Indian General Insurance

  • 462 views
Uploaded on

The presentation focuses on price de-regulation and the resultant change in value chain of the industry & Further Developments. It also includes the effect of insurance cycle on underwriting …

The presentation focuses on price de-regulation and the resultant change in value chain of the industry & Further Developments. It also includes the effect of insurance cycle on underwriting margin in a free market country like United States.

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
462
On Slideshare
0
From Embeds
0
Number of Embeds
1

Actions

Shares
Downloads
0
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. IMPACT OF DETARIFFICATION OF INDIAN GENERAL INSURANCE MARKET
    BY
    PRASANNA R
    THANKS TO
    PROJECT GUIDE: Dr. VIKAS GUPTA
    ORGANIZATION: WADHAWAN HOLDINGS PRIVATE LTD
    Last Updated: Aug’08
  • 2. OUTLINE
    • INDIAN GENERAL INSURANCE
    • 3. DETARIFFICATION PLAN
    • 4. GENERAL INSURANCE VALUE CHAIN
    • 5. PORTER’S FIVE FORCE ANALYSIS
    • 6. INSURANCE CYCLE AND ITS CAUSES
    • 7. FUTURE DEVELOPMENTS
    • 8. INTERNATIONAL DEVELOPMENTS
    Presentation done to Wadhawan Holdings Private Limited
  • 9. INDIAN GENERAL INSURANCE MARKET
  • 10. GENERAL INUSRANCE IN INDIA
    Colonial Era
    Nationalization
    Liberalization
    Economy Nationalization begins
    Economy Liberalization begins
    Private Companies Licensed
    India’s first general insurance company – Triton established
    Corporate Agency Regulations
    Insurance Act passed
    Malhotra Committee Report
    Nationalization of General Insurance
    Insurance Broker Regulations
    IRDA Act
    1850 1938 1947 1972 1991 1994 99 00 01 02
    1907 1950 1956 1968 1994 J08 A08
    Partial Price Detariffication
    Nationalization of Life Insurance
    Complete Price Detariffication
    Indigenous – Indian Mercantile Insurance Company Limited established
    Tariff committee replaced by TAC
    Product Detariffication
    Tariff committee was set up
    Detariffication
    Presentation done to Wadhawan Holdings Private Limited
  • 11. AVIATION
    AVIATION
    AVIATION
    Detariffed
    LIABILITY
    LIABILITY
    LIABILITY
    Tariffed
    PA & HEALTH
    PA & HEALTH
    PA & HEALTH
    PRODUCT DETARIFFICATION
    MARINECARGO
    MARINE CARGO
    MARINE CARGO
    MARINE HULL
    MARINE HULL
    MARINE HULL
    FIRE
    FIRE
    FIRE
    ENGINEERING
    ENGINEERING
    ENGINEERING
    MOTOR OD
    MOTOR OD
    MOTOR OD
    MOTOR TP
    MOTOR TP
    MOTOR TP
    DETARIFFICATION PLAN
    COMPLETE PRICE DETARIFFICATION
    1994 APRIL 2005 JAN 2007 JAN 2008 APRIL 2008
    Presentation done to Wadhawan Holdings Private Limited
  • 12. Back Office Outsourcing
    ICT Manufacturers
    INDUSTRY STAKEHOLDERS
    IRDA
    Institute of Actuaries of India
    TAC
    Actuaries
    Internet
    General Insurance Council
    Insurance Ombudsmen
    Tele Marketing
    Insurer
    Correspondence
    IndianPartner
    Referrals
    HR
    Agency Force
    Retail Customers
    ForeignPartner
    Brokers
    GIC
    Bancassurance
    Underwriter’s Forum
    Mallassurance
    Reinsurance Brokers
    Corporate Customers
    One stop shops
    Retail Agents
    Insurance Institute of India
    Reinsurance
    MI Agents
    Presentation done to Wadhawan Holdings Private Limited
  • 13. GENERAL INSURANCE INDUSTRY VALUE CHAIN
    Reinsurer
    Public Disclosure
    Calculating Solvency
    Risk assessment
    Investing excess Premium
    Risk and Premium sharing
    Data Collection
    Underwriting
    Distribution of the products
    Calculating premium
    Calculating expected claims
    Marketing the products
    Designing product
    End Customer
    Investing excess premium
    Identifying market
    need
    Settlement of Claims
    Investigating Claims
    Claiming Loss
    A GROUP 11 PRESENTATION
  • 14. PORTER’S FIVE FORCE & CHANNEL POWER
    Presentation done to Wadhawan Holdings Private Limited
  • 15. INSURANCE CYCLE AND ANALYSING ITS CAUSES
  • 16. CLASSIC INSURANCE CYCLE
    Presentation done to Wadhawan Holdings Private Limited
  • 17. Time Lag
    Capital Constraints
    Stock Market Performance
    Catastrophic loss
    Naïve Rate Making Process
    Competitor driven pricing
    Economic Growth
    Interest Rate
    CAUSES OF AN INSURANCE CYCLE
    Presentation done to Wadhawan Holdings Private Limited
  • 18. INSURANCE CYCLE – UNITED STATES
    .
    R Value =-0.410
    HUGO
    ANDREW
    NORTHRIDGE
    SEPT 11
    4 hurricanes
    R Value =-0.307
    Presentation done to Wadhawan Holdings Private Limited
  • 19. INSURANCE CYCLE – UNITED STATES
    .
    Presentation done to Wadhawan Holdings Private Limited
  • 20. GROWTH IN PREMIUM – UNITED STATES
    .
    ANDREW
    NORTHRIDGE
    SEPT 11
    HUGO
    4 hurricanes
    Presentation done to Wadhawan Holdings Private Limited
  • 21. FUTURE DEVELOPMENTS AND GLOBAL PRACTICES
