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Insurance Sector In India

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Insurance Sector In India

  1. 1. PROJECT REPORT ON “Insurance Sector in India” Name: Vijay Phoolchand Verma (S.Y.B.Voc) Financial Market & Services Semester III (2015-2016) Project Guideline:- Prof. Soni J. Khemani UNIVERSITY OF MUMBAI RAMNIRANJAN JHUNJHUNWALA COLLEGE GHATKOPAR (WEST) MUMBAI- 400086.
  2. 2. DECLARATON Mr.VIJAY P.VERMA student of S.Y.Bvoc Financial Market& Services (2015-2016) of Ramniranjan Jhunjhunwala College, Ghatkopar (W), Mumbai 400086 do hereby declare that I have completed the project work titled “Insurance Sector in India”. The information contained in this project is true and original to the best of my knowledge and belief. Date: - Signature of the Student
  3. 3. ACKNOWLEDGEMENT I take this opportunity to extend my profound sense gratitude and heartfelt appreciation to Prof. Soni Khemani for her guidance at all stages of my project. I would like to thank her for her annotations and suggestions during the development of this project and also for taking out time from their busy. Prof. Usha Mukundun Principal, Ramniranjan Jhunjhunwala College Prof. Soni Khemani Finally I would like to sincerely thank all those who were directly or indirectly involved in this project. To sum it all, I would like to say is.... “Your experience and cooperation along with my efforts helped me to successfully complete my project.” Signature of the student
  4. 4. CERTIFICATE Prof. Soni Khemani do hereby certify that, Mr. Vijay Phoolchand Verma student of S.Y.Bvoc Financial Market & Services (2015-2016) of Ramniranjan Jhunjhunwala College, Ghatkopar (w), Mumbai -400086 has completed the project work on “Insurance Sector in India” as a part of the academic fulfilment, under my guidance. Signature of Principal Signature of project guide Signature of Examiner
  6. 6. WHAT IS INSURANCE? INTRODUCTION Everyone is exposed to various risks. Future is very uncertain, but there is way to protect one’s family and make one’s children’s future safe. Life Insurance companies help us to ensure that our family’s future is not just secure but also prosperous. Life Insurance is particularly important if you are the sole breadwinner for your family. The loss of you and your income could devastate your family. Life insurance will ensure that if anything happens to you, your loved ones will be able to manage financially. This study titled “Study of Consumers Perception about Life Insurance Policies” enables the Life Insurance Companies to understand how consumer’s perception differs from person to person. How a consumer selects, organizes and interprets the service quali tyand the product quality of different Life Insurance Policies, offered by various Life Insurance Companies. Insurance is a tool by which fatalities of a small number are compensated out of funds (premium payment) collected from plenteous. Insurance companies pay back for financial losses arising out of occurrence of insured events e.g. in personal accident policy death due to accident, in fire policy the insured events are fire and other al lied perils like riot and strike, explosion etc. hence insurance safeguard against uncertainties. It provides financial recompense for losses suffered due to incident of unanticipated events, insured with in policy of insurance. Moreover, through a number of acts of parliament, specific types of insurance are legally enforced in our country e.g. third party insurance under motor vehicles Act, public liability insurance for handlers of hazardous substances under environment protection Act. Etc. It is a commonly acknowledged phenomenon that there are countless risks in every sphere of life .for property, there are fire risk; for shipment of goods. There are perils of sea; for human life there are risk of death or disability; and so on .the chances of occurrences of the events causing losses are quite uncertain because these may or may not take place. Therefore, with this view in mind, people facing common risks come together and make their small contribution to 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. When risk occurs, the loss is made good out of the common fund .in this way each and every one shares the risk .in fact they share the loss by payment of premium, which is calculated on the likelihood of loss .in olden time, the contribution make the above-stated notion of insurance
  7. 7. DEFINITION OF INSURANCE Insurance has been defined to be that in, which a sum of money as a premium is paid by the insured in consideration of the insurer’s bearings the risk of paying a larges um upon a given contingency. The insurance thus is a contract whereby: a.Certain sum, termed as premium, is charged in consideration, b.Against the said consideration, a large amount is guaranteed to be paid bythe insurer who received the premium, c. The compensation will be made in certain definite sum, i.e., the loss or the policy amount which ever may be, and d. The payment is made only upon a contingency More specifically, insurance may be defined as a contact between two parties, wherein one party (the insurer) agrees to pay to the other party (the insured) or the beneficiary, ascertain sum upon a given contingency (the risk) against which insurance is required.
  8. 8. Indian Insurance Market Indian economy is the 12th largest in the world, with a GDP of $1.25 trillion and 3rd largest in terms of purchasing power parity. With factors like a stable 8-9 per cent annual growth, rising foreign exchange reserves, a booming capital market and a rapidly expanding FDI inflows, it is on the fulcrum of an ever increasing growth curve. Insurance is one major sector which has been on a continuous growth curve since the revival of Indian economy. Taking into account the huge population and growing per capita income besides several other driving factors, a huge opportunity is in store for the insurance companies in India. According to the latest research findings, nearly 80% of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. And this part of the population is also subjected to weak social security and pension systems with hardly any old age income security. As per our findings, insurance in India is primarily used as a means to improve personal finances and for income tax planning; Indians have a tendency to invest in properties and gold followed by bank deposits. They selectively invest in shares also but the percentage is very small 4-5%. This in itself is an indicator that growth potential for the insurance sector is immense. It’s a business growing at the rate of 15-20% per annum and presently is of the order of $47.9 billion.India is a vast market for life insurance that is directly proportional to the growth in premiums and an increase in life density. With the entry of private sector players backed by foreign expertise, Indian insurance market has become more vibrant. Competition in this market is increasing with company’s continuous effort to lure the customers with new product offerings. However, the market share of private insurance companies remains very low -- in the 10-15% range. Even to this day, Life Insurance Corporation (LIC) of India dominates Indian insurance sector. The heavy hand of government still dominates the market, with price controls, limits on ownership, and other restraints.
  9. 9. HISTORY OF INSURANCE SECTOR 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 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.
