Shakti Shiromani Shukla

Email: shukla_shakti@rediffmail.com
Mob.: 08604601069

1
 Insurance in India has its history dating back until
1818, when Oriental Life Insurance Company was
started by Anita Bhavsar inKolkatato cater to the
needs of European community.

The pre-independence era in India saw

discrimination between the lives of foreigners
(English) and Indians with higher premiums being
charged for the latter.

In 1870, Bombay Mutual Life Assurance Society

became the first Indian insurer

2
 1912: The Indian Life Assurance Companies Act came into force for
regulating the life insurance business.

1928: The Indian Insurance Companies Act was enacted for

enabling the government to collect statistical information on both
life and non-life insurance businesses.

1938: The earlier legislation consolidated the Insurance Act with the
aim of safeguarding the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies were
taken over by the central government and they got nationalized. LIC
was formed by an Act of Parliament, viz. LIC Act, 1956. It started off
with a capital of Rs. 5 crore and that too from the Government of
India.

The history of general insurance business in India can be traced

back to Triton Insurance Company Ltd. (the first general insurance
company) which was formed in the year 1850 in Kolkata by the
British.

3
 1907: The Indian Mercantile Insurance Ltd. was set up which was the
first company of its type to transact all general insurance business.

1957: General Insurance Council, an arm of the Insurance Association

of India, framed a code of conduct for guaranteeing fair conduct and
sound business patterns.

1968: The Insurance Act improved for regulating investments and set
minimal solvency levels and the Tariff Advisory Committee was set up.

1972: The General Insurance Business (Nationalization) Act, 1972

nationalized the general insurance business in India. It was with effect
from 1st January 1973.

107 insurers integrated and grouped into four companies viz. the
National Insurance Company Ltd., the New India Assurance Company
Ltd., the Oriental Insurance Company Ltd. and the United India
Insurance Company Ltd. GIC was incorporated as a company.

4
 Life Insurance Companies

Aviva Life Insurance

Bajaj Allianz Life Insurance
Birla Sun-Life Insurance
HDFC Standard Life Insurance
ING Vysya Life Insurance
Life Insurance Corporation
Max New York Life Insurance
MetLife Insurance
Om Kotak Mahindra Life Insurance
Reliance Life Insurance
Sahara India Life Insurance
SBI Life Insurance
TATA AIG Life Insurance

5
 General Insurance Companies

Agriculture Insurance
Amsure Insurance
ANZ Insurance
Bajaj Allianz General Insurance
Cholamandalam General Insurance
Employee State Insurance
Export Credit Guarantee Corporation
ICICI Lombard General Insurance
IFFCO-Tokio General Insurance
National Insurance
Oriental Insurance
Peerless Smart Financial
Royal Sundaram Alliance
TATA AIG General Insurance

6
LIFE INSURERS Websites

Public Sector

Life Insurance Corporation of India www.licindia.com

Private Sector

Allianz Bajaj Life Insurance Company Limited www.allianzbajaj.co.in

Birla Sun-Life Insurance Company Limited www.birlasunlife.com

HDFC Standard Life Insurance Co. Limited www.hdfcinsurance.com

ICICI Prudential Life Insurance Co. Limited www.iciciprulife.com

ING Vysya Life Insurance Company Limited www.ingvysayalife.com

Max New York Life Insurance Co. Limited www.maxnewyorklife.com

MetLife Insurance Company Limited www.metlife.com

Om Kotak Mahindra Life Insurance Co. Ltd. www.omkotakmahnidra.com

SBI Life Insurance Company Limited www.sbilife.co.in

TATA AIG Life Insurance Company Limited www.tata-aig.com

AMP Sanmar Assurance Company Limited www.ampsanmar.com

Dabur CGU Life Insurance Co. Pvt. Limited www.avivaindia.com

7
GENERAL INSURERS
Public Sector
National Insurance Company Limited www.nationalinsuranceindia.com
New India Assurance Company Limited www.niacl.com
Oriental Insurance Company Limited www.orientalinsurance.nic.in
United India Insurance Company Limited www.uiic.co.in
Private Sector
Bajaj Allianz General Insurance Co. Limited www.bajajallianz.co.in
ICICI Lombard General Insurance Co. Ltd. www.icicilombard.com
IFFCO-Tokio General Insurance Co. Ltd. www.itgi.co.in
Reliance General Insurance Co. Limited www.ril.com
Royal Sundaram Alliance Insurance Co. Ltd. www.royalsun.com
TATA AIG General Insurance Co. Limited www.tata-aig.com
Cholamandalam General Insurance Co. Ltd. www.cholainsurance.com
Export Credit Guarantee Corporation www.ecgcindia.com
HDFC Chubb General Insurance Co. Ltd.
REINSURER
General Insurance Corporation of India www.gicindia.com

8
 1.Primary Functions

2.Secondary Functions

3.Other Functions

9
 Providing protection The elementary purpose of insurance is to
allow security against future risk, accidents and uncertainty. Insurance
cannot arrest the risk from taking place, but can for sure allow for the
losses arising with the risk. Insurance is in reality a protective cover
against economic loss, by apportioning the risk with others.

