Chapter : 1 Introduction

103
BRIEF HISTORY OF INSURANCE

The Indian life insurance industry has its own origin and history, since its inception. It
has passed through many obstacles, hindrances to attain the present status. Insurance
owes its existence to 17th century England. In fact, it took shape in 1688 at a rather
interesting place called Lloyd's Coffee House in London, where merchants, ship-owners
and underwriters met to discuss and transact business. The first stock companies to get
into the business of insurance were chartered in England in 1720. The year 1735 saw the
birth of the first insurance company in the American colonies in Charleston. In 1759, the
Presbyterian Synod of Philadelphia sponsored the first life insurance corporation in
America for the benefit of ministers and their dependents.

Life insurance in its modern form came to India from England in 1818 with the formation
of Oriental Life Insurance Company (OLIC) in Kolkata mainly by Europeans to help
widows of their kin. Later, due to persuasion by one of its directors (Shri Babu Muttyal
Seal), Indians were also covered by the company. However, it was after 1840 that life
insurance really took off in a big way. By1868, 285 companies were doing business of
insurance in India. Earlier these companies were governed by Indian company Act 1866.

By 1870, 174 companies ceased to exist, when British Parliament enacted Insurance Act
1870. These companies however, insured European lives. Those Indians who were
offered insurance cover were treated as sub-standard lives and were accepted with an
extra premium of 15% to 20%. By the end of the 18th century, Lloyd's had brewed
enough business to become one of the first modern insurance company.

Meaning and concept of Insurance

Life is a roller coaster ride and is full of twists and turns. Insurance policies are a
safeguard against the uncertainties of life. As in all insurance, the insured transfers a risk
to the insurer, receiving a policy and paying a premium in exchange. The risk assumed
by the insurer is the risk of death of the insured in case of life insurance.

Insurance policies cover the risk of life as well as other assets and valuables such as
home, automobiles, jewelry etc. On the basis of the risk they cover, insurance policies
can be classified into two categories:
(a) Life Insurance

(b) General Insurance

Life insurance products cover risk for the insurer against eventualities like death or
disability. Non-life insurance products cover risks against natural calamities, burglary,
etc.

Insurance is system by which the losses suffered by a few are spread over many, exposed
to similar risks. With the help of Insurance, large numbers of people exposed to a similar
risk make contributions to a common fund out of which the losses suffered by the
unfortunate few, due to accidental events, are made good. Insurance is a protection
against financial loss arising on the happening of an unexpected event. Insurance policy
helps in not only mitigating risks but also provides a financial cushion against adverse
financial burdens suffered.

Insurance is defined as a co-operative device to spread the loss caused by a particular

risk over a number of persons who are exposed to it and who agree to ensure themselves
against that risk. Risk is uncertainty of a financial loss. Insurance is also defined as a
social device to accumulate funds to meet the uncertain losses arising through a certain
risk to a person injured against the risk. Insurance provides financial protection against
a loss arising out of happening of an uncertain event. A person can avail this protection
by paying premium to an insurance company. A pool is created through contributions
made by persons seeking to protect themselves from common risk. Any loss to the
insured in case of happening of an uncertain event is paid out of this pool. Life insurance
has come a long way from the earlier days when it was originally conceived as a risk-
covering medium for short periods of time, covering temporary risk situations, such as
sea voyages. As life insurance became more established, it was realized what a useful
tool it was for a number of situations that includes temporary needs, threats, savings,
investment, retirement etc. Insurance is a contract between two parties whereby one
party agrees to undertake the risk of another in exchange for consideration known as
premium and promises to pay a fixed sum of money to the other party on happening of
an uncertain event (death) or after the expiry of a certain period in case of life insurance
or to indemnify the other party on happening of an uncertain event in case of general
 insurance. The party bearing the risk is known as the 'insurer' or 'assurer' and the party
whose risk is covered is known as the 'insured' or 'assured'.

According to the U.S. Life Office Management Inc., “Life Insurance provides a sum of
money if the person who is insured dies whilst the policy is in effect.”

The definition of insurance can be seen from two view points:

(a) Functional Definition

(b) Contractual Definition

(a) Functional Definition

Insurance is a co-operative device of distributing losses, falling on an individual or his

family over large number of persons each bearing a nominal expenditure and feeling
secure against heavy loss.

(b) Contractual Definition

Insurance may be defined as a contract consisting of one party (the insurer) who agrees
to pay to other party (the insured) or his beneficiary, a certain sum upon a given
contingency against which insurance is sought.

1.3 Principles OF INSURANCE

Insurance is based upon:

(a) Principles of Co-operation

(b) Principles of Probability

(a) Principles of Co-operation

Insurance is a co-operative device. If one person is providing for his own losses, it cannot
be strictly insurance because in insurance the loss is shared by a group of persons who
are willing to co-operate.

(b) Principles of Probability

The loss in the form of premium can be distributed only on the basis of theory of
probability. The chances of loss are estimated in advance to affix the amount of
premium. Since the degree of loss depends upon various factors, the affecting factors are
analyzed before determining the amount of loss. With the help of this principle, the
uncertainty of loss is converted into certainty. The insurer will not have to suffer loss as
well as gain windfall. Therefore, the insurer has to charge only so much of amount which
is adequate to meet the losses.

The insurance, on the basis of past experience, present conditions and future prospects,
fixes the amount of premium. Without premium, no co-operation is possible and the
premium cannot be calculated without the help of theory of probability, and
consequently no insurance is possible.

FUNCTIONS OF INSURANCE

The functions of Insurance can be bifurcated into three parts:

(a) Primary Functions

(b) Secondary Functions

 (a) Primary Functions

The primary functions of insurance include the following:

 Provide Protection

The primary function of insurance is to provide protection against future risk, accidents
and uncertainty. Insurance cannot check the happening of the risk, but can certainly
provide for losses of risk. Insurance is actually a protection against economic loss, by
sharing the risk with others.

 Assessment of risk

Insurance determines the probable volume of risk by evaluating various factors that give
rise to risk. Risk is the basis for determining the premium rate also.

 Collective bearing of risk

Insurance is a device to share the financial loss of few among many others. Insurance is
a mean by which few losses are shared among larger number of people. All the insured
contribute premiums towards a fund, out of which the persons exposed to a particular
risk are paid.

 Savings and investment

Insurance serves as a tool for savings and investment, insurance is a compulsory way of
savings and it restricts the unnecessary expenses by the insured. For the purpose of
availing income-tax exemptions, people invest in insurance also.
 (b) Secondary Functions

The secondary functions of insurance include the following:

 Prevention of Losses

Insurance cautions individuals and businessmen to adopt suitable device to prevent

unfortunate consequences of risk by observing safety instructions; installation of
automatic sparkler or alarm systems, etc. Reduced rate of premiums stimulate more
business and better protection to the insured.

 Small capital to cover large risks

Insurance relieves the businessmen from security investments, by paying small amount
of premium against larger risks and uncertainty.

 Contributes towards the development of large industries

Insurance provides development opportunity to large industries having more risks. Even
the financial institutions may be prepared to give credit to sick industrial units which
have insured their assets including plant and machinery.

 Source of Earning Foreign Exchange

Insurance is an international business. The country can earn foreign exchange by way of
issue of insurance policies.

 Risk Free Trade

Insurance promotes exports insurance, which makes the foreign trade risk free with the
help of different types of policies under marine insurance cover.
 IMPORTANCE OF INSURANCE

The process of insurance has been evolved to safeguard the interests of people from
uncertainty by providing certainty of payment at a given contingency. Insurance not only
serve the ends of individuals, or of special groups of individuals, it tends to pervade and
transform our modern social order, too. The role and importance of insurance, here, has
been discussed from an individual, business and society‟s view:

(A) Individual

 Insurance provides security and safety

Insurance provides safety and security against the loss on a particular event. In case of
life insurance, payment is made when death occurs or the term of insurance expires. The
loss to the family at a premature death and payment in old age are adequately provided
by insurance. In other words security against premature death and old age sufferings are
provided by life insurance. In other insurance, too, this security is provided against the
loss at a given contingency. for eg. property of insured is secured against loss due to fire
in fire insurance.

 Insurance affords peace of mind

Insurance provide security which is the prime motivating factor. It tends to stimulate an
individual do more work.

 Insurance protects mortgaged property

At the death of the owner of the mortgaged property, the property is taken over by the
lender of money and the family is deprived of the use of the property. On the other hand,
the mortgagee wishes to get the property insured because at the damage or destruction
of the property he may lose his right. Insurance provides adequate amount to the
dependents at the early death and the property-owner to pay off the unpaid loans.
Similarly, the mortgagee gets adequate amount at the loss of the property.
 Insurance eliminates dependency

At the death of the husband or father or earning mother, the loss to the family needs no
elaboration. Similarly, at destruction of property and goods, the family would suffer a
lot. The economic independence of the family is reduced or, sometimes, lost totally.
Insurance tries to eliminate dependency.

 Life Insurance encourages saving

The elements of protection and investment are present only in case of life insurance. In
property insurance, only protection element exists. In most of the life policies elements
of saving predominates. Systematic saving is possible because regular premiums are
required to be compulsorily paid. In insurance the deposited premium cannot be
withdrawn easily before the expiry of the term of the policy. The compulsion to pay
premium in insurance is so high that if the policy-holder fails to pay premiums within
the days of grace, he subjects his policy to lapsation and may get back only a very
nominal portion of the total premiums paid on the policy. For the preservation of the
policy, he has to try his level best to pay the premium.