  10. 10. The history of general insurance dates back to the Industrial Revolution in the west and the consequent growth of sea-faring trade and commerce in the 17th 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 (Nationalisation) Act, general insurance business was nationalized with effect from 1st 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 be 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.
  11. 11. 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 28 general insurance companies including the ECGC and Agriculture Insurance Corporation of India and 24 life insurance companies operating in the country. The insurance sectoris 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.
  12. 12. Important Developments in the History of Indian Insurance Business Before deregulation in 1999, the insurance industry in India consisted of only two state insurers, namely Life Insurance Corporation of India (LIC) for life insurance, and General Insurance Corporation of India (GIC) with its four subsidiaries for general insurance. According to the Insurance Regulatory and Development Authority (IRDA), the insurance industry in India at present consists of 24 general insurance companies including specialised insurers such as Export Credit Guarantee Corporation of India and the Agricultural Insurance Corporation of India, and 23 life insurance companies. Of the 22 insurers who set up operations in life insurance after the industry was opened up for the private sector, 20 are joint ventures with foreign companies. Similarly, of the 17 non- life insurers, including health insurers operating in the private sector, 16 are in collaboration with foreign partners. Thus, 36 insurance companies in the private sector are operating in collaboration with well-established foreign companies. Prior to the opening up of insurance for the were introduced and these included products’ liability, corporate cover, professional indemnity policies, weather insurance, credit insurance and travel insurance. Table 1.1 shows important developments in the history of the Indian insurance industry.
  13. 13. Socio-Economic Characteristics of Insured and Uninsured Households The distribution of households by occupation and level of education is shown in Table 3.1. The occupation which forms the major source of income for the family has been taken as the occupation of the household. Similarly, the highest level of education of any member in the household has been taken as its level of education. This was done because, even where the head of the family is not literate, the younger members might be well educated and, being aware of insurance, become responsible for the household becoming insured. It can be seen from Table 3.1 that a high percentage of the insured households are: (i) self-employed to the extent of approximately 52 per cent, comprising 9.67 per cent in agriculture and 32.28 per cent in nonagricultural work; (ii) salaried, comprising 34 per cent; and (iii) engaged as labour,comprising less than 13 per cent. As regards uninsured households, theposition is: (i) approximately 38 per cent belong to the labour force, comprising five per cent in agricultural labour and 33 per cent in casual labour; (ii) approximately 41 per cent are selfemployed, comprising 16.2 per cent in agriculture and 24.81 per cent in nonagricultural work; and (iii) only one-fifth are salaried or earn regular wages. The irregularity in the earnings of uninsured households could be a major impediment in their opting for insurance, as it involves regular payment. However, a slightly higher percentage of urban uninsured households (3.46%) are self-employed in agriculture, as compared with insured urban households (2.38%). Nevertheless, in both insured and uninsured households, a higher proportion in the rural category is selfemployed in agriculture or works as agricultural labour, as opposed to urban households where a higher proportion works as casual labour, is self-employed in non- agricultural work, or is salaried. Tables S3.1(a), S 3.1(b) and S 3.1(c) given in Annexure, show the state-wise distribution of households by main occupation of the household. While the distribution follows the pattern applicable to India as a whole, there are some
  14. 14. differences, such as: (i) in Chandigarh, Delhi, Daman and Diu, Goa and Andhra Pradesh, the proportion of households receiving salaries and regular wages is higher in the uninsured urban households as compared with insured urban households; (ii) among the rural insured households surveyed, in Sikkim more than 95 per cent were salaried or had regular wages, while the uninsured once again had the highest proportion of households that were self-employed in agriculture; (iii) among insured urban households, Mizoram has the highest proportion of salaried households at approximately 95 per cent; (iv) among uninsured urban households, three-fourths in Orissa depend on casual labour; and (v) for urban households, there is a large difference in the proportion of salaried and labour categories as between the insured (43 per cent salaried and 14 per cent labour) and uninsured (18 per cent salaried and 42 per cent labour) in the eastern region. As regards the highest level of education of households, nearly two-thirds of those insured are educated at least up to higher secondary school, but much lower for the uninsured at approximately 45 per cent. On the other hand, illiterate households account for approximately one per cent of the insured group, but three per cent of the uninsured group. These observations suggest that education does influence the households’ decision to opt for insurance. Within insured households, the proportion of illiterate households is slightly higher and those educated up to higher secondary school or above slightly lower among the rural households as compared with the urban households. This implies that urban households are better educated. Tables S3.1 (d), S3.1 (e) and S3.1 (f ) in the Annexure show the state-wise distribution of households by level of education of household. Among the rural insured, 95.45 per cent of the households in Mizoram come under the highest education level, while the highest proportion of illiterates is seen in Rajasthan. Among the urban insured, Meghalaya has the highest proportion of households under the highest education level (94.52%), while once again Rajasthan has the highest percentage of illiterates (11.72%). Among rural households, the southern region has the largest proportion of households in the highest education category at 65 per cent in the insured and 50 per cent in the uninsured households. The proportion of illiterates is highest in the northern region (2%) amongst both insured and uninsured (6%) households.
  15. 15. TYPES OF INSURANCE Insurance occupies an important place in the modern world because of the risk, which can be insured, in number and extent owing to the growing complexity of present day economic system. The different type of insurance have come about by practice within insurance companies, and by the influence of legislation controlling the transacting of insurance business, broadly, insurance may be classified into the following categories:
  16. 16. Classification from business point of view a)Life insurance b)General insurance 2.Classification on the basis of nature of insurance a)Life insurance b)Fire insurance c)Marine insurance d)Social insurance, and e)Miscellaneous insurance 3.Classification from risk point of view a)Personal insurance b)Property insurance c)Liability insurance d)Fidelity general insurance
  17. 17. Life Insurance : Life insurance may be defined as a contract in which the insurer, in consideration of a certain premium, either in a lump sum or by other periodical payments, agrees to pay the assured, or to the person for whose benefit the policy is taken, the assured sum of money, on the happening of a specified event contingent on the human life. A contract of life insurance, as in other forms of insurance, requires that the assured must have at the time of the contract an insurable interest in his life upon which the insurance is affected. In a contract of life insurance, unlike other insurance, interest has only to be proved at the date of the contract, and not necessarily present at the time when the policy falls due. A person can assure in his own life and every part of it, and can insure for any sum whatsoever, as he likes. Similarly, a wife has an insurable interest in her husband and vice-versa. However, mere natural love and affection is not sufficient to constitute an insurable interest. It must be shown that the person affecting an assurance on the life of another is so related to that other person as to have a claim for support. For example, a sister has an insurable interest in the life of a brother who supports her. A person not related to the other can have insurable interest on that other person. For example, a creditor has insurable interest in the life of his debtor to the extent of the debt. A creditor can insure the life of his debtor upto the amount of the debt, at the time of issue of the policy. An employee has an insurable interest in the life of the employer arising out of contractual obligation to employ him for a stipulated period at fixed salary. Similarly, from an employer to the employee, who is bound by the contract to serve for a certain period of time.
