LIFE INSURANCE CORPORATION VS PRIVATE LIFE INSURANCE

UNIVERSITY OF MUMBAI BACHELOR OF MANAGEMENT STUDIES SEMESTER V (2010-11) SUBMITTED BY: SWAPNIL .R. AWSARE ROLL NO. 16 PROJECT GUIDE PROF. HARESH PARPIANI

JAI BHARAT COLLEGE OF COMMERCE O/B, 8(1-10) MULUND COLONY, MULUND (WEST), Mumbai82

LIFE INSURANCE CORPORATION VS

PRIVATE LIFE INSURANCE

BACHELOR OF MANAGEMENT STUDIES SEMESTER V (2010-11) Submitted In Partial Fulfillment of the requirements For the Award of the Degree of Bachelor of Management Studies By SWAPNIL .R. AWSARE ROLL NO 16 JAI BHARAT COLLEGE OF COMMERCE O/B, 8(1-10) MULUND COLONY, MULUND (WEST),MUMBAI 82

JAI BHARAT COLLEGE OF COMMERCE

O/B, 8(1-10) MULUND COLONY, MULUND (WEST), MUMBAI 82.

C E R T I F I C A T E
This is to certify that Mr. SWAPNIL.R.AWSARE Roll no. 16 of Bachelor Of Management Studies Semester V (2010-11) has successfully completed the project on LIFE INSURANCE CORPORATIPN VS PRIVATE LIFE INSURANCE under the guidance of PROF. HARESH PARPIANI .

Course Coordinator

Principal

Project Guide/ Internal

External Examiner

DECLARATION
I, SWAPNIL.R.AWSARE the student of JAI BHARAT COLLEGE OF COMMERCE T.Y.BMS Semester V (2010-11) hereby declare that I have completed this project on LIFE INSURANCE CORPORATION

VS PRIVATE LIFE INSURANCE The information submitted is true & original to the best of my knowledge.

SIGNATURE OF STUDENT SWAPNIL.R.AWSARE ROLL NO: 16

ACKNOWLEDGEMENT
I sincerely acknowledge the help received from various persons and sources in collecting datas and information in completing this satisfactory Project.

The project report entitled LIFE INSURANCE CORPORATION VS PRIVATE LIFE INSURANCE The entire project report owes its credit for the chlorite guidance and encouragement rendered by my PROF.HARESH PARPIANI I record my sincere thanks to him with deep gratitude. I would also like to thank our Principal MRS. PREETI KANITKER for giving me an opportunity to do this project, and for their valuable guidance in successful completion of project. Last but not least I would like to thank all the faculties of institute, and friends for their kind co-operation throughout the project.

INDEX
SR NO. 1)

PARTICULER
CONCEPT OF INSURANCE

PAGE NO.

Concept of Insurance
Human life is subject to various risksrisk of death or disability due to natural or accidental causes. Humans are also prone to diseases, the treatment of which may involve huge expenditure. On the other hand, property owned by man is exposed to various hazards, natural and man-made.

When human life is lost or a person is disabled permanently or temporarily, there is a loss of income to the household. The family is put to hardship. Sometimes survival itself is at stake for the dependants. When it comes to property, loss or damage to property results in either whole or partial loss in income to the person or entity. Risk has the element of unpredictability. Death/disability or loss/damage could occur at anytime. Losses can be mitigated through insurance. Insurance is a commodity which offers protection against various contingencies. Insurance products available for life and non-life are many. In non-life, apart form personal covers such as accident covers and health insurance, there are products covering liabilities under a particular law and or common law. The various products are designed to cater to different needs of an individual or industry such as fire insurance policy on multi-storeyed building, householders policy. An insurance contract promises to make good to the insured certain sum in consideration for a payment in the form of premium from the insured.

Human life cannot be valued. Hence the sum assured ( or the amount guaranteed to be paid in the event of a loss ) is by way of abenefit in the case of life insurance. Life insurance products provide a definite amount of money to the dependants of the insured in case the life insured dies during his active income earning period or becomes disabled on account of an accident causing reduction/complete loss in his income earnings. An individual can also protect his old age when he ceases to earn and has no other means of income by purchasing an annuity product. A Personal Accident cover is also for protection. In the event of death or disability, permanent or temporary, of the insured, it provides for compensation which is either the whole or a percentage of the Capital Sum Insured depending on the kind of loss. In the case of Health Insurance, the policy seeks to cover expenses towards of treatment of diseases and or injury upto the Sum Insured opted for by the insured. In respect of insurance relating to property, there are many products available. Property may be covered against fire and perils of nature including flood, earthquake etc. Machinery may be insured for breakdown. Goods in transit can be insured under a marine cargo insurance cover. Insurance covers are also available for ships and other vessels. A motor insurance

policy covers third party damage as well as damage to the vehicle. Insurance of property is based on the principle of indemnity. The idea is to bring the insured to the same financial position as he /she was before the loss occurred. It safeguards the investment in the property. Where there is no insurance, losses can mar a project or an industry. General Insurance offers stability to the economy and to the society. Insurance offers security and so peace of mind to the individual. The concept of insurance is that the losses of a few are made good by contribution from many. It is based on the law of large numbers. It stemmed from the need of man to find a solution for mitigation of losses. It also reflects the nature of man to find a
solution collectively.

It is important for all to understand the various products that life and general insurance companies offer before they make a choice as to the product they want to buy. As per regulations, insurers have to give the various features of the products at the point of sale. The insured should also go through the various terms and conditions of the products and understand what they have bought and met their insurance needs. They ought to understand the claim procedures so that they know what to do in the event of a loss.

The concept of insurance is that the losses of a few are made good by contribution from many. It is based on the law of large numbers. It stemmed from the need of man to find a solution for mitigation of losses. It also reflects the nature of man to find a solution collectively.

INTRODUCTION OF LIFE INSURANCE CORPORATION

The Life Insurance Corporation of India (LIC) (Hindi: ) is the largest state-owned life insurance company in India, and also the country's largest investor. It is fully owned by the Government of India. It also funds close to 24.6% of the Indian Government's expenses. It has assets estimated of trillion (US$ 202.03 billion).[1] It was founded in 1956. 9.31

