INDIAN INSURANCE INDUSTRY-POSTLIBERELISATION SCENARIOPresented by :M.S.NARAYAN,Development Officer, LIC of India,Mandya Branch, Mandya.
LIBERALISATION OF INDIANINSURANCE MARKET• In July 2000, immediately after the firstmeeting of the Insurance Advisorycommittee, 11 essential regulations relevantfor players entering the Indian market werenotified.• In October 2000, six licenses to new playersin the life and non-life sectors were issued.• India thus became a liberalized insurancemarket.
THE IRDA BILL• A fresh Bill was introduced by the new government in thesecond half of 1999 by incorporating the provisions ofthe Insurance Regulatory Authority Bill 1998 and theamendments suggested by the standing committee onfinance.• The amendments pertained to foreign equity beingrestricted to 26%; name of IRA being changed to IRDAas also emphasis on development of social, rural andunorganized sectors.• The IRDA Bill was passed in December 1999 andbecame an Act in April 2000.
CONSTITUTION OF IRDA1 - CHAIR PERSON5 - WHOLE TIME MEMBERS5 - PART TIME MEMBERSTENURE 5 YEARS
PURPOSE OFREGULATIONTHE PURPOSE OF REGULATIONS ARE TO,ENSURE PROTECTION OF CUSTOMER INTERESTENSURE FINANCIAL SOUNDNESS OF INSURANCE COMPANIES,WITH AVIEW TO AVOID INSOLVENCYENSURE HEALTHY COMPETION& GROWTH OF INSURANCE MARKETREGULATE APPOINTMENT,CONDUCT &PERFORMANCE OFINTERMEDIARIESWEED OUT INEFFICIENT FIRMS FROM THE MARKETENSURE A FAIR PREMIUM RATEENSURE EQUITABLE ALLOCATION OF PROFIT TO THE CUSTOMERS
ROLES OF IRDASUPERVISORY ROLEREVIEW OF BUSINESS OPERATIONSREVIEW OF ACCOUNTIG STANDARDSREVIEW OF OVERALL CORPORATE PERFORMANCEISSUE OF EARLY WARNING SIGNALSINTERVENTIONARY ROLEENFORCING COMPLIANCE TO THE ACTENSURING OBLIGATORY INSURANCE COVERAGEENSURING RETENTION OF SURPLUS WITHIN THE COUNTRYINVESTMENT STIPULATIONSENSURING GROUND RULES FOR COMPANY CONSTITUTIONPROMOTIONAL ROLETO ACT AS FECILITATORTO PROVIDE ENCOURAGEMENT TO NEW ENTRANTSTO ENSURE MANDATORY INSURANCE COVERTO INTEGRATE LOCALMARKET WITH GLOBAL MARKETTO ENSURE ADEQUATE RETURNS TO POLICY HOLDERS
MANDATES OF IRDATHE IRDA POSSESSES THE AUTHORITY TO• ISSUE CERTIFICATION OF REGISTRATION TO INSURER• RENEW THE CERTIFICATE OR MODIFY OR WITHDRAW ORSUSPEND OR CANCEL SUCH REGISTRATION AS THECIRCUMSTANCES MAY BE,• CONDUCT INSPECTION/AUDIT OFINSURERS/INTERMEDIARIES AND OTHER ORGANISATIONS,• REGULATE INVESTMENT FUNDS,* REGULATE MAINTANANCE OF SOLVENCY MARGINS,* ADJUDICATE THE DISPUTES,
MANDATES OF IRDATHE IRDA IS ALSO AUTHORISED TO,* STIPULATE PERCENTAGE OF BUSINESS FROM RURAL/SOCIALSECTOR,*ESTABLISH ADVISORY COMMITTEE CONSISTING OF NOTMORE THAN 25 MEMBERS AS EX-OFFICIO PARTICIPANTSTO ADVISE THE IRDA ON ALL MATTERS OF THE AC* STIPULATE PERCENTAGE OF BUSINESS FROM RURAL/SOCIALSECTOR,*ESTABLISH ADVISORY COMMITTEE CONSISTING OF NOTMORE THAN 25 MEMBERS AS EX-OFFICIO PARTICIPANTSTO ADVISE THE IRDA ON ALL MATTERS OF THE AC
