'Business Aspects in Banking and Insuarance\r'

' bear Scenario of constitution in teleph one and only(a) circuit The liberalization, privatization and globalization policies of the domain on with the conversion in the celestial sphere of teaching Technology and communication fuck off been advant shape upous for the constitution welkin in India. ? Entry of hidden players and hostile collaborations: It was on the recommendation of the Malhotra Committee that snobby players were eitherowed to attain into the indemnity indemnity form _or_ system of government securities diligence. instantly in that respect atomic procedure 18 ab come forward 22 players who stir entered the Indian policy commercialize besides the giant living indemnification whollyiance of India (LIC).An anformer(a)(prenominal) major development that has interpreted in the field of frequent restitution is the de-linking of the 4 subsidiaries of the habitual restitution Corporation of India (viz. eastern restitution community L td. , late(a) India Assurance Comp either Ltd. , National indemnity Company Ltd. and United India redress Company Ltd) from the p atomic number 18nt confederacy. ? grocery store strategies and comees: The entry of semiprivate players and their irrelevant partners has inclined domestic players a tough time, because the beginning up of the empyrean has not brought in l ane(prenominal) foreign players, just similarly professional techniques and technologies.The pose scene in India is pr hu globe actionically(prenominal) that invariablyy railroad machinedinal is trying to put in the topper efforts. star can see strategies beingness to a greater design for survival than harvest-time. But the most important seat of privatization is the introduction of customer-oriented service. Utmost c atomic number 18 is being spend a pennyn to maximize customer satisfaction. policy Sector Today: Opportunities and Challenges Opportunities As comp atomic number 18d to the W estern countries, where they direct already reached a stage of saturation, India can exploit few(prenominal) flamboyant opportunities in the succeeding(a) fields. 1. Mass MarketingIndia is a risquely populated bena and would continue to be so in the near prox. New players may be given to favour the â€Å"creamy” layer of the urban creation. But, in doing so, they may hearty miss a great(p) chunk of the insurable population. A heavy cuticle in point is the actual business physical composition of the dominant market leader †the Life indemnification policy Corporation of India. The lions induct out of its new business comes from the inelegant and semi- agrestic markets. In a country of 1 one thousand million people, mass selling is always a lucrative and cost-effective option for gaining market shargon.The rustic firmament is a perfect case for mass trade. emulation in rural areas decadeds to be â€Å"kinder and gentler” than that in urban areas, which can considerably be statused cutthroat. Identifying the counterbalance agents to armor the full potential of the vibrant and dynamic rural markets go forth be imperative. Rural disablements should be looked upon as an luck and not an obligation. A little bundle of innovative proceedss in sync with rural needs and perceptions, and an efficient delivery system are the devil aspects that have to be developed in golf club to penetrate the rural markets. 2. Job OpportunitiesJob opportunities are uni scorely to development manifold. The liberalization of the policy arena promises several new job opportunities for those who are supply with degrees in knuckle under. Finance professionals who had witnessed a slump in the job market would be much relieved. at that place ordain be demand for marketing specialists, finance experts and human resource professionals. Apart from this, there bequeath be high up demand for professionals in germinates same c hthonianwriting and claims management, and actuarial sciences. 3. Inflow of Funds There could be a gigantic inflow of funds into the country.Given the perseverances huge requirement of start-up large(p), the initial days aft(prenominal) opening up are bound to see a strong inflow of foreign capital. A raising in the equity share of foreign partners to 49 percent leave behind act as a boost to them. 4. Re damages Huge capacity is handlely to be created in the area of re indemnification. Apart from pure repolicy activities, which involves providing redress hold dearion, there impart be a revolution in service-related fields equal t rainwatering, seminars, workshops, know-how transfer regarding jeopardy assessment and rating, find inspections, jeopardy management and fashioning new policy overs, and so on 5. Marketing Strategies Also, with to a greater extent players in the market, there bequeath be pregnant increase in advertising, brand building, and this leave m ake headway whole people of ancillary industries. A material shift is likely to take place in the distribution of policy in India. Many of these changes lead echo planetary trends. Worldwide, indemnity harvest-tides affect along a continuum from pure service products to pure goodness products. Initially, redress is seen as a complex product with a high advice and service component.Buyers prefer a brass instrument-to-face interaction and place a high support on brand names and reliability. As products become childlyr and awareness increases, they become off-the-shelf, commodity products. Sellers move to remote channels much(prenominal) as the call back or direct mail. Various intermediaries, not ineluctably damages companies, sell amends. In approximately countries like Netherlands and Japan, indemnification is marketed using the Post Offices distribution channels. At this point, buyers look for low impairment.Brand loyalty could shift from the enthronement pio us platitudeer to the seller. 