  • 22. FURTHER DEVELOPMENTS
    LIBERALIZATION OF THE COMMISSION
    • Let the market decide the commission of agency, broker and other channels
    • 23. Result in development of innovative channels – Mallassurance (Future Generali), Tele Marketing (TATA AIG) and One stop financial shop (Way2Wealth)
    • 24. Policies at discount rate and Intermediate earning his own margin
    INCREASE OF FDI INFLOW
    • Insurers demand that the raise of FDI cap from 26 % to 49 %
    • 25. WTO and countries like Japan, US are forcing to allow foreign players towards India’s commitment to GATS
    • 26. Plans underway to raise FDI caps in sensitive areas like Defense Manufacturing (26 % to 49 %) and air cargo (49 % to 76 %)
    Presentation done to Wadhawan Holdings Private Limited
  • 27. FURTHER DEVELOPMENTS…
    INTRODUCTION OF RETAIL AGENTS
    • Recommended by NM Govardhan Committee
    • 28. Can sell products of all insurers
    • 29. Cannot customize products unlike Brokers
    ESTABILISHMENT OF PREVENTION FUNDS
    • Training on Fire equipment
    • 30. Promote healthy diet and importance of being fit
    • 31. Prevent Automobile theft
    CATASTROPHE POOL
    • 2007: India is one of the worst hit countries due to natural disaster
    • 32. Govt. pays compensation due to lack of catastrophe cover
    • 33. Govt. has urged IRDA to create a catastrophe pool on “no profit, no loss” basis
    Presentation done to Wadhawan Holdings Private Limited
  • 34. INTERNATIONAL DEVELOPMENTS…
    PAYMENT GUARANTEE SCHEME
    • Competition and Price War Risk of insurer becoming insolvent
    • 35. Payment can be guaranteed by enforcing the following:
    • 36. Disclosure of solvency margin to the public while purchasing policies
    • 37. Mandating the submission of business plan when solvency ratio decreases below 150 %
    • 38. Allowing investment portfolio transfer and liquidity with another insurance company
    • 39. Creation Policy Holder Protection Fund
    Presentation done to Wadhawan Holdings Private Limited
  • 40. INTERNATIONAL DEVELOPMENTS…
    Insurance Contracts
    Policyholder
    Failed Insurance Company
    POLICYHOLDERS PROTECTION FUND
    Transfer of Insurance contracts
    Claims Payment
    Appointed/Substituted Insurance company
    Transfer of Insurance contracts
    Claims Payment
    Financial Aid
    Non-life Policyholders Protection Fund
    Prior Contribution
    Non Life Insurance Companies
    (Compulsory Participation)
    Presentation done to Wadhawan Holdings Private Limited
  • 41. INTERNATIONAL DEVELOPMENTS…
    • Solvency – having enough money to meet pecuniary liabilities.
    • 42. The solvency capital approaches are
    1) Fixed ratio 3) Scenario based approach and
    2) Risk based capital 4) Probabilistic approach (Solvency II)
    SOLVENCY APPROACHES
    SOLVENCY II
    • Initiated to improve harmonization of insurance companies in EU
    • 43. Based on Three-pillar concept similar to Basel II
    • 44. Introduces a two level structure – a strictly defined minimum and higher control level
    Quantitative Measures (SCR & MCR)
    Qualitative Measures (Supervision)
    Disclosure (Reporting to Supervisor & Stakeholders)
    Presentation done to Wadhawan Holdings Private Limited
  • 45. INTERNATIONAL DEVELOPMENTS…
    • Securities, Banking and Insurance are converged to form a single regulatory body
    • 46. In United States Glass-Steagall Act of 1933 was repealed
    • 47. In European Union, Financial Supervisor Agency (FSA) was formed
    • 48. In Japan, Financial Services Agency was formed as a part of Financial Big Bang revolution.
    • 49. Financial organizations into Insurance : SBI, ICICI, Religare, Canara Bank, Oriental Bank of Commerce, HDFC, DLF, Andhra Bank, Bank of Baroda, Bank of India and Union Bank of India.
    • 50. Evolution of one stop financial shops – Sivan securities (Way2wealth), equity bulls, Corporation Bank.
    • 51. There should either be a effective co-ordination or creation of a single regulatory body to manage the situation
    CONVERGENCE
    Presentation done to Wadhawan Holdings Private Limited
  • 52. REFERENCES
    • IRDA web site
    • 53. Fact Books of General Insurance Association of Japan
    • 54. Fact Books of Insurance Bureau of Canada
    • 55. National Association of Insurance Commissioners Presentations
    • 56. Craig Thorburn “On the Measurement of solvency of Insurance Companies”
    • 57. Swiss Re site
    • 58. TapenSinha “ The Indian Insurance Industry: Challenges and Prospects”
    • 59. CAS Spring Meeting Presentation “ EU Solvency II – a non life perspective”
    • 60. www.gicofindia.in
    • 61. Joan Lamm-Tennant and Mary A. Weiss on “International Insurance cycle: Rational expectations /Institutional Interventions”
    • 62. World bank database
    • 63. J.P. Wieske on Actuarial Vs Underwriting
    Presentation done to Wadhawan Holdings Private Limited
  • 64. THANK YOU