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EXECUTIVE SUMMARY Objectives:1) To Highlight the Insurance business in India.

2) To make analysis of business breakup of HAVMORE INSURANCE BROKERS PVT LTD. 3) To explain ULIP Business in India and its future. 4) To explain reasons behind LIC dominance. 5) To Highlight Current Non-Life Insurance performance In Indi

ANALYSIS & INTREPRETATION. Brief history of insurance sector The insurance sector in India has completed all the facets of competition from being an open competitive market to being nationalized and then getting back to the form of a liberalized market once again. The history of the insurance sector in India reveals that it has witnessed complete dynamism for the past two centuries approximately. With the establishment of the Oriental Life Insurance Company in Kolkata, the business of Indian life insurance started in the year 1818.

Important milestones in the Indian LIFE insurance business

1912: The Indian Life Insurance Companies Act came into force for regulating the life insurance business.

1928: The Indian Insurance Companies Act was enacted for enabling the government to collect statistical information on both life and non-life insurance businesses.

1938: The earlier legislation consolidated the Insurance Act with the aim of safeguarding the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies were taken over by the central government and they got nationalized. LIC was formed by an Act of Parliament, viz. LIC Act, 1956. It started off with a capital of 5 crore and that too from the Government of India.

The history of general insurance business in India can be traced back to Triton Insurance Company Ltd. (the first general insurance company) which was formed in the year 1850 in Kolkata by the British.

Important milestones in the Indian GENERAL insurance business

1907: The Indian Mercantile Insurance Ltd. was set up which was the first company of its type to transact all general insurance business.

1957: General Insurance Council, an arm of the Insurance Association of India, framed a code of conduct for guaranteeing fair conduct and sound business patterns.

1968: The Insurance Act improved for regulating investments and set minimal solvency levels and the Tariff Advisory Committee was set up.

1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India. It was with effect from 1st January 1973.

107 insurers integrated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC was incorporated as a company.

Insurance companies in India IRDA has till now provided registration to 12 private life insurance companies and 9 general insurance companies. If the existing public sector insurance companies are considered then there are presently 13 insurance companies in the life side and 13 companies functioning in general insurance business. General Insurance Corporation has been sanctioned as the "Indian rein surer" for underwriting only reinsurance business. List of Insurance companies in India

LIFE INSURERS Public Sector Life Insurance Corporation of India Private Sector Allianz Bajaj Life Insurance Company Limited Birla Sun-Life Insurance Company Limited HDFC Standard Life Insurance Co. Limited ICICI Prudential Life Insurance Co. Limited ING Vysya Life Insurance Company Limited

Websites

www.licindia.com

www.allianzbajaj.co.in www.birlasunlife.com www.hdfcinsurance.com www.iciciprulife.com www.ingvysayalife.com

Max New York Life Insurance Co. Limited www.maxnewyorklife.com MetLife Insurance Company Limited Om Kotak Mahindra Life Insurance Co. Ltd. SBI Life Insurance Company Limited TATA AIG Life Insurance Company Limited AMP Sanmar Assurance Company Limited Dabur CGU Life Insurance Co. Pvt. Limited GENERAL INSURERS Public Sector National Insurance Company Limited www.nationalinsuranceindia.c om www.metlife.com www.omkotakmahnidra.com www.sbilife.co.in www.tata-aig.com www.ampsanmar.com www.avivaindia.com

New India Assurance Company Limited Oriental Insurance Company Limited

www.niacl.com www.orientalinsurance.nic.in

United India Insurance Company Limited www.uiic.co.in Private Sector Bajaj Allianz General Insurance Co. Limited ICICI Lombard General Insurance Co. Ltd. IFFCO-Tokio General Insurance Co. Ltd. Reliance General Insurance Co. Limited Royal Sundaram Alliance Insurance Co. Ltd. www.bajajallianz.co.in www.icicilombard.com www.itgi.co.in www.ril.com www.royalsun.com

TATA AIG General Insurance Co. Limited www.tata-aig.com Cholamandalam General Insurance Co. Ltd. Export Credit Guarantee Corporation HDFC Chubb General Insurance Co. Ltd. REINSURER General Insurance Corporation of India www.gicindia.com www.cholainsurance.com www.ecgcindia.com

Current Issues in Insurance Sector:FDI limit in insurance sector to be raised Continuing the financial sector reforms initiated in 1990, the government in Union Budget 2011 announced the introduction of a series of legislations that would increase the foreign direct investment (FDI) in the insurance, pension and banking sectors.

