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About Insurance Industry. Insurance is a contract between two parties whereby one party called insurance company undertakes in exchange for a fixed amount called premiums, to pay the other party called insured a fixed sum of money on the occurrence of a certain event. Insurance is a protection against fiscal loss originating on the occurrence of an unexpected event. Insurance companies collect premiums to supply for this protection. A loss is paid out of the premiums collected from the sing public and the Insurance Companies act as legal guardians to the sum collected. For Example, in a Life Policy, by paying a premium to the Insurer, the household of the insured individual receives a fixed compensation on the decease of the insured. Similarly, in auto insurance, in the event of the auto meeting with an accident, the insured receives the compensation to the extent of harm. It is a system by which the losingss suffered by a few are spread over many, exposed to similar hazards.

Logic of insurance

It is a system by which the losingss suffered by a few are spread over many, exposed to similar hazards. Insurance is a protection against fiscal loss originating on the occurrence of an unexpected event. Insurance companies collect premiums to supply for this protection. A loss is paid out of the sum premiums collected from the sing public and the Insurance Companies act as legal guardians to the collected.

Need of insurance

Insurance is desired to safeguard oneself and one ‘s household against possible losingss on history of hazards and hazards. It provides fiscal compensation for the losingss suffered due to the occurrence of any unanticipated events. By taking life insurance a individual can hold peace of head and need non worry about the fiscal effects in instance of any ill-timed decease. Certain Insurance contracts are besides made compulsory by statute law. For illustration, Motor Vehicles Act 1988, stipulates that a individual driving a vehicle in a public topographic point should keep a valid insurance policy covering “ Act ” hazards. Another illustration of compulsory insurance pertains the Environmental Protection Act, wherein a individual utilizing or to transporting risky substances ( as defined in the Act ) must keep a valid public liability ( Act ) policy.

Insurance in India

Insurance is a federal topic in India and has a history dating back to 1818. Life and general insurance in India is still a nascent sector with immense potency for assorted planetary participants with the life insurance premiums accounting to 2.5 % of the state ‘s GDP while general insurance premiums to 0.65 % of India ‘s GDP. The Insurance sector in India has gone through a figure of stages and alterations, peculiarly in the recent old ages when the Govt. of India in 1999 opened up the insurance sector by leting private companies to beg insurance and besides leting FDI up to 26 % . Ever since, the Indian insurance sector is considered as a dining market with every other planetary insurance company desiring to hold a king of beasts ‘s portion. Presently, the largest life insurance company in India is still owned by the authorities.

History of Insurance in India

Insurance in India has its history dating back boulder clay 1818, when Oriental Life Insurance Company was started by Europeans in Kolkata to provide to the demands of European community. Pre-independent epoch in India saw favoritism among the life of aliens and Indians with higher premiums being charged for the latter. It was merely in the twelvemonth 1870, Bombay Mutual Life Assurance Society, the first Indian insurance company covered Indian lives at normal rates.

At the morning of the 20th century, insurance companies started mushrooming up. In the twelvemonth 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed to modulate the insurance concern. The Life Insurance Companies Act, 1912 made it necessary that the premium rate tabular arraies and periodical ratings of companies should be certified by an actuary. However, the disparage still existed as favoritism between Indian and foreign companies. The oldest bing insurance company in India is National Insurance Company Ltd, which was founded in 1906 and is making concern even today. The Insurance industry earlier consisted of merely two province insurance companies: Life Insurers i.e. Life Insurance Corporation of India ( LIC ) and General Insurers i.e. General Insurance Corporation of India ( GIC ) . GIC had four subordinate companies.

With consequence from December 2000, these subordinates have been de-linked from parent company and made as independent insurance companies: Oriental Insurance Company Limited, New India Assurance Company Limited, National Insurance Company Limited and United India Insurance Company Limited.

Life Insurance Corporation Act, 1956

Even though the first statute law was enacted in 1938, it was merely in 19 January 1956, that life insurance in India was wholly nationalized, through a Government regulation ; the Life Insurance Corporation Act, 1956 effectual from 1.9.1956 was enacted in the same twelvemonth to, inter-alia, form LIFE INSURANCE CORPORATION after nationalisation of the 245 companies into one entity. There were 245 insurance companies of both Indian and foreign beginning in 1956. Nationalization was accomplished by the govt. acquisition of the direction of the companies. The Life Insurance Corporation of India was created on 1 September, 1956, as a consequence and has grown to be the largest insurance company in India as of 2006.

Different Insurance Companies

Insurance is an approaching sector, in India the twelvemonth 2000 was a landmark twelvemonth for life insurance industry, in this twelvemonth the life insurance industry was liberalized after more than 50 old ages. Insurance sector was one time a monopoly, with LIC as the lone company, a public sector endeavor. But nowadays the market opened up and there are many private participants viing in the market. There are 15 private life insurance companies has entered the industry. After the entry of these private participants, the market portion of LIC has been well reduced. In the last five old ages the private participants is able to spread out the market ( turning at 30 % per annum ) and besides has improved their market portion to 18 % .For the past five old ages private participants have launched many inventions in the industry in footings of merchandises, market channels and advertizement of merchandises, agent preparation and client services etc.

The assorted life insurance companies entered India: –

1. Bajaj Allianz Life Insurance Company Limited

2. Birla Sun Life Insurance Co. Ltd

3. HDFC Standard life Insurance Co. Ltd

4. ICICI Prudential Life Insurance Co. Ltd.

5. ING Vysya Life Insurance Company Ltd.

6. Max New York Life Insurance Co. Ltd

7. Met Life India Insurance Company Ltd.

8. Kotak Mahindra Old Mutual Life Insurance Limited

9. SBI Life Insurance Co. Ltd

10. Tata AIG Life Insurance Company Limited

11. Reliance Life Insurance Company Limited.

12. Aviva Life Insurance Co. India Pvt. Ltd.

13. Sahara India Life Insurance Co, Ltd.

India: The Following Insurance Giant

Market Performance & A ; Forecast: In 2000, Indian insurance market size was $ 21.71 billion. Between 2000 and 2007, it had an addition of 120 % and reached $ 47.89 billion. Between 2000 and 2007, entire premiums maintained an mean growing rate of 11.96 % and the CAGR growing during this clip frame has been 11.96 % . It was one of the most consistent growing patterns we have noticed in any other emerging economic systems in Asiatic every bit good as Global markets.

Comparative analysis of life insurance companies in India on the footing of merchandises

Introduction TO THE COMPANIES: –

Birla Sun Life Insurance

Birla sun life Insurance Company limited is a joint venture between the Aditya Birla group, one of the largest concern houses in India and Sun Life Financial Inc. , as prima international fiscal services organisation. The local cognition of the Aditya Birla group combined with the expertness of Sun Life Financial Inc. , offer a formidable protection for your hereafter. The Aditya Birla group has a turnover of Rs. 1,33,875 corers ( as on 31st March 2008 ) . It has over 100,000 employees across all its units worldwide. It is led by its president – Mr. Kumar Mangalam Birla. Some of its cardinal companies are Hindalco, Grasim and Aditya Birla Nuvo.

Sun Life Financial Inc. and its spouses, have operations in cardinal markets worldwide. These include Canada, U.S, U.K, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. Sun Life Financial Inc. has assets under direction of over us $ 404.7 BILLION ( as on 31st March, 2008 ) . It is a taking performing artist in the life insurance market in Canada.

Birla sun life insurance ( BSLI ) has been runing for 7 old ages. It has contributed significantly to the growing and development of the life insurance industry in India. It pioneered the launch of unit linked life insurance programs amongst the private participant in India. It pioneered the launch of united linked life insurance programs amongst the private participants in India. It was the first participant in industry to sell its policies through the Bancassurance path and through the cyberspace. It was the first private sector participant to present a pure term program in the Indian market. BSLI has covered more than 2 million lives since it commenced operations.

