INSURANCE INDUSTRY

REPORT

PREPARED BY:
GROUP 9
SECTION G

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 CONTENTS
1. EXECUTIVE SUMMARY ............................................................................................................... 3
2. INDUSTRY PROFILE ....................................................................................................................... 4
2.1 OVERVIEW: ................................................................................................................................................... 4
2.2 MARKET SIZE: ............................................................................................................................................. 4
2.2.1 Life Insurance :............................................................................................................................. 5
2.2.2 Non-life Insurance: ................................................................................................................... 5
2.3 KEY DRIVERS: ............................................................................................................................................. 5
2.4 KEY TRENDS: ............................................................................................................................................... 6
2.5 TECHNOLOGICAL TRENDS AND MAJOR INNOVATIONS:................................................. 6
2.6 MERGERS AND ACQUISITIONS: ....................................................................................................... 7
2.6.1 Upcoming Mergers and Acquisitions: .................................................................................. 8
3. PLAYERS PROFILE ........................................................................................................................ 10
3.1 LIFE INSURANCE CORPORATION OF INDIA: ......................................................................... 10
3.2 ICICI LOMBARD: ..................................................................................................................................... 11
3.3 UNITED INDIA INSURANCE . ........................................................................................................... 12
3.3.1 Key Products .............................................................................................................................. 13
3.3.2 Performance Indicators (for Q4 2018-2019) : ................................................................. 13
3.4 UNITED HEALTH GROUP INCORPORATED ............................................................................. 13
3.4.1 Market shares ............................................................................................................................. 13
3.4.2 The Key products include ................................................................................................... 14
3.4.3 KEY FINANCIAL INDICATORS..................................................................................... 15
4. MACROECONOMIC ANALYSIS .............................................................................................. 15
4.1 GOVERNMENT REGULATIONS AND POLICY CHANGES:....................................... 15
4.1.1 Insurance Regulatory and Development Authority of India (IRDAI) ..................... 15
4.1.2 Insurance Laws (Amendment) Bill 2015 .......................................................................... 15
4.1.3 Impact of Union Budget on Insurance Sector: ............................................................... 16
4.1.4 Impact of GST on Insurance Sector: .................................................................................. 16
4.1.5 Impact of Demonetisation on Insurance Sector: ............................................................. 16
4.2 IMPACT OF BIG DATA ON FUTURE OF INSURANCE: ........................................................ 17
4.3 BREAKTHROUGH TECHNOLOGIES IN INSURANCE SECTOR: ..................................... 17
4.4 FDI IN INSURANCE SECTOR: ........................................................................................................... 18
4.5 OPPORTUNITIES FOR THE INSURANCE SECTOR: ............................................................... 18
5. REFERENCES: .................................................................................................................................. 19

