INSURANCE SECTOR IN INDIA –

AN OVERVIEW

AJAY SURENDRA SAIN

HPGD/JL16/2342

WELINGKAR INSTITUTE OF MANAGEMENT

DEVELOPMENT AND RESEARCH.

YEAR OF SUBMISSION :- JUNE,2019

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 UNDERTAKING BY STUDENT

I MR AJAY SURENDRA SAIN having admission no HPGD/JL16/2342

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Signature of Candidate.

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 TABLE OF CONTENTS
 TITLE PAGE………………………..1
 ACKNOWLEDGEMENT…………..2

A.INTRODUCTION
 INSURANCE SECTOR OVERVIEW
 GROWTH OF INSRUANCE INDUSTRY
 MARKET SIZE IN INDIA
 GOVERNMENT INITIATIVES
 TYPE OF INSURANCE COMPANY IN INDIA

B.BACKGROUND

C.METHODOLOGY

D.CONCLUSION
E. RECOMMENDATIONS
F.LIMITATIONS
G.BIBLIOGRAPHY

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 INSURANCE SECTOR OVERVIEW

The insurance industry of India consists of 57 insurance companies of which 24 are in life
insurance business and 33 are non-life insurers. Among the life insurers, Life Insurance
Corporation (LIC) is the sole public sector company. Apart from that, among the non-life
insurers there are six public sector insurers. In addition to these, there is sole national re-insurer,
namely, General Insurance Corporation of India (GIC Re). Other stakeholders in Indian
Insurance market include agents (individual and corporate), brokers, surveyors and third party
administrators servicing health insurance claims.

Out of 33 non-life insurance companies, five private sector insurers are registered to underwrite
policies exclusively in health, personal accident and travel insurance segments. They are Star
Health and Allied Insurance Company Ltd, Apollo Munich Health Insurance Company Ltd, Max
Bupa Health Insurance Company Ltd, Relegate Health Insurance Company Ltd and Cigna TTK
Health Insurance Company Ltd. There are two more specialized insurers belonging to public
sector, namely, Export Credit Guarantee Corporation of India for Credit Insurance and
Agriculture Insurance Company Ltd for crop insurance.

The insurance sector has a long history in India. The insurance sector in India has come a full
circle from being an open competitive market to nationalization and back to a liberalized market
again. Tracing the developments in the Indian insurance sector reveals the 360-degree turn
witnessed over a period of almost 190 years.

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. The 1st legal enactment
was made in 1870. The 1st Indian Insurance Act was passed in 1938 and amended in 1950, when
it was nationalized. However, the sector was once again thrown open to the private sector on
December 1999, followed by the establishment of the Insurance Regulatory and Development
Authority (IRDA) in April 2000.

Though the Insurance Sector is now open for private players as a consequence of the new
liberalization policies of the Government, the existing government owned Insurance companies
will, nevertheless, continue to be in the government sector. These existing companies will,
however, have to strive for better realization of their corporate objectives and goals to meet the
demands and expectations of the public.

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Quality of service and product that an industry offers must move forward with progress in the
state of the economy. As the quantum and quality of service change over time, the levels at
which customers continue to remain satisfied with the services provided, also keep on increasing.
Ultimately, the success of any industry depends upon its positioning in the state of economy and
on meeting the expectations of the service users.

With competition, the performance level of individual companies is expected to increase.

Segmentation is taking place within the economy with a need for socially responsive service
sector.

Globalization is the new economic reality, which is here to stay, heralding a new era of insurance
in India. With the opening of the insurance industry, India stands to gain with the following
major advantages:

1. Globalization will provide improved opportunities to the customer for better products,
with more reasonable and affordable pricing.
2. The customer will get faster servicing.
3. It will enhance the savings rate.
4. Long-term funds for infrastructure development will be available to the Country.
5. It will secure for India larger inflows of foreign capital needed to sustain our GDP
growth.

