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  2. 2.  Introduction.  Need Of Insurance.  Relevance Of Insurance In Infrastructure.  Advantage.  History Of Insurance Sector.  IRDA.  TypesOf Insurance.  IT In Insurance  Current Scenario  Major Players  Growth Factors.  Challenges & Opportunity.  References
  3. 3. INTRODUCTION  Insurance is defined as an agreement between two parties whereby one of them is called insurer, agrees to protect the known insured, against a loss which may arise on the happening of on event. The document containing the agreement is called `the policy`.
  4. 4. Need Of Insurance  All types of activities are subject to risks of loss or damage due to unforeseen events which are beyond control of common people or businessmen.  Loss or damage may arise due to fire, theft,natural calamities like flood or earthquake and so on.  Hence the need of insurance arises.
  5. 5. Relevance Of Insurance In Infrastructure  The insurance sector is an integral part of the nation’s infrastructure.  Insurance sector generates Long term funds for infrastructure : Investments of insurance companies have been largely in bonds which are floated by GOI, PSUs, state governments, local bodies etc.  It provides the mode of infrastructural In 2008–09, the insurance industry contributed US$ 15.7 billion to infrastructure funding.
  6. 6. Advantage India  Risk management for strategic advantage- Expansion in the insurance industry has necessitated specialized risk management, business continuity planning and asset liability management.  Rising contribution to GDP- Premium income as a percentage of GDP has increased from 3.3 per cent in 2002–03 to 7.6 per cent in 2008–09.  Wide range of insurance products available- Insurance companies are providing a wide range of products to meet the diverse requirements of the Indian population.
  7. 7.  Mode of employment- Life insurance industry provides increased employment opportunities. Like it employed around 2 lakhs during 31st March, 2005 and 0.3 million people directly and 2.9 million people as individual agents in 2008–09. Many agents depend on insurance for their livelihood. No. of agents on 31st March 2004 – 15.59 lakhs. Brokers, corporate agents, training establishments provide extra employment opportunities. Many of these openings are in rural sectors.
  8. 8. History Of The Insurance Sector  The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta.  Some of the important milestones in the life insurance business in India are:  1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.  1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses.
  9. 9. 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. Some of the important milestones in the general insurance business in India are:  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 (Nationalisation) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973.
  10. 10.  The Malhotra committee formed in 1993 granted some reforms in the India insurance industry. The main idea behind forming this committee was to assess the function of the industry and to set the road of the future for the industry.  The committee recommended the set up of the Insurance Regulatory and Development Authority Act (IRDA Act) of 1999 paved the way for establishment of Insurance Regulatory and Development Authority (IRDA) in 2000.
  11. 11.  IRDA was formed by an act of the Indian Parliament (known as the IRDAAct, 1999) as the regulatory body to govern the Indian insurance sector.  The main aim of IRDA was to protect the concerns of insurer as well as the insured and to adopt new policies to keep up the growth of insurance in India.  As per IRDA: 1. A company, to operate as an insurance company in India, must be incorporated under the Companies Act, 1956, and possess the certificate of the memorandum of association and articles of association. 2. International players can operate in India only through a joint venture with a domestic firm and are classified under private sector insurers. 3. FDI up to 26 per cent is permitted in the insurance sector.
  12. 12. 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.
  13. 13. • It is obligatory on the part of the insurance companies to disclose clearly the benefits, terms and conditions under the policy. •All insurers are required to set up proper grievance redress machinery in their head office and at their other offices. Cont….
  14. 14. TYPES OF INSURANCE  Life Insurance: In this policy, the insurance company pays in case of the demise of the policy holder or at the time of the maturity of the policy. Now a days a new policy has been launched by LIC in which you will be covered under the insurance policy even after the maturity of the policy  Property Insurance: This insurance helps you to prevent the losses against theft, fire, burglary or any natural calamity like Earthquake, Floods etc. based on the points mentioned in the policy.
  15. 15.  Travel Insurance: Loss of personal belongings while traveling, medical coverage, delays in the travel are all part of the travel insurance policy.  Auto Insurance Any financial loss due to accident of a vehicle is covered under the auto insurance policy.  Health Insurance Health Insurance consists of a package of various types of insurance related to health. Conti….