Headquartered in Mumbai, which is considered the financial capital of India, the Life Insurance Corporation of India currently has 8 zonal Offices and 101 divisional offices located in different parts of India, at least 2048 branches located in different cities and towns of India along with satellite Offices attached to about some 50 Branches, and has a network of around 1.2 million agents for soliciting life insurance business from the public. I n s u r a n c e i s a s o c i a l d ev i c e w h er e u n c er t a i n r i s k s o f i n d i v i d u a l s m a y b e c o mb i n e d i n a g r o u p a n d t h u s ma d e mo r e c er t a i n - s ma l l p er i o d i c c o n t r i b u t i o n s b y t h e i n d i v i d u a l s p r o v i d e a fo u n d o u t o f w h i c h t h o s e w h o s u f fe r l o s s e s m a y b e r ei mb u r s ed . In a d d i t i o n t o b ei n g a me a n s t o p r o t ec t o n es el f, t h e i n s u r a n c e I n d u s t r y i s a n ef fi c i en t c o n d u i t fo r t h e s a v i n g o f p eo p l e to be channeled towards economic growth. I n I n d i a , t h e In s u r a n c e I n d u s t r y 7 i s m o r e t h a n 1 5 0 y ea r s o l d . T o d a y , i t i s mo n o p o l i ze d b y t w o P S U 's i n t h e i r r es p ec t i v e fi el d s o f l i fe a n d G en er a l I n s u r a n c e. Ho w ev er , w i t h t h e s u c c es s f u l p a s s a g e I RD A B i l l t h r o u g h b o t h h o u s e s o f p a r l i a m en t i n D e c e mb er 1 9 9 9 t h e s e c t o r h a s b ee n o p en ed u p t o p r i v a t e p l a y er s . T h i s w i l l p r o v i d ed mu c h . N e ed ed i m p e t u s t o t h e In d u s t r y a n d w i l l i m p r o v e t h e q u a l i t y o f s er v i c e a n d p r o d u c t s a n d w i l l a l s o i n c r e a s e em p l o y m en t o p p o r t u n i t i es .

T h er e a r e s t i l l s o me i s s u es t h ei r n e ed t o b e s o r t e d out, particularly with regard to the status of i n t e r m ed i a r i e s a s e n v i s a g ed b y t h e In s u r a n c e R eg u l a t o r y A u t h o r i t y .

LOGO OF LIC

Life Insurance Corporation of India Type Government-owned corporation

Founded September 1, 1956 Headquart Headquarters in Mumbai, India( ers Various other locations in India and abroad) Key people T. S. Vijayan (Chairman) D. K. Mehrotra, Thomas Mathew and A. Dasgupta (Managing Directors) Industry Life insurance Products Individual Life Insurance,Group Insurance and Pension Plans Total Rs 8 Trillion ($173 Billion USD) assets Employees 112,184 Parent NIL

Subsidiari es

Website

LIC Housing Finance Limited, LIC(Nepal)Ltd, LIC(Lanka)Ltd, LIC(International)BSC(C),Behra in, www.licindia.com

History
The Oriental Life Insurance Company, the first corporate entity in India offering life insurance coverage, was established in Calcutta in 1818 by Bipin Behari Dasgupta and others. Europeans in India were its primary target market, and it charged Indians heftier premiums. The Bombay Mutual Life Assurance Society, formed in 1870, was the first native insurance provider. Other insurance companies established in the pre-independence era included Bharat Insurance Company (1896) United India (1906) National Indian (1906) National Insurance (1906) Co-operative Assurance (1906) Hindustan Co-operatives (1907) Indian Mercantile General Assurance Swadeshi Life (later Bombay Life) The first 150 years were marked mostly by turbulent economic conditions. It witnessed, India's First War of Independence, adverse effects of the World War I and World War

II on the economy of India, and in between them the period of worldwide economic crises triggered by the Great depression. The first half of the 20th century also saw a heightened struggle for India's independence. The aggregate effect of these events led to a high rate of bankruptcies and liquidation of life insurance companies in India. This had adversely affected the faith of the general public in the utility of obtaining life cover. The Life Insurance Act and the Provident Fund Act were passed in 1912, providing the first regulatory mechanisms in the Life Insurance industry. The Indian Insurance Companies Act of 1928 authorized the government to obtain statistical information from companies operating in both life and non-life insurance areas. The subsequent Insurance Act of 1938 brought stricter state control over an industry that had seen several financially unsound ventures fail. A bill was also introduced in the Legislative Assembly in 1944 to nationalize the insurance industry.

Nationalization
In 1955, parliamentarian Amol Barate raised the matter of insurance fraud by owners of private insurance companies. In the ensuing investigations, one of India's wealthiest businessmen, Ram Kishan Dalmia, owner of the Times of India newspaper, was sent to prison for two years. Eventually, the Parliament of India passed the Life Insurance of India Act on 1956-06-19, and the Life Insurance Corporation of India was created on 1956-09-01, by consolidating the life insurance business of 245 private life insurers and other entities offering life insurance services. Nationalization of the life insurance business in India was a result

of the Industrial Policy Resolution of 1956, which had created a policy framework for extending state control over at least seventeen sectors of the economy, including the life insurance. The company began operations with 5 zonal offices, 33 divisional offices and 212 branch offices. LIC received another set back with Mundra fraud but it escaped with least damage from Harshad Mehta scam. There are intermittent rumours in media but LIC has largely escaped large scale scandals of the type encountered by erstwhile UTI largely because of its immunity from being transparent in the name of confidentiality in the era of RTI. Often there is consumer demand to open the investment portfolio of LIC but no body knows if it will be good for the corporation. But there is a great and undue reliance on the management environment of this great corporation. People are scared after what has happened to Goldman Sachs or Lehman Brothers in USA and elsewhere, which were equally or more big and great.

Current status

LIC building, at Connaught Place, New Delhi, designed by Charles Correa, 1986. Over its existence of around 50 years, Life Insurance Corporation of India, which commanded a monopoly of soliciting and selling life insurance in India, created huge surpluses, and contributed around 7.5 % of India's GDP in 2010. The Corporation, which started its business with around 300 offices, 5.6 million policies and a corpus of INR 459 million (US$ 92 million as per the 1959 exchange rate of roughly Rs. 5 for a US $), has grown to 25000 servicing around 180 million policies and a corpus of over 8 trillion (US$ 173.6 billion). The organization now comprises 2048 branches, 109 divisional offices and 8 zonal offices, and employs over 1,002,149 agents.The corporate Office of LIC is in Mumbai. It also operates

in 12 other countries, primarily to cater to the needs of Non Resident Indians. With the change in the India's economic philosophy from the early 1990s, and the subsequent relaxation of state control over several sectors of the economy, the monopolistic position of the Life Insurance Corporation of India was diluted, and it has had to compete with a number of other corporate entities, Indian as well as transnational Life Insurance brands. However, it still manages to be the largest player in the Indian market, with the lion's share of 55%. The recent Economic Times Brand Equity Survey rated LIC as the No. 1 Service Brand of the Country. In the financial year 2006-07 Life Insurance Corporation of India's number of policy holders are said to have crossed a whopping 200 million (fourth in terms of population of the countries of the world)

Subsidiaries LIC owns the following subsidiaries:

Life Insurance Corporation of India International: This is a joint venture offshore company promoted by LIC which commenced operations in July, 1989 with the objectives of offering US$ denominated policies to cater to the insurance needs of NRIs and providing insurance services to holders of LIC policies currently residing in the Gulf. LIC International operates in all GCC countries.

LIC Nepal: A joint venture company formed in 2001 with the Vishal Group of Industries, Nepal. LIC Lanka: A joint venture company formed in 2003 with the Bartleet Group of Companies, Sri Lanka. LIC Housing Finance: Incorporated in 19 June 1989, its main objective is to provide long term finance for construction or purchase of houses or apartments. It has a Dubai office.

