INDIAN INSURANCE INDUSTRY:

Insurers

Insurance industry, as on 1.4.2000, comprised mainly two players: the state

insurers:

Life Insurers:

• Life Insurance Corporation of India (LIC)

General Insurers:

• General Insurance Corporation of India (GIC) (with effect from

Dec'2000, a National Reinsurer)

GIC had four subsidary companies, namely ( with effect from Dec'2000, these
subsidaries have been de-linked from the parent company and made as
independent insurance companies.

1. The Oriental Insurance Company Limited

2. The New India Assurance Company Limited
3. National Insurance Company Limited
4. United India Insurance Company Limited.

Yr: 2000-2001 : ( From 2nd April '2000 to 31st December'2001)

Insurance Industry in the year 2000-2001 had 16 new entrants, namely:

Life Insurers:

S.No Registrati Date of Name of the Company

. on Reg.
Number

1 101 23.10.2000 HDFC Standard Life Insurance Company Ltd.

2 104 15.11.2000 Max New York Life Insurance Co. Ltd.
3 105 24.11.2000 ICICI Prudential Life Insurance Company
Ltd.

4 107 10.01.2001 Kotak Mahindra Old Mutual Life Insurance

Limited

5 109 31.01.2001 Birla Sun Life Insurance Company Ltd.

6 110 12.02.2001 Tata AIG Life Insurance Company Ltd.
7 111 30.03.2001 SBI Life Insurance Company Limited .
8 114 02.08.2001 ING Vysya Life Insurance Company Private
Limited

9 116 03.08.2001 Bajaj Allianz Life Insurance Company

Limited

10 117 06.08.2001 Metlife India Insurance Company Ltd.

11 133 04.09.2007 Future Generali India Life Insurance Company Limited
12 135 19.12.2007 IDBI Fortis Life Insurance Company Ltd.

General Insurers :

S.No. Registrati Date of Name of the Company

on Number Registratio
n

1 102 23.10.2000 Royal Sundaram Alliance

Insurance Company Limited

2 103 23.10.2000 Reliance General Insurance

Company Limited.

3 106 04.12.2000 IFFCO Tokio General

Insurance Co. Ltd

4 108 22.01.2001 TATA AIG General Insurance

Company Ltd.

5 113 02.05.2001 Bajaj Allianz General

Insurance Company Limited

6 115 03.08.2001 ICICI Lombard General

Insurance Company Limited.

7 131 03-08- Apollo DKV Insurance

2007 Company Limited

8 132 04-09- Future Generali India

2007 Insurance Company Limited

9 134 16-11-2007 Universal Sompo General Insurance

Company Ltd.
Yr: 2001-2002 : ( From 1st Jan 2001 to Dec. 2002)

Insurance Industry in this year, so far has 5new entrants; namely

Life Insurers:

S.No. Registration Date of Name of the Company

Number Reg.

1 121 03.01.2002 Reliance Life Insurance Company Limited.

2 122 14.05.2002 Aviva Life Insurance Co. India Pvt. Ltd.

General Insurers :

S.No. Registrati Date of Name of the Company

on Number Registrati
on

1 123 15.07.2002 Cholamandalam General

Insurance Company Ltd.

2. 124 27.08.2002 Export Credit Guarantee

Corporation Ltd.

3. 125 27.08.2002 HDFC-Chubb General Insurance

Co. Ltd.

Yr: 2003-2004 : ( From 1st Jan 2003 till Date)

Insurance Industry in this year, so far has 1new entrants; namely

Life Insurers:

S.No. Registration Date of Name of the Company

Number Reg.

1 127 06.02.2004 Sahara India Insurance Company Ltd.

Yr: 2004-2005 :
Insurance Industry in this year, so far has 1new entrants; namely

Life Insurers:

S.No. Registration Date of Name of the Company

Number Reg.

1 128 17.11.2005 Shriram Life Insurance Company Ltd.

