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CHAPTER 5
A COMPARATIVE STUDY BETWEEN LIFE INSURANCE
CORPORATION AND GENERAL INSURANCE CORPORATION
India’s economic development strategy immediately after
Independence was based primarily on the Mahalanobis model, which
gave preference to the investment goods industries sector, with
secondary importance accorded to the services and household goods
sector (Nayar, 2001)1. For example, the Mahalanobis model placed
strong emphasis on mining and manufacturing (for the production of
capital goods) and infrastructural development (including electricity
generation and transportation). The model downplayed the role of
the factory goods sector because it was more capital intensive and
therefore would not address the problem of high unemployment in
India. Any increase in planned investments in India required a higher
level of savings than existed in the country. Because of the low
average incomes in India, the needed higher levels of savings had to
be generated mainly by restrictions on the growth of consumption
expenditures. Therefore, the Indian government implemented a
progressive tax system not only to generate the higher levels of
savings but also to restrict increases in income and wealth
inequalities.2
1 Dreze, Jean and Amartya Sen (eds.) (1990), The Poitical Economy of Hunger, Oxford, Clarendon Press. 2 Sinha, Tapen and Sinha, Dipendra. "A Comparison of Development Prospects in India, 2003, page no. 124
164
Among other things, this strategy involved canalization of
resources into their most productive uses. Investments were carried
out both by the government and the private sector, with the
government investing in strategic sectors (such as national defense)
and also those sectors in which private capital would not be
forthcoming because of lags or the size of investment required (such
as infrastructure). The private sector was required to contribute to
India’s economic growth in ways envisaged by the government
planners. Not only did the government determine where businesses
could invest in terms of location, but it also identified what
businesses could produce, what they could sell, and what prices they
could charge.
Thus the strategy of economic development in India meant (1)
direct participation of the government in economic activities such as
production and selling, and (2) regulation of private sector economic
activities through a complex system of controls. In addition, the
Indian economy was sheltered from foreign competition through use
of both the “infant industry argument” and a binding foreign
exchange constraint. Imports were limited to goods considered
essential either to the development of the economy (such as raw
materials and machines) or to the maintenance of minimal living
standards (such as crude oil and food items). It was further decided
165
that exports should play a limited role in economic development,
thereby minimizing the need to compete in the global market place.
As a result, India became a relatively closed economy, permitting
only limited economic transactions with other countries. Domestic
producers were sheltered from foreign competition not only from
abroad but also from within India itself.3
The huge savings-investments gap could not be filled by the
amount of foreign aid that was both sought and available. Further,
additional foreign investments (both direct and portfolio) were never
seriously considered as a way to close this savings-investment gap.
Higher levels of income and wealth were taxed at much higher rates
relative to lower income and wealth. Further, as Rao (2000) notes, the
marginal rate of taxation including a tax surcharge was 93.5 per cent
in early 1970s.4
Over time, India created a large number of government
institutions to meet the objective of growth with equity. The size of
the government grew substantially as it played an increasingly larger
role in the economy in such areas as investment, production,
retailing, and regulation of the private sector. For example, in the late
3 Bardhan, Pranab, 1997. “Corruption and development: a review of issues,” Journal of Economic Literature, vol. 35, September, pp. 1320-1346. 4 Bhalla, G.S., 2000. “Political economy of Indian development in the 20th century: India’s road to freedom and growth,” Presidential Address at the 83rd Annual Conference of the Indian Economic Association, University of Jammu, Jammu and Kashmir, 30 December, pp. - 263.
166
1950s and 1960s, the government established public sector enterprises
in such areas as production and distribution of electricity, petroleum
products, steel, coal, and engineering goods. In the late 1960s, it
nationalized the banking and insurance sectors. To alleviate the
shortages of food and other agricultural outputs, it provided modern
agricultural inputs (for example farm machinery, irrigation, high
yielding varieties of seeds, chemical fertilizers) to farmers at highly
subsidized prices (World Economic Indicators, 2001). In 1970, to
increase foreign exchange earnings, it designated exports as a priority
sector for active government help and established, among other
things, a duty drawback system, programmes of assistance for
market development, and 100 per cent export-oriented entities to
help producers export (Government of India, 1984). Finally, from the
late 1970s through the mid-1980s, India liberalized imports such that
those not subject to licensing as a proportion to total imports grew
from five per cent in 1980-1981 to about 30 per cent in 1987-1988
(Pursell, 1992)5. However, this partial removal of quantitative
restrictions was accompanied by a steep rise in tariff rates.
This active and dominant participation by the government in
economic activities resulted in the creation of a protected, highly-
regulated, public sector-dominated economic environment. Along
5 Balachandran, G. (1998), The Reserve Bank of India: 1951-1967, Oxford University Press, Delhi.
167
with this government domination of the economy, India soon faced
not only some major problems in its overall approach to
development, particularly in the area of industrialization (Ahluwalia,
1985)6, but also a dramatic increase in corruption in its economy.
Finally, like any other growing economy, the Indian economy faced a
number of serious sectoral imbalances, with shortages in some
sectors and surpluses in others.
India’s environment of regulated economic development led to
the formulation of policies that were concerned with both
macroeconomic and microeconomic aspects. Whereas much attention
in the literature has been devoted to the macroeconomic issues, we
focus primarily on the microeconomic aspects of Indian economic
policies. In particular, we examine how individuals guided by their
self-interests of survival and wealth accumulation will act in a
regulated environment, which in fact discourages the pursuit of those
self-interests.
It shows how price ceilings can influence a nation’s economy.
Specifically, when prices are kept artificially low, demand outstrips
supply. To alleviate the resulting shortage of products and services,
the government can either help to increase the supply or help to
decrease demand for those products and services. Considering the 6 Dreze Jean and Amartya Sen (eds.) (1995), India: Economic Development and Social Opportunity, Oxford University Press.
168
supply side options first, the government had the following choices:
(1) increase the price of the product; (2) subsidize production of
existing suppliers so they will produce and sell more; (3) encourage
new businesses to enter the line of production and selling; or (4)
permit imports to reduce or eliminate the shortage. In India, none of
these options was seen as satisfactory. First, the government certainly
did not wish to increase prices, because price ceilings appealed to a
majority of the vote bank. Second, although the government did
subsidize production in several sectors considered essential, the
resulting increased production was not sufficient to eliminate the
large shortages. Third, the government decided to restrict rather than
increase the entry of new producers under the pretext of directing
scarce resources into their efficient uses. Finally, it allowed only
limited recourse to imports, in order to protect Indian producers,
unless the shortage reached a stage of crisis. The overall result was
that inadequate amounts of products and services were supplied to
the market.
5.1 ECONOMIC REFORMS: THE MIXED RESULTS FOR
INDIA AND INSURANCE SECTOR
Due to government intervention, particularly the high levels of
government subsidies, it was clear by 1990 that India was living
beyond its means. The result was a severe payments crisis in which,
169
for the first time, the government physically transported gold
overseas to prevent defaulting on foreign commitments. To meet its
immediate balance of payments crisis, India also entered into a
structural loan adjustment agreement with the International
Monetary Fund (IMF). However, one condition of this loan required
India to undertake economic reforms to move from a centrally-
planned development strategy to one based on market-based
resource allocations. As a result, the government of India undertook a
package of economic reforms between 1991 and 1993, with the intent
of placing the market in place of government controls as the prime
mover in the economic development process.
As one might expect, macroeconomic policy played a major
role in India’s economic progress in the 1990s. For example, Acharya
(2001)7 concludes that India’s devaluation of the rupee and its
decision to increase the level of allowable foreign investment helped
it to make considerable economic progress. Joshi (2001)8 and
Karunaratne (2001)9 both say that India’s policy of selective capital
account liberalization helped it to achieve important economic
objectives (and still avoided the crises faced by the East Asian
7 Jalan, B (2000), ‘Finance and Development-Which Way Now?’ RBI Bulletin, January, 29-45. 8 Jalan, B (2001), ‘Banking and Finance in the New Millennium’, RBI Bulletin, February, 215.232. 9 Rangarajan, C. (1998): “Indian Economy – Essays on Money and Finance”, UBS Publishers’ Distributors Ltd.
170
countries). Gupta (1999)10 highlights the important role played by
India’s prudent management of exchange rate policy and its tight
monetary policy. Bhalla (2000) notes both the privatization of the
public sector enterprises and the gradual dismantling of the
government planning process in favour of market forces.
Overall, there can be no doubt that the reforms implemented
since 1991 have led to considerable economic progress in India. For
example, from 1992-1993 through 2000-2001, economic growth
averaged an unprecedented 6.3 per cent per year (Acharya, 2001)11.
Further, as Bhalla (2000)12 indicates, the rate of inflation and the fiscal
deficit have both decreased substantially. He also says that India’s
improved exchange rate management has restored the confidence of
foreign investors, which in turn has led to improved financing of the
current account deficit and higher levels of foreign exchange
reserves.13
The progress of Indian economic development from 1947 to the
present provides further evidence that individuals do respond to
incentives in their pursuit of self-survival and accumulation of
10 Rangarajan, C (2000): “Perspectives on Indian Economy – A collection of Essays”, UBS Publishers’ Distributors Ltd. 11 Reddy, Y.V. (2000), Monetary and Financial Sector Reforms in India, A Central Banker’s Perspective, UBS Publishers, New Delhi. 12 Reddy, Y.V. (November 2000): “Fiscal and Monetary Policy Interface: Recent Developments in India”, RBI Bulletin, pp.1257-72. 13 A.K. Dasgupta Memorial Lecture at the 82nd Annual Conference of the Indian Economic Association, Guru Nanak Dev University, Amritsar, December 29.
