Comparative study on LIC V/S other insurances company

“PROJECT ON LIFE INSURANCES COMPANY V/S OTHER
INSURANCES COMPANIES”
Master of commerce
Semester – III
20116 – 2017
Submitted
In Partial Fulfillment of the requirements
For the award of
M.com
By
Tushar Madhukar Bhuwad
Seat No.
Tolani College of Commerce
Sher- E – Punjab Society
Andheri (East)
Mumbai - 400 065

CERTIFICATE
This is to certify that Tushar Madhukar Bhuwad of M.Com. Semester III (2016 –
2017) has successfully completed the project on Project On Life Insurances Company V/S
Other Insurances Companies under the guidance of Prof. Deepali Kamle.
Project Guide: - _____________
Course Coordinator: - _____________
External Examiner: - _____________
Principal: - _____________

DECLARATION
I Tushar Madhuakar Bhuwad the student of M.Com. Semester – III (2016 – 2017) hereby
declare that I have completed the project on Project On Life Insurances Company V/S Other
Insurances Companies in the course research methodology. The information submitted is true
and original to the best of my knowledge. References have been cited wherever necessary.
Date: - _________
Place: - Mumbai
Signature of Student
(Tushar Madhuakar Bhuwad)

ACKNOWLEDGEMENT
Preparing the project on Project On Life Insurances Company V/S Other
Insurances Companies has given me extensive practical knowledge related to the
course.
I would like to first thank our I/C Principal Dr. Vijaya Krishna for his
valuable support in preparing this project.
I express my deep sense of Gratitude to the Course Coordinator, Prof.
Sadhana Venkatesh for the valuable guidance and support during my project work.
I am thankful to my guide Prof. Deepali Kamle for providing me the
guidance throughout the course of this project. I am also thankful to him/her for
patiently and critically evaluating the content of this project.
I would like to take this opportunity to express my gratitude to all the staff of
the Library and the Computer Lab for their support.

INDEX
SR NO. Particulars Page NO.
1 Abstract 1
2 Introduction 2
3 Market Structure 3-4
4 Review of Literature 5
5 Hypothesis 6
6 Research Methodology 7-8
7 Questionnaire 9-16
8 Conclusion 17
9 Suggestion 18
10 Webliography 19

1
Abstract
My research is aimed at understanding the life insurance sector in India and flagging
issues relating to competition in this sector. The life insurance sector has a small market and
cover approx. 3 % of population in India. As a growing sector, it is important that all players get
a level playing field. The competition act is to provide for a level playing field to all players to
encourage competition in market. Through my study I have tried to substantiate this with facts
and evidence proving that LIC as a state owned enterprise enjoys a dominant market. The
enterprise having a dominant position is not per se illegal but abuse is. The dominance of LIC is
not deliberate rather it is by virtue of the regulations that the market is deprived of a level playing
field and market has an anti-competitive environment. This sector is highly lucrative and
therefore increasing the FDI cap would be a step to enhance competition in this sector and also
cover a large population. Exclusive networking, sovereign guarantee and entry barriers like
limited FDI creates an anti-competitive environment in market.
The project probes in to the Indian Economy and observes the characteristics of
Insurance Industry in India based on Strength of Insurance Industry in India and Weakness of
Insurance Industry in India. Further making literature survey, it is essential to re-look into the
Private and Public Players in insurance industry in India as insurance companies are
mushrooming after liberalization. Further, increase in the foreign direct investment from 26% to
49% shows that insurance business will grow in India but facing tough competition from rest of
the world and specifically the Asian countries. Hence, there is a chance that there may be some
difference observed in between the private and public insurance firms. Thus, in this study, an
attempt has been made to make the comparison of Private and Public firms in Insurance industry
in India will be done based on Insurance Education, Mergers and Acquisitions, Percentage of
Foreign investments in Insurance sector, Premium, Performance Evaluation. The performance
will be evaluated using the Key Performance Indicators (KPIs) in the Insurance Industry such as
operating expenses, commission expenses, retention ratio, new policies issued, registered
insurers, premium underwritten, distribution of offices of life insurers, market share, incurred
claims ratio, investment income and leverage.