So, it’s clear that the insurance was in private hands before 1971 and was nationalized in 1972
with all private companies merged into General Insurance Corporation of India as

The parent company with 4 subsidiaries as National Insurance Company Ltd. with Head Office
at Calcutta, New India Assurance Company Ltd. with Head Office at Bombay, Oriental
Insurance Company Ltd. with Head Office at New Delhi and United India Insurance Company
Ltd. with Head Office at Madras.

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 GROWTH OF INSURANCE INDUSTRY

Life Insurance History:

Life Insurance History: Life insurance in its existing form came in India from United Kingdom
(UK) with the establishment of a British firm, Oriental Life Insurance Company in 1818
followed by Bombay Life Assurance Company in 1823, the Madras Equitable Life Insurance
Society in 1829 and Oriental Life Assurance Company in 1874. Prior to 1871, Indian lives were
treated as sub-standard and charged an extra premium of 15% to 20%. Bombay Mutual Life
Assurance Society, an Indian insurer that came into existence in 1871, was the first to cover
Indian lives at normal rates. The Indian Life Assurance Companies Act, 1912 was the first
statutory measure to regulate life insurance business. Later, in 1928 the Indian Insurance
Companies Act was enacted, inter alias, to enable the government to collect statistical
information about life and non-life insurance business transacted in India by Indian and foreign
insurers, including the provident insurance societies.

In 1938, with a view to protecting the interest of insuring public, earlier legislation was
consolidated and amended by Insurance Act, 1938 with comprehensive provisions for detailed
and effective control over the activities of insurers. In order to administer the aforesaid
legislation, an insurance wing was established and attached first with the Ministry of Commerce
and then Ministry of Finance. This ministry was administratively responsible for policy matters
pertaining to insurance. The actuarial and operational matters relating to the insurance industry
were looked after by an attached office in Shimla, headed first by Actuary to the Government of
India, then by Superintendent of Insurance and finally by the Controller of Insurance. The act
was amended in 1950, making far-reaching

changes such as requirement of equity capital for companies, carrying on life insurance business,
ceilings on shareholdings I such companies, stricter control on investment of life insurance
companies, submission of periodical returns relating to investments and such other information
to the Controller as he may call for, appointments of administrators for mismanaged companies,
ceilings on expenses of management and agency commission, incorporation of the Insurance
Association of India and formation of councils and committees thereof.

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By 1956, 154 Indian insurers, 16 non-Indian insurers and 75 provident societies were carrying on
life insurance business in India. Life insurance business was confirmed mainly to cities and
better off segments of the society.

On 19th January 1956 the management of life insurance business of 245 Indian and foreign
insurers and provident societies, then operating in India, was taken over by the Central
Government and then nationalized on 1st September 1956. An Act of Parliament, viz. LIC Act,
formed LIC in September 1956, with capital contribution of Rs. 5 crore from the Government of
India.

The then Finance Minister, Shri S.D.Deshmukh, while piloting the bill for nationalization,
outlined the objectives of LIC thus: to conduct the business with utmost economy, in a spirit of
trusteeship; to charge premium no higher than warranted by strict actuarial considerations; to
invest the funds for obtaining maximum yield for the policy holders consistent with safety of the
capital; to render prompt and efficient service to policy-holders, thereby making insurance of
recommendations of the Administrative Reforms Commission as under:

1. To spread life insurance much more widely and in particular to the rural areas and to the
socially and economically backward classes

2. To making mobilization of people’s savings by making insurance linked savings

adequately attractive.

3. To bear in mind, in the investment of funds, the primary obligation to its policyholders,
whose money it holds in trust without losing sight of the interest of the community as a
whole

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4. To conduct business with utmost economy and with the full realization that money
belongs to the policy- holders.

5. To act as trustees of the insured public in their individual and collective capacities.

6. To meet various life insurance needs of the community that would arise in the changing
social and economic environment.

7. To promote amongst all agents and employees of the Corporation a sense of participation,
pride and job satisfaction through discharge of their duties with dedication towards
achievement of corporate objectives.

