Ppt on Insurance

1. INSURANCE
Shraddha Kokane

2. BASICS
• Why?
• How it works?
• Advantage to society- Pooling of resources
• Arthashastra, Manusmriti
• 1818- Oriental Life Insurance started in Calcutta but failed in 1834
• 1956- 154 insurance companies came together to form LIC
• NIA
• Warren Buffet- As high Risk in Products, insurance is compulsory
• In India penetration of life insurance currently stands at just 3.50 percent of
GDP.

3. IRDA
• British Insurance Act
• In 1912 first regulatory body Life Insurance Company’s
Act was passed
• 1999- IRDA
• Malhotra Committee- Introduced Competition from Pvt
Sector
• Earlier FDI 26% now 49%; but 100% for insurance
intermediaries

4. Evolution

5. Change from Public to Private
• Government responsibility- Social expenditure
• Public Share – 98% to 70% from 2003 to 2016 (based on
the premium collected)
• Private insurance companies’ growth but issues in claims
manipulation- to be controlled by IRDA

6. Types
• Life
• Non-Life
• Reinsurance

7. Structure

8. Market Share- LIFE
• LIC- 70%
• SBI- 5%
• ICICI- 5%
• HDFC- 5%
• Bajaj
• Max
• Birla Sunlife
• Reliance
• Others

9. Why Life Insurance?
• Family
• Inheritance
• Debt Repayment

10. NON LIFE PRODUCTS
• Auto
• Health
• Fire
• Marine
• Farm/ Crop
• Pension (PFRDA)

12. Public Sector- Non Life
• The New India Assurance Co
• United India Insurance Co
• National Insurance Co
• Oriental Insurance Co
• Agriculture Insurance Co. of India Ltd.

13. Private Sector –Growth & Opportunity
• Untouched sectors by public
• ICICI Lombard, Bajaj Allianz, IFFCO Tokio, HDFC Ergo,
Tata-AIG, Reliance, Cholamandalam, Royal Sundaram
• Private – 45% market
• Pvt Sector Premium Collection- 20% CAGR

14. Why General Insurance?
• Valuables- Burglary, Theft
• Emergencies- Flood, Famines
• Mishap- Travel
• ECGC Ltd. (formerly Export Credit Guarantee Corporation
of India Ltd.) and General Insurance Corporation of India

15. Important Terms
• Premium
• Sum Assured
• Surrender Value
• Medical & Underwriting
• Agent and Commission
• Loan against Policy
• Tax Benefit 80C and 10(10D)

16. Plans
• ULIPS
• TERM
• HEALTH
• MONEY BACK
• PENSION
• WHOLE LIFE
• ENDOWMENT

17. TERM
• Fixed term
• Low Premium
• Loss of Premium on
Maturity
WHOLE LIFE
• Not Fixed Term
• Comparatively High
Premium but fixed amount
• Option of One time
payment

18. MONEY BACK
• High Premium
• At maturity- no loss of
premium
• Debt Investment
• Guaranteed returns ensure
the wellbeing of the family in
case of the death of
policyholder.
• Death benefits include the
sum assured as well as
bonuses accrued on the
policy since the time of
buying.
ULIPs
• ULIPs are Equity linked
• Flexible returns as equity linked
• High Expense Ratio/
Management Charges
• In 2005 ULIPs had gained 450%
premiums
• IRDA disclosure norms- returns
at 6% and 10%
• Transparent than before and
option of choosing fund
• Investor can even switch from
equity to debt and visa-versa
• Long Term Benefits
• Mutual Funds are much better

19. ENDOWMENT
• High Premium
• At Maturity you get-
1. Sum Assured/
Coverage
2. Bonus
3. Guaranteed Additions
• Low Yield
• At Maturity the SV< Total
Premium
PENSION
• Annuity Plan
• Does not cover for
medical
• Cannot avail loan on this
policy
• No money back
• Cannot combine pensions
and withdraw
• Aggressive plans are
linked to equity

20. Pension
• Pension Fund Regulatory & Development Authority
• Social Security by GOI
• Act passed in 2003
• NPS scheme
• NPS manages about Rs 1.70 trillion of funds belonging to
1.5 crore subscribers.
• Of this 85 per cent are government subscribers which are
managed by seven fund managers.