Presenting his sixth budget and the country's 80th, Finance Minister Pranab Mukherjee said the financial sector reforms initiated in 1990s gave good results and he proposes to move forward on that. The insurance legislation would increase the FDI limit to 49 percent from the current 26 per cent. The LIC bill would increase the share capital of Life Insurance Corporation (LIC) to Rs 100 crore from its current Rs 5 crore.

Future Expectations from Insurance Sector:India's insurance industry will outpace economic growth and is likely to reach $350-400 billion in terms of premium income by 2020, making it among the top three life insurance markets, an industry report revealed. India will also be among the top 15 non-life insurance markets by 2020, according to an industry study conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the US-based Boston Consulting Group. The report points out that penetration of the insurance industry, premium as percentage of the country's gross domestic product (GDP), has increased from 2.3 percent in 2001 to 5.2 percent in 2011. In addition, there has been a vast increase in the coverage of insurance. The number of life policies in force has increased nearly 12fold over the past decade and health insurance, nearly 25-fold. Better terms and availability of a wide variety of products, like unitlinked products, whole life, maximum net asset value (NAV) guarantee,

auto assistance, auto pay per km insurance, disease management and wellness, have boosted the growth of the industry. "While the industry has come a long way over the past decade, the big challenge is profitability. Private life insurers have accumulated losses of over Rs.16, 000 crore till March 2010," said Alpesh Shah, partner and director of Boston Consulting Group India. "The non-life insurance industry has cumulative underwriting losses of nearly Rs.30, 000 crore," he said. Difference Between Life & Non-Life Insurance:Life insurance pays the beneficiary, usually the family, upon the death of the policyholder. Major non-life insurance categories include health insurance to pay medical expenses and automobile insurance, homeowner's or renter's insurance and insurance to cover professional and business liabilities.

UNIT LINKED INVESTMENT PRODUCTS (ULIP):Insurers have developed plans that combine the benefits of life insurance as well as giving various options of participating in the growth of capital market. Such plans are called Unit Linked Life Insurance Plan (ULIP). Not too long back, the good old endowment plan was the preferred way to meeting the dual objective of insuring oneself against an eventuality ad setting aside savings to meet ones financial objectives. Then the insurance sector was thrown open to the private sector. The

result was the launch of a wide variety of insurance plans; including ULIP. Two factors were responsible for the advent of ULIPs on the domestic insurance horizon. First was the arrival of private insurance companies. ULIPs were one of the most significant innovations introduced by private insurers. The other factor that saw investors take to ULIPs was the decline of assured returns in endowment plans. ULIPs have some fundamental positives like enhanced flexibility and merging of investment and insurance in a single entity that have really endeared them to individuals.

Investments:Traditionally, endowment plans have invested in government securities, corporate bonds and money market instruments. They generally shirked from investing in the stock markets, although there was a provision for the same. However, for some time now, endowment plans have discarded their traditional outlook on investing and allocate about 10%- 15% of monies to stocks. This Percentage varies across life insurance companies. ULIPs have no such constraints on investments. They invest across the board in stocks, government securities, corporate bonds and money market instruments. Of Course, within a ULIP there are options wherein there are caps on each investment avenue. (stocks, bonds). There are insurance companies that offer as many as six options within a ULIP with the equity component varying from zero to a maximum of 100 %( of corpus). You can select an option that best fits your objectives and risk taking capacity. Having selected an option, you still