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1. Executive Summary
Insurance means the protection from financial loss. It is a method of risk transfer in which
individual transfers his/her risk for a fee. Insurance sector can be broadly divided into Life
insurance and General Insurance. India has the population of 1.31 billion individuals and is one
of the largest producers of crops and users of automobiles thus depicting a strong market
potential for the insurance industry. There are 54 Insurance companies in India where 24 are
Life Insurance and 30 are General insurance companies. LIC is the only public Life insurance
company in India dominating the market with 52.78% market share in new premium life
insurance segment. Premium from life insurance companies have increased at a 14.44%
compounded annual average growth rate (CAGR) while premiums for non-life insurers
increased at 16. 65% CAGR from FY12 to FY18. The factors driving the demand for insurance
industry include increasing disposable household incomes, increased awareness among people
and higher government focus on improving healthcare and financial inclusion. The sector has
started witnessing changes owing to the advent of technology. The market trends are evolving
from traditional broker-based scenarios to a more subtle direct-to-market approach where
middlemen are cut off and the brokerage benefits are passed directly to the consumer. By
leveraging machine learning and Artificial Intelligence, the insurance sector companies are
incorporating innovative techniques to grow and cut cost. They have developed systems to
advise on products tailored for specific customers, depending on their history with the insurer
and income band. The Government regulations are also changing the landscape for the industry.
Pradhan Mantri Jan Arogya Yojna (PMJAY) is expected to provide coverage to around 50
crore people. The Government has also allowed 100% Foreign Direct Investment (FDI) in the
industry which is expected to increase cash flows to the sector. Insurance Regulatory and
Development Authority of India (IRDAI) is the regulatory body for insurance sector in India
which is responsible for regulating, promoting growth of the insurance and re-insurance
business in India. The body is relaxing the norms for registration of insurance marketing firms
(IMFs) to improve penetration of insurance products in the country. Fintech Companies are
also eyeing the insurance sector because of their untapped potential demand. In India,
Penetration of life insurance stood at 2.76% as compared to the global average of 3.5%. On the
other hand, the general insurance penetration stood at 0.93% as compared to the global average
of 2.8%. This shows the huge untapped potential in the Indian insurance market. This can
mainly be attributed to the unwillingness of individuals to pay upfront premium to secure their
lives and assets and thus they don’t want to forego the present consumption of rupee. Thus,
Insurance industry in India faces some challenges but it can be overcome with the support from

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government and increased awareness among citizens so that the penetration levels could rise
and the market potential could be utilised.

2. Industry Profile
2.1 Overview:
• Insurance sector can be broadly divided into Life insurance and Non-life /general insurance.
• Life insurance covers the risk to life (death of an individual) where as general insurance
covers the risk to other assets such as vehicles, property, health, etc.
• There are 54 Insurance companies where 24 are Life Insurance and 33 are general insurance
in India.
• Insurance Regulatory and Development Authority (IRDA) was founded in 1999 and it is
responsible for regulating, promoting growth of the insurance and re-insurance business in
India.
• Founded in 1956, LIC is the only public Life insurance company in India. It has 52.78% of
market share in new premium life insurance segment.
• At 3.69%, India was ranked 41st in 2017 in terms of insurance penetration. It is an
underserved market.
• Penetration of life insurance stood at 2.76% as compared to the global average of 3.5%. On
the other hand, the general insurance penetration stood at 0.93% as compared to the global
average of 2.8%. This shows the huge untapped potential in the Indian insurance market.

2.2 Market Size:

• Gross premium collected by life insurance Growth in Life Insurance Premium (US$ bn)
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companies in India increased from Rs 2.56 35.3
37.7
33.3
trillion in FY12 to Rs 5.78 trillion in FY19. 30.1 30.1 30.7
27.3 27.2 27.8
26.3
• In FY19, premium from new life insurance 21.5
17.7 18.6 17.6
business increased 10.73 per cent y-o-y to 13.4
Rs 2.15 trillion. During FY12 to FY18,
premium from new business of life
insurance companies have increased at a FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

14.44% CAGR. Premiums for non-life New Business Premium Renewal Premium

insurers increased at 16. 65% CAGR in the same period. Figure 1: Growth in Life Insurance
Premium

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 2.2.1 Life Insurance :
• Life insurance sector has 24 private players now in comparison to only four in FY02.
• With a 52.78% share in new business market in FY19, LIC, the only public sector life
insurer in the country, continues to be the market leader.
• Share of private sector in life insurance segment has grown from around 2% in FY03 to
33.8% in FY19. Number of lives covered under private life insurance companies reached
36.20 million (up to June 2018), showing y-o-y growth rate of 27.48 %.
Figure 2: Non-Life Insurance Market
9.90% Non Life Insurance Market in
India (FY19) 2.2.2 Non-life Insurance:
1.90%
• In FY20 (up to May 2019), gross direct
6.90% premiums of non-life insurers reached Rs
37.90%
16.60% 201.74 billion, 14% y-o-y growth.
• Premiums for non-life insurers increased
26.80%
at 16.65% CAGR during FY12-FY18.

