MARKET ANALYSIS OF INSURANCE SECTOR

SUMMER TRAINING REPORT SUBMITTED TOWARDS THE PARTIAL FULFILLMENT OF

POST GRADUATE DIPLOMA IN MANAGMENT

SUBMITTED BY: VIBHU AGARWAL PGDM (2008-20 0!

R"## $"% PGD080&'

SUBMITTED TO C"#% A%S% M(#)"*+(

FACULTY GUIDE M,% S-(*. S)(+/(

Institute of Professional Excellence and Management, Ghaziabad NH-24, -!"#!, $outh $ide G% &oad Industrial rea, Ghaziabad

ACKNOWLEDGEMENT

I express my sincere gratitude to my industry guide Mr.Rajeev Doval, Manager Sales, Kotak life insurance for his a le guidance, continuous support and cooperation throughout my project, !ithout !hich the present !ork !ould not have een possi le. I !ould also like to thank the entire team of Kotak life insurance, for the constant support and help in the successful completion of my project. "lso, I am thankful to my faculty guide Ms. S!ati Sharma of my institute, for his#her continued guidance and invalua le encouragement.

(V.0)1 A2(+-(#!

TABLE OF CONTENTS
C)(3*4+ N"% $h.%&.' $h.%).' ).& ).) )./ ).0 ).1 ).2 $h.%/.' $h.%0.' 0.& 0.) 0./ $h.%1.' 1.& 1.) $h.%2.' $h.%6.' S10546* (xecutive Summary Research Methodology *rimary + jective,s.ypothesis Research Design Sample Design Scope of the Study 3imitations $ritical Revie! of 3iterature $ompany *rofile $ompany *rofile. Industry *rofile. S!ot "nalysis. Data $ollection *rimary Data Secondary Data 4indings 5 "nalysis Recommendations and Suggestions

C)(3*4+ N"% $h.%7.' $h.%8.'

S10546* "nnexure 9i liography and 3imitation

CHAPTER -

E7ECUTIVE SUMMARY

E7ECUTIVE SUMMARY
In )''0, the Indian insurance market !as ranked &8th glo ally and !as the fifth largest in "sia. "lthough it accounts for only ).1: of premiums in "sia, it has the potential to ecome one of the iggest insurance markets in the region. ;here are different factors !hich !ill make further strong gro!th in the market, including sound economic fundamentals, rising household !ealth and a further improvement in the regulatory frame!ork. ;he insurance industry in India has come a long !ay since the time !hen usinesses !ere tightly regulated and !ere in the hands of a fe! pu lic sector insurers. "fter the passage of the Insurance Regulatory and Development "uthority "ct in &888, India stopped pu lic sector exclusivity in the insurance industry in favour of market%driven competition. ;his shift has rought a out major changes to the industry. ;he start of a ne! era of insurance development has seen the entry of international insurers, the increase of innovative products and distri ution channels, and the raising of supervisory standards. ;he o jectives of this report are to explore the current state of development in India<s life%insurance market and enumerate the opportunities and challenges offered y this exciting market. ;he report compares private and pu lic sector players operating in Indian life%insurance market. ;his comparative analysis is done on the asis of market share, investment portfolio, usiness under!ritten through different intermediaries and contri ution of various investment funds. ;he report also compares the existing Indian insurance market !ith the rest of the !orld ased on different parameters like premiums, insurance penetration, insurance density, demand elasticity and gro!th potential. ;he report egins !ith the overvie! of Indian life%insurance market in chapter%0. In later part of the report analysis of the primary data is given and the defined hypothesis are verified i.e. !hether the hypothesis are true or not. .ypothesis in the report talk a out things like if there exist a relation et!een investment in life%insurance and age or earning of a person. +ther hypothesis talks !hether the market share of pu lic sector or +M Kotak life !ill increase or not. $hapter%2 of this report also gives an insight a out the perception of the people regarding investment in life%insurance. ;his report finds out ans!er to the =uestions !hy people invest in life insurance i.e. for life cover, tax planning, and !ealth creation or for future needs of their children. .ere investment pattern of different people in different investment instruments is also studied. "nother thing !hich report talks a out is !hat a person looks in a investment tool i.e. security, returns, li=uidity or duration of investment. So, asically chapter%2 of this report tries to find out consumers perceptions and patterns of investments.

CHAPTER -2

RESEARCH METHODOLOGY

RESEARCH METHODOLOGY
OB8ECTIVES:

;o study and analy>e the Insurance industry in India. ;o compare the private and pu lic companies in Indian insurance market. ;o kno! the target market for the life insurance companies. ;o kno! if there exist a relationship et!een investment in life insurance and age or income of a person. ;o make predictions a out the market share of +M Kotak life.

HYPOTHESIS: Hypothesis-1 .'? ;here exist no relationship et!een the age of a person and percentage of investment in 3ife Insurance. .&? ;here exist a relationship et!een the age of a person and percentage of investment in 3ife Insurance. Hypothesis-2 .'? ;here exist no relationship et!een a person<s income and percentage of his savings he put in 3ife Insurance. .&? ;here exist a relationship et!een a person<s income and percentage of his savings he put in 3ife Insurance. Hypothesis -3 .'? Market share of 3I$ !ill not increase in the future. .&? market share of 3I$ !ill increase in the future. Hypothesis .'? Market share of +M Kotak life insurance !ill not increase in the future. .&? Market share of +M Kotak life insurance !ill increase in the future. REASERCH DESIGN: ;he goal of marketing research is to provide the facts and direction that managers need to improve their customer service so as to increase satisfaction level of its customers y kno!ing the current scenario. (xploratory research has the goal of formulating pro lems more precisely, clarifying concepts, gathering explanations, gaining insight, eliminating impractical ideas, and forming hypotheses. (xploratory research can e performed using a literature search, surveying certain people a out their experiences, focus groups, and case studies. @hen surveying people, exploratory research studies !ould not try to ac=uire a 8

representative sample, ut rather, seek to intervie! those !ho are kno!ledgea le and !ho might e a le to provide insight concerning the relationship among varia les. Since I have carried this research ased primarily on secondary data, have formulated the hypothesis and gained insight into the pro lem y using a literature search, thus the type of research used is e!p"o#$to#y #ese$#%h& SAMPLE DESIGN: Pop'"$tio( )e*i(itio(+ *opulation is nothing ut the entire aggregation of items from !hich samples can e dra!nA Bit is an estimate of the mean of the population Cor it can also e said to e the num er of inha itants ,either the total num er or the num er of a particular race or class- in a given place ,country or city etc B-. ;he population consists of? S$,p"e si-e+ Sample si>e of &'' !as taken for this research. Sample constituted those !ho do investments or !ho are in the usiness of investments. *eople !ho are the usiness of home loans, car finance, general insurance, life insurance !ere =uestioned through =uestionnaire. *rofessionals and executives !ho have good amount of money to invest !ere also the part of this sample. Residents of Delhi and Doida. 9oth men and !omen "ll income groups "ll age groups

TOOLS OF ANALYSIS: 9

;o do the statistical analysis of the primary and secondary data the follo!ing tools !ere used? $hi%s=uare test Z-test

SCOPE OF THE STUDY: ;his research !ork talks a out the follo!ing things? $hange in market shares of oth private and pu lic players in life%insurance market in India. In this research various predictions regarding change in market share of different life insurance companies is made using E%test analysis. @hether there is a relation et!een investment in life insurance and age. $hi% s=uare test is used here y to check the relationship if any et!een investment in insurance and age of a person. @hether income of a person related to his investment in life insurance. .ere again chi%s=uare test is used to find out the relationship in a ove said varia les. ;his research also does a comparative analysis of Indian Insurance market !ith other international markets.