have the flexibility to switch to another option. Most insurance companies allow a number of free switchesin a year. Another innovative feature with ULIP is the top-up facility. A top-up is a one-time additional investment in the ULIP over and above the annual premium. This feature works well when you have a surplus that you are to invest in a market-linked avenue, rather than keep in a savings account or a fixed deposit. With traditional endowment, there are no investment options. You select the only option you have and must remain with it till maturity. There s also no concept of a top-up facility. Your premium amount cannot be enhanced on a one-time basis and sipped premiums will result in your policy lapsing. Transparency ULIPs are also more transparent than traditional endowment plans. Since they are market-linked, there is a price per unit. This is the net asset value (NAV) that is declared on a daily basis. A simple calculation can tell you the value of your ULIP investments. Over time you know exactly how your ULIP has performed. Most ULIPs also disclose their portfolios regularly. This gives you an idea of how your money is being managed. It also tells you whether or not your mutual fund and/or stock investments coincide with your ULIP investments. If they are, then you have the opportunity to do a rethink on your investment strategy across the board so as to ensure you are well-diversified across investment avenues at all times. With traditional endowment, there is no concept of a NAV. However, insurers do send you an annual statement of bonus declared during the year, which gives you an idea of how your insurance plan is performing. Traditional Endowment also does not have practice of disclosing portfolios. But given that there are provisions that ensure a large chunk of the

endowment portfolio is in high quality (AAA/sovereign rating) debt paper, disclosure of portfolios is likely to evoke little investor interest. Liquidity Another flexibility that ULIPs offer the individual is liquidity. Since ULIP investments are NAV-based it is possible to withdraw a portion of your investments before maturity. Of course, there is an initial lock-in period (3 years) after which the withdrawal is possible provided the minimum fund value is to be maintained. Traditional endowment has no provision for pre-mature withdrawal. You can surrender your policy, but you wont get everything you have earned on your policy in terms of premiums paid and bonuses earned. If you are clear that you will need money at regular intervals then it is recommended that you opt for money back endowment. Tax Benefits Taxation is one area where there is common ground between ULIP and traditional endowment. Premiums in ULIPs as well as traditional endowment plans are eligible for tax benefits under Section 80C subject to a maximum limit of Rs 1, 00,000. On the same lines, monies received on maturity on ULIPs and traditional endowments are tax free under section 10. ULIPs have no such constraints on investments. They invest across the board in stocks, government securities, corporate bonds and money market instruments. Of Coure, within a ULIP there are options wherein there are caps on each investment avenue (Stocks, Bonds).

Life Insurance Industry in India

What is Life Insurance? Life insurance is a contract between the policy holder and the insurer, where the insurer promises to pay a designated beneficiary a sum of money (the "benefits") upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger payment. In return, the policy holder agrees to pay a stipulated amount (the "premium") at regular intervals or in lump sums. In some countries, death expenses such as funerals are included in the premium; however, in the United States the predominant form simply specifies a lump sum to be paid on the insured's demise. The value for the policy owner is the 'peace of mind' in knowing that the death of the insured person will not result in financial hardship. Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; common examples are claims relating to suicide, fraud, war, riot and civil commotion. Life-based contracts tend to fall into two major categories:

Protection policies designed to provide a benefit in the event of specified event, typically a lump sum payment. A common form of this design is term insurance.

Investment policies where the main objective is to facilitate the growth of capital by regular or single premiums. Common forms (in the US) are whole life, universal life and variable life policies.

Life Insurance Companies in India 1. Life Insurance Corporation of India Life

Insurance Corporation of India (LIC) is a Government of India enterprise, and is the largest life insurance company. LIC had been established in 1956, after the Life Insurance Corporation Act had been passed by the Parliament of India in the same year. It also provides savings features along with various insurance policies. LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance. LIC with its massive corpus is also the largest investor in the Indian market. LIC continues to be the best insurance company in India just because of its track record and the high trust it is held in. Private life insurance companies in India like the Car Insurance Companies are held in low trust and it is true considering the harassment and the low claims percentage that these companies give out. Even if LIC cant manage to give the polish of the private insurers, its scores on delivery which the only thing that matters. 2. TATA AIG - Tata AIG Life Insurance Company Limited is a joint venture between the Tata Group and American International Group, Inc. The Tata Group holds 74 per cent stake in the insurance venture with AIG holding the balance 26 percent. Tata AIG General Insurance Company, which started its operations in India in 2001, provides insurance solutions to individuals and corporate. It also offers a complete range of general insurance products including

