TERM PAPER ON

INSURANCE
SECTOR IN INDIA
 CONTENTS

 OVERVIEW
 Historical Perspective
 History
 Reforms
 IRDA
 Present Scenario
 Life Insurance Market
 Rural Health insurance
 Top ten life insurers by market share
 ULIP (Unit Linked Insurance Plan)
 ULIP VS TRADITIONAL INSURANCE PLAN
 ULIP - KEY FEATURES
 BAJAJ ALLIANZ v/s ICICI PRUDENTIAL
 Comparison between ICICI Lombard and New India assurance

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INSURANCE IN INDIA

Overview
With largest number of life insurance policies in force in the world, Insurance happens to
be a mega opportunity in India. It’s a business growing at the rate of 15-20 per cent
annually and presently is of the order of Rs 450 billion. Together with banking services,
it adds about 7 per cent to the country’s GDP. Gross premium collection is nearly 2 per
cent of GDP and funds available with LIC for investments are 8 per cent of GDP.

Yet, nearly 80 per cent of Indian population is without life insurance cover while health
insurance and non-life insurance continues to be below international standards. And this
part of the population is also subject to weak social security and pension systems with
hardly any old age income security. This itself is an indicator that growth potential for the
insurance sector is immense.

A well-developed and evolved insurance sector is needed for economic development as it

provides long-term funds for infrastructure development and at the same time strengthens
the risk taking ability. It is estimated that over the next ten years India would require
investments of the order of one trillion US dollar. The Insurance sector, to some extent,
can enable investments in infrastructure development to sustain economic growth of the
country.

Insurance is a federal subject in India. There are two legislations that govern the sector-
The Insurance Act- 1938 and the IRDA Act- 1999.

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 two centuries.

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Historical Perspective
The history of life insurance in India dates back to 1818 when it was conceived as a
means to provide for English Widows. Interestingly in those days a higher premium was
charged for Indian lives than the non-Indian lives, as Indian lives were considered more
risky for coverage.

The Bombay Mutual Life Insurance Society started its business in 1870. It was the first
company to charge same premium for both Indian and non-Indian lives. The Oriental
Assurance Company was established in 1880. The General insurance business in India,
on the other hand, can trace its roots to the Triton (Tital) Insurance Company Limited, the
first general insurance company established in the year 1850 in Calcutta by the British.
Till the end of nineteenth century insurance business was almost entirely in the hands of
overseas companies.

Insurance regulation formally began in India with the passing of the Life Insurance
Companies Act of 1912 and the provident fund Act of 1912. Several frauds during 20's
and 30's sullied insurance business in India. By 1938 there were 176 insurance
companies. The first comprehensive legislation was introduced with the Insurance Act of
1938 that provided strict State Control over insurance business. The 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.

The Government of India in 1956, brought together over 240 private life insurers and
provident societies under one nationalized monopoly corporation and Life Insurance
Corporation (LIC) was born. Nationalization was justified on the grounds that it would
create much-needed funds for rapid industrialization. This was in conformity with the
Government's chosen path of State lead planning and development.

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A brief history of the Insurance sector
The business of life insurance in India in its existing form started in India in the year
1818 with the establishment of the Oriental Life Insurance Company in Calcutta.

Some of the important milestones in the life insurance business in India are:

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate
the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with the
objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies taken over by the central
government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956,
with a capital contribution of Rs. 5 crore from the Government of India.

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Insurance sector reforms
In 1993, Malhotra Committee headed by former Finance Secretary and RBI Governor R.
N. Malhotra, was formed to evaluate the Indian insurance industry and recommend its
future direction.

The Malhotra committee was set up with the objective of complementing the reforms
initiated in the financial sector. The reforms were aimed at “creating a more efficient and
competitive financial system suitable for the requirements of the economy keeping in
mind the structural changes currently underway and recognizing that insurance is an
important part of the overall financial system where it was necessary to address the need
for similar reforms…”

In 1994, the committee submitted the report and some of the key recommendations
Included:

i) Structure
• Government stake in the insurance Companies to be brought down to 50%.
• Government should take over the holdings of GIC and its subsidiaries so that these
subsidiaries can act as independent corporations
• All the insurance companies should be given greater freedom to operate.

ii) Competition
• Private Companies with a minimum paid up capital of Rs.1bn should be allowed to
enter the industry.
• No Company should deal in both Life and General Insurance through a single entity.
• Foreign companies may be allowed to enter the industry in collaboration with the
domestic companies.
• Postal Life Insurance should be allowed to operate in the rural market.
• Only one State Level Life Insurance Company should be allowed to operate in each
state.

iii) Regulatory Body

• The Insurance Act should be changed.
• An Insurance Regulatory body should be set up.
• Controller of Insurance (Currently a part from the Finance Ministry) should be made
independent.

