Last Updated: June, 2019

Introduction
The insurance industry of India consists of 63 insurance companies of which 24 are in life insurance business and 39 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 seven public sector insurers. In addition to these, there are two national re-
insurer. Other stakeholders in Indian Insurance market include agents (individual and corporate), brokers, surveyors and
third party administrators servicing health insurance claims.
Market Size
Government's policy of insuring the uninsured has gradually pushed insurance penetration in the country and proliferation
of insurance schemes.
Gross premiums written in India reached Rs 5.53 trillion (US$ 94.48 billion) in FY18, with Rs 4.58 trillion (US$ 71.1 billion)
from life insurance and Rs 1.51 trillion (US$ 23.38 billion) from non-life insurance. Overall insurance penetration (premiums
as % of GDP) in India reached 3.69 per cent in 2017 from 2.71 per cent in 2001.
In FY19 (up to Jan 2019), premium from new life insurance business increased 3.91 per cent year-on-year to Rs 1.59 trillion
(US$ 22.04 billion). In FY19 (up to Jan 2019), gross direct premiums of non-life insurers reached Rs 1.39 trillion (US$ 19.28
billion), showing a year-on-year growth rate of 12.65 per cent.
Investments and Recent Developments
The following are some of the major investments and developments in the Indian insurance sector.

 As of November 2018, HDFC Ergo is in advanced talks to acquire Apollo Munich Health Insurance at a
valuation of around Rs 2,600 crore (US$ 370.05 million).
 In October 2018, Indian e-commerce major Flipkart entered the insurance space in partnership with Bajaj
Allianz to offer mobile insurance.
 In August 2018, a consortium of WestBridge Capital, billionaire investor Mr Rakesh Jhunjunwala announced
that it would acquire India’s largest health insurer Star Health and Allied Insurance in a deal estimated at
around US$ 1 billion.
 In September 2018, HDFC Ergo launched ‘E@Secure’ a cyber insurance policy for individuals.
 Insurance sector companies in India raised around Rs 434.3 billion (US$ 6.7 billion) through public issues in
2017.
 In 2017, insurance sector in India saw 10 merger and acquisition (M&A) deals worth US$ 903 million.
 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.

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

 In September 2018, National Health Protection Scheme was launched under Ayushman Bharat to provide
coverage of up to Rs 500,000 (US$ 7,723) to more than 100 million vulnerable families. The scheme is
expected to increase penetration of health insurance in India from 34 per cent to 50 per cent.
 Over 47.9 million famers were benefitted under Pradhan Mantri Fasal Bima Yojana (PMFBY) in 2017-18.
 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.
 Road Ahead
The future looks promising for the life insurance industry with several changes in regulatory framework which will lead to
further change in the way the industry conducts its business and engages with its customers.
The overall insurance industry is expected to reach US$ 280 billion by 2020. Life insurance industry in the country is
expected grow by 12-15 per cent annually for the next three to five years.
Demographic factors such as growing middle class, young insurable population and growing awareness of the need for
protection and retirement planning will support the growth of Indian life insurance.
Exchange Rate Used: INR 1 = US$ 0.0139 as of Q3 FY19
References: Media Reports, Press Releases, Press Information Bureau, Union Budget 2017-18, Insurance Regulatory and
Development Authority of India (IRDA), Crisil

ICICI LOMBARD GENERAL INSURANCE

GO BACK

 Fourth largest non-life insurance company in India as in FY18

 Provides motor, health, travel, home, property, marine, liability, crop and other specialty insurances products

 253 branches as of March 2018

 23.5 million policies issued and 1.54 million claims settled in FY18

 Gross Written Premium of Rs 147.89 billion (US$ 2.12 billion) in FY19

Currently a leading private general insurer in India, ICICI Lombard was started in 2001 as a joint venture between ICICI
Bank and Fairfax Financial Holdings. Over the years, it has grown rapidly along with India’s insurance industry. In FY19, it
became the fourth largest non-life insurance company in the country and issued 26.5 million new policies. Its Gross Direct
Premium Income (GDPI) has grown as a CAGR of 13.9 per cent between FY08-18 to reach Rs 123.57 billion (US$ 1.92
billion).