LICHFL Care Homes: A wholly owned subsidiary of LIC Housing Finance, it builds and operates "Assisted Community Living Centres" for senior citizens.

Chair person of lic

LIC is one of the largest employers in India. The organization is headed by 4 officers, namely the Chairman and three Managing Directors. The top brass is appointed by the Government of India after an intensive selection procedure. Though the company was accused to go by mere seniority in number of years for the selection of the senior management, this has changed as seen in the case of Thomas Matthew and A. Dasgupta (Managing Directors). The Chairman assumes authority of the CEO and chairs the board while the Managing Directors are allotted the three main categories of the organization's functioning. The current Chairman, Mr. T.S. Vijayan, is particularly responsible for the major IT infrastructure turnaround that the organization has witnessed and for its advanced EDMS structure.

 D.K. Mehrotra manages the Marketing Units of LIC, which also happens to be one of the largest spenders on advertising in India. Thomas Mathew manages the close to $187 billion investment portfolio of the company, which is the largest investor in the country. A. Dasgupta manages the engineering and other functions, many of which are very advanced in the Indian corporate scenario.

Objectives of LIC of India

Spread and provide life insurance to the masses at a reasonable cost. Spread Life Insurance widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in the country and providing them adequate financial cover against death at a reasonable cost. Maximize mobilization of people's savings by making insurance-linked savings adequately attractive. Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose money it holds in trust, without losing sight of the interest of the community as a whole; the funds to be deployed to

the best advantage of the investors as well as the community as a whole, keeping in view national priorities and obligations of attractive return. Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders. Act as trustees of the insured public in their individual and collective capacities. Meet the various life insurance needs of the community that would arise in the changing social and economic environment. Involve all people working in the Corporation to the best of their capability in furthering the interests of the insured public by providing efficient service with courtesy.

Promote amongst all agents and employees of the Corporation a sense of participation, pride and job satisfaction through discharge of their duties with dedication towards achievement of Corporate Objective.

Mission:
"Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with

competitive returns, and by rendering resources for economic development."

Vision:
"A trans-nationally competitive financial conglomerate of significance to societies and Pride of India."

Organization Structure
The 15 member of the life insurance corporation of India are appointed by the central government. One of the members is also appointed by the central government as the chairman. The LIC of India has a 4 tire structure, the central office at Mumbai, 8 Zonal Offices, 100 Divisional Offices and 2048 Branch Offices in India. Foreign branches report directly to the central office Mumbai. All offices clearly demarcated geo-graphical areas of operations, excepts branch offices in big cities which have common areas. Almost 99% of the activities relating to policy holders are done at the level of the branch offices. Investments are done at the central office.

Thus, this is the big and giant organization structure of LIC of India ltd. This organization can be shown through the chart also as under.

Product of lic Whole Life with Profits Plan

Features:
This plan is mainly devised to create an estate for the heirs of the policyholder as the plan basically provides for payment of sum assured plus bonuses on the death of the policyholder. However, considering the increased longevity of the Indian population, the Corporation has amended the above provision, thereby proving for payment of sum assured plus bonuses in the form of maturity claim on completion of age 80 years or on expiry of term of 40 years from date of commencement of the policy whichever is later. The premiums under the policy are payable up to age 80 years of the policyholder or for a term of 35 years whichever is later. If the payment of premium ceases after 3 years, a paid-up policy for such reduced sum assured will be automatically secured provided the reduced sum assured exclusive of any attached bonus is not less than Rs.250/-. Such reduced paid-up policy is not entitled to participate in the bonus declared thereafter but the bonuses already declared on the policy will remain attach, provided the policy is converted in to a paid-up policy after the premiums are paid for5 years.

Suitable For:

This policy is suitable for people of all ages who wish to protect their families from financial crises that may occur owing to the policyholder's premature death.

BENEFITS
SURVIVAL BENEFIT
Sum assured plus accrued bonuses and the terminal bonuses, if any; on the policyholder attaining age 80 years or on expiry of term of 40 years from the date of commencement of the policy whichever is later. DEATH BENEFIT: Sum assured plus accrued bonuses and the terminal bonuses, if any, on the death of the policyholder are paid to his/her nominees/heirs

LIMITED PAYMENT

WHOLE LIFE - (WITH PROFITS)

Features:

This is the best form of life assurance for family provision since it enables the Life Assured to pay all the premiums during the ordinarily vigorous and most productive years of life. He need not pay any premium in the later stages of life if and when his conditions might become adverse . With Profits Limited Payments Policies do not cease to participate in profits after completion of the premium paying period but continue to share in the periodical Bonus Distribution until the death of the Life Assured. Least 3 years' premiums and then discontinues paying any more premiums, a reduced paid up assurance policy comes into force. Such a reduced paid- up Policy will not be entitled to participate in the profits declared. Thereafter , but such Bonus as has already been declared on the Policy will remain attached thereto. The premium paying

Death Benefits:
In case either of the couple dies during the policy's term, two things happen. One, LIC pays to the surviving spouse the full sum assured. And, two, the policy continues on the life of the surviving partner without him/her having to pay any further premiums, i.e. the life cover on the survivor continues free of cost. The sum assured is again be payable on the death of the other partner in case both the husband and wife were to die during the term of the policy. Vested bonus would also be paid along with the sum assured on the second death.

NEW INSURANCE SCHEME

Universal Health Insurance Scheme The Universal Health Insurance policy is available to groups of 100 or more families. The policy provides for reimbursement of medical expenses upto Rs.30000/- towards hospitalization floated amongst the members of the family, death cover due to an accident for Rs.25000 to the earning head of the family and compensation due to loss of earning head of the family @ Rs.50/- per day up to a maximum of 15 days, after a waiting period of three days, when the earning head of the family is hospitalized. The premium under the policy is Rs.1! - Per day (Le. Rs.365/-per annum) for an individual, Rs. 1.50 per day for a family of five limited to spouse and children (i.e. Rs.548 per annum), and Rs.2/- per day (i.e. Rs. 730 per annum) for covering dependent parents within the overall family size of seven. Subsidy of Rs. 100 per under the Scheme For purpose of this policy HOSPITAL means: Any Hospital/Nursing home registered with the local authorities and under the Supervision of a registered and qualified Medical practitioner Hospital, Nursing Home runs by Government

. Enlisted hospitals run by NGOs/ Trusts/ selected private hospitals with fixed Schedule of charges. Hospitalization should be for a minimum period of 24 hours However, this time limit is not applied to some specific treatments and also where due to technological advancement hospitalization for 24 hours may not be required. Main Exclusions: All pre-existing diseases. Corrective, cosmetic or aesthetic dental surgery or treatment Cost of spectacles, contact lens and hearing aid Primarily diagnostic expenses not related to sickness/injury. Treatment for Pregnancy, Childbirth, Miscarriage, abortions etc. This policy covers people between the age of 3 months to 65 years. Floater Basis The benefit of family' will operate on floater basis i.e. the total reimbursement of Rs. 30,000/- can be availed of individually or collectively by members of the family : Insurance plans: As individuals it is inherent to differ. Each individuals insurance needs and requirements are different from that of the others. LICs Insurance Plans are a policy that talk to you individually and gives the most suitable options that can fit ones requirement.

