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PROJECT REPORT
ON
A COMPARITIVE ANALYSIS OF LIFE INSURANCE CORPORATION AND PRIVATE
INSURANCE COMPANIES
PROJECT GUIDE SUBMITTED BY
Mrs.ALKA MITTAL MADHURI SURANA
(Lecturer) (BBA-B&I)
DEPTT. OF BUSINESS ADMINISTRATION 0481491808
SUBMITTED TO
MAHARAJA SURAJMAL INSTITUTE
AFFLIATED TO GURU GOBIND SINGH
INDRAPRASTHA UNIVERSITY
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CERTIFICATE
This is to certify that the project titled A COMPARITIVE ANALYSIS OF LIFE
INSURANCE CORPORATION AND PRIVATE INSURANCE COMPANIES is an original
work of the student (MADHURI SURANA ROLL NO.:0481491808) And is being submitted
in partial fulfillment for the reward of the BBA (Banking and Insurance) from Maharaja
Surajmal Institute, GGSIPU.
She was working under my supervision and successfully completed her project work.
MRS. ALKA MITTAL
(PROJECT GUIDE)
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ACKNOWLEDGEMENT
Project work is never the work of an individual. It is more a combination of views, ideas,
suggestions, contributions and work involving many individuals. This project report forms
an integral part of our curriculum.
I would like to pay my sincere regards to Mrs.Alka Mittal (My Project Guide) whose wisdom
words and teaching had guided me during the preparation of this report. This could not
have been possible without her guidance. I express my gratitude for her continuous
support without which this project could not have reached a successful completion.
Last but not the least; I am thankful to all my friends for their continuous encouragement
and support.
MADHURI SURANA
BBA (B&I)
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TABLE OF CONTENTS
Page no.
Chapter1. Introduction
Concept of InsuranceIndustry Overview
Research Methodology
Significance of Study
Limitations of Study
Chapter2. Company Profile
Chapter3. Analysis and Interpretation
Chapter4. Findings & Conclusions
Bibliography
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CHAPTER-1
INTRODUCTION
Concept Of Insurance
What is Insurance?
Insurance Act,1938
Types Of Insurance
Life Insurance Or Life Assurance
Life Insurance Business
Purpose And Need Of Insurance
How Insurance Works?
Role of Insurance in Economic Development
Criticism Of Insurance Companies
Indian Insurance Industry: New Avenues for Growth 2012
Research Methodology
Significance Of The Study
Limitations Of The Study
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INTRODUCTION
CONCEPT OF INSURANCE:
Life has always been an uncertain thing. To be secure against unpleasant possibilities, always
requires the utmost resourcefulness and foresight on the part on man. To pray always requires the
utmost resourcefulness and foresight on the part of man. To pray or to pay for protection is the
spirit of the humanity. Man has been accustomed to pray God for protection and security from
time immemorial. In modern days Insurance Companies want him to pay for protection and
security. The insurance man says "God helps those who help themselves"; probably he is correct.
Risk has become central to one's life. It is within this background life insurance policy has
been introduced by the insurance companies covering risks at various levels. Life insurance
coverage is against disablement or in the event of death of the insured, economic support for the
dependents. It is a measure of social security to livelihood for the insured or dependents. This is
to make the right to life meaningful, worth living and right to livelihood a means for sustenance.
Therefore, it goes without saying that an appropriate life insurance policy within the payingcapacity and means of the insured to pay premium is one of the social security measures
envisaged under the Indian Constitution. Hence, right to social security, protection of the family,
economic empowerment to the poor and disadvantaged are integral part of the right to life and
dignity of the person guaranteed in the constitution.
Man finds his security in income (money) which enables him to buy food, clothing, shelter and
other necessities of life. A person has to earn income not only for himself but also for his
dependents, viz., wife and children. He has to provide legally for his family needs, and so he has
to keep aside something regularly for a rainy day and for his old age. This fundamental need for
security for self and dependents proved to be the mother of invention of the institution of life
insurance.
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What is Insurance?
The business of insurance is related to the protection of the economic values of assets. Everyasset has a value. The asset would have been created through the efforts of the owner. The asset is
valuable to the owner, because he expects to get some benefit from it. The benefit may be an
income or some thing else. It is a benefit because it meets some of his needs.
Every asset is expected to last for a certain period of time during which it will perform. After that,
the benefit may not be available. The owner is aware of this and he can so manage his affairs that
by the end of that period or life-time, a substitute is made available. Thus, he makes sure that the
value or income is not lost. However, the asset may get lost earlier. An accident or some other
unfortunate event may destroy it or make it non-functional. In that case, the owner and those
deriving benefits from there would be deprived of the benefit and the planned substitute would
not have been ready. There is an adverse or unpleasant situation. Insurance is a mechanism that
helps to reduce the effect of such adverse situations.
Insurance, in law and economics, is a form of risk management primarily used to hedge against
the risk of a contingent loss. Insurance is de fined as the equitable transfer of the risk of a
potential loss, from one entity to another, in exchange for a premium. Insurer, in economics, is the
company that sells the insurance. Insurance rate is a factor used to determine the amount, called
the premium, to be charged for a certain amount of insurance coverage. Risk management, the
practice of appraising and controlling risk, has evolved as a discrete field of study and practice.
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INSURANCE ACT, 1938:
The Insurance Act, 1938, was the first comprehensive legislation governing not only life but also
non- life branches of insurance to provide strict state control over insurance business. In sub-sections to dealt with provident companies, mutual offices and co-operative societies as well.
The salient features of the Act were as follows:
(A)Constitution of a Department of Insurance under a superintendent vested with wide
powers of supervision and control over all kinds of insurance companies.
(B) Regulation for the compulsory registration of insurance companies and for filing of
returns of investment and financial conditions.
(C) Provisions for deposit, to prevent insurers of inadequate financial resources of
speculative concerns for commencing business.
(D) Provisions that 55% of the net life fund of an Indian or non- Indian insurer should
invested in Indian Government and approved securities with at least 25% in Indian
Government Rupee securities. All other companies, i.e., foreign companies must invest
100% of their Indian liabilities in Indian Government and approved securities, with at least
33.3% Indian Government securities.
(E) Prohibition of rebating, restriction of commission, licensing of agents etc. Maximum
rates of commission were fixed at 40% of the first premiums and 5% of the renewal
premium in respect of life assurance business. The agent must be licensed, to improve the
status of the profession.
(F) Periodical valuation of Indian Insurance business of foreign companies and the
business of Indian companies.
(G) Provision for policy holders' directors, making it possible for the re preventatives of
policyholders to be on the Board of directors.
(H) Standardization of policy conditions required all companies to file standard forms and
tables of premium approved by an Actuary. Under this requirement, the initial deposit for
life insurance business was raised from Rs. 25000 in Government securities to Rs. 50000
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in cash approved securities, which was subsequently to be raised by installments to Rs. 2
lakh within a specified time limit.