insurance for automobile, home, personal accident, travel as well as several specialized financial lines. 3. Bajaj Allianz Bajaj Allianz life Insurance Company Limited is a joint venture between Bajaj Fin serve Limited (recently demerged from Bajaj Auto Limited) and Allianz SE. Bajaj Allianz has made a profit before tax of Rs. 180 crores and has become the only private insurer to cross the Rs.100 crore mark in profit before tax in the last four years. Today, Bajaj Allianz is one of Indias leading and fastest growing insurance companies. 4. Reliance Life Insurance Ltd. -It is a part of Reliance Capital Ltd (ADAG Group) which one of Indias leading private sector financial services companies. In just 2 years, the Company has crossed the mark of 1.7 Million policies. It is one of Indias leading private insurance companies with over 94 customized insurance products catering to the corporate, SME and individual customers. Reliance Life Insurance is not only one of Indias fastest growing life insurance companies, but also counts among the top 4 private sector insurers. 5. Birla Sun life Insurance .- Birla Sun Life Insurance Co. Ltd. is a joint venture between Aditya Birla Group and Sun Life Financial Inc. This insurance company has pioneered the unique Unit Linked Life Insurance Solutions in India. Within 4 years of its launch, BSLI became one of the leading players in the industry of Private Life Insurance. 6. HDFC Standard Life Insurance It is a joint venture between HDFC Limited and a Group Company of the Standard Life Plc, UK. The Company is one of leading private insurance companies, offering a range of individual and group insurance solutions, in India. Being a joint venture of

top financial services groups, HDFC Standard Life has adequate financial expertise to manage long-term investments safely and resourcefully. The Companys business premium income stood at Rs. 1,839.70 Crores in 2008; it has covered over 812,811 lives so far. 7. ICICI Prudential Life Insurance - It is a joint venture between ICICI Bank and Prudential plc, which is a leading international financial services. ICICI Prudential began the operations in December 2000. It has been voted as Indias Most Trusted Private Life Insurer for three consecutive years. ICICI Prudential Life Insurance Company has various insurance plans that have been designed for different individuals, as every individual has different insurance needs. 8. ING Vysya Life Insurance It is a joint venture between Vysya Bank, which is one of the largest private sector banks in India, and ING Insurance Co., which is the worlds second largest life insurance company. It presently has around 4.5 lakh customers. 9. Max New York Life Insurance -It is a joint venture between Max India Limited, which is a multi-business corporate, and New York Life International, which is a Fortune 100 company . Max New York Life offers a variety of flexible products covering both life and health insurance including 8 riders that can be customized to over 800 combinations 10. Met Life India Insurance Co. Pvt. Ltd. It is a joint venture between MetLife Group and its Indian partners, are J&K Bank, Dhanalakshmi Bank, Karnataka Bank, Karvy Consultants, Geojit Securities, Way2Wealth, and Mini Muthoothu. MetLife is 88 of the top one-hundred FORTUNE

500 companies. MetLife entered Indian insurance sector in 2001. 11. Kotak Mahindra Old Mutual Life Insurance Ltd. Joint venture between Kotak Mahindra Bank Ltd. (KMBL), and Old Mutual plc. Kotak Mahindra Old Mutual Life Insurance Ltd. is a company which offers Life Insurance products. It is one of Indias most rapidly growing insurance companies. 12. Aviva Life Insurance- It is a private insurance

company, formed by a joint venture between the Aviva insurance group of UK and the Dabur group of India. Aviva holds 26 percent stake and the Dabur group holds the balance 74 percent share in the joint venture. Aviva is also known as the fifth largest insurance group in the world. At the time of nationalization, Aviva was the largest foreign insurer in India in terms of the compensation paid by the Government of India. 13. Shriram Life Insurance - IT is a joint venture of the Shriram Group of India and SANLAM of South Africa. The group offers several policies catering to various needs of the policy holders. Along with life insurance, distinct policies cover subjects like child education, retirement funds, marriage of children, expectation of high returns etc. 14. Sahara India Life Insurance Company Ltd. Was granted license by IRDA in 2004. It is the first wholly Indianowned company in the Indian life insurance market without any collaboration with the organizations abroad. The paid up capital of the insurance company at the time of its commencement was Rs 157 Crore. The company offers both individual and group insurance products.