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iv) Investments
• Mandatory Investments of LIC Life Fund in government securities to be reduced from
75% to 50%.
• GIC and its subsidiaries are not to hold more than 5% in any company (There current
holdings to be brought down to this level over a period of time).

v) Customer Service
• LIC should pay interest on delays in payments beyond 30 days.
• Insurance companies must be encouraged to set up unit linked pension plans.
• Computerization of operations and updating of technology to be carried out in the
insurance industry.

The committee emphasized that in order to improve the customer services and increase
the coverage of the insurance industry should be opened up to competition. But at the
same time, the committee felt the need to exercise caution as any failure on the part of
new players could ruin the public confidence in the industry.

Hence, it was decided to allow competition in a limited way by stipulating the minimum
capital requirement of Rs.100 crores.

The committee felt the need to provide greater autonomy to insurance companies in order
to improve their performance and enable them to act as independent companies with
economic motives. For this purpose, it had proposed setting up an independent regulatory
body- The Insurance Regulatory and Development Authority.

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in
Parliament in December 1999. The IRDA since its incorporation as a statutory body in
April 2000 has fastidiously stuck to its schedule of framing regulations and registering
the private sector insurance companies. Since being set up as an independent statutory
body the IRDA has put in a framework of globally compatible regulations. The other
decision taken simultaneously to provide the supporting systems to the insurance sector
and in particular the life insurance companies was the launch of the IRDA online service
for issue and renewal of licenses to agents. The approval of institutions for imparting
training to agents has also ensured that the insurance companies would have a trained
workforce of insurance agents in place to sell their products.

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The Insurance Regulatory and
Development Authority
Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in
Parliament in December 1999. The IRDA since its incorporation as a statutory body in
April 2000 has fastidiously stuck to its schedule of framing regulations and registering
the private sector insurance companies.

The other decisions taken simultaneously to provide the supporting systems to the
insurance sector and in particular the life insurance companies was the launch of the
IRDA’s online service for issue and renewal of licenses to agents.

The approval of institutions for imparting training to agents has also ensured that the
insurance companies would have a trained workforce of insurance agents in place to sell
their products, which are expected to be introduced by early next year.

Since being set up as an independent statutory body the IRDA has put in a framework of
globally compatible regulations. In the private sector 12 life insurance and 6 general
insurance companies
have been registered.

Present Scenario
The Government of India liberalized the insurance sector in March 2000 with the passage
of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry
restrictions for private players and allowing foreign players to enter the market with some
limits on direct foreign ownership. Under the current guidelines, there is a 26 percent
equity cap for foreign partners in an insurance company. There is a proposal to increase
this limit to 49 percent.

The opening up of the sector is likely to lead to greater spread and deepening of insurance
in India and this may also include restructuring and revitalizing of the public sector
companies. In the private sector 12 life insurance and 8 general insurance companies
have been registered. A host of private Insurance companies operating in both life and
non-life segments have started selling their insurance policies since 2001.

THE new stars of the Indian Insurance Industry are on the rise as private insurers are
increasingly chipping away at public sector behemoth LIC's lead in the Rs 25,000 crore
life insurance market. Prominent among the newcomers are ICICI Prudential, Bajaj

8
Allianz and HDFC Standard life. These together collectively account for around 15% of
the total first year premiums collected for April-June '05. LIC is clearly losing market
share, where it was the only player not so long ago. Consider this - for the year ended
March '05. LIC had a share of 78.07% of the total life insurance premium market, which
in a span of three months has fallen to around 74.87%.

ICICI Prudential is the second largest player and the largest among private insurers with a
7.53% share of premium collected during April-June '05 followed by Bajaj Allianz at
4.18% and HDFC Standard at 3.20%. Overall, the life insurance industry continues to see
good growth with premiums collected registering a 36% growth over the previous year
for FY05. The growth in premium collected is being driven by the increasing popularity
of ULIPs (unit linked plans). In the past year, premiums from ULIPs grew by around
422% while non-ULIP business premiums increased by around 0.03% only. ULIPs are
driving the growth in premiums collected with ULIPs accounting for 38% of total
premiums collected as of June '05. The rising sensex has greatly increased the popularity
of investment oriented insurance options. Private insurers seem to be the biggest
beneficiaries of ULIPs with 72% of their total premium collections for FY05 coming
from ULIPs. With LIC, ULIPs accounted for a more modest 21% share. This, too, is
considerable since ULIPs accounted for just 2% of premiums collected during FY04.

