APROJECT REPORT

ON

"Role of LIC In Indian Insurance Industry "

of

LIC Company

MASTER OF BUSINESS ADMINISTRATION

Semester-4

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PREFACE(SEPARATE PAGE)

ACKNOWLEDGEMENT(SEPARATE PAGE)________________________________________________________

TABLE OF CONTENTS ABSTRACT / EXECUTIVE SUMMERY CHAPTERS APPENDICES / ANNEXURES REFERENCES / BIBLIOGRAPHY

INTRODUCTION1.1 LIFE INSURANCE IN INDIA

1 LIFE INSURANCE IN INDIA

With such a large population and the untapped market area of this populationInsurance happens to be a very big opportunity in India. Today it stands as a business growing atthe rate of 15-20 per cent annually. Together with banking services, it adds about 7 per cent tothe country¶s GDP .In spite of all this growth the statistics of the penetration of he insurance inthe country is very poor. Nearly 80% of Indian populations are without Life insurance cover andthe Health insurance. This is an indicator that growth potential for the insurance sector isimmense in India. It was due to this immense growth that the regulations were introduced in theinsurance sector and in continuation Malhotra Committee was constituted by the governmentin 1993 to examine the various aspects of the industry. The key element of the reform processwas Participation of overseas insurance companies with 26% capital. Creating a more efficientand competitive financial system suitable for the requirements of the economy was the main idea behind this reform. Since then the insurance industry has gone through many sea changes .Thecompetition LIC started facing from these companies were threatening to the existence of LIC.Since the liberalization of the industry the insurance industry has never looked back and todaystand as the one of the most competitive and exploring industry in India. The entry of the private players and the increased use of the new distribution are in the limelight today. The use of newdistribution techniques and the IT tools has increased the scope of the industry in the longer run.

  1.2 A BRIEF HISTORY

The origin of insurance is very old .The time when we were not even born; manhas sought some sort of protection from the unpredictable calamities of the nature. The basicurge in man to secure himself against any form of risk and uncertainty led to the origin of insurance. The insurance came to India from UK; with the establishment of the Oriental Lifeinsurance Corporation in 1818.The Indian life insurance company act 1912 was the first statutory body that started to regulate the

life insurance business in India. By 1956 about 154 Indian, 16 foreign and 75 provident firmswere been established in India. Then the central government took over these companies and as a result theLIC was formed. Since then LIC has worked towards spreading life insurance and building a widenetwork across the length and the breath of the country. After the liberalization the entrance of foreign players has added to the competition in the market. The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance companyestablished in the year 1850 in Calcutta by the British. In 1957 General Insurance Council, a wing of theInsurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. In 1972 The General Insurance Business (Nationalization) Act, 1972 nationalized the generalinsurance business in India with effect from 1st January 1973. It was after this that 107 insurersamalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New IndiaAssurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance CompanyLtd. GIC incorporated as a company.

1.3 INSURANCE SECTOR REFORMS

In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor wasformed to evaluate the Indian insurance industry and give its recommendations. The committee came upwith the following major provisionsy Private Companies with a minimum paid up capital of Rs.1bn should be allowed to enter theindustry.y   Foreign companies may be allowed to enter the industry in collaboration with the domesticcompanies.y Only one State Level Life Insurance Company should be allowed to operate in each state It wasafter this committee came into affect the regulatory body for insurance sector was formed withthe name of IRDA.IRDA:

The IRDA since its incorporation as a statutory body has been framing regulationsand registering the private sector insurance companies. IRDA being an independent statutory body has

1.4 IMPACT OF LIBERALIZATIONThe 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 carrer.The market share was distributed among the private players. Though LIC still holds the 75% of the insurance sector but the upcoming natures of these private players are enough to give more competition to LIC in the near future. LIC market share has decreased from 95% (2004-05) to 81 %( 2009-10).The following companies has the rest of the market share of the insurance industry

Theoretical Background

Industry Profile

• India is the seventh largest country in the world with a population of around 1100 million.

• India is the second most populous country in the world, next only to China.

• It has 28 states and 7 Union Territories with distinct cultural backgrounds.

• India is known for its diversity with multi varied socio-economic conditions and languages. It has many geographical features and a rich history.

• India is the largest democratic country in the world with a strong judicial framework.

• The middle class segment is 250 million strong. It has aspirations and is ambitious.

• India has the 4th largest economy based on Purchasing Power Parity.

• Indian GDP is growing at an average of 9% over the last few years.

• The total individual policies serviced by all life companies in India are around 270 millions of which LIC alone has around 250 million.

• Total premium of all life companies is only about 4% GDP.• It still leaves a lot of potential for the life companies to grow

and prosper in India.• Since Independence, in 1947 India had followed a socialistic

pattern of economy, wherein government intervention and investment were high.

• Even then there was a strong private sector participation since the time of Independence.

