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Insurance Industry in India – An Overview
Sep 17, 2010 | 4396 VIEWS

Introduction

It’s now been more than a decade since the opening up of the insurance sector in India to the private sector and for foreign players. The past decade has seen considerable growth in the insurance sector and has seen the introduction of a large number of innovative products – a natural and positive outcome of increasing competition. The insurance sector plays a very crucial role in the economy of any country – it increases avenues for savings of individuals, protects the future of individuals and spreads risks of institutions by forming a large pool of fund. The sector also contributes significantly to the capital markets and assists in large capital infrastructure developments of our country through their funds.  

The insurance industry in India is divided into 2 basic sectors – Life Insurance and Non-life Insurance (also called General Insurance and even called Property and Casualty or P&C ). Both these sectors are governed by Insurance Regulatory and Development Authority (IRDA) of India which is a government body which frames the rules for the entire industry and all insurance companies have to abide by them. IRDA is the policy maker for the entire insurance industry in India and also serves as the custodian of consumers rights.

As the name suggests life insurance companies cover the risks associated with the life of a person and non-life insurance companies cover other risks associated with our daily living like health, our vehicles, travel and home insurance to name a few. Non-life insurance sector also covers a lot of other risks in the corporate world – from simple office insurance to insuring entire factories and industrial equipments. Over a period of time life insurance policies have started incorporating an investment component along with the basic insurance cover so that your money grows while it remains invested with the insurance companies – details about these types of policies will be taken up in detail in the forthcoming posts in this series. But non-life insurance companies have so far been restricted to pure risk cover itself.

History of insurance in India

There is a lot that can be written on the history of insurance in India, but it would take up a lot of your time and make this a long article. Those interested may read it by clicking here. To put it in short, the insurance sector had only government owned entities till a decade back. LIC (Life Insurance Corporation of India) was the only life insurance provider. In the general insurance space there were players like National Insurance, New India Assurance, Oriental Insurance and United India Insurance which offered solutions. All this changed in the year 2000 when private players were allowed to start operations. A host of private players entered this market and have been aggressive ever since. As of now we have 23 life insurance companies and 24 general insurance companies. There are a number of new players who are awaiting regulatory clearances and approvals to start their business in India in both the life and general insurance sectors.

Current market Scenario

LIC is by far the biggest life insurance company in India both in terms of market share and their presence in India – it is the only government owned entity. Most of the private players, in both life and non-life sectors, have started business in India with the partnership of established insurance players in the world. The expertise of these global players help the Indian insurance company’s perform much better as they can replicate the learning gained from other markets over a large period of time. The foreign partner in any insurance company in India is not allowed to own more than 26% of the shares in Indian insurance company as per IRDA regulations. We have seen big financial groups in India like SBI, ICICI and HDFC enter this pace and become aggressive players. Other famous corporate groups like the Tatas, Birlas and the Ambanis have also formed insurance companies.

List of Life Insurance Companies

While LIC has been around for a long time and is an extremely profit making venture, some of the private players have just about started making profits on a year-on-year basis. It will take some time before most of them break even. The life insurance business has a long gestation period and it may take more than a decade to break even – so all players would be ready for the same.

1. Aegon Religare

Private Player

2. Aviva India

Private Player

3. Bajaj Allianz Life Insurance

Private Player

4. Bharti Axa Life Insurance

Private Player

5. Birla Sun Life

Private Player

6. Canara HSBC

Private Player

7. DLF Pramerica

Private Player

8. Future Generali Life

Private Player

9. HDFC Standard

Private Player

10. ICICI Prudential

Private Player

11. IDBI Fortis

Private Player

12. IndiaFirst

Private Player

13. ING Vysya

Private Player

14. Kotak Mahindra Old Mutual

Private Player

15. LIC

Government Owned

16. Max New York

Private Player

17. Met Life

Private Player

18. Reliance Life Insurance

Private Player

19. Sahara India

Private Player

20. SBI Life

Private Player

21. Shriram Life Insurance

Private Player

22. Star Union Dai-ichi

Private Player

23. Tata AIG Life Insurance

Private Player

 

List of Non-Life Insurance Companies

The core business of almost all non-life insurance companies in India are loss making. It is only through investment income that these companies report profits. This is not a desirable scenario and we should see a lot of upward price revisions in the coming years – some this has already started. With an entry of every new player we see a effort to grab market share and drop premiums. This has been the status of the general insurance companies for quite a few years and as a result the premium collected are not proportionate to the risks and claims are either greater than the premium collected or very close to it. Gradually, we are witnessing some companies taking steps to correct this anomaly.

1. Agriculture Insurance Company

Government Owned

2. Apollo Munich Health Insurance

Private Player

3. Bajaj Allianz General Insurance

Private Player

4. Bharti AXA General Insurance

Private Player

5. Cholamandalam MS

Private Player

6. Export Credit Guarantee Corp

Government Owned

7. Future Generali

Private Player

8. HDFC Ergo

Private Player

9. ICICI Lombard

Private Player

10. Iffco Tokio

Private Player

11.. L&T General Insurance

Private Player

12. Max Bupa

Private Player

13. National Insurance

Government Owned

14. New India Assurance

Government Owned

15. Oriental Insurance

Government Owned

16. Raheja QBE

Private Player

17. Reliance General Insurance

Private Player

18. Royal Sundaram

Private Player

19. SBI General Insurance

Private Player

20. Shriram General Insurance

General Insurance

21. Star Health Insurance

Private Player

22. Tata AIG General Insurance

Private Player

23. United India

Government Owned

24. Universal Sompo

Private Player

Deepak Yohannan
Deepak Yohannan is the CEO of MyInsuranceClub. He enjoys writing on Personal Finance and contributes regularly on sites like Reuters & Moneycontrol. He is a strong proponent of online insurance and is often found pointlessly babbling about it!

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