UNIVERSITY OF MUMBAI

PROJECT REPORT ON

INVESTMENT BANKING
MASTER OF COMMERCE (BANKING & FINANCE)
SUBJECT:-INVESTMENT MANAGEMENT
SEMESTER III
2015-2016

In Partial Fulfilmentof the Requirement uder Semester Based Credit

And Grading System for Post Gradutes (P.G)
Programme under Faculty of Commerce

SUBMITTED BY
VISHAKHA H MARU
ROLL NO:-36

PROJECT GUIDE
PROF:- KULDEEP SHARMA

K.P.B HINDUJA COLLEGE OF COMMERCE

315, NEW CHARNI ROAD, MUMBAI-400 004

[Link] (Banking and Finance)

3RD SEMESTER

INVESTMENT BANKING

SUBMITTED BY
Miss. VISHAKHA HARISH MARU
ROLL NO: 36

CERTIFICATE
This is to certify that Ms. MARU VISHAKHA HARISH of [Link]
BANKING AND FINANCE Semester- 3 [2015-2016] has successfully completed
the Project on INVESTMENT BANKING under the guidance of PROF
.KULDEEP SHARMA.

Project Guide

________________

Course Coordinator

________________

Internal Examiner

________________

External Examiner

________________

Principal

________________

Date: ______
Place: Mumbai

DECLARATION

I, Ms. VISHAKHA HARISH MARU student of [Link]-Banking and

Finance, semester- 3 (2015-2016), hereby declare that I have completed the project
on INVESTMENT BANKING.
The information submitted is true and original copy to the best of my
knowledge.

VISHAKHA MARU

ACKNOWLEDGEMENT

I owe my special thanks to the Principle Dr. Chitra Natrajan and the Cocoordinator of [Link] PROF KULDEEP SHARMA for giving me an opportunity
for this project work. I would like to give my thanks to the Project Guide PROF
KULDEEP SHARMA for her guidance and kind assessment that she has provided
me and the inspiration in valued guidance and ideas throughout the project. I am
also thankful to the library staff of K. P. B. Hinduja College Of Commerce who cooperated with me and even all those seen and unseen hands and heads which
helped me in her completion of this project.

INDEX
PAGE
SR- NO.

TOPICS
NO.

1
2
3
4
5
6
7
8
9
10
11
12

INSURANCE IN INDIA
1-6
LIFE INSURANCE IN INDIA
7-8
LIST OF LIFE INSURANCE
9-10
FOREIGN DIRECT INVESTMENT IN INSURANCE
10
SECTOR
INITIAL PUBLIC OFFERS RULES OF INDIAN
11
INSURANCE COMPANIES
INDIAN LIFE INSURANCE OVERVIEW
12-13
NATIONAL INSURANCE COMPANY
14-16
LIFE INSURANCE COPERATION IN INDIA
17-21
GENERAL INSURANCE CORPORTION OF INDIA
21-22
NEW INDIAN ASSURANCE COMPANY
23-24
UNITED INDIAN INSURANCE
25-29
INSURANCE
REGUATORY
&
DEVELOPMENT
30-31
AUTHORITY OF INDIA

13

AGIRCULTURE INSURANCE IN INDIA

14

BIBLOGRAPHY

32-33
34-35

CH:1 INSURANCE SECTOR IN INDIA

INTRODUCTION
Insurance in India refers to the market for insurance in India which covers both the public and
private sector organisations. It is listed in the Constitution of India in the Seventh Schedule as
a Union List subject, 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. India allowed private companies in
insurance sector in 2000, setting a limit on FDI to 26%, which was increased to 49% in

2014. 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.

History
In India, insurance has a deep-rooted history. Insurance in various forms has been mentioned in
the writings of Manu (Manusmrithi), Yagnavalkya (Dharmashastra) and Kautilya(Arthashastra).
The fundamental basis of the historical reference to insurance in these ancient Indian texts is the
same i.e. pooling of resources that could be re-distributed in times of calamities such as fire,
floods, epidemics and famine. The early references to Insurance in these texts have reference to
marine trade loans and carriers' contracts.
Insurance in its current form has its history dating back until 1818, when Oriental Life Insurance
Company] was started by Anita Bhavsar in Kolkata to cater to the needs of European community.
The pre-independence era in India saw discrimination between the lives of foreigners (English)
and Indians with higher premiums being charged for the latter. In 1870, Bombay Mutual Life
Assurance Society became the first Indian insurer.
The Government of India issued an Ordinance on 19 January 1956 nationalising the Life
Insurance sector and Life Insurance Corporation came into existence in the same year. The Life
Insurance Corporation (LIC) absorbed 154 Indian, 16 non-Indian insurers as also 75 provident
societies245 Indian and foreign insurers in all. In 1972 with the General Insurance Business
(Nationalisation) Act was passed by the Indian Parliament, and consequently, General Insurance
business was nationalized with effect from 1 January 1973. 107 insurers were amalgamated and
grouped into four companies, namely National Insurance Company Ltd., the New India
Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance
Company Ltd. The General Insurance Corporation of India was incorporated as a company in
1971 and it commence business on 1 January 1973.
The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private
sector. Before that, the industry consisted of only two state insurers: Life Insurers (Life Insurance

Corporation of India, LIC) and General Insurers (General Insurance Corporation of India, GIC).
GIC had four subsidiary companies. With effect from December 2000, these subsidiaries have
been de-linked from the parent company and were set up as independent insurance
companies: Oriental

Insurance

Company

Limited, New

India

Assurance

Company

Limited, National Insurance Company Limited and United India Insurance Company Limited.

