EXECUTIVE SUMMARY

Insurance industry contributes to the financial sector of an economy and also provides
an important social security net in developing countries. The growth of the insurance
sector in India has been phenomenal. The insurance industry has undergone a massive
change over the last few years and the metamorphosis has been noteworthy. There are
numerous private and government insurance companies in India that have become
synonymous with the term insurance over the years. Offering a diversified product
portfolio and excellent services the many insurance companies in India have managed
to make their way into almost every Indian household. The domestic life insurance
industry registered 22.55 per cent growth for new business premium in financial year
2015-16, generating revenue of USD20.34 billion largely due to the high growth in
the group single premium policy. The non-life insurance premium market grew at a
CAGR of 12.1 per cent over FY04-16 from USD3.4 billion in FY04 to USD13.35
billion in FY16.

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 1. INTRODUCTION
Insurance is one of the demanding financial products in India. Its basic motto is to
protect the family of any uncertainty in life. So it is long term investment and need
knowledge about that. Indian life insurance is too old. It is there from British Period
and after nationalization; it has come fully under Government. In the post
liberalization era, insurance has attracted any private players from different parts of
the country to start business India.

India as a country has potential for growth of this business. With the upcoming of
regulator in the year 2000, the business in India became more streamlined. Large
players along with customer choice results severe competition Life Insurance
Corporation of India in one end and ICICI Prudential life insurance from private
sector on the other end has taken maximum market share from both category. Product
innovation, profitable growth, multi-channel distribution and ethical practices in
business are few factors to be considered. Regulation from Government and research
in this sector, many times is a challenge for the existing players. According to Mr J.
Hari Narayan, Chairman of IRDA, Indian insurance industry in set for some serious
changes. Mr. Narayan said that Indian insurance industry had matured from its state of
childhood to early adulthood. He said that in countries like UK, the agents have
adopted themselves to latest form of marketing and very soon such changes will also
be introduced in India. With an annual growth rate of 15-20% and the largest number
of life insurance policies in force, the potential of the Indian insurance industry is
huge. The total investible funds with the Life Insurance Corporation of India (LIC) are
almost 8 per cent of GDP. The LIC employs more than one lakh employees who in
turn supervise through 2,000 branch offices more than five lakh agents. Yet these
numbers believe the fact that life insurance in India is spread very thinly and
'shallowly', and its role as a mobiliser of long-term savings is underdeveloped.
Insurance companies in the developed world also sell products for old age income
security in the form of pensions and annuities. The absence of pension coverage for a
vast majority of Indians, also points to an important gap to be filled by the life
insurance sector. In the 1990s however, LIC was put on its toes due to winds of
liberalisation unleashed by the report of the committee on insurance reforms, and
subsequent talk of allowing private entry into insurance sector. This has led to
introduction of some new products and some innovations in customer service. But
LIC largely remains a slow moving, over-staffed behemoth. For several decades now,
it has sold overpriced and under-priced policies, and has tried to combine business
objectives (being a corporation) and social objectives (being a state monopoly). There
are big gaps in its product range and along with liberalisation threaten to undermine its
position. However, despite the usual public sector handicaps, LIC has the potential to
turn its big size and reach to its decisive advantage in the wake of private sector entry
into life insurance business.

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 2. OBJECTIVE OF STUDY
This study and analyse the recent trends of life insurance and their impact on the
insurance industry.

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 2.1 RESEARCH METHODOLOGY
Exploratory research methodology is used here to analyse the data. Data was collected
from multiple sources such as books, journals to understand the Life insurance
industry. Apart from this, we have visited different websites and professional
magazines. Some more data was collected through newspapers. So it is purely based
on available secondary data.

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 3. OVERVIEW OF LIFE INSURANCE
The sector of life insurance has witnessed immense growth in the past few years.
Today, it is second only to banks for mobilized savings and forms a formidable part of
the capital market.
The life insurance sector controls:

* More than Rs.35,127 crores of deployed capital

* Over Rs. 28,23,082 crores of managed assets
* Investments in infrastructure exceeding Rs 3,31,674 crores

Another indication of the sector's growth is its infrastructural strength.

Today the life insurance sector comprises of:

* Over 10,943 branches

* More than 20.54 lakh agents
* 2.46 lakh direct employees and growing significantly
* 31.88 crores In-force policies.

