A PROJECT REPORT ON

―INDIAN INSURANCE INDUSTRY‖

SUBMITTED BY

BHAVSAR MANTHAN RAJENDRA

THIRD YEAR (BANKING AND INSURANCE (SEMESTER VI)

2011-2012

MODEL COLLEGE

DOMBIVLI

UNIVERSITY OF MUMBAI

APRIL 2012
A PROJECT REPORT ON INDIAN INSURANCE INDUSTRY

A PROJECT REPORT ON

―INDIAN INSURANCE INDUSTRY‖

SUBMITTED TO

THE UNIVERSITY OF MUMBAI

IN PARTIAL FULFILLMENT

FOR THE AWARD OF THE DEGREE OF

BACHELOR OF COMMERCE (BANKING AND INSURANCE)

(VI SEMESTER)

BY

BHAVSAR MANTHAN RAJENDRA

MODEL COLLEGE DOMBIVLI

APRIL 2012

2
 TABLE OF CONTENTS

SR.NO. DESCRIPTION PA

1. DECLARATION

2. ACKNOWLEDGEMENT

3. CHAPTER 1: INTRODUCTION

4. CHAPTER 2:THEORETICAL VIEW

5. CHAPTER 3:COMPARATIVE STUDY

6. CHAPTER 4: CONCLUSION

7. BIBLOGRAPHY

8. ANNEXURE
 DECLARATION

I, BHAVSAR MANTHAN RAJENDRA, STUDENT OF BANKING AND

INSURANCE VI SEMESTER OF MODEL COLLEGE DOMBIVLI (E),
HERE BY DECLARE THAT, I HAVE COMPLETED THIS PROJECT
ON ―Indian Insurance Industry‖ FOR THE ACADEMIC YEAR 2011-
2012
THE INFORMATION SUMBITTED IS TRUE AND
ORIGINAL TO THE BEST OF MY KNOWLEDGE.

BHAVSAR MANTHAN RAJENDRA

THIRD YEAR (BANKING AND INSURANCE)

 ACKNOWLEDGEMENT

I WOULD LIKE TO EXTEND MY SINCERE GRATITUDE TO ALL

THOSE PEOPLE WHO HAVE HELPED ME IN THE SUCCESSFUL
COMPLETION OF MY PROJECT ENTITLED ―Indian insurance
industry‖
FIRST AND FOREMOST I WOULD LIKE TO THANK MY PROJECT
GUIDE MRS.GAURI PATHAK FOR BEING KIND ENOUGH IN
SPARING HER TIME AND ENERGY FROM HER BUSY SCHEDULE
AND HELPING ME IN COLLECTING THE NECESSARY DATES.
I WOULD ALSO LIKE TO EXPRESS MY SINCERE THANKS TO
OUR PRINCIPLE, DR. M.R.NAIR FOR HIS CONSTANT MORAL
SUPPORT AND VISION
THIS PROJECT COULD NOT HAVE BEEN POSSIBLE WITHOUT
HELP OF ENTIRE LIBRARY DEPARTMENT OF OUR
COLLEGE.THEY MAKE AS MUCH DATA, BOOKS, MAGAZINES,
ETC. AVAILABLE AS THEY CAN TO FACILITATE THE EASY
COLLECTION OF INFORMATION.

BHAVSAR MANTHAN RAJENDRA

 CHAPTER 1
AN INTRODUCTION
Introduction
In 2003, the Indian insurance market ranked 19th globally and was
the fifth largest in Asia. Although it accounts for only 2.5% of
premiums in Asia, it has the potential to become one of the biggest
insurance markets in the region. A combination of factors underpins
further strong growth in the market, including sound economic
fundamentals, rising household wealth and a further improvement in
the regulatory framework.

The insurance industry in India has come a long way since the time
when businesses were tightly regulated and concentrated in the
hands of a few public sector insurers. Following the passage of the
Insurance Regulatory and Development Authority Act in 1999, India
abandoned public sector exclusivity in the insurance industry in favor
of market-driven competition. This shift has brought about major
changes to the industry. The inauguration of a new era of insurance
development has seen the entry of international insurers, the
proliferation of innovative products and distribution channels, and the
raising of supervisory standards.

