growth of around 10 percent is expected in India's life insurance

industry in 2010 over the previous year, mainly by improving efficiency

but also by expanding in small towns and villages,

industry experts say.

Life insurers are also expected to rebalance their sales mix - unit linked
insurance policies (ULIP) and non-ULIP.

"We expect the industry to grow at an average of around 10 percent.

We do expect a slight balancing of portfolios with a shift towards
traditional policies with ULIP contribution coming down to 85 percent
from the high 90s," Malay Ghosh, president, Reliance Life Insurance,
told IANS.

G.L.N. Sarma, appointed actuary, Bharti Axa Life Insurance and An

industry official said," After years of mis-selling ULIPs as a short-term
investment instrument on the back of a stock market boom, risk-
averse customers will make life insurers look at alternatives. ULIPs
offering guarantees will find favour with policy buyers."

R. Krishnamurthy, managing director of global consultancy firm Towers

Watson's insurance and financial services division, told IANS," We can
expect the branch expansion to continue at semi-urban and the larger
of rural centers by private players."

A senior industry official further said: "The focus will be on getting the
fundamentals right - arresting expense overrun, reducing policy lapse
rates and increasing productivity - though some players seem to be
playing the top line game all over again."

Mis-selling of life insurance policies as short-term investment is cited

as the major reason for the high surrender or lapse rate.

Managing Director P. Nandagopal of IndiaFirst Life Insurance's, mis-

selling of policies is resorted to by companies that use distribution
channels like multi-level marketing companies. (With Input from
Agencies)

CHENNAI: India's life insurance industry is expected to grow by around 10 per cent in 2010 over the
previous year, mainly by improving efficiency but also by expanding in small towns and villages, industry
experts say.

They also expect life insurers to rebalance their sales mix — unit linked insurance policies (ULIP) and non-
ULIP.

"We expect the industry to grow at an average of around 10 per cent. We do expect a slight balancing of
portfolios with a shift towards traditional policies with ULIP contribution coming down to 85 per cent from
the high 90s," Malay Ghosh, president, Reliance Life Insurance, told IANS.

"After years of mis-selling ULIPs as a short-term investment instrument on the back of a stock market
boom, risk-averse customers will make life insurers look at alternatives," an industry official said.

"ULIPs offering guarantees will find favour with policy buyers," GLN Sarma, appointed actuary, Bharti
Axa Life Insurance told IANS.

According to industry officials, much of the growth will happen by increasing agents' productivity and not
by expanding the distribution network. If companies do expand their branches this will be in small towns
and villages.

"In the coming years, innovative low cost structures will be used for expansion especially in interior
locations, a potentially lucrative market," said Ghosh.

"We can expect the branch expansion to continue at semi-urban and the larger of rural centres by private
players," R Krishnamurthy, managing director of global consultancy firm Towers Watson's insurance and
financial services division, told IANS.

Even new players like Future Generali India Life Insurance Company Ltd are cautious in opening new
branches.

"We will not expand our branch network this year. I don't expect most other companies doing it as some
had rationalised their branch network last year," G.N. Agarwal, appointed actuary, Future Generali, said.

A senior industry official said: "The focus will be on getting the fundamentals right - arresting expense
overrun, reducing policy lapse rates and increasing productivity - though some players seem to be playing
the top line game all over again."

"Reducing policy lapse rate or increasing the policy persistency ratio is the big challenge for the industry -
and this is not an isolated experience of India. There are daunting experiences in other large emerging
markets such as China," remarked Krishnamurthy.

Mis-selling of life insurance policies as short-term investment is cited as the major reason for the high
surrender or lapse rate.

According to IndiaFirst Life Insurance's Managing Director P Nandagopal, mis-selling of policies is

resorted to by companies that use distribution channels like multi-level marketing companies.

"These companies operate pyramid schemes where many times there are no real customers and
consequently there is no real persistence," Nandagopal told IANS.

According to Reliance Life's Ghosh, as the life insurance sector steps into a new decade, the regulator will
lay emphasis on expense and persistency management as these are key drivers of profitability.