2
Introduction
India is one of the fastest growing economies of the world. It is now Asia’s third largest
economy. The insurance industry has contributed in India’s growth story in recent years. The
contour of insurance business have been changing across the globe and the rippling effect of the
same can be observed in the Indian market as well as insurance industry is a growth oriented
industry. In India too, the industry has started to reveal the potential after liberalization and
privatization of the sector. The topic basically revolves around the life insurance sector which
has been recently opened for the private players. LIC has for a long period of time has enjoyed a
dominant market of life insurance and the fact cannot be denied that LIC has a pre accomplished
market leadership which makes it difficult for the new players to compete.
While the new players struggle to increase their market in India, LIC continue to leverage
advantage of its old establishment and government support for maintaining its growth. Life
Insurance is the fastest growing sector in India since 2000 as Government allowed Private
players and FDI up to 26%. Life Insurance in India was nationalized by incorporating Life
Insurance Corporation (LIC) in 1956. All private life insurance companies at that time were
taken over by LIC. In 1993 the Government of Republic of India appointed RN Malhotra
Committee to lay down a road map for privatization of the life insurance sector. While the
committee submitted its report in 1994, it took another six years before the enabling legislation
was passed in the year 2000, legislation amending the Insurance Act of 1938 and legislating the
Insurance Regulatory and Development Authority Act of 2000. The same year that the newly
appointed insurance regulator Insurance Regulatory and Development Authority IRDA started
issuing licenses to private life insurers. Insurance is an upcoming sector. In India the year 2000
was a landmark year for life insurance industry, in this year the life insurance industry was
liberalized after more than fifty year.
Insurance sector was once a monopoly, with LIC as the only company, a public sector
enterprise. But now a day the market opened up and there many private players competing in the
market. There are twenty four (annual report 2012-13 issued by IRDA) Private life Insurance
companies entered in the industry. After the entry of these private players, the market share of
LIC has been considerably reduced. For the past some year’s private players have launched
many innovations in the industry in terms of products, market channels and advertisement of
products, agent training and customer services etc.

3
Market Structure
It is important to understand the market structure of life insurance sector. LIC as a
dominant player has gained an increase of 88%in new business premium income. Despite of
uncertain environment, total premium of Life Insurance industry increase by 66% to Rs
62,361.34 crore in first six months of the current fiscal from Rs 39,046.59 crore in same period
last fiscal. In 2010, life insurance companies witnessed new business premium collecting during
first five months. According to LIC‘s recent filing with IRDA the total value of its investments
from policy holders funds, as at June 30 2010, stood at Rs 867,935 crore as agencies Rs. 717,002
crore on June,2009, the value of investments in equity share has become 183,233 crore. Public
sector Life Insurance Corporation of India (LIC) has clocked a robust 72.53 per cent jump in
fresh premium collection in January 2009 leaving behind major private sector players, most of
whom have posted negative growth in the month as compared to January 2008. Data released by
insurance sector regulator IRDA shows that the first year premium of the life insurers for the
period of December, 2010 is again predominantly in favors of LIC. Herein mentioned are some
statistics given by IRDA regarding the individual single premium of several life insurers in
December 2011:-
1. Bajaj Allianz - 77.26 crore
2. ING vyasa - 2.58 crore
3. Reliance Life - 80.26 crore
4. SBI life - 248.54 crore
5. Tata AIG - 14.02 crore
6. HDFC standard - 136.72 crore
7. ICICI prudential - 251.97 crore
8. Birla Sunlife - 9.73 crore
9. Aviva - 21.57 crore
10. Max New York - 25.15 crore

4
11. Met Life - 33.86 crore
12. Shriram Life - 44.90 crore
13. IDBI federal - 21.11 crore
14. Star Union Dai-ichi - 44.98 crore
15. LIC - 1774.43 crore
Fig: - market split up of private life insurers only excluding LIC
These are some top companies and there premium collected in December 2010 which
clearly depicts that LIC has lucrative market dominance and other private players have a small
market share. Such figures explain that LIC is a dominant entity and can influence competition in
market negatively due to the regulation of the regulatory body and the government.

5
Review of Literature
This project reviews empirical research conducted in Strategic sectors such as the
banking and the financial sector were reformed. Time had come for the policymakers to
introspect the current policies in the Indian insurance industry as well. Committees on insurance
sector reforms followed suit and it was found that India had continued to be one of the least
insured countries till the late 20th century. Experts emphasized that customer service, insurance
coverage, allocation of resources needed to be improved within the industry. Also more
innovative products were needed to suit varied customer needs and to change opinion of people
towards insurance, from tax exemption product to a tool for mitigating risks and increasing
savings. Thus it was recommended that the industry should be opened up to enhance competition
and autonomy be given to insurance companies to improve their performance and enable them to
act as independent companies with economic motives. Thus the life insurance industry was
liberalized with the aim of increasing contribution to the GDP and to the society.
Life insurance traces its origins in India to the early nineteenth century when companies
in India insured the lives of Europeans living here. Eventually these companies began to cover
Indians as well but required them to pay higher premiums. Regulations were passed to regulate
the Indian insurers (but not the foreign companies providing insurance services in India) and to
allow collection of information about insurance companies thus facilitating comparison amongst
them. However the legislations became insignificant with time and the government nationalized
the sector by combining all the 154 Indian private insurance companies to give birth to one
behemoth the Life Insurance Corporation of India. Through this the Government strived to put
an end to prevalent malpractices such as poor Servicing standards along with the appalling
management of companies wherein funds were simply being divested to all types of securities
without any valuation of the borrowers. The Government took over the reins of the industry in
its own hands reasoning that insurance was a cooperative enterprise and should be within the
purview of the state in order to provide improved services to the public at lower costs. It was also
envisioned that the nationalization of this sector would lead to more effective mobilization of
funds to enable capital to be allocated to development projects. Besides the charter of freedom
also pleaded the control of the state on key industries such as banking and insurance. Thus the
industry was transformed from a competitive one to a highly regulated monopoly.

