Emerging Trends in Financial Performance of General Insurance Industry in India

The rapid expansion of Public Sector Insurance companies since nationalization has given rise to a number of problems related to the image, operational efficiency, productivity, and the quality of portfolio of the system as a whole. Liberalization and privatization of the insurance sector has offered tremendous opportunities and since the onset of reforms, the public sector insurance companies have been compelled to review their philosophy and method of working, in order to be ready for competition with private sector companies. The present study attempts to evaluate the emerging trends in the growth and financial performance of General Insurance Companies in India. The study reveals that the insurance market has witnessed dynamic changes due to liberalization and privatization of insurance sector and the industry witnessed significant growth, which is mainly contributed by private sector companies. The study further reveals that the Private Sector General Insurance Companies' results present better efficiency in terms of expenses of management ratio, combined ratio, underwriting results ratio and they are increasing their market share year by year, whereas the performance of Public Sector General Insurance Companies in terms of net earnings, and return on net worth ratio is better than that of Private Sector General Insurance Companies. The study highlights that public sector insurance companies are suffering from losses when it comes to their core insurance business, but still manage to get good net earnings, which is mainly ascribed to the investment income. The study concludes that undoubtedly, the entry of Private Sector Insurance Companies has contributed to the strengthening of General Insurance business as a whole by creating a competitive atmosphere. The Indian economy continues to outperform expectations and has recently joined the trillion dollar club. India's GDP for 2006-07 is estimated at Rs.41, 00,000 crore, which comes to $ 1.01 trillion, making it the 11th largest economy in the world in nominal dollar terms. The service sector has remained the main engine of the growth, contributing more than 55% of the GDP (Vgayan, 2007). Insurance is considered as one of the mainline financial services like banking, mutual funds and wealth management products and it occupies an important position in the financial sector of an economy. It contributes to economic development through risk management, protection of assets and mobilization of savings, leading to capital formation in the country. The historical perspective of the General Insurance Companies reveals that the rapid expansion of Insurance Companies since nationalization had given rise to a number of problems

related to the image, operational efficiency, productivity, and the quality of portfolio of the system as a whole and there have been persistent complaints about deterioration in customer service. Close on the heels of the success of the privatization initiatives in the banking sector, insurance sector reforms were initiated following the report of R. N. Malhotra Committee, which was set up in 1993 with an objective of complementing the reforms in the financial sector. The reforms are aimed at creating more efficient and competitive financial system suitable for the requirement of the economy. The year 1999 saw a revolution in the Indian insurance sector, as major structural changes took place with the ending of the government monopoly, and the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting entry restrictions for private players, and allowing foreign players to enter the market with some limits on direct foreign ownership. The insurance industry has been maintaining its constant growth rate of 15% to 16% over the last few years. While insurance penetration was 1.93% in 1999, it rose to 4.8% in the year 2006. Thus, it got more than doubled in 7 years. While the increase is impressive in the case of life insurance, where it increased from 1.39% to 4.1 %, it remained stagnant at nearly 0.6% in the case of non-life insurance (Rao, 2007). One of the reasons for low penetration in general insurance has been lack of concerted efforts to effectively tap the retail segment (Parekh, 2007). The reforms of Indian Insurance Sector brought substantial changes in the level of competition, business environment, managing strategies, service quality and advance technology front. The wind of liberalization, globalization and privatization has opened new vistas in the insurance industry in the generation of intensely competitive environment. The postliberalized insurance industry in India has been witnessing a discernible shift from the sellers' to the buyers' market. The reformed insurance industry has offered a plethora of new customer friendly products, new delivery channels like banc assurance, corporate agents, brokers and direct selling through the internet, greater use of computerization and information technology. The reforms at this stage need to be reviewed in order to assess their compatibility vis-a-vis the growth and performance of insurance industry in India. The deregulation of General Insurance Industry in India is having far reaching consequences in terms of market size, structure and operational practices. While the effects of privatization and deregulation on the firm's performance have received bulk of attention in the national and international business research and has suggested that liberalization has positive long-term effect on economic growth and firm's

performance (Dollar, 1992; Sachs and Warner, 1997; Chennappa, 2006; Sinha, 2006; Detzel & Banerjee, 2008), relatively little has been said about trends in the financial performance of General Insurance Industry in India in the post-reforms period. The present study seeks to fill the research gap and attempts to analyses the growth, financial performance, opportunities and challenges for General Insurance Companies in India in the post-liberalization period. The study is conceived with the following objectives : I. To study the emerging trends in the growth and performance of General Insurance Companies in India. II. To appraise the comparative financial performance of the Public Sector and the Private Sector General Insurance Companies in India. III. To suggest the strategies for improving the performance of General Insurance Companies in India. The present study is based on secondary data mainly collected from annual reports of insurance companies, IRDA annual reports and journals, and websites. The scope of the study has been restricted to five top general insurance companies, i.e., two Public Sector and three Private Sector companies on the basis of their market share. The criterion adopted for selecting the Private Sector companies is the year of their registration. The reforms in the insurance industry were initiated in the year 1999 and the Private Sector general insurance companies started their business in 2000. Total six companies were registered during this period. However, for the purpose of uniformity, top three Private Sector companies registered on the basis of their market share have been selected. The time frame of the study is from 2002 to 2007. To make an appraisal of comparative growth & financial performance of both the Public & the Private Sector, the study mainly focuses on financial parameters used in insurance industry, such as Gross Direct Premium, Expense of Management Ratio, Claim Incurred Ratio, Combined Ratio, Under Writing Results Ratio, Net Earnings Ratio, and Return on Net worth Ratio. This set of six financial parameters is not exhaustive but provides an overall picture of the performance of General Insurance companies.