By mid-2004, the number of insurers in India had been augmented by

the entry of new private sector players to a total of 28, up from five
before liberalization. A range of new products had been launched to
cater to different segments of the market, while traditional agents
were supplemented by other channels including the Internet and bank
branches. These developments were instrumental in propelling
business growth, in real terms, of 19% in life premiums and 11.1% in
non-life premiums between 1999 and 2003.

There are good reasons to expect that the growth momentum can be
sustained. In particular, there is huge untapped potential in various
segments of the market. While the nation is heavily exposed to
natural catastrophes, insurance to mitigate the negative financial
consequences of these adverse events is underdeveloped. The same
is true for both pension and health insurance, where insurers can play
a critical role in bridging demand and supply gaps. Major changes in
both national economic policies and insurance regulations will
highlight the prospects of these segments going forward.

Insurance or assurance, device for indemnifying or guaranteeing an

individual against loss. Reimbursement is made from a fund to which
many individuals exposed to the same risk have contributed certain
specified amounts, called premiums. Payment for an individual loss,
divided among many, does not fall heavily upon the actual loser. The
essence of the contract of insurance, called a policy, is mutuality. The
major operations of an insurance company are underwriting, the
determination of which risks the insurer can take on; and rate making,
the decisions regarding necessary prices for such risks. The
underwriter is responsible for guarding against adverse selection,
wherein there is excessive coverage of high risk candidates in
proportion to the coverage of low risk candidates.
In preventing adverse selection, the underwriter must consider
physical, psychological, and moral hazards in relation to applicants.
Physical hazards include those dangers which surround the individual
or property, jeopardizing the well-being of the insured. The amount of
the premium is determined by the operation of the law of averages as
calculated by actuaries. By investing premium payments in a wide
range of revenue-producing projects, insurance companies have
become major suppliers of capital, and they rank among the nation's
largest institutional investors.

GENERAL DEFINITION:

The general definitions are given by the social scientists & they
consider insurance as a device to protection against risks, or a
provision against inevitable contingencies or a co-operative device of
spreading risks. Some of such definitions are given below:

 In the words of John Magee, ―Insurance is a plan by which

large number of people associate themselves & transfer to the
shoulder of all, risks that attach to individuals.‖
 In the words of Sir William, ―The collective bearing of risks is
insurance.‖
 In the words of Boone & Kurtz, ―Insurance is a substitution for a
small known loss (the insurance premium) for a large unknown loss,
which may or may not occur.‖
 In the words of Thomas, ―Insurance is a provision, which a
prudent man makes against for the loss or inevitable contingencies,
loss or misfortune.‖
 In the words of Allen Z. Mayer, ―Insurance is a device for the
transfer to an insurer of certain risks of economic loss that would
otherwise come by the insured.‖
 In the words of Ghosh & Agarwal, ―Insurance is a co-operative
form of distributing a certain risk over a group of persons who are
exposed to it.‖
ABOUT THE REPORT

TITLE OF THE STUDY

The present study is titled as ―INDIAN INSURANCE INDUSTRY‖

OBJECTIVES OF THE STUDY

 To Study the awareness of the insurance policies.

 To know what are the priorities of people of city for making
investment in Insurance.
 To know what are the perception of the consumer about
investments in insurance sector.
 To know the standing of the Indian insurance sector in global.

SCOPE OF THE STUDY

 It provides a complete knowledge of insurance sector in India.

 It provides a view in Indian insurance market.
DATA AND METHODOLOGY:-

The data has been collected in two ways:

PRIMARY DATA

As far as primary data is concerned, a detailed study is done and a

survey has been taken up; the carefully analysis of the data is done
to arrive at conclusion. Hence, for this study, primary data has been
collected directly from the respondents through an questionnaire.

SECONDARY DATA

The secondary source of information has been collected from

internet, books.

CHAPTER LAYOUT

CHAPTER 1 – Introduction of the title ―Indian insurance industry‖

CHAPTER 2 – Theoretical view of Indian insurance industry.

CHAPTER 3 – Survey.

CHAPTER 4 – Summarizes the results of the study.

