History of Life Insurance in India
What is Insurance?
Pro m i o f re i b u rse m e n t i th e se m n ca se o f l ss. p a i to p e o p l o r o d e co m p a n i s so co n ce rn e d a b o u t e h a za rd s th a t th e y h a ve m a d e p re p a ym e n ts to a n i su ra n ce co m p a n y n
.What Is Life Insurance?
Li fe i su ra n ce o r l fe a ssu ra n ce i a n i s co n tra ct b e tw e e n th e p o l cy o w n e r i a n d th e i su re r. n vi s' su ch a s te rm i a l i l e ss o r cri ca l n ln ti i l e ss. w h e re th e i su re r n n a g re e s to pay a d e si n a te d g b e n e fi a ry a su m o f m o n e y u p o n th e ci o ccu rre n ce o f th e i su re d i d i d u a l s n n vi ' o r i d i d u a l d e a th o r o th e r e ve n t.
social institutions and guilds. new sea routes for trade. With increased protection that revolved
. • As European civilization progressed. where citizens formed burial clubs that would meet the funeral expenses of its members as well as help survivors by making some payments.History of Life Insurance
• Life insurance had its origins in ancient Rome. in particular with many welfare and protective measures were also introduced.
to collect data about both life and non life insurances.History of Life Insurance in India
• 1818: Oriental Life Insurance company started functioning in India. 1870: Establishment of first Indian life insurance company (Bombay mutual life assurance society). 1928:The insurance companies act enabled govt.
. 1912:The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.
• In 1955. and the Life Insurance Corporation of India was created on 01-09-1956. • Eventually. was sent to prison for two years. • In the ensuring investigations. the Parliament of India passed the Life Insurance of India Act on 19-06-1956. by consolidating the life insurance business of 245 private life insurers and other entities offering life insurance services. which had created a policy framework for extending state control over at
. one of India's wealthiest businessmen. owner of the Times of India newspaper. • Nationalization of the life insurance business in India was a result of the Industrial Policy Resolution of 1956. parliamentarian Amol Barate raised the matter of insurance fraud by owners of private insurance companies. Ram Kishan Dalmia.
there are 22 other private sector life insurers. Ltd • •
. most of them joint ventures between Indian groups and global •SBI Life Insurance insurance giants. •ING Vysya Life Insurance •Shriram Life Insurance •IDBI Fortis Life Insurance •AEGON Religare Life Insurance •India First Life insurance company limited •Star Union Dia-ichi Life Insurance Co. ••HDFC Standard Life •Metlife India Life Insurance Birla Sunlife
•ICICI Prudential Life Insurance •Bajaj Allianz Life •Max New York Life Insurance •Sahara Life Insurance •Tata AIG Life •Bharti AXA Life Insurance Co Ltd •Future Generali Life Insurance Co Ltd •DLF Pramerica Life Insurance •CANARA HSBC Oriental Bank of Commerce LIFE INSURANCE • •
•Kotak Life Insurance •Aviva Life Insurance •Reliance Life Insurance Co.Other insurers…
• Apart from Life Insurance Corporation. the public sector life insurer. Ltd.
Life Insurance Corporation of India. has grown to 25000 servicing around 180 million policies and a corpus of over 8 trillion (US$173.
. 5 for a US $ .
• The Corporation.6 billion). and contributed around 7 % of India's GDP in 2006. created huge surpluses. which commanded a monopoly of soliciting and selling life insurance in India. 5.6 million policies and a corpus of INR 459 million (US$ 92 million as per the 1959 exchange rate of roughly Rs. which started its business with around 300 offices.Current Status Of LIC
• Over its existence of around 50 years.
without losing sight of the interest of the community as a whole. the primary obligation to its policyholders. whose money it holds in trust. the funds to be deployed to the best advantage of the investors as well as the community as a whole. • Maximize mobilization of people's savings by making insurance-linked savings adequately attractive. • Bear in mind. • Spread Life Insurance widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in the country and providing them adequate financial cover against death at a reasonable cost. keeping in view national priorities and
.Objective of LIC of India
• Spread and provide life insurance to the masses at a reasonable cost. in the investment of funds.
