AWARENESS OF INSURANCE IN INDIA

1. THE INSURANCE INDUSTRY IN INDIA AN OVERVIEW

With the largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. Its a business growing at the rate of 15-20 per cent annually and presently is of the order of s 15!0."1 billion #for the financial year 200! $ 200%&. 'ogether with ban(ing ser)ices, it adds about %* to the countrys +ross ,omestic -roduct #+,-&. 'he gross premium collection is nearly 2* of +,- and funds a)ailable with .I/ for in)estments are 0* of the +,-. 1)en so nearly !5* of the Indian population is without life insurance co)er while health insurance and non-life insurance continues to be below international standards. 2 large part of our population is also sub3ect to wea( social security and pension systems with hardly any old age income security 2 well-de)eloped and e)ol)ed insurance sector is needed for economic de)elopment as it pro)ides long term funds for infrastructure de)elopment and strengthens the ris( ta(ing ability of indi)iduals. It is estimated that o)er the ne4t ten years India would re5uire in)estments of the order of one trillion 67 dollars.

AWARENESS OF INSURANCE IN INDIA

2. HISTORICAL PERSPECTIVE

'he history of life insurance in India dates bac( to 1010 when it was concei)ed as a means to pro)ide for 1nglish Widows. Interestingly in those days a higher premium was charged for Indian li)es than the non - Indian li)es, as Indian li)es were considered more ris(y to co)er. 'he 8ombay 9utual .ife Insurance 7ociety started its business in 10%0. It was the first company to charge the same premium for both Indian and non-Indian li)es. 'he :riental 2ssurance /ompany was established in 1000. 'he +eneral insurance business in India, on the other hand, can trace its roots to 'riton Insurance /ompany .imited, the first general insurance company established in the year 1050 in /alcutta by the 8ritish. 'ill the end of the nineteenth century insurance business was almost entirely in the hands of o)erseas companies. Insurance regulation formally began in India with the passing of the .ife Insurance /ompanies 2ct of 1;12 and the -ro)ident <und 2ct of 1;12. 7e)eral frauds during the 1;20=s and 1;>0=s sullied insurance business in India. 8y 1;>0 there were 1%! insurance companies. 'he first comprehensi)e legislation was introduced with the Insurance 2ct of 1;>0 that pro)ided strict 7tate /ontrol o)er the insurance business. 'he insurance business grew at a faster pace after independence. Indian companies strengthened their hold on this business but despite the growth that was witnessed, insurance remained an urban phenomenon.

AWARENESS OF INSURANCE IN INDIA

'he +o)ernment of India in 1;5!, brought together o)er 2"0 pri)ate life insurers and pro)ident societies under one nationali?ed monopoly corporation and .ife Insurance /orporation #.I/& was born. @ationali?ation was 3ustified on the grounds that it would create the much needed funds for rapid industriali?ation. 'his was in conformity with the +o)ernment=s chosen path of 7tate led planning and de)elopment. 'he non-life insurance business continued to thri)e with the pri)ate sector till 1;%2. 'heir operations were restricted to organi?ed trade and industry in large cities. 'he general insurance industry was nationali?ed in 1;%2. With this, nearly 10% insurers were amalgamated and grouped into four companies- @ational Insurance /ompany, @ew India 2ssurance /ompany, :riental Insurance /ompany and 6nited India Insurance /ompany. 'hese were subsidiaries of the +eneral Insurance /ompany #+I/&.

3. KEY MILESTONES
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AWARENESS OF INSURANCE IN INDIA

1912: 'he Indian .ife 2ssurance /ompanies 2ct enacted as the first statute to regulate the life insurance business. 1928: 'he Indian Insurance /ompanies 2ct enacted to enable the go)ernment to collect statistical information about both life and non-life insurance businesses. 1938: 1arlier legislation consolidated and amended by the Insurance 2ct with the ob3ecti)e of protecting the interests of the insuring public. 1956: 2"5 Indian and foreign insurers along with pro)ident societies were ta(en o)er by the central go)ernment and nationali?ed. .I/ was formed by an 2ct of -arliament- .I/ 2ct 1;5!- with a capital contribution of +o)ernment of India s. 5 crore from the

4. INDUSTRY REFORMS

AWARENESS OF INSURANCE IN INDIA

eforms in the Insurance sector were initiated with the passage of the I ,2 8ill in -arliament in ,ecember 1;;;. 'he I ,2 since its incorporation as a statutory body in 2pril 2000 has fastidiously stuc( to its schedule of framing regulations and registering the pri)ate sector insurance companies. 7ince being set up as an independent statutory body the I ,2 has put in a framewor( of globally compatible regulations. 'he other decision ta(en simultaneously to pro)ide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the I ,2 online ser)ice for issue and renewal of licenses to agents. 'he appro)al of institutions for imparting training to agents has also ensured that the insurance companies would ha)e a trained wor(force of insurance agents in place to sell their products.

5. PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA

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AWARENESS OF INSURANCE IN INDIA

'he life insurance industry in India grew by an impressi)e "%.>0*, with premium income at s. 15!0."1 billion during the fiscal year 200!-200%. 'hough the total )olume of .I/=s business increased in the last fiscal year #200!-200%& compared to the pre)ious one, its mar(et share came down from 05.%5* to 01.;1*.

'he 1% pri)ate insurers increased their mar(et share from about 15* to about 1;* in a year=s time. 'he figures for the first two months of the fiscal year 200%-00 also spea( of the growing share of the pri)ate insurers. 'he share of .I/ for this period has further come down to %5 percent, while the pri)ate players ha)e grabbed o)er 2" percent. With the opening up of the insurance industry in India many foreign players ha)e entered the mar(et. 'he restriction on these companies is that they are not allowed to ha)e more than a 2!* sta(e in a companys ownership. 7ince the opening up of the insurance sector in 1;;;, foreign in)estments of companies ha)e been granted licenses. Inno)ati)e products, smart mar(eting, and aggressi)e distribution ha)e enabled fledgling pri)ate insurance companies to sign up Indian customers faster than anyone e4pected. Indians, who had always seen life insurance as a ta4 sa)ing de)ice, are now suddenly turning to the pri)ate sector and snapping up the new inno)ati)e products on offer. 7ome of these products include in)estment plans with insurance and good returns #unit lin(ed plans&, multi $ purpose insurance plans, pension plans, child plans and money bac( plans. #www.wi(ipedia.com& s.

