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Present & Relative Position & Prospects
in Global Context of Indian Insurance
Flow of Presentation
India in the international context
Relative Position of India
Major Driving Force
Issues, Trends & Opportunities
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
Milestones in Life Insurance Business in India
Oriental Life Insurance Company started by Europeans in Kolkata
for European community
Bombay Mutual Life Assurance Society, the first Indian life
insurance company started its business.
The Indian Life Assurance Companies Act enacted as the first
statute to regulate the life insurance business.
Legislation consolidated and amended by the Insurance Act with
the objective of protecting the interests of the insuring public.
245 Indian and foreign insurers and provident societies are taken
over by the central government and nationalized. LIC formed by
an Act of Parliament
Milestones in General Insurance Business in India
The Indian Mercantile Insurance Ltd. sets up first company to transact all classes of
general insurance business.
The Insurance Act amended to regulate investments and set minimum solvency margins
and the Tariff Advisory Committee set up.
The General Insurance Business (Nationalisation) Act, 1972 nationalised the general
insurance business in India with effect from 1st January 1973.
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.
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,
Headed by former Finance Secretary and RBI Governor R.N.
Malhotra in year 1993.
The objective was to complement the reforms initiated in the
The reforms were aimed at creating a more efficient and
competitive financial system suitable for the requirements of
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
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
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 be allowed to operate in
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
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) .
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
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.
Various Insurance Covered
Home or House Insurance
Infrastructure Projects Insurance
Real Estate insurance
Mobile insurance, etc.
• Reinsurance (for insurance companies)
India’s Current Scenario
Most populous country in the world after China.
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
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.
Out of 78 % Indian households that are aware about life
insurance only 24 % own a policy.
Wide scale expansion activities by private insurance
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.
Major Life Insurance Companies in India
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 %
Market Share: 4.2 %
• Other companies contribute 16 %
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
EU (at $1,198 billion) & Japan (at $492 billion.)
The United States & Japan account for a half of world insurance
Emerging markets accounted for over 85% of the world’s
population but generated only 10% of premium.
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
In 2003, India had the 11th highest insurance penetration in Asia
and ranked 54th worldwide.
The following chart depicts the current position of
different emerging markets as well as their
expected position by 2013.
Penetration rate of P & C insurance
as a % of GDP in 2007
Major Driving Factors
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
Need for diversification in the income streams
Insurance companies create products and go out to find
Lack of proper agent quality
Risk management concerns in insurance companies
Impact of sub-prime
Regulatory and market obstacles in the emerging markets
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
Unit–linked Insurance Plans.
India needs to further liberalize investment
Price structures should reflect product risk.
Provide flexible products suited to the customers
Application of information technology in insurance sector.
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.
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