43790 50074 5301 703 524 35275
2007
Rabi 634635 1018254 173890 14132 10040 190610
2007-08
Kharif 183481 221202 35110 3616 1605 108975
2008
Rabi 191647 260908 53633 4553 3342 120804
2008-09
Kharif 1161340 1530782 264531 21438 15789 902866
2009
Rabi 1201525 1891091 285799 23553 18719 600336
2009-10
Kharif 4916784 7393242 567690 59550 19194 1790436
2010
Rabi 4383504 5745537 863379 69386 44264 2526629
2010-11
Kharif 6905831 9786279 1035162 102973 42588 3597644
2011
Rabi 4766033 5944759 985846 81472 75114 2732017
2011-12
Kharif 8008123 11124734 1287053 129474 87681 6752196
2012
Rabi 5591512 6565336 1065546 92303 104382 4052901
2012-13
Kharif 8854147 11172437 1462396 147033 119959 6870673
2013
Rabi 5302443 5335856 1090192 92345 81709 3785595
2013-14
Kharif 8170689 9636268 1325201 156564 123529 6719926
2014
Rabi 3079551 4756070 440068 55832 80213 2892611
2014-15
Kharif 5397709 6341391 853792 98748 105922 4326429
2015
Rabi 3373602 5943212 632910 73984 0 0
2015-16
Total 72166346 94717431 12427499 1227660 934576 48005923
Source: AIC,2015
Page | 104
Modified National Agriculture Insurance Scheme is shown in Table 4.30.

Farmers insured, area insured, sum insured, gross premium and number farmer
beneficiaries were recorded higher for Kharif crop as compared to Rabi crop in the
Modified National Agriculture Insurance Scheme over the period of 2010-11 to 2015-
16. The scheme has shown increasing performance over the period.
Table: 4.30
Modified National Agricultural Insurance Scheme
(Rs. in Lakh)
Season Farmers Area Sum Gross Claims Farmers
Insured Insured Insured Premium Reported Benefitted
(ha)
Rabi 358421 323734 69364 4732 1615 46879
2010-11
Kharif 458157 665654 134588 12179 9610 100201
2011
Rabi 754999 707381 201008 16520 8428 122820
2011-12
Kharif 2062445 2239317 489694 56437 62346 605631
2012
Rabi 949009 741753 207715 18931 5347 112953
2012-13
Kharif 2361297 2274437 582583 64027 85679 962971
2013
Rabi 2997404 3253405 640654 43445 53292 810839
2013-14
Kharif 5896415 7000041 948118 94079 6 1984 1571622
2014
Rabi 3205933 3553445 910882 50152 87566 1406569
2014-15
Kharif 4809164 6348392 778182 82514 2839 35492
2015
Rabi 1681820 1809394 705533 49213 0 0
2015-16
Total 25535064 28916953 5668321 492228 378705 5775977
Source: AIC,2015
Page | 105
Trend in Health Insurance Premium is shown in Table 4.31. There has been an
increase of 82.18 per cent in Health Insurance over the period of 2010-11 to 2014-15.
The amount of Health Insurance premium was reported Rs. 11031 crores in 2010-11
which increased to Rs. 20096 crores in 2014-15. However, share of public sector in
health insurance accounted 64 per cent in 2014-15 while it was recorded 61 per cent
in 2010-11. There has been decline of the share of private sector during the
corresponding period. However, about 22 per cent share in health insurance accounted
for private sector in 2014-15. About 14 per cent share goes to stand alone health
insurers.
Table: 4.31
Trend in Health Insurance Premium
(Rs. Crore)
Market Share 2010-11 2011-12 2012-13 2013-14 2014-15

Public Sector Non- 6689 8015 9580 10841 12882
Life Insurers
% (61%) (61%) (62%) (62%) (64%)
Private Sector Non- 2850 3445 4205 4482 4386
Life Insurers
% (26%) (27%) (27%) (26%) (22%)
Stand-Alone Health 1492 1609 1668 2172 2828
Insurers
% (13%) (12%) (11%) (12%) (14%)
Total Non-Life 11,031 13,070 15,453 17,495 20,096
Industry
Source: IRDAI , 2015.
Number of persons covered under health insurance is shown in

