FINAL RESEARCH REPORT

ON

TOPIC - PROJECT ON STUDY AND ANALYSIS OF THE INDIAN

INSURANCE SECTOR

COURSE NAME/ CODE – MBA / OBA310 FINAL RESEARCH REPORT

SUBMITTED IN PARTIAL FULFILMENT

FOR THE REQUIREMENTS OF THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION (MBA)

INSTITUTE OF DISTANCE & ONLINE LEARNING

CHANDIGARH UNIVERSITY, DISTT MOHALI

PUNJAB

SUBMITTED TO: SUBMITTED BY:

Institute of Distance & Online Learning STUDENT NAME: APARNA

MBA Programme UID: D21MBA16059

Chandigarh University MBA Batch -Jan 2021

Dist. Mohali, Punjab

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 ACKNOWLEGMENT

It is a matter of pleasure for me to thank all the persons who have contributed directly or
indirectly towards the successful completion of my report with the title “PROJECT ON
STUDY AND ANALYSIS OF THE INDIAN INSURANCE SECTOR”.

At the very outset, I would like to offer a token of heartfelt gratitude to the management
and teachers at Institute of Distance and Online Learning at Chandigarh University for
granting me a learning opportunity on how to work towards a report.

This acknowledgement would not be complete without expressing gratitude to my

Family and friends who stood by me through all the trying hours, dilemma and panic.

Name of student- APARNA

UID No. - D21MBA16059

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 STUDENT DECLARATION

I hereby declare that my Report titled PROJECT ON STUDY AND ANALYSIS OF

THE INDIAN INSURANCE SECTOR is a bonafide record of the project work which

I have submitted to Institute of Distance Education and Online Learning, Chandigarh

University in partial fulfillment of the credit requirements for the degree of Master of

Business Administration is my authentic work. This project report has not been copied,

duplicated or plagiarised from any other paper, journal, document or book and has not

been submitted to any educational institute or otherwise for the award of any certificate,

diploma, degree or recognition.

This is an authentic piece of work and in case there is any query regarding the same, I

shall be held responsible for answering any queries in this regard.

Name of student: APARNA

UID No.- D21MBA16059

Place: - HARYANA

Date Page | 3
 Table of Content

S.NO CHAPTER NAME PAGES

1 CHAPTER 1: INTRODUCTION 5-10

1.1 Background of the study 5

1.2 Objectives of the study 7

1.3 Research methodology 8

1.4 Review of the Literature on the Insurance Industry of 8

India
1.5 Limitations of the study 10

1.6 Chapter Planning 10

2 CHAPTER 2: CONCEPTUAL FRAMEWORK 11-20

2.1 National Scenario of Insurance Industry 11

2.2 Insurance Industry in Global Scenario 15

3 CHAPTER 3: PRESENTATION OF DATA 20-57

ANALYSIS AND FINDINGS

3.1 Market Share of Life Insurance Companies 20

3.2 Study of Private Insurers Vs LIC of India (in terms 25

of Premium)
3.3 The Present of Insurance Sector in India 28

3.4 Performance of Life Insurance Companies of India - 32

20 Vs 20
3.5 Role of Agents in Life Insurance Industry 42

3.6 Claim settlement in the Life Insurance industry 47

3.7 Flagship schemes of Govt. of India 52

3.8 Findings 57
4 CHAPTER 4: CONCLUSION 58-62

4.1 Conclusion 58

4.2 Recommendation and suggestion 60

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  CHAPTER 1 -INTRODUCTION

1.1: Background of the study:

The insurance industry is critical for any country’s economic development. A well-Developed insurance

sector boosts risk-taking in the economy, as it provides some Security in the event of an unforeseen, loss

causing incident. It also provides much-Needed support to family members in the case of loss of life or

health as well as for an Entity it provides financial protection or reimbursement against losses from an

insurance Company.

Categories of Insurance

Life Medical Health General

Endorsement Whole life

Pension / Annuity Contracts

With profit or without profit GIC

for fixed amounts on maturity
LIC

In India, the insurance sector operates under the aegis of the Ministry of Finance and is regulated by the

Insurance Regulatory and Development Authority of India (IRDAI). The Insurance sector plays a critical

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role in country’s economic development. It acts as a Mobilizer of savings, a financial intermediary, and a

promoter of investment activities, a Stabilizer of financial markets and a risk manager.

India’s Insurance industry is one of the premium sectors experiencing upward growth. This upward growth

of the insurance industry can be attributed to growing incomes and increasing awareness in the industry.

India is the fifth largest life insurance market in the world's emerging insurance markets, growing at a rate

of 32-34% each year. In recent years the industry has been experiencing fierce competition among its peers

which has led to new and innovative products within the industry. Foreign Direct Investment (FDI) in the

industry under the automatic method is allowed up to 26% and licensing of the industry is monitored by

the insurance regulator the Insurance Regulatory and Development Authority of India (IRDAI).

The insurance industry of India has 57 insurance companies - 24 are in the life insurance business, while

34 are non-life insurers. Among the life insurers, Life Insurance Corporation (LIC) is the sole public sector

company. There are six public sector insurers in the non-life insurance segment. In addition to these, there

is a sole national re-insurer, namely General Insurance Corporation of India (GIC Re). Other stakeholders

in the Indian Insurance market include agents (individual and corporate), brokers, surveyors and third party

administrators servicing health insurance claims.

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 OBJECTIVES OF INSURANCES

1. Family of insured is protected.

2. Provision of retirement and old age.

3. To provide funds for education, marriage and donations to charitable institutions like hospitals and

schools.

4. To get tax relief form income tax, wealth tax and gift tax, the premium paid as well as the sum

assured.

5. To insure own life or those of any other members of the family.

6. Installment payments in quarterly or monthly basis in addition or as alternative to yearly payments.

1.2: Objectives of the study:

Below mentioned are some of the objectives of the study:-

 To understand the national and international scenario of the insurance industry.

 To understand the competitiveness in insurance industry with the help of Comparative study.

 To know the recent market structure and size of both public and private Insurance sector.

 To understand the different types of premium for insurance industry.

 To understand the importance of agency in insurance industry.

 To understand the claim settlement in the insurance industry.

 To know the flagship schemes launched by the government.

 To know the recent developments in the insurance sector.

 To know the government initiatives / policies taken for the betterment of the Insurance industry.

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1.3: Research Methodology:

The study on the Insurance Industry of India was done on the basis of SECONDARY DATA. Secondary

data has contributed in a significant way to understand the scope as well as it helped in developing the

conceptual framework.

The present study is a combination of both exploratory and descriptive literature review types and was

entirely based on published secondary data. Literature searches were performed using Google Scholar,

Research Gate, ProQuest, and Scopus databases for articles published between 2020 and 2022. The study

also used various annual reports of the Insurance Regulatory and Development Authority of India (IRDAI),

the internet, newspaper articles, and company websites for the study.

Chapter 3 has been devoted to secondary data analysis.

Basically the analysis of data is done through comparative study between the public and Private insurance

sector, on the basis of market share, in terms different types of Premium, performance, role of the insurance

agents, claim settlement and flagship Schemes launched by the Government of India. For this study some

secondary data sources are collected from publications of IRDAI and LIC etc. Annual reports, journals and

articles regarding to the Indian insurance Sector.

