Pls use the data to your project

The brief outlook about the regulatory changes done by the Indian Government over the years is given below.

The effect of insurance reforms has been positive on the insurance industry. There has been positive growth in all the segments, with investments flowing in the right direction. Reforms have helped to achieve rapid growth in critical areas and sustain them over a period of time through channelized strategies. Post reforms, the number of players have increased from 4 to 22 players presently registered under IRDA (INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA).

The Various Players in the Indian Insurance Industry is given below. 1. Bajaj Allianz Life Insurance Company Limited 2. Birla Sun Life Insurance Co. Ltd 3. HDFC Standard Life Insurance Co. Ltd 4. ICICI Prudential Life Insurance Co. Ltd.

5. ING Vysya Life Insurance Company Ltd. 6. Life Insurance Corporation of India 7. Max New York Life Insurance Co. Ltd 8. Met Life India Insurance Company Ltd. 9. Kotak Mahindra Old Mutual Life Insurance Limited 10. SBI Life Insurance Co. Ltd 11. Tata AIG Life Insurance Company Limited 12. Reliance Life Insurance Company Limited. 13. Aviva Life Insurance Co. India Pvt. Ltd. 14. Sahara India Life Insurance Co, Ltd. 15. Shriram Life Insurance Co, Ltd. 16. Bharti AXA Life Insurance Company Ltd. 17. Future Generali Life Insurance Company Ltd. 18. IDBI Federal Life Insurance Company Ltd. 19. Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd 20. AEGON Religare Life Insurance Company Limited. 21. DLF Pramerica Life Insurance Co. Ltd. 22. Star Union Dai-ichi Life Insurance Comp. Ltd.

The Market leader in the insurance sector is public owned company LIC the market share picture of various companies is given below.

But recently in the year 2009 IRDA (Insurance Regulatory And Development Authority of India) has brought in some regulatory changes, the effect of new regulations done by IRDA (Insurance Regulatory And Development Authority of India) has adversely affected the Insurance Industry. So what are these changes which have affected the Insurance Industry so badly the changes are given below in a brief manner.

1. years

Agency commission for retail life insurance business: + 7- 90% for 1st year premium if the premium paying term is more than 20 + 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. 2. In case of Mutual fund related - Unit linked policies commission or company charges varies between 1.5% to 6% on the premium paid. 3. Agency commission for retail pension policies + 7.5% for 1st year premium and 2.5% thereafter 4. Maximum broker commission - 30% 5. Referral fees to banks Max 55% for regular premium and 10% for single premium. As you can see in the in the Second point above the company according to the new rules set by IRDA for all ULIP products the company can charge the customer up to 6% of the premium paid by the customer were as before this rule was done by the IRDA the companies used to charge around 20% of the premium paid by the customer as company charges or commission. Since ULIP is the bread earner in the Insurance industry this rule has badly hit the cash inflow of the insurance companies as there has been a drastic reduction in the percentage of premium what companies used to charge the customers for ULIP products.

As shown in the above chart generally around 60% of the premium collected by the Insurance Companies come from the ULIP products and other 40% of the premium come from general insurance products, Endowment, Money Back policies and general life insurance products. Due to these regulatory changes done by IRDA (Insurance Regulatory Development Authority of India) with respect to ULIP products there has been a negative impact on the Insurance Industry, according to one of the leading News papers survey due to squeeze in margins on account of changes in unit-linked plans (ULIP) has forced private life insurance companies to close offices and retrench employees due to shortage of working capital.

During the first half of the fiscal 2010 private life insurance companies cut down branches by 442. As of September, private life insurers had 8,227 branches as compared to 8,667 as of March, data compiled by the Life Insurance Council shows. Private players also retrenched employees mainly in the sales division. The number of employees for private companies reduced by 5,840 during the first half of the year to 1.46 lakh employees, the data shows.

The Worst hit companies were ICICI Prudential, HDFC, Met Life, Bharti AXA the number branches of individual companies closed down is given below.

Some of the replies given by the Financial Experts for the shutting down of the branches are given below: Amitabh Chaudhry, managing director and CEO of HDFC Standard Life Insurance said in an interview We are looking at consolidating some of our branches and resizing some of the others to manage expense. Mr S.B. Mathur, Secretary General, Life Insurance Council, said that some private players might take some more time to get adjusted to the new regulatory framework. According to G Murlidhar, chief operating officer of Kotak Mahindra Life Insurance, the company intends to bring down the expense ratio from 18 per cent to 12-13 per cent in the short term because the usual expense ratio for all private life insurers range between 18-25 per cent but due to the new regulatory rules done by IRDA there has been a reduction in the Cash Inflow and has affected the Working Capital of the Companies so these measures have to be taken. Considering the above circumstances we can actually see the importance of proper Working Capital Management so that the company will be prepared to face any kind of risk which might arise in the future due to any reason like Competition in the Market, change in the regulations, slump in the market situation and so on.