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 (i) MARKET SIZE IN INDIA

Government's policy of insuring the uninsured has gradually pushed insurance penetration in the
country and proliferation of insurance schemes are expected to catapult this key ratio beyond 4
per cent mark by the end of this year, reveals the ASSOCHAM latest paper.

The number of lives covered under Health Insurance policies during 2015-16 was 36 core which
is approximately 30 per cent of India's total population. The number has seen an increase every
subsequent year as 28.80 crore people had the policy in the previous fiscal.

Premium income of the life insurance segment had increased 14.04 per cent in FY17 to Rs 4.18
trillion (US$ 64.92 billion). In August 2017, the Life Insurance industry reported a 24 per cent
growth in overall annualized premium equivalent with the help of both private players and Life
Insurance Corporation.

 INVESTMENT

The following are some of the major investments and developments in the Indian insurance
sector.

 Pradhan Mantri Fasal Bima Yojana (PMFBY) covered 50.9 million farmers in India in
2016-17.
 India's leading bourse Bombay Stock Exchange (BSE) will set up a joint venture with
Ebix Inc to build a robust insurance distribution network in the country through a new
distribution exchange platform.
 Revenues of the healthcare sector are projected to grow by 15 per cent between FY18-20
on the back of rise in health insurance coverage through government-sponsored schemes.

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  GOVERNMENT INITIATIVES

The Government of India has taken a number of initiatives to boost the insurance industry. Some
of them are as follows:

 Government of India launches Pradhan Mantri Vaya Vandana Yojana, a pension scheme
which will provide guaranteed 8 per cent annual return to all the senior citizen above 60
years of age for a policy tenure of 10 years.

 The Union Cabinet has approved the public listing of five Government-owned general
insurance companies and reducing the Government’s stake to 75 per cent from 100 per
cent, which is expected to bring higher levels of transparency and accountability, and
enable the companies to raise resources from the capital market to meet their fund
requirements.

 The Insurance Regulatory and Development Authority of India (IRDAI) plans to issue
redesigned initial public offering (IPO) guidelines for insurance companies in India,
which are to looking to divest equity through the IPO route.

 IRDAI has allowed insurers to invest up to 10 per cent in additional tier 1 (AT1) bonds
that are issued by banks to augment their tier 1 capital, in order to expand the pool of
eligible investors for the banks.

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 TYPE OF INSURANCE COMPANY IN INDIA

 HEALTH INSURANCE COMPANY

 APOLLO MUNICH HEALTH INSURANCE

 BHARTI HEALTH INSURANCE
 RELIANCE HEALTH INSURANCE
 MAX LIFE
 FUTURE GENERALI INDIA LIFE INSURANCE
 EXIDE LIFE INSURANCE
 LIC
 BIRLA SUN LIFE
 HDFC LIFE
 TATA AIA

 MOTOR INSURANCE

 BAJAJ ALLIANZ GENERAL INSURANCE

 NEW INDIA ASSURANCE
 HDFC ERGO
 ORIENTAL INSURANCE

 TRAVEL INSURANCE

 TATA AIG
 ICICI

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 INTRODUCTION OF HEALTH INSURANCE COMPANY

 APOLLO MUNICH

Apollo Munich Health Insurance Company Ltd. is a private sector health

insurance company in India. Founded on 8 August 2007, it is a joint venture between
the Apollo Hospitals group and Munich Health, one of the three business segments
of Munich Re; a leading reinsurance company based in Germany.

Apollo Munich Health Insurance is ISO – 9001:2008 certified for Design, Distribution
and Servicing of health insurance products. It has 100 physical offices all over India and
more than 2,200 employees.

 MAX LIFE

Max Life Insurance Company Limited (formerly known as Max New York Life Insurance
Company Limited) is a leading life insurance company in India. The company is a
subsidiary of the publicly listed Max Financial Services Limited and is the largest non-
bank private-sector life insurer in India. It was founded in 2000 after the liberalization of
the insurance sector in India and its operations began in 2001. Ajit Singh, founder of
Max Healthcare, is the chairman of Max Life Insurance.[1] The company is headquartered
at New Delhi.