Motor Health Crop Fire Marine Others • The number of policies issued increased
from 65.55 million in FY08 to 182.8 million in
FY18, at a CAGR of 10.8%.
• Private players accounted for a 55.7% share in the gross direct premiums generated in non-
life insurance sector while rest of the market is captured by public sector companies and
specialised insurers.
• Public sector insurers lead the non-life insurance market in India with New India

Gross Premiums Written in India Assurance, United India Insurance and

(US$ bn) National Insurance having market shares of
94.5
84.7
14.07 %, 9.64 % and 8.85%, respectively in
82.8
71.8 FY19.
60.7 64
56 • In the private sector, ICICI-Lombard is
the leader in FY19 with a market share of
8.52%.

2.3 Key drivers:

FY13 FY14 FY15 FY16 FY17 FY18 FY19* • Increasing per capita GDP of India and
increasing disposable household incomes.
• Increased awareness among people about different insurance policies.

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• Increase in micro insurance due to increased focus of government on financial inclusion.
• Increase in health insurance due to the govt focus on improving healthcare.
• Increase in number of group insurance.
• Pradhan Mantri Jan Arogya Yojna (PMJAY) is expected to provide coverage to around 50
crore people.
• Tax incentives. Insurance products are covered under EEE taxation which gives tax benefits
to the policy holder.
• FDI limit for an insurance company was increased to 49% in 2016.
• As per Union Budget 2019-20, 100%FDI permitted for insurance intermediaries.
• Largest crop insurance market in the world.
• GOI came up with PMBFY and NAIS to further boost the crop insurance segment.
• Only 2% of total health expenditure is covered under insurance. There is huge potential in
this segment.
• The protection margin for India was the highest amongst all the countries at 92%.
• As of 2014, around 8% of the retirees within the private sector receive a pension providing
a huge opportunity for insurance companies.

2.4 Key trends:

• Share of private sector is constantly increasing over the years.
• IRDA is making constant changes in regulations to facilitate the growth if Insurance sector.
• Companies have tied up with local NGOs to tap rural market.
• Companies are offering wide range of products to the customers.
• Focus on digitalization to cut the service costs.

2.5 Technological trends and major innovations:

The market trends are evolving from traditional broker-based scenarios to a more subtle direct-
to-market approach where middlemen are cut off and the brokerage benefits are passed directly
to the consumer. Technology integration is the key for insurance companies to streamline
processes and to make buying and usage of insurance convenient to customers.

By leveraging machine learning and Artificial Intelligence, the insurance sector companies are
incorporating innovative techniques to grow and cut cost. They have developed systems to
advise on products tailored for specific customers, depending on their history with the insurer
and income band.

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They are starting to automate processes thought platforms like chat bots to enhance customer
engagement significantly like:

• Understanding client needs: by gathering client information, understanding needs and

preference, assessing risk tolerance, considering outside accounts.

• Proposing a policy: by developing a financial plan, selecting asset allocation Implementing

the policy: opening accounts, transferring assets.

• Monitoring and adjusting the policy: by quarterly or annual performance reviews, dashboards
and status alerts, market updates and research.

Large insurers have launched mobile phone apps which is making it easier for customers to
transact with them. They are also slowly moving towards paperless claims as well. Insurer that
focuses on creating smaller value products are using blockchain-based systems at the backend
to speed up claims processing. Example time taken to service a mobile phone damage claim
from about 25 days to a few hours.

Insurers are using data analytics and Internet of Things technology to increase operational
efficiencies. Using Blockchain as a distributed ledger has created opportunities to insurers
across the value chain from verified digital customers to automated underwriting, claim
management and fraud prevention.

Different e-commerce platforms are working with insurance companies to onboard sachet
financial products on their platforms targeting mass market focusing on mid and low-income
section.

Example of technology benefitting the industry and customers as whole was during a surge in
home insurance claims following destructive floods in Kerala. Insurers like Reliance General
Insurance decided to deploy a video conversation feature, used to process motor vehicle claims,
to quicken claims processing. The policy holders had a two-way video chat to show the extent
of damage to the surveyor which resulted in claims getting processed in three days from over
two weeks earlier.