The history of Life Insurance in India• The birth and growth of the Insurance sector in India is quite

breath taking.• In the year 1818 the Oriental Life Insurance Company was

started at Kolkata.• In 1912 the Indian Life Assurance Companies Act was enacted

as the first statute to regulate the Life Insurance Business.• In 1938 the earlier legislation was consolidated and amended to

become the Insurance Act with the objective of protecting the interests of the insuring public.

• In 1956, the LIC of India was formed under the LIC Act,1956 with a capital contribution of Rs. 5 crores i.e $ 1.2 million at current rates from the Government of India, nationalising 245 life insurance companies.

• In 1999, the Insurance Regulatory and Development Authority popularly known as IRDA was created by an act of the Parliament to regulate all insurance companies and businesses in India.

• IRDA has evolved into an effective regulator and it has facilitated the entry and growth of private players in the insurance sector.

• Since then the growth of the insurance industry in India has never been the same again.

• Life Insurance is a sun rise industry in India.• Many major international players are operating in

collaboration with Indian partners. The Joint Ventures are backed by strong capital base and latest technology.

• The sector was opened up for private players in the year 2000. Currently there are 19 companies operating in India in addition to LIC of India.

• I am proud to state that LIC is the dominant player.• LIC Highlights• Assets as on 31.03.2008 : $ 185 billion• No. of policies : 250 million• No. of employees : 1,13,000• No. of agents : 1.2 million• After opening up of the sector the life insurance industry has

grown leaps and bounds. The industry has earned $ 45 billion total premium income during the F.Y 2007-08.

• The life insurance companies are the largest institutional investors in India.

• There is a shift from long term policies to short term.• Customers are expecting higher returns and thereby a strong

emphasis on unit linked plans.• When stock markets are volatile can the life insurance

companies overcome the turbulence? Are they equipped to tide over the storm?

• Innovative and market driven products are being offered by all the companies.

• All companies are building the distribution channels with strong tied agency network.

• Alternate distribution channels are also being developed in order to strengthen the overall process of procuration of business and deliver of service.

• India has a total of 2.5 million agents of which 50% are with LIC alone.

• There is a sharp increase in the remuneration of life insurance professionals Challenges : Many

• Professionals and experts are in short supply. Man power requirement has increased manifold.

• Increase in salaries to employees leading to high levels of attrition. Retention of employees is a major challenge.

• India being a vast country and with huge population, is a challenge for the life companies.

• Designing products for the people of various economic strata is

a daunting task indeed Prosperity of all companies depends upon their capability to innovate and include all sections of the society into their business portfolio.

• Micro Insurance and financial inclusion will be major challenges for all the companies.

• There is a shift from traditional endowment policies to unit linked policies.

• There is a shift from long term policies to short term.• Customers are expecting higher returns and thereby a strong

emphasis on unit linked plans.• When stock markets are volatile can the life insurance

companies overcome the turbulence? Are they equipped to tide over the storm?

• One of the key drivers of the Indian economy has been the dramatic increase of the urban population.

• Urban India today is already more populous than the entire United States. By 2025, it will exceed the current population of the European Union.

• Apart from this, the real potential lies in the rural India where prosperity is on the rise

• Go Rural is the slogan for most of the companies in India today. Key Issues

• Building institutions for development of self regulation for better market conduct

• Development professionalism and organising research for industry to develop on scientific lines

• Ensuring profitability and return to stakeholders by cost competitive policies.

company profile

Brief History Insurance

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 recent past, particularly after the industrial era – past few centuries – yet its beginnings date back almost 6000 years.

Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of European community and Indian natives were not being insured by these companies. However, later with the efforts of eminent people like Babu Muttylal Seal, the foreign life insurance companies started insuring Indian lives. But Indian

lives were being treated as sub-standard lives and heavy extra premiums were being charged on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of such companies inspired by nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance companies. The United India in Madras, National Indian and National Insurance in Calcutta and the Co-operative Assurance at Lahore were established in 1906. In 1907, Hindustan Co-operative Insurance Company took its birth in one of the rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were some of the companies established during the same period. Prior to 1912 India had no legislation to regulate insurance business. In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed. The Life Insurance Companies Act, 1912 made it necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary. But the Act discriminated between foreign and Indian companies on many accounts, putting the Indian companies at a disadvantage. 