The above figures are provisional as of 31st December 2016

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 4. WHAT IS INSURANCE
Life Insurance is the key to good financial planning. On one hand, it safeguards your
money and on the other, ensures its growth, thus providing you with complete
financial well being. Life Insurance can be termed as an agreement between the policy
owner and the insurer, where the insurer for a consideration agrees to pay a sum of
money upon the occurrence of the insured individual's or individuals' death or other
event, such as terminal illness, critical illness or maturity of the policy.

Life insurance plans, unlike mutual funds, are beneficial when you look at them as a
long term avenue of investment which also offers protection through life cover. Life
insurance policies are broadly categorized into 2 types; Traditional Plans and Unit
Linked Insurance Plans (ULIPs).

Traditional policies offer in-built guarantees and define maturity benefits through
variety of products such as guaranteed maturity value. The investment risk in
traditional life insurance policies is borne by life insurance companies. Additionally,
the investment decisions are regulated to a large extent by IRDAI rules and
regulations, ensuring stable returns with minimal risk. Investment income is
distributed amongst the policy holders through annual bonus. These policies are ideal
for policy holders who are not market savvy and do not wish to take investment risks.

ULIPs, on the other hand provide a combination of risk cover and investment. More
importantly they offer a flexibility to decide your risk taking profile.

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 5. ADVANTAGE
Life Insurance provides the dual benefits of savings and security. The following
benefits explain why this investment tool should be an integral part of your financial
plans.

Advantages of Life Insurance

Risk Cover- Life today is full of uncertainties; in this scenario Life Insurance ensures
that your loved ones continue to enjoy a good quality of life against any unforeseen
event.

Planning for life stage needs- Life Insurance not only provides for financial support
in the event of untimely death but also acts as a long term investment. You can meet
your goals, be it your children's education, their marriage, building your dream home
or planning a relaxed retired life, according to your life stage and risk appetite.
Traditional life insurance policies i.e. traditional endowment plans, offer in-built
guarantees and defined maturity benefits through variety of product options such as
Money Back, Guaranteed Cash Values, Guaranteed Maturity Values.

Protection against rising health expenses- Life Insurers through riders or stand
alone health insurance plans offer the benefits of protection against critical diseases
and hospitalization expenses. This benefit has assumed critical importance given the
increasing incidence of lifestyle diseases and escalating medical costs.

Builds the habit of thrift- Life Insurance is a long-term contract where as

policyholder, you have to pay a fixed amount at a defined periodicity. This builds the
habit of long-term savings. Regular savings over a long period ensures that a decent
corpus is built to meet financial needs at various life stages.

Safe and profitable long-term investment- Life Insurance is a highly regulated

sector. IRDAI, the regulatory body, through various rules and regulations ensures that
the safety of the policyholder's money is the primary responsibility of all stakeholders.
Life Insurance being a long-term savings instrument, also ensures that the life insurers
focus on returns over a long-term and do not take risky investment decisions for short
term gains.

Assured income through annuities - Life Insurance is one of the best instruments for
retirement planning. The money saved during the earning life span is utilized to
provide a steady source of income during the retired phase of life.

Protection plus savings over a long term- Since traditional policies are viewed both
by the distributors as well as the customers as a long term commitment; these policies
help the policyholders meet the dual need of protection and long term wealth creation
efficiently.

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Growth through dividends- Traditional policies offer an opportunity to participate in
the economic growth without taking the investment risk. The investment income is
distributed among the policyholders through annual announcement of
dividends/bonus.

Facility of loans without affecting the policy benefits- Policyholders have the
option of taking loan against the policy. This helps you meet your unplanned life stage
needs without adversely affecting the benefits of the policy they have bought.

Tax Benefits-Insurance plans provide attractive tax-benefits for both at the time of
entry and exit under most of the plans.

Mortgage Redemption- Insurance acts as an effective tool to cover mortgages and

loans taken by the policyholders so that, in case of any unforeseen event, the burden
of repayment does not fall on the bereaved family.

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 6. HISTORY

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu
( Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ). The
writings talk in terms of pooling of resources that could be re-distributed in times of
calamities such as fire, floods, epidemics and famine. This was probably a pre-cursor
to modern day insurance. Ancient Indian history has preserved the earliest traces of
insurance in the form of marine trade loans and carriers contracts. Insurance in India
has evolved over time heavily drawing from other countries, England in particular.