1.4: Review of the Literature on the Insurance Industry of India

1. Global Index Insurance Facility (2016) in its report “When and How Agricultural Insurance

Should be subsidized? Issues And Good Practices” discussed how to avoid the problems regarding

agriculture, any insurance subsidy needs to be carefully designed to be “smart”, in the sense that it

is cost effective in achieving its underlying purpose, minimizes disincentive problems, and does not

become a growing financial burden on the government. At the end they have proposed some best

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 practice guidelines for the design and implementation of subsidized agricultural insurance. (Source:

World Bank Group)

2. Indian Chamber of Commerce (ICC) and Price water house Coopers (PwC) (2017) in its report

“India insurance perspective” stated that India’s robust economy is expected to keep pace with the

growth in insurance premiums written. Higher personal disposable incomes will result in higher

household savings that will be channeled into different financial savings instruments like insurance

and pension policies. (Source: India Insurance Perspective - PwC)

3. Rudra P. Pradhan, Mak B. Arvin, Mahendhiran Nair, John H. Hall, Atul Gupta (2017) in their article

“Is there a link between economic growth and insurance and banking sector activities in the G-20

countries?” discussed about by using the vector auto-regression model and the Granger causality test,

the study shows that in the long run, developments in the banking sector and insurance industry have

had a significant impact on the economic growth of the G-20 countries. In the short term, the inter-

relationships between the three factors prove to be more complex in that they differ by countries in

different stages of development. (Source: Review of Financial Economics)

4. Prasanna Rajesh (2019) in his book “Valuation of Indian Life Insurance Companies” bridges the

gap between the accounting and the actuarial sides of Indian life insurance companies, by exploring

the relationships between the embedded value calculated by actuaries and the revenue account and

balance sheet prepared by the accountants. (Source: Orilley)

5. J. D. Chandrapal (2019) in his article “Impact of liberalisation on Indian life insurance industry: A

truly multivariate approach” discussed that with the passage of the Insurance Regulatory and

Development Authority (IRDA) Bill, The Government of India has liberalized the insurance sector in
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 March 2000. Thus entry restrictions lifted and foreign players were allowed to enter in the Indian

insurance industry with their domestic partners with FDI Capital of 26 per cent. Deregulation and

liberalization has revolutionized insurance sector in India. (Source: IIMB Management report)

1.5: Limitations of the study:

Below mentioned are some of the limitations of the study:-

 Lack of detailed study on the sector due to secondary source perspective.

 Some of the data analysis on life insurance industries are encrypted and Therefore presenting of data

makes it difficult.

 Lack of initiatives from the Private insurance companies in terms of flagship Schemes for poor peoples.

 Many company has low percentage of Claim settlement.

 Lack of data available on website.

 Preparation of such detailed project work within limited pages.

 Preparation of such detailed project within short span of time.

1.6: Chapter Planning:

 Chapter 1| Introduction

 Chapter 2| Conceptual Framework

 Chapter 3| Presentation of Data, Analysis and Findings

 Chapter 4| Conclusion and Recommendation

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  CHAPTER 2: CONCEPTUAL FRAMEWORK

2.1: National Scenario of Insurance Industry:

The life insurance industry in India is regulated by the Insurance Regulatory and Development Authority

(IRDA). Twenty four Life Insurance companies are licensed to do Insurance Business in India. Out of these

companies, Life Insurance Corporation of India (LIC of India) is the only public sector company.

The opportunity for Insurance in India continues to be huge, given the low insurance penetration and

density in India. FY22 witnessed a 14 % YOY growth in Life Insurance, 11 % YOY Growth in overall

General Insurance and 25% YOY Growth in Health Insurance.

But beyond the numbers, the last two years of the pandemic have fundamentally transformed the sector

and accelerated the pace of change – from the perspective of insurers, the healthcare ecosystem,

consumers, and the regulator. This can have a long-lasting positive impact on healthy business growth,

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increased insurance penetration, product and process innovation, and, most importantly, customer

experience.

 Life Insurance:

The Indian Life Insurance sector has grown at a CAGR of more than 10 percent over the past few

years, faster than the average global growth rate. Still, the gap between India and the Asian

economies concerning the insurance density and penetration levels indicates a significant growth

opportunity.

The top five players hold over 85 percent market share, while the remaining companies

make up a long tail.

Last year’s growth in collected ‘New Business Premium’ is backed by a rise in group single

premium and group yearly renewable premium. This is coupled with robust growth in the

individual insurance segment driven by the development of strong distribution channels.

COVID has brought the spotlight on the need for protection. This also applies to employers

seeking to provide more reassurance to their employees; hence, we see more demand for

Protection products - Individual and Group. Also, given the market volatility, ULIPs have seen

muted growth, and customers are looking for solutions offering guaranteed returns and assured

savings.

In the future, the focus will be on growth (estimated 12-14%) over the next five years, which is

expected to be driven by group products, individual pensions, and life cover products.

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 General Insurance and Health Insurance:

The story in General Insurance is about Health Insurance now being the dominant product

segment after it took over motor insurance, driven by the increased awareness and demand created

by the pandemic. The supply challenges in the automotive industry impacted Motor Insurance

Third Party premiums. Health segment premiums have grown by 25 %, while motor segment

premiums have grown by 3 %. Crop Insurance, which has seen some profitability concerns, was

the third dominant product segment.

ICICI Lombard’s acquisition of Bharti AXA General Insurance helped it become the second-

largest Insurer behind National Insurance. Five standalone Health Insurance companies clocked a

32% growth compared to the 25% growth for the health segment overall.

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As business levels bounce back, one can expect Commercial Insurance to grow faster than pre-

COVID levels. Similarly, increasing distribution penetration and recovery in the automotive sector

will see Motor Insurance picking up, focusing on increased digitalization in the customer journey

from sales to service to claims.

However, Health Insurance will continue to gain prominence. 63% of total Healthcare spending is

still out-of-pocket expenses. While premiums will continue to get adjusted upwards due to the

high claims experience over the past two years and the rising cost of healthcare, there will be

innovation and customization in products to provide more value to customers in managing their

health, viz., benefit plans and riders, the inclusion of OPD expenses, critical illness coverage,

wellness programs, etc.

In General Insurance, insurers are partnering with Insures to offer solutions and seamless

experience across the entire customer journey – distribution, service, and claims. There is a

dependency on the healthcare ecosystem for health insurance claims, one area where a lot of work

needs to be done. While InsurTechs are partnering with hospitals and insurers to provide seamless

CX, the National Health Stack has the potential to be a game-changer and set global standards in

this space. Insurers will have to be proactive to take advantage of this opportunity.

Industry Level

At an overall Insurance industry level, customer preference for effortless processes and digital

channels will continue to rise.

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 Digital enablement at the last mile for sales will drive the distribution penetration. Insurers will

focus on expanding service channels, providing more engagement options – physical branches,

phone-based contact centers, chatbots, WhatsApp, Mobile Apps, social media, etc. Customer

experience and engagement will be the focus with significant investments in digitalization.

Insurers must transition out of legacy platforms by collaborating with ecosystem players. Niche

players with a digital-only approach will capture key customer segments.

2.2 Global Scenario of Indian Insurance Company

India's Insurance Industry has experienced immense growth in recent years. India is one of the fifth largest

life Insurance market in the world and has become of the most prominent emerging insurance markets

globally. This growth in the Insurance industry has been fuelled by increasingly favorable government

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policies, rising incomes, and increasing financial awareness among the middle class. In recent years, the

industry has experienced a rise in competitiveness with a rapid rise in innovation and new product offerings.

India has also experienced a significant rise in insurance-related startups and an increase in foreign

investments. In 2021, the government increased the FDI limit of India's insurance industry from 49% to

74%. This was considered a boon for foreign players in India's insurance industry and helped fuel product

innovation and thus aiding in increased insurance penetration. India's insurance industry currently has 24

life insurance companies. Out of these companies, 23 belong to the private sector. One of the most

prominent companies in India's life insurance industry is the Life Insurance Corporation of India (LIC).

LIC has played a significant role in driving India's insurance penetration and expanding the industry's reach.

 Size of India's Insurance Industry

In recent years India's insurance industry has experienced significant growth. The Life insurance

industry has seen a rapid rise in New Business premiums. India's Life insurance sector controls

more than Rs. 46,449 crores (US$ 5.68 billion) of deployed capital, has managed assets worth Rs.

5,249,271 crores (US$ 641.98 billion), and has infrastructural investments worth Rs. 458,614

crores (US$ 56.08 billion). As of March 2022, the industry has been able to generate direct

employment for more than 3.55 lakh people and has more than 24.43 lakh agents. The industry

has also experienced a significant rise in product innovation. The total number of products in

India's Life insurance industry rose from 665 in March 2020 to 800 in March 2022. Currently,

there are 847 products in the Life insurance industry.

