Name:  Varun Sood

Class : MBA 4 sem, sec- c (F2)

Roll No.1273661.

Q.44 The insurance market has a considerable amount of latent potential, given the fact that the Indian economy is expected to do well in the coming decades leading to increase in per capita incomes and awareness. Comment

INTRODUCTION

As a result of globalization, deregulation and terrorist attacks, the insurance industry has gone through tremendous changes  and grow fastly.

In the simplest terms, insurance of any type is all about managing risk. For example, in life insurance, the insurance company attempts to manage mortality (death) rates among its clients. The insurance company collects premiums from policy holders, invests the money (usually in low risk investments), and then reimburses this money once the person passes away or the policy matures. A person called an actuary constantly crunches demographic data to estimate the life of a person. This is why characteristics such as age/sex/smoker/etc. all affect the premium that a policy holder must pay. The greater the chance that a person will have a shorter life span than the average, the higher the premium that person will have to pay. This process is virtually the same for every other type of insurance, including automobile, health and property. Insurance in India is the market for insurance in India which covers both the state and private sector organisations. It is listed in the Constitution of India on the Union list in the Seventh Schedule meaning it can only be legislated by the central government.

The insurance sector has gone through a number of phases by allowing private companies to solicit insurance and also allowing foreign direct investment of up to 26% (as of 2013 there have been proposals to extend the FDI up to 49% to strengthen the Insurance Market even further). However, the largest life-insurance company in India, Life Insurance Corporation of Indiais still owned by the government and carries a sovereign guarantee for all insurance policies issued by it.

DISCUSSION

insurance growth drivers in India

The demand for insurance products is likely to increase due to the exponential growth of household savings, purchasing power, the middle class and the country’s working population. Listed below, are the various underlying growth drivers for India’s insurance industry:

• Growing of the financial industry as a whole
• Growth of life and non-life industry
• Promoting innovation and removing inefficiency
• Competition and orderly growth
• Growth of specific insurance segments such as motor insurance

Emerging trends

• Multi-distribution i.e. increasing penetration through new modes of distribution such as the internet, direct and telemarketing and NGOs
• Product innovation i.e. increased levels of customization through product innovation
• Claims management i.e. timely and efficient management of claims to prevent delays which can increase the claims cost
• Profitable growth i.e. expanding product range, developing innovative products and expanding distribution channels
• Regulatory trends i.e. mandated regulatory changes by the IRDA to promote a competitive environment in both the life and non-life insurance sectors

CONCLUSION :

 In conclusion we can say that india insurance industry grew faster rate. All type of insurance that is life insurance and non life insurance play significant role. The insurance sector has gone through a number of phases by allowing private companies to solicit insurance and also allowing foreign direct investment of up to 26% (as of 2013 there have been proposals to extend the FDI up to 49% to strengthen the Insurance Market even further). However, the largest life-insurance company in India, Life Insurance Corporation of India is still owned by the government and carries a sovereign guarantee for all insurance policies issued by it.