General insurance business in India

ACKNOWLEDGEMENT

No task is a single man's effort Co-operation and Co-ordination of various people at various places go into the successful implementation. It is a great pleasure to have opportunity to extend my heart-felt thanks to everybody who helped me through the successful completion of this project.It would be prudent to commence this term paper with a sincere tribute to all those who played an indispensable role in the accomplishment of this work and obliged whenever and wherever their able guidance was required.

I would like to express my deep sense of gratitude to MS. SWATI MEHTA for providing me regular guidance, full cooperation, support and encouragement throughout the project. Under her experienced teaching and guidance, my knowledge has increased resulting in achieving better results.

INTRODUCTION

Insurance is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for a premium, and can be thought of as a guaranteed small loss to prevent a large, possibly devastating loss. Insurance offers protection against risks that already exist. Insurance is a contract wherein the insurer accepts the proposal offered by the insured in return of a consideration called premium to identify any loss, which the insured may face due to some unforeseen risk or event. An insurer is a company selling the insurance; an insured or policyholder is the person or entity buying the insurance. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage, called the premium.

In present when we buy Insurance, we are still sharing the risk. The data as observed by insurance companies today show the frequency of past losses - for e.g. losses from industrial fires in order to predict what losses their clients will experience in the future so that the insurance company can compensate the losses of the clients by using the funds paid their other clients.

Insurance would assist business to operate with less volatility and risk of failure and provided for greater financial and social stability from the growth pangs of an estimated growth rate over 8% in GDP. It will also facilitate trade and commerce by flexible adaptation to changing risk needs particularly of the burgeoning services sector Today, like any other financial institution companies generate savings from the insurance sector within the economy and make available the same in well directed areas of the economy deserving investments; a sector with potential for business.

It also enables risk to be managed more efficiently through risk pricing and risk transfers and this is in an area which provided unlimited opportunities in the Indian context for consulting, broking and education in the post-privatization base with newer employment opportunities.

INSURANCE INDUSTRY

The insurance sector in India initially took off with the establishment of the two public sector insurance companies known by the names Life Insurance Corporation of India and the General Insurance Corporation of India. The insurance sector in India has grown in leaps and bounds to become the most significant financial players in the Indian financial market. The popularity of the insurance sector has mainly evolved on account of the large investments flow from this sector that facilitates the growth of the overall economy of the country. Their success has attracted the attention of the insurance companies hailing from foreign countries. The foreign insurance companies have stated forming pacts and collaborations with the Indian insurance companies to influence the Indian Insurance sector. The insurance companies offer protection to their clients, collect the small savings of the clients to turn into a huge capital to reinvest in priority sectors of the economy that requires huge.

As per a study carried out by the Associated Chambers of Commerce and Industry of India (Assoc ham) the Indian insurance sector will see phenomenal growth in the next two years on the back of robust growth in both general and life insurance segments of private sector, the sector grew nearly 175% over the last few years and would continue growing strongly in near future due to its huge potential.

TRENDS

In Today's automated and modernized era any organization cannot take a chance by not maintaining pace with the competition.

With the passage of time and taking into consideration today's needs and changing scenario insurance companies should also adopt new technology i.e. it should be trendy enough to meet customer needs and expectations.

Trends or use of technology should be such that it is eco friendly enough to be used by customers. Today, right from a grocery shop to I.T sector technologies is explored to the fullest.

E-Business or E-commerce has sown its seeds in every sector of business which is one of the strongest sign of improvement and technology.

As we are dealing here with insurance industry let us see the technology involved in the Insurance sector.

Technological:

Computerization:

Initially, in the late 1950's the insurance companies used Unit Record Machines (Electro Magnetic Machines) to process data punched into cards. Computers were introduces in the mid 1960's and by the 1980's the Unit Phased Machines were phased out and the entire process was computerized. This brought about greater efficiency and quick service delivery.

Internet:

Internet usage has drastically improved in the last decade. There was a tremendous increase in the use of technology by GIC during the late 1990's. The companies Launched its website in the mid 1990's to offer basic services such as modifying policies (change of address, change of nominee, etc) and querying the status of the policy.

