INDIA’s GDP

PRESENTED BY:-
HARDIK SHAH
JAY M DESAI
NISHA S SHETH
YASH S DESAI
 Origin And Growth Of Insurance Sector:
Oriental life Insurance Company was
incorporated at Calcutta in 1818, followed by
Bombay Life Assurance Company in 1823 and
Triton Insurance Company for General
Insurance in 1850. By 1938 there were 176
insurance companies.
Insurance regulation formally began in India
through the passing of two acts
 the Life Insurance companies Act of 1912 and
 the Provident Fund Act of 1912.
 Origin And Growth Of Insurance Sector:
The decision of nationalization of life insurance
business took place in 1956 when 245 Indian
and foreign insurance provident societies were
first merged and then nationalized.
It paved the way towards the establishment of
one nationalized monopoly corporation called
Life Insurance Corporation (LIC)
 Origin And Growth Of Insurance Sector:
 Nationalization was justified on the grounds
that it would create the much needed funds for
rapid industrialization and self-reliance in
heavy industries.
 General Insurance followed suit in 1968;
 Subsequently in 1973, non-life insurance
business was nationalized and the General
Insurance Business (Nationalization) Act, 1972.
  1912 - The Indian Life Assurance Companies Act
enacted as the first statute to regulate the life
insurance business.
 1928 - The Indian Insurance Companies Act
Milestones in LIC

enacted to enable the government to collect

statistical information about both life and non-life
insurance businesses.
 1938 - Earlier legislation consolidated and
amended to by the Insurance Act with the
objective of protecting the interests of the insuring
public.
 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 crore from the Government
of India.
 Contributors
 Life Insurance Corporation of India.
 ICICI Prudential Life Insurance Co. Ltd.
 Allianz Bajaj Life Insurance Co. Ltd.
 AMP Sanmar Assurance Co. Ltd.
 Birla Sun Life Insurance Co. Ltd.
 Dabur CGU Life Insurance Company Pvt. Ltd.
 HDFC Standard Life Insurance Co. Ltd.
 ING Vysya Life Insurance Co. Pvt. Ltd.
 Max New York Life Insurance Co. Ltd.
 Metlife India Insurance Co. Pvt. Ltd.
 Om Kotak Mahindra Life Insurance Co. Ltd.
 SBI Life Insurance Co. Ltd.
 Tata AIG Life Insurance Co. Ltd.
 Contribution To Growth:
 Currently, the insurance sector size is estimated
at Rs.500 billion.
 On account of intense marketing strategies
adopted by private insurance players, the market
share of state owned insurance companies like
GIC, LIC and others have come down to 64% in
last few years from over 97%.
 The private insurance players despite the sector
is still regulated has been offering rate of return
(RoR) to its policy holders which is estimated at
about 35% as against 20% of domestic insurance
companies.
 Contribution To Growth:
 The total contribution of Insurance sector to
total GDP is 7%.
 LIC and GIC have limited number of policies to
offer to their subscribers
 Private insurance companies offer many policies
and the premium amount as well as the maturity
period is much competitive as against those of
government insurance companies.
 SWOT Analysis
1) Risk protection is provided by
this sector only.
1)Unable to convenience the people
2) Insurance having currently good
about the products.
market.
2) Insurance companies instability
3) Tax exemption.
3) Limited working capital
5) The variety of products is
4) Products or services similar to
increasing.
competitors.
6) Insurance to build close
relationship with customers.

1)Technology is improving paperless

transaction are available.
1) Weather cycles.
2) Busy life, customer need flexible
2) New substitute product emerging.
and customizable policies.
3) Increasing expenses and lower
3) Like mobile banking mobile
profit margins with hard on the
insurance could be a hit.
smaller agencies and insurance
4) 200 million middle class
companies.
household
4) Government regulations.
5) New innovations in technology-
measuring weather variables.
 PEST ANALYSIS
•Increased service tax on
premium
•5% discount on corporate
premium •Increase in Gross
•Hike in FDI limit Domestic Savings
•Favourable regulation for
rural insurance

•Low insurance coverage •Automation of processes

•Rise in elderly population
•Changing Indian perception
•Increase in lifestyle diseases
•Increase in CRM solutions
•Internet driven information era
•Business Process Monitoring
(BPM)
 Aggregation of Long Term Savings
12

Total Premium generated

 2002 – 2003 57,708 cr
 2003 – 2004 66,278 cr
 2004 – 2005 79,000 cr
 2005 – 2006 94,000 cr
 2006 – 2007 1,12,000 cr
 2007 – 2008 1,33,000 cr
Porter's 5 Forces Analysis
 1-Threat of New Entrants.
 Life insurance industry entry barriers is
moderate
 The Indian market is highly brand oriented .so it
is difficult to introduce new brand
 The acceptability of new brand is also very low
 Economies of scale is difficult to find in the
initial stage of entry in to market
 Special permission is required from the
government to enter in the insurance sector
 2-Power of Suppliers.
Policy designer tend to have less influence to
Bargain over premium
Insurance is tax exempted so that suppliers
bargaining power increases
 3-Power of Buyers
Market is highly segmented
Insurance industry very return oriented and
switches easily
High switching cost creates buyers lock in one
company.
Exercise bargaining power over premium
 4-Availability of Substitutes