 CHAPTER 2
THEORETICAL VIEW
HISTORY OF INSURANCE IN INDIA

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.

th
An Ordinance was issued on 19 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 societies—245 Indian and
foreign insurers in all. The LIC had monopoly till the late 90s when
the Insurance sector was reopened to the private sector.
The history of general insurance dates back to the Industrial
Revolution in the west and the consequent growth of sea-faring trade
th
and commerce in the 17 century. It came to India as a legacy of
British occupation. General Insurance in India has its roots in the
establishment of Triton Insurance Company Ltd., in the year 1850 in
Calcutta by the British. In 1907, the Indian Mercantile Insurance Ltd,
was set up. This was the first company to transact all classes of
general insurance business.
1957 saw the formation of the General Insurance Council, a wing of
the Insurance Association of India. The General Insurance Council
framed a code of conduct for ensuring fair conduct and sound
business practices.

In 1968, the Insurance Act was amended to regulate investments

and set minimum solvency margins. The Tariff Advisory Committee
was also set up then.

In 1972 with the passing of the General Insurance Business

(Nationalization) Act, general insurance business was nationalized
st
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 January 1sst 1973.
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 are allowed to enter by floating Indian companies,
preferably a joint venture with Indian partners.

Following the recommendations of the Malhotra Committee report,

in 1999, the Insurance Regulatory and Development Authority (IRDA)
was constituted as an autonomous body to regulate and develop the
insurance industry. The IRDA was incorporated as a statutory body in
April, 2000. The key objectives of the IRDA include promotion of
competition so as to enhance customer satisfaction through
increased consumer choice and lower premiums, while ensuring the
financial security of the insurance market.

The IRDA opened up the market in August 2000 with the invitation
for application for registrations. Foreign companies were allowed
ownership of up to 26%. The Authority has the power to frame
regulations under Section 114A of the Insurance Act, 1938 and has
from 2000 onwards framed various regulations ranging from
registration of companies for carrying on insurance business to
protection of policyholders’ interests.

In December, 2000, the subsidiaries of the General Insurance

Corporation of India were restructured as independent companies
and at the same time GIC was converted into a national re-insurer.
Parliament passed a bill de-linking the four subsidiaries from GIC in
July, 2002.

Today there are 24 general insurance companies including the

ECGC and Agriculture Insurance Corporation of India and 23 life
insurance companies operating in the country.

The insurance sector is a colossal one and is growing at a

speedy rate of 15-20%. Together with banking services, insurance
services add about 7% to the country’s GDP. A well-developed and
evolved insurance sector is a boon for economic development as it
provides long- term funds for infrastructure development at the same
time strengthening the risk taking ability of the country.
Characteristics of Insurance:

 Sharing of Risks

Insurance is a co-operative device to share the burden of risk, which

may fall on happening of some unforeseen events, such as the death
of head of the family, or on happening of marine perils or loss of by
fire.

 Co-operative
Device

Insurance is a co-operative form of distributing a certain risk over a

group of persons who are exposed to it (Ghosh & Agarwal). A large
number of persons share the losses arising from a particular risk.

 Evaluation of
Risk

For the purpose of ascertaining the insurance premium, the volume of

risk is evaluated, which forms the basis of insurance contract.

 Payment of happening of specified event

On happening of specified event, the insurance company is bound to

make payment to the insured. Happening of the specified event is
certain in life insurance, but in the case of fire, marine or accidental
insurance, it is not necessary. In such cases, the insurer is not liable
for payment of indemnity.
 Amount of payment

The amount of payment in indemnity insurance depends on the

nature of losses occurred, subject to a maximum of the sum insured.
In life insurance, however, a fixed amount is paid on the happening of
some uncertain event or on the maturity of the policy.

 Large number of insured

persons

The success of insurance business depends on the large number of

persons insured against similar risk. This will enable the insurer to
spread the losses of risk among large number of persons, thus
keeping the premium rate at the minimum.

 Insurance is not a
gambling

Insurance is not a gambling. Gambling is illegal, which gives gain to

one party & loss to the other. Insurance is a valid contract to
indemnity against losses. Moreover, insurable interest is present in
insurance contracts & it has the element of investment also.

 Insurance is not
charity

Charity pays without consideration but in the case of insurance,

premium is paid by the insured to the insurer in consideration of
future payment.