LIMITATIONS: 3imitation of the research is that the primary data collected is only from the ur an area soA it does not give a clear and true picture of the life insurance market in India ecause still there is a lot of una!areness in rural India regarding life insurance. *eople in ur an area have started understanding life insurance as an investment tool ut rural population still think that it is nothing more than a life cover. So, data collection from oth rural and ur an population is necessary to kno! the right perception of people a out investment in life insurance. "nother limitation is that people don<t reveal clearly their investment patterns. ;ime and resource constraints !ere the other limitation of this project.

10

CHAPTER -9

CRITICAL REVIEW OF THE LITERATURE

CRITICAL REVIEW OF LITERATURE

11

Dum er of researches have already een done on the insurance industry e it regarding Indian market or any other market. 9efore !riting this report I have gone through the follo!ing papers. Insurance sector in India? to!ards )')' vision. @orld insurance in )''/? insurance industry on the road of recovery. "nnual under!riter survey 4e ruary )''2. ;he monitor group study on insurance. *rivati>ation of the insurance market in India? from 9ritish raj to monopoly raj to s!araj. ;apen Sinha ,March &&, )''0- examines ho! insurance sector !ill play a important role in the )')' vision statement mooted y the planning commission. 4irstly, the vision is examined y him that !hether it is a realistic vision. In this report ;apen Sinha says that Insurance and anking plays a vital role in country<s gro!th. ;alking a out the importance of insurance the ;apen Sinha says? CInsurance has the fundamental role of smoothing out fluctuation of cash flo!s. 4or households, life insurance can reduce the drastic fall in income of the family if the insured person dies. ;hrough pension plans, a fall in retirement income can also e mitigated. Similarly, companies may e a le to avoid ankruptcy through the use of risk management in general and insurance in particular. In general, saving is channeled into several specific financial institutions.F 4or most countries, a su stantial proportion is invested in anks. Some of it is invested in longer term markets for capital such as stocks and onds. In many cases, a significant portion goes to the insurance sector. It could take the form of life insurance, pension plans, health insurance and others. "ccording to the his report y studying the data from different countries in general, it can e said that high per capita income is associated !ith high proportion of GDS ,and also !ith high proportion of GD*- coming from the insurance sector. ;hus, higher level of development seems to come !ith high level of activities in the insurance sector. In the end ;apen Sinha says the insurance usiness is at a critical stage in India. +ver the next t!o decades !e are likely to !itness high gro!th in the insurance sector for three reasons. 4inancial deregulation al!ays speeds up the development of the insurance sector. Gro!th in income also helps the insurance usiness to gro!. In addition, increased longevity and aging population !ill also spur gro!th in health and pension segments. Hlrike 9irkmaier and $amille $odoni ,Iune &, )''0- did the study on the asis of the premium volume of insurance companies. ;hey examine non life and life insurance premium volume in &1) countries. ;he insurance data in the study originate primarily from national supervisory authorities, and partially from insurance associations. ;he

12

macroeconomic data in the report originates from International financial statistics of International monetory funds ,IM4-. In their study Hlrike 9irkmaier and $amille $odoni talk a out !orld<s insurance scenario. It compares industriali>ed and emerging markets on the asis of insurance penetration and insurance density. ;hey have primarily examined the past gro!th in the insurance industry in the !hole !orld. "nalysis of this data is done after dividing different parts of the !orld in different regions. ;his report helps us kno! that !hich region of !orld !ill e the fastest gro!ing life and non%life insurance market in the future. During Ianuary )''2 3loyd<s undertook a researchA this !as its second annual under!riter opinion survey. "critas spoke directly to Hnder!riters at the ox recording their individual opinions relating to challenges and opportunities faced y the market. In total, &&/ Hnder!riters from a large num er of syndicates !ere intervie!ed at random in 3loyd<s under!riting room. "ll figures for )''2 results are ased on &&/ intervie!s. ;he compara le )''1 data given in the report !as ased on &') intervie!s. 4indings of this research !ere ? ;he HS and $hina are seen to offer the most significant gro!th opportunities for the insurance market in )''2, increasing further in importance since last year. $ontract certainty and increased transparency are seen as the next most important challenges. @hilst pricing is again expected to e the most significant concern for uyers, other considerations such as availa ility of coverage and financial security are expected to come into play in )''2.
In

the !ake of t!o record hurricane seasons, !indstorm losses are again predicted to cost the industry the most money in )''2, and the risk of further natural catastrophes is the greatest concern for the industry this year.

+;he Monitor $ompany J the 9oston% ased strategy consulting firm did a research a out forecasting the trends that !ill emerge and predicting their impact on insurance sector. In this, the first piece, researchers examined !hether the t!o State%o!ned monopolies in the insurance industry, the 3ife Insurance $orporation and the General Insurance $orporation, !ill e a le to survive J or not. ;o summari>e the monitor group research paper talked a out follo!ing things? ;here are fears that the deregulation of the insurance industry !ill adversely affect the 3I$ and the GI$. ;he ne! entrants in the life insurance market !ill face a po!erful incum ent in the 3I$, !hich has a strong sales net!ork. 13

In the general insurance market, the GI$ !ill face stiff challenges since its customers cannot e locked in. @ith a phased deregulation policy, oth incum ents can e expected to hold their o!n in the face of fresh competition.

;apen Sinha, IDG commercial chair professor examined the institution of insurance in India. +ver the past century, Indian insurance industry has gone through ig changes. It started as a fully private system !ith no restriction on foreign participation. "fter the independence, the industry !ent to the other extreme. It ecame a state%o!ned monopoly. In &88&, !hen rapid changes took place in many parts of the Indian economy, nothing happened to the institutional structure of insurance? it remained a monopoly. +nly in &888, a ne! legislation came into effect signaling a change in the insurance industry structure. the report examines !hat might happen in the future !hen the domestic private insurance companies are allo!ed to compete !ith some foreign participation. 9ecause of the time dependence of insurance contracts, it is highly unlikely that these erst!hile monopolies are going to disappear. In his paper he also talks a out roken partnerships in the year )''' for e.g. the most dramatic reakdo!n took place et!een .industan ;imes ,a ne!spaper group- and the $ommercial Hnion of the HK, Kotak%Mahindra and $hu declared their divorce , Da ur Group and "llstate also parted, "llian> and "lpic also roke their partnership. 9ut mainly ;apen Sinha study is a out deregulation in insurance industry and its affects on pu lic companies.