171
wealth. Further, the nature of this response depends on the economic
climate, particularly the role of the government. India’s economy
struggled as long as it was based in a system of government
regulation with little interaction with economic forces outside the
country. The economic reforms of the early 1990s set the stage for
substantial improvements in the Indian economy. As was stated
earlier, India’s economy grew at an average of 6.3 per cent from 1992-
1993 to 2000-2001 (Acharya, 2001)14. Further, its rate of inflation and
fiscal deficit both decreased substantially (Bhalla, 2000)15. Improved
exchange rate management led to improved financing of the current
account deficit and higher foreign exchange reserves. Finally, India’s
GDP and per capita income both increased substantially from 1990-
1991 to 1998-1999.
India can do more, however, to further advance its economic
development. Indeed, one of the more recent microeconomic
approaches to economic growth is the promotion of entrepreneurial
activities. Entrepreneurial efforts have been found to generate a wide
range of economic benefits, including new businesses, new jobs,
innovative products and services, and increased wealth for future
community investment (Kayne, 1999)16. The following narrative
14 Reddy, Y.V. (November 2001), Autonomy of the Central Bank: Changing Contours in India, RBI Bulletin, pp.1197-1211 15 Reddy, Y.V. (2001 b.), “Developments in Monetary Policy and Financial Markets in India”, RBI Bulletin, pp.595-615. 32 16 Reserve Bank of India (1991) Report of the Committee on the Financial System (Chairman Shri M.Narasimham)
172
explains in considerable depth how entrepreneurial activities have
succeeded in several countries and how it can now be used to further
India’s economic development.17
The GEM Conceptual Model suggests that the social-cultural-
political context within a country must foster certain “General
National Framework Conditions,” which can generate not only the
opportunities for entrepreneurship but also the capacity for
entrepreneurship – in particular, the skills and motivation necessary
to succeed. Together, the entrepreneurship opportunities, on the one
hand, and the skills and motivation, on the other, lead to business
dynamics that yield creative destruction, a process in which new
firms are created and older, less efficient firms are destroyed. The
overall result for a country is economic growth.
Given India’s economic progress in recent years, the country
may now be ready for the implementation of microeconomic policies
that will foster entrepreneurial activities. Fortunately, in addition to
the macroeconomic reforms mentioned earlier, India has taken other
steps to lay the foundation for the type of economic growth that can
be fostered only by entrepreneurial activities and appropriate
economic policies that reflect individual rights and responsibilities.
For example, in recent years India has made several important
structural changes, including the construction of telecommunications
networks and the implementation of a nationwide road-construction 17 Joshi, Vijay, 2001. “Capital controls and the national advantage: India in the 1990s and beyond,” Oxford Development Studies, vol. 29, 3, pp. 305-320.
173
programme (Solomon, 2003)18. Further, several thousand “new
economy” businesses – the types of businesses especially suited for
entrepreneurship efforts-were started in 2000 alone.19
However, more than just opportunities should lead India to
consider entrepreneurial activities as a way to economic growth. At
least one major threat, a growing population, also should motivate it
to consider entrepreneurial effort as an economic policy. Specifically,
the country’s population is expected to increase by 110 to 130 million
people over the next 10 years, with approximately 80 to 100 million of
those new citizens seeking jobs that do not currently exist (Gupta,
2001).
5.1.1 CONTRIBUTION OF INSURANCE SECTOR TO INDIAN
ECONOMY
5.1.1.1 Insurance is the only sector which garners long term
savings
Insurers are increasingly introducing innovative products to
meet the specific needs of the prospective policyholders. An evolving
insurance sector is of vital importance for economic growth. While
encouraging savings habit it also provides a safety net to both
enterprises and Individuals. 18 Reserve Bank of India, (April 1993) Report of High Level Committee on Balance of Payments, (April 1993) (Chairman Dr.C.Rangarajan). 19 Karunaratne, Neil Dias, 2001. “Revisiting capital account convertibility in the aftermath of the Currency Crisis,” Intereconomics, vol. 36, 5 September/October, pp. 264-271.
174
Insurance Companies receive, without much default, a steady
cash stream of premium or contributions to pension plans. Various
actuary studies and models enable them to predict, relatively
accurately, their expected cash outflows. Liabilities of Insurance
companies being long-term or contingent in nature, liquidity is
excellent and their investments are also long-term in nature. Since
they offer more than the return on savings in the shape of life-cover
to the investors, the rate of return guaranteed in their insurance
policies is relatively low. Consequently, the need to seek high rates of
returns on their investments is also low. The risk-return trade off is
heavily tilted in favour of risk.
As a combined result of all this, investments of insurance
companies have been largely in bonds floated by GOI, PSUs, state
governments, local bodies, corporate bodies and mortgages of long
term nature.
Generates Long term funds for infrastructure and strong
positive correlation between development of capital markets and
insurance/pension sector. For GDP to grow at 8 to 10%, qualitative
improvement in infrastructure is essential. Estimates of funds
required for development of infrastructure vary widely. An
investment of 6,19,600 crore is anticipated in the next 5 years. Tenure
of funding required for infrastructure normally ranges from 10 to 20
175
years. The insurance industry also provides crucial financial
intermediary services, transferring funds from the insured to capital
investment, critical for continued economic expansion and growth,
simultaneously generating long-term funds for infrastructure
development.20
In fact infrastructure investments are ideal for asset-liability
matching for life insurance companies given their long term liability
profile. According to preliminary estimates published by the Reserve
Bank of India, contribution of insurance funds to financial savings
was 14.2 per cent in 2005-06, viz., 2.4 per cent of the GDP at current
market prices. Development of the insurance sector is thus necessary
to support continued economic transformation. Social security and
pension reforms too benefit from a mature insurance industry.21
The insurance sector in India, which was opened up to private
participation in the year 1999, has completed over seven years in a
liberalized environment. With an average annual growth of 37 per
cent in the first year premium in the life segment and 15.72 per cent
growth in the nonlife segment, together with the largest number of
life insurance policies in force, the potential of the Indian insurance
industry is still large. Life insurance penetration in India was less
20 Kayne, Jay, 1999. State Entrepreneurship Policies and Programs (Kansas City, Kauffman Center for Entrepreneurial Leadership), page no. 165-168. 21 Krueger, Anne O., 1993. Political Economy of Policy Reform in Developing Countries (Cambridge, MIT Press), page no. 35-36.
176
than 1 per cent till 1990-91. During the 1990s, it was between 1 and 2
per cent and from 2001 it was over 2 per cent. In 2005 it had increased
to 2.53 per cent.22
5.1.1.2 Spread of financial services in rural areas and amongst
socially less privileged
IRDA Regulations provide certain minimum business to be
done - in rural areas- in the socially weaker sections. Life Insurance
offices are spread over nearly 1400 centres. Presence of representative
in every tehsil – deeper penetration in rural areas.
Table 5.1
Year No. of Policies Sum Assured
2004-05 55 lakhs 46000 crores
2005-06 65 lakhs 66000 crores
2006-07 84 lakhs 99500 crores
2007-08 109 lakhs 138000 crores
2008-09 133 lakhs 198000 crores
2009-10 158 lakhs 214000 crores Source : Economic Survey, 2010
Insurance agents numbering over 6.24 lakhs in rural areas. In
the financial year Policies sold in rural areas (2004-05) - No. of
22 Economic Survey, Government of India, 2006, page no. 105-106
177
policies - 55 lakhs, Sum assured 46,000 crores, (2005-06) - No. of
policies - 65 lakhs, Sum assured 66,000 crores, (2006-07) - No. of
policies - 84 lakhs, Sum assured 99,500 crores, (2007-08) - No. of
policies - 109 lakhs, Sum assured 1,38,000 crores, (2008-09) - No. of
policies - 133 lakhs, Sum assured 1,98,000 crores, (2009-10) - No. of
policies - 158 lakhs, Sum assured 2,14,000 crores, Social security No.
of lives covered 2009-10 17.4 lakhs 2004-05 42.1 lakhs.
5.1.1.3 Employment generation
Life insurance industry provides increased employment
opportunities. Employees in insurance sector as on 31st March, 2005
is around 2 lakhs. Many agents depend on insurance for their
livelihood. No. of agents on 31st March 2004 – 15.59 lakhs. Brokers,
corporate agents, training establishments provide extra employment
opportunities. Many of these openings are in rural sectors.23
Insurance is a widely used financial service used primarily to
diversify and pool risks so that the consequences of randomly
occurring events do not cripple individuals and businesses. Insurance
also facilitates long-term savings through savings and investment
products, reduces losses through risk management expertise, and
transmits information about risks throughout society so economic
factors can make more informed decisions. 23 Ibid
178
Life insurance includes mortality protection-only life insurance
products, such as term life (with no money returned to policyholder
after coverage expires) and savings-investment life insurance
products, such as whole life, variable life, and universal life.
Non-life insurance includes all property and liability insurance,
such as auto liability and collision, fire, hail, flood, aviation and
marine, and health insurance.
Weather derivatives are financial instruments that can be used
to reduce the risk associated with adverse or unexpected weather
conditions, serving as a form of hedging against potential losses.
Insurance penetration is the level of insurance used in an economy as
measured by total insurance premiums collected by the insurance
market divided by Gross Domestic Product (GDP).
Given the lack of global information on insurance market
development, USAID contracted Chemonics International and the
International Insurance Foundation to assess 1) the link between
strengthening the insurance industry and economic growth and
development in developing countries, and 2) possible donor
interventions that would support the development of insurance
products in different types of countries, with what preconditions and
for what level of investment.
