UNIVERSITY OF MUMBAI

T.Y.B.B.I
(VI - SEMESTER)

A
PROJECT
ON
INSURANCE BUSINESS ENVIRONMENT IN
INDIA

ACADEMIC YEAR
2015 2016

BY
CHIRAG BOHRA
ROLL NO: 152

PROJECT GUIDE
Prof. SHWETA PANDEY

MALINI KISHOR SANGHVI COLLEGE OF

COMMERCE & ECONOMICS
VILE PARLE (W), MUMBAI

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 DECLARATION

I Mr. Chirag Bohra, Student of Malini Kishor Sanghvi College of Commerce & Economics

studying in T.Y. B.Com (Banking and Insurance) Semester VI, hereby declare that I have

completed the project on INSURANCE BUSINESS ENVIRONMENT IN INDIA in the

academic year 2015-2016. The information submitted herein is true and original to the

best of my knowledge.

Date of Submission Signature of Student

(Mr. Chirag Bohra)

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 CERTIFICATE

This is to certify that Mr. Chirag Bohra of T.Y. B.Com (Banking & Insurance) Semester VI

of Malini Kishor Sanghvi College of Commerce and Economics has successfully

completed the project on INSURANCE BUSINESS ENVIRONMENT IN INDIA for

the academic year 2015-2016. The information submitted is true and original to the best

of my knowledge.

Signature of Principal Signature of Project Guide

(Dr. Krushna Gandhi) (Prof. Shweta Pandey)

Signature of Co-ordinator
(Prof. Shweta Pandey)

College seal Signature of External Examiner

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 ACKNOWLEDGEMENT

I would like to thank Malini Kishor Sanghvi College of Commerce & Economics & the

faculty members of BBI for giving me an opportunity to prepare a project on INSURANCE

BUSINESS ENVIRONMENT IN INDIA. It has truly been an invaluable learning

experience. Completing a task is never one mans efforts. It is often the result of invaluable

contribution of number of individuals in direct or indirect way in shaping success and

achieving it.

I would like to thank principal of the college Dr. (Mrs.) Krushna Gandhi and Co-ordinator

Prof. Shweta Pandey for granting permission for this project. I would like to extend my

sincere gratitude and appreciation to Prof. Shweta Pandey who guided me in the study of this

project. It has indeed been a great learning, experiencing and working under him during the

course of the project.

I would like to thank the librarian of the college for helping me in finding out the relevant

material for my project. I would like to appreciate all my colleagues and family members

who gave me support and backing and always came forward whenever a helping hand was

needed. I would like to express my gratitude to all those who gave me the possibility to

complete this thesis.

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 EXECUTIVE SUMMARY

The service industry is one of the fastest growing sectors in India today. The upcoming

sectors which are really showing the graph towards upwards are - Telecom, Banking, and

Insurance. These sectors really have a lot of responsibility towards the economy.

Amongst the above-mentioned areas insurance is one sector, which took a lot of time in

positioning itself. The insurance business of non-life companies was not much in problems

but the major problem was with life insurance. Life Insurance Corporation of India had

monopoly for more than 45 years, but the picture then was completely different. Previously

people felt that Insurance is only for classes not for masses but now the picture is vice-

versa.

The story of insurance is probably as old as the story of mankind. The same instinct that

prompts modern businessmen today to secure themselves against loss and disaster existed in

primitive men also. They too sought to avert the evil consequences of fire and flood and loss

of life and were willing to make some sort of sacrifice in order to achieve security. Though

the concept of insurance is largely a development of the.00000000 recent past, particularly

after the industrial era past few centuries yet its beginnings date back almost 6000 years.

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 TABLE OF CONTENTS

SR. NO TOPIC PAGE NO.

1 INTRODUCTION 7
2 HISTORY 9
3 LIMITATIONS 12
4 STRUCTURE 14
5 INSURANCE INDUSTRY IN INDIA 16
6 TYPES OF INSURANCE 17
7 NEED OF INSURANCE 19
8 INSURANCE IN INDIA 20
9 HOW INSURANCE WORKS 23
10 INTRODUCTION TO LIFE INSURANCE 27
11 LIFE INSURANCE CORPORATION OF INDIA 28
12 BAJAJ ALLIANZ LIFE INSURANCE COMPANY 30
LIMITED
13 ICICI PRUDENTAL LIFE INSURANCE COMPANY 31
14 GENERAL INSURANCE IN INDIA 33
15 HEALTH INSURANCE IN INDIA 51
16 PRESENT SCENARIO IN THE INSURANCE SECTOR 55
17 MAJOR PLAYERS IN THE INSURANCE INDUSTRY 56
IN INDIA
18 DISTRIBUTION CHANNELS IN INSURANCE 58
SECTOR
19 CONCLUSION 59
20 BIBLIOGRAPHY 60

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 INTRODUCTION

Insurance is defined as a co-operative device to spread the loss caused by a particular risk

over a number of persons who are exposed to it and who agree to ensure themselves against

that risk. Risk is uncertainty of a financial loss.

Insurance is a policy from large financial institutions that offers a person, company, or other

entity reimbursement or financial protection against possible future losses or damages.

MEANING OF INSURANCE

The meaning of insurance is important to understand for anybody that is considering buying

an insurance policy simply understanding the basics of finance. Insurance is a hedging

instrument used as a precautionary measure against future contingent losses. This instrument

is used for managing the possible risks of the future.

Insurance is bought in order to hedge the possible risks of the future which may or may not

take place. This is a mode of financially insuring that if such a incident happens then the loss

does not affect the present well-being of the person or the property insured. Thus, through

insurance, a person buys security and protection.

A simple example will make the meaning of insurance easy to understand. A biker is always

subjected to the risk of head injury. But it is not certain that the accident causing him the head

injury would definitely occur. Still, people riding bikes cover their heads with helmets. This

helmet in such cases acts as insurance by protecting him/her from any possible danger. The

price paid was the possible inconvenience or act of wearing the helmet; this is equivalent to

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the insurance premiums paid. Though loss of life or injuries incurred cannot be measured in

financial terms, insurance attempts to quantify such losses financially. Insurance can be

defined as the process of reimbursing or protecting a person from contingent risk of losses

through financial means, in return for relatively small, regular payments to the insuring body

or insurance company.

HISTORY

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In India, insurance has a deep-rooted history. Insurance in various forms

has been mentioned in the writings of Manu (Manusmrithi), Yagnavalkya

(Dharmashastra) and Kautilya (Arthashastra). The fundamental basis of

the historical reference to insurance in these ancient Indian texts is the

same i.e. pooling of resources that could be re-distributed in times of

calamities such as fire, floods, epidemics and famine. The early references

to Insurance in these texts have reference to marine trade loans and

carriers' contracts.

