Insurance Business Environment In India s4q

UNIVERSITY OF MUMBAI T.Y.B.B.I (VI - SEMESTER) A PROJECT ON

“INSURANCE BUSINESS ENVIRONMENT IN INDIA” ACADEMIC YEAR 2015 – 2016 BY CHIRAG BOHRA ROLL NO: 152 PROJECT GUIDE Prof. SHWETA PANDEY MALINI KISHOR SANGHVI COLLEGE OF COMMERCE & ECONOMICS VILE PARLE (W), MUMBAI

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DECLARATION I Mr. Chirag Bohra, Student of Malini Kishor Sanghvi College of Commerce & Economics studying in T.Y. B.Com (Banking and Insurance) Semester VI, hereby declare that I have completed the project on “INSURANCE BUSINESS ENVIRONMENT IN INDIA” in the academic year 2015-2016. The information submitted herein is true and original to the best of my knowledge.

Date of Submission

Signature of Student (Mr. Chirag Bohra)

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CERTIFICATE This is to certify that Mr. Chirag Bohra of T.Y. B.Com (Banking & Insurance) – Semester VI of Malini Kishor Sanghvi College of Commerce and Economics has successfully completed the project on “INSURANCE BUSINESS ENVIRONMENT IN INDIA” for the academic year 2015-2016. The information submitted is true and original to the best of my knowledge.

Signature of Principal

Signature of Project Guide

(Dr. Krushna Gandhi)

(Prof. Shweta Pandey)

Signature of Co-ordinator (Prof. Shweta Pandey)

College seal

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Signature of External Examiner

ACKNOWLEDGEMENT I would like to thank Malini Kishor Sanghvi College of Commerce & Economics & the faculty of BBI for giving me an opportunity to prepare a project on “INSURANCE BUSINESS ENVIRONMENT IN INDIA”. It has truly been an invaluable learning experience. Completing a task is never one man’s efforts. It is often the result of invaluable contribution of number of individuals in direct or indirect way in shaping success and achieving it. I would like to thank principal of the college Dr. (Mrs.) Krushna Gandhi and Co-ordinator Prof. Shweta Pandey for granting permission for this project. I would like to extend my sincere gratitude and appreciation to Prof. Shweta Pandey who guided me in the study of this project. It has indeed been a great learning, experiencing and working under him during the course of the project. I would like to thank the librarian of the college for helping me in finding out the relevant material for my project. I would like to appreciate all my colleagues and family who gave me and backing and always came forward whenever a helping hand was needed. I would like to express my gratitude to all those who gave me the possibility to complete this thesis.

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EXECUTIVE SUMMARY

The service industry is one of the fastest growing sectors in India today. The sectors which are really showing the graph towards upwards are - Telecom, Banking, and Insurance. These sectors really have a lot of responsibility towards the economy. Amongst the above-mentioned areas insurance is one sector, which took a lot of time in positioning itself. The insurance business of non-life companies was not much in problems but the major problem was with life insurance. Life Insurance Corporation of India had monopoly for more than 45 years, but the picture then was completely different. Previously people felt that “Insurance is only for classes not for masses” but now the picture is viceversa.

The story of insurance is probably as old as the story of mankind. The same instinct that prompts modern businessmen today to secure themselves against loss and disaster existed in primitive men also. They too sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Though the concept of insurance is largely a development of the.00000000 recent past, particularly after the industrial era – past few centuries – yet its beginnings date back almost 6000 years.

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TABLE OF CONTENTS SR. NO

TOPIC

PAGE NO.

1 2 3 4 5 6 7 8 9 10 11 12

INTRODUCTION HISTORY LIMITATIONS STRUCTURE INSURANCE INDUSTRY IN INDIA TYPES OF INSURANCE NEED OF INSURANCE INSURANCE IN INDIA HOW INSURANCE WORKS INTRODUCTION TO LIFE INSURANCE LIFE INSURANCE CORPORATION OF INDIA BAJAJ ALLIANZ LIFE INSURANCE COMPANY

7 9 12 14 16 17 19 20 23 27 28 30

13 14 15 16 17

LIMITED ICICI PRUDENTAL LIFE INSURANCE COMPANY GENERAL INSURANCE IN INDIA HEALTH INSURANCE IN INDIA PRESENT SCENARIO IN THE INSURANCE SECTOR MAJOR PLAYERS IN THE INSURANCE INDUSTRY

31 33 51 55 56

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IN INDIA DISTRIBUTION CHANNELS IN INSURANCE

58

19 20

SECTOR CONCLUSION BIBLIOGRAPHY

59 60

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INTRODUCTION

Insurance is defined as a co-operative device to spread the loss caused by a particular risk over a number of persons who are exposed to it and who agree to ensure themselves against that risk. Risk is uncertainty of a financial loss. Insurance is a policy from large financial institutions that offers a person, company, or other entity reimbursement or financial protection against possible future losses or damages.

MEANING OF INSURANCE The meaning of insurance is important to understand for anybody that is considering buying an insurance policy simply understanding the basics of finance. Insurance is a hedging instrument used as a precautionary measure against future contingent losses. This instrument is used for managing the possible risks of the future. Insurance is bought in order to hedge the possible risks of the future which may or may not take place. This is a mode of financially insuring that if such a incident happens then the loss does not affect the present well-being of the person or the property insured. Thus, through insurance, a person buys security and protection. A simple example will make the meaning of insurance easy to understand. A biker is always subjected to the risk of head injury. But it is not certain that the accident causing him the head injury would definitely occur. Still, people riding bikes cover their heads with helmets. This helmet in such cases acts as insurance by protecting him/her from any possible danger. The price paid was the possible inconvenience or act of wearing the helmet; this is equivalent to 7 | Page

the insurance s paid. Though loss of life or injuries incurred cannot be measured in financial , insurance attempts to quantify such losses financially. Insurance can be defined as the process of reimbursing or protecting a person from contingent risk of losses through financial means, in return for relatively small, regular payments to the insuring body or insurance company.

