Indian Insurance Industry

INDIAN INSURANCE INDUSTRY:

Insurers Insurance industry, as on 1.4.2000, comprised mainly two players: the state insurers: Life Insurers: •

Life Insurance Corporation of India (LIC)

General Insurers: •

General Insurance Corporation of India (GIC) (with effect from Dec'2000, a National Reinsurer)

GIC had four subsidary companies, namely ( with effect from Dec'2000, these subsidaries have been de-linked from the parent company and made as independent insurance companies.

1. 2. 3. 4.

The Oriental Insurance Company Limited The New India Assurance Company Limited National Insurance Company Limited United India Insurance Company Limited.

Yr: 2000-2001 : ( From 2nd April '2000 to 31st December'2001) Insurance Industry in the year 2000-2001 had 16 new entrants, namely: Life Insurers: S.No Registrati Date of . on Reg. Number

Name of the Company

1

101

23.10.2000 HDFC Standard Life Insurance Company Ltd.

2

104

15.11.2000 Max New York Life Insurance Co. Ltd.

3

105

24.11.2000 ICICI Prudential Life Insurance Company Ltd.

4

107

10.01.2001 Kotak Mahindra Old Mutual Life Insurance Limited

5

109

31.01.2001 Birla Sun Life Insurance Company Ltd.

6

110

12.02.2001 Tata AIG Life Insurance Company Ltd.

7

111

30.03.2001 SBI Life Insurance Company Limited .

8

114

02.08.2001 ING Vysya Life Insurance Company Private Limited

9

116

03.08.2001 Bajaj Allianz Life Insurance Company Limited

10

117

06.08.2001 Metlife India Insurance Company Ltd.

11

133

04.09.2007 Future Generali India Life Insurance Company Limited

12

135

19.12.2007 IDBI Fortis Life Insurance Company Ltd.

General Insurers : S.No.

Registrati Date of on Number Registratio n

Name of the Company

1

102

23.10.2000

Royal Sundaram Alliance Insurance Company Limited

2

103

23.10.2000

Reliance General Insurance Company Limited.

3

106

04.12.2000

IFFCO Tokio General Insurance Co. Ltd

4

108

22.01.2001

TATA AIG General Insurance Company Ltd.

5

113

02.05.2001

Bajaj Allianz General Insurance Company Limited

6

115

03.08.2001

ICICI Lombard General Insurance Company Limited.

7

131

03-082007

Apollo DKV Insurance Company Limited

8

132

04-092007

Future Generali India Insurance Company Limited

9

134

16-11-2007

Universal Sompo General Insurance Company Ltd.

Yr: 2001-2002

: ( From 1st Jan 2001 to Dec. 2002)

Insurance Industry in this year, so far has 5new entrants; namely Life Insurers: S.No. Registration Date of Number Reg.

Name of the Company

1

121

03.01.2002 Reliance Life Insurance Company Limited.

2

122

14.05.2002 Aviva Life Insurance Co. India Pvt. Ltd.

General Insurers : S.No.

Registrati Date of on Number Registrati on

1

123

15.07.2002 Cholamandalam General Insurance Company Ltd.

2.

124

27.08.2002 Export Credit Guarantee Corporation Ltd.

3.

125

27.08.2002 HDFC-Chubb General Insurance Co. Ltd.

Yr: 2003-2004

Name of the Company

: ( From 1st Jan 2003 till Date)

Insurance Industry in this year, so far has 1new entrants; namely Life Insurers: S.No. Registration Date of Number Reg. 1

127

Yr: 2004-2005

Name of the Company

06.02.2004 Sahara India Insurance Company Ltd.

:

Insurance Industry in this year, so far has 1new entrants; namely Life Insurers: S.No. Registration Date of Number Reg. 1

128

Yr: 2006-2007

Name of the Company

17.11.2005 Shriram Life Insurance Company Ltd.

:

Insurance Industry in this year, had 1new entrants; namely Life Insurers: S.No. Registration Date of Number Reg.

Name of the Company

1

Bharti AXA Life Insurance Company Ltd.