The increasing popularity of ULIPs can be attributed to the transparency and flexibility
offered in comparison to other insurance products." In a ULIP plan, the NAVs are
declared daily which allows the policyholder to keep check on how the premiums paid
are invested unlike a blanket cover. Also, the flexibility to move among various
investment options in a ULIP scheme has greatly increased the flexibility available to a
policyholder.

The order also remains same in terms of the number of lives insured or covered with LIC
accounting for around 87.25% of the total lives covered, followed by ICICI Prudential
among the private insurers with a 3% share and Bajaj Allianz at around 2% for April-
June '05. Among the private players, Bajaj Allianz has seen the highest growth rates at
around 388% for FY05 and 181% for the month of June. Others seeing strong growth are
AMP Sanmar, HDFC Standard life, Max NewYork Life and Met life among the private
players. Birla Sunlife, among the private players has registered a negative growth 12%
for the April-June '05 period and has failed to keep pace with the growth rates of other
insurers apart from LIC for FY05.

Sahara Life is the smallest among life insurers at 0.02% share of the market for April –
June '05. Other insurers with a under one percent share of the market are ING Vysya,
AMP Sanmar, Kotak Mahindra Old Mutual and Metlife insurance for April – June '05.

Among insurance policies, the figures point towards increasing preference for categories
like pension plans. Pension plans accounted for around one third of the total premiums
collected in April-June '05. In terms of percentage share, though Life insurance still
accounts for the lion's share at 64%, followed by pension plans at 33%, annuities at 2%
and health accounting for a round 0.025%. Within the life insurance category, the group

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schemes have been registering strong growth rates .The segment grew by 23% for the
month of April-June '05 and a 75% growth over the previous year. Within group
insurance LIC accounts for the largest pie at around 63% but there is change at top league
within private insurers with Tata AIG taking top honours with a 12% share of the market
and SBI life with a 7% share of the market.

Group insurance has evolved into a cheap and alternate way for insurers to grow their
businesses. Group Insurance lets insurers access a group of customers at lower rates of
premium. The Advantage here is the lower origination costs involved for the over and the
huge ticket sizes for the insurance company.

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Life Insurance Market
The Life Insurance market in India is an underdeveloped market that was only tapped by
the state owned LIC till the entry of private insurers. The penetration of life insurance
products was 19 percent of the total 400 million of the insurable population. The state
owned LIC sold insurance as a tax instrument, not as a product giving protection. Most
customers were under- insured with no flexibility or transparency in the products. With
the entry of the private insurers the rules of the game have changed.

The 12 private insurers in the life insurance market have already grabbed nearly 9 percent
of the market in terms of premium income. The new business premium of the 12 private
players has tripled to Rs 1000 crore in 2002- 03 over last year. Meanwhile, state owned
LIC's new premium business has fallen.

Innovative products, smart marketing and aggressive distribution. That's the triple
whammy combination that has enabled fledgling private insurance companies to sign up
Indian customers faster than anyone ever expected. Indians, who have always seen life
insurance as a tax saving device, are now suddenly turning to the private sector and
snapping up the new innovative products on offer.

The growing popularity of the private insurers shows in other ways. They are coining
money in new niches that they have introduced. The state owned companies still
dominate segments like endowments and money back policies. But in the annuity or
pension products business, the private insurers have already wrested over 33 percent of
the market. And in the popular unit-linked insurance schemes they have a virtual
monopoly, with over 90 percent of the customers.

The private insurers also seem to be scoring big in other ways- they are persuading
people to take out bigger policies. For instance, the average size of a life insurance policy
before privatization was around Rs 50,000. That has risen to about Rs 80,000. But the
private insurers are ahead in this game and the average size of their policies is around Rs
1.1 lakh to Rs 1.2 lakh- way bigger than the industry average.

Buoyed by their quicker than expected success, nearly all private insurers are fast-
forwarding the second phase of their expansion plans. No doubt the aggressive stance of
private insurers is already paying rich dividends. But a rejuvenated LIC is also trying to
fight back to woo new customers.

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Health insurance growing and going rural
OVER the last few years, health insurance has witnessed a significant increase both in
terms of premiums and numbers. The health insurance sector, which constitutes an
estimated 9.6% of the total premiums of the general non-life insurance industry in India,
has recorded a growth of 36% over the last year, health premium thus rising to Rs 1,732
crore in '04-05 from Rs 1,274 crore the previous year.

Health insurance continues to be the fastest growing segment of the insurance industry.
ICICI Lombard, which has a 6.9% share in the overall market but a 39% share of the
private health insurance market, registered an increase of 257% of its health insurance
business over the last year. As a result, while health premium represented not more than
6% of the company's insurance business in '03-04, it represents over 13% today.
Likewise, Bajaj Allianz, which holds a 23.1% market share of the private health
insurance market, has registered a 242.2% increase of its health business in '04-05.
Health premium has increased from 4 to 8% of the company's total non-life business.