HISTORY

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In India, insurance has a deep-rooted history. Insurance in various forms has been mentioned in the writings of Manu (Manusmrithi), Yagnavalkya (Dharmashastra) and Kautilya (Arthashastra). The fundamental basis of the historical reference to insurance in these ancient Indian texts is the same i.e. pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics and famine. The early references to Insurance in these texts have reference to marine trade loans and carriers' contracts. Insurance in its current form has its history dating back until 1818, when Oriental Life Insurance Company was started by Anita Bhavsar in Kolkata to cater to the needs of European community. The pre-independence era in India saw discrimination between the lives of foreigners (English) and Indians with higher s being charged for the latter. In 1870, Bombay Mutual Life Assurance Society became the first Indian insurer. At the dawn of the twentieth century, many insurance companies were founded. In the year 1912, the Life Insurance Companies Act and the Provident Fund Act were ed to regulate the insurance business. The Life Insurance Companies Act, 1912 made it necessary that the -rate tables and periodical valuations of companies should be certified by an actuary. However, the disparity still existed as discrimination between Indian and foreign companies. The oldest existing insurance company in India is the National Insurance Company , which was founded in 1906, and is still in business. The Government of India issued an Ordinance on 19 January 1956 nationalising the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The Life Insurance Corporation (LIC) absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. In 1972 with the General 9 | Page

Insurance Business (Nationalisation) Act was ed by the Indian Parliament, and consequently, General Insurance business was nationalized with effect from 1 January 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a company in 1971 and it commence business on 1 January 1973. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector. Before that, the industry consisted of only two state insurers: Life Insurers (Life Insurance Corporation of India, LIC) and General Insurers (General Insurance Corporation of India, GIC). GIC had four subsidiary companies. With effect from December 2000, these subsidiaries have been de-linked from the parent company and were set up as independent insurance companies: Oriental Insurance Company Limited, New India Assurance Company Limited, National Insurance Company Limited and United India Insurance Company Limited.

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TYPES OF INSURANCE

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C E

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LIMITATION OF INSURANCE

Some of the difficulties and limitations faced by me during my training are as follows:  Lack of awareness among the people – This is the biggest limitation found in this sector. Most of the people are not aware about the importance and the necessity of the insurance in their life. They are not aware how useful life insurance can be for their family if something happens to them.  Perception of the people towards Insurance sector – People still consider insurance just as a Tax saving device. So today also there is always a rush to buy an Insurance Policy only at the end of the financial year like January, February and March making the other 9 months dry for this business.  Insurance does not give good returns – Still today people think that Insurance does not give good returns. They are not aware of the modern Unit Linked Insurance Plans which are offered by most of the Private sector players. They are still under the perception that if they take Insurance they will get only 5-6% returns which is not true nowadays. Nowadays most of the modern Unit Linked Insurance Plans gives returns which are many times more than that of bank Fixed deposits, National saving certificate, Post office deposits and Public provident fund.  Lack of awareness about the earning opportunity in the Insurance sector – People still today are not aware about the earning opportunity that the Insurance sector gives. After the privatization of the insurance sector many private giants have entered the insurance sector. These private companies in order to beat the competition and to increase their Insurance Advisors to increase their reach to the customers are giving very high commission rates but people are not aware of that. 14 | P a g e

 Increased competition – Today the competition in the Insurance sector has became very stiff. Currently there are 14 Life Insurance companies working in India including the LIC (life insurance Corporation of India). Today each and every company is trying to increase their Insurance Advisors so that they can increase their reach in the market. This situation has created a scenario in which to recruit Life insurance Advisors and to sell life Insurance Policy has became very very difficult.

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INDUSTRY STRUCTURE By 2012 Indian Insurance is a US$72 billion industry. However, only two million people (0.2% of the total population of 1 billion) are covered under Mediclaim, whereas in developed nations like USA about 75% of the total population are covered under some insurance scheme. With more and more private companies in the sector, this situation is expected to change. ECGC, ESIC and AIC provide insurance services for niche markets. So, their scope is limited by legislation but enjoy some special powers.

Legal Structure The insurance sector went through a full circle of phases from being unregulated to completely regulated and then currently being partly deregulated. It is governed by a number of acts. The Insurance Act of 1938 was the first legislation governing all forms of insurance to provide strict state control over insurance business. Life insurance in India was completely nationalized on 19 January 1956, through the Life Insurance Corporation Act. All 245 insurance companies operating then in the country were merged into one entity, the Life Insurance Corporation of India. The General Insurance Business Act of 1972 was enacted to nationalize about 100 general insurance companies then and subsequently merging them into four companies. All the companies were amalgamated into National Insurance, New India Assurance, Oriental Insurance and United India Insurance, which were headquartered in each of the four 16 | P a g e

metropolitan cities.Until 1999, there were no private insurance companies in India. The government then introduced the Insurance Regulatory and Development Authority Act in 1999, thereby de-regulating the insurance sector and allowing private companies. Furthermore, foreign investment was also allowed and capped at 26% holding in the Indian insurance companies. In 2006, the Actuaries Act was ed by parliament to give the profession statutory status on par with Chartered ants, Notaries, Cost & Works ants, Advocates, Architects and Company Secretaries. A minimum capital of US$80 million (Rs.400Crore) is required by legislation to set up an insurance business.

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INSURANCE INDUSTRY IN INDIA The business of insurance started with marine business. Traders, who used to gather in the Lloyd’s coffee house in London, agreed to share the losses to their goods while being carried by ships. The losses used to occur because of pirates who robbed on the high seas or because of bad weather spoiling the goods or sinking the ship. The first insurance policy was issued in 1583 in England. In India, insurance began in 1870 with life insurance being transacted by an English company, the European and the Albert. The first Indian insurance company was the Bombay Mutual Assurance Society Ltd, formed in 1870. This was followed by the Oriental Life Assurance Co. in 1874, the Bharat in 1896 and the Empire of India in 1897. Later, the Hindustan Cooperative was formed in Calcutta, the United India in Madras, the Bombay life in Bombay, the National in Calcutta, the New India in Bombay, the Jupiter in Bombay and the Lakshmi in New Delhi. These were all Indian companies, started as a result of the swadeshi movement in the early 1900s. By the year 1956, when the life insurance was nationalized and the Life Insurance Corporation of India (LIC) was formed on 1 st September 1956, there were 170 companies and 75 provident fund societies transacting life insurance business in India. After the amendments to the relevant laws in 1999, the L.I.C. did not have the exclusive privilege of doing life insurance business in India. By 31.3.2002, eleven new insurers had been ed and has begun to transact life insurance business in India.

