industrial analysis report on insurance

Chapter-1 Introduction to insurance Industry

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INTRODUCTION OF INSURANCE INDUSTRY
Insurance is a form of risk-management which spreads risk of many people in exchange for small payments from each. Specifically, insurance transfers some type of risk (accident, theft, natural disaster, illness, etc) from one person or group to a more financially-sound entity in exchange for a payment (also Known as a premium). Premiums are often annual or monthly, but depending on the type of insurance they can be at other intervals. Insurance in India can be traced back to the Vedas. For instance, yogakshema, the name of Life Insurance Corporation of India's corporate headquarters, is derived from the Rig Veda. The term suggests that a form of "community insurance" was prevalent around 1000 BC and practiced by the Aryans. Burial societies of the kind found in ancient Rome were formed in the Buddhist period to help families build houses, protect widows and children. Bombay Mutual Assurance Society, the first Indian life assurance society, was formed in 1870. Other companies like Oriental, Bharat and Empire of India were also set up in the 1870-90s. It was during the swadeshi movement in the early 20th century that insurance witnessed a big boom in India with several more companies being set up. As these companies grew, the government began to exercise control on them. The Insurance Act was passed in 1912, followed by a detailed and amended Insurance Act of 1938 that looked into investments, expenditure and management of these companies' funds.

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Insurance Companies:
IRDA has so far granted registration to 12 private life insurance companies and 9 general insurance companies. If the existing public sector insurance companies are included, there are currently 13 insurance companies in the life side and 13 companies operating in general insurance business. General Insurance Corporation has been approved as the "Indian reinsurer" for underwriting only reinsurance business. Particulars of the life insurance companies and general insurance companies are explained below.

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BACKGROUND OF INSURANCE INDUSTRY
In India, insurance has a deep-rooted history. It finds mention in the writings of Manu ( Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ). The writings talk in terms of pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics and famine. This was probably a pre-cursor to modern day insurance. Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans and carriers’ contracts. Insurance in India has evolved over time heavily drawing from other countries, England in particular. 1818 saw the advent of life insurance business in India with the establishment of the Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In 1829, the Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency. This era, however, was dominated by foreign insurance offices which did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard competition from the foreign companies. In 1914, the Government of India started publishing returns of Insurance Companies in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life business transacted

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in India by Indian and foreign insurers including provident insurance societies. In 1938, with a view to protecting the interest of the Insurance public, the earlier legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control over the activities of insurers. The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large number of insurance companies and the level of competition was high. There were also allegations of unfair trade practices. The Government of India, therefore, decided to nationalize insurance business. An Ordinance was issued on 19th January, 1956 nationalizing the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector. The history of general insurance dates back to the Industrial Revolution in the west and the consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a legacy of British occupation. General Insurance in India has its roots in the establishment of Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the Indian Mercantile Insurance Ltd, was set up. This was the first company to transact all classes of general insurance business. 1957 saw the formation of the General Insurance Council, a wing of the Insurance Association of India. The General Insurance Council framed a code of conduct for ensuring fair conduct and sound business practices.

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In 1968, the Insurance Act was amended to regulate investments and set minimum solvency margins. The Tariff Advisory Committee was also set up then. In 1972 with the passing of the General Insurance Business (Nationalization) Act, general insurance business was nationalized with effect from 1st January, 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a company in 1971 and it commence business on January 1sst 1973. This millennium has seen insurance come a full circle in a journey extending to nearly 200 years. The process of re-opening of the sector had begun in the early 1990s and the last decade and more has seen it been opened up substantially. In 1993, the Government set up a committee under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations for reforms in the insurance sector. The objective was to complement the reforms initiated in the financial sector. The committee submitted its report in 1994 wherein, among other things, it recommended that the private sector be permitted to enter the insurance industry. They stated that foreign companies are allowed to enter by floating Indian companies, preferably a joint venture with Indian partners.

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Industry Structure

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A brief history of the Insurance sector The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are:
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1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and nonlife insurance businesses.

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1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public.

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1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 core from the Government of India. The General insurance business in India, on the other hand, can trace

its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. Some of the important milestones in the general insurance business in India are:
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1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business.

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1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices.

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1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up.

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1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973.

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107 insurers amalgamated 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 incorporated as a company.

FEATURES OF INSURANCE INDUSTRY
Insurance Policy India provides the clients with the details required for the coverage’s in the policy, date of commencement of the policy and their adopting organizations. It plays an important role in the Indian insurance sector. 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
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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 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 Some of the well known Insurance Policy India is: Social Security Group Scheme – a scheme covering the age group of 18-60 years and an insurance of Rs.5000 for natural death and of Rs.25000 on due to accidental death.

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Shiksha Sahyog Yojana – a scheme providing an educational scholarship of Rs.300 per quarter per child is given for a period of four years. Jan Arogya Bima Policy – a scheme for the adults up to the age of 45 years is Rs. 70 and for children it is Rs. 50. The limit coverage is fixed at Rs.5000 per annum. Mediclaim Insurance Policy – a scheme covering the age group from 5-80 years with a tax benefit of up to Rs 10,000. Jana Shree Bima Yojana – this is coverage of Rs 2,000 on natural death and Rs 50,000 for accidental death. The premium amount is fixed at Rs. 200 for single member. Videsh Yatra Mitra Policy – a scheme covering medical expenses during the period of overseas travel. Bhagya Shree Child Welfare Bima Yojana – a scheme covering one girl child in a family up to the age of 18 whose parents age does not exceed 60 years, with a premium of Rs.15 per annum. Raj Rajeshwari Mahila Kalyan Yojana – a scheme providing protection to woman in the age group of 10 to 75 years with an insurance of Rs. 25,000 and premium Rs.15 per annum. Ashray Bima Yojana – a scheme covering workers in case of loss of jobs. Personal Accident Insurance Scheme for Kissan Credit Card – a scheme covering all the KCC holders up to an age of 70 years. Insurance coverage includes 50,000 for accidental death and 25,000 for partial disability.