Table 4.32. There has been an increase of 13.61 per cent in the coverage of persons
under health insurance scheme during 2010-11 to 2014-15. However, health insurance
coverage is still found to be low in India as compared to developed countries. During
2014-15, 2880 lakh persons were covered under health insurance in India. Out of
total persons covered under health insurance, government employees accounted for
74.41 per cent in 2014-15. Group Insurance other than government also accounted for
16.77 per cent while individual health insurance comprises of 8.82 per cent. There has
Page | 106
been decline in the share of individual health insurance over the period of 2010-11 to
2014-15.
Table: 4.32
Number of Persons Covered Under Health Insurance
(In Lakh)
Class Of 2010-11 2011-12 2012-13 2013-14 2014-15
Business
Government 1891 1612 1494 1553 2143
Group (Other 226 300 343 337 483
Than Govt.)
Individual 418 206 236 272 254
Total 2535 2118 2073 2162 2880
Source: IRDAI Journal, 2015
Classification of health insurance premium is shown in Table 4.33. Out of

total health insurance premium, Group Insurance other than government sector
accounted for 44 per cent in 2014-15 while insurance premium from individual
comprised of 44 per cent. Thus, health insurance premium earned from government
sector accounted for 12 per cent. There has been significant decline in the share of
government in health insurance premium while there has been significant increase in
individual health insurance premium over the period of 2010-11 to 2014-15.
Table: 4.33
Classification of Health Insurance Premium
(Rs. Crore)
Class Of 2010-11 2011-12 2012-13 2013-14 2014-15
Business
Government 2198 2225 2347 2082 2425
(20%) (17%) (15%) (12%) (12%)
Group 4952 5948 7186 8058 8899
(Other Than
(45%) (46%) (47%) (46%) (44%)
Govt.)
Individual 3881 4897 5919 7355 8772
(35%) (37%) (38%) (42%) (44%)
Total 11031 13070 15453 17495 20096
Source: IRDAI Journal, 2015
Page | 107
Micro-insurance refers to the insurance of low-income people. Low-income

households are vulnerable to risks and economic uncertainties. One way for the poor
to protect themselves is through insurance. If governments, donors, development
agencies and others working for the welfare of the commercial activity but as an
activity coupled with a sense of responsibility towards the society. Micro-insurance is
a highly technical operation and it creates many problems and challenges. Operating
costs to the insurers are high and experience indicates that it is very difficult for them
to offer effective and sustainable insurance policies for poor people. The insurers have
to re-design their organizational strategies to include low-premium group loans,
treating them both as a business opportunity as well as a corporate social
responsibility.
Micro life insurance agents in India are shown in Table 4.34. There has been
increase of 22.30 per cent in the number of micro life insurance agents in India during
the period of 2012-13 to 2014-15. During 2012-13, 89.30 per cent micro life
insurance agents were found associated with public sector while their share increased
to 92.92 per cent in 2014-15. The share of private sector had declined from 10.69 per
cent in 2012-13 to 7.08 per cent in 2014-15.
Table: 4.34
Micro Life Insurance Agents in India
Insurers Agents
2012-13 2013-14 2014-15
Private 1824 1656 1476
Public 15228 18401 19379
Total 17052 20057 20855
New business premium under micro insurance portfolio is shown in Table

4.35. There has been significant increase in premium of micro insurance botrh for
individual and group insurance over the perod of 2010-11 to 2014-15. However,
market share of LIC has been found significantly high both for individual and group
insurance. There has been significant decline in the share of LIC in business premium
under micro insurance over the period of 2010-11 to 2014-15.
Page | 108
Table: 4.35
New Business Premium Under Micro Insurance Portfolio