Types of Insurance:
Any risk that can be quantified probably has a type of insurance to protect it. Among the
different types of insurance are:
Automobile insurance, also known as auto insurance, car insurance and in the
UK as motor insurance, is probably the most common form of insurance and may cover
both legal liability claims against the driver and loss of or damage to the vehicle itself.
Over most of the United States purchasing an auto insurance policy is required to legally
operate a motor vehicle on public roads. Recommendations for which policy limits
should be used are specified in a number of books. In some jurisdictions, bodily injury
compensation for automobile accident victims has been changed to No Fault systems,
which reduce or eliminate the ability to sue for compensation but provide automatic
eligibility for benefits.
Casualty insurance insures against accidents, not necessarily tied to any specific
property.
Credit insurancepays some or all of a loan back when certain things happen to the
borrower such as unemployment, disability, or death.
Financial loss insuranceprotects individuals and companies against various
financial risks. For example, a business might purchase cover to protect it from loss of
sales if a fire in a factory prevented it from carrying out its business for a time. Insurance
might also cover failure of a creditor to pay money it owes to the insured. Fidelity bonds
and surety bonds are included in this category.
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Health insurance covers medical bills incurred because of sickness or accidents.
Liability insurance covers legal claims against the insured. For example, a
homeowner's insurance policy provides the insured with protection in the event of a claim
brought by someone who slips and falls on the property, and brings a lawsuit for her
injuries. Similarly, a doctor may purchase liability insurance to cover any legal claims
against him if his negligence (carelessness) in treating a patient caused the patient injury
and/or monetary harm. The protection offered by a liability insurance policy is two-fold:
a legal defense in the event of a lawsuit commenced against the policyholder, plus
indemnification (payment on behalf of the insured) with respect to a settlement or court
verdict.
Life insuranceprovides a cash benefit to a decedent's family or other designated
beneficiary, and may specifically provide for burial and other final expenses.
Annuitiesprovide a stream of payments and are generally classified as insurance
because they are issued by insurance companies and regulated as insurance. Annuities
and pensions that pay a benefit for life are sometimes regarded as insurance against the
possibility that a retiree will outlive his or her financial resources. In that sense, they are
the complement of life insurance.
Total permanent disability insuranceprovides benefits when a person is
permanently disabled and can no longer work in their profession, often taken as an
adjunct to life insurance.
Locked Funds Insurance is a little known hybrid insurance policy jointly issued by
governments and banks. It is used to protect public funds from tamper by unauthorized
parties. In special cases, a government may authorize its use in protecting semi-private
funds which are liable to tamper. Terms of this type of insurance are usually very strict.
As such it is only used in extreme cases where maximum security of funds is required.
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Marine Insurance covers the loss or damage of goods at sea. Marine insurance
typically compensates the owner of merchandise for losses sustained from fire,
shipwreck, etc., but excludes losses that can be recovered from the carrier.
Nuclear incident insurance - damages resulting from an incident involving
radioactive materials is generally arranged at the national level. (For the United States,
see Price-Anderson Nuclear Industries Indemnity Act.)
Political risk insurance can be taken out by businesses with operations in
countries in which there is a risk that revolution or other political conditions will result in
a loss.
Professional Indemnity Insurance is normally a mandatory requirement for
professional practitioners such as Architects, Lawyers, Doctors and Accountants to
provide insurance cover against potential negligence claims. Non licensed professionals
may also purchase malpractice insurance; it is commonly called Errors and Omissions
Insurance and covers a service provider for claims made against them that arise out of the
performance of specified professional services. For instance, a web site designer can
obtain E&O insurance to cover them for certain claims made by third parties that arise
out of negligent performance of web site development services.
Property insuranceprovides protection against risks to property, such as fire,
theft or weather damage. This includes specialized forms of insurance such as fire
insurance, flood insurance, earthquake insurance, home insurance, inland marine
insurance or boiler insurance.
Terrorism insurance
Title insuranceprovides a guarantee that title to real property is vested in the
purchaser and/or mortgagee, free and clear of liens or encumbrances. It is usually issued
in conjunction with a search of the public records done at the time of real estate
transactions.
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Travel insurance is an insurance cover taken by those who travel abroad, which
covers certain losses such as medical expenses, lost of personal belongings, travel delay,
personal liabilities, etc.
Workers' compensation insurance replaces all or part of a worker's wages
lost and accompanying medical expense incurred due to a job-related injury.
A single policy may cover risks in one or more of the above categories. For example, car
insurance would typically cover both property risk (covering the risk of theft or damage to the
car) and liability risk (covering legal claims from say, causing an accident). A homeowner's
insurance policy in the US typically includes property insurance covering damage to the home
and the owner's belongings, liability insurance covering certain legal claims against the owner,
and even a small amount of health insurance for medical expenses of guests who are injured on
the owner's property.
Potential sources of risk that may give rise to claims are known as "perils". Examples of perils
might be fire, theft, earthquake, hurricane and many other potential risks. An insurance policy
will set out in details which perils are covered by the policy and which are not.
LIFE INSURANCE or LIFE ASSURANCE:
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Human life is subject to risks of death and disability due to natural and accidental causes. When
human life is lost or a person is disabled permanently or temporarily, there is a loss of income to
the household. The family is put to hardship. Sometimes, survival itself is at stake for the
dependants. Risks are unpredictable. Death/disability may occur when one least expects it. An
individual can protect himself or herself against such contingencies through life insurance.
Life insurance orlife 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's or
individuals'death or other event, such as terminal illness or critical illness. In return, the policy
owner agrees to pay a stipulated amount called a premium at regular intervals or in lump sums
It can also be a form of savings in the long run if you purchase a plan, which offers the option of
contributing regularly. Additionally, a little known function of life insurance is that it can be tied
in with a person's pension plan. A person can make contributions to a pension that is funded by a
life insurance company. These are considered private pension arrangements
There are a number of life insurance products which offer protection and also coupled with
savings.
A term insurance product provides a fixed amount of money on death during the period of
contract.
A whole life insurance product provides a fixed amount of money on death.
An Endowment Assurance product provided a fixed amount of money either on death during
the period of contract or at the expiry of contract if life assured is alive.
A money back assurance product provides not only fixed amounts which are payable on
specified dates during the period of contract, but also the full amount of money assured on death
during the period of contract.
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An annuity product provides a series of monthly payments on stipulated dates provided that the
life assured is alive on the stipulated dates.
A linked product provides not only a fixed amount of money on death but also sums of money
which are linked with the underlying value of assets on the desired dates.
Thus life insurance policies offer protection and security to families and provide happiness to
society.