  18. 18. General insurance: Insurance other than ‘Life Insurance’ falls under the category of General Insurance. General Insurance comprises of insurance of property against fire, burglary etc, personal insurance such as Accident and Health Insurance, and liability insurance which covers legal liabilities. There are also other covers such as Errors and Omissions insurance for professionals, credit insurance etc. Non-life insurance companies have products that cover property against Fire and allied perils, flood storm and inundation, earthquake and so on. There are products that cover property against burglary, theft etc. The non-life companies also offer policies covering machinery against breakdown,there are policies that cover the hull of ships and so on. A Marine Cargo policy covers goods in transit including by sea, air and road. Further, insurance of motor vehicles against damages and theft forms a major chunk of non-life insurance business. Personal insurance covers include policies for Accident, Health etc. Products offering Personal Accident cover are benefit policies. Health insurance covers offered by non-life insurers are mainly hospitalization covers either on reimbursement or cashless basis. The cashless service is offered through Third Party Administrators who have arrangements with various service providers, i.e., hospitals. The Third Party Administrators also provide service for reimbursement claims. Sometimes the insurers themselves process reimbursement claims
  19. 19. Marine Insurance : A contract of marine insurance is an agreement whereby the insurer undertakes to indemnity the assured in a manner and to the extent thereby agreed, against marine losses, that is, the losses incidental to marine adventure. There is a marine adventure when any insurable property is exposed to marine perils. Marine perils also known as perils of the seas, means the perils consequent on, or incidental to, the navigation of the sea or the perils of the seas, such as fire, war perils, pirates, robbers, thieves; captures, jettisons, barratry and any other perils which are either of the like kind or may be designed by the policy. There are different types of marine policies known by different names according to the manner of their execution or the risk they cover. They are : voyage policy, time policy, valued policy, unvalued policy, floating policy, wager or honour policy. Marine insurance provides protection against loss of marine perils. The marine perils are collision with rock, or ship attacks by enemies, fire and capture by pirates etc. These perils cause damage, destruction or disappearance of the ship and cargo and non-payment of freight. So, marine insurance insures ship (Hull), cargo and freight. Types of policies are: - Voyage policies - Time policies - Valued policies - Hull insurance - Cargo insurance - Freight insurance
  20. 20. Social Insurance : Social insurance has been developed to provide economic security to weaker sections of the society who are unable to pay the premium for adequate insurance. The following types of insurance can be included in social insurance (i) Sickness Insurance : In this type of insurance medical benefits, medicines and reimbursement of pay during the sickness period, etc. are given to the insured person who fell sick. ii) Death Insurance : Economic assistance is provided to dependants of the assured in case of death during employment. The employer can transfer his such liability by getting insurance policy against employees. iii) Disability Insurance : There is provision for compensation in case of total or partial disability suffered by factory employees due to accident while working in factories. According to Employees Compensation Act, the responsibility to pay compensation is vest with the employer. But the employer transfers his liability on the insurer by taking group insurance policy. iv) Unemployment Insurance : In case insured person becomes unemployed due certain specific reasons, he is given economic support till he gets employment. v) Old-age Insurance : In this category of insurance, the insured or his dependents is paid, after certain age, economic assistance. For the last few years, the Indian Government has extended the scope of Social Insurance. Under the concept of social justice, this scheme now extended to Daily-wages earners, Rickshaw pullers, Landless labourers, Sweepers, Craftsmen, etc. through different insurance
  21. 21. Miscellaneous Insurance : The process of fast development in the society gave rise to a number of risk or hazards. To provide security against such hazards, many other types of insurance also have been developed. The important among them are (i) Vehicle insurance on buses, cars, trucks, motorcycles, etc. and made compulsory so that the losses due to accidents can be claimed from the insurance company. (ii) Personal accident insurance by paying an annual premium Rs.12 on policy worth Rs.12,000. In case of accidental death or total/partial disability, a fixed amount as per conditions of insurance, is paid to the insured. (iii) Burglary insurance -- (against theft, decoity etc.) (iv) Legal liability insurance (insurance whereby the assured is liable to pay the damages to property or to compensate the loss of personal injury or death. This is in the form of fidelity guarantee insurance, automobiles insurance and machines etc.) (v) Crop insurance (crops are insured against losses due to heavy rains and floods, cyclone, draughts, crop diseases, etc.) (vi) Cattle insurance (Insurance for indemnity against the loss of cattle from various kinds of diseases) In addition to the above, insurance plans are available against crime, medical insurance, bullock cart, jewellery, cycle rickshaw, radio, T.Vs., etc.
  22. 22. Classificationfrom Risk Point of View From risk point of view, insurance canbe classifiedinto four categories 1. Personal Insurance 2. Property Insurance 3. Liability Insurance 4. Fidelity Guarantee Insurance A brief description of each is given below : Personal Insurance Personal insurance refers, the loss of life by accident, or sickness to individual which is covered by the policy. The insurer undertakes to pay the sum insured on the happening of certain event or on maturity of the period of insurance. This insurable sum is determined at the time of affecting the policy and include life insurance, accident insurance, and sickness insurance. Life insurance contains the element of investment and protection, while the accidental, sickness or health insurance contain the element of indemnity only. Property Insurance Contract of property insurance is a contract of indemnity. Proof by the assured of loss is an essential element of property insurance. The policies of insurance against burglary, home-breaking or theft etc. fall under this category. The assured is required to protect the insured property. After the loss has taken place, the assured usually required to notify the police as to losses.
