Introduction:

Insurance = Collective bearing of

Risk.
Basic Human trait is to be averse to
the idea of risk taking.
Insurance, whether life or non-life,
provides people with a reasonable
degree of security and assurance
that they will be protected in the
event of a calamity or failure of any
sort.

Factors afecting service

sector

Five environmental variables that afect

all industries

Customers
Competitors
Government
Technology and

Globalization -are forcing rapid changes

in the service sector.

In addition, there are four factors of
particular importance to service
providers

change in how quality is perceived

cost control
customer services and
the new definitions of the customer.

DIVISION OF INSURANCE
SECTOR

ORIGIN AND GROWTH OF INSURANCE

SECTOR:
Till end of FY 1999-2000, two state-run
insurance companies, namely, Life
Insurance Corporation (LIC) and General
Insurance Corporation (GIC) were the
monopolyinsurance providers in India.
Under GIC there were four subsidiaries

National Insurance Company Ltd.

Oriental Insurance Company Ltd.
New India Assurance Company Ltd.
United India Assurance Company Ltd.

ORIGIN AND GROWTH OF INSURANCE

SECTOR:
In fiscal 2000-01, the Indian federal
government lifted all entry restrictions
for private sector investors.
Foreign investment insurance market
was also allowed with 26 percent cap.
GIC wasconverted intoIndia's national
reinsure from December, 2000
All the subsidiaries working under the
GIC umbrella were restructured as
independent insurance companies.

Milestones in GIC
107 insurers amalgamated and
grouped into four companies viz.:
The National Insurance Company Ltd.
The New India Assurance Company
Ltd.
The Oriental Insurance Company Ltd.
The United India Insurance Company
Ltd.
GIC incorporated as a company.

Contributors

Life Insurers:
Allianz Bajaj Life Insurance Co. Ltd.
AMP Sanmar Assurance Co. Ltd.
Birla Sun Life Insurance Co. Ltd.
Dabur CGU Life Insurance Company Pvt.
Ltd.
HDFC Standard Life Insurance Co. Ltd.
ICICI Prudential Life Insurance Co. Ltd.
ING Vysya Life Insurance Co. Pvt. Ltd.
Life Insurance Corporation of India.
Max New York Life Insurance Co. Ltd.
Metlife India Insurance Co. Pvt. Ltd.
Om Kotak Mahindra Life Insurance Co. Ltd.
SBI Life Insurance Co. Ltd.
Tata AIG Life Insurance Co. Ltd.

Contributors

Non-Life Insurers:
Bajaj Allianz General Insurance Co. Ltd.
ICICI Lombard General Insurance Co. Ltd.
IFFCO Tokyo General Insurance Co. Ltd.
National Insurance Co. Ltd.
New India Assurance Co. Ltd.
Oriental Insurance Co. Ltd.
Reliance General Insurance Co. Ltd.
Royal Sundaram Alliance Insurance Co.
Ltd.
Tata AIG Life Insurance Co. Ltd.
United India Insurance Co. Ltd
Reinsurers:
General Insurance Corporation of India.

Contribution to growth:
Currently, the insurance sector size is
estimated at Rs.500 billion.
On account of intense marketing strategies
adopted by private insurance players, the
market share of state owned insurance
companies like GIC, LIC and others have
come down to 70% in last 4-5 years from
over 97%.
The private insurance players despite the
sector is still regulated has been ofering
rate of return (RoR) to its policy holders
which is estimated at about 35% as against
20% of domestic insurance companies.

Contribution to growth:
LIC and GIC have limited number of
policies to ofer to their subscribers
Private insurance companies ofer many
policies and the premium amount as well
as the maturity period is much
competitive as against those of
government insurance companies.
The private sector insurance players have
started exploring the rural markets in
which until recently, the state owned
companies had the monopoly.
Indias life insurance premium, as a
percentage of GDP is 1.8%

Future of the Sector:

Indian insurance sector is likely to
register unprecedented growth of 200%
and attain a size of Rs. 2000 billion by
2009-10
A private sector insurance business will
achieve a growth rate of 140% as a result
of aggressive marketing technique being
adopted by them against 35-40% growth
rate of state owned insurance companies.
In rural markets, the share of private
insurance
players
would
increase
substantially as these have been able to
generate a faith among their rural
consumers.

Insurance Sector Emerging Areas:

Demand for Pension Plans

Two relatively modern trends afect life

insurance business in India significantly:
Joint Family System and
elderly are increasingly having to fend
for themselves

Separateness of Banking and

Insurance
Bancassurance

Role of Information Techno-logy

Using Postal Network
Creating Insurance awareness
Innovative Products

CHANGE IN TRENDS
FROM PRICE POINT OF VIEW
DIFFERENT COMPANIES ARE PROVIDING
POLICES OF INSURANCE AT COMPETETIVE
PRICES
EVEN THE ALLOCATION CHARGES UNDER
POLICIES IS ALSO DECREASED
THE INSURANCE AGENT COMISSION IS ALSO
FIXED AAND REDUCED SO THAT THE
CUSTOMER CAN GET THE BEST.

FROM CUSTOMER AND

SERVICE POINT OF VIEW

Globalization - "The Dynamic Force"

MNCs - "The New Path Maker"
More customer oriented
Mostly better service oriented
More competitive
Better satisfaction
More value addition
Strategic development

FROM PROMOTION POINT

OF VIEW
Computerization
Internet
Electronic Clearance Service
(ECS)
Call Centres and SMS services

INDIAN INSURANCE IN 21ST

CENTURY
2000: IRDA starts giving licenses to private insurers: ICICI
prudential and HDFC Standard Life insurance first private insurers
to sell a policy
2001: Royal Sundaram Alliance first non life insurer to sell a
policy
2002: Banks allowed selling insurance plans. As TPAs enter the
scene, insurers start setting non-life claims in the cashless
mode
2007: First Online Insurance portal, https:/// set up by an Indian
Insurance Broker, Bonsai Insurance Broking Pvt Ltd.
The Government of India liberalized the insurance sector in
March 2000 with the passage of the Insurance Regulatory and
Development Authority (IRDA) Bill, lifting all entry restrictions for
private players and allowing foreign players to enter the market
with some limits on direct foreign ownership.
Minimum capital requirement for direct life and Non-life Insurance
company is INR1000 million and that for reinsurance company is
INR 2000 million. In the 2004-05 budgets, the Government
proposed for increasing the foreign equity stake to 49%, this is
yet to be efected. Under the current guidelines, there is a 26
percent equity cap for foreign partners in direct insurance and
reinsurance Company

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