emergining trend in insurance

8/20/2019 Emergining Trend in Insurance

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EMERGENCY TREND INSURANCE

INTRODUCATION

Market by 2015, particularly in countries like India and China. The IRDA is

the a!or body, "hich is pro#idin$ better opportunities %or the pri#ate

player in India. &IC ' (IC)s onopoly arket approach is no ore

pre#alent in India. The ne" arket scenario %or insurance is $ro"in$* no

doubt it is a %lyin$ bird.

Change is the eternal law of nature. Everything is changing according to the

need of the time. Economic growth and social development in present

scenario is due to sudden change in industrial policy and economic planning.

Globalization has been the basic mantra after 1991, so every one thinks of

being global. iberalization, privatization and globalization is the basic

concept of success in all aspect of development. Competition is tough now

due to globalization. !usiness has positioned the entire economy, and

industrialists think about making things global. "here are no stringent rules

or regulations for making any business house or industry. Government gives

more emphasis on e#port and entrepreneurship. "his is a changing world.

Everyone has to compete for better success. $arketing is the ma%or concept

for developing any type of business. &fter globalization, marketing has taken

a new dimension and it is the most challenging task now. "he new horizonof marketing in the field of finance and insurance in present scenario is a

good sign of development.

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Globalization ' ("he )ynamic *orce(

$any people consider globalization nothing new ' societies have been

interconnected for years. "he world has never e#perienced globalization at

this level of intensity before, or the speed at which it is transforming and

integrating societies.

+erman E. )aly, an analyst of Global olicy *orum, characterizes

globalization as, (Global integration of many former national economies into

global economy, mainly by free trade and free mobility, but also by easy or

uncontrolled economic purposes.( +e further clarifies that globalization isnot internationalization ' globalization brings about a single, integrated,

global economy, while internationalization is a federation of nations

cooperating as sovereign units to advance the national interest of all

members. "hough globalization has become a broad heading for a multitude

of global interactions, ranging from the e#pansion of cultural influences

across borders to the enlargement of economic and business relations

throughout the world, it has different dynamic force for different person. *or

the economist, globalization is essentially the emergence of a global market.

*or a historian, it is an epoch dominated by global capitalism. -ociologists

see globalization as the celebration of diversity and the convergence of

social preferences in matters of life style and social values. "o the political

scientist, it represents the gradual erosion of state sovereignty. !ut discipline

specific studies e#plain only a part of the phenomenon.

*rom a multi'disciplinary angle, globalization may be treated as a

phenomenon, a philosophy and a process, which affects human beings as

profoundly as any previous event. -everal factors have been responsible for


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this phenomenon. "his study confines its attention to four growth'enhancing

facets of globalization that have been among its key drivers, namely trade,

finance, communication and transport.

$/Cs ' ("he /ew ath $aker(

&fter globalization, so many $/Cs are the ma%or path maker for economic

growth. "he world'class $/Cs constantly pursued their strategy of gaining

access to every promising market world over, which had sound growth

potentialities, in order to e#pand their network and control over the

respective local economies. "he conse0uence was that some of the markets, particularly in developing countries like China and ndia, adopted some sort

of self'protectionist mechanisms by imposing certain deliberate politico'

legal restrictions in order to restrict the entry of capital goods of these $/Cs

into their markets.

nsurance being an integral part of financial service could not claim

immunity to the impact of the globalization process and opened up to private

and global players world over, including ndia. -o many $/Cs are now

entering into the insurance sector which is now a booming sector.

/ew +orizons of nsurance $arket after Globalization

&fter 1923, insurance sector has become more prosperous. *or a long time,

the two most important insurance players were C 4 GC. /ow so many

$/Cs have entered into the same sector like !a%a% &llianz, &viva, !irla

-unlife, CC rudential, etc. nsurance is now acting on two dimensions,

i.e., the element of investment and the element of protection. "he Economic

5alue &ddition 6E5&7 has taken the ma%or concern of the same business.

