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About Insurance

Insurance is a social device to reduce or eliminate the risk of loss to life/property. In other words, it spreads the risks and losses of some people among a large number of people. This is achieved by different schemes of economic cooperation participating in which members of the community share the unavoidable risks. Talking about the history of the Insurance sector in India, it seemed to be first quoted in the Vedas as “Yogakshema” which is also the name of LIC (Life Insurance Corporation of India)’s corporate headquarters. Obviously, insurance can’t prevent the occurrence of risk, but it provides the losses of risk.

In other words, insurance can be defined as a legal contract between 2 parties- the insurer and the insured where the insurer undertakes to pay a fixed amount of money on the happening of a particular event which may be certain or uncertain. The insured pays a premium (a fixed sum of money) in exchange. The document which embodies the contract is called the policy.

Some important points related to the life insurance industry:

  • There are 24 players in the life insurance industry. Amongst these LIC is the public sector insurer and the remaining 23 are private sector insurers. These insurers are:
    • HDFC Life Insurance Co. Ltd
    • Max Life Insurance Co. Ltd.
    • ICICI Prudential Life Insurance Co. Ltd,
    • Kotak Mahindra Life Insurance Co. Ltd.
    • Aditya Birla SunLife Insurance Co. Ltd.
    • TATA AIA Life Insurance Co. Ltd.
    • SBI Life Insurance Co. Ltd.
    • Exide Life Insurance Co. Ltd.
    • Bajaj Allianz Life Insurance Co. Ltd.
    • PNB MetLife India Insurance Co. Ltd,
    • Reliance Nippon Life Insurance Company Limited
    • Aviva Life Insurance Company India Ltd.
    • Sahara India Life Insurance Co. Ltd.
    • Shriram Life Insurance Co. Ltd.
    • Bharti AXA Life Insurance Company Ltd,
    • Future Generali India Life Insurance Company Limited
    • IDBI Federal Life Insurance Company Limited
    • Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited,
    • Aegon Life Insurance Company Limited,
    • DHFL Pramerica Life Insurance Co. Ltd.
    • Star Union Dai-Ichi Life Insurance Co. Ltd.
    • IndiaFirst Life Insurance Company Ltd.,
    • Edelweiss Tokio Life Insurance Company Limited,3rd & 4thFloor,
  • LIC is the largest insurer followed by ICICI Prudential Life Insurance and SBI Life.
  • The new business premium for the industry was around Rs 1,07,362 crore in 2012-13 which was Rs 1,13,942 in 2011-12. While LIC’s market share has increased to 73%, that of the private players has declined to 27.5% in 2012-13 from 29.32% in 2011-12.
  • The growth of the life insurance industry in India was fastest in the world in 2006 touching 163 %. LIC’s growth was a phenomenal 184% contributing significantly to the industry’s growth.
  • The individual single premium segment was the dominant one in the new business growth accounting for 60% of it.
  • Insurance penetration/premium volume as a ratio of GDP stood at 3.17% and 0.78% for life & non-life insurance respectively in the year 2012.
  • Only 16 private sector companies reported a net profit in 2012-13.
  • The share of insurance is the overall GDP is a mere 4% for life and 0.6% for non-life insurance.
  • IRDA issued stringent guidelines in Dec 2005 to curb the aggressive selling of ULIPs (Unit Linked Insurance Plans) by insurers.

Hope the above article helps you in your preparation. Wait for the next article in this series of Insurance & Financial Market Awareness. Also, consider taking a Free Mock Test of LIC AAO to get a frank assessment of your performance.

LIC AAO Study Material

S. No.Topic

Topics of Insurance Market Awareness

1History of the Insurance sector in India
2Opening Up of the Insurance Sector
3Current Scenario of the Life Insurance Industry
4What is Insurance?
5Principles of Insurance
6An Overview of Life Insurance
7An Overview of General Insurance
8Insurance and Industries/ Business
9All about IRDA
10Roles and Functions of IRDA
11Insurance Regulatory Framework
12An Overview of LIC
13Other institutions in Indian Insurance Market like Insurance Ombudsman
14An Overview of Bancassurance
15An Overview of ULIPs
16Various Government Insurance Schemes
17Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB – PM-JAY)
18Pradhan Mantri Suraksha Bima Yojana (PM – SBY)
19PM Jeevan Jyoti Bima Yojana (PMJJBY)
20PM Fasal Bima Yojana (PM-FBY)
21Other Important Government schemes
22Insurance and Financial Market Awareness Definitions- PDF- Part 1

Topics of Financial Market Awareness

1Indian Financial System- An Introduction
2An Overview of Capital Market
3An Overview of Money Market
4Definitions of Different Types of Money Market Instruments
5Primary and Secondary Market
6Financial Institutions- Banking and Non-Banking
7All about RBI
8Roles and Functions of RBI
9Other Market Regulators like SEBI
10Payments Banks and Small Banks
11Secondary Market and its Instruments
12Mergers, Amalgamations and Takeovers
13Important World Financial Bodies – World Bank, IMF etc.
14An Overview of Bond Market
15Insurance and Financial Market Awareness Definitions- PDF- Part 2

Wishing you all the best for your preparation!

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