The presentation focuses on price de-regulation and the resultant change in value chain of the industry & Further Developments. It also includes the effect of insurance cycle on underwriting margin in a free market country like United States.

1. IMPACT OF DETARIFFICATION OF INDIAN GENERAL INSURANCE MARKET BY PRASANNA R THANKS TO PROJECT GUIDE: Dr. VIKAS GUPTA ORGANIZATION: WADHAWAN HOLDINGS PRIVATE LTD Last Updated: Aug’08

3. DETARIFFICATION PLAN

4. GENERAL INSURANCE VALUE CHAIN

5. PORTER’S FIVE FORCE ANALYSIS

6. INSURANCE CYCLE AND ITS CAUSES

7. FUTURE DEVELOPMENTS

8. INTERNATIONAL DEVELOPMENTSPresentation done to Wadhawan Holdings Private Limited

9. INDIAN GENERAL INSURANCE MARKET

10. GENERAL INUSRANCE IN INDIA Colonial Era Nationalization Liberalization Economy Nationalization begins Economy Liberalization begins Private Companies Licensed India’s first general insurance company – Triton established Corporate Agency Regulations Insurance Act passed Malhotra Committee Report Nationalization of General Insurance Insurance Broker Regulations IRDA Act 1850 1938 1947 1972 1991 1994 99 00 01 02 1907 1950 1956 1968 1994 J08 A08 Partial Price Detariffication Nationalization of Life Insurance Complete Price Detariffication Indigenous – Indian Mercantile Insurance Company Limited established Tariff committee replaced by TAC Product Detariffication Tariff committee was set up Detariffication Presentation done to Wadhawan Holdings Private Limited

11. AVIATION AVIATION AVIATION Detariffed LIABILITY LIABILITY LIABILITY Tariffed PA & HEALTH PA & HEALTH PA & HEALTH PRODUCT DETARIFFICATION MARINECARGO MARINE CARGO MARINE CARGO MARINE HULL MARINE HULL MARINE HULL FIRE FIRE FIRE ENGINEERING ENGINEERING ENGINEERING MOTOR OD MOTOR OD MOTOR OD MOTOR TP MOTOR TP MOTOR TP DETARIFFICATION PLAN COMPLETE PRICE DETARIFFICATION 1994 APRIL 2005 JAN 2007 JAN 2008 APRIL 2008 Presentation done to Wadhawan Holdings Private Limited

12. Back Office Outsourcing ICT Manufacturers INDUSTRY STAKEHOLDERS IRDA Institute of Actuaries of India TAC Actuaries Internet General Insurance Council Insurance Ombudsmen Tele Marketing Insurer Correspondence IndianPartner Referrals HR Agency Force Retail Customers ForeignPartner Brokers GIC Bancassurance Underwriter’s Forum Mallassurance Reinsurance Brokers Corporate Customers One stop shops Retail Agents Insurance Institute of India Reinsurance MI Agents Presentation done to Wadhawan Holdings Private Limited

13. GENERAL INSURANCE INDUSTRY VALUE CHAIN Reinsurer Public Disclosure Calculating Solvency Risk assessment Investing excess Premium Risk and Premium sharing Data Collection Underwriting Distribution of the products Calculating premium Calculating expected claims Marketing the products Designing product End Customer Investing excess premium Identifying market need Settlement of Claims Investigating Claims Claiming Loss A GROUP 11 PRESENTATION

14. PORTER’S FIVE FORCE & CHANNEL POWER Presentation done to Wadhawan Holdings Private Limited

15. INSURANCE CYCLE AND ANALYSING ITS CAUSES

16. CLASSIC INSURANCE CYCLE Presentation done to Wadhawan Holdings Private Limited

17. Time Lag Capital Constraints Stock Market Performance Catastrophic loss Naïve Rate Making Process Competitor driven pricing Economic Growth Interest Rate CAUSES OF AN INSURANCE CYCLE Presentation done to Wadhawan Holdings Private Limited