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$arketing after globalization has become '

• $ore customer oriented

• $ostly better service oriented

• $ore competitive

!etter satisfaction, more value addition and strategic development can help

any insurance sector to sustain in the present era.

/ew $arket -cenario 4 nsurance

nsurance market in present scenario though is a booming sector, but the

market has changed from simpler to comple#, less challenging to more

challenging. Going domestic to international is a very difficult task.

:nderstanding market synergy and cognisation of perception of customer in

the insurance field is very difficult. "he ;egulatory !oard like


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&fter the terrorist attack on the >orld "rade Center in -eptember 331, the

momentum of growth of world economy suffered some temporary setback.

&ccording to 8rd &nnual Globalization nde# ;eport of >orld >atch

nstitute, the growth rate fell sharply from =? in 333 to 1.8? in 331. !ut

the world had become stabilized after that and the economic growth was

back with entry of so many $/Cs and insurances.

"riggered by the sound fundamentals in global economy and

internationalization of world markets, several countries turned towards free

market regimes in banking and insurance, putting an end to several decade'

old state'owned controlled markets. "he insurance market in China 4 ndia

is brighter. "he leading reinsurance company like -wiss ;e 4 $unich ;e

has pro%ected 3'@? growth in life and health insurance market by 31@,

particularly in countries like ndia 4 China

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/-:;&/CE /):-";A C&--*C&"B/

INSURANCE

GENERALLIFE

INSURANCE

MotorMediclaimFire Marine


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nsurance D Collective bearing of ;isk

nsurance is nothing but a system of spreading the risk of one onto the

shoulders of many. >hile it becomes somewhat impossible for a man to bear

by himself 133? loss to his own property or interest arising out of an

unforeseen contingency, insurance is a method or process which distributes

the burden of the loss on a number of persons within the group formed for

this particular purpose.

!asic +uman trait is to be averse to the idea of risk taking. nsurance,

whether life or non'life, provides people with a reasonable degree of security

and assurance that they will be protected in the event of a calamity or failure

of any sort.

nsurance may be described as a social device to reduce or eliminate risk of

loss to life and property. :nder the plan of insurance, a large number of

people associate themselves by sharing risks attached to individuals. "he

risks, which can be insured against, include fire, the perils of sea, death and

accidents and burglary. &ny risk contingent upon these, may be insured

against at a premium commensurate with the risk involved. "hus collective

bearing of risk is insurance.

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nsurance ndemnifies &ssets 4 ncome

Every &sset has a value and generates ncome to its Bwner. "here is a

normally e#pected ife'time for the &sset during which time it is e#pected

to perform. f the &sset gets lost earlier, being destroyed or made /on'

functional through an &ccident or other unfortunate event the Bwner is

re%udiced. nsurance helps to reduce CB/-E:E/CE- of such &dverse

Circumstances which are called ;isks

nsurance is the science of spreading of the risk

t is the system of spreading the losses of an ndividual over a group of

ndividuals

nsurance is a $ethod of sharing of financial losses

of a few from a common fund formed out of Contribution of the many

who are e0ually e#posed to the same loss

>hat is uncertainty for an ndividual becomes a certainty for a Group. "his

is the basis of &ll nsurance Bperations. "hus insurance convert

uncertainties to certainty

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)E*/"B/-

"he definition of insurance can be made from two points

*unctional definition.

Contractual definition.

*unctional definition

nsurance is a co'operative device to spread the loss caused by a particular

risk over a number of persons who are e#posed to it and who agree to insure

themselves against the risk.