Collective risk bearing Insurance is an instrument to share the

financial loss. It is a medium through which few losses are divided
among larger number of people. All the insured add the premiums
towards a fund and out of which the persons facing a specific risk is
paid.

Evaluating risk Insurance fixes the likely volume of risk by

assessing diverse factors that give rise to risk. Risk is the basis for
ascertaining the premium rate as well.

Provide Certainty Insurance is a device, which assists in changing

uncertainty to certainty.

10
 Preventing losses Insurance warns individuals and
businessmen to embrace appropriate device to prevent
unfortunate aftermaths of risk by observing safety
instructions; installation of automatic sparkler or alarm
systems, etc.

Covering larger risks with small capital Insurance

assuages the businessmen from security investments.
This is done by paying small amount of premium
against larger risks and dubiety.

Helps in the development of larger industries

Insurance provides an opportunity to develop to those
larger industries which have more risks in their setting
up.

11
 http://winsure.yolasite.com

Is a savings and investment tool Insurance is the best savings

and investment option, restricting unnecessary expenses by the
insured. Also to take the benefit of income tax exemptions, people
take up insurance as a good investment option.

Medium of earning foreign exchange Being an international

business, any country can earn foreign exchange by way of issue of
marine insurance policies and a different other ways.

Risk Free trade Insurance boosts exports insurance, making

foreign trade risk free with the help of different types of policies
under marine insurance cover.

Insurance provides indemnity, or reimbursement, in the event

of an unanticipated loss or disaster. There are different types of
insurance policies under the sun cover almost anything that one
might think of. There are loads of companies who are providing
such customized insurance policies.

12
 http://winsure.yolasite.com

The US$ 41-billion Indian life insurance industry is

considered the fifth largest life insurance market,
and growing at a rapid pace of 32-34 per cent
annually, according to the Life Insurance Council.

Since the opening up of the insurance sector in

India, the industry has received FDI to the tune of
US$ 525.6 million.

The government is likely to reintroduce the

Insurance Bill which proposes to increase the FDI
cap in private sector insurance companies from
26 per cent to 49 per cent.

13
 The total number of life insurers registered with the
Insurance Regulatory Development Authority (IRDA) has
gone up to 23.

The Life Insurance Corporation (LIC) posted a 50 per cent

growth in new premium collection in the first nine months
of the 2010 fiscal, increasing its market share to 65 per
cent from 56 per cent a year ago.

LICs new premium collection touched US$ 9.58 billion in

the April-December 2009 period while the combined
business of the 22 private insurers grew to US$ 5.07 billion
from the previous year, as per data collated by the
Insurance Regulatory and Development Authority (IRDA).

Overall the industry grew at 29 per cent in the April-

December period of the fiscal year 2010.

14
 General Insurance

The total number of general insurers registered with IRDA

has gone up to 22, with the registration of SBI General
Insurance Company Limited, a joint venture general
insurance company promoted by State Bank of India and
Insurance Australia Group, Australia, as a general insurer in
December 2009.

Overall, the non-life insurance sector grew 9.95 per cent in April-
December 2009, compared to the corresponding period last year

According to IRDA data, out of the US$ 5.46 billion premium

underwritten by the industry during the April-December 2009 period,
US$ 3.24 billion came from the four public sector companies as
compared to US$ 2.91 billion during the same period in 2008.

The Gross Premium underwritten by public sector non-life insurers for

the April-December 2009 period posted year-on-year growth of 11.37
per cent as compared to the year-on-year growth of 7.93 per cent
posted by private sector non-life insurers

15
 Moreover, in the 2010-11 budget, Finance Minister, Mr
Pranab Mukherjee, has decided to roll back the
governments decision to tax the unrealised gains of non-
life insurance companies.

The appreciation in the value of investments, being in the

nature of unrealized gain is not taken into account for
determining profit or loss of non-life insurance business as
per the IRDA regulations. It is, therefore, proposed that the
unrealized gains due to appreciation in the value of
investments will not be included in the total income,
according to the budget documents.

According to data from the IRDA (Summary Reports of

Motor Data of Public and Private Sector Insurers - 2008-09),
in 2008-09, nearly 30 million vehicles were registered and a
total premium worth US$ 2.03 billion was collected.

16
 Project Insurance

Insurance companies are also witnessing increasing demand

for project insurance in the last few months. Corporates are
beginning to demand project insurance across sectors such as
power generation with the cover beginning right from the start
of the project till it is declared ready for commercial use.