 Protection against
risks
Insurance provides protection against risks involved in life, materials
& property. It is a device to avoid or reduce risks.
 Spreading of risk

Insurance is a plan, which spread the risks & losses of few people
among a large number of people. John Magee writes, ―Insurance is a
plan by which large number of people associates themselves &
transfer to the shoulders of all, risks attached to individuals.‖

 Transfer of
risk

Insurance is a plan in which the insured transfers his risk on the

insurer. This may be the reason that Mayerson observes, that
insurance is a device to transfer some economic losses to the
insurer, and otherwise such losses would have been borne by the
insured themselves.

 Ascertaining of
losses

By taking a life insurance policy, one can ascertain his future losses
in terms of money. This is done by the insurer to determining the rate
of premium, which is calculated on the basis of maximum risks.

 A
contract

Insurance is a legal contract between the insurer & insured under

which the insurer promises to compensate the insured financially
within the scope of insurance policy, & the insured promises to pay a
fixed rate of premium to the insurer.
 Based upon certain principle

Insurance is a contract based upon certain fundamental principles of

insurance, which includes utmost good faith, insurable interest,
contribution, indemnity, cause proximal, subrogation, etc., which are
the basis for successful operation of insurance plan.

 Utmost Good
Faith

Insurance is a contract based on good faith between the parties.

Therefore, both the parties are bound to disclose the important facts
affecting to the contract before each other. Utmost good faith is one
of the important principles of insurance.

To conclude, insurance is a device for the transfer of risks from the

insured to the insurers, who agree to it for a consideration (known as
premium), & promises that the specified extent of loss suffered by the
insured shall be compensated. It is a legal contract of a technical
nature.
Insurance Sector Reforms

In 1993, Malhotra Committee- headed by former Finance Secretary

and RBI Governor R.N. Malhotra- was formed to evaluate the Indian
insurance industry and recommend its future direction. The Malhotra
committee was set up with the objective of complementing the
reforms initiated in the financial sector. The reforms were aimed at
creating a more efficient and competitive financial system suitable for
the requirements of the economy keeping in mind the structural
changes currently underway and recognizing that insurance is an
important part of the overall financial system where it was necessary
to address the need for similar reforms. In 1994, the committee
submitted the report and some of the key recommendations included:

i) Structure Government stake in the insurance Companies to be

brought down to 50%. Government should take over the holdings of
GIC and its subsidiaries so that these subsidiaries can act as
independent corporations. All the insurance companies should be
given greater freedom to operate.
ii) Competition Private Companies with a minimum paid up capital
of Rs.1bn should be allowed to enter the sector. No Company should
deal in both Life and General Insurance through a single entity.
Foreign companies may be allowed to enter the industry in
collaboration with the domestic companies. Postal Life Insurance
should be allowed to operate in the rural market. Only one State
Level Life Insurance Company should be allowed to operate in each
state.
iii) Regulatory Body The Insurance Act should be changed. An
Insurance Regulatory body should be set up. Controller of Insurance-
a part of the Finance Ministry- should be made independent
iv) Investments Mandatory Investments of LIC Life Fund in
government securities to be reduced from 75% to 50%. GIC and its
subsidiaries are not to hold more than 5% in any company (there
current holdings to be brought down to this level over a period of
time)
v) Customer Service LIC should pay interest on delays in
payments beyond 30 days. Insurance companies must be
encouraged to set up unit linked pension plans. Computerization of
operations and updating of technology to be carried out in the
insurance industry.

The committee emphasized that in order to improve the customer

services and increase the coverage of insurance policies, industry
should be opened up to competition. But at the same time, the
committee felt the need to exercise caution as any failure on the part
of new players could ruin the public confidence in the industry.
Hence, it was decided to allow competition in a limited way by
stipulating the minimum capital requirement of Rs.100 crores.

The committee felt the need to provide greater autonomy to

insurance companies in order to improve their performance and
enable them to act as independent companies with economic
motives. For this purpose, it had proposed setting up an independent
regulatory body- The Insurance Regulatory and Development
Authority.