General )efinition

nsurance has been defined to be that in which a sum of money as a premium

is paid in consideration of the insurers incurring the risk of paying a large

sum upon a given contingency.

n the words of Hohn $agee, Insurance is a plan by themselves

which large number of people associate and transfer to the shoulders of all,

risks that attach to individuals.J

*undamental )efinition

n the words of ).-. +ansell, Insurance accumulated contributions of all

parties participating in the scheme.J

Contractual )efinition

n the words of %ustice "indall, Insurance is a contract in which a sum of

money is paid to the assured as consideration of insurers incurring the risk

of paying a large sum upon a given contingency.J

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>orking of nsurance

Pre-Liberalization Scenario

ndian +istory "ime to turn the clock back'and open up insurance

*ifty years ago, ndia had a bustling, if somewhat chaotic, entirely private

insurance industry. "he year after ndependence, 39 life nsurance

companies were doing business worth ;s21.2 crore 6which grew to an

amazing ;s 9@,2@F crore in 199@'97. *oreign insurers had a large market

share =3 per cent for general insurance but there were also plenty of ndian

companies, many promoted by business houses like the "atas and )almias.

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"he first ndian'owned life insurance company, the !ombay $utual ife

&ssurance -ociety, was set up in 1F23 by si# friends. t nsured ndian lives

at the normal rates instead of charging a premium of 1@ to 3 percent as

foreign insurers did. ts general insurance counterpart, ndian $ercantile

nsurance Company td., opened in !ombay in 1932.

& plethora of insufficiently regulated players was a sure recipe for abuse,

especially because there was no separation between business houses and the

insurance companies they promoted. "he nsurance &ct, 198F, introduced

state controls on insurance, including mandatory investments in approved

securities, but regulation remained ineffective. n 19=9, urshottamdas

"hakurdas, chairman of the Briental &ssurance Company, admitted (>e

cannot deny that, today, there is a tendency on the part of insurance

companies in general to make illicit gains. Can we overlook the cutthroat

competition for ac0uiring businessK &nd still worse is the dishonest practice

of ad%usting of accounts.( &fter a 19@1 in0uiry, the government was

dismayed that companies had high e#pense and premium rates, were

speculating in shares, and giving loans regardless of security. /o wonder

that between 19=@ and 19@@, @ insurers went into li0uidation and @

transferred their business to other companies.

"his reckless record stoked the pro'nationalization fires. "he 19@ life

insurance /ationalization was a top'secret intrigueL for fear that

unscrupulous insurers would siphon funds off if warned. "he government

resolved to first take over the management of life insurance companies by

ordinance, then their ownership. "he then finance minister C.). )eshmukh

later wrote


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opportunity. >e were ready to nationalize, with every detail worked out.(

Bn 19 Hanuary 19@, the news was announced on the radio, though even the

director' general of &; was not shown the speech. "he ne#t morning, at 9

am, while e#ecutives were frantically seeking details over the trunk

telephone, says )eshmukh in his autobiography, our officers walked into the

respective insurance offices, showed their authority and then took over the

business. believe this will be regarded as one of the best kept secrets of the

Government of ndia in all times to come.( "he ordinance transferred control

of =@ insurers to the government. C, established eight months later, took

over their ownership. General nsurance had its turn in 192, when 132

insurers were amalgamated into four companies head0uartered in the four

metros, with GC as a holding company. /ationalization brought some

benefits. nsurance spread from an urban'oriented, high'end business to a

mass one. "oday, =F per cent Bf C


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ost iberalization -cenario

>hile no aspect of the reform process in ndia has gone smoothly since its

inception in 1991, no individual initiative has stirred the proverbial hornets<

nest as much as the proposal to liberalize the country


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Chapter

"rends in nsurance -ector

/)&/ /-:;&/CE / 1-" CE/":;A

333 ;)& starts giving licenses to private insurers CC prudential and

+)*C -tandard ife insurance first private insurers to sell a policy

331 ;oyal -undaram &lliance first non life insurer to sell a policy

33 !anks allowed selling insurance plans. &s "&s enter the scene,

insurers start setting non'life claims in the cashless mode

332 *irst Bnline nsurance portal, httpsMMM set up by an ndian nsurance

!roker, !onsai nsurance !roking vt td.