INSURANCE PLANS
As individuals it is inherent to differ. Each individuals insurance needs and requirements are different from that of the others. LICs Insurance Plans are policies that talk to you individually and give you the most suitable options that can fit your requirement.

Jeevan Anurag CDA Endowment Vesting At 21 CDA Endowment Vesting At 18 Jeevan Kishore Child Career Plan Child Fortune Plus

Komal Jeevan Marriage Endowment Or Educational Annuity Plan Jeevan Chhaya Child Future Plan

The Endowment Assurance Policy The Endowment Assurance Policy-Limited Payment Jeevan Mitra(Double Cover Endowment Plan) Jeevan Mitra(Triple Cover Endowment Plan) Jeevan Anand New Janaraksha Plan Jeevan Amrit

The Money Back Policy-20 Years The Money Back Policy-25 Years Jeevan Surabhi-15 Years Jeevan Surabhi-20 Years

Jeevan Surabhi-25 Years Bima Bachat

Jeevan Bharati - I

Anmol jeevan-I

Amulya jeevan-II

The Whole Life Policy The Whole Life Policy- Limited Payment The Whole Life Policy- Single Premium Jeevan Anand Jeevan Tarang

Jeevan Nidhi Jeevan Akshay-VI New Jeevan Dhara-I New Jeevan Suraksha-I

RSEARCH
Public the report gives the brief background of the sector and proceeds to highlight the short comings of the existing setup and players. The benefits of liberalized sector are enumerated. The report also tries to identify the market potential for insurance products and the strategy that can we employed to exploit the same. The stress is also given on knowing the awareness level of general.

RESEARCH METHODOLOGY
To conduct the market research first of all it is necessary to create a research design. A research design is basically a blue print of how a research is to be conducted, it may include; 1. Choosing the approach 2. Determining the types of data needed 3. Locating the source of data 4. Choosing a method of data

RESEARCH DESIGN
Basically there are 3 types of approaches used during the any research 1. Exploratory 2. Descriptive 3. Experimental During this research Descriptive and Exploratory approach is taken into consideration because of the availability of relevant information to describe the relationships between the marketing problem and the available information

TYPES OF DATA USED: Both primary and secondary data is used in the research. Data Collection Methods. PRIMARY DATA SECONDARY DATA

PRIMARY DATA The primary sources of data refer to the first hand information Primary data is Collected during the survey with the help of Questionnaire.

SECONDARY DATA secondary data is one which already exists and is collected from the published sources. The sources from which secondary data was collected are: Newspapers and Magazines like Economic Times, Insurance Times, and Internet .

INTRODUCTION OF THE COMPANY LIFE INSURANCE CORPORATION OF INDIA (LIC)

Life Insurance Corporation of India (LIC) was formed in September, 1956, by an Act of Parliament, viz., Life Insurance Corporation Act, 1956, with capital contribution from the Government of India. The then Finance Minister, Shri C.D. Deshmukh, while piloting the bill, outlined the objectives of LIC thus to conduct the business with the utmost economy, and a spirit of trusteeship; to charge premium no higher than warranted by strict actuarial considerations; to invest the funds for obtaining maximum yield for the' policy holders consistent with safety of the capital; to render prompt and efficient service to policy holders, thereby making insurance widely popular. Since nationalization, LIC has built up a vast network of 2,048 branches, 100 divisions and 7 zonal offices spread over the country. The Life Insurance Corporation of India also' transacts business abroad and has offices in Fiji, Mauritius and United Kingdom. LIC is associated with joint ventures abroad in the field of insurance, namely, Ken-India ,Assurance Company Limited, Nairobi; United Oriental Assurance Company Limited, Kuala Lumpur and Life Insurance Corporation (International) E.C. Bahrain. The Corporation has registered a joint venture company in 26th December, 2000 in Katmandu, Nepal by the name of Life Insurance Corporation (Nepal) Limited in collaboration with Vishal Group Limited, a local industrial Group. An off-shore company L.I.C. (Mauritius) Off-shore Limited has also been set up in 2001 to tap the

General Insurance: General insurance business in the country was nationalized with effect from 1st January, 1973 by the General Insurance Business (Nationalization) Act, 1972. More than 100 non-life insurance companies including branches of foreign companies operating within viz., the National Insurance Company Ltd.
The new India Insurance Company Ltd. With head offices at Calcutta, Bombay, New Delhi and Madras, respectively. General Insurance Corporation (GIC) which was the holding company of the four public sector general insurance companies has since been delinked from the later and has been approved as the "Indian Reinsurer" since 3rd November 2000. The share capital of GIC and that of the four companies are held by the Government of India. All the five entities are Government companies registered under the Companies Act, 1956. The general insurance business has grown in spread and volume after nationalization. The four companies have 2699 branch offices, 1360 divisional offices and 92 regional offices spread all over the country. GIC and its subsidiaries have representation either directly through branches or agencies in 16 countries and through associate locally incorporated subsidiary companies in 14 other countries. A wholly- owned subsidiary company of GIC, i.e. Indian International Pvt. Ltd. Is operating in Singapore and there is a joint venture company, viz. Ken-India Assurance Ltd. In Kenya. A new wholly owned subsidiary called New India International Ltd., UK has also been registered.

MAJOR PLAYERS OF THE INDUSTRY

SBI Life Insurance

SBI Life Insurance is a joint venture between the State Bank of India and BNP Paribas Assurance. SBI Life Insurance is registered with an authorized capital of Rs2000 crores. SBI owns 74% of the total capital and BNP Paribas Assurance the remaining 26%. State Bank of India enjoys the largest banking franchise in India. Along with its 7 Associate Banks, SBI Group has the unrivalled strength of over 14,500 branches across the country, arguably the largest in the world. BNP Paribas Assurance is the insurance arm of BNP Paribas - Euro Zones leading Bank. BNP Paribas, part of the worlds top 10 group of banks by market value and part of Europe top 3 banking companies, is one of the oldest foreign banks with a presence in India dating back to 1860. BNP Paribas Assurance is the forth largest life insurance company in France, and a worldwide leader in Creditor insurance products offering protection to over 50 million clients. BNP Paribas Assurance operates in 41

countries mainly through the bancassurance and partnership model. SBI Life Insurances mission is to emerge as the leading company offering acomprehensive range of Life Insurance and pension products at competitive prices, ensuring high standards of

customer service and world class operating efficiency. SBI Life has a unique multi-distribution model encompassing Bancassurance Agency and Group Corporates. SBI Life extensively leverages the SBI Group as a platform for cross- selling insurance products along with its numerous banking product packages such as housing loans and personal loans. SBIs access to over 100 million accounts across the country provides a vibrant base for insurance penetration across every region and economic strata in the country ensuring true financial inclusion. Agency Channel, comprising of the most productive force of more than 63,000 Insurance Advisors, offers door to door insurance solutions to customers.