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The functions of Insurance can be bifurcated into two parts: 1. Primary Functions 2. Secondary Functions 3. Other Functions The primary functions of insurance include the following: Provide Protection - The primary function of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for the losses of risk. Insurance is actually a protection against economic loss, by sharing the risk with others. Collective bearing of risk - Insurance is a device to share the financial loss of few among many others. Insurance is a mean by which few losses are shared among larger number of people. All the insured contribute the premiums towards a fund and out of which the persons exposed to a particular risk is paid. Assessment of risk - Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. Risk is the basis for determining the premium rate also. Provide Certainty - Insurance is a device, which helps to change from uncertainty to certainty. Insurance is device whereby the uncertain risks may be made more certain. The secondary functions of insurance include the following: Prevention of Losses - Insurance cautions individuals and businessmen to adopt suitable device to prevent unfortunate consequences of risk by

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observing safety instructions; installation of automatic sparkler or alarm systems, etc. Prevention of losses causes lesser payment to the assured by the insurer and this will encourage for more savings by way of premium. Reduced rate of premiums stimulate for more business and better protection to the insured. Small capital to cover larger risks - Insurance relieves the businessmen from security investments, by paying small amount of premium against larger risks and uncertainty. Contributes towards the development of larger industries - Insurance provides development opportunity to those larger industries having more risks in their setting up. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery. The other functions of insurance include the following: Means of savings and investment - Insurance serves as savings and investment, insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insured's For the purpose of availing incometax exemptions also, people invest in insurance. Source of earning foreign exchange - Insurance is an international business. The country can earn foreign exchange by way of issue of marine insurance policies and various other ways. Risk Free trade - Insurance promotes exports insurance, which makes the foreign trade risk free with the help of different types of policies under marine insurance cover.

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Types of Insurance Available:
Auto Insurance : - Two Wheeler Insurance - Car Insurance - Commercial Vehicle Insurance Commercial Insurance : - Agriculture Insurance - Fire Insurance - Industrial Insurance - Marine Insurance - Shop Insurance Home Insurance Life Insurance Accident Insurance : NRI Accident Insurance Personal Accident Insurance Health Care Insurance - Medical Insurance - Critical Illness Insurance Travel Insurance

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1.2 Objectives and scope of the study
The analysis objectives regarding my term paper are –
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To fulfill the requirement of the course curriculum. To analyze the growth of the industry. To know how the share value will grown up. To know the importance of the insurance industry The preparation of the report will enable to gather concept of the insurance business. To find out some major problems of insurance in insurance industry, as follows o Social o Political o Economical o Legal o Miscellaneous To suggest or recommend some necessary steps to solve the existing problems. To suggest necessary steps to develop this business in a developing the insurance industry.

This analysis will enhance my overall knowledge about insurance and help me further to prepare any documents regarding insurance. I think this analysis will also be beneficial for those people who need information about insurance.

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Methodology.
Secondary sources of data will be used for data requirements of the report. Secondary sources of data: Use Internet and different web sites have been used. Secondary Sources are: Textbooks on insurance Insurance Journals. Reference books on insurance. Annual Reports of BGIC.  Internet Books.  Different insurance companies web sites.    

Limitations.
Preparing the term paper I have faced some obstructions which are  Lack of proper information in the magazines, which may biased to the insurance business.  Lack of necessary information in the news papers and official publications of insurance companies.  Lack of proper primary data.  Secondary data has been collected from the web sites.

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Chapter-2

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GOVERNMENT REGULATIONS
Insurance Regulatory and Development Authority (IRDA):
Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies. The other decisions taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies were the launch of the IRDA’s online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products, which are expected to be introduced by early next year. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. In the private sector 12 life insurance and 6 general insurance companies have been registered. Duties, Power and Functions of IRDA: 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

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and ensure orderly growth of the insurance business and re-insurance business. 2. Without prejudice to the generality of the provisions contained in sub section. The powers and functions of the Authority shall include a) Issue to the applicant a certificate of registration, renew,

modify, withdraw, suspend or cancel such registration; b) Protection of the interests of the policy holders in matters

concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance;. c) Specifying requisite qualifications, code of conduct and

practical training for intermediary or insurance intermediaries and agents. d) e) f) Specifying the code of conduct for surveyors and loss assessors. Promoting efficiency in the conduct of insurance business Promoting and regulating professional organizations connected

with the insurance and re-insurance business. g) Levying fees and other charges for carrying out the purposes of

this Act. h) Calling for information from, undertaking inspection of, intermediaries, insurance intermediaries and other

conducting enquiries and investigations including audit of the insurers, organizations connected with the insurance business;

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Insurance Regulatory and Development Authority (IRDA) Act: The Insurance Regulatory and Development Authority Act was introduced to end the monopoly of State-owned companies and to invest in the Insurance Regulatory Authority power to control the insurance sector. These powers inter aria are:  Imposition of prudential norms such as solvency margins, capital adequacy;  Requirements and investment guidelines for insurance companies;  Grant of licenses to new companies, and cancellation, suspension and withdrawal of licenses given to insurance companies;  Regulation of fund investment by insurance companies;  Maintenance of solvency margins;  Adjudication of disputes between insurers and intermediaries; and  Tariff fixing. As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development Authority (IRDA, which was constituted by an act of parliament) specify the composition of Authority the Authority is a ten member team consisting of a. A Chairman; b. Five whole-time members; c. Four part-time members, (All appointed by the Government of India)

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Regulatory Issues: The IRDA Bill lies down that the Indian promoter must dilute the stake in the private insurance firms from 74 per cent to 26 per cent in ten years. The bill stipulates tough solvency margins -- Rs 500 million for life insurance firms, Rs 500 million or a sum equivalent to 20 per cent of net premium income for general insurance and Rs 1 billion for reinsurance business. The insurer has to maintain separate accounts relating to fund of shareholders and policyholders. The funds of policyholders should be retained within the country but does not cover repatriation of profits and dividends. Insurance companies under the new regime will have to have exposure to rural and social sectors. Foreign investment in insurance, the bill states, is crucial to financing infrastructure and better insurance cover. The key to success in opening up the insurance sector in India is regulation. An example of how poor regulation can destroy a market is the mutual fund industry. A combination of improper marketing practice has resulted in a loss of investor faith in that industry. Incidentally, the insurance industry in India itself has gone through the same phase. One of the reasons for nationalization of the insurance industry (LIC in 1956 and GIC in 1973) was the mismanagement and malpractice of erstwhile private players. But if the statements of IRA officials are anything to go by, the new regulations are expected to be on the right track. N I Rangachary, chairman, IRA, has already provided the timetable for the

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changes once the Bill is passed. The IRA has already indicated that it will have tough norms for new participants. This is the most compelling reason why private sector (and foreign) companies, which will spread the insurance habit in the societal and consumer interest, are urgently required in this vital sector of the economy. With the nation's infrastructure in a state of imminent collapse, India couldn't have afforded to be lumbered with sub-optimally performing monopoly insurance companies and therefore the passage of the Insurance Regulatory & Development Authority Bill on December 2, 1999 heralds an era of cautious optimism where stakes are high for all parties concerned. For the Govt. of India, Foreign Direct Investment (FDI) must pour in as anticipated; for foreign insurers, investments must start yielding returns and for the domestic insurance industry - their market penetration should remain intact. On the fringe, the customer is pondering whether all the hype created on liberalization will actually benefit him. Regulatory Body:  The Insurance Act should be changed  An Insurance Regulatory body should be set up  Controller of Insurance (Currently a part from the Finance Ministry) should be made independent Investments: • Mandatory Investments of LIC Life Fund in government

securities to be reduced from 75% to 50%

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GIC and its subsidiaries are not to hold more than 5% in any

company (There current holdings to be brought down to this level over a period of time)

