entry of private players1111

8/6/2019 Entry of Private Players1111.

1/21


2/21

LIFE INSURERS

Public Sector

Life Insurance Corporation of India

Private Sector

Allianz Bajaj Life Insurance

Company Limited,

Birla Sun-Life Insurance Company

Limited,

HDFC Standard Life Insurance Co.Limited,

ICICI Prudential Life Insurance Co.

Limited,


3/21

ING Vysya Life Insurance Company Limited,Max New York Life Insurance Co. Limited,

MetLife Insurance Company Limited,

Om Kotak Mahindra Life Insurance Co. Ltd.

SBI Life Insurance Company Limited

TATA AIG Life Insurance Company Limited,AMP Sanmar Assurance Company Limited,

Dabur CGU Life Insurance Co. Pvt. Limited,

GENERAL INSURERS

Public Sector

National Insurance Company Limited

New India Assurance Company LimitedOriental Insurance Company Limited

United India Insurance Company Limited


4/21

PRIVATE SECTORBajaj Allianz General Insurance Co. Limited

ICICI Lombard General Insurance Co. Ltd.

IFFCO-Tokio General Insurance Co. Ltd.

Reliance General Insurance Co.Limited

Royal Sundaram Alliance Insurance Co. Ltd.

TATA AIG General Insurance Co. Limited

Cholamandalam General Insurance Co. Ltd.

Export Credit Guarantee Corporation

HDFC Chubb General Insurance Co. Ltd.

REINSURER

General Insurance Corporation of India


5/21

Indian insurance sector to touch Rs.20 bn mark

by 2010August 15th, 2008 - 12:59 pm ICT by IANS (INDIAN ASIAN NEWS

SERVICE)

New Delhi, Aug 15 (IANS) Indias insurance business will reach a level

of Rs.20 billion in the next two years from the current level of Rs.500

billion, according to an industry lobby. A growth of over 200 percent

is likely to be seen in Indian insurance business by 2009-10 in which

private insurance business would grow at 140 percent in view ofaggressive marketing techniques, said a report by the Associated

Chambers of Commerce and Industry of India (Assocham).


6/21

The state-owned insurance companies growth rate

will be 35-40 percent, the study said.

According to Assocham, in the last couple of years, the

insurance sector had grown by 175 percent and thetrend will emerge still better because of huge potential.


7/21

On account of intense marketing strategies adopted

by private insurance players, the market share of state-

owned insurance companies like GIC (General

Insurance Corp), LIC (Life Insurance Corp) and others

have already come down to 70 percent in last four-five

years from over 97 percent, and more intense

competition is likely to be witnessed in the nearfuture, Assocham president Sajjan Jindal said.


8/21

The private insurance players entry into insurancesector is still restricted since India has yet to open it up

liberally. But even then, their rate of return to their

subscribers and policy holders is estimated at about 35

percent against 20 percent of domestic insurancecompanies, Jindal added.

Moreover, the state-run companies have limited

number of policies to offer to their subscribers while the

private players offer many more policies with premium

amount and maturity period, he added.


9/21

Interestingly, the private sector insurance playershave started exploring the rural markets in which

until recently the state-run companies had the

monopoly.

The chamber has projected that in rural markets, the

share of private insurance players would increase

substantially.At present, Indias life insurance premium, as a

percentage of GDP, was 1.8 percent against 5.2

percent in the US, 6.5 percent in Britain and eight

percent in South Korea.


10/21

IRDA ACT 1999This Act was passed by Parliament in December 1999 and it

received presidential assent in Jan.2000.it provides for establishment

of the Authority to protect the interest of holders of Insurancepolicies to regulate promote ,and ensure orderly growth of insurance

industry and for matters connected therewith or incidental thereto.

Under this act, an authority called IRDA has been established

which replaces controller under Insurance Act 1938


11/21

As per section 2 of the Act various terms have been defined as

follows:

(a) Appointed day means the date on which theAuthority is established

(b) Authority means the Insurance Regulatory and

Development Authority

(c) Chairperson means the chairperson of the Authority

(d) Fund means the Insurance Regulatory andDevelopment Authority Fund

(e) Interim Insurance Regularity Authority means the

Insurance Regularity

Authority set up by the Central Government through

Resolution No.17(2)/94- Insurance v, dated the 23rd January, 1996


12/21

(f) Intermediary or Insurance Intermediary includes

Insurance brokers, reinsurance brokers, insurance consultants, surveyors

and loss assessors

(g) Member means a whole time or a part time member of the

Authority and Includes the Chairperson

(h) notification means prescribed by rules made under in

the Official Gazette(i) prescribed means prescribed by rules made under this Act

(j) regulations means the regulations made by the Authority


13/21

The Authority shall be body corporate by the aforesaid name having perpetual

succession and a common seal with power to enter into a contract and sure

or be sued.The Authority shall consist of the following members namely:

(a) Chairperson

(b) Not more than 5 whole time members

(c) Not more than 4 part time members to be appointed by the Central Govt.

from amongst persons of ability, integrity and standing who have knowledgeor experience in life insurance, general insurance, actuarial science, finance,

economics, law accountancy, administration or other discipline which would

in the opinion of the Central Govt. be useful to the Authority (section 4).