0.% billion ha)e poured into the Indian mar(et and 1; pri)ate life insurance

AWARENESS OF INSURANCE IN INDIA

6. INSURANCE INDUSTRY CLASSIFICATION

INSURANCE

AWARENESS OF INSURANCE IN INDIA

LIFE INSURANCE

GENERAL INSURANCE

F !" I#$%!&#'"

M&! #" I#$%!&#'"

M"( ')& *

M+,+! V"- ')"

L ." #$%!&#'"
L ." #$%!&#'" is a contract between the policy owner and the insurer, where the insurer agrees to pay a designated beneficiary a sum of money upon the occurrence of the insured indi)idual=s or indi)iduals= death or other e)ent, such as terminal illness or critical illness. In return, the policy owner agrees to pay a stipulated amount #at regular inter)als or in lump sums&. 'here may be designs in some countries where bills and death e4penses plus catering for after funeral e4penses

should be included in -olicy -remium. In the 6nited 7tates, the predominant form simply specifies a lump sum to be paid on the insured=s demise. 'he )alue for the policyholder is deri)ed, not from an actual claim e)ent, rather it is the )alue deri)ed from the =peace of mind= e4perienced by the policyholder, due to the negating of ad)erse financial conse5uences caused by the death of the .ife 2ssured.
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AWARENESS OF INSURANCE IN INDIA

.ife policies are legal contracts and the terms of the contract describe the limitations of the insured e)ents. 7pecific e4clusions are often written into the contract to limit the liability of the insurerA for e4ample claims relating to suicide, fraud, war, riot and ci)il commotion.

F !" I#$%!&#'"
<ire Insurance is one of the oldest forms of insurance and goes as far bac( as 9arine insurance. Its origins are in the the age-old fear of fire and human failing to control fire. In the early de)elopment of industrial society fire was the main source of energy. @o industrial acti)ity or commerce was possible without fire and the need to insure the ris( of uncontrolled fire became the integral part of society. <ire insurance is designed to pro)ide for financial loss to property due to fire and few other related ha?ards. <ire insurance is go)erned by 'ariff under the 'ariff 2d)isory /ommittee #'2/&.

M&! #" I#$%!&#'"

9arine insurance has been defined as a contract between insurers and insured whereby the insurer underta(es to indemnify the insured in a manner and to the

interest thereby agreed, against marine losses incident to marine ad)enture. 7ection 2#1>& 2 of Insurance 2ct 1;>0 defines it as followsB 9arine insurance businessC means the business of effecting contracts of insurance upon )essels of any description, including cargoes freights and other interests which may be legally insured in or in relation to such )essels, cargoes, freights,
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AWARENESS OF INSURANCE IN INDIA

goods, wares, merchandise and property of whate)er description insured for any transit by land or water or both, and whether or not including warehouses ris(s or similar ris(s in addition or as incidental to such transit and includes any other ris(s customarily included among the ris(s insured in marine policies

H"&),- I#$%!&#'"
Dealth Insurance mainly co)ers two types of benefitsB one is related to the reimbursement of medical e4penses related to specific diseases and the other is related to the hospitali?ation. +lobally, the health co)ers operate in two ways $ cashless and cash reimbursable ones. 'he health insurance has changed the way medicine is dispensed and sold in the most parts of the world. In India, its impact has yet to be felt. Dowe)er, the introduction of the now famous E9ediclaim policy made a huge difference to an ordinary citi?ens usage of insurance for medical co)er purpose.

M+,+! I#$%!&#'"
9otor Insurance is one of the largest non-life insurance business in the world. 'his is because it is statutorily mandated in most parts of world. 2ll motor )ehicles are re5uired to be registered with road transport authorities and insured for third party liability. 'he basic premise is that motor )ehicles could either cause in3ury or be a sub3ect to damage and in3ury and thus re5uire insurance. 'he 9otor Fehicle 2ct of 1;>; introduces compulsory insurance to ta(e care of those who may get in3ured in an accident. 'he insurance of damage to )ehicle is not mandatory

I#$%!&#'" /!+0 ("$:

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AWARENESS OF INSURANCE IN INDIA

-rotection to in)estor. 2ccumulation of sa)ings. /hanneling these sa)ings into sectors needing huge long term in)estment.

F%#', +#$ +. #$%!&#'":

P!+0 (" /!+,"', +#: 'he primary function of insurance is to pro)ide

protection against future ris(, accidents and uncertainty. Insurance cannot chec( the happening of the ris(, but can certainly pro)ide for the losses of
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AWARENESS OF INSURANCE IN INDIA

ris(. Insurance is actually a protection against economic loss, by sharing the ris( with others.

C+))"', 0" 1"&! #2 +. ! $3: Insurance is an instrument to share the

financial loss of few among many others. Insurance is a mean by which few losses are shared among larger number of people. 2ll the insured contribute the premiums towards a fund and out of which the persons e4posed to a particular ris( is paid.

A$$"$$*"#, +. ! $3: Insurance determines the probable )olume of ris(

by e)aluating )arious factors that gi)e rise to ris(. determining the premium rate also. is( is the basis for

P!+0 (" '"!,& #,4: Insurance is a de)ice, which helps to change from
uncertainty to certainty. Insurance is de)ice whereby the uncertain ris(s may be made more certain.

S*&)) '&/ ,&) ,+ '+0"! )&!2"! ! $3 : Insurance relie)es the businessmen

from security in)estments, by paying small amount of premium against larger ris(s and uncertainty.

C+#,! 1%,"$ ,+5&!($ ,-" ("0")+/*"#, +. #(%$,! "sB Insurance

pro)ides de)elopment opportunity to those larger industries ha)ing more ris(s in their setting up. 1)en the financial institutions may be prepared to
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AWARENESS OF INSURANCE IN INDIA

gi)e credit to sic( industrial units which ha)e insured their assets including plant and machinery.

M"&#$ +. $&0 #2$ &#( #0"$,*"#,: Insurance ser)es as sa)ings and

in)estment, insurance is a compulsory way of sa)ings and it restricts the unnecessary e4penses by the insured=s <or the purpose of a)ailing incometa4 e4emptions also, people in)est in insurance.

S+%!'" +. "&!# #2 .+!" 2# "6'-&#2": Insurance is an international

business. 'he country can earn foreign e4change by way of issue of marine insurance policies and )arious other ways.

R $3 .!"" ,!&(": Insurance promotes e4ports insurance, which ma(es the

foreign trade ris( free with the help of different types of policies under marine insurance co)er.