Insurance in its current form has its history dating back until 1818, when Oriental Life

Insurance Company was started by Anita Bhavsar in Kolkata to cater to the needs of

European community. The pre-independence era in India saw discrimination between the

lives of foreigners (English) and Indians with higher premiums being charged for the latter. In

1870, Bombay Mutual Life Assurance Society became the first Indian insurer.

At the dawn of the twentieth century, many insurance companies were founded. In the year

1912, the Life Insurance Companies Act and the Provident Fund Act were passed to regulate

the insurance business. The Life Insurance Companies Act, 1912 made it necessary that the

premium-rate tables and periodical valuations of companies should be certified by an actuary.

However, the disparity still existed as discrimination between Indian and foreign companies.

The oldest existing insurance company in India is the National Insurance Company , which

was founded in 1906, and is still in business.

The Government of India issued an Ordinance on 19 January 1956 nationalising the Life

Insurance sector and Life Insurance Corporation came into existence in the same year. The

Life Insurance Corporation (LIC) absorbed 154 Indian, 16 non-Indian insurers as also 75

provident societies245 Indian and foreign insurers in all. In 1972 with the General

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Insurance Business (Nationalisation) Act was passed by the Indian Parliament, and

consequently, General Insurance business was nationalized with effect from 1 January 1973.

107 insurers were amalgamated and grouped into four companies, namely National Insurance

Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd

and the United India Insurance Company Ltd. The General Insurance Corporation of India

was incorporated as a company in 1971 and it commence business on 1 January 1973.

The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private

sector. Before that, the industry consisted of only two state insurers: Life Insurers (Life

Insurance Corporation of India, LIC) and General Insurers (General Insurance Corporation of

India, GIC). GIC had four subsidiary companies. With effect from December 2000, these

subsidiaries have been de-linked from the parent company and were set up as independent

insurance companies: Oriental Insurance Company Limited, New India Assurance Company

Limited, National Insurance Company Limited and United India Insurance Company

Limited.

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 TYPES OF INSURANCE

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C
E

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 LIMITATION OF INSURANCE

Some of the difficulties and limitations faced by me during my training are as follows:

Lack of awareness among the people This is the biggest limitation found in this

sector. Most of the people are not aware about the importance and the necessity of the

insurance in their life. They are not aware how useful life insurance can be for their

family members if something happens to them.

Perception of the people towards Insurance sector People still consider insurance

just as a Tax saving device. So today also there is always a rush to buy an Insurance

Policy only at the end of the financial year like January, February and March making

the other 9 months dry for this business.

Insurance does not give good returns Still today people think that Insurance does

not give good returns. They are not aware of the modern Unit Linked Insurance Plans

which are offered by most of the Private sector players. They are still under the

perception that if they take Insurance they will get only 5-6% returns which is not true

nowadays. Nowadays most of the modern Unit Linked Insurance Plans gives returns

which are many times more than that of bank Fixed deposits, National saving

certificate, Post office deposits and Public provident fund.

Lack of awareness about the earning opportunity in the Insurance sector

People still today are not aware about the earning opportunity that the Insurance

sector gives. After the privatization of the insurance sector many private giants have

entered the insurance sector. These private companies in order to beat the competition

and to increase their Insurance Advisors to increase their reach to the customers are

giving very high commission rates but people are not aware of that.

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 Increased competition Today the competition in the Insurance sector has became

very stiff. Currently there are 14 Life Insurance companies working in India including

the LIC (life insurance Corporation of India). Today each and every company is trying

to increase their Insurance Advisors so that they can increase their reach in the

market. This situation has created a scenario in which to recruit Life insurance

Advisors and to sell life Insurance Policy has became very very difficult.

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 INDUSTRY STRUCTURE

By 2012 Indian Insurance is a US$72 billion industry. However, only two million people

(0.2% of the total population of 1 billion) are covered under Mediclaim, whereas in

developed nations like USA about 75% of the total population are covered under some

insurance scheme. With more and more private companies in the sector, this situation is

expected to change. ECGC, ESIC and AIC provide insurance services for niche markets. So,

their scope is limited by legislation but enjoy some special powers.

Legal Structure

The insurance sector went through a full circle of phases from being unregulated to

completely regulated and then currently being partly deregulated. It is governed by a number

of acts.

The Insurance Act of 1938 was the first legislation governing all forms of insurance to

provide strict state control over insurance business. Life insurance in India was completely

nationalized on 19 January 1956, through the Life Insurance Corporation Act. All 245

insurance companies operating then in the country were merged into one entity, the Life

Insurance Corporation of India.

The General Insurance Business Act of 1972 was enacted to nationalize about 100 general

insurance companies then and subsequently merging them into four companies. All the

companies were amalgamated into National Insurance, New India Assurance, Oriental

Insurance and United India Insurance, which were headquartered in each of the four

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metropolitan cities.Until 1999, there were no private insurance companies in India. The

government then introduced the Insurance Regulatory and Development Authority Act in

1999, thereby de-regulating the insurance sector and allowing private companies.

Furthermore, foreign investment was also allowed and capped at 26% holding in the Indian

insurance companies.

In 2006, the Actuaries Act was passed by parliament to give the profession statutory status on

par with Chartered Accountants, Notaries, Cost & Works Accountants, Advocates, Architects

and Company Secretaries. A minimum capital of US$80 million (Rs.400Crore) is required by

legislation to set up an insurance business.

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 INSURANCE INDUSTRY IN INDIA

The business of insurance started with marine business. Traders, who used to gather in the

Lloyds coffee house in London, agreed to share the losses to their goods while being carried

by ships. The losses used to occur because of pirates who robbed on the high seas or because

of bad weather spoiling the goods or sinking the ship. The first insurance policy was issued

in 1583 in England. In India, insurance began in 1870 with life insurance being transacted by

an English company, the European and the Albert. The first Indian insurance company was

the Bombay Mutual Assurance Society Ltd, formed in 1870. This was followed by the

Oriental Life Assurance Co. in 1874, the Bharat in 1896 and the Empire of India in 1897.