New business premiums in the Life insurance industry stood at US$ 38.3 billion in FY22, from US$

26.21 billion in FY19. The life insurance industry's renewable premium also stood at Rs. 377,398

crores (US$ 46.16 billion), out of which Rs. 64,383 crores (US$ 7.87 billion) were linked premiums

and Rs. 313,015 crores (US$ 38.27 billion) were unlinked premiums.

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India's Insurance Industry has experienced immense growth in recent years. India is one of the fifth largest

life Insurance market in the world and has become of the most prominent emerging insurance markets

globally. This growth in the Insurance industry has been fuelled by increasingly favorable government

policies, rising incomes, and increasing financial awareness among the middle class. In recent years, the

industry has experienced a rise in competitiveness with a rapid rise in innovation and new product offerings.

India has also experienced a significant rise in insurance-related startups and an increase in foreign

investments. In 2021, the government increased the FDI limit of India's insurance industry from 49% to

74%. This was considered a boon for foreign players in India's insurance industry and helped fuel product

innovation and thus aiding in increased insurance penetration. India's insurance industry currently has 24

life insurance companies. Out of these companies, 23 belong to the private sector. One of the most

prominent companies in India's life insurance industry is the Life Insurance Corporation of India (LIC).

LIC has played a significant role in driving India's insurance penetration and expanding the industry's reach.

 Key Factors triggering the growth of insurance markets in India:

Various factors have triggered the growth of India's insurance industry. Some of these factors

include:

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 Increased Distribution of Rural Insurance:

Including the uninsured rural areas and the urban poor in insurance coverage is crucial to enhance

insurance penetration in India. Insurance companies provide creative, affordable insurance

solutions that correspond to the market. The government of India also introduced Ayushman

Bharat to provide insurance for India's 10 crore poor and vulnerable families and provides

coverage up to Rs. 5 lakh (US$ 6,117).

 Product innovation, Cost-effective offerings:

For almost all non-life insurance products and some life insurance products, Insurance Regulatory

and Development Authority (IRDAI) has implemented the "use & file" approach. This approach

has aided insurance providers to focus on developing innovative, cost-efficient, and simple retail

insurance products.

 Technology & Innovation:

With the help of big data and digital transformation, the insurance market in India is evolving

rapidly. Technology is being used efficiently to speed up claim processing and settlement, which

reduces turnaround times (TATs) and boosts consumer confidence. Machine learning has the

potential to significantly improve the operations and complaint procedures of insurance firms,

reduce claim fraud, and automate settlements. Technology integration throughout the insurance

sales cycle will revolutionize the market over the coming years and significantly increase

insurance penetration.

 India's Insurtech Industry

The rapid growth in India's insurance industry has aided the rise of Insurtech. The insurtech

industry is essentially the integration of technology into insurance. The integration of insurance

and technology would provide a significant boost for the industry; it will help increase insurance

distribution in the rural segments of India. It will also provide increasingly customizable products

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 for the life insurance industry. Integration of drones, satellites, and big data would aid insurers in

understanding risk more accurately. Integration of technology in the Insurance sector would also

help reduce the friction between claims and settlements and help drive the overall coverage of

India's insurance industry. India's Insurtech industry has experienced significant momentum in

recent years. Funding in Insurtech has doubled in the last 2 years. As of 2021, the total equity

funding in India's Insurtech Industry stood at US$ 800 million and was US$ 10 million in 2016.

Most of the equity funding in India's insurtech industry is concentrated in the general insurance

sector. India currently has three unicorns: Policy bazaar, an application-based policy comparison

and purchase platform; Acko, a digital-first insurance platform; and Digit, a tech-integrated

general insurance startup.

Insurtech industry would help expand the penetration of India's insurance industry and help India's

insurance industry realize its full potential. In July 2018, NITI Aayog introduced the blueprint of the

National Health Stack (NHS) initiative. The National Health Stack (NHS) is a futuristic digital framework

that can be used by both the center and the state in both the public and commercial sectors. It is a

comprehensive platform that supports a wide range of health verticals and their many branches, and it can

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integrate future IT solutions for the Insurance sector. NHS is expected to be a global standard, similar to

UPI.

 Outlook

India's insurance industry has grown at a double-digit growth rate of 12-15% in the last five years.

This has majorly contributed to the increased penetration of India's insurance market. This

tremendous growth in India's insurance sector has resulted from increasing FDI, rising incomes,

awareness, and favorable government policies. Integration of Tech into insurance would be

considered a game changer for the sector and aid India in exploring the full potential of India's

insurance industry. India already has a robust startup ecosystem, and the exploration of new-age

startups in India's insurance industry would be a game changer and help drive the growth of the

Indian insurance ecosystem.

 CHAPTER 3: - PRESENTATION OF DATA ANALYSIS AND FINDINGS

3.1: Market Share of Life Insurance Companies:

From the past 2 decades Privatization in the Insurance sector took place and till now this Sector

continuously increasing its market share in terms of both premium and no. of Policies at a steady pace.

Apart from LIC which is still holding the top position in terms of market share on both the aspects.

 Public Sector:

1. LIC of India: Life Insurance Corporation of India (LICI) is a statutory corporation established in

1956. It came into existence on 1st September, 1956 with the objectives of spreading life insurance

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 more widely and in particular to the rural areas with a view to reach all insurable persons in the

country, providing them adequate financial cover at a reasonable cost.

 Private Sector:

1. HDFC Life: It is a joint venture between Housing Development Finance Corporation Ltd (HDFC)

and Standard Life Aberdeen of United Kingdom. HDFC Life was established in 2000 becoming the

first private sector life insurance company in India.

2. SBI Life: SBI Life Insurance is a joint venture life insurance company between State Bank of India

(SBI), the largest state-owned banking and financial services company in India, and BNP Paribas

Cardif a French multinational bank and financial services.

3. ICICI Prudential Life Insurance: ICICI Prudential Life Insurance Company Limited (ICICI

Prudential Life) is promoted by ICICI Bank Limited and Prudential Corporation Holdings Limited.

ICICI Prudential Life began its operations in fiscal year 2001 and has consistently been amongst

the top players in the Indian life insurance sector. The first insurance company in India to be listed

on NSE and BSE.

The data helps to study about the Market share of Insurance companies in terms of Market share of:

(a) Insurance premium and

(b) No. of policies and to compare it between the Private and Public Insurance companies.

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Interpretation:

Here the market share in terms of insurance premium for the year 2018-19 shows that Life Insurance

Corporation of India (LICI) the only Public Sector Company leads the market with 66.24% share in terms

of premium, whereas in private sector HDFC Life leads the market with 7% share in terms of premium,

SBI Life comes after that with 6.40%, ICICI Prudential with 4.80% and others standing with 15.60%.

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Interpretation:

Here the market share in terms of number of policy for the year 2018-19 shows that Life Insurance

Corporation of India (LICI) the only Public Sector Company leads the market with 74.70% share in terms

of number of policy, whereas in private sector SBI Life leads the market with 5.30% share in terms of

policy, HDFC Life comes after that with 3.40%, ICICI Prudential with 3.12% and others standing with

13.50%.

Life Insurance Corporation of India (LICI) leads the market in terms of both insurance premium collected

with 66.20% and in terms of number of policies with 74.70% during the year 2018-19. The reason behind

this is the vast number of agent working under and providing insurance facilities not only to the urban or

sub-urban people but also to the rural people where other private sectors could not reached till date. Unlike

privates insurance companies LICI have 8 Zonal Offices and number of divisional, branch, mini and

satellite offices across India insuring lives and people face less difficulty in paying premiums or submission

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of any grievances. Another aspect is that as it is a public sector company, therefore people have more trust

as their savings are in safer hands and will surely get their maturity benefits.