15.

Bharti AXA Life Insurance - It is a joint venture

between Bharti and AXA global leader in financial protection and wealth management. Bharti AXA Life Insurance has a 74% stake from Bharti and 26% stake of AXA in the joint venture. The Company launched its operations in India in 2006.With the continuous expansion, Bharti AXA Life Insurance is making itself proactive to cater to insurance and wealth management needs of people. 16. Future Generali India Life Insurance. It is one of the rapidly growing Insurance companies in India. The Company is a joint venture between the India-based Future Group and the Italy-based Generali Group. Future Generali group is present in both the Life and Non-Life businesses in India. 17. IDBI Fortis Life Insurance - It is a joint venture of IDBI Bank, Federal Bank (India) and Fortis Insurance International. IDBI has a 48% stake in the venture, while Fortis and Federal Bank 26% stake each. While IDBI and Federal Bank are major Indian banks, Fortis has the expertise of bancasurance across global markets. IDBI Fortis Life Insurance has become 18th life insurer in India. 18. Canara HSBC Oriental Bank of Commerce Life Insurance Canara Bank, HSBC Insurance (Asia-Pacific) Holdings Limited and Oriental Bank of Commerce (OBC), together established an insurance company. Canara Bank holds 51% equity while the holdings of HSBC and OBC are 26% and 23%, respectively. 19. AEGON Religare Life Insurance Company . - It is a joint venture of AEGON, Religare and Bennett, Coleman & Company. One of the pioneers in offering low cost term plans online.

20.

DLF Pramerica Life Insurance Company -It has

been formed by the collaboration between DLF Limited and Prudential International Insurance Holdings, Ltd. (a fully owned subsidiary of Prudential Financial, Inc.). The insurance company aspires to become a significant player in the growing Indian life insurance market. 21. Star Union Dai-ichi Life Insurance It is a joint endeavor of Bank of India and Union Bank of India (two major Public Sector Banks in India) and Dai-ichi Mutual Life Insurance Company. It has an initial capital of Rs. 250 crores, of which Bank of India has a 51% stake, Union Bank of India has 23% and Dai-ichi Life holds 26% stake. The company is expected to be a strong contender in the insurance sector, taking into consideration its insurance, IT, finance and investment resources. The enterprise offers various products to serve all sections of the society. In India, Insurance is a national matter, in which life and general insurance is yet a booming sector with huge possibilities for different global companies, as life insurance premiums account to 2.5% of Indias GDP. The Indian Insurance sector has gone through several phases and changes, especially after 1999, when the Govt. of India opened up the insurance sector for private companies to solicit insurance, allowing FDI up to 26%. Since then, the Insurance sector in India is considered as a flourishing market amongst global insurance companies. However, the largest life insurance company in India is still owned by the government. The Insurance Industry has grown (premium as percentage of GDP) from 2.3 per cent in 2001 to 5.2 per cent in 2011.The report estimates the total insurance premium at approximately Rs $350-400 billion in

2020 with Life Insurance making 90% of the premiums. The profitability of the industry is negative as they have spent their energies in expanding their base in a rapidly growing market without concentrating on the margins leading to a cumulative loss by private insurers of around $3.5 billion. However the huge size of the insurance market which has been estimate at an astounding $350 billion in premium by 2020 is attracting companies in droves. Almost all major global insurance companies have a presence in India through JV (as government regulations only allow 26% holding). Major Indian Banks and Finance Companies too have a presence in the sector through JV with foreign partners who bring the expertise.