"he Government of ndia liberalized the insurance sector in $arch 333

with the passage of the nsurance ;egulatory and )evelopment &uthority

6;)&7 !ill, lifting all entry restrictions for private players and allowingforeign players to enter the market with some limits on direct foreign

ownership.

$inimum capital re0uirement for direct life and /on'life nsurance

company is /;1333 million and that for reinsurance company is /; 333

million. n the 33='3@ budgets, the Government proposed for increasing the

foreign e0uity stake to =9?, this is yet to be effected. :nder the current

guidelines, there is a percent e0uity cap for foreign partners in direct

insurance and reinsurance Company.

1=


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Growth of nsurance

G;B>"+ B* *E /-:;&/CE -B$E *&C"- 6$&A 31=7

Global Indutr! Statitic

1@

+B> "+EA -"&CN :

remium income of life insurers in ;s crore

&pril ' Hune Growth

?

"otal

-hare 6?7332 33F

C [email protected]= 2@=.@ '1 @.@@

CC rudential 13@.=@ 1,@93.2 @1 11.11

!a%a% &llianz 281.F@ F9.= 18 @.29-! ife =.89 1,1=F.2 19 F.3

+)*C -tandard 8@@.98 =93.=3 8F 8.=

$a# /ew Aork F9.2= @31.1 28 8.@3

;eliance ife 3=.13 @@2.88 128 8.F9

!irla -un ife 12=.8 @31.@8 1F2 8.@3

"otal rivate 8983.9@ ,29@.= 28 =2.=@

"otal $arket [email protected] 1=,83.3 1= 133.33

Emerging $arkets

6"otal remium, figures in Obillion7

"aiwan 12.8 China 18.=

ndia 2. +ong Nong .1 srael @.F -ingapore @.3


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resent -cenario of the nsurance -ector in ndia

&s per the findings of a survey carried out in 338'3=, the ndian insurance

market ranked @th in the &sian continent after Hapan, -outh Norea, China 4

"aiwan, and 19th

n ndia, the process of liberalization and opening of insurance sector to

private and foreign players started taking shape as part of the series of financial and economic reforms brought in by the Government in the late

1993s, in accordance with the recommendations made by ;. /. $alhotra

Committee constituted by the Government in &pril 1998. !y amending the

relevant provisions of the nsurance &ct, 198F, and passing the ;)& &ct,

1999, by an &ct of arliament, nsurance ;egulatory and )evelopment

&uthority 6;)&7 was established in the year 333, which marked the

opening act of the insurance sector to private participation and foreign

investment.

G) 4 nsurance

"hough potentially insurance is more than ;s. @33 !illion business in ndia,

and together with banking, it adds slightly more than 2.@? to the G), of

the country, the gross premium collection has been hardly ? of the G),

not withstanding its growth between 1@'3? annually, during the decade

preceding the opening up of insurance market for private and foreign players

in the year 333. &s the insurance premium database of various developed

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and developing countries for the year 1999 indicates, the per capita premium

of ndia was %ust around O F as against the same having been very high in the

developed countries. n other words, and in terms of percentage of G), it

was 1=? for Hapan, 1? for Norea and 9? for :N as against the same

staggering below ? for ndia for the fiscal year 333'331.

n the new economic reality in globalization, insurance companies in 1st

century face a dynamic global business environment. ;adical changes are

taking place owing to the internationalization of activities. "he appearance

of new risks, new types of cover to match with new risk situation,

unconventional and innovative ideas on customer service, low growth rates

in developed markets, changing customer needs and the uncertain economic

conditions in the developing world are e#erting pressure on insurers

resources while testing their ability to survive. "he e#isting insurers are

facing difficulties from non'traditional competitors that are entering the

retail market with new approaches and through new channels. "he basic

premise of globalization is opening up of new service markets to provide the

developing countries with new opportunities for the e#pansion of trade and

economic growth.