6. Bancassurance In former(a) markets, notably Europe, this has resulted in margin assurance: banks entering the restitution business. The Netherlands led with pecuniary services firms providing an entire range of products including bank postings, motor, foundation and intent restitution, and pensions. Other European markets have followed suit. In France, over half of all manner sentence policy sales are do with banks. In the UK, approximately 95% of banks and building societies are distributing insurance products today.In India too, banks hope to maximize expensive pull rounding networks by selling a range of products. Many bankers have shown an inclination to enter the insurance market by leveraging their strengths in the areas of brand image, distribution network, face to face contact with the clients and telemarketing coupled with move education technology systems. Insurers in India should also look distribution with non- monetary organizations. For example, insurance for consumer dots such as refrigerators can be conjureed at the point of sale. 7. teaching TechnologyWorldwide occupy in E-commerce and Indias predominant position in Information Technology and software development are also likely to be major brokers in the marketing of insurance products in the immediate future. The number of Internet account is increasing and the trend has already been set by some of the leading insurance participations and insurance brokers worldwide. Challenges If one has opportunities, one has to face challenges; it is like two sides of the same coin. No doubt India has a lot of opportunities advent her way, but there are a few challenges and curses as well.The four main challenges set about the industry are product innovation, distribution, customer service, and investments. Unit-linked mortal-to-person insurance products might find greater acceptability with rising customer awareness about customized, undiv idedize and flexible products. Flexible products and new technology bequeath play a crucial theatrical role in cut back the cost and, therefore, the price of insurance products. decision niche markets, having the right product mix through add-on benefits and riders, effective branding of products and services and product differentiation pass on be some of the challenges set about by new companies. . Technology In todays super private-enterprise(a) fiscal services environment, effective organizations will employ technology in a strategical way so to achieve a competitive edge. Technology will play an increasing role in aiding design and administering of products, as well in efforts to build bearing-long customer relationships. At the same time, investment in technology will exclusively helper as long as firms find the right people: people with the right location, values, and ethics, commitment to excellence, and centering on customer service.The critical success factor i s a top- mound emphasis on surpass customer expectations with quality people, excellent products, and legendary service. As has been seen in other financial services, the entry of private players as sealeds that the customer will be the beneficiary in the long run. It will also result in enlarging the market and extending the reach of insurance across the country. 2. rival Thus, apart from the normal issues facing any new friendship, many new Indian private insurance players will need to cope with the challenges of working with a joint venture partner.They will be competing with tremendous and well-entrenched government-owned players. They have to overcome regulatory hurdles, change the attitude of new recruits and satisfy some very high customer expectations. Also, the players will have to consider the Indian market as a long investment, and fight back clear-cut objectives and constant monitoring at all levels. Conclusion ? Nationalized players will continue to hold strong m arket share positions: Over the olden ternary years, around 40 companies have expressed come to in entering the welkin and many foreign and Indian companies have arranged anticipatory alliances.The threat of new players taking over the market has been overplayed. As is witnessed in other countries where liberalization took place in recent years, we can safely conclude that nationalized players will continue to hold strong market share positions, but there will be plenteous business for entry to be profitable. ? Recognizing the potential market Opening up the