Reliance Life rates high on customer satisfaction: Survey New Delhi, Aug 30 (PTI)
Anil Dhirubhai Ambani Group company Reliance Life Insurance has been awarded a
high rating in customer satisfaction for the third year in a row, according to a survey.
"Reliance Life Insurance Company, part of Reliance Capital, has been awarded a high
rating for the third consecutive year in Nielsen's pan-India customer satisfaction survey,"
Reliance Life said in a release.

According to the survey, conducted between April and May this year, Reliance Life
Insurance scored a good rating in customer satisfaction, which is close to excellent."The
Nielsen rating and findings are encouraging for us. The survey indicates that we have
been consistent in our efforts to understand the customer and improve our service
standards," Reliance Life President and Executive Director Malay Ghosh said.

The methodology used for the Nielsen eQ survey was quantitative in nature and have
taken into account the views of 1,806 customers and 822 advisers for Reliance Life
Insurance. The study was done using face-to-face interviews with customers and advisers
across the country.

Nielsen eQ system assesses the impact of customer loyalty and provides insights into
how an organisation can creatively respond to market changes in order to attract and
retain its most valuable customers.

"In an intensely-competitive market, service can be a key differentiator. With this in

mind, we engaged the Nielsen Company to conduct a satisfaction survey across the
country as we are mindful of the challenges that await us in continuing to maintain high
satisfaction scores in the face of rising expectations," Ghosh said.

Reliance Life, which has completed three years of independent customer survey by
Nielsen, has decided to increase the frequency of customer survey from yearly to
quarterly basis for mapping the pulse of discerning customers."The objective behind the
quarterly measurement of customers and advisers' satisfaction is to move towards
excellence in services," he added.

The Indian insurance market in spite of having a history covering

almost two centuries took a turn after the establishment of the Life
insurance corporation in India in 1956. From being an open
competitive market to being nationalized and then back to a liberalized
market again, the insurance sector has witnessed all aspects of
contest.

The Indian insurance market conventionally focused around life insurance

until recently, a various range of other insurance policies covering sectors like medical,
automobile, health and other classes falling under general insurance came up, generally
provided by the private companies. The life insurance of India added 4.1% to the GDP of
the economy in 2009, an immense growth since 1999, when the gates were opened for
the private company in the market.
Policy Change in the Indian Insurance
market

The Insurance Regulatory Development Act, 1999 (IRDA Act) allowed the entry of
private companies in the insurance sector, which was so far the sole prerogative of the
public sector insurance companies. The act was passed to protect the concerns of holders
of insurance policy and also to govern and check the growth of the insurance sector. This
new act allowed the private insurance companies to function in India under the following
circumstances :

• The company should be established and registered under the 1956 company Act
• The company should only the serve the purpose of life or general insurance or
reinsurance business
• The minimum paid up equity capital for serving the purpose of reinsurance
business has been decreed at Rs 200 crores
• The minimum paid up equity capital for serving the purpose of reinsurance
business has been decreed at Rs 100 crores
• The average holdings of equity shares by a foreign company or its subsidiaries or
nominees should not go above 26% paid up equity capital of the Indian Insurance
company.

Investment policy in the Indian insurance market

• A policy known by the name of 'Health plus Life Combi Product', offering life
cover along with health insurance has been granted permission by the IRDA act
and insurance companies are allowed to provide it now.
• The FDI limit in the insurance sector has been capped at 26% for the foreign
marketeers but the government is thinking to increase it to 49% and a bill of this
offer is pending at the Rajya Sabha
• A low cost pension scheme is supposed to be formed by the Pension Fund
Regulatory and Developmental Authority (PFRDA) on 1st April, 2010 to provide
social security to the the poorer class.
• The compulsory ceding by every General Insurance Corporation (GIC), would go
on to stay at 10% under current regulations as specified by IRDA.

Future of Indian Insurance Market

As per the report of 'Booming Insurance Market in India' (2008-2011), concentration of

insurance markets in many developed countries of the world has made the Indian
insurance market more magnetic in terms of international insurance players. Furthermore,
the report says

• Home insurance sector is likely to achieve a 100% growth since home insurance
are made compulsory for housing loan approvals by the financial institutions.
• In the coming three years Health insurance sector is all set to become the second
largest business after motor insurance.
• During the period of 2008-09 to 2010-11 the non life insurance premium is likely
to have a growth of 25%.

Insurance Companies in India

Registration has been granted to 12 private life insurance companies and 9 general
insurance companies so far by the IRDA. Considering the existing public sector
companies in the Indian insurance market there are 13 companies functioning in both life
and general insurance business respectively.

Some of the major insurance companies in public sector are

• Life Insurance Corporation (LIC) of India

• National Insurance Company Limited
• Oriental Insurance Limited

Some of the major insurance companies in Private sector are

• Tata AIG Life

• HDFC Standard
• Bajaj Allianz
• ICICI Prudential
• SBI Life

New Delhi, Spetember 18: Wealthier, aging Indians will help transform the country's
largely untapped life insurance market into one of the world's fastest growing over the
next five years, a global consultancy says.

Life insurance is already the most popular financial product among

Indians because of the tax benefits and income protection it offers in a
country where there is no social security.

But with household earnings accelerating in the fast-growing economy,

the life insurance income premiums market could double from 40
billion dollars to 80 billion or even 100 billion dollars by 2012, said
McKinsey Co in a report.

"All factors are in place for the Indian life insurance industry to blossom
into one of the fastest-growing financial services markets in the world,"
said report co-author Tilman Erhbeck.

"At the size of the market we're talking about and potential the only
one with similar potential is China," he said. "The next five years will
be very exciting."

Key to insurers' enthusiasm about India is its increasing affluence,

aging population and low penetration of insurance coverage at a time
when the market in industrialised countries is relatively saturated.

The potential in the country of 1.1 billion people can be seen from the
fact the ratio of life insurance premiums to GDP -- a common measure
for penetration -- is 4.1 per cent, far lower than developed market
levels of 6-9 per cent.

"This will change as India sees strongly accelerating household income

and a more favourable demographic profile over the next two
decades," Erhbeck said.

Household disposable income is seen rising by 5.3 per cent annually,

much more than the 3.6 per cent annual growth over the past two
decades.

"With increased GDP growth there will be more income for consumers
to put into life insurance," said Erhbeck.

"Our research suggests the life insurance industry could witness a rise
in insurance sector premiums to between 5.1 and 6.2 per cent of GDP
in 2012 from 4.1 per cent."

Demand for pension cover is also seen rising, with 113 million Indians
expected to be over 60 by 2016, a figure seen swelling to 179 million
by 2026.

"There is an untapped opportunity" in pensions where life insurance

players have no meaningful presence, said the report.

Just 10 to 11 per cent of India's working population is covered by

formal old-age social security schemes.
There are currently close to 30 public and private firms in India's
insurance market with state-owned Life Insurance Corp of India (LIC)
still holding a stranglehold of over 70 per cent.

But private players have moved aggressively, chasing for business

after being allowed to compete with LIC in 2000. And overseas insurers
have raced into the market despite rules limiting foreign direct
investment in domestic insurers to 26 per cent.

Last week, global bank HSBC Holdings signed a deal for an insurance
venture with two state-run Indian banks, gaining access to over 40
million customers.

HSBC will hold a 26-percent stake -- the maximum allowed to overseas

insurance partners -- while India's Bangalore-based Canara Bank will
take 51 percent. The rest will be held by Oriental Bank of Commerce.

Oriental Bank chairman Alok Mishra was upbeat about prospects,

calling life insurance penetration rates in India "dismally low."

The Congress government has been seeking to raise the FDI cap to 49
percent as part of economic reform but its communist allies fiercely
oppose such a step.

Brief history of insurance sector

The insurance sector in India has completed all the facets of competition –from being an
open competitive market to being nationalized and then getting back to the form of a
liberalized market once again. The history of the insurance sector in India reveals that it
has witnessed complete dynamism for the past two centuries approximately.

