Lesson 4 - Acquaintance with Major Insurance Players

Introduction of the Host
Mr.Harikumar is a freelance journalist with rich experience gained from working with leading periodicals and dotcoms. His association with leading financial portals has contributed greatly to his ability to deal with classroom sessions in the financial sector, especially investments. Currently, he is a columnist with some of the well known publishing companies. Some of his published works on mutual funds and insurance have got wide acclaim.

Major Insurance Players

In the earlier sessions, we have seen the concept, terms and types of insurance. It is assumed that the full implication of the term "insurance" is driven home by now. Keeping in mind the wants and needs of the insuring public, various companies have started offering customised products in life as well as non-life insurance segments.

Till recently, the insurance sector was vested with the Government of India and no private companies were allowed to test their hands on this. But with the liberalisation in the economy, the floodgates of insurance were open to private players too. The Insurance Regulatory and Development Authority (IRDA) headed by N.Rangachary was formed by the Government and was empowered to issue license to private companies with good track records to start insurance business. This paved the way for the international majors who were biding time to enter Indian market, to get into joint ventures with Indian companies.

In early days, people had heard only about Life Insurance Corporation of India (LIC). Life insurance business was the monopoly of LIC. On similar line, General Insurance Corporation (GIC) was formed by the Government to deal with non-life/general insurance business.

Started with 56.86 lakh policies in force in 1957, the corporation could garner a whopping 917.26 lakh policies in 1999 (courtesy: data published online by LIC). Over a period of five decades, the corporation has been able to gain confidence among public and a wide area network has been established by the company, especially in the rural segment.

General Insurance Corporation (GIC) comprises of four companies namely United India Insurance, National Insurance, Oriental Insurance and New India Assurance. These companies have helped maintain a healthy growth in the sector.

But forming an array of competitors, private companies, both in life and general insurance have sprouted up in Indian market. Global insurance majors like Allianz, Prudential, Standard Life, and Royal & Sun Alliance have marked their presence in Indian market.

One of the frontrunners in life sector in this industry is ICICI Prudential Life Insurance Company Limited, incorporated in July, 2000. The Company is a joint venture of ICICI with 74% stake and Prudential plc. UK picking up 26%. The authorised capital of the Company is Rs.1500 Million.

Another company in the fray is a joint venture between the German insurance major Allianz and Bajaj, named Allianz Bajaj Life Insurance Company Ltd. The experience of Allianz over 100 years with over 60 million customers world wide, is hoped to help capture Indian insurance market.

In the general insurance segment, the first licensed company in India is Royal Sundaram Alliance Insurance Company Ltd., a union of Sundaram Finance, a leading financial institution in India and Royal &SunAlliance, one of the oldest insurance companies in the world. The Alliance was founded in 1824 and the Royal in 1845.

HDFC Standard Life, another private life insurance company is targeting about 25,000 life policies in the first year of operation. HDFC, an already established housing loan company hopes to spread its products through the large network of its branches across the country.

Since the IRDA commenced issue of licence, many industrial majors have tested the waters. Some have come through and some have backtracked. By now, about 12 private insurance companies are in the field.

The current trend is to combine life and non-life insurance business. Though it is too early to assess the success rate of private players, their presence is sure to trail a blaze of more such entrants with innovative products and razor edge technology. The hitherto untouched market of insurance has now got more life, as many a financial institution and banks have come forward to distribute insurance products through their branches spanned across the country.
Yes, it seems, Insurance has become the talk of the business sector today, of people too.