 Life Insurance provides profitable investment

Individuals unwilling or unable to handle their own funds are pleased to find an outlet
for their investment in life insurance policies. The elements of investment i.e. regular
saving, capital formation, and return of capital along with certain additional return are
perfectly observed in life insurance. Life insurance fulfils all these requirements at a low
cost.

(B) Business

 Business efficiency is increased with insurance

When the owner of a business is free from the botheration of losses, he will certainly
devote much time to the business. The carefree owner can work better for the
maximization of the profit. The new as well as old businessmen are guaranteed payment
of certain amount with the insurance policies at the death of the person; at the damage,
 destruction or disappearance of the property or goods. The uncertainty of loss may affect
the mind of the businessman adversely. Insurance removes the uncertainty and
stimulates the businessmen to work hard.

 Enhancement of Credit

Business can obtain loan by pledging the policy as collateral for the loan. And persons
can get more loans due to certainty of payment at their deaths. The insurance properties
are the best collateral and adequate loans are granted by the lenders.

 Business continuation

In partnership, business may discontinue at the death of any partner although the
surviving partners can re-start the businesses, but in both the cases the business and the
partners will suffer economically. Insurance policies provide adequate fund at the time
of death. Each partner may be insured for the amount of his interest in the partnership
and his dependents may get that amount at the death of partner. With the help of property
insurance, the property of the business is protected against disasters and the chance of
disclosure of the business is reduced.

 Welfare of Employee

The welfare of employees is the responsibility of the employer. The former work for the
latter. Therefore, the latter has to look after the welfare of the former which can be
provision for early death, provision for disability and provision for old age. These
requirements are easily met by the life insurance, accident and sickness benefit and
pensions which are generally provided by group insurance. The premium for group
insurance is generally paid by the employer. This plan is the cheapest form of insurance
for employers to fulfill their responsibilities. The employees will devote their maximum
capacities to complete their jobs when they are assured of the above benefits. The
struggle and strife between employees and employer can be minimized easily with the
help of such schemes.
 (C) Society

 Wealth of the society is protected

The loss of a particular wealth can be protected with insurance. Life insurance provides
for loss of human wealth. The human force, if it is strong, educated and care-free, will
generate more income. Similarly, the loss of damage of property at fire, accident etc.,
can well indemnified by property insurance , cattle, crop, profit and machines are also
protected against their accidental and economical losses. With the advancement of the
society, the wealth or the property of the society attracts more hazard and so new types
of insurance are also invented to protect them against possible losses. Through the
prevention of economic losses, insurance protects the society against degradation.
Through stabilization and expansion of business and industry, the economic security is
maximized. The present, future and potential human and the property resources are well
protected.

 Economic Growth of the country

For the economic growth of the country, insurance provides protection against loss of
property and adequate capital to produce more wealth. Welfare of employees creates a
conducive atmosphere to work. Adequate capital from insurers accelerates production
cycle. Similarly in business, too, the property and human materials are protected against
certain losses, capital and credit are expanded with the help of insurance. Thus, the
insurance meets all the requirements for the economic growth of a country.

Types of Life Insurance Policies

A life insurance policy could offer pure protection (insurance), another variant could
offer protection as well as investment while some others could offer only investment. In
India, life insurance has been used more for investment purposes than for protection in
one‟s overall financial planning. Followings are the types of life insurance policy:
 Term Life Insurance Policy

As its name implies, term life insurance policy is for a specified period. It depends on
the length of time. It has one of the lowest premiums among insurance plans and also
carries an added advantage of fixed payments that do not increase during the term of the
policy. In case of the policy holder's untimely demise, the benefit amount specified in
the insurance agreement goes to the nominees.

 Whole Life Insurance Policy

Whole life insurance policies do not have any fixed term or end date and is only payable
to the designated beneficiary after the death of the policy holder. The policy owner does
not get any monetary benefits out of this policy. Because this type of insurance involves
fixed known annual premiums, it's a good option to ensure guaranteed financial benefits
for surviving family members.
 CHAPTER : 2

INDUSTRY PROFILE
All private life insurance companies and public sector company operating in India during
2000-01 to 2009-10 were taken for the study. Life Insurance Corporation which is the
only public sector life insurer and twenty two private sector life insurers, most of them
joint ventures between Indian groups and global insurance giants, were taken for the
study.

PUBLIC SECTOR

Life Insurance Corporation of India

Life Insurance Corporation of India (LIC) is an autonomous body authorized to run the
life insurance business in India with its Head Office at Mumbai. About 154 Indian
insurance companies, 16 non-Indian companies and 75 provident fund societies 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 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.

Following are the objectives of Life Insurance Corporation of India:

(i) “Spreading life insurance much more widely and in particular to the rural areas
and to the socially and economically backward classes, with a view to reach all insurable
persons in the country and provide them adequate financial coverage against death at a
reasonable cost,

(ii) Maximizing mobilization of people savings by making insurance linked savings

adequately attractive

(iii) Investing funds 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 and
(iv) Meeting the various life insurance needs of the community that would arise in the
changing social and economic environment through its Family Schemes and Group
Insurance Schemes.

Under Indian conditions there are only two broad classifications of insurance companies:
life and non-life insurance. The life insurance activities are solely managed by Life
Insurance Corporation of India in the public sector. The Life Insurance Corporation (LIC)
was established about 55 years ago with a view to provide an insurance cover against
various risks in life. A monolith then, the corporation, enjoyed a monopoly status and
became synonymous with life insurance.

At the industry level, along with the Government and the General Insurance Corporation,
it has helped establish the National Insurance Academy. It presently transacts individual
life insurance businesses, group insurance businesses, social security schemes and
pensions, grants housing loans through its subsidiary, markets savings and investment
products through its mutual fund. It has a very wide range of business strategy all over
India and abroad. LIC of India has been one of the pioneering organizations in India who
introduced the leverage of Information Technology in servicing and in their business.

1964 saw the introduction of computers in LIC of India. Unit Record Machines
introduced in late 1950‟s were phased out in 1980‟s and replaced by Microprocessors
based computers in Branch and Divisional Offices for Back Office Computerization.
Standardization of Hardware and Software commenced in 1990‟s. Standard Computer
Packages were developed and implemented for Ordinary and Salary Savings Scheme
(SSS) Policies.

LIC of India 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, a need was felt in
the later years to expand the operations and place a branch office at each district
headquarter. Re-organization of LIC of India 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.
Today LIC of India functions with 3250 fully computerized branch offices, 100
divisional offices, 7 zonal offices and the corporate office. LIC‟s Wide Area Network
covers 100 divisional offices and connects all the branches through a Metro Area
Network. LIC of India 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 of India has launched its Satellite Sampark
offices. The satellite offices are smaller, leaner and closer to the customer.

PRIVATE SECTOR

The Government having tried various models for the insurance industry such as
privatization with negligible regulation (pre 1956) and nationalization (19562000) and
having observed sub optimal performance of the sector, resorted to adopting a hybrid
model of both these, resulting in privatization of the sector with an efficient regulatory
mechanism (post 2000). This was initiated with the aim of making the industry
competitive so that there are more players offering a greater variety of products over a
large section of the population. The following companies are entitled to do insurance
business in India.

HDFC Standard Life Insurance Co.Ltd.

HDFC Standard Life Insurance Company Ltd. is one of India's leading private insurance
companies, which offers a range of individual and group insurance solutions. HDFC
Standard Life Insurance Co. Ltd. is a joint venture between HDFC Ltd., India's largest
housing finance institution and Standard Life Assurance Company, Europe's largest
mutual life company. It was the first life insurance company to be granted a certificate of
registration by the IRDA on the 23rd of October, 2000. HDFC holds about 72.43% of the
equity, Standard Life holds 26% while the rest is held by others.
Standard Life, UK was founded in 1825 and has an experience of over 185 years. The
company is rated as "very strong" by Standard & Poor's (AA) and "excellent" by Moody's
(Aa2). Headquartered in Edinburgh, Standard Life has around 9,000 employees across
the UK, Canada, Ireland, Germany, Austria, India, USA, Hong Kong and mainland
China. The Standard Life group includes savings and investments businesses, which
operate across its UK, Canadian and European markets; corporate pensions and benefits
businesses in the UK and Canada; Standard Life Investments is a global investment
manager.

HDFC Limited, India's premier housing finance institution has assisted more than 3.8
million families to own a home, since its inception in 1977 across 2400 cities and towns
through its network of over 289 offices. It has international offices in Dubai, London and
Singapore with service associates in Saudi Arabia, Qatar, Kuwait and Oman to assist
NRI's and PIO's to own a home back in India. HDFC has set benchmarks for the Indian
housing finance industry. Recognition for the service to the sector has come from several
national and international entities including the World Bank that has lauded HDFC as a
model housing finance company for the developing countries. HDFC has undertaken a
lot of consultancies abroad assisting different countries including Egypt, Maldives,
Mauritius , Bangladesh in the setting up of housing finance companies.

Max New York Life Insurance co.Ltd.

Max New York Life Insurance Company Limited is a joint venture between

Max India Limited, a multi-business corporate, and New York Life

International, a global expert in life insurance.

New York Life is a Fortune 100 company that has over 160 years of experience in the
life insurance business. Max India Limited is a multi-business corporate dealing in
Clinical Research, IT and Telecom Services, and Specialty plastic product businesses.

