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Introduction to Insurance Sector
Presented by - Amol , Asif ,Praveen ,Rakesh .Mahendra
MEANING
Insurance, in general terms refers to the practice of guaranteeing a sum of money to the owner or possessor of a valuable asset for a limited period of time, to cover the cost of any damage to that asset arising out of any contingency.
In the process of insurance there must necessarily be two parties
‘Insurer’
‘Insured
REGULATORY ACTS
INSURANCE BUSINESS IN INDIA
Insurance industry, as on 1.4.2000, comprised mainly two players:
1-Life Insurance 2- General Insurance
The Insurance sector is Governed by a number of Acts
The Insurance Act, 1938
The Life Insurance Corporation Act, 1956
The General Insurance Business (Nationalization) Act, 1972
The Insurance Regulatory and Development Authority Act, 1999
1-Life Insurance
MEANING
Life insurance means insuring your life to save for the future of your family . HISTORY
The origin of life insurance in India can be traced back to 1818 with the establishment of the Oriental Life Insurance Company in Calcutta .
The first insurance company insuring Indian Lives at standard rates was BOMBAY MUTUAL LIFE INSURANCE COMPANY which was formed insurance 1870
The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business in 1912
In 1956, Government of India brought together 245 Indian and foreign insurers under one nationalised monopoly corporation and formed Life Insurance Corporation (LIC) Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs.5 crore.
MEANINGThis sector covers almost everything related to property, vehicle, cash, household goods, health and also one's liability towards others.
2-General Insurance
HISTORY
Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British.
1907: The Indian Mercantile Insurance Ltd. set up, the firstcompany to transact all classes of general insurance business .
The General Insurance Business (Nationalisation) Act, 1972 nationalised the general insurance business in India with effect from January 1, 1973. The 107 private insurance companies were amalgamated and grouped into four companies: 1 -National Insurance Company, 2 -New India Assurance Company, 3 -Oriental Insurance Company and 4 -United India Insurance Company.
GROSS DOMESTIC PROUCT
life insurance account to 2.5% and General insurance account to 0.65% of India's GDP in term of premiums
Insurance penetration of insurance in India
The life insurance penetration in India increased from 1.77 per cent in 2000 to 4.10 per cent in 06-07, before declining to 4.0 per cent in 07-08. The general insurance penetration increased from 0.55 per cent in 2000 to 0.60 per cent in 06-07 and remained at the same level in 07-08.
Life insurance premium per capita in India
The life insurance density which is premium per capita in US$ terms stood at US$ 40.4 in 07-08 as against US$ 33.2 in 2006-07
The general insurance density was, however, lower at US$ 6.2 in 07-08 as against (US$ 5.20 in 06-07 ).
1- key players in Life Insurance market
Public Sector: 1- Life Insurance Corporation (LIC) of India,
Private Sector:
1- Bajaj Allianz, 2- SBI Life, 3- Tata AIG Life, 4- HDFC Standard, 5- ICICI Prudential Life Insurance, 6- Birla Sunlife, 7- Aviva Life Insurance, 8- Kotak Mahindra Old Mutual 9- Max New York Life
10- Met Life. 11- DLF Pramerica Life Insurance Co. Ltd 12- IDBI Fortis Life Insurance Company Ltd. 13- Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd. 14-.Aegon Religare Life Insurance Company Ltd 15- Shriram Life Insurance Company Ltd 16- Bharti Axa Life Insurance Company 17- Future Generali India Life Insurance Company Ltd.
2- key players in NON- Life Insurance market include:
Public Sector
1-National Insurance Co. Ltd, 2-Oriental Insurance Ltd, 3-New India Assurance Co. Ltd 4-United India Insurance Co. Ltd.