  23. 23. Liability Insurance Liability insurance is the major field of general insurance whereby the insurer promises to pay the damage of property or to compensate the losses to a third party. The amount of compensation is paid directly to third party. The fields of liability insurance include workmen compensation insurance, third party motor insurance, professional indemnity insurance and third party liability insurance etc. In liability insurance, there may be various reasons for the arising of liability; viz. accident to a worker at the workplace, defective goods, explosion in the factory during the process of production, formation of poisonous gas within the factory, due to the uses of chemicals and other such substances in the manufacturing process. Fidelity Guarantee Insurance : In this type of insurance, the insurer undertakes to indemnify the assured (employer) in consideration of certain premium, for losses arising out of fraud, or embezzlement on the part of the employees. This kind of insurance is frequently adopted as a precautionary measure in cases where new and untrained employees are given positions of trust and confidence.
  24. 24. THE IMPORTANCE OF INSURANCE Insurance benefits society by allowing individuals to share the risks faced by many people. But it also serves many other important economic and societal functions. Because insurance is available and affordable, banks can make loans with the assurance that the loan’s collateral (property that can be taken as payment if a loan goes unpaid) is covered against damage. This increased availability of credit helps people buy homes and cars. Insurance also provides the capital that communities need to quickly rebuild and recover economically from natural disasters, such as tornadoes or hurricanes. Insurance itself has become a significant economic force in most industrialized countries. Employers buy insurance to cover their employees against work-related injuries and health problems. Businesses also insure their property, including technology used in production, against damage and theft. Because it makes business operations safer, insurance encourages businesses to make economic transactions, which benefits the economies of countries. In addition, millions of people work for insurance companies and related businesses. In 1996 more than 2.4 million people worked in the insurance industry in the United States and Canada. Insurance as an investment that offers a lot more in terms of returns, risk cover &as also thattax concessionsaddedbonuses not all effects of insurance are positive ones. The possib ility of earning insurance payments motivates some people to attempt to cause damage or losses. Without the possibility of collecting insurance benefits, for instance, no one would think of arson, thewilful destruction of property by fire, as a potential source of money
  25. 25. EVOLUTION OF INSURANCE IN INDIA The marine insurance is the oldest form of insurance. If we trace Indian history there are evidence that marine insurance was practiced here about three thousand years ago. The code of Manu indicates that there was the practice of marine insurance carried out by the traders in India with those of SriLanka, Egypt and Greece .it is wonderful to see that Indians had even anticipated the doctrine of average and contribution. Fright was fixed according to season and was then very much at the mercy of the wind and other elements. Travellers by sea and land were very much exposed to the risk of losing their vessels and merchandise because of piracy on open seas and highway robbery of caravans was very common. The practice of insurance was very common during the rule of Akbar to Aurangzeb, but the nature and coverage of the insurance in this period is not well known. It was the British insurer who introduced general insurance in India in the modern form. The Britishers opened general insurance in India around the year 1700 .The first company known as the sun insurance office was set up in Calcutta in the year 1710.This was followed by several insurance companies like London assurance and royal exchange assurance (1720), Phoenix Assurance Company (1782). Etc. Generalinsurance business in the country was nationalized with effect from 1st January 1 973 by the General Insurance Business (Nationalization) Act, 1972. More than 100 non- life insurance companies including branches of foreign companies operating within the country were amalgamated and grouped into four companies, viz., the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance CompanyLtd., and the United India Insurance Company Ltd. with head offices at Calcutta, Bombay, New Delhi and Madras, respectively. Life insurance in the current form came in India from united kingdom with the establishment of a British firm, oriental life assurance company in 1818 followed by Bombay life assurance company in 1823, the madras equitable life insurance society in 1829 and oriental life assurance company in 1874.Prior to 1871, Indian lives were treated as sub-standard and charged an extra premium of 15% to 20%. Bombay mutual life assurance society, an Indian insurer that came in to existence in 1871, was the first to cover Indian lives at normal rates. The Indian insurance company Act 1923 was enactedinter alia, to enable the government to collect statistical information about life and non-life insurance business transacted in India by Indian and foreign insurer, including the provident insurance societies. The first half of the 20thcentury marked by two world war, the adverse effects of the World War I and World War II on the economy of India, and in between them the period of world-wide economic crises triggered by the Great depression. The first half of the 20th century was also marked by struggles for India’s independence. The aggregate effect of these events led to a high rate of bankruptcies and liquidation of life insurance companies in India. This had adversely affected the faith of the general public in the utility of obtaining life cover In
  26. 26. this background, the Parliament of India passed the Life Insurance of India Act on19th June 1956, and the Life Insurance Corporation of India was created on 1stSeptember, 1956, by consolidating the life insurance business of 245 private life insurers and other entities offering life insurance services. Since 1972, the insurance sector has been totally under the control of government of India through LIC and GIC and its subsidiaries. As a result, revenue of both of them increased in the last years .the amount of savings pooled by LIC increased from Rs.2704 crores in 1974 to Rs .57670 in 1994 with an annual growth rate of 16.53%.similarly premium underwritten by GIC rose from 280 crores in 193 to 7647 crores in1998 showing an annual growth rate of 25.18%.Despite increase in premium collected by both LIC and GIC there were inefficiency and red tapeisum creeped in to the insurance sector. Apart from that a major policy shift by the Narasimha Rau government during 1990’s.the Indian economy opened for foreign competition .In this background The government of India in 1993 had set-up a high powered committee by R.N Malhothra,former governor reserve bank of India, toexa mine the structure of Indian insurance sector and recommended changes to make it more efficient and competitive keeping in view structural changes in other part of the financial system of the country. Insurance sector has been opened up for competition from Indian private insurance companies with the enactment of Insurance Regulatory and Development Authority Act, 1999 (IRDA Act). As per the provisions of IRDA Act, 1999, Insurance Regulatory and Development Authority (IRDA) was established on 19th April 2000 to protect the interests of holder of insurance policy and to regulate, promote and ensure orderly growth of the insurance industry. IRDA Act 1999 paved the way for the entry of private players into the insurance market, which was hitherto the exclusive privilege of public sector insurance companies corporations. EVOLUTION OF INSURANCE ORGANIZATION
  27. 27. With a view to serve the society, the insurance organizations have been developed in different forms with innovation of insurance practice for social welfare and development; some of these forms are outlined here. a) Self-insurance The arrangement in which an individual or concern sets up a private fund to meet the future risk. If some losses happened in the future the firm meets the loss out of the fund. While it may be called ‘self-insurance’ it is not a single matter of fact, insurance at all because there is no hedge, no shifting, or distributing the burden of risk among larger Persons. It is merely a provision to meeting the unforeseen event. Here the insured become the insurer for the particular risk. But it can be effectively worked only w henthere is wide distribution of risks subjected the same hazard. b) Partnership A PartnershipFirm may also carry on the insurance business for the sake of profit. Since it is not an entity distinct from the persons comprising it, the personal liability of partners in respect to the partnership debts is unlimited. In case of huge loss the partners may have to pay from their own personal funds and it will not be profitable to them to starts insurance business .in the early period before the advent of joint stock companies many in suranceundertakings were partnership firms or unincorporated companies c) Joint stock companies The joint stock companies are those, which are organized by the shareholders who subscribe the necessary capital to start the business. These are formed for earning profits for the stockholders who are the real owners of the companies. The management of a company is entrusted to a board of directors who is elected by the shareholders from amongst themselves. The company can operate insurance business and policyholders have nothing to do with the management of the concern. But in life insurance it is the practice to share certain portion of profit among the certain policyholders.
