INDIAN

INSURANCE
SECTOR
Group 4
Section A
MBA II
FINANCIAL SERVICE
Course Instructor: Prof.
S.B.MISHRA
 Evolution India

1818 - Oriental Life Insurance Company – 1st Insurance Company.

1870 - Bombay Mutual Life Assurance Society – 1st Life Insurance

Company.

1912 - The Indian Life Assurance Companies Act enacted the 1st Law to
Regulate the Life Insurance Business.

1928 - The Indian Insurance Companies Act enacted to enable the

government to collect statistical information about both life & non-life
insurance businesses.
1956: 245 Indian & foreign insurers & provident
societies are taken over by the central government &
nationalized.

LIC formed by an Act of Parliament, viz. LIC Act, 1956,

with a capital contribution of Rs. 5 crore from the
Government of India.

The first General Insurance Company established in the

year 1850 in Calcutta by the British.
 Types of Insurance

Life insurance
Non - Life Insurance
(general insurance)

Property (eg.Builders risk insurance)

Aviation(eg.Private aircraft insurance)
Marine (eg. Marine hull insurance)
Miscellaneous (eg.Purchase insurance)
 Insurance Sector Reforms
 In 1993, Malhotra Committee - headed by former Finance Secretary & RBI
Governor R.N. Malhotra.
 Objective - to create more efficient & competitive financial system.
 Key recommendations of the reform;

 1.Structure: – a. government stake 50% in insurance companies.

 2.Competition:
 Private Companies with a minimum paid up capital of Rs.1bn should be
allowed to enter the sector.
 No Company should deal in both life and general insurance through a
single entity.
 Foreign companies may be allowed to enter the industry in collaboration
with the domestic companies.
 Regulatory Body:

• The insurance act should be changed.

• An insurance regulatory body should be set up.
• Controller of insurance-a part of the Finance Ministry –
should be made independent.
 Investments :

• Mandatory Investments of LIC Life Fund in government

securities to be reduced from 75% to 50%.
• GIC and its subsidiaries are not to hold more than 5% in any
company.
 Customer Service:

• LIC should pay interest on delay on payment beyond 30 days.

• Insurance companies must be encouraged to set up unit link
pension plans.
LIFE INSURERS Websites

Public Sector

Life Insurance Corporation of India www.licindia.com

Private Sector

Allianz Bajaj Life Insurance Company Limited www.allianzbajaj.co.in

Birla Sun-Life Insurance Company Limited www.birlasunlife.com

HDFC Standard Life Insurance Co. Limited www.hdfcinsurance.com

ICICI Prudential Life Insurance Co. Limited www.iciciprulife.com

ING Vysya Life Insurance Company Limited www.ingvysayalife.com

Max New York Life Insurance Co. Limited www.maxnewyorklife.com

MetLife Insurance Company Limited www.metlife.com

Om Kotak Mahindra Life Insurance Co. Ltd. www.omkotakmahnidra.com

SBI Life Insurance Company Limited www.sbilife.co.in

TATA AIG Life Insurance Company Limited www.tata-aig.com

AMP Sanmar Assurance Company Limited www.ampsanmar.com

Dabur CGU Life Insurance Co. Pvt. Limited www.avivaindia.com

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GENERAL INSURERS
Public Sector
National Insurance Company Limited www.nationalinsuranceindia.com
New India Assurance Company Limited www.niacl.com
Oriental Insurance Company Limited www.orientalinsurance.nic.in
United India Insurance Company Limited www.uiic.co.in
Private Sector
Bajaj Allianz General Insurance Co. Limited www.bajajallianz.co.in
ICICI Lombard General Insurance Co. Ltd. www.icicilombard.com
IFFCO-Tokio General Insurance Co. Ltd. www.itgi.co.in
Reliance General Insurance Co. Limited www.ril.com
Royal Sundaram Alliance Insurance Co. Ltd. www.royalsun.com
TATA AIG General Insurance Co. Limited www.tata-aig.com
Cholamandalam General Insurance Co. Ltd. www.cholainsurance.com
Export Credit Guarantee Corporation www.ecgcindia.com
HDFC Chubb General Insurance Co. Ltd.  
REINSURER
General Insurance Corporation of India www.gicindia.com

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 LIFE INSURANCE CORPORATION

FORMATION:
 Insurance corporation LIC was formed in September 1956 by an act of
parliament
 LIC was formed with the capital contribution of 5 crores from the govt. of
India and has the sole mandate of conducting life insurance business in
India.
 Before the formation of LIC there where 245 Indian and foreign insurers in
India.

OBJECTIVES:
 To maximize mobilization of peoples savings by making insurance linked
saving adequately attractive.
 To spread life insurance much more widely and in particularly in rural area,
providing them with insurance at reasonable price and adequate finance
cover.
 GROWTH:

 LIC has come a long way since its nationalization in 1956 over 40 years
later in 1997

 LIC had grown from Rs. 3.78 billion of new business in 1957 to Rs 555.5
billion

 The rural India accounting for around 40% of the business.

 In 1997, LIC had spread to the farthest corners of the country with an
extensive network of over 8 lakh agents, 2048 branches(1370cities), 100
Divisional office, 7 Zonal offices and 1 Central office.

 LIC has branch offices in U.K., Mauritius, & Fiji. In U.K.

Indian Insurance Sector

 The US$ 41-billion Indian life insurance industry is

considered the fifth largest life insurance market,
and growing at a rapid pace of 32-34 per cent
annually, according to the Life Insurance Council.

 Since the opening up of the insurance sector in

India, the industry has received FDI to the tune of
US$ 525.6 million.

