Insurance:

Introduction
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. Basic human trait is to be averse to the idea of risk taking. Insurance,
whether life or non-life, provides people with a reasonable degree of security and assurance
that they will be protected in the event of a calamity or failure of any sort. Insurance may be
described as a social device to reduce or eliminate risk of loss to life and property. 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.

History of Indian Insurance

The history of life insurance in India dates back to 1818 when it was conceived as a means to
provide for English Widows. Interestingly in those days a higher premium was charged for
Indian lives than the non-Indian lives as Indian lives were considered more risky for
coverage. The Bombay Mutual Life Insurance Society started its business in 1870. It was the
first company to charge same premium for both Indian and non-Indian lives. The Oriental
Assurance Company was established in 1880. The General insurance business in India, on the
other hand, can trace its

roots to the Triton (Tital) Insurance Company Limited, the first general insurance company
established in the year 1850 in Calcutta by the British. Till the end of nineteenth century
insurance business was almost entirely in the hands of overseas companies. Insurance..

Insurance can be defined as assurance for uncertainty. Insurance is about something going
wrong. Its’ often about things going right.; One of the Wonders of human nature is that we
never believe anything can actually go wrong.

The insurance sector in India has come a full circle from being an open competitive market to
nationalization and back to liberalized market again. Tracking the development in Indian
insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries.
 The business of life insurance in Indian in its existing form started in India in the year 1818
with the establishment of Oriental Life. Insurance Company in Calcutta

2.4 Objectives and Importance of Financial Statement Analysis

The primary objective of Financial Statement Analysis is to understand and diagnose the
information contained in the financial statement with the view to judge the profitability
financial soundness of the firm and to make forecast about future prospects of the firm.
The purpose of analysis depends upon the person interested in such analysis and his
objective. However, the following purpose or objective of the financial statement may be
stated to bring out significance of such analysis:

1. To access the earning capacity or profitability of the firm.

2. To access the operational efficiency and managerial effectiveness.

3. To access the short term as well as long term solvency of the firm.

4. To identify the reasons for change in profitability and financial position of the firm.

5. To make inter firm comparison.

6. To make forecast about future prospects of a firm.

7. To assess the progress of a firm over a period of ti

1.1 About Insurance Industry in India

With 36 crore policies, India's life insurance sector is the world’s largest. The life insurance industry
in the country is forecasted to increase at a compound annual growth rate (CAGR) of 12–15 per cent
in the next five years. The industry aims to hike penetration levels to five per cent by 2020, and has
the potential to touch US$ 1 trillion over the next seven years.

The cap on foreign direct investment (FDI) also looks likely to be increased from 26 per cent to
49 per cent. The Insurance Bill which has been approved by the Government of India and will in all
possibility be cleared by the Parliament is expected to increase FDI inflows to US$ 10 million in the
short term

The total market size of the insurance sector in India was US$ 66.4 billion in FY 13. It is
projected to touch US$ 350–400 billion by 2020. Information technology (IT) services, the biggest
spending segment of India’s insurance industry at Rs 4,000 crore (US$ 666.78 million) in 2014, is
expected to continue enjoying strong growth at 16 per cent. Category leaders are business process
outsourcing (BPO) at 25 per cent and consulting at 21 per cent.

India ranked 10th among 147 countries in the life insurance business in FY 13, with a share of
2.03%. The life insurance premium market expanded at a CAGR of 16.6 per cent from US$ 11.5
billion to US$ 53.3 billion during FY 03–FY 13. The non-life insurance premium market also grew
at a CAGR of 15.4 per cent, from US$ 3.1 billion in FY 03 to US$ 13.1 billion in FY 13.

In a bid to facilitate banks to provide greater choice in insurance products through their branches,
a proposal will likely be made which will allow banks to act as corporate agents and tie up with
multiple insurers. A committee established by the Finance Ministry of India is likely to suggest this
model as an alternative to the broking model.

Public sector banks will soon be offering their customers a choice of insurance products from
different companies as against products from a single company. The Finance Ministry of India has
written to public sector banks, asking them to turn into insurance brokers instead of corporate agents.
"By becoming brokers, banks would now be directly responsible for mis-selling as against earlier
when they were seen to be acting as agents of insurance companies," said Mr Sam Ghosh, CEO,
Reliance Capital.

IRDA body Insurance Information Bureau (IIB) has created a registry of healthcare providers and
allocated them unique IDs. By creating this database, the regulator plans to build an analytics
capability for spotting endemics, evaluating medical cost inflation, and detecting fraud.

The insurance sector’s future looks bright, on the back of India’s favourable demographic, greater
awareness, supportive regulatory environment, policies that improve customer-centric products, and
practices that help businesses grow. India's insurable population is projected to touch 75 crore in
2020, with life expectancy reaching 74 years. Life insurance will continue to supplement household
financial savings, and is projected to be 35 per cent of total savings by the end of this decade, as
against 26 per cent in 2009–10.

Competitors of IDBI Federal Life Insurance co. Ltd.

 Life Insurance Corporation of India

 HDFC Standard Life Insurance Co. Ltd
 Bajaj Allianz Life Insurance Company Limited
 AEGON Religare Life Insurance Company Limited
 Birla Sun Life Insurance Co. Ltd
 DLF Pramerica Life Insurance Co. Ltd.
 Star Union Dai-ichi Life Insurance Comp. Ltd.
 ICICI Prudential Life Insurance Co. Ltd.
 ING Vysya Life Insurance Company Ltd.
 Max New York Life Insurance Co. Ltd
 Met Life India Insurance Company Ltd.
 Kotak Mahindra Old Mutual Life Insurance Limited
 SBI Life Insurance Co. Ltd
 Tata AIG Life Insurance Company Limited
 Reliance Life Insurance Company Limited.
 Aviva Life Insurance Co. India Pvt. Ltd.
 Sahara India Life Insurance Co, Ltd.
 Shriram Life Insurance Co, Ltd.1
 Bharti AXA Life Insurance Company Ltd.
 Future General Life Insurance Company Ltd.
 Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd.