Challenges in the Field of Insurance Sector

7/29/2019 Challenges in the Field of Insurance Sector

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PRESENTEDBY:-

Name Roll no.

Archana Gupta 16

Manju Gupta 17


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CONTENTS

What is Insurance?

Evolution

Types of InsuranceGlobal Players Indian Mergers

Market Share

Current ScenarioChallenges

Conclusion


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WHATISINSURANCE? Insurance is a form of contract or agreement under one party agrees in

return of a consideration to pay an agreed amount of money to anotherparty to make goods for a loss, damage, injury to something of value

Insurance, in law and economics, is a form of risk management primarily

used to hedge against the risk of a contingent loss.

Insurance is defined as the equitable transfer of the risk of a potential

loss, from one entity to another, in exchange for a premium.

Insurance rate is a factor used to determine the amount, called thepremium, to be charged for a certain amount of insurance coverage

Risk management, the practice of appraising and controlling risk, has

evolved as a discrete field of study and practice


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EVOLUTION INDIA

1818 - Oriental Life Insurance Company 1stInsurance

Company.

1870 - Bombay Mutual Life Assurance Society 1st Life

Insurance Company.

1912 - The Indian Life Assurance Companies Act enacted the 1st

Law to Regulate the Life Insurance Business.

1928 - The Indian Insurance Companies Act enacted to enable

the government to collect statistical information about both

life & non-life insurance businesses.


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CONTINUED

1938: Earlier legislation consolidated & amended the InsuranceAct with the objective ofprotecting the interests of theinsuring public.

1956: 245 Indian & foreign insurers & provident societiesare taken over by the central government & nationalized.

LIC formed by an Act of Parliament, viz. LIC Act, 1956, with acapital contribution of Rs. 5 crore from the Government of

India.

The first General Insurance Company established in the year1850 in Calcutta by the British.


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TYPESOF INSURANCE

LIFE INSURANCE NON- LIFE INSURANCE

Property (eg. Builders risk insurance)

Aviation(eg. Private aircraft insurance)

Marine (eg. Marine hull insurance)

Miscellaneous (eg. Purchase insurance)


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American International Group, Inc.

(AIG)

Prudential PLC
http://images.google.co.in/imgres?imgurl=http://www.business-insurance-cardiff.co.uk/assets/170_0269_1_w.jpg&imgrefurl=http://donklephant.com/2007/05/07/worlds-oldest-insurer-states-global-warming-is-real/&h=779&w=980&sz=197&hl=en&start=14&tbnid=qQ52pdsmG-0cYM:&tbnh=118&tbnw=149&prev=/images?q=global+insurance+company&gbv=2&svnum=10&hl=enhttp://images.google.co.in/imgres?imgurl=http://www.business-insurance-cardiff.co.uk/assets/170_0269_1_w.jpg&imgrefurl=http://donklephant.com/2007/05/07/worlds-oldest-insurer-states-global-warming-is-real/&h=779&w=980&sz=197&hl=en&start=14&tbnid=qQ52pdsmG-0cYM:&tbnh=118&tbnw=149&prev=/images?q=global+insurance+company&gbv=2&svnum=10&hl=enhttp://images.google.co.in/imgres?imgurl=http://www.business-insurance-cardiff.co.uk/assets/170_0269_1_w.jpg&imgrefurl=http://donklephant.com/2007/05/07/worlds-oldest-insurer-states-global-warming-is-real/&h=779&w=980&sz=197&hl=en&start=14&tbnid=qQ52pdsmG-0cYM:&tbnh=118&tbnw=149&prev=/images?q=global+insurance+company&gbv=2&svnum=10&hl=en


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MAJOR PLAYERS


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MARKET SHARE


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CURRENT SCENARIO

Growing at the rate of 15-20% annually

75% population has no insurance

Adds 7% to countrys GDP

LIC market share come down to 75% and private

insurers increased over 24%

Annuity or pension product have over 33% of

market


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REASONSFOR GROWTH Provides value for money

Flexibility

Transparency.

Good products to offer.

Innovative Offers,Customer-Centric Products,

Increasing Awareness Levels of Consumers,

Enhanced Service Standards,

Reaching out to the customer through a numberof distribution and communications channels,

Use of customer feedback in improvement of offers.


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RURAL MARKETANDITSCHALLENGESFORLIFEINSURANCEINDUSTRY

72% of Indian population belongs to rural area. Rural literacy rate have swollen to 59% from 37%.

53% of the total FMCG consummation is of rural market.

59% of the total durable goods get consumed in rural

market alone. Products like TV, DVD players and mobile phones have

registered 200% growth.

If the above mentioned figure arent seems impressiveconsider this, Rural households have more than 42million saving bank accounts then 27 million of urban.


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CHALLENGESOFREGULATOR

Development of insurance sector.

Confidence of general public.

Insurance policy regulation (establishing market

discipline). Granting of license to new Insurers.

Foreign direct Investment (FDI).

Solvency Regulations

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New Comer Poses threat-With more companies coming up everyday with the

growing demand of the industry the market very competitive. Until and unless theexisting companies makes a mark and create their very own brand name it wouldbe quite tough to sustain their position in the market.

There is also probability of big companies taking over the new emergingcompanies.

Supplier Power: The people providing the capital dont act as big terror asopportunity always lies in the big hands and they can any day attract good insurerfrom small companies to their own company.

Buyer Power: Individual never stands a chance in front of big corporate sectorsas they dominate the insurance industries with high potential of negotiationpower.

Presence of substitutes: the insurance industry is full of replacement option andlarge insurance companies offer the same service as of others be it in any sectorof home, commercial ,auto, health or life.

CHALLENGESININSURANCE SECTOR


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CONCLUSION

Insurance can be summed up as

Praying for the best

.


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Challenges in the Field of Insurance Sector