But today, the internet has completely changed the service delivery process. Internet is today used to even sell insurance policies. Internet is, in fact, proving to be one of the widely used distribution networks for selling insurance policies. Also internet is used for sending premium notices to policy holders through e-mails.

Also GIC has a special feature on its website. It has a premium calculator which accurately displays the amount of premium month wise and the remaining balance. One just has to enter the age, name of the insurance policy the sum assured and whether there is an accident cover or not. By keying in this information, the entire premium amounts are shown within no time. This has helped the customer in a way so that he/she doesn't have to travel all the way to the branch to ascertain the amount of premium to be paid.

Metropolitan Area Network (MAN) and Wide Area Network (WAN):

GIC has commissioned a MAN connecting more than 75 branches in Mumbai. This enabled the policy holders to pay their premiums and get their status report, surrender value quotations and loan quotation, from any branch in the city. Following the MAN in Mumbai, seven MAN centres (Chennai, Bangalore, Delhi, Calcutta, Pune, Hyderabad, and Ahmedabad) became operational. These MAN centers' were connected to each other by a WAN network. This WAN was designed for distributed processing without a central database - each division maintained a database of the policyholders. The central office in Mumbai maintained an index of policy numbers and the corresponding IP addresses of the servers where the details of the policy were maintained.

Electronic Clearance Service (ECS):

Almost all the big organizations today provide the ECS facility to its customers. A policy holder having an account in any bank which is a member of the local clearing house can opt for ECS debit to pay premiums. The advantage here is that once the option is exercised, the policy holder need not visit a branch for paying the premium or collecting the receipts. On 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.

Bank ATM's:

Many insurance companies have a tie-up with commercial banks so as to enable policyholders to use the facility of paying premiums through the bank ATM's. ICICI Lombard has a tie up with ICICI bank; Bajaj Allianz has a tie-up with Corporation bank and UTI Bank.

Call Centres and SMS services:

Almost all the insurance companies have their own call centres which cater to the phone based queries of the policyholders. This service is 24x7 and they have the Interactive Voice Response (IVR) systems at all the branches.

Also, LIC and other companies now provide SMS services going with the new trends like SMS banking in the banking sector.

Claims

The Settlement of claims constitutes one of the important functions in an insurance organization. The proper settlement of claims requires a sound knowledge of thee law, principles and practices governing insurance contracts and in particular a thorough knowledge of the terms and conditions of the standard policies and various extensions and modifications there under. The procedure in respect of claim a under various classes of insurance follows a common pattern and may be considered under 3 broad headings

Preliminary procedure

It is essential that early notification of the loss is received by insurance undue delay in notification would adversely affect the position of the insurer. However if there is any delay in notification or not or weather is material will be ultimately decided by the courts based on the facts of the individual cases

The notice of loss condition in liability policies provides for two aspects

  1. Notification of the happening of the accident immediately followed by
  2. Notification of the receipt of claim or suit filed against the insured.

Under certain types of policies (e.g. Burglary) notice is also to be given to police authorities.

Loss Minimization

At common law, there is a duty on the part of the insured to observe good faith .This duty of good faith means that at all times the insured has to act as if he is uninsured.

For E.g., the private car package policy provides , among other things , that the insured shall take all reasonable steps to safeguard the motor car from loss or damage and to maintain it in efficient condition. In the event of any accident or breakdown the motor car shall not be left unattended without proper precautions being taken to prevent further damage or loss.

Procedural

On receipt of intimation of loss or damage insurers check that:

  1. the policy is in force on the date of occurrence of the loss or damage
  2. The loss or damage is by a peril insured by the policy.
  3. Notice of loss received without undue delay.

After this check up the loss is allotted a number and entered in the claims register.

Claim Forms

The contents of the claim form vary with each class of insurance .In general the claim in general the claim form is designed to elicit full information regarding the circumstances of the loss such as date of loss, time, cause of loss, extent of loss etc claim forms are invariably sued in fire and miscellaneous insurance.