Industry structure
By 2012 Indian Insurance is a US$72 billion industry. However, only two million people (0.2%
of the total population of 1 billion) are covered under Mediclaim, whereas in developed nations
like USA about 75% of the total population are covered under some insurance scheme. With
more and more private companies in the sector, this situation is expected to change. ECGC,
ESIC and AIC provide

insurance services for niche markets. So, their scope is limited by

legislation but enjoy some special powers

Insurance Repository
On 16 September 2013, IRDA launched 'Insurance Repository' services in India. It is a unique
concept and first to be introduced in India. This system enables policy holders to buy and keep
insurance policies in dematerialized or electronic form. Policy holders can hold all his insurance
policies in an electronic format in a single account called electronic insurance account (eIA).
Insurance Regulatory and Development Authority has issued licenses to five entities to act as
Insurance Repository:
NSDL Database Management Limited, Central Insurance Repository Limited ( CIRL ), SHCIL
Projects Limited, Karvy Insurance repository Limited, CAMS Repository Services Limited

Legal structure
The insurance sector went through a full circle of phases from being unregulated to completely
regulated and then currently being partly deregulated. It is governed by a number of acts.
The Insurance Act of 1938 was the first legislation governing all forms of insurance to provide
strict state control over insurance [Link] insurance in India was completely nationalized
on 19 January 1956, through the Life Insurance Corporation Act. All 245 insurance companies
operating then in the country were merged into one entity, the Life Insurance Corporation of
India.
The General Insurance Business Act of 1972 was enacted to nationalize about 100 general
insurance companies then and subsequently merging them into four companies. All the
companies were amalgamated into National Insurance, New India Assurance, Oriental Insurance
and United India Insurance, which were headquartered in each of the four metropolitan
[Link] 1999, there were no private insurance companies in India. The government then
introduced the Insurance Regulatory and Development Authority Act in 1999, thereby deregulating the insurance sector and allowing private companies. Furthermore, foreign investment
was also allowed and capped at 26% holding in the Indian insurance companies.
In 2006, the Actuaries Act was passed by parliament to give the profession statutory status on par
with Chartered Accountants, Notaries, Cost & Works Accountants, Advocates, Architects and
Company Secretaries.A minimum capital of US$80 million(Rs.400 Crore) is required by
legislation to set up an insurance business.

Authorities
The primary regulator for insurance in India is the Insurance Regulatory and Development
Authority (IRDA) which was established in 1999 under the government legislation called
the Insurance Regulatory and Development Authority Act, 1999 The industry recognises

examinations conducted by IAI (for actuaries), III (for agents, brokers and third-party
administrators) and IIISLA (for surveyors and loss assessors). TAC is the sole data repository for
the non-life industry. IBAI gives voice for brokers while GI Council and LI Council are
platforms for insurers. AIGIEA, AIIEA, AIIEF, AILICEF, AILIEA, FLICOA, GIEAIA, GIEU
and NFIFWI cater to the employees of the insurers. In addition, there are a dozen Ombudsman
offices to address client grievances.

Insurance education
A number of institutions provide specialist education for the insurance industry, these include;

National Insurance Academy, Pune, specialized in teaching, conducting research and

providing consulting services in the insurance sector. NIA offers a two year PGDM program
in insurance. NIA was founded as Ministry of Finance initiative with capital support from the
then public insurance companies, both Life (LIC) and Non-Life (GIC, National, Oriental,
United & New India).

Institute of Insurance and Risk Management, Hyderabad, was established by the regulator
IRDA. The institute offers Postgraduate diploma in Life, General Insurance, Risk
Management and Actuarial Sciences. The institute is a global learning and research center in

insurance, risk management, actuarial sciences. They provide consulting services for the
financial industry.

Amity School of Insurance Banking and Actuarial science (ASIBAS) of Amity

University, located in Noida and established in 2000, offers MBA programs in Insurance,
Insurance and Banking, and [Link]./[Link]. actuarial sciences to a Post Graduate Diploma in
Actuarial Sciences.

Pondicherry University is offering mba in insurance management. Pondicherry university

is the only central university which offers insurance management in India.

Birla Institute of Management Technology is a graduate business school located in

Greater Noida, established in 1988, offers a PGDM-IBM program in insurance business
management. This program was launched in 2000 by the Centre for Insurance and Risk
Management and is accredited by the Insurance Regulatory and Development Authority. Life
Office Management Association (LOMA), USA is BIMTECH's educational partner and
BIMTECH is an approved centre for LOMA examination. The Chartered Insurance
Institute (CII), UK has accorded recognition (by way of credits) to the BIMTECH PGDMIBM program. Their two year PGDM program in insurance business has been recognized as
equivalent to the Associate level of the Insurance Institute of India, Mumbai.

NLU, Jodhpur, offers a two year MBA and one year MS (for engineering graduates)
program in insurance.

IRDA controls all the Insurance business in India. They set up the structure and boundaries for
the insurance companies to act within. Starting from licensing to approving the products, IRDA
directs the companies in India. They also protect customer interests in the country.
To become an insurance advisor in India insurance act 1938 mandates that the individual has to
be "a Major with sound mind". After the advent of IRDA as Insurance Regulator it has framed
various regulations viz training hours, examination and fees which are amended from time to
time. Since November 2011 IRDA the Insurance Regulator in India has introduced a syllabus
(IC-33) conceived and developed by CII, London. The syllabus mainly aims to make an
Insurance Agent a financial professional. But almost all insurers are facing tough times making
the candidates pass the examination which has become relatively tough.

CH:2 Life insurance in India

Life Insurance is the fastest growing sector in India since 2000 as Government allowed Private
players and FDI up to 26% and recently Cabinet approved a proposal to increase it to 49%. Life
Insurance in India was nationalised by incorporating Life Insurance Corporation (LIC) in 1956.
All private life insurance companies at that time were taken over by LIC.

In 1993, the Government of India appointed RN Malhotra Committee to lay down a road map for
privatisation of the life insurance sector.
While the committee submitted its report in 1994, it took another six years before the enabling
legislation was passed in the year 2000, legislation amending the Insurance Act of 1938 and
legislating the Insurance Regulatory and Development Authority Act of 2000. The same year the
newly appointed insurance regulator - Insurance Regulatory and Development Authority IRDA
started issuing licenses to private life insurers.