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AWARENESS OF INSURANCE IN INDIA

7. CONSUMER A8ARENESS
/onsumer awareness is the mainspring of demand creation which runs the wheels of industry $ any industry for that matter. 'o this Edemand cur)e, suppliers and ser)ice pro)iders respond, by ma(ing a)ailable to consumers what they want, meeting their needs and e4pectations. 'his is the way two usages Ecustomer needs and Ecustomer satisfaction emerged. 2nd these later tra)elled to domains of Ecustomer delight and Ecustomer ecstasy. /onsumer awareness, thus, becomes the genesis for business entities. <or life insurers to initiate, e4pand, grow and sustain by responding to larger and larger )olumes of demand emerging with greater awareness, and setting in place supply chain management. <or life insurers to penetrate significantly and forge ahead in the emerging mar(et, enhancing consumer awareness becomes the prime focus of all acti)ities. 2s also strength and competencies to Ecompete for future

H+5 ,-"4 2+ &1+%,

.ife insurers, both in public sector and pri)ate sector, should appreciate this Emoment of truth so to say and gal)ani?e their energies and resources intelligently to bring about greater consumer awareness as a basic facilitator and an important constituent of business strategy. 'his will create synergy all across the organi?ation. It should be appreciated that /onsumer awareness pro)ides a new frame of reference for )alue creation as also an opportunity for inno)ation. It is time to thin( out of EIn bo4 and adopt no)el strategies and measures to foster awareness. 'o mention a fewB

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AWARENESS OF INSURANCE IN INDIA

launch awareness mo)ement through )arious con)enient people-oriented programs through media, corporate publicity, rural camps and popular communication channels including adio, 'F, -ublicity FansA awareness of products and ser)ices though )isuals that trigger curiosity and manifest in terms of desire and later sale-purchase transactionsA beyond these stages, to ta(e up awareness of other aspects such as product, price, 5uality, ser)ice , con)enience, status, pride, 3oy and easeA campaigns to educate rural and semi urban masses on the need for security that protects their li)elihood, security for produce and belongings and create feel-good feelingsA 1ngage @+:s with pro)en credentials and rural intermediaries. In summary, as life insurers #and similarly non-life insurers& get into such massi)e efforts to reach out to all and sundry, a new phenomenon will emerge to their delight )i?., opening up promising a)enues for Ecreation of new mar(ets $ the basic fundamental and prere5uisite for sustainable growth. 9ar(et dynamics will rule and unfold a stage through a process of e)olution Enew )alue creation $ the sum total of all inno)ations. 'hereby a new phenomenon of Eco-creating uni5ue )alue with customers will emerge as so brilliantly in his later path-brea(ing 'itle G'he <uture of /ompetitionB /o-creating 6ni5ue Falue with /ustomersC. /reating /onsumer 2wareness in .ife Insurance .et conclude by putting across two well(nown propositions that underline E consumer awarenessB Gcustomer is business, business is people, people are customersC G satisfying a customer is e)erybodys businessC 'his phenomenon $ creating /onsumer awareness

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AWARENESS OF INSURANCE IN INDIA

8. INSURANCE A8ARENESS
INSURANCE A8ARENESS
#Issued in -ublic Interest&

Why do you need to put your hard earned money inH 6@I' .I@I1, I@76 2@/1 -.2@7 li(e .I/ 1@,:W91@' plus, 9oney plus, -rofit plus, <ortune plus, 8a3a3 6nit gain, 78I 6nit plus etcH 'erm Insurance is the /heap J 8est form of Insurance recommended by /ertified <inancial -lanners all o)er the worldK .et 1)eryone Inow about G'erm InsuranceC 2nd Delp them to a)oid losing their hard earned money in 6.I-sK

T-" 9"$, T"!* I#$%!&#'" P)&#$ # I#( &

INSURANCE COMPANY POLICY NAME

IDBI Fortis TATA AIG Reliance Life HDFC Life Bajaj Allianz LIC In%ia First Bharti A&A 'ahara Life

Termsurance Raksha Term Plan Term Assurance Ne Risk Care II Anmol !ee"an # $ Life Plan 'ecure Confi%ent 'ahara (a"ach :INSURANCE IS NOT AN INVESTMENT : 718I $ 7ecurities 14change J 8oard of India #@I79&

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AWARENESS OF INSURANCE IN INDIA

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AWARENESS OF INSURANCE IN INDIA

9. INSURANCE AND ECONOMY

Indian economy is growing in reference to global mar(et. 8usiness of insurance with its uni5ue features has a special place in Indian economy. It is a highly speciali?ed technical business and customer is the most concern people in this business, therefore this business is able to spur the growth of infrastructure and act as a catalyst in the o)erall de)elopment of Indian economy. 'he high )olumes in the insurance business help spread ris( wider, allowing a lowering of the rates of the premium to be charged and in turn, raising profits. When there is a bigger base, the probabilities become more predictable, and with system wide ris(s balanced out, profits impro)e. 'his e4plains the current scenario of mergers, ac5uisitions, and globali?ation of insurance. Insurance is a type of sa)ings. Insurance is not only important for ta4 benefits, but also for sa)ings and for pro)iding security. It can be ser)ing as an essential ser)ice which a welfare state must ma(e a)ailable to its people. Insurance play a crucial role in the commercial li)es of nations and act as the lubricants of economic acti)ities. Insurance firms help to spread the potentially financial conse5uences of ris( among the large number of entities, to mobili?e and distribute sa)ings for producti)e use, facilitate in)estment, support and encourage e4ternal trade, and protect economic entities against e4ternal ris(.

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AWARENESS OF INSURANCE IN INDIA

Insurance and economic growth mutually influences each other. 2s the economy grows, the li)ing standards of people increase. 2s a conse5uence, the demand for life insurance increases. 2s the assets of people and of business enterprises increase in the growth process, the demand for general insurance also increases. In fact, as the economy widens the demand for new types of insurance products emerges. Insurance is no longer confined to product mar(etsA they also co)er ser)ice industries. It is e5ually true that growth itself is facilitated by insurance. 2 well-de)eloped insurance sector promotes economic growth by encouraging ris(ta(ing. is( is inherent in all economic acti)ities. Without some (ind of co)er against ris(, some of these acti)ities will not be carried out at all. 2lso insurance and more particularly life insurance is a mobili?e of long term sa)ings and life insurance companies are thus able to support infrastructure pro3ects which re5uire long term funds. 'here is thus a mutually beneficial interaction between insurance and economic growth. 'he low income le)els of the )ast ma3ority of population ha)e been one of the factors inhibiting a faster growth of insurance in India. 'o some e4tent this is also compounded by certain attitudes to life. 'he economy has mo)ed on to a higher growth path. 'he a)erage rate of growth of the economy in the last three years was 0.1 per cent. 'his strong growth will bring about significant changes in the insurance industry. 2t this point, it is important to note that not all acti)ities can be insured. If that were possible, it would completely negate entrepreneurship. -rofessor <ran( Inight in his celebrated boo( G is( 6ncertainty and -rofitC emphasi?ed that profit is a conse5uence of uncertainty. De made a distinction between 5uantifiable ris( and non-5uantifiable ris(.

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AWARENESS OF INSURANCE IN INDIA

2ccording to him, it is non-5uantifiable ris( that leads to profit. De wrote GIt is a world of change in which we li)e, and a world of uncertainty. We li)e only by (nowing something about the futureA while the problems of life or of conduct at least, arise from the fact that we (now so little. 'his is as true of business as of other spheres of acti)ityC. 'he real management challenges are uninsurable ris(s. In the case of insurable ris(s, ris( is a)oided at a cost.