For FY19 (up to October 2018), the company had 8.90 per cent share in gross direct premium underwritten in India’s non-life
insurance sector. In FY19, the company earned GDPI of Rs 144.88 billion (US$ 2.07 billion).
Company Website: www.icicilombard.com

ICICI Lombard – Nibhaye Vaade

2017 Became a listed company, GDPI crossed Rs 100 billion (US$ 1.54 billion)

2016 First general insurance company in India to issue subordinated debt

2015 Investment book size crossed Rs 100 billion (US$ 1.56 billion)
2014 Number of policies issued surpassed 10 million

2010 Settled over 5 million claims

2006 Crossed Gross Direct Premium Income (GDPI) of Rs 10 billion (US$ 220.61 million)

2004 Became India’s largest private sector general insurer

2001 Commenced non-life insurance operations

At ICICI Lombard, customer centricity is the cornerstone of our culture. Stretching

ourselves and going beyond the ordinary, for the satisfaction and smiles of our

customers, is deeply embedded in our DNA. Whether our customers face an untoward

incident due to the unpredictability of nature, suffer losses due to accidents or face

medical challenges, we remain committed to be at their side and serve them in their

hard times.

Our value proposition is driven by a promise to be the best partner for our customers.

Simply put, it means providing unmatched services. This deep and unceasing

commitment to our customers guides us to do things right, every time. It inspires us to

evolve our services every day, from small modifications to major changes. For us,

customer satisfaction is a promise to be lived every day, because our customers’ peace

of mind is our greatest reward.

At ICICI Lombard, customer satisfaction is our motto. Stretching ourselves and going
beyond the ordinary for the satisfaction and smiles of our customers is something that is
deeply embedded in our DNA. Be it an untoward incident due to the unpredictability of
nature or losses suffered due to accidents or medical challenges, we remain committed
to be at your side and serve you always.
The 2015 Chennai floods affected the lives of hundreds of people and caused
widespread damage. In the face of such unexpected events, our team continues to work
towards our goals without losing focus. Reaching out and reassuring customers by
going the extra mile, reinstating normalcy as fast as possible, we remained steadfast in
reducing emotional trauma and the impact of loss. Fast, fair and friendly as always, we
put our customers’ needs above all.
In August 2018, the State of Kerala has been witnessing significant disruption due to
widespread floods that were triggered by excessive rains. Not only did it affect the lives
of hundreds of people but has also caused widespread damage. Nevertheless, our
team has continued to work towards our goals of assisting our customers without losing
focus. Activating direct communication through SMS and social media to initiate speedy
settlement of claims, we've successfully reached out and reassured our customers by
going the extra mile. By initiating a hotline facility to prioritize customer calls from
Kerala, we have remained steadfast in reinstating normalcy at the earliest. Fast, fair and
friendly as always, we put our customers’ needs above all.
Our value proposition is driven by a promise to be the best partner for our customers.
Hence we are here to live up to our promises. With a promise to ensure quick and
smooth claims processing, our unmatched services are there to assist you at all times.
As a responsible corporate citizen, ICICI Lombard reiterates its commitment towards its
customers and the community at large. The initiatives are expected to yield positive
results and the company hopes to support the flood-ravaged State in bringing back the
situation to normalcy.