6
Hypothesis
1. Age and income has no significant impact on the customer life insurance investment
decision.
2. Occupation and gender are independent of the customer life insurance investment
decision.
3. There is an immense need to focus on product innovation and customers need based
policies for market expansion.
4. LIC is the most trusted and preferred brand among other life insurance companies.

7
Research methodology
The study will be carried on making content analysis from the data collected from various
secondary sources such as annual reports of insurance companies, Insurance Regulatory
Development Authority (IRDA) journal, and insurance journal. The statistical tools used in the
study will be descriptive statistics, percentage analysis, growth trends. The hypothesis of the
study is that there is no difference in the growth and performance between the public and private
firm in insurance industry. The study is explorative, descriptive and empirical in nature.
1. Objective of the study
(A)Primary objectives:
1. To compare the relative effectiveness/ acceptance/ satisfaction of
2. To study the consumer behavior and investment pattern towards life insurance.
(B) Secondary objective:
1. To find out the current market scenario & current market standing of our company.
2. To provide the suggestion & recommendation to the company.
2. Data Sources:
The data collection process was carried out in various stages. These stages can be
clubbed two major heads.
Primary source- survey:
A random survey was carried out according to my convenience while going out to contact
the respondents. The different employees of government offices, private offices & different
business houses were kept in mind.
Secondary Sources:
Internal: Company’s Prospectus
External: books, Magazines, Journal’s

8
3. Data collection techniques
The data was collected through open and closed ended questionnaire, in which question
were asked in a logical order. Each question has a specific meaning. The data analysis is bases
on the data collected through these questions.
4. Sample design
(A) Target Population or Sampling Unit
The universe for the research is Goregaon East Area
(B) Sample Size
The sample size taken for the study is 30 respondents.
(C) Sample Procedure
Sample procedure used in the project is non probability sampling. The required
information was collected through convenience and judgmental sampling.
5. Data Analysis & Interpretation:
Analysis of data was done by drawing inferences through what was collected as input
from the respondents. The data analysis & interpretation part is detail on the next page

9
Questionnaire
1. General Information about the Person
a. Name of the person
b. Educational background of the person
c. Age of the person
d. Information about policy taken by the person
According to the Question I asked the selected 30 people about their name and general
information about the policy is taken by the respondent numbers of policy take small and their
educational background.
20-25
26-30
30-35
above 35
Persons
H.S.C.
Graduate
Post
Graduacte
professional
Persons
Age
between Persons
20-25 5
26-30 12
30-35 11
Above 35 2
Total 30
Persons Education
7 H.S.C.
12 Graduate
2 Post Graduate
9 professional

10
2. Have you taken a life insurance policy? If yes, how many policies have you taken?
In numbers
According to this question I found all the 30 peoples have the insurance policy. As shown
in diagram, 7 peoples have more than 4 numbers of policies and 8 respondents have only 1
policy.
7
4
11
8
Numbers of Policy taken
Person
Numbers of
Policy taken
7 4
4 3
11 2
8 1

11
3. Why did you take them? Is it due to?
Reasons Persons
Agents force 5
for effective savings 14
To meet future expected expenses 8
To meet contingencies. 3
Any other 0
Many respondents gave answer for above question that insurance policy is for effective
savings and to meet there future expected expenses.
0
2
4
6
8
10
12
14
16
Agents force for effective
savings
To meet future
expected
expenses
To meet
contingencies.
Any other
Persons
Persons

12
4. Do you know that insurance aims at covering risk and also a means of investment?
The above diagram clearly shows that 18 persons said that insurances policy aims at
covering risk as well as the investment purpose.
0 5 10 15 20
Covering risk
Investment
Both
Persons
Persons
Reason Persons
Covering risk 7
Investment 5
Both 18