ICICI Prudential Life Insurance Company

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank one of India's foremost financial service companies-and Prudential plca leading international financial services group headquartered in the United Kingdom. Total capital infusion stands at Rs. 47.80 billion, with ICICI Bank holding a stake of 74% and Prudential plc holding 26%. We began our operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). Today, our nation-wide team comprises of 2099 branches (inclusive of 1,116 micro-offices), over 276,000 advisors; and 18 bancassurance partners. ICICI Prudential is the first life insurer in India to receive a National Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. For three years in a row, ICICI Prudential has been voted as India's Most Trusted Private Life Insurer, by The Economic Times - AC Nielsen ORG Marg survey of 'Most Trusted Brands'. As we grow

our distribution, product range and customer base, we continue to tirelessly uphold our commitment to deliver world-class financial solutions to customers all over India. The ICICI Prudential edge comes from our commitment to our customers, in all that we do - be it product development, distribution, the sales process or servicing. Here's a peek into what makes us leaders. 1. Our products have been developed after a clear and thorough understanding of customers' needs. It is this research that helps us develop Education plans that offer the ideal way to truly guarantee your child's education, Retirement solutions that are a hedge against inflation and yet promise a fixed income after you retire, or Health insurance that arms you with the funds you might need to recover from a dreaded disease. 2. Having the right products is the first step, but it's equally important to ensure that Our customers can access them easily and quickly. To this end, ICICI Prudential has an advisor base across the length and breadth of the country, and also partners with leading banks, corporate agents and brokers to distribute our products . 3. Robust risk management and underwriting practices form the core of our business. With clear guidelines in

place, we ensure equitable costing of risks, and thereby ensure a smooth and hassle-free claims process. 4. Entrusted with helping our customers meet their long-term goals, we adopt an investment philosophy that aims to achieve risk adjusted returns over the long-term. 5. Last but definitely not the least, our team is given the opportunity to learn and Grow, every day in a multitude of ways. We believe this keeps them engaged and enthusiastic, so that they can deliver on our promise to cover you, at every step in life.

Vision:
To be the dominant Life, Health and Pensions player built on trust by world-class people and service.

This we hope to achieve by:

Understanding the needs of customers and offering them superior products and service. Leveraging technology to service customers quickly, efficiently and conveniently.

Developing and implementing superior risk management and investment strategies to offer sustainable and stable returns to our policyholders. Providing an enabling environment to foster growth and learning for our employees. And above all, building transparency in all our dealings.

The success of the company will be founded in its unflinching commitment to 5 core values -- Integrity Customer First, Boundary less, Ownership and Passion. Each of the, values describe what the company stands for, the qualities of our people and the way we work. We do believe that we are on the threshold of an exciting new opportunity, where we can play a significant role in redefining and reshaping the sector. Given the quality of our parentage and the commitment of our team, there are no limits to our growth.

Values :
Every member of the ICICI Prudential team is committed to 5 core values: Integrity, Customer First, Boundary less, Ownership, and Passion. These values shine forth in all we do, and have become the keystones of our success.

Birla Sun Life Insurance Company

Established in 2000, Birla Sun Life Insurance Company Limited (BSLI) is a joint venture between the Aditya Birla Group, a well known and trusted name globally amongst Indian conglomerates and Sun Life Financial Inc, leading international financial services organization from Canada. The local knowledge of the Aditya Birla Group combined with the domain expertise of Sun Life Financial Inc., offers a formidable protection for its customers future. With an experience of over 9 years, BSLI has contributed significantly to the growth and development of the life insurance industry in India and currently ranks amongst the top 5 private life insurance companies in the country. Known for its innovation and creating industry benchmarks, BSLI has several firsts to its credit. It was the first Indian Insurance Company to introduce

Free Look Period and the same was made mandatory by IRDA for all other life insurance companies. Additionally, BSLI pioneered the launch of Unit Linked Life Insurance plans amongst the private players in India. To establish credibility and further transparency, BSLI also enjoys the prestige to be the originator of practice to disclose portfolio on monthly basis. These category development initiatives have helped BSLI be closer to its policy holders expectations, which gets further accentuated by the complete bouquet of insurance products (viz. pure term plan, life stage products, health plan and retirement plan) that the company offers. Add to this, the extensive reach through its network of 600 branches and 1,75,000 empanelled advisors. This impressive combination of domain expertise, product range, reach and ears on ground, helped BSLI cover more than 2 million lives since it commenced operations and establish a customer base spread across more than1500 towns and cities in India. To ensure that our customers have an impeccable experience, BSLI has ensured that it has lowest outstanding claims ratio of 0.00% for FY 2008-09. Additionally, BSLI has the best Turn Around Time according to LOMA on all claims Parameters. Such services are well supported by sound financials that the

Company has. The AUM of BSLI stood at Rs. 8165 crs as on February 28, 2009, while as on March 31, 2010, the company has a robust capital base of Rs. 2500 crs.

Vision:
To be a leader and role model in a broad based and integrated financial services business.

Mission:

To help people mitigate risks of life, accident, health, and money at all stages and under all circumstances
Enhance the financial future of our customers including enterprises.

Values:
Integrity Commitment Passion Seamlessness Speed

HDFC Standard Life Insurance Company

HDFC Limited, Indias premier housing finance

institution has assisted more than3.3 million families own a home, since its inception in 1977 across2400 cities and towns through its network of over 250 offices. It has international offices in Dubai, London and Singapore with service associates in Saudi Arabia, Qatar, Kuwait and

Oman to assist NRIs and PIOs to own a home back in India. As of December 2008, the total asset size has crossed more than Rs. 95,000 crores including the mortgage loan assets of more than Rs. 82,800 crores. The corporation has a deposit base of Rs. 17,551 crores, earning the trust of more than 9,00,000 depositors. Customer Service and satisfaction has been the mainstay of the organization. HDFC has set benchmarks for the Indian housing finance industry. Recognition for the service to the sector has come from several national and international entities including the World Bank that has lauded HDFC as a model housing finance company for the developing countries. HDFC has undertaken a lot of consultancies abroad assisting different countries including Egypt, Maldives, and Bangladesh in the setting up of housing finance companies. Standard Life Group (Standard Life plc and its subsidiaries) The Standard Life Group has been looking after the financial needs of customers for over 180 years. It currently has a customer base of around 7 million people who rely on the company for their insurance, pension, investment, banking and healthcare needs. Its investment manager currently administers 125 billion in assets. It is a leading pensions provider in the UK, and is rated by Standard & Poor's as'strong' with a rating of A+

and as 'good' with a rating of A1 by Moody's. Standard Life was awarded the 'Best Pension Provider' in 2004, 2005 and 2006 at the Money Marketing Awards, and it was voted a 5 star life and pensions provider at the Financial Adviser Service Awards for the last 10 years running. The '5 Star' accolade has also been awarded to Standard Life Investments for the last 10 years, and to Standard Life Bank since its inception in 1998. Standard Life Bank was awarded the 'Best Flexible Mortgage Lender' at the Mortgage Magazine Awards in 2006.