1:Types of Life Insurance in India

Insurance products come in a variety of offerings catering to the investment needs and objectives
of different kinds of investors. Following is the list of broad categories of life insurance products:

1.1Term Insurance Policies

The basic premise of a term insurance policy is to secure the immediate needs of nominees or
beneficiaries in the event of sudden or unfortunate demise of the policy holder. The policy holder
does not get any monetary benefit at the end of the policy term except for the tax benefits he or
she can choose to avail of throughout the tenure of the policy. In the event of death of the policy
holder, the sum assured is paid to his or her beneficiaries. Term insurance policies are also
relatively cheap to acquire compared to other insurance products.

1.2Money-back Policies
Money back policies are basically an extension of endowment plans wherein the policy holder
receives a fixed amount at specific intervals throughout the duration of the policy. In the event of
the unfortunate death of the policy holder, the full sum assured is paid to the beneficiaries. The
terms again might slightly vary from one insurance company to another.

1.3Unit-linked Investment Policies (ULIP)

Unit linked insurance policies again belong to the insurance-cum-investment category where one
gets to enjoy the benefits of both insurance and investment. While a part of the monthly premium
pay-out goes towards the insurance cover, the remaining money is invested in various types of
funds that invest in debt and equity instruments. ULIP plans are more or less similar in
comparison to mutual funds except for the difference that ULIPs offer the additional benefit of
insurance.

1.4Pension Policies
Pension policies let individuals determine a fixed stream of income post retirement. This
basically is a retirement planning investment scheme where the sum assured or the monthly payout after retirement entirely depends on the capital invested, the investment timeframe, and the
age at which one wishes to retire. There are again several types of pension plans that cater to
different investment needs. Now it is recognized as insurance product and being regulated by
IRDA.

2:List of Life Insurers (as of June 2014)

Apart from Life Insurance Corporation, the public sector life insurer, there are 23 other private
sector life insurers, most of them joint ventures between Indian groups and global insurance
giants.

2.1 Life Insurer in Public Sector

1. Life Insurance Corporation of India

2.2 Life Insurers in Private Sector

1. SBI Life Insurance
2. PNB Metlife India Life Insurance
3. ICICI Prudential Life Insurance
4. Bajaj Allianz Life
5. Max Life Insurance
6. Sahara Life Insurance
7. Tata AIG Life
8. HDFC Life
9. Birla Sun Life Insurance
[Link] Life Insurance
[Link] Life Insurance
[Link] Life Insurance
[Link] Life Insurance Company Limited - Formerly known as AMP Sanmar LIC
[Link] Life Insurance - Formerly known as ING Vysya Life Insurance

[Link] Life Insurance

[Link] AXA Life Insurance Co Ltd.
[Link] Generali Life Insurance Co Ltd
[Link] Federal Life Insurance
[Link] Religare Life Insurance
[Link] Pramerica Life Insurance - Formerly known as DLF Pramerica Life Insurance
[Link] HSBC Oriental Bank of Commerce
[Link] Union Dia-ichi Life Insurance Co. Ltd
[Link] Tokio Life Insurance Company Ltd.

3:Foreign Direct Investment (FDI) Policy in Insurance

Sector:As per the current (March 2006) FDI norms, foreign participation in an Indian insurance
company is restricted to 26.0% of its equity / ordinary share capital. The Insurance Regulator has
stipulated that foreign investment in Indian Insurance companies be limited to 26% of total
equity issued (FDI limit) with the balance being funded by Indian promoter entities. The limit to
foreign investment includes both direct and indirect investment and has been a cause of
significant lobbying by foreign insurance companies for a change in regulations to increase the
FDI limit to 49% of equity issued. Recently,In the Fiscal Budget of Modi Government of 201415 it has introduced 49.0% FDI which will bring in more investments in Insurance Sector.

The Indian government has supported an increase in the FDI limit, which requires a change in
the Insurance Act. The Union Budget for fiscal 2005 had recommended that the ceiling on
foreign holding be increased to 49.0%.
A change in the Insurance Act requires a passage of the bill in both houses of Parliament. The
Indian government has tabled the bill in the Upper House of Parliament in August 2010.

3.1Initial Public Offer (IPO) rules for Indian Life Insurance

Companies
A key piece of legislation impacting on the Life Insurance industries capital raising abilities is
the lock-in period of 10 years for investment to be limited to promoter group equity investments.
Under the Insurance Guidelines, Indian Life Insurance companies can opt for a public issue of
equity through an Initial Public Offer (IPO) after 10 years of operations.
In October 2010, the securities market regulator, Securities and Exchange Board of India (SEBI),
issued disclosure norms for Indian Life Insurance Companies seeking to make an initial public
offer for sale of equity shares to the public.

3.2Indian life insurance industry overview

All life insurance companies in India have to comply with the strict regulations laid out by
Insurance Regulatory and Development Authority of India (IRDA).
Life Insurance Corporation of India (LIC), the state owned behemoth, remains by far the largest
player in the market. The private companies have come out with products called ULIPs (Unit
Linked Investment Plans) which offer both life cover as well as scope for savings or investment
options as the customer desires. These type of plans are subject to a minimum lock-in period of
three years to prevent misuse of the significant tax benefits offered to such plans under the
Income Tax Act. Comparison of such products with mutual funds would be erroneous.

3.3Commission / intermediation fees

The maximum commission limits as per statutory provisions are:

3.4 Agency commission for retail life insurance business:

7- 25% for 1st year premium if the premium paying term is more than 20
years

7- 10% for 1st year premium if the premium paying term is more than 15
years

7- 10% for 1st year premium if the premium paying term is less than 10
years

7% - yr 2 and 3rd year and 3.5% - thereafter for all premium paying terms.

In case of Mutual fund related - Unit linked policies it varies between 1.5% to 6% on the
premium paid:

Maximum broker commission - 30%

Referral fees to banks Max 55% for regular premium and 10% for single premium.
However in any case this fee cannot be more than the agency commission as filed under the
product.

However, the above commission may be further subject to the product wise limits
specified by IRDA while approving the product.

