2.  What is Insurance?
 Evolution
 Types of Insurance
 Insurance Sector Reforms
 Global Players – Indian Mergers
 LIC
 Global Growth
 Sub Prime
 Indian Scenario
 Interview
 Careers
 Conclusion

3.  Insurance is a form of contract or agreement under one party agrees in
return of a consideration to pay an agreed amount of money to another
party to make goods for a loss, damage, injury to something of value
 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

4. 1818 - Oriental Life Insurance Company – 1st Insurance Company.
1870 - Bombay Mutual Life Assurance Society – 1st Life Insurance Company.
1912 - The Indian Life Assurance Companies Act enacted the 1st Law to Regulate the Life
Insurance Business.
1928 - The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life & non-life insurance businesses.
1938: Earlier legislation consolidated & amended the Insurance Act with the objective of
protecting the interests of the insuring public.
1956: 245 Indian & foreign insurers & provident societies are taken over by the central
government & nationalized.
LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore
from the Government of India.
The first General Insurance Company established in the year 1850 in Calcutta by the British.

5.  LIFE INSURANCE NON- LIFE INSURANCE

 Property (eg.Builders risk insurance)
 Aviation(eg.Private aircraft insurance)
 Marine (eg. Marine hull insurance)
 Miscellaneous (eg.Purchase insurance)



6.  In 1993, Malhotra Committee - headed by former Finance Secretary &
RBI Governor R.N. Malhotra.
 Objective - to create more efficient & competitive financial system.
 Key recommendations of the reform;
 1.Structure: – a. government stake 50% in insurance companies.
 2.Competition:
 Private Companies with a minimum paid up capital of Rs.1bn should be
allowed to enter the sector.
 No Company should deal in both life and general insurance through a
single entity.
 Foreign companies may be allowed to enter the industry in collaboration
with the domestic companies.

7.  Regulatory Body:
• The insurance act should be changed.
• An insurance regulatory body should be set up.
• Controller of insurance-a part of the Finance Ministry –
should be made independent.
 Investments :
• Mandatory Investments of LIC Life Fund in government
securities to be reduced from 75% to 50%.
• GIC and its subsidiaries are not to hold more than 5% in
any company.
 Customer Service:
• LIC should pay interest on delay on payment beyond 30
days.
• Insurance companies must be encouraged to set up
unit link pension plans.

8. THE GLOBAL PLAYERS
in Life insurance
AVIVA
American International Group, Inc.
(AIG)
Prudential PLC

9. • Aviva is the fifth-largest insurance group of the world &
the biggest in the UK.
• They are among the leading providers of life &
pensions products in Europe.
• Aviva has a 35 million-customer base worldwide and
more than £332 billion of assets under management.
• The mission of Aviva is: “to provide prosperity and
peace of mind for our customers”.

10. • Aviva was the first foreign insurance company in India to set
up its representative office in 1995.
• In India Aviva has a joint venture with Dabur.
• Aviva has 112 Branches in India.
• Aviva products are available in 392 towns & cities across
India.
• Annual sales turnover is over Rs.12 billion.

11. • Provides value for money
• Flexibility
• Transparency.
• It has been among the 1st to introduce the
more modern Unit Linked Products in the
market. [eg.whole life insurance(life long)]
•Good products to offer.

12. • AIG is the world's leading international insurance & financial
services org, with operations in more than 130 countries &
jurisdictions.
• In the United States, AIG companies are the largest
underwriters of commercial & industrial insurance.
• AIG companies are the largest underwriters.AIG also has one
of the largest U.S. retirement savings.
• AIG American General is a top-ranked life insurer.
• A major focus of AIG's insurance business model is the
concept of an underwriting profit.

13. • Tata AIG General Insurance company is a joint venture
between the Tata Group & American International
Group, Inc
• The Tata AIG General Insurance company’s offers a
complete range of insurance solutions
• The Tata AIG ‘s product innovation
• The rural difference
• The enhancement of distribution channels

14. • Innovative Offers,
• Customer-Centric Products,
• Increasing Awareness Levels of Consumers
• Enhanced Service Standards,
• Reaching out to the customer through a number of
distribution and communications channels
• Providing advice to the customer

15. • Prudential PLC is an international financial services company.
• It has a product range of personal
banking, insurance, pensions and retail investments, to
institutional fund management and property investments .
• In the UK Prudential is a leading life & pensions provider with
around 7 million customers.
• It is Asia’s leading European life insurer with life and fund
management operations in 12 countries serving some seven
million customers.


16. • ICICI Prudential Life Insurance Company is a joint
venture between ICICI Bank & Prudential PLC.
• ICICI Prudential was amongst the first private sector
insurance companies to begin operations in December
2000.
• The company has a network of about 56,000 advisors;
as well as 7 banc assurance and 150 corporate agent
tie-ups.

• For the past four years, ICICI Prudential has retained its
position as the No. 1 private life insurer in the country.

17. Reasons for Growth
 Lucrative offers
 High standard service
 Customer-centric products
 Good communication techniques
 Use of customer feedback in
improvement of offers

18. FORMATION:
 Insurance corporation LIC was formed in September 1956 by an act of
parliament
 LIC was formed with the capital contribution of 5 crores from the govt. of
India and has the sole mandate of conducting life insurance business in
India.
 Before the formation of LIC there where 245 Indian and foreign insurers
in India.
OBJECTIVES:
 To maximize mobilization of peoples savings by making insurance linked
saving adequately attractive.
 To spread life insurance much more widely and in particularly in rural
area, providing them with insurance at reasonable price and adequate
finance cover.