The Public Sector General Insurance companies have experienced branch expansion network since nationalization, but the quantitative expansion has not always been matched by a corresponding improvement in the performance. Since the onset of reforms, these insurance

companies have been compelled to review their philosophy and method of working, in order to be ready for competition with private sector companies. Attempts have been made to remain competitive by doing things better and faster, and by ensuring cost effectiveness with performance. Large number of initiatives have been taken by these public sector companies to compete with private sector companies, but despite all that, their market share is declining. Table 1 details the growth in the gross direct premium and the market share of the public sector and the private sector companies in the post-liberalization period. As is evident from the table, there is an increasing trend in the gross direct premium of all the General Insurance Companies during the period under study. A comparative analysis reveals that growth is more profound in the private sector companies. The figures related to four public sector companies present a single digit growth, whereas the private sector players are growing at more than 50 per cent rate during the period under study. The table also "highlights that ICICI Lombard comes out to be the fastest growing company in the general insurance business. The table further reveals that there is very fast erosion in the market share of Public Sector General Insurance Companies and Private Sector General Insurance Companies are consolidating their position very fast. Overall, the general insurance industry grew by 15.62% in 2005-06; and in 2006-07, it witnessed 21.51% growth. The market share of Public Sector has decreased from 90.92% to 66.65% and that of Private Sector has increased from 9.08% to 33.35% during the period under study. ICICI Lombard's market share has increased from 1.42% to 11.53% during this period and has emerged as the largest Private Sector General Insurance Company.

Table 1 Gross Direct Premium and Market Share of General Insurance Companies Name of the Gross Direct Premium Market Share of Company in the Gen. Company Insurance Industry (%) 2002-03 2003-04 2004-05 2005-06 2006-07 2002-03 2003-04 2004-05 2005-06 2006-07 New India Insurance 4812.79 4921.47 5103.16 5675.44 5936.78 32.37 29.75 27.65 26.60 22.90 Co. (14.64) (2.26) (3.69) (11.22) (4.61) Oriental Insurance Co. 2868.15 2899.74 3090.55 3609.77 4020.78 19.29 17.53 16.75 16.92 15.51 (14.79) (1.10) (6.58) (16.80) (11.39)

ICICI Lombard 211.66 486.73 873.86 1582.86 2989.02 1.42 2.94 4.73 7.42 11.53 (678.90) (13Q.43) (79.63) (81.16) (88.85) Bajaj Allianz 296.48 476.53 851.62 1272.29 1786.34 1.99 2.88 4.61 5.96 6.89 (618.60) (60.97) (78.81) (49.43) (40.44) IFFCO-Tokio 213.33 322.24 496.64 892.72 1144.72 1.43 1.95 2.69 4.18 4.41 (206.81) (51.52) (54.33) (79.84) (28.23) Total Four Public 13520.44 14284.65 14948.82 15976.44 17283.45 90.92 86.35 81.00 74.87 66.65 Sector Companies ( 13.45) (5.65) (4.65) (6.87) (8.18) Total Eight Private 1349.80 2257.83 3507.62 5362.66 8646.57 9.08 13.65 19.00 25.13 33.35 Sector Companies (188.73) (67.28) (55.26) (52.89) (61.24) Grand Total 14870.25 16542.49 18456.45 21339.10 25930.02 100 100 100 100 100 (20.06) ( 11.25) ( 11.57) (15.62) (21.51 ) Source : Compiled from IRDA Journals. Note: The figures given in parentheses indicate the growth of Gross Direct Premium in percentage terms.

The ratio of Expenses of Management as percentage of gross direct premium Reflect show much percentage of revenue is being utilized for expenses on management. This ratio is a pointer of the cost effectiveness and the productivity. Expenses of Management are, generally, operating expenses which include employees' remuneration and benefits, office and administrative expenses, etc. and a higher ratio reflects financial instability of the business because a decrease in revenue may result in losses, whereas lower ratio is an indicator of better operational performance. It becomes important to examine, how far the public sector General Insurance Companies have been in a position to reduce their operating costs, in the postliberalization period.

Table 2 Expenses of Management Ratio Name of the Company 2002-03 2003-04 2004-05 2005-06 2006-07

New India Insurance Co. 18.60 27.23 23.30 23.00 19.41 Oriental Insurance Co. 22.75 26.70 23.61 23.53 18.76 ICICI Lombard 20.26 18.20 17.00 18.75 16.60 Bajllj Allianz 23.00 21.25 17.00 19.00 17.00 IFFCO- Tokio 22.48 19.70 19.36 17.00 17.76 Table 2 explains that as far as the Expenses of Management Ratio are concerned, the Private Sector General Insurance Companies' performance is better than that of Public Sector General Insurance companies. The competitive environment has compelled the Public Sector General Insurance Companies to reduce their expenses of management and inculcate more operational efficiencies. New India Insurance Company reduced expenses of management from 27.23 per cent in 2003-04 to 19Al in 2006~07 and Oriental Insurance Company reduced its management expenses from 26.70 to 18.76 per cent during that corresponding period. Among the Private Sector general insurance companies, ICICI Lombard seems to be the most cost effective having least expenses of management ratio. Overall, the private sector insurance companies' results present lower expenses of management ratio than public sector companies, though the figures also point out that public sector companies are also working on inculcating efficiencies to become competitive. Claims incurred ratio may be defined as total net incurred claims divided by net written premium (NWP). This indicator is a good complement to the picture of economics, client value and service quality of the various insurance schemes. The acceptable level for this indicator cannot be determined, but generally, the higher, the better.

Table 3 Claim Incurred Ratio Name of the Company 2002-63 2003-64 2004-65 2005-06 2006-67

New India Insurance Co 76.77 74.65 74.58 83.64 76.68 Oriental Insurance Co. 77.30 78.09 86.04 82.57 81.91 ICICI Lombard 40.00 53.96 48.23 53.04 56.09 Bajaj Allianz 57.52 52.58 47.21 58.68 53.43 IFFCO- Tokio 41.00 54.63 50.79 51.02 68.65 Table 3 shows that the claim incurred ratio of Public Sector General Insurance Companies is much higher than that of the Private Sector General Insurance Companies. Oriental Insurance Company has the highest claim incurred ratio throughout the period under study, whereas in the private sector players, Bajaj Allianz has the least claim incurred ratio during most of the period under study. A closer investigation of the product portfolio, through their annual reports, reveals that it is mainly ascribed to the fact that the Private companies are concentrating more on the cream business. In respect of loss making portfolio, such as motor business, they have avoided to enter these businesses to reduce their claim incurred ratio. Further investigation reveals that public sector insurance companies do not get much of their business reinsured in contrast to the private sector players, who get most of the business reinsured to reduce their claim incurred ratio. The combined ratio highlights the combined impact of expenses of management ratio and the claims incurred ratio. It has been calculated by taking expenses of management plus net claim incurred over the gross direct premium.