If the private health insurance sector has registered a spectacular increase with an average
growth rate of 148% of premiums, 82% of the total health insurance market remains
under control of the public sector. The four public insurance providers' health premium
has increased to Rs 1732.2 crore in '04-05 from Rs 1,151.2 crore a year ago.

Health represents 9.8% of the public insurance provider's business, a share increasing
steadily every year. New India Assurance, with an overall market share of 30%, is the
leader of the total market, followed by National Insurance, which controls 21% of the
market followed by United India and finally Oriental Insurance.

However, in spite of a significant growth over the last few years, the market for health
insurance in India remains limited. Today, only 85m people in India are covered by heath
insurance policy, and among them only 10.8m are covered by a health insurance
provider. The rest are covered under government schemes, company schemes, etc.

Insurance providers are starting to look at new opportunities. Senior citizens stand out as
a promising untapped market and private players are looking at offering complementary
insurance to individuals already benefiting from a government or a company scheme.
Yet, lack of data has been and remains a significant stumbling block to the development
of a robust health insurance market in India. Patients' needs vary from region, city and
age group.

According to insurance companies, without accurate data, designing adapted products

and pricing them efficiently is very difficult. In fact, the health insurance portfolio is not
profitable at the moment.

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Top ten life insurers by market share

Insurer Market Share (%)

LIC 74.87

ICICI Prudential 7.53

Bajaj Allianz 4.18

HDFC Standard 3.20

Tata AIG 1.93

Birla Sunlife 1.84

SBI Life 1.69

Max New York life 1.44

Aviva 1.14

Kotak Mahindra old mutual 0.77

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 ULIP (Unit Linked Insurance Plan)

INTRODUCTION:
A Unit Link Insurance Policy (ULIP) is one in which the customer is provided with a life
insurance cover and the premium paid is invested in either debt or equity products or a
combination of the two. In other words, it enables the buyer to secure some protection for
his family in the event of his untimely death and at the same time provides him an
opportunity to earn a return on his premium paid. In the event of the insured person's
untimely death, his nominees would normally receive an amount that is the higher of the
sum assured or the value of the units (investments). To put it simply, ULIP attempts to
fulfill investment needs of an investor with protection/insurance needs of an insurance
seeker. It saves the investor/insurance-seeker the hassles of managing and tracking a
portfolio or products.

A ULIP, as the name suggests, is a market-linked insurance plan. The main difference
between a ULIP and other insurance plans is the way in which the premium money is
invested. Premium from, say, an endowment plan, is invested primarily in risk-free
instruments like government securities (gsecs) and AAA rated corporate paper, while
ULIP premiums can be invested in stock markets in addition to corporate bonds and
gsecs.

ULIPs offer a variety of options to the individual depending on his risk profile. For
instance, an individual with an above-average risk appetite can choose a ULIP option that
invests upto 60% of premium in equities. Likewise, an individual with a lower risk
appetite can select a ULIP that invests upto 20% of premium in equities.

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ULIP VS TRADITIONAL INSURANCE PLAN

It wasn't too long back, when the good old endowment plan was the preferred way to
insure oneself against an eventuality and to set aside some savings to meet one's financial
objectives. Then insurance was thrown open to the private sector. The result was the
launch of a wide variety of insurance plans, including the ULIPs.

Two factors were responsible for the advent of ULIPs on the domestic insurance horizon.
First was the arrival of private insurance companies on the domestic scene. ULIPs were
one of the most significant innovations introduced by private insurers. The other factor
that saw investors take to ULIPs was the decline of assured return endowment plans. Of
course, the regulator -- IRDA (Insurance and Regulatory Development Authority) was
instrumental in signaling the end of assured return plans.

Today, there is just one insurance plan from LIC (Life Insurance Corporation) -- Komal
Jeevan -- that assures return to the policyholder.

These were the two factors most instrumental in marking the arrival of ULIPs, but
another factor that has helped their cause is a booming stock market. While this now
appears as one of the primary reasons for their popularity, we believe ULIPs have some
fundamental positives like enhanced flexibility and merging of investment and insurance
in a single entity that have really endeared them to individuals.

SUM ASSURED

Perhaps the most fundamental difference between ULIPs and traditional endowment
plans is in the concept of premium and sum assured.

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When you want to take a traditional endowment plan, the question your agent will ask
you are -- how much insurance cover do you need? Or in other words, what is the sum
assured you are looking for? The premium is calculated based on the number you give
your agent.