  16. 16. APPLICATION OF INFORMATION TECHNOLOGY IN INSURANCE SECTOR  Customers are getting increasingly sophisticated and tech- savvy.  People today don’t want to accept the current value propositions, they want personalized interactions and they look for more and more features and add ones and better service  Personalization helps organizations to reach their customers with more impact and to generate new revenue through cross selling and up selling activities.  For this many organizations are incorporating knowledge database of content that typically include a search engine and lets the customers locate the all document and information related to their queries of request for services
  17. 17. MARKET OVERVIEW The insurance industry in India is at an early stage with low penetration and high potential.  The total premium of the insurance industry has grown at a CAGR of 24.6 per cent from 2002–03 to 2008–09 to reach US$ 52.6 billion in 2008–09.  The number of insurance players has increased from four and eight in life and non-life sectors, respectively, in 2000 to 23 and 22, respectively, as on January 2010. Source: “Annual reports FY00–09, ” Insurance Regulatory and Development Authority website,, a
  18. 18. Overview of the life insurance segment Premium income has grown at a high CAGR of 25.8 per cent between 2002–03 and 2008–09. The number of policies issued grew at a CAGR of 12.3 per cent. between 2002–03 and 2008–09. There are 23 players, 1 from the public sector and 22 from the private sector, as of January 2010. There is increased insurance penetration due to a growing consumer class, rising insurance awareness and increasing domestic savings and investments. Sources: “Annual report FY00-09,” Insurance Regulatory and Development Authority website,, accessed 06 January 2010; Life Insurance Council website,, accessed January 2010
  19. 19. A wide range of life insurance products are available. These include: •Group insurance products —endowments, term insurance, annuities, whole life insurance • Individual insurance products —Unit Linked Insurance Plans (ULIPs), pension funds, guaranteed life products
  20. 20. Overview of the non-life insurance segment Premium income grew at a CAGR of 17.6 per cent between 2002–03 and 2008–09. There are 22 players, out of which 7 are public sector players (including 1 reinsurer) and 15 private sector players, as of January 2010. Segments covered include auto, health, fire, marine and engineering, among others
  21. 21. Product trends: Auto insurance had the largest share in the non-life insurance segment in 2008–09 (43.2 per cent). Health segment recorded a growth of 21.3 per cent in 2008–09 (a growth of 9.3 per cent over 2005–06). Public sector companies have a dominant share in the marine insurance segment
  24. 24. 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  Favourable government and regulatory initiatives are expected to increase the contribution of the insurance industry to the overall economic development of the country.
  25. 25. Penetration levels set to increase  The increasing literacy rate, specially in rural India, has spread awareness about the need for insurance.  Between 2006 and 2026, the working population (25–60 years) is expected to increase from 675.8 million to 795.5 million giving rise to a favourablemarket for insurance companies.
  26. 26.  Fast progressing medical technology and increasing demand for better healthcare has resulted in rising demand for health insurance. Regulatory initiatives to promote health insurance include:  IRDA has set up a separate department for health insurance.  The government is set to raise budgetary support of US$ 28.33 billion for the health sector during the Eleventh Plan.  International players and life insurers have entered this segment.  Emergence of new distribution channels, such as bancassurance, brokers and e-channels, has increased outreach.
  27. 27. Rise in sale of passenger cars, fuelling demand for auto insurance
  28. 28. Challenges facing Insurance Industry Threat of New Entrants: The insurance industry has been budding with new entrants every other day. Therefore the companies should carve out niche areas such that the threat of new entrants might not be a hindrance. There is also a chance that the big players might squeeze the small new entrants.
  29. 29. Cont… • 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.
  30. 30. OPPORTUNITIES-FUTURE PROSPECT  High potential demand for insurance products  Lower penetration of the health insurance sector  Growing pension sector  Rising demand from semi-urban and rural population for micro-insurance products
  31. 31. References:  (20/10/2010)  (20/10/2010)  The CIP Report (20/10/2010)  (20/10/2010)
  32. 32. THANK YOU