Growth of life Insurance Business: Public and Private Insurance Players in India Abstract-

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1 Growth of life Business: Public and Private Players in India Mrs. Sushma K. Kotgiri Abstract- Investment is primary requirement of common man to give fight to the uncontrollable circumstances to reduce the risk of life. is a tool which safeguards an individual with benefits. As there is increase in risk due to imbalances in nature, growth is found in all corners of world in the form of insurance. The study will focus on working of players in Indian scenario. Researcher will try to make comparison in terms of growth in insurance industry and trend of customers of investing amount in particular plans. The purpose of the study was to find out the investment habits, change in attitude of customer s investment, importance given to type of business organization. Key words: Investment, Attitude, Private and public life insurance and plans. Keywords- Investment,Attitude,Private and Public Life and Plans I. INTRODUCTION Bharati V.Pathak (2008) is one of the most growing sectors in the Indian economy. is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer, or insurance carrier, is a company selling the insurance, the insured, or policyholder, is the person or entity buying the insurance policy. The amount to be charged for a certain amount of insurance coverage is called the premium. Risk S.M.Zha(2012)The transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate means to indemnify the insured in the case of a financial personal loss. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated. management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice. II. OBJECTIVES The objectives of the study are as follows- 1. To take overview of Public and Private insurance companies in India. 2. To make the comparison between Public and Private insurance companies on the basis of Growth. III. SAMPLE AND METHODOLOGY The research methodology includes research design, methods of data collection. The details are as follows- This paper is based on the published article, refereed journals, insurance providing agencies reports, company records, internal documentation, Books from libraries, Newspapers, Journals, Companies website, Companies legal documents,annual reports etc. and the IRDA reports. IV. RESEARCH LIMITATIONS This paper is based on the secondary data, and for the service deliveries empirical study is needed for the comparing the two different sector. Practical & Social Implications: In the expectation of better services, consumers have the choice to choose the service providers while the organization are working under the pressure to reduce their operating expenses in insurance segments in developing economies. V. LITERATURE REVIEW Dr. Sonika Chaudhary, Priti Kiran (2011) During middle of 20 th Century life insurance companies started to operate the evil play natural to all business had its sway. Number of competitors were entered and abolished while profiteering. On 1 st September 1956, Life Corporation of India came into existence after nationalisation of all 245 insurance providing companies. However Government made a paradigm shift in the economic policy by adopting LPG policy.in1999, Regulatory and Development Authority (IRDA) has been established under IRDA Act to regulate the insurance business in the country which resulted lot of entries which offer insurance to the society in terms of offices, policies, number of agents, plans, premium incomes etc. As there is progress changes are found in launching various plans like pension plans or unit linked plans and riders were provided by the life insurers to suit the requirements of various customers.[1] Tapan Sinha (2005) in his paper begins with an overview of the Indian insurance market in section II which highlights the phenomenal growth experienced recently in connection with improvements in economic fundamentals. With comparison in growth, penetration, Indian Journal of Research in Management, Business and Social Sciences (IJRMBSS) 62

2 density and other insurance variables it can be said that still India is an underdeveloped insurance market with huge catch-up potential. It is found that there is potential for expansion of insurance into rural areas, growth has remained slow. Focusing on the fact India lives in rural, it is imperative that insurance industry s development.[2] N.Kannan, 2010 Act implemented in India in the year Regulatory and Development Authority(IRDA)Act 1999is controlling authority over The Life Corporation Act,1956and General Business (Nationalisation)Act,1972 and other related act. India is rich in population and most of the area is untapped and so there is a tremendous scope for growth in insurance sector. Today insurance business is growing at the rate of percent annually. Together with banking services, it adds about 7 per cent to the country s GDP.In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without Life insurance cover and the Health insurance. This is an indicator that growth potential for the insurance sector is immense in India. It was due to this immense growth that the regulations were introduced in the insurance sector and in continuation Malhotra Committee was constituted by the government in 1993 to examine the various aspects of the industry. The key element of the reform process was Participation of overseas insurance companies with 26% capital. Creating a more efficient and competitive financial system suitable for the requirements of the economy was the main idea behind this reform.[3] Sanjeev Bajaj(2007)India is steadily increasing contribution in overall GDP as is a fast growing financial service in India. Since 2000, private players were invited to provide insurance service as there was untapped market and the study focused on causes for restricted growth of insurance sector in India. The study was also done to work out how sustained growth can be achieved by insurance companies along with geographical spread of the services.[4] Manoj Kumar(2010) A thriving insurance sector is of vital importance to every modern economy. First because it encourages the savings habit, second because it provides a safety net to rural and urban enterprises and productive individuals. And perhaps most importantly it generates long-term investible funds for infrastructure building. The nature of the insurance business is such that the cash inflow of insurance companies is constant while the payout is deferred and contingency related.[5] Dr.M.SelvaKumar & Dr.J.Vimal riyan(2012),financial infrastructure, sector and other elements of marketing have gained importance due to the implementation of liberalization, Privatisation and Globalization policy implemented by Government of India. Today s market is customer centric,and customer is supposed to be king of market.life insurance is dealing with intangible products. Private insurance providers kade competirion very intact. To satisfy customers innovations are taking place with distinct features to attract the customers.the study is an attempt to analyse the performance of public and private companies in India.[6] life insurance Dr.Anshuja Tiwari & Babita Yadav(2012) As India is known as a fastest emerging ecnomy on the world map and a strong economy and content huge population. Indian market is untapped market and found good aooprtunity. Liberalisation,Privatisation and Glabalisation policy helped in remarkable improvement in the Indian Life Industry.After 1991,the Indian life insurance industry has geared up in all respects and able to avail healty competition from in-house and abroad players.the study conducted with the help of last ten years data and analysed by the reasearchers.[7] Shilpa Thakur 2012focused on understanding the life insurance sector in Indiawith its flagging issues.the article reveals that life insurance sector has a small market and cover approx. 3 % of population in India. As a growing sector, it is important that all players get a level playing field. The competition act is to provide for a level playing field to all players to encourage competition in market. The dominance of LIC is not deliberate rather it is by virtue of the regulations that the market is deprived of a level playing field and market has an anti-competitive environment. This sector is highly lucrative and therefore increasing the FDI cap would be a step to enhance competition in this sector and also cover a large population. Exclusive networking, sovereign guarantee and entry barriers like limited FDI creates an anti-competitive environment in market.[8] Ashraf Imam(2011) India is a country where the sale of life insurance policies is less than many western and Asian countries, even India stood second largest population in world the Indian insurance market is looking very prospective to many multinational and Indian insurance companies for expanding their business and market share., Life Corporation (LIC) was the only company which dealt in Life Before the opening of Indian market for Multinational Companies and after opening of this sector to other private companies; all the world leaders of life insurance have started their operation in India. With their world market experience and network, these companies have offered many good schemes to lure all type of Indian consumers but unfortunately failed to get the major share of market. Still the LIC is the biggest player in the life insurance market with approx. 65% market share. But why Indian customers do not trust on many companies and why the major populations of India do not have any life insurance policy or what are the Indian Journal of Research in Management, Business and Social Sciences (IJRMBSS) 63