2.6 Mergers and Acquisitions:

With multiple players in the market Mergers and Acquisitions(M&A) is a very common
activity in today’s world and insurance sector is not any exception to it. According to KPMG,
84% of insurance firms look out for at least one acquisition.

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There are certain benefits of mergers and acquisitions which are mentioned below.

1. Increase in market share: It is one of the major reasons of M & A

2. Greater value generation: M&A helps in increasing the cost efficiency by operating in
efficiency if scale. This helps in higher value proposition by shareholders.
3. Cost Efficiency: After M&A companies benefit form cost efficiency as the new and bigger
company is able to provide services on a larger scale.
4. Improves Competitiveness: The new company is more competitive as compared to its
previous state.

Classification of M&A in Insurance Sector:

Market Extension Product Extension Conglomeration

• Two insurance • Two companies involved • Two different companies

companies selling the in different but
same product come complimenatry products
together to increase their come together provide
market size service
• Eg- Vehicle Insurance,
Travel Insurance
come together to provide
services to
customers.Main motive
is diversifaication
• Bancasurrance

List of Bancassurance Tie ups in India:

- Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd. – Between Canara
Bank, HSBC Insurance Ltd and Oriental Bank of Commerce.
- SBI General Insurance Company Ltd. – Between SBI and Insurance Australia Group
- ICICI Lombard General Insurance Company Ltd. – Between ICICI Bank and Faifax
Financial Holding Limited
- HDFC Life – Between HDFC and the Standard Life
- ICICI Prudential Life Insurance Company – Between ICICI Bank and Prudential plc

2.6.1 Upcoming Mergers and Acquisitions:

In the February 2018 Budget, the central government announced its plan to merge three public
sector general insurance companies that will help in consolidation of market and will also help
the government in meeting its disinvestment target. Government has appointed E&Y as a
consultant to manage the merger process.

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The three Insurance companies are National Insurance, United India Insurance and Oriental
Insurance. The merger is pending for approval from Central Government and other Regulatory
Bodies. The government has kept both the options open i.e. mergers or acquisitions. However,
these firms need recapitalisation before the mergers as the health of these companies look
bleak.

For measuring the health of an insurance company solvency ratio is one of the key parameters.
It determines if cash flow is sufficient to meet short-and long-term obligations. The minimum
regulatory requirement is 1.5, but two companies – Oriental and National Insurance have
slipped below the regulatory requirement. National Insurance reported a solvency ratio of 1.01
at the end of Q3 of FY19, against 1.53 at the end of Q2 of FY19. Oriental Insurance’s solvency
ratio slipped from 1.54 in Q2 to 1.21 in Q3 of FY19.

Insurance Solvency Profit Loss – Rs Cr Market Share - % Market Share - %

Companies ratio (Up to Dec -18) (As of April,19) (As of Mar,18)
National 1.01 -1177 8.04 10.55
Insurance
Oriental 1.21 -634 8.42 8.69
Insurance
United India 1.51 -2070 8.73 9.28
Insurance

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3. Players Profile

Premiums Market Share in Life Insurance (FY19)

18%
LIC
6% HDFC Standard Chartered
SBI Life Insurance
53%
9% ICICI Prudential Life
Others
14%

3.1 Life Insurance Corporation of India:

Life Insurance Corporation of India is an Indian government owned insurance company. It was
founded on 1 September 1956 and has its headquarters at Mumbai, Maharashtra. LIC was
founded as a result when Government of India passed the Life Insurance of India Act on 19
June 1956, that nationalised the private insurance industry in India. This resulted in the merger
of more than 245 insurance companies and provident societies and thus created the state-owned
Life Insurance Corporation of India. The current chairman of LIC is M.R. Kumar.