"he rapidly changing economic scene, the political attitude, social values

and structures, cultural patterns, developments in " have transformed

lifestyles in urban and rural areas. )evelopments in other parts of the world,

which are witnessing sweeping changes in terms of convergence of financial

and insurance markets through banc assurance, replacement of reinsurance

contracts by financial instruments, sale of insurance through mergers and

ac0uisitions will also have their impact on ndian nsurance ndustry.)uring

the long monopoly regime, the government attempted minor changes in the

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procedures without going into the root cause. "he deregulation re0uires

comprehensive changes in the character and basic policies of the industry.

"ill the year 333, the insurance industry was a government monopoly

and is now e#periencing cut'throat competition because a number of players

have entered into the ndian market in the form of Hoint ventures with ndian

private sector partners.

Conse0uently, ndian nsurance ndustry has closely integrated with

world economy thereby making crucial for insurance companies to operate

outside national boundaries.

India Insurance sector a%ter $lobali+ation has bri$hter %uture. The

econoic status o% people is chan$in$. o any ne" $o#ernent policies

and econoic re%ors are ipetus %or insurance sector. The %iraent o%

econoic $ro"th is #ast and ne#er endin$ but the insurance as a bird ha#e

to %ly. -o doubt insurance arket a%ter $lobali+ation is A %lyin$ bird/

"EC+/BBGA ";E/) / /-:;&/CE $&;NE" &;E &- *BB>-

1F


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Computerization

nitially, in the late 19@3s the insurance companies used :nit ;ecord

$achines 6Electro $agnetic $achines7 to process data punched into cards.

Computers were introduces in the mid 193s and by the 19F3s the :nit

hased $achines were phased out and the entire process was computerized.

"his brought about greater efficiency and 0uick service delivery

nternet

"oday, the internet has completely changed the service delivery process.nternet is today used to even sell insurance policies. nternet is, in fact,

proving to be one of the widely used distribution networks for selling

insurance policies. &lso internet is used for sending premium notices to

policy holders through e'mails

Companies like C 6www.licindia.com7, CC

6www.iciciprudential.com7 all have websites from which people can get the

information about their products, prices, various schemes, and lots of other

information. eople can also purchase the product through this website.

Electronic Clearance -ervice 6EC-7

19

http://www.licindia.com/http://www.iciciprudential.com/http://www.licindia.com/http://www.iciciprudential.com/


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&lmost all the big organizations today provide the EC- facility to its

customers. & policy holder having an account in any bank which is a

member of the local clearing house can opt for EC- debit to pay premiums.

"he advantage here is that once the option is e#ercised, the policy holder

need not visit a branch for paying the premium or collecting the receipts. Bn

the day indicated by the policy holder, the premium amount will be directly

debited to the bank account of the policyholder and the receipt will be issued

by the designated branch office.

Call Centres and -$- services

&lmost all the insurance companies have their own call centres which

cater to the phone based 0ueries of the policyholders. "his service is =#2

and they have the nteractive 5oice ;esponse 65;7 systems at all the

branches

Globalization of ife nsurance $arket

-B$E GE/E;& /*B;$&"B/ &!B:" *E /-:;&/CE /

/)&

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Li"e Inurance

G) penetration of =.1?

-ignificant channel for household savings into capital formation

nd largest financial service in after ban

"otal &ssets :nder $anagement of ife nsurance Cos. as on $arch 81, 33F' ;s. F,@3,333 crores

"otal number of lives insured and on books as on $arch

atutory re0uirements to provide reach to rural areas

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"he ife nsurance market in ndia is an underdeveloped market that was

only tapped by the state owned C till the entry of private insurers. "he

penetration of life insurance products was 19 percent of the total =33 million

of the insurable population. "he state owned C sold insurance as a ta#

instrument, not as a product giving protection. $ost customers were under'

insured with no fle#ibility or transparency in the products. >ith the entry of

the private insurers the rules of the game have changed.

"he 1 private insurers in the life insurance market have already

grabbed nearly 9 percent of the market in terms of premium income. "he

new business premium of the 1 private players has tripled to ;s 1333 crore

in 33' 38 over last year. $eanwhile, state owned C


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linked insurance schemes they have a virtual monopoly, with over 93

percent of the customers.