Premium in Lakhs
Insurers Individual Group
2010-11 2013-14 2014-15 2010-11 2013-14 2014-15
Private 735.09 929.29 1249.22 1719.14 1595.23 3366.22
23.12 -8.76 34.42 12.10 110.76 111.01
Public 12305.76 8635.77 1640.23 13803.67 12581.45 28193.80
10.12 -13.20 -81.01 20.17 -40.22 124.09
Market 94.36% 90.28% 56.76% 88.92% 88.74% 89.33
share
(LIC)
State-wise social security coverage in India is shown in Table 4.36. Social
security coverage was recorded high in Uttar Pradesh followed by Madhya Pradesh,
Andhra Pradesh, Chhattisgarh and Rajasthan. The share in total renewal recorded high
for Madhya Pradesh followed by Andhra Pradesh, Uttar Pradesh and Rajasthan.
Table: 4.36
State-wise Social Security Coverage in India
(As on March, 2016)
State Total Renewal (Rs.) % Total Lives %
Andhra Pradesh 5680284 16.04 6902935 13.80
Assam 138719 0.39 242607 0.48
Bihar 181949 0.51 605415 1.21
Chhattisgarh 4666825 13.17 6270675 12.53
Gujarat 761006 2.14 980946 1.96
Haryana 924759 2.61 1267276 2.53
Himachal Pradesh 36969 0.10 48328 0.09
Jammu and Kashmir 57111 0.16 101330 0.20
Jharkhand 125036 0.35 334975 0.66
Karnataka 1338339 3.77 2589615 5.17
Kerala 114998 0.32 868236 1.73
Madhya Pradesh 7402033 20.90 7749068 15.49
Maharashtra 274945 0.77 580605 1.16
Odisha 1882684 5.31 2521383 5.04
Punjab 52073 0.14 68445 0.13
Rajasthan 3051987 8.61 4439777 8.87
Tamil Nadu 330589 0.93 1319513 2.63
Telangana 1472427 4.15 3666723 7.33
Uttar Pradesh 5664630 15.99 7876133 15.74
Uttarakhad 697501 1.96 779371 1.55
West Bengal 297702 0.84 437338 0.87
Total 35410163 100 50014082 100
Page | 109
Operating expenses of life and non-life insurers are shown in

Table 4.37. There has been declining trend in the share of public sector in total
operating expenses of life insurers. The share of public sector was reported 79 per
cent in 2003-04 which decline to 41 per cent in 2007-08 and increased to 60.76 per
cent in 2014-15. Similarly, the share of private sector in operating expenses of life
insurers increased from 21 per cent in 2003-04 to 39.44 per cent in 2014-15.
Similarly, the share of public sector has declined from 88 per cent in 2003-04 to 55.33
per cent in total operating expenses of non-life insurers. The share of private sector in
operating expenses of non-life insurers increased from 12 per cent in 2003-04 to 44.66
per cent in 2014-15.
Table: 4.37
Operating Expenses of Life and Non-Life Insurers
Year Life insurers Non-Life Insurers
Public Private Total Public Private Total
2003-04 5186.498 1402.444 6588.942 3647.68 495.1666 4142.847
(79%) (21%) (100%) (88%) (12%) (100%)
2004-05 6241.261 2229.468 8470.729 3640.309 691.9826 4332.292
(74%) (26%) (100%) (84%) (16%) (100%)
2005-06 6041.554 3568.14 9609.694 4016.921 1060.515 5077.436
(63%) (37%) (100%) (79%) (21%) (100%)
2006-07 7085.84 6500.01 13585.85 3606.74 1700.15 5306.89
(52%) (48%) (100%) (68%) (32%) (100%)
2007-08 8309.32 12032.46 20341.78 3652.96 2482.3 6135.27
(41%) (59%) (100%) (60%) (40%) (100%)
2008-09 9064.29 16763.03 25827.32 4347.21 3019.88 7367.09
(35%) (65%) (100%) (59%) (41%) (100%)
2009-10 12245.82 16561.11 28806.93 5262.59 3129.61 8392.2
(43%) (57%) (100%) (63%) (37%) (100%)
2010-11 16980.28 15962.02 32942.3 6688.6 3931.88 10620.48
(52%) (48%) (100%) (63%) (37%) (100%)
2011-12 14914.4 14760.19 29674.59 6563 4609 11172
(50%) (50%) (100%) (59%) (41%) (100%)
2012-13 16707.66 14844.7 31552.37 7791 5516 13307
(53%) (47%) (100%) (59%) (41%) (100%)
2013-14 20277.88 14773.88 35051.76 8791 6327 15118
(58%) (42%) (100%) (58%) (42%) (100%)
2014-15 22395.45 14466.14 36861.59 11181 7527 20206
Source: Compiled from Annual reports of IRDA of different years
Page | 110
Commission expenses of life insurers are shown in Table 4.38. There has been
increasing trend in total commission expenses of life insurers during the period of
2003-04 to 2014-15. The share of public sector has declined from 93 per cent in 2003-
04 to 81.89 per cent in 2014-15 while the share of private sector in total commission
expenses increased from 7 per cent in 2003-04 to 18.11 per cent in 2014-15.
Table: 4.38
Commission Expenses of Life Insurers
Year Total Commission
Public Private Sector Total
2003-04 5742.92(93%) 415.42(7%) 6158.33(100%)
2004-05 6203.23(88) 854.73(12%) 7057.96(100%)
2005-06 7100.19(82%) 1543.11(18%) 8643.30(100%)
2006-07 9173.58(75%) 3109.65(25%) 12283.24(100%)
2007-08 9614.69(65%) 5089.61(35%) 14704.30(100%)
2008-09 10055.09(65%) 5477.89(35%) 15532.98(100%)
2009-10 12132.56(67%) 5942.06(33%) 18074.62(100%)
2010-11 13347.29(73%) 4982.03(27%) 18329.32(100%)
2011-12 14063.06(76%) 4458.05(24%) 18521.11(100%)
2012-13 14790.26(77%) 4471.19(23%) 19261.45(100%)
2013-14 16762.88(80%) 4083.49(20%) 20846.37(100%)
2014-15 15118.14(81.89) 4342.54(18.11) 18460.66 (100.00)

