PRIVATISATION OF LIFE INSURANCE SECTOR IN INDIA

PROJECT GUIDEMr. Manish BansalHOD-Management

SUBMITTED BYSunil

KumarREGD.

510910249

INTRODUCTION• This project is related to life insurance business in

India. This study is mainly related to privatization of life insurance sector. LIC was monopoly in insurance sector till 2000.

• The decision by IRDA to grant licences to private pledgers in life and non-life sector is expected to increase the insurance business in India. This is bound to board to force existing player to become more competitive thus the buyer can now expect better deals form its insurance agents.

DEFINITION OF INSURANCE

“ Insurance is a plan by themselves which large number of people associate and transfer to the shoulders of all, risk that attach to individuals.”

According To John Merge

TYPES OF INSURANCE

• Marine Insurance• Life Insurance in India• Fire Insurance• Miscellaneous Insurance

Life Insurance in India

• The British companies started life insurance business in India, by issuing policies exclusively on the lives of European soldiers and civilians.

• Different insurance companies like Bombay Insurance Company Ltd. (1793) and Oriental Life Assurance Company (1818) was formed to issue life assurances policies in India. Gradually, the first Indian Company named as Bombay Mutual Life Insurance Society Ltd.

• The act was amended in 1950 resulting in far reaching changes in the insurance sector . By 1956, 154 Indian insurers 16 foreign insurers and 75 provident society were carrying on life insurance business in India then it was taken over by central govt. life insurance corporation (LIC) was formed in sept. 1956 by an act of parliament with a capital contribution of Rs. 50 mn.

BENEFITS OF LIFE INSURANCE

• Superior To Any Other Savings Plan• Encourages And Forces Thrift• Easy Settlement And Protection Against Creditors• Administering The Legacy For Beneficiaries• Ready Marketability And Suitability For Quick

Borrowing• Disability Benefits• Tax Relief

RESEARCH METHODOLOGY

• Statement of the problem• Research objectives• Research Methodology

– Type of study– Data collection– Sampling– Tools & techniques

• Scope of study• Limitations

• Defining Research Problem • Problem definition is the first & foremost part of the

research process, without this research cannot be completed until and unless there is a problem or objective, the research cannot be initiated. Problem definition refers to the objective on which research has to be done, so problem definition in my project work is Privatization of insurance sector, its impact & its scope in India.

•

Objectives • To study the scope of privatization in Indian life insurance

sector.• To study the impact of privatization.• To study the current performance of private insurance

players.• To study awareness level of customers towards private

insurance companies.• To study the expectations of customers from private sector.

• Research Methodology :- Research refers to search for knowledge. In other words research is defined as a careful investigation or inquiry especially through for new facts in any branch of knowledge.

• Type of Study: Study is empirical in nature as it’s based upon the facts and figures.

1)Data Collection 2)Source of Data

• Two types of data sources will be taken into consideration – Primary Data– Secondary Data

• Scope of Study :• This study is mainly confined to the customer

of Malout & near villages. The size of sample is 100 respondents.

• Limitations of the Study:– Time for the completion of the project was too

short to do an in-depth study.– Respondents were not willing to give the

response.– Most of question in the questionnaire was close

ended which reduced the scope for people to give free opinion.

– The sample size was not enough to reach on any exact conclusion.

INTRODUCTION TO PRIVATISATION

• The world privatization appeared in directly in 1983 and defines narrowly as “ to make private especially to change from public to private control or ownership”.

• Privatization is act of reducing the role of govt. or increasing the role of private sector in activities.

NEED FOR PRIVATIZATION

• Insurance companies create products and go out to find customer.• Monopolistic situation• Insurance awareness among the general public is low.• Returns from Insurance sector products are low.• Most agents and development officers are interested only in

producing new business servicing existing customers satisfactorily.• Lack of any competitive pressure on government owned insurance

firm.• Delay in settlement of claims.• High premium rates.• Discourteous behavior of insurance officials.• Small and ineffective distribution networks.

Opportunities and challenges

• The threat of new players taking over the market has been overplayed.

• Nationalized players will continue to hold strong market share positions, but there will be enough business for new entrants to be profitable.

• Opening up the sector will certainly mean new products, better packaging and improved customer service.

• A middle-market approach tapping segments and niches that are currently under-served will prove profitable for new entrants.

• New companies often overestimate the need for insurance expertise.

• CHALLENGES :-• Selection of right type of distribution channels

among with prudent & efficient management.• An effective CRM system, which would create

a sustainable and long lasting relationship.• Should increase the customer base in semi

urban and rural areas, which offer huge potential.

•MAJOR PLAYERS IN INSURANCE INDUSTRY IN INDIA

• Till 01.04.2000, Insurance industry in India comprised mainly of only two state insurers namely:-

• Life Insurers• General Insurers

• Life Insurers:Life Insurance Corporation of India (LIC) • General Insurers: • General Insurance Corporation of India (GIC) (with effect

from December, 2000, it has been made a National Reinsurer) GIC had four subsidiary companies, namely: -

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

INSURANCE INDUSTRY – SWOT ANALYSIS

Strengths:• Huge potential market • Insurable population of 300 millions• Absence of specialized product range of

established players.Weaknesses:• Players have to build their own distribution

network.• Huge investment is required.

Opportunities:• Existing players are slow and burucratic in nature.• Companies can concentrate on niche market

ensuring better returns. Threats:• Repartriation of benefits not allowed • Joint venture in insurance industry have a history

of following apart • Market may not accept new products.

POLICIES

• TERM PLAN• Free add-on insurance• ENDOWMENT PLANS• Without-profit plans• With-profit plans• Money-Back Plan• WHOLE-LIFE PLAN• UNIT-LINKED INSURANCE PLANS• PENSION PLAN