1O. DISTRI9UTION OF INSURANCE PRODUCTS

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AWARENESS OF INSURANCE IN INDIA

Insurance has to be sold the world o)er. 'he 'ouch point with the ultimate customer is the distributor or the producer and the role played by them in insurance mar(ets is critical. It is the distributor who ma(es the difference in terms of the 5uality of ad)ice for choice of product, ser)icing of policy post sale and settlement of claims. In the Indian mar(et, with their distinct cultural and social ethics, these conditions will play a ma3or role in shaping the distribution channels and their effecti)eness. In today=s scenario, insurance companies must mo)e from selling insurance to mar(eting an essential financial product. 'he distributors ha)e to become trusted financial ad)isors for the clients and trusted business associates for the insurance /ompanies.

D .."!"#, ( $,! 1%, +# '-&##")$ # I#( &

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AWARENESS OF INSURANCE IN INDIA

2 multi-channel strategy is better suited for the Indian mar(et. Indian insurance mar(et is a combination of multiple mar(ets. 1ach of the mar(ets re5uires a different approach. 2part from geographical spread the socio-cultural and economic segmentation of the mar(et is )ery wide, e4hibiting different traits and needs. ,ifferent multi-distribution channels in India are as follows

InternetB 1-commerce sales through internet portals Wor(siteB 9ar(eting arrangements with entities to sell insurance to their employees ,irectB 7ales through call centres andLor direct mailing 8ro(ersB epresentati)es for buyers who deal with either agent or companies in arranging for co)erage /orporate agentsB @on-ban( institutions in)ol)ed in the sale of insurance products 8anc assuranceB Insurance products offered through ban(s 'ied agentsB Insurance companies aligned agency force In todays scenario, insurance companies must mo)e from selling insurance to mar(eting an essential financial product. 'he distributors ha)e to become trusted
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AWARENESS OF INSURANCE IN INDIA

financial ad)isors for the clients and trusted business associates for the insurance companies. 'he most prominent channel of insurance distribution areB

A2"#,$: 2gents are the primary channel for distribution of insurance. 'he
public and pri)ate sector insurance companies ha)e their branches in almost all parts of the country and ha)e attracted local people to become their agents. 'oday=s insurance agent has to (now which product will appeal to the customer, and also (now his competitor=s products to be an effecti)e salesman who can sell his company, the product, and himself to the customer. 'o the a)erage customer, e)ery new company is the same. -erceptions about the public sector companies are also cemented in his mind. 7o an insurance agent can play an important role to create a good image of company.

9&#3$: 8an(s in India are all per)asi)e, especially the public sector ban(s.
9any insurance companies are selling their products through ban(s. /ompanies which are ban( owned, they are selling their products through their parent ban(. 'he public sector ban(s, with their )ast branch networ(s, are helpful to insurance companies. 'his channel of selling insurance is (nown as 9&#' &$$%!&#'".

INSURANCE COMPANY

ASSOCIATE 9ANKS
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AWARENESS OF INSURANCE IN INDIA

ICICI /!%("#, &)

ICICI

1&#3;

1&#3

+.

I#( &;

C , 1&#3; A))&-&1&( 1&#3; F"("!&) 1&#3; $+%,- I#( &# 1&#3; P%#<&1 &#( 1&#3 S9I ) ." 9 !)& $%# ) ." S,&," 1&#3 +. I#( & D"%,$'-" 1&#3; C , 1&#3; 1&#3 +. R&<&$,-&#; A#(-!& 1&#3 IN= V4$4& 1&#3 A0 0& ) ." #$%!&#'" HDFC $,&#(&!( ) ." M", ) ." V4$4& 1&#3 A9N &*!+ 1&#3; '&#&!& 1&#3 U# +# 1&#3; I#( &# 1&#3 K&!#&,&3& 1&#3; <>3 1&#3 M&-&!&$-,!& '++/"!&, 0"

Source: - Hindu Business Line, January 08, 2007

9!+3"!$: @ow a days different financial institution are selling insurance.

'hese financial institutions are (nown as bro(ers. 'hey are ta(ing some underwriting charges from the insurance companies to sell their insurance products.

C+!/+!&," &2"#,$: /orporate agency is a cross selling type of channel.

Insurance companies tie-up with business houses in other industries to sell insurance either to their employees or their customers. Insurance industry, during the past 2 years has witnessed a number of such strategic tie-ups and alliances. /orporate agents ha)e become a ma3or force to rec(on with in
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AWARENESS OF INSURANCE IN INDIA

distributing insurance products. 7uch as- 8a3a3 2llian? tied up with 9aruti 6dyog and <ord for auto insurance and 'ata 2I+ life has tied up with 'ata tea, (haitans Williamson ma3or and bridge foundation for selling rural policies.

I#,"!#",: In this technological world internet is also a channel of selling

insurance. 'his can be as direct mar(eting.

O,-"! D $,! 1%, +# M",-+($

2lternate distribution channels are needed for the following reasonsB 'o increase insurance penetration in the country 'o differentiate on the basis of customer ser)iceA to retain and attract customers to e4pand business 'o increase insurance awareness and (nowledge among people 'o satisfy the needs of more demanding customers
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AWARENESS OF INSURANCE IN INDIA

'o impro)e cost efficiency in insurance distribution -ri)ate players are e4ploring se)eral alternati)es to reduce the cost of replicating the distribution networ( of public sector insurance companies. While third-party distribution in fast-mo)ing consumer goods is a possibility, the comple4ity of insurance products, especially gi)en the low awareness le)els, would necessitate direct selling. :ne potential channel is mar(eting through corporate employers, i.e., employers purchase products on behalf of the employees or at least support the mar(eting effort. 'he concept of Gwor(site mar(eting,C i.e., the sale of )oluntary insurance products to employees at the wor(site through payroll deduction has become common. Wor(site mar(eting, which was once the realm of a few small companies, selling 3ust a few products, has now stretched to large companies, offering a )ariety of wor(site products.