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Types of insurance  Automobile insurance

 Aviation insurance

 Boiler insurance

 Builder’s risk insurance

 Casualty insurance

 Disability insurance

 Liability insurance

 Marine cargo insurance

 Purchase insurance

 Credit insurance

 Crime insurance

 Crop insurance

 Directors and officers liability insurance

 Property insurance

 Terrorism insurance

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 Title insurance

 Travel insurance

 Workers’ compensation

 Life insurance

 Total permanent disability insurance

 Locked funds insurance

 Marine insurance

 Financial loss insurance

 Health insurance

 Professional indemnity insurance

 Environmental liability insurance

 Pet insurance

 Political risk insurance

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NEED OF INSURANCE Assets are insured, because they are likely to be destroyed, through accidental occurrences. Such possible occurrences are called perils. Fire, floods, breakdowns, lightning, earthquakes, etc, are perils. If such perils can cause damage to the asset, we say that the asset is exposed to that risk. Perils are the events. Risks are the consequential losses or damages. The risk to an owner of a building, because of the peril of an earthquake, may be a few lakhs or a few crores of rupees, depending on the cost of the building and the contents in it. The risk only means that there is a possibility of loss or damage. The damage may or may not happen. Insurance is done against the contingency that it may happen. There has to be an uncertainty about the risk. Insurance is relevant only if there are uncertainties. If there is no uncertainty about the occurrence of an event, it cannot be insured against. In the case of a human being, death is certain, but the time of death is uncertain. In the case of a person who is terminally ill, the time of death is not certain, though not exactly known. He cannot be insured. Insurance does not protect the asset. It does not prevent its loss due to the peril. The peril cannot be avoided through insurance. The peril can sometimes be avoided, through better safety and damage control management. Insurance only tries to reduce the impact of the risk on the owner of the asset and those who depend on that asset. It only compensates the losses – and that too, not fully. Only economic consequences can be insured. If the loss is not financial, insurance may not be possible. Examples of non-economic losses are love and affection of parents, leadership of managers, sentimental attachments to family heirlooms, innovate and creative abilities, etc. 21 | P a g e

INSURANCE IN INDIA

About 154 Indian insurance companies, 16 non-Indian companies and 75 provident were operating in India at the time of nationalization. Nationalization was accomplished in two stages; initially the management of the companies was taken over by means of an Ordinance, and later, the ownership too by means of a comprehensive bill. The Parliament of India ed the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of India was created on 1st September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost. LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the year 1956. Since life insurance contracts are long term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter. reorganization of LIC took place and large numbers of new branch offices were opened. As a result of re-organization servicing functions were transferred to the branches, and branches were made ing units. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 crores of New Business in 1957 the corporation crossed 1000.00 crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But with re-organization happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices, 7 zonal offices and the Corporate office. LIC’s Wide Area Network covers 100 divisional offices and connects all the branches through a Metro Area Network. LIC has tied 22 | P a g e

up with some Banks and Service providers to offer on-line collection facility in selected cities. LIC’s ECS and ATM payment facility is an addition to customer convenience. Apart from on-line Kiosks and IVRS, Info Centres have been commissioned at Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access to its policyholders, LIC has launched its SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the customer. The digitalized records of the satellite offices will facilitate anywhere servicing and many other conveniences in the future.

LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on a new growth trajectory suring its own past records. LIC has issued over one crore policies during the current year. It has crossed the milestone of issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the corresponding period of the previous year.

Insurance business in India are

1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning. 1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business. 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.

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1928: The Indian Insurance Companies Act 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 are 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.

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HOW INSURANCE WORKS

The mechanism of insurance is very simple. People who are exposed to the same risks come together and agree that, if any one of them suffers loss, the others will share the loss and make good to the person who lost. All people who send goods by ship are exposed to same risks, which are related to water damage, ship sinking, piracy, etc. Those owning factories are not exposed to these risks, but they are exposed to different kinds of risks like, firer, hailstorms, earthquakes, lightning, burglary, etc. Like this, different kinds of risks can be identified and separate groups made, including those exposed to such risks. By this method, the heavy loss that any one of them may suffer is divided into bearable small losses by all. In other words, the risk is spread among the community and the likely big impact on one is reduced smaller manageable impacts on all.

Insurance as a Security Tool The United Nations Declaration of Human Rights 1948 provides that “Everyone has a right to standard of living adequate for the health and well being of himself and his family, including food, clothing, and housing and medical care and necessary social service and the right to security in the event of unemployment, sickness, disability. Life insurance provides such an alternate arrangement. If this did not happen, another family will be pushed into the lower strata of society. The lower strata create a cost on society. Life insurance tends to reduce such a cost. In this sense, the life insurance business is complimentary to the states efforts in the social management. In a capitalist society provision of security is largely left to the individual. Insurance is one of them to provide social security by state under some schemes.

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Role of Insurance in Economic Development For economic development investments are necessary. Investments are made out of savings. A life insurance is a major instrument for the mobilization of savings, particularly from the middle and lower income groups. This savings are channeled into investments for economic growth. Major Market Players in India Presently there are 15 Life insurance companies in the country. There is only one public sector company LIC and the rest 14 are private sector. Although LIC has been dominating the Life Insurance business since past few years the private players have now started to build up momentum. HDFC – Standard Life HDFC Standard is a 74:26 t venture between HDFC and Standard Life. It is a private sector company. The market share for FY 2005-06 was 2.87%. Birla Sun Life Insurance Company Birla Sun Life Insurance Company is a 74:26 t venture between Birla group and Sun Life Financial. It is a private sector company. The market share for FY 2005-06 was 1.89%. ICICI Prudential Life Insurance ICICI Prudential Life is a 74:26 t venture between ICICI and Prudential. It is a private sector company. The market share for FY 2005-06 was 7.35%. Life Insurance Corporation of India (LIC)