Customers deposits in their amount in to

bank & post deposits & purchase gold & silver
Investment in government securities
Money market investment
Capital market investment
 5-Competitive Rivalry.
 There is cut thought competitions among rivals in
life insurance industry
 There are mainly 13 private organizations and 1
public organization in life insurance competition
 Insurance companies deal in identical policies as
service levels offered are similar
 Ministry of finance controls all the insurance
companies that are in the industry at present
hence there are less chance of exit.
Life Insurance Corporation of India

Type Government-owned corporation

Founded September 1, 1956
Headquarters Headquarters in Mumbai, India(Various
other locations in India and abroad)

Key people T. S. Vijayan (Chairman)

D. K. Mehrotra, Thomas Mathew and A.
Dasgupta (Managing Directors)

Industry Life insurance

Products Individual Life Insurance,Group Insurance
and Pension Plans
Total assets Rs 8 Trillion ($173 Billion USD)
Employees 112,184
Parent NIL
Subsidiaries LIC Housing Finance Limited,
LIC(Nepal)Ltd, LIC(Lanka)Ltd,
LIC(International)BSC(C),Behrain,

Website www.licindia.com
 It is the oldest and most well experienced
player having a Pan India presence.
 LIC has a strong and very well developed
distribution network.
 It is having a huge consumer base and is
evolved as one of the most powerful brands
of the country.
 It has a large product portfolio and claim
settlement is easier to get.
 It has the advantage of government
guarantee is accompanied with it.
 Its employees and other staff are
lethargic and least motivated to render
prompt and sincere customer service.
 Agents not taking into account the
needs of people and promote policies
having high
commissions only.
 Very slow decision making process and
internal problems between top
management and lower cadre staff.
 large scale corruption in main office.

 Emergence of a huge middle income

consumer market in the country  There is too much internal discord.
 People becoming more aware and
 Entry of new private players in
demanding so there is scope for a whole
lot of innovative industry.
products.
 Pension markets, health insurance and
large real estate portfolio.
 Strategies Adopted By LIC

LIC started intense , systematic & well focused

public relation and publicity activities both at the
corporate and operational levels.
LIC upped its ad spend to tackle competition.
LIC has launched its SATELLITE SAMPARK offices.
LIC has established elaborate Grievance Redressal
Machinery
Joint Venture of ICICI & Prudential

Type Private Insurance company

Founded December 2000
Headquarters UK & India

Key people Ms. Chanda D. Kochhar, Chairperson

Mr. N. S. Kannan, Director
Mr. K. Ramkumar, Director
Mr. Barry Stowe, Director
Mr. Adrian O’Connor, Director
Industry Life Insurance
Products Life Insurance & pension plan

Total assets Rs. 53,000 crores as on December 31, 2009.

Employees 2,37,000
Parent ICICI Bank
Subsidiaries ICICI security , ICICI Lombard GIC , ICICI venture ,
ICICI prudential Life insurance

Website www.iciciprulife.com
•ICICI Prudential is No. 1 private life player
in India. Innovative insurance policies with
rider benefits.
•Motivation factors provided by the
company.
•One of the largest financial Institution of
India’s.
•Training provided to all people associating
with ICICI prudential.
•Highest paid up capital deposited in IRDA,
in comparison to all players.
•Assets base of ICICI is more then Rs
1,08,000 Crores.
•Tie up with more corporate agents all
over India.
•Tie up with broker also
•No. of adopting new technology.
•Strong Brand of Company Helps to boost
sales inn market
•Attract more people of providing
customer centric products
•Very huge premiums of policies.
•Compare to other insurance sector.
•Minimum premium is 19000.(Expect
tax saving policy only 10,000)
•Target upper class people only.
•Policy charges are very high.
•Poor distribution is in English
language only.
•Threat from existing life insurance players
•Threat from new entrance.
•Threat to substitute products
•Change in the policy of IRDA
•People don’t aware of different distribution
channel
 Strategies of ICICI Pru

 It has tied up with ICICI Bank, Bank of India, Federal Bank,

Lord Krishna Bank, some co-operative banks, NGOs, MFIs
and corporates for making inroads into the rural areas.
 New range of products are being served to customer.
 The Company recently tied up with the Forbes Six Sigma
rated Dabbawalla organization in Mumbai for a direct
marketing exercise.
 strategic distribution tie-up with Hariyali Kisaan Bazaar,
the rural business arm of DCM Shriram Consolidated Ltd
(DSCL).
 ICICI Prudential launched the ‘TruLife Club’ for its high-
value policyholders as part of its marketing strategy.
 Pragati Ki Anokhi Paathsaala or PKAP. PKAP aims to
bring out the inherent creative skills amongst children.
 ICICI Prudential Life has also partnered with e-governance
kiosks in Andhra Pradesh - aponline.com and Rajasthan -
emitra.com, to enable consumers renew their policies in
their kiosks.
 Future Of The Sector:
 Indian insurance sector is likely to register
unprecedented growth of 200% and attain a
size of Rs. 2000 billion in 2009-10
 A private sector insurance business will achieve
a growth rate of 140% as a result of aggressive
marketing technique being adopted by them
against 35-40% growth rate of state owned
insurance companies.
 In rural markets, the share of private insurance
players would increase substantially as these
have been able to generate a faith among their
rural consumers.
 Bibliography

Important Website
www.iciciprudential.com
www.licindia.com
www.scribd.com
www.google.co.in/indian insurance industry
Newspaper
◦ The Economic Times
◦ Hindu Business Line