Later, the Hindustan Cooperative was formed in Calcutta, the United India in Madras,

the Bombay life in Bombay, the National in Calcutta, the New India in Bombay, the Jupiter in

Bombay and the Lakshmi in New Delhi. These were all Indian companies, started as a result

of the swadeshi movement in the early 1900s. By the year 1956, when the life insurance was

nationalized and the Life Insurance Corporation of India (LIC) was formed on 1 st September

1956, there were 170 companies and 75 provident fund societies transacting life insurance

business in India. After the amendments to the relevant laws in 1999, the L.I.C. did not have

the exclusive privilege of doing life insurance business in India. By 31.3.2002, eleven new

insurers had been registered and has begun to transact life insurance business in India.

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 Types of insurance

Automobile insurance

Aviation insurance

Boiler insurance

Builders risk insurance

Casualty insurance

Disability insurance

Liability insurance

Marine cargo insurance

Purchase insurance

Credit insurance

Crime insurance

Crop insurance

Directors and officers liability insurance

Property insurance

Terrorism insurance

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 Title insurance

Travel insurance

Workers compensation

Life insurance

Total permanent disability insurance

Locked funds insurance

Marine insurance

Financial loss insurance

Health insurance

Professional indemnity insurance

Environmental liability insurance

Pet insurance

Political risk insurance

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 NEED OF INSURANCE

Assets are insured, because they are likely to be destroyed, through accidental

occurrences. Such possible occurrences are called perils. Fire, floods, breakdowns, lightning,

earthquakes, etc, are perils. If such perils can cause damage to the asset, we say that the asset

is exposed to that risk. Perils are the events. Risks are the consequential losses or damages.

The risk to an owner of a building, because of the peril of an earthquake, may be a few lakhs

or a few crores of rupees, depending on the cost of the building and the contents in it.

The risk only means that there is a possibility of loss or damage. The damage may or

may not happen. Insurance is done against the contingency that it may happen. There has to

be an uncertainty about the risk. Insurance is relevant only if there are uncertainties. If there

is no uncertainty about the occurrence of an event, it cannot be insured against. In the case of

a human being, death is certain, but the time of death is uncertain. In the case of a person

who is terminally ill, the time of death is not certain, though not exactly known. He cannot

be insured.

Insurance does not protect the asset. It does not prevent its loss due to the peril. The

peril cannot be avoided through insurance. The peril can sometimes be avoided, through

better safety and damage control management. Insurance only tries to reduce the impact of

the risk on the owner of the asset and those who depend on that asset. It only compensates

the losses and that too, not fully.

Only economic consequences can be insured. If the loss is not financial, insurance

may not be possible. Examples of non-economic losses are love and affection of parents,

leadership of managers, sentimental attachments to family heirlooms, innovate and creative

abilities, etc.

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 INSURANCE IN INDIA

About 154 Indian insurance companies, 16 non-Indian companies and 75 provident

were operating in India at the time of nationalization. Nationalization was accomplished in

two stages; initially the management of the companies was taken over by means of an

Ordinance, and later, the ownership too by means of a comprehensive bill. The Parliament of

India passed the Life Insurance Corporation Act on the 19th of June 1956, and the Life

Insurance Corporation of India was created on 1st September, 1956, with the objective of

spreading life insurance much more widely and in particular to the rural areas with a view to

reach all insurable persons in the country, providing them adequate financial cover at a

reasonable cost.

LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its

corporate office in the year 1956. Since life insurance contracts are long term contracts and

during the currency of the policy it requires a variety of services need was felt in the later

years to expand the operations and place a branch office at each district headquarter. re-

organization of LIC took place and large numbers of new branch offices were opened. As a

result of re-organization servicing functions were transferred to the branches, and branches

were made accounting units. It worked wonders with the performance of the corporation. It

may be seen that from about 200.00 crores of New Business in 1957 the corporation crossed

1000.00 crores only in the year 1969-70, and it took another 10 years for LIC to cross

2000.00 crore mark of new business. But with re-organization happening in the early eighties,

by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies

Today LIC functions with 2048 fully computerized branch offices, 100 divisional

offices, 7 zonal offices and the Corporate office. LICs Wide Area Network covers 100

divisional offices and connects all the branches through a Metro Area Network. LIC has tied

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up with some Banks and Service providers to offer on-line premium collection facility in

selected cities. LICs ECS and ATM premium payment facility is an addition to customer

convenience. Apart from on-line Kiosks and IVRS, Info Centres have been commissioned at

Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many

other cities.

With a vision of providing easy access to its policyholders, LIC has launched its

SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the

customer. The digitalized records of the satellite offices will facilitate anywhere servicing and

many other conveniences in the future.

LIC continues to be the dominant life insurer even in the liberalized scenario of Indian

insurance and is moving fast on a new growth trajectory surpassing its own past records. LIC

has issued over one crore policies during the current year. It has crossed the milestone of

issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67%

over the corresponding period of the previous year.

Insurance business in India are

1818: Oriental Life Insurance Company, the first life insurance company on Indian soil

started functioning.

1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started

its business.

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the

life insurance business.

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1928: The Indian Insurance Companies Act enacted to enable the government to collect

statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective

of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies are taken over by the central

government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a

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

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 HOW INSURANCE WORKS

The mechanism of insurance is very simple. People who are exposed to the same

risks come together and agree that, if any one of them suffers loss, the others will share the

loss and make good to the person who lost. All people who send goods by ship are exposed

to same risks, which are related to water damage, ship sinking, piracy, etc. Those owning

factories are not exposed to these risks, but they are exposed to different kinds of risks like,

firer, hailstorms, earthquakes, lightning, burglary, etc. Like this, different kinds of risks can

be identified and separate groups made, including those exposed to such risks. By this

method, the heavy loss that any one of them may suffer is divided into bearable small losses

by all. In other words, the risk is spread among the community and the likely big impact on

one is reduced smaller manageable impacts on all.

Insurance as a Security Tool

The United Nations Declaration of Human Rights 1948 provides that Everyone has a

right to standard of living adequate for the health and well being of himself and his family,

including food, clothing, and housing and medical care and necessary social service and the

right to security in the event of unemployment, sickness, disability. Life insurance provides

such an alternate arrangement. If this did not happen, another family will be pushed into the

lower strata of society. The lower strata create a cost on society. Life insurance tends to

reduce such a cost. In this sense, the life insurance business is complimentary to the states

efforts in the social management.

In a capitalist society provision of security is largely left to the individual. Insurance

is one of them to provide social security by state under some schemes.

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Role of Insurance in Economic Development

For economic development investments are necessary. Investments are made out of

savings. A life insurance is a major instrument for the mobilization of savings, particularly

from the middle and lower income groups. This savings are channeled into investments for

economic growth.

Major Market Players in India

Presently there are 15 Life insurance companies in the country. There is only one

public sector company LIC and the rest 14 are private sector. Although LIC has been

dominating the Life Insurance business since past few years the private players have now

started to build up momentum.

