insurance industry in india

1. PRESENTATION
ON
INSURANCE INDUSTRY
S U B M I T T E D B Y
S H I V A N I
M B A 1 S T S E M

2. CONTENT
Introduction
History
IDRA
Types of insurance
Growth factor
Major players
Functions
Current Scenario
GIC
Bibliography

3. WHAT IS INSURANCE INDUSTRY?
Insurance is the equitable transfer of the risk of a
loss, from one entity to another in exchange for
payment. It is a form of risk
management primarily used to hedge against
the risk of a contingent, uncertain loss.
The amount of money to be charged for a certain
amount of insurance coverage is called the
premium.

4. HISTORY OF INSURANCE
Insurance in India has its history dating back till
1818,when Oriental Life Insurance Company
was started by European community.
The oldest existing insurance company in India is
National Insurance Company, which was
founded in 1906 and is doing business even day.
Insurance industry, earlier comprised of only two
state insurer
• Life Insurance CORPORATION OF India
(LIC)
General Insurance Corporation of India(GIC)

5. In 1956, 245 Indian and Foreign life insurers and provident
societies were nationalized, and new single entity namely
“LIC” was established by passing the LIC Act, 1956.
- Similarly, in 1972, 107 general insurers were nationalized
through the passing of General Insurance Business
(Nationalization) Act, 1972.
- The existing 107 insurers were amalgamated and grouped
into Five companies, viz., National Insurance Company
(NIC), New India Assurance Company (NIAC), Oriental
Insurance Company (OIC), United India Insurance
Company (UIIC), and General Insurance Corporation
(GIC).
- Then insurance industry transformed into monopoly and
Oligopolistic state or public sector insurance industry in
India.

6. The General insurance business in India, on the other hand,
can trace its roots to the Triton Insurance Company Ltd.,
the first general insurance company established in the year
1850 in Calcutta by the British.
1907: The Indian Mercantile Insurance Ltd. set up, the first
company to transact all classes of general insurance
business.
1957: General Insurance Council, a wing of the Insurance
Association of India, frames a code of conduct for ensuring
fair conduct and sound business practices.
1972: The General Insurance Business (Nationalization) Act,
1972 nationalized the general insurance business in India
with effect from 1st January 1973.

7. OBJECTIVE OF THE STUDY
To study the patterns of growth and development of life
insurance industry in India.
To study the performance of public and private sector life
insurance units in a comparative manner on the basis of
the selected variables.

8. IRDA
PROTECTION OF THE INTEREST OF POLICY
HOLDERS
IRDA has notified Protection of Policyholders Interest
Regulations 2001 to provide for: policy proposal
documents in easily understandable language; claims
procedure in both life and non-life; setting up of grievance
redressal machinery; speedy settlement of claims; and
policyholders' servicing.
The insurers are required to maintain solvency margins so
that they are in a position to meet their obligations towards
policyholders with regard to payment of claims.

10. CLASSIFICATION OF INSURANCE
Types
General
insurance
Health
insurance
Vehicle
insurance
Fire
insurance
Marine
insurance
Life
Insurance

12. GROWTH FACTORS FOR
INSURANCE SECTOR
 There is a high demand for insurance products due to a
growing middle class, increasing working population,
rising household savings and increasing purchasing power
 Favorable government and regulatory initiatives are
expected to increase the contribution of the insurance
industry to the overall economic development of the
country.

13. Source: IDRA.ORG

14. WHY INSURANCE?
• To provide security
• Old age pensions
• As an investment /or saving
mechanism
• As a collateral for loans
• For tax benefits

15. FUNCTIONS OF INSURANCE
Primary
Functions
• Provide Protection
• Collective bearing of risk
• Provide Certainty
Secondary
Functions
• Provide prevention of losses
• Small capital to cover larger risk
• Contributes towards the developments of larger
industries
Other
Functions
• Means of saving investments
• Source of earning foreign exchange
• Risk free trade

16. WHY INSURANCE SECTOR IS PRIVATIZED?
To give individual & corporate consumers a
competitive environment that can deliver
products and services in tune with their
requirement. Industry to benefits from
technology transfer & capital from global
insurance players.
India is signatory to WTO committed to open
insurance & banking.