Dominance in market : LIC All this time, we find a dominant position being enjoyed by state owned LIC in life insurance market. This has to be substantiated to prove its dominance in the relevant market. In India, LIC is the only state owned enterprise working in life insurance sector. There are several private players in this market but only one state owned enterprise. To say that private players have some catching up to do with LIC would be an understatement of sorts. After all, given the massive head start the latter has over the private insurers, coupled with its army of agents that gives it enormous distribution leverage, its strength is staggering, to say the least. Moreover, as the private players have been around for only for few years, it would not be possible for them to make a substantial dent in LIC's market-share either. A look at the business underwritten by all the players, including LIC indicates that LIC continues to be the dominant player in the life insurance business. Prior to the opening up of private participation in

August 2000, the insurance sector was government monopoly consisting of LIC and GIC with its four subsidiaries. Now there are several new Life insurance companies and General life insurance companies. LIC has huge investment and financial strength. Owing its bigger size it has the best advantage of pricing as well as getting better investment returns which can subsidies its original insurance product. Therefore, Like SBI continues to be market leader despite of so many private banks coming, LIC is still the big player. LIC is said to have a dominant position in insurance market and the factors leading to distortion in level playing field are as follows :1. Sovereign Guarantee LIC has sovereign guarantee from central government. By sovereign guarantee, Government gives the policy holders of LIC a commitment that it will fulfill all the Promises made by the company. Private players and insurance regulator IRDA have been asking the government to remove sovereign guarantee given to LIC to create level playing field. The committee finds no merit in the demand of the private sector insurance players for reducing or doing away with the sovereign guarantee on LICs policies, said the committee In its report of the LICs (amendment) Bill 2009.In the bill the government had sought to replace the 100 per cent sovereign guarantee by to the extent as the central government may, by order from time to time. In 1956, when life insurance industry was nationalized, Parliament directed LIC to take the

Message of Life insurance to every part of the country. It also directed the government to guarantee the sums assured under all policies issued as well as taken over by the corporation (section 37 of LIC act). Some forces are lobbying vigorously for the withdrawal of the guarantee which will later twist the facts and launch a publicity blitzkrieg, stating that it is a proof of the Governments loss of confidence in the ability of the corporation to survive competition, and succeed in impairing its image. The consequences that follow may affect millions of families in the country. LIC enjoys this dominance because it is obvious that investors want a guarantee of their money irrespective of cycles of market. They know that it would be a safe play to investing LIC as the government guarantee to bail out in case of any mishap. This denies the life insurance market from a level playing field to the competitors. The private players have been in the market for 10 years now but could not bring a big change in market share of life insurance. Peoples trust is build up with LIC due to such sovereign guarantee. I do not deny the fact that LIC has not used this benefit of sovereign guarantee but this definitely helps They grow their market size because of the faith people lay in them being a state owned enterprise. Not only the employees of LIC, but every member of the public should therefore appeal to the Government to understand the game plan of these forces, lobbying for the withdrawal of the Government guarantee to this national institution. Sovereign guarantee reduces the sector from healthy competition and gives an undue advantage to LIC to attain the faith of people due to which other private players suffer a loss. Through the LIC Act of1956, government provides sovereign guarantee to LIC which comforts approximately 16 Crore policy holders and its withdrawal would require an amendment to the LIC Act, 1956.

2. Distribution network The distribution network is most important in insurance industry. Insurance is not high cost industry like telecom sector. Therefore it is building its market on goodwill and access on distribution network. We cannot deny that insurance are not bought, it is sold. The industry covers approx. 3% of the population of our country. The market has a great scope to grow. This can be better done by more innovative channels like super market, a bank, a post office, an ATM, departmental store etc. these could bemused to increase channels of insurance. But such growth in channels shall increase with time. Till than agents seem to be the most important distribution channel in this industry. Agents connect with people and influence them to buy any insurance policy. For the same such agents charge commission on the policies they get for the company. There is a fixed percentage of commission for which these agents work. It is important to mention that the IRDA regulation which says that one agent can enrol with only one insurance company. This leads to narrowing down of exposure to customers to various products. When I go to a shop, I get all varieties to choose from. Similarly, agents are like a shop where consumer looks for options of insurance Available. Such a policy leads to leveraging of distribution network. This plays as an advantage for LIC. In life insurance, the LIC has two important elements in its favor which are as follows: The LIC has vast distribution network in the rural and semi rural urban areas. This would be hard to duplicate. One potential way to duplicate it could be increasing other distribution network like banc assurance.