Ch:-3 National Insurance Company

National Insurance Company Limited (NICL) is a state owned general insurance company
in India. The company headquartered at Kolkata was established in 1906 and nationalised in
1972 It's portofolio consists of a multitude of general insurance policies, offered to a wide arena
of clients encompassing different sectors of the economy. Apart from being a leading insurance
provider inIndia, NICL also serves Nepal.

History
After nationalisation in 1972, NICL operated as a subsidiary of General Insurance Corporation of
India (GIC). NICL was spun off as a distinct company under the General Insurance Business
(Nationalisation) Amendment Act in 2002. In April, 2004, NIC signed an agreement
with Nainital Bank for distribution of its general insurance products through the bank's branches
in Uttarakhand, Haryana and New Delhi.

Company profile
National Insurance Company Limited was incorporated in December 6, 1906 with its Registered
office in Kolkata. Consequent to passing of the General Insurance Business Nationalisation
Act in 1972, 21 Foreign and 11 Indian Companies were amalgamated with it and National
became a subsidiary of General Insurance Corporation of India (GIC) which is fully owned by
the Government of India. After the notification of the General Insurance Business ans its India's
largest gic company(Nationalisation) Amendment Act, on 7 August 2002, National has been delinked from its holding company GIC and presently operating as an independent insurance
company wholly owned by Govt of India. National Insurance Company Ltd (NIC) is one of the
leading public sector insurance companies of India, carrying out non life insurance business.
Headquartered in Kolkata, NIC's network of about 1000 offices, manned by more than 16,000
skilled personnel, is spread over the length and breadth of the country covering remote rural
areas, townships and metropolitan cities. NIC's foreign operations are carried out from its branch
offices in Nepal. Befittingly, the product ranges, of more than 200 policies offered by NIC cater
to the diverse insurance requirements of its 14 million policyholders. Innovative and customised
policies ensure that even specialised insurance requirements are fully taken care of. The paid-up
share capital of National is 100 crores. Starting off with a premium base of 50 crores in 1974,
NIC's gross direct premium income has steadily grown to about 9000 crores rupees in the
financial year 2012-13. National transacts general insurance business of Fire, Marine and
Miscellaneous insurance. The Company offers protection against a wide range of risks to its
customers. The Company is privileged to cater its services to almost every sector or industry in
the Indian Economy viz. Banking, Telecom, Aviation, Shipping, Information Technology, Power,
Oil & Energy, Agronomy, Plantations, Foreign Trade, Healthcare, Tea, Automobile, Education,
Environment, Space Research etc. As of 2010, NICL has a AAA rating from Indian rating
agency, CRISIL, a subsidiary of Standard and Poor's Company.[7][8] The gross premiums from
underwriting by the company grew by 32.22% to over 6,100 crores during the Financial
Year 2010-2011. And Gross Premiun grew up to 10,000 crores during the financial year 20132014.[9] With this, the company was ranked second among general insurance companies
operating in India, behind New India Assurance, at the end of the 2014 Financial Year.[9] With

about 1000 offices and 16,000 employees and agents, the company operates in all of India, and
neighbouring Nepal.[1] In 2008, the company signed a deal with HCL Technologiesworth
almost 400 crores to outsource the companys information technology requirements over 7
years.

Products and services

NICL has a range of coverage policies targeting different sectors

Personal Insurance policies include medical insurance, accident, property and auto
insurance coverage

Rural Insurance policies provide protection against natural and climatic disasters for
agriculture and rural businesses

Industrial Insurance policies provide coverage for project, construction, contracts, fire,
equipment loss, theft, etc.

Commercial Insurance policies provide protection against loss and damage of property
during transportation, transactions, etc.

Awards
The Enterprise has been the recipient of various awards and accolades including:

Business Leadership Award, 2012 byZNDTV Profit

Digital Inclusion Awards 2012,

Top 100 CISO Awards 2012,

The Indian Insurance Awards 2013, 3rd Annual Edition, for

Best Under-served Market Penetration,

Industry Champion - General Insurance - NSR Chandraprasad, CMD, NICL.

CH-4LIFE

INSURANCE

CO-OPERATION

IN

INDIA
Life

Insurance

Corporation

of

India (LIC)

is

an

Indian state-owned insurance

group and investment company headquartered inMumbai. It is the largest insurance company in
India with an estimated asset value of 1560482 crore (US$240 billion). As of 2013 it had total
life fund of Rs.1433103.14 crore with total value of policies sold of 367.82 lakh that year.
The company was founded in 1956 when the Parliament of India passed the Life Insurance of
India Act that nationalised the private insurance industry in India. Over 245 insurance companies
and provident societies were merged to create the state owned Life Insurance Corporation.

Founding
The Oriental Life Insurance Company, the first company in India offering life insurance

coverage, was established in Calcutta in 1818 by Bipin Behari Dasgupta and others. Its primary
target market was the Europeans based in India, and it charged Indians heftier premiums.
[3]

Surendranath Tagore (son of Satyendranath Tagore) had founded Hindusthan Insurance

Society, which later became Life Insurance Corporation.[4]

The Bombay Mutual Life Assurance Society, formed in 1870, was the first native insurance
provider. Other insurance companies established in the pre-independence era included

Postal Life Insurance (PLI) was introduced on 1 February 1884

Bharat Insurance Company (1896)

United India (1906)

National Indian (1906)

National Insurance (1906)

Co-operative Assurance (1906)

Hindustan Co-operatives (1907)

Indian Mercantile

General Assurance

Swadeshi Life (later Bombay Life)

Sahyadri Insurance (Merged into LIC, 1986)

The first 150 years were marked mostly by turbulent economic conditions. It witnessed, India's
First War of Independence, adverse effects of the World War I and World War II on the economy
of India, and in between them the period of world wide economic crises triggered by the Great

depression. The first half of the 20th century also saw a heightened struggle for India's
independence. The aggregate effect of these events led to a high rate of and liquidation of life
insurance companies in India. This had adversely affected the faith of the general public in the
utility of obtaining life cover.