179
5.1.2 LINKS BETWEEN INSURANCE DEVELOPMENT AND
ECONOMIC GROWTH
It considers the current state of insurance market technical
assistance, and examines key relationships between insurance and
economic growth indicators using an international insurance dataset.
The three key findings that arise from this analysis are: 1) countries
are much more likely to experience sustained growth if their
insurance markets develop well; 2) insurance market development is
closely related to improved financial sector performance; and 3)
insurance markets do not develop adequately without both public
and private sector investment in their infrastructure.
The researcher identifies the links between insurance, financial
sector performance and growth in substantial detail, helping define
the insurance – economic growth relationship and supporting the
policy conclusions. The thrust of these links is that insurers
encourage a greater efficiency and depth in the financial sector, by
complementing, competing, and otherwise improving the services
offered by other financial institutions. Some of the specific points
made are summarized below:
• Insurers measure and manage non-diversifiable risk faced
by creditors and borrowers more efficiently than other
financial institutions, facilitating the provision of credit.
180
• Because of their success in marketing contractual savings
products and the nature of their liabilities, life insurers
(and to some extent non-life insurers) can be an important
source of long-term finance.
• Insurance facilitates investment in infrastructure and
high-risk/return activities, by generating sources of long-
term finance, and helping measure and manage high-risk
exposures.
• By mobilizing substantial funds through contractual
savings products, and investing them in bonds and
stocks, insurers help stimulate the growth of debt and
equity markets.
• As institutional investors, insurers pressure equity
markets to adopt stronger corporate governance
measures and greater transparency.
5.1.3 LINKS BETWEEN INSURANCE TECHNICAL
ASSISTANCE AND GROWTH
Despite the existence of substantial research linking insurance
market development and economic growth, there is yet little data
showing direct causality between technical assistance to the
insurance industry and growth.. The case for technical assistance is,
181
however, quite compelling: both the role that insurance plays in
economic growth and the need for insurance market technical
assistance in emerging markets are clearly shown. This fact no doubt
has much to do with the increasing attention paid by leading donor
agencies to insurance market interventions in the last decade.Well-
designed technical assistance to the insurance market as a means to
more rapid development of the financial sector and increased
economic growth is becoming an essential component of the widely
recognized development framework.24
5.1.4 STAGES OF INSURANCE MARKET DEVELOPMENT
It is easier to understand how to strengthen insurance markets
by first understanding their development cycle. To perform well and
grow, insurance markets require investment in infrastructure, which
includes institutions, technical resources and capacity, as well as the
existence of suitable economic, legal, and political environments. This
paper identifies the internal building blocks of market infrastructure,
as well as the external environmental factors, that are commonly
decisive during each of the four stages of insurance market
development: 1) dormant; 2) early growth; 3) sustained growth; and
4) mature. 25
24 Roy, Samit. "Insurance Sector: India." Industry Sector Analysis, National Trade and Development Board, US Department of State, Washington, DC, December 1999, page no. 165-168. 25 Sigma. "World Insurance in 1999." No. 9/2000. Published by SwissRe. Available at www.swissre.com.
182
5.1.5 STRATEGIES FOR TECHNICAL ASSISTANCE
To assist donor agencies and policymakers determine which
countries might benefit most from insurance market intervention, it
provides a preliminary means to compare levels of insurance market
over or under-development, and assess its consequences for the
potential economic pay-off from insurance market technical
assistance. It also provides guidance on selecting the most relevant
type of technical assistance for a particular country, based upon its
stage of economic, political, and insurance market development. The
various types of insurance market technical assistance that are
recommended include the following:
• Conducting insurance sector assessments, ideally in
conjunction with financial sector assessments to
encourage synergies and cost savings.
• Improving insurance regulation and supervision by
encouraging the application of International Association
of Insurance Supervisors’ core principles and other global
best practice standards.
• Encouraging the collection and sharing of insurance data,
possibly through public-private partnerships with the
Insurance Services Office, the Insurance Data
183
Management Association, and Standard and Poor’s,
among others.
• Building actuarial resources through the development of
formal education and apprenticeships that emphasize
experiential learning.
• Supporting professional insurance education, by
providing access to or developing a range of off-the-shelf
training materials in a broad range of topics and adapting
them to local environments, as well as supporting
scholarships and exchanges.
• Educating markets and consumers on standards by
facilitating exchanges of information, establishing a self-
regulatory industry organization, and providing models
of consumer education websites.
• Encouraging ethical market discipline by disseminating
adequate information (possibly through rating agencies)
and ensuring proper incentives and enforcement.
• Promoting institutional development in multiple ways,
from developing actuarial databases and strengthening
information systems to product development and
marketing.
184
• Connecting regulators with the private sector by
nurturing effective communication links between
insurance supervisors and private sector executives.
5.2 INSURANCE, FINANCE AND ECONOMIC
DEVELOPMENT
The Researcher have looked at insurance markets in different
countries and over different time periods, applying econometric
techniques to separate and control for the effects of many known
factors in growth, as well as to identify the probable causal direction
between these factors and growth. We have attempted to answer the
question: does insurance contribute to growth, or is it simply a by-
product of economic growth? The study has sought not only to
understand whether insurance makes an important contribution, but
also if this contribution can be measured empirically.
The study testing the causal relationship has found evidence
that insurance market development is a supply-leading phenomenon.
While the number of studies carried out to date is limited, being
greatly constrained by the lack of available insurance data, the few
existing studies present a number of strong arguments, backed up by
rigorous and methodological data analysis, advancing the conclusion
that insurance is an agent, and not just a by-product, of growth.
Using Granger causality tests, Soo (1996)26 found that life insurance
26 Reserve Bank of India, The Report on Currency and Finance (1998-99, 1999-00 and 2000-01)
185
contributed to the productivity and economic growth of the United
States over a 30-year period. His study concluded that much of life
insurance’s impact on growth was likely due to the huge contribution
that life insurance made to U.S. financial intermediation and
investment over this period. A follow-up study by Kugler and Ofoghi
(2005)27, using Granger causality tests with disaggregated measures
of specific classes of life and non-life insurance in the United
Kingdom, found that eight out of nine classes of insurance showed
evidence of causing economic growth in the UK. The results implied
that stronger causal relationships between insurance and growth
could be found across countries if the bias introduced by using
aggregated measures of insurance were avoided.
In a larger, multiple-country study, using a different
econometric technique, Webb, Skipper and Grace (2002)28 found that
both banking and life insurance penetration were robustly indicative
of increased productivity (as measured by increase in growth rate of
real GDP per capita) in 55 countries over the period from 1980 to
1996.
Patrick (1966)29 noted that the correlation between financial
activity and economic growth could be either supply-driven, where a
greater supply of financial sector capacity and activity drives
economic growth, or demand-following , where greater financial 27 Reserve Bank of India, Annual Statements on Monetary and Credit Policy and Mid-term Reviews of Monetary and Credit Policy for the years 1997-2001. 28 Tarapore S.S. (2000), Issues in Financial Sector Reforms, UBS Publishers. 29 Reserve Bank of India, Annual Report for the years 1997-2001.
186
activity and capacity merely follow economic growth because there is
a greater demand for it as the economy grows.
5.2.1 INSURANCE’S ROLE IN FINANCIAL SECTOR
DEVELOPMENT.
The depth and efficiency of a country’s financial sector largely
determine how well its economy allocates resources. Wide agreement
has been reached regarding the importance of a strong financial
sector to economic growth. Greater financial depth (i.e. greater
variety and availability of financial services and instruments)
advances economic growth by providing economic agents more
opportunities to save, invest, and borrow. Financial efficiency is a
measure of how cost effectively these economic agents operate.
Greater financial depth and efficiency translate into increased levels
of financial intermediation, investment, and productive resource
allocation.30
The mechanisms through which insurance works to stimulate
economic growth revolve around the role insurance plays in
deepening and improving the efficiency of the financial sector.
Studies show that insurance influences financial activity in the
following ways:
30 Pursell, Gary, 1992. “Trade Policies in India,” in Dominick Salvatore, ed National Trade Policies:Handbook of Comparative Economic Policies, vol. 2 (New York, Greenwood Press).
187
Insurers measure and manage non-diversifiable risk faced by
creditors and borrowers more efficiently than other financial
institutions, facilitating the provision of credit.
A common measure of financial depth across countries and
over time is the ratio of currency to narrow money (M1) or the ratio
of broad money (M2) to nominal GDP. This measure somewhat
crudely attempts to measure how well the financial sector caters to
savers and how well it serves borrowers who want to raise capital for
real long-term investment.
Insurers generate price signals for risk that enables the
economy to allocate its resources more efficiently among activities.
Insurers often offer more competitive and long-term
contractual savings vehicles than other financial institutions.
Because of their success in marketing contractual savings
products and the nature of their liabilities, life insurers (and to some
extent non-life insurers) can be an important source of long-term
finance.
Insurance facilitates investment in infrastructure and high-
risk/return activities, by generating sources of long-term finance, and
helping measure and manage high-risk exposures.
188
By mobilizing substantial funds through contractual savings
products, and investing them in bonds and stocks, insurers help
stimulate the growth of debt and equity markets.
As institutional investors, insurers pressure equity markets to
adopt stronger corporate governance measures and greater
transparency.