 Market Size (2021-22)

The life insurance industry is expected to increase at a CAGR of 5.3% between 2019 and 2023. India’s

insurance penetration was pegged at 4.2% in FY21, with life insurance penetration at 3.2% and non-life

insurance penetration at 1.0%. In terms of insurance density, India’s overall density stood at US$ 78 in

FY21.

Premiums from India’s life insurance industry is expected to reach Rs. 24 lakh crore (US$ 317.98 billion)

by FY31. In FY23 (Until October 2022), premiums from new businesses of life insurance companies in

India stood at US$ 25.3 billion. In October 2022, life insurers’ new business premiums grew to Rs.

15,920.13 crores (US$ 1.94 billion), according to Life Insurance Council data. The gross first-year premium

of life insurers increased by 12.93% in 2021-22 to Rs. 314,262.42 crore (US$ 40.06 billion).

Between April 2021-March 2022, gross premiums written off by non-life insurers reached Rs. 220,772.07

crore (US$ 28.14 billion), an increase of 11.1% over the same period in FY21.

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In May 2022, the total premium earned by the non-life insurance segment stood at Rs. 36,680.73 crore

(US$ 4.61 billion), a 24.15% increase as compared to the same period in the previous year. The market

share of private sector companies in the general and health insurance market increased from 48.03% in

FY20 to 49.31% in FY21. Six standalone private sector health insurance companies registered a jump of

66.6% in their gross premium at Rs 1,406.64 crore (US$ 191.84 million) in May 2021, as against Rs. 844.13

crore (US$ 115.12 million) earlier.

We have taken some top performing Public and Private companies providing Life Insurance facilities to

the people and made a comparative study by analyzing the Market share of Premium and No. of policies

made during the year.

3.2 Study of Private Insurers Vs LIC of India (in terms of Premium):

Insurance premium is a specified amount stipulated by the insurance company, which the insured individual

should periodically pay to maintain the actual coverage of insurance.

Insurance companies offer policyholders a number of options when it comes to paying insurance premium.

Policyholders can generally pay the insurance premium in installments, for example monthly or semi-

annual payments, or they can even pay the entire amount upfront before coverage starts.

Here, the insurance premiums are categorized in the following 5 groups:

1. Individual Single Premium: An individual single premium policy is a type of life insurance policy

wherein a lump sum is paid as premium by an individual instead of the yearly, quarterly or monthly

form of premium payment.

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2. Individual Non-Single Premium: An individual non-single premium policy also known as Regular

premium policy is a type of life insurance policy wherein premium is paid by an individual either

yearly, quarterly or monthly.

3. Group Single Premium: The Single Premium Group Insurance Plan is a non-participating, non-

linked, single premium payment, term insurance policy that is especially catered towards employees

of an organization or members of an affinity/homogenous group.

4. Group Non-Single Premium: Group non-single premium or commonly known as Group regular

premium life insurance is a type of life insurance in which a single contract covers an entire group

of people wherein premium is paid by an individual either yearly, quarterly or monthly. Typically,

the policy owner is an employer or an entity such as a labor organization, and the policy covers the

employees or members of the group.

5. Group Yearly Renewable Premium: Group term life is typically provided in the form of yearly

renewable term insurance. When group term insurance is provided through employer, the employer

usually pays for most (and in some cases all) of the premiums. The amount of coverage is typically

equal to one or two times of annual salary.

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The data provides the Study of Private Insurers Vs LIC of India (in terms of Premium):

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Interpretation:

LIC of India is leading in three categories namely Individual Single Premium, Group Single Premium, and

Group Non-Single premium. On the other hand, Private total is higher in Individual Non-Single premium

and Group-Yearly-Renewable premium.

3.3 The Present of Insurance Sector in India

So far as the industry goes, LIC, New India, National Insurance, United insurance and Oriental are the only

government ruled entity that stands high both in the market share as well as their contribution to the

Insurance sector in India. There are two specialized insurers – Agriculture Insurance Company Ltd catering

to Crop Insurance and Export Credit Guarantee of India catering to Credit Insurance. Whereas, others are

the private insurers (both life and general) who have done a joint venture with foreign insurance companies

to start their insurance businesses in India.

 Life Insurance Companies:

Private Sector Companies

1) Aegon Life Insurance Co. Ltd.

2) Aviva Life Insurance Co. India Ltd.

3) Bajaj Allianz Life Insurance Co. Ltd.

4) Bharti AXA Life Insurance Co. Ltd.

5) Birla Sun Life Insurance Co. Ltd.

6) Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd.

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7) DHFL Pramerica Life Insurance Co. Ltd.

8) Edelweiss Tokio Life Insurance Co. Ltd

9) Exide Life Insurance Co. Ltd.

10) Future Generali India Life Insurance Co. Ltd.

11) HDFC Standard Life Insurance Co. Ltd.

12) ICICI Prudential Life Insurance Co. Ltd.

13) IDBI Federal Life Insurance Co. Ltd.

14) IndiaFirst Life Insurance Co. Ltd

15) Kotak Mahindra Old Mutual Life Insurance Ltd.

16) Max Life Insurance Co. Ltd.

17) PNB MetLife India Insurance Co. Ltd.

18) Reliance Life Insurance Co. Ltd.

19) Sahara India Life Insurance Co. Ltd.

20) SBI Life Insurance Co. Ltd.

21) Shriram Life Insurance Co. Ltd.

22) Star Union Dai-Ichi Life Insurance Co. Ltd.

23) Tata AIA Life Insurance Co. Ltd.

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  General Insurance Companies:

Private Sector Companies

1. Aditya Birla Health Insurance Co. Ltd.

2. Bajaj Allianz General Insurance Co. Ltd.

3. Bharti AXA General Insurance Co.Ltd.

4. Cholamandalam General Insurance Co. Ltd.

5. Future Generali India Insurance Co.Ltd.

6. HDFC ERGO General Insurance Co. Ltd.

7. ICICI Lombard General Insurance Co. Ltd.

8. IFFCO-Tokio General Insurance Co. Ltd.

9. Kotak General Insurance Co. Ltd.

10. L&T General Insurance Co. Ltd.

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 11. Liberty Videocon General Insurance Co. Ltd.

12. Magma HDI General Insurance Co. Ltd.

13. Raheja QBE General Insurance Co. Ltd.

14. Reliance General Insurance Co. Ltd.

15. Royal Sundaram Alliance Insurance Co. Ltd

16. SBI General Insurance Co. Ltd.

17. Shriram General Insurance Co. Ltd.

18. TATA AIG General Insurance Co. Ltd.

19. Universal Sompo General Insurance Co.Ltd.

 Health Insurance Companies

1) Apollo Munich Health Insurance Co.Ltd.

2) Star Health Allied Insurance Co. Ltd.

3) Max Bupa Health Insurance Co. Ltd.

4) Religare Health Insurance Co. Ltd.

5) Cigna TTK Health Insurance Co. Ltd.

This collaboration with the foreign markets has made the Insurance Sector in India only grow tremendously

with a high current market share. India allowed private companies in insurance sector in 2000, setting a

limit on FDI to 26%, which was increased to 49% in 2014. IRDAI states – Insurance Laws (Amendment)

Act, 2015 provides for enhancement of the Foreign Investment Cap in an Indian Insurance Company from

26% to an Explicitly Composite Limit of 49% with the safeguard of Indian Ownership and Control.

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Private insurers like HDFC, ICICI and SBI have been some tough competitors for providing life as well as

non-life products to the insurance sector in India.

3.4: Performance of Insurance Companies of India - 2018 to 2022:

Life Insurance Corporation of India (LICI) is a Public sector giant in terms of market share of insurance

premium. Therefore, a comparative study has been made for LIC of India in terms of premium for the year

ended 2018 Vs 2019.

(Source: IRDAI Annual Report 2018-19)

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Interpretation:

The total premium collected by LIC of India increased by 5.68 % in 2019 compared to the previous year.

LIC of India collected a premium of 142191.69 crores in 2019 whereas the premium collection for the year

2018 was 13455.68 crores. Changes of premium in percentage as compared to 2018:

 Individual Single Premium reduced by -8.30% in 2019.