CHAPTER -:
14

COMPANY PROFILE

COMPANY PROFILE

15

Kotak Mahindra one of IndiaKs leading financial institutions !as orn in &871 as Kotak $apital Management 4inance 3imited. ;his company !as promoted y Mr. Hday Kotak, Mr. Sidney ". ". *into and Kotak 5 $ompany. Industrialists Mr. .arish Mahindra and Mr. "nand Mahindra took a stake in &872, and thatKs !hen the company changed its name to Kotak Mahindra 4inance 3imited.

Gro!th and success story of Kotak Mahindra can e summari>ed as follo!ing?

A.o't the #est#'%t'#i(/? In +cto er )''1, Kotak Group ac=uired the 0': stake in Kotak *rime held y 4ord $redit International ,4$I- and 4$I ac=uired the stake in 4ord $redit Kotak Mahindra ,4$KM- held y Kotak Group. In May )''2, Kotak Group ought )1: stake held y Goldman Sachs in Kotak $apital and Kotak Securities.

Kotak Mahindra is one of IndiaKs leading financial institutions, offering complete financial solutions that encompass every sphere of life. 4rom commercial anking, to stock

16

roking, to mutual funds, to life insurance, to investment anking, the group caters to the financial needs of individuals and corporate. ;he group has a net !orth of over Rs. ),1'' crore, employs around 2,6'' people in its various usinesses and has a distri ution net!ork of ranches, franchisees, representative offices and satellite offices across )1' cities and to!ns in India and offices in De! Lork, 3ondon, Du ai and Mauritius. ;he Group services over &.2 million customer accounts.

THE 0OTA0 1ISION+ @e see ourselves asMMMMMMMM. " glo ally Indian financial services rand. ;he most trusted financial services company. ;he most preferred employer in financial services.

+ur usiness driver N Oalue creation rather than si>e alone.

+M K+;"K 3I4( IDSHR"D$(?

17

Kotak Mahindra ank ltd. ,60:-

+ld Mutual plc ,)2:-

G(+GR"*.L?
*resent in /' cities ,including )& out of the top 0' cities-, !ith 0& ranches.

$"*"9I3I;L?
&)''P (mployees 27'' life advisors (sta lished systems and processes ade=uate for existing scale of usiness.

*R+DH$;S?
" complete range of individual products ,&'- to cater to varying needs of customers.

9R"DDIDG?
4ourth most recalled rand as per +RG M"RG survey. ;hird most recalled rand in Mum ai and Delhi.

INDUSTRY PROFILE

18

INTRODUCTION @ith such a large population and the untapped market area of this population Insurance happens to e a very ig opportunity in India. ;oday it stands as a usiness gro!ing at the rate of &1%)' per cent annually. ;ogether !ith anking services, it adds a out 6 percent to the country<s GD* .In spite of all this gro!th the statistics of the penetration of the insurance in the country is very poor. Dearly 7': of Indian populations are !ithout 3ife insurance cover and the .ealth insurance. ;his is an indicator that gro!th potential for the insurance sector is immense in India. It !as due to this immense gro!th that the regulations !ere introduced in the insurance sector and in continuation M(#)"*+( C"//.**44 !as constituted y the government in &88/ to examine the various aspects of the industry. ;he key element of the reform process !as *articipation of overseas insurance companies !ith )2: capital. $reating a more efficient and competitive financial system suita le for the re=uirements of the economy !as the main idea ehind this reform. Since then the insurance industry has gone through many sea changes .;he competition 3I$ started facing from these companies !ere threatening to the existence of 3I$. Since the li erali>ation of the industry the insurance industry has never looked ack and today stand as the one of the most competitive and exploring industry in India. ;he entry of the private players and the increased use of the ne! distri ution are in the limelight today. ;he use of ne! distri ution techni=ues and the I; tools has increased the scope of the industry in the longer run. A BRIEF HISTORY Insurance in India started !ithout any regulation in the Dineteenth $entury. It !as a typical story of a colonial era? a fe! 9ritish insurance companies dominating the market serving mostly large ur an centers. "fter the independence, it took a dramatic turn. Insurance !as nationali>ed. 4irst, the life insurance companies !ere nationali>ed in &812, and then the general insurance usiness !as nationali>ed in &86). +nly in &888 private insurance companies have een allo!ed ack into the usiness of insurance !ith a maximum of )2: of foreign holding. In !hat follo!s, !e descri e ho! and !hy of regulation and deregulation. ;he entry of the State 9ank of India !ith its proposal of ancassurance rings a ne! dynamics in the game. @e study the collective experience of the other countries in "sia already deregulated their markets and have allo!ed foreign companies to participate. If the experience of the other countries is any guide, the dominance of the 3ife Insurance $orporation and the General Insurance $orporation is not going to disappear any time soon. Insurance under the British Raj

19

3ife insurance in the modern form !as first set up in India through a 9ritish company called the +riental 3ife Insurance $ompany in &7&7 follo!ed y the 9om ay "ssurance $ompany in &7)/ and the Madras (=uita le 3ife Insurance Society in &7)8. "ll of these companies operated in India ut did not insure the lives of Indians. ;hey !ere there insuring the lives of (uropeans living in India. Some of the companies that started later did provide insurance for Indians. 9ut, they !ere treated as Bsu standardB and therefore had to pay an extra premium of )': or more. ;he first company that had policies that could e ought y Indians !ith Bfair valueB !as the 9om ay Mutual 3ife "ssurance Society starting in &76&. ;he first general insurance company, ;riton Insurance $ompany 3td., !as esta lished in &71'. It !as o!ned and operated y the 9ritish. ;he first indigenous general insurance company !as the Indian Mercantile Insurance $ompany 3imited set up in 9om ay in &8'6. 9y &8/7, the insurance market in India !as u>>ing !ith &62 companies , oth life and non%life-. .o!ever, the industry !as plagued y fraud. .ence, a comprehensive set of regulations !as put in place to stem this pro lem ,see ;a le &-. 9y &812, there !ere &10 Indian insurance companies, &2 non%Indian insurance companies and 61 provident societies that !ere issuing life insurance policies. Most of these policies !ere centered in the cities ,especially around ig cities like 9om ay, $alcutta, Delhi and Madras-. In &812, the then finance minister S. D. Deshmukh announced nationali>ation of the life insurance usiness. Monopoly Raj ;he nationali>ation of life insurance !as justified mainly on three counts. ,&- It !as perceived that private companies !ould not promote insurance in rural areas. ,)-;he Government !ould e in a etter position to channel resources for saving and investment y taking over the usiness of life insurance. ,/- 9ankruptcies of life insurance companies had ecome a ig pro lem ,at the time of takeover, )1 insurance companies !ere already ankrupt and another )1 !ere on the verge of ankruptcy-. ;he experience of the next four decades !ould temper these vie!s.