Table 4 Combined Ratio Name of the Company 2002-03 2003-04 2004-05 2005-06 2006-07 New India Insurance Co 74.68 82.37 72.13 87.02 80.79 Oriental Insurance Co. 73.88 81.72 85.36 80.76 77.42 ICICI Lombard 28.24 32.46 34.53 43.18 43.70 Bajaj Allianz 57.70 52.64 43.44 48.60 50.00 IFFCO- Tokio 35.64 42.04 43.14 44.20 52.33 Table 4 reveals that the combined ratio of the Public Sector General Insurance Companies is higher than that of Private Sector General Insurance Companies. It is due to their higher expenses of management and incurred claim ratio. But over a period of time, an increasing trend

in the combined ratio of private sector insurance companies is also discernible, whereas no consistency in the combined ratio could be established in the case of Public Sector General Insurance Companies, though the fact remains that the overall ratio is quite high and these companies need to relook into that Trends in Underwriting Result Ratio. The underwriting results of a general insurance company are depicted by taking net written premium minus increase in the unexpired risk reserve minus expense of management minus claim incurred minus commission. The underwriting results indicate the performance of the insurance company from core insurance business. The underwriting result ratio is calculated by dividing underwriting result to net written premium.

Table 5 Underwriting Result Ratio Name of the Company 2002-03. 2003-04 2004-05 2005-06 2006-07 New India Insurance Co (13.94) ( 18.66) (16.90) (27.62) (13.75) Oriental Insurance Co. (14.72) (21.83) (27.18) (26.52) (17.93) lCICI Lombard (5.06) 13.90 .84 (4.6) (3.82) Bajaj Allianz (1.82) .38 8.53 3.30 2.44 IFFCO- Tokio (2.40) .25 1.89 (2.37) (2.43) Source : Compiled from Annual Reports of General Insurance Companies. Note: The figures given in parentheses indicate underwriting loss ratio. Bajaj Allianz has suffered losses from its underwriting activities. It is constantly earning profits from underwriting activities from 2003-04 onwards. A peep into the annual reports of the insurance companies reveal that the underwriting losses of Public Sector General Insurance Companies are much higher than those of the Private Sector General Insurance Companies and this is mainly ascribed to low reinsurance of their business and their higher expenses of management and incurred claim. The main cause of their excessive management expenses is having a massive strength of manpower. On the other hand, private companies get most of their business reinsured to reduce their losses from underwriting. More so, they have minimum staff strength and advanced technology at their disposal. So, Public Sector General Insurance Companies have to reduce the staff strength and use more technology to compete with the Private Sector. The General Insurance business in India has been DE tariffed with effect from 1st

January 2007 and even, companies are allowed to change the policy wordings with effect from 1st April 2008. Now, it is a better time for the Public Sector to revisit their loss making portfolios to improve upon their underwriting results. The Net Earnings Ratio shows how profitable the insurance business is. This ratio reflects the summary of all activities during the period under review. The Net Earnings Ratio has been calculated by dividing profit after tax to net written premium. Table 6 explains that the net earnings of the Public Sector General Insurance Companies have improved during the period under study.

Table 6 Net Earnings Ratio Name of the Company 2002-03 2003-04 2004-05 2005-06 2006-07 New India Insurance Co 7.27 15.99 10.33 16.50 30.72 Oriental Insurance Co. 5.65 15.56 14.90 11.35 17.27 ICICI Lombard 7.40 24.48 15.06 6.85 4.71 Bajaj Allianz 5.31 7.57 9.80 7.38 7.25 IFFCO- Tokio 9.08 7.19 6.27 3.00 4.67 The table mirrors that Net Earnings Ratio of New India Insurance Co. increased from 7.27 per cent in 2002-03 to 30.72 per cent in 2006-07 and Oriental Insurance Co. improved this ratio from 5.65% per cent to 17.27 per cent. However, Net Earnings Ratio of private players presents a mix trend and as such stands nowhere closer to the public sector companies in terms of net earnings. It is interesting to note that the private sector could not increase its net earnings despite having better underwriting results. An investigation into the annual reports of all the insurance companies under study revealed that the reason for better performance of net earnings of Public Sector is their higher investment income. Public sector insurance companies are making huge investments in the capital market and due to excellent performance of the market, the profits of these insurance companies are also booming, though they are suffering from losses from their core insurance business. Return on net worth ratio indicates how well the resources of the owners have been used (Anthony and Reece, 1995). It measures the return accruing to owners' capital. It is computed by dividing profit after tax to Net Worth. Table 7 shows the return accruing to owners' capital in the General Insurance companies under study.

Table 7 Return on Net worth Ratio Name of the Company 2002-03 2003-04 2004-05 2005-06 2006-07 New India Insurance Co 7.51 14.74 9.67 15.22 24.44 Oriental Insurance Co. 14.34 34.76 26.20 18.41 24.55 ICICI Lombard 3.20 14.10 19.40 13.40 8.60 Bajaj AlIianz 9.00 16.00 26.00 18.00 28.00 IFFCO- Tokio 5.95 8.67 11.75 7.00 9.00 As is evident from the table, Return on Net Worth of all the General Insurance Companies is increasing from year to year, though the growth is more profound in the case of New India Insurance Co., Oriental Insurance Co., and Bajaj Allianz. In 2006-07, Bajaj Allianz has witnessed the highest return on net worth ratio, i.e., 28 per cent closely followed by Oriental Insurance Co. and New India Insurance Co. with the percentage values of 24.55 and 24.44 respectively. As mentioned earlier, this is mainly ascribed to better underwriting results in the case of Bajaj Allianz and high investment income in the case of Oriental Insurance Company and New India Insurance Company.