Reforms in the Insurance sector were initiated with the passage of

the IRDA Bill in Parliament in December 1999. The IRDA since its
incorporation as a statutory body in April 2000 has fastidiously stuck
to its schedule of framing regulations and registering the private
sector insurance companies. Since being set up as an independent
statutory body the IRDA has put in a framework of globally
compatible regulations. The other decision taken simultaneously to
provide the supporting systems to the insurance sector and in
particular the life insurance companies was the launch of the IRDA
online service for issue and renewal of licenses to agents. The
approval of institutions for imparting training to agents has also
ensured that the insurance companies would have a trained
workforce of insurance agents in place to sell their products.
MALHOTRA COMMITTEE :

In 1993, the first step towards insurance sector reforms was initiated
with the formation of Malhotra Committee, headed by former Finance
Secretary and RBI Governor R.N. Malhotra. The committee was
formed to evaluate the Indian insurance industry and recommend its
future direction with the objective of complementing the reforms
initiated in the financial sector.

Key Recommendations of Malhotra Committee:

Structure

• Government stake in the insurance Companies to be brought down

to 50%.

• Government should take over the holdings of GIC and its

subsidiaries so that these subsidiaries can act as independent
corporations.

• All the insurance companies should be given greater freedom to

operate.
Competition

• Private Companies with a minimum paid up capital of Rs.1billion

should be allowed to enter the industry.

• No Company should deal in both Life and General Insurance

through a single Entity.

• Foreign companies may be allowed to enter the industry in

collaboration with the domestic companies.

• Postal Life Insurance should be allowed to operate in the rural

market.

• Only one State Level Life Insurance Company should be allowed to

operate in each state.

Regulatory Body

• The Insurance Act should be changed.

• An Insurance Regulatory body should be set up.

• Controller of Insurance should be made independent.

Investments

• Mandatory Investments of LIC Life Fund in government securities to

be reduced from 75% to 50%.

• GIC and its subsidiaries are not to hold more than 5% in any
company.

Customer Service

• LIC should pay interest on delays in payments beyond 30 days

• Insurance companies must be encouraged to set up unit linked

pension plans.

• Computerisation of operations and updating of technology to be

carried out in the insurance industry.

Malhotra Committee also proposed setting up an independent

regulatory body - The Insurance Regulatory and Development
Authority (IRDA) to provide greater autonomy to insurance
companies in order to improve their performance and enable them to
act as independent companies with economic motives.
Life Insurance Companies at a Glance:

a) LIFE INSURANCE CORPORATION OF INDIA:

On January 19, 1956 the President of the Indian Union issued an

ordinance, providing for the taking over, in public interest, of the
management of life insurance pending nationalization of such
business, & the then Finance Minister explained the objectives of
nationalization of life insurance business.

In June 1956, the parliament passed a bill for nationalization of life

insurance business in India and for setting up a corporation as the
sole agency for carrying on this business in India. The corporation,
set up under this Act, is known as ―Life Insurance Corporation of
India‖, which started functioning on September 1, 1956.

For the purpose of servicing of policies issued before September 1,

1956, some integrated head offices & integrated branch office units
were created. These offices have nothing to do with the policies
issued by the corporation. Corporation also took over foreign life
business of the Indian insurers.
 Objectives of LIC:

 Maximize mobilization of people’s savings by making insurance

– linked savings adequately attractive. Conduct business with utmost
economy & with the full realization that the moneys belong to the
policyholders.
 To publicize & extent the insurance business specifically in rural
& remote areas.
 To provide suitable financial security at reasonable cost.
 To make the investments more dynamic by popularizing the
savings plans attached with insurance.
 To invest the insurance fund keeping with maximum benefit &
interest of insured’s.
 To run the insurance business at minimum administrative costs.
 To function as trusts of the insured’s.
 To fulfill the needs of the society in a changing social and
economic environment.
 To make the employees collectively responsible for providing
efficient services to the insured’s.
 To develop work satisfaction among agents & employees.
b) HDFC STANDARD LIFE INSURANCE COMPANY:

HDFC Standard Life Insurance Co. Ltd. is a joint venture between

HDFC, India’s largest housing finance institution and Standard Life
Assurance Company, Europe’s largest mutual life company. HDFC
manages Rs. 21,450 Crores in assets and Standard Life manages
over US $100 billion in assets. Both the promoters are well known for
their ethical dealings, their financial strength and their commitment to
be a long-term player in the life insurance industry.