"he private insurers also seem to be scoring big in other ways' they

are persuading people to take out bigger policies. *or instance, the average

size of a life insurance policy before privatisation was around ;s @3,333.

"hat has risen to about ;s F3,333. !ut the private insurers are ahead in this

game and the average size of their policies is around ;s 1.1 lakh to ;s 1.

lakh' way bigger than the industry average.

!uoyed by their 0uicker than e#pected success, nearly all private insurers

are fast' forwarding the second phase of their e#pansion plans. /o doubt the

aggressive stance of private insurers is already paying rich dividends. !ut a

re%uvenated C is also trying to fight back to woo new customers

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$arket -hare of rivate -ector life nsurance Companies

Chapter 8

mpact of !udget on nsurance -ector

=


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$&C" B* !:)GE" 33=

"he finance ministers reform to strengthen risk management in banking "he

*inance !ill has some brilliant promises to offer and yet there are adverse to

the financial service sector.

"he decision to permit =9 per cent foreign direct investment 6*)7 in

insurance is welcome. "he industry will agree that there is an acute need for

it to grow and to write more business. f one were to analyze the growth of

some new private sector insurance players the underlying strength seems to

be their ability to get more capital and meet the solvency re0uirement

perform, write more business and grow faster. ets not forget that these

insurance companies will be able to tap the capital market in two to three

years.

"he best performer in the sector have also e#panded their capital to about

;s. 233 to F33 crore. & look at the non performers suggests that they do not

have ade0uate capital to grow. +ence the increase in the *) limit would

help. $ore importantly, this will give greater control to the foreign partners

in areas of management control and governance. "hey will now be more

willing to bring in their e#pertise in product development, technology, and

implement best practices.

"he striking future of the *inance !ill is that the government has accepteddefined contribution as the way forward for pension reforms, particularly for

new government employees.

Bne could have e#pected some clarity on the sub%ect of multiple regulators

for pension. "hough there be some benefits having a separate pension

@


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regulator, one supposes that there would be a strong case for %ust one

regulator both the pension and insurance sectors. "he government must

e#amine the confusion that may arise on account of having multiple

regulators.

!anking and insurance companies are significant players in the securities

market today. $idsize public sector banks may have made a turnover of

about ;s. =3,333 crore on securities trade and larger banks would have made

two to three times the number. "he transaction ta# of a 3.1@ per cent would

certainly eat away a good part of banks profits.

ikewise, all services rendered by banks 6e#cept the fund based assistances7

would attract service ta#. !anks would be able to conveniently pass on some

of these costs to the customers. -o, each time an individual goes and gets a

demand draft or pay order, they will end up paying much more than the

e#isting rates. +owever, if competition becomes acute, banks would have to

bear it, which is bad news for the banking companies.

Chapter =


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rivate 5M- ublic nsurance -ector

;5&"E 5M- :!C /-:;&/CE -EC"B;

rivate players in the life insurance business are growing at a scorching

pace. >ithin three years of their inception, they have seized about 1= per

cent of the market.

Compare this to new generation private'sector banks, which took nine years

for 3 per cent share in the ndian banking industry. &nd after seven years in

the industry, in 333, private mutual funds accounted for %ust 9 per cent of a

market that had been dominated by the :nit "rust of ndia.

"herehile the private

insurance companies have attained 18 to 1= per cent share of the overall

insurance market, their share in the key metros 6$umbai and )elhi7 is as

high as 83 to =3 per cent.

(>e have to struggle to complete a deal in the metros now, because

policyholders are comparing products and asking for better deals,( says - !

$athur, chairman of the ife nsurance Corporation of ndia.

rivate insurance companies are essentially %oint ventures with global

insurance companies holding a ma#imum of per cent stake. "he foreign

partners are investing heavily in the ndian market and, thereby, driving

sales, because they see ndia emerging as one of the biggest markets in the

&sian region.