 Individual Non-Single Premium increased by 5.87% in 2019.

 Group Single Premium increased by 8.36% in 2019.

 Group Non-Single Premium increased by a whopping 66.32% in 2019.

 Group Yearly Renewable Premium increased by 35.90% in 2019.

Life insurance premium for unit-linked products (ULIPs) witnessed a gradual growth for the last three

financial years, while premium for traditional products grew in double digits in the previous fiscal.

Traditional products registered a growth of 10.15% year-on-year in 2021-22, with premium of Rs 5.92

trillion, compared with Rs 5.38 trillion in 2020-21. ULIPs grew 10.24% YoY, with premium rising from

Rs 0.91 trillion in 2020-21 to Rs 1 trillion in 2021-22. The share of unit-linked products in total premium

was 14.48% in the previous fiscal, Irdai’s annual report for 2021-22 showed.

During 2020-21, traditional products had registered a growth of 9.77% YoY, with premium of Rs 5.38

trillion, against Rs 4.90 trillion in the previous year. On the other hand, ULIPs had reported a growth of

9.58%, with premium rising from Rs 83,050 crore in 2019-20 to Rs 0.91 trillion in 2020-21. The share of

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Unit-linked products in total premium marginally decreased to 14.47% in 2020-21, against 14.50% in 2019-

20. The year was affected with Covid-19 pandemic.

Traditional products grew 13.40% in 2019-20 with premium of Rs 4.90 trillion, against Rs 4.32 trillion in

the previous fiscal. ULIPs registered a growth of 9.05%, premium increasing from Rs 76,152 crore in 2018-

19 to Rs 83,000 crore in 2019-20. “The share of unit-linked products in total premium marginally decreased

to 14.50% in 2019-20 as against 14.99% in 2018-19,” according to the Irdai report.

Profits of the life insurance industry declined 10.50% in the last financial year, with profit after tax of Rs

7,751 crore, compared with Rs 8,661 crore in 2020-21. “Out of the 24 life insurers in operation during

2021-22, 15 companies reported profits. LIC reported increase in profits by 39.39%, while private insurers

together reported a loss of 35.62% in 2021-22.

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During 2021-22, the net loss of general and health insurance industry stood at Rs 2,857 crore. It has posted

a net profit of Rs 3,853 crore in 2020-21. Out of the four public sector insurers, one reported net profit and

three reported loss after tax during the year under review. New India Assurance, the market leader in the

non-life insurance space, reported a net profit of Rs 164 crore, against a net profit of Rs 1,605 crore in 2020-

21. National Insurance Company, Oriental Insurance Company and United India Insurance reported losses

of Rs 1,675 crore, Rs 3,115 crore and Rs 2,136 crore, respectively.

 Investments and Recent Developments (2018-22)

The following are some of the major investments and developments in the Indian insurance sector.
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 ICICI Lombard and Airtel Payments bank have entered into a partnership for providing cyber

insurance in February 2022.

 Probus Insurance receives US$ 6.7 million in funding from a Swiss impact fund in December 2021.

 Companies are trying to leverage strategic partnership to offer various services as follows:

 In November 2021, ICICI Lombard collaborated with Vega to provide a personal accident insurance

cover with every online Vega helmet purchase to increase road safety awareness among customers.

 In November 2021, ICICI Prudential Life Insurance partnered with NPCI Bharat BillPay, a

subsidiary of National Payments Corporation of India (NPCI), to offer ClickPay feature to its

customers.

 In November 2021, the Competition Commission of India (CCI) approved HDFC Life Insurance’s

acquisition of 100% shareholding in Exide Life Insurance. The move is expected to strengthen

HDFC Life’s position in South India.

 In November 2021, Willis Towers Watson acquired the remaining 51% shares in WTW India,

taking the company’s holding in WTW India to 100%.

 In November 2021, Acko, a digital insurance start-up, raised US$ 255 million in funds, taking the

company’s valuation to ~US$ 1.1 billion.

 In September 2021, ZestMoney raised US$ 50 million to enter new business opportunities in the

insurance sector.

 In August 2021, PhonePe announced that it has received preliminary approval from IRDAI to act

as a broker for life and general insurance products. As a result, the company can now offer insurance

advice to its 300+ million users.

 In FY21, LIC achieved a record first-year premium income of Rs. 56,406 crore (US$ 7.75 billion)

under individual assurance business with a 10.11% growth over last year.

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 In India, gross premiums written of non-life insurers reached US$ 26.52 billion in FY21 (between

April 2020 and March 2021), from US$ 26.49 billion in FY20 (between April 2019 and March

2020), driven by strong growth from general insurance companies.

 In August 2021, ICICI Prudential Life Insurance tied up with the National Payments Corporation

of India (NPCI) to provide a unified payments interface autopay.

 Industry Scenario

India is ranked 11th in global insurance business. India’s share in global insurance market was

1.72% during 2020 and total insurance premium volume in India increased by 0.1%

 India’s insurance penetration was pegged at 4.2% in FY21 (from 3.76% in 2019-20), with life

insurance penetration at 3.2% and non-life insurance penetration at 1%

 The market share of private sector companies in the non-life insurance market rose from 15% in

FY2004 to 49.3% in FY2021.

 In terms of the size of insurance industry in India, the share of life insurance in total premium in

India is 75.24% and the share of non-life premium is 24.76% (2020)

 Life insurers recorded new business premium of INR 2.78 tn ($38 bn) in FY21 growing at 7.49%

over the last year with private life insurers growing at 16.29%. Private Life Insurers account for

33.8% of the industry’s new business premium (FY21) with the rest being accounted for by the Life

Insurance Corporation of India (LIC).

 The Life Insurance Industry in India recorded a total premium of INR 5.73 tn ($81.3 bn) in FY20

witnessing a growth of 12.75% over the previous year and the private insurers accounted for 33.7%

of total premium underwritten by the industry. New business premium contributed 45.25% of the

total premium and witnessed a strong growth of 20.59% over FY19. 60% of the new business

premium was derived from single premium with remaining 40% accounted for by first year

premiums
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 The traditional (non-linked) products accounted for 85% of the total premium written in FY20 and

share of ULIPs (linked products) in the total premium stood at 15%.

 During the last year (FY20), life insurers issued 288.47 lakh new individual policies, out of which

LIC issued 75.9% of policies and the private life insurers issued 24.1% of policies.

 In FY21, non-life insurers (comprising general insurers, standalone health insurers and specialized

insurers) recorded a 5.19% growth in gross direct premiums.

 Motor insurance accounted for 34.1% of the non-life insurance premiums earned, followed by

health insurance at 29.5%, in FY21 Post-Covid rising demand for personal mobility space is leading

to a shift in vehicle ownership patterns and may create an opportunity for motor insurers

 Health insurance witnessed 13.3% growth in GDPI in FY21, while fire insurance and liability

insurance observed 28.1% and 16.4% growth respectively in the same period

 Government schemes and financial inclusion initiatives shall have helped in driving the adoption &

penetration across all segments. The government’s flagship initiative for crop insurance (PMFBY)

has led to significant growth in the premium income for crop insurance, and now covers over 55 mn

farmer applications year-on-year. Even during the COVID-19 lockdown period, nearly 70 lakh

farmers have benefitted from it, and claims worth INR 87.4 bn ($1.2 bn) were transferred to the

beneficiaries.

 AB PM-JAY is an entitlement-based scheme under Ayushman Bharat and is fully funded by the

Government. It is the largest health assurance scheme in the world and aims at providing a health

cover of INR 500,000 ($6,900) per family per year for secondary and tertiary care hospitalization

to over 107 mn vulnerable families (approximately 500 mn beneficiaries).

 The insurance regulator IRDAI has also undertaken various initiatives towards boosting the

insurance penetration, such as permitting insurers to conduct video-based KYC, launching

standardized insurance products and allowing insurers to offer rewards for low-risk behaviour.