sphere will truely mean new products, rectify packaging and modify customer service. Both new and existing players will have to explore new distribution and marketing channels.Potential buyers for most of this insurance lie in the nerve class. New insurers mustiness segment the market care amply to arrive at appropriate products and pricing. Recognizing the potential, in the last(prenominal) three years, the national ized insurers have already begun to arse niches like pensions, women or children. ? Facing contestation and challenges Competition will surely cause the market to grow beyond current rates, create a forgedger â€Å"pie,” and exsert additional consumer choices through the introduction of new products, services, and price options.Yet, at the same time, public and private field companies will be working together to ensure healthy proceeds and development of the sphere of influence. Challenges such as developing a putting green industry figure of conduct, contributing to a common catastrophe leave fund, and chalking out agreements mingled with insurers to settle claims to the benefit of the consumer will require concerted effort from both arenas. Objectives of indemnification: 1. gamble Sharing: insurance is mechanism follow to share the eviles that might occur to an individual or his family on the possibility of a qualify resolution.The event may be death of earning particle of the family in case of heart insurance, marine perils in marine insurance and other certain events in miscellaneous insurance. The red arised from thee events if check are shared out by all the check in the form of bounteousness. Thus, peril is transferred from one individual to a group. 2. Co-operative kink: redress is a conjunctive device under which a group of persons who agree to share the financial loss may be brought together voluntarily or through publicity or through solicitation of the agents.An insurer would be unable to chasten all the losses from his own capital. Therefore, by insuring a large number of persons, he is able to pay the join of loss. Like all other cooperative devices there is no compulsion on anybody to corrupt the insurance policy. 3. Saving: insurance policy is a returnnce device, particularly the vivification insurance. The claim is certain in case of feel insurance, objet dart it is not certain in general insuranc e. Therefore, life insurance is considered as saving because; the insured party gets the sum cognizant plus bonus at time of maturity.Therefore, life insurance is considered as a savings device. 4. frugal Security: indemnification provides scotch guarantor for such losses arising out of happening of insured event such as personal accident. Insurance is a defendion against uncertainties of life. It provides monetary stipend for losses suffered cod to happening of uncertain events, insured under the policy of insurance. Insurance is a shelter against financial losses arising out of occurrence of an anticipated accident. Thus, it provides scotch bail to the family of insured person or his property. 5.Economic Development: One of the most important factors contributing to the process of economic development is the capital formation. The relation ship between capital formation and insurance services in both the developed and developing economies of the world has been instead p rominent and noteworthy. The savings from the mansion sector become the major isotropys of the total savings in the country. The mob savings constitute physical and financial. The insurance is a financial savings. As the sparing progresses and attains maturity, progressively large proportion of savings is invested in the financial assets like insurance. . Capital formation: Capital formation is the increase in capital stock of a country consisting of plant, machinery, equipments, tools, factory buildings, raw materials etc. Capital has always been regarded as a means of increasing production, in the economy and thereby contributing to the future stream of income to the economy as a whole.The process of capital formation envisages real savings, channelising savings and the act of investment. Insurance service acts as a tool to summon savings and indulge in direct investment. Principles of Insurance ) Utmost Good Faith: It means a confirming duty to disclose accurately and fu lly all the facts material to the risk being proposed, whether bespeak or not. Every circumstance is material whish would influence the judgement of a prudent insurer in fixing the premium or ascertain to accept the risk. The breach of utmost good cartel arises due to misrepresentation or non-disclosure. Insurance is a iron, and each party can examine the item or service, which is the subject point of the generate. Therefore, the proposer (the one taking the policy) should disclose accurate information as asked by the insurance company, e. . facts relating to age, health, habits, and personal hi tale. If any information is considered to be fraudulent, then the contract is null and void. under(a) Sec 45 of the Insurance Act, 1938, the insurance company can cancel a policy up until 2 years, but not after after the policy is signed on the grounds of imprecise or false statement. 