The first two decades of the twentieth century saw lot of growth in insurance business. From 44 companies with total business-in-force as Rs.22.44 crore, it rose to 176 companies with total business-in-force as Rs.298 crore in 1938. During the mushrooming of insurance companies many financially unsound concerns were also floated which failed miserably. The Insurance Act 1938 was the first legislation governing not only life insurance but also non-life insurance to provide strict state control over insurance business. The demand for nationalization of life insurance industry was made repeatedly in the past but it gathered momentum in 1944 when a bill to amend the Life Insurance Act 1938 was introduced in the Legislative Assembly. However, it was much later on the 19th of January, 1956, that life insurance in India was nationalized. 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 passed 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. Re-organization of LIC took place and large numbers of new branch offices were opened. As a result of re-organisation servicing functions were transferred to the branches, and branches were made accounting 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-organisation 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, 109 divisional offices, 8 zonal offices, 992 satallite offices and the Corporate office. LIC’s Wide Area Network covers 109 divisional offices and connects all the branches through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer on-line premium collection facility in selected cities. LIC’s ECS and ATM premium 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 surpassing 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.

From then to now, LIC has crossed many milestones and has set unprecedented performance records in various aspects of life insurance business. The same motives which inspired our forefathers to bring insurance into existence in this

country inspire us at LIC to take this message of protection to light the lamps of security in as many homes as possible and to help the people in providing security to their families.

Some of the important milestones in the life 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.

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 nationalised. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.

The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British.

Some of the important milestones in the general insurance business in India are:

1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices.

1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalisation) Act, 1972 nationalised thegeneral insurance business in India with effect from 1st January 1973.

107 insurers amalgamated and grouped into four companies viz. the NationalInsurance Company Ltd., the New India Assurance Company Ltd., theOriental Insurance Company Ltd. and the United India Insurance CompanyLtd. GIC incorporated as a company.

Objectives if LIC

Spread Life Insurance widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in the country and providing them adequate financial cover against death at a reasonable cost.

Maximize mobilization of people's savings by making insurance-linked savings adequately attractive.

Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose money it holds in trust, without losing sight of the interest of the community as a whole; the funds to be deployed to the best advantage of the investors as well as the community as a whole, keeping in view national priorities and obligations of attractive return.

Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders.

Act as trustees of the insured public in their individual and collective capacities.

Meet the various life insurance needs of the community that would arise in the changing social and economic environment.

Involve all people working in the Corporation to the best of their capability in furthering the interests of the insured public by

providing efficient service with courtesy.

Promote amongst all agents and employees of the Corporation a sense of participation, pride and job satisfaction through discharge of their duties with dedication towards achievement of Corporate Objective.

Mission "Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns, and by rendering resources for economic development." 

Vision"A trans-nationally competitive financial conglomerate of significance to societies and Pride of India."

 

Members On The Board Of The Corporation

Shri D.K.Mehrotra, (CHAIRMAN,LIC)

Shri ThomasMathewT. (ManagingDirector,LIC)

Shri SushobhanSarker (ManagingDirector,LIC)

Shri ArvindMayaram (Secretary, Department of Economic Affairs, Ministry of Finance, Govt. of India.)

Shri RajivTakru (Secretary,DepartmentofFinancialServices,MinistryofFinance,Govt.ofIndia.)

Shri A.K. Roy (ChairmancumManagingDirector,GIC.)

Shri M.V. Tanksale (Chairman & Managing Director, Central Bank of India

)

ShriAnupPrakashGarg

ShriSanjayJain

ShriAshokSingh

ShriK.S.Sampath 

ShriAmardeepSinghCheema 

Smt Manjari Kackar

Detailed survey of literature

Litrature Review (Banking & Insurance)

1. Life Insurance Industry in India - Current Scenario Dr. Sonika Chaudhary, Priti Kiran (September 2011)

ObjectivesThe present paper is an attempt to study the recent life insurance

scenario in the light of changes mentioned above. For this purpose, various indicators like growth in total number of offices of life insurers, growth in number of individual agents working

in life insurance industry, number of products and riders, growth of life insurance business and premium income, lapse / forfeiture ratio and settlement of death claims in Indian life insurance industry have been analyzed.

Data Collection and AnalysisThe study is based upon secondary data which has been collected from

annual reports of IRDA, IRDA journal and Life Insurance Today. Besides, a few websites have also been consulted. The data used in the paper covers the period from

2006-07 to 2010-11.For the analysis of data, statistical tools like percentages, ratios,growth rates and coefficient of variation have been used

ConclusionsFrom the above discussion it is evident that life insurance industry

expanded tremendously from 2000 onwards in terms of number of offices, number of agents, new business policies, premium income etc. Further, many new products (like ULIPs, pension plans etc.) and riders were provided by the life insurers to suit the requirements of various customers. However, the new business of such companies was more skewed in favor of selected states and union territories. During the period of study, most of life insurance business was underwritten in the last four months of the year. Private life insurers used the new business channels of marketing to a great extent when compared with LIC. Investment pattern of LIC and private insurers also showed some differences. Solvency ratio of private life insurers was much better than LIC in spite of big losses suffered by them. Lapsation ratio of private insurers was higher than LIC and servicing of death claims was better in case of LIC as compared to private life insurers.

