Services of Insurance Sector

8/2/2019 Services of Insurance Sector

1/20

erv ces nsuranceSector.


2/20

Introduction The Insurance sector in India governed by Insurance Act, 1938, the Life

Insurance Corporation Act, 1956 and General Insurance Business

(Nationalisation) Act, 1972, Insurance Regulatory and DevelopmentAuthority (IRDA) Act, 1999 and other related Acts.

Two types of insurances are:

General Insurance

Life Insurance.

Basic functions of Insurance

1.Primary Functions

2.Secondary Functions

3.Other Functions

Primary functions of insurance

Providing protection The elementary purpose of insurance is to allowsecurity against future risk, accidents and uncertainty. Insurance cannotarrest the risk from taking place, but can for sure allow for the lossesarising with the risk. Insurance is in reality a protective cover againsteconomic loss, by apportioning the risk with others.


3/20

Collective risk bearing Insurance is an instrument to share thefinancial loss. It is a medium through which few losses are dividedamong larger number of people. All the insured add the premiumstowards a fund and out of which the persons facing a specific risk ispaid.

Evaluating risk

Insurance fixes the likely volume of risk by assessingdiverse factors that give rise to risk. Risk is the basis for ascertainingthe premium rate as well.

Provide Certainty Insurance is a device, which assists in changinguncertainty to certainty.

Secondary functions of insurance

Preventing losses Insurance warns individuals and businessmen toembrace appropriate device to prevent unfortunate aftermaths of risk byobserving safety instructions; installation of automatic sparkler or alarmsystems, etc.

Covering larger risks with small capital Insurance assuages thebusinessmen from security investments. This is done by paying smallamount of premium against larger risks and dubiety.

Helps in the development of larger industries Insurance provides an

opportunity to develop to those larger industries which have more risks intheir setting up.


4/20

Other functions of insurance

Is a savings and investment tool Insurance is the

best savings and investment option, restrictingunnecessary expenses by the insured. Also to takethe benefit of income tax exemptions, people take upinsurance as a good investment option.

Medium of earning foreign exchange Being aninternational business, any country can earn foreignexchange by way of issue of marine insurancepolicies and a different other ways.

Risk Free trade Insurance boosts exportsinsurance, making foreign trade risk free with the helpof different types of policies under marine insurancecover.


5/20

Business Environment

India with about 200 million middle class household shows ahuge untapped potential for players in the insurance industry.Saturation of markets in many developed economies has madethe Indian market even more attractive for global insurance

majors. The insurance sector in India has come to a position ofvery high potential and competitiveness in the market. Indians,have always seen life insurance as a tax saving device, arenow suddenly turning to the private sector that are providingthem new products and variety for their choice.


6/20

The insurance agents still remain the main source through whichinsurance products are sold. The concept is very well established in thecountry like India but still the increasing use of other sources isimperative. At present the distribution channels that are available in the

market are listed below. Direct selling

Corporate agents

Group selling

Brokers and cooperative societies

Banc assurance

The rural consumer is now exhibiting an increasing propensity forinsurance products. A research conducted exhibited that the ruralconsumers are willing to dole out anything between Rs 3,500 and Rs2,900 as premium each year. In the insurance the awareness level for

life insurance is the highest in rural India, but the consumers are alsoaware about motor, accidents and cattle insurance. In a study conductedby MART the results showed that nearly one third said that they hadpurchased some kind of insurance with the maximum penetrationskewed in favor of life insurance. The study also pointed out the privatecompanies have huge task to play in creating awareness and credibility

among the rural populace. The perceived benefits of buying a life policyrange from security of income bulk return in future, daughter's marriage,


7/20

Competitive Scenario Customers have tremendous choice from a large variety of products

from pure term (risk) insurance to unit-linked investment products.Customers are offered unbundled products with a variety of benefits as

riders from which they can choose. More customers are buying productsand services based on their true needs and not just traditional moneyback policies, which is not considered very appropriate for long-termprotection and savings. There is lots of saving and investment plans inthe market. However, there are still some key new products yet to be

introduced - e.g. health products.


8/20

1. Bajaj Allianz - 77.26 crore

2. ING Vyasa - 2.58 crore

3. Reliance Life - 80.26 crore

4. SBI life - 248.54 crore

5. Tata AIG - 14.02 crore 6. HDFC standard - 136.72 crore

7. ICICI prudential - 251.97 crore

8. Birla Sun life - 9.73 crore

9. Aviva - 21.57 crore

10. Max New York - 25.15 crore

11. Met Life - 33.86 crore

12. Shriram Life - 44.90 crore

13. IDBI federal - 21.11 crore

14. Star Union Dai-chi - 44.98 crore

15. LIC - 1774.43 crore

Data released by insurance sector regulator IRDA shows that the first yearpremium of the

life insurers for the period of December, 2010 is again predominantly in favour ofLIC.

Herein mentioned are some statistics given by IRDA regarding the individual single

premium of several life insurers in December 2010


9/20

Challenges:

Competition

Rural Insurance Liquidity Issues

Geographic catastrophic Issues

Lack of HealthCare Awareness High Dependence On Auto Sector.


10/20

LIC Life Insurance Corporation (LIC) of India is

the only public sector Life Insurance Companyin India. The company was formed inSeptember 1956.Formed with more than 200 insurance

companies and provident societies. Since thenthey have been among the most trusted brandsin India providing insurance solutions to eventhe remotest corners of India through theirhuge network of agents and distributors. It was

only in 2001 that the private sector was allowedinto the insurance sector in India. LIC hasmaintained its dominant leadership status evenwith the presence of 22 other life insurance

companies.


11/20

Products: Life Insurance Corporation of India provides number of products to its

costumers.LIC differentiated their policies into five different types whichare:

1. Insurance Plans

2. Pension Plans

3. Unit Plans

4. Special Plans

5. Group Scheme


12/20

Pricing:

Pricing of LIC is not much concerned, asit carries the brand name & is the onlyPublic Sector Organization In the sector.

It depends Upon the type of Policy

Required by the client or optionsavailable to the Clients. Major pricing are on the basis of Rural &

Urban sectors, Or Commercial & Self

Used. Comparatively to other insurance

providers LIC has minimum costing &charges as per the products offered in

comparison to other players.


13/20

Place

Rural Areas

Commercial Scale.

Urban Areas

Co-operative sector.


14/20

Promotion

Government support for FinancialInclusion in Rural Areas.

Special Schemes for agricultural

Purpose Preference to Healthcare/ Life

Insurance.

Tie

ups/ Collaboration


15/20

People:

LIC has training programs for theiragents on relevance of how to dealwith clients, Products Knowledge is

also the priority to be delivered. LIC has attached training programs

with every regional offices so as to beupdated in their services & offerings.

Regular meets of the agents & clientsare conducted in order to solvevarious issues related to business.


16/20

Physical Evidence:

Policy Bond

Agreement/ Documents/Photos

Money Receipt

Claim Check


17/20

Demand & CapacityManagement: Demand is high But conversion is low.

Awareness about the Insurance &their benefits are being explained to

the customers through severalchannels of promotion


18/20

Service RecoveryMechanism: Proper Documentation to avoid

Frauds.

Clearance & Settlement of claim In

lesser time. High Documentation which is not

available with rural customers so

supportive documents of their farmsor etc can be accepted.


19/20

Dimension Of Service Quality:

Tangibility: physical facility, personnelbehavior, equipments(channels)

Reliability: to deliver promised

services accurately Assurance: employees ability to gain

trust & confidence of customers

Empathy: Caring, individualized orrelation building services to thecustomers

Responsiveness: willingness to help

promptly to the needs of the


20/20

No Thanks

ONLY

CHEEERRZZZZ!!!!!!!!