insurance sector

Document Sample
insurance sector Powered By Docstoc

                      SUBMITTED BY-:
                       MAHAK DHOOT

1. Introduction
2. History of insurance sector
3. Indian insurance: Sector reforms
4. Technology
5. Market share
6. Industry classification
7. Working
8. Current scenario
9. SWOT analysis
10. Conclusion
11. Bibliography
Insurance is a system of spreading the risk of one onto the shoulders of many.
While it becomes somewhat impossible for a man to bear by himself 100% loss
to his own property or interest arising out of an unforeseen contingency,
insurance is a method or process which distributes the burden of the loss on a
number of persons within the group formed for this particular purpose.
      Under the plan of insurance, a large number of people associate
themselves by sharing risks attached to individuals. The risks, which can be
insured against, include fire, the perils of sea, death and accidents and
burglary. Any risk contingent upon these, may be insured against at a premium
commensurate with the risk involved. Thus collective bearing of risk is

Insurance = Collective bearing of Risk

History of Insurance sector:

1818: Establishment of the Oriental Life Insurance Company in Kolkata , first
      insurance company

1912: The Indian life assurance company 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

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 . LIC act , 1956, with a capital contribution of Rs 5 crore from
      The government of india

1972: The General Insurance Business (Nationalization) Act nationalized the
      general insurance business in India with effect from 1st January 1973.

1999: Insurance Regulatory and Development Authority Act

2000: IRDA starts giving licenses to private insurers: ICICI prudential and HDFC
      Standard Life insurance first private insurers to sell a policy

2001: Royal Sundaram Alliance first non life insurer to sell a policy

2002: Banks allowed selling insurance plans. As TPAs enter the scene, insurers
      start setting non-life claims in the cashless mode

2007: First Online Insurance portal, https:/// set up by an Indian Insurance
      Broker, Bonsai Insurance Broking Pvt. Ltd.

Indian Insurance: Sector Reform
Formation of the Malhotra Committee in 1993 initiated reforms in the Indian
insurance sector. The aim of the Malhotra Committee was to assess the
functionality of the Indian insurance sector. This committee was also in charge
of recommending the future path of insurance in India.
The Malhotra Committee attempted to improve various aspects of the
insurance sector, making them more appropriate and effective for the Indian
market. The recommendations of the committee put stress on offering
operational autonomy to the insurance service providers and also suggested
forming an independent regulatory body.

The Insurance Regulatory and Development Authority Act of 1999 brought
about several crucial policy changes in the insurance sector of India. It led to
the formation of the Insurance Regulatory and Development Authority (IRDA)
in 2000. The goals of the IRDA are to safeguard the interests of insurance
policyholders, as well as to initiate different policy measures to help sustain
growth in the Indian insurance sector.

            Computerization
            Internet
            Electronic clearance service
            Call centre and SMS service
Market Share of Private Sector life Insurance



   LIFE                        GENERAL
INSURANCE                     INSURANCE
    Fire         Marine    Mediclaim    Motor
 insurance     insurance               vehicle

Working of Insurance
Major Foreign Insurance Companies in India
Many of the foreign companies are also coming to India. Global giants such as
New York Life, Tokyo Marine, UK based prudential have formed joint ventures
with many Indian companies. Some of the major joint venture companies are
Bajaj Allianz, HDFC Standard, Aviva Life Insurance, Birla Sunlife, Met Life, Royal
Sundaram etc.

The domestic insurance industry is believed to be around US$ 61 billion by
2010 and non- life insurance market is estimated to be around US$25 billion.
The booming Insurance sector is sure to grow further in the coming years and
it can be said that in the next few years, the Insurance sector in India will be on
the top of the world insurance market.

                              Growth of Insurance

     Premium income of life insurers in Rs crore
                                     April - June       Growth   Total
                              2007           2008         %    Share (%)
     LIC                       8580.84       7524.56        -12     52.55
     ICICI Prudential          1056.45       1,590.27       51      11.11
     Bajaj Allianz              731.85         829.24       13       5.79
     SBI Life                   426.39       1,148.67      169       8.02
     HDFC Standard              355.93         490.40       38       3.42
     Max New York               289.74         501.16       73       3.50
     Reliance Life              204.10         557.33      173       3.89
     Birla Sun Life             174.63         501.53      187       3.50
     Total Private             3930.95       6,795.64       73      47.45
     Total Market             12511.80     14,320.20        14     100.00

Current scenario of insurance sector in India:

Taking into account the changing socio-economic demographics, rate of GDP
growth, changing consumer behavior and occurrences of natural calamities at
regular intervals, the Indian life insurance market is expected to reach the
value of around Rs 1683 Billion in the year 2009. The market is expected to
grow at a CAGR of more than 200% YOY from the year 2006.

Indian life insurance business is expected to grow at 20% in 2009, supported by
rising demand for both single premium and unit-linked policies. In the first 9
months of the fiscal year single premium policies generated 100 billion.
The Indian insurance industry has travelled a long way ever since businesses
were regulated tightly & concentrated by few insurers of the public sector. The
insurance industry is a key component of the financial infrastructure of an
economy, and its viability and strengths have far reaching consequences for
not only its money and capital markets,' but also for its real sector. The launch
of new developments in the insurance industry saw many new international
insurers entering the market. It also gave way to propagation of innovative
goods & channels for distribution & the supervisory values rising. Indian per
capita revenue is likely to grow up to more than 6% in coming 10 years & with
developing awareness, the Indian insurance rate is estimated to rise at a
striking rate in India. Till recently, only 20% of the Indian population is covered
by different schemes of life insurance. It is also seen that the healthcare
penetration rate as well as schemes of non-life insurance in Indian insurance
market are well under the worldwide levels. These aspects show vast potential
of the Indian insurance industry.

   Times of india
   Economic times
   Insurance industry by ICFAI publication