Reference:www.irdaindia.orgwww.irdajournal@irda.gov.in

2. Pre-launch Report of Insurance Campaign Survey Awareness

Study Team :Anushree Sinha, Rajesh Jaiswal, Barun Deb Pal, Kalicharan Shukla,Ramamani Sundar,Geetha,Natesh,Sadhana Singh (2011)

The report is based on a survey of 30,200 respondents spread over 29 states and union territories.

NCAER queried respondents on their awareness levels regarding rights, policyholders’ protection, types of insurance products and benefits of insurance.The study also generated a socio-economic profile of insured and uninsured population. In studying the aggregate data,we were able to identify distinct indicator-based segments, and compared how different segments perceive insurance differently.

stratified sample design used.

The intention of this report is to inform various insurers regarding the range and complexity of insurance awareness issues.The report will equip insurance companies with a ready reference to the fundamental aspects of business.The aim of this report is to reach those with limited knowledge of insurance and to provide a comprehensive picture of the awareness scenario across the country. Starting with the history of insurance sector, the report charts out a course of insurance awareness parameters. First the concept, importance, origin and development of insurance is dealt with followed by the methodology.

Methodology is followed by an exposition of the socio-economic characteristics of the insured and uninsured households. The almost revealing perception of households about insurance as a concept and its benefits is detailed in the following chapter.Amore ready understanding has been detailed with regard to benefits of insurance.Awareness levels of the insured

households about various aspects of insurance are elaborated in the next chapter. Each chapter is dealt with comprehensively and yet compendiously and each is accorded appropriate significance in the chapter conclusions. There is also a final chapter concluding the report which also provides policy recommendations.

The information contained in this report is quite diverse. It is structured for easy comprehension of policy makers and insurers of the ground realities. The analysis too is quite diverse.The emphasis is placed on findings fromrespondents of the desired role and significance for the insurance business. I hope that armed with the assessment of the report, the propagators of insurance would gain greater appreciation of the significance of their role and that of the other players in the business.The report recognizes that some readers may merely wish to use this from time to time to refresh their insight.

conclusionThe analysis yields the following conclusions:(i) A higher proportion of insured households have salaried, regular

wage earners or are selfemployed;(ii) The proportion of labourers is higher among the uninsured.(iii) The average annual income, expenditure and savings of insured

households ismuch higher than that of uninsured households.(iv) Among both the insured and the uninsured, urban households are

better off than rural households.(v) Parameters such as ownership of land and bhouse with electricity

connection also indicate that insured households are economically better off than the uninsured.

Reference:www.policyholder.gov.in

3. C. Barathi, C. D. Balaji and Ch. Ibohal Meithei (2011),

In the research paper title“ Innovative Strategies To Catalyse Growth Of Indian Life Insurance Sector-An Analytical Review” have clearly discussed about the impact of global recession on the fastest growing Indian insurance

market. He find the entry of many private companies has created a paradigm shift in insurance marketing in India in terms of products, tariffs; customer service etc. The paper is exploratory and secondary based in nature and explores thevarious strategic options that can be effectively implemented by the life insurers to improve the coverage and penetration of life insurance this paper explore the strategies that insurance companies can adopt in order to counter the negative impact of the global economic recession. The findings of the study is that companies instead of focusing only on improving the variety of products needs to focus on targeting new segments and implement innovative strategies in order to achieve sustained growth and ensure profitability of business as well as growth of insurance coverage.

Krishnamurthy. S, Mony S.V, Jhaveri. N, Bakhshi.S, Bhat.S and Dixit M.R (2005)In the paper titled “Insurance Industry in India: Structure, Performance and Future Challenges”, has clearly explained the status and growth of Indian Insurance Industry after liberalization and also presents future challenges and opportunities linked with the Insurance. Insurance is the backbone of country’s risk management system and influence growth of an economy in several ways. Penetration of Insurance largely depends on availability of Insurance products, insurance awareness and quality of services. The future growth of this sector will depend on how effectively the insurers are meeting the expectations of their customers and able to change the perceptions of the Indian consumers and make them aware of the insurable risks. On the demand side, the rises in income will trigger the growth of Insurance. The process of reforms has enhanced competition, provided a choice to the customers, improved the efficiency level of the Industry and obligated the insurers to provide social and rural sectors. LIC continues to remain strong in rural areas while in major urban and metros the private insurers have made their presence felt.

Kundu (2003)in an article titled ‘What’s next in India’s Insurance market’ discussed the changes in various issues of Insurance Industry after the entry of new players. Despite of having huge population, India still has a low insurance

penetration. Today, people are increasingly looking not just at products but at integrated financial solutions that can offer stability of returns along with total protection. Technology will play an important role in aiding design and administrating of products as well in efforts to build long customer relationships.

