Life insurance in India

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Life Insurance is the fastest growing sector in India since 2000 as Government allowed
Private players and FDI up to 26%. Life Insurance in India was nationalised by
incorporating Life Insurance Corporation (LIC) in 1956. All private life insurance
companies at that time were taken over by LIC.

In 1993 the Government of Republic of India appointed RN Malhotra Committee to lay

down a road map for privatisation of the life insurance sector.

While the committee submitted its report in 1994, it took another six years before the
enabling legislation was passed in the year 2000, legislation amending the Insurance Act
of 1938 and legislating the Insurance Regulatory and Development Authority Act of
2000. The same year that the newly appointed insurance regulator - Insurance Regulatory
and Development Authority IRDA -- started issuing licenses to private life insurers.

Contents
[hide]

• 1 List of Life Insurers (as of Sept, 2008)

• 2 Foreign Direct Investment (FDI) Policy in Insurance Sector
• 3 Indian life insurance industry overview

o 3.1 Commission / intermediation fees

[edit] List of Life Insurers (as of Sept, 2008)

Apart from Life Insurance Corporation, the public sector life insurer, there are 22 other
private sector life insurers, most of them joint ventures between Indian groups and global
insurance giants.

Life Insurer in Public Sector

1. Life Insurance Corporation of India

Life Insurers in Private Sector

 1. SBI Life Insurance
2. Metlife India Life Insurance
3. ICICI Prudential Life Insurance
4. Bajaj Allianz Life
5. Max New York Life Insurance
6. Sahara Life Insurance
7. Tata AIG Life
8. HDFC Standard Life
9. Birla Sunlife
10. Kotak Life Insurance
11. Aviva Life Insurance
12. Reliance Life Insurance Company Limited - Formerly known as AMP Sanmar
LIC
13. ING Vysya Life Insurance
14. Shriram Life Insurance
15. Bharti AXA Life Insurance Co Ltd
16. Future Generali Life Insurance Co Ltd
17. IDBI Fortis Life Insurance
18. AEGON Religare Life Insurance
19. DLF Pramerica Life Insurance
20. CANARA HSBC Oriental Bank of Commerce LIFE INSURANCE
21. India First Life insurance company limited
22. Star Union Dia-ichi Life Insurance Co. Ltd

[edit] Foreign Direct Investment (FDI) Policy in Insurance Sector

As per the current (Mar 06) FDI norms, foreign participation in an Indian insurance
company is restricted to 26.0% of its equity / ordinary share capital. The Union Budget
for fiscal 2005 had recommended that the ceiling on foreign holding be increased to
49.0%.

The government approved the much-awaited comprehensive Insurance Bill that seeks to
raise foreign direct investment (FDI) cap in private sector to 49 per cent from 26 per cent.

[edit] Indian life insurance industry overview

All life insurance companies in India have to comply with the strict regulations laid out
by Insurance Regulatory and Development Authority of India (IRDA). Therefore there is
no risk in going in for private insurance players. In terms of being rated for financial
strength like international players, only ICICI Prudential is rated by Fitch India at
National Insurer Financial Strength Rating of AAA(Ind) with stable outlook indicating
the highest claims paying ability rating.

Life Insurance Corporation of India (LIC), the state owned behemoth, remains by far the
largest player in the market. Among the private sector players, ICICI Prudential Life
Insurance(JV between ICICI Bank and Prudential PLC) is the largest followed by Bajaj
Allianz Life Insurance Company Limited (JV between Bajaj Group and Allianz).Among
others, Kotak Life Insurance emerging as a one of the best product provider in the current
market.It has been estimated that customer growth of Kotak Life Insurance is better than
any private insurance company in India. The private companies are coming out with
better products which are more beneficial to the customer. Among such products are the
ULIPs or the Unit Linked Investment Plans which offer both life cover as well as scope
for savings or investment options as the customer desires.Further, these type of plans are
subject to a minimum lock-in period of three years to prevent misuse of the significant
tax benefits offered to such plans under the Income Tax Act. Hence, comparison of such
products with mutual funds would be erroneous.

[edit] Commission / intermediation fees

• The maximum commission limits as per statutory provisions are:

Agency commission for retail life insurance business:

•
o

 7- 90% for 1st year premium if the premium paying term is more
than 20 years
 7- 10% for 1st year premium if the premium paying term is more
than 15 years
 7- 10% for 1st year premium if the premium paying term is less
than 10 years
 7% - yr 2 and 3rd year and 3.5% - thereafter for all premium
paying terms.

In case of Mutual fund related - Unit linked policies it varies between 1.5% to6% on the
premium paid.

•
o Agency commission for retail pension policies
 7.5% for 1st year premium and 2.5% thereafter

• Maximum broker commission - 30%

• Referral fees to banks – Max 55% for regular premium and 10% for single
premium. However in any case this fee cannot be more than the agency
commission as filed under the product.

• However, the above commission may be further subject to the product wise limits
specified by IRDA while approving the product.

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Categories: Insurance in India | Life insurance
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