Life Insurance Corporation Of India

Mission

“ Explore and heighten the quality of life of people through fiscal security by supplying merchandises and services of aspired properties with competitory returns, and by rendering resources for economic development. ”

Vision

“ A trans-nationally competitory fiscal pudding stone of significance to societies and Pride of India

Every twenty-four hours we wake up to the fact that more than 220 million lives are portion of our household called LIC. We are humbled by the magnitude of the duty we carry and realize that the lives that are associated with us are really valuable so.

Although this journey started five decennaries ago, we are still witting of the fact that, while insurance may be a concern for us, being portion of 1000000s of lives every twenty-four hours for the past 52 old ages has been a procedure called TRUST.

Tata AIG life-A New Look at Life

Tata AIG Life Insurance Company Limited ( Tata AIG Life ) is a joint venture company, formed by the Tata Group and American International Group, Inc. The Tata Group holds 74 per centum interest in the insurance venture with AIG keeping the balance 26 per centum. Tata AIG Life provides insurance solutions to persons and corporate. Tata AIG Life Insurance Company was licensed T operates in India on February 12, 2001 and started operations on April 1, 2001.

Tata AIG Life offers a wide array of life insurance coverage to both persons and groups, supplying assorted types of additions and options on basic life merchandises to give consumers flexibleness and pick.

Comparative Analysis: –

BIRLA SUN LIFE INSURANCE vs. LIFE INSURANCE CORPORATION OF INDIA

Birla sun life insurance

Name of the strategy

Saral jeevan program

Aim

BSLI saral jeevan program comes with a corsage of benefits, which fulfill demands of life screen and investing at an low-cost rate.

Type of policy

Unit of measurement linked endowment program

Tax returns and added benefits

An easy and simple program

Earn efficient returns

Match your hazard profile at every phase

Death benefits with a asset, that is, amount assured plus the fund value.

Unmatched liquidness

At the terminal of policy term you get fund value.

The policy can be surrendered at any clip during the term of office of the policy topic to give up charge. The charge will be zero after 4thpolicy twelvemonth.

Payment of premium

Pay the premiums on an one-year, semi-annual, quarterly or monthly manner.

Eligibility

18 to 55 old ages of age

Term of adulthood

There is an option of three policy footings 10 old ages, 15 old ages and 20 old ages.

Tax benefit

Avail of revenue enhancement benefit under subdivision 80C and subdivision 10 ( 10 D ) of the Income Tax Act, 1961.

Life Insurance Corporation Of India

Name of the strategy

Jeevan saral

Aim

jeevan saral program comes with a corsage of benefits, which fulfill demands of life screen.

Type Of Policy

Traditional program

Tax returns and added benefits

Maturity benefit is entire premium + fillip ( approx Rs 50/thousand )

Death benefit is 250 times of monthly premium

The policy can be surrendered at any clip during the term of office of the policy topic to give up charge. The charge will be zero after 4thpolicy twelvemonth.

Payment of premium

Pay the premiums on an one-year, semi-annual, quarterly or monthly manner

Eligibility

18 to 70 old ages of age

Term of adulthood

There is an option of three policy footings 10 old ages, 15 old ages and 20 old ages.

Tax benefit

Avail of revenue enhancement benefit under subdivision 80C and subdivision 10 ( 10 D ) of the Income Tax Act, 1961.

COMPARATIVE ANALYSIS OF BIRLA SUN LIFE INSURANCE AND TATA AIG LIFE

Birla sun life insurance

Name of the strategy

Gold-plus II program

Aim

A simple, hassle free program it helps you strike the right proportion between protection and nest eggs.

Type of policy

This is a non-participating unit linked nest eggs program.

Tax returns and added benefits

Match your hazard profile at every phase.

Unlimited partial backdowns after 3 policy old ages, free of cost.

The policy can be surrendered at any clip during the term of office of the policy topic to give up charge, the charge will be zero after 4thpolicy twelvemonth.