Nationalisation in 1955
LIC Zonal Office, at Connaught Place, New Delhi, designed by Charles Correa, 1991.
LIC Building at Chennai, was the tallest building in India when it was inaugurated in 1959In
1955, parliamentarian Amol Barate raised the matter of insurance fraud by owners of private
insurance agencies. In the ensuing investigations, one of India's wealthiest businessmen, Sachin
Devkekar, owner of the Times of India newspaper, was sent to prison for two years.
Eventually, the Parliament of India passed the Life Insurance of India Act on June 19, 1956
creating the Life Insurance Corporation of India, which started operating in September of that
year. It consolidated the life insurance business of 245 private life insurers and other entities
offering life insurance services, this consisted of 154 life insurance companies, 16 foreign
companies and 75 provident companies. The nationalisation of the life insurance business in
India was a result of the Industrial Policy Resolution of 1956, which had created a policy
framework for extending state control over at least seventeen sectors of the economy, including
life insurance.

Growth
From its creation, the Life Insurance Corporation of India, which commanded a monopoly of
soliciting and selling life insurance in India, created huge surpluses, and by 2006 was
contributing around 7% of India's GDP.
The Corporation, which started its business with around 300 offices, 5.7 million policies and
a corpus of INR 45.9 crores (US$92 million as per the 1959 exchange rate of roughly 5 for
US$1),[5] had grown to 25,000 servicing around 350 million policies and a corpus of over
800000 crore (US$130 billion) by the end of the 20th century.

Liberalisation
In August 2000, the Indian Government embarked on a program to liberalise the Insurance
Sector and opened it up for the private sector. Ironically, LIC emerged as a beneficiary from this
process with robust performance, albeit on a base substantially higher than the private sector.
In 2013 the First Year Premium compound annual growth rate (CAGR) was 24.53% while Total
Life Premium CAGR was 19.28% matching the growth of the life insurance industry and also
outperforming general economic growth.

Products and services

LIC offers a variety of insurance products to its customers such as insurance plans, pension
plans, unit-linked plans, special plans and group schemes.[7]

Operations
Today,the LIC has 8 zonal offices, around 109 divisional offices, 2,048 branches and 992 satellite
offices and corporate offices;[1] it also has 54 customer zones and 25 metro-area service hubs
located in different cities and towns of India. It also has a network of 1,337,064 individual
agents, 242 Corporate Agents, 79 Referral Agents, 98 Brokers and 42 Banks for soliciting life
insurance business from the public.

Slogan
LIC's slogan yogakshemam vahamyaha is in Sanskrit language which translates in English as
"Your welfare is our responsibility". This is derived from ancient Hindu text, the Bhagavad Gita's
9th chapter, 22nd verse.[8] The slogan can be seen in the logo, written in Devanagariscript.
Awards and recognitions

The Economic Times Brand Equity Survey 2012 rated LIC as the No. 6 Most Trusted
Service Brand of India.[9]

From the year 2006, LIC has been continuously winning the Readers' Digest Trusted
brand award.[10]

Voted India's Most Trusted brand in the BFSI category according to the Brand Trust
Report for 4 continuous years - 2011-2014 according to the Brand Trust Report[

Employees and Agents

As on 31 March 2014, LIC had 1,20,388 employees, out of which 24,867 were women (20.65%).
Category of employees

Total Number

No. of Women

Class-I Officers

31,420

6,292

Development Officers

26,621

1,033

Class III/IV employees

62,347

17,542

Total

1,20,388

24,867

LIC had 11,95,916 agents as on 31 March 2014, out of which the number of active agents were
11,32,677 (94.71%).

Golden Jubilee Foundation

LIC Golden Jubilee Foundation was established in 2006 as a charity organization. This entity has
the aim of promoting education, alleviation of poverty, and providing better living conditions for
the under privileged. Out of all the activities conducted by the organisation, Golden Jubilee
Scholarship awards is the best known. Each year, this award is given to the meritorious students
in standard XII of school education or equivalent, who wish to continue their studies and have a
parental income less than 100000 (US$1,600).
In News : About holdings in various companies

LIC holds shares worth about Rs 2.33 lakh crore in all the Nifty companies put together, but it
lowered its holding in a total of 27 Nifty companies during the quarter.
The cumulative value of LIC holding in these 27 companies fell by little over Rs 8,000 crore
during the quarter shows the analysis of changes in their shareholding patterns.
Individually, LIC is estimated to have sold shares worth Rs 500-1,000 crore in each of Mahindra
& Mahindra, HDFC Bank, ICICI Bank, Tata Motors, L&T, HDFC, Wipro, SBI, Maruti Suzuki,
Dr Reddys and Bajaj Auto.
The insurance behemoth also trimmed holdings in Ambuja Cements, Cipla, TCS, Lupin and
Asian Paints. A marginal decline was also witnessed in its stakes in companies such as IDFC,
Hindustan Unilever, Grasim, ACC, BPCL, Bank of Baroda, Punjab National Bank, Sun Pharma
and Tata Power.
On the other hand, LIC further ramped up its stake in a total of 14 Nifty constituents with
purchase of shares worth an estimated Rs 4,000 crore.
The major companies where LIC has raised its stake include Infosys, RIL,Coal India Ltd and
Cairn India. Other such companies are ITC, Power Grid Corp, NTPC, Siemens, Bharti Airtel and
Hero MotoCorp.
The state-run insurer also marginally hiked its exposure in Ultratech, Gail India, Ranbaxy, Kotak
Mahindra Bank and HCL Technologies, while its shareholding remained almost unchanged in
companies like ONGC, Tata Steel, BHEL and Reliance Infra.

CH-5 General Insurance Corporation of India

GIC of India (GIC Re) is the sole reinsurance company in the Indian insurance market with
over four decades of experience.
GIC Re has its registered office and headquarters in Mumbai.

