Content

 Concept Of Insurance
 History Of Insurance
 Insurer’s Business Model
 Insurance Sector In India
 Company Profile
 Research Methodology
 Main Competitors Of LIC
 Comparison
 Findings And Conclusion
 Bibliography
 Concept Of Insurance
 Human life is subject to risk
 Loss of Human life means loss of income
 Risk has element of unpredictability
 The concept of insurance is that the losses of a
few are made good by contribution from many.
It is based on the law of large numbers. It
stemmed from the need of man to find a
solution for mitigation of losses. It also reflects
the nature of man to find a solution collectively.
 History Of Insurance
 History of insurance refers to the development of
a modern laws and market in insurance against
risks. In some sense we can say that insurance
appears simultaneously with the appearance of
human society.
 It has its origins in ancient Rome
 As European civilization progressed, its social
institutions and welfare practices also got more
and more refined
 Insurance as we know it today owes its existence
to 17th century England.
 Insurance in India can be traced back to the Vedas
 Bombay Mutual Assurance Society, the first Indian
life assurance society, was formed in 1870.
Insurer’s Business Model
 Profit = earned premium + investment income -
incurred loss - underwriting expenses.
 Insurers make money in two ways:
 (1) Through underwriting, the process by which
insurers select the risks to insure and decide
how much in premiums to charge for accepting
those risks
 (2) By investing the premiums they collect from
insured parties.
 Most complicated aspect of the insurance
business is the underwriting of policies.
Insurance Sector In India
Some of the important milestones in the life insurance
business in India are:
 1818: Oriental Insurance company first insurance company in India.
 1870: Bombay mutual life assurance company first Indian Insurance
company.
 1912: The Indian Life Assurance Companies Act enacted as the first
statute to regulate the life insurance business.
 1928: The Indian Insurance Companies Act enacted to enable the
government to collect statistical information about both life and non-life
insurance businesses.
 1938: Earlier legislation consolidated and amended to by the Insurance
Act with the objective of protecting the interests of the insuring public.
 1956: 245 Indian and foreign insurers and provident societies taken over
by the central government and nationalised. LIC formed by an Act of
Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore
from the Government of India.
 Cont
…
 The overall business growth has been more than 36%.
 By the mid-1950s, there were around 170 insurance
companies and 80 provident fund societies in the country's
life insurance scene. However, in the absence of regulatory
systems, scams and irregularities were almost a way of life
at most of these companies. As a result, the government
decided nationalise the life assurance business in India.
The Life Insurance Corporation of India was set up in 1956
to take over around 250 life companies.
 Upto year 2001 private sectors were not allowed to enter
in Life insurance business. Lic was having 100% market
share but after 2001 IRDA allows private sector to enter
into insurance business.
 Fire Deat
h

Marine Disabili
ty

Accident
Moto
r

Sickne
ss
Accide
nt
Misc Old
age
Cont
…
 The IRDA which is Insurance
Regulatory and Development
Authority has Provided three levels
in the Insurance sector.
 Insurance Company (insurer)
 Insurance Broker
 Insurance Agent.
 Cont
…
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.
SR.no. Reg. no Date of reg. Name of the company
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.
11 121 03.01.2002 Reliance Life Insurance Company Limited.
12 122 14.05.2002 Aviva Life Insurance Co. India Pvt. Ltd.
13 127 06.02.2004 Sahara India Insurance Company Ltd.
14 128 17.11.2005 Shriram Life Insurance Company Ltd.
15 130 14.07.2006 Bharti AXA Life Insurance Company Ltd.
16 133 04.09.2007 Future Generali India Life Insurance Company Limited
17 135 19.12.2007 IDBI Fortis Life Insurance Company Ltd.
18 136 08.05.2008 Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd.
19 138 27.06.2008 Aegon Religare Life Insurance Company Ltd.
20 140 27.06.2008 DLF Pramerica Life Insurance Company Ltd.
21 142 Star Union Dai-ichi Life Insurance Co. Ltd.,
 Life Insurance
 It is insurance on human being
 Human life cannot be valued
 Monetary sum determined based on
loss of future income
 Individual can also protect his old
age with life insurance
 Life insurance procucts
 Term insurance
 Endowment assurance
 Money back assurance
 Annuity
 Linked
There are a variety of life insurance product
to suit the needs of various categories of
people- children, youth, women, middle age
person, old people; and also rural people, film
actors and unorganised labourers.
Why Is It Superior To Other
Forms Of Savings?
 Protection
 Aid to thrift
 Liquidity
 Tax relief
 Money when u need it
 Company Profile
 On the 19th of January, 1956, that life insurance in
India was nationalized. About 154 Indian insurance
companies, 16 non-Indian companies and 75 provident
were operating in India at the time of nationalization.
 Nationalization was accomplished in two stages;
initially the management of the companies was taken
over by means of an Ordinance, and later, the
ownership too by means of a comprehensive bill.
 The Parliament of India passed the Life Insurance
Corporation Act on the 19th of June 1956, and the Life
Insurance Corporation of India was created on 1st
September, 1956
 Cont
…
 LIC had 5 zonal offices, 33 divisional
offices and 212 branch offices, apart
from its corporate office in the year
1956.
 Today LIC functions with 2048 fully
computerized branch offices, 100
divisional offices, 8 zonal offices and
the Corporate office.
 Cont
…
Mission:
"Explore and enhance the quality of life
of people through financial security by
providing products and services of
aspired attributes with competitive
returns, and by rendering resources for
economic development.“