  28. 28. d) Mutual fund companies The mutual fund companies are co- operative association formed for the purpose of effecting insurance on the property of its members. The policyholder’s are themselves the shareholders of the companies each member is insured as well as insured. They have power to participate in management and in the profit sharing to the full extent. Whenever the income is more than the expenses and claims, it is accumulated I the form of saving and is entitled in reducing the rate of premium. Since the insured are insurers also, they always try to reduce the management expenses and to keep the business at sound level. e) Co-operative insurance organizations Cooperativeinsurance organizations are those concerns, which are incorporated and registered under Indian cooperative societies Act. The concerns are also called ‘co- operative insurance societies’ these societies like mutual fund companies arenon-profit organization .the aim is to provide insurance protection to its members at thelowest reasonable net cost .the Indian insurance Act. 1938, has provided special provis ions for the co-operative insurance societies, but after nationalization the societies have ceased to exist. f) Lloyd’s Association Lloyd’s association is one of the greatest insurance institutions in the world. Taking its name from the coffee house Lloyd where underwriters assembled to transact business and pick- up news. The organization traces its origins to the latter part of theseventeenth century .so it is the oldest insurance organization in existing form in the world. In 1871, Lloyds Act was passed incorporating the members of the association into a single corporate body with perpetual succession and corporate seal .the powers of Lloyds corporation were extended from the business of marine insurance to the other insurance and guarantee business. The Lloyds Association also publishes, Lloyds list and register of shipping for the information of insuring public and the insurers g) State Insurance The government of a nation, sometimes, owns the insurance and runs the business for the benefit of the public. The sate insurance is defined as that insurancew hich is under public sector. In Brazil, Japan and Mexico, the insurance are largely
  29. 29. nationalized. Previously, the state undertook only those insurances, which were regarded as vital for the national interest. 6.INSURANCESECTOR REFORMS Having looked at the insurance sector, the efforts made by the government to make the industry more dynamic and customer friendly. To begin with, the Malhotracommittee was set up with the objective of suggesting changes that would achieve the much required dynamism. The Malhotra Committee Report In 1993, Malhotra Committee, headed by former Finance Secretary and RBIGovernor R. N. Malhotra, was formed to evaluate the Indian insurance industry and recommend its future direction. In 1994, the committee submitted the report and gave the following recommendations: 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.1bn 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
  30. 30. 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 stat Regulatory Body The Insurance Act should be changed. An Insurance Regulatory body should be set up. Controller of Insurance (Currently a part from the Finance Ministry) Investments Mandatory Investments of LIC Life Fund in government securities to be reduced from75% 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). 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.Overall, the committee strongly felt that in order to improve the customer services and increase the coverage of the insurance 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. Few Life Insurance policies are: Whole life policies - Cover the insured for life. The insured does not receive money while he is alive; the nominee receives the sum assured plus bonus upon death of the insured. Endowment policies - Cover the insured for a specific period. The insured receives money on survival of the term and is not covered thereafter. Money back policies - The nominee receives money immediately on death of the insured. On survival the insured receives money at regular intervals during the term. These policies cost more than endowment with profit policies. Annuities / Children's policies
  31. 31. - The nominee receives a guaranteed amount of money at a pre-determined time and not immediately on death of the insured. On survival the insured receives money at the same pre-determined time. These policies are best suited for planning children's future education and marriage costs. Pension schemes - are policies that provide benefits to the insured only upon retirement. If the insured dies during the term of the policy, his nominee would receive the benefits either as a lump sum or as a pension every month. Since a single policy cannot meet all the insurance objectives, one should have a portfolio of policies covering all the needs
  33. 33. INDUSTRY PROFILE INSURANCE AND BUSINESS ENVIRONMENT Insurance is considered as one of the important segment of the economy for its growth and development. This industry provides long term funds which are essential for the growth and development of the nation .so the growth of insurance industry largely depends up on the environment in which they exists. Here I would like to mention about Indian business environment and their impact on insurance sector. There are two type of environment which affect the business one is environment which is internal to the organization (internal environment) and the other one which is external to the organization (external environment). Internal environment includes management, technology, competitors, employees, shareholders, policyholders, marketing intermediary, etc. The external environment of insurance business has been classified in four parts, namely legal, economic, financial, and commercial. Let us discus them in detail by taking one by one. THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (IRDA) The Malhotra 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. Based on the Malhotra committee report in April 2000 IRDA was incorporated. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. Section 14 of the IRDA Act 1999, lays the duties, power and functions of the authority .the authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and reinsurance business.