LIFE INSURANCE BUSINESS:
The growth of Life Insurance in concrete terms could be said to being during the first two decades
of twentieth century when most of the major companies were founded. They grew in terms of rise
in the number of companies, in terms of number of policies and sum assured as well as total life
fund. Indian Insurance Year Book, published for the first time in 1914, gives the figure of the total
business-in -force as 22.44 crore which grew to Rs. 298 crore in 1938. In 1914, there were only
44companies transacting insurance business in India, and during the next 25 years their number
rose to 176. The total progress on all the primary heads, viz. life fund (Rs. 50.50 crore), premium
income (Rs. 10.50 crore) and new business (Rs. 43.30 crore) indicate that Indian Insurance
Business had been ma king a definite headway during this years. The inter-war -years thus saw
rapid growth life insurance in India.
The promotion of new life insurance companies continued to be almost a craze and insurance
companies mushroomed. In this period, 176 insurance companies were formed and many of them
failed. Thus unhealthy growth was harmful to the interest of the policy holders and insurancebusiness in India. Feeling concerned about it, the All India Life Assurance Offices' Association
urged upon the Government in 1932 to undertake the insurance legislation to:
(a) Compulsorily register all Life Insurance companies.
(b) Secure a deposit of Rs.2 lakh from all Life Insurance companies.
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(c) Compel foreign companies doing business in India to keep sufficient funds in India securities
to meet their liabilities under all policies issued in India.
Important milestones in the life insurance business in India:
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 nationalized. 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.
Purpose and Need of Insurance:
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Assets are insured, because they are likely to be destroyed through accidental occurrences. Such
possible occurrences are called perils. Fire, floods, breakdowns, lightening, earthquakes, etc, are
perils. If such perils can cause damage to the asset, we say that the asset is exposed to that risk.
Perils are the events. Risks are the consequential losses or damages. The risk to a owner of a
building, because of the peril of an earthquake, may be a few lakhs or a few crores of rupees,
depending on the cost of the building and the contents in it.
The risk only means that there is a possibility of loss or damage. The damage may or may not
happen. Insurance is done against the contingency that it may happen. There has to be an
uncertainty about the risk. Insurance is relevant only if there are uncertainties. If there is no
uncertainty about the occurrence of an event, it cannot be insured against. In the case of human
being, death is certain, but the time of death is uncertain. In the case of person who is terminally
ill, the time of death is not uncertain, though not exactly known. He cannot be insured.
Insured does not protect the asset. It does not prevent its loss due to peril. The peril cannot be
avoided through insurance. The peril can sometimes be avoided through better safety and damage
control management. Insurance only tries to reduce the impact of the risk on the owner of the
asset and those who depend on that asset. It only compensates the losses and that too, not fully.
Only economic consequences can be insured. If the loss is not financial, insurance may not be
possible. Examples of non-economic losses are love and affection of parents, leadership of
managers, sentimental attachments to family heirlooms, innovative and creative abilities, etc.
How Insurance Works?
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The mechanism of insurance is very simple. People who are exposed to the same risks come
together and agree that, if any one of them suffers a loss, the others will share the loss and make
good to the person who lost. All people who send goods by ship are exposed to the same risks,
which are related to water damage, ship sinking, piracy, etc. Those owning factories are not
exposed to these risks, but they are exposed to different kinds of risks like, fire, hailstorms,
earthquake, lightning, burglary, etc. Like this, different kinds of risks can be identified and
separate groups made, including those exposed to such risks. By this method, the heavy loss that
any one of them may suffer (all of them may not suffer such losses at the same time) is divided
into bearable small losses by all. In other words, the risk is spread among the community and the
likely big impact on one is reduced to smaller manageable impacts on all.
If a Jumbo Jet with more than 350 passengers crashes, the loss would run into several crores of
rupees. No airline would be able to bear such a loss. It is unlikely that many Jumbo Jets will crash
at same time. If 100 airline companies flying Jumbo Jets, come together into an insurance pool,
whenever one of the Jumbo Jets in the pool crashes, the loss to be borne by each airline would
come down to a few lakhs of rupees. Thus, insurance is a business of sharing.
There are certain principles, which make it possible for insurance to remain a fair arrangement.
The first is that it is difficult for any one individual to bear the consequences of the risks that he is
exposed to. It will become bearable when the community shares the burden. The second is that the
perils should occur in an accidental manner. Nobody should be in a position to make the risk
happen. In other words, none in the group should set fire to his assets and ask others to share the
costs of damage. This would be taking unfair advantage of an arrangement put into place to
protect people from risks they are exposed to. The occurrence has to be random, accidental, and
not the deliberate creation of the insured person. The manner in which the loss is to be shared can
be determined before-hand. It ma y be proportional to the risk that each person is exposed to. This
would be indicative of the benefit he would receive if the peril befell him. The share could becollected from the members after the loss has occurred or the likely shares ma y be collected in
advance, at the time of admission to the group. Insurance companies collect in advance and create
a fund from which the losses are paid. The collection to be made from each person in advance is
determined on assumptions. While it may not be possible to tell beforehand, which person will
suffer, it ma y be possible to tell, on the basis of past experiences, how many persons, on an
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average, ma y suffer losses. The following two examples explain the above concept of insurance:
EXAMPLE-1
In a village, thereare 400 houses, each valued at Rs. 20000. Each year, on the average, 4 houses
get burnt, resulting into a total loss of Rs. 80000. If all the 400 owners come together and
contribute Rs. 200 each, the common fund would be Rs. 80000. This is enough to pay Rs. 20000
to each of the 4 owners whose houses got burnt. Thus, the risk of 4 owners is spread over 400
house-owners of the village.
EXAMPLE-2
There are 1000 persons who are all aged 50 and are healthy. It is expected that of these, 10
persons may die during the year. If the economic value of the loss suffered by the family of each
dying person is taken to b e Rs. 20000, the total loss would work out to Rs. 200000. If each
person in a group contributed Rs. 200 a year, the common fund would be Rs. 200000. This would
be enough to pa r Rs. 20000 to the family of each of the ten persons who die. Thus, the risks in the
case of 10 persons are shared by 1000 persons.
Role of Insurance in Economic Development:
For economic development, investments are necessary. Investments are made out of savings. A
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life insurance company is a major instrument for the mobilization of savings of people,
particularly from the middle and lower income groups. These savings are channeled into
investments for economic growth. As on 31.3.2002, the total investments of the LIC exceeded Rs.
245000 crores, of which more than Rs. 130000 crores were directly in Government (both State
and Centre) related securities, more than Rs. 12000 crores in the State Electricity Boards, nearly
Rs. 20000 crores in housing loans and Rs. 4000 crores in water supply and sewerage systems.
Other investments included road transport, setting up industrial estates and directly financing
industry. Investments in the corporate sector (shares, debentures and term loans) exceeded
Rs.30000 crores. These directly affect the lives of the people and their economic well-being.