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Life Insurance Corporation of India is a 100% government held Public Sector Company. Being the first to be established LIC is the forerunner in the Life Insurance sector. The market share for FY 2005-06 was 71.44%. Kotak Mahindra OLD Mutual Kotak Mahindra OLD Mutual is a 74:26 t venture between Kotak Mahindra bank and Old Mutual. It is a private sector company. The market share for FY 2005-06 was 1.11%. Max New York Life Max New York Life is a 74:26 t venture between J & Bank, Pallonji & Co and MetLife. It is a private sector company. The market share for FY 2005-06 was 1.23%. Aviva Life Insurance India Aviva Life insurance is a 74:26 t venture between Aviva and Dabur. It is a private sector company. The market share for FY 2005-06 was 1.14%. ING Vysya Life insurance ING Vysya Life Insurance is t venture between Exide (50%), Gujarat Cements (14.87%), Enam (9.13%) and ING (26 %). It is a private sector company. The market share for FY 2005-06 is 0.79%. MetLife India MetLife India is a 74:26 t venture between J & K Bank, Pallonji & Co and MetLife. It is a private sector company. The market share for FY 2005-06 was 0.40%. Bajaj Allianz Life Insurance Co 27 | P a g e

Bajaj Allianz Life Insurance Company is a 74:26 t venture between Bajaj Auto limited and Allianz AIG. The market share for FY 2005-06 was 7.56%. SBI Life Insurance Company Ltd SBI Life Insurance Company is a 74:26 t venture between SBI and Cardiff S.A. It is a private sector company. The market share for FY 2005-06 was 2.31%.

TATA AIG Group TATA AIG group is a 74:26 t venture between Tata Group and AIG. It belongs to the private sector. The market share for FY 2005-06 was 1.29%. Sahara India Life Insurance Company Ltd First Wholly Indian Owned Private Life Insurance Company. The market share for FY 2005-06 was 0.06 %. Shriram Life Insurance Company Ltd Shriram Life is a recent entrant into the life insurance sector It is a 74:26 t venture between the Shriram group through its Shriram Financial Holdings and Sanlam Life Insurance Limited, South Africa

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INTRODUCTION OF LIFE INSURANCE Life insurance is designed to protect life and to product family against financial uncertainties that may result due to unfortunate demise or illness. It can also view as a comprehensive financial instrument, as a part of the financial planning offering savings & investment facilities along with cover against financial loss. By choosing the right policy as per the needs. i.e. customized solutions, you will be able to plan for a secure future for yourself and your loved ones. We all have different financial needs and objectives. But life insurance plays a fundamental role in most of our plans for financial security. That's because of the variety of life insurance plans available and the many ways they can be customized to meet unique needs at different periods of your life.

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LIFE INSURANCE CORPORATION OF INDIA

Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency. This era, however, was dominated by foreign insurance offices which did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard competition from the foreign companies.

In 1914, the Government of India started publishing returns of Insurance Companies in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life business transacted in India by Indian and foreign insurers including provident insurance societies. In 1938, with a view to protecting the interest of the Insurance public, the earlier legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control over the activities of insurers.

The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large number of insurance companies and the level of competition was high. There were

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also allegations of unfair trade practices. The Government of India, therefore, decided to nationalize insurance business.

An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector.

In 1968, the Insurance Act was amended to regulate investments and set minimum solvency margins. The Tariff Advisory Committee was also set up then.

This millennium has seen insurance come a full circle in a journey extending to nearly 200 years. The process of re-opening of the sector had begun in the early 1990s and the last decade and more has seen it been opened up substantially. In 1993, the Government set up a committee under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations for reforms in the insurance sector. The objective was to complement the reforms initiated in the financial sector. The committee submitted its report in 1994 wherein , among other things, it recommended that the private sector be permitted to enter the insurance industry. They stated that foreign companies be allowed to enter by floating Indian companies, preferably a t venture with Indian partners.

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BAJAJ ALLIANZ LIFE INSURANCE COMPANY LIMITED

Bajaj Allianz life Insurance Company Limitedis a t venture between BajajAuto Limited and Allianz AG of . Both enjoy a reputation of expertise, stabilityand strength. Bajaj Allianz General Insurance received the Insurance Regulatory andDevelopment Authority (IRDA) certificate of Registration (R3) on May 2nd, 2001 toconduct General Insurance business (including Health Insurance business) in India. TheCompany has an authorized and paid up capital of Rs 110 crores. Bajaj Auto holds 74%and Allianz, AG, holds the remaining 26% .In its first year of operations, the company has acquired the No. 1 status amongthe private non-life insurers. As on 31st March 2003, Bajaj Allianz General Insurancemaintained its leadership position by garnering a income of Rs.300 Crores.Bajaj Allianz also became one of the few companies to make a profit in its first full year of operations. Bajaj Allianz made a profit after tax of Rs.9.6 croresBajaj Allianz today has a network of 42 offices spread across the length and breadth of the country. From Surat to Siliguri and Jammu to Thiruvananthapuram, all theoffices are interconnected with the Head Office at Pune.In the first half of the current financial year, 2004-05, Bajaj Allianz garnered a income of Rs. 405 crores, achieving a growth of 84% and ed a 52%growth in Net profits of Rs.20 Crores over the last year for the same period. In thefinancial year 2003-04, the earned was Rs.480 Crores, which is a jump of 60%and the profit zoomed by 125% to Rs. 21.6 Crores.

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ICICI PRUDENTIAL LIFE INSURANCE COMPANY

ICICI Prudential Life Insurance Company is a t venture between ICICI Bank,a premier financial powerhouse, and prudential plc, a leading international financialservices group headquartered in the United Kingdom. ICICI Prudential was amongst thefirst private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA).ICICI Prudential’s equity base stands at Rs. 925 crore with ICICI Bank andPrudential plc holding 74% and 26% stake respectively. In the quarter ended June 30,2005 , the company garnered Rs 335 crore of new business for a total sumassured of Rs 2,619 crore and wrote 111,522 policies. For the past four years, ICICIPrudential has retained its position as the No. 1 private life insurer in the country, with awide range of flexible products that meet the needs of the Indian customer at every stepin life.Products offered by ICICI Prudential are:

1.Savings Plan 1)Smart kid 2)Life Time 3)Save ‘n’ Protect 4)Cash Bank 2.Protection plan

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•Life Guard •Extra Protection Through •Riders 3.Retirement Plans •Forever Life •Life link pension •Life time pension •Reassure 4.Investment Plans •Assure Invest •Life Link 5.Group plans •Group Superannuation •Group Gratuity •Group Term Assurance

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GENERAL INSURANCE POLICIES Personal Insurance Personal insurance is essentially a plan availed by an individual to take care of various requirements like health and coverage against death or injury by accident. There are several policies nowadays where there is an option to cover the family in an individual policy.

