LIFE INSURANCE INDUSTRY
IN INDIA - AN OVERVIEW
T.S.VIJAYAN
Chairman, LIC of India
President, Insurance Institute of India
LIFE INSURANCE INDUSTRY
IN INDIA - AN OVERVIEW
THEME OF THE PRESENTATION
Future challenges in Life Insurance
Business in India
LIFE INSURANCE INDUSTRY
IN INDIA - AN OVERVIEW
• India is the seventh largest country in the
world with a population of around 1100
million.
• India is the second most populous country in
the world, next only to China.
• It has 28 states and 7 Union Territories with
distinct cultural backgrounds.
• India is known for its diversity with multi
varied socio-economic conditions and
languages. It has many geographical
features and a rich history.
• India is the largest democratic country in the
world with a strong judicial framework.
LIFE INSURANCE INDUSTRY
IN INDIA - AN OVERVIEW
• The middle class segment is 250 million
strong. It has aspirations and is ambitious.
• India has the 4th largest economy based on
Purchasing Power Parity.
• Indian GDP is growing at an average of 9%
over the last few years.
LIFE INSURANCE INDUSTRY IN
INDIA - AN OVERVIEW
• The total individual policies serviced by all
life companies in India are around 270
millions of which LIC alone has around 250
million.
• Total premium of all life companies is only
about 4% GDP.
• It still leaves a lot of potential for the life
companies to grow and prosper in India.
LIFE INSURANCE INDUSTRY IN
INDIA - AN OVERVIEW
• Since Independence, in 1947 India had
followed a socialistic pattern of economy,
wherein government intervention and
investment were high.
• Even then there was a strong private sector
participation
since
the
time
of
Independence.
LIFE INSURANCE INDUSTRY IN
INDIA - AN OVERVIEW
The history of Life Insurance in India
• The birth and growth of the Insurance sector
in India is quite breath taking.
• In the year 1818 the Oriental Life Insurance
Company was started at Kolkata.
• In 1912 the Indian Life Assurance Companies
Act was enacted as the first statute to
regulate the Life Insurance Business.
LIFE INSURANCE INDUSTRY IN
INDIA - AN OVERVIEW
• In 1938 the earlier legislation was
consolidated and amended to become the
Insurance Act with the objective of
protecting the interests of the insuring public.
• In 1956, the LIC of India was formed under
the LIC Act,1956 with a capital contribution
of Rs. 5 crores i.e $ 1.2 million at current rates
from the Government of India, nationalising
245 life insurance companies.
LIFE INSURANCE INDUSTRY IN
INDIA - AN OVERVIEW
• In 1999, the Insurance Regulatory and
Development Authority popularly known as
IRDA was created by an act of the
Parliament to regulate all insurance
companies and businesses in India.
• IRDA has evolved into an effective regulator
and it has facilitated the entry and growth of
private players in the insurance sector.
• Since then the growth of the insurance
industry in India has never been the same
again.
LIFE INSURANCE INDUSTRY IN
INDIA - AN OVERVIEW
• Life Insurance is a sun rise industry in India.
• Many major international players are
operating in collaboration with Indian
partners. The Joint Ventures are backed by
strong capital base and latest technology.
• The sector was opened up for private
players in the year 2000. Currently there are
19 companies operating in India in addition
to LIC of India.
• I am proud to state that LIC is the dominant
player.
LIFE INSURANCE INDUSTRY IN
INDIA - AN OVERVIEW
LIC Highlights
Assets as on 31.03.2008
No. of policies
No. of employees
No. of agents
: $ 185 billion
: 250 million
: 1,13,000
: 1.2 million
LIFE INSURANCE INDUSTRY IN
INDIA - AN OVERVIEW
• After opening up of the sector the life
insurance industry has grown leaps and
bounds. The industry has earned $ 45 billion
total premium income during the F.Y 200708.
• The life insurance companies are the largest
institutional investors in India.
LIFE INSURANCE INDUSTRY IN
INDIA - AN OVERVIEW
• The life insurance companies have brought
in huge capital for investment and
expansion. They have generated good
employment opportunities, both direct and
in-direct.
• The latest technology is being introduced by
all the companies thereby improving the
servicing standards.
LIFE INSURANCE INDUSTRY IN
INDIA - AN OVERVIEW
• Innovative and market driven products are
being offered by all the companies.
• All companies are building the distribution
channels with strong tied agency network.
• Alternate distribution channels are also
being developed in order to strengthen the
overall process of procuration of business
and deliver of service.
• India has a total of 2.5 million agents of
which 50% are with LIC alone.
• There is a sharp increase in the remuneration
of life insurance professionals
LIFE INSURANCE INDUSTRY IN
INDIA - AN OVERVIEW
Challenges : Many
• Professionals and experts are in short supply.
Man power requirement has increased
manifold.
• Increase in salaries to employees leading to
high levels of attrition. Retention of
employees is a major challenge.
LIFE INSURANCE INDUSTRY IN
INDIA - AN OVERVIEW
Challenges : Many
• India being a vast country and with huge
population, is a challenge for the life
companies.
• Designing products for the people of various
economic strata is a daunting task indeed.
LIFE INSURANCE INDUSTRY IN
INDIA - AN OVERVIEW
• Prosperity of all companies depends upon
their capability to innovate and include all
sections of the society into their business
portfolio.
• Micro Insurance and financial inclusion will
be major challenges for all the companies.
• There is a shift from traditional endowment
policies to unit linked policies.
LIFE INSURANCE INDUSTRY IN
INDIA - AN OVERVIEW
• There is a shift from long term policies to
short term.
• Customers are expecting higher returns and
thereby a strong emphasis on unit linked
plans.
• When stock markets are volatile can the life
insurance
companies
overcome
the
turbulence? Are they equipped to tide over
the storm?
LIFE INSURANCE INDUSTRY IN
INDIA - AN OVERVIEW
• One of the key drivers of the Indian economy has
been the dramatic increase of the urban
population.
• Urban India today is already more populous than
the entire United States. By 2025, it will exceed the
current population of the European Union.
• Apart from this, the real potential lies in the rural
India where prosperity is on the rise
• Go Rural is the slogan for most of the companies in
India today.
LIFE INSURANCE INDUSTRY IN
INDIA - AN OVERVIEW
Key Issues
• Building institutions for development of self
regulation for better market conduct
• Development professionalism and
organising research for industry to develop
on scientific lines
• Ensuring profitability and return to
stakeholders by cost competitive policies.
LIFE INSURANCE INDUSTRY IN
INDIA - AN OVERVIEW
Thank You