19.  LIC has come a long way since its nationalization in 1956
over 40 years later in 1997
 LIC had grown from Rs. 3.78 billion of new business in
1957 to Rs 555.5 billion
 The rural India accounting for around 40% of the business.
 In 1997, LIC had spread to the farthest corners of the
country with an extensive network of over 8 lakh
agents, 2048 branches(1370cities), 100 Divisional
office, 7 Zonal offices and 1 Central office.
 LIC has branch offices in U.K., Mauritius, & Fiji. In U.K.

20. LIC’s Game Plan:
“LIC IS TO BE IDENTIFIED AS AN EPITOME OF CUSTOMER
CARE AND CONCERN IN THE ENTIRE SERVICE INDUSTRY”
-Chairman G N BAJPAI
The IT initiative
 The company, has invested over Rs. 400 crore in technology up
gradation.
 LIC now plans to increase the MAN to 33 more Cities by the end of
the year so that they have 4 I cities on the WAN. That will make it
the biggest network in the whole country, including that of the
railways

21.  Premium payment facility through internet, smart
card, credit card
 Tie up with banks for payment of premium through ATM’S
 Market focus initiative
 Launching schemes for the rural areas designed to meet
their requirement. Derive 60% of its new business from
rural areas
 The corporation will soon go in for restructuring and is
talking with leading management institutes such as the IIM
of Lucknow for brushing up its marketing skills, IIM
Ahmedabad for fine-tuning its investment skills & IIM
Bangalore for polishing its IT skills.

22.  Global 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.

23.  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.

24.  The property/casualty and life insurance industry will not be
materially affected by credit market developments.
 Because both by law and by the nature of their business, insurers
generally limit themselves to the low-risk end of the investing
universe.
 A small number of P/C insurers provide insurance on the credit-
worthiness on mortgage-backed securities.
 The loss ratios for the credit insurance products of these companies
are likely to rise due to increased delinquencies and defaults.

25.  At least half of these companies are parts of larger financial
services groups, so that the experience of this line of business
is, for them, a small part of their overall operations.
 As such, it is much too early to estimate the dimensions of the
claims experience that may emerge from the recent credit market
developments.
 Of course some companies will be affected more than others, and
the depth and length of the credit market “challenges” might be
more adverse than many experts currently foresee .
 But for now, these developments do not appear poised to adversely
affect the insurance industry’s ability to pay its claims and continue
to have financially successful operations.

27.  Insurers
Premium[Rs.Cr.]
 ICICI Prudential 271.00
 Bajaj Allianz 124.00
 SBI Life 90.00
 HDFC Standard
70.00
 Max New York Life 69.00
 Tata AIG 48.00
 Aviva
39.00
 Reliance Life 33.00

28.  Birla Sunlife 28.00
 Kotak Mahindra Old
Mutual 26.00
 ING Vysya 22.00
 Met Life 19.00
 Shriram Life 4.50
 Sahara Life 1.70
 Bharti Axa Life 0.72

29.  ICICI Prudential - premium income rising 84.5 % to Rs 271 crore -
9.08% market share.
 Bajaj Allianz - 15 % in business - collected Rs 124 crore - 4.16 %
market share.
 general insurance industry grew 16 % in April,
 New India - With 8 % growth in premium collection at Rs 651
crore, retained its number one slot by cornering 20.72 % of market share.
 ICICI Lombard - new premium 36 % to Rs 448 crore - a market share of
14.28 %
 ICICI Lombard - the second-largest non-life insurance player.
 Oriental Insurance premium collection at Rs 413 crore & a market of
13.16 %.
 United India - 3 % growth in business at Rs 407 crore & 12.97 % of the
market.

30.  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.

31.  The year 1999 saw a revolution in the Indian
insurance sector------the ending of government
monopoly -----the passage of the Insurance Regulatory
and Development Authority (IRDA) Bill
 “A foreign partner can hold 26% equity in an insurance
company, but there was a proposal to increase this limit
to 49%.
 Foreign investments of Rs. 8.7 billion have poured into
the Indian market & 21 private companies have been
granted licenses.

32. LIC PRIVATE
PLAYERS
Growth – 21.87% Growth – 129%
Earned – Rs.197.86 billion[04-05] Earned – Rs.55.57 billion[04-05]
Against Rs.24.29 billion [03-04]
Sold – 2.4 billion policies
Market share – Market share –
87.04% 78.07% 75% 13% 22% 24%

33. India's insurance sector to see 500 per cent growth by 2010:
Study
 India's insurance sector - 500 % growth over the next three years
- 60 billion-dollar industry by 2010
 India's more than one billion people are uninsured, the study by
the Associated Chambers of Commerce and Industry
(Assocham) said.
 'A large part of rural India is still untapped due to poor
distribution, large distances & high costs relative to returns,‘ said
Assocham president Anil K Agarwal
 He said the study had revealed that rural & semi-urban India
would contribute 35 billion dollars to the Indian insurance
industry by 2010.
 The study added that the urban sector insurance was estimated
to reach 25 billion dollars by 2010, life insurance 15 billion and
non- life insurance 10 billion dollars.

35.  When was LIC formed?
 What are the objectives of LIC?
 How does LIC functions?
 What mission and vision do you practice?
 How do you address to customers grievances?
 Any significant achievement you would like to
mention?

36. Jobs in insurance involve helping individuals and business
manage risk to protect themselves from catastrophic losses
and to anticipate potential risk problems.
 Insurance brokers and agents
 Claims handlers [are responsible for investigating
incidents and paying claims. They decide the extent and
validity of the claim]
 Underwriters [assess risks and decide whether to accept
applications for insurance cover - and on what terms]

37. Insurance can be summed up as
“Praying for the best …
…being PREPARED for the
WROST”.

38. ?