14/21

The Chairman tenure will be for 5 years and he will be

eligible for reappointment till he attains the age of 65 years.

The appointment of members will be for 5 years and

they will be eligible for reappointment till he attains the age

of 65 years.

The Central Government can remove any member of theAuthority under section 6 of the Act if he is:

(a) Adjudged as an insolvent

(b) Has become physically or mentally incapable of

acting as a member

(c) Has been convicted


15/21

(d) Has acquired such financial or other interest which

affect prejudicially his function as a member

(e) Has so abused his position as to render his continuation

in office detrimental to the public interest.

The salary and allowance to the members will be

prescribed by the government (section 7).According to section 8 of the Act the chairperson

and the whole time members cannot accept any

appointment without Govt. approval within 2 years from

the date on which he ceased to be in office.

As per Section 9 of the Act the Chairperson shall

have the powers of general superintendence and

direction in respect of all administrative matters of

Authority.


16/21

Powers and Functions of the authority shall

include(a) issue to the applicant a certificate of registration, renew, modify,withdraw, suspend or cancel such registration;

(b) Protection of the interests of the policy holders in matters

concerning assigning of the policy, nomination by policy holders,

insurable interest, settlement of insurance claim, surrender value

of policy and other terms and conditions of contracts of

insurance;

(c) Specifying requisite qualification, code of conduct and practical

training for the intermediary or insurance intermediaries andagents;

(d) Specifying the code of conduct for surveyors and loss assessors;

(e) Promoting efficiency in the conduct of insurance business;


17/21

(f) Promoting and regulating professional organisations connected

with the insurance and reinsurance business;

(g) Levying fees and other charges for carrying out the purposes ofthis act;

(h) Calling for information from, undertaking inspection of,

conducting enquiries and investigations including audit of the

insurers, intermediaries, insurance intermediaries and other

organisations connected with insurance business;

(i) Control and regulation of the rate, advantage, terms and

conditions that may be offered by insurers in respect of general

insurance business not so controlled and regulated by the Tariff

Advisory Committee under section 64U of the InsuranceAct,1938(4 of 1938);

(j) Specifying the form and manner in which books of account shall

be maintained and statement of accounts shall be rendered by

insurers and other insurance intermediaries;


18/21

(k) Regulating investment of funds by insurance

companies;

(l) Regulating maintenance of margin of solvency;(m) Adjudication of disputes between insurers and

intermediaries or insurance intermediaries;

(n) Supervising the functioning of the Tariff Advisory

(o) Specifying the percentage of premium income of the

insurer to finance schemes for promoting and regulatingprofessional organizations referred to in clause (f);

(p) Specifying the percentage of life insurance business

and general insurance business to be undertaken by the

insurer in the rural or social sector; and

(q) Exercising such other powers as may be prescribed.


19/21

Impact of the Opening Up of the Insurance SectorOn October 23, 2000, the Government of India created history once

again through the IRDA, by returning insurance business to privatecompanies which had been abolished way back in 1956. At that time

LIC was the only corporation providing life insurance to the people of

this country. Although its own business grew, the people it sought to

serve remained largely unsatisfied and unhappy. As the Indianpopulace grew, the LIC also grew, but there was also an increasing

clamour for removing the monopoly of the LIC. People basically

wanted better service and a wider range of products. But LIC failed

on both counts. Despite these shortcomings, LIC continued to grow

on account of four factors, viz. the sheer need for insurance, the taxbenefits it gave taxpayers, the savings factor and its monopoly status.


20/21

Before market liberalization, LIC sold mostly savings with

premiums being tax-deductible in the hands of theconsumers. Protection business was a relatively small

proportion of its total business and riders were not popular.

Not surprisingly, the new companies have introduced a wider

range of products along with more need-based selling

techniques. Some companies are selling protection plans in

abundance. Most companies are offering a choice of riders,

covering benefits such as accidental death, critical illness,

waiver of premium, total and permanent disability, and

guaranteed insurability. Several of the new players havealready launched unit-linked products. For instance, Birla

Sunlifes portfolio has unit-linked products which incorporate

certain guarantees.


21/21

Before liberalization, distribution was entirely via agencies. The

focus of many of the entrants has been to implement multi-

channel strategies, including a significant bancassuranceelement. An interesting development has been the proactive

response ofLIC to its competitors. The private players are

bringing international experience, new technology, new

channels of distribution and new products. The ground rules in

the insurance business are being redefined. The existing publicsector players are gearing up with matching strategies so as to

face the competition. The majority of insurance companies

today are under tariff. This means that insurance companies

cannot price the product to suit the customer or customer

group. The way to serve the customer is to segment the market

and offer the correct product at the correct price to that market

segment.

entry of private players1111

Documents