18. INSURANCE CYCLE – UNITED STATES . R Value =-0.410 HUGO ANDREW NORTHRIDGE SEPT 11 4 hurricanes R Value =-0.307 Presentation done to Wadhawan Holdings Private Limited

19. INSURANCE CYCLE – UNITED STATES . Presentation done to Wadhawan Holdings Private Limited

20. GROWTH IN PREMIUM – UNITED STATES . ANDREW NORTHRIDGE SEPT 11 HUGO 4 hurricanes Presentation done to Wadhawan Holdings Private Limited

21. FUTURE DEVELOPMENTS AND GLOBAL PRACTICES

23. Result in development of innovative channels – Mallassurance (Future Generali), Tele Marketing (TATA AIG) and One stop financial shop (Way2Wealth)

25. WTO and countries like Japan, US are forcing to allow foreign players towards India’s commitment to GATS

26. Plans underway to raise FDI caps in sensitive areas like Defense Manufacturing (26 % to 49 %) and air cargo (49 % to 76 %)Presentation done to Wadhawan Holdings Private Limited

28. Can sell products of all insurers

30. Promote healthy diet and importance of being fit

32. Govt. pays compensation due to lack of catastrophe cover

33. Govt. has urged IRDA to create a catastrophe pool on “no profit, no loss” basis Presentation done to Wadhawan Holdings Private Limited

35. Payment can be guaranteed by enforcing the following:

36. Disclosure of solvency margin to the public while purchasing policies

37. Mandating the submission of business plan when solvency ratio decreases below 150 %

38. Allowing investment portfolio transfer and liquidity with another insurance company

39. Creation Policy Holder Protection FundPresentation done to Wadhawan Holdings Private Limited

40. INTERNATIONAL DEVELOPMENTS… Insurance Contracts Policyholder Failed Insurance Company POLICYHOLDERS PROTECTION FUND Transfer of Insurance contracts Claims Payment Appointed/Substituted Insurance company Transfer of Insurance contracts Claims Payment Financial Aid Non-life Policyholders Protection Fund Prior Contribution Non Life Insurance Companies (Compulsory Participation) Presentation done to Wadhawan Holdings Private Limited

43. Based on Three-pillar concept similar to Basel II

44. Introduces a two level structure – a strictly defined minimum and higher control level Quantitative Measures (SCR & MCR) Qualitative Measures (Supervision) Disclosure (Reporting to Supervisor & Stakeholders) Presentation done to Wadhawan Holdings Private Limited

46. In United States Glass-Steagall Act of 1933 was repealed

47. In European Union, Financial Supervisor Agency (FSA) was formed

48. In Japan, Financial Services Agency was formed as a part of Financial Big Bang revolution.

49. Financial organizations into Insurance : SBI, ICICI, Religare, Canara Bank, Oriental Bank of Commerce, HDFC, DLF, Andhra Bank, Bank of Baroda, Bank of India and Union Bank of India.

50. Evolution of one stop financial shops – Sivan securities (Way2wealth), equity bulls, Corporation Bank.

51. There should either be a effective co-ordination or creation of a single regulatory body to manage the situation CONVERGENCE Presentation done to Wadhawan Holdings Private Limited

53. Fact Books of General Insurance Association of Japan

54. Fact Books of Insurance Bureau of Canada

55. National Association of Insurance Commissioners Presentations

56. Craig Thorburn “On the Measurement of solvency of Insurance Companies”

57. Swiss Re site

58. TapenSinha “ The Indian Insurance Industry: Challenges and Prospects”

59. CAS Spring Meeting Presentation “ EU Solvency II – a non life perspective”

60. www.gicofindia.in

61. Joan Lamm-Tennant and Mary A. Weiss on “International Insurance cycle: Rational expectations /Institutional Interventions”

62. World bank database

63. J.P. Wieske on Actuarial Vs UnderwritingPresentation done to Wadhawan Holdings Private Limited

64. THANK YOU