Kapse.S and Kodwani d.g (2003)in their article titled “insurance as an investment option”. It is argued that in the changing scenario for the insurance sector there is going to be a good opportunities for insurance sector to expand its market base. For this purpose there is need to improve the features of the insurance products to make them more liquid or short term schemes could be increased. It is shown that although rewards implied by the insurance products particularly by the tax benefits are quite close to those observed in banks and small saving scheme of the governments.

Murthy, R.Babu and Ansari (2009)in the paper examined the performance of Life Insurance Corporation. Due to globalization of financial services and liberalization of economy, the Life Insurance Corporation of India (LIC) has been facing intense competition from the new entrants and is also playing a lead role in the life insurance industry. The purpose of the study is to analyze the growth and development of LIC business before and after liberalization, ways to improve customer services and to make appropriate suggestions for the improvement in LIC business. There is no doubt that, life Insurance Industry has grown significantly with the entry of private players but the market share of LIC has declined gradually over a period of years. The direct competition from the private players has forced LIC to look for effective marketing strategy with innovative products and better customer services in order to satisfy existing policyholders and policy seekers Creating a win-win situation for both the parties are the main aim of this study to achieve this healthier competition has to be intensified by both the sectors, to increase insurance-density and penetration levels in order to fulfill customer needs and reach their expectations of the Indian Insurance market.

Paramita Chatterjee (2009)In her article titled “Private insurers command majority share of life Insurance market”. She evidently said private insurers recorded 62% growth rate in April-December 2008 against 45% in the same period of last fiscal. ICICI Prudential, HDFC Standard, SBI Life and Bajaj Allianz are the dominant players of the life Insurance sector. LIC a market leader recorded a decline of 28% and experts said the Industry has witnessed a reasonable growth despite the tight financial conditions.

Rastogi. S and Sarkar.R (2006)In the research paper deals with enhancing competitiveness: the case of the Indian life insurance industry identifies the causes and the objectives with which the sector was reformed in 2000. Despite oh huge population and abundance growth opportunity, India was one of the least insured.

countries compared to the other developed nations. In view to increase market penetration, the life insurance sector was opened for private entry in the year 2000. Opening of the sector to private firms was aimed at fostering competition and innovation through a greater variety of products. The study was an effort at studying the trends emerging with in this sector and an attempt has been made to analyze whether the industry has benefited from the governmental reforms. Hence this paper is an endeavor towards analyzing the industry in its present form and comparing it with the pre-liberalized era, thereby understanding the alternate strategies that can facilitate the development of sound policies and practices leading to a globally competitive insurance industry within the country.

Tripathi. S (2009)In his dissertation report on “A comparative analysis of LIC and Private Insurance Companies”. The main objective of the study is to compare the

performance of LIC and private life insurance companies. The study was analytical and based on secondary data sources. Comparison between LIC and private insurers has been done on the basis of size, growth, productivity and grievances handling mechanism. Private companies are giving direct competition to LIC, LIC is a dominating player even after privatization and abundance scope of insurance expansion in the Indian market, LIC is having huge customer base being an old giant are some of the main findings of this study. He concluded that LIC is a most popular and leading brand but with aggressive marketing approach; private companies are giving direct competition to LIC.

Need of the StudyWhen compared with the developed foreign countries, the Indian life insurance industry has achieved only a little because of the lack of quality strategies adopted by the LIC, lack of standard education and awareness about savings, low capital per income and lack of employment opportunities. Since the introduction of new economic policy (lpg) in the year 1991, the shape of the Indian life insurance industry has been changing and it has geared up. The huge and ever rising population levels in our country provide an attractive opportunity for the global insurance majors to seek their fortunes here. That is the reason we find so many private players today competing with LIC the only life insurer prior to liberalization for insuring Indian lives. The study is basically intended to analyze the condition of life insurance industry after liberalization.

Importance of the StudyThe insurance industry is one of the fastest growing industries in the country and offers unlimited growth potential. The LIC was the only company in life insurance business in India from 1956 to 1999. The low performance, poor customer services, ineffective marketing, low insurance penetration were some of the problem with LIC. In view to overcome these problems and improved market penetration; liberalization of Indian insurance industry were announced in an IrDA reform 1999. Hence the researcher has taken up the present study to analysis the present condition of life insurance in post

liberalization and benefits to the industry after opening up of the sector to the private insurers.Objectives Of The Study

• To examine the need of liberalization in Indian life insurance industry.

• To analyze the condition of life insurance business in post-liberalization period.

• To analyze the impact of liberalization on Indian life insurance business.

• To compare the performance of LIC and private life insurers.

• To provide suggestion to improve the performance of life insurance business in India.

Hypothesis• H0: There Is No Significant Impact Of Liberalization On The Growth

Of Indian Life Insurance Business.

• Ha: There Is A Significant Impact Of Liberalization On The Growth Of Indian Life Insurance Business.