1818 saw the advent of life insurance business in India with the establishment of
the Oriental Life Insurance Company in Calcutta. This Company however failed in
1834. In 1829, the Madras Equitable had begun transacting life insurance business in
the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in
the last three decades of the nineteenth century, the Bombay 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 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.

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 7. IRDA
The Insurance Regulatory and Development Authority (IRDA) is a national agency
run by the Government of India. IRDA is based in Hyderabad and was formed by an
act of Indian Parliament called as IRDA Act of 1999. Considering some of the
emerging requirements of the Indian insurance industry, IRDA was amended in 2002.
As stated in the act mission of IRDA is "to protect the interests of the policyholders, to
regulate, promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto." Indian insurance industry is regulated by
the terms and conditions of the IRDA.
Indian law has certain expectations from the IRDA to perform in the Indian insurance
industry. IRDA should protect the interest of policyholders by ensuring fair treatment
by the insurance companies. The growth of insurance companies in a speedy and
orderly manner should be taken care by the IRDA. It should monitor and implement
quality competence and fair dealing of the insurance companies in the industry. IRDA
should make sure that the insurers are providing precise and correct information about
the products offered by them for the insurance customers. IRDA should also ensure
speedy settlement of genuine claims of the policyholders and prevent malpractices in
the process of claims settlement

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 8. CLASSIFICATION OF INSURANCE
INDUSTRY

Ministry of
Finance
(Government
of India)

Insurance
Regulatory and
Development
Authority
(IRDA)

Life Non-life Re-insurance

insurance insurance (1 player)
(24 players) (28 players)

Public (1) Public (6)

Public (1)

Private (23) Private (22)

Source: IRDA, TechSci Research

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 9. EVOLUTION OF THE INDIAN
INSURANCE SECTOR
Before 1956:
The life insurance sector was made up of 154 domestic life insurers, 16 foreign life
insurers and 75 provident funds.

195672:
All life insurance companies were nationalized to form LIC in 1956 to increase
penetration and protect policy holders from mismanagement. The non-life insurance
business was nationalized to form GIC in 1972

199399:
Malhotra Committee recommended opening up the insurance sector to private players
IRDA, LIC and GIC Acts were passed in 1999, making IRDA the statutory regulatory
body for insurance and ending the monopoly of LIC and GIC

2000-14:
Post liberalisation, the insurance industry recorded significant growth; the number of
private players increased to 44 in 2012. The industry has been spurred by product
innovation, vibrant distribution channels, coupled with targeted publicity and
promotional campaigns by the insurers
In December 2014, Government approved the ordinance increasing FDI limit in
Insurance sector from 26 per cent to 49 per cent. This would likely to attract
investment of USD7-8 billion

2015:
In 2015, Government introduced Pradhan Mantri Suraksha Bima Yojna and Pradhan
Mantri Jeevan Jyoti Bima Yojana Government introduced Atal Pension Yojana and
Health insurance in 2015. As per Union Budget 2016-17, new health insurance
scheme under the National Health Protection Scheme has been introduced

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 10. GROWTH DRIVERS OF LIFE
INSURANCE INDUSTRY:
The total market size of India's insurance sector is projected to touch US$ 350-400
billion by 2020 from US$ 66.4 billion in FY13. Digital Insurance- by 2020, a report
by Boston Consulting Group (BCG) and Google India, projects insurance sales from
online channels to increase 20 times from present day sales by 2020, and overall
internet influenced sales to reach Rs.300,000-400,000 crore (US$ 48.51-66.68
billion). Investment corpus in India's pension sector is anticipated to cross US$ 1
trillion by 2025, following the passage of the Pension Fund Regulatory and
Development Authority (PFRDA) Act 2015, according to a joint report by CII-EY on
Pensions Business in India. Indian insurance companies are expected to spend Rs.117
billion (US$ 1.89 billion) on IT products and services in 2016, an increase of five per
cent from 2015, as per Gartner Inc. Also, insurance companies in the country could
spend Rs.4.1 billion (US$ 66.29 million) on mobile devices in 2017, a rise of 35 per
cent from 2016.

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 11. ANALYSIS & DISCUSSION

MAJOR FACTORS RESPONSIBLE FOR

THIS GROWTH

Rural as a major thrust: More than 70% of population lives in rural area. Their
consumption pattern, choice and preference have changed. Technology and internet
has given ample scope for rural people towards adopting new ideas. These forces have
provided a larger platform to multinational players to focus more on rural. In order to
faster growth, Government has also made mandatory to do certain percentage of
policies every year from rural area for the insurance companies. All these steps
provide new avenues for the players to think growth more in rural area.