Vision:
'The most successful and admired life insurance company, which means that we are the most trusted company, the easiest to deal with, offer the best value for money, and set the standards in the industry'. 'The most obvious choice for all'.

Values:
Integrity Innovation Customer centric People Care One for all and all for one Team work Joy and Simplicity

Reliance Life Insurance Company

Reliance Life Insurance offers you products that fulfill your savings and protection needs. Our aim is to emerge as a transnational Life Insurer of global scale and standard. Reliance Life Insurance is an associate company of Reliance Capital Ltd., a part of Reliance - Anil Dhirubhai Ambani Group. Reliance Capital is one of Indias leading

private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital has interests in asset management and mutual funds, stock broking, life and general insurance, proprietary investments, private equity and other activities in financial services. Reliance - Anil Dhirubhai Ambani Group also has presence in Communications, Energy, Natural Resources, Media , Entertainment, Healthcare and Infrastructure.

Vision:
Mission:

Empowering everyone live their dreams. Create unmatched value for everyone through dependable, effective, transparent and profitable life insurance and pension plans.

Goal:

Reliance Life Insurance would strive hard to achieve the 3 goals mentioned below:
Emerge as translational Life Insurer of global scale and standard Create best value for Customers, Shareholders and all Stake holders

Achieve impeccable reputation and credentials through best business practices

GROWTH OF PRIVATE LIF E INSURANCE COMPANIES IN THE LAST 5 YEARS

The insurance industry recorded a booming growth of 35% in premium income during2004-05 with the 13 private sector players walking away with. An impressive 129% while the Life Insurance Corporation of India recorded a 21% growth. Thus the market share of state behemoths dropped to 78% in 2004 05 from 87% a year ago. According to ASSOCHAM Eco Pulse (AEP) Study, the industry premium increased to Rs253.42bn in 2004-05 from Rs187.1bn in 2003-04. The LIC total premium for the year 2004-05 amounted to Rs197.85bn as against the Rs162.84bn during previous year. The figures for the first two months of the fiscal 2005-06 also

speak of the growing share of the private insurers. The share of LIC for this period has further come down to 75%, while the private players have grabbed over 24% share. "With the huge potential the market has, the Government should, more seriously look into increasing the FDI cap in the sector" said Mahendra K. Sanghi, ASSOCHAM President. ICICI PRUDENTIONAL LIFE INSURANCE During April-June 2005, the largest private company ICICI Prudential has increased its share from 6.25% in 2004-05 to 7.68% in current fiscal. The opening up of the sector has given some of the most innovative products like the47 customized insurance policies and now the unit linked policies that have gained much of customer attention. The sector has huge potential and certain other new and innovative areas can also be looked into for enhancing market share and premium income, said Sanghi. HDFC STANDERD LIFE

HDFC is next in the row with 2.91% market share which has increased from 1.92% last fiscal followed by TATA AIG which now shares 2% of the market from 1.18% last fiscal. BIRLA SUNLIFE INSURANCE

Birla Sun life's share has dropped from 2.45% during FY'05 to 1.76% in first two months of FY'06. SBI life comes next with1. 72% share and has infact dropped a few percent points from last year.

MAX NEWYORK LIFE INSURANCE Max New York life and Aviva Life Insurance have captured more than 1% share each from less than 1% share during FY'05. Others like ING, AMP Sanmar, Met Life and Sahara India have less than 1 % share. The detail of the market share of life insurance companies is attached. The market share of the private players has doubled every year from 5.6% in 2002-03 to, 12% in2003-04 and close to 22% in 2004-05. The state run insurance company has the biggest advantage of its huge network which the company can use to penetrate into rural market that is still lying untapped. Another option with the life insurance companies to capture

more and more market. Share could be product innovation and constantly developing an insurance product in order to meet the ever-changing requirements of the customer. Quality customer service and education can be another area where a company can differentiate itself customized insurance policies and now the unit linked policies that have gained much of customer attention. The sector has huge potential and certain other new and innovative areas can also be looked into for enhancing market share and premium income, said Sanghi.

IT to boost life market growth

THE LIFE Insurance Corporation of India (LIC) has turned to information technology in a bid to shed its image as a dinosaur among more nimble private sector companies. LIC, India's dominant life insurer, is encouraging policyholders to use its web site to pay premiums and make claims. Last- month, it announced new mobile phone SMS (testing) services to alert policyholders of news about their plans. These moves, unmatched by most of LIC's smaller private sector rivals, are part of an effort to open new

channels to increase the speed and quality of customer service long seen as LIC's weakness after decades as India's monopoly life insurer. LIC's performance in the year to March 2004 suggests that these efforts are working. It sold27 million new policies generating Rs85.7 billion (US$1.9 billion) in premium income - an annual growth of about 11 percent. LIC's deployment of information technology may have helped it maintain its 88 percent market share of premium sales.

ROLE OF IRDA
1).To (protect) the interest of and secure fair treatment to policyholders. 2). To bring about (speedy) and orderly growth of the insurance industry(includi ng annuity and superannuation payments), for the benefit of the common man, and to provide long term funds for accelerating growth of the economy.

3). To set, promote, monitor and enforce high standards of (integrity), financial soundness, fair dealing and competence of those it regulates. 4). To ensure that insurance customers receive precise, clear and correct (inform ation) about products and services and make them aware of their responsibilities and duties in this regard. 5). To ensure speedy settlement of genuine (claims), to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery. 6). To promote fairness, (transparency) and orderly conduct in financial markets dealing with insurance and build a reliable management information system to enf orce high standards of financial soundness amongst market players. 7). To take (action) where such standards are inadequate or ineffectively enforce d. 8. To bring about optimum amount of (self-regulation)in day to day working of th e industry consistent with the requirements of prudential regulation.

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA
(1) Subject to the provisions of this Act and any other law for the time being i n force, the Authority shall have the duty to regulate, promote and ensure order ly growth of the insurance business and re-insurance business. 2) Without prejudice to the generality of the and functions of the Authority shall include, provisions contained in sub-section on (1), the powers (a) issue to the applicant a certificate of registration, renew, modify, withdraw w, suspend or cancel such registration; (b) protection of the interests of the policy holders in matters concerning assi gning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of co ntracts of insurance; (c) specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents; (d) specifying the code of conduct for surveyors and loss assessors; (e) promoting efficiency in the conduct of insurance business; (f) promoting and regulating professional organisations connected with the insur ance and re-insurance business; ( g) levying fees and other charges for carrying out the purposes of this Act;

(h) calling for information from, undertaking inspection of, conducting enquirie s and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organisations connected with the insurance business; (i )control and regulation of the rates, advantages, terms and conditions that m ay be offered by insurers in respect of general insurance business not so contro lled and regulated by the Tariff Advisory Committee under section 64U of the Ins urance Act, 1938 (4 of 1938); (j) specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance int ermediaries; (k) regulating investment of funds by insurance companies; (l) regulating maintenance of margin of solvency; (m) adjudication of disputes between insurers and intermediaries or insurance in termediaries; (n) supervising the functioning of the Tariff Advisory Committee; (o) specifying the percentage of premium income of the insurer to finance scheme s for promoting and regulating professional organisations referred to in clause (f); (p) specifying the percentage of life insurance business and general insurance b usiness to be undertaken by the insurer in the rural or social sector; and (q) exercising such other powers as may be prescribed