  34. 34. Reforms and Implications The liberalizations of the Indian insurance sector has been the subject of much heated debate for some years. The sector is finally set to open up to private competition. The Insurance Regulatory and Development Authority bill will clear the way for private entry into insurance, as the government is keen to invite private sector participation into insurance. To address those concerns, the bill requires direct insurers to have a minimum paid- up capital of Rest. 1 billion, to invest policyholder’s funds only in India; and torestrict international companies to a minority equity holding of 26 percent in any new company. Indian Promoters will also have to dilute their equity holding to 26 percentover a 10-year period. Over the past three year, around 30 companies have expressed interest in entering the sector and many foreign and Indian companies have arranged alliances. Whether the insurer is old or new, private or public, expanding the market will present challenges. Anumber of foreign Insurance Companies have set up representative offices in India and have also tied up with various asset management companies. Some of the Indian companies, which have tied up with International partners, are Indian Partners International Partners Bombay Dyeing General Accident, UK Tata American Int. Group, US Dabur Group Liberty Mutual Funds, US ICICI Prudential, UK Sundaram Finance Winterthur Insurance, Switzerland Hindustan Times Commercial Union, UK Ranbaxy Cigna, US HDFC Standard Life, UK CK Birla Group Zurich Insurance, Switzerland DCM Shriram Royal Sun Alliance, UK Godrej J Rothschild, UK M A Chidambaram Met Life Cholamandalam Guardian Royal Exchange, UK SK Modi Group Legal and General, Australia 20th Century Finance Canada Life Alpic Finance Allianz Holding, Germany
  35. 35. Vysya Bank ING Kotak Mahindra Chubb, US The likely impact of opening up of India’s insurance sector is that private players may swamp the market. International insurers often derive a significant part of their business from multinational operations. Multinational insurers are indeed keenly interested as; perhaps there home markets are saturated while emerging countries have low insurance penetration and high growth rates
  36. 36. Type of life insurance policies Whole life insurance Whole life is a form of permanent insurance, with guaranteed rates and guaranteed cash values. It is the least flexible form of permanent insurance. Universal life insurance Universal life is similar to whole life, except that you can change the death benefit (the money paid to the beneficiary when the insured person dies), the amount of premiums and how often you pay the premiums. Variable life insurance Variable life insurance is the riskiest form of permanent insurance, but it can also give you the best return for your money. Essentially, the life insurance company will invest your insurance premiums for you. If the investments do well, the death benefit and cash value of the policy go up. If they do poorly, they go down. It's a little like putting your savings into the stock market. Group life insurance Many companies allow their employees to buy group life insurance through the company. Usually, you can get very good rates for this insurance but you have to give the insurance up when you stop working there. For that reason, group insurance can be a good way to buy a little extra life insurance, but it does not make sense to make it your main policy
  37. 37. There are a number of policies for specific insurance needs. Some of these include: Family income life insurance This is a decreasing term policy that provides a stated income for a fixed period of time, if the insured person dies during the term of coverage. These payments continue until the end of a time period specified when the policy is purchased. Family insurance A whole life policy that insures all the members of an immediate family --husband, wife and children. Usually the coverage is sold in units per person, with the primary wage- earner insured for the greatest amount. Senior life insurance Also known as graded death benefit plans, they provide for a graded amount to be paid to the beneficiary. For example, in each of the first three to five years after the insured dies, the death benefit slowly increases. After that period, the entire death benefit is paid to the beneficiary. This might be appropriate if the beneficiary is not able to handle a large amount of money soon after the death, but would be in a better position to handle it a few years later. Juvenile insurance This is life insurance on a child. Coverage is paid for by an adult, usually the parents or guardians. Such policies are not considered traditional life insurance because the child is not producing an income that needs to be protected. However, by buying the policy when the child is young, the parents are able to lock in an extremely low premium rate and allow many more years of tax-deferred cash value build-up
  38. 38. Credit life insurance This insurance is designed to pay off the balance of a loan if you die before you have repaid it. Credit life insurance is available for many kinds of loans including student loans, auto loans, farm equipment loans, furniture and other personal loans including credit cards. Credit life insurance can be purchased by an individual. Usually it is sold by financial institutions making loans, like banks, to borrowers at the time they take out the loan. If a borrower dies, the proceeds of the policy repay the loan directly to the lender or creditor. Mortgage insurance This decreasing term coverage is designed to pay off the unpaid balance of a mortgage if you die before the mortgage is paid off. Premiums are generally level throughout the term of the policy. The policy is usually independent of the mortgage, meaning that the financial institution granting the mortgage is separate from the insurance company issuing the policy. The proceeds of the policy are paid to the beneficiaries of the policy, not the mortgage company. The beneficiary is not required to use the proceeds to pay off the mortgage. Annuity An annuity is a form of insurance that enables you to save for your retirement. Basically, you give the insurance company money for a certain period of time, and then after you retire they will pay you a certain amount of money every year until you die. There are many different forms of annuities. . Most people who buy annuities are 55 or older.
  39. 39. PROFILE OF THE ORGANISATIONS: Insurance Regulatory and Development Authority of India (IRDAI) Insurance Regulatory and Development Authority of India (IRDAI) is an autonomous apex statutory body which regulates and develops the insurance industry in India. It was constituted by a Parliament of India act called Insurance Regulatory and Development Authority Act, 1999 and duly passed by the Government of India.[4] The agency operates from its headquarters at Hyderabad, Telangana where it shifted from Delhi in 2001. IRDA batted for a hike in the foreign direct investment (FDI) limit to 49 per cent in the insurance sector from the erstwhile 26 per cent.[6] The FDI limit in insurance sector was raised to 49% in July 2014.
