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INDIAN INSURANCE INDUSTRY-POST LIBERELISATION SCENARIO

INDIAN INSURANCE INDUSTRY-POST LIBERELISATION SCENARIO. Presented by : M.S.NARAYAN, Development Officer, LIC of India, Mandya Branch, Mandya. LIBERALISATION OF INDIAN INSURANCE MARKET.

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INDIAN INSURANCE INDUSTRY-POST LIBERELISATION SCENARIO

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  1. INDIAN INSURANCE INDUSTRY-POST LIBERELISATION SCENARIO Presented by : M.S.NARAYAN, Development Officer, LIC of India, Mandya Branch, Mandya.

  2. LIBERALISATION OF INDIAN INSURANCE MARKET • In July 2000, immediately after the first meeting of the Insurance Advisory committee, 11 essential regulations relevant for players entering the Indian market were notified. • In October 2000, six licenses to new players in the life and non-life sectors were issued. • India thus became a liberalized insurance market.

  3. THE irda bill • A fresh Bill was introduced by the new government in the second half of 1999 by incorporating the provisions of the Insurance Regulatory Authority Bill 1998 and the amendments suggested by the standing committee on finance. • The amendments pertained to foreign equity being restricted to 26%; name of IRA being changed to IRDA as also emphasis on development of social, rural and unorganized sectors. • The IRDA Bill was passed in December 1999 and became an Act in April 2000.

  4. CONSTITUTION OF IRDA 1 - CHAIR PERSON 5 - WHOLE TIME MEMBERS 5 - PART TIME MEMBERS TENURE 5 YEARS

  5. PURPOSE OF REGULATION THE PURPOSE OF REGULATIONS ARE TO, ENSURE PROTECTION OF CUSTOMER INTEREST ENSURE FINANCIAL SOUNDNESS OF INSURANCE COMPANIES,WITH A VIEW TO AVOID INSOLVENCY ENSURE HEALTHY COMPETION& GROWTH OF INSURANCE MARKET REGULATE APPOINTMENT,CONDUCT &PERFORMANCE OF INTERMEDIARIES WEED OUT INEFFICIENT FIRMS FROM THE MARKET ENSURE A FAIR PREMIUM RATE ENSURE EQUITABLE ALLOCATION OF PROFIT TO THE CUSTOMERS

  6. ROLES OF IRDA SUPERVISORY ROLE REVIEW OF BUSINESS OPERATIONS REVIEW OF ACCOUNTIG STANDARDS REVIEW OF OVERALL CORPORATE PERFORMANCE ISSUE OF EARLY WARNING SIGNALS INTERVENTIONARY ROLE ENFORCING COMPLIANCE TO THE ACT ENSURING OBLIGATORY INSURANCE COVERAGE ENSURING RETENTION OF SURPLUS WITHIN THE COUNTRY INVESTMENT STIPULATIONS ENSURING GROUND RULES FOR COMPANY CONSTITUTION PROMOTIONAL ROLE TO ACT AS FECILITATOR TO PROVIDE ENCOURAGEMENT TO NEW ENTRANTS TO ENSURE MANDATORY INSURANCE COVER TO INTEGRATE LOCALMARKET WITH GLOBAL MARKET TO ENSURE ADEQUATE RETURNS TO POLICY HOLDERS

  7. MANDATES OF IRDA THE IRDA POSSESSES THE AUTHORITY TO • ISSUE CERTIFICATION OF REGISTRATION TO INSURER • RENEW THE CERTIFICATE OR MODIFY OR WITHDRAW OR SUSPEND OR CANCEL SUCH REGISTRATION AS THE CIRCUMSTANCES MAY BE, • CONDUCT INSPECTION/AUDIT OF INSURERS/INTERMEDIARIES AND OTHER ORGANISATIONS, • REGULATE INVESTMENTFUNDS, * REGULATE MAINTANANCE OF SOLVENCY MARGINS, * ADJUDICATE THE DISPUTES,

  8. MANDATES OF IRDA THE IRDA IS ALSO AUTHORISED TO, * STIPULATE PERCENTAGE OF BUSINESS FROM RURAL/SOCIAL SECTOR, *ESTABLISH ADVISORY COMMITTEE CONSISTING OF NOT MORE THAN 25 MEMBERS AS EX-OFFICIO PARTICIPANTS TO ADVISE THE IRDA ON ALL MATTERS OF THE AC * STIPULATE PERCENTAGE OF BUSINESS FROM RURAL/SOCIAL SECTOR, *ESTABLISH ADVISORY COMMITTEE CONSISTING OF NOT MORE THAN 25 MEMBERS AS EX-OFFICIO PARTICIPANTS TO ADVISE THE IRDA ON ALL MATTERS OF THE AC