A life insurance company will have large funds. These amounts are collected by way of
premiums. Every premium represents a risk that is covered by that premium. In effect, therefore,
these vast amounts represent pooling of risks. The funds are collected and held in trust for the
benefit of the policyholders. The management of life insurance companies is required to keep this
aspect in mind and make all its decisions in ways that benefit the community. This applies also to
its investments. That is why successful insurance companies would not be found investing in
speculative ventures. Their investments, as in the case of the LIC, benefit the society at large.
Apart from investments, business and trade benefit through insurance. Without insurance, trade
and commerce will find it difficult to face the impact to major perils like fire, earthquake, floods,
etc. Financiers, like banks, collapse if the factory, financed by it, is reduces to ashes by terrible
fire. Insurers cover also the loss to financiers, if their debtors default.
Criticism of Insurance Companies:
Some people believe that modern insurance companies are money-making businesses which have
little interest in insurance. They argue that the purpose of insurance is to spread risk so the
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reluctance of insurance companies to take on high-risk cases (e.g. houses in areas subject to
flooding, or young drivers) runs counter to the principle of insurance.
Other criticisms include:
A) Insurance policies contain too many exclusion clauses. For example, some house insurance
policies do not cover damage to garden walls.
B) Most insurance companies now use call centre and staff attempt to answer questions by
reading from a script. It is difficult to speak to anybody with expert knowledge.
Indian Insurance Industry: New Avenues for Growth 2012:
With an annual growth rate of 15-20% and the largest number of life insurance policies in force,
the potential of the Indian insurance industry is huge. Total value of the Indian insurance market
(2004-05) is estimated at Rs. 450 billion (US$10 billion). According to government sources, the
insurance and banking services contribution to the country's gross domestic product (GDP) is 7%
out of which the gross premium collection forms a significant part. The funds available with the
state-owned Life Insurance Corporation (LIC) for investments are 8% of GDP.
Till date, only 20% of the total insurable population of India is covered under various lifeinsurance schemes, the penetration rates of health and other non-life insurances in India is also
well below the international level. These facts indicate the of immense growth potential of the
insurance sector.
The year 1999 saw a revolution in the Indian insurance sector, as major structural changes took
place with the ending of government monopoly and the passage of the Insurance Regulatory and
Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing
foreign players to enter the market with some limits on direct foreign ownership.
Though, the existing rule says that a foreign partner can hold 26% equity in an insurance
company, a proposal to increase this limit to 49% is pending with the government. Since opening
up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have poured into the
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Indian market and 21 private companies have been granted licenses.
Innovative products, smart marketing, and aggressive distribution have enabled fledgling private
insurance companies to sign up Indian customers faster than anyone expected. Indians, who had
always seen life insurance as a tax saving device, are now suddenly turning to the private sector
and snapping up the new innovative products on offer.
The life insurance industry in India grew by an impressive 36%, with premium income from new
business at Rs. 253.43 billion during the fiscal year 2004-2005, braving stiff competition from
private insurers. This report, Indian Insurance Industry: New Avenues for Growth 2012, finds
that the market share of the state behemoth, LIC, has clocked 21.87% growth in business at
Rs.197.86 billion by selling 2.4 billion new policies in 2004-05. But this was still not enough to
arrest the fall in its market share, as private players grew by 129% to mop up Rs. 55.57 billion in
2004-05 from Rs. 24.29 billion in 2003-04.
Though the total volume of LIC's business increased in the last fiscal year (2004-2005) compared
to the previous one, its market share came down from 87.04 to 78.07%. The 14 private insurers
increased their market share from about 13% to about 22% in a year's time. The figures for the
first two months of the fiscal year 2005-06 also speak of the growing share of the private insurers.
The share of LIC for this period has further come down to 75 percent, while the private players
have grabbed over 24 percent.
There are presently 12 general insurance companies with four public sector companies and eight
private insurers. According to estimates, private insurance companies collectively have a 10%
share of the non-life insurance market.
Though the focus of this market research report is on the potential growth on the IndianInsurance Sector, it also talks about the market size, market segmentation, and key developments
in the market after 1999.
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RESEARCH METHODOLOGY
RESEARCH OBJECTIVES:
1. To compare the performance of LIC and private insurance companies in India.
2. To find out the performances of LIC and private insurance companies in each category size.
(Growth, productivity and efficiency.)
3. To compare grievance management of LIC and private insurance companies.
RESEARCH DESIGN:
(A) Type of research design : Analytical Research
(B) Data collection : Secondary Sources
(C) Statistical tools : Bar Graphs
RESEARCH PROCESS:
In this research, my research objective was to compare the performance of LIC and Private
insurance companies. For this purpose I decided the four broad categories under which I have
compared the LIC and Private insurance companies. These are:
1. Size
2. Growth3. Productivity
4. Grievance Handling
Under these Broad Categories I have analyzed 13 factors which are:
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1. Size
Total Premium
Total Income
Size of Balance Sheet
Total number of Policies
Total number of Branches
2. Growth
Growth in Premium
Growth in Income
Growth in number of Policies
Growth in Market share
3. Productivity
Business per Branch
Income per Branch
New Premium per Branch
4. Grievance Handling
I have used the Secondary data of last five financial years. I have collected data from the various
balance sheets of LIC and other private insurance companies and web sites. I tried to find out
most of the information required to compare the LIC and private insurance companies.
In Analysis I have found all the required data and on the basis of performance gave the rank to
LIC and Private Insurance Companies on each factor and then points. Now these Points have
been multiplied with the weightage of that factor. And then after the analysis of each factor a
consolidated point tab le has been prepared to know that which sector is performing better thanother.
The Weightage for different categories are:
FACTORS WEIGHTAGE
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SIZE 25%
A. Total Premium 5%
B. Total Income 5%
C. Balance Sheet Size 5%
D. Total No. of Policies 5%
E. Total No. of Branches 5%
GROWTH 40%
A. First Premium 10%
B. Growth in Income 10%
C. Increase in No. of Policies 10%
D. Growth in Market Share 10%
PRODUCTIVITY 15%
A. Business per Branch 5%
B. Income Per Branch 5%C. First Premium per Branch 5%
GRIEVANCE HANDLING 20%
SIGNIFICANCE OF THE STUDY:
The Detailed Study has been done with the purpose of finding out the relative share of LIC
and Private Insurance in India. It is useful for the people associated with the Insurance
Industry and the research associates related to the Insurance Sector in India. This study will
acquaint them with the data of all the banks complied at one place along with the findings,
conclusion and recommendations.
LIMITATIONS:
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1. Could reach to a limited number of documents of different insurance companies inregard
to the management and other policies and resultant figures so as to identify the exact cause of
their lag in performance.
2. Due to the limited time could not study all the insurance companies original
documents individually.
3. Non-Proficiency in technical aspects of insurance companies might have hindered the
best analysis of the findings.