With a ULIP it works in reverse. When you opt for a ULIP, you will have to answer the
question -- how much premium can you pay?

Depending on the premium amount you state, you are offered a sum assured as a multiple
of the premium. For instance, if you are comfortable paying Rs 10,000 annual premium
on your ULIP, the insurance company will offer you a sum assured of say 5 to 20 times
the premium amount.

In the case of LIC's ULIP, the sum assured--premium relationship works the traditional
way. So you need to state how much sum assured you are looking for and your premium
is calculated as 1/10th the sum assured. If you have opted for a sum assured of Rs
100,000, your annual premium will be Rs 10,000.

INVESTMENTS

Traditionally, endowment plans have invested in government securities, corporate bonds

and the money market. They have shirked from investing in the stock markets, although
there is a provision for the same.

However, for some time now, endowment plans have discarded their traditional outlook
on investing and allocate about 10%-15% of monies to stocks. This percentage varies
across life insurance companies.

ULIPs have no such constraints on their choice of investments. They invest across the
board in stocks, government securities, corporate bonds and money market instruments.
Of course, within a ULIP there are options wherein equity investments are capped.

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EXPENSES

ULIPs are considered to be very expensive when compared to traditional endowment

plans. This notion is rooted more in perception than reality.

Sale of a traditional endowment plan fetches a commission of about 30% (of premium) in
the first year and 60% (of premium) over the first five years. Then there is ongoing
commission in the region of 5%.

Sale of a ULIP fetches a relatively lower commission ranging from as low as 5% to 30%
of premium (depending on the insurance company) in the first 1-3 years. After the initial
years, it stabilizes at 1-3%. Unlike endowment plans, there are no IRDA regulations on
ULIP commissions.

Mortality expenses for ULIPs and traditional endowment plans remain the same as also
the administration charges.

One area where ULIPs prove to be more expensive than traditional endowment is in fund
management. Since ULIPs have an equity component that needs to be managed actively,
they incur fund management charges. These charges fluctuate in the 0.80%-1.50% (of
premium) range.

FLEXIBILITY

As we mentioned, one aspect that gives ULIPs an edge over traditional endowment is
flexibility. ULIPs offer a host of options to the individual based on his risk profile.

There are insurance companies that offer as many as five options within a ULIP with the
equity component varying from zero to a maximum of 100%. You can select an option
that best fits your objectives and risk-taking capacity.

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Having selected an option, you still have the flexibility to switch to another option. Most
insurance companies allow a number of free 'switches' in a year.

Another innovative feature with ULIPs is the 'top-up' facility. A top-up is a one-time
additional investment in the ULIP over and above the annual premium. This feature
works well when you have a surplus that you are looking to invest in a market-linked
avenue, rather than stash away in a savings account or a fixed deposit.

ULIPs also have a facility that allows you to skip premiums after regular payment in the
initial years. For instance, if you have paid your premiums religiously over the first three
years, you can skip the fourth year's premium. The insurance company will make the
necessary adjustments from your investment surplus to ensure the policy does not lapse.

With traditional endowment, there are no investment options. You select the only option
you have and must remain with it till maturity. There is also no concept of a top-up
facility.

Your premium amount cannot be enhanced on a one-time basis and skipped premiums
will result in your policy lapsing.

TRANSPARENCY

ULIPs are also more transparent than traditional endowment plans. Since they are
market-linked, there is a price per unit. This is the net asset value (NAV) that is declared
on a daily basis. A simple calculation can tell you the value of your ULIP investments.
Over time you know exactly how your ULIP has performed.

ULIPs also disclose their portfolios regularly. This gives you an idea of how your money
is being managed. It also tells you whether or not your mutual fund and/or stock
investments coincide with your ULIP investments. If they are, then you have the
opportunity to do a rethink on your investment strategy across the board so as to ensure
you are well diversified across investment avenues at all times.

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With traditional endowment, there is no concept of a NAV. However, insurers do send
you an annual statement of bonus declared during the year, which gives you an idea of
how your insurance plan is performing.

Traditional endowment also does not have the practice of disclosing portfolios. But given
that there are provisions that ensure a large chunk of the endowment portfolio is in high
quality (AAA/sovereign rating) debt paper, disclosure of portfolios is likely to evoke
little investor interest.

LIQUIDITY

Another flexibility that ULIPs offer the individual is liquidity. Since ULIP investments
are NAV-based it is possible to withdraw a portion of your investments before maturity.
Of course, there is an initial lock-in period (3 years) after which the withdrawal is
possible.