Private Sector
1-Bajaj Allianz 2-Cholamandalam3-Future Generlai 4-HDFC Ergo 5-ICICI Lombard 6-IFFCO-TOKIO7-Reliance8-Royal Sundaram 9-Tata AIG 10-Bharti AXA General Insurance Co. ltd 11-Shriram General Insurance Co. Ltd12-Apollo DKV Insurance Co. Ltd13-Star Health & Allied Insurance Co. Ltd14-Universal Sompo
1- Market share of various Life Insurance Companies in India at the end of FY2008
Public Sector 48.1% Private Sector 51.9%.LIC - 48.1% ICICI Prudential - 13.7%
Allianz Bajaj - 10.3%SBI Life - 6.2%HDFC Standard - 4.1%Birla Sunlife - 3.4%Reliance Life - 3.4%Max New York - 2.4%OM Kotak - 1.9%AVIVA - 1.8%Tata AIG - 1.5%MetLife - 1.4%ING Vysya - 1.2%Shriram Life - 0.3%Bharti Axa Life - 0.2%
2- Market share of Non- Life Insurance Companies in India at the end of FY2008
Public Sector 60.5%
Private Sector – 39.5 %
Market share of Non- Life Insurance – Segment wise
1- There are various types of life Insurance Policy India
a. Term Life Policy
b. Whole Life Policy
c. Endowment Policy
d. Money-back Policy
e. Unit Linked Insurance Plan
f. Pension Plan or Annuities
2- There are various types of Non life Insurance Policy India -Segment wise
- Standard fire policy
1-Fire Insurance
1 Liability only motor policy 2 Package motor policy
3-Health Insurance
1 Catastrophic health insurance 2 Short-term health insurance
3 A Preferred Provider Organization (PPO)
4 Health Maintenance Organizations (HMOs)
5 Full-service health insurance
2-Motor Insurance
4-Travel Insurance1 Single Trip Travel Insurance
2 Annual Travel Insurance/Multi Trip Travel Insurance
3 Long Stay Travel Insurance
4 Medical Travel Insurance
5 Cruise Travel Insurance
6 Group Travel Insurance 7 Business Travel Insurance
5-Engineering Insurance
1 Machinery Breakdown Insurance
2 Electronic Equipment Insurance
3 Contractors Plant & Machinery Insurance (CP&M
4 Contractors All Risk Insurance (CAR)-
5 Boiler and Pressure Vessel Insurance – 6 Erection All Risk Insurance (EAR ]-
6-Marine Insurance
7-Home Insurance
1- Marine Cargo Insurance Policy
Home insurance policy available in the market covers broadly two things:
1- Building structure
2- Contents inside the home
8-Rural Insurance
1-Poultry policy2-Cattle policy 3-KISAN AGRICULTURAL PUMPSET INSURANCE
2-Marine Hull 3-Marine Inland Transit Insurance Policy4-Marine Export Transit Insurance Policy5-Marine Import Transit Insurance Policy
1- TOTAL LIFE INSURANCE PREMIUM(As on 31st March)
[RS. CRORE]
INSURER 2008-07 2007-06 2006-05
PUBLIC
L I C 149789.99 127822.84 90792.22
PRIVATE
Aviva 1891.88 1147.23 600.27
Bajaj Allianz 9725.31 5345.24 3133.58
Bharti Axa 118.41 7.78
Birla Sunlife 3272.19 1776.71 1259.68
Future Generali 2.49
HDFC Std 4858.56 2855.87 1569.91
ICICI Pru 13561.06 7912.99 4261.05
IDBI Fortis 11.90
ING Vysya 1158.87 707.20 425.38
Kotak Mahindra 1691.14 971.51 621.85
TOTAL LIFE INSURANCE PREMIUM(As on 31st March)
[RS. CRORE]
INSURER 2008-07 2007-06 2006-05
PRIVATE
Met Life 1159.54 492.71 205.99
Max New York 2714.60 1500.28 788.13
Reliance Life 3225.44 1004.66 224.21
Sahara 143.49 51.00 27.66
SBI Life 5622.14 2928.49 1075.32
Shriram 358.05 184.17 10.33
Tata AIG 2046.35 1367.18 880.19
[Private ] Total
51561.42 28253.00 15083.54
[ LIC+Private ] Total
201351.41 156075.84
105875.76
2- TOTAL NON- LIFE INSURANCE PREMIUM
Total gross premium collected by the general insurance industry up to July was Rs 11,682.61 crore in 08-09 against Rs 10,938 crore in the corresponding period in 07-08 total premium by public general insurers up to July was Rs 6920.64 crore in 08-09 against Rs 6367.70 crore in the corresponding period in in 07-08
private insurers collected Rs 4761.97 crore up to July in 08-09 against Rs 4570.76 crore in 07-08