The different types of personal insurance may be mentioned as well: Medical Insurance Provider

Policy Name

Star Health

Star Comprehensive

Apollo Munich Health

Optima Senior

Insurance Bajaj Allianz

Family Floater Health Guard Plan

Max Bupa

Heartbeat

ICICI Lombard

iHealth Plan

HDFC Ergo

Health Suraksha

Medical or health insurance is taken to cover against the chances of medical costs. These plans are created with estimates of health care expenses a person may face in future and the s are determined on such approximations.

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Following are some of the leading health insurance policies available in India:

Accidental Insurance The accidental insurance policies cover both death and any sort of disability arising from an accident. These plans cover a wide range of situations but not ones arising from using alcohol or drugs. The top accidental insurance policies available in India may be mentioned as below:

Provider

Policy Name

ICICI Lombard

Personal Protect

Apollo

Individual Personal Accident Plan

Munich

Health Insurance HDFC

Ergo

Personal Accident

General Insurance Tata AIG Insurance

Group Personal Accident

Future Generali

Future Accident Suraksha

Oriental Insurance

Personal Accident Insurance Cover

Property Insurance Property insurance provides coverage against risks to property arising from fire, weather damage, or theft to name a few. This type of insurance can be further sub divided into fire insurance, earthquake insurance, flood insurance, and boiler insurance for example. The

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Standard Fire & Special Perils policy of SBI General Insurance is one of the major examples of such a policy.

Vehicle Insurance Vehicle insurance is also referred to as auto insurance, car insurance, GAP insurance, and motor insurance. It is primarily bought for securing road vehicles such as cars, motorcycles, and trucks from physical damage from traffic accidents as well as any liability that may arise thereafter. Following are the leading vehicle insurance policies available in India:

Provider

Policy Name

ICICI Lombard

Car Insurance

Bajaj Allianz

Car Insurance Online

Reliance

Reliance Private Car Insurance

General

Insurance HDFC

Ergo

Motor Insurance

General Insurance ICICI Bank

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Car Insurance

Rural Insurance Rural insurance is meant to cater to the requirements of rurally bases businesses or individuals. These policies provide a wide range of coverage starting from life and health to protection against natural disasters that can have a negative effect on business. The leading rural insurance policies available in India may be mentioned as below:

Provider

Policy Name

ICICI

Family Health Insurance, Weather Insurance, Home Insurance, Shop Insurance

Lombard

Tractor Insurance, and Artisans and Weavers

Tata

Motor Insurance, Health and Accident Insurance, Property, and Livestock

AIG

Insurance New India

Cattle Insurance, Sheep & Goat Insurance, Poultry Insurance Scheme, Dog

Assurance

Insurance Scheme, Silk Worm Insurance Scheme, Honey Bee Insurance, Agricultural Pumpsets Insurance Scheme, Hut Insurance, Lift Irrigation Insurance, Janata Personal Accident, and Horticulture/Plantation Insurance

ICICI

ICICI Pru Sarv Jana Suraksha, and ICICI Pru Anmol Nivesh

Prudential

Industrial Insurance The industrial insurance policies are availed by various companies to get protection for important projects, construction, contracts, and equipment from situations like fire, theft and any form of damage or loss.

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The top industrial insurance policies of India may be mentioned as below:

Provider

Policy Name

ICICI

Boiler and Pressure Plant Insurance Policy, Machinery Loss of Profits Insurance

Lombard

Policy, Electronic Equipment Insurance Policy, Contractors' All Risk Policy, Machinery Breakdown Insurance Policy, Contractors' Plant & Machinery, and Erection All Risks

United

Boiler and Pressure Plant Policy, Electronic Equipment Policy, Contractors Plant and

India

Machinery Policy, Machinery Breakdown Policy, Deterioration of Stock, and

Insurance

Industrial All Risk Policy

Royal

Industrial All Risks Policy

Sundaram General Insurance New India

Fire Policy, Contractors All Risk Policy, Burglary Policy, Marine cum Erection /

Assurance

Storage cum Erection Policy, Machinery Breakdown Policy, Advanced Loss of Profit / Delay in Startup Policy, Electronics Equipment Policy, Contractor Plant and Machinery Policy, Consequential Loss Policy, and Mega Package Policies

Commercial Insurance Provider

Name of Policy

National

Burglary (Business Premises) Policy, Jewellers Block Policy, Shopkeepers Policy,

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Insurance

Extended Warranty Policy, Bankers Indemnity Policy, Directors and Officers Liability Policy, Office Package Policy, Fidelity Guarantee Policy, Glass Insurance, Marine Cargo Insurance, and Money Insurance

Tata

AIG

Commercial General Liability Insurance

Insurance

Commercial insurance is availed in order to get security against theft, liability, and property damage. These plans also help in cases of employee injuries and business interruption. Following are the leading commercial insurance policies available in India: Life Insurance Life insurance is taken primarily to secure oneself and/or one's family when the ability to earn is less or provide for the dependents when the insured is either deceased or unable to earn

a

livelihood.

Following are the various types of life insurance:

Whole Life Insurance Whole life insurance policies are taken for the entire duration of an insured's life. In these policies has to be paid on a yearly basis as long as the policy lasts.

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The leading whole life plans offered in India may be enumerated as below:

Provider

Name of Policy

Life Insurance Corporation of

The Whole Life Policy, The Whole Life Policy - Limited Payment, The

India

Whole Life Policy - Single

HDFC Life

HDFC Single Whole of Life Insurance Plan

Reliance Life Insurance

Reliance Whole Life Plan

Kotak Life Insurance

Kotak Eternal Life Classic Shield Plan, Kotak Eternal Life Premier Plan

Endowment Plans The endowment plans are supposed to provide a lump sum once the policyholder dies or when the policy matures. Certain endowment policies also provide payment in case of critical illnesses.