20

21

INDUSTRY EVOLUTION

U3 *" '''

''' *.## 2002

2009 "$-(+=,

Do. of *layers

3I$ Monopoly Do *rivate *layers

*rivate *layers allo!ed &) ne! insurers

&) *rivate *layers 3I$ loses &): share

allo!ed

Distri ution 4ocus

"gency only 7''K 3I$ agents

"gency model replicated 3ittle confidence in 9"

$onfidence in 9" 9" takes )': P share among *rivate *layers "lignment of most 9anks for exclusive arrangements 9" regulations ecome clearer Multiple models allo!ed% $", Referral, 9roking

Regulatory (nvironment

3I$ of India "ct Insurance "ct &8/7

IRD" "ct &888 *rimarily "gency driven regulations

;9" < 9ancassurance So'#%e+ Repo#t .y 2St'#$t P'#)y34 M$($/i(/ Di#e%to# o* A1I1A&

22

CURRENT SCENARIO OF THE INDUSTRY India !ith a out )'' million middle class household sho!s a huge untapped potential for players in the insurance industry. Saturation of markets in many developed economies has made the Indian market even more attractive for glo al insurance majors. ;he insurance sector in India has come to a position of very high potential and competitiveness in the market. Innovative products and aggressive distri ution have ecome the say of the day. Indians, have al!ays seen life insurance as a tax saving device, are no! suddenly turning to the private sector that are providing them ne! products and variety for their choice. 3ife insurance industry is !aiting for a ig gro!th as many Indian and foreign companies are !aiting in the line for the green signal to start their operations. ;he Indian consumer should e ready no! ecause the market is going to give them an array of products, different in price, features and enefits. .o! the customer is going to make his choice !ill determine the future of the industry. ;oday there are thirteen companies are there in life insurance market, one out of these are a pu lic sector company and rest t!elve are privately o!ned. ;he list of these players operating in India life insurance market is given elo!?

LIFE INSURERS P10#.6 S46*"+ 3ife Insurance $orporation of India P+.>(*4 S46*"+ "llian> 9ajaj 3ife Insurance $ompany 3imited 9irla Sun%3ife Insurance $ompany 3imited .D4$ Standard 3ife Insurance $o. 3imited I$I$I *rudential 3ife Insurance $o. 3imited IDG Oysya 3ife Insurance $ompany 3imited Max De! Lork 3ife Insurance $o. 3imited Met3ife Insurance $ompany 3imited +m Kotak Mahindra 3ife Insurance $o. 3td. S9I 3ife Insurance $ompany 3imited ;";" "IG 3ife Insurance $ompany 3imited

23

"M* Sanmar "ssurance $ompany 3imited Da ur $GH 3ife Insurance $o. *vt. 3imited ;he market share of the a ove companies can e summari>ed as follo!ing?

So'#%e + 5$#io's #epo#ts o( (et

24

So'#%e+ A!%o i(s'#$(%e i(*o#,$tio( se#5i%es ;he market share of the private players is as given in the follo!ing diagram. I$I$I *ru is the market leader among the private players in Indian life insurance market !ith /&.7: share of the market. K"*(C 2%'? ING VD,D( 2% ? M4*L.@4 A>.>( %2? MNYL :%&? &% ? T(*( AIG B%9? HDFC S*=% L.@4 B%B? SBI L.@4 0%2? B.+#( S1$#.@4 :%:? AMP S($/(+ %&?

ICICI P+1=4$*.(# 9 %8?

B(5(5 A##.($A %&?

25

So'#%e+ Repo#t .y 2St'$#t P'#)y34 M$($/i(/ Di#e%to# o* A1I1A&

;he percentage contri ution of respective segments ,rene!a le or first year premium- of life insurers is given the follo!ing figure?

26

So'#%e+ $(('$" #epo#t IRDA 266 -67

;he contri ution of various investment funds to follo!ing?

oth private and pu lic sector is as

27

So'#%e+ $(('$" #epo#t IRDA 266 -67

28

So'#%e+ $(('$" #epo#t IRDA

INVESTMENT TRENDS OF THE INSURERS OPERATING IN INDIA

29

"ccording to the regulations set y IRD" every insurer carrying on the usiness of life% insurance shall invest and at all times keep invested his controlled fund in the follo!ing manner?

30

"ccording to reports of different life%insurance companies their investment profile is as given in the follo!ing ?

So'#%e+ $(('$" #epo#t IRDA

31

So'#%e+ 8$"%'"$te) *#o, the $.o5e )$t$ t$9e( *#o, $(('$" #epo#t IRDA

It can e o served that pu lic and private companies do not differ tangi ly in their asset allocations. ;he 3I$ has 21: invested in government securities and other approved securities. 4or the private sector it ranges from 0': ,9irla Sun 3ife- to 6': ,"M* Sanmar-. Infrastructure investment for 3I$ !as &):. 4or the private companies it ranges from a high of )': for "M* Sanmar and "llian> 9ajaj to a lo! of 8: for 9irla Sun 3ife. In the Cother approvedF investment category, 3I$ has invested )/:. ;he average for the private sector in this category is /':. In the unapproved category, the 3I$ has no investment !hatsoever, !hereas the private sector has 1: of the total in this category. It should e noted that different investment portfolios could e the result of the different lia ility structure of the 3I$ and the other private sector companies. In particular, most private companies< lia ilities are of shorter duration, given that many of them have just started their operations.

LIFE INSURANCE IN INDIA: A WORLD PERSPECTIVE 32

Indian market today is vie!ed as one of the fastest gro!ing insurance market. In India the penetration of life insurance is very less as compared to other countries. ;he Indian Insurance is the &8 th largest market glo ally and ranks fifth in "sia after Iapan, South Korea, $hina, and ;ai!an. ;otal premium amount collected amounts to HSD &6./ illion, representing just under '.2 percent of !orld premiums. I(s'#$(%e pe(et#$tio( ,premiums as percentage of GD*- has remained sta le at a relatively lo! level in early &88'<s. ;otal Insurance penetration in India !as &.1: in &88' and !as not much higher y the middle of the decade. 9y )''/, the total penetration has risen to ).77:, comprising ).)2: life and '.2) non%life insurance usinesses. In the context of international comparison, insurance penetration in India is low but commensurate with its level of per capita income. In 2003, India had the 11th highest insurance penetration in Asia and ranked !th worldwide.