Research Methodology

• Type of Research : Descriptive and Analytical Research

• Data Collection : Completely Secondary Based

• Statistical Tools : Bar graphs and simple tabulation.

Findings:• The total premium income of the industry has increased from Rs.

50094.46 crores in 2001-2002 to Rs. 265450.37 in 2009-2010. This shows that life insurance industry has achieved a remarkable growth in the premium income after the entry of private insurers

• If we see the total number of policies issued by LIC and private insurance companies, we find that there is a huge gap between them. No doubt that LIC is a well established player in the field of insurance

and many private companies have just started their business. Hence it is obvious that LIC is having large number of policyholders.

• Number of polices has subsequently increased year after year but the performance of LIC has deteriorated and those of private players have been improved tremendously. With every successive year, private players are gaining the trust of the pubLIC and have quite successful in snatching the business from LIC.

• Though the income of private insurance companies is negligible when compared with LIC but then also the pace with which they are increasing their income is tremendous. Private insurance companies are expanding their business and will certainly going to give a tough competition to LIC in the coming days.

• Suggestions

• LIC was the only company in life insurance business prior to privatization and after privatization also LIC has a strong presence in life insurance market and to retain its market leader status the LIC needs to acquire more competitiveness in terms of product innovation, customer awareness, customer services and technology.

• The liberalization of the Indian insurance sector has both pros and cons. The ill-effects of liberalization on insurance industry can be lessen by promoting healthy competition among the life insurers and keeping the interest of common people above profit motive of the insurers.

• To achieve greater insurance penetration, the healthier competition has to be intensified by both the sectors and they should come up with new innovative products to offer greater variety or choice to the customers and also make improvement in the quality of services and sell products through appropriate distribution channel to win-win situation for both the parties.

• Conclusion• India is among the important emerging insurance markets in the world.

Life insurance will grow very rapidly over the next decades in India.

Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors. Competition has brought more product innovation and better customer servicing and bring positive influence on the life insurance business. India insurance is a flourishing industry, with several national and international players competing and growing at rapid rates. The overall business of life insurance has been significantly increased after privatization but still a huge Indian population lives is being uninsured. Although LIC is a giant player in life insurance business but private insurance companies are moving at a fast pace. Though the income, size and penetration of private insurance companies is less when compared with LIC but then also the pace with which they are raising their market share is tremendous. Private insurance companies with its new innovative products and better customer services are expanding their business and will certainly going to give a tough competition to LIC in the coming days.

Reference:www.irda.orgwww.ijsst.com

4. JOURNEY OF INSURANCE SECTOR IN INDIA: SINCE IT'S INCEPTION

Dr. Govind P. Shinde, Dr. D.Y.Patil, Prof. Kuldeep Bhalerao (July 2011)

Insurance sector in India is one of the booming sectors of the economy and is growing at the rate of 15-20 percent per annum. Together with banking services, it contributes to about 7 per cent to the country's GDP. Insurance sector in India was liberalized in March 2000 with the passage of the Insurance Regulatory and Development Authority (IRDA) Bill. This lifted entry

restrictions for private players and allowed foreign players to enter the market with some limits on direct foreign ownership. There is a 26 percent equity cap for foreign partners in an insurance company and a proposal to increase this limit to 49 percent. The opening up of the insurance sector has led to rapid growth of the sector. The potential for growth of insurance industry in India is immense as nearly 80 per cent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be well below international standards.

Objectives of the study:·To study growth of Indian Insurance sector.·To study the Role of Regulatory frame work of IRDA.·To study the Market Potential for Insurance Business.

Research Methodology:The paper is completely a conceptual one whose basic foundation

comes from various secondary sources like research articles in Journal, published and unpublished scholarly papers, and books, various international and local journals, speeches, newspapers and websites. The analysis part of the paper is based on the statistical data provided by IRDA.

Significance of the study:The study has been conducted to review the insurance sector after its

liberalization and to find out the growth of the insurance sector. Insurance sector has shown a phenomenal growth after its liberalization and it has increased after the private sectors entry. Insurance sector in India is the most trusted sector and has insured Indians lives to protect them from the uncertaintities and sudden disasters. Insurance sector is working in all the facets of human life. The study basically talks about the changes in the sector regulations and its impact on the growth.

Conclusions:India is the important emerging insurance markets in the world. Life

insurance will grow very rapidly over the next decades in India. The major drivers include sound economic fundamentals, a

rising middle-income class, an improving regulatory framework and rising risk awareness. The fundamental regulatory changes in the insurance sector in 1999 were significant for future growth. Despite the restriction of 26% on foreign ownership, large foreign insurers were entered the Indian market. State owned insurance companies still have dominant market positions. But, this would probably change over the next decade.