Development of other insurance: There is strong growth in auto sector from 2003 to
2012.
The no of passenger and commercial vehicles has increased incrementally. As a result,
the motor insurance has become more popular among people.
Health insurance has created a separate portfolio in the last few years. People have
realized the importance of this due to rise in the healthcare cost. Introduction of
Technology in medical science and demand for good service is the main cause for
higher medical cost.
Awareness about the health due to various schemes and non-government intervention
has enlarged the vision of the people about health care. Rastriya Swathya Bima yojana
(RSBY) of 2007 is one of the mile stone in this area where people below poverty line
are able to get minimum health service. Also in 2014, Government has come out with
Pradhan Mantri Suraksha Bima Yojana i.e. Accidental death insurance for Rs.12 per
annum and Pradhan Mantri Jeevan Jyoti Bima Yojana i.e. Life Insurance for Rs.330
per annum.

Growing Economy: The economy of India is growing significantly. The second most
populated country has witnessed a phenomenal growth in major financial services.
Various government schemes and programs also helped a lot. The purchasing power
of people has increased. Also increase in income has augmented the disposal income
among people. Good saving and awareness among various sources of getting the
products have compelled the people to go for specialization rather than generalization.
It is estimated that by 2026, the working population which ranges in the age group of
25 to 40 will reach approximately 795.5 million. The growth if Indian life insurance
sector is divided into two main periods, one from 2001 to 2010 and other from 2012 to
onwards. The first 10 years was high growth with compound annual growth rate
(CAGR) of approximately 3.1% in new business premium. Most of the players were
in good condition due to the emergence of unit linked insurance plans (ULIP). From
2010 onwards, the compound annual growth rate was around 2%. Stiff competition
was one of the reasons for the stagnant growth in the year of 2012.

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 Table 1 shows the companies in detail.

LIFE INSURANCE COMPANIES REGISTERED IN INDIA AS ON 2015-16

SR.NO NAME OF COMPANY DATE OF REGISTRATION FOREIGN PARTNER
1 Life Insurance Corporation of India 01-09-1956
2 HDFC Standard Life 23-10-2000 Standard Life Assurance,U.K
3 Max New York 15-10-2000 New York Life,U.S.A
4 ICICI Prudential Life Insurance co. ltd 24-11-2000 Prudential Plc, U.K
5 Kotak Mahindra Old Mutual Life Insurance Ltd. 10-01-2001 Old Mutual,South Africa
6 Birla Sun Life Insurance Ltd 31-01-2001 Sun Life, Canada
7 TATA AIA Life Insurance Pvt Ltd 12-02-2001 AIA,USA
8 SBI Life Insurance Co Ltd 29-03-2001 BNP Paribas Assu SA,France
9 Bajaj Allianz Life Insurance Co Ltd 03-08-2001 Allianz,Germany
10 Met Life India 06-08-2001 Metlife Inter Holdings Ltd,U.S.A
11 Reliance Life Insurance Co.Ltd 03-01-2002
12 AVIVA Life Insurance Co India Pvt Ltd 14-05-2002 AVIVA Inter Holding Ltd,U.K
13 Sahara Life Insurance Pvt.Ltd 06-02-2004
14 Shriram Life Insurance Co. Ltd 17-11-2005 Sanlam,South Africa
15 Bharti AXA Life Insurance Pvt. Ltd 14-07-2006 AXA Holdings, France
16 Future Generali India Life Insurance Co Ltd 04-09-2007 Generali,Italy
17 IDBI Federal Life Insurance Co Ltd. 19-12-2007 Ageas,Europe
18 Canara HSBC OBC Life Insurance 08-05-2008 HSBC,U.K
19 Aegon Religare Life Insurance Co. Ltd 26-06-2008 Aegon,Netherlands
20 DHFL Pramerica Life Insurance Co.Ltd 27-06-2008 Prudential of Americal,U.S.A
21 Star Union Dai-ichi Life Insurance Co Ltd 26-12-2008 Dai-ichi Mutual Life Insurance,Japan
22 India First Insurance Co. Ltd 05-11-2009 Legal & General Middle East,U.K
23 Edelweiss Tokio Life Insurance Co Ltd Tokio Marine Holdings,Japan
24 Exide Life Insurance Co.Ltd 02-08-2001
Source: Data collected from website information and IRDA annual report.