th •Pro m o te a m o n g st a l g e n ts a n d e m p l ye e s o f th e la o C o rp o ra ti n a se n se o f p a rti p a ti n . c ro •I vo l a l e o p l w o rki g i th e C o rp o ra ti n to th e n ve lp e n n o b e st o f th e i ca p a b i i i fu rth e ri g th e i te re sts r l ty n n n o f th e i su re d p u b l c b y p ro vi i g e ffi e n t se rvi n i d n ci ce w i co u rte sy. i d •A ct a s tru ste e s o f th e i su re d p u b l c i th e i n i n r i d i d u a la n d co l e cti ca p a ci e s.Objective of LIC of India
•C o n d u ct b u si e ss w i u tm o st e co n o m y a n d w i n th th th e fu l a l za ti n th a t th e m o n e ys b e l n g to th e lre i o o p o l cyh o l e rs. n vi l ve ti •M e e t th e va ri u s l fe i su ra n ce n e e d s o f th e o i n co m m u n i th a t w o u l a ri i th e ch a n g i g so ci l ty d se n n a a n d e co n o m i e n vi n m e n t. p ri e a n d j b o ci o d o
Role of LIC of India
• Largest Insurance Company in India-55 percent share in 2009. • Maximum types of schemes which touch every aspect of life-40+ schemes. • Largest institutional investor• Provides expenses of Central government-24. • Covers different economic sections of the society
. insurance is not an option but necessity in current times.6 percent of the expenses of the central govt.monpoly for 50 years.
1. at least 2048 branches.Role of LIC of India
• Help in Channelizing Money of NRI's through schemes-Currency Policy • One of the biggest Employer-8 zonal Offices and 101 divisional offices located in different parts of India.2 million agents • Non inflationary source of funds for the government • Funds to Private sector • Contribution to national GDP.In 2006. LIC created huge surpluses and contributed 7 percent to the national GDP. • Social service with profit
Indian life insurance industry
• Life Insurance is the fastest growing sector in India since 2000 as Government allowed Private players and FDI up to 26%. • In 1993 the Government of Republic of India appointed RN Malhotra Committee to lay down a road map
. All private life insurance companies at that time were taken over by LIC. Life Insurance in India was nationalized by incorporating Life Insurance Corporation (LIC) in 1956.
Indian life insurance industry
• All life insurance companies in India have to comply with the strict regulations laid out by Insurance Regulatory and Development Authority of India (IRDA).
. only ICICI Prudential is rated by Fitch India at National Insurer Financial Strength Rating of AAA(Ind) with stable outlook indicating the highest claims paying ability rating. In terms of being rated for financial strength like international players. Therefore there is no risk in going in for private insurance players.
according to the Life Insurance Council. insurers sold $10. • Life Insurance Corporation of India (LIC) registered an 83 per cent increase in new business income in March 2010.55 million new policies in 2009-10 with LIC selling $ 8.03 million policies.52 million and private companies $ 2.Current insurance market
• The $ 41-billion Indian life insurance industry is considered the fifth largest life insurance market. and growing at a rapid pace of 32-34 per cent annually. • At the end of March 2010.
. while private players posted a 47 per cent growth in new business premium • According to IRDA. LIC held 65 per cent market share in terms of new business income collection with the private sector contributing the remaining 35 per cent share in 2009-10.
• A growth of 18 per cent is expected in total premium income and is likely to cross the $ 64.
.64 billion.Current insurance market condition
• According to IRDA. according to B Mathur.64 billion collected in 200809.46 per cent over $ 19. an increase of 25.93 billion mark. Secretary General. Life Insurance Council. total premium collected in 2009-10 was $ 24.
• Building institutions for development of self regulation for better market conduct • Development of professionalism and organizing research for industry to develop on scientific lines • Ensuring profitability and return to stakeholders by cost competitive policies. •
• This meant that no there was no exit route for companies that wanted to opt out. • This was largely due to IRDA rules and regulations.LIC Till now
• Soon after the IRDA announcements. which stipulated that the partners to a joint venture could not disinvest from the venture for a period of seven years after the license was granted. foreign insurers would have little say in the management of the company and important decisions could be easily
. there were a number of breakups in the private sector joint ventures. foreign insurers were allowed only 26% equity participation. With the majority stake being with the domestic partner. • Also.