Traditional endowment has no provision for pre-mature withdrawal. You can surrender
your policy, but you won't get everything you have earned on your policy in terms of
premiums paid and bonuses earned. If you are clear that you will need money at regular
intervals then it is recommended that you opt for money-back endowment.

TAX BENEFITS

Taxation is one area where there is common ground between ULIPs and traditional
endowment. Premiums in ULIPs as well as traditional endowment plans are eligible for
tax benefits under Section 80C subject to a maximum limit of Rs 100,000. On the same
lines, monies received on maturity on ULIPs and traditional endowment are tax-free
under Section 10.

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ULIP - KEY FEATURES (IN GENERAL):

1. Premiums paid can be single, regular or variable. The payment period too can
be regular or variable. The risk cover can be increased or decreased.

2. As in all insurance policies, the risk charge (mortality rate) varies with age.

3. The maturity benefit is not typically a fixed amount and the maturity period can
be advanced or extended.

4. Investments can be made in gilt funds, balanced funds, money market funds,
growth funds or bonds.

5. The policyholder can switch between schemes, for instance, balanced to debt or
gilt to equity, etc.

6. The maturity benefit is the net asset value of the units.

7. The costs in ULIP are higher because there is a life insurance component in it
as well, in addition to the investment component.

8. Insurance companies have the discretion to decide on their investment

portfolios.

9. They are simple, clear, and easy to understand.

10. Being transparent the policyholder gets the entire episode on the performance
of his fund.

11. Lead to an efficient utilization of capital.

12. ULIP products are exempted from tax and they provide life insurance.

13. Provides capital appreciation.

14. Investor gets an option to choose among debt, balanced and equity funds.

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ULIP SALES SINCE 2003

The Story in Numbers

2003-04 2004-05 Apr-Sep '05
No of policies 186,443 288,189 200,213
Gross premium (Rs cr) 221 1,002 762
Market share (%)
Pvt life insurance cos 7.3 15.4 19.8
All life insurance cos 0.96 3.39 4.75

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22
ULIP

Bajaj Allianz Unit Gain ICICI Prudential Life Time2

Joint/Single life Single life Single life
Min Annual premium(Rs) 10,000 18,000
Mode of premium payment Yearly, quarterly, monthly Yearly, quarterly, monthly
Min Sum Assured 5*Annual Premium 7*Annual Premium

6(Equity, Equity Gain,

Equity Midcap, Debt, 4(Maximiser, Balancer, Protector,
Types of Funds Balanced, Cash) Reserver)
Benefits
Death Benefit Yes Yes
Accidental Death Benefit Optional
Critical illness Benefit Optional
Accidential Permanent/Partial
Disability Benefit Optional
Hospital Cash Benefit Optional
MahilaGain Rider Benefit Optional (for women only)
Anytime after payment of 3 Anytime after payment of 3 full year
Cash Withdrawal Option full year premiums premiums
Min Withdrawal Amt (Rs.) 1000 2000
Min Balance requirement (Rs.) 10000
Redirect Premium Allowed Allowed
Free Switches 3/yr 4/yr
Min Switching Amt (Rs) 5000 10000
Top Up
Choice Of Top Up Yes Yes
Min Top Up Amt. - 5000

Percentage of Top up Allocated 100% 100%

Flexibility to Increase Sum
Assured Yes Yes
No of Times Every 3rd year upto 4 times Every 3rd year upto 3 times
25% of the SA/Rs.1Lakh 25% of the SA/Rs.1Lakh whichever
Quantum of Increase whichever lower lower
Flexibility to Decrease Sum
Assured yes Yes
Yes, max Decrease 20 % of the original
Flexibility to Decrease Premium No premium
Flexibility to Increase Premium Yes yes
Additional Allocation of Units No Yes
Charges
(50,000 &
Allocation All (18000-49,999) above)
1st year 30% 80% 82%
2nd year 98% 92.50% 92.50%
3rd Year 99% 96% 96%

4 th Year 100 % onwards 96% onwards 96% onwards

Bid Offer Spread 5%
Transaction Charges 0.5%(equity) 0.2%(debt)

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Comparison between ICICI
Lombard and New India
assurance
(General Insurance)

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ICICI Lombard
Home insurance
Protect your single largest investment
Insure your home and its contents against natural calamities like fire, earthquake, flood, gas cylinder
explosion, and electric short circuit as well as man-made disaster like burglary.