CHAPTER 1

INTRODUCTION
1.1 GENERAL INTRODUCTION ABOUT THE SECTOR

Insurance is not the sale of products, but servicing customers. It is a system, by which the
losses suffered by a few are spread over many, Exposed to similar risks. Insurance is a
protection against financial loss arising on the happening of an unexpected event. Insurance
companies collect premiums to provide for this protection. A loss is paid out of the premiums
collected from the insuring public and the Insurance Companies act as trustees to the amount
collected. The very fundamental principle of spreading of the risk is actually practiced by the
insurance companies by reinsuring the risks that they have insured. The opening up of the
Insurance Sector to Private Companies, has made available more products and world class
service to Indian Customer.
This project has been made with an objective to give an insight into various facts of
General Insurance sector in India. An attempt has been made to explain the apex body of
General Insurance. i.e. General Insurance Corporation of India, its structure, products and
subsidiaries.

Also the review of latest entrants into insurance sector viz. private players like TATA AIG
General Insurance Company, Reliance General Insurance Company limited, Bajaj Allianz
General Insurance Company, IFFCO Tokyo General Insurance Company, Royal Sundaram
General Insurance Company limited and ICICI Lombard General Insurance Company have
been described in brief, Due to the growth in the technological sector of the country, the
insurance companies have started utilizing these technologies to it‚as optimum level.
1.2 INDUSTRY PROFILE

a. Origin and Development of the industry

Till May, 1971 there were 107 companies operating in the market, bothIndian and foreign. Some
companies were in the co-operative sector. The size ofthe companies and there reach varied to
a great extent. Whereas many companiesused to underwrite all types of covers fire, marine&
miscellaneous insurance.

The government in May, 1971 took over the undertaking of all the
Companies as a prelude to ultimate nationalization. This was brought about underthe General
insurance business (Nationalsation) Act, 1972.

Thus, effective 01/01/1973 a single holding company was created namedas General Insurance
Corporation of India, with 4 subsidiaries to take care of thegeneral insurance business
operation.

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 Colkata. Some of the important
milestones in the 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. The General insurance
business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd.,
the first general insurance company established in the year 1850 in Colkata by the British.

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

1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of
general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of
conduct for ensuring fair conduct and sound business practices.

1968: The Insurance Act amended to regulate investments and set minimum solvency
margins and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalization) Act, 1972.Nationalized the general
insurance business in India with effect from 1st January 1973.

107 insurers amalgamated and grouped into four companies.

The four subsidiaries formed were as under:

1. The National Insurance Co. Ltd

2. The India Assurance Co. Ltd
3. The Oriental Insurance Co. Ltd
4. The United India Insurance Co. Ltd

The four subsidiary companies operated under the all direction of the GIC.Each of these had
almost a similar structure with 4 tiers

 The branch at thebottom rung,

 The divisional office,
 Regional office and
 TheHead Office at the apex.
b. Growth and Present status of the industry

At present 12 companies are operating in general insurance market for direct business. The four
public sector companies mentioned above and the following companies in the private sector.
These private companies were formed after the passing of the IRDA Act, 1999. This removed
the prohibition existing in the GIBNA Act relating to formation of insurance companies other than
the four Public sector companies.

The companies in the private sector are:-

1.Bajaj Allianz General Insurance Co.Ltd.

2.Cholamandalam General Insurance Co. Ltd.
3.HDFC Chubb General Insurance Co. Ltd.
4.ICICI LOMBARD General Insurance Co. Ltd.
5.IFFOCO Tokyo General Insurance Co. Ltd.
6.Reliance General Insurance Co. Ltd.
7.Royal Sundaram Alliance Insurance Co. Ltd.
8.Tata AIG General Insurance Co. Ltd.

The General Insurance Corporation is now only Reinsurance Company and operates as the
National Reinsures. There are however, some companies in the market, which are formed for a
specific purpose only.

Deposit insurance company

To take care of loss suffered by the depositors of a bank.

 Exports Credit Guarantee Corporation - this takes care of the credit risk, which exporters
face in respect of the goods exported.

 Agricultural Insurance Corporation to take care of crop insurance and allied risks.

 There are also insurance departments in some of the states.