Investigation and Assessment

On receipt of the claim form duly completed from the insured the insurers decide about the investigation and assessment of loss if the loss is small the investigation to determine the cause and extent of loss is done by an officer of the insurers. Sometimes even this may be waived and the loss settled he basis of the claim form only. The investigation of larger or complicated claims is entrusted to independent professional surveyors who are specialist in their line the appointment of a surveyor is intimated to the claimant the surveyor is furnished with all relevant claim papers such as claim form policy copy etc...However, many a times surveyor is appointed and survey is carried immediately on receipt on notice of loss, that is even before claim form could be issued.

Claims documents

In addition to the claim form independent survey report certain documents are required to be submitted by the insurers to substantiate the claim for example for fire claims for fire claims a report for the fire brigade for motor claims driving license registration copy police report etc.

Arbitration

It is distinct from litigation and is a method of settling disputes under contract in accordance and conciliation act 1996.

Settlement

The claim is processed on the basis of Claim form Independent report from Surveyors, legal opinion, medical opinion etc as the case may be. Various documents furnished by the insured. Any other evidence secured by the insurers. If the claim is in order settlement is effected by cheque the payment is entered in claims register as well as in the relevant process record. Appropriate recoveries are made from the insurers if any.

CHANGING SCENARIO OF GENERAL INSURANCE MARKET

Brief the history of general Insurance.

In India General Insurance business started, Marine Insurance started on later part of the 17th century. Before nationalization in 1947 we have 147 insurance companies, foreign and Indian both. But during there nationalization, in 1973 we have 107 companies that merge into four companies, i.e. taken over by Government. General Insurance Corporation of India (GIC) was set up in 1973 as a holding company with four subsidiary operating companies - National Insurance co Ltd., New India Assurance Co. Ltd., Oriental Insurance co Ltd., and United India Insurance Co Ltd., with a clear cut mission as set out in the Act. The overall scenario in the insurance market in India after nationalization.GIC and its subsidiaries function through a vast country - wide network of around 4100 offices spread across the length and breadth of the country, GIC has taken the benefit of insurance to almost every district, across hilly terrain and often inaccessible areas of the country. The customer interface is made easy through a network of agents, development officers and employees at Branch, Divisional and Regional offices as well as at the corporate level. The GIC and its subsidiaries have a workforce of approximately 86,000. In 1973 tainted at various levels through in house training institutions. Now the total number of employees went up. The industry has also promoted the National Insurance Academy (NIA), which is the premier training institute in insurance, catering not only to Indian Nationals but also to select foreign nationals. The industry issues around 23 million documents and settles 2million claims every year. Country wide computerization in the recently past has made the task of policy- holder's servicing easier and rapid. At the same time, profitable lines and premium components increases and we became a investment company.

The Schemes

Recognizing its organizational strengths, the Govt. of India has also entrusted the corporation with the administration of various schemes for social melioration and public welfare. Social security schemes benefiting millions of Citizens below the poverty line. Personal Accident Insurance and Hut Insurance are operated all over the country for which the premiums are paid by the Government. The GIC administers on behalf of Government, the crop Insurance scheme for areas and crops notified under the crop Insurance Scheme.Various low cost mass insurance policies have been evolved over a period of time, e.g.'Jan Arogya Bima Policy'.

Role General Insurance Industry is playing in the growth of economy of the country:

The General Insurance Industry has an enviable track record among public sector units. It has a consistent profit and dividend paying record accompanied by a steady growth in its financial resources.

Through investments in the- Government sector and: socially - oriented Sectors the Industry has contributed immensely to the nation's development. The industry is recognized as one of the largest financial' Institutions in the Country. The ventures initiated by the industry in the areas of Mutual Fund, Housing Finance have done exceedingly well in recent years.

To protect the country's foreign exchange reserves, the reinsurance arrangement are so organized that maximum retention is made possible within the country while at the same time protecting interests of the policy holders. The GIC'S inwards reinsurance wing called the SWIFT, maximizes the foreign exchange balance by acting as an international insurer-accepting risk from all over the globe.