11. CHAN=IN= FACE OF INDIAN INSURANCE INDUSTRY

2fter the Insurance egulatory and ,e)elopment 2uthority 2ct ha)e been passed there has been establishment of many pri)ate insurance companies in India. -re)iously there was a monopoly business for .ife Insurance /orporation of India #..I./.& who was the only life-insurance company for the people till 2000. ..I./.
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AWARENESS OF INSURANCE IN INDIA

still holds %1."* of the mar(et share in 200!. 8ut after the introduction of pri)ate life insurance companies there is a great competition in Indian mar(et now. 1)eryone is trying to capture the fresh mar(et here and penetrate it with aggressi)e mar(eting strategies. 'oday life-insurance is not only limited up to 3ust life ris( co)er and maturity period bonuses but changed to greater return from the in)estments. With the introduction of the unit lin(ed insurance policies these companies are in)esting the money in different in)estment instruments li(e shares, bonds, debentures, go)ernment and other securities. -eople are demanding for higher returns with the life ris( co)er and pri)ate companies are gi)ing >0-"0* a)erage growth per annum. 'hese life-insurance companies ha)e e)ery (ind of policies suiting e)ery need right from financial needs of, marriage, gi)ing birth and rearing up a child, his education, meeting daily financial needs of life, pension solutions after retirement. 'hese companies ha)e e)ery aspects and needs of our life co)ered along with the death-benefit. In India only 25* of the population has life insurance. 7o Indian life-insurance mar(et is the target mar(et of all the companies who either want to e4tend or di)ersify their business. 'o tap the Indian mar(et there has been tie-ups between the ma3or Indian companies with other International insurance companies to start up their business. 'he go)ernment of India has set up rules that no foreign insurance company can set up their business indi)idually here and they ha)e to tie up with an Indian company and this foreign insurance company can ha)e an in)estment of only 2"* of the total start-up in)estment. Indian insurance industry can be featured byB .ow mar(et penetration.

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AWARENESS OF INSURANCE IN INDIA

1)er growing middle class component in population. +rowth of customers interest with an increasing demand for better insurance products. 2pplication of information technology for business. ebate from go)ernment in the form of ta4 incenti)es to be insured. 'oday, the Indian life insurance industry has a do?en pri)ate players, each of which are ma(ing strides in raising awareness le)els, introducing inno)ati)e products and increasing the penetration of life insurance in the )astly underinsured country. 7e)eral of pri)ate insurers ha)e introduced attracti)e products to meet the needs of their target customers and in line with their business ob3ecti)es. 'he success of their effort is that they ha)e captured o)er 20* of premium income in fi)e years. 'he biggest beneficiary of the competition among life insurers has been the customer. 2 wide range of products, customer focused ser)ice and professional ad)ice has become the mainstay of the industry, and the Indian customers forms the pi)ot of each companys strategy. -enetration of life insurance is beginning to cut across socio-economic classes and attract people who ha)e ne)er purchased insurance before. .ife insurance is also now being regarded as a )ersatile financial planning tool. 2part from the traditional term and sa)ing insurance policies, industry has seen the entry and growth of unit lin(ed products. 'his pro)ides mar(et lin(ed returns and is among the most fle4ible policies a)ailable today for in)estment. @ow products are priced, fle4ible, and realistic and sustain so people
28

AWARENESS OF INSURANCE IN INDIA

in better position to understand the ris( and benefits of the product and they are accepting these inno)ati)e products. 7o it is clear that the face of life insurance in India is changing, but with the changes come a host of challenges and it is only the credible players with a long term )ision and a robust business strategy that will sur)i)e. Whate)er the de)elopments, the future and the opportunities in this industry will surely be e4citing. 'here are 12 pri)ate players in Indian life insurance mar(et. 6 1&#3 +5#"( #$%!"!$: - D,</ standard life, I/I/I prudential, I@+ Fysya, 9et.ife, :9 Iota(, 78I life. 6 #("/"#("#, #$%!"!$: - 2)i)a, 2@- sanmar, 8irla sun life, 8a3a3 2llian?, 9a4 @ew Mor( life, 'ata 2I+. 9a3or international insurers are- -rudential and 7tandard life from 6I, 7un life of /anada, 2I+, 9et.ife and @ew Mor( life of the 67. I#'!"&$ #2 2!+5,- $ #'" ) 1"!&) ?&, +#: M12 <M0> <M0" <M05 <M0! <M0% .I/ #in bn rs.& 110 120 1>0 1"0 2"0 - IF2'1 -.2M1 10 20 "0 !0 1!0

P+$$ 1 ) , "$ .+! #$%!&#'" '+*/&# "$ # I#( &:

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AWARENESS OF INSURANCE IN INDIA

<urther deregulation of the mar(et. +reater concern for the customers. @ewer products and ser)ices. /ompetition and 5uality consciousness. /ost effecti)e operations. estructuring of the public sector.

/onsolidation of domestic insurance mar(ets. 'echnology dri)en shift in product design. 2ctual operations and distribution. /on)ergence of financial ser)ices.

I#$%!&#'" M&!3",- P!"$"#,

'he insurance sector was opened up for pri)ate participation four years ago. <or years now, the pri)ate players are acti)e in the liberali?ed en)ironment. 'he insurance mar(et ha)e witnessed dynamic changes which includes presence of a large number of insurers both life and non-life segment. 9ost of the pri)ate insurance companies ha)e formed 3oint )enture collaborating well-recogni?ed foreign players across the globe. 'here are now 2; insurance companies operating in the Indian mar(et $ 1" pri)ate life insurers, nine pri)ate non-life insurers and si4 public sector companies. With
30

AWARENESS OF INSURANCE IN INDIA

many more 3oint )entures in the offing, the insurance industry in India today stands at a crossroads as competition intensifies and companies prepare sur)i)al strategies in a detariffed scenario. 'here is pressure from both within the country and outside on the +o)ernment to increase the <oreign ,irect In)estment #<,I& limit from the current 2!* to ";*, which would help NF partners to bring in funds for e4pansion. 'here are opportunities in the pensions sector where regulations are being framed. .ess than 10 * of Indians abo)e the age of !0 recei)e pensions. 'he I ,2 has issued the first license for a standalone health company in the country as many more players wait to enter. 'he health insurance sector has tremendous growth potential, and as it matures and new players enter, product inno)ation and enhancement will increase. 'he deepening of the health database o)er time will also allow players to de)elop and price products for larger segments of society.

12. CHAN=IN= PERCEPTION OF INDIAN CUSTOMERS

Indian Insurance consumers are li(e Indian Foters, they are soft but when time is right and ripe, they demand and see( necessary changes. ,e-tariff of many Insurance -roducts are the reflection of changing aspirations and growing demand of Indian consumers. <or historical years, Indian consumers were at recei)ing end. Insurance -roduct was underwritten and was practically forced onto consumers on a G'a(e-it-2s-itbasisC. 2ll that got changed with passage of I ,2 act in 1;;;. @ew insurance
31

AWARENESS OF INSURANCE IN INDIA

companies ha)e come into e4istence leading to open competition and hence better products for customers. Indian customers ha)e become )ery sensiti)e to /o)erage L -remium as well as the -roducts #read is( 7olution&, that is gi)en to them. 'here are not ready to accept any product, no matter e)en if that is coming from the mar(et leader, should that product is not ser)ing the purpose. 2 case in point is 6.I- -roduct L +roup .ife and /redit .ife in .ife Insurance segment and 'ra)el L <amily <loater Dealth and .iability Insurance in the @on-life segment are new age 2)atar. 'he new products are constantly being demanded by Indian consumers, which is putting huge pressures on Insurance companies # ead respond. /ustomers are loo(ing at Insurance for co)ering -ure is( now which I ha)e is( 6nder-writers& and 8ro(ers to

co)ered in my ne4t section. 2nother good reason why we are seeing 5uic( changes in the buying beha)ior of Insurance from mere In)estment to ris( mitigation is the cost of eplacement of +oods # :+& or /ost of 7er)ices #/:7&.