Max New York Life Insurance started its operations in India on 15th November, 2000. It
is the first life insurance company in India to be awarded the IS0 9001:2000 certifications.
Max New York offers customized products tailored to suit individual's needs. With its
various Products and Riders, they offer more than 400 product combinations. Today, Max
New York Life Insurance has a network of 705 offices spread over 37 cities all over India.

Max New York Life has identified individual agents as its primary channel of
distribution. The Company places a lot of emphasis on its selection process, which
comprises four stages - screening, psychometric test, career seminar and final interview.
The agent advisors are trained in-house to ensure optimal control on quality of training.
Max New York Life invests significantly in its training programmer and each agent is
trained for 152 hours as opposed to the mandatory 100 hours stipulated by the IRDA
before beginning to sell in the marketplace. Training is a continuous process for agents
at Max New York Life and ensures development of skills and knowledge through a
structured programmed spread over 500 hours in two years. This focus on continuous
quality training has resulted in the company having amongst the highest agent pass rate
in IRDA examinations and the agents have the highest productivity among private life
insurers.

Having set a best in class agency distribution model in place, the company is
spearheading a major thrust into additional distribution channels to further grow its
business. The company is using a five-pronged strategy to pursue alternative channels of
distribution. These include the franchisee model, rural business, direct sales force
involving group insurance and telemarketing opportunities, bancassurance and corporate
alliances.

ICICI Prudential Life Insurance co. Ltd.

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a
premier financial powerhouse and prudential plc, a leading international financial
services group headquartered in the United Kingdom.

ICICI was established in 1955 to lend money for industrial development. Today, it has
diversified into retail banking and is the largest private bank in the country. Prudential
plc was established in 1848 and is presently the largest life insurance company. Total
capital infusion stands at Rs. 33.62 billion, with ICICI Bank holding a stake of 74% and
Prudential plc holding 26%.
They began their operations in 24th November, 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA). Today, their nation-wide team
comprises of over 1,000 offices, over 263,000 advisors; and 22 bancassurance partners.
ICICI Prudential was the first life insurer in India to receive a National Insurer Financial
Strength rating of AAA from Fitch ratings. For three years in a row, ICICI Prudential has
been voted as India's Most Trusted Private Life Insurer, by The Economic Times - AC
Nielsen ORG Marg survey of 'Most Trusted Brands'.

Kotak Mahindra Old Mutual Life Insurance Co. Ltd.

Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between Kotak
Mahindra Bank Ltd.(KMBL), and Old Mutual plc. Kotak Mahindra is one of India's
leading financial institutions and offers a range of financial services such as commercial
banking, stock broking, mutual funds, life insurance, and investment banking. Kotak
Mahindra Old Mutual Life Insurance Ltd. started its operations in India on 10th January,
2000.

Old Mutual, a company with 160 years experience in life insurance was established more
than 150 years ago and offers a diverse range of financial services in South Africa, the
United States and the United Kingdom. The company is listed on the London Stock
Exchange with a market capitalization and has its head quarters in London.

Kotak Mahindra Old Mutual Life Insurance is a 74:26 joint venture between Kotak
Mahindra Bank Ltd. and Old Mutual plc. Kotak Mahindra Old Mutual Life Insurance is
one of the fastest growing insurance companies in India and has shown remarkable
growth since its inception in 2001.

Birla Sun Life Insurance Co.Ltd.

Established in 2001, 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 of Canada. Aditya Birla Group is an Indian
multinational conglomerate with presence in India, Thailand, Indonesia, Malaysia,
Philippines, Egypt, Canada, Australia and China.
Sun Life Assurance, Sun Life Financials primary insurance business, is one of the leading
insurance companies of the world and ranks amongst the largest international financial
services organizations in the world. With an experience of over 10 years, BSLI has
contributed significantly to the growth and development of the life insurance industry in
India and currently ranks amongst the top ten private life insurance companies in the
country.

Known for its innovation and creating industry benchmarks, BSLI has several first to its
credit. It was the first Indian Insurance Company to introduce "Free Look Period" and
the same was made mandatory by IRDA for all other life insurance companies.
Additionally, BSLI pioneered the launch of Unit Linked Life Insurance plans amongst
the private players in India. To establish credibility and further transparency, BSLI also
enjoys the prestige to be the originator of practice to disclose portfolio on monthly basis.
These category development initiatives have helped BSLI be closer to its policy holders'
expectations, which gets further accentuated by the complete bouquet of insurance
products (viz. pure term plan, life stage products, health plan and retirement plan) that
the company offers.

It has an extensive reach through its network of 600 branches and 1, 47,900 empanelled
advisors. This impressive combination of domain expertise, product range, reach and ears
on ground, helped BSLI cover more than 2.4 million lives since it commenced operations
and establish a customer base spread across more than 1500 towns and cities in India.
BSLI has ensured that it has lowest outstanding claims ratio of 0.00% for FY 2010-
11.The company has web-enabled IT systems for better customer services and a strong
distribution channel. It has professional knowledge and global expertise of Aditya Birla
Group.

TATA AIG Life Insurance Co.Ltd.

Tata AIG Life Insurance Company Limited is a joint venture between Tata Group and
American International Group, Inc. (AIG). Tata Group is one of the oldest and leading
business groups of India. Tata Group has had a long association with India's insurance
sector having been the largest insurance company in India prior to the nationalization of
insurance. The Late Sir Dorab Tata was the founder Chairman of New India Assurance
Co. Ltd., a group company incorporated way back in 1919.
American International Group, Inc is the leading U.S. based international insurance and
financial services organization and the largest underwriter of commercial and industrial
insurance in the United States. AIG has one of the most extensive life insurance networks
in the world.

Tata AIG Life combines the Tata Group‟s pre-eminent leadership position in India and
AIG‟s global presence as the world‟s 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 percent. Tata AIG Life provides insurance solutions to
individuals and corporates. Tata AIG Life Insurance Company was licensed to operate in
India on February12, 2001and started operations on April 1, 2001.

SBI Life Insurance Co.Ltd.

SBI Life Insurance is a joint venture between the State Bank of India and Cardif of
France. State Bank of India is the largest banking franchise in India. Along with its 7
Associate Banks, SBI Group has a network of over 14,500 branches across the country,
the largest in the world.

Cardif is a wholly owned subsidiary of BNP Paribas, which is The Euro Zone's leading
Bank. BNP is one of the oldest foreign banks with a presence in India dating back to
1860. SBI Life Insurance is registered with an authorized capital of Rs 1000 crore and a
paid up capital of Rs 500 crores. SBI owns 74% of the total capital and Cardif the
remaining 26%.Cardif is ranked 2nd worldwide in creditor‟s insurance offering protection
to over 35 million policyholders and net income in excess of Euro 1 billion. Cardif has
also been a pioneer in the art of selling insurance products through commercial banks in
France and in 35 more countries.

SBI Life has a unique multi-distribution model encompassing Bancassurance, Agency

and Group Corporates.SBI Life extensively leverages the SBI Group as a platform for
cross-selling insurance products along with its numerous banking product packages such
as housing loans and personal loans. SBI‟s access to over 100 million accounts across
the country provides a vibrant base for insurance penetration across every region and
economic strata in the country ensuring true financial inclusion.
ING Vysya Life Insurance Co.Ltd.

ING Vysya Life Insurance Company Limited is a joint venture between Vysya Bank and
ING Group of Holland, the world's 4th largest financial services group, with presence
across 50 countries, and a heritage of over 150 years.

ING Vysya Life Insurance Company Limited (the Company) entered the private life
insurance industry in India in September 2001, and has established itself as a distinctive
life insurance brand with an innovative, attractive and customer friendly product portfolio
and a professional advisor sales force.

It has a dedicated and committed advisor sales force of over 21,000 people, working from
140 branches located in 74 major cities across the country and over 3,000 employees. It
also distributes products in close cooperation with the ING Vysya Bank network. The
Company has a customer base of over 4,50,000 and is headquartered at Bangalore. The
Company‟s portfolio offers products that cater to every financial requirement, at any life
stage. In fact, the company has developed the Life Maker-a simple method which can be
used to choose a plan most suitable to a specific customer based on his needs,
requirements and current life stage.

Bajaj Allianz Life Insurance Co.Ltd.

Bajaj Allianz is a joint venture between Allianz AG one of the world's largest insurance
companies, and Bajaj Auto, one of the biggest two and three wheeler manufacturer in the
world. Bajaj Allianz is into both life insurance and general insurance.

Allianz Group is one of the world's leading insurers and financial services providers.
Founded in 1890 in Berlin, Allianz is now present in over 70 countries with almost
174,000 employees. Allianz is a leading insurance conglomerate globally and one of the
largest asset managers in the world, managing assets worth over a Trillion Euros (Over
Rs. 55,00,000 crores). Allianz SE has over 115 years of financial experience in over 70
countries.

Today, Bajaj Allianz is one of India's leading and fastest growing insurance companies.
Currently, it has presence in more than 550 locations with over 60,000 Insurance
Consultants.
Met Life India Insurance Co.Ltd.

Met Life Insurance Co.Ltd is a joint venture between Met Life Group and its Indian
partners. The Indian partners include J&K Bank, Dhanalakshmi Bank, Karnataka Bank,
Karvy Consultants, Geojit Securities, Way2Wealth, and Mini Muthoothu.