With the establishment of the Oriental Life Insurance Company in Kolkata, the business
of Indian life insurance started in the year 1818.

Important milestones in the Indian life insurance business

• 1912: The Indian Life Assurance Companies Act came into force for regulating
the life insurance business.

• 1928: The Indian Insurance Companies Act was enacted for enabling the
government to collect statistical information on both life and non-life insurance
businesses.

• 1938: The earlier legislation consolidated the Insurance Act with the aim of
safeguarding the interests of the insuring public.
 • 1956: 245 Indian and foreign insurers and provident societies were taken over by
the central government and they got nationalized. LIC was formed by an Act of
Parliament, viz. LIC Act, 1956. It started off with a capital of Rs. 5 crore and that
too from the Government of India.

The history of general insurance business in India can be traced back to Triton Insurance
Company Ltd. (the first general insurance company) which was formed in the year 1850
in Kolkata by the British.

Important milestones in the Indian general insurance business

• 1907: The Indian Mercantile Insurance Ltd. was set up which was the first
company of its type to transact all general insurance business.
• 1957: General Insurance Council, an arm of the Insurance Association of India,
framed a code of conduct for guaranteeing fair conduct and sound business
patterns.
• 1968: The Insurance Act improved for regulating investments and set minimal
solvency levels and the Tariff Advisory Committee was set up.
• 1972: The General Insurance Business (Nationalization) Act, 1972 nationalized
the general insurance business in India. It was with effect from 1st January 1973.

107 insurers integrated and grouped into four companies viz. the National Insurance
Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company
Ltd. and the United India Insurance Company Ltd. GIC was incorporated as a company.

Insurance companies in India

IRDA has till now provided registration to 12 private life insurance companies and 9
general insurance companies. If the existing public sector insurance companies are
considered then there are presently 13 insurance companies in the life side and 13
companies functioning in general insurance business. General Insurance Corporation has
been sanctioned as the "Indian reinsurer" for underwriting only reinsurance business.

List of Insurance companies in India

LIFE INSURERS Websites

Public Sector
Life Insurance Corporation of India www.licindia.com
Private Sector
Allianz Bajaj Life Insurance Company Limited www.allianzbajaj.co.in
Birla Sun-Life Insurance Company Limited www.birlasunlife.com
HDFC Standard Life Insurance Co. Limited www.hdfcinsurance.com
ICICI Prudential Life Insurance Co. Limited www.iciciprulife.com
ING Vysya Life Insurance Company Limited www.ingvysayalife.com
Max New York Life Insurance Co. Limited www.maxnewyorklife.com
MetLife Insurance Company Limited www.metlife.com
Om Kotak Mahindra Life Insurance Co. Ltd. www.omkotakmahnidra.com
SBI Life Insurance Company Limited www.sbilife.co.in
TATA AIG Life Insurance Company Limited www.tata-aig.com
AMP Sanmar Assurance Company Limited www.ampsanmar.com
Dabur CGU Life Insurance Co. Pvt. Limited www.avivaindia.com
GENERAL INSURERS
Public Sector
National Insurance Company Limited www.nationalinsuranceindia.com
New India Assurance Company Limited www.niacl.com
Oriental Insurance Company Limited www.orientalinsurance.nic.in
United India Insurance Company Limited www.uiic.co.in
Private Sector
Bajaj Allianz General Insurance Co. Limited www.bajajallianz.co.in
ICICI Lombard General Insurance Co. Ltd. www.icicilombard.com
IFFCO-Tokio General Insurance Co. Ltd. www.itgi.co.in
Reliance General Insurance Co. Limited www.ril.com
Royal Sundaram Alliance Insurance Co. Ltd. www.royalsun.com
TATA AIG General Insurance Co. Limited www.tata-aig.com
Cholamandalam General Insurance Co. Ltd. www.cholainsurance.com
Export Credit Guarantee Corporation www.ecgcindia.com
HDFC Chubb General Insurance Co. Ltd.
REINSURER
General Insurance Corporation of India www.gicindia.com
The Indian Insurance Industry
India insurance is a flourishing industry, with several
national and international players competing and growing at rapid
rates. Thanks to reforms and the easing of policy regulations, the
Indian insurance sector been allowed to flourish, and as Indians
become more familiar with different insurance products, this growth
can only increase, with the period from 2010 - 2015 projected to be the
'Golden Age' for the Indian insurance industy.

