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Insurance is a form of risk management primarily used to hedge against the risk of a contingent loss.

Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium. Insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice

In 1993, Malhotra Committee - headed by former Finance Secretary & RBI Governor R.N. Malhotra. Objective - to create more efficient & competitive financial system. Key recommendations of the reform

1.Structure: a. government stake 50% in insurance companies. 2.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.

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.


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 delay on payment beyond 30 days. Insurance companies must be encouraged to set up unit link pension plans.

THE GLOBAL PLAYERS in Life insurance

AVIVA

American International Group, Inc. (AIG)

Prudential PLC

Aviva Life Insurance

Aviva is the fifth-largest insurance group of the world & the biggest in the UK.
They are among the leading providers of life & pensions products in Europe. Aviva has a 35 million-customer base worldwide and more than 332 billion of assets under management. The mission of Aviva is: to provide prosperity and peace of mind for our customers.

AVIVA INDIA
Aviva was the first foreign insurance company in India to set up its representative office in 1995. In India Aviva has a joint venture with Dabur. Aviva has 112 Branches in India. Aviva products are available in 392 towns & cities across India.

Annual sales turnover is over Rs.12 billion.

Reasons for Growth


Provides value for money

Flexibility Transparency. It has been among the 1st to introduce the more modern Unit Linked Products in the market. Good products to offer.

American International Group, Inc. (AIG)

AIG is the world's leading international insurance & financial services org, with operations in more than 130 countries & jurisdictions. In the United States, AIG companies are the largest underwriters of commercial & industrial insurance. AIG companies are the largest underwriters.AIG also has one of the largest U.S. retirement savings. AIG American General is a top-ranked life insurer. A major focus of AIG's insurance business model is the concept of an underwriting profit.

TATA AIG
Tata AIG General Insurance company is a joint venture between the Tata Group & American International Group, Inc The Tata AIG General Insurance companys offers a complete range of insurance solutions The Tata AIG s product innovation The rural difference The enhancement of distribution channels

Reasons for Growth


Innovative Offers, Customer-Centric Products, Increasing Awareness Levels of Consumers Enhanced Service Standards, Reaching out to the customer through a number of distribution and communications channels Providing advice to the customer

Prudential PLC is an international financial services company. It has a product range of personal banking, insurance, pensions and retail investments, to institutional fund management and property investments . In the UK Prudential is a leading life & pensions provider with around 7 million customers. It is Asias leading European life insurer with life and fund management operations in 12 countries serving some seven million customers.

ICICI PRUDENTIAL
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank & Prudential PLC. ICICI Prudential was amongst the first private sector insurance companies to begin operations in December 2000.

The company has a network of about 56,000 advisors; as well as 7 banc assurance and 150 corporate agent tie-ups.
For the past four years, ICICI Prudential has retained its position as the No. 1 private life insurer in the country.

Reasons for Growth

Lucrative offers High standard service

Customer-centric products
Good communication techniques Use of customer feedback in improvement of offers.

FORMATION: Insurance corporation LIC was formed in September 1956 by an act of parliament LIC was formed with the capital contribution of 5 crores from the govt. of India and has the sole mandate of conducting life insurance business in India.

Before the formation of LIC there where 245 Indian and foreign insurers in India.
OBJECTIVES:

To maximize mobilization of peoples savings by making insurance linked saving adequately attractive.
To spread life insurance much more widely and in particularly in rural area, providing them with insurance at reasonable price and adequate finance cover.

GROWTH:
LIC has come a long way since its nationalization in 1956 over 40 years later in 1997 LIC had grown from Rs. 3.78 billion of new business in 1957 to Rs 555.5 billion The rural India accounting for around 40% of the business. In 1997, LIC had spread to the farthest corners of the country with an extensive network of over 8 lakh agents, 2048 branches(1370cities), 100 Divisional office, 7 Zonal offices and 1 Central office.

LIC has branch offices in U.K., Mauritius, & Fiji. In U.K.

Reasons for Growth


LICs Game Plan: LIC IS TO BE IDENTIFIED AS AN EPITOME OF CUSTOMER CARE AND CONCERN IN THE ENTIRE SERVICE INDUSTRY -Chairman G N BAJPAI

The IT initiative The company, has invested over Rs. 400 crore in technology up gradation. LIC now plans to increase the MAN to 33 more Cities by the end of the year so that they have 4 I cities on the WAN. That will make it the biggest network in the whole country, including that of the railways

Global insurance premiums grew by 9.7% reached $3.3 trillion by 2006. The profits of property and casualty insurance industry actually rose by $3.2 billion, or 5.5 %, to $30.6 billion during the first half of 2007. North America was the most important region with premium income of $1,217 billion in 2006. Followed by the EU (at $1,198 billion) & Japan (at $492 billion.) The United States & Japan alone accounted for a half of world insurance premiums.

