Presented To: Dr. Amandeep Kaur Presented By: Kanika Gupta (4326) Shevani Gupta (4343) Rupam (4357) Shallu (4359) Malika (4381)
CONTENT Insurance Introduction € Privatisation in Insurance Types of Insurance € Growing up of Insurance Sector € Major driving factor Top players of Insurance sector Insurance and Salary € Challenges and Opportunity € Causes € € €
Introduction to InsuranceWhat is Insurance?Definitions:In law and economics, insurance is a form ofrisk management primarily used to hedgeagainst the risk of a contingent, uncertainloss. Insurance is defined as the equitabletransfer of the risk of a loss, from one entityto another, in exchange for payment.Insurance is a hedging instrument used as aprecautionary measure against futurecontingent losses.
Insurance- Introduction Insurance= Protection against Risk • Insurance is a co-operative device of distributing losses, falling on an individual or family over a large number of persons, each bearing a nominal expenditure & feeling secured against heavy loss. • Insurance business has emerged as one of the prominent financial services during recent times, particularly in developing countries where it could not grow before globalization. But it is very difficult to trace exactly when insurance originated.
Contd…Insurance has always been a politically sensitive subjectin India.Within less than 10 years of independence, the Indiangovernment nationalized private insurance companiesin 1956 to bring this vital sector under governmentcontrol to raise much needed development funds. Since then, state-owned insurance companies have grown into monoliths, lumbering and often inefficient but the only alternative. They have been criticized for their huge bureaucracies, but still have millions of policy holders as there is no alternative.€
Privatization in insuranceThe Narasimha Rao government (1991-96) which unleashed liberal changesin Indias rigid economic structure could not handle this political hot potato.Ironically, it is the coalition government in power today which has declaredits intention of opening up insurance to the private sector. Ironical becausethis government is at the mercy of support from the left groups which havebeen the most vociferous opponents of any such move.All segments of the financial sector had been opened to private playerswithbetter product, services & social objective International players are eyeing the vast potential of the Indian market and are already making plans to come in.
Types of Insurance Privatization has brought in lot of surprises for insurance sector. In India, insurance sector is at the booming stage as only 40% of the population is insured. Private organizations are striving hard and hard to develop the sector. €Government is also supporting the insurance sector to inrease the Gross Domestic Product ratio from the sector which is now about 1.4% only. Medical Auto Mediclaims Accidental insurance insurance insurance Family Other Diabetes Dental Health insurance insurance insurance insurance
Grown up insurance sector The insurance industry has grown by 83 per cent since the opening up of the sector. -C S Rao, chairman (IRDA)Insurance premium income has risen to Rs 82,415 crore in 2003-04, against45,000 crore in 2000-01.‡premium income in the life insurance sector to rise further by 15-16 per centand non-life insurance premium by 14 per cent in 2005-06.‡The health insurance sector is expected to grow by 10-15 per cent.‡foreign direct investment is increased to 49 per cent from the current 26 percent,the industry can expect greater entry of players
Cont….Indian insurance sector is likely to register unprecedentedgrowth of 200% and attain a size of Rs. 2000 billion by 2009- 10, in which 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. 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 over 97%.
Cont…. 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.€ LIC and GIC have limited number of policies to offer to their subscribers while in case of private insurance companies, their policy numbers are many more and the premium amount as well as the maturity period is much competitive as against those of government insurance companies.€ The Chamber has projected that in rural markets, the share of private insurance players would increase substantially as these have been able to generate a faith among their rural consumers.
Growth of top 10 private insurancecompanies of India: ICICI Prudential Life Insurance Co. Ltd is the biggest private life insurance company in India. It experienced growth of 58%.€ Bajaj Allianz Life Insurance Co. Ltd has reported a growth of 52% and its market share went up to 6.98% in 2007-08 form 5.66% in 2006-07.€ SBI Life Insurance Co Ltd in terms of new number of policies sold, the company ranked 6th in 2007-08. its growth is 87% over last year.
Cont…. Reliance Life Insurance Co. Ltd Total collected was Rs 2,792.76 crore and its market share went up to 2.96% from 1.23% a year back.€ HDFC Standard Life Insurance Co Ltd with an income of Rs 2,680 crore in FY2007-08, registering a year-on-year growth of 64%.€ Birla Sun Life Insurance Co Ltd market share of the company increased from 1.22% to 2.11% in 2007-08. The company moved to the 7th position in 2007-08.
Cont…. Max New York Life Insurance Co Ltd has reported growth of 73% in 2007-08. Total new business generated was Rs 641.83 crore as against Rs 387.51 crore.€ Kotak Mahindra Old Mutual Life Insurance Ltd the fiscal 2007- 08, the company reported growth of 80%, moving from the 11th position to 9th. It captured a market share of 1.19% in 2007-08.€ Aviva Life Insurance Company India Ltd ranking dropped to 10th in 2007-08 from 9th last year. It has presence in more than 3,000 locations across India via 221 branches and close to 40 banc assurance partnerships.
Major Driving FactorGrowing Demand from Semi-Urban Population.€Rising demand for retirement provision in the ageingpopulation.€The opening of the pension sector and the establishmentof the new pension regulator.€Rising per capita incomes among the strong middle class,and spreading affluence.€Public private partnerships infrastructure development.€Growing consumer class and increase in spending &saving capacity.
Top Players of Insurance SectorFollowing are the top playersof the insurance sectoroffering most competitivepackages to their employees:€Life Insurance Corporation€New York LifePrudentialMet LifeBirla InsuranceKotak MahindraICICIHDFC
Insurance and Salary •Due to privatization in insurance sector growth options have been changed. •From basic salary with small incentives, compensation systems have been grown to increased salaries, incentives, perks, allowances, accommodations, etc. •The average salary increase for the year 2006 was 17.1%.
Insurance due to Current Scenario privatizationProcess of privatization will Entry of privatization lead to `green field area of €Competition activity. €New product & €The banks and capital technology markets were integrated €Distribution work with insurance, which, in €Customer services turn, was vital to sustain €CRM policy increases and grow the economy sales force €Trade and finance had no €Modern marketing geographical limits and, approach hence, the need to align with the international scenario in this aspect. €Risk coverage & security
Challenges & Opportunities Mass Marketing €Job Opportunities €Inflow of Funds €Reinsurance €Marketing Strategies €Bank assurance €Information technology
Causes Ineffective distribution and marketing strategies adopted by LIC €Limited advertising initiatives