INSURANCE SECTOR OF INDIA

INSURANCE

The insurance industry in India has changed rapidly in the challenging economic environment throughout the world. In the
current scenario, Indian insurance companies have become competitive in nature and are providing appropriate
distribution channels to get the maximum benefit and serve customers in manifold ways.

Indian Insurance industry has big opportunity to expand, given the large population and untapped potential.The insurance
market in India has witnessed dynamic changes including entry of a number of global insurers. Most of the private
insurance companies are joint ventures with recognized foreign institutions across the globe. Saturation of markets in
many developed economies has made the Indian market even more attractive for global insurance majors.

The Insurance Regulatory and Development Authority (IRDA) regulate and develop the insurance sector in India through
calibrated policy initiatives.

OVERVIEW OF THE INSURANCE SECTOR IN INDIA

A growing economy, low insurance penetration in terms of premium percentage to the GDP, as well as increasing
affordability on account of higher disposable incomes and savings, increasing urbanization and increasing awareness, are
some of the factors that continue to power the growth of insurance sector in India.

During the year 2009-10, there were forty-four insurance companies operating in India; of which twenty-two were in the
life insurance business and the remaining twenty-one were in general insurance business and one national re-insurer. Of
these forty-four companies, 8 are in the public sector. The remaining thirty-six are private sector companies.

PERFORMANCE IN THE FISCAL 2008-09

In the fiscal 2008-09, life insurance business registered a growth of 10.15 per cent, general insurance business recorded
a growth of 9.09 per cent in 2008-09. With this, Insurance penetration (premium volume as a ratio of GDP) for the year
2008-09 stood at 4.74 per cent; 4.17 per cent for life insurance and 0.57 per cent for non-life insurance.

The Insurance density of India in 2008-09 stood at US$ 47.4, which continued to be dominated by life insurance business
(US$ 41.2). Also, the general insurance industry has been growing at a little over 16% CAGR over the past three years.

PERFORMANCE IN THE FIRST QUARTER OF 2009-10

The insurance industry has registered a growth of 11.35 per cent in the first six months of this financial year (2009-10).
The life insurance sector has grown by around 13 per cent while the non-life segment witnessed a growth of around 8 per
cent in the first-half of 2009-10. The level of penetration, particularly in life insurance, tends to rise as income levels
increase. India, with its huge middle class households, has exhibited growth potential for the insurance industry.
 INVESTMENTS OF THE INSURANCE SECTOR

The total investments of insurance sector in the financial year 2009-10 recorded an increase of 18.61 per cent over the
previous year. While life insurers reported 19.63 per cent growth in investments, non-life insurers registered only 4.64 per
cent growth. In both life and non-life insurance business, private sector insurers reported larger increase in investments
than the public sector insurers because of lower base of private sector companies in the previous year.

WHY DO PEOPLE IN INDIA TAKE INSURANCE

People in India have been viewing Insurance, especially life insurance as a form of Investment. These are the common
reasons why people in India take up insurance:

1. Insurance safeguards a person /his family /his business against possible losses on account of risks and perils. It
provides financial compensation for the losses suffered due to the happening of any unforeseen events.

2. Tax Relief: asunder Section 88 of Income Tax Act, a portion of premiums paid for life insurance policies (LIC) are
deducted from tax liability. Similarly, exemption is available for Health Insurance Policy premiums. b.Money paid
as claim including Bonus under a life policy is exempted from payment of Income Tax.

3. Encourages Savings: An insurance scheme encourages thrift among individuals. It inculcates the habit of saving
compulsorily, unlike other saving instruments, wherein the saved money can be easily withdrawn.

4. The beneficiaries to an insurance claim amount are protected from the claims of creditors by affecting a valid
assignment.