Chapter-3 Resent developments

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MARKET SHARE OF INSURANCE INDUSTRY

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Life Insurance Industry grows 49 per cent in April
New Delhi: The life insurance industry clocked 49 per cent growth in new businesses, while general insurance players saw 16 per cent increase in April, the first month of the current financial year. Strong performance by Life Insurance Corporation, ICICI Prudential and SBI Life helped the 16 player-strong life insurance industries to mop up Rs 2,982 core in April this year compared with Rs 1,996 core collected in the same month last year, according to data compiled by the Insurance Regulatory and Development Authority. The country’s largest life insurer, LIC, saw new premiums grow 57 per cent to Rs 2,134 core in April by selling 15, 89,684 policies against Rs 1,355 core a year ago. It had a market share of 71.56 per cent in April. Insurers
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Premium (Rs cr)

ICICI Prudential Bajaj Allianz SBI Life HDFC Standard Max New York Life Tata AIG Aviva Reliance Life Birla Sunlife Kotak Mahindra Old Mutual ING Vysya Met Life Shriram Life Sahara Life Bharti Axa Life

271.00 124.00 90.00 70.00 69.00 48.00 39.00 33.00 28.00 26.00 22.00 19.00 4.50 1.70 0.72

Life Insurance Corporation of India
LIC still remains the largest life insurance company accounting for 64% market share. Its share, however, has dropped from 74% a year before, mainly owing to entry of private players with innovative products and better sales force.

ICICI Prudential Life Insurance Co Ltd
ICICI Prudential Life Insurance Co Ltd is the biggest private life insurance company in India. It experienced growth of 58% in new business premium, accounting for increase in market share to 8.93% in 2007-08 from 6.97% in 2006-07.
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Bajaj Allianz Life Insurance Co Ltd
Bajaj Allianz Life Insurance Co Ltd has reported a growth of 52% and its market share went up to 6.98% in 2007-08 form 5.66% in 2006-07. The company ranked second (after LIC) in number of policies sold in 2007-08, with total market share of 7.36%.

SBI Life Insurance Co Ltd
SBI Life Insurance Co Ltd in terms of new number of policies sold, the company ranked 6th in 2007-08. New premium collection for the company was Rs 4,792.66 core in 2007-08, an increase of 87% over last year.

Reliance Life Insurance Co Ltd
Reliance Life Insurance Co Ltd Total collected was Rs 2,792.76 core and its market share went up to 2.96% from 1.23% a year back. It now ranks 5th in new business premium and 4th in number of new policies sold in 2007-08.

HDFC Standard Life Insurance Co Ltd
HDFC Standard Life Insurance Co Ltd with an income of Rs 2,680 core in FY2007-08, registering a year-on-year growth of 64%. Its market share is 2.88% and it ranks 6 Th among the insurance companies and 5th amongst the private players.

Birla Sun Life Insurance Co Ltd
Birla Sun Life Insurance Co Ltd market share of the company increased from 1.22% to 2.11% in 2007-08. The company moved to the 7th

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position in 2007-08 from 8the a year before, pushing down Max New York Life insurance company.

Max New York Life Insurance Co Ltd
Max New York Life Insurance Co Ltd has reported growth of 73% in 2007-08. Total new business generated was Rs 641.83 core as against Rs 387.51 core. The company was pushed down to the 8th position from 7th in 2007-08.

Kotak Mahindra Old Mutual Life Insurance Ltd
Kotak Mahindra Old Mutual Life Insurance Ltd the fiscal 2007-08, the company reported growth of 80%, moving from the 11th position to 9th. It captured a market share of 1.19% in 2007-08. Last year the company doubled its branch network to 150 from 74.

Aviva Life Insurance Company India Ltd
Aviva Life Insurance Company India Ltd ranking dropped to 10th in 2007-08 from 9th last year. It has presence in more than 3,000 locations across India via 221 branches and close to 40 banc assurance partnerships. Aviva Life Insurance plans to increase its capital base by Rs 344 core. With the fresh investment, total paid-up capital of the insurer would go up to Rs 1,348.8 core.

Current Market Share of LIFE INSURANCE COMPANIES
LIC still remains the largest life insurance company accounting for 64% market share. Mainly owing to entry of private players with innovative products and better sales force.

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Bajaj Allianz Life Insurance Co Ltd has reported a growth of 52% and its market share went up to 6.98% in 2007-08. The company ranked second (after LIC) in number of policies sold in 2007-08, with total market share of 7.36%. ICICI Prudential Life Insurance Co Ltd is the biggest private life insurance company in India. Accounting for increase in market share to 8.93% in 2007-08. SBI Life Insurance Co Ltd in terms of new number of policies sold, the company ranked 6th in 2007-08. New premium collection for the company was Rs.4,792.66 core in 2007-08, an increase of 87% over last year. Reliance Life Insurance Co Ltd Total collected was Rs.2, 792.76 cores and its MARKET SHARE went up to 2.96% from 1.23% a year back. HDFC Standard Life Insurance Co Ltd with an income of Rs.2, 680 cores in FY2007-08, registering a year-on-year growth of 64%. Its MARKET SHARE is 2.88% and it ranks 6th among the insurance companies and 5th amongst the private players. Birla Sun Life Insurance Co Ltd market share of the company increased from 1.22% to 2.11% in 2007-08. The company moved to the 7th position in 2007-08 from 8the a year before. Max New York Life Insurance Co Ltd has reported growth of 73% in 2007-08. Total new business generated was Rs.641.83 core as against Rs.387.51 core. The company was pushed down to the 8th position from 7th in 2007-08.

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Kotak Mahindra Old Mutual Life Insurance Ltd the fiscal 2007-08, the company reported growth of 80%, moving from the 11th position to 9th. It captured a market share of 1.19% in 2007-08. Aviva Life Insurance Company India Ltd ranking dropped to 10th in 2007-08 from 9th last year. It has presence in more than 3,000 locations across India via 221 branches and close to 40 bancassurance partnerships. Aviva Life Insurance plans to increase its capital base by Rs.344 core. With the fresh investment, total paid-up capital of the insurer would go up to Rs.1, 348.8 cores.