• Structure
An ideal cover for a homeowner to protect the structure of the home i.e. walls, roof and flooring. In
case you have given the house on rent then this cover is all the more important for you. This
insurance cover protects your home structure against any damages by the perils covered by paying
for the repair / remake of your home structure.
• Content
This cover is ideally suited for individuals staying on rent who do not own the property but own the
contents inside the house. The contents cover can include consumer durables, furniture & fitting,
jewelry and other special items like utensils, clothing etc. The contents are covered against the
perils listed below and also against burglary.
• Structure & Content
This cover is ideally suited for individuals having their own home and owns the contents in the
home. The Content cover can include consumer durables, furniture & fitting, jewelry and other
special items like utensils, clothing etc. The contents are covered against the perils listed below
and also against burglary. The structure cover protects your home structure against any damages
by the perils covered by paying for the repair / remake of your home structure.

Health insurance
A fixed premium floater health plan which is designed to give you maximum tax benefit for health insurance
under section 80 D so that your effective rate for a Rs.10,000 cover is Rs.6634* only.

The floater health plan covers your entire family under one policy with one sum insured and one premium.

E.g.: The Prakash Family is covered under a traditional health insurance – Mr. Prakash Rs. 2 lac, his wife
Rs. 1 lac, their son Rs. 50,000 & daughter Rs. 50,000 – and they have paid premium for all these 4 policies.
In an unforeseen situation, wherein surgery and post hospitalization bill of their son amounts to Rs. 1.30 lac,
the existing policy will cover only Rs. 50,000, while Mr. Prakash will have to bear the balance Rs. 80,000
from his pocket.

With Family Health Floater Insurance plan, all members of Prakash Family are covered
up to a total sum insured of Rs. 4 lac. Thus, Family Floater would have covered entire Rs.
1.30 lac medical expenses of Mr. Prakash’s son.

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Overseas travel insurance
Introduction

All overseas travel policies charge premium on a slab basis. Which means if you are on a 16-day trip, you
end up paying for 21 days, as the slab is 14 to 21 days. But with us you ‘pay per day’.

Key Benefits

Worldwide cashless medical service

Pre-existing and Maternity cover in case of an emergency
Special Family Plans and Annual Multi-Trip Plans to save you money
Immediate policy issuance, no medical checks
Coverage up to 85 years*
Claims settlement in 7 days, with minimum documentation

Student travel insurance

Introduction

A comprehensive cover, which insures you against unfortunate incidents or unexpected expenses abroad
and provides timely assistance and support when you need it the most.

Key Benefits

• Accepted by most of the foreign universities as a substitute for their compulsory insurance
• Medical out-patient expenses covered
• No pre-medical check-up required
• 12 - Plan options
• Tailor-made plans to meet varied student needs
• Buy the policy in Indian rupees, which is 1/3 the cost of buying abroad

Four-wheeler insurance

Introduction

Be informed, save more and get coverage on your vehicle and cover yourself and your family. Get all the
information and take control of your insurance.

Car Insurance though mandatory is important. With motor Insurance you obtain

- Immediate policy through online facility

- Covers towing charges up to Rs.1, 500. Get this facility through our 24 X 7 call centre

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- Cashless claims facility through large tie-ups with more than 400 garages
- Online approval for minor claims through cashless network dealers

Two-wheeler insurance
Introduction

Two- wheeler riding calls for a constant alertness from theft and accidents. Two-wheeler policy guarantees
safety for your vehicle and yourself, thereby making your ride stress- free.

Key Benefit

Get discount up to Rs.250: This discount is available on choosing a higher voluntary deductible.

No Claim Bonus: If you do not make a claim over a period of time, a No Claim Bonus (NCB) is offered on
renewals. This discount can go as high as 50%.

Cover yourself too: Vehicle insurance provides compulsory personal accident cover for individual owners
of the vehicle while driving.

NEW Life Assurance

Motor Policy
This policy covers all types of vehicles plying on public roads such as:-

• Scooters &Motorcycles
• Private cars
• All types of commercial vehicles
• Motor Trade (vehicles in show rooms and garages)

As per the Motor Vehicles Act, 1988 it is mandatory for every owner of a vehicle plying
on public roads, to take an insurance policy, to cover the amount, which the owner
becomes legally liable to pay as damages to third parties as a result of accidental death,
bodily injury or damage to property. A Certificate of Insurance must be carried in the
vehicle as a proof of such insurance.

Two types of covers are available:

1. Liability only policy. This covers third party liability for bodily injury liability
and / or death and property damage. Personal Accident cover for Owner-driver is
also included.

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 2. Package policy. This covers loss or damage to the vehicle insured in addition to
(1) above.

No- claim discounts are available on renewal of policy, ranging from 20% to 50%,
depending upon the type of vehicle and the number of years for which no claim has been
made.