5.2.2 INSURANCE CONTRIBUTES TO AND IMPROVES THE
EFFICIENCY OF CREDIT IN VARIOUS WAYS
Insurance markets contribute to investment in infrastructure
and high-risk/return activities by providing price signals regarding
project risks, offering insurance coverage against undiversifiable
risks, and generating long-term funds through collecting premiums
that can be invested in long-term projects. Uncertainty affects
entrepreneurship, investment, and social progress, threatening to
curtail growth if it is not well managed. Banks, investment
companies, pension funds, and capital markets combine their
resources with insurance companies to accumulate information,
consolidate and diversify risks, and manage this uncertainty.
Insurance coverages implicitly measure and price risks, thus
providing signals regarding the project risks. When risks cannot be
managed, or when they are not adequately mitigated through risk
management and safety measures, insurance coverages will change,
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signaling the nature of these underlying risks to potential investors.
These price signals and provision of coverage help reduce the
transaction costs of investors and borrowers, as they clarify the
nature and price of these underlying undiversifiable risks. Hence, it is
not surprising that insurance is generally a necessary precondition in
many mortgage finance markets and large-scale industrial
investments.31
5.2.3 INSURANCE COMPANIES, ESPECIALLY LIFE INSURERS,
FACILITATE LARGE AMOUNTS OF CAPITAL
ACCUMULATION
By offering products with various combinations of life
insurance and savings benefits, life insurers add financial depth to an
economy, simultaneously encouraging long-term savings. The benefit
of long-term funds to emerging market investment and productivity
has been pointed out by various researchers.
The World Bank Development Report (1994, p.107) highlights
the fact that the growth in life insurance assets provides a scarce, but
highly valuable commodity in developing countries—long-term
finance—saying that “Contractual savings institutions, such as
pension funds and life insurance companies, are particularly suited
31 Rao, M. Govinda, 2000. “Tax reform in India: achievements and challenges,” Asia-Pacific Development Journal, vol. 7, No. 2, December 2000, pp. 59-74.
190
to making long-term investments. These institutions levy fixed
premiums, have steady and predictable cash inflows, and incur long-
term liabilities, making them ideal suppliers of long-term finance for
infrastructure projects.”
World Bank researchers Musalem, Impavido, and Tressel (2001)
studied the relationships among life insurance companies, pension
funds, and banks in 34 countries and found that the development of
life insurance companies and pension funds is associated with more
efficient banking systems. Their explanation was that life insurers
and pension funds, as contractual savings institutions, compete with
banks. In response to the competition, banks concentrate on their
comparative advantage, their superior ability to monitor firms, and
provide short-term loans, thus increasing the efficiency of the
financial sector.
5.2.4 LIFE INSURANCE ALSO CONTRIBUTES TO CAPITAL
MARKET DEVELOPMENT
Musalem and Impavido (2000) examined the growth of life
insurers and pension funds across 34 countries over a 15-year period
and found that the rapid growth of these contractual savings
institutions partly explain the rapid growth of stock markets.
Another World Bank study, conducted by Vittas (1998) also
concludes that insurance companies and pension funds can provide a
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strong stimulus to the development of securities markets. This
relationship occurs because life insurers and pension funds can
accumulate large amounts of savings in countries, which, in turn, are
invested in businesses through equities and bonds. The result is that
as life insurers grow, they channel large amounts of medium- to
long-term funds through capital markets, deepening the country’s
financial sector.32
5.2.4.1 As Institutional Investors, Life Insurers Exert A Positive
Impact Upon The Transparency And Liquidity Of Equity
Markets
Vittas (1998) describes the important role that life insurers have
had in enhancing corporate governance by requiring greater
information disclosure and in stimulating financial innovation and
modernizing capital markets, mostly in mid-level developing to
developed countries. The 1989 World Development Report suggests
that “Because pension and insurance institutions are likely to be
relatively large and therefore able to afford professional
management, these managers can play a role in monitoring and
control of the firms in which they invest.” Better managed
investments in turn improve the efficiency of the financial sector.
32 Reynolds, Paul D., Michael Hay, William D. Bygrave, S. Michael Camp and Erkko Autio, 2000, page no. 107-108.
192
5.2.4.2 Insurance And Financial Sector Development Are Mutually
Supportive
The economic benefits produced by a strong insurance market,
through its effect on financial sector efficiency and depth, are
identified within the study by Webb, Skipper, and Grace (2002).
Using 16 years of data from 55 countries, this study finds that when
higher levels of banking and insurance activity coexist, countries are
more likely to have higher levels of economic growth. The finding is
particularly noteworthy in that it shows that higher economic growth
can not be explained as well by the individual development of
banking or insurance markets as it can by the joint development of
these markets.
5.3 STAGES OF INSURANCE MARKET DEVELOPMENT
Insurance market growth rates seem to vary according to the
state of the enabling environment, which includes economic, legal,
and political factors, as well the existence of the necessary internal
building blocks of insurance markets, such as institutional
infrastructure, technical resources and capacity.
With largest number of life insurance policies in force in the
world, Insurance happens to be a mega opportunity in India. It’s a
business growing at the rate of 15-20 per cent annually and presently
193
is of the order of Rs 450 billion. Together with banking services, it
adds about 7 per cent to the country’s GDP. Gross premium
collection is nearly 2 per cent of GDP and funds available with LIC
for investments are 8 per cent of GDP.33
Yet, nearly 80 per cent of Indian population is without life
insurance cover while health insurance and non-life insurance
continues to be below international standards. And this part of the
population is also subject to weak social security and pension
systems with hardly any old age income security. This itself is an
indicator that growth potential for the insurance sector is immense.34
A well-developed and evolved insurance sector is needed for
economic development as it provides long term funds for
infrastructure development and at the same time strengthens the risk
taking ability. It is estimated that over the next ten years India would
require investments of the order of one trillion US dollar. The
Insurance sector, to some extent, can enable investments in
infrastructure development to sustain economic growth of the
country. Insurance is a federal subject in India. There are two
legislations that govern the sector- The Insurance Act- 1938 and the
IRDA Act- 1999. The insurance sector in India has come a full circle
33 Economics Survey, Government of India, 2009, page no. 65 34 Rodrik, Dani, 1996. “Understanding economic policy reform,” Journal of Economic Literature, vol. XXXIV, March, pp. 9-41.
194
from being an open competitive market to nationalisation and back to
a liberalised market again. Tracing the developments in the Indian
insurance sector reveals the 360 degree turn witnessed over a period
of almost two centuries.35
INSURANCE, both life and general, are widely perceived to be
nursing easy constituencies and lax in customer service. Insurance
products, especially non-life, have not touched most Indians in any
significant way, especially in the unorganised sector. Not many
would disagree that the development of insurance needs to be
intensified significantly.
A definitive action on the insurance reforms process started
with parliamentary approval for the Insurance Regulatory and
Development Authority (IRDA) Bill in November 1999, albeit almost
six years after the Insurance Reforms (Malhotra) Committee Report.
It is a good augury that the MPs have consciously tried to soften the
restrictive connotation of the term `regulatory' by using it in
conjunction with `development'.
It is of primary importance both vis-a-vis national economy and
international trade. Insurance premium cash flows generate funds for
investment in the economy. The development of the insurance sector
35 Sinha, Tapen. Pension Reform in Latin America and Its Implications for International Policymakers. Boston, USA, Huebner Series Volume No. 23, Kluwer Academic Publishers, 2000.
195
would depend on the general level of economic development and
prospects for the immediate future. Generally there is a positive
correlation between the economic development of a country and the
amount the people spend on insurance.
India ranks 23rd in the world with total insurance business
(premiums) of a little over $7.2 billions (non-Life: over $2 billions,
32nd rank; life: over $5 billions, 20th rank). The spread and reach of
insurance remains, even after so many years of nationalisation,
skewed and urban-oriented. India has an insurance density, which is
premium $ per capita of only 7.6 (non-life: 2.2; life: 5.6), and ranks
82nd in the world. Insurance penetration, which is premium as share
of GDP (per cent), in India is a measly 1.95 (non-Life: 0.56; life: 1.39),
and ranks 51st in the world36.
The country is behind even amidst the Asian countries. Non-
Life sector is more sluggish than life in terms of the spread and reach.
Its slender progression has to be further qualified by the facts that: (a)
most of the growth in the non-life business is in the corporate sector
and linked to institutional finance, and to the motor business with
compulsory third party insurance, (b) the nationalised insurance
36 Ajay Chhibber is the UN Assistant Secretary General and Assistant Administrator & Regional Director of the Bureau for Asia and the Pacific, UNDP. Thangavel Palanivel is the Senior Advisor and Programme Coordinator at the UNDP’s Asia-Pacific Regional Centre in Colombo. The usual disclaimer applies.
196
sector has had a free run, as the Government kept the real
competition out by law.
The IRDA has the daunting task _ to establish and promote fair
competition in hitherto monopolistic insurance market. It will have to
do it in a manner that will whip up sustainable growth in the
national insurance market, and, in the final analysis, sup port the
greater national economic growth.
The General Insurance Business (Nationalisation) Act, 1972
explicitly mentions the necessity of `securing the development of
general insurance business in the best interest of the community', as a
rationale of nationalisation of the insurance business in the early
1970s. Regardless of the performance of nationalised insurance
companies in achieving this objective, it would be incorrect to
dismiss the matter of social linkages of insurance business as
redundant socialist rhetoric. The governments of the developed
markets, by themselves and in association with insurance regulators,
have intervened in many ways to find, facilitate, and further social
purposiveness of the insurance business.