3 factors plays major role in buying behavior of Consumers towards life policies. Customers is the king. and it is the customer determines what a product is to be buy therefore a sound marketing programme start with a careful analysis of the habits, attitudes, motives and needs of customers.[9] Dr.Arnika Srivastava & Dr.Sarika Tripathi(2012) in their paper presented the facts that when almost all the industries in the world trying hard for survival due to the major economic meltdown, Indian life insurance industry is one of the sectors that is still observing good growth. Change must be tapped by everyone and try to modified itself with the passage of time by introducing customized products based on customer s need, through innovative distribution channels. Indian life insurance industry searched a path to grow.[10] Ravikant Sharma(2012)The study on life insurance services have been compared because of growth potential of life insurance segment in both of economies. India spends 4% of its GDP on life insurance. Life products are seen in India primarily as a means of improving financial health. India lacks any system of social security, and life insurance products offer tax benefits, and income protection. Endowment or whole-life policies provide good saving options, and are more popular in India than simple term-life plans that offer pure risk protection.[11] VI. DATA ANALYSIS & INTERPRETATION The following are the details of insurance companies who are playing in Indian market. S.N. Name of the Company S. N. Name of the Company 1 HDFC Standard Life (HDFC Std.) 12 Aviva Life India Private Limited (Aviva) 2 Max New York Life (Max New York) 3 ICICI Prudential Life (ICICI Pru.) 4 Kotak Mahindra Old Mutual Life Limited (Kotak Mahindra) 5 Birla Sun Life ( Birla Sun Life) 6 Tata AIG Life 13 Sahara India Limited (Sahara) 14 Shriram Life Limited(Shriram) 15 Bharti AXA Life Limited (Bharti AXA) 16 Future Generali India Life (Future Generali) 17 IDBI Fortis Life Company Limted (Tata AIG ) 7 SBI Life (SBI Life) 8 ING Vysya Life Company Private Limted (ING Vysya) 9 Bajaj Allianz Life (Bajaj Allianz) 10 Metlife India (Metlife) 11 AMP Sanmar (now it is Reliance Life (Reliance) Limited (IDBI Fortis) 18 Canara HSBC Oriental Bank of Commerce Life Limited (Canara HSBC) 19 Aegon Religare Life Limited (Aegon Religare) 20 DLF Pramerica Life Limited 21 A Star Union Daichi Life Co Ltd. 22 Life Corporation of India Source: IRDA Annual Report As on 2012, In Indian market, total fifty-two[52] insurance companies are offering services-out of which twenty-two[22] are life insurance and remaining are nonlife insurance business. The life insurance industry recorded a premium income of `2, 87,072 crore during as against `2, 91,639crore in the previous financial year, registering a negative growth of 1.57 per cent. While private sector insurers posted 4.52 per cent decline (11.08 per cent growth in previous year) in their premium income, Life Corporation (LIC ), the fully state owned insurance company, recorded 0.29 per cent decline (9.35 per cent growth in previous year), in its total premium underwritten.while the renewal premium accounted for per cent (56.66 per cent in ) of the total premium received by the life insurers, first year premium contributed the remaining per cent (43.34 per cent in ).During , the growth in renewal premium was 4.77per cent (6.23 per cent in ). First year premium registered a decline of 9.85 per cent in comparison to growth of per cent during Indian Journal of Research in Management, Business and Social Sciences (IJRMBSS) 64

