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The Indian economy grew at the rate of 6.5 per cent in 2011-12. It is the lowest growth rate achieved in the past nine year period. Such dismal growth was preceded by two successive years of robust growth of 8.4 per cent. The slowdown in economy was reflected across all sectors of the Indian economy, but the weakest performance was reported in the industrial sector. During 2011-12, the agricultural sector grew at the rate of 2.8 per cent, substantially lower than the growth of 7.0 per cent recorded in the previous year. The year 2010-11 saw simultaneous occurrence of a normal and well distributed south-west monsoon as also an excess north-east monsoon, which was not observed in the last decade. The north-east monsoon witnessed a deficit by 48 per cent in 2011-12, although the south-west monsoon remained normal during 2011-12. With this the production level of food grains stood at 257.4 million tonnes in 2011-12 (244.8 million tonnes in 2010-11). The industrial sector reported a growth rate of 2.6 per cent during 2011-12, as compared to 6.8 per cent of previous year and an average growth rate of 6.3 per cent in the last five years. The slowdown in industrial production appeared to be across all subsectors except electricity leading to the slowdown in overall growth of the economy during 2011-12. Various macroeconomic factors, such as, the moderation in demand (both domestic and external), hardening of interest rates, slowdown in consumption expenditure, especially in interest rate sensitive commodities, subdued business confidence and global economic uncertainty contributed to the weakening of Indian economy. The services sector, the main contributor of Indias success story in recent years, reported slower growth of 8.5 per cent compared to 9.2 per cent growth achieved in the previous year. The deceleration in services sector appeared to be on account of both weakening demand as well as inter-linkages with the industrial sector. The savings and investment rates continued to decline. The average savings rate has witnessed consistent decline since 2008-09, led by a sharp decline in public sector savings rate, which was not offset by private savings. As per the preliminary estimates of RBI, the net financial savings of the household sector reduced to 7.8 per cent of GDP in 2011-12 from 9.3 per cent in the previous year and 12.2 per cent in 2009-10. This moderation in the net financial savings rate of the household sector during the year mainly reflected an absolute decline in small savings and
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slower growth in households holdings of bank deposits, currency as well as life funds. Furthermore, with real interest rates on bank deposits and instruments such as small savings remaining relatively low on account of the persistent high inflation, and the stock market adversely impacted by global developments, households seemed to have favoured investment in valuables such as gold, which impacted the pace of their investment in physical assets such as housing in 2011-12 (RBI Annual Report, 2011-12). The headline inflation rate continued to rule at high levels. It remained high at 9.6 per cent and 8.9 per cent during 2010-11 and 2011-12 respectively, as measured through annual average Wholesale Price Index (WPI). These levels appeared to be very high as compared to the same for the average of last 10 years (2000-01 to 2009-10), which remained at a substantially low level at 5.4 per cent. Due to high Inflation rate, Reserve Bank continued its stance of high interest rates. Comparatively, interest rates hovered at higher levels in 2011-12, as compared to 2010-11. the average Call Money rate stood at 8.2 per cent in 2011-12 compared to 5.8 per cent in the previous year. The yield on 10-year Government Securities hovered at around 8.4 per cent in 2011-12, higher from the 7.9 per cent of previous year. The weighted average interest rate on Central Government Borrowings went up from 7.9 per cent in 2010-11 to 8.5 per cent in 2011-12. The benchmark deficit indicators widened in 2011-12 on account of many external and domestic factors. The year 2011-12 witnessed surge in international crude oil prices as also decrease in the indirect taxes on petroleum products. On domestic front, the shortfall in revenue due to more than anticipated slowdown in economic growth and lower than budgeted disinvestment receipts contributed to the fiscal slippage leading to the gross fiscal deficit (GFD)-GDP ratio to a level of 5.8 per cent in 2011-12. The ratio stood at 4.6 per cent in 2010-11.


As per World Insurance Report published by reinsurance major Swiss Re, the global direct premium during 2011 fell by 0.8 per cent (Year 2010: grew by 2.7 per cent). The growth situation varied significantly by regions. While in the advanced markets, premium volume slipped by 1.1 per cent, the same grew in the emerging markets at 1.3 per cent. The growth also varied by lines of business. In the Western Europe, life premiums dropped steeply by 9.8 per cent. The North America
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witnessed a positive growth of 2.3 per cent in its life premium. In the emerging markets, though life premium dropped by 5.1 per cent partly due to new distribution regulations in China, non-life insurance reported a smart growth of 9.1 per cent. Out of total global insurance premium, life insurance premiums accounted for 57 per cent (USD 2627 billion). This share is higher in advanced economies (58 per cent) than in emerging markets (52 per cent) mainly due to the low share of life insurance in the Middle East and Central & Eastern Europe. During 2011, global life insurance premium shrank by 2.7 per cent to USD 2627 billion. However, remarkable differences appeared to be in the development of premium income across various markets. In advanced economies, life insurance premium declined by 2.3 per cent, thereby reversing their short-lived recovery in 2010. In the United States, where in-force life premium continued to decline till last year, the premium accelerated modestly in 2011, driven by a rebound in savings products. However, in Western Europe, premiums declined by 9.8 per cent. Premium continued to slip in the United Kingdom and in-force premiums fell sharply in Germany, Italy, Portugal and France. Among the advanced Asian economies, growth in Japan accelerated on account of good sales of individual whole life policies and a recovery in sales of annuity products. Hong Kong and Singapores life markets remained robust. Amongst the emerging markets, life premium income fell sharply as premium volume shrank in China and India. The introduction of tighter regulations governing banc assurance in China and the distribution of unit-linked insurance products in India resulted in a sharp fall in new life premium growth. Premium underwritten slipped by 15 per cent and 8.5 per cent in China and India respectively. In contrast, other emerging regions witnessed good growth. Premium underwritten went up by 9.4 per cent in the Middle East and 9.5 per cent in the Latin America. Overall, emerging markets share of global life premiums decreased slightly from 14.2 per cent in 2010 to 13.9 per cent in 2011. The growth in non-life insurance premium stood at 1.9 per cent in 2011. Costly natural catastrophe events in Japan, New Zealand, and Australia led to significant rate increases in property markets. Rates increased in other advanced markets as well, partially off-setting the effects of the weak economic environment. In emerging markets, premium growth was mostly driven by robust economic growth.
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The non-life insurance markets in emerging economies grew faster than the advanced economies in 2011. However, the year 2011 witnessed heavy natural calamities, such as the earthquake in Japan, the countrys worst on record in terms of magnitude.