I(s'#$(%e )e(sity Another measure of insurance development is per capita spending on insurance, ie insurance densit". #" this measure, India is among the lowest$ spending nations in Asia in respect of purchasing insurance. An average Indian spent %&' 1(.! on insurance products in 2003, comprising %&' 12.) for life insurance and %&' 3. for non$life insurance products. *he level of spending is comparable to that of the +hilippines ,%&' 1!.( in total-, Indonesia ,%&' 1!. - and &ri .anka ,%&' 12. -. It lags behind /hina, which spent %&' 3(.3 per capita on insurance products in 2003. 0ne factor that has been slowing down the improvement of insurance densit" is India1s relativel" high population growth rate, which has averaged 1.23 over the past ten "ears. *he graphs and charts showing the above said data is given as following4

33

So'#%e+ $(('$" #epo#t IRDA

34

4ig%Insurance premiums in "sia, HSD illion

Source ? N$tio($" i(s'#$(%e st$tisti%s + S:iss Re e%o(o,i% ; %o(s'"ti(/ p#e"i,i($#y esti,$tes 4ig%Insurance penetration in "sia 35

So'#%e+ N$tio($" i(s'#$(%e st$tisti%s + S:iss Re e%o(o,i% ; %o(s'"ti(/ p#e"i,i($#y esti,$tes

4ig%Insurance density in "sia

Source? N$tio($" i(s'#$(%e st$tisti%s S:iss Re e%o(o,i% ; %o(s'"ti(/ p#e"i,i($#y esti,$tes

36

De,$() e"$sti%ity $() /#o:th pote(ti$" India1s low level of insurance penetration and densit" has to be viewed in the context of the countr"1s earl" stage of economic development. +er capita income in India is currentl" at around %&' (00 but is expected to increase rapidl", which could bring in an era of accelerated demand for insurance. International experience tends to suggest that demand for insurance will take off once per capita income has surpassed the %&' 1000 mark. *his income level is deemed high enough for households to consider insurance protection, particularl" as man" people begin to own their homes and cars. *he empirical relationship between insurance demand elasticit" and per capita income can be characteri5ed as a bell$shaped curve. 6lasticit" remains relativel" low at a low income level but increases at an accelerated rate once it has passed the %&' 1000 level. *he following chart depicts the current position of different emerging markets as well as their expected position b" 2013.

4ig%Relation et!een gro!th in income and demand elasticity

37

India1s improving economic fundamentals will support faster growth in per capita income in the coming "ears, which will translate into stronger demand for insurance products. It is also worthwhile to note that it generall" takes longer for life insurance demand to reach saturation than non$life insurance ,in terms of rising income elasticit"-. #ased on the growth assumption provided b" &wiss 7e 6conomic 7esearch 8 /onsulting, it can be seen that the window of opportunit" in India1s insurance market will remain wide open for a prolonged period of time. &trong growth can be sustained for 309!0 "ears before the market reaches saturation as income elasticit" starts to decline.

4ig%Dum er of years to reach maximum elasticity

38

INDIAN INSURANCE INDUSTRY: FUTURE AND POTENTIAL Dot!ithstanding the rapid gro!th of the sector over the last decade, insurance in India remains at an early stage of development. "t the end of )''/, the Indian insurance market ,in terms of premium volume- !as the &8th largest in the !orld, only slightly igger than that of Denmark and compara le to that of Ireland. ;his !as despite India eing the second most populous country in the !orld as !ell as the &)th largest economy. Let, there are strong arguments in favour of sustained rapid insurance usiness gro!th in the coming years, including India<s ro ust economic gro!th prospects and the nation<s high savings rates. ;he dynamic gro!th of insurance uying is partly affected y the ,changing- income elasticity of insurance demand. It has een sho!n a ove that insurance penetration and per capita income have a strong non%linear relationship. 9ased on this relation and other

39

considerations, it can e postulated that y )'&0 the penetration of life insurance in India !ill increase to 0.0: and that of non%life insurance to '.8:

;he follo!ing data sho!s the predicted values of the life insurance premiums in the coming years in India?

40

So'#%e+ S:iss #e e%o(o,i% #ese$#%h $() %o(s'"t$(%y <#epo#t 266 =

41

L.@4 P4$4*+(*."$
&' 8 7 6 2 3+4/.1/EGDP 1 0 / ) & ' /.) /.0 /.2 /.7 0 0.) 0.0 0.2 #"2(34+ 6(3.*( .$6"/4!

I$=.( 2002

I$=.( 2020

So'#%e+ A #epo#t .y T$pe( Si(h$ <ING %h$i# p#o*esso#4 ITAM4 Me!i%o=

42

What will it take to realize this potential? @hile the macro%economic ackdrop remains favoura le to gro!th, there are still major hurdles to overcome in order for India to reali>e this gro!th potential. ;his report !ill cover some of the key challenges and issues that have to e tackled y the Indian insurance market. Q +n the regulatory side, there are outstanding issues concerning solvency regulations, further li erali>ing of investment rules, caps on foreign e=uity shareholdings1 as !ell as the enforcement of price tariffs in the non%life insurance sector. Q ;he proliferation of ancassurance is rapidly changing the !ay insurance products are distri uted in India. ;his !ill also have strong implications on the process of financial convergence and capital market development in India. Q .ealth insurance is still underdeveloped in India ut offers huge potential, as there !ill e increasing needs to purchase private health cover to supplement pu lic programs. 3ike!ise, the deficiencies in current pension schemes should offer significant opportunities to private providers. Q @ith the majority of the population still residing in rural areas, the development of rural insurance !ill e critical in driving overall insurance market development over the longer term.

SWOT ANALYSIS OF LIFE-INSURANCE INDUSTRY STRENGTH+ .ottest sector today. *redicted annual gro!th rate &7%)': 3ife insurance industry in India gre! y an impressive /2:, !ith premium income from ne! usiness at Rs.)1/.0/ illion during the fiscal year )''0%)''1. ;ax enefits under section 7' are given on insurance products. Insurance has emerged as an attractive and sta le investment alternative that offers total protection for life, health, and !ealth. Hnit linked plans. Strong saving culture in India. Insurance products flexi ility i.e. one can shift from one plan to another. 3ife insurance provide inflation protection.

43

WEA0NESS+ Difficulty in development of industry code of conduct, contri uting to a common catastrophe reserve fund and chalking out agreements to settle claims to the enefit of customer. Insurance products in India are not perceived as an investment instrument. 4e! product changes have taken place since nationali>ation.

OPPORTUNIT>+ More than one illion population. 7': market untapped. India has an enormous middle%class that can afford to uy life, health, and disa ility and pension plan products. 3o! level of penetration of life insurance in India compared to other developed nations.

THREAT+ 3ack of a!areness in rural India a out life insurance policies. ;o convince a large population, !hich is comparatively not !ell informed a out the intangi le enefits of life insurance, is indeed an onerous task. $ompetition !ith other instruments of investment. So there !ill e need to provide returns compara le to other financial instruments. Investment management. Oolatile share market is threat for market linked life insurance plans ,H3I*-.

44

CHAPTER -&

DATA COLLECTION

45

DATA COLLECTION

PRIMARY DATA: *rimary data !as collected y the means of =uestionnaires. SECONDARY DATA: Secondary data !as collected y internet, annual report of IRD" and research papers y S!iss re economic research and consultancy. Secondary data has the advantage of saving time and reducing data gathering costs. $ollection of secondary data is time consuming and cheapest source of o taining information. ;he disadvantages are that the data may not fit the pro lem perfectly and that the accuracy may e more difficult to verify for secondary data than for primary data.