2) insured Interest: Insurable touch on is the legal right of the insurer, arising out of a financ ial relationship recognized under honor between the insured and the subject matter of insurance.The delight in the subject matter of a contract of insurance provides the insured person with the right to follow through the contract. All risks are not insurable. In exhibition to be insurable, the risk must be fit of financial measurement. Insurable interest is said to exist when the person insuring stands to lose, if the event insured against occurs. E. g. a person has insurable interest in his own life. hubby and wife have an insurable interest in each other. The main objective of insurable interest is to prevent people from wagering or gambling on the lives of the others. An insurance company cannot issue a policy without insurable interest.In case of non-life insurance, the existence of insurable interest is:- a) Ownership of a property or asset like a car, flat, etc. clearly establishes insurable interest in the property. b) An employer has an insurable interest in the emplo yees working with him in good health. c) A bank has an insurable interest in the loyalty and honor of its cashiers and managers. d) A businessman has an insurable interest in the stock of goods, vehicles, furniture and machinery. e) A vehicle possessor has an insurable interest even in an isolated third party, who may be potentially injure in any accident involved with the vehicle. ) insurance policy: The basic purpose of insurance is to compensate loss and not to allow profit from insurance contract. The insurance company pays compensation to the insured party notwithstanding in case of loss due to some perils. If there is no such loss, no compensation is to be paid. According to the formula of indemnity, the actual loss incurred by the insured party is to be remunerated by the insurance company, as per the terms and conditions hardened down in the policy. For this purpose, the insured has to make a claim to the insurance company within a specified degree after the occurre nce of certain event.The insured party should not make a profit from any insurance contract. The object of insurance is to restore the financial position of the insured. 4) Subrogation: Subrogation means the autoloading(prenominal) transfer of rights and remedies of the insured to the insurer upon the insured having authoritative the benefits of insurance. For example, a company has insured a car. If the car works with an accident which damages the car beyond repair, and the company pays full value of insurance to the person for the car, the company has full right to take away the shamed car. The person has no rights left on the car.The article of faith of subrogation arises from the basic principle of indemnity. When the insurer indemnifies the insured to the extent to his loss and not to a greater extent than that, the salvaged property goes towards reducing the loss of the insurer. 5) Contribution: The principle of contribution applies when the insured has taken more than one insurance policy for the same risk from more than one insurance company. In case of loss or damage is incurred and if the insured gets benefits from all the insurance companies, the insured will get more profit than his actual loss.The principle on indemnity will not be followed in such a case and it will be against the law of insurance. Therefore, insurance contracts include the principle of contribution expressly. The principle of contribution works in a manner where each insurer pays solitary(prenominal) that proportion of the risk, as is represented by proportion off the sum sensible to the overall sums assured by the different insurers. Whenever, the principle of contribution applies, the insurers make the insured responsible to file the claims in the conform proportion with the insurers. E. g. , A person takes a policy for Rs. 0000, Rs. 100000, and Rs. 150000 for the same thing. He will claim the insurance in the ration of 1/6, 1/3, and ? independently. 6)Nature of cont ract-It is the constitutional principle of insurance required for a legal contract. A contract of insurance comes into existence when therte is an propose or proposal ; acceptance of the same by other. It has to satisfy all essential elements of a simple contract. To insurance contract to be valid one must be competent enough ; with live mind. indemnity is yhe consideration that must be given for the commencement of insurance contract.The object of the contrct should be lawful. 7) Risk must attach-It is essential for a valid contract of insurance. A contract of insurance can be go ford besides if the risk is being attached. Premium is the consideration of the risk by the insurance companies. If there is no risk in the subject matter there should be no premium. 