Gross Premium Segment-Wise
1-NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
INSURER 2008-07 2007-06 2006-05
PUBLIC
L I C 2522 2301 2220
PRIVATE
Aviva 213 140 110
Bajaj Allianz 1007 877 567
Bharti Axa 77 16 01
Birla Sunlife 538 148 97
Future Generali 09
HDFC Std 569 448 150
ICICI Pru 1958 583 175
IDBI Fortis 02
ING Vysya 265 183 68
Kotak Mahindra 151 75 46
NUMBER OF LIFE INSURANCE OFFICES-COMPANY WISE
INSURER 2008-07 2007-06 2006-05
PRIVATE
Met Life 94 53 43
Max New York 194 118 84
Reliance Life 745 159 157
Sahara 33 33 18
SBI Life 200 138 46
Shriram 53 12 11
Tata AIG 283 89 72
[Private ] Total
6391 3072 1645
[ LIC+Private ] Total
8913 5373 3865
1- EQUITY SHARE CAPITAL OF LIFE INSURANCE COMPANIES(As on 31st March)
[ RS.CRORE ]
INSURER 2008-07 2007-06 2006-05
PUBLIC
L I C 5.00 5.00 5.00
PRIVATE
Aviva 1004.50 758.20 458.70
Bajaj Allianz 150.71 150.37 150.23
Bharti Axa 366.11 150.00 1.10
Birla Sunlife 1274.50 671.50 460.00
Future Generali 185.00
HDFC Std 1271.00 801.26 620.00
ICICI Pru 1401.11 1312.30 1185.00
IDBI Fortis 200.00
ING Vysya 790.00 690.00 490.00
Kotak Mahindra 480.27 330.35 244.58
1- EQUITY SHARE CAPITAL OF LIFE INSURANCE COMPANIES(As on 31st March)
[ RS.CRORE]
INSURER 2008-07 2007-06 2006-05
PRIVATE
Met Life 761.08 530.00 235.00
Max New York 1032.43 732.43 557.43
Reliance Life 1147.70 664.00 331.00
Sahara 232.00 157.00 157.00
SBI Life 1000.00 500.00 425.00
Shriram 125.00 125.00 125.00
Tata AIG 870.00 547.00 447.00
[Private ] Total
12291.42 8119.41 5887.05
[ LIC+Private ] Total
12296.42 8124.41 5892.05
2- EQUITY SHARE CAPITAL OF NON-LIFE INSURANCE COMPANIES(As on 31st March)
[ RS.CRORE ]
NON-LIFE INSURER
2008-07 2007-06 2006-05
PRIVATE
Bajaj Allianz 110.23 110.13 110.05
Cholamandalam 141.96 141.96 141.96
Future Generlai 150
HDFC Ergo 150.00 125.00 125.00
ICICI Lombard 377.36 335.71 245.00
IFFCO-TOKIO 220.00 220.00 220.00
Reliance 107.15 103.07 102.00
Royal Sundaram
170.00 140.00 140.00
Tata AIG 225.00 225.00 195.00
Universal Sompo
150.00
Total (Private Sector)
1801.70 1400.87 1279.01
2- EQUITY SHARE CAPITAL OF NON-LIFE INSURANCE COMPANIES(As on 31st March)
[ RS.CRORE ]
NON-LIFE INSURER
2008-07 2007-06 2006-05
PUBLIC
National 100.00 100.00 100.00
New India 200.00 200.00 200.00
The Oriental 100.00 100.00 100.00
United India 150.00 150.00 100.00
Total (Public Sector)
550.00 550.00 500.00
Total (Non-Life) 2351.70 1950.87 1779.01
1- SOLVENCY RATIO OF LIFE INSURERS IN INDIA
(As on 31st March)
INSURER 2008-07 2007-06 2006-05
PUBLIC
L I C 1.52 1.50 1.30
PRIVATE
Aviva 4.29 6.31 2.80
Bajaj Allianz 2.34 2.45 2.80
Bharti Axa 2.73 1.96
Birla Sunlife 2.37 1.80 2.00
Future Generali 2.94
HDFC Std 2.38 2.05 2.90
ICICI Pru 1.74 1.53 1.60
IDBI Fortis 3.45
ING Vysya 2.36 2.87 2.30
Kotak Mahindra 2.41 1.64 1.80
1- SOLVENCY RATIO OF LIFE INSURERS IN INDIA(As on 31st March)
INSURER 2008-07 2007-06 2006-05
PRIVATE
Met Life 1.70 1.73 1.70
Max New York 2.25 2.08 2.00
Reliance Life 1.65 1.62 2.00
Sahara 4.32 2.68 2.70
SBI Life 3.30 1.78 2.90
Shriram 2.85 2.74 2.20
Tata AIG 2.50 2.59 2.70
2- SOLVENCY RATIO OF NON-LIFE INSURERS IN INDIA
(As on 31st March)
NON-LIFE INSURER 2008-07 2007-06 2006-05
PRIVATE
Bajaj Allianz 1.55 1.56 1.22
Cholamandalam 1.89 2.63 2.51
Future Generlai 2.61
HDFC Ergo 2.02 1.69 1.78
ICICI Lombard 2.03 2.08 1.29
IFFCO-TOKIO 1.51 1.70 1.95
Reliance 1.64 1.95 3.04
Royal Sundaram 1.59 1.64 1.66
Tata AIG 1.91 1.85 1.68
Universal Sompo 4.63
2- SOLVENCY RATIO OF NON-LIFE INSURERS IN INDIA
(As on 31st March)
NON-LIFEINSURER
2008-07 2007-06 2006-05
PUBLIC
National 1.80 1.76 1.08
New India 4.00 3.57 3.09
The Oriental 1.91 2.17 1.97
United India 3.24 3.00 2.23
