EFFECTS OF GLOBALIZATION ON INDIAN INSURANCE

SECTOR -----Presented by THE STARTERS

Globalization defined…..

•“…processes whereby social relations acquire relatively distance-less or border-less qualities, so that human lives are increasingly played out in the world as a single place.” (Jan Aart Scholte)

•“…technological, political, economic, and cultural dimensions that connect individuals, governments, and firms across national borders.” (Rosa Gomez Dierks)

Purpose of Globalization:1.Clarification of the notion of Globalization applied to the world Economy.

2.Evaluate the potential benefit and potential cost dangers streaming from Globalization.

3.Find out cost or Danger streaming from Globalization.

Indian Insurance Sector Before Globalization

.

G.I. is a British Legacy in India.General insurance started with Triton Insurance Company in Kolkata in 1850.Few landmark years are 1907, 1957, 1968, 1972.GIC started operations in 1973 with four subsidiaries.Life insurance started with Oriental life Insurance in 1818 in Kolkata.Few Landmark years are 1912, 1928, 1938, 1956. LIC started with 243 companies.

Year No. of Indian offices No. of Non- Indian offices

1928 97 138

1929 108 149

1938 200 143

1941 197 80

1945 234 81

Before nationalization of LIC, non Indian insurers were there too.They made business of about Rs 160 crores.Post war (1946- 1955) the Indian companies took over the market.Non Indian companies were 16 then.

Competitors then..

Changing course..• Over the post war period the foreign companies took

backseat.• Suffered of the Indian Insurance Act, 1938.• Revenues and their earnings declined.

1945 1955

No. of policies

Insured amount

Premium income

No. of policies

Insured amount

Premium income

Indian life offices

577000 12278 673 749000 22085 1139

Non Indian life offices

22000 1260 74 22000 1744 100

Total 599000 13538 747 771000 23829 1239

% of Non Indian to total

3.7 9.3 9.9 2.9 7.0 8.0

Still a long way to go..• The average amount of money for a new policy increased.

• Insurance companies were touching few urbans only, many of them went in liquidation, so nationalization started and bill was passed in 1956.

Year Average amount of money for a new policy in India (in Rs)

1946 2205

1947 2177

1948 2306

1949 2341

1950 2471

1951 2575

1952 2526

1953 2569

1954 3123

1955 2950

Important milestones in the life insurance business in India

•

1912: The Indian Life Assurance Companies Act enacted.

• 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses.

• 1938: Earlier legislation consolidated and amended to by the Insurance Act .

• 1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalised companies.

 

• 1956 - The Life Insurance Company was nationalized

• 1972 - The general insurance business was nationalized

• 1999 - Private insurance companies came into existence

• 2000 - Insurance Regulatory and Development Authority bill was passed

• ∏LIC market share has decreased from 95%(2002-03) to 81% (2004-05)

•NAME OF THE PLAYER MARKET SHARE (%)

•LIC 82.3ICICI PRUDENTIAL 5.63BIRLA SUN LIFE 2.56BAJA ALLIANZ 2.03SBI LIFE 1.80HDFC STANDARD 1.36TATA AIG 1.29MAX NEW YORK 0.90AVIVA 0.79OM KOTAK MAHINDRA 0.51ING VYASA 0.37AMP SANMAR 0.26METLIFE 0.21

LICICICI BIRLABAJAJSBIHDFCTATAMAX NEWYORK AVIVAMAHINDRA INGVYASASANRARMETLIFE

Insurance today

The Malhotra Committee - For initiating reform in insurance

sector.

Set up of IRDA

Current scenario in life insuran

ce sector

Present scenario of Insurance sector

Competitions between the

public and

private sector

companies

Growth of the

private players in India insurance market

Impact of globalization on Insurance Sector

End of

fear factor

Coming up

of private and foreig

n insura

nce companies

Name of the playe

r mark

et share(%)

opportunity• New customer have much

more option to choose• Job opportunity• It will cover large area.• Better customer service• Coming of domestic and

foreign companies.

Challenges before the industry

Threat for public sector companies

Increasing awareness leading to large number of legal cases

Essentials to meet the challenges

•Understand the customer•Selection of right type of distribution channel•Very efficient CRM system•Should Focus on semi urban and rural areas.•Promoting Health Insurance..

Indian Insurance Sector ready to tap rural India

Indian Insurance sector will reach US$ 60 Billion in the coming 4 years

Semi urban and rural areasShare: US $35 Billion

Urban areasShare: US $25 Billion

Life Insurance Share: US $20 Billion

Non Life InsuranceShare: US $ 15 Billion

Life InsuranceShare : US $15 Billion

Non Life Insurance Share :US $ 10 Billion

FUTURE

THANK YOU

The Starters…Arindam Dey Abirlal MukherjeeChandan HaikelMonoj DevMurli Dhar choudhury Sourav Dey Supriyo paul Prakash SharmaSamrat SarkarPriyotosh Das.