CHAPTER-2
PROFILE OF THE COMPANY
LIC:Life Insurance Corporation
Private Life Insurance Companies
Market Share
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LIC: LIFE INSURANCE CORPORATION
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 thecurrency 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-organization
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
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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-organization 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, 100 divisional offices, 7
zonal offices and the corporate office. LICs Wide Area Network covers 100 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. LICs ECS
and ATM premium payment facility is an addition to customer convenience. Apart from on-line
Kiosks and IVRS, Info Centers 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.
PRIVATE LIFE INSURANCE COMPANIES
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Kotak Mahindra Old Mutual Life Insurance Ltdis a joint venture between
Kotak Mahindra Bank Ltd., its affiliates and Old Mutual plc. A company that combines its
international strengths and local advantages to offer its customers a wide range of innovative lifeinsurance products, helping them in taking important financial decisions at every stage in life and
stay financially independent. The company is one of the fastest growing insurance companies in
India and has shown remarkable growth since its inception in 2001. Kotak Life Insurance
employs around 5,565 people in its various businesses and has 197 branches across 141 cities.
ICICI Prudential Life Insurance Company is a joint venture between ICICI
Bank - one of India's foremost financial services companies-and Prudential plc - a leading
international financial services group headquartered in the United Kingdom. Total capital
infusion stands at Rs. 47.80 billion, with ICICI Bank holding a stake of 74% and Prudential plc
holding 26%.
It began our operations in December 2000 after receiving approval from Insurance Regulatory
Development Authority (IRDA). Today, our nation-wide team comprises of 2074 branches
(inclusive of 1,116 micro-offices), over 225,000 advisors; and 7 banc assurance partners.
Established in 2000,Birla Sun Life Insurance Company Limited (BSLI) is a
joint venture between the Aditya Birla Group, a well known and trusted name globally amongst
Indian conglomerates and Sun Life Financial Inc, leading international financial services
organization from Canada. The local knowledge of the Aditya Birla Group combined with the
domain expertise of Sun Life Financial Inc., offers a formidable protection for its customers
future.
With an experience of over 9 years, BSLI has contributed significantly to the growth and
development of the life insurance industry in India and currently ranks amongst the top 5 private
life insurance companies in the country.
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Max New York Life Insurance Company Ltd. is a joint venture between Max
India Limited, one of India's leading multi-business corporations and New York Life
International, the international arm of New York Life, a Fortune 100 company. The company has
positioned itself on the quality platform. In line with its vision to be the most admired life
insurance company in India, it has developed a strong corporate governance model based on
the core values of excellence, honesty, knowledge, caring, integrity and teamwork.
Incorporated in 2000, Max New York Life started commercial operation in 2001. In line with its
values of financial responsibility, Max New York Life has adopted prudent financial practices to
ensure safety of policyholder's funds. The Company's paid up capital as on 30th April, 2009 is
Rs 1782 crore.
Bajaj Allianz Life Insurance is a union between Allianz SE, one of the largest
Insurance Company and Bajaj Finserv.
Allianz SE is a leading insurance conglomerate globally and one of the largest asset managers in
the world, managing assets worth over a Trillion (Over INR. 55, 00,000 Crores). Allianz SE has
over 115 years of financial experience and is present in over 70 countries around the world.
At Bajaj Allianz Life Insurance, customer delight is our guiding principle. Our business
philosophy is to ensure excellent insurance and investment solutions by offering customised
products, supported by the best technology.
Tata AIG Life Insurance Company Limited (Tata AIG Life) is a jointventure company, formed by the Tata Group and American International Group, Inc. (AIG). Tata
AIG Life combines the Tata Groups pre-eminent leadership position in India and AIGs global
presence as one of the worlds leading international insurance and financial services
organization. The Tata Group holds 74 per cent stake in the insurance venture with AIG holding
the balance 26 per cent. Tata AIG Life provides insurance solutions to individuals and
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corporates. Tata AIG Life Insurance Company was licensed to operate in India on February 12,
2001 and started operations on April 1, 2001
HDFC Standard Life Insurance Company Limited Is one of India's leading
private insurance companies, which offers a range of individual and group insurance solutions. It
is a joint venture between Housing Development Finance Corporation Limited (HDFC Limited),
India's leading housing finance institution and a Group Company of the Standard Life Plc, UK.
As on February 28, 2009 HDFC Ltd. holds 72.43% and Standard Life (Mauritius Holding) 2006,
Ltd. holds 26.00% of equity in the joint venture, while the rest is held by others.
MetLife India Insurance Company Limited (MetLife) is an affiliate of
MetLife, Inc. and was incorporated as a joint venture between MetLife International Holdings,
Inc., The Jammu and Kashmir Bank, M. Pallonji and Co. Private Limited and other private
investors. MetLife is one of the fastest growing life insurance companies in the country. It serves
its customers by offering a range of innovative products to individuals and group customers at
more than 600 locations through its bank partners and company-owned offices. MetLife has
more than 50,000 Financial Advisors, who help customers achieve peace of mind across the
length and breadth of the country.
Established in India in September 2001, ING Vysya Life Insurance Company
Limitedis a joint venture between Vysya Bank, which is one of the largest private sector
banks in India, and ING Insurance Co., which is the world's second largest life insurance
company. This private life insurance company has around 140 branches all over India, with head
office in Bangalore. ING Vysya Life Insurance Co. has around 3000 employees with over 21,000
sales insurance agents and brokers. ING Vysya Life presently has around 4.5 lakh customers,
and is making a total income of Rs. 400 crore.
Reliance Life Insurance Company Limitedis a part of Reliance Capital Ltd., a
part of Reliance - Anil Dhirubhai Ambani Group. Reliance Capital is one of India's leading
private sector financial services companies, which ranks among the top 3 private sector financial
services and banking companies. Reliance Life Insurance is not only one of India's fastest
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growing life insurance companies, but also counts among the top 4 private sector insurers. In just
2 years, the Company has crossed the mark of 1.7 Million policies.
SBI Life Insurance offers a slew of products designed for various segments of society.
These include money back products, pension products, protection cum savings products, and unit
linked products. All these products cater to various requirements of its end users.
Bharti AXA Life Insurance Co. Ltd. is a joint venture between Bharti - one of
Indias leading business groups with interests in telecom, agri business and retail, and AXA -
global leader in financial protection and wealth management. Bharti has recently entered into the
retail business under a company called Bharti Retail Pvt. Ltd. AXA's operations are diverse
geographically, with major operations in Western Europe, North America and the Asia/Pacific
area. It also has operations in Australia, New Zealand, Hong Kong, Singapore, Indonesia,
Philippines, Thailand, China, India and Malaysia.