Yr: 2006-2007 :

Insurance Industry in this year, had 1new entrants; namely

Life Insurers:

S.No. Registration Date of Name of the Company

Number Reg.

1 130 14.07.2006 Bharti AXA Life Insurance Company Ltd.

Yr: 2007-2008 :

Insurance Industry in this year, had 2 new entrants; namely

S.No. Registration Date of Name of the Company

Number Reg.

1 133 04.09.2007 Future Generali India Life Insurance Company Limited

2 135 19.12.2007 IDBI Fortis Life Insurance Company Ltd.

Yr: 2008-2009 :

Insurance Industry in this year, so far has 3 new entrants in Life and 1 new
entry in General ; namely

Life Insurers:
S Registrati Date of Name of the Company
.No. on Reg.
Number

1 136 08.05.20 Canara HSBC Oriental Bank of Commerce Life Insurance

08 Company Ltd.

2 138 27.06.20 Aegon Religare Life Insurance Company Ltd.

08

3 140 27.06.20 DLF Pramerica Life Insurance Company Ltd.

08

4 142 Star Union Dai-ichi Life Insurance Co. Ltd.,

General Insurers:

S.No. Registration Date of Name of the Company

Number Reg.

1 139 27.06.2008 Bharti Axa General Insurance Company Ltd.

2 141 15.12.2008 Raheja QBE General Insurance Co. Ltd

INSURANCE BUSINEES :
Insurance business is divided into four classes :

1) Life Insurance 2) Fire Insurance 3) Marine Insurance and 4) Miscellaneous

Insurance.

Life Insurers transact life insurance business; General Insurers transact the
rest.

No composites are permitted as per law.

LEGISLATION (as on 1.4.2000):

Insurance is a federal subject in India. The primary legislation that deals with
insurance business in India is:

Insurance Act, 1938, and Insurance Regulatory & Development Authority Act,
1999.
INSURANCE PRODUCTS (as on 1.4.2000) (for latest information get in touch with
the current insurers – website information of insurers is provided at the web
page for insurers ):

Life Insurance:

Popular Products: Endowment Assurance (Participating), and Money Back

(Participating). More than 80% of the life insurance business is from these
products.

General Insurance:

Fire and Miscellaneous insurance businesses are predominant. Motor Vehicle

insurance is compulsory.

Tariff Advisory Committee (TAC) lays down tariff rates for some of the general
insurance products (please visit website of GIC for details )

2001

New products have been launched by life insurers. These include linked-
products. For details, please visit the websites of life insurers.

INFORMATION

About the insurance industry, the following documents may be helpful:

Malhotra Committee Report (The Report of the Committee on Reforms in the

Insurance Sector);

IRDA's First Annual Report - 2001

CUSTOMER PROTECTION:

Insurance Industry has Ombudsmen in 12 cities. Each Ombudsman is

empowered to redress customer grievances in respect of insurance contracts
on personal lines where the insured amount is less than Rs. 20 lakhs, in
accordance with the Ombudsman Scheme. Addresses can be obtained from
the offices of LIC and other insurers.

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In dust ry Ov er view : : Insu rance
The domestic insurance industry in India is estimated to be around US$ 60.5 billion by 2010, of which US$ 35 billion
will come from rural and semi-urban areas. While the life insurance market is expected to grow to US$ 35 billion,
non-life insurance market will touch an estimated US$ 25 billion.