4 TABLE II TABLE III PREMIUM UNDERWRITTEN : LIFE INSURERS MARKET SHARE : LIFE INSURERS Insurer Regular [1] LIC Private Total Single [2] LIC Private Total First Year [1+2] LIC Private Total Renewal [4] LIC Private Total Total [5=(3+4)=(1+2+4) LIC Private Total Source: Statistical Handbook of Various environmental factors are responsible for vibrations in the insurance sector. Entry of new private insurance serving companies are trying to get place in the market. So there is change in growth of insurance sector both in LIC and Private sector. In regular premium category LIC is leading as compare to Private sector as well as there is growth in the year and LIC was able collect regular premium in the year amounting Rs crores to Rs crores. For second category that is Single again LIC is leading as Rs as compare to Private Rs The figures also shows down trend in the year For third category First Year is the sum of fist category and second category. In Renewal LIC is leading than Private sector and lead is found in last two years comparisons also. In the year LIC received Rs crores and in Rs and Private sector received Rs to Rs Content Regular LIC Private Single LIC Private First Year LIC Private Renewal LIC Private Total LIC Private Source: Statistical Handbook of Market Share LIC grows in Market Share on the basis of yearly analysis for Regular and First Year by to and to Private is growing on the basis of Single and Renewal from18.74 to and to On the basis of total premium income, the market share of LIC increased marginally from per cent in to per cent in Accordingly, the market share of private insurers has gone down marginally from per cent in to percent in The market share of private insurers in first year premium was per cent in (31.16 per cent in ). Indian Journal of Research in Management, Business and Social Sciences (IJRMBSS) 65

5 TABLE IV GROWTH OF INVESTMENT: FUND WISE Fund Total Growth Total Growth Life Pension & General Annuity & Group Fund Unit linked Total Source: Statistical Report( ) Table explains the status of Growth of Investment fund wise. Growth is found on the basis life from15.01 to in the year 2011 and 2012.Thsre is downward trend in Pension and General Annuity & Group fund as well as Unit linked Fund. TABLE NO.V TOTAL INVESTMENT OF THE INSURANCE SECTOR Insurer Public Private Total Source: LIC website. Graph No.1 Total Investment of Table No.V gives the details of Total Investment of of the year 2011 and 2012 of both Public and Private sector. It rose from Rs to Rs in Crores whereas for Public and Rs to Rs in Crores which showed a positive trend in growth of. VII. FINDINGS The above study reveals the fact that there is no doubt LIC is leading player in the Indian Market. But slowly and steadily other private sector is also capturing the market and offering challenge to the market leader LIC. Different private companies are entering with their USP and trying to capture market share and with all different Private Companies only LIC has to answer by working on all fronts and satisfy their customers by innovative products, competition and service. But it undoubtedly, LIC has growth a bit or remarkable constraining the various environmental factors. VII. REFERENCES [1] Dr. Sonika Chaudhary, Priti Kiran, Life Industry in India - Current Scenario, IJMBS Vol.1, Issue 3, September 2011 ISSN: (Online) ISSN : (Print) RGI, Mohali, Punjab, India [2] Tapan Sinha2005, The Indian Industry: Challenges and prospects Centre for Risk & Studies-Discussion Paper studies 2005 x pp [3] N.Kannan,2010, A study on the Growth of Indian International Journal of Management, Volume 1, Issue 1, May 2010, pp Sanjeev Bajaj, Life insurance: The life ahead, XISS, Ranchi, 2007 [4] Dr.Anshuja Tiwari & Babita Yadav, Analytical study on Indian Life Industry in Post liberalization,international Journal of Social science Tommorrow ISSN: vol.1 No.2PP [5] Sanjeev Bajaj(2007) [6] Manoj Kumar(2010) [7]Dr.M.Selva Kumar & Dr.J.Vimal Priyan, A Comparative study of Public & Private Life insurance companies in India, Global Economic Research, ISSN ,Vol.I Issue Oct March2012. [8] ShilpaThakur, Competition in Life of India [9] Ashraf Imam, Analysing Customer behaviours in Life Industry,Asian Journal of Research in Social Sciences and Humanities,Volume 1,Issue 1,2011. [10] Dr.Arnika Srivastava & Dr.Sarika Tripathi, Indian Life Industry-The changing Trends,Researchers World- Journal of Arts,Science & Commerece,E-ISSN ,ISSN Vol.III,Issue 2(3),April 2012(96). [11] Ravikant Sharma(2012), A comparative study on Deliveries of Service on Life :India vs China,The Internationa; Journal s Research Journal of Social Sciences & Management,ISSI Author Assistant Professor, (sush123_kotgiri@rediffmail.com) SKN Sinhgad Business School, Pandharpur, Solapur (MS), India. Indian Journal of Research in Management, Business and Social Sciences (IJRMBSS) 66