ROLE OF IRDA AND TAC IN PVT INSURANCE

IRDA had earlier indicated that the entire non-life business would be detariffed and left to market forces in the next two years. This would mean that the Tariff Advisory Committee would lose its prime reason for existence The TAC was constituted to issue administered rates in business in the non-life sector. At present over two thirds of non-life business is governed by tariff rates. The businesses where rates are fixed include motor and fire insurance Marine and many other classes are non-tariff where rates are decided by the operating offices. The TAC, which has its own secretariat, employees and offices in various centres is working towards becoming a data warehouse. IRDA has made it mandatory for the insurance brokers to invest Rs. 50 lakhs so that they can remain committed to their clients and offer professional services. 44 THE JOURNAL take up professional indemnity policy of three-times of their brokerage income subject to a minimum amount of Rs. 50 lakhs. Thus the brokers have sunk in couple of crores to set up their businesses, are finding the going tough with the clients approaching the insurance companies directly to avail of the special 5% discount. The insurance agents are able to earn15% discount if the sum assured is less than a crore of rupees, with an investment of just about Rs. 250/- per annum, while the insurance brokers earn 12.5% return after having invested Rs. 50 lakhs for registering themselves. Brokers certainly earn more brokerage than the agents in the categories where the sum assured is more than Rs. 1 crore, but today none of the corporate clients move to them as they can get a special discount of5% if they directly approach the insurance compaines. Unless IRDA scraps the special discount, none of the insurance broking companies can survive. Several insurance brokers in the country are today able to survive only by eating into their share capital as

the clients are by passing them to approach the insurance companies directly to avail of the special discount of 5%.

INTER-COMPETITION AMONG INSURERS : Private insurance companies can give a good competition to the PSUs in terms of customer orientation and quick settlements. There is a big scope for financiers to book a good fee based income by becoming corporate agents. Before the industry was opened up, the four public sector insurance companies were underwriting Rs. 14000/- crore premium a year. So far, the eight private insurers had taken away only14% of the business. They have an uphill task in taking on the four PSUs which have big network of officers, market reach and a vast development force. The need for de-tariffing premium for the sake of removing unfair trade practices, has been stressed upon by all the private players. While there is a big business potential, the regulators, in a bid to create entry barriers, have forced the promoters to pump over Rs. I 00 crore as capital. This will result in longer payback period of six to seven years. The insurance companies so far have been providing separate insurance cover for each and every segment but the efforts are on to provide a comprehensive insurance cover to machines, assets and the people . Attempts are also on to include the health and accident insurance for the IT companies where the insurers are trying to bundle the existing services to provide a comprehensive package. Three leading insurance companies are preparing a blueprint for offering the policy to IT companies. However, these companies are yet to approach the insurance Regulatory and Development Authority for seeking approval. IT companies are still major clients for the country.s budding insurance industry, attempts are on to roll out an exclusive insurance cover for IT Companies. Insurance broking Companies like India Insure, Helios Insurance Services and Kadel Insurance Services for IT Companies. Insurance companies are today looking at different segments where there is

business potential and are trying to customize policies to suit the specific needs of their clients. . UNLIMITED TP LIABILITY Unlimited third party limit is another grey area causing worry to insurance companies. The unlimited third party claims permitted under the law on road accidents is threatening the viability of the general insurance industry. It immediately requires a ceiling in the insurance claims. Nowhere in the world such unlimited third party claim is allowed and there is no reason for Imposing it on motor insurance in India when there is a limit for mishaps in aviation and railways. The robust growth of the commercial vehicle and passenger cars and falling interest rates augur well for the growth of Motor portfolio. The increase in premium rates of motor insurance have come as a life-blood to the much maligned sector but the increase in third party cases and unlimited third party awards have threatened the viability of all public and private sector insurers.

NEW RISKS : NEW COVERS

Companies could purchase insurance products for their displaced workers as part of severance package. All the jobs displaced from off-shoring can be insured for as little as 4-5% of saving coming out of offshoring these jobs. This sort of a proposal has been jointly developed by professionals of University of California and Brooking Institute for Trade-displaced workers This would cover wage loss for all full-time workers. Once they are re-

employed, compensating them70% of wage loss between their old and new jobs for up to two years. If this happens, the insurance premiums will increase, cutting into the gains from offshoring less attractive to companies in periods of higher unemployment. This form of insurance will create a selfregulating mechanism, by aligning the rate of offshoring with the rate of employment. Event insurance has created rooms to cover new risks in the field of sports and festival ceremonies. India, which is a country of traditions and rituals, have plenty of religious and social events which take place every now and then. These events are dominated by religious and regional factors and, therefore, various risks attached to these areas are giving birth to the event insurance

AMENDED REBATING PROVISIONS :

Several insurance brokers have put their expansion plans on hold owing to the new notification put forward by IRDA, which enables the insurance companies to pass on rebates directly to the clients. Early this Year IRDA had decided to take action on insurance brokers indulging in rebating and called for submission of detailed returns from brokers. But from July2003, IRDA itself has legalized rebating between the insurance companies and clients. Rebates have been legalized despite the fact that Section41 of the Insurance Act of 1938 prohibits the offer of any direct or indirect inducement, including to procure insurance rebating business. Section 41 of Insurance Act 1938. for instance, states . No person shall allow or offer to allow, either directly or indirectly as an inducement to any person to take out or renew or continue an insurance in respect of any kind relating to lives or property in India, any rebate of the whole or part of the commission payable or any rebate of the premium shown onthe policy or accept any

rebat e, except such rebate as may be allowed in accordance with the published prospectuses of the insurer.. The licensed Insurance brokers are strongly opposing the double standard.

PRESENT SCENARIO
Public Sector Insurance Companies have finally ceased to be the GIC Subsidiaries. The Rs. 100 Crore of equity has been transferred to Government from GIC. The transfer of approach of IRDA in rebating equity follows amendments in the General Insurance Business Nationalisation Act, passed by Parliament. The possibility of tapping the capital market by public sector Insurers cannot be ruled out in future. There are visible signs of market expansion and therefore, all the insurers are expanding the targets and concentrating on most profitable personal and health segment The Commission structure has been the focus of debate today. The insurance players are trying to balance the diverse objectives of providing enough incentives upfront to draw full time agents and at the same time ensuring that commissions are spread over at increased rates to ensure persistency of service. IRDA cannot of its own notify changes as commission payments are fixed by law. Any change in commission structures would require a change in legislation. The insurer.s cup of woes has been similar to that of its peers In the industry. Third party claims in motor insurance have hit these companies hard with some companies having to shell out. high as 300% of the motor as insurance premium collected. The new line of thinking is to tap the profitable personal lines of business. Companies are looking to bancassurance tieups. Emphasis also laid upon recruitment of unemployed graduates as agents. This would also provide some social

stability. Companies have necessary.