The four public sector and the 8 private sector companies are authorized to handle direct
business as well as reinsurance business, both inward outward. The buyers of insurance would
be property owners, factory owners, traders, vehicle owners, commercial establishments,
professionals etc. In fact the whole population could deemed as potential costumers for
insurance of one type or another.
With the largest number of life insurance policies in force in the world, Indian insurance sector
accounted for 4.1 per cent of GDP in 2006-07, up from 1.2 per cent in 1999-2000, far ahead of
China where insurance accounts for just 1.7 % of the GDP and even the US where insurance
penetration stands at 4 per cent of the GDP.
The time factor plays an important role while providing service to the customer.
The customer expects that the procedures for settling the claim should be short and not much
time consuming. They should get the benefits of the service as soon as possible.
Today the technology is boosting in each and every field. Insurance is not an
exception. Companies have started providing customers facility of online payment of premium
through their websites. They also provide online assistant to the customer the policy status and
how to calculate the premium. To calculate the premium they just need the present age, the
type of police, sum assured, and accident covered if any. By filling in this information you can
calculate the amount of premium you have to pay. The customer can pay their premiums by
means of credit cards or can also give standing instruction to the bank in order to pay their
monthly premiums.

The insurance companies also provide loan facilities against their policies. At present loans are
granted on unencumbered polices as: Up to 90% of the Surrender Value for policies, where the
premium due is fully paid-up, and Up to 85% of the Surrender Value for policies where the
premium due is partly paid- up.

The minimum amount for which a loan can be granted under a policy is Rs150. The rate of
interest charged is 10.5% p.a., payable half-yearly. Loans are not granted for a period shorter
than six months, or on the security of lost policies (the assured must have the duplicate policies)
or on policies issued under certain plans. Certain types of policies are, however, without loan
facility.

In the first month of financial year 2007-08, private sector insurers grew 37.34 per cent to
Rs1272.22 crore over April 2006. In the process, the market shares have further undergone a
change.

Private sector has grabbed a market share of 40 per cent in the non-life insurance business,
from 34 per cent in the financial year 2006-07. Public sector market share is now only 60 per
cent.

c. Future of the Industry

India's insurance sector is zooming to show an unprecedented progressive growth of more than
200% by the period of 2009-12. The Associated Chambers of Commerce and Industry of India
has clocked out the fact that during this period, private players in the industry will see a growth
of about 140 per cent, owing to the adoption of the aggressive marketing techniques in
comparison of the growth rate of 35-40 per cent achieved by the state owned insurance
companies. The chamber is expected to poise the business of insurance to reach at Rs.2000
billions in coming 2 years from the present level of Rs. 500 billion. With the result of adoption of
the intense marketing strategies by the private players, the declination has been witnessed in
respect of the share of the state owned insurance companies captured in the market.

The market share fallout has been noticed in context of such companies like GIC, LIC, which
have come down to nearly 70 per cent in the past 4-5 years from the 97 per cent. The experts
have fore casted the more severe competition in the insurance sector likely to be occurred in the
near future. Till recently, insurance sector was majority driven by the government sector players
but now many private sector multinational players have come into the picture. Like HDFC, ICICI
Lombard, Royal Sundram,Tata Aig,etc. Insurance sector has been characterized as the
booming sector of the Indian arena, which has shown the growth rate of more than 15 per cent
to 20 per cent. Insurance in India is put under the federal subject and is governed by the
Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and General Insurance Business
(Nationalization) Act, 1972, Insurance Regulatory and Development Authority (IRDA) Act, 1999
and by various other acts.

Today Insurance Companies in India have grown manifold. The insurance sector in India has
shown immense growth potential. Even today a giant share of Indian population nearly 80% is
not under life insurance coverage, let alone health and non-life insurance policies. This clearly
indicates the potential for insurance companies to grow their market in India. In 1999, various
reforms were suggested in the insurance industry in India. This has changed a lot of things for
the insurance companies in India. These reforms were:

Bringing down of the government stake holding to 50%. Only the private companies with a
minimum capital of Rs.100 crores should be allowed to enter the insurance sector.

