Insurance, Sector History, FDI in Insurance, Government Role in Insurance, Industry Growth Pattern, Challenges of Insurance Market, Foreign Direct Investment in Insurance

2. • Insurance Overview
• Sector History
• FDI in Insurance
• Benefit Of FDI
• Government Role
• Future Expectation
• Challenges
• Industry Growth Pattern
• References

3. • A contract (policy) in which an individual or entity receives financial protection or
reimbursement against losses from an insurance company. The company pools clients' risks to
make payments more affordable for the insured.(1)
According to Investopedia
TYPES OF INSURANCE(2)
1. Life Insurance
2. General Insurance
 Motor Insurance
 Personal Accident Insurance
 Medical and Health Insurance
 Travel Insurance
 Marine Insurance

4. Year Milestones in the life insurance business in India(3)
1912 The Indian Life Assurance Companies Act enacted as the first statute to
regulate the life insurance business
1928 The Indian Insurance Companies Act enacted to enable the government to
collect statistical information about both life and non-life insurance
businesses
1938 Earlier legislation consolidated and amended to by the Insurance Act with
the objective of protecting the interests of the insuring public.
1956 245 Indian and foreign insurers and provident societies taken over by the
central government and nationalized. LIC formed by an Act of Parliament,
viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the
Government of India.

5. Year Milestones in the general insurance business in India(3)
1907 The Indian Mercantile Insurance Ltd. set up, the first company to transact all
classes of general insurance business
1957 General Insurance Council, a wing of the Insurance Association of India,
frames a code of conduct for ensuring fair conduct and sound business
practices
1968 The Insurance Act amended to regulate investments and set minimum
solvency margins and the Tariff Advisory Committee set up.
1972 The General Insurance Business (Nationalization) Act, 1972 nationalized the
general insurance business in India with effect from 1st January 1973. 107
insurers amalgamated and grouped into four companies viz. the National
Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental
Insurance Company Ltd. and the United India Insurance Company Ltd. GIC
incorporated as a company.

6. • The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector.
Due to new economic policy the insurance sector was reopened to the private sector.
• The IRDA opened up the market in August 2000 with the invitation for application for registrations. The
bill allows foreign equity stake in domestic private insurance companies to maximum of 26% of the
total paid-up capital and seeks to provide statutory status to the insurance regulator.
• The Insurance Bill, 2015, already passed by the Lok Sabha, Receive a green signal from the Rajya Sabha
(on Mar 12, 2015), seeks to increase the cap on foreign direct investment (FDI) in the insurance sector
from 26% to 49%
Type of Business No. of Public Sector
Companies
No. of Private
Sector Companies
Total Companies
Life Insurance 01 23 24
General Insurance 06 22 28
Re Insurance 01 0 01
Total 08 45 53
Data as on June 2014

7. 1. Insurance Products : Insurers will benefit from the hike of FDI
and will offer better and wide range of insurance products to
customers at larger competitive prices.
2. Aggression : The industry has been cautious in selling products
which are capital intensive, it will be able to become more
aggressive.
3. Increased Capital Inflow : Most of the private sector insurance
companies have been making considerable losses. The
increased FDI limit has brought some much needed relief to
these firms as the inflow of more than 10,000 crore is
expected in the near term. This could go up to 40,000 crore in
the medium to long term, depending on how things pan out.
4. New Players : We can expect about 100 life and non-life
insurance companies to serve a market of our size. Increasing
FDI could see 25-30 new insurers entering the market.
5. Level Playing Field : With the increase in foreign direct
investment to 49 percent, the insurance companies will get
the level playing field. So far the state owned Life Corporation
of India controls around 70 percent of the life insurance
market.
IRDA's Annual Report 2014

8. • Increase in Foreign Direct Investment Limit from 26 to 49%.
• Increase in Deduction Allowed for Medical Insurance (Section 80D) in Income Tax (Budget
2015)(6).
• Pradhan Mantri Jeevan Jyoti Bima Yojana. This scheme aims to provide life insurance cover.
Premium: Rs. 330 per annum. It will be auto-debited in one instalment.
• Pradhan Mantri Suraksha Bima Yojana. This scheme is mainly for accidental death insurance
cover for up to Rs. 2 lakh. Premium: Rs. 12 per annum.

9. • India's life insurance sector is the biggest in the world with about 360 million policies which are
expected to increase at a compound annual growth rate (CAGR) of 12-15% over the next five years.
• The insurance industry plans to hike penetration levels to five per cent by 2020.
• The country’s insurance market is expected to quadruple in size over the next 10 years from its
current size of US$ 60 billion. During this period, the life insurance market is slated to cross US$ 160
billion.
• The general insurance business in India is currently at Rs 78,000 crore (US$ 11.7 billion) premium
per annum industry and is growing at a healthy rate of 17 per cent.
• The Indian insurance market is a huge business opportunity waiting to be harnessed. India currently
accounts for less than 1.5% of the world’s total insurance premiums and about 2 per cent of the
world’s life insurance premiums despite being the second most populous nation. The country is the
fifteenth largest insurance market in the world in terms of premium volume, and has the potential
to grow exponentially in the coming years.
• Life Insurance Sector Likely to Grow 12-15% in FY16: ICRA

10. • Cut Threat Competition
• Customer Relationship Management
• Distribution of Products
• Risk Management
• Untapped Market Segments
• Relationship Management
• Human Resource Management
• Managing the Regulatory Authority

12. 1. http://www.investopedia.com/terms/i/insurance.asp (Dated 1st Nov 2015)
2. http://www.insuranceinfo.com.my/learn_the_basics/types_of_insurance.php?intPrefLangID=1 and
http://www.allbankingsolutions.com/Top-Topics/Types-of-insurance.shtml (Dated 1st Nov 2015)
3. https://www.irda.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=PageNo4&mid=2 (Dated 1st Nov 2015) and Dr. N.
KANNAN (2010), “A STUDY ON THE GROWTH OF INDIAN INSURANCE SECTOR” International Journal of Management, Vol. 1,
Issue-1, May 2010, pp. 17 –32
4. Singh Ruby, Gautam Amit (2014), “Foreign Direct Investment and Indian Insurance Industry”, International Journal of Advance
Research Computer Science and Management Studies, Vol. 2, Issue-6, June 2014 and http://www.business-
standard.com/article/current-affairs/six-year-wait-ends-for-up-to-49-fdi-in-insurance-115031300034_1.html (Dated 1st Nov
2015).
5. Pawar Subhash D., “ROLE OF FDI AND INSURANCE SECTOR : INDIAN PERSPECTIVE”, Tactful Management Research Journal
6. http://www.charteredclub.com/section-80d/
7. http://www.ibef.org/industry/insurance-sector-india.aspx
8. G. Chandrayya (2015), “Opportunities and Challenges of Insurance Industry in India”, International Journal of Academic
Research, Vol.2, Issue-2(3)
9. http://www.ibef.org/industry/insurance-sector-india.aspx