46

CHAPTER -F

FINDINGS AND ANALYSIS

47

FINDINGS AND ANALYSIS

PRIMARY DATA AND ITS INTERPRETATION . &. ;he percentage of earnings people invest is as follo!ing?

PERCENTAGE OF INVESTMENT NUMBER OF PEOPLE

G &? 8

&-90? )2

90-:&? /6

:&-F0? )/

HF0? 1

G &? &-90? 90-:&? :&-F0? HF0?

;he data collected clearly sho!s that 2': of the people invest /'%2': of there earnings. +n the contrary, a very fe! people invest less than &1: or greater than 2':.

48

). +n an average people invest in the follo!ing pattern. TYPES OF INVESTMENT G+O;. S($HRI;I(S S;+$K M"RK(; MH;H"3 4HDDS 3I4( IDSHR"D$( AVG% INVESTMENT IN PERCENTAGE 02 8 )0 )&

LIFE INSURANCE

MUTUAL FUNDS

2:

STOCK MARKET

'

GOVT% SECURITIES

:F

&

&

20

2&

90

9&

:0

:&

&0

;he data collected sho!s that the most trusted instrument for investment is govt. securities and mutual funds follo! them. Investing directly in the stock market is the least preferred investment instrument y the people. 3ife insurance takes around )': of people<s investment.

49

/. *eople rated their priorities for investing in insurance in the follo!ing !ay :

PRIORITIES *rotecting the family @ealth creation Retirement needs ;ax planning $hild education

SCORE )&0 &81 )6' 0'/ )01

OUT OF 1'' 1'' 1'' 1'' 1''

8' 7' 6' 2' 1' 0' /' )' &' ' *R+;($;I+D +4 4"MI3L @("3;. $R(";I+D R(;IR(M(D; D((DS ;"R *3"DDIDG $.I3D (DH$";I+D

;his =uestion gives us very interesting and most important insight of the reason !hy people invest in insurance. ;ax planning !as the most important reason !hich got 0'/ points on 1''. +ne of the strange things !hich come out here is that protecting the family option scored only )&0 points just a ove !ealth creation option. Irony here is that

50

the life insurance asically targets protection of ones family ut it is lo! do!n in the list of priorities of the people !hen they invest in life insurance.

SCORE OUT OF

TATA AIG /// 1''

BA8A8 ALLIANI )8' 1''

ICIC PRU 01) 1''

OM KOTAK )'1 1''

HDFC //' 1''

MA7 NEWYORK ))' 1''

MET LIFE &7' 1''

0. *eople on the asis of trust rated the private insurance companies the follo!ing !ay?

1'' 01' 0'' /1' /'' )1' )'' &1' &'' 1' ' ;";" "IG 9"I"I "33I"DE I$I$I *RH +M K+;"K 3I4( .D4$ M"R D(@ L+RK M(; 3I4(

51

@hen people !ere asked a out the rand they trust in the life insurance industry I$I$I *ru came out to e the most trusted rands follo!ed y ;";" "IG and .D4$. +M Kotak life is still far ehind these companies and needs to create a trust in people<s mind.

TVERADIOE BANNERS COLDCALLINGE NEWSPAPERS AGENT NO% OF PEOPLE 7 /0 )6 /&

1. @hen the people !ere asked from !here did came to kno! a out the a ove company they gave the follo!ing response.

:0 9& 90 2& 20 & 0 & 0

FRIENDSECOLLEAGUES TVERADIOENEWSPAPERS BANNERS COLD CALLING

;his =uestion gives very useful information a out the rand recall of the life insurers in India. Most of the people !ho could recall I$I$I *ru said that they could recall it

52

ecause of the cold calling. +n the contrary to this the people !ho recalled ;";" "IG said that they got to kno! a out the rand through ;O ads.

2. *eople rated the features of investment in follo!ing manner?

FEATURES SCORES OUT OF

RETURNS 006 1''

SECURITY 01/ 1''

DURATION /2/ 1''

LIJUIDITY /&7 1''

LIJUIDITY

RETURNS

DURATION SECURITY

53

"s sho!n a ove the features like returns and security !ere rated the highest y the people. *eople re=uire high returns ut not at the cost of the security of their investment. *eople !ant a safe investment !hich can give them decent returns.

6. @hen the people !ere asked !hen did they first invested in life insurance follo!ing !ere the results.

AGE (YRS%! NO% OF PEOPLE

20-90 )/

90-:0 /8

:0-&0 )2

ABOVE &0 7

54

:0 90 20 0 0 20-90

90-:0

:0-&0

ABOVE &0

Maximum num er of people !ho enter the life insurance market is at the age group of /'%0' yrs. 9ut a very fe! enter this market after 1'yrs of age.

7. ;he respondents can e divided into different income groups as follo!ing?

INCOME NO% OF RESPONDENTS

H2%& )/

2%&-:%& )8

:%&-8%& ))

H8%& )2

55

S7.1

2F

0.1%7.1

22

).1%0.1

2'

S).1

29

" ove data tells us a out the income levels of the people intervie!ed. Income !as divided into four categories and an effort !as made to have roughly e=ual num er of people in all four categories to get an ideal of investment pattern of people !ith different incomes.

8. @hen people !ere asked in !hich sector they have their life insurance investments, i.e. either pu lic or private follo!ing !as the response.

PUBLIC SECTOR NUMBER OF RESPONDENTS 26

PRIVATE SECTOR ("*)4+ *)($ K"*(C #.@4! )6

KOTAK LIFE ) 56

OM KOTAK 2? PRIVATE SECTOR 28?

PUBLIC SECTOR B0?

+ut of &'' respondents 82 !ere already insured and out of these 82, 26 had invested in pu lic sector i.e. in 3I$. )6 had invested in private companies and ) of these )6 had a life policy of +M Kotak life

HYPOTHESISH0? THERE E?IST NO RELATIONSHIP BETWEEN AGE OF A PERSON AND PER8ENTAGE OF IN1ESTMENT IN LIFE INSURAN8E HI: THERE IS A RELATIONSHIP BETWEEN AGE PER8ENTAGE OF IN1ESTMENT IN LIFE INSURAN8E OF A PERSON AND

CHISJUARE TEST TO VERIFY ABOVE HYPOTHESIS

57

INVESTMENTS IN INSURANCE AGE (YR%! HIGH (H2&?! MODERATE ( & - 2&?! LOW (G &?! TOTAL

20-90

F (B% :!;

F (B%BB!;

' (F%0'!;

90-:0

B (8%&0!;

2 ('%2&!;

F (B%2&!;

2&

:0-&0

' (8%8:!;

' ('%F2!;

8 (B%&:!;

2F

ABOVE &0 TOTAL

2 ('%&2!;

0 ( 0%9F!;