SUGGESTIONS FOR IMPROVING PERFORMANCE OF GENERAL SURANCE COMPANIES The preceding discussion reveals that the insurance market has witnessed dynamic changes due to liberalization and privatization of insurance sector. The growth rate of Private Sector General Insurance Companies is much higher than that of Public Sector General Insurance Companies and these Private Sector companies are increasing their market share year by year. Liberalization of this sector has offered tremendous opportunities to tap the potential of the lucrative market. The following suggestions will further enhance their performance on growth, profitability and efficiency. The productivity trend in the General Insurance industry reveals that private sector insurance companies are more cost effective as compared to public sector companies. It is mainly ascribed to the use of information technology, professional approach, and lean work force. So, to improve upon the operational efficiency in the public sector insurance companies, it is suggested that these companies should expand the use of information technology and make their employees more smart and receptive to the technological changes. It has been

highlighted in the present study that underwriting results of the public sector insurance companies are poor as they have been suffering from losses in their core insurance business. One of the main reasons for that is lesser reinsurance of the business as compared to that of private sector insurance companies. Public sector companies are depending more and more on the investment income to increase their earnings, and getting more exposed to the risks, which may prove to be risky in the long run. It is suggested that these public sector insurance companies should try to balance their investment activities to keep their risk complexion at reasonable level by getting more business reinsured. . The competitive environment poses the most difficult challenge to provide return as compared to other financial options. Therefore, there is pressure on insurance companies to provide better operational results. Since the customer is the focus of the business, not only marketing practices acquire critical importance, but the manner in which the customer is served also needs close attention, and at the same time they have to make their own business viable. The customer is now much better informed and his expectations are on the rise in marketing. These changing circumstances are exerting pressure on the existing players in the industry to rewrite their strategies and policies. It is time that these companies raised their level of customer services to fight for survival in the market place. They will have to become much sharper and more market savvy. The rapid expansion of Public Sector Insurance companies since nationalization has given rise to a number of problems related to the image, operational efficiency, productivity, and the quality of portfolio of the system as a whole. These insurance companies must assess the drivers of customer satisfaction, loyalty and defection; and at the same time should also explore alternative methods to reduce costs and improve operational efficiency. To achieve this, these companies must become learning organizations and invest in training and development to cope up with the competitive environment. The general insurance penetration in India is very low as compared to the international standards in general and the rural sector in particular. Liberalization of this sector has offered tremendous opportunities to the insurance players on the unexplored rural market. So, to ensure higher growth, the general insurance companies have to design their products suitable for the rural market. It may be concluded that the entry of Private Sector Insurance Companies has, undoubtedly, contributed to the strengthening of General Insurance business by creating a competitive atmosphere. The Private Sector General Insurance Companies' results present better efficiency in terms of

expenses of management ratio, combined ratio, underwriting results ratio and they are increasing their market share year by year, whereas the performance of Public Sector General Insurance Companies in terms of net earnings, and return on net worth ratio is better than that of Private Sector General Insurance Companies. It has been highlighted that public sector insurance companies are suffering from losses when it comes to their core insurance business, but still manage to get good net earnings, which is mainly ascribed to the investment income. Since the onset of reforms, the Public Sector Insurance Companies have been compelled to review their philosophy and method of working, and many initiatives have been taken to compete with Private Sector companies but still Public. Sector companies need to reassess their present status after having modified their approach and philosophy in the post-reforms period.

MODULE - 1 Business Environment Notes RECENT TRENDS IN INSURANCE SECTOR 1.0 INTRODUCTION In day to day life every human being is engaged in some activity, it may be related to earn livelihood or household activity. The activity which provides livelihood is known as economic activity. Though there are so many economic activities like manufacturing, trading, banking, transportation and insurance and many more. But in this module we are explaining only the Insurance activity which can be taken by an individual or group of persons to earn their livelihood. The detail meaning of insurance is being explained in other module but in simple words insurance means transfer of risks of an individual (unexpected and uncertain) i.e Death, old age. Disability, illness or business risks (unexpected and uncertain) i.e fire, earthquake, theft and liability to an insurance company. The insurance sector is divided in two parts life and general or non-life. Insurance Life Non-life/General Life insurance deals with only human lives and non-life deals with other than human life. Insurance is divided into two

segments i.e. Life and non-life/general and each segment have developed independently therefore it is being discussed DIPLOMA IN INSURANCE SERVICES MODULE - 1 Notes 2 Recent Trends in Insurance Sector Business Environment separately in the following paragraphs. In 2000, Indian insurance sector has taken U turn i.e. Privatization (private insurance companies to nationalization (Government Companies) to Privatization/mixed economy (Private/Government companies). Before we discuss how it has happened we would like to enlighten you the past history of insurance in India in brief. It is said that insurance was practiced in India even in the Vedic times and the Sanskrit term YOGAKSHEMA in the Rig-Veda is in reference to a form of insurance practiced by the Aryans 3000 years ago. The code of Manu which prescribes the many practices to be followed by the people for social harmony and development in Ancient India had also dictated that a special charge be made on goods carried from one city to another to ensure their safe carriage to the destination.

1.1 OBJECTIVES At the end of the lesson you will be able to know Why the life & general insurance sector was nationalized Why insurance sector was liberalized in 1999 IRDA action to develop the insurance sector

1.2 LIFE INSURANCE In 1870 two British life insurance companies entered in India and attempted to do life insurance business on Indian lives. After that many Indian & foreign companies started business in India and by the year 1955 there were 255 insurance companies operating in India and transacting the business to the extent of Rs 200 crores. Due to the following reasons the Government decided to nationalize the life insurance industry w.e.f 1/7/1956. 1. No full guarantee to the Policyholders (who are insured). 2. The concept of trusteeship (confidence) was lacking.

3. Many insurance companies went into liquidation (bankrupt). 4. There was malpractice in the business. 5. Non-Spreading of life insurance. 6. No insurance in rural areas. 7. No group insurance 8. No social security

MODULE - 1 Business Environment Notes 3 Recent Trends in Insurance Sector DIPLOMA IN INSURANCE SERVICES To overcome the abovementioned problems the life insurance business was nationalized and formed Life Insurance Corporation with following features: 1. The Central Govt. guaranteed the Policyholders through the LIC. 2. Being a Corporation formed under Special Act Passed by the Parliament therefore the public can trust. 3. The LIC cannot be liquidated without the order of the Central Govt. 4. Under the LIC Act, all day-to-day functions of the Corporation and the method of Investment in Govt. Securities were defined. Therefore, the malpractices were eliminated. After the nationalization the life insurance business has grown substantially in very first year i.e. from Rs 200 crore upto 1956 to Rs 328 crores in 1957 and till privatization in 2000 the business was transacting worth Rs 73436 crores.