HDFC Standard Life

HDFC Standard is a 74:26 joint venture between HDFC and Standard Life. It is a

private sector company. The market share for FY 2005-06 was 2.87%.

Birla Sun Life Insurance Company

Birla Sun Life Insurance Company is a 74:26 joint venture between Birla group and

Sun Life Financial. It is a private sector company. The market share for FY 2005-06 was

1.89%.

ICICI Prudential Life Insurance

ICICI Prudential Life is a 74:26 joint venture between ICICI and Prudential. It is a

private sector company. The market share for FY 2005-06 was 7.35%.

Life Insurance Corporation of India (LIC)

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 Life Insurance Corporation of India is a 100% government held Public Sector

Company. Being the first to be established LIC is the forerunner in the Life Insurance sector.

The market share for FY 2005-06 was 71.44%.

Kotak Mahindra OLD Mutual

Kotak Mahindra OLD Mutual is a 74:26 joint venture between Kotak Mahindra bank

and Old Mutual. It is a private sector company. The market share for FY 2005-06 was 1.11%.

Max New York Life

Max New York Life is a 74:26 joint venture between J & Bank, Pallonji & Co and

MetLife. It is a private sector company. The market share for FY 2005-06 was 1.23%.

Aviva Life Insurance India

Aviva Life insurance is a 74:26 joint venture between Aviva and Dabur. It is a private

sector company. The market share for FY 2005-06 was 1.14%.

ING Vysya Life insurance

ING Vysya Life Insurance is joint venture between Exide (50%), Gujarat Cements

(14.87%), Enam (9.13%) and ING (26 %). It is a private sector company. The market share

for FY 2005-06 is 0.79%.

MetLife India

MetLife India is a 74:26 joint venture between J & K Bank, Pallonji & Co and

MetLife. It is a private sector company. The market share for FY 2005-06 was 0.40%.

Bajaj Allianz Life Insurance Co

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 Bajaj Allianz Life Insurance Company is a 74:26 joint venture between Bajaj Auto

limited and Allianz AIG. The market share for FY 2005-06 was 7.56%.

SBI Life Insurance Company Ltd

SBI Life Insurance Company is a 74:26 joint venture between SBI and Cardiff S.A. It

is a private sector company. The market share for FY 2005-06 was 2.31%.

TATA AIG Group

TATA AIG group is a 74:26 joint venture between Tata Group and AIG. It belongs to

the private sector. The market share for FY 2005-06 was 1.29%.

Sahara India Life Insurance Company Ltd

First Wholly Indian Owned Private Life Insurance Company. The market share for FY

2005-06 was 0.06 %.

Shriram Life Insurance Company Ltd

Shriram Life is a recent entrant into the life insurance sector It is a 74:26 joint venture

between the Shriram group through its Shriram Financial Holdings and Sanlam Life

Insurance Limited, South Africa

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 INTRODUCTION OF LIFE INSURANCE

Life insurance is designed to protect life and to product family against financial

uncertainties that may result due to unfortunate demise or illness. It can also view as a

comprehensive financial instrument, as a part of the financial planning offering savings &

investment facilities along with cover against financial loss. By choosing the right policy as

per the needs. i.e. customized solutions, you will be able to plan for a secure future for

yourself and your loved ones.

We all have different financial needs and objectives. But life insurance plays a

fundamental role in most of our plans for financial security. That's because of the variety of

life insurance plans available and the many ways they can be customized to meet unique

needs at different periods of your life.

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 LIFE INSURANCE CORPORATION OF INDIA

Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay

Residency. This era, however, was dominated by foreign insurance offices which did good

business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London

Globe Insurance and the Indian offices were up for hard competition from the foreign

companies.

In 1914, the Government of India started publishing returns of Insurance Companies in

India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to

regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the

Government to collect statistical information about both life and non-life business transacted

in India by Indian and foreign insurers including provident insurance societies. In 1938, with

a view to protecting the interest of the Insurance public, the earlier legislation was

consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for

effective control over the activities of insurers.

The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were

a large number of insurance companies and the level of competition was high. There were

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also allegations of unfair trade practices. The Government of India, therefore, decided to

nationalize insurance business.

An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector

and Life Insurance Corporation came into existence in the same year. The LIC absorbed 154

Indian, 16 non-Indian insurers as also 75 provident societies245 Indian and foreign

insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was

reopened to the private sector.

In 1968, the Insurance Act was amended to regulate investments and set minimum solvency

margins. The Tariff Advisory Committee was also set up then.

This millennium has seen insurance come a full circle in a journey extending to nearly 200

years. The process of re-opening of the sector had begun in the early 1990s and the last

decade and more has seen it been opened up substantially. In 1993, the Government set up a

committee under the chairmanship of RN Malhotra, former Governor of RBI, to propose

recommendations for reforms in the insurance sector. The objective was to complement the

reforms initiated in the financial sector. The committee submitted its report in 1994 wherein ,

among other things, it recommended that the private sector be permitted to enter the

insurance industry. They stated that foreign companies be allowed to enter by floating Indian

companies, preferably a joint venture with Indian partners.

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 BAJAJ ALLIANZ LIFE INSURANCE COMPANY LIMITED

Bajaj Allianz life Insurance Company Limitedis a joint venture between BajajAuto Limited

and Allianz AG of Germany. Both enjoy a reputation of expertise, stabilityand strength. Bajaj

Allianz General Insurance received the Insurance Regulatory andDevelopment Authority

(IRDA) certificate of Registration (R3) on May 2nd, 2001 toconduct General Insurance

business (including Health Insurance business) in India. TheCompany has an authorized and

paid up capital of Rs 110 crores. Bajaj Auto holds 74%and Allianz, AG, holds the remaining

26% Germany.In its first year of operations, the company has acquired the No. 1 status

amongthe private non-life insurers. As on 31st March 2003, Bajaj Allianz General

Insurancemaintained its leadership position by garnering a premium income of Rs.300

Crores.Bajaj Allianz also became one of the few companies to make a profit in its first full

year of operations. Bajaj Allianz made a profit after tax of Rs.9.6 croresBajaj Allianz today

has a network of 42 offices spread across the length and breadth of the country. From Surat to

Siliguri and Jammu to Thiruvananthapuram, all theoffices are interconnected with the Head

Office at Pune.In the first half of the current financial year, 2004-05, Bajaj Allianz garnered

a premium income of Rs. 405 crores, achieving a growth of 84% and registered a 52%growth

in Net profits of Rs.20 Crores over the last year for the same period. In thefinancial year

2003-04, the premium earned was Rs.480 Crores, which is a jump of 60%and the profit

zoomed by 125% to Rs. 21.6 Crores.