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 Going forward, general insurance companies will be key beneficiaries of the opening-up of

economies, especially with improved trade activity increasing demand for motor and health

insurance. Strong growth in the automotive industry over the next decade is expected to boost the

motor insurance market. Meanwhile, the life insurance sector will benefit from a steep yield curve,

with low short-term rates and higher long-term rates.

 Digital issuance and online channels are expected to witness continued growth, the share of web

aggregators within digital insurance has been constantly increasing and web-aggregators currently

originate 30-40% of digital insurance.

 The total mortality protection gap in India stands at $16.5 tn (as of 2019) with an estimated

protection gap of 83% of total protection need. This offers a huge opportunity to life insurers with

an estimated additional life premium opportunity of average $78.2 bn annually over 2020-30

 The retail protection sum assured is estimated to grow 8X by over 2020-30, implying 23% premium

CAGR

 India is the 2nd largest InsurTech market in the APAC region, accounting for 35% of the $3.66 bn

capital invested in this region. The online individual insurance market opportunity is estimated to

be $1.25 bn by FY25 more than tripling from $365 mn in FY20.

 The growth of the insurance market is being supported by important government initiatives, strong

democratic factors, conducive regulatory environment, increased partnerships, product innovations,

and vibrant distribution channels.

 The increase in the FDI in Insurance from 49% to 74% announced in the Union Budget (Feb’21)

shall further help in driving increased penetration and coverage by enabling additional avenues for

capital support required for the expansion of the insurance industry in India.

 The recent pandemic has emphasized the importance of healthcare on the economy, and health

insurance would play a critical role in the effort to strengthen the healthcare ecosystem.

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 The insurance penetration across India at the end of the financial year 2021 stood at one percent.

This was a slight increase compared to 0.94 percent in the previous year. Compared to the global

average of four percent, India's insurance penetration is significantly low. Insurance penetration is

the ratio of insurance premiums to the gross domestic product of the country.

 GROWTH DRIVERS IN THE PANDEMIC

 Favorable Demographics

68% of India’s population is young and 55% of its population is in the age group of 20-59 (working

population) in the year 2020 and is estimated to reach 56% of the total population by 2025. These

point towards a young insurable population in India

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

 Wide middle-class expansion

By 2030, India will add 140 Mn middle-income and 21 Mn high-income households which will

drive the demand and growth of Indian insurance sector.

 Digital behavior patterns

Customers are now starting to prefer digital modes for their insurance needs - 73%/62% of

customers preferred the online mode for GI/HI products (2020). Agents’ ease with digital tools has

also grown, with 63% of agents comfortable with video-calling clients and >50% amenable to

virtual renewals. India is the 2nd largest Internet user market. ~1 Bn Internet Users by 2026.

 Pandemic-related shift in demand patterns

COVID has expedited digital adoption and 67% of agents felt customers are more willing to use

portals/apps post-COVID. Further, the pandemic increased the insurance penetration rate and

triggered awareness on insurance and demand for protection products, especially health insurance

 Government Program

Government initiatives such as PM-JAY, PMFBY, PMJJBY, PMSBY etc. are increasing insurance

penetration.

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3.5: Role of Agents in Life Insurance Industry:

An agent is a primary source for procurement of insurance business and as such his role is the corner stone

for building a solid edifice of any life insurance organization. Insurance Agents are responsible for

identifying sales opportunities for insurance plans and overseeing a portfolio of clients. Also known as

Insurance Sales Agents, these professionals are responsible for identifying risk management strategies,

handling policy renewals, and tracking claims.

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 

 Role of life insurance agents:

 In viewpoint of Insurance companies:

An agent in law is one who acts for another and insurance agent is one who works for an insurer. His job

is to bring in customers for the insurance company and is remunerated in the form of commission expressed

as a percentage of the premium payable on the business introduced. The rates of commission payable to an

agent would normally depend on market competition and the volume and profitability of business procured

by the agent concerned. In India, the rates of commission payable are stipulated under the insurance law

and no commission is payable for insurance of firms having paid up capital in excess of the amount

stipulated.

 In viewpoint of policyholder:

An insurance agent is a trained professional whose job is to sell insurance policies. Life insurance agents

specialize in selling policies that pay beneficiaries when a policyholder dies. An agent has to sell himself

before selling his product of life insurance. This is due to the intangible nature of the products and its long-

term commitment. So, trust and belief in the customer is to be created for buying this product, which also

needs to be sustained and continued in future too.

 Contributions of agents in Life Insurance Corporation (the Giant insurance co. in India):

In India, life insurance is generally considered as a tax-saving device instead of its other implied long term

financial benefits. Indian people are prone to investing in properties and gold followed by bank deposits.

They selectively invest in shares also but the percentage is very small. Even to this day, Life Insurance

Corporation of India dominates Indian insurance sector.

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 

 What is it that takes this performance forward?

One reason undoubtedly is the large network of agents on rolls in LIC. The tremendous success is of course

on account of constant and tireless efforts of LIC agents who bring new business to the corporation with

increasing growth rate. This record will become the benchmark for future evolution of the efforts of agents.

With the help of this data, a comparative study has been shown between LIC of India Vs

Private Insurance (Total) and total number of agents working under this industry:

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Interpretation:

The number of individual agents as at 31st March, 2019 were 21.95 lakhs as against 20.83 lakhs as on 31st

March 2018. Private insurers stands with 10.16 lakh agents, whereas LIC of India stands with 11.79 lakh

agents as at 31st March, 2019.

During the year 2018-19, the total number of agents appointed in life insurance industry were 6.46 lakhs

and the number of agents terminated were 5.34 lakhs. While private insurers appointed 3.82 lakh and

terminated 3.00 lakh agents, LIC of India appointed 2.64 lakh agents and terminated 2.33 lakh agents.

IRDAI data shows that the number of individual agents in the life insurance industry was 24.50 lakh as on

March 2021. Considering 1.35 billion population, a rough calculation shows that India has one agent for

every 550 people.

Interpretation:

Overall, the life insurance industry has added a net of 1.80 lakh new agents in 2020-2021, resulting in 8%

jump in the total agent count to 24.5 lakh, according to IRDAI's annual report 2020-2021.

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In FY 2020-21, LIC has seen its agent count jumping 12% to 13.50 lakh from 12 lakh at the end of 2019-

2020. The growth in agent count was subdued in case of private life insurers as their agent count went up

by only 3%. They together added a net of 31,600 new agents.

The muted growth in private life insurers' agent count is a result of high termination rate. For every 10 new

additions, almost 9 existing agents have left private insurers in the last financial year.

Overall, there are now 24.50 lakh agents in the life insurance industry. The count is 8% higher from the

total figure at the end of March 2020. Of the aggregate, 27% or 6.6 lakh agents are female.

Agent count of private general insurers rises 62%

In general insurance, the agent count of private insurers has risen 62% to 3.60 lakh in 2020-2021. Public

insurers have witnessed their agent count declining 1% to 2.90 lakh.

Standalone health insurers (SAHI) have empaneled almost 2 lakh new agents and seen 7,000terminations,

resulting in a net 13% increase in agent count to 7.70 lakh.

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Overall, general and SAHI insurers added a net of 2.20 lakh new agents in 2020-2021.

3.6 Claim Settlement Ratio 2023

 Life insurance claim settlement is the procedure of claimant/beneficiary filing a claim to the

insurance provider to avail the death benefits under the life insurance policy of the life assured in

case of an untimely demise of the life assured during the policy tenure.

 Life Insurance Claim Settlement Ratio

Life insurance claim settlement is a process where the claimant/beneficiary can make a request to the

policyholder's insurance company to avail the death benefits under the life insurance of the insured in case

of the policyholder’s death. With this, the claimant/beneficiary can file a claim request for critical/terminal

illness, accidental death benefit, and accidental total/permanent disability if required.

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 

 Types of Life Insurance Claims

Following are the two types of life insurance claims:

1. Maturity Claims: Maturity claims are payable at the time of maturity of the life insurance policy. This

means when the policy tenure ends and the policyholder survives the whole policy tenure a certain amount

is paid to the policyholder itself. Maturity claims are only paid when the policy term ends and the premiums

are paid on time. The policyholder is required to fill a duly signed discharge form to avail maturity claim.