On March 31, 2018 LIC had an employee strength of 1,11,979 out of which 24,510 were
women and distributed in three categories shown below: Along with the employees, LIC also
has a huge agent strength. The agents are also distributed in different categories. There are
1,537,064 individual agents, 342 corporate agents, 109 referral agents, 114 Brokers and 42
Banks to offer insurance services to the public. LIC has acquired 51% stakes in IDBI Bank, it
has 1899 branches of IDBI Bank to provide insurance services.

Key Products: Every individual has a different need for insurance according to his
requirements. LIC India offers a diverse variety of insurances and gives opportunity to the
customer to choose the optimal insurance.

Major Competitors:

1. SBI Life Insurance

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2. Metlife India Life Insurance
3. Bajaj Allianz Life Insurance
4. Max New York Life Insurance
5. Tata AIG Life Insurance
6. HDFC Standard Life Insurance
Production Facilities with capacity and relative strengths:

LIC India has a huge network of offices distributed all over the country. The infrastructure
constitutes a headquarter in Mumbai, 8 zonal offices, around 113 divisional offices, 2048 fully
computerized branch offices and 1408 satellite offices. LIC also has 54 customer zones and 25
metro area service hubs located in different cities and towns of India.

Performance Indicators (As per March 2019):

(₹000)

Total Assets 30,55,61,26,585

EBITDA 2,66,46,782

PAT 2,66,32,515

Source:http://www.licindia.in/Bottom-Links/Public-disclosure/2018-19/Mar-2019

3.2 ICICI Lombard:

ICICI Lombard is one of the leading private firms that provides non-life insurances in India. It
provides financial services in the domains of general insurance, reinsurance, insurance claims
management and investment management. The corporation works with assurance products
including Car insurance, Health Insurance, International Travel insurance and across various
other product categories.

Gross Written Premium (GWP) in fiscal 2019 - 147.89 billion

Market Share among private insurance companies- 15.6%

Overall market share - 8.5%

CMP of ICICI Lombard General Insurance - ₹1257.80 (NSE)

ICICI Lombard has a market cap of around 53600 crore.

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Over FY15-18, it has recorded a 23% GDPI CAGR, outperforming the industry (20%), using
parent’s brand equity, retail-focused diversified product mix and strong, multi-channel
distribution in 638 of 716 districts in India.

Issued 26.5 million new policies in FY19. Its Gross Direct Premium Income (GDPI) has grown
as a CAGR of 13.9 % between FY08-18 to reach Rs 123.57 billion. In FY19, the company
earned GDPI of Rs 144.88 billion.

Stock gave 55% return last year and 26% in the last 6 months. Several mutual funds are also
holding this stock.

Total employees- 8444 (as on March 2019)

Performance Indicators (for Q1 2019-2020) :

(₹ ’000)

Total Assets 102,615,205

EBITDA 4,752,723

PAT 3,098,167

3.3United India Insurance

United India Insurance is one of the major insurance providers in the country that was formed
in 1938 post which it was nationalised in 1972. Government of India owns the corporation and
it has its headquarters in Chennai. The company is currently headed by Girish Radhakrishnan.
It attained its autonomous status along along with Oriental Insurance, National Insurance and
New India Assurance in 1999 when General Insurance Corporation of India restructured itself
as a reinsurance corporation as per the IRDA act.

United India Insurance majorly offers a multitude of insurance products across a variety of
personal and commercial lines. Personal lines include travel, medical, household and various
other issues pertaining to an individual whereas commercial lines include marine cargo and
hull, burglary and banker’s indemnity.

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In terms of its reach, the firm employs a workforce of 19,000+ employees across 2248 branches
that cater to more than 10 million policyholders.

3.3.1 Key Products

United India Insurance offers a diverse products category:

● Motor Insurance
● Health Insurance
● Travel Insurance
● Personal Accident
● Householder’s insurance
● Shopkeeper’s Insurance
3.3.2 Performance Indicators (for Q4 2018-2019) :

Total Assets 103,734,333

EBITDA 2,153,405

PAT 1,921,523

3.4 United Health Group Incorporated

CEO: David S. Wichmann

US based Health Insurance giant, is ranked the world’s number one insurance company. The
net premiums written for the year 2018 were USD 158.5 billion. The group provides people
with health benefits and health services through the complementary and distinct businesses-
United healthcare and Optum.