REAL GROWTH IN PREMIUM DURING 2011 (In per cent) COUNTRIES Advanced Countries Emerging Market Asia India World LIFE -2.3 -5.1 0.5 -8.5 -2.7 NON-LIFE 0.5 9.1 7.0 13.5 1.9 TOTAL -1.1 1.3 2.2 -5.5 -0.8

Source: Swiss Re, Sigma No. 3/2012. Note: * calendar year ** financial year 2011-12.

Table 1.1

Indian Insurance in the global scenario

In the life insurance business, India ranked 10 th among the 156 countries, for which the data is published by Swiss Re. During 2011-12, the life insurance premium in India declined by 8.5 per cent (inflation adjusted). During the same period, the global life insurance premium declined by 2.7 per cent. The share of Indian life insurance sector in global life insurance market stood at 2.30 per cent during 2011, as against 2.54 per cent in 2010. The non-life insurance sector witnessed a significant growth of 13.5 per cent during 2011-12. Its performance is far better when compared to global non-life
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premium, which expanded by a meagre 1. per cent during the same period. The share of Indian non-life insurance premium in global non-life insurance premium increased slightly from 0.57 per cent in 2010- 11 to 0.62 per cent in the year 201112. India stood at 19th rank in global non-life premium income.

Insurance penetration & density in India

The measure of insurance penetration and density reflects the level of development of insurance sector in a country. While insurance penetration is measured as the percentage of insurance premium to GDP, insurance density is calculated as the ratio of premium to population (per capita premium). Since opening up of Indian insurance sector for private participation, India has reported increase in insurance density for every subsequent year and for the first time reported a fall in the year 2011. However, insurance penetration, which surged consistently till 2009, slipped in the consecutive second year on account of slower rate of growth in the life insurance premium as compared to the rate of growth of the Indian economy.


Density 2007 2008 2009 2010 2011 (USD) 40.4 41.2 47.7 55.7 49.0 Penetration (Percentage) 4.0 4.0 4.6 4.4 3.4

Density (USD) 6.2 6.2 6.7 8.7 10.0 Penetration (Percentage) 0.6 0.6 0.6 0.71 0.70

Density (USD) 46.6 47.4 55.3 64.4 59.0 Penetration (Percentage) 4.7 4.6 5.2 5.1 4.1

1. Insurance density is measured as ratio of premium (in US Dollar) to total population. 2. Insurance penetration is measured as ratio of premium (in US Dollars) to GDP (in US Dollars). 3. The data of Insurance penetration is available with rounding off to one digit after decimal from 2006. Source: Swiss Re, Various Issues.

Table 1.2
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People who are prone to the similar risks come together and agree to share and compensate the losses of the particular person facing losses. Different kinds of risks can be identified and separate groups made, including those prone to similar risks. By this way, the loss on a particular person is divided among other member of group. Thus risk is shared by the community and the particular person doesnt have to face the impact of such a heavy loss. There are some rules and principles, which make it possible for insurance to remain a fire- arrangement. It is difficult for any individual to bear the result of the risk that he is pone to. It will become manageable when the community shares the loss. And that the peril should happen unexpectedly and not be deliberately created by the insured person.
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The loss should be proportionally divided amongst the members of the community who are prone to similar risks, and this method must be predetermined. The share can be collected before or after the losses arise or at the time of admission to the group.

Insurance companies collect in and create a fund from which the losses are paid. From the past experiences of the individuals, assumptions are made and collections are determined accordingly. Therefore, Insurance is necessary to aid those depending on the income and he who would have made arrangements on the basis of some expectation. If of these expectation do not come true, the original arrangement would become inadequate and there could be problems, which need to be protected against.

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Thus, The Need Of Insurance Can Be Classified As:

Protection of the interest of the faculty of the loss of income due to death of the breadwinner.

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Provision for the education & marriage of children. Post retirement income for self & dependent. Special needs like loss of income due to disabilities, accidents, treatment of diseases, sickness etc.

To protect against future inflation.

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Investments are made out of savings and they are necessary for further economic development. A life insurance company is a quit important in mobilizing savings of people, especially from the middle and lower income group and these savings are channeled into investment for economic growth. Most of the life insurance companies have large funds that are accumulated through the payments of small amounts of premium of individuals and these funds further the economic development of the countries in which they do business. These funds are collected and held in trust for the benefit of the policyholders. The managements of life insurance companies have to remember this aspect and take decision keeping in mind the benefit of the community.
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Business and trade also benefit through insurance. Without insurance, trade and commerce is exposed to perils and it will find it difficult to face the impact of such events.


The new face of the insurance industry is craving for attention in Varanasi. Before the entry of the private sector the insurance market in Varanasi is an underdeveloped market that was only ruled and tapped by the state owned LIC. Today, the dozen-odd life and non-life companies in the private sector are fighting a quiet but intense battle to make their presence felt to the general mass of Varanasi through advertisements in newspapers and on television, insurance agents and direct mailers form part of the campaign vehicle. However, the biggest players of insurance sector which have captured the market and gained trust, and built faith in the minds of people with their immense marketing strategy, aggressive and penetrative distribution channel, and innovative products in Varanasi. The following, therefore, are the major players of insurance business in the
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Life Insurance Corporation of India (LIC) is an autonomous body authorized to run the life insurance business in India with its Head Office at Mumbai. It has been established by an act of the Parliament and started functioning from 1/9/1956. LIC is the biggest insurance player in the country. Out of the total premium of Rs 3766 crore generated by the insurance industry through group business in the year 2005-06, LIC alone accounted for Rs 3051 crore. As it is the giant Life Insurance Corporation in Public Sector and enjoys the life insurance monopoly. The corporation has been fully carrying out the role assigned to it and justifying the confidence of people by offering the following benefits to them, which are:1 Absolute Security 1 Better Policy 1 Condition 1 Cheaper Rates 1 Dependable Service and Better Economic Management 1 Favorite Returns to the People

In the financial year 2005-06, LIC has grown at 30.68%. In respect of number of lives insured, LIC has shown a growth of over 152%. In respect of number of schemes, LIC has a growth of 2%. LIC market share in number of individuals covered and number of policies stands at 77% and 81%, respectively.
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ICICI Ltd. was established in 1955 by the World Bank, the Government of India and the Indian Industry, to promote and lend money for industrial development. ICICI Prudential Life Insurance Company Limited was incorporated on July 20, 2000. It is a joint venture between ICICI Bank, a premier financial powerhouse and Prudential plc, established in 1848 is a leading international financial services group and is presently the largest life insurance company in the UK. Today, it has diversified into retail banking and is the largest private bank in the country. ICICI Prudential is currently the No. 1 private life insurer in the country. For the financial year ended March 31, 2005, the company garnered Rs 1584 crore of new business premium for total sum assured of Rs 13,780 crore and wrote nearly 615,000 policies.