Mediclaim policy
This policy provides for cashless hospitalization in India for the treatment of any illness
or disease or accidental injury (not specifically excluded) suffered during the policy
period. The payment of claim is made through Third Party Administrators who have been
empanelled by the Company to provide hassle free admission and discharge from the
Network hospital without making any payment. The reimbursement of domiciliary
hospitalization claims will also be made through the TPA.fff

For obtaining Mediclaim Policy the proposer has to fill up the proposal form and Insured
Person details form and submit two latest stamp sized coloured photograph of each
family member to be insured.

A family package cover can be taken covering proposer, spouse, dependent parents and
two dependent children with a 10% discount in premium.

Group policies can be issued to specified groups and group discount can be availed
provided group size is more than 100 members.

Premium upto Rs.10, 000/- paid by cheque for this policy is entitled for tax rebate under
section 80D of the Income Tax Act.

Scope
This policy becomes operative when treatment is taken as an in-patient in a hospital /
nursing home in India which satisfies the following criteria:

It should be an institution established for indoor care and treatment of sickness and injury
and which either

A. Has been registered as a Hospital/Nursing Home with the local authorities and is
under the supervision of a registered and qualified Medical Practitioner

OR

B. Should comply with minimum criteria as under:

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 i. It should have at least 15 in-patient beds (10 beds in class'C' city)
ii. Fully equipped operation theatre of its own wherever surgical operations
are carried out
iii. Fully qualified Nursing Staff under its employment round the clock
iv. Fully qualified Doctor should be in charge round the clock

The policy also reimburses through TPA relevant medical expenses incurred upto 30 days
prior to and 60 days after hospitalization subject to the overall sum insured.

The policy provides for Domiciliary Hospitalization expenses when medical treatment is
taken for a period exceeding 3 days for an illness/disease/injury (not specifically
excluded) which normally would require treatment as an in-patient in a hospital/nursing
home but is actually taken whilst confined at home in India under the following
circumstances:

Either the condition of the patient is such that he/she cannot be removed to the
hospital/nursing home OR the patient cannot be removed to the hospital/nursing home for
lack of the accommodation therein.

The policy does not cover any disease / injury which the insured is suffering from, at the
time of taking the first policy. Certain specified illnesses are also excluded during the
first year of insurance.

In individual Mediclaim policy only, there is a provision for reimbursement of expenses

incurred for a medical check-up, subject to certain limits, once every 4yrs, provided the
policy is renewed without break and no claim has been preferred during this period. This
payment can be claimed from TPA after submission of bills.

Add on covers

The policy can be extended to cover treatment taken in Nepal and /or Bhutan with prior
permission from the insurance company.

The group Mediclaim policy can be extended, on payment of additional premium, to

cover maternity benefit i.e. expenses incurred in delivery, provided the extension is taken
for all the members covered in the group.

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Overseas Mediclaim Policy

Highlights

Premium payable in Rupees and Claims settled abroad in foreign Currency.

Policy available for frequent corporate travelers.

Scope

Medical expenses incurred by the insured persons, outside India as a direct result of
bodily injuries caused or sickness or diseases contracted are covered.

Eight Plans available under the policy:

PLAN A-1) For travel to countries excluding USA & Canada for business and
holiday limited to USD 50,000.

PLAN-A-2) Same as (A-1) above except that benefits stand increased to USD
250000.

PLAN B-1) For travel worldwide including USA & Canada for business and
holiday limited to USD 1,00,000.

PLAN B-2) Same as (B-1) above except that benefits stand increased to USD
5,00,000.

PLAN C) For travel to countries excluding USA & Canada for employment and
studies limited to USD 150,000.

PLAN D) For travel worldwide including USA & Canada for employment and
studies limited to USD 150,000.

PLAN E-1) For travel worldwide including USA & Canada for corporate
frequent travelers limited to USD 1,00,000.

PLAN-E-2) Same as (E-1) above except that benefits stand increased to USD
5,00,000.

CFT Cover is available for Executives Of Corporate clients and Partners of registered
firms annually subject to the duration of any one trip not exceeding 60 days.

ADDITIONAL Add-on benefits:-Besides the above additional add-on benefits are

available under Business & Holiday and CFT cover(Except Plan C and Plan D)

1. Personal Accident
2. Loss of checked in Baggage

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 3. Delay of checked in Baggage
4. Loss of passport
5. Personal Liability

Premium: Depends on Age-band, Trip-band and Country of visits. Coverage: Initially

cover upto 180 days is provided under Business & Holiday Plan .Extension allowed on
original policy for further period of 180 days subject to declaration of good health.

Householders Policy
Highlights

This is a package policy specially designed to meet the insurance requirements of a

householder by combining under a single policy, a number of our standard policies
usually taken by householders.

Discount in premium is offered depending upon the number of sections of the policy,
opted for, by the proposer.

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