1.3 GENERAL INSURANCE Prior to nationalization of the General Insurance Business in 1972 by enactment of the General Insurance Business Nationalization Act 1972 (GIBNA 1972) there were 55 Indian Companies and 52 non-Indian Companies carrying of the business of General Insurance in India. Before the

nationalization the total premium written by these companies was Rs.170 crores as on 1971. At that time the key Economic indicators were as follows: Gross Domestic Product Rs. 36503 Crores Per Capita Income Rs. 675 Crores Population 541 mns

To understand the why of nationalization in the first place it is sufficient to read the following excerpts from the speech of the then Finance Minister Mr. Y.B. Chavan. The primary objective of nationalization of general Insurance was to make it meaningful to the common man, to carry its message to the remotest corner of the country and to give it its rightful place in the economy of the country. When it was in the private sector it was a mere handmaid to trade.

DIPLOMA IN INSURANCE SERVICES MODULE - 1 Notes 4 Recent Trends in Insurance Sector Business Environment industry and served to cater to the interests of a limited clientele. Worse still it functioned in a manner favoring the interests of a few at the expense of, needless to say, the majority. There were allegations of malpractices on a big scale. It was the objective of nationalization to remove these malpractices and usher in an era of Insurance run on sound business principles and functioning on healthy and egalitarian lines. The emphasis should be on spreading the message of Insurance as widely as possible and on ensuring that it gives the right weightage to the weaker sections of the society. The principle of competition must have its useful role to play, but not at the expense of unhealthy rivalry. General Insurance is a service and proper and efficient service is due to the policyholder as a matter of right. The Corporation exists for the benefit of the policyholder. Business must cease to work under purely mercenary motives. Whenever, one feels the need for protection against an unpredictable contingency, a suitable Insurance cover should be available. No excuse should be given that a particular cover is not conventionally given or that other markets of the world do not give it. Healthy employer-employees relationship is of vital importance to achieve the main objectives of nationalization.

It will be necessary for the Corporation to review the rating structure in order to ensure that all classes of the policyholder receive a fair deal and the equitable rate of premium. The Act led to the formation of the General Insurance Corporation (GIC) and the shares of the Indian Insurance Companies and the units of other Insurance Companies operating in India along with the General Insurance business of LIC were transferred to the GIC. The Indian companies became subsidiaries of GIC and the non-Indian Companies were transferred to 4 companies selected as flag companies to operate from 4 zones as under: 1. National Insurance Co. Ltd., with its Head Office at Calcutta. 2. The New India Assurance Co. Ltd. with its Head Office at Mumbai. 3. The Oriental fire & Insurance Co. Ltd., with its Head Office. 4. United India fire & General Insurance Co. Ltd., with its Head Office at Madras (now named United India Insurance Co. Ltd.)

MODULE - 1 Notes 5 Recent Trends in Insurance Sector DIPLOMA IN INSURANCE SERVICES Business Environment at New Delhi (from 1974) (now named as The Oriental Insurance Co. Ltd.) The basis of allocation of the 107 companies was the geographical areas of operation i.e. south based companies were allotted to United India, the North based to the Oriental Insurance, the West based to the New India Assurance and East based National Insurance. The 4 flag companies became the subsidiaries of General Insurance Corp. with effect from 1/1/1973.The total business has gone from Rs 1145 crores in 1973 to Rs 9522 crores in 2000. INTEXT QUESTIONS 1.1 1. Who started the life insurance in India ? 2. How many companies were merged to nationalize the general insurance business?

1.4 REVIEW OF INSURANCE BUSINESS IN INDIA From above you must have observed that the insurance business has grown manifold after the nationalization of Life Insurance in 1956 and General Insurance in 1972. But the international comparison as per details given below will show that insurance penetration and insurance density in India is at low level as compared to the developing/developed countries. International Comparison Insurance penetration Insurance Density (Premium as GDP) (Premium per capita in $) Countries Total Non-life Life Total Non-life Life USA 8.55 4.32 4.23 2921.1 1474.4 1446.6 UK 13.35 3.05 10.30 3244.3 741.5 2502.8 JAPAN 11.17 2.30 8.87 3908.9 805.50 3103.4 RUSSIA 2.13 1.34 0.78 26.80 17 9.9 France 8.52 2.82 5.70 2080.9 688.60 1392.30 Germany 6.52 3.55 2.96 1675.70 923.50 762.2 INDIA 1.93 0.54 1.39 8.50 2.40 6.10 BRAZIL 2.01 1.66 0.35 68.60 56.70 11.8 MEXICO 1.68 .86 0.82 84.60 43.30 41.30 DIPLOMA IN INSURANCE SERVICES MODULE - 1 Notes 6 Recent Trends in Insurance Sector Business Environment KENYA 3.26 2.48 0.78 9.9 7.5 2.4 AUSTRALIA 9.82 3.39 6.43 2037.4 703.8 1333.6 MALAYSIA 3.88 1.72 2.16 140.4 62.3 78.1 NIGERIA 0.95 0.88 0.07 2.6 2.4 0.20 The reasons for low penetration may be that the insurance sector was totally in the hands of the public enterprises. It is observed that the public enterprises in any country cant perform all the economic and business effectively. Even in the socialist country, public enterprises in all the

fields cant discharge their full responsibilities. It is also said that complete governmentalization or nationalization will lead towards slavery. Though the Indian economy is a mixed economy (not in Insurance sector till 2000) but the expectation from the public enterprises is too much. In fact, the support and subsidy provided by the Govt. indirectly punishes the taxpayer and the countrymen. Keeping in view these problems the Indian Govt. started the liberalization process in 1991. Though the liberalization, privatization and globalization (LPG) has taken place in many sector but the insurance sector was liberalized, privatization and globalized in the year 2000.

Liberalization: means abolition of industrial licensing, removal of the limit on industrial investment & a more welcoming approach to foreign investment.

Globalization: means opening of the Indian economy for global Co-operation in economic activities. This would involve foreign direct investment in industry and foreign institutional investors investing in the securities market by way of mutual funds etc., removal of quantitative restrictions on imports and reduction of import tariff.