Developed countries have adopted an integrated risk
management approach that includes use of insurance, both public
and private, to stabilise the agriculture industry. Insurance
complements, on the one hand, activities designed to strengthen the
197
base of agriculture that is, irrigation drainage, land reclamation, and
other means of increasing agricultural productivity; and, on the other
hand, pricing and other income support measures. Agriculture
insurance should be playing an even greater role in India, as not only
this sector's contribution to GDP is relatively high, but also the
majority of the people are engaged in agriculture and related
occupations.
The Indian nationalised insurance sector has not been able to
make any significant dent in agricultural and rural insurance. The
Government must take the initiative to find a judicious mix of private
and public insurance efforts, as part of integrated risk management
package, to be administered by the Ministry of Agriculture. It must
set clear definitions and mandate for public and private insurance,
after due consultations with state governments, agriculturists, and
the insurance industry. The insurance regulation in India must
quickly develop regulatory norms for addressing availability and
affordability of appropriate agricultural and rural insurance
products.
All over the world, regulation of the insurance sector has been
taking new dimensions ever since the process of globalisation begun.
It is being increasingly felt that a balanced and sustained growth of
the insurance sector is necessary for the sustenance of the
198
globalisation process. Developed countries have had a long tradition
of insurance supervision and have come to appreciate the benefits of
a sound supervisory regime. There, the paradigm of insurance
regulation has shifted to more proactive super vision, monitoring,
and facilitation of the business.
In the developing countries, too, attempts are afoot to establish,
promote, and fortify regulation as insurance business grows with the
economy's growth. The Indian insurance regulator too should find it
useful to draw upon international experience, as it firms up its
agenda for sustainable development of the insurance market.
RNCOS’ report, “Indian Insurance Industry Forecast (2007-
2009)”, provides extensive research and objective analysis of the
growing insurance industry, its product quality, and services in
India. This report helps to analyze the leading-edge opportunities
critical to the success of the insurance Industry in India. Detailed data
and analysis helps investors, financial service providers, and global
banking players to navigate through the evolving insurance market
in India.
- Taking into account the changing socio-economic
demographics, rate of GDP growth, changing consumer behavior and
occurrences of natural calamities at regular intervals, the Indian life
insurance market is expected to reach the value of around Rs 1683
Billion in the year 2009.
199
- In 2006-07, pension premium contributed about 22.11% to
total premium income of insurers. Interestingly, the
figure in the first nine months to December 2005 was
25.22%.
- In the non-life segment, the established players control
65% of the market. So it is their monthly performance that
determines how the market as a whole would perform.
- In Motor Insurance Business, Public sector covers almost
68% of the market value whereas the private sector just
had 32% market share till September 2006.
- In Accident Insurance Business, private sector players
have almost 53% market share with ICICI Lombard as the
lead player. Public sector players constitute about 47%
market value with New India as the leading player
followed by United India.37
5.4 Life Insurance industry in India and the role of Data
Analytics
It has been a natural tendency for the human being to hedge
against any unforeseen situation, and protect himself. This has been
going on since times immemorial, albeit in an unorganized fashion. If
this need to feel safe is so very innate to the human mind then there
must also be a business model which captures this as a opportunity. 37 LIC Bulletin, 2010
200
This is exactly what the insurance sector does. It feeds on the basic
human need to feel secure.
Amongst the various forms of insurance possible, Life
Insurance is the most predominant in India. The low life expectancy
rate and dismal public healthcare system has only added to it being
embraced even by the not-so-rich in our society. The life insurance
industry in India has seen a high CAGR of 12% ever since the
opening up of this sector to private players in 1999. However with
penetration levels still low compared to other developed countries,
the market size is expected to double in the next 5-6 years. A look at
some of the reports from veritable sources would do well to illustrate
the case.38
The Capgemini World Insurance Report of 2008 describes the
penetration of life insurance in India as ‘still woefully low’. India had
16% of the world population, but only 1.68% of the world life
insurance market in 2006. India is also far behind world averages in
terms of insurance penetration, and insurance density. A mere 20% of
the insurable population aged 20 to 60 years is currently covered by
life insurance. The average number of policies (life/non-life) held by
per Indian consumer is just 1.33 as against 5.2 policies per consumer
in mature markets. 38 Solomon, Jay, 2003. “India”s elephantine economy may be poised to run,” The Wall Street Journal, 25 September, p. A17.
201
As we can see from the numbers, the potential for expansion of
the market is huge especially with rising per capita income and a
growing middle class that is expected to constitute 32% of the total
population in 2010. The insurance penetration levels as a percentage
of GDP is expected to grow to 6% by 2012 from the current 4.8%
which would translate to a CAGR of 13% for the industry in the next
five years.
Insurance companies in the developed world, where insurance
has much higher penetration, realize the huge potential of insurance
industry in India. Add to it the fact that the possibility of Foreign
Direct Investment(FDI) cap in the sector rising up to 49% and we
have just another factor that holds promise of leading the growth in
this industry. Although currently FDI is capped at 26%, it’s soon
expected to be raised. This will result in increased investment by
foreign companies, especially by the foreign partners of private life
insurance companies. For instance, Max group is already in talks
with its partner, New York Life Insurance to chalk out a plan to
increase the latter’s stake. Foreign companies who are interested in
FDI have deeper pockets compared to the relatively small Indian
insurance companies. They bring with themselves the ‘best practices’
distilled through years of rich experience that they have had in this
industry. This augurs well for the insurance sector because the deep
202
pockets and ‘best practices’ of foreign partners can be dovetailed
with the awareness of the Indian psyche and marketing experience,
of their Indian counterparts to create a synergy which can increase
the reach of insurance in India making it more egalitarian.
But, as an increasing number of business houses enter the life
insurance industry, even survival is going to be difficult for many
companies. In the face of such stiff competition, organizations need to
make sure that they put their efforts in the right places like retaining
sales agents or minimizing lapsation rate. This is where data analytics
comes in, as it helps making informed, analytics driven decisions, in
these vital areas.39
5.4.1 THE ROLE OF DATA ANALYTICS
Insurers have an abundance of data across their organizations,
but most have not leveraged the full potential of this data in customer
acquisition, underwriting, claims servicing and customer
management. Insurers need to improve data collection, prioritize the
application of analytics across the customer life-cycle and build an
analytics capability to create a sustained culture of data driven
decision making.
39 Wade, Robert, 1985. “The market for public office: Why the Indian State is not better at development,” World Development, vol. 13, 4, April, pp. 467-497.
203
The insurance business though rich in data, but is mired in data
complexity. Even new companies less than 5 years old have a million
clients. Older and large companies e.g. LIC have over 130 million
policies. Insurance policies have a large amount of data, and they are
complex in structure, with variations such as benefits, face amounts,
schemes, pricing, claims, multiple client relationships, medical
history and family history and underwriting.40
Currently, use of statistics is largely limited to actuaries for
determination of the insurance premium rates. Statistics can have
wide applications in other departments of an insurance company.
For instance, the agency department can use statistical methods for
combating high agent attrition rates and hiring productive agents.
Also, the marketing department can use statistics to identify target
customers for cross selling a new insurance policy.41
Cross-selling
It costs five times more to acquire a new customer than to retain
an existing one. Encouraging existing customers to spend more not
only increases profit margins but also ensures that the relationship
with the customer is strengthened and therefore the customer is less
likely to stop paying premiums. In this process, existing customers
who are likely to buy another product are identified and sales
campaigns are targeted to these customers thereby increasing the cost 40 Berman, Peter. "Rethinking Health Care Systems: Private Health Care Provision in India." Harvard School of Public Health Working Paper, November 1996, page no. 38. 41 Business Today. "The Monitory Group Study on Insurance I and II." March 22 and April 7, 2000, page no. 322.
204
effectiveness of the campaigns. Let’s take the example, where the
Insurance Company knows which one thousand customers out of
their one lakh customers have teenaged children; they can target
these thousand customers with products tailored to teenaged
children. This was just one out of myriad such possibilities waiting
to be exploited by the sector.
5.4.2 INSURANCE MARKET- PRESENT
The insurance sector was opened up for private participation
four years ago. For years now, the private players are active in the
liberalized environment. The insurance market have witnessed
dynamic changes which includes presence of a fairly large number of
insurers both life and non-life segment. Most of the private insurance
companies have formed joint venture partnering well recognized
foreign players across the globe.42
There are now 29 insurance companies operating in the Indian
market – 14 private life insurers, nine private non-life insurers and six
public sector companies. With many more joint ventures in the
offing, the insurance industry in India today stands at a crossroads as
competition intensifies and companies prepare survival strategies in
a detariffed scenario.
42 Dasgupta, Samik. "RSA, Iffco-Tokio yet to appoint actuaries," Economic Times, January 23, 2001.
205
There is pressure from both within the country and outside on
the Government to increase the foreign direct investment (FDI) limit
from the current 26% to 49%, which would help JV partners to bring
in funds for expansion. There are opportunities in the pensions sector
where regulations are being framed. Less than 10 % of Indians above
the age of 60 receive pensions. The IRDA has issued the first licence
for a standalone health company in the country as many more
players wait to enter. The health insurance sector has tremendous
growth potential, and as it matures and new players enter, product
innovation and enhancement will increase. The deepening of the
health database over time will also allow players to develop and
price products for larger segments of society.
State Insurers Continue To Dominate There may be room for
many more players in a large underinsured market like India with a
population of over one billion. But the reality is that the intense
competition in the last five years has made it difficult for new
entrants to keep pace with the leaders and thereby failing to make
any impact in the market.
Also as the private sector controls over 26.18% of the life
insurance market and over 26.53% of the non-life market, the public
sector companies still call the shots.