The amount received from the maturity claim is considered to be tax-free as per the current Income Tax

Act.

2. Death Claims: In death claims, the claimant can make a request for death benefits upon the demise of

the policyholder. This means a sum assured amount is settled towards the beneficiary upon the death of the

policyholder in any case. The sum assured is paid to the beneficiary only after the death of the policyholder

is intimated to the insurance company. The death intimation includes policy number, date of death, cause
Page | 48
Of death, and the policy term upon which the company investigates the death claim. Amounts received as

the death claim are considered to be tax-free as per the current Income Tax Act under Section 10(10D).

 Documents Required for Life Insurance Claims

Following is the list of some of the mandatory documents required for life insurance claims:

 Claim Forms (Duly signed and attested)

 Original Policy Documents

 Death Certificate attested by the local authorities

 Copy of FIR/Post Mortem Reports/Punchnama

 Medical Records (including hospital discharge summary)

 Claimant’s Photo ID Proof

 Claimant’s Address Proof

 Copy of Cancelled Cheque/Bank Statement/Bank Passbook

 Claim Settlement Process of Life Insurance Policy Claims

Listed below is the process of life insurance claim settlement followed by most of the insurance companies.

However, every insurance operates differently hence the claim settlement process for a life insurance claim

can differ from insurer to insurer:

Step 1: Claim Intimation: The beneficiary is required to intimate the claim either in a written format or

online (on the insurance company’s official website) to the insurance company as soon as possible. The

claim intimation should have the information of the policyholder and the claimant such as policy number,

name of the policyholder, cause of death, place of death, and claimant details. The beneficiary can visit the

Page | 49
insurance company for claim intimation or download the forms online from the insurance company’s

website.

Step 2: Submission of Documents: The insurance company requires some documents to settle the claim,

which the beneficiary is required to submit within the stipulated time. With help of the relevant documents,

the insurance company will be able to carry out an investigation if required or ask for any additional

documents required. Submission of relevant documents at this stage is necessary to avoid any possibility

of fraud.

Step 3: Claim Evaluation and Settlement: After all the documents have been submitted to the insurance

company and the claim is thoroughly evaluated a settlement decision is taken by the insurance company.

Usually, it takes 30 days for an insurance company to settle a claim upon receiving the documents

submitted. If an investigation is required in any case the insurance company takes 120 days to settle a claim.

Note: Claimant must thoroughly go through the terms and conditions and submit all the required documents

for the claim, failing to do so will affect the claim settlement process.

 Claim Settlement Ratio of Life Insurance Companies in India

Following is the list of claim settlement ratio of the best life insurance companies in India:

Life Insurance Company Claim Settlement Ratio Number Of Claims Paid

2020-21 2020-21

Max Life Insurance 99.35% 19922

Aegon Life Insurance 99.25% 398

Bharti Axa Life Insurance 99.05% 1875

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Life Insurance Corporation of India 98.62%

(LIC)

Dhfl Pramerica Life Insurance 98.61% 638

Exide Life Insurance 98.54% 4978

Kotak Life Insurance 98.50% 4836

Reliance Life Insurance 98.49% 9274

Bajaj Allianz Life Insurance 98.48% 14115

PNB MetLife Insurance 98.17% 5218

Tata AIA Life Insurance 98.02% 4556

HDFC Life Insurance 98.01% 16639

Aviva India Life Insurance 98.01% 1034

ICICI Prudential Life Insurance 97.90% 14518

Aditya Birla Sun Life Insurance 98.04% 6347

Sahara India Life Insurance 97.18% 860

Canara HSBC Life Insurance 97.10% 1844

Edelweiss Tokio Life Insurance 97.01% 487

IndiaFirst Life Insurance 96.81% 2886

Daiichi Life Insurance 95.96% 1569

Shriram Life Insurance 95.12% 3506

Ageas Federal Life Insurance 95.07% 1716

Future Generali Life Insurance 94.86% 1163

SBI Life Insurance 93.09% 31855

(Source: IRDAI Annual Report - Claim Settlement Ratio for the year 2020-21)

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3.7: Flagship schemes of Govt. of India for insuring the lives of Indians:

The Central Government launched two landmark insurance schemes, namely, Pradhan Mantri Jeevan

Jyoti Bima Yojna (PMJJBY) and Pradhan Mantri Suraksha Bima Yojna (PMSBY) as a part of

financial inclusion on 9th may, 2015. The purpose of these schemes is to provide insurance protection to

account holders of the Banks at a very reasonable cost.

The PMJJBY is available to people in the age group of 18 to 50 years having a bank account who give their

consent to join / enable auto-debit. The life cover of Rs. 2 lakhs shall be for the one year period stretching

from 1st June to 31st May and will be renewable. Risk coverage under this scheme is for Rs. 2 Lakh in case

of death of the insured, due to any reason. The premium is Rs. 330 per annum which is to be auto-debited

in one installment from the subscriber’s bank account on or before 31st May of each annual coverage period

under the scheme. The scheme is being offered by Life Insurance Corporation and all other life insurers

who are willing to offer the product on similar terms with necessary approvals and tie up with banks for

this purpose.

A small data analysis has been shown on the gross enrollment reported by the banks as on 1st February,

2018 (recent available data updated data on website):

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Interpretation:

PMJJBY Enrollment as on 1st February, 2018 is Rs. 5.28 Crores with an addition of Rs. 4.17 Lakhs. Total

number of claims received is 92,053 and total number of claims disbursed is 83,274.

 Latest Government Initiatives (2021-22)

The Government of India has taken number of initiatives to boost the insurance industry. Some of them are

as follows:

 In 2022, the Indian government plans to sell a 7% stake in LIC for Rs. 50,000 crore (US$ 6.62

billion). This is the largest initial public offering (IPO) in India.

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 In November 2021, the Indian government signed an agreement with the World Bank for a US$ 40

million project to advance the qualities of health services in Meghalaya, including the state’s health

insurance programme.

 In September 2021, the Union Cabinet approved an investment of Rs. 6,000 crore (US$ 804.71

million) into entities, offering export insurance cover to facilitate additional exports worth Rs. 5.6 lakh

crore (US$ 75.11 billion) over the next five years.

 In August 2021, the Parliament passed the General Insurance Business (Nationalisation)

Amendment Bill. The bill aims to allow privatisation of state-run general insurance companies.

 Union Budget 2021 increased FDI limit in insurance from 49% to 74%. India's Insurance Regulatory

and Development Authority (IRDAI) has announced the issuance, through Digilocker, of digital

insurance policies by insurance firms.

 Under the Union Budget 2021, Finance Minister Ms. Nirmala Sitharaman announced that the initial

public offering (IPO) of LIC will be implemented in FY22, as part of the consolidation in the banking

and insurance sector. Though no formal market valuation has been undertaken, LIC’s IPO has the

potential to raise Rs. 1 lakh crore (US$ 13.62 billion).

 In June 2021, the government extended a Rs. 50 lakh (US$ 66.85 thousand) insurance coverage

scheme for healthcare workers across India until the next one year.

 In February 2021, the Finance Ministry announced to infuse Rs. 3,000 crore (US$ 413.13 million)

into state-owned general insurance companies to improve the overall financial health of companies.

 Under Union Budget 2021, fund of Rs. 16,000 crore (US$ 2.20 billion) has been allocated for crop

insurance scheme.

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  The Future of Insurance Sector in India

Though LIC continues to dominate the Insurance sector in India, the introduction of the new private insurers

will see a vibrant expansion and growth of both life and non-life sectors in 2017. The demands for new

insurance policies with pocket-friendly premiums are sky high. Since the domestic economy cannot grow

drastically, the insurance sector in India is controlled for a strong growth.

With the increase in income and exponential growth of purchasing power as well as household savings, the

insurance sector in India would introduce emerging trends like product innovation, multi-distribution, better

claims management and regulatory trends in the Indian market.