17. 5 R’S OF INSURANCE
Risk
Return
Rider
Rewards value add
Rebate

18. MAJOR PLAYERS OF LIFE INSURANCE IN
INDIA:-
1. Life Insurance Corporation of India
2. ICICI prudential Life Insurance
3. HDFC Standard Life Insurance
4. Max New York Life Insurance
5. Birla Sun Life Insurance
6. Om Kotak Mahindra Life Insurance
7. Reliance Life Insurance
8. Allianz Bajaj Life Insurance

19. 9. ING Vyasa Life Insurance
10. SBI Life Insurance
11. Metlife Insurance
12. Sahara Life Insurance
13. Aviva Life Insurance
14. TATA AIG life Insurance

20. MAJOR PLAYERS

21. GENERAL INSURANCE
CORPORATION (GIC)
• GIC was incorporated as a holding company in 1992.
• General Insurance Business is completely owned by
the government.
• The paid up capital of GIC was fully subscribed by
the Government and of four subsidiaries.
• It was controlled by a single organization with four
subsidiaries.

22. • GIC’s four subsidiaries:
1. National Insurance Co. Ltd.,
2. New India Assurance Co. Ltd.,
3. Oriental Fire and General Insurance Co. Ltd., and
4. United India Insurance Co. Ltd.
• The Govt of India took over Control, supervision, and policy making is
with GIC.
• The premium income for GIC comes mainly through the obligatory
reinsurance premium on a quota share basis from subsidiaries on their
direct business in India (almost 20% of subsidiaries business come to
GIC).

23. SWOT ANALYSIS
• Strengths : As a vast emerging economy and a country
with more than 1bn people, India is too large to ignore,
even if the present barriers to entry are high.
• The economy is growing quite strongly and will
experience less of a slowdown than a number of other
emerging markets.
• Weaknesses : The market is dominated by state-owned
insurers and the progress to open up the market is
glacial. In the current political climate there is even less
support for change.

24. • Opportunities : The long-term potential of an
emerging economy with more than 1bn people
is unmistakable
• While GDP per capita remains low, there is an
emerging wealthier group, loosely referred to as
'middle class', and an elite group of extremely
wealthy Indians.
• Threats : The political environment is not
conducive to constructive change or sound
economic management.

25. PORTER’S 5 FORCE MODEL

26. Challenges facing Insurance Industry
 Threat of New Entrants: The insurance industry has
been budding with new entrants every other day.
• Power of Buyers: No individual is a big threat to the
insurance industry and big corporate houses have a lot
more negotiating capability with the insurance companies.
Big corporate clients like airlines and pharmaceutical
companies pay millions of dollars every year in premiums.
 Availability of Substitutes: There exist a lot of
substitutes in the insurance industry. Majorly, the large
insurance companies provide similar kinds of services –
be it auto, home, commercial, health or life insurance

27. PEST Analysis
 Political factors affecting insurance industry
• Insurance business in rural/ social sector
• Capital requirement
• Renewal of registration
• Requirement as to capital
• Investment of funds outside India
• Power to investigation or inspection
• Tax policy and insurance sector
 Economical factors affecting insurance industry
• Adequacy of capital
• Increased economical activity
• Interest rates
• Inflation rate
• Market related factors
• Customer satisfaction

28.  Socio-Cultural factors affecting insurance industry
• Population
• Life style
• Educational level
• Level of earning
• Societal benefits
 Technological factors affecting insurance industry
• Maintaining the database
• E-business insurance in India

29. BIBLIOGRAPHY
IRDA website and its report.
Indianfinance.com
Insuranceinfo.com