Following are the top endowment plans available in India:

Provider

Name of Policy

Life Insurance Corporation of India

Endowment Plus

Future Generali

Future Generali Assure-With-Profit Endowment Plan

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Money Back Plans The money back plans are used as a form of investment that produces good financial returns in future for using in various purposes, even recreational.

The top money back plans may be mentioned as below:

Provider

Name of Policy

SBI Life Insurance

Money Back Plan

Birla Sun Life Insurance

BSLI Bachat (Moneyback) Plan

Reliance Life Insurance

Reliance Life Insurance Guaranteed Money Back Plan

Max Life Insurance

Life Pay Money Back

Life Insurance Corporation of India

Money Back with Profit

Kotak Life Insurance

Kotak Money Back Plan

HDFC Bank

HDFC SL New Money Back Plan

Term Life Insurance The term life insurance plans or term assurance plans are availed to receive a fixed payment rate over a period of time, which is the term period. Once the period comes to an end the policy owner can discontinue the policy or extend it.

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Following are the leading term plans available in India:

Provider

Name of Policy

ICICI Prudential

ICICI Pru iCare

Kotak Life

Kotak e-Term/e-Preferred Plan, Kotak Term Plan/Kotak Preferred Term

AEGON Religare

AEGON Religare Level Term Plan

ULIPs The ULIPs or Unit Linked Insurance Plans are one where the financial worth of a policy is dependent on the present net asset value of the core investment assets related to it. These policies are both flexible and protective, which is a unique feature. The s of these policies are used to buy investment asset units selected by the policy owners.The top ULIPs offered

in

Provider

Name of Policy

Bajaj Allianz

iGain III - Investment Plan

SBI Insurance

Life

are:

SBI Life - Smart Performer, SBI Life - Unit Plus Super, SBI Life - Saral Maha Anand

SBI Life - Smart Elite, SBI Life - Smart Scholar, SBI Life - Smart Horizon, and SB Life - SmartWealth Assure

Other Forms of Insurance

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India

Home Insurance Home insurance is also referred to as homeowner's insurance or hazard insurance and is primarily taken to cover private homes against various forms of losses and liabilities.

Following are the leading home insurance policies available in India:

Provider

Name of Policy

HDFC Ergo General Insurance

Home Insurance

New India Assurance

Householders Insurance

Reliance General Insurance

Home Insurance

SBI General Insurance

Long Term Home Insurance

Tata AIG Insurance

Home Insurance

ICICI Lombard

Home Insurance

Royal Sundaram General Insurance

Home Insurance

Travel Insurance Provider

Name of Policy

ICICI Lombard

Overseas Travel, Senior Citizen, and Annual Multi Trip

Reliance General Insurance

Overseas Travel Insurance, Senior Citizen Insurance, and Annual Multi Trip Insurance

Tata AIG Insurance

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Overseas Travel Insurance, Student Travel Insurance, and Domestic

Travel Insurance HDFC Ergo General

Travel Insurance

Insurance Bajaj Allianz

Individual Travel Insurance, Corporate Travel Insurance, Family Travel Insurance, Travel Asia, Senior Citizen Travel, Swadesh Yatra, and Student Travel Insurance

IFFCO

TOKIO

General

Travel Insurance Policy

Insurance Travel insurance policies can be availed to cover both long and short trips as well as trips within the country as well as outside it. These plans cover medical and non medical expenses.

The leading travel insurance policies available in India may be mentioned as below:

Agricultural Insurance

Agriculture in India is highly susceptible to risks like droughts and floods. It is necessary to protect the farmers from natural calamities and ensure their credit eligibility for the next season. For this purpose, the Government of India introduced many agricultural schemes throughout the country. 45 | P a g e

Comprehensive Crop Insurance Scheme(CCIS) : The Comprehensive Insurance Scheme (CIS) covered 15 states and 2 union territories. Participation in the scheme was voluntary. Around 5 million farmers and between 8-9 million hectares were annually covered by this scheme. If the actual yield in any area covered by the scheme fell short of the guaranteed yield, the farmers were entitled to an indemnity on compensation to the extent of the shortfall in yield. The General Insurance Corporation of India istered the scheme on behalf of the Ministry of Agriculture, Government of India. A major drawback of the scheme could be seen from the fact that out of all the all-India claims of Rs 1,623 crores, Gujarat alone received Rs. 792 crores for one single crop,groundnut. The scheme was scrapped in 1997. Experimental Crop Insurance : An experimental crop insurance scheme was introduced in 1997-98, covering non-loanee small and marginal farmers growing specified crops in selected districts. The was subsidized. The collected was about Rs. 3 crores and the claims amounted to Rs. 40 crores. The Government discontinued the scheme during 1997-98 itself.

Farm Income Insurance Scheme :

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The Central Government formulated the Farm Income Insurance Scheme (FIIS) during 200304. The two critical components of a farmer’s income are yield and price. FIIS targeted these two components through a single insurance policy so that the insured farmer could get a guaranteed income. The scheme provided income protection to the farmers by insuring production and market risks. The insured farmers were ensured minimum guaranteed income (that is, average yield multiplied by the minimum price). If the actual income was less than the guaranteed income, the insured would be compensated to the extent of the shortfall by the Agriculture Insurance Company of India. Initially, the scheme would cover only wheat and rice and would be compulsory for farmers availing crop loans. NAIS (explained in the section below) would be withdrawn for the crops covered under FIIS, but would continue to be applicable for other crops. The FIIS was withdrawn in 2004. The recent attempt by the Gujarat government to reintroduce the Farm Income Insurance Scheme (FIIS) can reform agricultural insurance and prevent farm-level distress. National Agriculture Insurance Scheme(NAIS) : The Government of India experimented with a comprehensive crop insurance scheme which failed. The Government then introduced in 1999-2000, a new scheme titled “National Agricultural Insurance Scheme” (NAIS) or “Rashtriya Krishi Bima Yojana” (RKBY). NAIS envisages coverage of all food crops (cereals and pulses), oilseeds, horticultural and commercial crops. It covers all farmers, both loanees and non-loanees, under the scheme. The rates vary from 1.5 percent to 3.5 percent of sum assured for food crops. In the case of horticultural and commercial crops, actuarial rates are charged. Small and marginal 47 | P a g e

farmers are entitled to a subsidy of 50 percent of the charged- the subsidy is shared equally between the Government of India and the States. The subsidy is to be phased out over a period of 5 years.

