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
Topics of Insurance Market Awareness
|1||History of the Insurance sector in India|
|2||Opening Up of the Insurance Sector|
|3||Current Scenario of the Life Insurance Industry|
|4||What is Insurance?|
|5||Principles of Insurance|
|6||An Overview of Life Insurance|
|7||An Overview of General Insurance|
|8||Insurance and Industries/ Business|
|9||All about IRDA|
|10||Roles and Functions of IRDA|
|11||Insurance Regulatory Framework|
|12||An Overview of LIC|
|13||Other institutions in Indian Insurance Market like Insurance Ombudsman|
|14||An Overview of Bancassurance|
|15||An Overview of ULIPs|
|16||Various Government Insurance Schemes|
|17||Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB – PM-JAY)|
|18||Pradhan Mantri Suraksha Bima Yojana (PM – SBY)|
|19||PM Jeevan Jyoti Bima Yojana (PMJJBY)|
|20||PM Fasal Bima Yojana (PM-FBY)|
|21||Other Important Government schemes|
|22||Insurance and Financial Market Awareness Definitions- PDF- Part 1|
Topics of Financial Market Awareness
|1||Indian Financial System- An Introduction|
|2||An Overview of Capital Market|
|3||An Overview of Money Market|
|4||Definitions of Different Types of Money Market Instruments|
|5||Primary and Secondary Market|
|6||Financial Institutions- Banking and Non-Banking|
|7||All about RBI|
|8||Roles and Functions of RBI|
|9||Other Market Regulators like SEBI|
|10||Payments Banks and Small Banks|
|11||Secondary Market and its Instruments|
|12||Mergers, Amalgamations and Takeovers|
|13||Important World Financial Bodies – World Bank, IMF etc.|
|14||An Overview of Bond Market|
|15||Insurance and Financial Market Awareness Definitions- PDF- Part 2|
Wishing you all the best for your preparation!