GIC'S International operation:

GIC'S international operations span over 31 countries around the globe. The reinsurance expertise built over a long period has made the Indian Insurance Industry a globally acknowledged reinsurer of repute GIC'S risk management skill has been backed by specialists with a vast insurance experience.

Thus, the technical and underwriting skills have been acknowledged in the international market. The corporation operates in 17 countries through branches and agencies, whereas in another 14 countries, it has subsidiaries and associate companies. The GIC has a subsidiary company known as 'India International Pvt Ltd, operating in Singapore and a joint-venture company, Kenindia Insurance co.Ltd.The impact of liberalization of economy in the activities of GlC. With the liberalization of economy, General Insurance in India is poised for a quantum jump, both in quality and quantity.

Vision for the future:

It is estimated that the industry will outstrip the present rate of growth and reach a premium value of over Rs. l,20,000 millions by taking advantage of the extra-large mega risk and social awareness of insurance in general, even as a developing country turns into a developed country.

The task before the industry to service the growing number of policy-holders would equally see a quantum jump in issuance of documents and settlement of claims. Matching reserves and consequent investment will be a natural corollary. It is expected that the investment portfolio will touch around Rs. 2,50,000 millions by the end of the next decade, with the strength built up over the years since nationalization.GIC new looks to the future with confidence and optimism, takes on global chal1enge with its high standard of service, innovative initiative and a compelling social perspective.

GIC's plan - in new business areas:

The two new areas that GIC is getting into are the areas of health care and crop insurance. For the health care business, the corporation has received permission to set up a separate management services company. GIC has plans to increase the scope of cover in health care, personal accident and crop insurance and will require expertise in pricing the products.

The Research & Development activities:

They have just entered these areas and for the coming five years we are investing approximately 500 crores. GIC'S R & D cell is created backed up market research data.The subsidiaries of GIC are becoming an autonomous body.Privatization in the insurance sector of India - Is it in the right direction

It's purely a government decision and the nationalized sector is ready to face the challenge. And have taken the challenge to stand in the stiff competition.

And now, many private companies have entered the market. These companies are a result of merger of Indian companies with foreign companies.

GROWTH OF GIC IN LAST FEW YEARS

National Insurance Company has overtaken New India Assurance Company to emerge as the numero uno in the general insurance sector for the first time.

National posted a premium income of Rs 408.91 crore during March 2009 against New India's gross premium income of Rs.529.99 crore. National Insurance co. ltd stands on second position after New India Insurance co ltd.

According to the Insurance Regulatory and Development Authority (IRDA), National has posted the sector's second highest growth rate of Rs.6.73 crore from previous year. National was ranked second among the four state-owned general insurance companies. The four public ltd companies of General insurance sector has collected Rs.18029.44 crores premium out of the total Rs 30601.20 crore . The industry overall has recorded a 12.5 per cent growth in the last five financial years.

National Insurance's aggressive drive and its ability to gain entry into the risk business of top corporate houses like Reliance and Tatas, as well as its tie-ups with banks has helped the public sector entity move up three notches (in ranking) within a span of less than one year.

National's personal rapport with a number of corporates and bank tie-ups, as well as recruitment of 50,000 agents are expected to help it bag the number 1 slot. In vast contrast, New India has preferred to control its top-line as it "exercises underwriting prudence". New India's net premium rose by Rs.4.53 crores as compare to corresponding previous year. Meanwhile, among the tweleve private sector insurance players, ICICI Lombard continues to lead and occupies first position with growth of 21% in last five years.

New India Assurance Company has garnered a premium income of over Rs.5516.82 crore during 2008-09, it retain its topmost position among general insurers. The company has registered a growth of Rs.4.53 crores in comparison with the industry growth rate of Rs.9.9 crore . Among private insurers, ICICI Lombard continues to be the leader having mobilized a premium income of Rs 3419.84 crore followed by Bajaj Allianz General Insurance which garnered Rs 2640.49 crore.

By considering 2005-06 as the base year, we can note that the market share of public companies have been deteriorating having 73.43% of the market share from 85.54% in the year 2003-04.