Also, since LIC started with 100% of market share, it will lose market share simply because of expansion of market itself and less because of loss of existing customers.

LIC has attempted to enlarge the distribution channels to build a real marketing Environment by involving cooperatives and panchayats in its market areas. The IRDA regulations on agents recruitment, qualification and training make the task easier for LIC (Locking in its agents). Distribution channel is an important stimulant of competition in market. In India, An agent can work for only one insurer. LIC has more than 10 lakh agents which are supposedly to grow more in future which in comparison to private players is Mammoth. The new players have comparatively few agents. The policy of IRDA Hinders distribution network. It leads to an exclusionary behavior of distribution Network. Such behavior gives LIC a dominant position in the market. I would like to explain the market factors influencing decision to purchase insurance through some statistics. There are several factors which influence customers to choose any life insurance like agents, advertisement, co-workers, friends and family. It is important to mention here that agents cover 55% market factor influencing purchase of insurance. Also it is important that LIC spends Rs.116 crore in 2008 where as major players like Bajaj Allianz and ICICI Prudential are Rs.17.7 cr and 15.4 cr respectively. With more market share, it is Obvious that LIC has better capacity to invest more on advertisement which leads them to dominate the market much more than other

players. There is an exclusively distribution network which is helping to build LICs core strength This needs to be made accessible to give a level playing field to all market players. Section 4(2) (c) of the act specifically mentions that an enterprise shall be deemed to abuse its dominant position if it indulges in practice resulting in denial of market access in any manner. Here the market access is denied through distribution network which is more exclusionary in nature. Also it is very important to mention that such exclusionary behavior makes agents charge a Very heavy commission which creates a pressure on customers, miss-sold and leads to poor service. Customers are not well informed due to such a practice. There is a robust agent network of LIC which needs to be broken by IRDA. IRDA needs to regulate such provision and allow agents to sell all insurance because it is important that customers get a variety from such source. If agents are allowed to sell more than one insurance, customers will get more Informed and get more exposure to market. 3. Other factors It has been reported several times through several journals that every time the stock market falls sharply; government asks LIC to step in as a buyer to curtail the fall in the market. Its investment decision is influenced by the government last year. LIC has to follow the guidelines of IRDA and there is a proper system to take investment decisions. There has been incidence where it seems that LIC gets offers from big Companies as well to pump in money in market when they are in need of cash. This gives LIC a dominant position as it acts as a savior during crisis due to its surplus liquid cash reserve. Nevertheless, it cannot be denied that LIC is a government agency and is therefore trusted by a lot of companies and has a lot of share in

these companies. Therefore it has a major role to play in influencing the decisions of such companies and big market players.

Non-Life Insurance in India What is General/Non-Life Insurance?

Insurance other than Life Insurance falls under the category of General Insurance. General Insurance comprises of insurance of property against fire, burglary etc, personal insurance such as Accident and Health Insurance, and liability insurance which covers legal liabilities. There are also other covers such as Errors and Omissions insurance for professionals, credit insurance etc.

Non-life insurance companies have products that cover property against Fire and allied perils, flood storm and inundation, earthquake and so on. There are products that cover property against burglary, theft etc. The non-life companies also offer policies covering machinery against breakdown, there are policies that cover the hull of ships and so on. A Marine Cargo policy covers goods in transit including by sea, air and road. Further, insurance of motor vehicles against damages and theft forms a major chunk of non-life insurance business.

In respect of insurance of property, it is important that the cover is taken for the actual value of the property to avoid being imposed a penalty should there be a claim. Where a property is undervalued for the purposes of insurance, the insured will have to bear a rateable proportion of the loss. For instance if the value of a property is Rs.100 and it is insured for Rs.50/-, in the event of a loss to the extent of say Rs.50/-, the maximum claim amount payable would be Rs.25/- ( 50% of

the loss being borne by the insured for underinsuring the property by 50% ). This concept is quite often not understood by most insureds.