5. Life Policies are accepted as a security for a loan. They can also be surrendered for meeting unexpected
emergencies.

6. Based on the concept of sharing of losses, the society will benefit as catastrophic losses are spread globally

TYPES OF INSURANCE

Insurance has been classified into:

• Life Insurance

• General Insurance or Non-Life insurance

LIFE INSURANCE

Life insurance is a written contract between the insured and the insurer, that provides for the payment of the insured sum
on the date of the maturity of the contract or on the unfortunate death of the insured, whichever occurs earlier.

The different types of life insurance are:

• Whole Life Assurance Plans

• Term Assurance Plans

• Annuity
NON LIFE INSURANCE

There are various broad categories of non-life or general

Insurance as follows:

Health Insurance:
Just like one looks to safeguard ones wealth, these policies ensure guarding the insurer's health against any calamities
that may cause long term harm to one’s life and even hamper ones earning ability for a lifetime. Some examples of this
type of policy are mediclaim policy, personal accident, group accident, traffic accident, etc

Business Insurance:

Risks of loss of profits/business, goods, plant and machinery are most profound in case of business. Under this head they
cover the most widely used policies that cover a business from any loss of the above kind. Some of these policies are
burglary insurance, shopkeeper’s insurance, key-man insurance, marine insurance, public liability insurance, workmen
compensation insurance, air transit insurance, fidelity guarantee insurance etc

Automobile Insurance:

Auto Policy is required to be taken to cover the risks that arise to the owner, vehicle and third party. This includes the
Compulsory Vehicle Policy (In India, by the Motor Vehicles Act, every car owner is required to covered against Act risks)
and the Comprehensive Vehicle Policy.

Fire Insurance:

This policy is required to be taken to prevent any loss of profits / property from incidental fire. Eg: fire insurance and fire
consequential loss policy

Travel Insurance:

Every year number of tourists die while travelling. They lose their baggage; passports etc are left stranded in unfamiliar
environments. Medical attention in a foreign land while very expensive is also very difficult to find in foreign land. Travel
policies are designed to take care of all the problems that generally occur while travelling, whether domestic or foreign.

POTENTIAL OF THE INSURANCE SECTOR IN INDIA LIFE INSURANCE

STATISTICS
India has an enormous middle-class that can afford to buy life, health, and disability and pension plan products. The low
level of penetration of life insurance in India compared to other developed nations can be judged by a comparison of per
capita life premium. Despite the fact that the market is vast in India for the Insurance business, the coverage is far less
compared with the international standards. Estimates show that a meagre 35-40 million, out of a population of 950 million,
have come so far under the umbrella of the insurance industry. India has traditionally been a high savings oriented.
Insurance sector in the Unites States is as big in size as the banking industry there. This gives us an idea of how
important the sector is. Insurance sector channelizes the savings of the people to long term investments. In India where
infrastructure is said to be of critical importance, this sector will bring the nations own money for the nation. Life Insurance
sector is one of the key areas where enormous business potential exists. In India currently the life insurance premium as
a percentage of GDP is 1.3 percentages against 5.2 per cent in the US. But in the liberalized scenario, the life insurance
premiums were projected to grow at around 18% to 20% from Rs. 215 billion in 1998- 99 to Rs.592 billion in 2004-05 and
to Rs.1450 billion by 2009-10. Corporate non-life premium was projected to grow from Rs.84 billion in 1998-99 to Rs.386
billion in 2009-10 and personal line non-life from Rs.4 billion to Rs.51 billion. The potential market is so huge that it can
grow by 15 to 17 per cent per annum. Now with the entry of private insurance companies, the Indian Insurance Market
may finally be able to make deeper penetration into newer segments and expand the market size manifold.