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Chapter-4 Domestic and international insurance markets

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DOMESTIC PLAYERS
Top 10 Players in Insurance Companies in India Life Insurance Corporation of India
Life Insurance Corporation (LIC) came into existence on 1st September 1956 through the amalgamation of 154 Indian insurance companies, 16 non-Indian companies and 75 provident. The amalgamation was achieved with the help of Life Insurance Act passed by the Parliament in the same year. The LIC was created with the goal of reaching all the
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insurable people in the country and providing them financial coverage at a reasonable price. In the year 1956, LIC had 5 zonal offices, 33 divisional offices and 212 branch offices. With time there was a need for a branch office at every district headquarter and many branches were opened, which raised the pace of the organization. LIC now has 2048 fully computerized branch offices, 100 divisional offices, 7 zonal offices and the corporate office. At present, online premium collection facility is being offered in selected cities as LIC has tied up with some banks and service providers. For providing customer satisfaction the organization has introduced various schemes such as ECS, ATM premium payment facility, IVRS, Info centers which are set up in various cities including Mumbai, Bangalore, Chennai, Kolkata, New Delhi, Pune and many more. It has also come up with SATELLITE SAMPARK offices providing easy access to policyholders. LIC has crossed many milestones and set standards for itself fostering unmatched performance.

Objectives
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Holding the money with obligation and using it in the best possible manner in the interests of the policyholder and the community.

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Bringing attractive savings plans and making them easily accessible to the policyholders.

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Giving attractive returns to the people and keeping in mind national priorities.

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Being trustworthy to the customers and develop the spirit of corporate social responsibility.

Bajaj Allianz General Insurance Company Limited
Bajaj Allianz General Insurance Company Limited is a joint venture between Bajaj Auto Limited and Allianz AG of Germany. Bajaj Allianz General Insurance came into existence on 2nd May 2001, when it got certification of Registration from the Insurance and Regulatory Development Authority. Bajaj Auto has a share of 74%, whereas Allianz has the remaining 26%. In the very first year, the company made a strong position for itself in the industry and was reckoned amongst the top private insurers. The premium income of the company as on 31st March 2006 was Rs. 1285 cores, whereas the profit after tax made was Rs. 52 cores. Bajaj Allianz has a Pan India network covering over 100 towns from Jammu to Thiruvananthapuram and aims to spread its operations in many other cities. The vision of the organization is to be the first choice for customers, and provide job satisfaction to the employees and create shareholder value. The organization strives to excel in its products and services, providing total customer satisfaction. Bajaj Allianz serves customers in all areas of General and Health Insurance as well as Risk Management. It has in-depth knowledge of the local market and extensive distribution network with expertise, stability and experience. It has a capital base of Rs.147 cores, and is allowed to serve both the General and Health insurance.

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It has achieved iAAA rating, by ICRA Limited and has the highest claims- paying ability and a stable position in the market. In a 2006 survey, Business World has rated it among the Most Respected Companies, putting it at No.2 position in Insurance sector. The Company provides the following products under general insurance:
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Travel Insurance Asset Insurance Health Insurance Corporate Insurance

ICICI Prudential Life Insurance Company
ICICI Prudential is a joint venture between ICICI bank and Prudential plc, both having strong operations in their respective countries. ICICI bank is one of the leading banks in India providing quality financial services and Prudential is an international financial service provider headquartered at United Kingdom. ICICI and Prudential have respective shares of 74% and 26%. The Company started operating in December 2000. Currently, total capital with the company is Rs. 18.15 billion. ICICI Prudential was the first insurance company in India to receive a National Insurer Financial Strength rating of AAA (Ind.) from Fitch ratings. It has been given the honor of being among the Most Trusted Brands in the industry by Economic Times for 3 consecutive years. It has a network of 450 branches, over 1, 50,000 insurance advisors and 18 banc assurance partners.

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As the organization grows and develops, it keeps introducing new range of products and services and enhancing the quality of plans and solutions given to the customers. The distribution network is one of the best, and is spreading across the length and breadth of the country. As on December 31, 2006, it had made imprints in over 360 cities and towns in India. It has over 1, 75,000 advisors across the country, serving clients with full commitment. It has tied up with ICICI Bank, Bank of India, Federal Bank, Lord Krishna Bank, some co-operative banks, NGOs, MFIs and corporate for making inroads into the rural areas.

ICICI Lombard General Insurance :
ICICI Lombard General Insurance Company Limited is a joint venture between ICICI Bank Limited and Fairfax Financial Holdings Limited. ICICI bank is India's second largest bank; Fairfax is Canada-based, engaged in general insurance, reinsurance, insurance claims management and investment management. ICICI Lombard General Insurance Company commenced its operations in general insurance business in August 2001. ICICI Lombard is India's number one private insurance company; it is also the first general insurance company to be given certification of ISO 9001:2000. The company provides simple and fast documentation, fast claims settlement, online policy issuance, and comprehensive product line. It has also been given iAAA rating by ICRA for having highest claims paying ability. In the very first year of operations, it was able to reach financial breakeven and achieve underwriting breakeven in the second year. Security is provided through encryption and it is the first company to provide digitally signed documents. It has been honored as the most Customer Responsive Company by the Economic Times. Times of India
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have designated it as the Best Housing Insurance in the Smart Living Awards by 360 degrees. It has also been awarded Gold Shield for "Excellence in Financial Reporting". It is among the top three companies to be awarded the "General Insurance Company of the Year" at the 10th Asia Insurance Industry Awards.

Birla Sun Life Insurance Company Limited
Birla Sun Life Insurance Company Limited (BSLI) is a joint venture between Aditya Birla Group and Sun Life Financial Inc. BSLI started functioning in March 2001 after getting the certificate of registration from IRDA. Birla Sun Life Insurance Company Limited introduced unit Linked Life Insurance Solutions in India. Within a short span of time it was able to establish itself as a leading player in the Private Life Insurance Industry. It has been innovative and come up with customer-centric products to provide safety and services. The company has web-enabled IT systems for better customer services and a strong distribution channel which is easily approachable. The company shows corporate governance and a high degree of transparency in all business practices. It has professional knowledge and global expertise of Aditya Birla Group. Birla Sunlife Insurance has been providing first class financial solutions to its customers and has been amongst the top three private sector life insurance companies. Its mission is to be amongst the top players in the eyes of customers and the first choice of insurance and retirement solutions to individuals and groups. These innovative solutions are linked with global and technical

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expertise and are deployed by a multi channel distribution network and enhanced technology. The company aims at keeping all people associated with it customers, clients, stakeholders and employees- happy and fully satisfied. It wants to provide value added products and services to the customers, job satisfaction to employees and highest returns to the shareholders. Qualities like integrity, commitment, passion, and speed are the core values of the company. The products offered by the company are:

TATA AIG General Insurance
Tata AIG General Insurance Company Ltd. is a joint venture between Tata Sons and American International Group, Inc. (AIG). The Tata Group is holding 74 per cent stake and the rest 26 percent is held by AIG. The company has got the expertise, knowledge and strength of both the organizations. Tata AIG General Insurance Company was founded on January 22, 2001. It offers general insurance in various categories, such as automobile, home, personal accident, travel, energy, marine, property and casualty and specialized financial solutions. Jamsetji Tata founded Tata Group in 1860s. It has an estimated turnover of around US $ 14.25 billion. It has spread its operations in various fields such as steel, power, hotels, airlines, software services, communications, etc. Some of its major projects have been Tata Tea, Tata Steel, Tata Chemicals, Titan, Tanishq, Voltas, Westside and Tata Motors. Its imprints are made on the telecommunication and technology sector. Regarding telecommunications, it is the largest international long distance

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service provider. Approximately two- third of the equity of Tata Sons is held by a host of national institutions in science and technology, medical services and performing arts. By combining the ethical values with business acumen and fulfilling its commitment to the nation, it has become one of the largest groups in India. American International Group, Inc. (AIG) is the leading international player in insurance and financial services. Its network spreads across 130 nations. AIG member companies serve all types of customers, be it commercial or individual. AIG is among the leading insurers and the largest underwriter of insurance. Aircraft leasing, financial products and trading are some of the services offered by AIG. AIG has a global expertise of fulfilling the customer-centric needs. It has specialized investment management capabilities in equities, fixed income, alternative investments and real estate. AIG's stock has been listed in the New York Stock Exchange as well as stock exchanges in London, Paris, Switzerland and Tokyo. The organization caters to individuals, small businesses and corporates. Individual plans include motor, home, accident & health and travel insurance, whereas corporate plans include accident & health, travel, energy, property, marine and liability plans.

New India Assurance Company
Sir Dorab Tata founded New India Assurance Company on 23rd July 1919. It has 1068 offices comprising of 26 regional offices, 393 divisional offices and 648 branches with more than 21,000 employees. It is one of the largest Non- Life insurers in Afro- Asia and the first one to cross Rs. 5,000 cores of Gross Premium. It has a global network expanding in countries like Japan, U.K., Middle East, Fiji and Australia. Its international operations
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started in 1920 and have spread across 24 countries having a network of 19 branches, 12 agencies, 2 associate companies and 2 subsidiary companies. The company contributes 80% of total overseas premium in India. The company has a highly qualified staff, which excels in both expertise and knowledge and is trained to provide satisfaction to the customers. It is the only company able to establish strong relationships overseas and has a record of successful trading outside India. The performance has been outstanding and the company has been able to maintain a strong position in the market. It has been the pioneer in various fields such as:
• •

Setting up an Aviation Insurance Department in 1946. Handling the complete insurance requirements of the Indian Shipping Fleet.

• • • •

Introduced its own Training School. Pioneering the concept of 'Model Office Training'. Creating department in Engineering insurance. Satellite insurance. The company wants to develop itself as the best general insurance

company in the industry. It is concerned about the society and community, and provides financial security at reasonable prices. The company gives utmost importance to customer needs and there is transparency in its operations. Some of the policies and schemes introduced by the company are:
•

Public Liability Policy

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• • • •

Jewellers Block Policy Pravasi Bharatiya Bima Yojana Policy Universal Health Insurance Scheme Fire Policy

IFFCO Tokio General Insurance
IFFCO Tokio General Insurance is a customer-centric company aiming to be easily accessible and approachable to all sections of society. It offers products and services that provide quality at reasonable cost. The organization has the deep knowledge of IFFCO and thus developed a business plan that has both stability and integrity.

It has set global standards for itself and is the only private general insurance company in India to make 5 consecutive years of experience. ITGI has been one of the few companies to show underwriting profits within four years of operations.The company focuses on delivering creative solutions to its customers. IFFCO Tokio General Insurance has 273 employees present in 68 cities, dedicated to give full satisfaction to the customers. It is the first company to underwrite mega policies for a fertilizer and automobile client.

The Oriental Insurance Company Ltd.
The Oriental Insurance Company Ltd. (OICL) is one of the general insurance companies under the support of the General Insurance Corporation (GIC) of India. It came into existence in the year 1947 and is one of the oldest organizations in India. It caters to all sections and sectors ranging from MNCs to rural sector. The headquarters of the company are situated at

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Delhi and it has 21 Regional Offices, 311 Divisional Offices and 635 Branch offices. It has a team of hard working employees, having the talent to take the company to new heights. Also the company shows concern for both the employees and customers. It provides special covers for large projects like power plants, steel plants and chemical plants. It believes in actively participating in economic growth by being a dynamic organization catering to the society with full commitment and efficiency. The main objectives of the company are to serve the insurance needs of the entire community, provide services at reasonable cost, and make optimum utilization of the funds, maintaining global standards, minimization of losses and retention of business.

HDFC Standard Life Insurance Company Limited
HDFC Standard Life Insurance Company Limited is one of the first companies to be licensed by IRDA to operate in the Insurance sector. The company came into existence on 14th August 2000. Both Crisis and ICRA have honored it with AAA Ratings. Similarly Moody's and Standard and Pours have also honored it AAA ratings. HDFC holds 81.4% share in HDFC and the remaining 18.6% stake is with Standard Life. It integrates the strong expertise and stability of Standard Life and HDFC. It is one of the most trusted companies; it is easily accessible and approachable, offering value services to its customers. The company aims to provide:
•

Innovative products to cater to different needs of different customers
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• • • • •

Customer service of the highest order Use of technology to improve service standards Value for money for customers Increasing market share Professionalism in carrying out business The values ingrained in the company are to provide financial security

to policyholders, maintain trust and keep innovating to establish it as a unique player.

INTERNATIONAL SCENARIO
Life insurance not plays an important role in national economy but also in international economy. Marine cargo insurance provides risk coverage for shippers and the banks, which finance international trades. This role becomes all the more important in the context of an active government policy to encourage exports. Indian life insurer operates in more than 30 countries through agencies, branches, associates companies. These operations earn foreign exchange. The insurance business is concerned with North America, Western Europe, Japan and Oceania. Together these region’s accounts for about 91 % of the world annul premium. By region’s North America and western Europe are growing moderately while oceanic, Latin America, eastern Europe and Africa display growth above lone –term trends to a global context globalization of life insurance helps companies practices underwriting discipline in one regions globalization of the insurance industry received a big boost.