At the terminal of the policy term you get the fund value.

On decease the campaigner will acquire the greater of ( a ) the fund value or ( B ) the amount assured reduced for partial backdowns.

Minimum sum assured:5*annual premium

Extra coverage

Nothing

Payment of premiums

Premium is paid for a period of 3 old ages with the flexibleness to cut down premium ( capable to lower limit of Rs.10000 ) from the 2nd policy twelvemonth onwards without decrease in amount assured.

Eligibility

18 to 70 old ages of age.

Term of adulthood

The policy term is 8 old ages.

Tax benefits

Avail of revenue enhancement benefit under subdivision 80C and subdivision 10 ( 10 D ) of the Income Tax Act, 1961.

Tata AIG life

Name of the strategy

Invest assure vertex

Aim

The program provides a platform guaranting the upside potency of the equity markets while safeguarding the investor ‘s involvement by offering a guaranteed adulthood unit monetary value ( GMUP ) .

Type of policy

This is a unit linked life insurance program.

Tax returns and added benefits

Can do partial backdown merely after completion of 3 old ages. A upper limit of 4 partial backdowns is allowed in one policy twelvemonth. No charges are applicable.

Minimum amount assured: 5 times the annualized premium.

Maximum amount assured: 60 times the annualized premium.

The policy can be surrendered any clip after 3 policy old ages by a written notice, capable to tax write-off of the applicable resignation charges.

On decease the campaigner will acquire higher of: the amount assured or the fund value.

On adulthood the campaigner will acquire higher of the fund value or the guaranteed adulthood unit monetary value multiplied by the figure of units.

Extra coverage

Tata AIG life inadvertent decease benefit rider.

Tata AIG life inadvertent decease and taking apart rider

Tata AIG life critical unwellness rider

Payment of premium

Premium is paid for a period of 3 old ages with the option to cut down, capable to minimal bound, which is higher of 75 % of the first twelvemonth regular premium paid or Rs.90000.the amount assured remains same even if decrease in premium is affected.

Eligibility

18 to 70 old ages of age.

Term of adulthood

The policy term is 10 old ages.

Tax benefit

Avail of revenue enhancement benefit under subdivision 80C and subdivision 10 ( 10 D ) of the Income Tax Act, 1961.

Decision

Insurance is one sector that witnessed uninterrupted growing owing to the reforms in 2000. The insurance sector is likely to achieve a size of Rs. 2,00,000 crore ( $ 51.2 billion ) in 2009-10. In life insurance, the concern grew by 23.3 % to Rs. 93,000 crore in 2007-08 ( Beginning: Assocham ) . The sector entirely employs close to 30 hundred thousand people ( including agents and direct employees ) .

Through comparative analysis we are able to analyze the different merchandises given by insurance companies to the clients so that they took more benfits of it.

A well-functioning insurance market plays an of import function in economic development and fiscal stableness of developing economic systems such as India ‘s. First, it inculcates and encourages the wont of salvaging. Second, it provides a safety cyberspace to rural and urban endeavor and productive persons.

The life insurance market in India is on a growing way. In malice of this, the state lags far behind the others in consciousness about life insurance. The challenge is to distribute consciousness about life insurance and it true benefits. The industry has to convert people to park their difficult earned money in long-run insurance and non merely look at it as a revenue enhancement salvaging instrument.

Suggestions and recommendation: –

Peoples are non cognizant of the life insurance. Most of them know merely one company which provides life insurance i.e. LIC. So awareness run should be run so that people are cognizant of different life insurance companies in India.

Peoples should be educated about the different types of merchandises or programs offered by the life insurance companies. Most of them do n’t cognize much of the different types of program or merchandises.

It was felt that most of the people took life for revenue enhancement nest eggs or merely to cover up their life, non as an investing avenue. Life Insurance companies need to publicize in such a mode that people start puting in life insurance like the manner they invest in the stock market

Insurance companies should seek to follow different schemes to market their merchandises or program. Companies should non chiefly concentrate on the agents for their concern.

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