Privatization: means refers to allowing private sector to invest in government companies as well as invest in areas earlier reserved for the public sector. It also implies greater participation of private sector in areas exclusively reserved for public sector. Before liberalization the Insurance sector was controlled by Controller of Insurance but now the corporate body known as Insurance Regulatory & Development Authority (IRDA) has been formed under IRDA Act 1999 whose main objectives are as follows: MODULE - 1 Business Environment Notes 7 Recent Trends in Insurance Sector DIPLOMA IN INSURANCE SERVICES So far, the IRDA has issued license to 20 Life Insurance companies and to 15 General Insurance companies including exclusive health insurance company. The private insurers have started their

business during the year from 2000 to 2001; and till date there is growth in insurance penetration from 1.93 to 2.40 as well as insurance density from 8.50 to 9.36.

1.5 STEPS TAKEN BY IRDA IRDA has taken the following steps to develop the Insurance sector in India keeping in view of the following key indicators. INDIAS PROFILE Total Area 3287263 Sq. Kms. Land Area 2973190 Sq.Kms. Coastlines 7000 Kms States 29 UT 6 Districts 463 Population 1.03 (Billion) as on 1/4/2001 Urban Population 27% Population Growth 2.14% Sex Ratio 927 Females 1000 Males Density of population 273 persons per KM Literacy Rate 52.10% Life Expectancy(Male/ 62/64 years Female)

1.5.1 Policies And Measures To Develop Insurance Market The Authority has taken a pro-active role in the establishment of a vibrant Insurance market in the country by taking the following steps: i) The market regulation by prudential norms, ii) The registration of players who have the necessary financial strength to withstand the demands of a growing and nascent market, iii) The necessity to have fit and proper person in-charge of businesses, iv) The implementation of a solvency regime that ensures continuous financial stability, and above all,

v) The presence of an adequate number of insurance companies to provide competition and choice to customers all these steps lead to the establishment of a regime committed to an overall development of the market in normal times. vi) Prescribed rural and social sector norms in respect of Insurance business being underwritten by the companies. vii) The companies have also been asked to devise insurance policy to specific sector in the economically weak population.

DIPLOMA IN INSURANCE SERVICES MODULE - 1 Notes 8 Recent Trends in Insurance Sector Business Environment

1.5.2 Research and Development Activities Undertaken by the Insurance companies The insurers have been conducting market research either in-house or through professional agencies i) to introduce tailor-made products targeted at specific segments of the population so that Insurance can become more meaningful and affordable. ii) Risk assessment studies are being carried out for measuring accumulation of risk of a particular place at any one point of time. iii) Consumer awareness campaigns are being encouraged to improve insurance literacy levels by conducting workshops, distributing literature etc.

1.5.3 Protection of Interests of Policyholders To protect the interests of holders of Insurance policies and to regulate, promote and ensure orderly growth of the Insurance industry the Authority has taken the following steps: i) a leading consumer activist has been inducted into the Insurance Advisory Committee. ii) In addition to this member, this committee has drawn representation form the industry, Insurance agents, womens organizations and other interest groups.

iii) While the Government has taken steps to strengthen the Boards of the State-run companies by inducting representatives from consumer organization and policyholder, MODULE - 1 Business Environment Notes 9 Recent Trends in Insurance Sector DIPLOMA IN INSURANCE SERVICES iv) the Authority, on it part, was careful to ensure that all the new private companies registered have a director representing consumer interests on their Boards. v) In addition to this measure all insurers have been advised to streamline their grievance redressal machinery and set benchmarks for efficient and effective service. vi) All insurance companies are adhering to the Insurance Ombudsman scheme formulated by the Government and complaints against insurance companies are being referred to them by the aggrieved policyholders from time to time. vii) The Authority is conscious of the fact that the fine print should not take away what the bold print promises and in this regard has come out with the Insurance Advertisement and Disclosure Regulations which ensure that the Insurance companies adhere to fair trade practices and transparent disclosure norms while addressing the policyholders or the prospects. viii) All Insurance intermediaries, before obtaining a license, or at the time of renewal of license, are required to undergo compulsory training to ensure that they can service the policyholders better by being well trained and informed. ix) Guidelines have been issued to insurers to file their existing and new products with the Authority. In case of new products insurers are required to submit details of premium rating, policy conditions, proposal form, claim form, underwriting manual and the system in vogue to review the rates, terms and conditions in future.

 In addition to this, they are required to furnish certificates from advocates and actuaries that the statements made are true and accurate and are not in violation of any law and that the policy wordings are simple and easily understandable to a policyholder. DIPLOMA IN INSURANCE SERVICES MODULE - 1 Notes 10 Recent Trends in Insurance Sector Business Environment

1.5.4 Maintenance of Solvency Margins of Insurers As per provisions of the Insurance Act and the regulations made there under, every life insurer is required to maintain an excess of value of his assets over the amount of his liabilities of not less than Rs.50 crore (Rs.100 crores in the case of a reinsurer) or a sum equivalent based on a prescribed formula, as determined by regulations not exceeding 5% of the mathematical reserves and a percentage not exceeding 1% of the sum at risk for the policies on which the sum at risk is not negative, whichever is highest. Similarly, every General insurer is required to maintain a minimum solvency margin of Rs.50 crores (Rs.100 crores in the case of a reinsurer) or a sum equivalent to 20% of net premium income or a sum equivalent to 30% of net incurred claims whichever is highest, subject to credit for reinsurance in computing net premiums and net incurred claims. In addition, at the time of registration all the new insurers have been required to maintain a solvency ratio of 1.5 times the normal requirements.

1.5.5 Monitoring of Investments of the Insurers Investment income is a key determinant in the calculation of premium rates for any insurance company under the various insurance policies/schemes and for declaration of bonus by life insurers. It is a core function of an insurance company, which cannot be outsourced by an insurer. In the case of general insurance, investment income compensates underwriting losses, if any, of the insurance company, which in turn enables then to keep their premium rates competitive.

