INSURANCE SECTOR

Pooja. Mishra

Priya. Singh

Nisha. Thapa

• Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss.

• Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium.

• Insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage

• Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice

What is INSURANCE?

INSURANCE SECTOR: History>The history of the Indian insurance sector dates back to 1818, when

the Oriental Life Insurance Company was formed in Kolkata. A new era began in the India insurance sector, with the passing of the Life Insurance Act of 1912.

>The Indian Insurance Companies Act was passed in 1928. This act empowered the government of India to gather necessary information about the life insurance and non-life insurance organizations operating in the Indian financial markets.

>The Triton Insurance Company Ltd formed in 1850 and was the first of its kind in the general insurance sector in India.

>Established in 1907, Indian Mercantile Insurance Limited was the first company to handle all forms of India insurance.

Types of Insurance

Life insurance

Non - Life Insurance

(general insurance)

Property (eg.Builders risk insurance)

Aviation(eg.Private aircraft insurance)

Marine (eg. Marine hull insurance)

Miscellaneous (eg.Purchase insurance)

Why do we need

insurance???

Lost House due to Floods

Need a Treatment, its URGENT!!!!

Lost !!!!

IRDATo protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.

>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.

The Insurance Regulatory and Development Authority (IRDA) is a national agency of the Government of India, based in Hyderabad.

>It was formed by an act of Indian Parliament known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements.

>In 2010, the Government of India ruled that the Unit Linked Insurance Plans (ULIPs) will be governed by IRDA, and not the market regulator Securities and Exchange Board of India.

>It has maintained a website where detail information about IRDA can be referred and understood www.irdaindia.org

Insurance companies in India

>IRDA has till now provided registration to 12 private life insurance companies and 9 general insurance companies.

>If the existing public sector insurance companies are considered then there are presently 13 insurance companies in the life side and 13 companies functioning in general insurance business.

>General Insurance Corporation has been sanctioned as the "Indian reinsurer" for underwriting only reinsurance business

The SWOT analysis of Whole Insurance sector is as follows:-

1.Strength-Very good policies of life coverage.

2.Weaknesses:-unable to convince the people about the products. There are not much advisors for the insurance companies

3.Oppourtunities:-Untapped rural sector and small towns

4.Threats:-growing competition from larger MNC's.

SWOT Analysis of RELIANCE GENERAL INSURANCE

Strengths

RGIC is second among private players after ICICI Lombard GI •India’s first insurance company to be awarded the ISO 9001:2000 certification •Net worth has increased up to Rs.4.94 billions doubled from last year’s Rs.2.59 billions •Excellent outreach with a large distribution network •Reserves and Surplus has increased five times to Rs.4.998 billion from Rs.1.04 billion previous year 2007 •RGIC has been able to give highest ROI of 11.27% in last five years. •RGIC commands 17% of the Private Sector Share & 7% share of the General Insurance Industry

Weaknesses

•Earning per share is Rs. -15.92 (previous year Rs.0.16) •Sudden expansion this year by establishing more than 125 branches has increased operations and administration expenses due to which losses incurred.•There is no technical support of the foreign principals as RGIC is not having any foreign tie-up as other players have. •All the inner facts and factors known to the family member cum competitor company headed by Mukesh Ambani. •Overdependence on fellow subsidiaries for various supplies

Opportunities

De-tariff –IRDA removed controls on pricing in General Insurance business with effect from 1st January, 2008

•The industry is going to be freed from product wordings and policy wordings

•Can become market leader as presently it is no. 2 position

•General insurance industry in India has grown at 15% CAGR in terms of gross premium collection

Threats

>New Entrants – Future General India Life Insurance Company Limited -Sep. 2007 – IDBI Fortis Life Insurance Company Ltd. –Dec 2007 – Bharti Axa General Insurance Company Ltd. -June 2008

> Many foreign bank giants are going to enter Indianmarket. They have very large portfolio of variousverticals and products with them

> New tie-ups by the competitors viz. – Online travel portal clear trip ties up with Tata AIG to offer travel insurance – ICICI Prudential has pact with Suvidha Infoserve

THE GLOBAL GROWTHGlobal insurance premiums grew by 9.7% reached $3.3 trillion by 2006.

The profits of property and casualty insurance industry actually rose by $3.2 billion, or 5.5 %, to $30.6 billion during the first half of 2007.

North America was the most important region with premium income of $1,217 billion in 2006.

Followed by the EU (at $1,198 billion) & Japan (at $492 billion.)

The United States & Japan alone accounted for a half of world insurance premiums.

The volume of UK insurance business totaled $295 billion or 9.1% of global premiums by 2006.

Emerging markets accounted for over 85% of the world’s population but generated only 10% of premium.

The ISO results indicate a growth rate in net written premiums of just 0.1 % during the first half of 2007, down substantially from the 2.7 % increase during calendar year 2006.

The 0.1 % increase in premium growth, if maintained through 2007, would represent the lowest growth rates for the during the past 40 years

“Indian Insurance Industry: New Avenues for Growth 2012”,

The potential of the Indian insurance industry is huge. HOW???….. It has an annual growth rate of 15-20% &…..the largest number of life insurance policies in force.

Total value of the Indian insurance market (2004-05) is at Rs. 450 billion (US$10 billion).

Insurance & Banking Services’ contribution to the country's gross domestic product (GDP) is 7%

The funds available with the state-owned Life Insurance Corporation (LIC) for investments are 8% of GDP.

Insurance can be summed up as

“Praying for the best ……being

PREPARED for the WROST”.

THANK YOU