c) MAX NEW YORK LIFE INSURANCE COMPANY:

Max New York Life Insurance Company is a joint venture between

New York Life International Inc. and Max India Limited. New York
Life, a Fortune 100 Company, is one of the world’s experts in life
insurance with over 156 years of experience in the business and over
US$ 165 billion (Rs. 775,000 Crores) in assets under management.
Max India Limited is a multi-business corporate, focused on the
knowledge, people, and service-oriented bus ines s of lif
e ins uranc e, healt hc are and inf or m at ion t ec hnolog y .
d) O M K O T AK M AH I N D R A L I F E I N S U R AN C E :

Om Kot ak Ma hin dra Lif e I ns ura nc e, a c ompan y un der

Kot ak Mahin dra Group is a 74: 26 life ins u ranc e joi nt
vent u re bet ween K ot ak Mahin dra F inanc e Limit ed wit h
Old Mut ua l, U. K.
The phi los oph y of Om Kot ak Mahin dra is hel ping t
heir c us t omers t ak e f inanc ial dec is io ns at e ve r y s t
age in lif e. Their ai m is t o c ons is t ent l y of f er a wid e
ran ge of i nno vat i ve lif e ins uranc e produc t s , t o help
t heir c us t omers remain f inanc iall y i ndep endent , whic
h i s wh y t he y bel ie ve t hat f reedom t o t ak e l if e on "
J eene Ki Aaz adi"
The a llia nc e of Om Kot ak Ma hi ndra wit h Old Mut ual
h as gi ve n it un mat c hed e xpert is e in lif e ins ura nc e a
rea. W it h
156 years of e xper ienc e in lif e ins uranc e b u s ines s ,
Old Mut ual is t oda y an I nt ernat ional Financ ial Ser v ic e
Group bas ed in Lond on .

e) BIRLA SUN LIFE INSURANCE COMPANY:

I t is a joint ve nt ure of Ad it ya Birla Group an d Sun L

if e Fina nc ial Ser vic es wit h t he ob je c t ive t hat I ns uranc
e is not about s omet h ing going wron g. I t 's of t en about t
hi ngs going right . One of t he wo nders of hum an nat ure is
t hat we ne ve r belie ve an yt hin g c an ac t uall y go wrong.
Sure l y, l if e has it s s hare of if s . At Birla Su n Lif e ho we
ver, we b elie v e it has it s
equall y ple as ant s hare of but s as wel l. W e at Birla Sun
Lif e s t and c ommit t e d to helping you rea liz e t hos
e happ y mome nt s , wh ic h mak e a lif e. Be it living t he s
ame lif es t yl e in you r pos t ret ir ement da ys or pr o vid ing
a s ec ure f ut ure f or your l o ve d ones , in c as e s omet hing
happe ns t o you.

f) T AT A AI G L I F E I N S U R AN C E C O M
P AN Y :

Tat a AI G is a joi nt vent ure t h at is bac k ed b y t he T at a

Group
– I ndia’s mos t res pec t ed ind us t rial c ongl om erat e,
wit h re ve nues of more t han US $ 8. 4 billion, and
Americ an I nt ernat iona l Group, I nc . (AI G) – t he
leading US -bas ed int ernat io nal ins uranc e and f ina nc ial
s er vic es organiz at ion, wit h a pres enc e in ove r 130 c
ount ries and juris dic t ions througho ut t he world. Tat a AI
G of f ers a gamut of inno vat i ve produc t s in t he Lif e I ns
uranc e s ec t or.

g) S B I L I F E I N S U R AN C E C O M
P AN Y :

SBI Lif e I ns uran c e Com pan y Lt d. is a jo int vent ur e bet

we en St at e Bank of India and Cardif f of Franc e. SBI
is t he larges t bank i n I ndia and Car dif f is a leadin g
ins uranc e c ompan y in Fr a nc e operat ing i n 29 c ount ries
. Cardif f is a whol l y o wne d s ubs idiar y of BNP Par
ibas , t he larg es t Europea n Bank .
 CHAPTER 3
SURVEY, DATA ANALYSIS
Q.1.Do you have a Life Insurance Policy?