Met Life Group has presence in America and Asia and has an experience of over 139
years in providing financial services. The Met Life companies are the number one life
insurer in the U.S. with approximately US $2.8 trillion of life insurance in force. MetLife
serves 88 of the top one hundred FORTUNE 500 companies. MetLife entered Indian
insurance sector in 2001. The MetLife companies offer life insurance, annuities,
automobile and home insurance, retail banking and other financial services to individuals,
as well as group insurance, reinsurance and retirement and savings products and services
to corporations and other institutions, reaching more than 70 million customers around
the world.

Reliance Life Insurance Co.Ltd.

AMP Sanmar Life Insurance was a joint venture between AMP, Australia and the Sanmar
Group. Headquartered in Chennai, AMP Sanmar had over 90 offices across the country,
9000 agents, and more than 900 employees. Consequent to the acquisition of the entire
equity capital of AMP, Australia and Sanmar Group in AMP Sanmar Life Insurance Co.
Ltd., by Reliance
Capital Limited, „AMP Sanmar Life Insurance Co. Ltd.‟ has changed to „Reliance Life
Insurance Co. Ltd.‟ on 17.01.2006.

Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the
Reliance - Anil Dhirubhai Ambani Group. The company acquired 100 per cent
shareholding in AMP Sanmar Life Insurance Company in August 2005. RLIC has a huge
network of around 1145 branches covering a wide geographical area. It is one of the ISO
9001:2000 certified life insurance companies of India.
Reliance Capital has interests in asset management and mutual funds, stock broking, life
and general insurance, proprietary investments, private equity and other activities in
financial services. Reliance Group also has presence in
Communications, Energy, Natural Resources, Media, Entertainment,

Healthcare and Infrastructure

Aviva Life Insurance Co.Ltd.

Aviva Life Insurance Company India Pvt. Ltd. is a joint venture between Aviva of UK
and Dabur, one of India's leading producers of traditional healthcare products. Aviva
holds a 26 per cent stake in the joint venture and the Dabur group holds the balance 74
per cent share. Aviva is UK's largest and the world's sixth largest insurance Group. It is
one of the leading providers of life and pensions products to Europe and has substantial
businesses elsewhere around the world.

Aviva pioneered the concept of Banc assurance in India. Currently, Aviva has
Bancassurance tie-ups with ABN Amro Bank, American Express Bank, Canara Bank,
Centurion Bank of Punjab, The Lakshmi Vilas Bank Ltd. and Punjab and Sind Bank, 11
Co-operative Banks in Gujarat, Rajasthan, Jammu & Kashmir and Maharashtra and one
regional Bank in Sikkim. Aviva has 40 Branches in India (including rural branches)
supporting its distribution network. Through its Bancassurance partner locations, Aviva
products are available in 378 towns and cities across India. Aviva is one of the leading
providers of life and pensions products to Europe and has substantial businesses
elsewhere around the world. With a history dating back to 1696, Aviva has a 40 million-
customer base worldwide. It has more than £377 billion of assets under management.In
India; Aviva has a long history dating back to 1834. At the time of nationalization it was
the largest foreign insurer in India in terms of the compensation paid by the Government
of India. Aviva was also the first foreign insurance company in India to set up its
representative office in 1995.With a strong sales force of over 28,000 Financial Planning
Advisers (FPAs), Aviva has initiated an innovative and differentiated sales approach to
the business. Through the “Financial Health Check” (FHC) Aviva‟s sales force has been
able to establish its credibility in the market. The FHC is a free service administered by
the FPAs for a need-based analysis of the customer‟s long-term savings and insurance
needs. Depending on the life stage and earnings of the customer, the FHC assesses and
recommends the right insurance product for them. Aviva has 176 Branches in India
(including rural branches) supporting its distribution network. Through its Bancassurance
partner locations, Aviva products are available in more than 1600 locations across India.
Through its association with Basix (a micro financial institution) and other NGOs, it has
been able to reach the weaker sections of the society and provide life insurance to them.
Aviva has been felicitated with the "Bronze Award for Excellence in People
Management" by Grow Talent Company Limited and Businessworld. This honour is
given to Aviva based on the ranks received in top 25 list of the Great Place to Work India
studies conducted in the last four years.
 CHAPTER : 3

Review of Literature
Review of Literature

The initial studies on the efficiency of U.S. life insurers, Grace and Timme (1992)
Yuengert (1993) and Gardner and Grace (1993) mostly focused on scale economies.
These studies tend to find evidence of significant scale economies in the industry,
although larger firms generally are found to exhibit decreasing returns to scale.

Weiss (1991) analyzed factor productivity of 5 countries of Organization for Economic

co-operation and Development (OECD) - France, Germany, Japan, Switzerland and US
spanning 1975 to 1987.They found that US and Germany had high productivity while
France, Japan and Switzerland were below average.

Fecher et al.(1993) used the Data Envelopment Analysis and Stochastic Frontier
Approach model and examined the technical efficiency of life insurers and non life
insurers of France during 1984 to 1989. The inputs used in their model were labor cost
and other outlays. On the output side, the factors included only Gross premium. The
conclusion of the study was that there was high correlation between parametric and non
parametric results and wide dispersion in the rates of inefficiency across companies.

Delhausse et al.(1995) studied technical efficiency of non life insurer in Belgium and
France by using Data Envelopment Analysis and Stochastic Frontier Approach method.
They found that the technical efficiency of France was more than Belgium. But the
overall technical efficiency was quite low in both countries. They also found that non
profit companies were more efficient than profit companies.

Rai (1996) studied cost efficiency by Stochastic Frontier Approach method during 1988
to 1992 covering 11 OECD countries- Denmark, Finland, France, Germany, Italy, Japan,
Netherlands, Sweden, Switzerland, U.K. and US. He concluded that the cost efficiency
of Finland and France was greater than U.K. where as small firms were more cost
efficient than large firms.

Donni, Fecher (1997) covered both life and non life sector in 15 OECD countries -
Belgium, Canada, Finland, France, Germany, Iceland, Italy, Japan, Netherlands,
Newzealand, Portugal, Switzerland, Turkey, U.K. and US during 1983 to 1988 using
Data Envelopment Analysis approach to find out technical efficiency. They found that
US, U.K., France and Germany were the best and Portugal was the worst. They also found
that the technical efficiency level was high and dispersed.

Cummins and Zi (1998) made comparative analysis of Frontier Cost Efficiency

methodologies by the application of a wide range of econometric and mathematical
programming techniques to a data set consisting of 445 life insurers over the period 1988
to 1992. The alternative methodologies gave significantly divergent estimates of
efficiency for the in-sample insurers. The efficiency rankings were quite well-preserved
among the econometric methodologies; but the rank correlations were found to be lower
between the econometric and mathematical programming categories and between
alternative mathematical programming methodologies. Thus, the choice of methodology
had a significant effect on the results. Most of the insurers in the sample displayed either
increasing or decreasing returns to scale.

Sloan A., Conover J. (1998) examined the functional status of Insurance Companies from
1995 to 1997 in Japan. The result showed that functional status of insurer does not affect
the profitability but public coverage has significant impact on profitability of insurance
companies.

Cummins, Tennyson and Weiss (1998) studied the relationship between mergers and
acquisitions, efficiency, and scale economies in the US life insurance industry. They
estimated cost and revenue efficiency over the period
1988 to1995 using Data Envelopment Analysis. The Malmquist methodology was used
to measure changes in efficiency over time. They found that acquired firms achieved
greater efficiency gains than firms that have not been involved in mergers or acquisitions.
Firms operating with non-decreasing returns to scale and financially vulnerable firms
were found to be acquisition targets. Overall, mergers and acquisitions in the life
insurance industry were found to have a beneficial effect on efficiency.

Cummis, Tennyson, and Weiss (1999) used the Data Envelopment Analysis to examine
the relationship among mergers and acquisitions, efficiency, and economies of scale in
the US life insurance industry over the period 1988 to 1995.They found that acquired
firms achieve greater efficiency gains than firms that have not been involved in mergers
or acquisitions.
Mahlberg (1999) included 36 life insurers of Australia and 118 life insurers of Germany
for the period of 1992 to 1996 to find out technical efficiency. The study revealed that
the technical efficiency of Australia was greater than Germany but at the same time
inefficiency was found in both the countries.

Cummins (1999) examined pure technical and cost efficiency of US life insurers spanning
1988 to 1995 by using Data Envelopment Analysis approach. The study found that
efficiency scores in insurance were relatively low compared to other financial service
industry and brokerage system was most efficient.

Carr,Cummins,Regan (1999) analyzed cost efficiency as well as revenue efficiency of 66

life insurers of US by using Data Envelopment Analysis approach. The result showed
that exclusive dealing insurers were less efficient than non-exclusive dealing or direct
writers. The study also found that dealing insurers should focus on fewer product lines.

Peter Drucker (1999) admitted that by providing financial protection against the major
eighteenth and nineteenth century risk of dying too soon, life insurance became the
biggest financial industry of that century.

Berger et al. (2000) analyzed cost efficiency, revenue efficiency and profit efficiency of
684 insurers in US by using Thick Frontier Approach and Stochastic Frontier Approach
method for the period 1988 to 1992.The result showed that conglomeration hypothesis
holds for some types while strategic focus hypothesis dominates others.