The government also strives hard to provide insurance to individuals in a below poverty line by introducing

schemes like the

 Pradhan Mantri Suraksha Bima Yojana (PMSBY),

 Rashtriya Swasthya Bima Yojana (RSBY) and

 Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY).

Introduction of these schemes would help the lower and lower-middle income categories to utilize the new

policies with lower premiums in India.

With several regulatory changes in the insurance sector in India, the future looks pretty awesome and

promising for the life insurance industry. This would further lead to a change in the way insurers take care

of the business and engage proactively with its genuine buyers.

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Some demographic factors like the growing insurance awareness of the insurance, retirement planning,

growing middle class and young insurable crowd will substantially increase the growth of the Insurance

sector in India.

 Robust Demand

* The gross first year premium of Life insurers increased by 6.94% in 2021-22 until 31st January 2022, this

was Rs. 2, 27,188 crore (US$ 29.54 billion).

 Attractive Opportunities

* Insurance Regulatory and Development Authority of India (IRDAI) allowed insurers to invest debt

securities of Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs); this is

expected to provide more investment options for the country's emerging start-up ecosystem.

* Insurance reach is still low in India. Overall insurance penetration (premiums as % of GDP) was 4.2% in

FY21, providing a huge underserved market.

 Policy support

* In September 2021, the Union Cabinet approved an investment of Rs. 6,000 crore (US$ 804.71 million)

into entities, offering export insurance cover to facilitate additional exports worth Rs. 5.6 lakh crore (US$

75.11 billion) over the next five years.

 Increasing Investments

* In February 2021, the Finance Ministry announced to infuse Rs. 3,000 crore (US$ 413.13 million) into

state-owned general insurance companies to improve the overall financial health of companies.

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3.8: Findings:

1. The market share in terms of Life Insurance Premium for the year 2018-19 shows that Life Insurance

Corporation of India (LICI) leads the market with 66.24%, whereas in Private sector HDFC Life leads with

7% share in terms of premium, SBI Life comes after that with 6.40%, ICICI Prudential with 4.80% and

others standing with 15.60%.

2. The market share in terms of Number of Policy for the year 2018-19 shows that Life Insurance

Corporation of India (LICI) leads the market with 74.70%, whereas in Private sector SBI Life leads the

market with 5.30% share in terms of policy, HDFC Life comes after that with 3.40%, ICICI Prudential with

3.12% and others standing with 13.50%.

3. LIC of India is leading in three categories of premium namely Individual Single Premium, Group Single

Premium and Group Non-Single premium. On the other hand, Private total is higher in Individual Non-

Single premium and Group-Yearly-Renewable premium.

4. The total premium collected by LIC of India increased by 5.68 % in 2019 compared to the previous

year. LIC of India collected a premium of Rs.142191.69 crores in 2019 whereas the premium collection for

the year 2018 was Rs.13455.68 crores.

5. The number of individual agents as at 31st March, 2019 were 21.95 lakhs as against 20.83 lakhs as on

31st March 2018. Private insurers stands with 10.16 lakh agents, whereas LIC of India stands with 11.79

lakh agents as at 31st March, 2019.

During the year 2018-19, the total number of agents appointed in life insurance industry were 6.46 lakhs

and the number of agents terminated were 5.34 lakhs. While private insurers appointed 3.82 lakh and

terminated 3.00 lakh agents, LIC of India appointed 2.64 lakh agents and terminated 2.33 lakh agents.
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6. Among the Private life insurance companies and in the whole life insurance sector MAX Life

provides the highest Claim settlement with 98.33%, whereas Aditya Birla Sunlife provides 91.30% of the

claim settlement, which stands lowest among the top 10 life insurance companies. On the other hand, Life

Insurance Corporation of India (LICI), stands second position in the terms of claim settlement with 96.95%.

7. PMJJBY Enrollment as on 1st February, 2018 is Rs. 5.28 Crores with an addition of Rs. 4.17 Lakhs.

Total number of claims received is 92,053 and total number of claims disbursed is 83,274

 CHAPTER 4 -CONCLUSION

4.1: Conclusion:

After the reforms in insurance sector, life insurance industries have seen a remarkable growth moreover;

the policies measures provided a favorable environment for insurance companies to flourish in the country.

Till 2019 there were 24 life insurance companies operating in India of which 23 are private insurers and 1

public insurer that is LIC of India. LIC has been successfully able to create value for its customers or policy

holders, showing a respectable growth in its business. There is enormous potential for life insurance and no

doubt that LIC still enjoys immense goodwill in our country. Government of India tries to promote the

insurance sector by giving Deductions under Section 80C of Chapter VIA of the Income Tax Act, 1961 and

there are number of peoples who invest in life insurance for attaining Tax saving benefits. Also, flagship

schemes like Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) helps in insuring lives for those who

are of lower income groups and are unable to purchase policies.

The future looks promising for the life insurance industry with several changes in regulatory framework

which will lead to further change in the way the industry conducts its business and engages with its
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customers. The overall insurance industry is expected to reach US$ 280 billion by 2020. Life insurance

industry in the country is expected grow by 12-15 per cent annually for the next three to five years.

Demographic factors such as growing middle class, young insurable population and growing awareness of

the need for protection and retirement planning will support the growth of Indian life insurance.

The future looks promising for the life insurance industry with several changes in the regulatory framework

which will lead to further changes in the way the industry conducts its business and engages with its

customers. Life insurance industry in the country is expected to increase by 14-15% annually for the next

three to five years. The scope of IoT in Indian insurance market continues to go beyond telematics and

customer risk assessment. Currently, there are 110+ InsurTech start-ups operating in India. These startups

are expected to provide a major boost to the industry and help increase India’s insurance penetration which

plays a crucial role in the overall development of the country. In the past, the Indian government has played

a crucial role in increasing the scope of the insurance sector through various policies and schemes. This

trend will continue in the further through schemes like the Pradhan Mantri Fasal Bima Yojana (PMFBY)

providing crop insurance and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) providing life insurance

coverage to the youth at an affordable price. Schemes like these coupled with India’s demographic factors

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such as a growing middle class, young insurable population and growing awareness of the need for

protection and retirement planning will support the growth of the Indian insurance sector.

4.2: Recommendations and Suggestions:

The life insurance industry plays an important role in improving national economy and for developing this

sector certain changes and improvements are to be made. Some of these are:

a) Due to the intense competition in the life insurance market, the life insurance companies

have to adopt better strategies to attract more customers. Insurers will need to increase efforts to

design new products that are suitable for the market and make use of innovative distribution

channels to reach a broader range of the population.

b) Life insurance products are taken mainly by middle and higher income groups. Hence, they

should be regarded as main targeted income groups. Apart from them a large number of lower

income groups lives in the country, therefore, life insurance products which are suitable for lower

income group should also be released so that the market share increases.

c) There are people living in the society who prefers to invest their savings in purchasing gold

ornaments rather than investing in insurance especially life insurance. Life insurance companies

should educate importance and benefits of insurance to general public through the agent and

corporate social responsibility activity.

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 d) LIC has to made more efforts to enhance its business in terms of technology distribution network,

technological innovations, client relationship and quality.

e) Procedure of claim should be made hassle-free and comfortable for the policyholder or the

beneficiaries, as there are lot of guidelines which have to be followed for making the claim and many

of the policyholder gets irritated as they have to approach from one department to the other.

f) There are also a lot of fake claims which the insurers must take care of it. They must develop a

simple guideline in which they could identify whether the claim is genuine or not, as it would be

applied to all the policyholders. Thus, it would make the claim easy for both the insurers and

policyholders.

 BIBLIOGRAPHY

References and links:

 Annual Reports:

1. IRDAI Annual Report

2. LIC of India Annual Report

 Journals:

1. Competing in a new age of Insurance - PwC

2. Role of agents in competitive regimes etc.

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  Websites and web links:

1. www.ibef.org

2. www.investindia.gov.in

3. www.licindia.in

4. www.irdai.gov.in.

5. https://data.gov.in/

6. https://economictimes.indiatimes.com/ etc.

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