206
The country’s largest life insurer, Life Insurance Corporation of
India (LIC), had a share of 74.82% in new business premium income
in November 2005. Similarly, the four public-sector non-life insurers
– New India Assurance, National Insurance, Oriental Insurance and
United India Insurance – had a combined market share of 73.47% as
of October 2005. ICICI Prudential Life Insurance Company continues
to lead the private sector with a 7.26% market share in terms of fresh
premium, whereas ICICI Lombard General Insurance Company is
the leader among the private non-life players with a 8.11% market
share. ICICI Lombard has focused on growing the market for general
insurance products and increasing penetration within existing
customers through product innovation and distribution. 43
Reaching Out To Customers No doubt, the customer profile in
the insurance industry is changing with the introduction of large
number of divergent intermediaries such as brokers, corporate
agents, and bancassurance. The industry now deals with customers
who know what they want and when, and are more demanding in
terms of better service and speedier responses. With the industry all
set to move to a detariffed regime by 2007, there will be considerable
improvement in customer service levels, product innovation and
newer standards of underwriting.44
43 Ibid 44 Kumari, Vaswati, "India Insurers Seek Perfect Partners." National Underwriters, March 5, 2001, 38-39.
207
Intense Competition In a de-tariffed environment, competition
will manifest itself in prices, products, underwriting criteria,
innovative sales methods and creditworthiness. Insurance companies
will vie with each other to capture market share through better
pricing and client segmentation.
Global Standards While the world is eyeing India for growth
and expansion, Indian companies are becoming increasingly world
class. Take the case of LIC, which has set its sight on becoming a
major global player following a Rs280-crore investment from the
Indian government. The company now operates in Mauritius, Fiji, the
UK, Sri Lanka, Nepal and will soon start operations in Saudi Arabia.
It also plans to venture into the African and Asia-Pacific regions in
2006. The year 2005 was a testing phase for the general insurance
industry with a series of catastrophes hitting the Indian sub-
continent.45
With life insurance premiums being just 2.5% of GDP and
general insurance premiums being 0.65% of GDP, the opportunities
in the Indian market place is immense. The next five years will be
45 Mitra, Sumit and Nayak, Shilpa. "Coming to Life." India Today, May 7, 2001.
208
challenging but those that can build scale and market share will
survive and prosper46.
5.4.3 HEALTH INSURANCE
Health insurance expenditure in India is roughly 6% of GDP,
much higher than most other countries with the same level of
economic development. Of that, 4.7% is private and the rest is public.
What is even more striking is that 4.5% are out of pocket expenditure
(Berman, 1996). There has been an almost total failure of the public
health care system in India. This creates an opportunity for the new
insurance companies. Thus, private insurance companies will be able
to sell health insurance to a vast number of families who would like
to have health care cover but do not have it.47
5.4.4 PENSION
The pension system in India is in its infancy. There are
generally three forms of plans: provident funds, gratuities and
pension funds. Most of the pension schemes are confined to
government employees (and some large companies). The vast
majority of workers are in the informal sector. As a result, most
46 Dreze Jean and Amartya Sen (eds.) (1995), India: Economic Development and Social Opportunity, Oxford University Press, page no. 22. 47 Patel, Freny. "Centre wants GIC to merge unviable outfits before recast." Business Standard, April 13, 2001.
209
workers do not have any retirement benefits to fall back on after
retirement. Total assets of all the pension plans in India amount to
less than USD 40 billion.
5.5 MARKET SHARE OF INDIAN INSURANCE INDUSTRY
The introduction of private players in the industry has added
value to the industry. The initiatives taken by the private players are
very competitive and have given immense competition to the on time
monopoly of the market LIC. Since the advent of the private players
in the market the industry has seen new and innovative steps taken
by the players in this sector. The new players have improved the
service quality of the insurance. As a result LIC down the years have
seen the declining phase in its career. The market share was
distributed among the private players. Though LIC still holds the
75% of the insurance sector but the upcoming natures of these private
players are enough to give more competition to LIC in the near
future. LIC market share has decreased from 95% (2002-03) to 81 %(
2004-05).The following companies has the rest of the market share of
the insurance industry. Table 5.4 shows the mane of the player in the
market.48
48 Roy, Abhijit. "Pension fund business in India." The Hindu, July 16, 1997, p. 25.
210
TABLE : 5.2
NAME OF THE INSURANCE COMPANY AND THE SHARE HOLDING PATTEN
Name of the Insurance Company Shareholding
Agricultural Insurance Co Bank and Public Ins Co
Bajaj Allianz General Insurance Co. Ltd. Privately Held
Cholamandalam MS General Insurance Co. Ltd. Privately Held
Export Credit Guarantee Company Public Sector
HDFC Chubb General Insurance Co. Ltd. Privately Held
ICICI Lombard General Insurance Co. Ltd. Privately Held
IFFCO-Tokio General Insurance Co. Ltd. Privately Held
National Insurance Co. Ltd. Public Sector
New India Assurance Co. Ltd. Public Sector
Oriental Insurance Co. Ltd. Public Sector
Reliance General Insurance Co. Ltd. Privately Held
Royal Sundaram Alliance General Insurance Co. Ltd. Privately Held
Tata AIG General Insurance Co. Ltd. Privately Held
United India Insurance Co. Ltd. Public Sector
211
There are a total of 13 life insurance companies operating in
India, of which one is a Public Sector Undertaking and the balance 12
are Private Sector Enterprises.
List of Companies are indicated below:-
TABLE : 5.3
NAME OF THE LIFE INSURANCE COMPANY AND THE SHARE HOLDING PATTEN
Name of the company Nature of Holding
Allianz Bajaj Life Insurance Co Private
Aviva Life Insurance Private
Birla Sun Life Insurance Co Private
HDFC Standard Life Insurance Co Private
ICICI Prudential Life Insurance Co Private
ING Vysya Life Insurance Co. Private
Life Insurance Corporation of India Public
Max New York Life Insurance Co. Private
MetLife Insurance Co. Private
Om Kotak Mahindra Life Insurance Private
Reliance insurance Private
SBI Life Insurance Co Private
TATA- AIG Life Insurance Company Private
212
TABLE 5.4
NAME OF THE PLAYER MARKET SHARE (%)
Name of the Player Market share (%)
LIFE INSURANCE CORPORATION OF INDIA 82.3
ICICI PRUDENTIAL 5.63
BIRLA SUN LIFE 2.56
BAJAJ ALLIANZ 2.03
SBI LIFE INSURANCE 1.80
HDFC STANDARD 1.36
TATA AIG 1.29
MAX NEW YARK 0.90
AVIVA 0.79
OM KOTAK MAHINDRA 0.51
ING VYSYA 0.37
MET LIFE 0.21
Source : www.rbi.org.in
5.6 PRESENT SCENARIO OF INSURANCE INDUSTRY
� India with about 200 million middle class household
shows a huge untapped potential for players in the
insurance industry. Saturation of markets in many
213
developed economies has made the Indian market even
more attractive for global insurance majors. The
insurance sector in India has come to a position of very
high potential and competitiveness in the market.
Indians, have always seen life insurance as a tax saving
device, are now suddenly turning to the private sector
that are providing them new products and variety for
their choice.
� Consumers remain the most important centre of the
insurance sector. After the entry of the foreign players the
industry is seeing a lot of competition and thus
improvement of the customer service in the industry.
Computerisation of operations and updating of
technology has become imperative in the current
scenario. Foreign players are bringing in international
best practices in service through use of latest technologies
� The insurance agents still remain the main source
through which insurance products are sold. The concept
is very well established in the country like India but still
the increasing use of other sources is imperative. At
present the distribution channels that are available in the
market are listed below.
214
� 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 products
and services based on their true needs and not just
traditional moneyback policies, which is not considered
very appropriate for long-term protection and savings.
There is lots of saving and investment plans in the
market. However, there are still some key new products
yet to be introduced - e.g. health products.
� The rural consumer is now exhibiting an increasing
propensity for insurance products. A research conducted
exhibited that the rural consumers are willing to dole out
anything between Rs 3,500 and Rs 2,900 as premium each
year. In the insurance the awareness level for life
insurance is the highest in rural India, but the consumers
are also aware about motor, accidents and cattle
insurance. In a study conducted by MART the results
showed that nearly one third said that they had
purchased some kind of insurance with the maximum
penetration skewed in favor of life insurance. The study
215
also pointed out the private companies have huge task to
play in creating awareness and credibility among the
rural populace. The perceived benefits of buying a life
policy range from security of income bulk return in
future, daughter's marriage, children's education and
good return on savings, in that order, the study adds.