Hogan, John D (2001) assumed that the banking industry would quickly expand into non-
banking activities, as synergies could be expected from the large bank customer
information base and frequent contacts with customers. However, this quick response has
not taken place, partly because of perception of risk in the insurance business. The author
also suggests that banking companies should add insurance products to their lines of
business for sound reasons such as small increment costs involved, the presence of
existing customer relationships, revenue diversification, absence of interest rate risk in
insurance compared with loans and banks’ web-based marketing capability.

Carrow Kenneth A.(2001) investigated whether the announcement of a merger between

Citicorp and Travelers abnormally impacted stock prices of financial and insurance
companies. Analysis of abnormal returns surrounding the merger show that life insurance
companies and large banks experienced significant stock price increases, while the
returns of stocks of smaller banks, health insurers, and property insurers remain relatively
unchanged.

Diacon (2001) included 431 general insurers of 6 European countries: France, Germany,
Italy, Netherland, Switzerland and U.K.in 1999. He concluded that the technical
efficiency of U.K. was greater than Germany and Netherlands but at the same time
Germany was more efficient compared to Netherlands.

Kessner (2001) found technical efficiency of 78 life insurers of Germany and 87 life
insurers of U.K. spanning 1994 to 1999 by using Data Envelopment Analysis method.
He came to the conclusion that the technical efficiency of U.K. was more than Germany
and at the same time technical efficiency increased in both markets.

Diacon,Starkey,O’Brien (2002) included 454 life insurers of 15 European countries such

as Australia, Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg,
Netherlands, Portugal, Spain, Sweden, Switzerland and U.K. The study examined pure
technical efficiency, scale and mix efficiency by using Data Envelopment Analysis
approach of life insurers from the year 1996 to 1999.The study reached a logical
conclusion that the efficiency level had decreased and there was striking international
differences.

Boonyasai,Grace,Skipper (2002) examined technical efficiency of Life insurers of 4

Asian countries: Korea, Philippines, Taiwan and Thailand. The study covered 33 life
insurers of Korea, 33 life insurers of Philippines, 31 life insurers of Taiwan and 13 life
insurers of Thailand. The conclusion of the study was that the productivity of Korea and
Philippines was more than Taiwan and Thailand. The technical efficiency of all life
insurers had increased.

Carrow Kenneth A. and Heron R. (2002) investigated how the passage of the Financial
Services Modernization Act of 1999 (FMA) affected stock prices of banks, thrifts,
finance companies and insurance companies. The study looks at stock excess returns
across sectors and company size. FMA opens doors for potential mergers and
consolidations across banking, financial and insurance sectors, translating into abnormal
positive returns for businesses that are likely candidate for mergers and consolidation.
The results of the study suggest that the largest returns to the FMA passage were realized
by large investment banks and insurance companies. The stock prices of banks, both
small and large, seemed to be unaffected by the new legislation while thrifts, finance
companies and foreign banks lost value.

Madabhushi Sridhar (2002) traces the evolution of the principle of moral hazard in a life
insurance contract and its gradual dilution with the changing style of human civilization
and understanding the influence of criminal' acts on the civil contract. The study reached
a logical conclusion that the principle of moral hazard plays a reduced role in a life
insurance contract with reference to suicide and that the terms of the contract should
prevail to fix the liability of the insurer to fulfill the purpose and objective of a life
insurance contract i.e. to help the dependents to absorb the shock of sudden death of the
insured, either by natural or suicidal death, in sane or insane conditions.

Lin (2002) applied the Data Envelopment Analysis approach to measure efficiency scores
and to examine whether life insurers in Taiwan have fully recognized the new market
structure after deregulation. Results showed no change in overall efficiency, no pure
technical efficiency change, and no scale efficiency change after deregulation.

Da Han Chung, Yen Lin Hung, Yu Hsuang Lee,Jun Min Wang (2003) compared
bancassurance sales and insurer’s own team of Taiwan from 2000 to 2002.They used
Data Envelopment Analysis approach to compute the efficiencies of bancassurance and
traditional channels separately. The conclusion of the research was that the efficiency
score of a life insurance company’s own sales representatives is significantly higher than
that of its bancassurance representatives and the efficiency relationship between the
bancassurance channel and traditional selling channel is independent.

A.K. Jain (2004) revealed that waves of liberalization have done wonders to the insurance
occupation. The average mindset, particularly of younger generation in India is very
amenable to these changes in insurance as an avenue where exhilarating opportunities
were opened up in changed environment.

Akihisa Oda (2004) studied natural catastrophe insurance systems of Japan and compared
them from three aspects: government commitment, insurance scheme, and mitigation
incentives. Through the study, the strengths and weaknesses of the Japanese earthquake
insurance system are implied and future improvements are suggested. The
comprehensiveness of the Japanese insurance system seems to be one of the strengths.
On the other hand, further improvements are expected for the system in the participation
rate, basis risk and mitigation incentives.

Chen, Wong (2004) examined determinants of financial health of insurance companies

of China from 2001 to 2003.The result showed that size, investment and liquidity are
important determinants of financial health of insurance companies.

Madhukar Palli (2004) assessed Life Insurance Potential in India. The report focused on
risk security, the core product of life insurance. It provides estimates of the Life Insurance
Gap to maintain dependents’ living standards after the death of the primary wage earner.
The primary drivers of demand for risk security are 'Age', 'Income', 'Affordability',
'Wealth' and finally the desire to protect income from Inflation. Though aggregate
demand is driven by these factors, various researches have shown that there is little
correlation between a specific family's need for security and its actual purchase of
insurance. Many families, especially young ones, have either no risk security or
inadequate security.

Tapen Sinha (2005) analyzed the evolution of insurance in India. He concluded that India
is fast becoming a global economic power. India is among the important emerging
insurance markets in the world. The fundamental regulatory changes in the insurance
sector in 1999 will be critical for future growth. Despite the restriction of 26% on foreign
ownership, large foreign insurers have entered the Indian market. State-owned insurance
companies still have dominant market positions. But, this would probably change over
the next decade.

Barros, Barroso, Borges (2005) covered 27 life and non-life insurers of Portugal country
during 1995 to 2001.In this study they found technical efficiency, pure technical
efficiency and scale efficiency by using DEA method. The study concluded that the
technical efficiency improved over time but deteriorated in terms of technological
change. At the same time pure technical efficiency and scale efficiency had increased.

AK Sukla (2006) reviewed the measures of liberalization initiated in insurance sector.

Six years into competitive market, the Indian insurance industry exhibited a healthy
growth trend of new business and market share. The life insurance industry saw the new
players stabilize their operations keenly matched by LIC of India and the premium
numbers brought out the fact that the size of the insurance market grew over the six years
of liberalization. He also viewed that with liberalization, India was penning the script of
insurance convergence and not Insurance divergence. It clearly indicated the comfort
zone of operation of the players.

Hwang, Shiuh-Nan; Kao, Tong-Liang (2006) studied managerial efficiency in Life

Insurance Companies with an application of two-stage Data Envelopment Analysis. The
results revealed that marketability can be explained by percentage of outer servers,
number of branches, premium investment percentage and corporate image, while
profitability can be explained by market share. This paper uses the two-stage data
envelopment analysis (DEA), which was first used by Seiford and Zhu (1999), to measure
managerial performance in 10 life insurance companies in Taiwan. Performance was
measured by Marketability in the first stage and Profitability in the second stage. In
addition, this paper uses the Tobit regression model to examine factors that significantly
influence managerial efficiency.

Hussels,Ward (2006) analyzed the cost efficiency as well as technical efficiency of 31

life insurers of Germany and 47 life insurers of U.K. during 1991 to 2002.They concluded
that the cost and technical efficiency of U.K. was greater than Germany. There was
limited evidence of improvement in post deregulation efficiency as well as limited
influence of deregulation on efficiency.

Cummins et al. (2006) were the first to explicitly investigate the relationship between risk
management, financial intermediation, and economic efficiency. In their application to
the US property-liability industry, they analyzed whether both activities contribute to
efficiency through reducing costs of providing insurance. In order to show the
contribution of risk management and financial intermediation to efficiency, they
estimated shadow prices of these two activities. They found positive shadow prices of
both activities and concluded that they significantly contribute to increasing efficiency.

Badunenko, Grechanyuk, Talavera (2006) studied technical and scale efficiency of 163
life and non life insurers of Ukraine country from 2003 to 2005 by using Data
Envelopment Analysis method. They found that increased capitalization requirements
have positively influenced Ukrainian markets and helped to improve both technical and
scale efficiency.

T. Sri Jyothi (2007) focused on the devastation caused by extreme climatic changes, with
particular reference to those experienced in the USA and Australia, and the role of
insurance industry and government in the occurrence of such events. The concepts like
adaptation, mitigation are also explained. Further, it also deals with the recent tools
available for the insurers to mitigate the loss and new policies developed by government
to provide financial stability to these companies. It concludes with the new disaster and
catastrophic risk insurance policies started by insurance companies in the US and
Australia. It mainly focuses on the devastation caused by Hurricane-Katrina in 2005 and
its aftermath.

Klumpes (2007) covered 1183 both life and general insurance companies of 7 European
countries such as France, Germany, Italy, Netherlands, Spain, Switzerland and U.K.
during 1997 to 2001.The study used Data Envelopment Analysis approach to find out
cost efficiency, technical efficiency and revenue efficiency. The study concluded that
acquiring firms achieved greater efficiency gains than target firms or firms not involved
in mergers.