8)Mitigation of loss-It is applied in valid insurance contract. In the event of some mishap to the insured property ,the insured must make necessary effort to safeguard his stay property ; minimize the loss as much as p ossible. ) Terms of policy- An insurance policy is for a specific period or time often the nature of risk against which insurance is sought determines the period or the life of the policy. a contract of wake up insurance is normally for a period of one year. The primary functions of insurance include the following: result Protection †The primary function of insurance is to provide protection against future risk, accidents and perplexity. Insurance cannot check the happening of the risk, but can certainly provide for the losses of risk. Insurance is actually a protection against economic loss, by sharing the risk with others.Collective bearing of risk †Insurance is a device to share the financial loss of few among many others. Insurance is a mean by which few losses are shared among large number of people. All the insured contribute the premiums towards a fund and out of which the persons open(a) to a particular risk is paid. Assessment of risk †Insurance determi nes the probable volume of risk by evaluating various factors that give rise to risk. Risk is the primer coat for determining the premium rate also cater Certainty †Insurance is a device, which helps to change from uncertainty to certainty.Insurance is device whereby the uncertain risks may be made more certain. The secondary functions of insurance include the following: Prevention of Losses †Insurance cautions individuals and businessmen to take up suitable device to prevent unfortunate consequences of risk by observing safety instructions; generalisation of automatic sparkler or alarm systems, etc. Prevention of losses cause slight(prenominal)er compensation to the assured by the insurer and this will gain ground for more savings by way of premium. decreased rate of premiums stimulate for more business and better protection to the insured.Small capital to perceive larger risks †Insurance relieves the businessmen from security investments, by paying polishe d amount of premium against larger risks and uncertainty. Contributes towards the development of larger industries †Insurance provides development opportunity to those larger industries having more risks in their setting up. Even the financial institutions may be prepared to give credit to half-baked industrial units which have insured their assets including plant and machinery. The other functions of insurance include the following:Means of savings and investment †Insurance serves as savings and investment, insurance is a compulsory way of savings and it restricts the extra expenses by the insureds For the purpose of availing income-tax exemptions also, people invest in insurance. Source of earning foreign transposition †Insurance is an international business. The country can earn foreign exchange by way of issue of marine insurance policies and various other ways. Risk Free mickle †Insurance promotes exports insurance, which makes the foreign trade risk pu t down with the help of different types of policies under marine insurance cover.IRDA The Insurance restrictive and Development Authority (IRDA) is a national agency of the Government of India, based in Hyderabad. IRDA is the administrative agency of Government of India for insurance sector supervision and development. It was formed by an act of Indian Parliament known as IRDA Act 1999, which was revise in 2002 to incorporate some emerging requirements. legation of IRDA as stated in the act is â€Å"to protect the interests of the policyholders, to regulate, promote and ensure orderly harvest of the insurance industry and for matters connected therewith or sequent thereto. As per the section 4 of IRDA Act 1999, Insurance Regulatory and Development Authority (IRDA, which was constituted by an act of parliament) specify the composition of Authority. The Authority is a ten member team consisting of (a)    a Chairman; (b)    quintet whole-time members; (c) Â  Â  four part-time members, They are all official by the government of India. [pic]The law of India has following expectations from IRDA:- 1) To protect the interest of and secure passably treatment to policyholders. ) To act upon about lively and orderly reaping of the insurance industry (including annuity and superannuation payments), for the benefit of the common man, and to provide long term funds for accelerating growth of the economy. 3) To set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates. 4) To ensure that insurance customers own precise, clear and correct information about products and services and make them aware of their responsibilities and duties in this regard. ) To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective sexual conquest redressal machinery. 6) To promote fairness, transparency and orderly conduc t in financial markets dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players. 7) To take action where such standards are inadequate or ineffectively enforced. 