New private insurers, like Tata AIG General Insurance Company - a joint venture between AIG, Inc. (world's largest insurance company by market cap and the only AAA rated insurance company in USA) and Tata group, who have come in with the liberalization of the sector have introduced innovative products and services and added multiple channels of distribution in the Indian market parallel to the existing ones. The mantra is innovation and diversification.

In addition to agency channel, we now see new channels such as brokers, corporate agents, Banc-assurance, broad market etc. We use comprehensive distribution channels like Banc-assurance, Corporate Agents, Brokers, Tele and Direct Marketing. This enables us to reach to a wider segment of the Indian society and provide modern and innovative as well as traditional insurance cover for all needs of individuals.

In-line with the increase in customer awareness and their changing demands even the products are being tailored to meet their requirements. Private insurance companies have significantly increased the product profile and range in a very short span of time. Products like liability insurance, directors & officers indemnity, warranty extensions, loss of profit policies, errors & omissions for technology companies, accident & health, unit linked products, weather insurance, customized travel insurance policies for students, business travelers etc. are now available in the country. These unique risk mitigation products are enabling Indian corporates and individuals become stronger players in the global marketplace.

The Indian insurance market has been growing at a rate of around 18 - 20% per annum and the private players have grabbed a good 12.09% of this.

Although the business of insurance is not new in India, however, the Indian insurance industry post-liberalization is still in its nascent state. It's barely four years old and in these four years, it's made tremendous progress. We have seen world-class products and services being introduced in the Indian market. Further, even the regulator, IRDA, has played a stellar role in regulating and disciplining the markets.

There is definitely room for further improvement in some aspects of this industry. We hope that with the de-tariffing of non-life insurance products, issues under-cutting / over-pricing will be curtailed and the markets will mature to the next level whereby the consumers get the world class products and services at competitive prices.

The general insurance industry took roots in India way back in 1850, with the establishment of Triton Insurance Company Ltd. in Calcutta. The central government nationalized the general insurance industry in India and set up General Insurance Corporation of India (GIC) in November 72. 107 Indian and foreign insurers which were operating in the country prior to nationalization were grouped into four operating subsidiaries of GIC, namely, (i) National Insurance Company Limited; (ii) New India Assurance Company Limited; (iii) Oriental Insurance Company Limited; and (iv) United India Insurance Company Limited. All these four subsidiaries of GIC competed with one another and underwrote various classes of general insurance business except aviation insurance of national airlines and crop insurance which was handled by the GIC.

The genesis for the insurance sector reforms was formation of Malhotra Committee in 1993 and submission of its report in 1994, recommending wide ranging reforms. Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999 which ushered in the entry of private sector under the guidance and supervision of a regulatory body, IRDA. Since being set up as an independent statutory body, the IRDA put in a framework of globally compatible regulations.

The general insurance players fix the insurance premiums of many products based on tariffs set by the Tariff Advisory Committee. As the players gain experience and maturity, there are growing demands for de-tariffing2 , which also enables players to differentiate themselves better. India is one of the least penetrated markets in terms of general insurance. Non-life insurance premium in India as per cent of GDP stands at 0.56 per cent and per capita premium at USD 2.4, which is starkly low even when compared to other developing economies like Indonesia, Brazil and China. With growth tapering off in the developed economies, global majors are keenly interested in large markets with untapped potential such as India and China.

Insurance the future boom sector of India

The insurance sector for private participation have brought in its wake major changes not only in the design of the products available in the market but also the manner in which they are marketed. We have today a host of products coupled with a large number of intermediaries who market them.

The post-liberalized insurance industry panorama in India is witnessing dramatic changes in terms of a slew of latest products and services, new channels of distribution, greater use of I.T. as a service facilitator etc. There is also the phenomenon of noticeable shifts in consumer preferences impacting the product mix being offered by insurers. The market structure dominated by a few stabilized public sector players and the 'new' players in the market (some of whom claim their lineage from established international insurance behemoths) is in a state of flux- in terms of figure out market shares but is full of potential.