Criteria No

Respo

Yes 5

No

Q.2.Which Company’s Insurance Policies do you have?

Company No. of Respond

LIC

Birla Sunlife

SBI

ICICI Pru. Life

Kotak Mahindra

Post Office

HDFC
 No. of Respondents

60
50
No. of 40
30
Respondents 20
10
0 LIC SBI Kotak HDFC

As from the above chart it is very clear the all of the respondents
have an insurance of the LIC while some of them have an insurance
of the other companies like post Office, ICICI Prudential Life
insurance Co., HDFC Co. Etc.

The reason behind this is that the LIC competitor since more than
four decades and the Indian Govt. allowed the Introduction of private
player in Insurance in the year 2000.
Q.3What is amount of insurance premium you pay annually?

Criteria No. of Responden

Below Rs. 10,000

10,000 to 20,000

20,000 to 30,000

30,000 to 40,000

Above 40,000

The analysis of the above available data is merely to find out the
percentage of income that one is willing to invest in insurance.
Q.4What priorities would you consider most important, while

purchasing a policy?

Criteria/Rank 1 2 3 4 5

Death Benefit 29 10 6 2 3

Children’s 7 13 21 3 0

Future

Retirement 5 5 6 20 7

Planning

Tax Planning 8 18 8 8 6

Financial 2 5 3 11 25

Planning

From the table and chart it can be say that most of the people rank

death benefit first for the decision to make investment in Insurance.

Their second priority is tax planning because the premium, which is

paid by the people towards Insurance, is deductible up to certain limit

from the income and also the maturity amount is also tax free. The

third and fourth priorities are children’s future and retirement

planning.
Q.5 Do you have any knowledge of the stock market?

Criteria No. of Respondents

Yes 32

No 18

Q.6If “Yes” do you have any knowledge about unit linked

insurance plans?

Criteria No. of Respondents

Yes 25

No 7

The question number 5 and 6 are designed to know the awareness of

people who have knowledge of share market or deals in shares also

have the knowledge of the new modern insurance product i.e. Unit

Linked Insurance Plan. From the available data it can be say that

those who deal in shares are also aware of the ULIP.

Q.7 If given a choice, where would you like to invest your

money?

(Please Rank Your Choice)

Choice/Rank 1 2 3 4 5 6 7

Mutual Fund 0 1 5 1 25 12 5

Insurance 4 12 14 4 8 3 0

Gold 4 8 1 2 2 5 13

Equities 17 3 0 5 2 6 1

Post Office 22 12 12 2 2 0 0

Debenture 0 2 4 10 1 14 2

Bank Deposit 0 6 12 19 1 0 3

Other 10 5 0 2 1 0 0

This question is mainly designed to know the investment priorities of

the people of DOMBIVLI town.

Q.8 According to you what are the factors that would affect

your decision while purchasing an insurance policy?

Criteria/Rank 1 2 3 4 5

Premium 12 15 15 6 2

Return 21 17 8 2 2

Safety 20 14 15 1 0

Liquidity 1 1 9 18 2

Market 1 2 0 16 2

Condition

The question No. 8 is designed to know which the factors are

affecting the most to the prospect while making decision to invest in
insurance. As far as investment in insurance is concerned most of the
people want that it should be safe and at the same time giving the
compatible returns because insurance is not only for death benefit it
is also a saving tool for future. So the mix response of respondents is
welcomed. Available data is such that there is a bit ambiguity.
Q. 9 Are you or any of your family members are planning to buy

an insurance policy in near future?

Criteria No. of Respondents

Yes

No

This question is taken to collect the information of those respondents

who are going to plan to purchase insurance within near future that is
used by the company for making personal contact for sale.

Q. 10 Are your needs satisfied with your current investment

in insurance?

Criteria No. of Respondents

Yes

No
Q. 11 If “No”, then give reasons?

Criteria No. of Respondents

High Premium 0

Low Return 1

Poor Services 7

Others 2

The question No.10 and 11 are designed to know the percentage of

people who are not satisfied with the current investment in insurance
and also to know the reasons behind it. So, that the company can
focus on those areas where the competitors fail. Because now a days
the competition is very stiff in the insurance industry. All companies
are trying to attract more customers by anyhow. So it will be useful for
designing the promotional schemes of the company.