Personal insurance covers include policies for Accident, Health etc. Products offering Personal Accident cover are benefit policies. Health insurance covers offered by non-life insurers are mainly hospitalization covers either on reimbursement or cashless basis. The cashless service is offered through Third Party Administrators who have arrangements with various service providers, i.e., hospitals. The Third Party also provide service for reimbursement claims. Administrators

Sometimes the insurers themselves process reimbursement claims.

Accident and health insurance policies are available for individuals as well as groups. A group could be a group of employees of an organization or holders of credit cards or deposit holders in a bank etc. Normally when a group is covered, insurers offer group discounts.

Liability insurance covers such as Motor Third Party Liability Insurance, Workmens Compensation Policy etc offer cover against legal liabilities that may arise under the respective statutes Motor Vehicles Act, The Workmens Compensation Act etc. Some of the covers such as the foregoing (Motor Third Party and Workmens Compensation policy ) are compulsory by statute. Liability Insurance not compulsory by statute is also gaining popularity these days. Many industries insure against Public liability. There are liability covers available for Products as well.

There are general insurance products that are in the nature of package policies offering a combination of the covers mentioned above. For instance, there are package policies available for householders, shop keepers and also for professionals such as doctors, chartered accountants etc. Apart from offering standard covers, insurers also offer customized or tailor-made ones.

Suitable general Insurance covers are necessary for every family. It is important to protect ones property, which one might have acquired from ones hard earned income. A loss or damage to ones property can leave one shattered. Losses created by catastrophes such as the tsunami, earthquakes, cyclones etc have left many homeless and penniless. Such losses can be devastating but insurance could help mitigate them. Property can be covered, so also the people against Personal Accident. A Health Insurance policy can provide financial relief to a person undergoing medical treatment whether due to a disease or an injury.

Industries also need to protect themselves by obtaining insurance covers to protect their building, machinery, stocks etc. They need to cover their liabilities as well. Financiers insist on insurance. So, most industries or businesses that are financed by banks and other institutions do obtain covers. But are they obtaining the right covers? And are they insuring adequately are questions that need to be given some thought. Also organizations or industries that are self-financed should ensure that they are protected by insurance.

Most general insurance covers are annual contracts. However, there are few products that are long-term.

It is important for proposers to read and understand the terms and conditions of a policy before they enter into an insurance contract. The proposal form needs to be filled in completely and correctly by a proposer to ensure that the cover is adequate and the right one. CURRENT SCENARIO OF NON-LIFE INSURANCE IN INDIA.

Non-life insurers log 27 percent business growth in May 2011

The Indian non-life insurance sector logged around 27 percent business growth in May 2011 over the corresponding period in 2010, as per the figures released by the Insurance Regulatory and Development Authority (IRDA). The 24 non-life insurers booked a total premium of around Rs.4,004 crore last month as compared to Rs.3,144 crore earned in May 2010. The six government owned insurers - Agriculture Insurance, the Export Credit Guarantee Corporation of India (ECGC), National Insurance, New India Assurance, United India Insurance and Oriental Insurance earned a total premium of Rs.2,358.60 crore. The city-based United India led the industry earning a premium of Rs.624.90 crore and is followed by National Insurance with Rs.584.45 crore, New India Rs.574.56 crore and Oriental Insurance Rs.456.37 crore.

Among the 18 private non-life insurers, ICICI Lombard led the pack earning Rs.329.26 crore and was followed by Bajaj Allianz Rs.264.98 crore, Reliance General Rs.156.59 crore and IFFCO Tokio Rs.139.60 crore. The three pure play health insurers - Star Health and Allied Insurance, Apollo Munich and Max Bupa booked a total premium of Rs.56.94 crore last month up from Rs.31.34 crore earned in May 2010. Leading the health insurer's pack is the city based Star Health with a premium of Rs.31.36 crore and is followed by Apollo Munich Rs.20.36 crore and Max Bupa Rs.5.22 crore.