Insurance Sector Final

8/7/2019 Insurance Sector Final

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Presented By:Onkar Mohole (67)Paras Verma (71)

Shamkant Sonawane(92)Soham Joshi (97)

Suhas Jambhale(102) Yashwant Thakur(118)

Rahul Patil (121)

Insurance Sector inIndia



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Contents

What is Insurance?Global PictureScenario in India

Life Insurance SegmentNon-Life Insurance Segment

Growth TrendsPolicy & Regulatory framework

Opportunities



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hat is Insurance?

Commercial mechanism for transferring risk and spreadingloss

Insurance can be described as“ …Praying for the best

… ”being PREPARED for the WORST

:Economic Concept of Insurance.1 Insurer offers policy to cover specified risks.2 Insurer collects policy premiums from customers.3 Insurer invests premiums.4 Insurer pays money to insured customers in the

event of losses covered by policy



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lobal Picture

.Taiwan tops avg expenditure of GDP on Insurance with. %13 2 High Growth potential in India



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dvantage India



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arket in India The insurance industry in India is at an early stage

with low penetration and high potential Number of players increased from 1 in 1999 to 22 in

2009 IRDA established in 1999 under the Ministry of

Finance,23 players 1 from the public sector and 22 from the

( )private sector 2010



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rowth in Indian Market

The total premium of the insurance industry has. –grown at a CAGR of 24 6 per cent from 2002 03 to

– . –2008 09 to reach US$ 52 6 billion in 2008 09



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rowth in Indian Market



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-r n a rsc man n ex( )HI

Calculated by squaring the market share of each firm

,competing in a market and then summing the resulting numbers( ) ( )Varies between 0 Perfect Competition and 10000 Monopoly



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ajorPlayers



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Market

Concentration ratio used to show the extentof market control of the largest firms in theindustry and to illustrate the degree towhich an industry is oligopolistic

Four-Firm Concentration Ratio measures thetotal market share of the 4 largest firms inan industry

Four-Firm Concentration ratio for LifeInsurance sector: 86% and 59% for Non-Life Insurance sector

Market: OligopolyProduct Type: Differentiated



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i fe Insurance Segment— , ,Group insurance products endowments term insurance

, ,annuities whole life insurance riders—Individual insurance products Unit Linked Insurance

( ), ,Plans ULIPs pension funds guaranteed lifeproducts

,There are 23 players 1 from the public sector and 22,from the private sector as of January 2010

§



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i fe Insurance Segment. %Premium income has grown at a high CAGR of 25 8

– –between 2002 03 and 2008 09 . %The number of policies issued grew at a CAGR of 12 3– –between 2002 03 and 2008 09

There is increased insurance penetration due to a,growing consumer class rising insurance awareness and

increasing domestic savings and investments

U S

$

B i l l i o n



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-on Life Insurance Segment, , ,Segments include auto health fire marine and

,engineering among others -Auto insurance had the largest share in the non life– ( . )insurance segment in 2008 09 43 2 per cent

,There are 22 players out of which 7 are public sector,players and 15 private sector players as of January

2010



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-on Life Insurance Segment.Premium income grew at a CAGR of 17 6 per cent

– – .between 2002 03 and 2008 09

U S $

B i l l i o n



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emand Elast ici ty



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rowth Drivers

There is a high demand for insurance products due,to a growing middle class increasing working,population rising household savings and increasing purchasing power

,The increasing literacy rate specially in rural

,India has spread awareness about the need forinsurance Working population assessment



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mployment Opportuni t ies

Insurance industry provides increased employment opportunities

, ,Brokers corporate agents training establishments

provide extra employmentopportunities

Many of these openings are in rural sectors

The life insurance sector.employed 0 3 million

.people directly and 2 9 million people as –individual agents in 08

09



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etwork Distr ibut ion



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ey Trends for Growth



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§ ,Emergence of new distribution channels such- ,as brokers and e channels has increased

outreach

§ -The non life insurance sector has witnessed

/personal retail line products pick up on the back of increasing income levels and

changing life styles§ ,Rise in sale of passenger cars fuelling

demand for auto insurance



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§ Fast progressing medical technology and increasing demand for better healthcare has

resulted in rising demand for health insurance§ Regulatory initiatives to promote health

:insurance include IRDA has set up a separate department for health insurance

The government is set to raise budgetary.support of US$ 28 33 billion for the health

sector during the Eleventh Plan International players and life insurers have entered this segment



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olicy and regulatoryframework

IRDA was formed in 1999 as a regulatory body to govern the Indian insurance sector

, ,A company to operate as an insurance company in India, ,must be incorporated under the Companies Act 1956 and

possess the certificate of the memorandum of association and articles of association

—Capital requirement paid up equity share capital should.be at least US$ 208 3 million for insurance business International players can operate in India only through a

joint venture with a domestic firm and are classified under private sector insurers

FDI up to 26 per cent is permitted in the insurance sector

IRDA does not allow foreign reinsurance companies to open.branches in India This proposal is currently under

consideration in the Parliament



i t I i



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et tar if fs and condit ions dominate

-on life insurance in India%74 of the market GWP is regulated by

;tariff the Tariff Advisory Committee,It decides on price terms and conditions

This prevents insurance companies from offering product or price differentiation

ei ns ur anc e m on op ol y,A monopoly in market being the only domestic

reinsurer in India

-The state owned General Insurance Corporation

( ),GIC has traditionally close ties to the primary insurers of the public sector

arr iers to Insurance in ndia



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Strengths Weakness

Good current market Premium rates are increasing and so

commission Increasing variety of

products IT bringing new dimension to sector

Slow to respond the changing needs Buying insurance is a

cumbersome process Products and services are

almost similar forcompetitors

Opportunit ies Threats

Technology is improving paperless transactions

Mobile insurance could be ahit

Busy life demanding more flexible and customized

policies

Unpredictability ofdisasters

Increasing expenses and profit margins will hit

hard on smaller agencies and insurance companies

WOT Analysis



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References

. . .www irda gov in

. .www insuranceinstituteofindia com

. . . / / /www dget nic in mes curricula InsuranceSector

. .www finblog in

. . .www iirmworld org in

http://www.irda.gov.in/


http://www.insuranceinstituteofindia.com/


http://www.dget.nic.in/mes/curricula/InsuranceSector


http://www.finblog.in/


http://www.iirmworld.org.in/







Insurance Sector Final

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