Fdi Insurance

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A RESEARCH PAPER ON FDI in Life Insurance

By
Susmit Kulkarni
Vineet Limaye
Amar Naphade
Ishan Kathale

ABSTRACT

The Insurance sector reforms have open in the door for private players, private insurance companies in the beginning of life insurance business with public sector company (LIC). Foreign Direct Investment (FDI) has allowed in private life insurance companies in India, under an act of Insurance Regulatory and Development Authority (IRDA) with a limit of foreign equity of 49% as per the bill introduced in Rajya Sabha in December 2008 (The Times Of India: October 4, 2012).The life insurance sector is playing a pivotal role in both Indian and Global markets. Those factors we have taken for the analysis of private life insurance company’s performance are premium growth, market share of the companies, portfolio Investment, equity share capital etc. It is used for a measure of positive or negative impact of FDI investment in Indian private life insurance companies. It has investigated for a sample of five selected private life insurance companies and one public company for the purpose to comparison with selected companies it is using a panel data for analysis in between the period of 2002-10. Different key variables are used to analysis yearly premium income, infrastructure development, employee facilities, business expansion etc. It was examined to identify cause for any significant impact on the life insurance sector. The study has made use of secondary data from different authenticated source to draw a meaningful conclusion.

Keywords: FDI, Life Insurance Sector, Private Company, Public Company & Market Share.

FDI IS GOING TO INSURE OUR LIFE
(FDI in Life Insurance)

INTRODUCTION

FDI trends in India started with the reforms of 1991 and immediately bought the world’s attention towards it. There was a sudden burst in the FDI inflows into the country. According to the Economic Survey (2001-02) the approved FDI in the year 1992 was a mere USD 0.3 billion which rose to USD 15.8 billion in the year 1997. And since 1991 the cumulative FDI inflow has reached USD 86,895 million. India has been successful in attracting substantial foreign investment, instead of a minor slow down in a couple of years such as 1999 and 2000 (Planning Commission Government of India, 2002). Most of the FDI in India has been coming from the United States with almost 20 per cent of the share of total FDI inflow (Industrial Policy and Statistics, 2001). With the deregulation of insurance industry in India since 1999, private players have got an opportunity to enter in an insurance markets. Prior to its deregulation, the life insurance business was dominated by the public sector company is life insurance Corporation of India. While liberalization of insurance sector, as many as twelve new private life insurance companies were entered with the help of foreign equity up to 49 per cent in the life insurance business apart from the HDFC standard life, which has stand foreign equity only 18.6% in the beginning of insurance business, in the present time there are entire 22 private life insurance companies operating business in India, there in we have selected five private life insurance companies, as like ICICI prudential life insurance (2000), HDFC standard life (2000), Aviva life (2002), SBI life insurance (2001), TATA life insurance (2001). They are the companies which are playing a vital role in life insurance business with motive for exist and prospective customers to provide better facilities in lives saving scheme, future security, investment plan, funds investment etc. Consequently, the public-sector companies are facing towards countering the challenges posed by the entered new players in the same business. The private players have been striving to build confidence in customers and get a foothold in the markets. In competitive...
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