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Bajaj Allianz is a joint venture between Allianz AG one of the world's largest insurance companies, and Bajaj Auto, one of the biggest 2 and 3 wheeler manufacturers in the world. Bajaj Allianz is into both life insurance and general insurance. Allianz Group is one of the world's leading insurers and financial services providers. Founded in 1890 in Berlin, Allianz is now present in over 70 countries with almost 174,000 employees. Bajaj group is the largest manufacturer of twowheelers and three-wheelers in India and one of the largest in the world. Today, Bajaj Allianz is one of India's leading and fastest growing insurance companies. Currently, it has presence in more than 550 locations with over 60,000 Insurance Consultants.


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Competition has well and truly set in the fast-growing insurance sector in Varanasi although the new breeds of companies are showing their presence in the market. Therefore, the stress is beginning to show on the key players of the market to compete with the emerging players in order to be in market and can create impact on the minds of people with better investment schemes and insurance policies. The new players of insurance business have attracted the attention of people in Varanasi due to following reasons:1

Innovative and wide range of products which are designed according to the needs of customer.

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Higher return Convenient and better distribution channel

The following, therefore, are the new players of insurance business in Varanasi city:-

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Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the 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 Life Insurance Company had acquired 100 per cent shareholding in AMP Sanmar Life Insurance Company in August 2005. Taking over AMP Sanmar Life provided Reliance Life Insurance a readymade infrastructure and a portfolio.

AMP Sanmar Life Insurance was a joint venture between AMP, Australia and the Sanmar Group. Headquartered in Chennai, AMP Sanmar had over 90 offices across the country, 9,000 agents, and more than 900 employees.

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Max New York Life Insurance Company Limited is a joint venture between Max India Limited, a multi-business corporate, and New York Life International, a global expert in life insurance. New York Life is a Fortune 100 company that has over 160 years of experience in the life insurance business. Max India Limited is a multi-business corporate dealing in Clinical Research, IT and Telecom Services, and Specialty Plastic Products businesses.

Max New York Life Insurance started its operations in India in 2000. It is the first life insurance company in India to be awarded the IS0 9001:2000 certifications. Max New York offers customized products tailored to suit individual's needs. With its various Products and Riders, there are more than 400 product combinations to choose from. Today, Max New York Life Insurance has a network of 57 offices spread over 37 cities all over India.

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Tata AIG Life Insurance Company Limited is a joint venture between Tata Group and American International Group, Inc. (AIG). Tata Group is one of the oldest and leading business groups of India. Tata Group has had a long association with India's insurance sector having been the largest insurance company in India prior to the nationalization of insurance. The Late Sir Dorab Tata was the founder Chairman of New India Assurance Co. Ltd., a group company incorporated way back in 1919. American International Group, Inc is the leading U.S. based international insurance and financial services organization and the largest underwriter of commercial and industrial insurance in the United States. AIG has one of the most extensive life insurance networks in the world.

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NAME OF THE INSURANCE COMPANY AND THE SHARE HOLDING PATTEN Name of the Insurance Company Agricultural Insurance Co Bajaj Allianz General Insurance Co. Ltd. Cholamandalam MS General Insurance Co. Ltd. Export Credit Guarantee Company HDFC Chubb General Insurance Co. Ltd. ICICI Lombard General Insurance Co. Ltd. IFFCO-Tokio General Insurance Co. Ltd. National Insurance Co. Ltd. New India Assurance Co. Ltd. Oriental Insurance Co. Ltd. Reliance General Insurance Co. Ltd. Royal Sundaram Alliance General Insurance Co. Ltd. Tata AIG General Insurance Co. Ltd. United India Insurance Co. Ltd. Shareholding Bank and Public Ins Co Privately Held Privately Held Public Sector Privately Held Privately Held Privately Held Public Sector Public Sector Public Sector Privately Held Privately Held Privately Held Public Sector

There are a total of 13 life insurance companies operating in India, of which one is a Public Sector Undertaking and the balance 12 are Private Sector Enterprises. List of Companies are indicated below:-

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TABLE NO: 4 NAME OF THE LIFE INSURANCE COMPANY AND THE SHARE HOLDING PATTEN Name of the company Allianz Bajaj Life Insurance Co Aviva Life Insurance Birla Sun Life Insurance Co HDFC Standard Life Insurance Co ICICI Prudential Life Insurance Co ING Vysya Life Insurance Co. Life Insurance Corporation of India Max New York Life Insurance Co. MetLife Insurance Co. Om Kotak Mahindra Life Insurance Reliance insurance SBI Life Insurance Co TATA- AIG Life Insurance Company Nature of Holding Private Private Private Private Private Private Public Private Private Private Private Private Private

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India with about 200 million middle class household shows a huge untapped potential for players in the insurance industry. Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors. The insurance sector in India has come to a position of very high potential and competitiveness in the market. Indians, have always seen life insurance as a tax saving device, are
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now suddenly turning to the private sector that are providing them new products and variety for their choice. Consumers remain the most important centre of the insurance sector. After the entry of the foreign players the industry is seeing a lot of competition and thus improvement of the customer service in the industry. Computerisation of operations and updating of technology has become imperative in the current scenario. Foreign players are bringing in international best practices in service through use of latest technologies The insurance agents still remain the main source through which insurance products are sold. The concept is very well established in the country like India but still the increasing use of other sources is imperative. At present the distribution channels that are available in the market are listed below. Direct selling Corporate agents Group selling Brokers and cooperative societies Bancassurance Customers have tremendous choice from a large variety of products from pure term (risk) insurance to unit-linked investment products. Customers are offered unbundled products with a variety of benefits as riders from which they can choose. More customers are buying products and services based on
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their true needs and not just traditional moneyback policies, which is not considered very appropriate for long-term protection and savings. There is lots of saving and investment plans in the market. However, there are still some key new products yet to be introduced - e.g. health products. The rural consumer is now exhibiting an increasing propensity for insurance products. A research conducted exhibited that the rural consumers are willing to dole out anything between Rs 3,500 and Rs 2,900 as premium each year. In the insurance the awareness level for life insurance is the highest in rural India, but the consumers are also aware about motor, accidents and cattle insurance. In a study conducted by MART the results showed that nearly one third said that they had purchased some kind of insurance with the maximum penetration skewed in favor of life insurance. The study also pointed out the private companies have huge task to play in creating awareness and credibility among the rural populace. The perceived benefits of buying a life policy range from security of income bulk return in future.