Some of the big projects also take cover for financial loss
arising out of delay in completion.

Industry players estimate that premiums collected from project

insurance will be around US$ 216.2 million for the industry as a
whole and is expected to increase significantly.

Oriental Insurance Company Ltd will be offering

comprehensive project insurance for the Tata Power Project at
Mundra in Gujarat.

17
 http://winsure.yolasite.com

Health Insurance
The health insurance market stood at around US$ 1.5 billion in 2008-09
and is expected to grow to US$ 9 billion by 2016-17. While health
insurance policies are mostly provided by general insurance
companies, life insurers contribute about five per cent to the overall
health insurance business.

Apollo DKV Health Insurance has renamed itself Apollo Munich Health
Insurance as a part of its five-year strategic plan to gain a five per cent
market share. Apollo Munich is a joint venture between Asias largest
integrated healthcare provider, The Apollo Hospitals Group, and
Germany-based Munich Re's segment, Munich Health.

Max India is planning to invest US$ 43.25 million in its health insurance
joint venture (Max Bupa) and will launch a product over the January
June 2010 period.

Star Health and Allied Insurance expects to invest US$ 38.9 million
during the current financial year to grow its health insurance business,
taking the total invested capital to US$ 67 million.

US-based health insurer CIGNA is looking at entering the Indian market.

18
 http://winsure.yolasite.com

Reinsurance

Reinsurance is a contract between the insurance company (insurer)

and a third party (re-insurer), wherein the latter will protect the
former by paying losses sustained by it under the original contract of
insurance.

Re-insurers from London, as well as other parts of Europe, see

significant potential in the re-insurance market in India. Top four
global re-insurers, Lloyds, Swiss Re, Munich Re and Berkshire
Hathaway are amongst those eyeing India.

Bancasssurance

Private insurers have adopted bancassurance in a much bigger way

than the state-owned Life Insurance Corporation (LIC) in the recent
years. Bancassurance is distribution of insurance products through a
bank's network.

In 2008-09, private insurers forked out US$ 44.4 million as

commission for banassurance, while the payout by LIC for this
distribution model was US$ 25,948.

19
 Investment Policy

The FDI limit in the insurance space for foreign players is capped at
26 per centpermissible under the automatic route subject to a
licence from the official regulator, IRDAbut the government is
planning to raise it to 49 per cent and a bill to give effect to the
proposal is pending in the Rajya Sabha.

IRDA has stipulated that the mandatory ceding by every general

insurer in the country to the national reinsurer General Insurance
Corporation (GIC), would continue to remain at 10 per cent as under
current regulations.

IRDA has also allowed insurance companies to offer 'Health plus Life
Combi Product', a policy that would provide life cover along with
health insurance to subscribers.

Pension Fund Regulatory and Development Authority (PFRDA) would

launch a low-cost pension scheme on April 1, 2010, to provide social
security cover to economically weaker sections like rickshaw pullers,
barbers and daily-wage labourers

20
 The Road Ahead

Saturation of insurance markets in many developed economies

has made the Indian market more attractive for international
insurance players, according to 'Booming Insurance Market in
India (2008-2011). Further, according to the report,

Total life insurance premium in India is projected to grow US$ 266

billion by 2010-11

Total non-life insurance premium is expected to increase at a

compound annual growth rate (CAGR) of 25 per cent for the period
spanning from 2008-09 to 2010-11

The home insurance segment is set to achieve a 100 per cent

growth as financial institutions have made home insurance
obligatory for housing loan approvals

In the next three years, health insurance is poised to become the

second largest business for non-life insurers after motor insurance

21
 Insurance Regulatory and Development Authority Irda

IRDA was set up by the parliament in 1999. The section 4 of IRDA Act' 1999, Insurance
Regulatory and Development Authority specify the composition of AuthorityThe Authority is a
ten-member team consisting ofa. Chairman; b. five whole-time members; c. four part-time
members,All these positions are appointed by the Government of India
IRDA - Duties,Powers and Functions
:Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA..(1) Subject to
the provisions of this Act and any other law for the time being in force, the Authority shall have
the duty to regulate, promote and ensure orderly growth of the insurance business and re-
insurance business.
Head Office
Insurance Regulatory and Development Authority
3rd Floor, Parisrama Bhavan,
Basheer Bagh
HYDERABAD 500 004
Andhra Pradesh (INDIA )
Ph: (040) 23381100
Email:irda@irda.gov.in

Delhi Office
Insurance Regulatory and Development Authority
Delhi Office - Gate No. 3
Jeevan Tara Building, First Floor
Sansad Marg,
New Delhi-110001
Ph: (011) - 2374 7648

Chairman:
Mr.J.Hari Narayan
040-23241273
040-66820957
Fax : 040-66823334
chairman@irda.gov.in

22
 The Insurance Policy India is regulated by certain acts like the Insurance Act(1938), the Life Insurance Corporation Act(1956), General
Insurance Business (Nationalization) Act(1972), Insurance Regulatory and Development Authority (IRDA) Act(1999).