F (8% 2!;

28

9:

9B

2'

00

, -T O"3H(S "R( ;.( (R*($;(D 4R(UH(D$I(S

( E < O !K2 %2'' 9% 99 8%:F8 2%2&0 B%&F2 %&F2 0%02&

( E < O !K2 E E 0% 82 0%:09 %9'0 0%2F& 0%8 B 0%20B 0%009

58

0%98: 0%2 F% &0 0% 2' :%:':

0%0:0 0%028 0%F:& 0%0 2 0%&&9 :%&:&

2 L M ,+%(-V) # (
So, ) W 0.101 Do!, Degree of freedom W ,r % &- ,c % &r? num er of ro!s c? num er of columns .ere, r W 0 5 c W / So, degree of freedom W ,0 N &- ,/ % &W 2 Do!, )
;a le

&0.008

,o served value from ta le corresponding to d.f W 2 5 level of significance W '.'1-

"s,

)
;a le

S )
calculated

;herefore, there exist no relationship et!een an individual<s age and the percentage of his savings he invest in life insurance. ;herefore !e can say that null hypothesis is true.

59

HYPOTHESIS-2 H0: THERE E?IST NO RELATIONSHIP BETWEEN A PERSON3S IN8OME AND THE PER8ENTAGE OF HIS IN1ESTMENTS HE PUT IN LIFE INSURAN8E& H : THERE E?IST A RELATIONSHIP BETWEEN A PERSON3S IN8OME AND THE PER8ENTAGE OF HIS IN1ESTMENTS HE PUT IN LIFE INSURAN8E&

CHISJUARE TEST TO VERIFY ABOVE HYPOTHESIS

60

INVESTMENT IN INSURANCE INCOME HIGH (H2&?! MODERATE ( & - 2&?! LOW (G &?! TOTAL

G 2%&

9 (B%82!;

8 (8%& !;

2 (F%FB!;

29

2%& < :%&

B ('%8F!;

&( 0%B9!;

B(8%: !;

2'

:%& < 8%&

' (B%8:!;

8 (8% :!;

& (F%98!;

22

H 8%&

: (8%8:!;

8 ('%F2!;

: (B%&:!;

2F

TOTAL

9:

9B

2'

00

, -T O"3H(S "R( ;.( (R*($;(D 4R(UH(D$I(S

( E < O !K2 29%292 0%2F 28%:08 8% BF 8%299 %'88 %9:& 0%0 ' %'0:

( E < O !K2 E E 2%'B0 0%090 :%2&' 0%89 %F'' 0%29& 0% B2 0%002 0%2 F

61

2F%F2& 0%98: 2%&9

9%0 2 0%009 %FF2 &%0'

2 L M ,+%(-V) # (
So, ) W &1.'8& Do!, Degree of freedom W ,r % &- ,c % &r? num er of ro!s c? num er of columns .ere, r W 0 5 c W / So, degree of freedom W ,0 N &- ,/ % &W 2 Do!, )
;a le

&0.008

,o served value from ta le corresponding to d.f W 2 5 level of significance W '.'1-

"s,

)
;a le

)
calculated

;herefore, there exist a relationship et!een a person<s income and the percentage of investment in life insurance. .ence the alternate hypothesis is true. ;he data sho!s that people !ith a high income invest more percentage of their savings in life insurance and the reason for this trend is the tax reduction !hich they get in doing so.

62

HYPOTHESIS-9 H0: MAR0ET SHARE OF LI8 WILL NOT IN8REASE IN THE FUTURE& H : MAR0ET SHARE OF LI8 WILL IN8REASE IN THE FUTURE&

HYPOTHESIS TESTING TO VERIFY THE ABOVE HYPOTHESIS

63

"t present 3I$ has 7)./: of market share and the primary data collected sho!s that out of 82 people 26 people have invested in 3I$ and )8 have invested in other private players. So, the data can summari>ed as follo!ing? *W'.7) xW26 nW&'' Do!, E
$alculated

W ,x#n N *-# ,Y *,&%*-#n-

*utting values in a ove formula

E E

W ,26#&''%'.7)- # ,Y'.7) ,&%'.7)- # &''$alculated

W % ,'.&)) # '.'/8$alculated

W %/.&&
$alculated

4or 81: level of confidence range of E according to E ta le is? E '.'1 W %&.20 is the acceptance region. i.e. .' is true if Ecalculated S E'.'1 "s the calculated value of E is not greater than the a ove range the null hypothesis ,.'is not true. i.e., the market share of 3I$ !ill increase. +n the contrary, the market share of the private players in life insurance !ill not increase. HYPOTHESIS-: H0: MAR0ET SHARE OF OM 0OTA0 LIFE WON3T IN8REASE& H : MAR0ET SHARE OF OM 0OTA0 LIFE WILL IN8REASE&

HYPOTHESIS TESTING TO VERIFY THE ABOVE HYPOTHESIS

64

"t present +M Kotak life has '.1&: of market share and the primary data collected sho!s that out of 82 people ) people have invested in +M Kotak life and 80 have invested in other insurance companies. So, the data can summari>ed as follo!ing? *W'.''1& xW') nW&'' Do!, E
$alculated

W ,x#n N *-# ,Y *,&%*-#n-

*utting values in a ove formula

E E

W ,')#&''%'.''1&- # ,Y'.''1,&%'.''1&- #&''$alculated

W ,'.'&160 # '.''6/$alculated

W).&12&
$alculated

4or 81: level of confidence range of E according to E ta le is? E S &.20 is the acceptance region. i.e. .' is true if Ecalculated S E'.'1 "s the calculated value of E is greater than the ta le value of E the null hypothesis ,.'is true. i.e., the market share of +M Kotak life !ill not increase.

CHAPTER < B

65

RECOMMENDATIONS N SUGGESTIONS

RECOMMENDATIONS
;he follo!ing recommendations !ere made to Kotak life insurance?

R'#$" p#ese(%e+ +ut of /' cities in !hich Kotak life insurance is present )& are
top cities ut they are not present in small cities so Kotak should increase the num er of their office in rural areas and have their presence in rural areas also.

N',.e# o* o**i%es+ Kotak should open small and more num er of offices
providing convenience to people.

66

A)5e#tise,e(t+ Kotak should advertise more aggressively using multiple channel

and non conventional advertising.

BPOs+ ;here is a need to have a )0 R 6 call centre, to handle the =ueries of

people a out their life insurance investments ecause these type of services !ill keep it ahead in today<s cutthroat competition of life insurance market.

P#o)'%t i((o5$tio(+ ;here is a need to have ne! products ecause the life
insurance !ith etter and different products !ill only e a le to survive in today<s li erali>ed Indian insurance market.

T#$i(i(/+ ;imely and proper training should e provided to the insurance agents.
Kotak don<t properly update its usiness partners i.e. the agents a out its ne! products and changes in the existing products.