UnitedHealthcare: The Health benefits platform is focussed at helping people live healthier
lives by simplifying health care experience, fulfilling customer health and wellness needs, and
maintaining trusted relationships with the care providers.

3.4.1 Market shares

Top 3 players in US Market share

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 United Health Group 12.90%
Anthem Inc. 9.80%
Humana Inc. 7.90%

3.4.2 The Key products include

Individuals and Families: Hospital and Doctor fixed Indemnity insurance: To help with the
medical bills when needed, this plan provides fixed cash benefits for commonly covered
medical services.

Medicaid: The lower income health care coverage program.

Medicare: For people aged 65 or above, UHG offers a federal health insurance program

Employers

Small Businesses: Business with employees from 1-99 are offered Small Business Health
Options Program (SHOP), an online marketplace where the qualified employers can select the
coverage for their employees.

Large Business: Business with employees from 100-2999 are offered Consumer Driven
Health Plans (CDHPs) to manage their health care expenses- Health Reimbursement Account
(HRA) in which the employer owns the account and Health Savings account in which the
employee owns the account.

National Accounts: Business with employees from 100-2999 are offered custom specialities
to suit the needs of large organizations. The purpose is to improve health and regulate costs
while providing high quality health care. The products include Retiree solutions,
Bridge2Health, etc.

Optum Employers: Prevention and wellbeing, population and behavioural health services,
medical benefit management, pharmacy care and financial services.

Federal Government: Health policy research, analytics, consulting, Military and veteran
health services, Health IT and operations, population health management and Pharmacy care
management.

State Government: Improve program effectiveness, manage complex populations, modernize

technology, manage pharmacy services and streamline eligibility.

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3.4.3 KEY FINANCIAL INDICATORS
Key Financial Indicators (US $) Profit ratios
Revenues 226,247 Mn Net Profit Margin 5.30%
Profits 11,986 Mn Return on Equity 23.20%
Assets 1,52,221 Mn Growth in Revenues (YoY) 12.5%
Total stockholder equity 51,696 Mn Earnings per share ($) 12.19
* Data as on 31st December, 2018

4. Macroeconomic Analysis
4.1 Government Regulations and Policy Changes:
4.1.1 Insurance Regulatory and Development Authority of India (IRDAI)
IRDAI governs all insurance and reinsurance companies in India. The IRDAI opened up the
market in August 2000. Foreign companies were allowed ownership up to 26%. The Authority
has power to frame regulations under Sec 114A of the Insurance Act, 1938. Some of the recent
developments in the sector by IRDAI are the following:

i) Effective from 1 Jan 2019, customers will not have to purchase separate compulsory
personal accident (CPA) cover for each new vehicle they buy.

ii) Aimed at improved penetration of insurance products in the country, IRDAI has
proposed to relax norms for registration of insurance marketing firms (IMFs). The current
capital requirement for registration s an IMF is minimum Rs 10 lakhs.

iii) IRDAI has created a special category of insurance policies called micro-insurance
policies (sum assured is Rs 50000 or less) to promote insurance coverage among economically
vulnerable sections of society. Also, IRDAI has allowed distribution of all micro-insurance
products through point-of-sales (PoS).

4.1.2 Insurance Laws (Amendment) Bill 2015

The Insurance Laws (Amendment) Bill passed by Rajya Sabha on 12th March 2015, paved way
for major reforms in the Insurance Act, 1938. The breakthrough amendment gave the Insurance
Regulatory and Development Authority of India (IRDAI) the flexibility to perform its functions
more efficiently and effectively.