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 ICICI PRUDENTIAL LIFE INSURANCE COMPANY

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank,a premier

financial powerhouse, and prudential plc, a leading international financialservices group

headquartered in the United Kingdom. ICICI Prudential was amongst thefirst private sector

insurance companies to begin operations in December 2000 after receiving approval from

Insurance Regulatory Development Authority (IRDA).ICICI Prudentials equity base stands

at Rs. 925 crore with ICICI Bank andPrudential plc holding 74% and 26% stake respectively.

In the quarter ended June 30,2005 , the company garnered Rs 335 crore of new business

premium for a total sumassured of Rs 2,619 crore and wrote 111,522 policies. For the past

four years, ICICIPrudential has retained its position as the No. 1 private life insurer in the

country, with awide range of flexible products that meet the needs of the Indian customer at

every stepin life.Products offered by ICICI Prudential are:

1.Savings Plan

1)Smart kid

2)Life Time

3)Save n Protect

4)Cash Bank

2.Protection plan

33 | P a g e
Life Guard

Extra Protection Through

Riders

3.Retirement Plans

Forever Life

Life link pension

Life time pension

Reassure

4.Investment Plans

Assure Invest

Life Link

5.Group plans

Group Superannuation

Group Gratuity

Group Term Assurance

34 | P a g e
 GENERAL INSURANCE POLICIES

Personal Insurance

Personal insurance is essentially a plan availed by an individual to take care of various

requirements like health and coverage against death or injury by accident. There are several

policies nowadays where there is an option to cover the family members in an individual

policy.

The different types of personal insurance may be mentioned as well:

Medical Insurance

Provider Policy Name

Star Health Star Comprehensive

Apollo Munich Health Optima Senior

Insurance

Bajaj Allianz Family Floater Health Guard Plan

Max Bupa Heartbeat

ICICI Lombard iHealth Plan

HDFC Ergo Health Suraksha

Medical or health insurance is taken to cover against the chances of medical costs. These

plans are created with estimates of health care expenses a person may face in future and the

premiums are determined on such

approximations.

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Following are some of the leading health insurance policies available in India:

Accidental Insurance

The accidental insurance policies cover both death and any sort of disability arising from an

accident. These plans cover a wide range of situations but not ones arising from using alcohol

or drugs.

The top accidental insurance policies available in India may be mentioned as below:

Provider Policy Name

ICICI Lombard Personal Protect

Apollo Munich Individual Personal Accident Plan

Health Insurance

HDFC Ergo Personal Accident

General Insurance

Tata AIG Insurance Group Personal Accident

Future Generali Future Accident Suraksha

Oriental Insurance Personal Accident Insurance Cover

Property Insurance

Property insurance provides coverage against risks to property arising from fire, weather

damage, or theft to name a few. This type of insurance can be further sub divided into fire

insurance, earthquake insurance, flood insurance, and boiler insurance for example. The

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Standard Fire & Special Perils policy of SBI General Insurance is one of the major examples

of such a policy.

Vehicle Insurance

Vehicle insurance is also referred to as auto insurance, car insurance, GAP insurance, and

motor insurance. It is primarily bought for securing road vehicles such as cars, motorcycles,

and trucks from physical damage from traffic accidents as well as any liability that may arise

thereafter.

Following are the leading vehicle insurance policies available in India:

Provider Policy Name

ICICI Lombard Car Insurance

Bajaj Allianz Car Insurance Online

Reliance General Reliance Private Car Insurance

Insurance

HDFC Ergo Motor Insurance

General Insurance

ICICI Bank Car Insurance

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Rural Insurance

Rural insurance is meant to cater to the requirements of rurally bases businesses or

individuals. These policies provide a wide range of coverage starting from life and health to

protection against natural disasters that can have a negative effect on business.

The leading rural insurance policies available in India may be mentioned as below:

Provider Policy Name

ICICI Family Health Insurance, Weather Insurance, Home Insurance, Shop Insurance

Lombard Tractor Insurance, and Artisans and Weavers

Tata AIG Motor Insurance, Health and Accident Insurance, Property, and Livestock

Insurance

New India Cattle Insurance, Sheep & Goat Insurance, Poultry Insurance Scheme, Dog

Assurance Insurance Scheme, Silk Worm Insurance Scheme, Honey Bee Insurance,

Agricultural Pumpsets Insurance Scheme, Hut Insurance, Lift Irrigation Insurance,

Janata Personal Accident, and Horticulture/Plantation Insurance

ICICI ICICI Pru Sarv Jana Suraksha, and ICICI Pru Anmol Nivesh

Prudential

Industrial Insurance

The industrial insurance policies are availed by various companies to get protection for

important projects, construction, contracts, and equipment from situations like fire, theft and

any form of damage or loss.

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The top industrial insurance policies of India may be mentioned as below:

Provider Policy Name

ICICI Boiler and Pressure Plant Insurance Policy, Machinery Loss of Profits Insurance

Lombard Policy, Electronic Equipment Insurance Policy, Contractors' All Risk Policy,

Machinery Breakdown Insurance Policy, Contractors' Plant & Machinery, and Erection

All Risks

United Boiler and Pressure Plant Policy, Electronic Equipment Policy, Contractors Plant and

India Machinery Policy, Machinery Breakdown Policy, Deterioration of Stock, and

Insurance Industrial All Risk Policy

Royal Industrial All Risks Policy

Sundaram

General

Insurance

New India Fire Policy, Contractors All Risk Policy, Burglary Policy, Marine cum Erection /

Assurance Storage cum Erection Policy, Machinery Breakdown Policy, Advanced Loss of Profit /

Delay in Startup Policy, Electronics Equipment Policy, Contractor Plant and

Machinery Policy, Consequential Loss Policy, and Mega Package Policies

Commercial Insurance

Provider Name of Policy

National Burglary (Business Premises) Policy, Jewellers Block Policy, Shopkeepers Policy,

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 Insurance Extended Warranty Policy, Bankers Indemnity Policy, Directors and Officers

Liability Policy, Office Package Policy, Fidelity Guarantee Policy, Glass Insurance,

Marine Cargo Insurance, and Money Insurance

Tata AIG Commercial General Liability Insurance

Insurance

Commercial insurance is availed in order to get security against theft, liability, and property

damage. These plans also help in cases of employee injuries and business interruption.