No insurance company can deal in both life and non-life insurance under the same business
entity.

Foreign Insurance Companies can enter India only in collaboration with domestic insurance
companies Interest should be paid on delays of payments by the insurance companies in case
of non-settlement of insurance claims. And many more to bring greater freedom and a well-
planned regulation to the insurance companies in India.

Though, the existing rule says that a foreign partner can hold 26% equity in an insurance
company, a proposal to increase this limit to 49% is pending with the government. Since
opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured
into the Indian market and 22 private companies have been granted licenses.

The demand for health insurance covers has seen a healthy increase, and today the sector is
the fastest growing segment in the non-life insurance industry in India, which grew at over 40%
last year. It is also emerging as an increasingly significant line of business for life insurance
companies. While this rate of growth appears to be very healthy, it is on a low base, and health
insurance penetration in the country continues to be low. Only about 25 million persons are
presently covered for health through commercial insurance, in a country of over 1.1 billion
people. Overall, the Indian health sector is still characterized by the near absence of any
significant risk protection against major health-related expenditure

Though LIC continues to dominate the Insurance sector in India, the introduction of the new
private insurers will see a vibrant expansion and growth of both life and non-life sectors in 2017.
The demands for new insurance policies with pocket-friendly premiums are sky high. Since the
domestic economy cannot grow drastically, the insurance sector in India is controlled for a
strong growth.

With the increase in income and exponential growth of purchasing power as well as household
savings, the insurance sector in India would introduce emerging trends like product innovation,
multi-distribution, better claims management and regulatory trends in the Indian market.
The government also strives hard to provide insurance to individuals in a below poverty line by
introducing schemes like the

 Pradhan Mantri Suraksha Bima Yojana (PMSBY),

 Rashtriya Swasthya Bima Yojana (RSBY) and
 Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY).

Introduction of these schemes would help the lower and lower-middle income categories to
utilize the new policies with lower premiums in India.

With several regulatory changes in the insurance sector in India, the future looks pretty awesome
and promising for the life insurance industry. This would further lead to a change in the way
insurers take care of the business and engage proactively with its genuine buyers.

Some demographic factors like the growing insurance awareness of the insurance, retirement
planning, growing middle class and young insurable crowd will substantially increase the growth
of the Insurance sector in India.

Read informative General Insurance Articles at Acko.

Having a vehicle insurance policy helps protect against damages to your vehicle under various
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The award is organised by the prestigious Advertising Club, which stands for effectiveness in
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Engineering Cover
Machinery Breakdown Insurance

Core Cover
Machinery/ Equipments
They are at work or at rest
Being Dismantled for the purpose of cleaning
Overhauling or in the course of the aforesaid operations themselves
When being shifted within the premises
Subsequent re-erection serial numbers Identification details mandatory

Additional Cover
Express freight (air freight excluded), holiday and overtime rates of wages
Air freight
Surrounding property
Third Party Liability
Additional Custom Duty
Escalation

Engineering Cover
Electronic Equipment Plant Insurance

Core Cover
Equipment are covered At Work, Rest &Fixed equipment

Non movable equipment such as Computers including monitor, keyboard, UPS, printer
Covering equipment on location basis
Identification number of each and every equipment
Valuation should be declared

Additional Cover
Earthquake

Terrorism

STFI
Escalation

Express Freight
Air Freight
Additional Custom Duty

Engineering Cover
Boiler & Pressure Plant Insurance
Core Cover
Damage (other than by fire) to the Boilers and/or other Pressure Plant.
Damage (other than by fire) to surrounding property of the insured described in the
Schedule or to property held by the insured
Damage to property not belonging to the Insured ,held in trust, on commission ,nor for
which he is responsible.
Identification number is mandatory
Valuation should be declared

Additional Cover
Escalation

Third Party Liability

Owners Surrounding Property of the Insured
Removal of debris
Express Freight
Air Freight