130

Yr: 2007-2008

14.07.2006

:

Insurance Industry in this year, had 2 new entrants; namely S.No. Registration Date of Number Reg.

Name of the Company

1

133

04.09.2007

Future Generali India Life Insurance Company Limited

2

135

19.12.2007

IDBI Fortis Life Insurance Company Ltd.

Yr: 2008-2009

:

Insurance Industry in this year, so far has 3 new entrants in Life and 1 new entry in General ; namely Life Insurers:

S Registrati Date of .No. on Reg. Number

Name of the Company

1

136

08.05.20 Canara HSBC Oriental Bank of Commerce Life Insurance 08 Company Ltd.

2

138

27.06.20 Aegon Religare Life Insurance Company Ltd. 08

3

140

27.06.20 DLF Pramerica Life Insurance Company Ltd. 08

4

142

Star Union Dai-ichi Life Insurance Co. Ltd.,

General Insurers: S.No. Registration Date of Number Reg.

Name of the Company

1

139

27.06.2008 Bharti Axa General Insurance Company Ltd.

2

141

15.12.2008 Raheja QBE General Insurance Co. Ltd

INSURANCE BUSINEES

:

Insurance business is divided into four classes : 1) Life Insurance 2) Fire Insurance 3) Marine Insurance and 4) Miscellaneous Insurance. Life Insurers transact life insurance business; General Insurers transact the rest. No composites are permitted as per law. LEGISLATION (as on 1.4.2000): Insurance is a federal subject in India. The primary legislation that deals with insurance business in India is: Insurance Act, 1938, and Insurance Regulatory & Development Authority Act, 1999.

INSURANCE PRODUCTS (as on 1.4.2000) (for latest information get in touch with the current insurers – website information of insurers is provided at the web page for insurers ): Life Insurance: Popular Products: Endowment Assurance (Participating), and Money Back (Participating). More than 80% of the life insurance business is from these products. General Insurance: Fire and Miscellaneous insurance businesses are predominant. Motor Vehicle insurance is compulsory. Tariff Advisory Committee (TAC) lays down tariff rates for some of the general insurance products (please visit website of GIC for details ) 2001 New products have been launched by life insurers. These include linkedproducts. For details, please visit the websites of life insurers. INFORMATION About the insurance industry, the following documents may be helpful: Malhotra Committee Report (The Report of the Committee on Reforms in the Insurance Sector); IRDA's First Annual Report - 2001 CUSTOMER PROTECTION: Insurance Industry has Ombudsmen in 12 cities. Each Ombudsman is empowered to redress customer grievances in respect of insurance contracts on personal lines where the insured amount is less than Rs. 20 lakhs, in accordance with the Ombudsman Scheme. Addresses can be obtained from the offices of LIC and other insurers. Career Prospects Bioinformatics professionals have multiple career options. Most of these professionals are absorbed in pharmaceutical and Biotech companies. They can also work with premier scientific research institutes of public and private sector. They can also work with government and private hospitals. These professional also can find employment in industries manufacturing various biomedical products. One can also take up teaching jobs in public and private collages offering bioinformatics as a subject. The scope of bioinformatics is in areas like database design and maintenance, sequence assembly, proteomics, clinical pharmacologist, sequence analysis, informatics developer and bio-analytics. Indian companies like Wipro, Reliance, Satyam, TCS and companies like Accelrys and IBM Life Sciences Pubgene, Silicon Genetics and Tessella offer good employments to the bioinformatics candidates.