Following are the leading commercial insurance policies available in India:

Life Insurance

Life insurance is taken primarily to secure oneself and/or one's family when the ability to

earn is less or provide for the dependents when the insured is either deceased or unable to

earn a livelihood.

Following are the various types of life insurance:

Whole Life Insurance

Whole life insurance policies are taken for the entire duration of an insured's life. In these

policies premium has to be paid on a yearly basis as long as the policy lasts.

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The leading whole life plans offered in India may be enumerated as below:

Provider Name of Policy

Life Insurance Corporation of The Whole Life Policy, The Whole Life Policy - Limited Payment, The

India Whole Life Policy - Single Premium

HDFC Life HDFC Single Premium Whole of Life Insurance Plan

Reliance Life Insurance Reliance Whole Life Plan

Kotak Life Insurance Kotak Eternal Life Classic Shield Plan, Kotak Eternal Life Premier Plan

Endowment Plans

The endowment plans are supposed to provide a lump sum once the policyholder dies or

when the policy matures. Certain endowment policies also provide payment in case of critical

illnesses.

Following are the top endowment plans available in India:

Provider Name of Policy

Life Insurance Corporation of India Endowment Plus

Future Generali Future Generali Assure-With-Profit Endowment Plan

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Money Back Plans

The money back plans are used as a form of investment that produces good financial returns

in future for using in various purposes, even recreational.

The top money back plans may be mentioned as below:

Provider Name of Policy

SBI Life Insurance Money Back Plan

Birla Sun Life Insurance BSLI Bachat (Moneyback) Plan

Reliance Life Insurance Reliance Life Insurance Guaranteed Money Back Plan

Max Life Insurance Life Pay Money Back

Life Insurance Corporation of India Money Back with Profit

Kotak Life Insurance Kotak Money Back Plan

HDFC Bank HDFC SL New Money Back Plan

Term Life Insurance

The term life insurance plans or term assurance plans are availed to receive a fixed payment

rate over a period of time, which is the term period. Once the period comes to an end the

policy owner can discontinue the policy or extend it.

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Following are the leading term plans available in India:

Provider Name of Policy

ICICI Prudential ICICI Pru iCare

Kotak Life Kotak e-Term/e-Preferred Plan, Kotak Term Plan/Kotak Preferred Term

AEGON Religare AEGON Religare Level Term Plan

ULIPs

The ULIPs or Unit Linked Insurance Plans are one where the financial worth of a policy is

dependent on the present net asset value of the core investment assets related to it. These

policies are both flexible and protective, which is a unique feature. The premiums of these

policies are used to buy investment asset units selected by the policy owners.The top ULIPs

offered in India are:

Provider Name of Policy

Bajaj Allianz iGain III - Investment Plan

SBI Life SBI Life - Smart Performer, SBI Life - Unit Plus Super, SBI Life - Saral Maha Anand

Insurance SBI Life - Smart Elite, SBI Life - Smart Scholar, SBI Life - Smart Horizon, and SB

Life - SmartWealth Assure

Other Forms of Insurance

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Home Insurance

Home insurance is also referred to as homeowner's insurance or hazard insurance and is

primarily taken to cover private homes against various forms of losses and liabilities.

Following are the leading home insurance policies available in India:

Provider Name of Policy

HDFC Ergo General Insurance Home Insurance

New India Assurance Householders Insurance

Reliance General Insurance Home Insurance

SBI General Insurance Long Term Home Insurance

Tata AIG Insurance Home Insurance

ICICI Lombard Home Insurance

Royal Sundaram General Insurance Home Insurance

Travel Insurance

Provider Name of Policy

ICICI Lombard Overseas Travel, Senior Citizen, and Annual Multi Trip

Reliance General Insurance Overseas Travel Insurance, Senior Citizen Insurance, and Annual Multi

Trip Insurance

Tata AIG Insurance Overseas Travel Insurance, Student Travel Insurance, and Domestic

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 Travel Insurance

HDFC Ergo General Travel Insurance

Insurance

Bajaj Allianz Individual Travel Insurance, Corporate Travel Insurance, Family

Travel Insurance, Travel Asia, Senior Citizen Travel, Swadesh Yatra,

and Student Travel Insurance

IFFCO TOKIO General Travel Insurance Policy

Insurance

Travel insurance policies can be availed to cover both long and short trips as well as trips

within the country as well as outside it. These plans cover medical and non medical

expenses.

The leading travel insurance policies available in India may be mentioned as below:

Agricultural Insurance

Agriculture in India is highly susceptible to risks like droughts and floods. It is necessary to

protect the farmers from natural calamities and ensure their credit eligibility for the next

season. For this purpose, the Government of India introduced many agricultural schemes

throughout the country.

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Comprehensive Crop Insurance Scheme(CCIS) :

The Comprehensive Insurance Scheme (CIS) covered 15 states and 2 union territories.

Participation in the scheme was voluntary. Around 5 million farmers and between 8-9 million

hectares were annually covered by this scheme. If the actual yield in any area covered by the

scheme fell short of the guaranteed yield, the farmers were entitled to an indemnity on

compensation to the extent of the shortfall in yield. The General Insurance Corporation of

India administered the scheme on behalf of the Ministry of Agriculture, Government of India.

A major drawback of the scheme could be seen from the fact that out of all the all-India

claims of Rs 1,623 crores, Gujarat alone received Rs. 792 crores for one single

crop,groundnut.

The scheme was scrapped in 1997.

Experimental Crop Insurance :

An experimental crop insurance scheme was introduced in 1997-98, covering non-loanee

small and marginal farmers growing specified crops in selected districts. The premium

was subsidized. The premium collected was about Rs. 3 crores and the claims amounted to

Rs. 40 crores.

The Government discontinued the scheme during 1997-98 itself.

Farm Income Insurance Scheme :

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The Central Government formulated the Farm Income Insurance Scheme (FIIS) during 2003-

04. The two critical components of a farmers income are yield and price. FIIS targeted these

two components through a single insurance policy so that the insured farmer could get a

guaranteed income.

The scheme provided income protection to the farmers by insuring production and market

risks. The insured farmers were ensured minimum guaranteed income (that is, average yield

multiplied by the minimum support price). If the actual income was less than the guaranteed

income, the insured would be compensated to the extent of the shortfall by the Agriculture

Insurance Company of India. Initially, the scheme would cover only wheat and rice and

would be compulsory for farmers availing crop loans. NAIS (explained in the section below)

would be withdrawn for the crops covered under FIIS, but would continue to be applicable

for other crops.

