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Insurance Sector of India with reference to LIC

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  2. 2. What Is Insurance ?  Insurance is a contract between 2 parties whereby one party called insurer under take in exchange for a fixed sum called premium to pay other party happening of a certain event.
  3. 3. History Of Insurance Sector  Oriental Life Insurance Company (in Calcutta) 1818.  Tritan Insurance Company (in Calcutta) 1850.  Bombay Mutual Assurance Society in 1870.
  4. 4. History Of Insurance Sector  Indian Life Assurance Companies Act enacted in 1912.  Swadeshi movement.  LIC was founded in 1956 with the merger of 245 insurance companies and provident societies.
  5. 5. History Of Insurance Sector  In 1957, General Insurance Council was formed to transact all kind of General Insurance.  In 1972, Non Life Insurance sector was nationalised.  In 1999, IRDA was formulated.
  6. 6. Why Insurance ?  To provide security  Reduces business loss or losses  As an investment/ or saving mechanism  For tax benefits  Economic Growth
  7. 7. Classification Chart INSURANCE General Insurance Life Insurance
  8. 8. General Insurance  General insurance or non-life insurance policies, including automobile and homeowners policies, provide payments depending on the loss from a particular financial event.  General Insurance General insurance is basically an insurance policy that protects you against losses and damages other than those covered by life insurance.
  9. 9. Types Of General Insurance  HEALTH INSURANCE : Just like one looks to safeguard ones wealth, these policies ensure guarding the insurer's health against any calamities that may cause long term harm to ones life and examples of this type of policy are mediclaim policy, personal accident, group accident, traffic accident, etc.  FIRE INSURANCE : This policy is required to be taken to prevent any loss of profits / property from incidental fire. e.g: fire insurance and fire consequential loss policy.
  10. 10. Types Of General Insurance  MARINE INSURANCE : Covers the loss or damage of ships, cargo, terminals, and any transport or cargo by which property is transferred, acquired, or held between the points of origin and final destination.  MOTOR INSURANCE : It is an insurance purchased for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage and/or bodily injury resulting from traffic collisions.
  11. 11. Types Of Life Insurance
  12. 12. Types Of Life Insurance • Term Plan • Endowment Plan • Money Back Life Insurance Plan • Group Life Insurance • Unit Linked Insurance Plan
  13. 13. Term Plan This type of life insurance policy is a contract between the insured and the life insurance company to pay the persons/s he has given entitlement to receive the money, in the case of his/her death, after a certain period of time. These policies can be taken for 5, 10, 15, 20 or 30 years.
  14. 14. Endowment Plan In an endowment policy, periodic premiums are received by the insured person and a lump sum is received either on the death of the insured or once the policy period expires.
  15. 15. Money Back Life Insurance Policy This policy offers the payment of partial survival benefits (money back), as is determined in the insurance contract, while the insured is still alive. In case the insured dies during the period of the policy, the beneficiary gets the full sum insured without the deduction of the money back amount given so far.
  16. 16. Group Life Insurance This is when a group of people have been named under a single life insurance policy. It is popular for an employer or a company to add employees under the same policy. Each member of the group has a certificate as legal evidence of insurance.
  17. 17. Unit Link Insurance Plan (ULIP) ULIPs (Unit Linked Insurance Plan) offer the insured the double benefit of protection from risk and investment opportunities. ULIPs are linked to the market where the insured’s money is invested to help earn additional monetary benefits.
  18. 18. Terminologies In Insurance • Policy is a document containing the agreement. • An insurance premium is the amount of money charged by a company for active coverage. • Lock in Period during which an investor is restricted from selling a particular investment.
  19. 19. Terminologies (continued) Actuary is the person who calculates Insurance Premium . Maturity Benefit signifies the claim of the policy holder once the policy matures Death Benefit is the payment made to the beneficiary from policy when the policy holder dies.
  21. 21. Life Insurance Public Sector  Life Insurance Corporation of India.  Employee's State Insurance Corporation.
  22. 22. Life Insurance Private Sector  Bajaj Allianz Life Insurance Company Limited.  Birla Sun Life Insurance Co. Ltd.  HDFC Standard life Insurance Co. Ltd.  ICICI Prudential Life Insurance Co. Ltd.  ING Vysya Life Insurance Company Ltd.  Met Life India Insurance Company Ltd.  Max New York Life Insurance Co. Ltd.  Tata AIG Life Insurance Company Limited , etc.
  23. 23. General Insurers: Public Sector  National Insurance Company Limited.  New India Assurance Company Limited.  Oriental Insurance Company Limited.  United India Insurance Company Limited.