The volume of UK insurance business totaled $295 billion


or 9.1% of global premiums by 2006.
Emerging markets accounted for over 85% of the worlds population but generated only 10% of premium.

The ISO results indicate a growth rate in net written premiums of just 0.1 % during the first half of 2007, down substantially from the 2.7 % increase during calendar year 2006.
The 0.1 % increase in premium growth, if maintained through 2007, would represent the lowest growth rates for the during the past 40 years.

The property/casualty and life insurance industry will not be materially affected by credit market developments. Because both by law and by the nature of their business, insurers generally limit themselves to the low-risk end of the investing universe. A small number of P/C insurers provide insurance on the creditworthiness on mortgage-backed securities.

The loss ratios for the credit insurance products of these companies are likely to rise due to increased delinquencies and defaults.

At least half of these companies are parts of larger financial services groups, so that the experience of this line of business is, for them, a small part of their overall operations. As such, it is much too early to estimate the dimensions of the claims experience that may emerge from the recent credit market developments. Of course some companies will be affected more than others, and the depth and length of the credit market challenges might be more adverse than many experts currently foresee .

But for now, these developments do not appear poised to adversely affect the insurance industrys ability to pay its claims and continue to have financially successful operations.

Life insurance industry grows 49% New Delhi June 14, 2007

life insurance industry - 49 % growth in new businesses, general insurance players - 16 % increase in April, Life Insurance Corporation, ICICI Prudential and SBI Life & 16 other players Rs 2,982 crore in April07 ------- with Rs 1,996 crore in April06 Countrys largest life insurer LIC saw new premiums grow 57 % to Rs 2,134 crore in April by selling 15,89,684 policies against Rs 1,355 crore last year. It had a market share of 71.56 % in April.

life insurers - Bajaj Allianz, ING Vysya Life & Reliance Life saw a decline in premium collections.

ICICI Prudential - premium income rising 84.5 % to Rs 271 crore - 9.08% market share.
Bajaj Allianz - 15 % share. in business - collected Rs 124 crore - 4.16 % market

general insurance industry grew 16 % in April, New India - With 8 % growth in premium collection at Rs 651 crore, retained its number one slot by cornering 20.72 % of market share. ICICI Lombard - new premium 36 % to Rs 448 crore - a market share of 14.28 % ICICI Lombard - the second-largest non-life insurance player.

Oriental Insurance premium collection at Rs 413 crore & a market of 13.16 %.


United India - 3 % growth in business at Rs 407 crore & 12.97 % of the market.

Indian Insurance Industry: New Avenues for Growth 2012

The potential of the Indian insurance industry is huge. HOW??? .. It has an annual growth rate of 15-20% & ..the largest number of life insurance policies in force.
Total value of the Indian insurance market (2004-05) is at Rs. 450 billion (US$10 billion). Insurance & Banking Services contribution to the country's gross domestic product (GDP) is 7% The funds available with the state-owned Life Insurance Corporation (LIC) for investments are 8% of GDP.

The year 1999 saw a revolution in the Indian insurance sector------the ending of government monopoly -----the passage of the Insurance Regulatory and Development Authority (IRDA) Bill

foreign partner can hold 26% equity in an insurance company, but there was a proposal to increase this limit to 49%.

Foreign

investments of Rs. 8.7 billion have poured into the Indian market & 21 private companies have been granted licenses.

retain only a part of the risk less than 10%. balance risk is re-insured. re-insurance is insurer's insurance. the backbone of the insurance business. provides a better spread of risk in the international market, allows primary insurers to accept risks beyond their capacity, settle accumulated losses arising from catastrophic events & maintain their financial stability. GIC - the major re-insurer.

all insurance companies have to give 20 per cent of their reinsurance business to GIC.
GIC reinsures the amount further with international companies such as Swissre (Switzerland), Munichre (Germany), and Royale (UK).

Jobs in insurance involve helping individuals and business manage risk to protect themselves from catastrophic losses and to anticipate potential risk problems. Insurance brokers and agents

Claims handlers
Underwriters

Conclusion

Insurance can be summed up as Praying for the best being PREPARED for the WORST.