Max Life Insurance is a part of the Max India Ltd. Group. It is a joint venture between
Max Financial Services and Mitsui Sumitomo Insurance Company. The former owns
68% of the company while the latter owns 26%.[2] After forming the joint venture
partnership with Mitsui Sumitomo, Max Life changed its name from Max New York Life
in 2012. In February 2016, Axis Bank held a 6% share in Max Life.

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  BHARTI HEALTH INSURANCE

Bharti Enterprises and AXA business Group that operates in India. Bharti Enterprises shares
51% stake in the venture while AXA Group shares 49% stake. The company offers general
insurance products to retail and commercial clients.

Bharti AXA started its operations in India from August 2008. Currently, it has 79 branches
around the country. The company is the first one in the general insurance industry to receive dual
certifications of ISO 9001:2008 and ISO 27001:2005. It is headed by Sanjeev Srinivasan, who is
CEO and the Managing Director

Bharti AXA General Insurance Company is a joint venture between Bharti Enterprises (a leading
business group with interests into telecom, agro business, financial services, manufacturing,
and retail sector) and AXA Group (an international insurance and asset management company
operating out of France). The company was incorporated on 13 July 2007 and commenced its
national operations in August 2008. It is headquartered in Bangalore and operates at 100
locations around the country.

 RELIANCE HEALTH INSURANCE

Reliance General Insurance was incorporated on 17 August 2000. It received the license to
conduct general insurance business in India from the Insurance Regulatory Development
Authority of India (IRDAI) on 23 October 2000. Unlike most insurance companies, who have
foreign partners, the firm is promoted solely by Reliance Capital.

Reliance General Insurance is an Indian private insurance company. It is a part of Reliance

Group. The Gross Written Premium for the year ended 31 March 2017, was at 4,007 cores
(US$616 million) with a distribution network composed of over 129 branches and more than
24,500 intermediaries.

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  Birla Sun Life Insurance Company Limited (BSLI)

Birla Sun Life Insurance Company Limited (BSLI) is a joint venture between the Indian
conglomerate Aditya Birla Group, and Sun Life Financial Inc., an international financial services
organizations from Canada. BSLI has a customer base of over two and half million policy
holders.

The Aditya Birla Group is an Indian multinational conglomerate named after Aditya Vikram
Birla, headquartered in the Aditya Birla Centre in Worli, Mumbai, India. It operates in 40
countries with more than 120,000 employees worldwide.[5] The group was founded by Seth Shiv
Narayan Birla in 1857. The group interests in sectors such as viscose staple fibre, metals, cement
(largest in India), viscose filament yarn, branded apparel, carbon black, chemicals, fertilisers,
insulators, financial services, telecom (third largest in India), BPO and IT services. The group
had revenue of approximately US$41 billion in year 2015.

 LIC

Life Insurance Corporation of India (LIC) is an Indian state-owned insurance

group and investment company headquartered in Mumbai. It is the largest insurance company in
India with an estimated asset value of 1,560,482 crore(US$240 billion).[3] As of 2013 it had total
life fund of Rs.1433103.14 crore with total value of policies sold of 367.82 lakh that year.

The Life Insurance Corporation of India was founded in 1956 when the Parliament of
India passed the Life Insurance of India Act that nationalised the private insurance industry in
India. Over 245 insurance companies and provident societies were merged to create the state
owned Life Insurance Corporation.

He first 150 years were marked mostly by turbulent economic conditions. It witnessed India's
First War of Independence, adverse effects of the World War I and World War II on
the economy of India, and in between them the period of worldwide economic crises triggered by
the Great depression. The first half of the 20th century saw a heightened struggle for India's
independence. The aggregate effect of these events led to a high rate of and liquidation of life
insurance companies in India. This had adversely affected the faith of the general public in the
utility of obtaining life cover.