21. National Pension Scheme
Architecture:
• NPS Trust
• Central Record
Keeping Agency
• Point of Presence
• Trustee Bank
• Fund Manager
Terminologies:
• PRAN
• Tier 1
• Tier 2
• Active Fund: E,C,G,A
• Auto Fund: 3
categories
21

22. NPS Models
• Central Govt (except armed forces)
• State Govt
• Corporate
• Individual- All Citizen
• Unorganized Sector- Swavalamban
22

23. My name is Insurance and I am not
an Investment

24. Reinsurance
• Insure an Insured Risk
• Origin- 1400- Barcelona
• Reasons-
1. Epidemics-Influenza,
2. WW I,
3. Cargo Ships
4. Catastrophic Fires
• Cologne Re- First Reinsurance Co followed by Munich Re

25. Reinsurance- Current
• Sectors- Aviation, Engineering, Marine and Fire
• High Capital Requirements- As industry to quadruple by 2025
• Increase in natural perils and deceases
• GIC Re- was sole reinsurance in India
• 2016- IRDA licenses given to Munich Re, Hannover
(Germany), Swiss Re (Switzerland) and SCOR (French), ITI
Re.

27. Sales Channel
• Agency sales reduced from 65% to 28%
• Bancassurance channel: 17%- 56%
• Online- Expected revenue to grow 20 times
• NGOs
• Others

28. Market Penetration India- 3.3%

29. Global
• China- Ping An Insurance & China Life Insurance
• Germany- Allianz
• HongKong- AIA Group
• France- AXA SA
• UK- Prudential Plc
• US- Metlife

30. Segmental Revenue
• New Policies- No of Policies and Premium
• Renewal- Premium
• Sum Assured- Coverage

31. Indian Growth
• The domestic life insurance industry registered 22.55 per cent growth
for new business premium in financial year 2015-16, generating a
revenue of US$ 20.34 billion largely due to the high growth in the
group single premium policy.
• The non-life insurance premium market grew at a CAGR of 12.1 per
cent
• The market share of private sector companies in the non-life
insurance premium market rose from 13.12 per cent in FY03 to 45.4
per cent in FY16

32. Latest
• Pradhan Mantri Suraksha Bima Yojana
• Pradhan Mantri Jeevan Jyoti Bima Yojana
• Atal Pension Yojana
• Success TATA AIA Life- 1 lakh to 10 lakh policies
• Latest IPOs

33. Challenges
• Technology- Not embracing the digital life
• Property & Casualty Insurance
• Claims Management- Time and Efficiency; Fraud Control
• Attrition Rate- Customer Service
• High Solvency Ratio

34. Challenges & Innovation
• Change in Sales Force-Customer Engagement- Constant
updated with the policyholder
• Products to be offered by Google and Facebook will be
preferred by Millennial- Gen Y- 18 to 24 Employee and
Client (Big Data)
• Lesser intermediary
• Asia & Insurance
• Selling Fitbits along with policies
• Pricing- Dropping the Expense Ratio

35. Challenges- Business
• Volume Growth for General Insurance- Low/ marginal growth
in Profitability
• Change in Business Models- Push to Pull Strategy
• Financial Crisis and Insurance- eg: Market Crash, Commodity
Crash, Sovereign Crisis
• Innovative financial products
• Disaster Management

36. Future
• Low Cost Products
• Micro Insurance- 140 to 300 million market- 23% growth.
Community Rural Insurance Group (CRIG).
• Farm Insurance- Tapping the agriculture sector- 30 million farmers
• Pension Plans- As retirement 5.5% by 2025
• Only 2% health coverage in the country
• Innovation in new areas- Pet Insurance, Renter’s Insurance etc

37. IPOs
• ICICI Prudential Life Insurance, the first public issue in the
Indian insurance industry has sold shares worth ₹6,057 crore
thorough the IPO.
• Apart from ICICI Pru in Life segment; HDFC Standard Life
Insurance and SBI Life Insurance Company will be taking out
IPOs.
• In the general insurance segment, GIC and New India
Assurance is all set to become to go public. The State-owned
insurance majors are likely to sell 10-15% stake. ICICI
Lombard General Insurance also is upcoming for an IPO in
the Private General Insurance segment.
• Taking together Life and General segment Insurance
companies will be raising more than Rs 40,000 crore from the
market.

38. Disruptive Innovation- Crop Insurance
• Crop insurance market in India is the largest in the world-
covering around 30 million farmers
• Government has launched various schemes
• Total sum insured under crop insurance is US$ 919.41
million in FY16
• Central Government aims at enhancing crop insurance
cover from 22 per cent of farmers to 50 per cent in the
forthcoming 2 years.

39. Crop Insurance

40. Placement
• Sales- Relationship Manager
• Business Development/ Bancassurance
• Underwriter
• Product Development
• Actuarial