The amendment also provided for enhancement of the foreign investment cap in an Indian
insurance company from 26% to 49% with the safeguard of Indian ownership and control.

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The amended law has also enabled raising capital through new and innovative methods under
the regulatory supervision of IRDAI. The public sector general insurance companies which
were then required by law to be 100% govt owned, were allowed to raise capital, for expansion
of business into rural and social sectors, to meet solvency margins and to enhance
competitiveness subject to the Govt equity not being less than 51% at any point of the time.

4.1.3 Impact of Union Budget on Insurance Sector:

On July 05,2019 Finance minister Nirmala Sitharaman in her budget speech, announced that
the Indian government will allow 100% Foreign Direct Investment for insurance
intermediaries. The FDI limit for insurance underwriters is kept at 49% as before.

Three public sector insurance companies are to be merged into a single insurance entity and
will be subsequently listed. The merging of the 3 state-run insurers will lead to the creation of
a mammoth organisation.

Proposed launch of a flagship National Health Protection Scheme to cover over 10 crore and
vulnerable families (approximately over 50 crore beneficiaries) providing coverage up to Rs 5
lakh per family for secondary and tertiary care hospitalisation. This will be the world’s largest
government funded health care programme.

4.1.4 Impact of GST on Insurance Sector:

For all insurance policies excluding single premium and term insurance policies, 25% of the
first year’s premium of the first year and 12.5% of the premium in subsequent years is
considered for GST calculation at 18%. In the case of health insurance policy, the calculation
of GST is on the entire premium amount. Before the GST rollout, the standard rate of service
tax was 15% for life insurance premiums. With the implementation of GST, the rates were
18%, resulting in increased premiums. General insurance includes fire insurance, marine
insurance, car insurance, theft insurance etc and the GST rate is 18%. The life insurance
provided by the government schemes are exempted from GST.

4.1.5 Impact of Demonetisation on Insurance Sector:

One of the beneficiaries of the huge inflow of money to banks after 8th November 2016 after
the invalidation of high-value currency notes was the life insurance sector. In November 2016,
the total first year premium collected by insurers jumped from 45% from the preceding month
o 113% according to IRDAI data. The benefits of insurance products like higher liquidity, more
flexibility, transparency, ease of maintenance and a ready secondary market, insurance

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companies leverage this shift in spending patterns, evolving consumer behaviour and the digital
drive in India to increase penetration and tap the latent potential.

4.2 Impact of Big Data on Future of Insurance:

Big Data refers to handling large volumes of data. It is a field of technology which analyses,
extracts and deals with large and complex data. Technology has a profound impact on the
insurance industry. Big Data is beneficial for all the three segments of people related to the
insurance industry namely the consumers, the regulators and the insurance regulators.
Insurance provides financial protection to a lot of consumers and hence a lot of granular data
is involved. With Big Data insurers can better refine data and foresee the risks in greater detail.
Consequently they are also able to transform these voluminous sets of data into ways how they
see a variety of customers and price the risks accordingly

Underwriting is based on the analysis of historical data to carry out risk assessment of a
policyholder. Insurance, on first glance, appears particularly well suited for “big data” analysis.
Handling large volumes of structured and unstructured information using Big Data helps the
insurers in underwriting, rating, pricing and marketing

The consumers are also at benefit since they are able to assess how much of premium pricing
will reflect their risk behaviour. Precisely, price might reduce risks and enhance better
behaviour.

4.3 Breakthrough Technologies in Insurance Sector:

Blockchain is a growing chain of blocks that are linked using cryptography. It follows a
distributed ledger structure where the data is sent over the entire network and added in blocks
which means no data can be changed and hence tampering becomes difficult. The data can only
be changed through a consensus which should abide by the rules of the blockchain protocol
and added only when approved by all other nodes in the network. The information that is
collected from the customers are added to the chain. All the parties in the network and view
the transactions made by any other party. Thus, blockchain enables making digital contracts
and transactions among different entities in a secured way. Consequently, it streamlines
paperwork and ensures better customer experience.

