Insurance in India
PRESENTED BY:-
Mihir Trivedi - 02
Rajaram Palav - 26
Chandan Kokul - 27
Samson Aranha - 28
Bansi Mehta - 23
Index
Definition of Insurance.
History of Insurance.
Liberlisation.
Contribution to the Economy.
Introduction of Micro insurance.
Misconceptions.
Critical Features.
IRDA.
Target Market.
Critical Issues.
Definition :
“Covers an individual / Company
/Household for some or all of a
financial loss that is linked to an
unpredictable event or risk, via risk
pooling & the payment of a
premium.”
1850 the first insurance company was formed in India.
1938 The insurance act was passed.
1947 economic nationalization began in insurance
sector.
1972 Insurance market was fully nationalized.
1991 economic liberalization was began.
1994 Marine tariffs were removed.
1999 the Insurance regulatory & development
authority Act (IRDA) was formed.
Liberalisation:
“ In 1991 Economic liberlisation began under
Dr.Manmohan Singh.3 Yrs later the Malhotra
committee report on the state of Indian insurance
industry was released.
These recommendation were put in to practice via
IRDA. In particular, the monopoly previously
enjoyed by GIC (General insurance corporation of
India) was removed in yr -2000 & First licensed
were granted to private. Companies.”
Contribution of Insurance market in Indian
Economy.
Insurance generated RS 400 billion business in India ,
and together with banking services adds about 7% to
India's GDP .Gross premium collection is about 2% of
GDP and has been growing by 15-20% per annum.
India also has the highest number of life insurance
policies in force in the world , and total investible
funds with the LIC are almost 8%. of GDP. Yet more
than three –fourths of India’s insurable population
has no life insurance or pension cover.
* Growth in major types of Insurance
Life insurance Non life insurance
Total Revenue earned (2007) $ 41.36 billion $ 6.53 billion
compound annual growth rate 11.84 % 5.75 %
Premium contribution in 2011 $ 65.96 billion $ 7.48 billion
What is Micro
Insurance ?
Micro-Insurance is a key element in the financial
services packages for people at the bottom of the
pyramid.
Micro insurance is a risk transfer device characterized
by low premiums and more coverage limits, and
designed for low-income people not served by typical
social or commercial insurance schemes. It is a
financial arrangement to protect low-income people
against specific risk in exchange for risk involved.
Misconceptions on Micro
Insurance
Small insurance companies.
Just another product offered by MFIs.
Regular insurance products with
smaller sums insured and premiums .
Savings, credit, risk prevention.
Critical Features of Micro
Insurance.
Transactions are low-cost and reflect members’ willingness to
pay.
Clients are essentially low-net-worth but not necessarily
uniformly poor.
Communities are involved in the important phases of the
process (such as package design and rationing of benefits).
The essential role of the network of micro insurance units is to
enhance risk management of the members of the entire pool of
micro insurance units over and above what each can do when
operating as a stand-alone entity.
Need for Micro Insurance
Poor also need insurance protection
Inclusive growth is the only way to ensure sustained growth
Trickle down effect of the process of economic growth
benefiting the poor belied
Poor get excluded unless special effort is made to bring
them into the development process
Monitor it effectively
Risk Priorities by low-income
people
Health Problems
Death of breadwinner
Death of family member
Crop loss / bad harvest
n ce
Theft; fire o rta
I mp
Natural disaster in g
Ris
IRDA’s Initiatives
Developmental Initiatives:-
Legislature delegated developmental responsibilities – A unique model.
Ensuring orderly growth and penetration of insurance are the prime
objectives.
Introduction of development oriented regulations to Bridge the Demand
Supply gap.
Mandatory Norms :-
Rural Sector - Life Insurers
First 5 years - 7% to 16% of total policies underwritten
6th to 10th* year - 18% to 20%
Non Life
First 5 years - 2% to 5% of total gross premium
6th to 10th* year - 5% to 7%.
Social Sector - Life & Non Life
5000 to 20000 lives for the first 5 years and 25000 to 55000 lives for 6th to
10th year*
Target Market.
A Commercial Insurance for
wealthy individuals and
B companies, as well as
A
Wealthy compulsory products.
Middle
Income
B Most of non-motor related
commercial insurance.
C
C Social security and public
D E health services.
Low
Income
D Aggregate market for
microfinance providers.
Destitute / Severely Poor E Potential market for micro
Policyholders (the market):- insurance.
People do respond to “good” products.
Generally lack understanding of insurance and thus require
knowledge and appreciation .
Education, marketing, policy documents MUST be simple and
appropriate .
We need to help people link needs with insurance as an
Critical Issues
Illiteracy.
Ignorance.
Lack of complete information.
Huge untapped rural market.
Commutation & Communication.
Lack of expertise.
THANK YOU