History
The entire general insurance business in India was nationalised by the Government of
India (GOI) through the General Insurance Business (Nationalisation) Act (GIBNA) of 1972. 55

Indian insurance companies and 52 other general insurance operations of other companies were
nationalized through the act.[2]
The General Insurance Corporation of India (GIC) was formed in pursuance of Section 9(1) of
GIBNA. It was incorporated on 22 November 1972 under the Companies Act, 1956 as a private
company limited by shares. GIC was formed to control and operate the business of general
insurance in India.
The GOI transferred all the assets and operations of the nationalized general insurance
companies to GIC and other public-sector insurance companies. After a process of mergers and
consolidation, GIC was re-organized with four fully owned subsidiary companies: National
Insurance

Company

Limited, New

India

Assurance Company

Limited, Oriental

Insurance Company Limited andUnited India Insurance Company Limited.

GIC and its subsidiaries had a monopoly on the general insurance business in India until the
landmark Insurance Regulatory and Development Authority Act (IRDA Act) of 1999 came into
effect on 19 April 2000. This act also amended the GIBNA Act and Insurance Act of 1938. The
act along with the amendments ended the monopoly of GIC and its subsidiaries and liberalized
the insurance business in India.
In November 2000, GIC was renotified as India's Reinsurer, but its supervisory role over its
subsidiaries was ended. This was followed by the General Insurance Business (Nationalisation)
Amendment Act of 2002. Coming into effect from 21 March 2003, this amendment ended GIC's
role as a holding company of its subsidiaries. The ownership of the subsidiaries was transferred
to the Government of India.
As a result of these reforms, GIC became the sole Re-Insurer in India, and is now called GIC
Re. Indian insurance companies are required by law to cede 5% of every policy value to GIC Re
w.e.f. 1 April 2013, subject to some limitations and exceptions. GIC Re has diversified its
operations and is now emerging as an important Re-Insurer in SAARCcountries, Southeast
Asia, Middle East and Africa, Europe and America. GIC Re has also expanded its international
operations through branches in London, Moscow, Dubai and Kuala Lumpur and is further
planning to establish offices in key regions.

As of 2012 GIC Re ranked 15th largest Reinsurer and 5th largest Aviation Reinsurer in the world
(S&P Ratings). GIC Re has a rating of A- (Excellent) from A. M. Best for its financial
strength. As of 2014 GIC Re has been assigned National Scale AAA Reliability Rating And
Global Scale iA- Credit Rating by Russian National Rating Agency (NRA).

CH:5 New India Assurance Company

The New India Assurance Co. Ltd., based in Mumbai, is one of the five Wholly Government of
India owned assurance companies of India.[4] It is the "largest general insurance company
of India on the basis of gross premium collection inclusive of foreign operations". .[5] It was
founded by Sir Dorabji Tata in 1919, and was nationalised in 1973.

Previously it was a subsidiary of the General Insurance Corporation of India (GIC). But when
GIC became an re-insurance company as per the IRDA Act 1999, its four primary insurance
subsidiaries New India Assurance, United India Insurance, Oriental Insurance and National
Insurance got autonomy.
New India Assurance operates both in India and foreign countries. In the recent past it has
collaborated with some of the leading public sector banks of India such as State Bank of
India, Central Bank of India, Corporation Bank and United Western Bank to increase its
distribution network.

Offices
The company with its corporate office in Mumbai has about 31 regional offices, 397 divisional
offices, 588 branches, 27 direct agent branches and 23 extension counters in the year 2011-2012 ]
The number of regional offices of the company in the year 2011 stood at 28, with numerous other
offices down the hierarchy of divisional offices, branch offices, direct agents branches, micro
offices. Centralised claim processing offices called claims hubs are operated from 29 locations.
Its overseas offices for the year 2011-2012 consisted of 19 branches, seven agencies, four
associate companies and three subsidiary companies spread over 23 countries.

Business Performance
The domestic gross premium procured for the period from April 2013 to March 2014 was
Rs.11,540 crore with a growth of 15.00%, when compared to the same corresponding period
pertaining to previous financial year and the global gross premium stood at Rs.14,304
crores with a growth of 14.40% over previous year. The company posted PAT (Profit After Tax)
of Rs.1089 crores. The company paid a dividend of Rs.220 crores to the Government of India for
the fiscal [Link] paid to Government of India.
The state owned company's achievements include;
1) Procurement of highest Global Gross Premium of Rs.14,304 crores for the year 2013-2014.
Maintaining the 'largest general Insurer in India' tag.
2) Market leadership position for four consecutive decades

3) The ratio of available solvency margin to required solvency margin standing at 250%
4) Highest net profit of Rs.1089 crores
5) Highest net worth of Rs.8,621 crores
6) Highest assets - crossed Rs.53,000 crores
7) Only Indian General Insurance Company to have presence in 22 countries
8) Financial Strength rating of A-Excellent (Stable) by A.M Best -Europe.

IT Solution
The company has teamed up with TCS BaNCS to provide a core insurance platform] The project
is known as CWISS or Centralised Web based Insurance System Solution.
For re-insurance, company uses RAMS software. RAMS stands for Re-insurance accounting and
management system. This software is also developed by TCS BaNCS.

Awards
J.D Power Asia Pacific part of McGraw Hill Companies has ranked New India Assurance
Company Ltd, the highest in satisfying auto insurance customers. [11] The award relates to 2011
India Auto Insurance Customer Satisfaction Index Study wherein out of a 1000 point scale, the
company scored 804.

CH:6 United India Insurance

United India Insurance Company Limited (Wholly owned by Govt. of India) under
Department of Financial Services, Ministry of Finance (India), is a public sector General
Insurance Company of India and one of the top General Insurers in Asia. With the net worth of
5407 crores and profit of 528 crores, the company has collected gross premium of 9709
crores as of in the financial year 2013-14. The company has more than seven decades of

experience in Non-life Insurance business and was formed to its present form by the merger of
22 companies, consequent to the nationalisation of General Insurance companies in India.