There is a evolutionary change in the technology that has revolutionized the entire
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insurance sector. Insurance industry is a data-rich industry, and thus, there is a need to use the data for trend analysis and personalization. With increased competition among insurers, service has become a key issue. Moreover, customers are getting increasingly sophisticated and tech-savvy. People today dont want to accept the current value propositions, they want personalized interactions and they look for more and more features and add ones and better service The insurance companies today must meet the need of the hour for more and more personalized approach for handling the customer. Today managing the customer intelligently is very critical for the insurer especially in the very competitive environment. Companies need to apply different set of rules and treatment strategies to different customer segments. However, to personalize interactions, insurers are required to capture customer information in an integrated system. With the explosion of Website and greater access to direct product or policy information, there is a need to developing better techniques to give customers a truly personalized experience. Personalization helps organizations to reach their customers with more impact and to generate new revenue through cross selling and up selling activities. To ensure that the customers are receiving personalized information, many organizations are incorporating knowledge databaserepositories of content that typically include a search engine and lets the customers locate the all document and information related to their queries of request for services. Customers can hereby use the knowledge database to mange their products or the company information and invoices, claim records, and histories of the service inquiry. These products also may be able to learn from the customers previous knowledge database and to use their information when determining the
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relevance to the customers search request.


Insurance acts as a catalyst in economic growth of a country. It is closely related to savings and investment that comes from, life insurance, funded pension systems and to some extent the non-life insurance industry. LIC(Life Insurance Corporation) & GIC(General Insurance Corporation) had monopoly prior to the expansion of insurance market to private companies. LIC was established in 1956 and controlled all life-insurance policies across the nation. These were government run organizations. The Insurance business is divided into
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four classes :
1. Life Insurance business 2. Fire 3. Marine 4. Miscellaneous Insurance.

Following the Insurance Regulatory and Development Act in 1999, India abandoned the public sector exclusivity of the insurance industry and switched to a market-driven competitive industry. This shift has brought about many changes and developments in the insurance industry in India. Domestic private-sector companies were permitted to enter both the life and general insurance business and foreign companies were allowed to participate and join these domestic companies albeit with a cap of 26% investment. The objectives of this report are to examine the current status of the insurance industry, its prospective growth and the valuation methods used for insurance companies in developed and under-developed countries.


Today there are 16 private players with aggregate control of 27% of the life insurance market and 15 private players in the general insurance industry. Entry of private sector has fuelled the growth in the sector driven by new products and aggressive marketing strategies. LIC still covers majority market share with other private companies growing at alarming rates with market share of 48.1% . ICICI Prudential has the majority market share among the private companies and has maintain its market leadership with an estimated market share of 19.2%, SBI
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life(10.7%),Bajaj Allianz (14.0%), HDFC Standard Life (8.6%), Birla Sun Life (9.2%) , Reliance life(11.0%),max new york (5.9%) etc within the private sector in FY09. With low barriers to entry, there will be increased competition and better quality of service within the next decade in the Indian insurance industry. An insurance survey by LIC & KPMG showed that annual growth in average premium is 8.2% in India compared to a global average of only 3.4%. The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has projected a 500% increase in the size of current Indian insurance business from US$ 10 billion to US$ 60 billion by 2010 particularly in view of contribution that the rural and semi-urban insurance will make to it. Below is the distribution of companies in Life Insurance Industry:

ICICI Prudential Allianz Bajaj HDFC Life SBI Life Birla Sunlife Reliance Life Max Life New York Standard

FY 11

FY 12

25.4 19.2 21.3 14.0 8.4 9.7 6.5 7.0 4.9 8.6 10.7 9.2 11.0 5.9
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Aviva Tata AIG OM Mahindra ING Vysya MetLife Shriram Bharti Axa Canara HSBC SOURCE:IRDA Kotak

3.7 3.0 3.6 2.5 2.9 0.5 0.4 0.0

2.4 3.6 4.4 2.4 4.0 0.7 1.0 1.1

Life Insurance industry is under the phase of infancy after 50 years of monopoly. LIC, the market leader in this segment, is a state owned organization and has had a monopoly in the life insurance business for over four decades until 2001. LIC still remains the market leader, by a wide margin, with an estimated market share of 48.1% (IRDA,FY09). However, at the margin, it has been loosing market share to private sector players.

Types of Insurance Policies

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a. Single Premium v/s Regular Premium b. Unit linked v/s Traditional c. Pure Risk Policies (Term) v/s Savings + Risk d. Participating v/s Non Participating

US$31.7 billion assets were managed by the private players(June,2009) , whereas LIC was able to manage with US$ 167.37 billion(march ,2009)

Gross direct premium income underwritten (GDPIU) by 21 generals insurance insurers grew by 12.62% in FY09 as said by insurance regulator IRDA. Some new entries in this field were Future Generali, Universal Sompo, Shriram General, Bhart AXA, Raheja QBE, Apollo DKV and Star Health , combined collected a total premium of INR11.47 bn. HDFC ERGO recorded a growth of 24%.

New india assurance secured 1st position and is enjoying market share of 14.80% , ahead of United india ny INR 1.78 billion. Among the private players ICICI Lombard stood 1st with market share of 8.52%. . star heath and Apollo DKV were new entrants.


The mix of non-life business in India resembles most other developing regional economies. Motor and fire policies are the backbone of non-life business in India. They also contributed the most to overall premium growth in the last five years. Compared to other markets, personal lines insurance is also relatively well29 29 29 29 29

developed in India. This is mainly manifested in personal motor and private residential fire policies. In fact, among emerging markets with a similar level of per capita income, India has the highest share of personal lines business. After the opening of the sector to private players, more new products were introduced. To take an example, one joint-venture non-life insurer introduced 29 different products during one year, according to the IRDA. They included products liability, corporate cover, professional indemnity policies, burglary cover, individual and group health policies, weather insurance, credit insurance, travel insurance and so on. Some of these products were completely new (e.g. weather insurance) while others were already available through the public insurance companies.


Before deregulation in 1999, non-life products that were available in the market were rather limited and similar across the four GIC subsidiaries. They could also be classified by whether they were regulated by tariffs: fire insurance, motor vehicle insurance, engineering insurance and workers' compensation etc that came under tariff; and burglary insurance, Mediclaim, personal accident insurance etc that did not. In addition, most specialized insurance (e.g. racehorse insurance) did not fall under tariff regulations.