Accidental death and dismemberment insurance

In insurance, accidental death and dismemberment (AD&D) is a policy that pays benefits to the beneficiary if the cause of death is an accident. This is a limited form of life insurance which is generally less expensive. Accidental death In the event of an accidental death, this insurance will pay benefits in addition to any life insurance but only up to a set amount total regardless of any other insurance held by same insurer, held by the client. This is called double indemnity coverage and is often available even when accidental death insurance is merely an add-on to a regular life insurance plan. Some of the covered accidents include traffic accidents, exposure, homicide, falls, heavy equipment accidents and drowning. Accidental deaths are the fifth leading cause of death in the U.S.as well as in Canada. Accidental death insurance is not an investment vehicle and thus clients are paying only for sustained protection. Most policies have to be renewed periodically (with revised ), although the client's consent with renewal is often implicitly assumed.

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Common exclusions. Every insurer maintains a list of events and circumstances that void the insured's entitlement to

his

or

her

accidental

death

benefit.

Death

by

illness, suicide,

non-

commercialradiation, war injury, and natural causes are generally not covered by AD&D. Similarly, death while under the influence of any non-prescribed drugs or alcohol is most likely exempt from coverage. Overdose with toxic or poisonous substances and injury of an athlete during a professional sporting event may void the right to claim too. Some insurance carriers will tailor their clients' coverage to include some of the above risks, but every such extension will be accompanied by increased s. Due to these restrictions, the process of claiming the benefit may be relatively lengthy; the deceased client may have to undergo autopsy and the accident may have to be officially investigated before a claim is approved by the insurer. Dismemberment : Fractional amounts of the policy will be paid out if the covered employee loses a bodily appendage or sight because of an accident. Additionally, AD&D generally pays benefits for the loss of limbs, fingers, toes, sight and permanent paralysis. The types of injuries covered and the amount paid vary by insurer and package, and are explicitly enumerated in the insurance policy. Coverage typesThere are four common types of group AD&D plans offered in the United States:

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1. Group Life Supplement – the AD&D benefit is included as part of a group life insurance contract, and the benefit amount is usually the same as that of the group life benefit; 2. Voluntary – the AD&D is offered to of a group as a separate, elective benefit, and s are generally paid as a payroll deduction; 3. Travel Accident (Business Trip) – the AD&D benefit is provided through an employee benefit plan and provides supplemental accident protection to workers while they are traveling on company business (the entire is usually paid by the employer); 4. Dependents – Some group AD&D plans also provide coverage for dependents.

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HEALTH INSURANCE IN INDIA Health insurance in India is a growing segment of India's economy. In 2011, 3.9%[1] of India's gross domestic product was spent in the health sector. According to the World Health Organisation (WHO), this is among the lowest of the BRICS (Brazil, Russia, India, China, South Africa) economies. Policies are available that offer both individual and family cover. Out of this 3.9%, health insurance s for 5-10% of expenditure, employers for around 9% while personal expenditure amounts to an astounding 82%. History Launched in 1986,the health insurance industry has grown significantly mainly due to liberalization of economy and general awareness. By 2010, more than 25% of India’s population had access to some form of health insurance. There are standalone health insurers along with government sponsored health insurance providers. Until recently, to improve the awareness and reduce the procrastination for buying health insurance, the General Insurance Corporation of India and the Insurance Regulatory

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and Development Authority had launched an awareness campaign for all segments of the population. Types of policies Health insurance in India typically pays for only inpatient hospitalization and for treatment at hospitals in India. Outpatient services were not payable under health policies in India. The first health policies in India were Mediclaim Policies. In 2000 government of India liberalized insurance and allowed private players into the insurance sector. The advent of private insurers in India saw the introduction of many innovative products like family floater plans, top-up plans, critical illness plans, hospital cash and top up policies. The health insurance sector hovers around 10 % in density calculations. One of the main reasons for the low penetration and coverage of health insurance is the lack of competition in the sector. The Insurance Regulatory Authority of India (IRDA) which is responsible for insurance policies in India can create health circles, similar to telecom circles to promote competition. Broadly we can divide the health insurance plans in India today can be classified into three categories: 

Hospitalization Hospitalization plans are indemnity plans that pay cost of hospitalization and medical costs of the insured subject to the sum insured. The sum insured can be applied on a per member basis in case of individual health policies or on a floater basis in case of family floater policies. In case of floater policies the sum insured can be utilized by any of the insured under the plan. These policies do not normally pay any

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cash benefit. In addition to hospitalization benefits, specific policies may offer a number of additional benefits like maternity and newborn coverate, day care procedures for specific procedures, pre- and post-hospitalization care, domiciliary benefits where patients cannot be moved to a hospital, daily cash, and convalescence. There is another type of hospitalization policy called a top-up policy. Top up policies have a high deductible typically set a level of existing cover. This policy is targeted at people who have some amount of insurance from their employer. If the employer provided cover is not enough people can supplement their cover with the top-up policy. However, this is subject to deduction on every claim reported for every member on the final amount payable. 

Hospital daily cash benefit plans:

Daily cash benefits is a defined benefit policy that pays a defined sum of money for every day of hospitalization. The payments for a defined number of days in the policy year and may be subject to a deductible of few days. 

Critical illness plans:

These are benefit based policies which pay a lumpsum (fixed) benefit amount on diagnosis of covered critical lllness and medical prodcedures. These illness are generally specific and high severity and low fequency in nature that cost high when compared to day to day medical / treatment need. eg heart attack, cancer, stroke etc now some insurers have come up with option of staggered payment of claims in combination to upfront lumpsum payment.

Key aspects of health insurance

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Payment options 

Direct Payment or Cashless Facility: Under this facility, the person does not need to pay the hospital as the insurer pays directly to the hospital. Under the cashless scheme, the policyholder and all those who are mentioned in the policy can undertake treatment from those hospitals approved by the insurer.