Market share of LIC & Pvt Companies

Indian life industry's expansion

"Ultimately the growth of life insurance depends on growth of the economy," said TK. Banerjee, a board member of the Insurance Regulatory Development Authority. India's economic growth rate in March 2004 hit double-digit figures to become Asia's fastest-growing economy. Most economists forecast growth to stabilize at around 7 percent to 2005. Banerjee said that this climate of rising economic prosperity is encouraging consumers to think more about insurance Nonetheless, most life companies believe consumers still need Sanmar: "People still don't think that insurance is important. Most sales happen after personal interaction." AMP Sanmar, a two-year old joint venture between south.-Indian based conglomerate Sanmar and Australia's AMP, has employed some 3,000 sales agents w4o are targeting small and medium-sized towns that have low penetration rates of life insurance. India's life insurance penetration is less than three percent We're focused.. " on places where there is no other company - not even LIC," Subramanian said, -remarking that unlike LIC, AMP Sanmar regards the internet and mobile phones as channels for promotion, not sales. He said that the internet is not widespread as a channel to sell consumer products in India, but Subramanian has not ruled out deploying such technology in the future. Whatever the merits of new distribution channels, the industry fears a decline in sales following new taxes levied on single premium products. Single premium life insurance has been popular in India mainly because guaranteed returns were taxfree. This encouraged policyholders to pay large premiums with minimal risk cover, for payments at maturity that often exceeded the returns of more sophisticated financial products such as

mutual funds. But last October, the government decided to tax premiums that paid above 20 percent of the sum assured. The decision has reduced sales of single premium products, which is likely to restrain the overall growth of India's life industry. The industry regulator has forecast growth of life premiums to be around 20 percent to March -2004, about the same level as 1999, down from a burst of sales in 2002 of 43.5 percent. India's life insurers have rallied to persuade the government to rescind the ruling later this year, but any decision must wait for the end of parliamentary elections currently underway.

Government has allowed 26% foreign equity participation in the insurance sector. This has its limitations. While most foreign insurers planning to start their services in India were not pleased by this condition, they reluctantly agreed that this was expected in an opening economy and this will not change their outlook for India. After all no insurance company can afford to ignore a market of 1bn people. But the fact remains that they Can not appoint majority directors on the company board; Can not have say in the day to day workings of the company; Can Affect Only Special Resolutions This cap, however, will have a great impact on the Indian counter part to raise 74% of the funds in their joint venture. To

ROLE OF FOREIGN COMPANIES IN INDIA

add to this if Indian partners like State bank of India, with over 9000 branches nationwide, will demand premium for their existing distribution network, we will see the foreign insurance companies demand hefty premiums for bringing in their global expertise and brand. Mr. Vaidya, Chairman of SBI, has recently stated that all it is looking for is a good and reliable partner and the question of a hefty premium to be charged to its foreign partner is not significant. The monolith has finally come to business senses foreign companies are unhappy even about laws pertaining to repatriation of funds. The Stipulated investment criteria is also something that all players in the sector, be it Indian or foreign, are closing watching. The foreign players are essentially looking to tap their" global expertise in the variety markets and use that know-how to work in the Indian scenario. Designing of products, information systems, technical expertise, manpower planning etc is what one expects

the foreign players to have a say in. Any venture of the joint kinds needs to be between equals. If this is not there then there is every chance that a partner in the venture will feel increasingly uncomfortable and would be looking to call the joint venture off.

comparisam of lic and pvt players

New Policies Issued

AMOUNT IN CRORES As in the chart we can see here that in 2007-08 new policies issued by LIC is 31590707, and in year it is 38229292 with rise of 21.01% and in year 2008-09 it is37612599 which is 1.61% decrease than year 2009-010 While private players have continuously growth. In year 2007-08 3871410 new policies were issued by private players in year private players gain rise of 104.64% with7922274 policies and in year 2008-09

new policies issued by private players are13261558 which is 67.40% more than year 2009-10.

Total premium

AMOUNT IN CRORES Amount in crores LIC has Rs. 99792.22 corers as total premium in year 2007-08 which increases by40.79% in year 2008-09 which is 127822.84 corers. And in year 2009-10 it has rise of17.19% which amounted to 149789.99corers. Private players has 15083.53 corers as total premium in year 2008-09 and it increased by 87.08% which amounted to Rs. 28218.75 and it again become almost double in year 2009-10 increased by 82.50% amounting Rs. 51561.42 corers.

Total premium commission

Amount in crores

Operating expenses

Amount in crores

Comparison of ratios
Commission Expense Ratio
Commission expense 100 Premium underwritten

Operating Expense Ratio

Operating expense 100 Premium underwritten

Commission Expense Ratios

Amount in Percentage

Total Premium

Amount in percentage

Operating Expense Ratios

Amount in percent

Amount in percentage

Market share of Life Insurers In Year 2009-10

Amount in core

Claims Paid By Life Insurers

Findings And Conclusion

There is only public company exist in the Indian Life Insurance market which is Life Insurance Corporation Of India and there are 21 private insurance companies role playing as life insurer in the Indian life insurance market. Like as , Sbi life insurance company, HDFC Standard life Insurance company, ICICI Prudential company, Reliance Life Insurance company, Birla sunlife Insurance company etc, Since, 1958 LIC is playing role as life insurance so that it has created its monopoly in the Indian Life Insurance Market. As things stand today LIC is still on strong footing vis--vis its competitors. However, to retain its market leader status the LIC needs to acquire competitive ness. With new contenders entering the fray there is need to act more market

savvy. Rather than getting bogged down by competition the LIC needs to see the challenge as an opportunity. Insurance in India was largely misconstrued as an investment or a tax saving device rather than a security hedge. In fact, insurance agents were promoting policies on life as instruments of returns and tax saving. Insurance consciousness as such was largely missing from the market. The new entrants with their aggressive penetration strategies are at least contributing to the cause of LIC by creating insurance consciousness in the minds of a wide cross section of consumers. Privileged by its monopoly status LIC did not bother much about creating an insurance consciousness, as its objective was to insure any how that was happening. This complacency now has to go and LIC must opt for marketing insurance as insurance. The insurance consciousness is creating the market is evident from the fact that there was a spurt in business underwritten in March 2009 at Rs. 201351.41 corer which was growth of 29.01%. Private sector increased their total premium from28253.01 to51561.42 that is 82.50% increase while LIC increased its premium income from127822.84 to 149789.99, which is increase of 17.19%.Private players also increased their market share from 18.1% to 25.61%. However, LIC needs to worry about the fact that the new entrants have increased their share by almost 69% during 200910. market share of private players increased by 41.50% than year 2009-10. No mean performance given the fact that the new players are still in the process of finding their feet. If the trend continuous the LIC needs to take guard and prepare for strike.

Bibliography

www.licindia.com www.birlasunlife.com www.sbilife.co.in www.reliancelife.co.in www.hdfcinsurance.com www.iciciprulife.com www.irda.org