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(ndia will become the biggest market for us in the ne#t three to four years,(

predicts )an !ardin, rudential Corporation &sia managing director south

&sia and greater China.

rivate players have certainly done their bit to increase the penetration levels

of insurance, mainly by creating alternative distribution channels''such as

associations with banks, brokers and corporate agents.

(Bur bancassurance channel''with tie'ups with four banks''contributes

almost 23 per cent of our total sales,( says &viva CEB -tuart urdy.

B$ Notak $ahindra ife, which is ranked eighth among private players, is

also leaning towards alternative distribution channels that will contribute to

=@ per cent of total sales, in line with the contribution from its tied agency

force.

n sharp contrast, most of the C


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power, this has fuelled growth opportunities for us,( says $a# /ew Aork

ife CEB &nuroop "ony -ingh.

&$ -anmar, another private player, has tied up with various chit funds and

transport finance companies in the country, where it is selling life policies on

the back of fi#ed deposits and bonds. & senior company official cites the

e#ample of 5i%aywada where a significant portion of the income is derived

from farming activities.

("he rural populace is managing their money well and no longer keeping it

under their beds. "hey have mobile phones and have opened bank accounts."hey are not very different from their urban counterparts when it comes to

purchasing life insurance covers,( he points out.

&nd thate Pprivate insurersQ are becoming an alternative to C.

f a customer has already bought an C plan, his second policy is likely to

be bought by the private insurance sector on account of various reasons''

more specifically fle#ibility and transparency,( says B$ Notak $ahindra

ife CEB -hiva%i )am.

erhaps this partly e#plains why the C has increased its advertising spend

multifold since the insurance sector was privatized. ts ad spend more than

doubled to ;s F1 crore 6;s F13 million7 in fiscal 338, against ;s 82 crore

6;s 823 million7 in 1999'333, prior to the industry being privatized.

Bf course, the private insurance sector has also been steadily increasing its

ad spend, from ;s 9 crore 6;s 93 million7 in fiscal 331 when the industry

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opened up, to ;s 9 crore 6;s 93 million7 the following year. n fiscal

338, private insurers spent ;s 1=8 crore 6;s 1.=8 billion7 on advertising.

!ut it


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&G


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*/)/G-

"he advantage with unit'linked plans is that they offer policyholders

transparency in terms of costs, annual returns and bonus calculations. >ith

many companies guaranteeing the capital investment 6some like !irla -un

ife even guarantee 8 per cent assured returns on its unit'linked plans7, the

interest in unit'linked plans only increased.

&nd the switch from traditional products to unit'linked plans gained

momentum as the -ense# climbed higher the returns on such policies are

linked to the e0uity market.

("he stock market has helped to a certain e#tent and has contributed to our

growth and performance,( agrees !irla -un ife CEB /ani Haveri.

&viva has shown a compounded aggregate growth rate of 8 per cent since

the inception of its fund. ;eturns on B$ Notak


33/33

CB/C:-B/

"he huge and ever rising population levels in our country provide

anattractive opportunity for the global insurance ma%ors to seek

their fortunes here. "hat is the reason why we find so many private

playerstoday competing with C the only life insurer prior to liberalization

of out economy, for insuring ndian lives. n spite of the loud noises made by

the various companiesR vying for a slice of the large ndian nsurance pie,

the irony is that even today not more than 3? of the population of out

country is aware about the very basic concepts regarding ifensurance. "his

is the precisely the reason why we see a mandatory tagtoday with every

advertisement that advertises for a insurance product,that goes S/-:;&/CE -

"+E -:!HEC" $&""E; B*-BC"&"B/T. "he /-:;&/CE

;EG:&"B;A)E5EB$E/" &:"+B;"A B* /)& 6;)&7 is

aware of thefact that many ndian consumers can be taken for a ride by fly

by nightoperators who could seek to sell insurance as a pure

investmentinstrument and make good with their hard earned money,

promisingthem huge returns.

emergining trend in insurance

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