  24. 24. General Insurers: Private Sector  Bajaj Allianz General Insurance Co. Limited.  ICICI Lombard General Insurance Co. Ltd.  IFFCO-Tokyo General Insurance Co. Ltd.  Reliance General Insurance Co. Limited.  Royal Sundaram Alliance Insurance Co. Ltd.  TATA AIG General Insurance Co. Limited.  Cholamandalam General Insurance Co. Ltd.  Export Credit Guarantee Corporation HDFC.  Chubb General Insurance Co. Ltd.
  25. 25. Defination Of FDI FDI is direct investment into production in a country by accompany located in another country, either by buying a company in the target country or by expanding operations of an existing business in that country.
  26. 26. FDI IN INSURANCE  India is the third most attractive foreign direct investment destination in the world.  The past figure of FDI in insurance sector was 26%  The present figure is 49%  India received approximately US$4753 million worth of FDI in June 2014 ; that number decreased to US$2390 million in July 2014. 26
  27. 27. Life Insurance Corporation Of India
  28. 28. Mission and Vision  MISSION : "Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns, and by rendering resources for economic development."  VISION : "A trans-nationally competitive financial conglomerate of significance to societies and Pride of India."
  29. 29. History Of LIC  1956 : Nationalisation of the life Insurance sector existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers and 75 provident societies— 245 Indian and foreign insurers in all.  LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector.
  30. 30. Operations • Head Quarter : Mumbai • Zonal Offices : 8 • Offices : 2048 • Satellite Offices : 992 • Individual Agents : 1,337,064 • Corporate Agents : 242
  31. 31. Categories of Plans in LIC • Endowment plans • Money back plans • Single premium plans • Term insurance plans • Pension plans • Health plans.
  32. 32. Major new plans in LIC • New jeevan anand • Jeevan rakshak • Varishta pension bima yojana
  33. 33. Why you should buy Life Insurance from LIC of India? • Largest insurance Company in the world in Customer Base • No.1 insurance company in the world in terms of agency • 2nd Biggest Real Estate Owner next to Indian Railways. • LIC is one of the Highest income tax paying Organization • Only 4 countries in the world have more population that LIC`s policy holders • LIC Settles 2.21 claims per second
  34. 34. • One of the Lowest outstanding Claim Ratio in the world • LIC is second largest PC user in the country. • Information centre are set up for customers to interact easily. Dial-1251 for details. • LIC is known as "Pension Provider" of the country. • It invest immensely for social cause and development of nation. • Employees very large number of India's population.
  35. 35. • Awarded with most of the awards in insurances sector like "The most trusted service Brand" in India by "Economic Times "Golden Peacock" award for Excellence in "corporate Governance, NDTV “Profit Business Leadership” Awards,Awarded Reader Digest's "Trusted Brand“, "Loyalty Awards"- in insurance and many more…
  36. 36. What is CAGR?  CAGR (Compound Annual Growth Rate) is a useful measure of the growth of your investment over multiple time periods.  Especially if the value of your investment has fluctuated widely during the time period in question.  To calculate CAGR, enter the beginning value (t0), ending value (tn) and number of periods over which your investment has grown.  E.g. tn-t0 = 3 years and Year end revenues are (2004- 07) 9000 and 13000 resp. Then, to calculate the CAGR of the revenues over the three-year period :
  37. 37. Current Scenario Of Insurance Sector In India  Projected to increase at a compound annual growth rate (CAGR) of 12-15 per cent in the next five years.  The industry plans to hike penetration levels to five per cent by 2020.  It has the potential to top the US$ 1 trillion mark over the next seven years.  The Union Cabinet in July approved a proposal to relax FDI limit in the domestic insurance sector to 49 per cent from 26 per cent.
  38. 38. Market Size  Total market size = US$ 66.4 billion (in FY 13) (Projected to touch US$ 350-400 billion by 2020)  India was ranked 10th among 147 countries in the life insurance business in FY 13 (Share 2.03%)
  39. 39. Market Expansion (FY 03-13) Life Insurance at CAGR of 16.6% US$ 11.5 billion to US$ 53.3 billion Non-life Insurance at CAGR of 15.4% US$ 3.1 billion to US$ 13.1 billion
  40. 40. Key Investments  IGATE has signed a multi-year, platform-based contract with CNA Financial.  Export Credit Guarantee Corporation of India Ltd (ECGC) has signed a memorandum of understanding (MoU) on co-operation with the Export Credit Insurance Agencies (ECA) of BRICS countries.
  41. 41. Growth in life insurance premiums Over FY03–FY13, life insurance premiums expanded at a CAGR of 16.6 per cent. Market share of major companies in terms of total life insurance premium collected LIC is still the market leader, with 72.7 per cent share in FY13.