  9. GOVERNANCE OF IRDA IRDA IS BOUND BY THE FOLLOWING. COMPTROLLER &AUDITOR GENERAL SHALL AUDIT ITS ACCOUNTS CENTRAL GOVT. SHALL GIVE DIRECTIONS ON QUESTIONS OF POLICY TO BE FOLLOWED GOVT. CAN SUPERSEDE THE IRDA IF NECESSARY FOR A PERIOD OF NOT EXCEEDING SIX MONTHS AND GOVT. CAN APPOINT A CONTROLLER OF INSURANCE IN THAT PERIOD IT SHOULD SUBMIT A REPORT TO THE GOVT.ON ITS ACTIVITIES DURING THE FINANCIAL YEAR WITHIN 9 MONTHS FROM THE CLOSING DATE THE CHAIRPERSON,MEMBERS,OFFICERS & EMPLOYEES SHALL BE DEEMED TO BE THE PUBLIC SERVANTS

  10. DOMINANCE OF LICI & GIC. Cos. GENERAL INSURANCE LIFE INSURANCE 23.09% 41.24% 76.91% Market Share of Policies in 2010-11 2010-2011 Market Share of 4 GIC Cos. 58.76% Market Share of Pvt.Cos. 41.24% New India 16.66% National 14.36% United India 14.97% Oriental 12.77% 31.3% 68.7% Market Share of Premium in 2010-11

  11. AWARDS & ACCOLADES FOR LIC OF INDIA 2010-2011. “Most Preferred Life Insurance Company of the Year’’ at the CNBC Awaaz Consumer Awards fifth time in a row. Outlook Money Award for“ Best Life Insurer” third time in a row. “Best Life Insurance Company of the Year’’– NDTV Profit Business LeadershipAwards-2010. AIMA- High Performance Award. READER’S DIGEST- Most Trusted Brand Award. Golden Peacock Award for Corporate Governance. World Brand Congress Award FOR Brand Excellence. World HRD Congress Award for Innovative HR Practices. Shoppers and Consumers Insight Award CORP. OFFICE- MUMBAI ZONAL OFFICES -8 DIVISIONAL OFFICES-113 BRANCH OFFICES-2048 SATTELITE OFFICES-340 Customer Zones-54 Metro Area Service Units-25 Over 13 Lakh Agents. TOTAL ASSETS – Rs 13.25trillion I.e., 295.48Billion US$

  12. MAJOR PRIVATE PLAYERS IN LIFE INSURANCE MARKET Reliance Life 17.12% Bajaj Allianz 13.88% ICICI Pru 12.15% Birla Sun life 09.05% Other 18 Private Insurers 47.79% 23.05% OF TOTAL INDIAN LIFE INSURANCE MARKET IS SHARED BY 22 PRIVATE COMPANIES

  13. LIC’S CLAIM PERFORMANCE • During 2010-11, LIC, the public sector insurance behemoth settled 97.5 per cent of death claims, whereas claims pending stood at 1.47 per cent. • Overall, LIC settled 99.6 per cent of the total claims in the last financial year. And 95 per cent of the death claims were settled within 15 days of intimation. • In total in 2010-11, LIC has settled around 18.3 million claims amounting to Rs 53,000 crore, which includes survival benefits, maturity and death claims. Of this, Rs 6,000 crore accounted for 721,000 death claims.

  14. The claim repudiation ratio The claim repudiation ratio is a measure of death claims rejected. The claim repudiation ratio has improved over the last financial year in insurance industry. LIC still remains the benchmark when it comes to settling death claims. However, major private players are also fast catching up. During 2010-11, LIC improved its repudiation ratio for death claims to 1.09 per cent from 1.21 per cent in the previous year. Among the private players, ICICI Prudential Life was the best performer in terms of claims repudiation ratio, whereas HDFC Life’s claims settlement ratio was the highest, respectively.

  15. FUTURE INDUSTRY PROSPECTS • CONVENTIONAL INSURANCE • PENSIONS & ANNUITIES • HEALTH INSURANCE • GROUP INSURANCE • MICRO INSURANCE • REINSURANCE • RISK MANAGEMENT

  16. thankyou M.S.NARAYAN, Development Officer, LIC of India, Mandya Branch, Mandya.

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