Reference:www. aygrt.isrj.net

5. Rural New Business Of LIC Of India Dr. P.N. Neelkantrao, Jitendra P. Kale, Shaji Shahdevan (Oct

2011 to Mar. 2012)

Life insurance plays an important role in today's modern economy. Initially, because it encourages, the habit of savings and then it provides a safety. Not to rural and urban enterprises and productive individuals. As well as the most important of this sector is it generates long term invisible funds for infrastructure building. Which is most important from the point of development under developed and developing countries like India. Where more than 65% of population live in rural area in these countries, India is not exception for that, so it is necessary to study the role of LIC of India in rural area. Study area:- in the present research paper an attempt has been made to study the "Rural new business LIC of India since 21st century " Rural new business is considered in terms of policies, schemes & sum assured " in order to study the same the data has collected from 2002-2003 to 2007-2008,.

Objectives of the study:-1. To examine the trends in Rural new business of LIC of India2. To examine the trends in Schemes of Rural new business of LIC of

India3. To examine the trends in total sum assured in rural new business of

LIC of India.

Data and research methodology:-The entire data used for the present study have been obtained from

thesecondarysources; the data required for the analysis of different periods are

collected from the following sources.

1. LIC Annual Reports and various issues2. Economic and Political Weekly -Various issues.3. IRDA reports.As far as research methodology is concerned the data has been

analyzed byusing simple Graphs are used for analyzing the data.

Findings and conclusions :-• Total rural new business in terms of schemes of LIC of India has been

increased• from from 2001-02 to 2007-08 from 3701444 to 9043413.• The sum assured of rural business is continuously increasing i.e. from

25461.94• crores per annum in 2001-02 to 68497.21 crores per annum in 2006-07.• There is increase in share of rural business from 13.65 % to 21.67 %.

Reference:www.irasg.com

6. ROLE OF INSURANCE IN ECONOMIC DEVELOPMENT OF INDIA

MONALISA GHOSAL(July 2012)

The economic development of India was dominated by socialist –influenced policies, state-owner sector, and red tape and extensive regulations, collectively known as ‘License Raj’. The Indian economic development got a boost through its Economic reforms in 1991 and again through its renewal in the 2000. Insurance serves a number of valuable economic functions that are

largely distinct from other types of financial intermediaries. Insurance contribution materially to economic growth by improving the investment climate and promoting a more efficient mix of activities then would be undertaken, in the absence of risk management instrument.

The economic reform of 1991 played a pivotal role in the economic development of India. Reaping its benefit the growth of the country reached around 7.5% in the late 2000s.Insurance is a risk transfer mechanism whereby the individuals or the business enterprise can shift some of the uncertainties of life on the shoulder of other. In peace the insurance provides of trade industry which ultimately contribution towards human progress. Thus, insurance is the most lending force contribution towards economic, social and technological progress of man. The Indian insurance market is the 19th largest globally and ranks 5th in Asia, after Japan, South Korea china and twain. In 2003, total gross premiums collected amount to USD 17.3billion representing just under 0.6%of world premiums. Similar to the pattern observed in other regional market and reflecting the country’s high savings rate, life insurance business accounted for 78.5% of total gross premiums collected in the year, against 21.5 for non-life insurance business.

OBJECTIVES AND METHODOLOGYThis paper examines the role of insurance in economic development of India and also the changes occurred till day by differentiating the developing and developed economic growth of India. The present study is based on secondary data and information the sources of which have been complied from different government records publication and related books and articles.

CONCLUSIONIt is very much apparent that the insurance sector is poised for huge growth by way of number of policy holders, policy premium, new product, and increased technology focus, This would in turn play an important role in facilating and sustaining growth. Life insurance has today become a mainstay of many market economies since it offers plenty of scope for garnering large sums of money for long periods of time. A well regulated life insurance

industry which moves with the times by offering its customers tailor made products to satisfy their financial needs is therefore essential if we desire to progress towards a worry free future.

Reference:www.zenithresearch.org.in

Research Methodology

Research Objective

• To analyse the market of Lic and Private Players.• To compare the performance of LIC and private life insurance.• To provide suggestion to improve the performance of life

insurance business in India.

Research Design• Type of Research:

• Descriptive and Analytical Research• Data Collection:

• Completely Secondary Based• Statistical Tools:

• Bar graphs and simple tabulation and Mann Whitney test

Data Collection• Secondary

• Secondary data will collect articles sources like internet, magazines, newspaper, and documents etc.

Data Analysis

• The study is based upon secondary data.• Which will collect from annual reports of IRDA, IRDA journal

and life insurance today.• A few websites will also consult.• For the analysis of data, statistical tools like percentage, Ratios,

Growth rates.• Paper covers from 2006-7 to 2010.