Commission expenses by non-life insurers are shown in Table 4.39. There has
been significant increase in commission expenses of non-life insurers during the
period of 2013-14 to 2014-15. The share of public sector insurers was found
significantly higher in total commission expenses of non-life insurers during the
Page | 111
corresponding period. Out of total commission expenses by non-life insurers,

commission expenses was recorded high for health followed by motor, fire and other
segments.
Table: 4.39
Commission Expenses by Non Life Insurers
(Rs. Crore)
Department Private Sector Public Sector Standalone Specialized Total
Insurer Insurer Health Insurer Insurer
2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15 2013-14 2014-15
Fire 169.27 192.14 494.66 568.04 0.00 0.00 0.00 0.00 663.93 760.18
Marine 89.58 99.16 179.66 169.37 0.00 0.00 0.00 0.00 269.24 268.53
Motor 743.11 716.53 886.24 870.95 0.00 0.00 0.00 0.00 1629.35 1587.48
Health 370.06 526.02 790.50 1000.52 845.80 1027.49 0.00 0.00 2006.36 2554.03
Others 271.63 226.87 518.66 496.23 0.00 0.00 37.10 34.19 827.39 757.29
Total 1643.65 1760.72 2869.72 3105.11 845.80 1027.49 37.10 34.19 5396.27 5927.51
In case of failure of insurer to reply within 15 days or the policyholder is not