India Insurance Policies at a Glance

Indian insurance companies offer a comprehensive range of insurance
plans, a range that is growing as the economy matures and the wealth
of the middle classes increases. The most common types include: term
life policies, endowment policies, joint life policies, whole life policies,
loan cover term assurance policies, unit-linked insurance plans, group
insurance policies, pension plans, and annuities. General insurance
plans are also available to cover motor insurance, home insurance,
travel insurance and health insurance.
Due to the growing demand for insurance, more and more
insurance companies are now emerging in the Indian insurance sector.
With the opening up of the economy, several international leaders in
the insurance sector are trying to venture into the India insurance
industry.

India Insurance: History

The history of the Indian insurance sector dates back to 1818, when
the Oriental Life Insurance Company was formed in Kolkata. A new era
began in the India insurance sector, with the passing of the Life
Insurance Act of 1912.
The Indian Insurance Companies Act was passed in 1928. This act
empowered the government of India to gather necessary information
about the life insurance and non-life insurance organizations operating
in the Indian financial markets.
The Triton Insurance Company Ltd formed in 1850 and was the first of
its kind in the general insurance sector in India. Established in 1907,
Indian Mercantile Insurance Limited was the first company to handle all
forms of India insurance.
Indian Insurance: Sector Reform
The formation of the Malhotra Committee in 1993 initiated reforms in
the Indian insurance sector. The aim of the Malhotra Committee was to
assess the functionality of the Indian insurance sector. This committee
was also in charge of recommending the future path of insurance in
India.
The Malhotra Committee attempted to improve various aspects of the
insurance sector, making them more appropriate and effective for the
Indian market.
The recommendations of the committee put stress on offering
operational autonomy to the insurance service providers and also
suggested forming an independent regulatory body.
The Insurance Regulatory and Development Authority Act of 1999
brought about several crucial policy changes in the insurance sector of
India. It led to the formation of the Insurance Regulatory and
Development Authority (IRDA) in 2000.
The goals of the IRDA are to safeguard the interests of insurance
policyholders, as well as to initiate different policy measures to help
sustain growth in the Indian insurance sector.
The Authority has notified 27 Regulations on various issues which
include Registration of Insurers, Regulation on insurance agents,
Solvency Margin, Re-insurance, Obligation of Insurers to Rural and
Social sector, Investment and Accounting Procedure, Protection of
policy holders' interest etc. Applications were invited by the Authority
with effect from 15th August, 2000 for issue of the Certificate of
Registration to both life and non-life insurers. The Authority has its
Head Quarter at Hyderabad. Detailed information on IRDA is available
at their web-site www.irdaindia.org

Protection of the interest of policy

holders:
IRDA has the responsibility of protecting the interest of insurance
policyholders. Towards achieving this objective, the Authority has
taken the following steps:

• IRDA has notified Protection of Policyholders Interest Regulations 2001 to

provide for: policy proposal documents in easily understandable language; claims
procedure in both life and non-life; setting up of grievance redressal machinery;
speedy settlement of claims; and policyholders' servicing. The Regulation also
provides for payment of interest by insurers for the delay in settlement of claim.
• The insurers are required to maintain solvency margins so that they are in a
position to meet their obligations towards policyholders with regard to payment of
claims.
• It is obligatory on the part of the insurance companies to disclose clearly the
benefits, terms and conditions under the policy. The advertisements issued by the
insurers should not mislead the insuring public.
• All insurers are required to set up proper grievance redress machinery in their
head office and at their other offices.
• The Authority takes up with the insurers any complaint received from the
policyholders in connection with services provided by them under the insurance
contract.