From the above table and chart it can be seen that the respondents
who are dissatisfied give the main reason behind it are poor services.
There are many others reasons like more time taken by the company
for claim settlement, non-dispatchment of cheques and other
important vouchers, etc. So the company can improve upon these
and increase its market share by offering quality service to the
customers.
 SWOT ANALYSIS

 Strengths

1. Flexible Products
2. Partners having experience in different markets of the world.
3. Synergy with existing operations
4. Expertise in the field of insurance
5. Professional management
6. Create a brand name

 Weakness

1. Low capital base

2. Yet to build strong distribution network
3. Cannot tap rural market
 Opportunities

1. Untapped market
2. Banks ready to tie up for as a readymade distribution network
for a small fee.

 Threats

1. Large distribution network of LIC

2. Decades of experience and brand name of LIC
3. 5% service tax on investments.
CHAPTER 4

CONCLUSION
India is among the most promising emerging insurance markets in the
world. Its current premium volume of USD 18 billion has the potential
to increase to USD 90 billion within the next decade. In particular, life
insurance, which currently makes up 80% of premiums, is widely
tipped to lead the growth. The major drivers include sound economic
fundamentals, a rising middle-income class, an improving regulatory
framework and rising risk awareness.

The groundwork for realizing potential was arguably laid in 2000

when India undertook to open the domestic insurance market to
private-sector and foreign companies. Since then, 13 private life
Insurers and eight general insurers have joined the Indian market.
Significantly, foreign players participated in most of these new
companies – despite the restriction of 26% on foreign ownership.
Incumbent state-owned insurance companies have so far managed
to hold their own and retain dominant market positions. Yet, their
market share is likely to decline in the near to medium term.
Important steps have thus been already taken, but there are still
major hurdles to overcome if the market is to realize its full potential.
To begin with, India needs to further liberalize investment regulations
on insurers to strike a proper balance between insurance solvency
and investment flexibility. Furthermore, both the life and non-life
insurance sectors would benefit from less invasive regulations. In
addition, price structures need to reflect product risk. Obsolete
regulations on insurance prices will have to be replaced by risk-
differentiated pricing structures.
 BIBLOGRAPHY

WEBLIOGRAPHY

http://www.irda.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?pa
ge=PageNo4&mid=2

http://en.wikipedia.org/wiki/Insurance#History_of_insurance

http://en.wikipedia.org/wiki/Insurance_in_India

BOOKS

Insurance Industry vol.3- edited by U. JAWAHARLAL

ANNEXURE
 Do you have a Life Insurance Policy?
 Yes  No 

 Which Company’s Insurance Policies do you have?

 (Tick where applicable)
 LIC  SBI Life Insurance
 HFC Standard Life  New York MaxLife
 Birla Sunlife  Alliance Bajaj
 Cholamandalam  ICICI Pru. Life Insurance
 TATA AIG Insurance MetLife Insurance
 ING Vysya  OM Kotak Mahindra
 AVIVA Life  AMP Sanmar

 What is amount of insurance premium you pay annually?

 What priorities would you consider most important, while purchasing

a policy? (Please Rank Your Choice)
 Death Benefit 
 Children’s Education 
 Retirements Benefit 
 Tax Planning 
 Financial Planning 

 you have any knowledge of the stock market?

 Yes  No 

 If “Yes” do you have any knowledge about unit linked insurance

plans?
 Yes  No 
 If given a choice, where would you like to invest your money?
 (Please Rank Your Choice)
 Mutual Funds  Post Office Schemes
 Insurance Policies  Debentures
 Gold  Banks (FD’s etc.)
 Equities  If other (specify)_

 According to you what are the factors that would affect you decision
while purchasing an insurance policy?
 (Please Rank Your Choice)
 Premium 
 Return 
 Safety 
 Liquidity 
 Market Condition 

 Are you or any of your family members are planning to buy an

insurance policy in near future?
 Yes  No 

 Are your needs satisfied with your current investment in insurance?

 Yes  No 

 If “No”, then give reasons?

 High Premium  Poor Services 
 Low Return  Other Reasons