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 INTRODUCTION OF MOTOR INSURANCE

 BAJAJ GENREAL INSURANCE

Bajaj Allianz General Insurance is a private general insurance company in India.[3] The
company is a joint venture between Bajaj Finserv Limited (formerly part of Bajaj
Auto Limited) owned by the Bajaj Group of India and Allianz SE, a German financial
services company

Bajaj Allianz General Insurance received an Insurance Regulatory and Development

Authority of India (IRDAI) certificate of registration on 2 May 2001 to conduct general
insurance business, including health insurance, in India. In the first year of its operations
the company had 36 offices and around 100 employees. The company started its
operations with a paid up capital of 1.10 billion. Bajaj Finser Limited holds 74% and the
remaining 26% is held by Allianz SE. Bajaj Allianz is headquartered in Pune with offices
in over 200 cities in India and more than 3,500 employees as of 2018 .

The Company lists 97 filed and approved products, of which 27 are health products.]In
January 2014, the company announced it would open up all-women branches. As of
2015, the company has 30 such branches in India.

 NEW INDIA ASSURANCE

The New India Assurance Co. Ltd., based in Mumbai, Maharashtra is a public sector
general insurance company of India.[3] It is the "largest general insurance company
of India on the basis of gross premium collection inclusive of foreign operations".[4] It
was founded by Sir Dorabji Tata in 1919, and was nationalized in 1973.

Previously it was a subsidiary of the General Insurance Corporation of India(GIC). But

when GIC became an re-insurance company as per the IRDA Act 1999, its four primary
insurance subsidiaries New India Assurance, United India Insurance, Oriental
Insurance and National Insurance got autonomy.

New India Assurance operates both in India and foreign countries. In the recent past it
has collaborated with some of the leading public sector bank of India and Financial
Institutions to increase its distribution network.

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 HDFC ERGO General Insurance Company

HDFC ERGO General Insurance Company Limited is a joint venture between HDFC
Ltd. and ERGO International AG, a Germany-based company that is part of the Munich
Re Group. HDFC holds 51 per cent, and ERGO the other 49 per cent. The firm operates
in 91 Indian cities with over 108 branches and 2,000 staff members.

In 2002, HDFC Ltd. and ERGO International AG formed a general insurancejoint

venture company, named HDFC ERGO General Insurance Company Limited with its
headquarter in Mumbai. Under the agreement, ERGO acquired 26 per cent share, the rest
being held by HDFC. During its initial years the company saw a slump and recorded an
underwritten Gross premium of Rs. 196.78 crores (FY 2006-07) as against Rs. 206.89
crore in the previous year (FY 2005-06). The company made a strong come back and
escalated its GWP to Rs.239.69 crores (FY 2006-07).

The firm is a Public Company and is categorized as Indian Non-Government Company.

The company’s authorized share capital is Rs. 6,000,000,000 and its paid up capital is Rs.
5,386,202,600. It received an ISO Certification in 2010.

In June 2016, the company announced the buyout of the L&T General Insurance for
around Rs 551 core, this was around 1.1 times the gross premium of the latter. The
merger completed on 23 August 2017

 ORIENTAL INSURANCE

The Oriental Insurance Company Ltd. is a public sector general insurance company of
India. The headquarters of the company are located in New Delhi. It has 31 regional
offices and more than 1800 active branches across the country. The company also has
branches in Nepal, Kuwait, and Dubai. The company had recorded a gross premium of
Rs. 7282.54 crores in the financial year 2013-2014. For the Financial year 2016-17, the
Company procured a global premium of Rs. 11,100 crores.[1] The Company offers more
than 170 General Insurance products. The IRDA Registration No. of the Company is
"556"
Oriental Insurance was incorporated on 12 September 1947 as a government-owned non-
life insurance company. It was established as a completely owned subsidiary of Oriental
Government Security Life Assurance Company Ltd. to execute its parent body's general
insurance operations.

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 INTRODUCTION OF TRAVEL INSURANCE

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