216
TABLE : 5.5 Financial Results For 2009/2010 of General Insurance Companies
INR Millions
Fire Portfolio
National New India
Oriental United India
Bajaj Allianz
Chola Mandalam
HDFC CHUBB
ICICI Lombard
IFFCO Tokio
Reliance General
Royal Sundaram
TATA AIG
Total
Gross Premium 5,195.30 10,676.90 5,355.80 6,313.20 1,202.90 254.50 3.60 2,639.00 1,428.90 463.60 505.30 784.50 34,823.50
Net Earned Premium
3,482.80 7,941.93 3,291.37 4,211.69 264.07 33.75 0.20 238.78 243.21 90.02 134.04 82.27 20,013.73
Net Incurred Claims
900.88 2,613.37 1,061.65 1,108.19 60.57 18.26 40.43 93.56 118.32 67.21 40.43 27.12 6,149.99
Operating Profit/Loss
1,974.26 2,947.70 1,616.30 2,334.59 225.19 4.02 5.42 383.13 156.64 59.95 92.28 196.26 9,984.90
Source : www.rbi.org.in
217
TABLE : 5.6 Financial Results for 2009/2010 of Marine Insurance Companies
Marine Portfolio
National New India
Oriental United India
Bajaj Allianz
Chola Mandalam
HDFC CHUBB
ICICI Lombard
IFFCO Tokio
Reliance General
Royal Sundaram
TATA AIG
Total
Gross Premium
1,888.79 3,056.50 2,286.40 3,001.40 207.30 58.30 0.20 471.00 244.90 132.00 133.80 309.00 11,789.59
Net Earned Premium
1,981.63 2,004.32 1,287.93 1,316.96 69.55 15.01 -0.01 64.86 101.86 18.05 69.15 151.92 7,081.23
Net Incurred Claims
914.51 819.38 674.94 717.04 92.19 13.83 44.04 127.45 117.45 13.32 44.04 119.41 3,697.60
Operating Profit/Loss
1,121.28 1,096.89 596.44 460.13 -33.57 -8.17 -0.25 -70.24 -43.80 3.65 5.87 -20.58 3,107.65
Source : www.rbi.org.in
218
TABLE : 5.7 Financial Results for 2009/2010 of Insurance Companies
Miscellaneous Portfolio
National New India
Oriental United India
Bajaj Allianz
Chola Mandalam
HDFC CHUBB
ICICI Lombard
IFFCO Tokio
Reliance General
Royal Sundaram
TATA AIG
Total
Gross Premium 26,915.60 35,481.30 21,355.20 21,320.10 3,355.10 657.70 1,125.70 2,209.90 1,548.60 1,015.00 1,938.50 2,341.70 119,264.40
Net Earned Premium 18,413.69 25,948.30 15,145.27 15,837.66 1972.75 189.52 398.00 487.17 657.21 155.14 1119 1201.96 81,525.67
Net Incurred Claims 19,283.60 23,703.04 14,139.88 16,596.45 1,353.30 176.8 811.58 479.53 492.75 156.88 811.58 699.31 78,704.70
Operating Profit/Loss -3,327.23 -2,959.21 762.88 -1,141.40 31.26 -168.01 -295.75 -43.01 -55.98 -60.50 -99.58 -161.47 7,518.00
Source : www.rbi.org.in
219
TABLE : 5.8 Financial Results for 2009/2010 of Total portfolio
Total
National New India
Oriental United India
Bajaj Allianz
Chola Mandalam
HDFC CHUBB
ICICI Lombard
IFFCO Tokio
Reliance General
Royal Sundaram
TATA AIG
Total
Gross Premium 33,999.69 49,214.70 28,997.40 30,634.70 4,765.30 970.50 1,129.50 5,319.90 3,222.40 1,610.60 2,577.60 3,435.20 165,877.49
Net Earned Premium 23,878.12 35,894.55 19,724.57 21,366.31 2,306.37 238.28 397.79 790.81 1,002.28 263.21 1,322.19 1,436.15 108,620.63
Net Incurred Claims 21,098.99 27,135.79 15,876.47 18,421.68 1,506.06 208.89 896.05 700.54 728.52 237.41 896.05 845.84 88,552.29
Operating Profit/Loss -231.69 1,085.38 2,975.62 1,653.32 222.88 -172.16 -301.42 269.88 56.86 3.10 -1.43 14.21 5,574.55
Source : www.rbi.org.in
220
CHART: 5.1
Gross and Net Premium in India for last 10 years
It has been observed from the above diagram that as soon as economic reforms has been introduced Gross
Direct Premium is increasing rapidly compare to Net Premium, which reflects private sector insurance is being
affected due to market competition.
221
TABLE : 5.9 Net Worth Movement for the Past Three Years
Net Worth Movement For The Past Three Years
INR Millions
National New
India
Oriental United
India
Bajaj
Allianz
Chola
Mandalam
HDFC
CHUBB
ICICI
Lombard
IFFCO
Tokio
Reliance
General
Royal
Sundaram
TATA
AIG
2001-02 9,639.20 31,893.90 6,728.00 13,018.80 1,010.00 1,094.00 1,000.00 1,020.00 1,300.00 1,093.00
2002-03 10,721.70 34,040.00 8,336.50 14,446.70 1,313.43 1,050.00 1,002.20 1,095.98 1,068.93 1,235.83 1,297.93 1,234.97
2003-04 8,851.90 39,434.40 11,219.00 13,018.80 1,094.75 1,419.60 1,193.95 2,259.32 1,104.82 1,325.73 1,298.96 1,234.97
Source : www.rbi.org.in
222
5.7 APPLICATION OF INFORMATION TECHNOLOGY IN
INSURANCE SECTOR
There is a evolutionary change in the technology that has
revolutionized the entire insurance sector. Insurance industry is a data-rich
industry, and thus, there is a need to use the data for trend analysis and
personalization. With increased competition among insurers, service has
become a key issue. Moreover, customers are getting increasingly
sophisticated and tech-savvy. People today don’t want to accept the
current value propositions, they want personalized interactions and they
look for more and more features and add ones and better service The
insurance companies today must meet the need of the hour for more and
more personalized approach for handling the customer. Today managing
the customer intelligently is very critical for the insurer especially in the
very competitive environment. Companies need to apply different set of
rules and treatment strategies to different customer segments. However, to
personalize interactions, insurers are required to capture customer
information in an integrated system.
With the explosion of Website and greater access to direct product or
policy information, there is a need to developing better techniques to give
customers a truly personalized experience. Personalization helps
organizations to reach their customers with more impact and to generate
new revenue through cross selling and up selling activities. To ensure that
223
the customers are receiving personalized information, many organizations
are incorporating knowledge database-repositories of content that typically
include a search engine and lets the customers locate the all document and
information related to their queries of request for services. Customers can
hereby use the knowledge database to mange their products or the
company information and invoices, claim records, and histories of the
service inquiry. These products also may be able to learn from the
customer’s previous knowledge database and to use their information
when determining the relevance to the customers search request.
224
TABLE 5.10 : INVESTMENTS BY LIC
(` crore)
Year (end-March) Sector-wise Instrument-wise
of which Total (2 to 5)
Public Private Joint Co-operative Stock Exchange Securities Loans
1 2 3 4 5 6 7 8
1980 3915.5 770.1 0.0 602.1 3113.4 2173.6 5287.7
1981 4707.8 647.2 0.0 665.5 3591.3 2725.6 6020.5
1982 5410.7 698.7 32.0 753.0 4040.6 2612.0 6894.4
1983 6189.7 787.4 32.7 825.2 7835.0
1984 7020.8 891.4 40.1 905.3 8857.6
1985 7919.5 1010.6 51.2 972.9 9954.2
1986 9063.8 1121.3 68.0 1036.8 6822.8 4474.1 11289.9
1987 10259.3 1408.1 86.9 1058.6 7929.6 4865.0 12812.9
1988 11837.3 1624.8 88.4 1161.7 9230.9 5412.0 14712.2
1989 14032.4 1973.1 97.1 1240.1 10932.3 5055.5 17342.7
1990 16404.3 2640.7 125.5 1333.2 12918.6 7257.5 20503.7
1991 19980.2 3310.0 165.2 1444.3 15871.2 7416.6 24899.7
1992 24425.4 4239.5 174.9 1562.6 19056.8 10942.3 30402.4
1993 28983.2 5397.0 284.3 1657.6 23082.5 11585.4 36322.1
225
1994 36246.5 5894.4 304.6 1716.1 29536.3 12876.3 44161.6
1995 44318.9 7017.2 350.3 1793.1 37420.1 14169.4 53479.5
1996 54003.4 8814.4 380.3 1858.8 47086.1 18085.6 65056.9
1997 65917.4 9588.5 490.3 1941.8 58850.8 16750.7 77938.0
1998 79235.7 11834.3 500.0 2030.3 72537.0 18489.9 93600.3
1999 96410.5 15048.4 549.3 2094.5 90823.8 26109.7 114102.7
2000 117059.0 19268.4 575.5 2129.3 114032.3 28925.5 139032.2
2001 141256.2 22779.5 799.7 2168.4 140106.0 32155.4 167003.8
2002 180574.1 23707.8 792.8 2128.6 178943.3 34913.2 207203.3
2003 219596.7 29406.8 684.5 2082.3 222449.3 27539.8 251770.3
2004 271778.5 51923.6 959.6 2079.5 297566.0 31800.4 326741.2
2005 322021.8 68484.5 1270.2 1408.2 355634.7 37529.5 393184.6
2006 378807.2 105148.1 1915.5 1356.5 450557.2 37135.3 487227.2
2007 433810.3 84294.0 75.2 3555.1 480426.8 41307.8 521734.6
2008 503388.4 128467.8 73.7 3817.6 590466.6 45281.0 635747.5
2009 572050.3 187140.8 71.7 3628.9 715710.4 47181.4 762891.7
2010 678374.5 236134.7 70.9 3336.5 872061.7 45854.9 917916.5
2011 775992.5 265798.3 82.1 3666.6 1001755.3 43784.2 1045539.4
Note : 1. Data for 2011 are provisional. 2. Instrument-wise loans for the years 2003 to 2011 exclude policy loans to HPF, Treasury bills and Commercial papers. Source : Life Insurance Corporation of India.
