-MADHU VERMA

Head , HUMANIES & Management

UIT - BARKATULLAH UNIVERSITY
BHOPAL
 That there are countless risks everyday in every walk of life
……is a commonly accepted phenomenon
 The basic human trait is to be averse to the idea of taking
risks
 There is always a constraint to minimize the

 The chances of occurrences of these events causing los. tses

are, however, uncertain as these may or may not occur

 People facing common risks come together and make their

small contributions in the common fund.

 While it may not be possible to tell in advance, which person

will suffer the losses, it is possible to work out how many
persons on an average out of the group, may suffer losses.

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 Thereby, a contract of insurance may be
created as a contract whereby, one person,
called the “insurer”, undertakes, in return for
the agreed consideration, called the
“premium” to pay to another person, called
“assured”, a sum of money or its equivalent
on the happening of a specified event.

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 Risk Evaluation
 Transfer and Sharing of Risk
 Payment Amount
 Large number of insured persons
 Payment at certain eventuality
 Exceedingly co-operative instrument

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 In India, protection has a thoughtful
recognized history. It stores in the works of
Manu (manusmrithi), Yagnavalkya
(Dharmasastra) and Kautilya (Arthasastra).
The written work mentions regarding pooling
of assets that could be re-appropriated in the
midst of debacle.
 Protection in India has advanced over time
hugely drawing from different nations,
England specifically.

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 In India, insurance business started 150 years
ago. With the establishment of the Oriental
Life insurance company in Calcutta, the
business of life insurance in India was started
in 1818.

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SWOT Analysis of
Insurance Industry in
India

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 Strengths

 • Growing economy with strong market

dynamics
 • Vast population as prospective consumers
 • Democratic government with regulatory
framework familiar to Western corporations
 • Less risk of slowdown of economy
compared to other emerging markets

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• Less supportive political and bureaucratic
regulatory environment
 • Dominance of state-owned insurers in
market
 • Low non-life penetration rate and low life
density compared to world

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 • One billion populations can bring enormous
opportunities as it has long-term potential as
it will increase insurance users.
 • Rising 'middle class', and an elite group of
extremely wealthy Indians are also seems as
business opportunities.
 . Increase in FDI limit to 49%


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 • The political environment is not conducive
to constructive change or sound economic
management.
 • The dominance of entrenched players
makes it possible that the industry will
stagnate.
 • The legal framework, bureaucracy and
financial infrastructure worsen the insurance
business environment.

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 Concentration and centralization processes:
-strategic alliances between insurance and
reinsurance companies;
-fusion of banks, insurance companies, and
credit companies to form transnational
financial groups;
-mergers between small and medium
insurance companies to form large
international insurance companies.

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 Public: Private
1:23

Market Share of Insurers Financial Year Public

(LIC) Vs Private Insurers

 2001-02 99.46 / 0.56

 2010-11 69.77 / 30.23

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 Modification to traditional forms and types of
insurance services and new insurance
products:

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Share of each Fund in total assets under
management

Year Life Fund Pension & ULIP Fund

Group Fund
2001 100.00 ----- ---
2010 60.79 11.69 27.52
2015 66.53 16.14 17.33

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 The analysis indicated a strong
correlation between inflation and life
insurance premium underwritten with a
correlation coefficient of 0.97

 Interest rate has a negative

correlation with life insurance
premium as expected with a
correlation co-efficient of -0.507.
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 When inflation rises, it reflects in increase in life
insurance premium amount for new business as the
premium charged should be adjusted under
inflationary conditions. Hence the new life insurance
premiums have increased and it is reflected in a strong
positive correlation between inflation and life
insurance premium.

 A fall in interest rates would lead to an increase in life

insurance premium because people will invest huge
amount and will take more number of policies from LIC
of India and other private life insurance companies
when compared to other financial savings. Since
people will invest and save their money in policies for
yielding additional returns with life risk cover

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 http://www.policyholder.gov.in/Annual_Reports.aspx
 “A Study on the Impact of FDI in Insurance Sector,” Pavithra and Murugan
Ramu, International Journal of Pure and Applied Mathematics Volume 119
No. 17 2018, 499-508 ISSN: 1314-3395 (on-line version) url:
http://www.acadpubl.eu/hub/ Special Issue
 http://mbaprojectreportindia.blogspot.in/2013/05/swot-analysis-of-
insurance-industry-in.html
 Mohanakumar, P. S. (2004). Globalization of Finance: Reflections on Indian
Banking and Insurance Sector. Asian Economic Review, 46(3).
 Yadav Rajesh K., , Sarvesh Mohania. Impact of F.D.I. on Life Insurance Sector
in India, World Scientific News, 47(2) (2016) 190-201. EISSN 2392-2192
 Press Information Bureau, Government of India, Ministry of Finance, 30-
November-2012 15:46 IST
 Approved Public/Private Insurance Companies
IRDA Annual Report 2001-02 to 2015-2016. [Online] Available:
http://www.irda.org
 Sigma 9/2000, "World Insurance in 1999: Soaring Life Insurance Business”,
Swiss Re, Swi.s.s Reinsurance Company, Zurich, Switzerland;
(www.swisjire.com); Annual Report of IRDA. (2(X)0-2(X)I), IRDA.

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