Presented by Ashish Chandra (29041) C. Sudhir (29044) Parvati Singh (29055) Sharat Jha (29065)
Institute of Rural Management, Anand
India has, according to 2001 census, 65.38% literacy rate. The literacy rate varies across rural (59.4%) and urban (80.3%) India. These contrasts in literacy levels are significant and have important implications for insurers. Literacy and education increases employability of the person in higher earning jobs and also brings about a change in perception about need for insurance. The median age in country was
Political and legal environment
IRDA Act 1999 The Bill allowed for up to 26% foreign equity participation in the insurance sector. The minimum paid up equity capital, excluding required deposits with the RBI and any preliminary expenses in the formation of the country, requirement of an insurer would be Rs 100 crore to carry on life insurance business Insurance business in Rural Sector: After the commencement of the IRDA Act, 1999, (Malhotra committee) every insurer would have to undertake such percentage of life insurance business in the rural sector as may be specified by the IRDA in this behalf. It is mandatory for the new companies to meet the obligations relating to the rural and
Inflation rate: Inflation can also be one of the causes to change the scenario of the insurance sector. High inflation for instance, would tend to reduce the insurance business, particularly life, because the real value of the money paid back to the policyholder on maturity of the policy would go down and would, therefore, lose its attraction for the investor. Impact of income on insurance: Income level significantly affects the demand for life insurance. Life insurance becomes more affordable when income increases((Rubayah and Zaidi (2000)).
Socio-Cultural and technological environment
Decline of joint family structure has added to need for insurance. New channels like Bancassurance, corporate agents and websites selling life insurance products are ubiquitous testaments to how the channels have grown in terms of not only selling, but also increasing awareness about life insurance. More innovative channels like a supermarket, a bank, a post office, an ATM, an internet kiosk or a departmental store could be introduced in the future. . For example MetLife India, a subsidiary of global insurance giant, entered into a strategic tie up with Viswas, a Hyderabad based retail chain, to offer life insurance and other financial products in the rural areas.
Insurance Corporation was formed as a government regulated monopoly in September 1956 by an Act of Parliament, (LIC Act 1956) with a capital contribution of Rs. 50 million. The total life insurance market can be judged on two parameters – premium collected and number of new policies underwritten. It can be seen that LIC has a market share of 53% which roughly amounts to Rs. 20000000 crores out of a total market of 4.3 crore crores. The number of players in this segment have increased to 30 (15 in private sector), with Life Insurance Corporation (LIC) being the dominant player (market share of over
• When The Life Insurance Corporation of India was set up in 1956, its primary objective was to propagate the idea and practice of life insurance in rural areas among financially backward people so that their risks were covered in the event of death. • The Life Insurance Corporation of India intends to increase the mobility of individual savings to the maximum extent possible. • The Life Insurance Corporation of India seeks to employ the investments of its customers in the best possible manner while at the same time prioritizing matters of national importance. • The company aims at meeting the dynamic expectations of its investors by adding innovative schemes and...