Life Insurance Business 14

Life Insurance Business
and
Operation
SUBMITTED TO Mr.MUNISH
History of life
insurance
 The business of life insurance in India in its
existing form started in India in the year
1818 with the establishment of the Oriental
Life Insurance Company in Calcutta. 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.
 1956 ACT OF PARLIAMENT LIC COMES IN
EXISTANCE
 245 Indian and foreign insurers and
provident societies taken over by the
central government and nationalized.
 1956 with a capital contribution of
Rs. 5 Crore
Insurance sector reforms
 In 1993, Malhotra Committee, headed
by former Finance Secretary and RBI
Governor R. N. Malhotra
 evaluate the Indian insurance

industry
 recommend its future direction.

IRDA
• 1997 Insurance regulator IRDA set up
• 2000 IRDA starts giving licenses to private insurers:

Kotak Life Insurance, ICICI prudential and HDFC
Standard Life insurance etc.
• first private insurers to sell a policy
• 2001 Royal Sundaram Alliance first non life insurer

to sell a policy
• 2002 Banks allowed selling insurance plans.

• Authority to protect the interests of holders of
insurance policies
Life insurance company
 Allianz Bajaj Life Insurance Co. Ltd.
 AMP Sanmar Assurance Co. Ltd.
 Birla Sun Life Insurance Co. Ltd.
 Dabur CGU Life Insurance Company Pvt. Ltd.
 HDFC Standard Life Insurance Co. Ltd.
 ICICI Prudential Life Insurance Co. Ltd.
 ING Vysya Life Insurance Co. Pvt. Ltd.
 Life Insurance Corporation of India.
 Max New York Life Insurance Co. Ltd.
 Metlife India Insurance Co. Pvt. Ltd.
 Om Kotak Mahindra Life Insurance Co. Ltd.
 SBI Life Insurance Co. Ltd.
 Tata AIG Life Insurance Co. Ltd.
Life insurance
 Life insurance or life assurance is a contract

between the policy owner and the insurer
where the insurer agrees to pay a sum of
money upon the occurrence of the insured
individual or individual’s death or other
event, such as terminal illness or critical
illness.
Types of life insurance
• Temporary: Term life insurance or 'term

assurance' provides for life insurance
coverage for a specified term of years for a
specified premium
• Permanent
The three basic types of permanent insurance
1) whole life
2) universal life
3) endowment.
Whole life
 The primary advantages of whole life are

guaranteed death benefits
 guaranteed cash values
 fixed and known annual premiums
 mortality and expense charges will not
reduce the cash value shown in the policy.
 The primary disadvantages of whole life are
premium inflexibility
Universal life coverage
• Universal life insurance (UL) is a relatively new
insurance product intended to provide
permanent insurance coverage with greater
flexibility in premium payment and the potential
for a higher internal rate of return
Endowments
Endowments are considerably more expensive (in
terms of annual premiums) than either whole life
or universal life because the premium paying
period is shortened and the endowment date is
earlier.
Accidental death
Benefit of life insurance
 Life coverage
 Saving
 Tax saving
 Investment
 Future income
 Reduce risk
CURRENT BUSINESS ENVIRONMENT
• The Indian insurance industry is currently

valued at Rs. 180000 crores ($400 billion)
• And gross premium collection contributes to 2%
of the GDP.
• The life insurance sector premiums grew at a
rate of 41% in the last fiscal (2008-09)
• Life Insurance Corporation of India continues to
be the market leader with the highest premiums
collected in FY2008 to the tune of Rs. 25645
crores
Market share of the company
 70.2% LIC
 8.0% Bajaj Allianz
 7.4% ICICI Prudential
 3.0% HDFC Standard
 2.5% SBI Life
 2.0% Birla Sun life
 1.3% Tata AIG
 1.3% Max New York
 1.2% Aviva
 1.2% Kotak Mahindra
 1.9% others
CONTRIBUTION TO INDIAN ECONOMY
• Insurers are increasingly introducing
innovative products to meet the specific
needs of the prospective policyholders.
• An evolving insurance sector is of vital
importance for economic growth.
• While encouraging savings habit it also
provides a safety net to both enterprises
and Individuals.
Investment of insurance
company
Investments of insurance companies have
been largely in bonds floated by GOI
PSUs
State governments
local bodies
Corporate bodies and mortgages of long
term nature.
Thanks

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Life Insurance Business

 evaluate the Indian insurance

 recommend its future direction.

• 2000 IRDA starts giving licenses to private insurers:

• 2001 Royal Sundaram Alliance first non life insurer

• 2002 Banks allowed selling insurance plans.

 Life insurance or life assurance is a contract

• Temporary: Term life insurance or 'term

 The primary advantages of whole life are

• The Indian insurance industry is currently

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