Yao, Han, and Feng (2007) used a panel data set of 22 insurance companies over the
period 1999 to 2004 to evaluate their efficiency by applying Data Envelopment Analysis
approach. In their study, labor and capital were input factors while premium, benefits and
claims costs were output factors to measure the efficiency of insurance companies.

Jeng et al. (2007) used the DEA model and examined the efficiency changes of US life
insurers before and after demutualization in the 1980s and 1990s. The inputs used in their
model were labor, business service, equity cost, assets and underwriting and investment
expenses. On the output side, the factors included benefit payments and return on assets.

CS Rao (2007) reported that Insurance is a vital economic activity and there is an
excellent scope for its growth in the emerging markets. The opening up of the insurance
sector has raised high hopes among people both in India and abroad. The recent
detarrification in the non-life domain has provided a great deal of operational freedom to
the players.
Gamarra (2007) estimated cost and profit efficiency of three groups of German life
insurance companies: multichannel insurers, direct insurers, and independent agent
insurers. Nonparametric Data Envelopment Analysis was used to estimate efficiencies
for a sample of German life insurers for the years 1997 to 2005. Testing a set of
hypothesis, she found economic evidence for the coexistence of the different distribution
systems. Further, she found evidence for scale economies in the German life insurance
industry.

Sabera (2007) studied the opening of the insurance sector. He concluded that the entry of
private players helped in spreading and keeping the operation in the Indian insurance
sector which in turn results in restructuring and revitalizing of public sector.

Barros,Obijiaku (2007) covered 10 life and non-life insurers of Nigeria during 2001 to
2005.The study analyzed technical efficiency, pure technical efficiency and scale
efficiency by using Data Envelopment Analysis approach. The study showed that the
most of the companies of Nigeria were VRS efficient.

Mohit Anand (2007) analyzed the impact of JV insurers upon growth and innovation in
the industry. Besides innovative ideas applied in product, Insurers face rising pressure to
retain clients. Hence innovation in information systems, customer service and
imaginative marketing approach are necessary. Many of the JV insurers bank upon
product innovation and an increased acceptance of its global products to survive in this
highly competitive insurance market which is even today dominated by public sector
insurers. Hence for JV firms, innovation is a necessity but also the key to competitively
survive and grow in long haul prospects of this market.

Naveed Ahmed,Zulfqar Ahmed,Ahmad Usman (2008) examined the impact of firm level
characteristics (size, leverage, tangibility, risk, growth, liquidity and age) on performance
of listed life insurance companies of Pakistan over seven years from 2001 to 2007.The
results showed that Ordinary Least Square regression analysis indicate the size risk and
leverage are important determinants of performance of life insurance companies of
Pakistan while ROA has statistically insignificant relationship with growth ,profitability
, age and liquidity.
Fenn et al. (2008) covered 14 Europeans countries such as Austria, Belgium, Denmark,
Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, Sweden
and Switzerland and found cost efficiency by using Stochastic Frontier Approach
method. The study covered both life and non life insurance companies during 1995 to
2001. The result of the study was that in case of life insurers, Portugal and Austria were
the best and Netherlands and U.K. was the worst. Among non life insurers U.K. was the
best and Luxembourg was the worst. The study also found that there were no
improvement in cost efficiency and returns to scale increased for most of the insurers. It
also concluded that the larger firms with high market shares were less cost efficient.

Martin Eling, Michael Luhnen (2008) reviewed 87 studies and put them into a joint
evaluation of efficiency measurement in the field of insurance. A broad efficiency
comparison of 350 insurers from 34 countries was conducted. They found a steady
technical and cost efficiency growth in international insurance markets from 2002 to
2006, with large differences across countries. Denmark and Japan had the highest average
efficiency, whereas the Philippines was the least efficient.

Martin (2008) studied the performance of micro insurance with Frontier Efficiency
Analysis. This was the first paper to use frontier efficiency analysis for measuring
performance of micro insurance programs. While research on performance in micro
insurance has focused on traditional financial ratio analysis in the past, they believed that
frontier efficiency might provide a new, powerful performance measurement technique
and a valuable addition to the existing performance measures in the field. They illustrated
efficiency values for 21 micro insurance programs from Asia, Africa, and Latin America
for the years 2004 to 2008 based on data provided by the Micro insurance Network. They
found that there was significant improvement with regard to productivity and efficiency
for many programs. The results also illustrated the diversity of different micro insurance
providers and emphasized the relevance of benchmarking in order to identify best
practices across different micro insurance providers, countries and organizational forms.

Davutyan,Klumpes (2008) studied technical efficiency, pure technical efficiency and

scale efficiency using Data Envelopment Analysis method. The study covered 472
insurers of 7 European countries: France Germany, Italy, Netherlands, Spain, Switzerland
and U.K. during 1996 to 2002.They included both life and non-life insurers in their study.
The inputs used in their model were labor, business service and equity capital. On the
output side, the factors included present value of losses incurred premiums and invested
asset. The study analyzed that the efficiency score was very low in seven European
countries. In life insurance France was the best and Netherlands was the worst where as
in non life insurers Switzerland was the best and Spain was the worst. It also concluded
that in life insurance, after mergers, business inputs replaced labor for both targets and
acquisition and mergers do not significantly impact acquirer behavior.

Sharon Tennyson (2008) studied the state Regulation and Consumer Protection in the
Insurance Industry. This paper analyzed the need for market conduct regulation in
insurance markets, and argued for state versus federal provisions and regulation. It also
examined the provision of consumer protection regulation by the states in light of
proposals for an increased federal role in insurance regulation.

Chiang Ku Fan, Shu Wen Cheng. (2009) compared the efficiency of bancassurance, an
indirect marketing channel formed through the creation of subsidiaries, with an insurer's
own team, a direct marketing channel, in the Taiwan insurance sector. The three major
findings were: the efficiency score of a direct marketing channel is significantly higher
than that of a comparable indirect marketing channel. The efficiency relationship between
the indirect marketing channel and the direct marketing channel is independent. A
marketing efficiency evaluation, when divided into different marketing channels for
evaluation, provides meaningful results for marketing decisionmakers.

Chen et. al. (2009) examined the determinants of profitability of insurance companies of
Japan from 2003 to 2008.The result showed that profitability of insurance companies
decreased with an increase in equity ratio. He added that insurance companies have to
diversify their investment and use effective hedging techniques which help them to create
better financial revenues.

R. Rajendran,B. Natarajan (2009) studied the impact of Liberization, Privatization and

Globalization on Life Insurance Corporation of India. They concluded that in India the
insurance habit among the general public during the independence decade was rare and
in the following decades, it slowly increased. There was a remarkable improvement in
the Indian insurance industry soon after the acceptance and adaptation of Liberalization,
Privatization, and Globalization in the year 1991. After 1991 the Indian life insurance
industry had geared up and was forced to face a lot of healthy competition from many
national as well as international private insurance players. The fall in the savings rate and
increased competition in the primary market and particularly the aggressive mobilization
by the Mutual Fund posed serious challenges before LIC.

Sandeep Ray Chaudhuri and Joy Chakraborty (2009) focused on the ins and outs of the
strategies adopted by the private life insurers to overcome the product-selling challenges
in the Indian life insurance market. The result showed that private life insurance
companies focused more on selling Unit Linked Insurance plan.

Skyline Business School (2010) examined the customer preference for purchasing life
insurance product during 2009. Out of the 500 people surveyed, 70.60% respondents
said that tax saving was the most important motivator for taking up a Life Insurance
Policy. 67.40% said that financial security was the most important motivator. When
asked which company the respondent would recommend, most of them i.e. 43.20% said
they would recommend LIC of India, reason being the high quality image. 87.80%
respondents said they would consider LIC of India while buying their Life Insurance
Policy.

The above literature reveals that most of the studies focused on cost and technical
efficiency for insurance companies abroad. Very few studies have attempted to study
about the impact of liberization on the insurance sector and the performance of LIC in
India. Even in this direction, the efforts are fragmented. No research has been
undertaken to compare LIC of India vis a vis the new private life insurance companies
in terms of cost efficiency. The present research seeks to fill this gap.
 CHAPTER : 3

Research Methodology
 Research Methodology
Introduction

The core concept underlying research is its methodology. The

methodology controls the study, dictates the acquisition of the data, and
arranges them in logical relationships, sets up a means of refining the raw
data, contrives an approach so that the meanings that lie below the surface
of those data become manifest, and finally issue a conclusion or series of
conclusions that lead to an expansion of knowledge. The entire process is
a unified effort as well as an appreciation of its component parts.

According to J.W.B. est, “Research is considered to be formal, systematic,

intensive process of carrying on the scientific method of analysis. It
involves a more systematic structure of investigation usually resulting in
some sort of formal record of procedures and report of result or
conclusions.”

According to P.M.Cook, “Research is an honest, exhaustive, intelligent

searching for facts and their meanings or implications with reference to a
given problem. It is the process of arriving at dependable solutions to
problem through planned and systematic collection, analysis and
interpretation of data. The best research is that which is reliable, verifiable
and exhaustive so that it provides information in which we have
confidence.”

Research STATEMENT

The research statement studied is entitled, “A comparative study of Life

Insurance Corporation of India and Private Life Insurance Companies in
India”. The present study focuses on the analysis of the performance of
public and all private life insurance companies in India with the help of
mean, percentage, ratios, ANOVA, Data Envelopment Analysis and linear
trend.
RESEARCH DESIGN

A Research design is a plan of action to be carried out in connection with

a research project. It is the conceptual structure within which research is
conducted and it constitutes the blue print for the collection, measurement
and analysis of data. It is the specification of methods and procedures for
acquiring the information needed for solving the problem. Decisions
regarding what, where, when, how much, by what means concerning an
inquiry or a research study constitute a research design.