IDBI Fortis Life Insurance Co. Ltdis a joint venture of IDBI Bank, Federal Bank
(India) and Fortis Insurance International. The Certificate of Registration has been issued by the
Insurance regulator IRDA to this Insurance Company on 19th December 2007. According to the
agreement, IDBI will have a 48-per cent stake in the venture, while Fortis and Federal Bank
would have 26-per cent stake each. While IDBI and Federal Bank are major Indian banks, Fortis
has the expertise of bancasurance across global markets. It is one of the best names in the
insurance business in Europe and has successful joint ventures in various Asian countries. IDBI
Fortis Life Insurance has become 18th life insurer in India.
AEGON Religare Ltdis a joint venture of AEGON, Religare and Bennett, Coleman &
Company. AEGON in one of the world's leading life insurance and pension groups. Religare is a
prominent player in the field of integrated financial services in India. On the other hand, Bennett-
Coleman & Company is Indias largest media house. The insurance company began its operation
in July 2008. Within a short span of time, it has spread across India, by opening over 30 branches
in the country.
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Future Generali India Life Insurance Co. Ltd. is one of the rapidly growing
Insurance companies in India. The Company is a joint venture between the India-based Future
Group and the Italy-based Generali Group. Future Generali group is present in both the Life and
Non-Life businesses in India as Future Generali India Life Insurance Co. Ltd. and Future
Generali India Insurance Co. Ltd.
MARKET SHARE OF LIFE INSURANCE COMPANIES:
MARKET SHARE (%)
LIFE INSURERS
1. LIC 76.07
2. ICICI Prudential 6.91
3. Bajaj Allianz 4.75
4. HDFC Standard 2.98
5. Birla Sun life 1.72
6. Tata AIG 1.66
7. SBI Life 1.46
8. Max New York 1.28
9. Aviva 1.08
10. Kotak Mahindra Old Mutual 0.71
11. ING Vysya 0.54
12. AMP Sanmar 0.46
13. Met Life 0.37
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14. Sahara Life 0.03
Private total 23.93
Public total 76.07
Grand total 100.00
In the above table shows, the private players in the life insurance business have increased their
market share to 23.93 per cent. Among them ICICI prudential is ranked first in capturing the
market followed by Bajaj Allianz and HDFC Standard. Moreover, private insurers have planned
to increase their market share in the next five years. The public insurers have to enrich its
approach to withhold its share.
CHAPTER-3
ANALYSIS AND INTERPRETATION
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63533
3120
751
27
7727
90792
15083
127822
28253
149789
51561
0
20000
40000
60000
80000
100000
120000
140000
160000
PREMIUM
AMOUNT
(In crores)
1 2 3 4 5
YEARS
TOTAL PREMIUM
LIC Private Insurers
ANALYSIS AND INTERPRETATION
1. SIZE:
(A) TOTAL PREMIUM:
(Rs.In crores)
34
YEARS
FIRMS
03-04
(1)
04-05
(2)
05-06
(3)
06-07
(4)
07-08
(5)
LIC 63533 75127 90792 127822 149789
Private
Insurers3120 7727 15083 28253 51561
TOTAL 66653 82854 105875 156075 201350
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Average premium of LIC is much more than that of all insurance companies altogether. LIC is
average premium of the last five years is nearly five times the average premium of the all other
private insurance companies.
It can be said that up to that time their were less number of private players in the field of
insurance but then also undoubtedly LIC is the king.
(B) TOTAL INCOME:
(Rs.In crores)
35
Premium
(in crores)
Ra
nk
P
oints
Points after
multiplying by
weightage (7.5%)
LIC 101412.20 1 1 7.5Private
Insurers21148.80 2 0.5 3.75
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93089
4323
112393
9049
132147
18863
174425
24242
206363
52648
0
50000
100000
150000
200000
250000
INCOME
(In crores)
1 2 3 4 5
YEARS
TOTAL INCOME
LIC Private Insurers
All over income of LIC is much more than of private players. It is due to the fact that LIC being a
government agency is being trusted by lot of companies and has large number of shares in big
36
YEARS
FIRMS
03-04
(1)
04-05
(2)
05-06
(3)
06-07
(4)
07-08
(5)
LIC 93089 112393 132147 174425 206363
Private
Insurers4323 9049 18863 24242 52648
TOTAL 97412 121442 151010 198667 259011
Average
Income
(in crores)
Rank Points Points after
multiplying by
weightage
(7.5%)
LIC 143683.40 1 1 7.5
Private
Insurers21825.00 2 0.5 3.75
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346022
6585
416910
13653
531390
28910
625956
53048
776904
100774
0
100000
200000
300000
400000
500000
600000700000
800000
SIZE
(In crores)
1 2 3 4 5
YEARS
SIZE OF BALANCE SHEET
LIC Private Insurers
corporate.
(C) SIZE OF BALANCE SHEET:
(Rs.In crores)
37
YEARS
FIRMS
03-04
(1)
04-05
(2)
05-06
(3)
06-07
(4)
07-08
(5)LIC 346022 416910 531390 625956 776904
Private
Insurers
6585 13653 28910 53048 100774
TOTAL 352607 430563 560300 679004 877678
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Total average size of balance sheet of LIC in the last five years is certainly higher than that ofprivate insurance companies. There is a huge gap in this value. It is obvious that LIC has bigger
balance sheet as being working in the insurance field for quite large time. As compared to average
balance sheet size
of 40,594 crores of private insurance companies, LIC s average balance sheet size goes to much
high as that of 5,39,436.4 crores.
(D) TOTAL NUMBER OF POLICIES:
38
Average
Balance Sheet
Size
(in crores)
Rank PointsPoints after
multiplying by
weightage (7.5%)
LIC 539436.40 1 1 7.5
Private
Insurers40954.00 2 0.5 3.75
YEARS
FIRMS
03-04
(1)
04-05
(2)
05-06
(3)
06-07
(4)
07-08
(5)
LIC 26968069 23978123 31590515 38229292 37612599Private
Insurers1658847 2233075 3871410 7922294 13261558
TOTAL 28626916 26211198 35462117 46151586 50874157
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26968069
1658847
23978123
2233075
31590515
3871410
38229292
7922294
37612599
13261558
0
5000000
10000000
15000000
20000000
25000000
30000000
35000000
40000000
NUMBER
1 2 3 4 5
YEARS
NUMBER OF POLICIES ISSUES
LIC
Private Insurers
LIC is an undoubted leader in the field of average number of policies per year in the last five
years. It is seen that private insurance companies are gaining momentum and are trying to defeat
LIC in case of new insurances. Main reason behind LIC having such a large number of policies
is the trust of a common man. LIC being a government agency has got a faith of Indian mass.
People are not yet prepared to give their savings in the hands of private players.