GOVERNANCE OF IRDAIRDA IS BOUND BY THE FOLLOWING.COMPTROLLER &AUDITOR GENERAL SHALL AUDIT ITS ACCOUNTSCENTRAL GOVT. SHALL GIVE DIRECTIONS ON QUESTIONS OF POLICYTO BE FOLLOWEDGOVT. CAN SUPERSEDE THE IRDA IF NECESSARY FOR A PERIOD OFNOT EXCEEDING SIX MONTHS AND GOVT. CAN APPOINT ACONTROLLER OF INSURANCE IN THAT PERIODIT SHOULD SUBMIT A REPORT TO THE GOVT.ON ITS ACTIVITIESDURING THE FINANCIAL YEAR WITHIN 9 MONTHS FROM THECLOSING DATETHE CHAIRPERSON,MEMBERS,OFFICERS & EMPLOYEES SHALL BEDEEMED TO BE THE PUBLIC SERVANTS
DOMINANCE OF LICI & GIC.COs.LICIPvt. Cos.N-IndiaNationalUnitedOrientalPvt.CosLICIPvt. Cos.76.91%23.09%31.3% 68.7%41.24%Market Share of Policies in 2010-11Market Share of Premium in 2010-112010-2011Market Share of 4 GIC Cos. 58.76%Market Share of Pvt.Cos. 41.24%New India 16.66% National 14.36%United India 14.97% Oriental 12.77%LIFE INSURANCE GENERALINSURANCE
AWARDs & ACCOLADEs FOR LIC OF INDIA2010-2011.“Most Preferred Life Insurance Company of the Year’’ at the CNBC AwaazConsumer Awards fifth time in a row.Outlook Money Award for“ Best Life Insurer” third time in a row.“Best Life Insurance Company of the Year’’– NDTV Profit BusinessLeadershipAwards-2010.AIMA- High Performance Award.READER’S DIGEST- Most Trusted Brand Award.Golden Peacock Award for Corporate Governance.World Brand Congress Award FOR Brand Excellence.World HRD Congress Award for Innovative HR Practices.Shoppers and Consumers Insight AwardCORP. OFFICE- MUMBAIZONAL OFFICES -8DIVISIONAL OFFICES-113BRANCH OFFICES-2048SATTELITE OFFICES-340Customer Zones-54Metro Area Service Units-25Over 13 Lakh Agents.TOTAL ASSETS –Rs 13.25trillionI.e., 295.48Billion US$
MAJOR PRIVATE PLAYERs INLIFE INsURANCE MARKETRelianceBajaj-AL.ICICI- PruBirla-SLOTHERSReliance Life 17.12% Bajaj Allianz 13.88% ICICI Pru 12.15% Birla Sun life 09.05%Other 18 Private Insurers 47.79%23.05% OF TOTAL INDIAN LIFE INSURANCEMARKET IS SHARED BY 22 PRIVATE COMPANIES
LIC’S CLAIM PERFORMANCE• During 2010-11, LIC, the public sector insurancebehemoth settled 97.5 per cent of death claims,whereas claims pending stood at 1.47 per cent.• Overall, LIC settled 99.6 per cent of the totalclaims in the last financial year. And 95 per centof the death claims were settled within 15 daysof intimation.• In total in 2010-11, LIC has settled around 18.3million claims amounting to Rs 53,000 crore,which includes survival benefits, maturity anddeath claims. Of this, Rs 6,000 crore accountedfor 721,000 death claims.
ThE CLAIM REPudIATIONRATIOThe claim repudiation ratio is a measure of death claims rejected.The claim repudiation ratio has improved over the last financial year ininsurance industry.LIC still remains the benchmark when it comes to settling deathclaims. However, major private players are also fast catching up.During 2010-11, LIC improved its repudiation ratio for death claims to1.09 per cent from 1.21 per cent in the previous year.Among the private players, ICICI Prudential Life was the best performerin terms of claims repudiation ratio, whereas HDFC Life’s claimssettlement ratio was the highest, respectively.
FuTuRE INduSTRY PROSPECTS• CONVENTIONAL INSURANCE• PENSIONS & ANNUITIES• HEALTH INSURANCE• GROUP INSURANCE• MICRO INSURANCE• REINSURANCE• RISK MANAGEMENT
M.S.NARAYAN,Development Officer,LIC of India,Mandya Branch, Mandya.