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Countries United Kingdom Japan United States South Africa Australia South Korea India China Malaysia Indonesia Brazil

Insurance Insurance Density Penetration (Per Capita (premium as a% of Premiums in USD) GDP) 12.71 8.70 4.48 14.04 6.04 9.89 1.77 1.12 2.13 0.54 0.36 3028.5 3165.1 1611.4 392.9 1193.5 935.6 7.6 9.5 86.4 4.0 12.9

Global insurance industry:
Global insurance premiums grew by 3.4% in 2008 to reach $4.3 trillion. For the first time in the past three decades, premium income declined in inflation-adjusted terms, with non-life premiums falling by 0.8% and life premiums falling by 3.5%. The insurance industry is exposed to the global economic downturn on the assets side by the decline in returns on investments and on the liabilities side by a rise in claims. So far the extent of losses on both sides has been limited although investment returns fell sharply following the bankruptcy of Lehman Brothers and bailout of AIG in September 2008. The financial crisis has shown that the insurance sector is sufficiently capitalized. The vast majority of insurance companies had enough capital to absorb losses and only a small number turned to government for support. Advanced economies account for the bulk of global insurance. With premium income of $1,753bn, Europe was the most important region in
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2008, followed by North America $1,346bn and Asia $933bn. The top four countries generated more than a half of premiums. The US and Japan alone accounted for 40% of world insurance, much higher than their 7% share of the global population. Emerging markets accounted for over 85% of the world’s population but generated only around 10% of premiums. Their markets are however growing at a quicker pace.

India and the World Market:
Unfortunately, the progress achieved by the life insurance industry in India, it compares unfavorably not just with the developed countries. But also even with the developing world. The global market for the life insurance is estimated to be around $ 1412.3 billions.

Chapter-5 Major players

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MAJOR PLAYERS IN INSURANCE INDUSTRY
The global insurance industry is one of the largest sectors of finance. It ranges from consumer to corporate and industrial insurance, and even reinsurance, or insurance of insurance. The major insurance markets of the world are obviously the US, Europe, Japan, and South Korea. Emerging markets are found throughout Asia, specifically in India and China, and are also in Latin America. With the internet and other forms of high-speed communication, companies

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and individuals are now able to purchase insurance and related financial products from almost anywhere in the world. Increasing affluence, especially in developing countries, and a rising understanding of the need to protect wealth and human capital has led to significant growth in the insurance industry. Given the evolving and growing socio-economic conditions worldwide, insurance companies are increasingly reaching out across borders and are offering more competitive and customized products than ever before. Over the past ten years, global insurance premiums have risen by more than 50%, with annual growth rates ranging between 2 and 10%.In 2004, global insurance premiums amounted to $3.3 trillion. The majority of insurance comes from developed nations such as most of Europe, the US, and Japan. In 2004, premiums in North American amounted to $1,217 billion, while the European Union generated $1,198 billion, and Japan produced $492 billion. The UK amounted to $295 billion. The four biggest generators of insurance premiums comprised almost twothirds of premiums for 2004, the US and Japan amount to half, while they only make up 7% of the world’s population. In contrast, the emerging markets that make up 85% of the world’s population produced only 10% of the premiums.

The leading global insurance companies are:
• Zurich • AXA • Berkshire • Allianz • Aviva • ING

Financial Services, Hathaway/ Berkshire Hathaway Re

Group • Munich RE Group • American International Group (AIG) • Nippon Life Insurance
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• Assicurazioni • PartnerRe • Munich • Lloyd's • Swiss

Generali

Re

Re • Allianz Re • Everest Re
• GE Insurance

Solutions.

Top 10 Players in Insurance Companies in India • • • •
•

• • • • •

Life Insurance Corporation of India. Bajaj Allianz General Insurance Company Limited. ICICI Prudential Life Insurance Company. ICICI Lombard General Insurance. Birla Sun Life Insurance Company Limited. TATA AIG General Insurance. New India Assurance Company. IFFCO Tokio General Insurance. The Oriental Insurance Company Ltd. HDFC Standard Life Insurance Company Limited.

Top Ten Global Insurance Companies by Market Value 2009
Since the recent financial meltdown which began in September 2008, a reshuffling of the market value of the world's largest insurance companies has occured. Below is a list of the top ten

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insurance companies Rank 1 2 3 4 5 6 7 8 9 10 Company American Intl Group AXA Group Allianz Worldwide Manulife Financial Generali Group Prudential Financial MetLife Aviva Munich Re Group Aegon Market Value ($ Billions) $172.24 $66.12 $65.55 $50.52 $45.45 $39.70 $37.94 $33.10 $30.99 $26.40 Country United States France Germany Japan Italy United States United States United Kingdom Germany Netherlands

Chapter-6 Best practices

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Best practices.


Growth rates in the global insurance industry are recovering after Two years of global recession. To limit exposure to the stock-market and Insurers are trying to diversify their portfolios into less risky products Including bonds.

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Insurers are expanding their product offerings and making their Services more customer friendly in search of higher profitability.  Non-life insurance growth is being driven by renewed premium Rate increases rather than new business, as new non-financial Entrants create competition.  Unit linked insurance real growth was negative in France, Spain And the UK as customers were reluctant to buy products directly Linked to the stock-market.  Developing markets in Asia are now an increasingly attractive Market for insurers, especially China, because of its strong growth And low insurance market penetration.  Increase profitability by directing your investments to the Products and markets targeted by top insurers.  Identify the best banc assurance strategy.  Using this report's examination of the most successful European Banc assurance models.  Benchmark your performance against the top European Insurers, learn best practices, avoid their mistakes, replicate theirSuccesses and be aware of the potential threats they are facing.  Improve your strategic planning using global premium income And growth data split at country level.