@ow Indian customers are aware of insurance industry and insurance products pro)ided by companies. 'hey ha)e become more sensiti)e. 'hey would not accept any type of insurance product unless it fulfills their re5uirements and needs. In historic days customers loo(ing at insurance products as a life co)er which can pro)ide security against any unacceptable e)ents, but now customers loo( at insurance products as an in)estment as well as life co)er. 7o todays customers wants good return from the insurance companies. 'he Indian customers forms the pi)ot of each companys strategy.

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AWARENESS OF INSURANCE IN INDIA

13. KEY SUCCESS FACTORS

In order to succeed in any of the business it is )ery necessary to ma(e and follow the strategies. 7trategies are )ery important for any of the business. <ollowing are the general strategies, which are recommending to the insurance sector. :ne approach is to focus upon product 5uality, which will instill confidence in minds of the customers that they would be offered best product from out of the se)eral a)ailable products. 'he other approach, is to focus on the customers need, would in)ol)e a hea)y in)estment in de)eloping relationships with policyholders. 6nder this approach, one can e4pect a range of products and ser)ices designed to gi)e the customer what he specially desires. 'he third approach is of greater mar(et segmentation under which the population should be di)ided into se)eral homogeneous groups and product, and ser)ices
33

AWARENESS OF INSURANCE IN INDIA

would be targeted towards such selected mar(ets. 'he effort would be to GtieC clients to their company- by customi?ed combination of co)erage, easy payment plan, ris( management ad)ice, and con)enient 5uic( claim handling.

P+!,"! ="#"! ' S,!&,"2 "$:

:ne of the e4pert 9ichel porters has identified three internally consistent generic strategies, which can be used singly or in combinationB o)erall cost leadership is clearly under stable. In a differentiation strategy, a company see(s to be uni5ue in its industry along some dimensions that are widely )aluable by the customer. 9ay be the lowest cycle time for settling a claim under say, a med claim policy could be differentiating factor. In a cost focus, a company see(s a cost ad)antage in its target segment, while in differentiation focusA a company see(s a differentiation target.

M&!2 #&) D .."!"#, P!+(%',:

2nother strategy would be for the companies to design products that will ma(e comparison-shopping difficult. 'hey could offer a wide )ariety of co)ers with marginal differences and )arying prices, whose terms and conditions are difficult to compare for consumers who may not ha)e sufficient e4perience in purchasing insurance and who would find it difficult to ma(e a clear choice. If the consumer is offered a uni5ue policy, he will ha)e no alternati)e co)erage with which can be compared. +i)en the combination policy, which can offer protection against a number of losses, the consumer will find comparison e)en more difficult.

D"$ 2# #2 N"5 S,!&,"2 "$:

'he e4isting insurance companies cannot be satisfied with concentrating on the consolidation of their e4isting mar(ets, but ha)e to achie)e further growth and
34

AWARENESS OF INSURANCE IN INDIA

penetration. 'hey must, therefore, concentrating on strengthening e4isting points of ser)ice, designing new channel of distribution, direct contact with their ultimate customers, and front line employee empowerment. 'hey also need to refresh their mar(eting set up. 'he new comers, on the other hand gi)e priority to tapping the mar(et, left une4ploited by the public sector companies.

M+0" ,+5&!($ R%!&) M&!3",:

It is one of the most important suggestionsA data says that rural mar(et is still unco)ered by this sector. We belie)e that the sector should mo)e towards tie rural mar(et. Insurance penetration can be achie)ed by tapping the neglected ural 9ar(ets. 'here is )ast potential for insurance growth in the rural sector. 2 recent sur)ey by foundation for research, training and 1ducation in insurance #<: '1& suggests that insurance can be sold profitably to rural communities in India. 'he sur)ey re)eals that 'here is distinct hierarchy of needs in rural areas. ural people find security in groups the sa)ing habit is )ery strong in rural areas. 2)erage sa)ing across the most important socio-economic strata comes to >0->5* of annual income or s.1>, 500 annually, which is significant. 'here is high le)el of awareness about life insurance and fairly high-le)el about >!* already own life insurance. 51* of these who own life insurance would li(e to buy more. 2mongst the sa)ers, a significant percentage does not sa)e through formal financial modes or institutions. ural buyers of insurance prefer a half yearly mode of premium payment to coincide with the time of the har)est. 'hus there are )ery much chances for
35

AWARENESS OF INSURANCE IN INDIA

any of the companies to wor( o)er this scenario. 7o we belie)e and suggest all the players to mo)e towards the rural areas.

M+, 0&, +# +. $&)"$ .+!'":

2 life insurance company should constantly be in)ol)ed in the process of moti)ating the sales force in the turbulent times. 'he following strategies are recommendingA 8uilding relationship is real per(. :ne should be sure to build in networ(ing times for agents during the program-in addition to entertainment and education. Web should be fre5uently used for creating gift ideas. Dold sales contests in the forth 5uarter. It is the best times to moti)ates agents who wants to 5ualify for a trip. /onsider a contrast within the contest Efor- top-tier producersA additional rewards for additional milestones that are met, such as air and guest room upgrades.

U$" +. I#,"!#",:
'he present scenario is such that the products sold with the help of Internet. 'he technological ad)ancement is such that force the companies to ta(e such steps. 7till the full-fledged use of Internet is not done in our country. 2s suggestion earlier the Internet based life insurance will help the companies to reduce the transaction cost and time. 2t the time it can impro)e the 5uality of ser)ice to its customers, which is the mission of the company.

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AWARENESS OF INSURANCE IN INDIA

M&!3", #2 T /$ +. A(0"!, $" +. I#$%!&#'" A2"#'4 5- '- *+$, '+*/&# "$ .+))+5 &#( 14 5- '- '%$,+*"! &!" &5&!" &1+%, ,-" ! &2"#'4

9)+'3 ) #" &(0"!, $ #2 # #(%$,!4 /%1) '&, +#$ +! ,!&(" <+%!#&)$: 9any companies li(e to ad)ertise in the same areas. 9%$ #"$$ +//+!,%# ,4 &(0"!, $ #2: 'hin( of local newspapers such as
the ,aily @ews 2nalysis #,@2&, 'imes of India, and 'he DI@,6 etc. 'his is a )ery effecti)e way to ad)ertise and mar(et agency, since the company needs to build brand name recognition.