Currently there is a huge scope for this industry to grow with increased disposable income among the working class in India. Up to 80% of India's population is uninsured today.
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Life expectancy is growing with advances in medicine and technology. The rapid rise in income levels and the high proportion of Indians below 30 years of age (estimated at 60% of India's total population of 1bn) should be a significant driver for life insurance in coming years. The following table shows the age-wise distribution of population in future years: Households earning over Rs5mn per year are growing the fastest (at 27%p.a.), and many of them are still either uninsured or under-insured. Further incrementally there is a shift happening from large joint families to nuclear families, which increases the need insurance amongst these households as the dependency ratio increases significantly. Aversion to debt by most of the new generation households has also led to higher monthly debt servicing requirement. Increasing debt servicing has also resulted in higher need for insurance as most of the families have a single bread earner.

Currently there is very low penetration in India specially in rural places. Tapping those markets will boost the insurance industry. Privatization of the insurance industry in 2000 improved penetration from 1.4% of GDP in 2000 to 3.8% of GDP in 2009 in India SOURCE: Macquarie research, July 2009 Life insurance market in semi-urban and rural territories is expected to rise to US$ 20 Billion mark in the upcoming four years from the existing value of less than US$ five Billion. Life insurance industry has contributed to more than 3.5% to
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India's GDP growth whereas non life insurance sector has contributed to only 0.6% over past 9 years. The non-life public sector insurers have been rather slow to respond to the evolving competition. Both the Authority and the industry have been playing an active role in increasing consumer awareness. Large sections of rural India are still untouched because of long distances, poor distribution and high return costs. To understand the prospects for insurance companies in rural India, it is very important to understand the requirements of India's villagers, their daily lives, their peculiar needs and their occupational structures. There are farmers, craftsmen, milkmen, weavers, casual laborers, construction workers and shopkeepers and so on. In the context of international comparison, insurance penetration in India is low but commensurate with its level of per capita income.

There is a high demand for skilled insurance agents to explain the technicalities and understand the various products offered in the market. With such high demand, the insurance industry has created scope for expansion in the employment industry too. Life insurance industry provides increased employment opportunities. Brokers, corporate agents, training establishments provide extra employment opportunities. Many of these openings are in rural sectors.

India differs from other Asian markets in the sense that its life insurance market is still heavily dominated by indigenous players, partly reflecting the fact that demonopolization only took hold in 2000. In contrast, most Asian life insurance
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sectors are already heavily populated by foreign insurers. Foreign non-life insurers have achieved penetration in India similar to those in other Asian markets. It can be expected that foreign insurance companies will continue to expand their market share in India in the coming years, notwithstanding the fact that public sector insurers are also proactively strengthening their business strategies to fight rising competition. With the entry of private foreign firms, consumer knowledge is increasing through international approach of advertising and marketing. With scope for foreign investment to increase to 49% according to the planning of the government, foreign companies will pay more attention to the Indian market but currently foreign direct investment (FDI) limit in the insurance sector for foreign investors is 26 per cent. Also most of the private sector players have set up a vast distribution network, including over 250,000 agents (LIC has over a million agents), most of whom are more qualified than LIC agents. A qualified work force and an extensive distribution network has further helped the private insurance companies to increase awareness about life insurance. The mentality of Indian policy holders is only from an investment perspective, and with foreign influence this is changing to awareness of insurance as security and protection.


The Indian insurance industry is still dominated by investment linked insurance products like endowment and ULIP(Unit linked insurance plan). Pure insurance products like term and health are not yet popular, largely owing to the mindset of the average Indian consumer. This is predicted to change with more western
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exposure and awareness of other insurance products. Pension system and health insurance are increasing with urbanization. There are around 30 health insurance products in the market right now . owing to growing awareness and rising health care costs has led to an increase in sale of health insurance products by 30% in 2009.companies are launching new health insurance products like tata launched Hospicashback' and metlife launched met health care in 2009

The tax structure in India is also favorable for the insurance industry in the form of deductions and exemptions. Over the past several years, Government of India has been offering various tax benefits to encourage individuals to buy life insurance. Tax relief offered is
Under Section 80C of Income Tax Act, a portion of premiums paid for life

insurance policies are deducted from tax liability. Exemption is also available for Health Insurance Policy premiums.
Money paid as claim including Bonus under a life policy is exempted from

payment of Income Tax. Under section 10(10D). Tax Incentives have been a key growth driver for the life insurance business over the past two decades, largely owing to the absence of awareness of other benefits of life insurance. Historically LIC collected the bulk of its premium income in the last quarter of the financial year, when people used to buy insurance to reduce their tax liabilities. However the trend has changed in the past few years, with the private insurance companies driving the growth by increasing the awareness.
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Some of the factors that have slowed down the growth of the industry are as follows:
Slow down in single premium policies owing to a change in regulation

.Sustainability of single premium policies, especially post June'06 when the new changes proposed by IRDA come into play which, in our view, could negatively impact the growth of single premium policies.
Managing the distribution network, especially the agent attrition rates Managing the cost as most of the insurance companies have already priced

in higher economies of scale in their load structure.

Rapid expansion of the insurance business and an attrition rate amongst life insurance agents has resulted in an estimated 30-40% rise in wage bills. In particular, the shortage of actuaries, specialized agents and marketing people has meant life insurers are paying up almost 50% more than they had originally budgeted when they had entered the sector, almost 5 years ago. This is partly due to the much higher money that life insurers have to spend on training and on retention of employees.

Distribution still appears to be a key challenge for insurers. Despite the large branch network of Indian banks, bank assurance has still not fully evolved in India.Bank branches still account for around 10% of all policies sold. In contrast, most Insurers still rely on the agency model. Almost 80% of the policies are sold
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through agents who have to be well trained.


Unfortunately for the industry, in the absence of skilled manpower, employee turnover has emerged as one of the challenges facing the industry. According to many of the insurers, employee turnover in the life insurance segment is running at 35-40%. The problem appears to stem from managing business managers' (typically people who manage about 100 agents) aspirations and keeping pace with the rise in salary levels offered by competitors. As a result, there is a concern that having sufficient employees could be the biggest challenge for the larger players to ensure that they face no capacity constraints while rapidly growing their business.