Therefore, insurance companies essentially invest these funds judiciously with the combined objectives of liquidity, maximization of yield and safety. An investment policy has to be submitted to the Authority by an insurer before the start of an accounting year. Since the insurance companies keep the policyholders money in their MODULE - 1 Business Environment Notes 11 Recent Trends in Insurance Sector DIPLOMA IN INSURANCE SERVICES fiduciary capacity they are also required to maintain a minimum level of solvency to meet the reasonable expectations of the policyholders. For this, the Authority has mandated the pattern of investment to be followed by the insurance companies. Investments in Government securities, approved investments and infrastructure and the social sectors have been prescribed in the Insurance Act, 1938. (details have been explained in other module)

1.5.6 Health Insurance All the new insurance companies have been advised that they will carry out health insurance business not as a stand-alone product but as a combined rider with existing life/ non-life policies, and introduce health products in the market. At the moment the health products available is of the standard reimbursement type policy and its variants. IRDA has recently notified regulations for Licensing of Third Party Administrators (TPA)- Health Services in order to popularize health insurance. Health services rendered by a TPA shall include services in connection with health insurance business. However this shall not include the business of insurance company or the soliciting, directly or through an insurance intermediary including an insurance agent. It is expected that TPAs will bring some sort of regulation regarding standard and quality of treatment, period of treatment and rates. The Authority is encouraging to business community to come forward to start exclusively health insurance Company. Till date there is only insurer who is exclusively engaged in health insurance business.

1.5.7 Public Complaints Many customers of insurance companies approach the authority-both formally and informally for the settlement of their grievances. IRDA follows up for the settlement of these grievances on the complaints on a continuous basis with the insurance companies. Timely attention is given to these complaints and the insurers are advised to settle claims and grievances promptly. DIPLOMA IN INSURANCE SERVICES MODULE - 1 Notes 12 Recent Trends in Insurance Sector Business Environment A system of grievance redressal has been built in the Authority supervised by one of its senior officers. This system has proved useful to the Authority not only to see that complaints get attended to but also to give it an idea of the areas of working of an insurer where have to be improved. The experience gained in this regard is reflecting in the regulations made by the Authority.

1.5.8 Functioning of Ombudsman (a person who decides the complaints of an individual on insurance matters) The institution of Insurance Ombudsman has great importance and relevance for the protection of interest of policyholders and also to build up their confidence in the system. This institution has helped to generate and sustain the faith and confidence amongst the consumers in insurers. The Insurance Council, which is the administrative body has appointed twelve ombudsmen across the country and have provided them with the necessary infrastructure. The companies are required to honors the awards passed by an Ombudsman within three months. The awards are binding on the Insurance companies: the customer, however, can resort to in case he decides on the insurance companies; the customer, however, can resort to it case he decides to do so, other methods of grievance settlement. The Insurance Ombudsman is empowered to receive and consider complaints in respect of personal lines of insurance from any person who has any grievance against an insurer. The complaint has to be writing, and addressed to the jurisdictional Ombudsman within whose territory a branch or office of the insurer complained against is located. The complaint can relate to any:

a) Grievance against insurer. b) Partial or total rejection of claims by the insurer. c) Dispute in regard to premium paid or payable in terms of the policy. d) Dispute on the legal construction of the policy in so far as such dispute relate to claims. MODULE - 1 Business Environment Notes 13 Recent Trends in Insurance Sector DIPLOMA IN INSURANCE SERVICES e) Delay in settlement of claims. f) Non-issue of any insurance document to customers after receipt of premium. The limit of an Ombudsmans powers is at present prescribed as Rs.20 lakhs. The insurance Ombudsman Scheme is complementary to the regulatory functions of IRDA, which has been mandated to take all necessary steps to protect the interest of the policyholders. The institution of ombudsman has evoked a good deal of public appreciation as is evident from media reports and performance appraisal made by the Authority.

1.5.9 Re-insurer (means insurance of insurance companies) Reinsurance Business in India is being transacted by General Insurance Corporation. Before the privatization of the Insurance sector the General Insurance Corporation was performing the dual functions i.e. Insurance and Reinsurance. The Insurance business was transacted through its four subsidiaries namely the New India Assurance Co. Ltd., National Insurance Co. Ltd., The Oriental Insurance Co. Ltd., United India Insurance Co. Ltd. After the privatization the functions of GIC has been restricted to reinsurance and civil aviation Insurance. The Insurance Act 1938 has notified under Section 101A that Indian Reinsurer will be General Insurance Corporation and the four subsidiaries have been de-linked from GIC and shall work under the Central Government. The Reinsurance Program of every Insurer, carrying on general insurance business, shall be guided by the following objectives viz; To maximize retention within the country; To develop adequate capacity;

 To secure the best possible protection for the reinsurance costs incurred; and To simplify the administration of business.

1.5.10 Customer Service One of the innovations that some of the insurers have introduced is opening up of call centers which are functioning DIPLOMA IN INSURANCE SERVICES MODULE - 1 Notes 14 Recent Trends in Insurance Sector Business Environment on a 24x7 basis. These centers act not only as enquiry offices for new business to be developed but also function as points of reference and records for claims, which have arisen. It is note worthy to find that some of the new insurers have found it possible to settle claims within 24 to 48 hours.

1.6 SUMMARY Keeping in view the above mentioned steps taken by the Govt. to develop insurance sector, it is expected that growth of insurance will be as follows: Presently the private players are making their presence felt only in the urban areas as they have open their offices in the selected cities. Particulars Audited 2006-07 Unaudited 2007-08 2014-15(Projected) LIFE (first Year Premium) LIC 55935 59182 100000 PRIVATE 19471 33806 95000 TOTAL 75406 92988 195000 % Growth 23% 109.70% NON-LIFE PSUs Includes 17442 18398 40000 ECGC & Agriculture Insurance) Private (includes 8739 11407 30000 Health Insurance cos) Total 26181 29805 70000 % Growth 14% 135% G. Total 101587 122793 265000 Population 1.04 billion 1.06 billion 1.25 billion To increase the insurance penetration and density these players have not only to operate in the rural area but also to develop new products to meet the customers needs.

1.7 TERMINAL QUESTIONS 1. Why life insurance sector was nationalized in 1956? 2. Why general insurance sector was nationalized in 1972? MODULE - 1 Business Environment Notes 15 Recent Trends in Insurance Sector DIPLOMA IN INSURANCE SERVICES 3. What steps have taken by the Authority to protect the policyholders rights? 4. Discuss the various steps taken by IRDA to develop the insurance sector.