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1.1 Changing Competitive Environment:
With the opening of insurance sector in India, the share of private insurer was very
less. As shown in table-1, total share of private insurer was just 2% in 2001-02. It was
because of any reason which includes credibility on private players. But soon because
of innovative & customized products, novel distribution channels, aggressive
marketing etc. private players gave a tough competition to public sector company
(LIC). Gradually, the market share of private insurer went up and till financial year
2007-08, total share of private insurer reached as high as 40.35%.The market share of
LIC decreases after the entry of private insurer but it doesnt mean that the growth of
LIC got down. LIC continue its growth even after a cut throat completion from the
private players.

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Market Share of Top Insurers in India

The following pie chart shows the market share of top insurance of India in the
period till FY16

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1.2 Product Innovations
Before entrance of private players, it was observed that only endowment and money
back policies were popular among consumers. But the new, private insurers focused
on providing customized products, products that contain innovative features to the
customers created favourable demands for other type of policies like tern insurance,
child plan, pension plans and unit linked insurance policies (ULIPs).

According to Mr J. Hari Narayan, Chairman of insurance watchdog IRDA, Indian

insurance industry in set for some serious changes. Mr Narayan said the Indian
insurance industry had matured from its state of childhood to early adulthood. He said
that in countries like UK, the agents have adopted themselves to latest form of
marketing and very soon such changes will also be introduced in India. With an
annual growth rate of 15-20% and the largest number of life insurance policies in
force, the potential of the Indian insurance industry is huge. The market share of
private sector companies in non-life insurance segment rose from 15 per cent in FY04
to 45.4 per cent in FY16. According to government sources, the insurance and
banking services contribution to the country's gross domestic product (GDP) is 7%
out of which the gross premium collection forms a significant part.

The chart below shows shares of linked and non-linked insurance premium

Share of linked and non-linked insurance premium

100%

80%
59% 58% 63%
60% 76% 83% 85% 88% Non- Linked Premium
40%
Linked Premium
20% 41% 42% 37%
24% 17% 15% 12%
0%
FY09 FY10 FY11 FY12 FY13 FY14 FY15

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 LIST OF PRODUCT

NAME OF THE INSURER Dec-2016

Aegon Life Insurance Company Limited 25
Aviva Life Insurance Company Limited 34
Bajaj Allianz Life Insurance Company Limited 34
Bharti Axa Life Insurance Company Limited 25
Birla Sun Life Insurance Company Limited 36

Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited 27

DHFL Pramerica Life Insurance Company Limited 28
Edelweiss Tokio Life Insurance Company Limited 31
Exide Life Insurance Company Limited 25
Future General India Life Insurance Company Limited 26
HDFC Life Insurance Company Limited 39
ICICI Prudential Life Insurance Company Limited 28
IDBI Federal Life Insurance Company Limited 22
IndiaFirst Life Insurance Company Limited 24
Kotak Mahindra Old Mutual Life Insurance Company Limited 39
Max Life Insurance Company Limited 21
PNB Metlife Life Insurance Company Limited 27
Reliance Nippon Life Insurance Company Limited 36
Sahara India Life Insurance Company Limited 11
SBI Life Insurance Company Limited 38
Shriram Life Insurance Company Limited 31
Star Union Dai-Ichi Life Insurance Company Limited 20
TATA AIA Life Insurance Company Limited 32
PRIVATE 659
Life Insurance Corporation Of India 35
TOTAL 694

Source: Life Insurance Council

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1.3 Premium Collected By Private Insurance Companies
The total amount of premium collected by the private insurance companies also has
been increasing in a faster rate like the increase in the number of policies.
The life insurance market grew from USD10.5 billion in FY02 to USD56.05 billion in
FY16. Over FY02FY16, life insurance premiums expanded at a CAGR of 13.10 per
cent.