satisfied with the response of insurer then he/she may approach grievance redressal
cell of Consumer Affairs Department of IRDAI or make a call through toll free
number. The policyholder may register and monitor complaint with Integrated
Grievance Management System or may download Complaint Registration form, fill it
and send it by post or fax to Consumer Affairs Department of IRDAI. As per IRDA
classification of grievances for year 2014-15, maximum grievances are reported in
terms of unfair business practices, followed by policy servicing grievances (Table
4.40).
Table 4.40
Yearly Classification of Various Life Insurance Complaints
Classification of Complaints Year
2012-13 2013-14 2014-15
Claims 43178 (12.69) 36685 (9.79) 31076 (11.13)
Policy Servicing 56277 (16.55) 62238 (16.61) 55869 (20.02)
Proposal Processing 38742 (11.39) 27774 (7.41) 20932 (7.50)
ULIP Related 9278 (2.72) 7127 (1.90) 4029 (1.44)
Unfair Business Practice 168482 (49.55) 211622 (56.48) 145129 (52.01)
Others 24055 (7.07) 29174 (7.78) 21957 (7.87)
Total 340012 374620 278992
Source: www.policyholder.gov.in
Page | 112
Status of life insurance grievances is shown in Table 4.41. There has been
increasing trend in number of grievances reported and grievances resolved over the
period of 2003-04 to 2012-13. Out of total grievances reported, private sector
accounted a larger share while it has also attempted to resolve the grievances.
However, out of total grievance outstanding, share of private sector is still high.
Table: 4.41
Status of Life Insurance Grievances
Year Grievance Reported Grievance Resolved Grievance
Outstanding
Public Private Total Public Private Total Public Private Total
2003-04 498 36 534
2004-05 704 195 899 210 98 308 992 133 1125
2005-06 851 540 1391 467 270 737 1376 403 1779
2006-07 354 507 861 1533 808 2341 197 102 299
2007-08 651 1406 2057 80 1100 1180 685 332 1017
2008-09 481 1313 1794 980 1373 2353 186 272 458
2009-10 606 1843 2449 642 1870 2512 150 245 395
2010-11 2588 7068 9656 2672 7125 9797 66 188 254
2011-12 52300 257313 309613 52135 256196 308331 165 1117 1282
2012-13 73034 267978 341012 72655 268415 341070 544 680 1224
Source : IRDAI, Various Annual Reports
Incurred Claims Ratio of Non-Life Insurers is shown in Table 4.42. Overall,

incurred claims ratio for non-life insurers was reported about 82 per cent during
2013-14 and 2014-15. Incurred claims ratio was reported high for health and motor
segment while it was recorded low for marine segment. Again, incurred claims ratio
was recorded slightly high for private sector insurers as against public sector insurers.
Page | 113
Table: 4.42
Incurred Claims Ratio of Non-Life Insurers
(In Per Cent
Department Private Sector Public Sector Standalone Specialized Total
Insurer Insurer Health Insurer
Insurer
2013- 2014- 2013- 2014- 2013- 2014- 2013- 2014- 2013- 2014-
14 15 14 15 14 15 14 15 14 15
Fire 80.39 75.21 55.45 66.19 - - - - 76.54 73.78
Marine 59.30 57.80 71.24 87.38 - - - - 63.37 67.44
Motor 77.51 72.38 81.40 81.91 - - - - 79.50 77.14
Health 106.19 109.97 87.62 79.17 66.06 62.18 - - 97.05 96.93
Others 64.55 55.97 63.00 60.61 - - 96.69 110.68 72.96 73.91
Total 83.20 82.09 79.58 79.69 66.06 62.18 96.69 110.68 81.98 81.70
Incurred claims ratio of non-life insurance for the period of 2001-02 to 2011-
12 is shown in Table 4.43. There has been fluctuating trend in incurred claims ratio of
non-life insurance during the period of 2001-02 to 2011-12. Incurred claims ratio for
private sector has increased from 23.03 per cent in 2001-02 to 88.22 per cent in 2011-
12 while there has been slight decline in incurred claims ratio of public sector from
90.19 per cent in 2001-02 to 89.22 per cent in 2011-12. Overall, incurred claims ratio
was reported high for National Insurance as compared to New Indian, Oriental and
United Insurance.
Table: 4.43
Growth of Incurred Claims Ratio of Non-Life Insurance
Year Private National New India Oriental United Public Total
2001-02 23.03 95.14 83.25 100.59 87.06 90.19 88.81
2002-03 50.93 245.30 76.77 77.25 91.06 94.17 91.70
2003-04 50.97 84.10 74.65 78.09 85.63 79.91 77.20
2004-05 51.16 79.92 74.58 86.04 91.99 81.63 77.43
2005-06 54.47 105.49 83.64 82.57 91.78 89.94 83.03
2006-07 68.02 86.51 80.34 87.66 90.26 85.22 81.27
2007-08 72.21 94.05 86.82 90.47 92.75 90.43 84.88
2008-09 77.04 99.16 89.00 99.69 78.62 91.30 85.37
2009-10 80.30 8505 89.87 90.79 86.74 88.27 85.50
2010-11 86.90 97.05 100.80 94.22 94.36 97.03 93.37
2011-12 88.22 87.50 90.00 91.00 88.50 89.22 88.85
Page | 114
Segment-wise incurred claims ratio of non-life insurance is shown in