About the company

United India Insurance Company Limited was incorporated as a Company on 18 February 1938.
General Insurance Business in India was nationalized in 1972. A total of 12 Indian Insurance
Companies, 4 Cooperative Insurance Societies and Indian operations of 5 Foreign Insurers,
besides General Insurance operations of southern region of Life Insurance Corporation of
India were merged with United India Insurance Company Limited. After nationalization the
company has grown by leaps and bounds and has a workforce of about 18000 employees spread
across more than 1600 offices providing insurance cover to more than 2 Crore policy holders.
The Company has variety of insurance products to provide insurance cover ranging from bullock
carts to satellites.

United India Insurance Company has been in the forefront of designing and implementing
complex covers to large customers, as in cases of ONGC Ltd, GMR- Hyderabad International
Airport Ltd, Mumbai International Airport Ltd Tirumala-Tirupati Devasthanam etc. It has been
also the pioneer in taking Insurance to rural masses with large level implementation of Universal
Health Insurance Programme ofGovernment of India & Vijaya Raji Janani Kalyan Yojana
( covering 45 lakhs women in the state of Madhya Pradesh), Tsunami Jan Bima Yojana (in 4
states covering 4.59 lakhs of families), National Livestock Insurance and many such schemes.

Offices
United India Insurance Company headquartered at Chennai has more than 1600 offices
consisting of 26 Regional Offices, 8 Large Corporate Offices and several divisional, branch and
micro offices. The company has also been operating large number of Service and TP hubs for
dedicated service to motor policy claims and related assistance.

Profit and performance

The United India Insurance reported a significant jump in its profit after tax at Rs 528 crore for
the financial year 2013-14. Gross premium collected for the year stood at 9609 crores, up by
about 7% from the previous year. Net worth of the company also witnessed a steady increase to
5361 crores
During the half-year period ended September 30, 2011, the company collected a total premium
of Rs 4,033 crore, up by 27 per cent from Rs 3,178 crore in the year-ago period. "We have set a
target premium of Rs 8,000 crore this year," he said. On plans for the year 2011-12, he said the
company would focus on retail, micro-small and medium enterprises and rural insurance
segments. "We will focus on agency channel and bancassurance. Agency channel contributed 40
per cent and bancassurance 7 per cent (in the first half of the year). We expect it to increase in the
years to come," he said. Replying to a question, he said the company would bid for the Tamil
Nadu government's health insurance scheme. The investment income of the company for the
first-half of the year stood at over Rs 803 crore as of September 30, 2011.
A steep reduction in management expenses (to 25% from 37%) claims outgo and an increase in
premium income across segments has enabled the company to post 57 percent growth in net
profit for the first half of the current fiscal. United India earned Rs.803 crore from its
investments during the first six months of the 2011-12. The market value of the company's
investments at the end of second quarter stood at Rs.15,803 crore
Future plans
Logging an average business growth of 27 percent in 2011-12, India's leading non-life insurer
United India Insurance Company Ltd declared that it is targeting a gross premium of Rs.10,000
crore in fiscal year 2013-14 and sizeable reduction in underwriting losses - premium less claims
outgo - to Rs.900 crore from last year's figure of Rs.1,760 crore.
The company would focus the retail, and small and medium enterprises (SME) segments for
growth. It is in the process of adding further to its 48,000 agents and also to open around 100
one-man offices across the country. Currently, there are 400 such micro-offices bringing in
around Rs.275 crore premium.

Company is waiting for approval from the insurance regulator IRDA to introduce three products
under the health portfolio

Products
Personal policies

Householder

Personal accident

Mediclaim

Unimedicare

Bhavishya arogya

Commercial policies

Fire insurance

Marine insurance

Motor insurance

Industrial insurance

Liability insurance

Awards and recognitions

United India wins The Skoch Financial Inclusion Award 2013 for M-Power project in the ICT
based innovation category. M-Power is a premium payment service running through mobile.
United India gets Skoch award 2010: United India Insurance Company has won the award for
successful implementation of the financial inclusion initiatives. The company has implemented

the Rashtriya Swasthya Bima Yojana in Kerala. Skoch awards, distributed by Skoch Consultancy
Services, are meant to honour extraordinary achievements in governance, capacity building,
empowerment, inclusive growth, citizen services delivery, technology, academics and change
management.
United India Insurance Company has been selected as one among the top three General
insurance companies in Asia by Asia Insurance Review at the 14th Asia Insurance Industry
Awards held in Bali, Indonesia.
United India Insurance Co. Ltd. has been awarded the Best Non-Life Insurance Company
by NDTV Profit-Business Leadership Awards 2010.
United India Insurance Co. Ltd. has been awarded 'iAAA' rating for its claims paying ability
by ICRA (Investment Information and Credit Rating Agency) for the third successive year. This
rating indicates company's highest claims paying ability, its strong fundamental and its overall
financial strength for meeting the policy holders obligations.
PCQuest, one of India's premier IT magazines has selected MPLS VPN project of UIIC as one of
the best implemented IT projects in the year 2007. The details of the same are published in the
June 2007 issue of the PCQuest magazine. MPLS VPN project of UIIC was selected after a
rigorous screening process in which 250 IT projects of various companies in the country were
evaluated. Subsequently, a jury of eminent personalities selected the top 21 IT projects
implemented in 2007, in which the MPLS project of UIIC figures prominently.