Vision:
"A trans-nationally competitive financial
conglomerate of significance to societies
and Pride of India."
4 Tier Structure of LIC
Central Office

NZ NCZ CZ EZ SCZ SZ WZ EZ

100 Divisional offices

2048 Branch Offices

Research Methadology
Objective:
The objective of study is to know the market position and
financial position of LIC compare to other Private Players.

Types of Data:
I have used secondary data, as the nature of the project
is study approach.

Data collection tools:

I have used various internal reports. As well as I have
used chairperson’s report of last 4 years and an intranet
site of LIC and IRDA to gather information that I needed.

Type of Study:
The type of study is comparative analysis of LIC and other
Private Players.
 Main Competitors of LIC
 SBI Life Insurance Company
 ICICI Prudential Life Insurance
Company
 Birla Sun Life Insurance Company
 HDFC Standard Life Insurance
Company
 Reliance Life Insurance company
 Comparison
1. Policies
2. Premium
3. Expenses
3.1 Commission Expenses
3.2 Operating Expenses
4. Ratios
4.1 Commission Expense Ratio
4.2 Operating Expense Ratio
5. Market Share
6. Claims Paid
7. Profit Of year 2007-08
8. Life Fund
New Policies Issued
LIC Privace Players

40000000

35000000

37612599
38229292
30000000
31590707
25000000

20000000

15000000

13261558
10000000
7922274
3871410

5000000

0
2005-06 2006-07 2007-08
 Premium
First year premium
LIC Private players

60000

59996.57
50000

56223.56
40000

30000

33715.95
28515.87

20000
19425.65

10000
10269.67

0
2005-06 2006-07 2007-08
 Single Premium
LIC Private Players

35000

30000

33774.56
25000

20000

15000 26337.21

10000

5049.8
14787.84

5000 3921.1
2742.78

0
2005-06 2006-07 2007-08
 Regular Premium
LIC Private Players

30000

29886.35

28666.15
25000

26222
20000

15000 `

15474.83
13728.06

10000
7526.88

5000

0
2005-06 2006-07 2007-08
 Renewal Premium
LIC Private Players

90000

80000

70000

60000
71599.27

89793.42
62276.35

50000

40000

30000

20000 17845.47

8825.05
10000 4813.86

0
2005-06 2006-07 2007-08
 Total Premium
LIC Private Players

160000
140000

149789.99
120000

127822.84
100000
99792.22

80000
60000

51561.42
40000
28218.75
15083.53

20000
0
2005-06 2006-07 2007-08
 Commission Expenses
First Year Premium
Expenses LIC Private Players

6000

5000

5203.75

4963.81
4000

4511.15
3630.33

3000

2802.69
2000

1000
1362.91

0
2005-06 2006-07 2007-08
 Single Premium
Commission
LIC Private Players

600

500

504.33
400
411.42

300

200
162.08

100

50.85
42.51
29.33

0
2005-06 2006-07 2007-08
 Regular Premium
Commission
LIC Private players

5000
4500
4000

4792.32

4459.48

4460.49
3500
3000
3468.25

2500
2760.17
2000
1500
1000
1333.57

500
0
2005-06 2006-07 2007-08
 Renewal Premium
Commission LIC Private players

5000
4500

4650.89
4000

3969.82
3500
3469.85

3000
2500
2000
1500
1000
578.46
500 306.96
180.19
0
2005-06 2006-07 2007-08
 Total Premium
Commission LIC Private players

10000
9000

9614.69
9173.58
8000
7000
7100.19

6000
5000

5089.61
4000
3000
3109.65

2000
1000
1543.1

0
2005-06 2006-07 2007-08
 Operating Expenses
LIC Private players

14000

12000

12032.46
10000

8000

8309.32
7080.86
6000
6520.04
6041.65

4000
3569.48

2000

0
2005-06 2006-07 2007-08
Commission Expense
Ratio
Commission 100
X
Expense
Premium
Underwritten

Operating Expense
Ratio
Operating Expense
X 100
Premium
Underwritten
Commission Expense Ratio
First year Premium
LIC Private players