With the largest number of life insurance policies in force in the world, India’s insurance sector accounted
for 4.1 per cent of GDP in 2006-07, up from 1.2 per cent in 1999-2000, far ahead of China where
insurance accounts for just 1.7 per cent of the GDP and even the US where insurance penetration stands
at 4 per cent of the GDP. One area that continues to cause concern is the number of customer grievances
in insurance, especially in a few specific classes. This calls for more transparency in designing the contract
wording and on insisting that the applicant is sufficiently informed about the coverage and more
particularly the exclusions. In addition, the legislation itself requires to be transformed to meet the needs
of the emerging markets. The Law Commission of India which has gone extensively into the various
insurance laws has submitted its report. Further, the expert committee headed by Mr. K.P. Narasimhan has
also submitted its proposals requiring amendments to the laws. The demand for health insurance covers
has seen a healthy increase, and today the sector is the fastest growing segment in the non-life insurance
industry in India, which grew at over 40% last year. It is also emerging as an increasingly significant line
of business for life insurance companies. During the last five years, the premium from health insurance
products in non-life companies has grown from 675 crores in 2001-02 to Rs 3200 crores in 2006-07,
almost 5 times its level 5 years back. While this rate of growth appears to be very healthy, it is on a low
base, and health insurance penetration in the country continues to be low. Only about 25 million persons
are presently covered for health through commercial insurance, in a country of over 1.1 billion people.
Overall, the Indian health sector is still characterized by the near absence of any significant risk protection
against major health-related expenditure, as insurance and other organized forms of payment for health
services, including ESIS, CGHS and other such schemes barely constitute a tenth of all health expenditure
in the country. Almost four-fifths of the health spending in the country is private, out-of-pocket
expenditure. In the absence of such protection, the financial impact of hospitalization can be very
pronounced, and indeed is reported as one of the leading causes of impoverishment in the country

Indian insurance companies recorded a 19.9 per cent growth in premium in dollar terms (adjusted for
inflation) in 2006-07, compared to the world market growth rate of 2.9 per cent. This rate of growth of
the industry looks particularly impressive when seen against the fact that the combined penetration of
both life and non-life is less than 2 per cent of the GDP compared to world average of 7.52 per cent.
Clearly, the scope for growth is enormous.

Led by the Life Insurance Corporation (LIC), the life insurance industry registered a growth of 110 per
cent in fiscal 2006-07, taking the total business to US$ 19.2 billion from the previous year’s US$ 9.1
billion. The life insurance market has grown rapidly over the past six years, with new business premiums
growing at over 40 per cent per year owing to the entry of a host of new players with significant growth
aspirations and capital commitments.

The total life insurance market premiums is likely to more than double from the current US$ 40 billion to
US$ 80-US$100 billion by 2012, says a study by McKinsey. The study titled ‘India Insurance 2012:
Fortune Favours the Bold,’ expects a rise in premiums between 5.1 and 6.2 per cent of the GDP in 2012
from the current 4.1 per cent driven by greater insurance intensity per capita as the average per capita
income increases and rise in penetration in urban and rural areas. The life insurance premium
contributions per capita have jumped from a little over US$ 7 in 1999-2000 (pre-liberalisation) to US$
38.5 in 2006-07.

Life insurance penetration in India - which was less than 1 per cent till 1990-91 - increased to 2.53 per
cent in 2005, and to 3 per cent in 2006-07. While the impetus for growth has come from both public and
private insurers, the number of players in this segment have also increased to 16 (15 in private sector),
with Life Insurance Corporation (LIC) being the dominant player (market share of over 74 per cent).

The general insurance industry grew 11.6 per cent between April and November in 2007-08 with robust
performances by private players. The 13 non-life insurers collected US$ 4.7 billion in premium against
US$ 4.2 billion in the same period last year. While the public sector could increase its premiums by just
3.57 per cent, 9 private sector players clocked premium growth of 26.49 per cent. Private sector players’
market share has grown to about 40 per cent in FY08 as compared to the public sector’s 60 per cent.

INSURANCE SECTOR POLICY BY GOVERNMENT

• Foreign direct investment up to 26 per cent is permitted under the automatic route subject to
obtaining a license from the IRDA.

• IRDA has removed administered pricing mechanism, i.e. de-tariffing in respect of fire and
engineering along with motor insurance of general insurance for premium, effective from 1 January, 2007.

• The control rates on fire, engineering and workmen’s compensation insurance classes has been