Analysis of Insurance setor in India. Scope and present scenario.

1. PRESENTATION BY:
AMIT KUMAR SINGH
SIMS 2014-16
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2. EARLY HISTORY
 Most ancient recording of insurance is the Code of
Hammurabi around the 1750 BC
 In 4th century BC the Ancient Athenians practiced “maritime
loan” with floating premiums
 600 BC gave rise to health and life insurance in the Roman
Empire
 The first known insurance contract dates from Genoa in 1347
 The first insurance company was set up in London under the
name "Insurance Office for Houses“
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3. INDIAN CONNECTION
 The earliest mention of Insurance in India is in our
Arthashastras
 The birth of modern insurance in India was with the set
up of the “Oriental Life Insurance Company” in 1818
in Kolkata
 Contractual insurance travels from LONDON coffee
houses to INDIA with East India Company.
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4. DEFINITION
 In simple terms insurance is an arrangement bound by a
contact in which a company or state guarantees
compensation for an uncertain loss (illness, death etc.) by
charging a certain amount of premium
 Insurance is a pivotal part of risk mitigation and transfer
of risk
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5. VERTICALS OF INSURANCE
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6. INSURANCE IN INDIA
 1956, life insurance companies were nationalized to form LIC
(Life Insurance Corporation of India)
 1972, non-life insurance companies were nationalized to form
General Insurance Corporation of India (GIC)
 1999, Insurance Regulatory and Development Authority created
under the IRDA Act, making it the sole body responsible for
regulating, promoting, and ensuring order in the insurance & re-insurance
sector in India.
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7. INSURANCE IN INDIA
 1999, Malhotra Committee allowed for privatization in the
insurance sector
 Prior 2000, there were only six insurance companies viz., LIC,
four public sector general insurers and GIC
 Cap of 26% for FDI’s (Foreign Direct Investment) to boost
growth and promote insurance in the country
 For private players to enter into the insurance sector a deposit
of Rs.100 crore had to be made in the reserve of the
government
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8. INSURANCE IN INDIA
 52 companies as at end-March 2014
Life insurance: 24 insurers (1 in public sector and 23 in private
sector)
Non-life insurance:28 insurers (6 in public and 15 in private
sector)
1 re-insurance company viz., General Insurance Corporation of
India in the public sector
 Of the 21 life insurance companies set up in the private sector since
2000,
19 are in joint venture with foreign partners
Out of which 15 new private insurers in the non-life segment, 14
have been opened in collaboration with the foreign partners.
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9. INDIA’s INSURANCE MARKET
SHARE - FY 2013
Source: Business Today 9

10. CURRENT SCENARIO IN INDIA
o Proposal to increase the cap on foreign direct investment to
49% from 26% has been passed recently
o India is ranked 10th among 147 countries in the life insurance
sector with a 16.6% CAGR during financial year 2013 (US$
53.3 billion)
o Non-life insurance sector market touched US$ 13.1 billion
o 36 crore issued policies in the Indian life Insurance Sector
o Compounded Annual growth rate of 12-15%
o To touch a staggering US$ 1 trillion market value by 2020
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11. CURRENT SCENARIO IN INDIA
 Insurance in India remains at an early stage of development
 It can be postulated that by 2014 the penetration of life
insurance in India will increase to 4.4% and that of non-life
insurance to 0.9%
 Indian insurance market is the 19th largest globally and ranks
5th in Asia
 The public sector Insurance companies have continued to
dominate the insurance market
 Enjoying over 90 per cent of the market share in life
insurance sector LIC has continued to dominate .
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12. CURRENT SCENARIO IN INDIA
 The Indian insurance market it accounts for only
2.5% of premiums in Asia, it has the potential to
become one of the biggest insurance markets in the
region
 India is among the most promising emerging insurance
markets in the world
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13. PUBLIC - PRIVATE COMAPRISON OF MAJOR
SHAREHOLDERS
Type of
Business
NOS OF PUBLIC
SECTOR
COMPANIES
NOS OF
PRIVATE
SECTOR
COMPANIES
TOTAL
Life insurance 01 12 13
General insurance 06 08 14
Reinsurance 01 - 01
Total 08 20 28
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14. THE STAGE IS ALL SET FOR
49%
EXPECTATIONS ???
WHAT DOES IT MEAN
???
WHAT WILL BE THE
OUTCOME??
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15. REGULATORY BODY
Role of IRDA :
o Protecting the interest of policyholders.
o Establishing guidelines for the operations of insurers, and
brokers.
o Specifying the code of conduct, qualifications, and training for
insurance intermediaries and agents.
o Promoting efficiency in the conduct of insurance business.
o Regulating the investment of funds by insurance companies.
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16. PEST ANALYSIS
Political factors affecting insurance industry
 Insurance business in rural/ social sector
 Capital requirement
 Renewal of registration
 Requirement as to capital
 Investment of funds outside India
 Power to investigation or inspection
 Tax policy and insurance sector
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17. PEST ANALYSIS
Economical factors affecting insurance industry
Adequacy of capital
Increased economical activity
Interest rates
Inflation rate
Market related factors
Customer satisfaction
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18. PEST ANALYSIS
Socio-Cultural factors affecting insurance industry
Population
Life style
Educational level
Level of earning
Societal benefits
Technological factors affecting insurance industry
Maintaining the database
E-business insurance in India
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19. SWOT ANALYSIS
STRENGTH
NEW INSURANCE INSTRUMENTS
INCREASED INCOME
HUGE POPULATION
INCREASED LITRACY RATE
WEAKNESS
ONLY ONE REINSURANCE COMPANY
FEW FOREIGN COMPANIES
NON LIFE INSURANCE UNDERDEVELOPED
OPPORTUNITY
30-40 YEARS FOR THE INDUSTRY TO REACH
SATURATION
DEVELOPING ECONOMY
RISING HOUSEHOLD INCOME
THREAT
CATASTROPHIC EVENTS (HIGH
OCCURANCE)
QUESTIONABLE REPUTATION OF FOREIGN
PARTNERS
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20. SUGGESTIONS
o To begin with, India needs to further liberalize investment
regulations on insurers to strike the right balance towards
growth of this industry
o Furthermore, both the life and non-life insurance sectors
would benefit from less invasive regulations
o In addition, price structures need to reflect product risk.
Obsolete regulations on insurance prices will have to be
replaced by risk-differentiated pricing structures
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21. SUGGESTIONS
o There is huge untapped potential, for example, in the
largely undeveloped private pension market. At the
moment, less than 11% of the working population in
India is eligible for participation in any formal old-age
retirement scheme. Private insurers will have a key role
to play in serving the large number of informal sector
workers.
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22. CONCLUSION
o On the regulatory side, there are outstanding issues concerning liberalizing
of investment rules, caps on foreign equity shareholdings as well as the
enforcement of price tariffs in the non-life insurance sector
o The proliferation of bancassurance is rapidly changing the way
insurance products are distributed in India. This will also have strong
implications on the process of financial convergence and capital market
development in India
o Health insurance is still underdeveloped in India but offers huge potential,
as there will be increasing needs to purchase private health cover to
supplement public programmes
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23. CONCLUSION
o Likewise, the deficiencies in current pension schemes
should offer significant opportunities to private
providers
o With the majority of the population still residing in
rural areas, the development of rural insurance will be
critical in driving overall insurance market
development over the longer term
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24. THANK YOU !
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