37

AWARENESS OF INSURANCE IN INDIA

T")"0 $ +# A($: 'he most ob)ious and e4pensi)e forms of ad)ertising is

the tele)ision.

L+'&) M+0 " T-"&,!"$: 2 local audience and a family type atmosphere
is a great way for mar(eting insurance business. 9any types of insurance come into play here when an indi)idual or the family are out watching the mo)ie. 2ll these things come into play when parents are out with their (ids.

D !"', M& ) A(0"!, $ #2: 'here are companies out there that will do
direct mail by which people are aware.

A(0"!, $ #2 +%,(++!$: 'ransit systems, bus benches, neon and

electronic signs are becoming a great way for the agent to ad)ertise. 'his is affordable, unli(e tele)ision ads. 2nd this targets the e4act audience as most insurers pro)ide insurance ser)ices to their local area.

S,&, +#&!4 &(0"!, $ #2: 2 )ery great way of ad)ertising is right through
business stationary and supplies. 2 nice way of showing good faith is gi)ing customers a pen of insurance office name and contact information

8"1$ ," A(0"!, $ #2: 2 website tells customer about insurance agency
and it a 5uic( and easy reference for customers loo(ing for 5uotes of any type of insurance such as, homeowners insurance, auto insurance, life insurance and many others

O#) #" &(0"!, $ #2: 9any insurance companies do online ad)ertisement.

2s today in 21st centaury it is )ery important.

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AWARENESS OF INSURANCE IN INDIA

o o

RSS FEED ECONOMY MARKETS

COMMENTS

Monday, April 21, 2008

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AWARENESS OF INSURANCE IN INDIA

I#( &@$ #$%!&#'" $"',+! /+ $"( .+! 2AAB 2!+5,- 14 2A1A

8y Jo Black Indian insurance sector is li(ely to register unprecedented growth of 200* and attain a si?e of s. 2000 billion #O51.2 billion& by 200;-10, in which a pri)ate sector insurance business will achie)e a growth rate of 1"0* as a result of aggressi)e mar(eting techni5ue being adopted by them against >5-"0* growth rate of state owned insurance companies. 'he aforesaid findings are made by 'he 2ssociated /hambers of /ommerce and Industry of India #277:/D29& on PInsurance in @e4t 2 Mears, saying that in the last couple of years, the insurance sector has grown by /2+ of around 1%5* and the trend will emerge still better because of potential factor. /urrently, the insurance sector si?e is estimated at s.500 billion #O12.0 billion&. eleasing the 277:/D29 findings, its -resident, 9r. Fenugopal @. ,hoot said that on account of intense mar(eting strategies adopted by pri)ate insurance players, the mar(et share of state owned insurance companies li(e +I/, .I/ and others ha)e come down to %0* in last "-5 years from o)er ;%*. 'he pri)ate insurance players despite the sector is still regulated has been offering rate of return # o & to its policy holders which is estimated at about >5* as against 20* of domestic insurance companies. 'his factor is mainly responsible for hi(e in pri)ate insurance mar(et share which will grow further which is why the 277:/D29 estimates that its growth rate could e)en e4ceed 1"0*. 7econdly, the state owned insurance companies such as .I/ and +I/ ha)e limited number of policies to offer to their subscribers while in case of pri)ate insurance companies, their policy numbers are many more and the premium amount as well as the maturity period is much competiti)e as against those of go)ernment
40

AWARENESS OF INSURANCE IN INDIA

insurance companies. Interestingly, said 9r. ,hoot that the pri)ate sector insurance players ha)e started e4ploring the rural mar(ets in which until recently, the state owned companies had the monopoly. 'he /hamber has pro3ected that in rural mar(ets, the share of pri)ate insurance players would increase substantially as these ha)e been able to generate a faith among their rural consumers. 1stimating the potential of the Indian insurance mar(et from the perspecti)e of macro-economic )ariables such as the ratio of premium to +,-, 277:/D29 re)eals that Indias life insurance premium, as a percentage of +,- is 1.0* against 5.2* in the 67, !.5* in the 6I or 0* in 7outh Iorea. 277:/D29 findings further re)eal that in the coming years, the corporate segment, as a whole will not be a big growth area for insurance companies. 'his is because penetration is already good and companies recei)e good ser)ices. In both )olumes and profitability therefore, the scope for e4pansion is modest. 'he /hamber has suggested that insurers strategy should be to stimulate demand in areas that are currently not ser)ed at all. Insurance companies mostly focus on manufacturing sectorA howe)er, the ser)ices sector is ta(ing a large and growing share of Indias +,-. 'his offers immense opportunities for e4pansion opportunities. 'o understand the prospects for insurance companies in rural India, it is )ery important to understand the re5uirements of Indias )illagers, their daily li)es, their peculiar needs and their occupational structures. 'here are farmers, craftsmen, mil(men, wea)ers, casual laborers, construction wor(ers and shop(eepers and so on. 9ore often than not, they are into more than one profession. 'he rural mar(et offers tremendous growth opportunities for insurance companies and insurers should de)elop )iable and cost-effecti)e distribution channelsA build consumer awareness and confidence. 'he 277:/D29 found that there are a total
41

AWARENESS OF INSURANCE IN INDIA

12" million rural households. @early 20* of all farmers in rural India own a Iissan /redit cards. 'he 25 million credit cards used till date offer a huge data base and opportunity for insurance companies. 2n e4tensi)e rural agent networ( for sale of insurance products could be established. 'he agent can play a ma3or role in creating awareness, moti)ating purchase and rendering insurance ser)ices. 'here should be nothing to stop insurance companies from trying to pursue their own uni5ue policies and target whate)er needs that they want to target in rural India. 277:/D29 suggests that insurance needs to be pac(aged in such a form that it appears as an acceptable in)estment to the rural people

N&, +#&) S%** , I#( &# I#$%!&#'": T-" 8&4 F+!5&!(

29 C&#%&!4; 2AA9 H+,") L"-M"! ( "#; N"5 D")egister :nline 7ummit ,etails 'he Insurance industry in India has been progressing at a rapid pace since opening up of the industry in 2000. Indian domestic insurance mar(et would touch around 67O !0.5 8illion by the year 2010 from e4isting si?e of about 67O 10.2 billion. 2ccording to the Insurance egulatory and ,e)elopment 2uthority #I ,2&, new
42

AWARENESS OF INSURANCE IN INDIA

business premium income from 2pril 200! to <ebruary 200% amounted to I@ 5%;.>0 billion #67O1>.10 billion&, registering an impressi)e 120* growth o)er the same period last year. 'he Insurance industry graph is definitely ascending. ,istribution accounts for the largest element in insurers cost and affects profitability. 'he si?e of the country combined with problems of connecti)ity in the rural areas, ma(es insurance selling in India a difficult proposition. 'he distribution capabilities strongly influence product design in insurance. 'he distribution channels ha)e a direct impact on the insurers mar(et image. 1mergence of alternati)e channels such as 8ancassurance and Internet is reshaping the insurance industry. India with a population of more than a billion people offers unlimited growth potential.