Decline in the growth of stock market , 2008 , due to global meltdown had also adversely affected investor sentiments towards ULIP products. ULIP contributed to around 60-70% of the business turnup of any private life insurance company. With reviving economy in the 3rd quarter of 2009 and better stock market performance , investors again started showing confidence in ULIP products. Now ULIP growth is expected to rise in the next 5 years.

On the regulatory side, there are outstanding issues concerning solvency regulations, further liberalizing of investment rules, caps on foreign equity shareholdings as well as the enforcement of price tariffs in the non-life insurance sector. The proliferation of bank assurance is rapidly changing the way insurance products
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are distributed in India. This will also have strong implications on the process of financial convergence and capital market development in India.


IRDA(Insurance Regulatory Development Authority) Act was formed in 1999 to promote market efficiency and ensure consumer protection of the insurance industry. Several regulations were laid down to control ensure a fair market after private companies were allowed to enter the market some of which are:

Capital Requirement:
A minimum capital requirement of INR 1 billion for new entrants and INR 2 billion of reinsures. This helped insure that companies were well established with long term goals.

Foreign Direct Investment:

is capped at 26% presently. This puts a strain on Indian promoters and blocks foreign investment in the insurance industry. However, currently there is an ongoing proposal to raise this cap to 49%. With this, there will be an influx of foreign investment and expansion of the insurance industry further.

Company Listing:
All the new life insurers would have to compulsorily list their companies within 10 years of beginning their operations.

Rural sector requirement:

Life insurance players are required to issue minimum no of policies in rural areas and in social sector.
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Solvency controls:
Insurers have to observe the required solvency margin (RSM).20. For general insurers, this is the higher of RSM-1 or RSM-2, where RSM-1 is based on 20% of the higher of (i) gross premiums multiplied by a factor A,21 or (ii) net premiums; RSM-2 is based on 30% of the higher of (i) gross net incurred claims multiplied by a factor B, or (ii) net incurred claims; There is also a lower limit of INR 500 million for the RSM. Life insurers have to observe the solvency ratio, defined as the ratio of the amount of available solvency margin to the amount of required solvency margin. In addition, The required solvency margin is based on mathematical reserves and sum at risk, and the assets of the policyholders fund; The available solvency margin is the excess of the value of assets over the value of life insurance liabilities and other liabilities of policyholders' and shareholders' funds.

In 1958, Section 27A of the Insurance Act was modified to stipulate the following investment regime:
a. Central government market securities of not less than 20%; b. Loans to National Housing Bank including (a) above should be no less than

c. In state government securities including (b) above should be no less than

50%; and

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d. In socially oriented sectors including the public sector, cooperative sector,

house building by policyholders, own-your-own-home schemes including (c) above should be no less than 75%. For General Insurance, The guideline for investment was set out as follows: (a) central government securities of no less than 25%; (b) state government and public sector bonds of no less than 10%; and (c) loans to state governments, various housing schemes of no less than 35%. The remaining 30% investment could be in the market sector in the form of equity, long-term loans, debentures and other forms of private sector investment. General insurance business lines that are subject to tariffs include fire, motor, marine hull, tea crop, engineering, industrial all risks, business interruption, personal accident and workers' compensation. Tariffs are managed by the Tariff Advisory Committee.


Different valuation methods are used for insurance companies in different countries.

Embedded Value(Ev)
The widely used method for valuation of insurance companies worldwide is EV. This is the addition of shareholders net worth and the value of in-force business. Shareholders net worth equals the sum of net assets of life insurance companies adjusted to reflect market values of these assets. Value of in-force business equals the present value of projected future after-tax regulated profits to be generated from policies in force. Appraisal value(AV) adds the value of future new
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business(goodwill) to the EV. The embedded value is higher for life insurers that can deliver across all these variables.
a. Investment Returns: Higher investment return will provide better investment

margins for insurers, lifting overall profitability and embedded value

b. Expenses: Better cost control, running under budgeted expense will provide

better expense profit

c. Persistency: This measures how successful insurers are able to retain its

d. Claims: Better mortality and morbidity experience would deliver higher risk

e. Product Mix: and lastly, product mix will affect all of the above.

For instance, insurers having a higher proportion of the traditional endowment and whole life policies, (all else being the same) would have a higher embedded value owing to the both the higher loading in these policies and also owing to the longer life of the policy providing the insurers with a more extended cash flow. In contrast ULIP's have lower loading and also shorter durations. The single premium policies have the lowest embedded value having no renewal premiums. In essence, EV is the present value of the current business base, while AV is EV plus the value of the company's growth potential. Usually for a typical life insurer, the EV would be the large component while the AV would be a much smaller proportion. Usually in markets where there is a developed life insurance market, the valuations would tend to range between the EV and AV.
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Problem with using EV and Appraisal Value for India

Unfortunately, the Indian insurance industry and has just spurted growth and currently all private companies are incurring large losses and initial set-up costs, hence the EV and Appraisal value methods of valuation are not useful. For most life insurers, the expenses are likely to be still quite high owing to high start up costs and money spent on creating a distribution network, marketing and advertising and expanding agent network (as they all rely on the agency model) as they are all rapidly scaling up their businesses. Further, owing to the high reserve requirements and the high acquisition costs that most life insurers have to incur, they are still making accounting losses. Most of these insurers could break even in about another 2-3 years by around FY09.

The best suitable valuation method at the current phase of the insurance industries is NBAP(new business achieved profit). It is the present value of the future profits expected from the new business written through that policy. Each product carries different NBAP margins. ULIP's for example have a NBAP margin of around 1920% v/s 30-33% margins for traditional endowment products. Single premium policies, in contrast, are the least profitable with an estimated NBAP margin of around 3-4%. An insurance company like LIC, which is at an advanced stage of its life cycle, would probably have EV accounting for 80-90% of total value of the firm, while for new companies 80-90% of the value will come from the NBAP calculation.
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For the majority of the private insurers, the EV is likely to be very small owing to the very small value of the in force business as they have been in existence for just about 6-7 years. Thus, the value of the existing business (EV) will be only a small proportion of the total actuarial value of the company with the new business component of AV dominating. Hence, the valuation of these companies would largely be a function of their AV and they could potentially trade at a premium to their AV depending upon the likelihood of them being able to achieve the projected growth rates and the underlying actuarial values.


Valuation of liabilities for life insurers requires assumptions of the rate of interest, rate of mortality, level of future expenses etc. Two methods to value liabilities of insurance companies which are Gross Premium method and Net premium method.