Added to these are the rising trends of convergence of financial services, especially in the areas like wealth management and evolution of newer risk management tools, particularly in the context of reinsurance management. Greater attention is also being bestowed on the areas like Agricultural Insurance and risk coverage of export-import trade. Then there is impact of visible socio-economic changes like greater urbanization, greater job mobility, growth of the services industry, weakening of traditional family structure, impact of globalization etc. All in all, interesting things are happening in the Indian insurance scene.

Insurance undergone rapid and massive changes in all aspects of their business: product and services, sectoral structure, market segmentation, competitive environment. It is believed that the information sharing has not taken its expected shape in the insurance industry for the purposes of practices, research and education. However, data is one of the most needed ingredients in the insurance business development as well as for research and consultancy. There have been regular efforts by IRDA for collection and sharing of the data and other information of public interest. The industry is facing problems in terms of data review as parliament need to register this beforehand. We believe that progress of the industry should not be constrained by any extraneous conditions in the interest of research and development in the area.

Privatization of insurance sector has allowed insurance companies to work in the market by depositing 100 crore rupees in the reserve of government. This has encouraged many overseas insurance companies, having a required amount in their reserve, to open their branch in our country. Introduction of the sector has changed the employment pattern, but people must know how to make profit from it. To be in the global market and have advantage of it, capital and skill as per the demand and knowledge of market is the requirement. It is necessary that institutions, which form a part of this financial system, have internal management, governance and accountability structures, which measure up to the highest standards.

India's insurance sector is likely to clock an unprecedented growth of over 200 per cent by 2009-10. During this period, private players will grow at 140 per cent owing to their aggressive marketing techniques as against a growth rate of 35-40 per cent of state owned insurance companies, according to the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

On account of intense marketing strategies adopted by private insurance The Chamber expects the total insurance business to reach Rs. 2000 billion in the next two years from current level of Rs. 500 billion players, the market share of state owned insurance companies like GIC, LIC and others have already come down to 70 per cent in the last four-five years from over 97 per cent and more intense competition is likely to be witnessed in the near future.

FUTURE PROSPECTS OF GNERAL INSURANCE

The strategy of 'being everything to everybody' works only for industry leaders and that position is reserved for only one or two players. General insurance is such a vast business that there are sizeable opportunities in business segments within it. For example, companies can focus on business segments like health insurance or credit insurance and develop superior abilities to understand the business needs, design, develop and market products and build brand equity in those niche areas. Instead of being a me-too player in a large number of business segments, one may be able develop a more sustainable business and earn higher return for shareholders if one is able to achieve a leadership position in a specific business segment.

Consider the example of Export Credit Guarantee Corporation of India Ltd (ECGC), a government-owned company, which has been in existence since 57, primarily providing export credit insurance and credit guarantees. After reforms, ECGC got itself registered with IRDA and is repositioning itself as a specialist credit insurer offering a range of credit insurance products.

Build Awareness / Brand

The root of the under-penetration problem of insurance in India is low awareness. This in turn could be stemming from low literacy. However, the demographic trends in India indicate that major social and economic shifts are in store in the next 10 to 15 years. More than two-thirds of the population will become literate. Close to half the people will be under the age of 30. Modern telecommunication will spread to all parts of the nation including remote areas. Coupled with these trends, the real GDP growth rate is likely to accelerate to over six to seven per cent per annum. General insurance players should exploit these trends by investing in building basic awareness about the need and benefits of insurance. Today there is no evidence of any player doing it in the general insurance domain, probably due to the perception that it may not be a worthwhile investment. However, this investment to increase insurance awareness is an essential part of the development of the markets. Also, this can be done in such a way that a company's brand equity is built up in the process, which is a key source of competitive advantage in retail markets.

Pricing Decisions:

Since most of the products are governed by tariff, pricing is uniform with all the insurers. The more important aspect while selecting an insurer is the value-added services offered by the company. Bajaj Allianz offers cashless claim settlement in some regions for motor claims. Our recently launched Health Guard offers cashless settlement of bills through the network of hospitals empanelled with third party administrators (TPAs). In case of a permanent total disability under the personal accident policy, we compensate for 125 per cent of the sum insured as against the 100 per cent offered in the market.

