Registered with Department of Charity Commissioner.

1. Present & Relative Position &
Prospects in Global Context of Indian
Insurance Sector

2. Flow of Presentation
 Introduction
 History
 Current Scenario
 Global Scenario
 India in the international context
 Relative Position of India
 Major Driving Force
 Issues, Trends & Opportunities
 Solutions

3. Introduction
 An insurance policy protects the buyer at some cost
against financial loss arising from a specified risk.
 Different situation and different people require
different mix of risk – cost combinations
 Insurance-as a security measure

4. Milestones in Life Insurance Business in
India
1818
Oriental Life Insurance Company started by
Europeans in Kolkata for European community
1870
Bombay Mutual Life Assurance Society, the first Indian
life insurance company started its business.
1912
The Indian Life Assurance Companies Act enacted as
the first statute to regulate the life insurance business.
1938
Legislation consolidated and amended by the
Insurance Act with the objective of protecting the
interests of the insuring public.
1956
245 Indian and foreign insurers and provident
societies are taken over by the central government
and nationalized. LIC formed by an Act of Parliament

5. Milestones in General Insurance Business in
India
1907
The Indian Mercantile Insurance Ltd. sets up first company to transact
all classes of general insurance business.
1968
The Insurance Act amended to regulate investments and set minimum
solvency margins and the Tariff Advisory Committee set up.
1972
The General Insurance Business (Nationalisation) Act, 1972
nationalised the general insurance business in India with effect from 1st
January 1973.
1999
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.

6. Acts related to Insurance
 The Insurance Act, 1938
 Life Insurance Corporation Act, 1956
 General Insurance Business (Nationalization) Act,
1972
 Insurance Regulatory and Development Authority
(IRDA) Act, 1999

7. INSURANCE SECTOR
REFORMS
 Headed by former Finance Secretary and RBI
Governor R.N. Malhotra in year 1993.
 The objective was to complement the reforms
initiated in the financial sector.
 The reforms were aimed at creating a more
efficient and competitive financial system suitable
for the requirements of the economy.

8. Key Recommendations
 STRUCTURE
 Government stake in the Insurance Companies to be brought
down to 50%.
 Government should take over the holdings of GIC and its
subsidiaries so that these subsidiaries can act as independent
corporations.
 All the insurance companies should be given greater freedom
to operate
 COMPETETION
 Private Companies with minimum paid up capital of Rs.1 bn
should be allowed to enter the industry.
 No Company should deal in both Life and General Insurance
through a single entry.
 Foreign Companies may be allowed to enter the industry in
collaboration with the domestic companies.
 Postal Life Insurance should be allowed to operate in the rural
market. Only one State Level Life Insurance Company should

9. Continued….
 REGULATORY BODY
 The Insurance Act should be changed.
 An Insurance Regulatory Body should be set up.
 Controller of Insurance (Currently a part from the Finance
Ministry)should be made independent .
 INVESMENTS
 Mandatory Investments of LIC Life Fund in government securities to
be reduced from 75% to 50%.
 GIC and its subsidiaries are not to hold more than 5% in any
company (There current holdings to be brought down to this level
over a period of time) .
 CUSTOMER SERVICE
 LIC should pay interest on delays on payments beyond 30 days.
 Insurance Companies must be encouraged to set up unit linked
pension plans.
 Computerisation of operations and updating of technology to be
carried out in the insurance industry.

10. Registered Insurance Companies in
India
1. Bajaj Allianz Life Insurance Co. Limited 12. Reliance Life Insurance Co. Limited.
2. Birla Sun Life Insurance Co. Ltd 13. Aviva Life Insurance Co. India Pvt. Ltd.
3. HDFC Standard life Insurance Co. Ltd 14. Sahara India Life Insurance Co, Ltd.
4. ICICI Prudential Life Insurance Co. Ltd. 15. Shriram Life Insurance Co, Ltd.
5. ING Vysya Life Insurance Company Ltd. 16. Bharti AXA Life Insurance Co. Ltd.
6. Life Insurance Corporation of India 17. Future General Life Insurance Co.Ltd.
7. Max New York Life Insurance Co. Ltd 18. IDBI Fortis Life Insurance Co. Ltd.
8. Met Life India Insurance Company Ltd. 19.
Canara HSBC Oriental Bank of Commerce
Life Insurance Co. Ltd
9. Kotak Mahindra Life Insurance Limited 20. AEGON Religare Life Insurance Co. Ltd
10. SBI Life Insurance Co. Ltd 21. DLF Pramerica Life Insurance Co. Ltd.
11. Tata AIG Life Insurance Co. Limited 22.
Star Union Dai-ichi Life Insurance Comp.
Ltd.