With a )iew to spreading the awareness of Insurance co)er and discussing )arious regulatory issues, ASSOCHAM $ +!2&# ? #2 & N&, +#&) S%** , +# :I#( &# I#$%!&#'" D T-" 8&4 F+!5&!(E &, 1A.AA &.*. +# 29,- C&#%&!4; 2AA9 &, H+,") L"-M"! ( "#; N"5 D")- . S-! P K 9&#$&); H+#F1)" M # $,"! +. S,&," .+! F #&#'" > P&!) &*"#,&!4 A..& !$ -&$ 0"!4 3 #()4 &2!""( ,+ #&%2%!&," ,-" S%** ,. 8" -&0" &)$+ #0 ,"( S-! C H&! N&!&4&#; C-& !*&#; IRDA &#( S-! T&%# 9&<&<; C+ #, S"'!",&!4 G9>IH M # $,!4 +. F #&#'"; =+0, +. I#( & ,+ &((!"$$ ,-" /&!, ' /&#,$ # ,-" I#&%2%!&) S"$$ +#. 'he 7ummit would pro)ide an ideal forum for e4pert discussion, information sharing and an e4cellent platform for business de)elopment. We e4pect a large participation by all sta(eholders - institutional in)estors, fund managers,
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AWARENESS OF INSURANCE IN INDIA

consultants, bro(ers, regulators, custodians, lawyers, ban(s, financial planners and retail in)estors.

I#$%!&#'"
L&$, U/(&,"(: D"'"*1"! 2A1A 'he 67O "1-billion Indian life insurance industry is considered the fifth largest life insurance mar(et, and growing at a rapid pace of >2->" per cent annually, according to the .ife Insurance /ouncil. .ife insurance companies ha)e witnessed a %0 per cent 3ump in new premium collection during the first fi)e months of the financial year. 2ccording to data released by the Insurance egulatory and ,e)elopment 2uthority #I ,2&, insurance companies garnered 67O 11.%> billion in new business premium during 2pril-2ugust 2010, against 67O !.;0 billion in the corresponding period last year. 7tate-owned .I/ gained the most, with an increase of 00 per cent in new business
44

AWARENESS OF INSURANCE IN INDIA

premium income. 2t the same time, pri)ate sector insurance recorded a >" per cent increase in income from sales of new policies. @ew business income collected by I/I/I -rudential stood at 67O 5%!.!0 million during 2pril-2ugust. 78I .ife remained in the third position after registering a "0 per cent increase in new sales to 67O 5>1.0% million from 67O >%;.20 million in 2pril-2ugust 200;. D,</ 7tandard .ife saw a robust 5" per cent increase in new business.

="#"!&) I#$%!&#'"
2ccording to data released by I ,2, the general insurance industry recorded 22.%! per cent year-on-year #y-o-y& growth in gross premium underwritten during 2pril$ :ctober 2010. 'he industry collected gross premium of 67O 5.2; billion during 2pril$:ctober 2010 compared with 67O ".>1 billion in the same period last year. 'he public sector players posted 21.0; per cent y-o-y growth in gross premium during 2pril$:ctober 2010 o)er the corresponding period last year. 2t the same time, pri)ate players recorded a 25.1; per cent y-o-y increase in gross premium. 'he state-run insurers fared better than their pri)ate counterparts, with @ew India Insurance collecting the ma4imum premium of 67O ;1!.%% million during 2pril:ctober 2010, compared to 67O %%0.25 million in the same period last year, growing by 1;.0" per cent. 2ccording to the I ,2=s 7ummary eports of 9otor ,ata of -ublic and -ri)ate 7ector Insurers - 200;-10, nearly 20." million policies were issued and a total premium of 67O 2.>1 billion was collected.
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AWARENESS OF INSURANCE IN INDIA

H"&),- I#$%!&#'"
'he Indian health insurance mar(et has emerged as a new and lucrati)e growth a)enue for both the e4isting players as well as the new entrants. 2ccording to a latest research report Q8ooming Dealth Insurance in IndiaQ by research firm @/:7 released in 2pril 2010, all emerging trends including the (ey factors dri)ing the mar(et growth. <urthermore, the report also identifies what could be the possible growth areas for e4pansion and gi)es a detailed o)er)iew of the competiti)e landscape. 'he Indian health insurance mar(et has continued to post record growth in the last two fiscals #2000-0; and 200;-10&. 9oreo)er, as per the @/:7 estimates, the health insurance premium is e4pected to grow at a compound annual growth rate #/2+ & of o)er 25 per cent for the period spanning from 200;-10 to 201>-1". 2ccording to a report published by Mes 8an( and an industry body in @o)ember 200;, the medical insurance sector would account for 67O > billion in the ne4t three years. Dealth insurance premium collections were 67O 1.%5 billion in 200;-10 compared with 67O 0;>.%! million in the pre)ious year, I ,2 said in its annual report for 200;-10. It should, howe)er, be noted that figures for 200;-10 include policies ser)ed by third party administrators #'-2s& as well as those directly ser)ed by insurers whereas figures for 2000-0; include policies ser)ed by '-2s only.

46

AWARENESS OF INSURANCE IN INDIA

I#( & I#$%!&#'" M&!3",: A ("'&(" +)( +! (&5# +. & #"5 "!&I

CONCLUSION
Insurance sector in India is one of the booming sectors of the economy and is growing at the rate of 15-20 per cent annum. :ne of the (ey ser)ice industries in India would be health and education. Insurance sector in India grew at a faster pace after independence. In 1;5!, +o)ernment of India brought together 2"5 Indian and foreign insurers and pro)ident societies under one nationali?ed monopoly corporation and formed .ife Insurance /orporation #.I/& by an 2ct of -arliament, )i?. .I/ 2ct, 1;5!, with a capital contribution of s.5 crore. 'he #non-life& insurance businessLgeneral insurance remained with the pri)ate sector till 1;%2. 'here were 10% pri)ate companies in)ol)ed in the business of general operations and their operations were restricted to organi?ed trade and industry in large cities. 'he insurance sector in India has come to a position of )ery high potential and competiti)eness in the mar(et. Indians, ha)e always seen life insurance as a ta4 sa)ing de)ice.

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AWARENESS OF INSURANCE IN INDIA

9I9ILO=RAPHY

8E9SITES REFFERED
www.irdaindia.org www.licindia.in www.wi(ipedia.org www.answers.com www.insuranceguru.com

REPORTSJARTICLES REFFERED
2sia 1conomy Watch India Infoline @ews 7er)ice 8irla 7un.ife Insurance /ompanys 2rticle

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