226
TABLE 5.11 : DEPOSIT INSURANCE AND CREDIT GUARANTEE CORPORATION - INSURED DEPOSITS
(Number in million; Amount in ` crore)
Year Number of fully protected accounts
Total number of accounts
Total amount of insured deposits
Total amount of assessable deposits
1 2 3 4 5
1973 40 42 5852 9152
1974 46 48 6801 10624
1975 58 60 8832 13494
1976 72 73 11827 16588
1977 84 86 14155 19892
1978 92 93 15369 21659
1979 107 109 18582 26743
1980 127 129 24234 32570
1981 137 138 25859 35004
1982 158 160 31774 42360
1983 179 182 37746 50797
227
1984 200 203 46340 61880
1985 215 224 56211 76517
1986 232 236 62878 86214
1987 252 257 75511 103044
1988-89 271 278 90192 126864
1989-90 306 314 101682 140746
1990-91 298 309 109316 156892
1991-92 317 329 127925 186307
1992-93 340 354 164527 244375
1993-94 350 353 168405 249034
1994-95 496 499 266747 364058
1995-96 482 487 295575 392072
1996-97 427 435 337671 450674
1997-98 371 411 370531 492280
1998-99 454 464 439609 609962
1999-00 430 442 498558 704068
228
2000-01 432 446 572434 806260
2001-02 464 482 674051 968752
2002-03 578 600 828885 1213163
2003-04 519 544 870940 1318268
2004-05 620 650 991365 1619815
2005-06 506 537 1052988 1790919
2006-07 683 717 1372597 2344351
2007-08 962 1039 1805081 2984800
2008-09 1204 1349 1908951 3398565
2009-10 1267 1424 1682397® 4587967
2010-11 977@ 1052@ 1735800® 4952427®
Note : As on the last Friday of September 1972 through September 1979; as on the last Friday of June 1980 through June 2003; as on the last working day of September 2004 through September 2010. @ : Data as per new reporting format. Also see Notes on Tables. Source : Deposit Insurance and Credit Guarantee Corporation., year 2009, page no. 64
229
Table 5.12 : Deposit Insurance and Credit Guarantee Corporation - Liabilities and Assets ( Deposit Insurance Fund )
(` crore)
Year Fund Surplus Balance
Inve-stment Reser-
ves
Claims Intimated and
Claims Admitted but
not Paid
Estimated Liability
in Respect of Claims Intimated
But not Admitted
Insured Depo sits
Remai ning
Unclai med
Other Liabili-
ties
Total Liabili
ties/ Assets
Bala nces with RBI
Deficit Bala nce
Invest ments in Central Govern
ment Secu rities
(at cost)
Inte rest Accr
ued on Invest-ment
Other Assets
1 2 3 4 5 6 7 8 9 10 11 12 13 14
1989-90 0 272 76 0 10 0 307 664 0 0 612 22 30
1990-91 65 271 76 0 18 355 787 0 0 678 24 85
1991-92 123 283 84 0 51 394 936 0 0 741 27 168
1992-93 89 222 162 0 15 622 1111 0 0 893 32 186
1993-94 80 125 162 0 8 1032 1408 0 0 1139 41 228
1994-95 169 2 184 0 16 1386 1758 0 0 1435 62 261
1995-96 203 2 261 0 7 1721 2195 0 0 1911 79 205
1996-97 298 0 261 0 45 2108 2713 0 0 2389 74 250
1997-98 249 1773 261 0 22 1042 3348 0 0 2953 133 262
1998-99 353 2754 261 0 25 2 706 4101 0 0 3355 119 627
1999-00 434 2876 261 0 639 3 787 5000 0 0 4171 142 687
2000-01 501 3205 261 0 1156 3 623 5749 0 0 4874 158 717
2001-02 563 3687 261 0 1187 3 899 6600 0 0 5453 166 981
230
2002-03 831 4683 261 0 517 6 1285 7584 0 0 5999 171 1413
2003-04 871 5037 259 0 1236 9 1328 8740 0 0 7079 192 1469
2004-05 875 6942 475 0 1789 54 1662 11797 0 0 9363 235 2199
2005-06 1026 8077 641 0 1260 41 3056 14102 0 0 10284 282 3535
2006-07 1211 9767 954 0 616 43 4417 17008 1 0 12194 322 4491
2007-08 1553 11809 1050 0 488 48 5905 20853 0 0 14399 348 6106
2008-09 1817 14339 929 0 1075 49 7213 25515 0 0 17268 395 7852
2009-10 3275 16877 1661 156 764 55 6893 29682 0 0 21532 425 7725
2010-11 3774 20930 1896 151 562 60 8924 36296 1 0 26582 492 9222
Note : Data on liabilities and assets of DICGC relate to end-December for 1988-89 and from 1989-90 onwards, they refer to the financial year (April-March). Also see Notes on Tables. Source : Deposit Insurance and Credit Guarantee Corporation.
231
Table 5.13 : Deposit Insurance and Credit Guarantee Corporation - Liabilities and Assets ( Credit Guarantee Fund )
(Rs. crore)
Year Fund Surplus Balance
Invest-ment
Re serves
Claims Intimated
and Claims Admitted
but not paid
Estimated Liability in Respect of
Claims intimated but not Admitted
Guran- teed Credits
Remai-ning Un-claimed
Other Liabi-lities
Total Liabi-lities/ Assets
Balances with RBI
Deficit Balance
Invest ments in Central Govern-
ent Securities (at cost)
Interest Accrued
on Invest- ment
Other Assets
1 2 3 4 5 6 7 8 9 10 11 12 13 14
1989-90 406 0 61 0 286 0 7 760 2 0 464 14 280
1990-91 495 0 61 0 356 0 97 1009 6 0 665 21 317
1991-92 751 0 67 1 377 0 126 1322 4 0 876 26 416
1992-93 907 0 67 2 700 0 2 1678 3 0 1005 30 640
1993-94 1521 0 67 20 742 0 21 2371 4 0 1322 40 1005
1994-95 1793 0 67 20 1017 0 47 2944 1 0 1537 42 1364
1995-96 1775 0 104 13 1712 0 12 3616 4 0 1843 52 1717
1996-97 2926 0 104 308 2705 0 32 6075 3 1312 2518 93 2149
1997-98 679 0 104 372 1922 0 677 3754 1 0 2866 101 786
1998-99 548 210 104 128 1066 0 1106 3162 1 0 1679 46 1436
1999-00 48 1140 104 25 127 0 1771 3215 137 0 1039 32 2007
2000-01 0 1134 104 0 4 0 1284 2526 1 0 1162 37 1326
2001-02 0 1262 104 0 0 0 1257 2623 0 0 1186 36 1400
232
2002-03 0 1393 104 0 0 0 909 2406 0 0 1479 45 882
2003-04 0 1510 106 0 0 0 987 2603 0 0 1680 48 875
2004-05 0 250 103 0 0 0 1035 1388 0 0 434 18 936
2005-06 0 345 28 0 0 0 986 1365 0 0 394 15 956
2006-07 0 349 50 0 0 0 1009 1408 0 0 437 16 955
2007-08 0 367 58 0 0 0 1019 1444 0 0 458 15 970
2008-09 0 385 58 0 0 0 1046 1489 0 0 591 16 882
2009-10 0 298 60 0 0 0 200 558 0 0 337 10 211
2010-11 0 310 68 0 0 0 206 584 0 0 359 10 215
Note : Data on liabilities and assets of DICGC relate to end-December for 1988-89 and from 1989-90 onwards, they refer to the financial year (April-March). Also see Notes on Tables. Source : Deposit Insurance and Credit Guarantee Corporation, page no. 32.
233
Table 5.14 : Deposit Insurance and Credit Guarantee Corporation - Liabilities and Assets ( General Fund )
(` crore)
Year Capital
provided by RBI
General reserves
Investment reserves
Other reserves
Current liabilities and
provisions
Total liabilities/
assets
Cash in hand and balances with RBI
Investment in Government securities (at
cost)
Interest accured on investment
Other assets
1 2 3 4 5 6 7 8 9 10 11
1989-90 50 18 12 0 3 84 0 75 3 6
1990-91 50 17 12 0 8 87 0 78 3 6
1991-92 50 18 13 0 5 86 0 77 3 6
1992-93 50 14 16 0 7 87 0 76 3 8
1993-94 50 12 16 0 7 85 0 72 3 10
1994-95 50 9 16 0 9 84 0 70 3 11
1995-96 50 14 16 0 10 90 0 77 2 11
1996-97 50 15 16 0 9 90 0 76 2 12
1997-98 50 17 16 0 9 92 0 79 2 11
1998-99 50 17 16 0 9 93 0 77 2 14
1999-00 50 17 16 0 10 93 0 81 2 10
2000-01 50 18 16 0 3 87 0 77 2 8
2001-02 50 20 16 0 5 91 0 88 2 1
2002-03 50 22 16 0 5 93 0 88 2 3
2003-04 50 24 16 0 7 97 0 91 2 4
234
2004-05 50 26 17 0 8 101 0 93 2 6
2005-06 50 74 19 0 8 151 0 140 3 8
2006-07 50 70 24 0 13 156 0 139 4 13
2007-08 50 164 30 0 14 257 0 214 6 38
2008-09 50 168 25 0 20 263 0 215 5 43
2009-10 50 428 79 0 8 564 0 521 12 31
2010-11 50 438 82 0 15 585 0 531 12 41
Note : Data on liabilities and assets of DICGC relate to end-December for 1988-89 and from 1989-90 onwards, they refer to the financial year (April-March). Source : Deposit Insurance and Credit Guarantee Corporation, page no. 38.
The all above tables represent sequential growth of Indian insurance industry as well its growth has also been calculated on
the behalo of statistical tool SPSS analyses by which CAGR has been calculated.