CURRENT PLAYERS
In the first year of insurance market liberalisation (April 2-December 31, 2001) as much as 16 private sector companies
including joint ventures with leading foreign insurance companies have entered the Indian insurance sector. Of this, 10
were under the life insurance category and six under general insurance. Since then, till June, 2002 two more joined the
life insurance sector. Thus in all there are 18 players (12 life insurance and 6 general insurance) in the Indian insurance
industry till date

Life Insurance Companies:

• Life Insurance Corporation of India

• ICICI Prudential

• HDFC Standard Life Insurance

• Max New York Life

• Birla Sun Life Insurance

• SBI Life

• Tata AIG Insurance

• ING Vysya Life Insurance

• Allianz Bajaj

• Amp Sanmar

• Old Kotak Mahindra Life

• MetLife India Insurance

General Insurance Companies:

• Bajaj Allianz General Insurance Co. Ltd

• ICICI Limited

• IFFCO-TOKIO General Insurance

• National Insurance

• New India Insurance

• United Insurance

• Oriental Insurance
• Royal Sundaram

• TATA AIG Insurance

COMPANY ANALYSIS

MetLife India Insurance Company Limited

MetLife India Insurance Company Limited India known as Metlife Insurance is an associate of MetLife, Inc. and was
established as a joint venture between MetLife International Holdings, Inc., the Jammu and Kashmir Bank, M. Pallonji and
Co. Private Limited and other private investors. MetLife is one of the quickest growing life insurance companies in India. It
attends its customers by extending a range of modern products to different individuals and group customers, with services
spread across more than 600 locations via the banking partners and company-owned offices. Currently, MetLife has in its
kitty over 50,000 Financial Advisors- who help the customers get the right product across the length and breadth of the
country. MetLife, Inc., through its associates, extends its services to more than 70 million customers in the Americas, Asia
Pacific and Europe.

Services offered by the MetLife companies:

• Life insurance

• Annuities

• Automobile and home insurance

• Retail banking

• Other financial services to individuals

• Group insurance

• Reinsurance

• Retirement and savings products and services

PLANS OF METLIFE INDIA INSURANCE

Child Plan:

Every parent would dream of fulfilling the child's need. Expenses are on the rise everyday, thus ensuring a good future for
the child in increasingly becoming difficult. The child insurance plans of Metlife secure the future of the child such that you
do not have to think tomorrow.

• Met Bhavishya

• Met Junior Endowment

• Met Little Star

• Met Junior Money Back

• Met Magic
Retirement Plan:

New beginnings, new joys and the opportunity to explore the unfulfilled dreams of the past - these are the essential
elements of a post retirement life. Financial independence is very important at this stage. The exhaustive retirement plans
of Metlife guarantee a financially secure retirement.

• Met Growth

• Met Advantage Plus

• Met Pension-Par

• Savings Plan:

Everybody dreams. And dreams can take any shape - be it the wedding of your child, buying a house or a car and
anything. The savings plans of MetLife help realize the dreams and secure the future.

• Met Sukh

• Met Suvidha

• Met Saral

• Met 100

Protection Plan:

The protection plans of Metlife Insurance relieve you from the burden of home loans, EMIs and similar responsibilities.

• Met Suraksha

• Met Suraksha TROP

• Met Mortgage Protector

• Met Suraksha Plus

Rural Plan:

The rural plans of Metlife Insurance shield your loved ones against financial obligations and also assist you to save for
tomorrow. The rates of premium are quite affordable.

• Met Vishwas

• Met Suvidha-Rural

• Investment Plan:

The Unit-Linked Insurance Plans of Metlife guarantees that your wealth is enhanced. Offering protection and wealth
optimization at the same time, they are customized to meet your requirements.

• Met Easy

• Met Smart Gold

 • Met Smart Plus-Regular Pay

• Met Smart Premier- Regular Pay

• Met Smart Plus- Single Pay

• Met Smart Premier- Single Pay

Health Plan:

Get yourself a health insurance plan from Metlife to meet the contingencies during ill health or ill financial health
consequently. The Met Health Care, an elementary health insurance policy has unique advantages associated for you
and your family. Family comprises of spouse and two children.

Met Health Care is a long term health insurance plan from MetLife which covers the following:

Against Hospitalisation disbursements by offering you a Daily Cash benefit

Against 10 major vital illnesses by giving you a lump sum benefit.

Against Total & Permanent Disability due to accident by allowing you a lump sum benefit.