Insurance Sector of India with reference to LIC

1. INSURANCE SECTOR AND LIC

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. History Of Insurance Sector
 Oriental Life Insurance Company (in Calcutta)
1818.
 Tritan Insurance Company (in Calcutta) 1850.
 Bombay Mutual Assurance Society in 1870.

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. 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. Why Insurance ?
 To provide security
 Reduces business loss or losses
 As an investment/ or saving mechanism
 For tax benefits
 Economic Growth

7. Classification Chart
INSURANCE
General
Insurance
Life
Insurance

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. 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. 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. Types Of Life Insurance

12. Types Of Life Insurance
• Term Plan
• Endowment Plan
• Money Back Life Insurance Plan
• Group Life Insurance
• Unit Linked Insurance Plan

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. 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. 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. 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. 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. 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. 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.

20. MAJOR PLAYERS

21. Life Insurance Public Sector
 Life Insurance Corporation of India.
 Employee's State Insurance Corporation.

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. General Insurers: Public Sector
 National Insurance Company Limited.
 New India Assurance Company Limited.
 Oriental Insurance Company Limited.
 United India Insurance Company Limited.

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. 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. 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. Life Insurance Corporation Of India

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. 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. Operations
• Head Quarter : Mumbai
• Zonal Offices : 8
• Offices : 2048
• Satellite Offices : 992
• Individual Agents : 1,337,064
• Corporate Agents : 242

31. Categories of Plans in LIC
• Endowment plans
• Money back plans
• Single premium plans
• Term insurance plans
• Pension plans
• Health plans.

32. Major new plans in LIC
• New jeevan anand
• Jeevan rakshak
• Varishta pension bima yojana

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. • 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. • 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. 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. 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. 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. 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. 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. 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.