Chapter-7 Key finding of insurance budget

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BUDGET
Insurance industry has an annual growth rate of 15-20% and the largest number of life insurance policies in force, the potential of the Indian insurance industry is huge. Total value of the Indian insurance market (200405) is estimated at Rs. 450 billion (US$10 billion). According to government sources, the insurance and banking services’ contribution to the country's gross domestic product (GDP) is 7% out of which the gross premium collection forms a significant part. The funds available with the state-owned

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Life Insurance Corporation (LIC) for investments are 8% of GDP. Till date, only 20% of the total insurable population of India is covered under various life insurance schemes, the penetration rates of health and other non-life insurances in India is also well below the international level. These facts indicate the of immense growth potential of the insurance sector. The year 1999 saw a revolution in the Indian insurance sector, as major structural changes took place with the ending of government monopoly and the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership. Though, the existing rule says that a foreign partner can hold 26% equity in an insurance company, a proposal to increase this limit to 49% is pending with the government. Since opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the Indian market and 21 private companies have been granted licenses. Innovative products, smart marketing, and aggressive distribution have enabled fledgling private insurance companies to sign up Indian customers faster than anyone expected. Indians, who had always seen life insurance as a tax saving device, are now suddenly turning to the private sector and snapping up the new innovative products on offer. The life insurance industry in India grew by an impressive 36%, with premium income from new business at Rs. 253.43 billion during the fiscal year 2004-2005, braving stiff competition from private insurers. RNCOS’s report, “Indian Insurance Industry: New Avenues for Growth 2012”, finds that the market share of the state behemoth, LIC, has clocked 21.87% growth in business at Rs.197.86 billion by selling 2.4 billion new policies in 200405. But this was still not enough to arrest the fall in its market share, as private players grew by 129% to mop up Rs. 55.57 billion in 2004-05 from Rs. 24.29 billion in 2003-04. Though the total volume of LIC's business increased in the last fiscal year (2004-2005) compared to the previous one, its market share came down from 87.04 to 78.07%. The 14 private insurers increased their market share from about 13% to about 22% in a year's time. The figures for the first two months of the fiscal year 2005-06 also speak of the growing share of the
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private insurers. The share of LIC for this period has further come down to 75 percent, while the private players have grabbed over 24 percent. There are presently 12 general insurance companies with four public sector companies and eight private insurers. According to estimates, private insurance companies collectively have a 10% share of the non-life insurance market. Though the focus of this market research report is on the potential growth on the Indian Insurance Sector, it also talks about the market size, market segmentation, and key developments in the market after 1999. The report gives an instant overview of the Indian non-life insurance market, and covers fire, marine, and other non-life insurance. The data is supplied in both graphical and tabular format for ease of interpretation and analysis. This report also provides company profiles of the major private insurance companies. BUDGET REPORT HIGHLIGHTS
• • • • • • • • •

Indian Insurance Market Segmentation By Products Size of the Market and Market Share Of Life Insurers, In INR (crore) Market Share Of Non-Life Insurers Forecast of Life Insurance Growth Up to 2012 Market Revenue of Both Public and Private Insurers Policies and Measures Taken By IRDA To Develop The Insurance Market Research and Development Activities Regulation of insurance and reinsurance companies Major Challenges That Indian Insurance Sector is Facing

Chapter-8

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Problems on insurance industry

Problem of Insurance industry

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In a developing the insurance companies are playing a very important role in the economy. Though insurance industry has very prospect in the economy but for some reasons it’s totally failed to achieve its goal. If we want to know the reasons behind this hence we should look forward the following according to Insurance industry. In this report the major problems in performing insurance business has been classified into some major criteria which are social, economic, political, legal and other reasons. The actual problems are discussed in detail within these criterions.

Social Problems
Less Public awareness
A vast majority of people especially in rural areas are left outside the insurance coverage. This mainly results from the unawareness among the people. Even a large portion of people don’t have the minimum idea of insurance. People are not aware of the benefits from the insurance policy and a great number of people believe that insurance business is nothing but cheating and assume that insurance policy is quite unnecessary. This negative attitude from the people is lessening the importance of absorbing insurance policy in a large extent.

Centralization:
Most of the insurance companies in our country are located in urban areas and there are few branches in rural areas. They think that they might have better scope for performing their business as the economic condition of the urban is better than the rural areas. They don’t think that the large number of our population reside in rural areas and if branches are expanded in rural areas then the business can thrive if proper motivation policy is taken to aware the mass people of the rural areas. Thus this centralization policy acts as an obstruction for the growth of insurance business in our country.

Economic Problems

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Poor economic conditions
India is one of the developing countries in the world and most of the people in this country live under extreme poverty level. All of these people fight hard to earn their livelihood and are marginal in relation to the expenditure with the income. It is quite impossible for them to save some money for future need. Therefore they are quite unable to give the amount to the insurer which is called as premium and regarded as safety or precautionary measures against any accident. Therefore the overall poor economic condition is creating obstacle to flourish the insurance industry.

Poor financial position of the insurance companies
Most of the insurance companies are facing financial problems. Recently governments are trying to take initiative to close some of the insurance companies because they are not maintaining the minimum standards. They are investing their money in poor securities and business which is vulnerable regarding getting back the money with profit. As a result most of the insurance companies are suffering from loss years after years and for poor financial condition the insurance companies are also unable to expand their branch which is a barrier for the growth of insurance industry.

Higher cost of business
Growing cost of business is another problem that insurance companies are facing now a day. They urge that government tax, house rent, utility, commission fee, stationeries are growing day by day. But their businesses are not growing so fast with that rate. Besides this the policy holders are not willing to pay too much premium with growing cost that is hampering the strategies of insurance companies. So they are facing difficulties in running their business efficiently.

Problems of economic bases and effective principle
Before independence insurance business was control by private company. But after independence maximum insurance company take over by the government. For that reason government changed the company management, policy and applies new rules and regulations which system was very tricky and uncomfortable for the mass people.

Political problems
Political instability
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Political instability is one of the major problems of every insurance company. For the instability in politics, many disruptive situations are often created which are bad for any businesses. The people who operate various businesses in our country often experience various types of inconvenience in running their business. Insurance business is not an exception 0of this. Political instability and inconsistency of political courses are a serious problem for the insurance business.

Lack of supervision from the government
Lack of surveillance from government ministry encourages many insurance companies to follow some unethical practices like make harassment to policy holder and showing less in the financial statement. This not only destroying the reputation of the well known insurance companies but also creates negative impact in the mind of the people about insurance. Besides this government sometimes impose some conflicting rules and regulation without discussing with insurance companies governing body. It creates conflict among insurance companies with government and act as one of the main hindrances of growing insurance business.

Problem of planning and administration
After the change of the government, the whole planning and administrative measures are changed which is the main constraint for long term plans. Without long term planning any permanent development or solution of existing problems are impossible.

Legal Problems
Too much complexity
To take an insurance policy there are great number of rules and regulations which must be compelled by the insured person. And into those rules a vast number of complexities are present there. Therefore the people are discouraged to take insurance policy because they think that the complexities will create extra pressure on their mind which may hamper other jobs.

Other problems
Lack of qualified officials
Insurance companies perform their activities by recruiting marketing agent and they try to convince the people to take a policy. Most of the cases the
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agents are not properly trained and they don’t know the right process to catch potential people to make their policy holders. Therefore these field level agents are unable to fulfill their target and act as a constraint in the insurance business.

Traditional method
Still some insurance company using or follows traditional methods on insurance policy. Where as foreign companies are using modern systems like computerized system. Our local company does not want to change themselves.