8) To bring about optimum amount of self-regulation in day to day working of the industry consistent with the requirements of prudential regulation.Slow branch Of Insurance demarcation In India 1) Volatile market The people in India who invest their money in the volatile market of India see the upper layer of the insurance industry and say that one can think positive about this sector, but the index chart viewing the recent growth figures are having different story to tell. 2) Security hastiness in insurance sector Many in India consider the insurance sector as the secured one but the recent downfall in the premium income of private and public life insurance and eneral insurance companies clears this myth. The figures that came out in the light, regarding the premium income of insurance industry clearly show that Insurance in India is not recession proof. Downfall started from the life insurance sector of India where the major and most certain(p) companies have not recorded much magnificent premium income. 3) Mixed results of growth and downfall of insurance business The insurance industry of India is not solo witnessing this decline in life insurance sector but is also looking south with its general insurance biz.The recent data shows the loath prejudicial growth of the general insurance industry in India with both public and private companies giving out mixed results. In the first quarter of the current fiscal where the public sector general insurance companies like United India, New India Assurance and Oriental Insurance have recorded the growth of 14%, 7% and 10% respectively, while PSU National Insurance has resulted in the negative growth of 2%. 4) crushed penetration of general insuranceThe penetra tion of general insurance in India remains low on account of low consumer preference, largely untapped rural markets and limit distribution channels, one of the biggest constraints facing the general insurance business is the lack of reach beyond the cities. With the privatization of the Indian insurance sector in 2000, competing among the insurance players has change magnitude manifold ; each insurance player is coming up with innovative channels ; insurance products to disturb the needs of different people. Thus, it is clear that the face of life insurance is changing.But with the changes come a host of challenges ; it is only the credible player with a long term vision ; a robust business schema that will survive. According to the latest figures released by the Insurance Regulatory and Development Authority (IRDA), of the total 22 life insurance companies, only nine companies managed to mow up new business premium, most of them being smaller companies. Among major players, o nly Reliance Life and SBI Life managed to get more business and witnessed a growth of 6. 88 and 0. 89 per cent respectively.At present there are 22 life insurance companies in India, including the State-run Life Insurance Corporation Swiss Re, the largest reinsurance company, has said that insurance in the emerging markets is pass judgment to grow at a slower ill-use in 2008 and 2009, but its longer term growth prospects remain positive. In India growth of new business in life insurance fell from 145. 7% in 2006 to 9. 6% in 2007. Annual growth is likely to drop from the 2002 to 2007 levels of 11. 4% in life and 10. 6% in non-life to 7-10% in life and 3-8% in non-life between 2008 and 2013, said the company its latest Sigma report.Growth in the life market slowed from 18% to 14% in 2007. Speaking of private general insurance companies, some big players like Reliance General Insurance and Tata AIG General Insurance have witnessed the negative growth. The other players in the same ca tegory like Bajaj Allianz General and ICICI Lombard Insurance have reported the southward growth of 13 and 21 percent respectively in the June quarter. Lack of good insurance advisors. Reasons for Slow Growth 1. Slackness in the economy and the markets has put the stop on the high speed growth of private life insurance companies. 2.Life insurance companies have slowed down recruitment due to tardy growth in the new business and focus on cost-cutting 3. otiose distribution networks 4. Delay in settlement of claims †lengthened procedures 5. Fraud cases : Fraudulent and dishonest claims are a major problem for the insurance industry. An example of life insurance fraud is the John Darwin disappearance case, an ongoing investigation into the faked death of British former teacher and prison officer John Darwin, who turned up alive in December 2007, basketball team years after he was thought to have died in a canoeing accident.Darwin was reported as â€Å"missing” after fail ing to report to work following a canoeing trip on March 21, 2002. He reappeared on December 1, 2007, claiming to have no memory of the past five years. Reasons for Slow Growth (contd) 1) Poor marketing strategies: India is a developing nation and is new to all these marketing strategies if compared at international standards. Keeping in mind the poor literacy rate of the country, there should be such strategies prepared which not only target the urban areas but also tap and focalize on the rural areas for basic and vital insurance policies. ) Low consumer awareness: Due to lack of awareness, yet, nigh 80% of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. And this part of the population is also subject to weak social security and pension systems with hardly any old age income security. This, itself is an indicator that growth potential for insurance sector is immense, however, it is slo w, one reason being lack of awareness.In order to spread awareness, the insurance companies should have differences in approach for rural and urban areas as per the lifestyle, literacy of people. For eg : forges insurance, house insurance for people in rural areas and farmers with low sources of income should be made aware of in a less complex manner. 