In dust ry Ov er view : : Insu rance

The domestic insurance industry in India is estimated to be around US$ 60.5 billion by 2010, of which US$ 35 billion will come from rural and semi-urban areas. While the life insurance market is expected to grow to US$ 35 billion, non-life insurance market will touch an estimated US$ 25 billion. With the largest number of life insurance policies in force in the world, India’s insurance sector accounted for 4.1 per cent of GDP in 2006-07, up from 1.2 per cent in 1999-2000, far ahead of China where insurance accounts for just 1.7 per cent of the GDP and even the US where insurance penetration stands at 4 per cent of the GDP. One area that continues to cause concern is the number of customer grievances in insurance, especially in a few specific classes. This calls for more transparency in designing the contract wording and on insisting that the applicant is sufficiently informed about the coverage and more particularly the exclusions. In addition, the legislation itself requires to be transformed to meet the needs of the emerging markets. The Law Commission of India which has gone extensively into the various insurance laws has submitted its report. Further, the expert committee headed by Mr. K.P. Narasimhan has also submitted its proposals requiring amendments to the laws. The demand for health insurance covers has seen a healthy increase, and today the sector is the fastest growing segment in the non-life insurance industry in India, which grew at over 40% last year. It is also emerging as an increasingly significant line of business for life insurance companies. During the last five years, the premium from health insurance products in non-life companies has grown from 675 crores in 2001-02 to Rs 3200 crores in 2006-07, almost 5 times its level 5 years back. While this rate of growth appears to be very healthy, it is on a low base, and health insurance penetration in the country continues to be low. Only about 25 million persons are presently covered for health through commercial insurance, in a country of over 1.1 billion people. Overall, the Indian health sector is still characterized by the near absence of any significant risk protection against major health-related expenditure, as insurance and other organized forms of payment for health services, including ESIS, CGHS and other such schemes barely constitute a tenth of all health expenditure in the country. Almost four-fifths of the health spending in the country is private, out-of-pocket expenditure. In the absence of such protection, the financial impact of hospitalization can be very pronounced, and indeed is reported as one of the leading causes of impoverishment in the country Indian insurance companies recorded a 19.9 per cent growth in premium in dollar terms (adjusted for inflation) in 2006-07, compared to the world market growth rate of 2.9 per cent. This rate of growth of the industry looks particularly impressive when seen against the fact that the combined penetration of both life and non-life is less than 2 per cent of the GDP compared to world average of 7.52 per cent. Clearly, the scope for growth is enormous. Led by the Life Insurance Corporation (LIC), the life insurance industry registered a growth of 110 per cent in fiscal 2006-07, taking the total business to US$ 19.2 billion from the previous year’s US$ 9.1 billion. The life insurance market has grown rapidly over the past six years, with new business premiums growing at over 40 per cent per year owing to the entry of a host of new players with significant growth aspirations and capital commitments. The total life insurance market premiums is likely to more than double from the current US$ 40 billion to US$ 80-US$100 billion by 2012, says a study by McKinsey. The study titled ‘India Insurance 2012: Fortune Favours the Bold,’ expects a rise in premiums between 5.1 and 6.2 per cent of the GDP in 2012 from the current 4.1 per cent driven by greater insurance intensity per capita as the average per capita income increases and rise in penetration in urban and rural areas. The life insurance premium contributions per capita have jumped from a little over US$ 7 in 1999-2000 (pre-liberalisation) to US$ 38.5 in 2006-07. Life insurance penetration in India - which was less than 1 per cent till 1990-91 - increased to 2.53 per cent in 2005, and to 3 per cent in 2006-07. While the impetus for growth has come from both public and private insurers, the number of players in this segment have also increased to 16 (15 in private sector), with Life Insurance Corporation (LIC) being the dominant player (market share of over 74 per cent). The general insurance industry grew 11.6 per cent between April and November in 2007-08 with robust performances by private players. The 13 non-life insurers collected US$ 4.7 billion in premium against US$ 4.2 billion in the same period last year. While the public sector could increase its premiums by just 3.57 per cent, 9 private sector players clocked premium growth of 26.49 per cent. Private sector players’ market share has grown to about 40 per cent in FY08 as compared to the public sector’s 60 per cent. INSURANCE SECTOR POLICY BY GOVERNMENT • Foreign direct investment up to 26 per cent is permitted under the automatic route subject to obtaining a license from the IRDA. • IRDA has removed administered pricing mechanism, i.e. de-tariffing in respect of fire and engineering along with motor insurance of general insurance for premium, effective from 1 January, 2007. •

The control rates on fire, engineering and workmen’s compensation insurance classes has been