Lack of training for the employees
Most of the insurance industries are failed in lack of proper training by the employees specially the field employees of insurance companies. Still there is not enough training center to provide proper training regarding insurance activities for the officials of insurance company. Though there is one insurance training center and it totally failed to achieve its target in insurance field.

Lack of exposure
Another main problem in the country is that the media is unconcerned to send the right message regarding insurance to the people. As a result a large portion of population is completely unaware about the insurance policy. Another problem is that the insurance company does not provide adequate information in the company’s websites which can fulfill the queries of their potential customers and satisfy themselves to buy an insurance policy.

Absence of business ethics
Some insurance companies create harassment on the policy holders or sometimes on the dependents of the policy holders when they want back their money after death or maturity. The insurance companies show different causes in order to make delay to return back the money at expected time. Sometimes they are eager to pay less than the desired amount by creating various circumstances such as they try to say that the disaster of the subject matter of the policy is not responsible due to their activities. Besides this some field officials also create some illegal acts. They often try to give false information to the people for buying a policy. And these kind of illegal acts create bad reputation to the insurance companies and hindrance the overall

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insurance business. Those who are harassed by the insurance companies discourage other not to take an insurance policy.

Lack of motivation program towards public
Some of the insurance companies are not much efficient to motivate the people to take insurance policy for safeguarding themselves against any kind of risk. Almost every time they failed to understand the people that insurance policy makes their life risk free all time. For lack of motivation among the mass people insurance companies are always lagging behind from their expected target.

Lack of information technology
Another problem is they do not use any web address, which is essential for a large leasing company. They can provide more information to its client by using web site.

Insufficient service
Few insurance companies failed to provide better service to the mass people that’s why the people who want to take the insurance policy they loss their interest from insurance. At same time in foreign country insurance workers goes to customer’s house and offices regularly to aware themselves and influence them to take insurance policy.

Lack of marketing policy
One of the major problems in insurance company is lack of marketing policy. Management is not taking initiative to increase their marketing expansion. They provide tiny amount advertisement, which is not sufficient for increasing business development.

Chapter-9
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Suggestions and conclusion

SUGGETIONS

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In order to succeed in any of the business it is very necessary to make and follow the strategies. Strategies are very important for any of the business. Following are the general strategies, which are recommending to the insurance sector. One approach is to focus upon product quality, which will instill confidence in minds of the customers that they would be offered best product from out of the several available products. The other approach, is to focus on the customers need, would involve a heavy investment in developing relationships with policyholders. Under this approach, one can expect a range of products and services designed to give the customer what he specially desires. The third approach is of greater market segmentation under which the population should be divided into several homogeneous groups and product, and services would be targeted towards such selected markets. The effort would be to “tie” clients to their company- by customized combination of coverage, easy payment plan, risk management advice, and convenient quick claim handling.

Porter Generic Strategies:
One of the expert Michel porters has identified three internally consistent generic strategies, which can be used singly or in combination: overall cost leadership is clearly under stable. In a differentiation strategy, a company seeks to be unique in its industry along some dimensions that are widely valuable by the customer. May be the lowest cycle time for settling a claim under say, a med claim policy could be differentiating factor. In a cost focus, a company seeks a cost advantage in its target segment, while in differentiation focus; a company seeks a differentiation target.

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Marginal Different Product:
Another strategy would be for the companies to design products that will make comparison-shopping difficult. They could offer a wide variety of covers with marginal differences and varying prices, whose terms and conditions are difficult to compare for consumers who may not have sufficient experience in purchasing insurance and who would find it difficult to make a clear choice. If the consumer is offered a unique policy, he will have no alternative coverage with which can be compared. Given the combination policy, which can offer protection against a number of losses, the consumer will find comparison even more difficult.

Designing New Strategies:
The existing insurance companies cannot be satisfied with concentrating on the consolidation of their existing markets, but have to achieve further growth and penetration. They must, therefore, concentrating on strengthening existing points of service, designing new channel of distribution, direct contact with their ultimate customers, and front line employee empowerment. They also need to refresh their marketing set up. The new comers, on the other hand give priority to tapping the market, left unexploited by the public sector companies.

Move towards Rural Market:
It is one of the most important suggestions; data says that rural market is still uncovered by this sector. We believe that the sector should move towards tie rural market. Insurance penetration can be achieved by tapping the neglected Rural Markets. There is vast potential for insurance growth in
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the rural sector. A recent survey by foundation for research, training and Education in insurance (FORTE) suggests that insurance can be sold profitably to rural communities in India. The survey reveals that • There is distinct hierarchy of needs in rural areas. • Rural people find security in groups the saving habit is very strong in rural areas. • Average saving across the most important socio-economic strata comes to 30-35% of annual income or Rs.13, 500 annually, which is significant. • There is high level of awareness about life insurance and fairly highlevel about 36% already own life insurance. • 51% of these who own life insurance would like to buy more. • Amongst the savers, a significant percentage does not save through formal financial modes or institutions. • Rural buyers of insurance prefer a half yearly mode of premium payment to coincide with the time of the harvest. Thus there are very much chances for any of the companies to work over this scenario. So we believe and suggest all the players to move towards the rural areas.

Motivation of sales force:
A life insurance company should constantly be involved in the process of motivating the sales force in the turbulent times. The following strategies are recommending;

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 Building relationship is real perk. One should be sure to build in networking times for agents during the program-in addition to entertainment and education.  Web should be frequently used for creating gift ideas.  Hold sales contests in the forth quarter. It is the best times it motivates agents who wants to qualify for a trip.  Consider a contrast within the contest ‘for- top-tier producers; additional rewards for additional milestones that are met, such as air and guest room upgrades.

Use of Internet:
The present scenario is such that the products sold with the help of Internet. The technological advancement is such that force the companies to take such steps. Still the full-fledged use of Internet is not done in our country. As suggestion earlier the Internet based life insurance will help the companies to reduce the transaction cost and time. At the time it can improve the quality of service to its customers, which is the mission of the company.

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CONCLUSION
Insurance sector in India is one of the booming sectors of the economy and is growing at the rate of 15-20 per cent annum. One of the key service industry in India would be health and education Insurance sector in India grew at a faster pace after independence. In 1956, Government of India brought together 245 Indian and foreign insurers and provident societies under one nationalized monopoly corporation and formed Life Insurance Corporation (LIC) by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs.5 crore. The (non-life) insurance business/general insurance remained with the private sector till 1972. There were 107 private companies involved in the business of general operations and their operations were restricted to organized trade and industry in large cities. The insurance sector in India has come to a position of very high potential and competitiveness in the market. Indians, have always seen life insurance as a tax saving device.

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