The FIIS was withdrawn in 2004. The recent attempt by the Gujarat government to

reintroduce the Farm Income Insurance Scheme (FIIS) can reform agricultural insurance and

prevent farm-level distress.

National Agriculture Insurance Scheme(NAIS) :

The Government of India experimented with a comprehensive crop insurance scheme which

failed. The Government then introduced in 1999-2000, a new scheme titled National

Agricultural Insurance Scheme (NAIS) or Rashtriya Krishi Bima Yojana (RKBY). NAIS

envisages coverage of all food crops (cereals and pulses), oilseeds, horticultural and

commercial crops. It covers all farmers, both loanees and non-loanees, under the scheme.

The premium rates vary from 1.5 percent to 3.5 percent of sum assured for food crops. In the

case of horticultural and commercial crops, actuarial rates are charged. Small and marginal

47 | P a g e
farmers are entitled to a subsidy of 50 percent of the premium charged- the subsidy is shared

equally between the Government of India and the States. The subsidy is to be phased out over

a period of 5 years.

Accidental death and dismemberment insurance

In insurance, accidental death and dismemberment (AD&D) is a policy that pays benefits

to the beneficiary if the cause of death is an accident. This is a limited form of life

insurance which is generally less expensive.

Accidental death

In the event of an accidental death, this insurance will pay benefits in addition to any life

insurance but only up to a set amount total regardless of any other insurance held by same

insurer, held by the client. This is called double indemnity coverage and is often available

even when accidental death insurance is merely an add-on to a regular life insurance plan.

Some of the covered accidents include traffic accidents, exposure, homicide, falls, heavy

equipment accidents and drowning. Accidental deaths are the fifth leading cause of death in

the U.S.as well as in Canada.

Accidental death insurance is not an investment vehicle and thus clients are paying only for

sustained protection. Most policies have to be renewed periodically (with revised terms),

although the client's consent with renewal is often implicitly assumed.

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Common exclusions.

Every insurer maintains a list of events and circumstances that void the insured's entitlement

to his or her accidental death benefit. Death by illness, suicide, non-

commercialradiation, war injury, and natural causes are generally not covered by AD&D.

Similarly, death while under the influence of any non-prescribed drugs or alcohol is most

likely exempt from coverage. Overdose with toxic or poisonous substances and injury of

an athlete during a professional sporting event may void the right to claim too.

Some insurance carriers will tailor their clients' coverage to include some of the above risks,

but every such extension will be accompanied by increased premiums.

Due to these restrictions, the process of claiming the benefit may be relatively lengthy; the

deceased client may have to undergo autopsy and the accident may have to be officially

investigated before a claim is approved by the insurer.

Dismemberment :

Fractional amounts of the policy will be paid out if the covered employee loses a bodily

appendage or sight because of an accident. Additionally, AD&D generally pays benefits for

the loss of limbs, fingers, toes, sight and permanent paralysis. The types of injuries covered

and the amount paid vary by insurer and package, and are explicitly enumerated in the

insurance policy.

Coverage types-

There are four common types of group AD&D plans offered in the United States:

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 1. Group Life Supplement the AD&D benefit is included as part of a group life

insurance contract, and the benefit amount is usually the same as that of the group life

benefit;

2. Voluntary the AD&D is offered to members of a group as a separate, elective

benefit, and premiums are generally paid as a payroll deduction;

3. Travel Accident (Business Trip) the AD&D benefit is provided through an employee

benefit plan and provides supplemental accident protection to workers while they are

traveling on company business (the entire premium is usually paid by the employer);

4. Dependents Some group AD&D plans also provide coverage for dependents.

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 HEALTH INSURANCE IN INDIA

Health insurance in India is a growing segment of India's economy. In 2011, 3.9%[1] of

India's gross domestic product was spent in the health sector. According to the World Health

Organisation (WHO), this is among the lowest of the BRICS (Brazil, Russia, India, China,

South Africa) economies. Policies are available that offer both individual and family cover.

Out of this 3.9%, health insurance accounts for 5-10% of expenditure, employers account for

around 9% while personal expenditure amounts to an astounding 82%.

History

Launched in 1986,the health insurance industry has grown significantly

mainly due to liberalization of economy and general awareness. By 2010,

more than 25% of Indias population had access to some form of health

insurance. There are standalone health insurers along with government

sponsored health insurance providers. Until recently, to improve the

awareness and reduce the procrastination for buying health insurance,

the General Insurance Corporation of India and the Insurance Regulatory

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and Development Authority had launched an awareness campaign for all

segments of the population.

Types of policies

Health insurance in India typically pays for only inpatient hospitalization and for treatment at

hospitals in India. Outpatient services were not payable under health policies in India. The

first health policies in India were Mediclaim Policies. In 2000 government of India

liberalized insurance and allowed private players into the insurance sector. The advent of

private insurers in India saw the introduction of many innovative products like family floater

plans, top-up plans, critical illness plans, hospital cash and top up policies.

The health insurance sector hovers around 10 % in density calculations. One of the main

reasons for the low penetration and coverage of health insurance is the lack of competition in

the sector. The Insurance Regulatory Authority of India (IRDA) which is responsible for

insurance policies in India can create health circles, similar to telecom circles to promote

competition.

Broadly we can divide the health insurance plans in India today can be classified into three

categories:

Hospitalization

Hospitalization plans are indemnity plans that pay cost of hospitalization and medical

costs of the insured subject to the sum insured. The sum insured can be applied on a

per member basis in case of individual health policies or on a floater basis in case

of family floater policies. In case of floater policies the sum insured can be utilized by

any of the members insured under the plan. These policies do not normally pay any

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 cash benefit. In addition to hospitalization benefits, specific policies may offer a

number of additional benefits like maternity and newborn coverate, day care

procedures for specific procedures, pre- and post-hospitalization care, domiciliary

benefits where patients cannot be moved to a hospital, daily cash, and convalescence.

There is another type of hospitalization policy called a top-up policy. Top up policies

have a high deductible typically set a level of existing cover. This policy is targeted at

people who have some amount of insurance from their employer. If the employer

provided cover is not enough people can supplement their cover with the top-up

policy. However, this is subject to deduction on every claim reported for every

member on the final amount payable.

Hospital daily cash benefit plans:

Daily cash benefits is a defined benefit policy that pays a defined sum of money for

every day of hospitalization. The payments for a defined number of days in the policy

year and may be subject to a deductible of few days.

Critical illness plans:

These are benefit based policies which pay a lumpsum (fixed) benefit amount on

diagnosis of covered critical lllness and medical prodcedures. These illness are

generally specific and high severity and low fequency in nature that cost high when

compared to day to day medical / treatment need. eg heart attack, cancer, stroke etc

now some insurers have come up with option of staggered payment of claims in

combination to upfront lumpsum payment.