The insurance policy determines the covers against risks, sometime opens investment options with insurance companies setting high
returns and also informs about the tax benefits like the LIC in India. There are two types of insurance covers:

1. Life insurance
2. General insurance
Life insurance this sector deals with the risks and the accidents affecting the life of the customer. Alongside, this
insurance policy also offers tax planning and investment returns. There are various types of life Insurance Policy India:
a. Endowment Policy
b. Whole Life Policy
c. Term Life Policy
d. Money-back Policy
e. Joint Life Policy
f. Group Insurance Policy
g. Loan Cover Term Assurance Policy
h. Pension Plan or Annuities
i. Unit Linked Insurance Plan

General Insurance this sector covers almost everything related to property, vehicle, cash, household goods, health
and also one's liability towards others. The major segments covered under general Insurance Policy India are:
a. Home Insurance
b. Health Insurance
c. Motor Insurance
d. Travel Insurance

23

The Insurance Regulatory Development Act, 1999 (IRDA Act) allowed the
entry of private companies in the insurance sector, which was so far the
sole prerogative of the public sector insurance companies. The act was
passed to protect the concerns of holders of insurance policy and also to
govern and check the growth of the insurance sector. This new act allowed
the private insurance companies to function in India under the following
circumstances :

The company should be established and registered under the 1956

company Act

The company should only the serve the purpose of life or general
insurance or reinsurance business

The minimum paid up equity capital for serving the purpose of

reinsurance business has been decreed at Rs 200 crores

The minimum paid up equity capital for serving the purpose of

reinsurance business has been decreed at Rs 100 crores

The average holdings of equity shares by a foreign company or its

subsidiaries or nominees should not go above 26% paid up equity capital
of the Indian Insurance company.
24

As per the report of 'Booming Insurance Market in India'
(2008-2011), concentration of insurance markets in many
developed countries of the world has made the Indian
insurance market more magnetic in terms of international
insurance players. Furthermore, the report says

Home insurance sector is likely to achieve a 100% growth

since home insurance are made compulsory for housing
loan approvals by the financial institutions.
In the coming three years Health insurance sector is all set
to become the second largest business after motor
insurance.

During the period of 2008-09 to 2010-11 the non life

insurance premium is likely to have a growth of 25%.

25
 Insurance Job Profiles in India

The Indian insurance industry churns out large volume of jobs every year. This industry is so
vast that you would find attractive opportunities in the fields of general insurance, health
insurance, finance insurance, travel insurance, online insurance and not to forget the life
insurance. However, some of the specific areas of expertise in this industry include:

Agent and Broker:Insurance agents/ brokers are the people who give product advice to the
clients in order to sell company's product.

Customer Service Agent:the person in-charge of this post needs to interact with the
customer on daily basis in the agency to update policy as well as coverage details.

Claims Adjuster:the office holder needs to ascertain the range of damage in case of
accidents and see if the insurance policy can cover it. He/ she make way for settlement
between the insurance company and its customers.

Actuary:this is one of the very crucial insurance jobs. The person in-charge of this office needs
to analyze the risks involved in creating the insurance policies in the areas of business,
property or life & death of the person. To find a job in this area, the aspirant needs to be
Mathematics, Econometrics, Statistics or Computer Science graduate. MBAs in finance can also
apply for the post.

Risk Manager:the person needs to spot the risk and suggest the ways to tackle such risks.
Service Representatives:this profile demands an individual to act as a medium between the
insurance companies and agents.

Loss Control Specialist:the office holder needs to look into safety measures so that
accidents at the workplace which can lead to financial losses can be avoided.

Underwriter:the office holder needs to determine the applicant's chances of risks and
whether the policy chosen by him/ her meets the insurance standard.
26
 Indian Insurance Industry - Challenges
New Comer poses threat - With more companies coming up
everyday with the growing demand of the industry the markets
very competitive. Until and unless the existing companies makes a
mark and create their very own brand name it would be quite tough
to sustain their position in the market. There is also a probability of
big companies taking over the new emerging companies.

Supplier Power: The people providing the capital don't act as big
terror as opportunity always lies in the big hands and they can any
day tempt good insurer from small companies to their own
company.
Buyer Power: Individual never stands a chance in front of big
corporate sectors as they dominate the insurance industries with
high potential of negotiation power.
Presence of substitutes: The insurance industry is full of
replacement option and the large insurance companies offers the
same service as of others be it in any sector of home, commercial,
auto, health or life.

27
28