Insurance companies deals with loads of data. By automating the process of extracting relevant
information reduces costs and time. These data also needs to be analysed in order to evaluate
the validity of claims. AI holds capability to read patterns of data and hence can identify any

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fraudulent claims. The AI chatbots interacts directly with customers via human-like interfaces.
They provide necessary information and also connects them to services that a customer needs.

4.4 FDI in Insurance Sector:

The proposed removal of foreign-ownership cap on insurance intermediaries is likely to
increase competition, strengthen distribution capabilities to enhance insurance penetration and
boost mergers and acquisitions in the medium to long term- according to Fitch ratings. The
government’s decision to permit 100% FDI in insurance intermediaries is expected to help
foreign brokerages buy into Indian companies and deepen the market in terms of new products
and technology.

4.5 Opportunities for the Insurance Sector:

ULIP stands for Unit Linked Insurance Plans which is a combination of Insurance and
Investment. In ULIP, the insurance company puts a part of the investment in life insurance and
the rest is invested in share or bonds or equity etc. ULIP comes with its own set of advantages.
It is beneficial for consumers since we get a life cover coupled with investment. The premium
paid towards ULIP is eligible for tax deduction under Section 80C and the returns on the policy
are exempt from income tax under Section 10(10D) of the Income Tax Act. ULIP turns out to
be a good option for long term goals as the money gets compounded and the net returns are
consequently more.

According to The Economic Times, Bancassurance means selling insurance product through
banks. Banks and insurance companies get into a partnership wherein the bank sells the
insurance company’s products to its clients. The full-fledged package of financial services not
only benefits customers but also profits both the insurance companies and the banks. It helps
the bank to strengthen their customer base and offer services under one single roof. This also
increases customer satisfaction leading to greater customer retention. The consumers rely more
and are confident about the services banks offer. The insurance company thus uses bank as a
platform for insurance penetration in the country. As for the customers, they get a risk coverage
at the bank itself and also have easy access to claims.

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5. References:

1. “Life Insurance Corporation’s Market Share fall below 70%”,13-Jan,2019,The

Economy Times.
2. “Govt. to formalize PSU General insurance consolidation plan in three Months”,1-
June,2019, Business Standard
3. “Big is beautiful: Merger of PSU general Insurance Companies to unleash economies
of scale”,14-June,2019, The Financial Express
4. India Brand Equity Foundation (IBEF) Insurance Report November 2018
5. https://www.licindia.in/Products/Insurance-Plan
6. Balance Sheet of LIC of India for the period ended on 31,March 2019
http://www.licindia.in/getattachment/Bottom-Links/Public-disclosure/2018-19/Mar-
2019/L-3-BALANCE-SHEET-March_2019.pdf.aspx
7. Profit and Loss Account of LIC of India for the period ended on 31,March 2019
http://www.licindia.in/getattachment/Bottom-Links/Public-disclosure/2018-19/Mar-
2019/L-2-P-L-MARCH,-2019.pdf.aspx
8. https://uiic.co.in/sites/default/files/uploads/publicdisclosure/NL%202.pdf
9. https://www.icicilombard.com/docs/default-source/public-disclosures/2019-
20/q1/nl_3.pdf
10. https://www.ibef.org/news/easier-norms-for-foreign-players-to-up-competition-in-
reinsurance-market
11. http://www.acekp.in/indnewsdetails/678752
12. https://www.researchgate.net/publication/275291334_BANCASSURANCE_THE_IND
IAN_SCENARIO
13. https://www.actuariesindia.org/downloads/gcadata/11thGCA/ULIP.pdf
14. https://www.irdai.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=PageNo
4&mid=2
15. Insurance Industry CRISIL Insights
16. https://www2.deloitte.com/us/en/pages/financial-services/articles/insurance-m-and-a-
outlook.html
17. https://fortune.com/fortune500/2019/unitedhealth-group
18. www.moneycontrol.com
19. www.motilaloswal.com

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