Bancassurance
Bancassurance simply means selling of insurance products by banks.It also sometimes known as Bank Insurance Model [BIM].
Wedding insurance
Wedding insurance policies are designed specifically to offer financial protection to couples planning a wedding against losses resulting from unforeseen circumstances
This policy covers losses resulting due to:SiteWeather: Sickness or InjuryNo Show of Service Providers
Commercial insurance
It provide safety against any kind of internal or external hazard. Commercial insurance companies in India offer products which suit the business and corporate needs and provide the commercial avenues all kind of safety and security.
Student insurance
It policy covers a person studying in a school or a college against expenses arising from ill health, accident and travel, among other things.There are several types of student insurance-
1-Student health insurance2-Student renter’s insurance3-Student car insurance4-Student travel insurance
Dental insurance
Indian dental insurance plan, the costs incurred due to dental care would be paid for by the insurer . Unlike most western countries, specific dental insurance plans are not common in India. In India, oral health is normally integrated with the general health insurance schemes
Indian dental insurance plans are mainly of two types:
1-Stand alone dental insurance plan2-Dental insurance cover as part of general health insurance plan
Flood insurance
An insurance policy that covers property damage due to natural flooding. Flood insurance is often purchased to supplement a homeowner's policy in the event that flooding damage occurs.The National Flood Insurance Act was originally adopted in 1968,
Types of coverage available under a Flood Insurance policy
1-Building Property Coverage2-Personal Property Coverage
Reinsurance
It is a means by which an insurance co. can protect itself against the risk of losses with other insurance companies. Individuals and corporations obtain insurance policies to provide protection for various risks (hurricanes, earthquakes, lawsuits, collisions, sickness and death, etc.). Reinsurers, in turn, provide insurance to insurance companies
Credit insurance
It covers businesses and an individual’s family members against losses resulting from the inability to repay a loan. A credit insurance policy usually provides a security cover for a specific reason for which a borrower defaults.
credit insurance can be of two types - 1-Trade Credit Insurance 2-Credit Life Insurance
PEST Analysis
It stand for Political , Economic , Social & Technological Factors
Political Factors
- Increased service tax on premium - Hike in FDI limit - Favorable regulation for rural insurance - Removal of all pricing controls on general insurance
Technological Factors
- E-business insurance in India- Business Process Monitoring - Increase in CRM solutions - Impact on distribution channels
Social Factors - Population- Educational level- Level of earning- Low Insurance penetration
Economic Factors - Increase in Gross Domestic Savings - Increase in premium per capita ,- Interest rate- Inflation rate
Michael Porter's Five Forces Analysis
SWOT ANALYSIS
Strengths
Government DeregulationsVariety of productsAggressive marketing & distribution strategies
Weakness
Shortage of trained insurance professionals & TechnicianLack of awarenessFalling premium income
Opportunities
TechnologyInsurance consultantHuge population
Threat
Natural calamitiesCreates threat among rival firms itself.Changing consumer’s perception
FINDINGS
Monopoly Popularity Financial growth Investment
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