CHALLENGES IN THE FIELD OF INSURANCE SECTOR

PRESENTED BY:-

Name Archana Gupta

Roll no. 16

Manju Gupta

17

CONTENTS
What

is Insurance? Evolution Types of Insurance Global Players Indian Mergers Market Share Current Scenario Challenges Conclusion

WHAT IS INSURANCE?

Insurance is a form of contract or agreement under one party agrees in return of a consideration to pay an agreed amount of money to another party to make goods for a loss, damage, injury to something of value Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss.

Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium.
Insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice

EVOLUTION INDIA

1818 - Oriental Life Insurance Company 1st Insurance Company. 1870 - Bombay Mutual Life Assurance Society 1st Life Insurance Company.

1912 - The Indian Life Assurance Companies Act enacted the 1st Law to Regulate the Life Insurance Business. 1928 - The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life & non-life insurance businesses.

CONTINUED

1938: Earlier legislation consolidated & amended the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian & foreign insurers & provident societies are taken over by the central government & nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India. The first General Insurance Company established in the year 1850 in Calcutta by the British.

TYPES OF INSURANCE

LIFE INSURANCE

NON- LIFE INSURANCE

Property (eg. Builders risk insurance)

Aviation(eg. Private aircraft insurance) Marine (eg. Marine hull insurance) Miscellaneous (eg. Purchase insurance)

THE GLOBAL PLAYERS in Life insurance AVIVA

American International Group, Inc. (AIG)

Prudential PLC

MAJOR PLAYERS

MARKET SHARE

CURRENT SCENARIO
Growing

at the rate of 15-20% annually 75% population has no insurance Adds 7% to countrys GDP LIC market share come down to 75% and private insurers increased over 24% Annuity or pension product have over 33% of market

REASONS FOR GROWTH

Provides value for money Flexibility Transparency. Good products to offer.

Innovative Offers, Customer-Centric Products, Increasing Awareness Levels of Consumers, Enhanced Service Standards, Reaching out to the customer through a number
of distribution and communications channels,

Use of customer feedback in improvement of offers.

RURAL MARKET AND ITS CHALLENGES FOR LIFE

INSURANCE INDUSTRY
72% of Indian population belongs to rural area. Rural literacy rate have swollen to 59% from 37%. 53% of the total FMCG consummation is of rural market. 59% of the total durable goods get consumed in rural market alone. Products like TV, DVD players and mobile phones have registered 200% growth. If the above mentioned figure arent seems impressive consider this, Rural households have more than 42 million saving bank accounts then 27 million of urban.

CHALLENGES OF REGULATOR
Development of insurance sector. Confidence of general public. Insurance policy regulation (establishing market discipline). Granting of license to new Insurers. Foreign direct Investment (FDI). Solvency Regulations

2/14/2013

CHALLENGES IN INSURANCE SECTOR

New Comer Poses threat-With more companies coming up everyday with the growing demand of the industry the market very competitive. Until and unless the existing companies makes a mark and create their very own brand name it would be quite tough to sustain their position in the market. There is also probability of big companies taking over the new emerging companies. Supplier Power: The people providing the capital dont act as big terror as opportunity always lies in the big hands and they can any day attract good insurer from small companies to their own company. Buyer Power: Individual never stands a chance in front of big corporate sectors as they dominate the insurance industries with high potential of negotiation power. Presence of substitutes: the insurance industry is full of replacement option and large insurance companies offer the same service as of others be it in any sector of home, commercial ,auto, health or life.

CONCLUSION

Insurance can be summed up as Praying for the best being PREPARED for the WROST.