Table 4.44. Overall, incurred claims ratio of non-life insurers in private sector was
reported 87.17 per cent in public sector and 38.71 per cent in private sector in 2001-
02 which increased to 82.09 per cent and 79.69 per cent respectively in 2014-15.
Incurred claims ratio for fire was recorded 36.6 per cent in public sector and 30.82 per
cent in 2001-02 which increased to 75.21 per cent and 66.19 per cent respectively in
2014-15. Similarly, incurred claims ratio for motor was reported 109.43 per cent in
public sector and 62.71 per cent in 2005-06 while it was reported 72.38 per cent and
81.91 per cent respectively in 2014-15. Incurred claims ratio for health insurance was
recorded high for public sector in 2005-06 which drastically decline to 55.97 per cent
in 2014-15.
Table: 4.44
Segment-wise Incurred Claims Ratio of Non-Life Insurers
Segment Year Fire Marine Miscellaneous Total
Motor Health Others
Public Sector 2001-02 36.6 64.5 105.9 87.1
Private Sector 2001-02 30.82 36.46 39.62 38.71
Public Sector 2002-03 48.1 67.2 89.6 80.2
Private Sector 2002-03 22 66 56 52
Public Sector 2003-04 30.6 59.77 93.91 81.75
Private Sector 2003-04 27.18 81.89 53.03 50.97
Public Sector 2004-05 39.72 62.81 92.34 81.63
Private Sector 2004-05 37.91 87.82 50.75 51.16
Public Sector 2005-06 65.14 67.67 109.43 153.89 49.52 92.44
Private Sector 2005-06 61.48 116.75 62.71 94.63 53.37 68.03
Public Sector 2006-07 60.81 80.5 92.25 157.79 53.93 85.22
Private Sector 2006-07 43.92 112.57 64.28 103.42 47.11 68.02
Public Sector 2007-08 50.69 100.32 71.95 94.84 46.03 72.23
Private Sector 2007-08 72.28 82.68 104.76 112.36 54.13 90.43
Public Sector 2008-09 74.97 109.02 75.64 85.33 59.11 76.84
Private Sector 2008-09 75.86 101.05 98.9 116.6 52.69 91.3
Public Sector 2009-10 81.1 75.5 87.84 119.85 56.59 88.27
Private Sector 2009-10 72.79 86.4 80.42 92.22 56.81 80.79
Public Sector 2010-11 87.86 92.89 111.1 106.31 58.11 97.03
Private Sector 2010-11 75.16 82.12 93.7 85.15 49.76 86.9
Public Sector 2011-12 67.06 82.07 97.62 77.93 50.31 88.26
Private Sector 2011-12 101.45 84.32 92.41 100.28 55.58 89.27
Public Sector 2012-13 52.46 76.88 81.26 79.08 55.47 79.56
Private Sector 2012-13 71.55 60.39 92.86 103.21 46.39 84.79
Public Sector 2013-14 80.39 59.3 77.51 106.19 64.55 83.2
Private Sector 2013-14 55.45 71.24 81.4 87.62 63 79.58
Public Sector 2014-15 75.21 57.80 72.38 109.97 55.97 82.09
Private Sector 2014-15 66.19 87.38 81.91 79.17 60.61 79.69
Page | 115
Retention Ratio of life insurers is shown in Table 4.45. There has been drastic
decline of public sector in the ratio of reinsurance ceded over the period of 2001-02 to
2013-14 while the share of private insurers in the ratio of reinsurance ceded has
increased from 18 per cent in 2001-02 to 87 per cent in 2013-14. However, amount of
reinsurance ceded has significantly increased for both the sectors during the period.
Table: 4.45
Retention Ratio of Life Insurers
Year Public Insurer Private Insurers Total
Reinsurance % of Total Reinsurance % of Total Reinsurance
Ceded Reinsurance Ceded Reinsurance Ceded
(In Rs Ceded (In Rs Ceded (In Rs
crore) crore) crore)
2001-02 16.76 82% 3.64 18% 20.4
2002-03 27.94 68% 13.33 32% 41.27
2003-04 38.31 54% 32.54 46% 70.85
2004-05 42.95 40% 64.79 60% 107.74
2005-06 34.54 25% 101.71 75% 136.25
2006-07 41.67 21% 160.05 79% 201.72
2007-08 87.95 28% 231.23 72% 319.18
2008-09 100.91 24% 325 76% 425.91
2009-10 95 19% 407 81% 502
2010-11 119 19% 507 81% 626
2011-12 85 11% 679 89% 764
2012-13 214 21% 822 79% 1036
2013-14 144 13% 949 87% 1093