  40. 40. LIFE INSURANCE CORPORATION OF INDIA Life Insurance Corporation of India was formed in September 1956 by passing LICAct, 1956 in Indian parliament. On the nationalization of the life insurance in 1956, the premium rating of Oriental Government security life Assurance company were adopted by LIC with a reduction of 5% of the tabular premium or Re. 1 per thousand sum assured, whichever was less. This reduction was made in anticipation of economies of scale that would emerge on the merger of different insurers in a single entity. Life Insurance Corporation Of India - there are many things to consider as Life Insurance Corporation of India offers various insurance products which are very complex, but underlying this complexity is a simple fact. The building blocks for all Life Insurance Corporation of India are (1) investment return; (2) mortality experience; and (3) expense management; for your Life Insurance Corporation Of India
  41. 41. Objectives of LIC •Spread Life Insurance much more widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in the country and providing them adequate financial cover against death at a reasonable cost. •Maximize mobilization of people's savings by making insurance-linked savings adequately attractive. •Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose money it holds in trust, without losing sight of the interestof the community as a whole; the funds to be deployed to the best advantage of the investors as well as the community as a whole, keeping in view national priorities and obligations of attractive return. •Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders. •Act as trustees of the insured public in their individual and collective capacities. •Meet the various life insurance needs of the community that would arise in the changing social and economic environment. •Involve all people working in the Corporation to the best of their capability in furthering the interests of the insured public by providing efficient service withcourtesy. Promote amongst all agents and employees of the Corporation a sense of participation, pride and job satisfaction through discharge of their duties with dedication t owardsachievement of Corporate Objective
  42. 42. VISION "A trans-nationally competitive financial conglomerate of significance to societies and Pride of India “ MISSION "Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns, and by ren dering resources for economic development” Various policies offered by life insurance corporation of India are 1) Whole Life Schemes •Whole life with profit •Limited payment whole life •Single Premium whole life •Convertible whole life plan
  43. 43. 2) Endowment Schemes •Endowment plan with profit •Limited payment Endowment •JeevanMitra (Double Cover) •JeevanMitra (Triple cover) •BhavishyaJeevan •JeevanAnand • New Jana Raksha
  44. 44. 3) Term Assurance Plan Every father desires to see that his children are well settled in life through sound education, leading to good jobs and happy marriage. These needs arise at ages which can be approximately anticipated. Say when the children are between 18 to 25 year of age. This plan provides for a sum assured to keep aside to meet marriage educational expenses of children. Under this plan the S A along with the vested bonus shall be payable at the end of the selected term either is lump sum or in ten half yearlyinstallme nt, at the option of the life assured nominee beneficiary. JeevanMitra This plan provides additional insurance cover equal to the sum assured in the event of death during the term of policy so that the total insurance cover in the event of death is twice the basic sum assured. i.e. The basic sum assured is doubled and the accrued bonus is also paid.
  45. 45. Here we see that LIC have more number of market share. People believe more in LIC because this is public sector insurance company.LIC have 60% market share in insurance industry but other like private sector insurance companies have less number of market share comparison than LIC.
  46. 46. ING VYSYA LIFE INSURANCE ING Vysya Life Insurance Company Private Limited entered the private life insurance industry in India in September 2001, and in a short span of 18 months has established itself as a distinctive life insurance brand with an innovative, attractive and customer friendly product portfolio and a professional advisor force. It also distributes products in close cooperation with its sister company ING Vysya Bank through Bank assurance. Currently, it has over 3000 advisors working from 22 locations across the country and over 300 employees. ING Vysya Life Insurance Company is headquartered at Bangalore and has established a strong presence in the cities of Delhi, Mumbai, Kolkata, Hyderabad and Chennai. In addition ING Vysya Life operates in Vizag, Vijaywada, Mangalore, Mysore, Pune, Nagpur, Chandigarh, Ludhiana and Jaipur.ING Vysya Life has pioneered product innovations in the Indian life insurance market with customer-oriented cash bonus endowment and money back products. (Reassuring Life and Maximising Life), the first anticipated whole life product (Fulfilling Life) and the first Term/Critical Illness combination product (Conquering Life). Conquering Life is an innovative term and critical illness product that has been launched recently. Conquering Life provides affordable term cover and critical illness coverage for 10critical illnesses of up to 50% of the Sum Assured. ING Vysya Life declared a bonus in September 2002 of 5% (cash bonus - payable immediately) and 4% (reversionary bonus - payable at the end of the term). The company has over 25,000 customers at the end of 2002 and has achieved a first premium income of Rs. 17 crores in 2002.ING Vysya Life Insurance is a joint venture between ING Insurance International BV a part of ING Group, the world's largest life insurance company (Fortune Global 500,2002), ING Vysya Bank, with 1.5 million customers and over 400 outlets and GMR Technologies and Industries Limited, part of GMR Group also based in Bangalore and involved in the field of power generation, infrastructural development and several other businesses.ING Vysya Life has a paid up capital of Rs.140 crores and an authorised capital of Rs.200 crores.Life insurance products offered by the company are:
  47. 47. 1) Protection plan •Critical illness plan •Endowment plan 2) Savings plan •Endowment plan •Child protection plan •Money back plan 3) Investment Plan •Whole life plan •Limited payment endowment plan •Anticipated whole life plan
  48. 48. TATA-AIG Life Insurance Tata-AIG Life Insurance Company is a joint venture between the Tata Group and American International Group Inc. (AIG), the leading US-based international insurance and financial services organization and the largest underwriter of commercial and industrial insurance in America. Its member companies write a wide range of commercial, personal and life insurance products through a variety of distribution channels in approximately 130 countries and jurisdictions throughout the world. AIG’s global businesses also include financial services and asset management, including aircraft leasing, financial products, trading and market making, consumer finance, institutional, retail and direct investment fund asset management, real estate investment management, and retirement savings products. TATA holds 76% shares and AIG holds 24% shares in the total share capital of TATA AIG.Tata AIG Life Insurance Company Ltd. "Tata AIG Life" offers a broad array of life insurance products to individuals, associations and businesses of all sizes, with awide variety of additional coverage to ensure our customers can find an insurance product to meet their needs. Tata-AIG Life Insurance and Tata-AIG General Insurance, both joint ventures between the Tata Group and American International Group (AIG), provide life and general insurance policies and solutions to companies, institutions and organizations across India. It is licensed to operation on 12thFebruary 2001. TATA-AIGlife is spread over28 branch offices and 39 training offices across the country. Tata-AIG Life offers a broad array of life insurance products and solutions to corporate and other organizations. These products and solutions have various value-added benefits and options that deliver flexibility and choice to the company's clients. Tata AIG Life has completed its 4th year of operations and registered a Total Premium of Rs. 497 Crores for the period April 2004 - March 2005. The company has some 20 life insurance products with over 250 product combinations, including endowment to term, pension to group life and credit life, money back to whole life plans, etc. Tata-AIG Life uses different distribution channels, including direct marketing, brokerage and banc assurance, to service client groups in 19 Indian cities. Tata-AIG Life is the first private insurer in India to offer group retirement schemes. Additionally, the company's group management division focuses on providing employee benefit solutions.