39
Average
Number Of
Policies
Rank Points
Points after
multiplying by
weightage (7.5%)
LIC 31675670 1 1 7.5
Private
Insurers5789437 2 0.5 3.75
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2196
416
2197
804
2220
1645 2
301
3072
2522
6391
0
1000
2000
3000
4000
5000
6000
7000
NUMBER
1 2 3 4 5
YEARS
NUMBER OF BRANCHES
LIC Private Insurers
(E) NUMBER OF BRANCHES:
40
YEARS
FIRMS
03-04
(1)
04-05
(2)
05-06
(3)
06-07
(4)
07-08
(5)
LIC 2196 2197 2220 2301 2522
Private
Insurers416 804 1645 3072 6391
TOTAL 2612 3001 3865 5373 8913
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2. GROWTH:
(A) FIRST PREMIUM:(Rs.In crores)
41
Average
Number Of
Branches
Rank Points Points after
multiplying by
weightage (7.5%)
LIC 14.84 1 1 7.5
Private
Insurers
1436.29 2 0.5 3.75
YEARS
FIRMS
03-04
(1)
04-05
(2)
05-06
(3)
06-07
(4)
07-08
(5)
LIC 17347 20653 28515 55934 59996
Private
Insurers2440 5564 10270 19425 33715
TOTAL 19787 26217 38785 75359 93711
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17347
2440
20653
5564
28515
10270
55934
19425
59996
33
715
0
10000
20000
30000
40000
50000
60000
PREMIUM
ANOUNT
(In crores)
1 2 3 4 5
YEARS
FIRST PREMIUM
LIC Private Insurers
42
Growth in
First
Premium
(In %)
Growth in
First Premium
(In absolute
terms)
(in crores)
Rank Points Points after
multiplying
by weightage
(10%)
LIC 245.85 426492 0.5 5
Private
Insurers
1281.76 31275 1 1 10
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Though LIC has attained more growth in absolute terms i.e. Rs.42649 crores but private players
being so less in number five years back has achieved a dream come true growth of 1281.76 %
which is certainly a matter of pride for them.
(B) GROWTH IN INCOME: (Rs.In crores)
% GROWTH IN INCOME:
43
YEARS
FIRMS
03-04
(1)
04-05
(2)
05-06
(3)
06-07
(4)
07-08
(5)LIC 12101 19303 19754 42277 31988
Private
Insurers
2692 4725 9814 5379 28406
TOTAL 14793 24028 29568 47656 60394
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44
YEARS
FIRMS
03-04
(1)
04-05
(2)
05-06
(3)
06-07
(4)
07-08
(5)LIC 14.9 20.7 17.5 32 18.3
Private
Insurers
165 109.3 108.4 28.5 117
TOTAL 17.8 24.6 24.3 31.5 30.3
14.
9
165
20.
7
109
.3
17.
5
108.
4
32
28.
5
18.
3
117
0
20
40
60
80
100
120
140
160
180
%
1 2 3 4 5
YEARS
% GROWTH IN INCOME
LIC Private Insurers
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Here LIC has neither attained more growth in absolute terms i.e. Rs.19887 crores as compared to
25714 crores of private players nor has got more growth in terms of percentage. This shows that
private players are doing great job in enhancing their business.
(C) INCREASE IN NUMBER OF POLICIES:
45
Growth in
Income
(In %)
Growth in
Income
(In absolute
terms)
(in crores)
Rank Points Points after
multiplying by
weightage
(10%)
LIC 164.34 19887 2 0.5 5
Private
Insurers
955.20 25714 1 1 10
YEARS
FIRMS
03-04
(1)
04-05
(2)
05-06
(3)
06-07
(4)
07-08
(5)LIC 1475992 -2989946 7632584 6638585 -616693
Private
Insurers
804696 574228 1638335 4050884 5339264
TOTAL 2280688 -2415718 9270919 10689469 4722571
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14.
9
94.2
1
-11.
09
34.
62
31.
75
73.
37
21.
01
104
.64
-1.
6
67.
4
-20
0
20
40
60
80
100
120
%
1 2 3 4 5
YEARS
% GROWTH IN NO.OF POLICIES
LIC Private Insurers
46
YEARS
FIRMS
03-04
(1)
04-05
(2)
05-06
(3)
06-07
(4)
07-08
(5)LIC 5.79 -11.09 31.75 21.01 -1.6
Private
Insurers
94.21 34.62 73.37 104.64 67.4
TOTAL 8.6 -8.4 35.3 30.1 10.2
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28.
93
7.
5
34.
2
9.
61
40
.9
9.
17
55.
55
9.
2
59.
2
8.
07
0
10
20
30
40
50
60
BUSINESS
(In crores)
1 2 3 4 5
YEARS
BUSINESS PER BRANCH
LIC is still the market leader in insurance industry with 73.9 % share. But we cannot forget that in
last five years market share of LIC has decreased. It was 87.7 % in year 2003-04 which came
down to 73.9 % in 2007-08.
3. PRODUCTIVITY:
(A) BUSINESS PER BRANCH:
(Rs.In crores)
48
YEARS
FIRMS
03-04
(1)
04-05
(2)
05-06
(3)
06-07
(4)
07-08
(5)
LIC 28.93 34.20 40.9 55.55 59.20
Private
Insurers7.5 9.61 9.17 9.2 8.07
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Average business per branch of LIC is much higher than that of whole private insurance
companies.
(B) INCOME PER BRANCH:
(Rs.In crores)
49
Average Business
Per Branch
(In crores)
Rank Points
Points after
multiplying by
weightage (5%)
LIC 43.756 1 1 5
Private
Insurers8.71 2 0.5 2.5
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42.
39
10.
41
51.1
6
11.
25
59.
52
11.
47
75.
8
7.
89
81.
8
8.
23
0
10
20
30
40
50
6070
80
90
INCOME (In
crores)
1 2 3 4 5
YEARS
INCOME PER BRANCH
LIC Private Insurers
50
YEARS
FIRMS
03-04
(1)
04-05
(2)
05-06
(3)
06-07
(4)
07-08
(5)
LIC 42.39 51.16 59.52 75.80 81.80
Private
Insurers10.41 11.25 11.47 7.89 8.23
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7.
9
5.
86
9.
4
6.
92
12.
84
6.
24
24.
3
6.
32
23.
78
5.
28
0
5
10
15
20
25
PREMIUM
(In crores)
1 2 3 4 5
YEARS
NEW PREMIUM PER BRANCH
LIC Private Insurers
Average income per branch of LIC is much more than that of private insurance companies. Its
almost six times the total value of all the private companies.
(C) NEW PREMIUM PER BRANCH:(Rs.In crores)
51
Average Income
Per Branch
(In crores)
Rank Points
Points after
multiplying by
weightage (5%)
LIC 62.134 1 1 5
Private
Insurers9.864 2 0.5 2.5
YEARS
FIRMS
03-04
(1)
04-05
(2)
05-06
(3)
06-07
(4)
07-08
(5)
LIC 7.90 9.40 12.84 24.30 23.78
Private
Insurers5.86 6.92 6.24 6.32 5.28
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This value tells us about increase in the business of an insurance company in a period. Here we
see that LIC is ahead of private insurance companies in case of increasing their business.