 The government is likely to reintroduce the

Insurance Bill which proposes to increase the FDI
cap in private sector insurance companies from 26
per cent to 49 per cent.

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Indian Insurance Sector

 The total number of life insurers registered with the

Insurance Regulatory Development Authority (IRDA) has gone
up to 23.

 The Life Insurance Corporation (LIC) posted a 50 per cent

growth in new premium collection in the first nine months of
the 2010 fiscal, increasing its market share to 65 per cent
from 56 per cent a year ago.

 LIC’s new premium collection touched US$ 9.58 billion in the

April-December 2009 period while the combined business of
the 22 private insurers grew to US$ 5.07 billion from the
previous year, as per data collated by the Insurance
Regulatory and Development Authority (IRDA).

 Overall the industry grew at 29 per cent in the April-

December period of the fiscal year 2010.

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Indian Insurance Sector
 General Insurance

 The total number of general insurers registered with IRDA has gone
up to 22, with the registration of SBI General Insurance Company
Limited, a joint venture general insurance company promoted by
State Bank of India and Insurance Australia Group, Australia, as a
general insurer in December 2009.

 Overall, the non-life insurance sector grew 9.95 per cent in April-
December 2009, compared to the corresponding period last year

 According to IRDA data, out of the US$ 5.46 billion premium

underwritten by the industry during the April-December 2009
period, US$ 3.24 billion came from the four public sector companies
as compared to US$ 2.91 billion during the same period in 2008.

 The Gross Premium underwritten by public sector non-life insurers

for the April-December 2009 period posted year-on-year growth of
11.37 per cent as compared to the year-on-year growth of 7.93 per
cent posted by private sector non-life insurers

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Indian Insurance Sector
 Project Insurance

 Insurance companies are also witnessing increasing demand

for project insurance in the last few months. Corporates are
beginning to demand project insurance across sectors such as
power generation with the cover beginning right from the start
of the project till it is declared ready for commercial use.

 Some of the big projects also take cover for financial loss
arising out of delay in completion.

 Industry players estimate that premiums collected from project

insurance will be around US$ 216.2 million for the industry as
a whole and is expected to increase significantly.

 Oriental Insurance Company Ltd will be offering comprehensive

project insurance for the Tata Power Project at Mundra in
Gujarat.

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Indian Insurance Sector
 Health Insurance
 The health insurance market stood at around US$ 1.5 billion in 2008-09
and is expected to grow to US$ 9 billion by 2016-17. While health
insurance policies are mostly provided by general insurance companies,
life insurers contribute about five per cent to the overall health
insurance business.

 Apollo DKV Health Insurance has renamed itself Apollo Munich Health
Insurance as a part of its five-year strategic plan to gain a five per cent
market share. Apollo Munich is a joint venture between Asia’s largest
integrated healthcare provider, The Apollo Hospitals Group, and
Germany-based Munich Re's segment, Munich Health.

 Max India is planning to invest US$ 43.25 million in its health insurance
joint venture (Max Bupa) and will launch a product over the January–June
2010 period.

 Star Health and Allied Insurance expects to invest US$ 38.9 million
during the current financial year to grow its health insurance business,
taking the total invested capital to US$ 67 million.

 US-based health insurer CIGNA is looking at entering the Indian market.

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Indian Insurance Sector
 Reinsurance

 Reinsurance is a contract between the insurance company (insurer)

and a third party (re-insurer), wherein the latter will protect the
former by paying losses sustained by it under the original contract of
insurance.

 Re-insurers from London, as well as other parts of Europe, see

significant potential in the re-insurance market in India. Top four
global re-insurers, Lloyds, Swiss Re, Munich Re and Berkshire
Hathaway are amongst those eyeing India.

 Bancasssurance

 Private insurers have adopted bancassurance in a much bigger way

than the state-owned Life Insurance Corporation (LIC) in the recent
years. Bancassurance is distribution of insurance products through a
bank's network.

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Indian Insurance Sector
 Investment Policy

 The FDI limit in the insurance space for foreign players is capped at 26
per cent—permissible under the automatic route subject to a licence
from the official regulator, IRDA—but the government is planning to
raise it to 49 per cent and a bill to give effect to the proposal is pending
in the Rajya Sabha.

 IRDA has stipulated that the mandatory ceding by every general insurer
in the country to the national reinsurer – General Insurance Corporation
(GIC), would continue to remain at 10 per cent as under current
regulations.

 IRDA has also allowed insurance companies to offer 'Health plus Life
Combi Product', a policy that would provide life cover along with health
insurance to subscribers.

 Pension Fund Regulatory and Development Authority (PFRDA) would

launch a low-cost pension scheme on April 1, 2010, to provide social
security cover to economically weaker sections like rickshaw pullers,
barbers and daily-wage labourers

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Indian Insurance Sector
 The Road Ahead

 Saturation of insurance markets in many developed economies has

made the Indian market more attractive for international insurance
players, according to 'Booming Insurance Market in India (2008-
2011)”. Further, according to the report,

 Total life insurance premium in India is projected to grow US$ 266

billion by 2010-11

 Total non-life insurance premium is expected to increase at a

compound annual growth rate (CAGR) of 25 per cent for the period
spanning from 2008-09 to 2010-11

 The home insurance segment is set to achieve a 100 per cent growth
as financial institutions have made home insurance obligatory for
housing loan approvals

 In the next three years, health insurance is poised to become the

second largest business for non-life insurers after motor insurance

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 Conclusion

Insurance can be summed up as

“Praying for the best …
…being PREPARED for the WROST”.
THANK YOU