Reimbursement at the end of the hospital stay: After staying for the duration of the treatment, the patient can take a reimbursement from the insurer for the treatment that is covered under the policy undertaken.

Cost and duration 

Policy price range: Insurance companies offer health insurance from a sum insured of Rs. 5000/- for micro-insurance policies to a higher sum insured of Rs. 50 lacs and above. The common insurance policies for health insurance are usually available from Rs. 1 lac to Rs. 5 lacs.



Duration: Health insurance policies offered by non-life insurance companies usually last for a period of one year. Life insurance companies offer policies for a period of several years.

Tax benefits Under the Income Tax Act, under Section 80D, the insured person who takes out the policy can claim for tax deductions

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PRESENT SCENARIO IN THE INSURANCE SECTOR

•Insurance agents are the main intermediaries in the Indian insurance market, but with liberalization brokers will be an additional channel for selling insurance products. •Brokers are likely to play a major role in ensuring clients get insurance covers tailor made to suit their requirements at good . •Fast growing middle class of 300 million who can afford insurance. •Increasing financial strength of middle class with disposable income. •Narrowing gap between rural and urban populace in of access to information and services.

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•More and more entrepreneurs in traditional and modern business areas. •Increase in number of double income families leading to lifestyles and attitude changes •Growth of rural market is at 4 times of urban markets. •The potential of the Indian insurance market is huge with current life insurance penetration being only 1.9 of the GDP. •Insurance market is set to touch 25 billion by 2010 in India. (It was only 7.2 billion in 98-99 survey. At that time India’s rank in annual was 23rd for Life insurance and contribution in GDP was merely 1.4%). Presently it is still lower then develops economy but increased to 2.61% of GDP in 2002. So immense opportunity can’t be ignoring.

MAJOR PLAYERS IN THE INSURANCE INDUSTRY IN INDIA

•Life Insurance Corporation of India (LIC) Life Insurance Corporation of India (LIC) was established on 1 September 1956 to spread the message of life insurance in the country and mobilise people’s savings for nation-building activities. LIC with its central office in Mumbai and seven zonal offices at Mumbai, Calcutta, Delhi, Chennai, Hyderabad, Kanpur and Bhopal, operates through 100 divisional offices in important cities and 2,048 branch offices. LIC has 5.59 lakh active agents spread over the country.The Corporation also transacts business abroad and has offices in Fiji, Mauritius and United Kingdom. LIC is associated with t ventures abroad in the field of insurance, namely, Ken-India Assurance Company Limited, Nairobi; United Oriental Assurance Company Limited, Kuala Lumpur; and Life Insurance Corporation (International), E.C. 56 | P a g e

Bahrain. It has also entered into an agreement with the Sun Life (UK) for marketing unit linked life insurance and pension policies in U.K.In 1995-96, LIC had a total income from and investments of $ 5 Billion while GIC recorded a net of $ 1.3 Billion. During the last 15 years, LIC's income grew at a healthy average of 10 per cent as against the industry's 6.7 per cent growth in the rest of Asia (3.4 per cent in Europe, 1.4 per cent in the US). LIC has even provided insurance cover to five million people living below the poverty line, with 50 per cent subsidy in the rates. LIC's claims settlement ratio at 95 per cent and GIC's at 74 per cent are higher than that of global average of 40 per cent. Compounded annual growth rate for Life insurance business has been 19.22 per cent per annum •General Insurance Corporation of India (GIC) The general insurance industry in India was nationalized and a government company known as General Insurance Corporation of India (GIC) was formed by the Central Government in November 1972. With effect from 1 January 1973 the erstwhile 107 Indian and foreign insurers which were operating in the country prior to nationalization, were grouped into four operating companies, namely, (i) National Insurance Company Limited; (ii) New India Assurance Company Limited; (iii) Oriental Insurance Company Limited; and (iv) United India Insurance Company Limited. (However, with effect from Dec'2000, these subsidiaries have been de-linked from the parent company and made as independent insurance companies). All the above four subsidiaries of GIC operate all over the country competing with one another and underwriting various classes of general insurance business except for aviation insurance of national airlines and crop insurance which is handled by the GIC.Besides the domestic market, the industry is presently operating in 17 countries directly through branches or agencies and in 14 countries through subsidiary and associate companies. 57 | P a g e

IN ADDITION TO ABOVE STATE INSURERS THE FOLLOWING HAVE BEEN PERMITTED TO ENTER INTO INSURANCE BUSINESS: The introduction of private players in the industry has added to the colors in the dull industry. The initiatives taken by the private players are very competitive and have given immense competition to the on time monopoly of the market LIC. Since the advent of the private players in the market the industry has seen new and innovative steps taken by the players in this sector. The new players have improved the service quality of the insurance. As a result LIC down the years have seen the declining phase in its career. The market share was distributed among the private players. Though LIC still holds the 75% of the insurance sector but the natures of these private players are enough to give more competition to LIC in the near future. LIC market share has decreased from 95% (2002-03) to 82 %( 2004-05)

DISTRIBUTION CHANNELS OF INSURANCE SECTOR

The liberalization followed by growth of the Indian Insurance Industry has opened wide oppurtunities for service & infrastructure sectors. This growth has to be properly channelized. Some of the major challenges which have to be addressed for challenging the growth of Insurance sector are product innovation,Distribution network, Investment management, Customer service and education. The aim of this project is to have an indepth knowledge of the booming Insurance sector in India and to study the various “Distribution Channels in Insurance Sector in relation to Reliance life insurance” which will help in increasing the penetration of Insurance in India

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and also reduces the cost of Insurers.

Firstly the Insurance industry as a whole has been

studied with emphasis on various Insurance channels. Then the emerging distribtion channels in Insurance industry have been discussed. Emphasis is given on the new distribution channels which are recently tried in India such as retail stores, telcassurance, and Internet. Finally the recommendations and conclusions on the basis of my understanding and analysis about the Indian insurance sector has been made.

CONCLUSION

Insurance sector is one of the most booming sectors in India. The penetration level of insurance in India is only 2.3% when compared to 9-15% in the developed nations. There is a huge market for the Insurance products in the future in India. The project was very useful to the researcher to understand the life insurance business.

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BIBLIOGRAPHY

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