Post on 07-Apr-2018
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Introduction:
Insurance = Collective bearing of Risk. Basic Human trait is to be averse to the idea
of risk taking.
Insurance, whether life or non-life, providespeople with a reasonable degree of security
and assurance that they will be protected in
the event of a calamity or failure of any sort.
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Factorsaffecting
service
sector
Five environmental variables that affect all
industries-
Customers
Competitors
Government
Technology and
Globalization -are forcing rapid changes in theservice sector.
In addition, there are four factors of particular
importance to service providers-
change in how quality is perceived
cost control
customer services and
the new definitions of the customer.
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DIVISION OF INSURANCE SECTOR
INSURANCE
GENERAL INSURANCE
FIREINSURANCE
MARINEINSURANCE
MEDICLAIMMOTORVEHICAL
LIFEINSURANCE
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Till end of FY 1999-2000, two state-run insurance
companies, namely, Life Insurance Corporation (LIC)
and General Insurance Corporation (GIC) were the
monopoly insurance providers in India. Under GIC there were four subsidiaries
National Insurance Company Ltd.
Oriental Insurance Company Ltd.
New India Assurance Company Ltd.
United India Assurance Company Ltd.
ORIGINANDGROWTHOFINSURANCESECTOR:
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In fiscal 2000-01, the Indian federal governmentlifted all entry restrictions for private sector
investors.
Foreign investment insurance market was also
allowed with 26 percent cap.
GIC was converted into India's national reinsure
from December, 2000
All the subsidiaries working under the GICumbrella were restructured as independent
insurance companies.
ORIGINANDGROWTHOFINSURANCESECTOR:
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Milestones in GIC
107 insurers amalgamated and grouped intofour companies viz.:
The National Insurance Company Ltd. The New India Assurance Company Ltd.
The Oriental Insurance Company Ltd.
The United India Insurance Company Ltd. GIC incorporated as a company.
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Contributors
Life Insurers:
Allianz Bajaj Life Insurance Co. Ltd.
AMP Sanmar Assurance Co. Ltd.
Birla Sun Life Insurance Co. Ltd. Dabur CGU Life Insurance Company Pvt. Ltd.
HDFC Standard Life Insurance Co. Ltd.
ICICI Prudential Life Insurance Co. Ltd.
ING Vysya Life Insurance Co. Pvt. Ltd. Life Insurance Corporation of India.
Max New York Life Insurance Co. Ltd.
Metlife India Insurance Co. Pvt. Ltd.
Om Kotak Mahindra Life Insurance Co. Ltd.
SBI Life Insurance Co. Ltd.
Tata AIG Life Insurance Co. Ltd.
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Contributors
Non-Life Insurers:
Bajaj Allianz General Insurance Co. Ltd.
ICICI Lombard General Insurance Co. Ltd.
IFFCO Tokyo General Insurance Co. Ltd.
National Insurance Co. Ltd.
New India Assurance Co. Ltd.
Oriental Insurance Co. Ltd. Reliance General Insurance Co. Ltd.
Royal Sundaram Alliance Insurance Co. Ltd.
Tata AIG Life Insurance Co. Ltd.
United India Insurance Co. Ltd
Reinsurers:
General Insurance Corporation of India.
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Contribution to growth:
Currently, the insurance sector size is estimated
at Rs.500 billion.
On account of intense marketing strategiesadopted by private insurance players, the
market share of state owned insurancecompanies like GIC, LIC and others have comedown to 70% in last 4-5 years from over 97%.
The private insurance players despite the sector
is still regulated has been offering rate of return(RoR) to its policy holders which is estimated atabout 35% as against 20% of domestic insurancecompanies.
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Contribution to growth:
LIC and GIC have limited number of policies to
offer to their subscribers
Private insurance companies offer many policiesand the premium amount as well as the
maturity period is much competitive as againstthose of government insurance companies.
The private sector insurance players havestarted exploring the rural markets in which
until recently, the state owned companies hadthe monopoly.
Indias life insurance premium, as a percentageof GDP is 1.8%
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Future of the Sector:
Indian insurance sector is likely to register
unprecedented growth of 200% and attain a size ofRs. 2000 billion by 2009-10
A private sector insurance business will achieve agrowth rate of 140% as a result of aggressivemarketing technique being adopted by them
against 35-40% growth rate of state ownedinsurance companies.
In rural markets, the share of private insuranceplayers would increase substantially as these have
been able to generate a faith among their ruralconsumers.
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Insurance Sector - Emerging
Areas: Demand for Pension Plans
Two relatively modern trends affect life insurancebusiness in India significantly:
Joint Family System and
elderly are increasingly having to fend for
themselves Separateness of Banking and Insurance
Bancassurance
Role of Information Techno-logy
Using Postal Network Creating Insurance awareness
Innovative Products
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CHANGE IN TRENDS
FROM PRICE POINT OF VIEW
DIFFERENT COMPANIES ARE PROVIDING POLICES OF
INSURANCE AT COMPETETIVE PRICES
EVEN THE ALLOCATION CHARGES UNDER POLICIES IS
ALSO DECREASED THE INSURANCE AGENT COMISSION IS ALSO FIXED
AAND REDUCED SO THAT THE CUSTOMER CAN GET THE
BEST.
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FROM CUSTOMER AND SERVICE
POINT OF VIEW
Globalization - "The Dynamic Force"
MNCs - "The New Path Maker"
More customer oriented Mostly better service oriented
More competitive
Better satisfaction More value addition
Strategic development
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FROM PROMOTION POINT OF VIEW
Computerization
Internet
Electronic Clearance Service (ECS) Call Centres and SMS services
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INDIAN INSURANCE IN 21ST CENTURY
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 InsuranceBroker, Bonsai Insurance Broking Pvt Ltd.
The Government of India liberalized the insurance sector in March 2000with the passage of the Insurance Regulatory and Development Authority(IRDA) Bill, lifting all entry restrictions for private players and allowingforeign players to enter the market with some limits on direct foreignownership.
Minimum capital requirement for direct life and Non-life Insurance
company is INR1000 million and that for reinsurance company is INR 2000million. In the 2004-05 budgets, the Government proposed for increasingthe foreign equity stake to 49%, this is yet to be effected. Under thecurrent guidelines, there is a 26 percent equity cap for foreign partners indirect insurance and reinsurance Company
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