Net retention of non-life insurance is shown in Table 4.46. There has been
fluctuating trend in net retention of non-life insurance during the period of 2003-04 to
2011-12. Net retention was recorded high for motor insurance followed by marine
cargo, fire and engineering.
Page | 116
Table: 4.46
Net Retention of Non-Life Insurance
Year Aviation Engineering Fire Marine Marine Motor Misc.

Cargo Hull
2003-04 25.98 81,29 80.46 89.46 26/68 99.02 94.70
2004-05 23.53 75.78 76.00 95.07 25.55 99.64 88.35
2005-06 48.53 91.55 85.76 91.77 39.76 100.00 94.47
2006-07 21.93 72.89 65.72 77.10 18.30 96.15 89.63
2007-08 24.21 77.52 75.65 84.43 20.01 100.00 97.11
2008-09 23.71 71.26 77.35 88.59 31.26 99.99 96.95
2009-10 25.64 68.88 73.99 85.35 23.31 99.99 91.39
2010-11 37.50 70.15 65.39 79.18 25.06 98.88 90.63
2011-12 20.16 73.53 75.16 78.86 32.29 99.00 94.52
Settlement of claims by LIC is shown in Table 4.47. There has been

significant increase in the amount of maturity claims settled during the period of
2013-14 to 2015-16. However, there has been decline in the number of maturity
claims settled during the corresponding period. Death claims settled have also shown
and declining trend both in number of claims and amount of insurance.
Table: 4.47
Settlement of Claims by LIC
Particulars 2013-14 2014-15 2015-16

Maturity Claims Settled
Number (In Lakh) 248.87 222.17 205.75
Amount (Rs. Crore) 81424.54 79365.71 88857.45
Percentage Outstanding 0.33 0.23 0.25
Death Claims Settled
Number (In Lakh) 10.13 10.15 9.96
Amount (Rs. Crore) 9761.91 11092.45 12184.20
Percentage Outstanding 0.48 0.44 0.45
Page | 117
The opening of the market and insurance sector for the private and foreign players has
definitely brought in remarkable changes in the insurance industries in India. It has
challenged the hegemony of LIC in life insurance and the GIC and its subsidiaries in the non-
life insurance sector. Market share of these two Government insurers have also dropped but
not as expected. The global financial crisis has reverted the trend and the market share of
these companies almost remains unchallenged, even today. Private players are doing better in
terms of bringing in professionalism, technology, range of products and the operational
efficiency yet it has not reached to the global standard. People still trust the Government
companies over private players in India. This is due to the after sale service and too much of
profit oriented approach of the existing private players. Overall analysis of data shows that
though we have achieved progresses yet there is dominance of LIC in life insurance and the
private players in the non-life segment. Though there is enormous scope and business
potential of health insurance, we are yet to have the specialists in health insurance sector.
Problem of under and inadequate insurance needs to be addressed in a systematic manner to
derive the full potential of the insurance which can provide social safety net to the people in
particular and liquidity to the nation in general. The future growth of life insurance depends
upon the products that provide pure protection, have variety to choose from, easy to
understand and customer centric with focus on the continuous improvement in its services.
An overview of the life insurance players working in the Indian life insurance market
shows the structure of both public and private sector set-up. An analysis of the
commencement of life insurance business by the private insurers is an important factor
for determining their break-even point. Some insurers have completed one decade of
experience in the market and many of them have reached to the position of getting profits
after recovering the initial high operating costs. Further, the nature and character of the
participation and involvement of the foreign partners with the domestic players will also
influence significantly the life insurance business perspective of our country. By using
their exposure in insurance business globally, the domestic companies can play a gigantic
role in performing their functions and tasks to the best satisfaction of all the stakeholders
of the insurance industry and can in a way to reach the international business standards.
The target of insurers is to increase revenue and achieve greater profitability by lowering
process costs and attracting more customers to the organization. Hence, an insurer must
plan and organize the business to ensure the long-term profitability which enables him to
provide funds for investments, ensuring payment of dividends to stakeholders and obtain
high quality ratings from insurance rating agencies. It also provides funds to develop
Page | 118
products, product lines, distribution channels and for expansion and acquisition. To
conclude, an important challenge before the insurance industry is to promote more
effective distribution channel to meet the new generation demand. Efforts of insurance
companies should be to promote institutional intermediaries like corporate agents and
brokers who will provide a new dimension to distribution channel.
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Page | 119

