1. Presented To: Dr. Amandeep Kaur
Presented By:
Kanika Gupta (4326)
Shevani Gupta (4343)
Rupam (4357)
Shallu (4359)
Malika (4381)

2. CONTENT
 Insurance Introduction
 € Privatisation in Insurance
 Types of Insurance
 € Growing up of Insurance Sector
 € Major driving factor
 Top players of Insurance sector
 Insurance and Salary
 € Challenges and Opportunity
 € Causes
€
€
€

3. Introduction to Insurance
What is Insurance?
Definitions:
In law and economics, insurance is a form of
risk management primarily used to hedge
against the risk of a contingent, uncertain
loss. Insurance is defined as the equitable
transfer of the risk of a loss, from one entity
to another, in exchange for payment.
Insurance is a hedging instrument used as a
precautionary measure against future
contingent losses.

4. Insurance- Introduction
Insurance= Protection against Risk
• Insurance is a co-operative device of distributing
losses, falling on an individual or family over a large
number of persons, each bearing a nominal
expenditure & feeling secured against heavy loss.
• Insurance business has emerged as one of the
prominent financial services during recent
times, particularly in developing countries where it
could not grow before globalization. But it is very
difficult to trace exactly when insurance originated.

5. Contd…
Insurance has always been a politically sensitive subject
in India.
Within less than 10 years of independence, the Indian
government nationalized private insurance companies
in 1956 to bring this vital sector under government
control to raise much needed development funds.
Since then, state-owned insurance companies have
grown into monoliths, lumbering and often inefficient
but the only alternative. They have been criticized for
their huge bureaucracies, but still have millions of
policy holders as there is no alternative.
€

6. Privatization in insurance
The Narasimha Rao government (1991-96) which unleashed liberal changesin
India's rigid economic structure could not handle this political hot
potato.Ironically, it is the coalition government in power today which has
declaredits intention of opening up insurance to the private sector.
Ironical becausethis government is at the mercy of support from the left
groups which havebeen the most vociferous opponents of any such move.
All segments of the financial sector had been opened to private playerswith
better product, services & social objective
International players are eyeing the vast
potential of the Indian market and are
already making plans to come in.

7. Types of Insurance
Privatization has brought in lot of surprises for insurance
sector. In India, insurance sector is at the booming stage as only 40% of the
population is insured. Private organizations are striving hard and hard to develop
the sector. €Government is also supporting the insurance sector to inrease the
Gross Domestic Product ratio from the sector which is now about 1.4% only.
Medical Auto Mediclaims
Accidental insurance
insurance insurance
Family Other
Diabetes Dental
Health insurance
insurance insurance
insurance

8. Grown up insurance sector
The insurance industry has grown by 83 per cent since the
opening up of the sector.
-C S Rao, chairman (IRDA)
Insurance premium income has risen to Rs 82,415 crore in 2003-04, against
45,000 crore in 2000-01.
‡premium income in the life insurance sector to rise further by 15-16 per cent
and non-life insurance premium by 14 per cent in 2005-06.
‡The health insurance sector is expected to grow by 10-15 per cent.
‡foreign direct investment is increased to 49 per cent from the current 26 per
cent,the industry can expect greater entry of players

9. Cont….
Indian insurance sector is likely to register unprecedented
growth of 200% and attain a size of Rs. 2000 billion by 2009-
10, in which a private sector insurance business will achieve
a growth rate of 140% as a result of aggressive marketing
technique being adopted by them against 35-40% growth
rate of state owned insurance companies.
On account of intense marketing strategies adopted by
€private insurance players, the market share of state owned
insurance companies like GIC, LIC and others have come
down to 70% in last 4-5 years from over 97%.

10. Cont….
The private insurance players despite the sector is still
regulated has been offering rate of return (RoR) to its policy
holders which is estimated at about 35% as against 20% of
domestic insurance companies.
€ LIC and GIC have limited number of policies to offer to their
subscribers while in case of private insurance companies, their
policy numbers are many more and the premium amount as
well as the maturity period is much competitive as against
those of government insurance companies.
€ The Chamber has projected that in rural markets, the share of
private insurance players would increase substantially as these
have been able to generate a faith among their rural consumers.

11. Growth of top 10 private insurance
companies of India:
ICICI Prudential Life Insurance Co. Ltd is the biggest
private life insurance company in India. It experienced
growth of 58%.
€ Bajaj Allianz Life Insurance Co. Ltd has reported a growth
of 52% and its market share went up to 6.98% in 2007-08
form 5.66% in 2006-07.
€ SBI Life Insurance Co Ltd in terms of new number of
policies sold, the company ranked 6th in 2007-08. its
growth is 87% over last year.

12. Cont….
Reliance Life Insurance Co. Ltd Total collected was Rs 2,792.76
crore and its market share went up to 2.96% from 1.23% a year
back.
€ HDFC Standard Life Insurance Co Ltd with an income of Rs
2,680 crore in FY2007-08, registering a year-on-year growth of
64%.
€ Birla Sun Life Insurance Co Ltd market share of the company
increased from 1.22% to 2.11% in 2007-08. The company moved
to the 7th position in 2007-08.

13. Cont….
Max New York Life Insurance Co Ltd has reported growth of 73%
in 2007-08. Total new business generated was Rs 641.83 crore as
against Rs 387.51 crore.
€ Kotak Mahindra Old Mutual Life Insurance Ltd the fiscal 2007-
08, the company reported growth of 80%, moving from the 11th
position to 9th. It captured a market share of 1.19% in 2007-08.
€ Aviva Life Insurance Company India Ltd ranking dropped to
10th
in 2007-08 from 9th last year. It has presence in more than 3,000
locations across India via 221 branches and close to 40
banc assurance partnerships.

14. Major Driving Factor
Growing Demand from Semi-Urban Population.
€Rising demand for retirement provision in the ageing
population.
€The opening of the pension sector and the establishment
of the new pension regulator.
€Rising per capita incomes among the strong middle class,
and spreading affluence.
€Public private partnerships infrastructure development.
€Growing consumer class and increase in spending &
saving capacity.

15. Top Players of Insurance Sector
Following are the top players
of the insurance sector
offering most competitive
packages to their employees:
€Life Insurance Corporation
€New York Life
Prudential
Met Life
Birla Insurance
Kotak Mahindra
ICICI
HDFC

16. Insurance and Salary
•Due to privatization in
insurance sector growth
options have been changed.
•From basic salary with
small incentives,
compensation systems have
been grown to increased
salaries, incentives, perks,
allowances,
accommodations, etc.
•The average salary increase
for the year 2006 was 17.1%.

17. Insurance due to Current Scenario
privatization
Process of privatization will  Entry of privatization
lead to `green field' area of  €Competition
activity.  €New product &
 €The banks and capital technology
markets were integrated €Distribution work
with insurance, which, in  €Customer services
turn, was vital to sustain  €CRM policy increases
and grow the economy sales force
 €Trade and finance had no
 €Modern marketing
geographical limits and, approach
hence, the need to align
with the international
scenario in this aspect.
 €Risk coverage & security

18. Challenges & Opportunities
 Mass Marketing
 €Job Opportunities
 €Inflow of Funds
 €Reinsurance
 €Marketing Strategies
 €Bank assurance
 €Information technology

19. Causes
 Ineffective distribution and
marketing strategies adopted
by LIC
 €Limited advertising initiatives