Data analysis and interpretation

MARKET SHARE (In Per cent)

Sr no LIFE INSURANCE COMPANIES PERCENT1. Life insurance corporation of india 72.12. ICICI pru Life 5.33. SBI Life 5.14. HDFC Life 2.85. Bajaja Allianze 2.66. Reliance Life 2.37. Other Life insurance Company 2.8

Source: Annual Report of IRDA, 2009-10

LIC ICICI SBI HDFC BAJAJ RELIANCE0

10

20

30

40

50

60

70

80

PERCENTColumn1Column2

MARKET SHARE OF PUBLIC AND PRIVATE INSURANCE COMPANIES

Insurance sector

2005-6 2006-7 2007-8 2008-9 2009-10

Public(LIC) 73.66 65.28 59.65

Private 26.34 34.72 40.35

FRESH BUSINESS PREMIUM (in Crore)

Life Insurance LIC Growth of rate Private Growth rate

2005-06 28515.87 38.07 10269.76 84.55

2006-07 56223.56 97.17 19425.65 88.84

2007-08 59996.57 6.71 33715.95 73.56

2008-09 53179.08 11.36 34152.00 1.29

2009-10 71521.90 34.49 38372.12 12.36

Source: Annual Report of IRDA, 2009-10.

New policies of public and private life insurers During 2009-10, life insurers had issued 532 lakh new policies, out of which, LIC issued 389 lakh policies (73.02 per cent of total policies issued) and the private life insurers issued 144 lakh policies (26.98 per cent). While LIC reported an increase of 8.21 per cent (-4.52 per cent in 2008-09) in the number of policies issued over the previous year, the private sector insurers reported a decline of 4.32 per cent (13.19 per cent increase in 2008-09) in the number of new policies issued. Overall, the industry witnessed a 4.52 per cent increase (0.10 per cent in 2008-09) in the number of new policies issued.

NUMBER OF NEW POLICIES ISSUED (In Lakh)

Year LIC Growth Rate Percent

Private Growth Rate Percent

2005-06 315.91 31.75 38.71 73.37

2006-07 382.29 21.01 79.22 104.64

2007-08 376.13 -1.61 132.62 67.40

2008-09 359.13 -4.52 150.11 13.19

2009-10 388.63 8.21 143.62 -4.32

Source: Statistical Hand book of Insurance 2009-10.

Total life insurance premium of public and private life insurance companies indicates that the total life insurance premium of LIC of India was 54628.49. it was increased to 186077.31 crore in 2009-10. There is instability in the growth rate of LIC of India. It was 5.01% in 2008-09 and it was increased to 18.30% during the year 2009-10. it was increased to 265450.37 crore in 2009-10. The growth rate of private insurance companies was reduced from year to year. It was 25.09% in 2008-09 and decreased to 19.69% in 2009-10. Compared to LIC of India, the growth rate of total premium of private life insurance companies was high.

The details of total insurance premium of public and privateinsurance companies.

Year Growth Rate LIC Growth Rate Private

2005-06 90792.22 20.85 15083.54 95.19

2006-07 127822.84 40.79 28242.48 87.24

2007-08 149789.99 17.19 51561.42 82.57

2008-09 157288.04 5.01 64497.43 25.09

2009-10 186077.31 18.30 265450.37 19.69

Source: Statistical Hand book of Insurance 2009-10.

Findings

Total new business Premium in terms of schemes of LIC of India has been increased from 2005-06 to 2009-10 from 269436.98 than private 135935.48.

The market share more of lic in percentage in 72.1 Number of New Policies Issued of LIC period in 2005-06 to 2009-10 was 1822.09 and

Private was 544.28 The Details of total insurance premium of public (LIC) was 711770.4 period in 2005-06

to 2009-10 and private was 424835.24 the increased of LIC premium.

LIC are the more claim settle than other private company overall analysis.

Suggestions

LIC was the only company in life insurance business prior to privatization and after privatization also LIC has a strong presence in life insurance market and to retain its market leader status the LIC needs to acquire more competitiveness in terms of product innovation, customer awareness, customer services and technology.

The liberalization of the Indian insurance sector has both pros and cons. The ill-effects of liberalization on insurance industry can be lessen by promoting healthy competition among the life insurers and keeping the interest of common people above profit motive of the insurers.

To achieve greater insurance penetration, the healthier competition has to be intensified by both the sectors and they should come up with new innovative products to offer greater variety or choice to the customers and also make improvement in the quality of services and sell products through appropriate distribution channel to win-win situation for both the parties.

CONCLUSIONLife insurance has today become a mainstay of any market economy since it offers plenty of scope for garnering large sums of money for long periods of time. Though privatization of the insurance sector is feared to affect the prospects of the LIC, the study shows that the LIC continues to dominate the sector. Private sector insurance companies also tried to increase their market share.so here are the most important role of the Lic.

Websites

• www.irdaindia.org • www.irdajournal@irda.gov.in • www.irda.org • www.ijsst.com • www.irasg.com • www.zenithresearch.org.in