Key aspects of health insurance

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Payment options

Direct Payment or Cashless Facility: Under this facility, the person does not need to

pay the hospital as the insurer pays directly to the hospital. Under the cashless

scheme, the policyholder and all those who are mentioned in the policy can undertake

treatment from those hospitals approved by the insurer.

Reimbursement at the end of the hospital stay: After staying for the duration of the

treatment, the patient can take a reimbursement from the insurer for the treatment that

is covered under the policy undertaken.

Cost and duration

Policy price range: Insurance companies offer health insurance from a sum insured

of Rs. 5000/- for micro-insurance policies to a higher sum insured of Rs. 50 lacs and

above. The common insurance policies for health insurance are usually available from

Rs. 1 lac to Rs. 5 lacs.

Duration: Health insurance policies offered by non-life insurance companies usually

last for a period of one year. Life insurance companies offer policies for a period of

several years.

Tax benefits

Under the Income Tax Act, under Section 80D, the insured person who takes out the

policy can claim for tax deductions

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 PRESENT SCENARIO IN THE INSURANCE SECTOR

Insurance agents are the main intermediaries in the Indian insurance market, but with

liberalization brokers will be an additional channel for selling insurance products.

Brokers are likely to play a major role in ensuring clients get insurance covers tailor made to

suit their requirements at good terms.

Fast growing middle class of 300 million who can afford insurance.

Increasing financial strength of middle class with disposable income.

Narrowing gap between rural and urban populace in terms of access to information and

services.

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More and more entrepreneurs in traditional and modern business areas.

Increase in number of double income families leading to lifestyles and attitude changes

Growth of rural market is at 4 times of urban markets.

The potential of the Indian insurance market is huge with current life insurance penetration

being only 1.9 of the GDP.

Insurance market is set to touch 25 billion by 2010 in India. (It was only 7.2 billion in 98-99

survey. At that time Indias rank in annual premium was 23rd for Life insurance and

contribution in GDP was merely 1.4%). Presently it is still lower then develops economy but

increased to 2.61% of GDP in 2002. So immense opportunity cant be ignoring.

MAJOR PLAYERS IN THE INSURANCE INDUSTRY IN INDIA

Life Insurance Corporation of India (LIC)

Life Insurance Corporation of India (LIC) was established on 1 September 1956 to spread the

message of life insurance in the country and mobilise peoples savings for nation-building

activities. LIC with its central office in Mumbai and seven zonal offices at Mumbai, Calcutta,

Delhi, Chennai, Hyderabad, Kanpur and Bhopal, operates through 100 divisional offices in

important cities and 2,048 branch offices. LIC has 5.59 lakh active agents spread over the

country.The Corporation 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.

56 | P a g e
Bahrain. It has also entered into an agreement with the Sun Life (UK) for marketing unit

linked life insurance and pension policies in U.K.In 1995-96, LIC had a total income from

premium and investments of $ 5 Billion while GIC recorded a net premium of $ 1.3 Billion.

During the last 15 years, LIC's income grew at a healthy average of 10 per cent as against the

industry's 6.7 per cent growth in the rest of Asia (3.4 per cent in Europe, 1.4 per cent in the

US). LIC has even provided insurance cover to five million people living below the poverty

line, with 50 per cent subsidy in the premium rates. LIC's claims settlement ratio at 95 per

cent and GIC's at 74 per cent are higher than that of global average of 40 per cent.

Compounded annual growth rate for Life insurance business has been 19.22 per cent per

annum

General Insurance Corporation of India (GIC)

The general insurance industry in India was nationalized and a government company known

as General Insurance Corporation of India (GIC) was formed by the Central Government in

November 1972. With effect from 1 January 1973 the erstwhile 107 Indian and foreign

insurers which were operating in the country prior to nationalization, were grouped into four

operating companies, namely, (i) National Insurance Company Limited; (ii) New India

Assurance Company Limited; (iii) Oriental Insurance Company Limited; and (iv) United

India Insurance Company Limited. (However, with effect from Dec'2000, these subsidiaries

have been de-linked from the parent company and made as independent insurance

companies). All the above four subsidiaries of GIC operate all over the country competing

with one another and underwriting various classes of general insurance business except for

aviation insurance of national airlines and crop insurance which is handled by the

GIC.Besides the domestic market, the industry is presently operating in 17 countries directly

through branches or agencies and in 14 countries through subsidiary and associate

companies.

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IN ADDITION TO ABOVE STATE INSURERS THE FOLLOWING HAVE BEEN

PERMITTED TO ENTER INTO INSURANCE BUSINESS: -

The introduction of private players in the industry has added to the colors in the dull industry.

The initiatives taken by the private players are very competitive and have given immense

competition to the on time monopoly of the market LIC. Since the advent of the private

players in the market the industry has seen new and innovative steps taken by the players in

this sector. The new players have improved the service quality of the insurance. As a result

LIC down the years have seen the declining phase in its career. The market share was

distributed among the private players. Though LIC still holds the 75% of the insurance sector

but the upcoming natures of these private players are enough to give more competition to LIC

in the near future. LIC market share has decreased from 95% (2002-03) to 82 %( 2004-05)

DISTRIBUTION CHANNELS OF INSURANCE SECTOR

The liberalization followed by growth of the Indian Insurance Industry has opened wide

oppurtunities for service & infrastructure sectors. This growth has to be properly channelized.

Some of the major challenges which have to be addressed for challenging the growth of

Insurance sector are product innovation,Distribution network, Investment management,

Customer service and education.

The aim of this project is to have an indepth knowledge of the booming Insurance sector in

India and to study the various Distribution Channels in Insurance Sector in relation to

Reliance life insurance which will help in increasing the penetration of Insurance in India

58 | P a g e
and also reduces the cost of Insurers. Firstly the Insurance industry as a whole has been

studied with emphasis on various Insurance channels.

Then the emerging distribtion channels in Insurance industry have been discussed. Emphasis

is given on the new distribution channels which are recently tried in India such as retail

stores, telcassurance, and Internet. Finally the recommendations and conclusions on the basis

of my understanding and analysis about the Indian insurance sector has been made.

CONCLUSION

Insurance sector is one of the most booming sectors in India. The penetration level of

insurance in India is only 2.3% when compared to 9-15% in the developed nations. There is a

huge market for the Insurance products in the future in India.

The project was very useful to the researcher to understand the life insurance

business.

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 BIBLIOGRAPHY

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