The life insurance industry has the potential to grow 2-2.5 times by 2020 in spite of
multiple challenges supported by long-term trends and fundamentals underlying
household savings

The life insurance premium market expanded at a CAGR of 11.93 per cent, from
USD14.5 billion in FY04 to USD56.05 billion in FY16 During the first half of
financial year 2016-17

Life Insurance industry reported a 20 per cent growth in overall Annual Premium
Equivalent (APE)

37 34 39 45 42 38 39 39.3 40.55
17 21 28
10 11 14

13 14 17 19 18 14 13 14.5 15.5
2 3 6
0 0 1

Private Public

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 12. FINDINGS
Difficulty in designing Marketing Mix:
Marketing mix refers the combination of all Ps to make the market attractive.
Innovation in product which invited many unit linked policies was the centre of
attraction for all. Low premium due to large no of players sometimes were
uncomfortable for all. The entire banking industry is advanced in the communication
strategy. This has compelled insurance players to practice innovative communication
strategy including advertisement. So is not only product, but a balanced marketing
mix is required for the industry with modern trend.

Hybrid distribution channel:

In the life insurance industry, the prominent distribution was agency. Around 90 % of
businesses were coming from them. The high cost and low persistency in policy has
thought of going to other channels known as alternate channels. Recently the
contribution from alternate channels is increasing. In this context, Bancassuarnce
increased and the no of banks as insurance partner has gone up. Both Public sector
banks and Private Banks have come up with their insurance partners.
Broking and corporate agency has their own way of doing the business. Individual and
institution as corporate agents has helped agency to increase the revenue. At the same
time, we have also taken the help of rural development organization such as NGOs,
Trust and SHG members to cover the rural area. Finding the right distribution channel
for the customer is a trouble area. All these have demanded a high skill in
management.

Online policy:
Internet and technology has helped a lot to insurer. Now policy procuring through on
line is cheaper than buying the same plan from agent. The major problem is not
getting the support from the agent for that policy, if there is a claim or maturity. The
person has to keep direct contact with the company.

Regulatory trend: The Indian regulator has introduced rules and regulation from to
time to control the entire industry. Recent changes in the cap on ULIP charges have
created havoc and the contribution of ULIP to entire policy has decreased. In order to
provide better service, the regulator has come with few changes. Servicing of orphan
policy, more focus on long term are few examples where the insurer are finding
difficult. Standardization of the proposal form is another step by regulator. So the
insurers are facing many challenges in the area of product, price, distribution and
taxation.

Claim Management: From 2010, the no of advisors have decreased in the industry.
The no of agents declined 29% from March 2010 to March 2013. Also it is expected
that more agents will leave the industry. Under this situation, Claim management will
be tougher for the companies. As people buy insurance because of the face value of
agents, assistance of them is highly essential for good business

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Customer Servicing: From the year 2013, it is very clear that traditional plans have
gained more weightage over ULIP. As traditional plans are long term products, insurer
need to focus more on this. Customer retention and servicing is the key to remain in
business. Even if in new pension plan, the capital protection features demands more
policy servicing. Here investment and servicing are important for the companies.
Above all, Policy administration is the most difficulty area to provide customer
servicing.
ECOMMENDATION
From the above discussion on findings, we came across few novel ideas. Life
insurance in
India is in growing stage and to maintain it, the following five points are to be
considered

Corporate must go to the basics of service marketing such as under promise and
over delivery
Customization of offerings, mainly in product and distribution
Pockets of service is to be done for quicker service and other operation
Advanced knowledge in the insurance is to be imparted to the employees in
Insurance industry
Digitalization and Relationship is to be kept in policy marketing.

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 12. STRATEGIES ADOPTED
Cost Optimization:

Players in industry are trying to come up with innovative low cost products to achieve
cost advantage. They are investing in Information Technology to automate various
processes and cut costs without affecting service delivery. It is estimated that
digitisation will reduce 15-20 per cent of total cost for life insurance and 20-30 per
cent for non-life insurance
From October 2016, IRDAI has mandated having an E-insurance (electronic
insurance) account to purchase insurance policies.

Differentiation:

Companies are trying to differentiate themselves by providing wide range of products

with unique features. For example, New India Assurance launched Farmers Package
Insurance to covering farmers house, assets, cattle etc. United India launched
Workmen
Medicare Policy to cover hospitalisation expenses arising out of accidents during and
in the course of employment

Focus:

Focus on providing one kind of service help insurance companies in differentiation.

For example, SBI is concentrating on individual regular premium products as against
single premium and group products

Insurance (Amendment) Law 2015:

The Insurance Law (Amendment) Bill, was passed in 2015 raises the foreign
investment cap in the sector from 26 per cent to 49 per cent

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 13. GOVERNMENT INITIATIVES
The Union Budget of 2017-18 has made the following provisions for the Insurance
Sector:

By providing tax relief to citizens earning up to Rs.5 lakh (US$ 7500), the government
will be able to increase the number of taxpayers. Life insurers will be able to sell them
insurance products, to further reduce their tax burden in future. As many of these
people were understating their incomes, they were not able to get adequate insurance
cover.Demand for insurance products may rise as peoples preference shifts from
formal investment products post demonetisation.