Overall Growth in General insurance:

Led by private players ICICI Lombard, Bajaj Allianz and IFFCO-Tokio, general insurance industry grew by an impressive 15 per cent in the first quarter of 2005-06 even as National Insurance and Reliance General continue to see decline in business. Except Reliance General, the new players gave a tough fight to the established players in all departments of business to capture 26 per cent of market share. The non-life insurance industry, consisting of 5 public and 8 private players, grew by 14.75 per cent at Rs 5,504 crore in premium collection till June 2005, as per figures released by regulator IRDA. Market leader New India's premium grew by 9.18 per cent to Rs 1,176 crore till June and cornered a market share of 21.37 per cent. Kolkata-based NIC regained its second slot despite posting 5.85 per cent decline in premium collection at Rs 935 crore till the first three months of this fiscal and had a market share of 16.98 per cent. Delhi-based Oriental Insurance was at the third spot after logging 11.26 per cent growth in premium income at Rs 933.5 crore and a market share of 16.96 per cent. Chennai-based United India grew by 4.3 per cent at Rs 895 crore till June and had 16.26 per cent of market share.

Another PSU, Export Credit Guarantee Corporation recorded 18.52 per cent growth in premium collection at Rs 134 crore. It had a market share of 2.44 per cent. Among the private players, ICICI Lombard performed excellently by recording 92 per cent growth in premium at Rs 423 crore while Bajaj Allianz grew by 51.7 per cent at Rs 319 crore.

Health insurance sector:

With lifestyle-impact diseases like cancer and cardiac diseases expected to account for nearly 30 per cent of in-patient ailments and HIV infections expected to rise significantly, healthcare insurance sector is poised to become a Rs 25,000-crore industry by 2010. What's more, it is estimated to treble itself in the next 10 years if insurance companies offered a right mix of targeted products, the industry chamber said based on findings of a recent study to access the potential of health insurance sector in India. Already, the healthcare sector, including service-providers, payers, pharmaceutical and medical devices manufacturers, is estimated to be a Rs 75,000-crore industry. It is estimated that the share of the elderly in the total population would increase to 8.9 per cent and the total number of senior citizens would rise 107 per cent to 113 million by 2016, providing scope for the sector's growth like never before, the study said. However, the absence of any standalone health insurance player in the market may prove to be a major hindrance. According to the study, share of the elderly in the total population would increase to 8.9% while the total number of senior citizens would increase by 107% to touch 113 million by 2016, providing huge scope for the sector's unprecedented growth. Health spending in India at 6% of GDP is among the highest estimated for developing countries like China, Indonesia and most other African countries, the chamber report pointed out. It has been estimated that over the next 10 years, growth in health insurance could reach 6.2-7.5% of GDP. In-patient spending, which is currently less than 40%, is also expected to increase to more than 50%. The study further points out that insurance products would have to broaden their scope in a major way beyond hospitalization and cover domiciliary (home-based) treatment. The bulk of the formal sector should be covered by an expanded mandatory insurance, with affordable cover and convenient modes of premium payment.

Conclusion

The General Insurance Industry has an enviable track record among public sector units. It has a consistent profit and dividend paying record accompanied by a steady growth in its financial resources. India's insurance sector is likely to clock an unprecedented growth of over 200 per cent by 2009-10. During this period, private players will grow at 140 per cent owing to their aggressive marketing techniques as against a growth rate of 35-40 per cent of state owned insurance companies. It is expected that the total insurance business to reach Rs. 2000 billion in the next two years from current level of Rs. 500 billion players, the market share of state owned insurance companies like GIC, LIC and others have already come down to 70 per cent in the last four-five years from over 97 per cent and more intense competition is likely to be witnessed in the near future.

Bibliography:

  • http://www.indianmba.com/Occasional_Papers/OP85/op85.html
  • http://www.banknetindia.com/finance/genins_asso.htm
  • http://www.irdaindia.org/fileusegi.htm

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