• Insurance = Collective bearing of
• 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
• Five environmental variables that affect
Factors affecting service
– Technology and
– Globalization -are forcing rapid changes
in the service sector.
• In addition, there are four factors of
particular importance to service
– change in how quality is perceived
– cost control
– customer services and
– the new definitions of the customer.
ORIGIN AND GROWTH OF INSURANCE
• Till end of FY 1999-2000, two state-run
insurance companies, namely, Life
Insurance Corporation (LIC) and General
Insurance Corporation (GIC) were the
monopoly insurance 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
• 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 was converted into India'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.
Allianz Bajaj Life Insurance Co. Ltd.
AMP Sanmar Assurance Co. Ltd.
Birla Sun Life Insurance Co. Ltd.
Dabur CGU Life Insurance Company Pvt.
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.
• 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
• 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
• The private insurance players despite the
sector is still regulated has been offering
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 offer to their subscribers
• Private insurance companies offer 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.
• India’s 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
Insurance Sector -
• Demand for Pension Plans
Two relatively modern trends affect life
insurance business in India significantly:
– Joint Family System and
– elderly are increasingly having to fend
• Separateness of Banking and
• 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
• 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
• Electronic Clearance Service
• Call Centres and SMS services
INDIAN INSURANCE IN 21ST
• 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
• 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 effected.
Under the current guidelines, there is a 26 percent equity cap for
foreign partners in direct insurance and reinsurance Company