Gross Premium Valuation

Liabilities= (P.V of the benefits contracted to be payable + P.V of the future expenses likely to be incurred + P.V of bonuses likely to be declared in the future) (P.V of premium receivable) An important feature of this method is its transparency. It is possible for any one examining the valuation report to judge whether sufficient margins have been provided for possible adverse developments. At the same time, the method has one serious drawback, viz., its sensitivity to the various parameters used. A marginal increase in the valuation rate of interest or a decrease in the expected level of future bonuses could lead to a significant reduction in liability and release of larger surplus for distribution than what could be considered as prudent.
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Net Premium Valuation

Liability under a policy = P.V of benefits contracted to be payable - P.V of the true/net premium. No explicit provision is made for either future expenses or future bonuses as under the gross premium method.

Practices in Different Developed countries

1) United Kingdom: Currently, the United Kingdom may perhaps be the only industrial country in which the net premium valuation is prescribed as the statutory method of valuation. 2) Canada: The statutory method of valuation prescribed in Canada since 1992 is known as the Policy Premium Method (PPM). The PPM is a gross premium prospective method of valuation. Policy premium simply means the premium charged under a policy, i.e., gross premium. The assumptions regarding valuation parameters are based on the best estimates of future experience with provision for adverse deviations. Though this method is similar to the gross premium valuation discussed earlier, there are some significant differences. 3) Australia: The statutory method of valuation prescribed in Australia is the 'Margin on Services Method'. In this method, the liability is defined as the sum of i) the best estimate value of policy liabilities, which is the amount required to meet future expenses and benefits and ii) the value of future expected profit margins on the services provided to policyholders such as insurance of mortality risks and ongoing expenses of administration. 4) Germany:The gross premium method of valuation that is generally used in
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Germany. The net premium method of valuation, with Zillmer adjustment, is also permitted. Since 1986, the Indian insurance industry has been following the gross premium method of valuation.

While well defined procedures are in place in almost all the countries for the valuation of liabilities under the life insurance business, it is not so in case of the general insurance business. The systems in vogue are more general than specific. The only stipulation is that the system followed should be in accordance with the GAAP. As per the European directives, the balance sheet needs only to show the directors' opinion about the financial position of the general insurance company. In the USA, the directors have liberty to place an appropriate value on the liabilities. In general, it is the responsibility of the accounting profession to ensure that the value placed on the liability is fair and reasonable. In many European countries, it is the tax authorities and not the insurance regulators who require that the amount of reserves shown be estimated scientifically. Investments of insurance companies have been largely in bonds floated by GOI, PSU's, state governments, local bodies, corporate bodies and mortgages of long term nature. Liability (known as the Technical Reserve) under a general insurance portfolio can be broadly defined as the sum of:
The amount of premium estimated as required to cover the risk during the

balance policy period falling after the balance sheet date (Unearned or Unexpired Premium Reserve - UPR),
The amounts expected to be paid in future in respect of the claims already

reported by the balance sheet date (Loss Reserve),

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The amount expected to be paid in future in respect of claims that might

have occurred but could not be reported to the insurer till the balance sheet date (Incurred But Not Reported - IBNR),
The direct expenses expected to be normally incurred for the settlement of

the above two classes of claims, and

Reserves required to be held on a prudent basis towards catastrophe losses or

a single incident giving rise to multiple claims.

Generally, under life insurance policies, premiums are received in advance and after providing for acquisition and management expenses, the current cost of claims and other outgo, the balance of premium is available for investment. These balance premiums and the investment income is available to meet claims, which would occur in later years.

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With a large population and untapped market, insurance happens to be a big opportunity in India. The insurance business is growing at the rate of 32-34% annually .India's insurance sector is the 5th largest life insurance market, globally worth US$ 41 billion. With alarming growth in the past, the insurance industry is predicted to grow even faster in the coming years, with a business opportunity of $70 billion in 2020 for private players.

Life Insurance
Life insurance industry recorded a premium income of US$ 24 billion during 2009 with a growth of 32-34% annually and non life insurance US$ 24 billion. The contribution of first year premium, single premium and renewal premium to the total premium was Rs.21275.75 crore (20.09 per cent); Rs.17509.78 crore (16.54 per cent); and Rs.67090.21 crore (63.37 per cent), respectively. Total Sector Premiums are expected to grow at 16% p.a. for the next 5 years. Private sector is expected to grow at 59% CAGR. Private players are expected to gain market share of 45% by 2010. Life insurance sector has contributed to more than 4% in the GDP whereas nonlife insurance has contributed to around 0.6% Projection of life insurance and non life insurance premiums, 2004-2012:

Life insurance (INR m)

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Non life insurance (INR m)

2004 2005 2006 2007 2008 2009 2010 2011 2012 Average growth rate between 20042012

749971 871672 102595 7 120142 5 140336 2 166781 4 198305 1 236657 6 280456 1 Is 18.1%

203856 234323 271830 315522 368094 429750 496953 572727 651736 And 15.1%

Source: Swiss ReEconomic Research and Consulting While the overall sector premium growth will continue to be in the 15-20% range, premium income for the private sector is expected to grow at a much faster rate as they are expected to continue to gain market share owing to:
Increasing demand for new products like health insurance and pension funds 47 47 47 47 47

Aggressive expansion of distribution network Low base effect

Rising share of private sector Source:IRDA

Growth To Decelerate Near Term (FY12)

A sharp deceleration in the single premium' policies is expected as the regulator, IRDA, has recently come out with regulations stipulating that from June'06 onwards, all ULIP's would have to have a life cover of at least 3 years and has also lowered the maximum commission that can be paid on ULIP's. In particular, this affects all unit linked policies which were structured as single premium policies. Hence, the FYP growth my decelerate to 35% from a heady 85% last year. Players like Bajaj Allianz and SBI Life that have a high proportion of single premium policies may see sharper deceleration. We, however, expect traditional policies (endowment / whole life) to grow at +40-50% pa. Hence, in FY12, the FYP (first year premiums) growth is expected to decelerate to 30% (v/s 93% in FY06E) driven by a sharp slowdown in single premium policies to under 20% from 120% in FY11. However, traditional products (whole life and endowment) are expected to gather more momentum and that should, help support overall industry growth (private players) at +30%.

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1. To study the awareness of insurance among different kind of Insurance

Company & Policy..

1. To study the customer preferences in the Insurance Segment. 1. To study the major players in the Insurance Segment. 2. To study the Reasons for the preference in the Insurance Sector. 1. To study the growth of insurance sector in past 10 years

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The information required for the study was collected in the form of Secondary data. The present research is of descriptive type. The information was gathered from Media and Secondary based data.