4. GRIEVANCE HANDLING:
(A) TOTAL NUMBER OF GRIEVANCES:
52
Average
Income Per
Branch
(In crores)
Rank Points
Points after
multiplying by
weightage (5%)
LIC 15.644 1 1 5
Private
Insurers6.124 2 0.5 2.5
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474
45
704
195
8
51
540
354
507
651
1406
0
200
400
600
800
1000
1200
1400
1600
NUMBER
(In crores)
1 2 3 4 5
YEARS
TOTAL NO.OF GRIEVANCES
LIC Private Insurers
(B) NUMBER OF GRIEVANCES RESOLVED:
53
YEARS
FIRMS
03-04
(1)
04-05
(2)
05-06
(3)
06-07
(4)
07-08
(5)
LIC 474 704 851 354 651
Private
Insurers45 195 540 507 1406
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39
26
123
83
215
216
313
450
80
1103
0
200
400
600
800
1000
1200
NUMBER
RESOLVED
(In crores)
1 2 3 4 5
YEARS
TOTAL NO.OF GRIEVANCES RESOLVED
LIC Private Insurers
(C) % OF GRIEVANCES RESOLVED:
54
YEARS
FIRMS
03-04
(1)
04-05
(2)
05-06
(3)
06-07
(4)
07-08
(5)
LIC 39 123 215 313 80
Private
Insurers26 83 216 450 1103
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8.
2
57.
7
17.
5
42.
6
25.
3
40
88.
4
88.
7
12.
2
78.
4
0
10
20
30
40
50
60
70
80
90
NUMBER
RESOLVED
(In crores)
1 2 3 4 5
YEARS
%OF GRIEVANCES RESOLVED
LIC Private Insurers
55
YEARS
FIRMS
03-04
(1)
04-05
(2)
05-06
(3)
06-07
(4)
07-08
(5)LIC 8.2 17.5 25.3 88.4 12.2
Private
Insurers57.7 42.6 40 88.7 78.4
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Grievance Handling is one of the major issues in any organization. It plays an important role in
Insurance sector. People do attract towards companies who handles their grievances.
Here we see that private players are much ahead of LIC when the matter comes to grievance
management. In the last five years LIC has resolved only 25.37 % of cases brought in front of
them while the percentage of cases resolved in case of private players is 69.7 %.
This shows that private players are very serious about their image and are working hard to
provide the solution of the problems of the people as early as possible.
TOTAL POINTS TABLE
56
% Grievances
resolvedRank Points
Points after
multiplying by
weightage
(7.5%)
LIC 25.37 2 0.5 3.75
Private
Insurers69.70 1 1 7.5
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57
FACTORS LICPRIVATE
INSURERS
SIZE
A. Total Premium 7.5 3.75
B. Total Income 7.5 3.75
C. Balance Sheet Size 7.5 3.75
D. Total No. of Policies 7.5 3.75
E. Total No. of Branches 3.75 7.5
GROWTH
A. First Premium 5 10
B. Growth in Income 5 10
C. Increase in No. of Policies 5 10
D. Growth in Market Share 10 5
PRODUCTIVITY
A. Business per Branch 5 2.5
B. Income Per Branch 5 2.5
C. First Premium per Branch 5 2.5
GRIEVANCE HANDLING 3.75 7.5
TOTAL SCORE 77.50 72.50
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CHAPTER-4FINDINGS AND CONCLUSIONS
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FINDINGS & CONCLUSIONS:
LIC is the giant of the insurance sector. The overall size of LIC is much more than that of all
private insurance companies. Private insurers are in expansion mode and are increasing their size
but are still much behind LIC. A total premium deposit in LIC is much higher than the private
insurance companies. Total premium of LIC in FY 07-08 was Rs.149789 crores which three times
more than that of private insurance companies.
Income of LIC is much greater than private insurance companies. Last year total income from
investments of LIC was Rs.48244.14 crores which was nearly equal to the total income of the all
private insurance companies. By this we can imagine how big the LIC is.
Size of balance sheet of private insurance companies are lagging much behind LIC. Balance
sheet of LIC is seven times bigger than that of private insurance companies.
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 fieldof insurance and many private companies have just started their business. Hence it is obvious that
LIC is having large number of policyholders.
Number of branches of private insurance companies is increasing as the new players are entering
in this market. Also the established players are in expansion phase and hence are expanding there
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business. There are many private insurance companies and hence there total number of branches
has gone past LIC in the last financial year. But offices of private insurance companies are mostly
in urban areas and still it is LIC which covers most of the area.
Hence we see that LIC is leading when it comes to size. It is a giant in insurance sector
having huge network and customer base.
We see that due to excellent service quality and attractive offers private insurance companies
have started getting a number of customers. They are growing rapidly. Though LIC is also
increasing its customer base but private insurance companies are moving at a fast pace.
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.
LIC is certainly having a large customer base. Private insurance companies are not having that
much number of customer base but they are increasing it rapidly. They have registered a decent
growth of 104.64 % in number of new policies in the year 2006-07. Last year also their growth
rate was 67.4 %.
LIC, being the oldest player in the existing insurance market, has the biggest market share of
73.9 % which was 87.3% five years earlier. We see that private insurance companies are
penetrating in the customer base of LIC.
Overall we can see that private insurance companies are giving a tough competition to the
LIC and will certainly create a good business for themselves in the coming days.
There are many new entrants in this sector. There are many private insurance companies whohave reported loss in this and previous years. This is the main reason why private insurance
companies lag behind LIC in case of business per branch. There is a big difference between them.
Same is the case when it comes to income per branch. LIC is much ahead of private insurance
companies in this field. They are undoubted champions in insurance when it comes to profit
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earning.
New business is increasingly going towards private insurance companies but still the customer
base of LIC is very strong. In issuing new policies per branch also, they are ahead of private
insurance companies though not by very large margin.
Customer base of LIC is very strong and still business per branch, profit per branch or
premium per branch, they are leading much ahead of private insurance companies.
LIC ha s not shown their good concern when the matter of grievance handling comes. Private
insurance companies are far ahead in this matter. LIC has just resolved 25%cases in the last five
years while private insurance companies have resolved nearly70% cases. This is a matter from
where customer shift starts. We have seen the rapid increase in customer base of private insurance
companies which ca n be very much affected by this factor.
Overall we have seen that still LIC is very famous but private insurance companies are
growing at exceptionally fast pace. Private companies show due concern in grievance
management and brings innovative schemes to attract the customers. Right now they are
giving good competition to LIC and very soon they will give very tough competition to Life
Corporation of India.
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