B$(%$ss'#$(%e+ @hile every other life insurance company is capitali>ing on this

distri ution channel Kotak is the only company !hich don<t have a anking partner. It is important for Kotak<s gro!th to have tie ups !ith some anks to sell their products. So, its important to ank upon ancassurance.

SUGGESTIONS

67

Positioning Insurance as a means to fulfillment ones duties during one life time . Fears relating to Thefts ,ailments, death could be addressed through sensitive communication. Fears relating to claims: Need to promote trust . !emonstrating claim testimonials ,positioning as "orr# free Low Returns :$eposition insurance as a ris% cover , securit# instrument rather than financial investment. Lack of understanding: Training of channels To provide &ualit# advice on products best suited

Lack of knowledge : 'ase of process, simplif#ing, the product and the procedure The Product :(atering to lifest#le

68

CHAPTER -8

ANNE7TURE

ANNE7TURE
69

UH(S;I+DD"IR( 4or every Rs. &'' ho! much you investZ a- less than &1 - &1 % /' c- /' % 01 d- 01 N 2' e- More than 2' @hich instruments you invest inZ ,please specify the percentage of investment in eacha- Govt. Securities. - Shares# Stocks. c- Mutual funds. d- 3ife insurance. In !hich of the follo!ing you have made your life%insurance investments a- *u lic sector ,3I$- *rivate sector ,other than kotak lifec- Kotak life 4eatures you look in an instrument efore investingZ,rate on the scale of five, 1 eing the highesta- Returns. ,&,),/,0,1- Security. ,&,),/,0,1c- Duration of investment. ,&,),/,0,1d- 3i=uidity. ,&,),/,0,1@hat are your priorities for investing in life insuranceZ a*rotecting your family. ,&,)@ealth creation. ,&,)cRetirement needs. ,&,)d- ;ax planning. ,&,)e$hildren education# Marriage. ,&,),/,/,/,/,/,0,0,0,0,0,1,1,1,1,1-

@hich private insurance company you trustZ aI$I$I *ru. Kotak life. c;";" "IG d9ajaj "llian>.

,&,&,&,&-

,),),),)-

,/,/,/,/-

,0,0,0,0-

,1,1,1,1-

70

efg-

.D4$. Max De! Lork life. Met life.

,&,&,&-

,),),)-

,/,/,/-

,0,0,0-

,1,1,1-

@hen !e talk of insurance !hich first name comes to your mind other than 3I$Z

4rom !here did you come to kno! a out the a ove companyZ acd4riends # $olleagues. ;O # Radio # De!s *aper. 9anners. $old calling # "gent.

4rom !here do you uy your insurance policiesZ a- Insurance agent. - $ompany office. .o! many mem ers of your family are insuredZ acd"ll. +nly old people. (arning mem ers. +nly male mem ers.

PERSONAL INFORMATION+ Dame? +ccupation? "ge ? Gross Salary ,p.a.-? a- X ).1 - ).1 % 0.1 c- 0.1 N 7.1 d- S 7.1.

+!ned "ssets? a- +!ned *roperty - Oehicle ,!ithout loanc- Investments d- +ther

71

So'#%e+ St$tisti%s #e"e$se) .y IRDA&

Market share of different players operating in Indian life%insurance market LIC ICICI Prudential irla Sun Li!e a"a" #llian$ S I Li!e %ata #I& 'a( ) *+L 'et Li!e #,i,a -. /0ta1 I*& 23s3a #'P San.ar
So'#%e + ,e)i$ #epo#ts

80% 6.7% 2.3% 2.8% 2.2% 1.3% 0.9% 0.2% 0.8% 0.6% 0.4% 0.3%

72

9usiness under!ritten through different intermediaries.

So'#%e+ IRDA $(('$" #epo#ts

So'#%e+ S:iss Re e%o(o,i%s #ese$#%h $() %o(s'"ti(/

73

WORLD LIFE AND NONLIFE INSURANCE PREMIUMSO ''&-200:

(D.+46* 3+4/.1/, -+.**4$O U%S% P /.##."$,! Y4(+ &881 &882 &886 &887 &888 )''' )''& )'') )''/ )''0 N"$#.@4 ( ! [8'2,67& 8'8,&'' 782,76/ 78&,/1) 8&),608 8)2,1'/ 828,801 &,'87,0&) &,)61,2&2 &,/81,)&7 L.@4 [&,)/2,2)6 &,&82,6/2 &,)/&,687 &,)61,'1/ &,0)0,)'/ &,1&7,0'& &,001,662 &,1/0,'2& &,27),60/ &,707,277 T"*(# [),&0/,0'7 ),&'1,7/7 ),&)7,26& ),&22,0'1 ),//2,81) ),000,8'0 ),0&1,6)' ),2/),06/ ),817,/18 /,)0/,8'2

,&- Includes accident and health insurance.

So'#%e+ S:iss Re4 si/,$4 5$#io's iss'es&

TOP TEN GLOBAL INSURANCE COMPANIES BY REVENUESO 200: ( !

(P /.##."$,!

R($C C"/3($D & ) / 0 1 2 6 7 8 &' "R" "llian> IDG Group "merican International Group "ssicura>ioni Generali 9erkshire .atha!ay "viva Munich Re Group Dippon 3ife Insurance Eurich 4inancial Services

R4>4$14, (2!

C"1$*+D

I$=1,*+D 3ife#health *roperty#casualty 3ife#health

[&)&,2'2 4rance &&7,8/6 Germany &'1,772 Detherlands

86,876 Hnited States *roperty#casualty 7/,)27 Italy Hnited 6/,')1 Kingdom 2',6'2 Germany 2',1)& Iapan 18,267 S!it>erland 3ife#health 60,/7) Hnited States *roperty#casualty 3ife#health *roperty#casualty 3ife#health *roperty#casualty

,&- 9ased on an analysis of companies in the Glo al 4ortune 1''. Includes stock and mutual companies. ,)- Revenues include premium and annuity income, investment income and capital gains or losses, ut exclude depositsA includes consolidated su sidiaries, excludes excise taxes.

So'#%e+ Fo#t'(e

74

CHAPTER -'

BIBLOGRAPHY N LIMITATIONS

75

LIMITATIONS

76

Attitudinal barrier to purchasing the policy from the Private Company

!nsurity about private companies

Low rate of return

"lockage of funds for the long period

#ervices provided by the company

$ore faith on Public %nsurance Company

BIBLOGRAPHY
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R(*+R;S "DD R(S("R$. *"*(RS? &. "nnual report of IRD". ). ;apen Sinha, Insurance sector in India? to!ards )')' vision. /. ;apen Sinha, *rivati>ation of the insurance market in India? from 9ritish raj to monopoly raj to s!araj. R(4R(D$(S? @e sites? !!!.ciionline.org !!!.economy!atch.com !!!. imaonline.com !!!.ficci.com !!!.monitor.com !!!.s!issre.com !!!.rediff.com !!!.iisonline.org !!!.nottingham.ac.uk !!!.kotak.com !!!. usinessline.com

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