1.8 OBJECTIVE TYPE QUESTIONS 1. Life insurance deals with_______(Human/Animal) 2. In which year ________ the Indian Insurance Sector took U turn. (2000/1999) Choose the correct option 3. Government decided to nationalize the life insurance companies in 1956 due to a. Lack of confidence b. No guarantee to the policyholders c. Malpractice in the insurance business d. All of the above 4. The name of the Finance Minister at the time of nationalization of general insurance business was __________. (Y.B Chavan, Indira Gandhi) 5. On nationalization of the general insurance business how many govt. companies were formed _____(four/six) 6. LPG in insurance sector means___________ {(Liberalization, Privatization, Globalization) (Liquefied Petroleum Gas)} 7. Statement A: Protection of Interest of Policyholders is one of the steps taken by the Government to develop the insurance sector. Statement B: Maintenance of solvency margins of insurer is not a step to develop the insurance sector. a. Only A is true b. Only B is true c. Both are true d. Neither of two 8. The main function of Ombudsman is to resolve the complaints of ______(Insurer/policyholders) 9. The financial power of Ombudsman to resolve the complaint is ______(Rs 20 lakhs/Rs 25 lakhs) 10. The reinsurance means______(Insurance of insurer/ insurance of an individual) DIPLOMA IN INSURANCE SERVICES MODULE - 1 Notes 16 Recent Trends in Insurance Sector Business Environment

1.9 ANSWERS TO INTEXT QUESTIONS 1.1 1. Two British companies in 1870 started to insure the lives of India. 2. 55 Indian and 52 non-Indian companies were merged in to four companies on regional basis. 1.10 ANSWERS TO OBJECTIVE TYPE QUESTIONS 1. Human 2. 2000 3. d 4. Y. B. Chavan 5. Four 6. Liberalization, privatization, globalization 7. a 8. policyholder 9. Rs 20 lakhs 10. Insurance of insurer (Rs in crores) Particulars Audited Audited 2014-15 2007-08 2008-09 (Projected) LIFE LIC 149740 157288 253314 PRIVATE 51561 64503 103883 TOTAL 201301 221791 357197 % Growth 10% 37.91% NON-LIFE PSUs Includes ECGC & 16832 18031 29039 Agriculture Insurance) Private (includes Health 10992 12321 19843 Insurance cos) Total 27824 30352 48882% Growth 9% 61% G. Total 229125 252143 406079 Population 1.04 billion 1.06 billion 1.25 billion

INTRODUCTION OF INSURANCE In India, insurance has a deep-rooted history. It finds mention in the writings of Manu (Manusmrithi), Yagnavalkya (Dharmasastra) and Kautilya (Arthasastra). The writings talk in terms of pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics and famine. This was probably a pre-cursor to modern day insurance. Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans and carriers contracts. Insurance in India has evolved over time heavily drawing from other countries, England in particular. 1818 was the advent of life insurance business in India with the establishment of the Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In 1829, the Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870 was the enactment of the British Insurance Act and in the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency. This era, however, was dominated by foreign insurance offices which did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard competition from the foreign companies. In 1914, the Government of India started publishing returns of Insurance Companies in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life business transacted in India by Indian and foreign insurers including provident insurance societies. In 1938, with a view to protecting the interest of the Insurance public, the earlier legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control over the activities of insurers. An Ordinance was issued on 19th January, 1956 nationalizing the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector. The history of general insurance dates back to the Industrial Revolution in the west and the consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a legacy of British occupation. General Insurance in India has its roots in the establishment of

Triton Insurance Company Ltd., in A Study Of Trend Analysis In www.theijes.com The IJES Page 2

the year 1850 in Calcutta by the British. In 1907, the Indian Mercantile Insurance Ltd was set up. This was the first company to transact all classes of general insurance business. 1957 was the formation of the General Insurance Council, a wing of the Insurance Association of India. The General Insurance Council framed a code of conduct for ensuring fair conduct and sound business practices. In 1972 with the passing of the General Insurance Business (Nationalization) Act, general insurance business was nationalized with effect from 1st January, 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a company in 1971 and it commence business on January 1st 1973. This millennium has seen insurance come a full circle in a journey extending to nearly 200 years. The process of reopening of the sector had begun in the early 1990s and the last decade and more has seen it been opened up substantially. In 1993, the Government set up a committee under the chairmanship of R N Malhotra, former Governor of RBI, to propose recommendations for reforms in the insurance sector. The objective was to complement the reforms initiated in the financial sector. The committee submitted its report in 1994 wherein, among other things, it recommended that the private sector be permitted to enter the insurance industry. They stated that foreign companies are allowed to enter by floating Indian companies, preferably a joint venture with Indian partners. Following the recommendations of the Malhotra Committee report, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in April, 2000. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market. The IRDA opened up the market in August 2000 with the invitation for application for registrations. Foreign companies were allowed ownership of up to 26%. The Authority has the power to frame regulations under Section 114A of the Insurance Act, 1938 and has from 2000 onwards framed various regulations ranging from registration of companies for carrying on insurance business to protection of policyholders interests. In December, 2000, the subsidiaries of the General Insurance Corporation of India were restructured as independent companies and at the same time GIC was converted into a national re-insurer. Parliament passed a bill de-linking the four

subsidiaries from GIC in July, 2002. Today there are 24 general insurance companies including the ECGC and Agriculture Insurance Corporation of India and 23 life insurance companies operating in the country. The insurance sector is growing at a speedy rate of 15-20%. Together with banking services, insurance services add about 7% to the countrys GDP. A well-developed and evolved insurance sector is a boon for economic development as it provides long- term funds for infrastructure development at the same time strengthening the risk taking ability of the country. II. OBJECTIVES OF THE STUDY

of insurance in India.

TREND ANALYSIS OF LIFE AND NON-LIFE INSURANCE SECTOR IN INDIA Study of international comparison of insurance density: In the part of analysis of trend analysis of insurance sector in India we can study about what is our position in the international level in insurance sector for this type of analysis we can study the insurance destiny of various countries in the world. In this analysis we can study about the life insurance and Non-life insurance in the 22 countries in the world so this analysis can give the full information about insurance density across the world.

INTERNATIONAL COMPARISON OF INSURANCE DENSITY

SL.NO

Name of the Country

2011-2012

LIFE INSURANCE

NON-LIFE INSURANCE

TOTAL

1 2 3 4 5 6 7 8

Australia Brazil France Germany Russia South Africa Switzerland United Kingdom

2077 208 2638 1389 8 823 4421 3347

2017 189 1403 1578 295 215 3591 1188

4094 398 4041 2967 303 1037 8012 4535