16

14
14.3
12 12.73
13.27 13.38

10
9.26
8
8.27

0
2005-06 2006-07 2007-08
 Single Premium
LIC Private players

1.6 1.57
1.49

1.4
1.2 1.1 1.08
1.07
1
1
0.8
0.6
0.4
0.2
0
2005-06 2006-07 2007-08
 Regular Premium
LIC Private players

30

25.26
25

20
17.72 17.68 17.01
16.03 15.56
15

10

0
2005-06 2006-07 2007-08
 Renewal Premium
LIC Private players

6
5.57 5.54
5.18
5

4 3.74
3.48
3.24
3

0
2005-06 2006-07 2007-08
 Total Premium
LIC Private Players

12
10.98
10.23
10 9.42

8 7.82
7.18
6.42
6

0
2005-06 2006-07 2007-08
Operating Expense Ratio
LIC Private players

25
23.66 23.34
23.01

20

15

10

6.65
5.54 5.55
5

0
2005-06 2006-07 2007-08
 Market share
Fist year Premium
LIC Private Players

Private
Players,
33715.97,
35.98%
LIC,
59996.57,
64.02%
Single Premium
LIC Privatte players

Privatte
players,
5049.8,
13.01%

LIC,
33774.56,
86.99%
Regular Premium
LIC Private players

LIC,
Private 26222,
players, 47.77%
28666.15,
52.23%
Renewal Premium
LIC Private Players

Private
Players,
17845.47,
16.58%

LIC,
89793.42,
83.42%
Total Premium
LIC Private Players

Private
Players,
51561.42,
25.61%
LIC,
149789.99
, 74.39%
Claims Paid By life Insurers
ClaimsPaid ClaimsRepudiated
ClaimsWrittenBack ClaimsPending

100 96.71
95
90
85
80 78.93

75
70
65
60
55
50
45
40
35
30
25
20
15 10.88
10.17
10
5 1.13
2.1
0.06 0.01
0
LIC PrivatePlayers
 Market share* from 2000-01
to 2007-08 LIC Private Players

100% 0 0.54% 2.01%

4.68%
9.33%
14.25%
90% 18.01%
25.61%
80%

70%

60%

50% 100% 99.46% 97.99%

95.32%
90.67%
85.75%
40% 81.90%
74.39%
30%
* In Terms of Total

20%

10%

0%
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Premium
 Profit of year2007-08

900 845

800
700
600
500
400
300
200
100 34 21 3 5
0 -30 -26

-100 -78

-200 -191
-244
-202
-242
-300 -257
-297
-339
-400
-445
-500
-600
-700
-800 -768

-900
-1000
-1100
-1200
-1300

li
ra

-1400
l

rd
t ia

rk

ra
-1395

s
e
e

e
ya

xa
a

t ie
yo

ne
e

lif
lif

ig
in
en

lif
-1500
e
nd

va
nc
ys

i A
aj
n

A
ah

lif

or
ew

C
lif

m
a

e
d
su

ta

aj

vi
lia

G
V

ar

LI
a

I F
ru

et

ira

rt
bi

m
N
S

A
at

ah

ha
a

e
G

M
P

B
hr
ak
R

T
irl

fc

ax

ur
IN

ID
i

B
S
ic
B

ot

ut
M
H
Ic

F
 Life Fund Of LIC
2005-06 2006-07 2007-08

700000

600000 560806.33 686616.45

500000 463147.62

400000

300000

200000

100000

0
2005-06 2006-07 2007-08
Findings And Conclusion
 There is only 1 public company exist in Indian life
insurance market which is LIC and there are 21
other private company
 Since, 1958 LIC is playing role as life insurance so
that it has created its monopoly in the Indian Life
Insurance Market.
 As things stand today LIC is still on strong footing
vis-à-vis its competitors.
 To retain its market leader status the LIC needs
to acquire competitiveness.
Cont….
 The new entrants with their aggressive
penetration strategies are at least
contributing to the cause of LIC by
creating insurance consciousness in the
minds of a wide cross section of
consumers.
 Privileged by its monopoly status LIC did
not bother much about creating an
insurance consciousness, as its objective
was to insure any how that was
happening. This complacency now has to
go and LIC must opt for marketing
insurance as insurance.
Cont….
 Private sector increased their total premium
from 28253.01 to 51561.42 that is 82.50%
increase while LIC increased its premium
income from 127822.84 to 149789.99, which
is increase of 17.19%.
 Private players also increased their market
share from 18.1% to 25.61%, which is
increase of 41.50%.
 No mean performance given the fact that the
new players are still in the process of finding
their feet. If the trend continuous the LIC
needs to take guard and prepare for strike.
 Bibliography
 Research Methodology – Kothari C.R.2007,
Research Methodology, Techniques and
Methods, New Delhi, 2007
 www.licindia.com
 www.birlasunlife.com
 www.sbilife.co.in
 www.reliancelife.co.in
 www.hdfcinsurance.com
 www.iciciprulife.com
 www.irda.org