OBJECTIVES OF THE STUDY

The objectives of the study are as follows:

 To understand the concept and mechanism of insurance.

 To compare and analyze the financial performance of private sector

life insurance companies and Life Insurance Corporation of India.

 To predict the volume of new business and total premium of life

insurance companies in India.

 To compare the cost efficiency of life insurance companies in India.

Nature of data and sources of data

Collection of the data is essential part of research. The nature of data

which is collected and used for this research is secondary in nature. The
relevant and required data has been collected from journals, dailies, annual
reports, magazines, literature and websites of selected companies and
through various search engines.

SAMPLE SELECTION

All private and public sector life insurance companies in India

from 2000-01 to 2009-10 were selected for the study.
The companies selected for the research work are as follows:

(a) Public Sector:

Life Insurance Corporation of India.

(b) Private Sector:

1. HDFC Standard Life Insurance Co. Ltd.

2. Max New York Life Insurance Co. Ltd.

3. ICICI Prudential Life Insurance Co. Ltd.

4. Kotak Mahindra Life Insurance Co. Ltd.

5. Birla Sun Life Insurance Co. Ltd.

6. TATA AIG Life Insurance Co. Ltd.

7. SBI Life Insurance Co. Ltd.

8. ING Vysya Life Insurance Co. Ltd.

9. Bajaj Allianz Life Insurance Co. Ltd.

10. Met Life India Life Insurance Co. Ltd.

11. Reliance Life Insurance Co. Ltd.

12. Aviva Life Insurance Co. Ltd.

13. Sahara India Life Insurance Co. Ltd.

14. Shriram Life Insurance Co. Ltd.

 15. Bharti AXA Life Insurance Co. Ltd.

16. Future Generali India Life Insurance Co. Ltd.

17. IDBI Fortis Life Insurance Co. Ltd

18. Canara HSBC Oriental Bank of Commerce Life Insurance

Co.Ltd.

19. Argon Religare Life Insurance Co.Ltd. 20. DLF Pramerica

Life Insurance Co.Ltd.
21. Star Union Dai-ichi Life Insurance Co. Ltd.

22. India First Life Insurance Co.Ltd.

HYPOTHESIS

In order to achieve the objectives of the study, the following hypothesis

are framed:

1. Ho: There is no significant difference in the total commission to total

premium ratio of the public and private sector life insurance companies.

2. Ho: There is no significant difference in the total commission to total

operating expense ratio of the public and private sector life insurance
companies.

3. Ho: There is no significant difference in the Actuarial Efficiency ratio

of the public and private sector life insurance companies.

4. Ho: There is no significant difference in the current ratio of the public

and private sector life insurance companies.

5. Ho: There is no significant difference in the Proprietary ratio of the

public and private sector life insurance companies.
6. Ho: There is no significant difference in the total investment to total
liability ratio of the public and private sector life insurance companies.

7. Ho: The cost efficiency score of Life Insurance Companies in India is

equal.

TOOLS and methods of data analysis

The present study involves calculation of different ratios to evaluate the

financial performance of life insurance companies in India from 2000-01
to 2009-10. It also compares the cost efficiency of all life insurance
companies in India during the same period. Prediction of new business
and total premium of the life insurance companies has also been done.
Various statistical measures like percentage, mean, ANOVA, Data
Envelopment Analysis and Linear trend are used in this study.

Data Envelopment Analysis (DEA)

Introduction
Data Envelopment Analysis (DEA) is a non-parametric linear
programming tool generally used for performance evaluation of economic
units through the construction of an economic frontier. It was originally
developed for performance measurement. The advantage of DEA is that
it requires very few prior assumptions on input-output relationship. The
DEA method enables extension of the single input-single output technical
efficiency measure to the multiple output-multiple input case. In its
constant returns to scale form, the DEA methodology was developed by
Charnes, Cooper and Rhodes (1978). Banker, Charnes and Cooper (1984)
extended the approach to the case of variable returns to scale. The DEA
approach constructs the production frontier from piecewise linear
stretches resulting in a convex production possibility set.

The principal advantage of the DEA approach stems from the fact that the
assumption of a specific functional form of the underlying technology is
not necessary. This makes DEA particularly useful when dealing with
service industries, since we have very limited knowledge about the
underlying production technology in such cases. Instead of using any
functional form, DEA uses linear programming approaches to envelope
the observed data as tightly as possible. It only requires that the production
possibility set is convex and the inputs and outputs are disposable.

Assumptions for Analysis of Variance

 Each of the sample is a simple random sample.

 Populations from which the samples are selected is normally

distributed.

 Each one of the samples is independent of the other samples.

 The effect of various components are additive.

SCOPE OF THE STUDY

The scope of present study is confined only to Public and all Private life
insurance companies in India from 2000-01 to 2009-10.The study mainly
involves analyzing the financial performance and cost efficiency of public
and all private life insurance companies in India. Similar studies on this
line may be conducted to compare performance of public and private
insurance companies in other countries.

LIMITATIONS OF THE STUDY

The present research work is undertaken to maximize objectivity and

minimize the errors. However, there are certain limitations of the study,
which are to be taken in to consideration for the present research work.

 The study is based on the analysis of the ten years data only.

 The study fully depends on financial data collected from the

published financial statements of companies.

 This study incorporates all the limitations that are inherent in the
financial statements.
 The data for analysis is basically derived from financial statements.
They are not adjusted for inflation.
CHAPTER : 5
Data Analysis
Life Insurance Density and Penetration in India

The potential and performance of the Insurance sector is universally assessed with
reference to two parameters.

1. Insurance Density

2. Insurance Penetration

The measure of Life Insurance penetration and density reflects the level of development
of life insurance sector in a country.

Life Insurance Density

Life Insurance density is defined as the ratio of premium underwritten in a given year to
the total population.

Market share based on premium and policies of public and private sector
Life insurance companies

1 Market Share based on Total Premium

The most important indicator to assess life insurers is the amount of premium collected.
The sum assured is fragmented into installments of premium. In other words, premium
is the fragmented value of the Sum Assured of policy, payable continuously at regular
intervals until the maturity of the policy. The total premium consists of first year
premium, Renewal Premium and Single Premium.

The amount of premium otherwise called premium rate, depends on:

 Mortality experience of insured lives

 Expenses incurred by the company in administrating the life fund

 Yield on investments of life fund

Besides these three, the premium rates may also be affected by other factors namely
interest rates and taxation rates.
 Table : VII

Market Share based on Total premium

Year Public Sector (%) Private sector (%)

2000-01 99.98 0.02
2001-02 99.46 0.54
2002-03 97.99 2.01
2003-04 95.29 4.71
2004-05 90.67 9.33
2005-06 85.76 14.24
2006-07 81.90 18.10
2007-08 74.40 25.60
2008-09 70.92 29.08
2009-10 70.10 29.90

Market Share based on Total Premium

2000-0 2001-0 2002-0 2003-0 2004-0 2005-0 2006-0 2007-0 2008-0 2009-1
1 2 3 4 5 6 7 8 9 0
Public Sector Private sector

Interpretation:

The total premium of Life Insurance Corporation of India increased continuously since
2000-01 to 2009-10.However a significant decline is noticed in market share from
99.98% in 2000-01 to 70.10% in 2009-10. While in case of private sector, the total
premium income and market share of total premium have both increased.

2 Market Share based on New Business

Premium collected on the new business is called first year premium. It also includes
single premium. It is the first Premium collected by the insurance companies from policy
holders.

Table : VIII

Market Share based on new business

Year Public Sector (%) Private sector (%)

2000-01 99.93 0.07
2001-02 98.65 1.35
2002-03 94.30 5.70
2003-04 87.66 12.34
2004-05 78.78 21.22
2005-06 73.52 26.48
2006-07 74.32 25.68
2007-08 64.02 35.98
2008-09 60.89 39.11
2009-10 65.08 34.92
 Market Share based New Business

2000-0 2001-0 2002-0 2003-0 2004-0 2005-0 2006-0 2007-0 2008-0 2009-1
1 2 3 4 5 6 7 8 9 0
Public Sector Private sector

Interpretation:

The market share of Life Insurance Corporation of India on the basis of the first year
premium in the year 2000-01 was 99.93% but it declined to 60.89% in 2008-09 and has
slightly risen to 65.08% in 2009-10 while the market share of private sector life
insurance companies was only 0.07% in 2000-01, which increased up to 39.11% in 2008-
09 and slightly declined to 34.92% in 200910.The growth in first year premium of
private sector was fuelled by sales of unit linked products.