The Budget has attempted to hasten the implementation of the Digital India initiative.
As people in rural areas become more tech savvy, they will use digital channels of
insurers to buy policies.

The Government of India has taken a number of initiatives to boost the

insurance industry. Some of them are as follows:

The Union Cabinet has approved the public listing of five Government-owned general
insurance companies and reducing the Governments stake to 75 per cent from 100
per cent, which is expected to bring higher levels of transparency and accountability,
and enable the companies to raise resources from the capital market to meet their fund
requirements.

The Insurance Regulatory and Development Authority of India (IRDAI) plans to issue
redesigned initial public offering (IPO) guidelines for insurance companies in India,
which are to looking to divest equity through the IPO route.

IRDAI has allowed insurers to invest up to 10 per cent in additional tier 1 (AT1)
bonds that are issued by banks to augment their tier 1 capital, in order to expand the
pool of eligible investors for the banks.

IRDAI has formed two committees to explore and suggest ways to promote e-
commerce in the sector in order to increase insurance penetration and bring financial
inclusion.

IRDAI has formulated a draft regulation, IRDAI (Obligations of Insures to Rural and
Social Sectors) Regulations, 2015, in pursuance of the amendments brought about
under section 32 B of the Insurance Laws (Amendment) Act, 2015. These regulations
impose obligations on insurers towards providing insurance cover to the rural and
economically weaker sections of the population.

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The Government of Assam has launched the Atal-Amrit Abhiyan health insurance
scheme, which would offer comprehensive coverage for six disease groups to below-
poverty line (BPL) and above-poverty line (APL) families, with annual income below
Rs 500,000 (US$ 7,500).

The Uttar Pradesh government has launched a first of its kind banking and insurance
services helpline for farmers where individuals can lodge their complaints on a toll
free number. The select committee of the Rajya Sabha gave its approval to increase
stake of foreign investors to 49 per cent equity investment in insurance companies.

Government of India has launched an insurance pool to the tune of Rs 1,500 crore
(US$ 220.08 million) which is mandatory under the Civil Liability for Nuclear
Damage Act (CLND) in a bid to offset financial burden of foreign nuclear suppliers.

Foreign Investment Promotion Board (FIPB) has cleared 15 Foreign Direct

Investment (FDI) proposals including large investments in the insurance sector by
Nippon Life Insurance, AIA International, Sun Life and Aviva Life leading to a
cumulative investment of Rs 7,262 crore (US$ 1.09 billion).

IRDAI has given initial approval to open branches in India to Switzerland-based

Swiss Re, French-based Scor SE, and two Germany-based reinsurers namely,
Hannover Re and Munich Re.

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 14. RECOMMENDATION
CONCLUSION
Where almost all the industries in the world trying hard for survival due to the major
economic meltdown, Indian life insurance industry is one of the sectors that is still
observing good growth. It is the changing trends of Indian insurance industry only that
has made it to cope with the changing economic environment. Indian insurance
industry has modified itself with the passage of time by introducing customized
products based on customers need, through innovative distribution channels,
Indian life insurance industry searched its path to grow. Changing government
policy and guideline of the regulatory authority, IRDA have also played a very vital
role in the growth of the sector. Move from non-linked to unit liked insurance policies
is one of the major positive changes in Indian life insurance sector. Similarly, opening
on the sector for private insurer broke the monopoly of LIC and bring in a tough
competition among the players. This completion resulted into innovations in products,
pricing, distribution channels, and marketing in the industry.
Though the sector is growing fast, the industry has not yet insured even 50% of
insurable population of India. Thus the sector has a great potential to grow. To achieve
this objective, this sector requires more improvement in the insurance density and
insurance penetration.
Development of products including special group policies to cater to different
categories should be a priority, especially in rural areas. The life insurers should
conduct more extensive market research before introducing insurance products
targeted at specific segments of the population so that insurance can become more
meaningful and affordable.
By adopting appropriate strategy along with proper government support and able
guidance of IRDA, India will certainly become the new insurance giant in near future.

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