  49. 49. PRODUCTS The product range of TATA-AIG Life is wide-spread across different segments. Some of the products are mentioned below.  Maha life  Invest Assure  Health Protector  Star Kid  Shubh Life  Nirvana  Nirvana Plus  Money Saver Plan  Health First  Assure Golden Life  Assure 10, 20, 30 years – Security and Growth  Assure Educate at 18, 21  Assure Career Builder Plan at 27  Assure Golden Years Plan  Assure 21 Money Saver Plan  Assure 1/5/10/15/20/25 years/ to age lifelines  TROP
  50. 50. People who buy policy from TATA AIG that people give highest rank to their insurance company.TATA AIG have 40% share of their rank.
  51. 51. HDFC STANDARD LIFE INSURANCE The Partnership: HDFC and Standard Life first came together for a possible joint venture, to enter the Life Insurance market, in January 1995. It was clear from the outset that both companies shared similar values and beliefs and a strong relationship quickly formed. In October 1995 the companies signed a 3 year joint venture agreement. Around this time Standard Life purchased a 5% stake in HDFC, further strengthening therelationship. The next three years were filled with uncertainty, due to changes in government andon-going delays in getting the IRDA (Insurance Regulatory and Development authority) Act passed in parliament. Despite this both companies remained firmly committed to theventure. In October 1998, the joint venture agreement was renewed and additional resource made available. Around this time Standard Life purchased 2% of Infrastructure Development Finance Company Ltd. (IDFC). Standard Life also started to use the services of theHDFC Treasury department to advise them upon their investments in India. Towards the end of 1999, the opening of the market looked very promising and both companies agreed the time was right to move the operation to the next level. Therefore, in January 2000 an expert team from the UK joined a handpicked team from HDFC to form the core project team, based in Mumbai. Around this time Standard Life purchased a further 5% stake in HDFC and a 5% stake inHDFC Bank. In a further development Standard Life agreed to participate in the Asset Management Company promoted by HDFC to enter the mutual fund market. The Mutual Fund was launched on 20th July 2000.
  52. 52. Incorporation of HDFC Standard Life Insurance Company Limited: The company was incorporated on 14th August 2000 under the name of HDFC Standard Life Insurance Company Limited. Companies ambition from as far back as October 1995, was to be the first private company to re-enter the life insurance market in India. On the23rd of October 2000, this ambition was realized when HDFC Standard Life was the only life company to be granted a certificate of registration. HDFC are the main shareholders in HDFC Standard Life, with 81.4%, while Standard Life owns 18.6%. Given Standard Life’s existing investment in the HDFC Group, this is the maximum investment allowed under current regulations. HDFC and Standard Life have a long and close relationship built upon shared values and trust. The ambition of HDFC Standard Life is to mirror the success of the parent companies and be the yardstick by which all other insurance company’s in India are measured. Products offered by the company are:
  53. 53. INDIVIDUAL PLAN  •With Profit Endowment Assurance  •With Profits Money Back  •Single Premium Whole of Life  •Term assurance Plan  •Loan Cover Term Assurance  •Personal Pension Plan  •Children’s Plan  GROUP PLANS  •Group Term Insurance  •Development Insurance Plan
  54. 54. ICICI PRUDENTIAL LIFE INSURANCE COMPANY ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse, and prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA).ICICI Prudential’s equity base stands at Rs. 925 crore with ICICI Bank and Prudentialplc.holding 74% and 26% stake respectively. In the quarter ended June 30, 2005, the company garnered Rs 335 crore of new business premium for a total sum assured of Rs 2,619 crore and wrote 111,522 policies. For the past four years, ICICIPrudential has retained its position as the No. 1 private life insurer in the country, with awide range of flexible products that meet the needs of the Indian customer at every step inlife. Products offered by ICICI Prudential are 1.Savings Plan 1)Smart kid 2)Life Time 3)Save ‘n’ Protect 4)Cash Back 2.Protection plan •Life Guard •Extra Protection Through •Riders
  55. 55. 3.Retirement Plans •Forever Life •Life link pension •Life time pension •Reassure 4.Investment Plans •Assure Invest •Life Link 5.Group plans •Group Superannuation •Group Gratuity •Group Term Assurance
  56. 56. OM KOTAK MAHINDRA LIFE INSURANCE COMPANY Established in 1985 as Kotak Capital Management Finance promoted by UdayKotak the company has come a long way since its entry into corporate finance. It has dabbled in leasing, auto finance, hire purchase, investment banking, consumer finance, broking etc. The company got its name Kotak Mahindra as industrialists Harish Mahindra and Anand Mahindra picked a stake in the company. Kotak Mahindra is today one of India's leading Financial Institutions Old Mutual plc is an international financial services group based in London with expanding operations in life assurance, asset management, banking and general insurance. Old Mutual is listed on the London Stock Exchange (where it is included on the FTSE 100 Index) and also on the South African, Namibian, Malawi and Zimbabwe stock exchanges. It has 156 years of experience in the life insurance business. The Products offered by the Company are Individual Plan •Kotak Endowment Plan •Kotak Term Plan •Kotak Retirement Income Plan •Kotak Child Advantage Plan •Kotak Preferred Term Plan •Kotak Capital Multiplier Plan •Kotak Safe Investment Plan •Riders •Exclusions Under Riders
  57. 57. Group Plan Kotak Term Group plan Kotak Gratuity Group plan Kotak Credit Term Group plan Riders Exclusions Under Riders Rural KotakGraminaBimaYojana