3 Market Share based on Renewal Premium

Premium collected on business in force is called renewal premium. Increase in the

renewal premium is a good measure of quality of the business underwritten by the
insurer. It reflects increase in their persistency ratio and enables insurers to bring down
overall cost of doing business.
 Table : IX

Market Share based on Renewal premium

Year Public Sector (%) Private sector (%)
2000-01 99.99 0.01
2001-02 99.98 0.02
2002-03 99.60 0.40
2003-04 98.55 1.45
2004-05 96.18 3.82
2005-06 92.82 7.18
2006-07 89.02 10.98
2007-08 83.42 16.58
2008-09 77.43 22.57
2009-10 73.64 26.36

Market Share based on Renewal Premium

2000-0 2001-0 2002-0 2003-0 2004-0 2005-0 2006-0 2007-0 2008-0 2009-1
1 2 3 4 5 6 7 8 9 0
Public Sector Private sector

Interpretation:
The public sector recorded 99.99% market share based on renewal premium in the year
2000-01 but it has decreased to 73.64% in the year 2009-10. While that of the private
sector recorded 0.01% in the year 2000-01 which increased to 26.36% in the year 2009-
10. Private sector has managed to take away nearly 26% of the market share from LIC
of India. LIC of India is still the market leader in this segment.

4 Market Share based on Total Policies

The life insurance contract provides elements of protection and investment. After getting
insured, the policy-holder feels a sense of protection because he shall be paid a definite
sum at death or maturity. Since a definite sum must be paid, the element of investment
is also present. In other words, life insurance provides
against pre-mature death and a fixed sum at maturity of policy. The two elements of
protection and investment exist in various degrees in different types of policies.

The older the policy, the lesser the element of protection and higher the element of
investment and vice-versa is also true. Having different elements in different policies,
the policy-holders are free to choose the best policies according to their requirements.

It should be known that no one policy is the best policy for all the policy-holders due to
variance in cost, elements of investments and protection, requirements of the policy-
holders and availability of the policy. Life insurance policies are divided on the basis of
duration of policy, method of premium payments and participation.

Table : X

Market Share based on total policies

Year Public Sector (%) Private sector (%)
2000-01 99.23 0.77
2001-02 93.98 6.02
2002-03 96.75 3.25
2003-04 94.21 5.79
2004-05 91.48 8.52
2005-06 89.08 10.92
2006-07 82.83 17.17
2007-08 73.93 26.07
2008-09 70.52 29.48
2009-10 73.02 26.98

156
 Market Share based on Total Policies

2000-0 2001-0 2002-0 2003-0 2004-0 2005-0 2006-0 2007-0 2008-0 2009-1
1 2 3 4 5 6 7 8 9 0
Public Sector Private sector

Interpretation: The market share of LIC of India was 99.23% in the year 2000-01.It
has decreased to 73.02% in the year 2009-10. While that of the private sector was 0.77%
in the year 2000-01 and increased to 26.98% in the year 2009-10.

There are concerns over Life Insurance Corporation of India’s declining market share
based on total policies and concurrent rise of private insurers who have just entered ten
years ago. Innovative products, smart marketing and aggressive distribution channels
has enabled private life insurance companies to sell policies. As of today, Life Insurance
Corporation of India has retained the market share based on total policies.
5.4 Prediction of new business and total premium of life insurance sector for the
year 2015

4 Prediction of New Business for Public Sector

Table : XV

Trend values of new business (Public sector)

Year Public Sector (Rs.) Trend values
(Rs.)
2000-01 970098 23949.22
2001-02 1958877 899722.34
2002-03 1597676 1775495.46
2003-04 1734762 2651268.58
2004-05 2065306 3527041.70
2005-06 2851587 4402814.82
2006-07 5622356 5278587.94
2007-08 5999657 6154361.06
2008-09 5317908 7030134.18
2009-10 7152190 7905907.30
 New Business - Public Sector Trend Values (in lacs)
9000000

8000000

7000000

6000000

5000000

4000000

3000000

2000000

1000000

0
2000-0 2001-0 2002-0 2003-0 2004-0 2005-0 2006-0 2007-0 2008-0 2009-1
-1000000 1 2 3 4 5 6 7 8 9 0

Interpretation: XV depicts the trend values of new business Life Insurance

Corporation India from 2000-01 to 2009-10.

= 3527041.70

Based on the year 2004-05 the trend value for the year 2015 is calculated using linear
function where, are constant. Substituting values in the trend
line equation, the expected new business in India for L ife Insurance Corporation of India
for the year 2015 would be Rs.12284772.90 lakh. New business in India for Life
Insurance Corporation of India shows an increasing trend.
5 New Business for Private Sector

Table : XVI

Trend values of new business (Private sector)

Year Private sector Trend Values

(Rs.) (Rs.)
2000-01 645.20 -776581.60
2001-02 26852 -219482.82
2002-03 96570 337615.96
2003-04 244071 894714.74
2004-05 556457 1451813.52
2005-06 1026967 2008912.30
2006-07 1942566 2566011.08
2007-08 3371595 3123109.86
2008-09 3415200 3680208.64
2009-10 3837212 4237307.42
 New Business - Private sector Trend Values (in lacs)
5000000

4000000

3000000

2000000

1000000

2000-0 2001-0 2002-0 2003-0 2004-0 2005-0 2006-0 2007-0 2008-0 2009-1
1 2 3 4 5 6 7 8 9 0
-1000000

-2000000

Interpretation: Depicts the trend values of new business of Private Sector life

insurance companies from 2000-01 to 2009-10.

= 1451813.52
= 557098.78

Y = + (X-2005)

= 1451813.52 + 557098.78 (2015-2005)

 = 7022801.32

Based on the year 2004-05 the trend value for the year 2015 is calculated using linear
function where, are constant. Substituting values in the trend
line equation, the expected new business in India for Private sector for the year 2015
would be Rs.7022801.32 lakh. New business in India for private sector also shows an
increasing trend.

6 Total Premium for Public Sector

Table : XVII

Trend values of total premium (public sector)

Year Public Sector (rs.) Trend Values

(Rs.)
2000-01 3489202 9816621.00
2001-02 4982191 3209765.85
2002-03 5462849 5437869.60
2003-04 6316760 7665973.35
2004-05 7512729 9894077.10
2005-06 9079222 12122180.85
2006-07 12782284 14350284.60
2007-08 14978999 16578388.35
2008-09 15728804 18806492.10
2009-10 18607731 21034595.85
 Total Premium - Public Sector Trend Values (in lacs)
25000000

20000000

15000000

10000000

5000000

2000-0 2001-0 2002-0 2003-0 2004-0 2005-0 2006-0 2007-0 2008-0 2009-1
1 2 3 4 5 6 7 8 9 0

Interpretation: depicts the trend values of total premium of Life Insurance

Corporation of India from 2000-01 to 2009-10.
 = 9894077.10

Based on the year 2004-05 the trend value for the year 2015 is calculated using linear
function where, are constant. Substituting the values in the trend
line equation, the expected t otal premium in India for Life Insurance Corporation of
India for the year 2015 would be Rs.32175114.60 lakh. Total premium in India for public
sector shows an upward trend.
7Total Premium for Private Sector

Table : XVIII

Trend values of total premium (private sector)

Year Private Sector Trend Values

(Rs.) (Rs.)
2000-01 713 -1607105.54
2001-02 27253 -577865.63
2002-03 111905 451374.28
2003-04 312035 1480614.19
2004-05 772751 2509854.10
2005-06 1507953 3539094.01
2006-07 2824249 4568333.92
2007-08 5154636 5597573.83
2008-09 6449741 6626813.74
2009-10 7937305 7656053.65
 Total premium - Private Sector Trend Values (in lacs)
10000000

8000000

6000000

4000000

2000000

2000-0 2001-0 2002-0 2003-0 2004-0 2005-0 2006-0 2007-0 2008-0 2009-1
1 2 3 4 5 6 7 8 9 0
-2000000

-4000000

Interpretation: predicts the trend values of total premium of Private Sector life
Insurance Company from 2000-01 to 2009-10.

= 2509854.10
Based on the year 2004-05 the trend value for the year 2015 is calculated using linear
function where, are constant. Substituting the values in the trend
line equation, the expected new business in India for Private sector for the year 2015
would be Rs.12802253.20 lakh. Total premium in India for private sector shows an
upward trend.

Thus we can conclude that new business and total premium for both the public sector
and private sector life insurance companies will increase in future as there is much scope
for life insurance business in India.
 CHAPTER : 6
CONCLUSION AND
SUGGESTIONS
Conclusion and suggestions

 The life insurance density of India was 9.1 percent in the year 2000-01 when the
private sector was opened up. It increased to 52.2 percent in 2009-10.

 India’s life insurance density is very low as compared to the developed countries
and developing countries, inspite of India being the second most populous
country in the world.

 This shows that there is much scope for life insurance sector to develop in India.
 The life insurance penetration of India was 2.15 percent in the year 200001when
the private sector was opened up..

 The prediction of new business and total premium for both private and public
sector life insurance companies in India for the year 2015 also shows an upward
trend which signifies that there is a lot of scope for life insurance business in
India.
 India, is now the fourth largest economy in terms of purchasing power parity,
may overtake Japan and become third major economic power within 10 years.

 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.
CHAPTER-

ANNEXURE
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1078-1092.

 Bartlett, Christopher A. and Samantha Ghoshal (2000) ‘Going Global-

Lessons from late Movers’, Harvard Business Review.
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 www.cea.assur.org

 www.licindia.com

 www.bimaonline.com

 www.irdaindia.org

 www.insurnaceinformatics.com

 www.provressive.com

 www.tac.org .in

 www.gicoi.com www.easylifeindia.com.
 www.transportersindia.com.

 www.trade-india.com.

 www.indiastat.com.

 www.insuranceinfoline.com.

 www.eastindiavyapaar.com.

 www.indiacore.com.

 www.indiannba.com.