A research design is the arrangement of conditions for the collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. In fact, the research design is the conceptual structure within which research is conducted. It constitutes the blueprint for the collection, measurement and analysis of data. Research design facilitates smooth sailing of various research operations, thereby making research as efficient as possible yielding maximum with minimal expenditure of effort, time and money. Research design stands for advance planning of methods to be adopted for collecting the relevant data and the techniques to be used in there analysis, keeping
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in view the objective of the research and the availability of staff, time and money.



The present research is of descriptive and exploratory type. Descriptive studies are those which are concerned with describing the characteristics of a particular individual, or of a group. Studies concerned with specific predictions, with narration of facts and characteristics concerning individual, group or situations are all examples of descriptive studies. In descriptive studies, researcher is able to define clearly, what he wants to measure and able to find adequate methods for measuring it with clear-cut definition of population. The information required for the study is collected in form of secondary data. Collection of secondary data Secondary data are those which have been collected by someone else and which have been passed through statistical process.
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Secondary data required for the study was collected from various websites, magazines, brochures, pamphlets and newspapers.

IRDA ranking in July 2012 showed that LIC has the higher market share in the number of policies sold compared with premium income means private life insurers are cornering a larger share of high premium policies. Market share of private life insurance companies in new business in July 2012 stood at 37 per cent. Among the private life insurance companies, ICICI Prudential Life Insurance Company is at the number one position in July 2012 and Bajaj Allianz Life Insurance Company captured the second place in the IRDA rankings of July 2012.


MARKET STRUCTURE Total in (%) 66% 12% 7.5%

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4.5% 2.5% 3.5% 4%


The above chart shows the market share structure of the major players and new players in the insurance business. LIC have the monopoly in the life insurance whereas, ICICI and BAJAJ are the top rankers in private sector.
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Source IRDA Ranking in July 2012.

2002 2003 2004 2005 2006 2007 2008 2009 2011 2012 TABLE No: 11 Net Worth Movement for the Past Ten Years

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1. It was found that people are interested to invest their money in mutual fund which is more than the percentage of the respondents who invest their money in other investment plans. 2. The foremost factor which people consider while purchasing an insurance policy is the company image and then they consider other factors. 3. People are satisfied with their investment and insurance policies 4. Everyone focuses on return at the time of investment in comparison of risk or liquidity. 5. According to the survey I observed that good return can be obtained if the risk is high. 6. Minimal knowledge about the investment schemes are being given.

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1. The company should educate people about their rigidity and longevity in

order to gain their confidence and built trust on them.

1. The company emphasize on their promotional tools to increase the

awareness level of people about their products.


Company should advertise and promote their emerging distribution channels through various media, which would helpful in creating awareness among the people.

1. The company should try to provide good return to the investors for creating

good level of satisfaction.


The company should mostly focuses on the quality of financial consultant instead of the quantity.

1. The company should ensure that insurance policies should not be purchased

for the purpose of tax benefits but it should be purchased for future security, investment and return.

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However, the size of the existing insurance market is very large; thus, it


bright future of insurance industry. On the other hand, the primary success of insurance sector depends upon to build trust and fulfill expectations of the people that help in the growth of the industry.

The sample taken may not be a true representative of the population. Thus, some of the limitations are:

As the universe is too large and to take opinion is very difficult. Exact data is not given on net. Due to shortage of time, response of countable sites and magzines are taken. These information is totally correct and appropriate as it's purely made and based on secondary data.

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India is among the most promising emerging insurance markets in the world. The major drivers include sound economic fundamentals, a rising middle-income class, an improving regulatory framework and rising risk awareness. The groundwork for realizing potential was arguably laid in 2000 when India undertook to open the domestic insurance market to private-sector and foreign companies. Significantly, foreign players participated in most of these new companies - despite the restriction of 26% on foreign ownership. Incumbent stateowned insurance companies have so far managed to hold their own and retain dominant market positions. Yet, their market share is likely to decline in the near to medium term. Important steps have thus been already taken, but there are still major hurdles to overcome if the market is to realize its full potential. To begin
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with, India needs to further liberalize investment regulations on insurers to strike a proper balance between insurance solvency and investment flexibility. With the current proposal in the parliament to raise the foreign investment cap to 49%, the future has potential. Furthermore, both the life and non-life insurance sectors would benefit from less invasive regulations. In the life sector, insurers will need to increase efforts to design new products that are suitable for the market and make use of innovative distribution channels to reach a broader range of the population. There is huge untapped potential, for example, in the largely undeveloped private pension market and the rural sector. Private insurers will have a key role to play in serving the large number of informal sector workers. The same is true for the health insurance business. In addition, the rapid growth of insurance business will put increasing pressure on insurers' capital level. The current equity holding ceilings, however, could limit the ability of new companies to rapidly inject capital to match business growth. A key challenge for India's non-life insurance sector will be to reform the existing tariff structure. From a pricing perspective, the Indian non-life segment is still heavily regulated. Some 75% of premiums are generated under the tariff system, which means that they are often below market clearing levels. Reinsurance in India is mainly provided by the General Insurance Corporation of India (GIC), which receives 20% compulsory cessions from other non-life insurers. As far as reinsurance is concerned, policymakers have to recognize that insurance and reinsurance cannot be treated in the same manner. Due to the unique nature of reinsurance, it is necessary to de-link the sector from regulations governing direct
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insurance companies. To allow branching of foreign reinsurers, for example, would make the market more attractive for international players and secure cover for natural catastrophe risks which, today, are mainly uninsured. Finally, the largely underserved rural sector holds great promise for both life and non-life insurers. To unleash this potential, insurance companies will need to show long-term commitment to the sector, design products that are suitable for the rural population and utilize appropriate distribution mechanisms.

Lack of trustworthiness of customers on private companies. Lack of good training programme. Technical knowledge of financial consultant and development officers are inadequate, thus, dont provide sufficient information to the customers. The company mostly focuses on to increase the quantity of FC instead of quality.

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1. Lack of awareness level of various life insurance plans was quite limited even amongst the policyholders, especially in rural areas. 2. The competitors of the company are of aggressive nature but Insurance companies is of conservative nature so if the competitors of the company continue doing aggressive nature in selling the Policies will loose their target customers.

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1. Marketing Management- Philip Kotler 1. Marketing Research- C.R. Kothari

Magazines and Journals:

1. Business Standard 1. The Economic Times 1. Outlook money

Web Site:
www.google.com www.hdfcinsurance.com
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www.iloveindia.com www.iciciprudential.com

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