Insurance Industry Growth and Trends in India

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Insurance Industry Growth and Trends in India

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Chapter – 4

PERFORMANCE OF INSURANCE INDUSTRY IN INDIA

The Indian insurance industry has undergone transformational changes since

Insurance Penetration and Density in India

Year Life Insurance Non-Life Insurance Total

Density Penetration Density Penetration Density Penetration

2001 9.1 2.15 2.4 0.56 11.5 2.71

2002 11.7 2.59 3 0.67 14.7 3.26

2003 12.9 2.26 3.5 0.62 16.4 2.88

2004 15.7 2.53 4 0.64 19.7 3.17

2005 18.3 2.53 4.4 0.61 22.7 3.14

2006 33.2 4.1 5.2 0.6 38.4 4.8

2007 40.4 4 6.2 0.6 46.6 4.7

2008 41.2 4 6.2 0.6 47.4 4.6

2009 47.7 4.6 6.7 0.6 54.3 5.2

2010 5.7 4.4 8.7 0.71 64.4 5.1

2011 49 3.4 10 0.7 59 4.1

2012 42.7 3.17 10.5 0.78 53.2 3.96

2013 41 3.1 11 0.8 52 3.9

2014 44 2.6 11 0.7 55 3.3

Insurance Penetration in India

State-wise life insurance penetration and density of individual new business is

Distribution of insurance products and efficient service delivery has been an

Distribution of offices of life insurers is shown in Table 4.5. During 2014,

Public 347 550 923 1430 3250 (26%)

Public 338 529 910 1253 3030 (28%)

Public 233 499 797 772 2301 (43%)

Members of Various Agent’s Club of LIC

Name of Club 2015-16 % 2014-15 % 2013-14 %

Corporate 214 0.11 227 0.10 181 0.07

Galaxy 429 0.22 - -

Chairman 38435 19.91 39554 17.82 40754 17.31

Zonal Manager 31213 16.17 32778 14.77 33919 14.41

Divisional 55029 28.51 59504 26.81 60786 25.82

Branch Manager 56162 29.10 60130 27.09 78796 33.48

Distinguished 11477 5.94 20697 9.32 20912 8.88

Total 192959 100.00 221890 100.00 235348 100.00

Borrowing and New Policies Issued by Life Insurers

Instrument-wise total amount of Life Insurance is shown in Table 4.10. Total

A well-developed insurance sector is a pre requisite for economic

Underwriting is the process by which an insurer determines whether or not to

Gross direct premium income of non-life insurers is shown in Table 4.14.

Corporate agents work on similar lines of broking companies but represent

IRDA has stipulated a minimum tenure of 3 years for corporate agents

Channel-wise individual new business performance of life insurance is shown

Individual Agents 42301907 39193141 54605.30 50972.32

93.15 88.55 90.46 78.69

Corporate Agents – Banks 1426919 2180018 3363.17 9692.90

3.14 3.94 5.57 14.96

Corporate Agents – Others 1284785 1588650 1825.89 1749.78

2.83 3.60 3.02 2.70

Brokers 259177 476054 331.63 1134.64

0.57 1.08 0.55 1.75

Direct Selling 139077 812478 235.33 1222.61

0.31 1.84 0.39 1.89

Total 45411865 44160341 60361.32 64772.24

100.00 100.00 100.00 100.00

Referrals 715933 12274 1256.51 34.90

1.55 0.03 2.04 0.05

Group insurance products are emerging as a business segment with

Channel-wise group new business performance of life insurance is shown in

Channel-wise Group New Business Performance of Life Insurance