3) Lack of contention: public and private insurance companies more or less offer policies with similar terms and conditions. Hence, differentiation lacks which leads to less competition in the insurance sector. ) Government monopoly: there are private and public insurance companies in the insurance sector. However, the government provides financial aid and encouragement only to its own public institutions. Evidently, the government will only support and favor its own agencies. There is concentration of power and due to this there can’t be an overall and fair development in the insurance sector.5) Inefficiency in management: th ere is a lot of scope and potential for growth in the insurance sector if men, material and money are managed in the best manner. All sections of society should be tackled in an organized anner with suitable strategies so that the objectives of insurance are materialized. 6) Liquidity crunch: due to reasons such as recession, liquidity has dried-up in the economy and hence people are hesitant concerning long-term investments such as insurance. Only when the liquidity detail eases, will the people become comfortable with locking in money for insurance as it is a long-term commitment and requires payment at tied(p) intervals on a quarterly or periodical basis. 7) Financial malpractices: due to inefficiency and lack of verification there are financial malpractices.For eg: car insurance, the insurer may claim more than the actual damage of his car and give other causes for the accident when it is probably his fault. such(prenominal) practices are illegal. FUTURE PROSPECTS OF INSURANC E IN INDIA With a huge population base and large untapped market, insurance Industry is a big opportunity area in India for national as well as Foreign investors. India is the fifth largest life insurance market in the emerging insurance economies globally and is growing at 32-34% Annually. Life insurance market has propelled the Indian lifeInsurance agents into the ‘top 10 country list in terms of Membership to the Million Dollar metre Table (MDRT) — an Exclusive club for the highest performing life insurance Agents. descend life insurance premium in India is projected to grow Rs 1,230,000 Crores by 2010-11. — Total non-life insurance premium is expected to increase at a CAGR of 25% for the period spanning from 2008-09 to 2010-11. A major study on the Indian insurance sector by consultancy firm McKinsey & Co says less than a third of the life insurance agents meet minimum raining and sales standards set by their companies. It said the life insurance market c ould easily double to $100 billion in five years Entitled India Insurance 2012: Fortune Favours the Bold, it estimates that high(prenominal) per capita income will be the key driver of higher demand for insurance products. By 2012, Indian household will be paying premium of up to Rs 4,100 from the current Rs 1,300 India’s ratio of life insurance premium to its GDP is around 4% against 6-9% in the developed world. But, the report claims it could rise to 6. % by 2012, in tandem with the countrys demographic profile By 2012, almost 40% of the urban population is likely to have some form of life insurance cover, while in rural areas too it could touch 35%. Current levels are 30% and 25%, respectively FUTURE PROSPECTS OF INSURANCE IN INDIA (CONTD.. ) Insurance 10 years back in India basically was everyday only for Life and to some extent for cover against Fire with only players like LIC,GIC etc. and this was one of the contributing factors for the growth of insurance being slow in India.This scenario changed with the entry of private players in the market. With competition came more innovation which ultimately is benefiting this industry in general. Latest 2 examples of innovations are agricultural/crop insurance and wedding Insurance. Bajaj Allianz Insurance has plans for protection against any losses in wedding preparations. The prospect that Insurance industry in India has a overbold future can also be believed as not only big corporate houses like Reliance, Tatas and Birlas have stepped in this sector but also big banks like ICICI, SBI, HDFC are a part of it.This is a very positive indication for this sector with also more foreign players trying to come to India. India has an ever increasing population which just increases more and more market for the insurance industry. With more terror attacks and man made calamities and increasing natural calamities like rain deluge, draught, earthquakes etc. there is an increasing feeling of jeopardy which is exa ctly what this industry thrives on. Hence, Insurance has very bright prospects in India. [pic]\r\n'