11. Various Insurance Covered
 Life Insurance
 Health insurance
 Non-life insurance
 Home or House Insurance
 Property insurance
 Auto Insurance
 Infrastructure Projects Insurance
 Travel Insurance
 Real Estate insurance
 Mobile insurance, etc.
• Reinsurance (for insurance companies)

12. India’s Current Scenario
 Most populous country in the world after China.
 4th largest economy based on PPP basis.
 Insurance sector in India has gone through no. of
phases.
 Private companies allowed FDI up to 26%.
 Life & General Insurance in India at infancy stage.
 Life Insurance : 4.1 % of GDP
 General Insurance : 0.6 % of GDP

13. Continued..
 Market size went up to US$ 47.89 billion in 2007
from US$ 21.71 billion in 2000.
 Between 2000 and 2007, overall premiums
sustained an average growth rate of 11.96 %.
 Health insurance sector (both life and general
insurance) is growing currently at 50 per cent.
 Expected to grow by 17 % in the current financial
year.

14. Continued..
 Out of 78 % Indian households that are aware
about life insurance only 24 % own a policy.
 Wide scale expansion activities by private
insurance companies.
 Share of state-owned insurance companies like
GIC, LIC and others is about 70 per cent
 20–30 per cent of business of many companies
comes from children-specific insurance policies.

15. Major Life Insurance Companies in
India
 LIC
 Largest Institutional Investor in India
 Operates in Mauritius, Fiji, the UK, Sri Lanka, Nepal
 Assets as on 31.03.2008 : $ 185 billion
 No. of policies : 250 million
 No. of employees : 1,13,000
 No. of agents : 1.2 million
• ICICI Prudential
 Market Share: 9.1 %
 Bajaj Allianz
 Market Share: 4.2 %
• Other companies contribute 16 %

16. Major General Insurance Companies (Mar’
08)

17. Global Scenario
 Global insurance premiums grew by 9.7% & reached
$4.2 trillion by 2007.
 NA is the most important region with premium
income of $1,600 billion in 2007. More than 75 % of
popln in USA is insured.
 EU (at $1,198 billion) & Japan (at $492 billion.)
 The United States & Japan account for a half of
world insurance premiums.
 Emerging markets accounted for over 85% of the
world’s population but generated only 10% of
premium.

18. Major Players in World

20. India in the international context
 The Indian insurance market is the 19th largest
globally.
 Ranks 5th in Asia, after Japan, South Korea, China
and Taiwan.
 Total gross premiums collected is under 2.0 % of
world premiums.
 In 2003, India had the 11th highest insurance
penetration in Asia and ranked 54th worldwide.

21. The following chart depicts the current position
of different emerging markets as well as their
expected position by 2013.

22. Insurance density in Asia 2007
(USD)

23. Penetration rate of P & C insurance as
a % of GDP in 2007

24. Major Driving Factors
 Globalization
 Deregulation which is opening up the markets
 Cheaper and more effective distribution channels
 Ongoing industry consolidation
 Increment in the policy holder firms
 Boost in Merger and Acquisitions activities
 Changing socio-economic dynamics
 Market offering wider margins
 Unique combination of size, age profile and growth
prospects

25. Major Issues
 Need for diversification in the income streams
 Insurance companies create products and go out to
find customers.
 Lack of proper agent quality
 Risk management concerns in insurance companies
 Impact of sub-prime
 Regulatory and market obstacles in the emerging
markets

26. Trends and Opportunities
 Continuous increment in intra-Asian trade
 Drastic increment in marine and cargo insurance
sectors
 Developments in countries, who are closely
regulated by their government
 Global Expansion.
 Unit–linked Insurance Plans.
 Healthcare Sector.
 Rural Market.

27. Solutions
 India needs to further liberalize investment
regulations.
 Price structures should reflect product risk.
 Provide flexible products suited to the customers
requirements
 Application of information technology in insurance
sector.

28. Conclusion
 Insurance sector today has become a mainstay of
any market economy since it offers plenty of
scope for garnering large sums of money for long
periods of time.
 A well-regulated life insurance industry which
moves with the times by offering its customers
tailor-made products to satisfy their financial
needs is, therefore, essential if we desire to
progress towards a worry-free future.

29. Thanks!!!!!!

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