13
5. Do you feel that the premiums paid in private life insurance companies are safe?
The respondent was little bit confuse about the premiums paid to private life insurance
companies is safe or not.
6. Do you think that the safety of the investments made in life insurance companies and
other private insurance companies shall be protected by the regulatory body, i.e. IRDA
The respondent was aware about the IRDA because of the ads on television except 3
people.
27
3
Persons
YES
NO
Ans. Persons
YES 11
NO 19
Ans. Persons
YES 27
NO 3
0
5
10
15
20
YES NO
Persons
Persons

14
7. Do you know that different life insurance companies have designed policies for your
different needs like children education, marriage of the daughter, retirement needs etc.
For the above question I get the positive answers from the respondent because more than
10 respondents have policies regarding children education and others respondent also have
policies regarding daughter’s marriage and meet expenses of retirement needs.
8. Do you think that SBI Life Insurance Company is a government owned company like
LIC of India?
The respondent is known that SBI life Insurance Company is government owned company
like LIC of India. But the respondent said the LIC is more trust insurance company than SBI.
0
20
40
YES NO
Persons
Persons
Ans. Persons
YES 22
NO 8
Ans. Persons
YES 30
NO 0
0
10
20
30
YES NO
Persons
Persons

15
9. Where do you invest your saving?
Many respondents gave very positive and interesting answers to this question, as shown in
diagram about 11 respondents were already invests their savings in the different insurance policies and 8
respondent invest there saving in the share market. The other 8 respondents invest their savings in post
office deposits and bank fixed deposits and 1 respondent invest their savings in real estate.
7
6
2
6
8
1 Life insurance
company
Private insurance
company
Post Office deposit
Bank deposit
Gold/Shares/Mutu
al fund
Life insurance company 7
Private insurance
company 6
Post Office deposit 2
Bank deposit 6
Gold/Shares/Mutual fund 8
Real estate 1

16
10. Did you find any difficulty in effecting corrections in policy, viz change of nomination, address
change etc?
The above question shows that the respondent is not satisfied with the services by the
LIC whereas, respondent said the private insurances companies are very effective in their
services to the customer.
0
5
10
15
20
25
30
35
LIC Private
YES
NO
Ans. LIC Private
YES 26 30
NO 4 0

17
Conclusion
The size of the market has grown and the size of the insurable population in India is
indeed vast and the existing player has managed to cover about one-fourth of it. The
opportunities before the players are therefore a plenty in terms of target audience. The falling
interest rates, the collapse of many small-time financial institutions, the scope for entering
related areas like banking and pensions in a bid for synergy and the promise of e-commerce are
some of the other opportunities knocking at the doors of the insurance majors. There is a
probability of a spurt in employment opportunities. A number of web-sites are coming up on
insurance, a few financial magazines exclusively devoted to insurance and also a few training
institutes being set up hurriedly. Many of the universities and management institutes have
already started or are contemplating new courses in insurance. Health insurance, which is still in
its infancy, is also likely to get a major boost, ultimately leading to improvement in the quality of
medical treatment and facilities in the country.
Life insurance has today 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.

18
Suggestion
 The commission needs to advocate competition in market. The commission needs to
enquire in detail about reasons behind such anti-competitive behavior of life insurance
market. The commission needs to advocate the government to remove such sovereign
guarantee to give the life insurance a free market and level playing field. The opinion
given by the commission under section 49(1) shall not be binding upon the central
government in formulating such policy. Under section 49(3) the commission shall also
takes measures for the promotion of competition advocacy, creating awareness and
imparting training about competition issues.
 The life insurance market will see a healthy competition with the opening up of
developing markets to competition, there is a greater impetus to demand growth and
volumes would start dictating economic sizes and pricing. This fuels mergers and
acquisition and makes survival of small sized firm difficult. Though life insurance
sector had not seen any merger and acquisition as yet but in the near future, with the
growth of the growth of market, such problems shall come up.
 The commission cannot challenge the regulation for insurance as there is a separate
body called IRDA governing insurance sector, but the commission can surely bring in
picture the adverse effect of such regulation on competition in market before the
consumer as well as the regulatory body to help market get a level playing field for all
players.
 There should be fair effort made by commission to enlarge the distribution network to
provide a level playing field to all players and also discourage dominance of LIC due
to exclusive distribution of network through agents.
 Also, the commission can make a report on how the IRDA regulation and also ask
government to increase FDI cap from 26% to 49% to bring more players in market
which would help more population to be covered from life insurance.

19
Webliography
1. http://indianresearchjournals.com/pdf/IJMFSMR/2012/July/9.pdf
2. https://www.scribd.com/doc/29840406/Competitive-Study-of-LIC-vs-
Private-Players-in-Life-Insurance-Sector
3. http://www.irdindia.in/journal_ijrdmr/pdf/vol2_iss3/2.pdf
4. http://shodhganga.inflibnet.ac.in

Comparative study on LIC V/S other insurances company

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