New Challenges
US President Barack Obama in India. Insurers to offer Rs 750 crore capacity for nuclear pool in
India.
The Republic Day visit of US President Barack Obama, to India, has brought new challenges to
the Indian Government owned general insurance industry, with nuclear energy risk [Link]
proposed nuclear risk pool that will be set up in India will have five government-owned
insurance

companies General

Insurance

Corporation

of

India (GIC), New

India

Assurance,Oriental Insurance, National Insurance and United India Insurance providing half the

capacity for the Rs 1,500-crore pool. The rest will come from the central government. It is meant
to insure the risks from nuclear reactors. There will be cover for both hot zones (radiation and
nuclear reactors) and cold zones (outside reactor areas). At present, nuclear reactors in India have
covers for zones outside the area of radiation and nuclear reactors. This is due to the lack of
underwriting data on the liability for hot zones. Once the pool is in place, the premiums will go
into the pool, and cover for hot zones and its liabilities will be provided.
In 2010, Parliament passed the CLND Act, which creates a liability cap for nuclear plant
operators for economic damage in the event of an accident. It also leaves nuclear suppliers free
of most liability. Industry experts had said both nuclear operators and suppliers should be jointly
held liable for civil damages in case of an accident.
The Act also provides for state-run Nuclear Power Corporation of India, which operates all the
atomic power plants in India, to seek compensation from suppliers in case of an accident due to
faulty equipment. The Kudankulam Nuclear Power Plant inTamil Nadu, the 21st atomic reactor
in India, will not be covered under this pool because its contract was signed much before the Act
was passed. However, this plant has been covered for its non-radiation or cold zones.
Prime Minister Narendra Modi in his statement at the joint press interaction with
President Barack Obama of United States of America, said that the IndiaUnited States Civil
Nuclear Agreement, was the centerpiece of our (India-US) transformed relationship,
demonstrating new trust.
National re-insurer General Insurance Corporation (GIC Re) plans to issue insurance-linked
bonds to raise Rs. 750 crore for creating capacity for the proposed Indian Nuclear Insurance
Pool. After breakthrough in the US-India civil nuclear deal, the government has asked GIC Re to
ensure that the pool is operational immediately. Following the withdrawal of insurance and
reinsurance capacity by foreign re-insurers for terrorism risk, in the international market
post 9/11, all the non-life insurers in India, along with the GIC Re, established the Terrorism
Pool in 2002 to cover property damage and consequential loss arising out of any terror strike.

CH:7 Insurance Regulatory and Development Authority of India

Insurance Regulatory and Development Authority of India (IRDA) is an autonomous apex
statutory body which regulates and develops the insurance industry in India. It was constituted
by a Parliament of India act called Insurance Regulatory and Development Authority Act, 1999
and duly passed by the Government of India.
The agency operates from its headquarters at Hyderabad, Telangana where it shifted
from Delhi in 2001.
IRDA batted for a hike in the foreign direct investment (FDI) limit to 49 per cent in the insurance
sector from the erstwhile 26 per cent ]The FDI limit in insurance sector was raised to 49% in July
2014.

History
The IRDA Act, 1999 was passed as per the major recommendation of the Malhotra
Committee report (7 jan,1994) which recommended establishment of an independent regulatory
authority for insurance sector in India. Later, It was incorporated as a statutory body in April,
2000. The IRDA Act, 1999 also allows private players to enter the insurance sector in India
besides a maximum foreign equity of 26 per cent in a private insurance company having
operations in India. The Insurance Bill proposes to raise the FDI limit in insurance sector to 49%.
Proposed by UPA government in July 2013, it is still pending discussion in Rajya Sabha. It
serves as an Authority to protect the interests of holders of insurance policies, to regulate,
promote and ensure orderly growth of the insurance industry and for matters connected
therewith. IRDA role is to protect rights of policy holders & they provide registration
certification to life insurance companies & responsible for renewal, modification, cancellation &
suspension of this registered certificate

Organizational structure or Composition of Authority

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
[Link] is a ten member body consisting of:

A Chairman,-(T.S. Vijayan)

Five whole-time members,-(R.K. Nair,M. Ram Prasad,S. Roy Chowdhary,D.D. Singh)

Four part-time members,-(Anup Wadhawan,S.B. Mathur,Prof. [Link],CA. Subodh

Kr. Agarwal)

All members are appointed by the Government of India.

Insurance Repository
Insurance Repository is a facility to help policy holders buy and keep insurance policies in
electronic form, rather than as a paper document. Insurance Repositories, like Share Depositories
or mutual fund Transfer Agencies, will hold electronic records of insurance policies issued to
individuals and such policies are called electronic policies or e Policies.

CH:8 Agricultural insurance in India

Agriculture in India is highly susceptible to risks like droughts and floods. It is necessary to
protect the farmers from natural calamities and ensure their credit eligibility for the next season.
For this purpose, the Government of India introduced many agricultural schemes throughout the
country.

Comprehensive Crop Insurance Scheme(CCIS)

The Comprehensive Insurance Scheme (CIS) covered 15 states and 2 union territories.
Participation in the scheme was voluntary. Around 5 million farmers and between 8-9 million
hectares were annually covered by this scheme. If the actual yield in any area covered by the
scheme fell short of the guaranteed yield, the farmers were entitled to anindemnity on
compensation to the extent of the shortfall in yield. The General Insurance Corporation of India
administered the scheme on behalf of the Ministry of Agriculture, Government of India.
A major drawback of the scheme could be seen from the fact that out of all the all-India claims of
Rs 1,623 crores, Gujarat alone received Rs. 792 crores for one single crop,groundnut.
The scheme was scrapped in 1997.

Experimental Crop Insurance

An experimental crop insurance scheme was introduced in 1997-98, covering non-loanee small
and marginal farmers growing specified crops in selected districts. The premium was subsidized.
The premium collected was about Rs. 3 crores and the claims amounted to Rs. 40 crores.
The Government discontinued the scheme during 1997-98 itself.
Farm Income Insurance Scheme
The Central Government formulated the Farm Income Insurance Scheme (FIIS) during 2003-04.
The two critical components of a farmers income are yield and price. FIIS targeted these two

components through a single insurance policy so that the insured farmer could get a guaranteed
income.
The scheme provided income protection to the farmers by insuring production and market risks.
The insured farmers were ensured minimum guaranteed income (that is, average yield multiplied
by the minimum support price). If the actual income was less than the guaranteed income, the
insured would be compensated to the extent of the shortfall by the Agriculture Insurance
Company of India. Initially, the scheme would cover only wheat and rice and would be
compulsory for farmers availing crop loans. NAIS (explained in the section below) would be
withdrawn for the crops covered under FIIS, but would continue to be applicable for other crops.
The FIIS was withdrawn in 2004

National Agriculture Insurance Scheme(NAIS)

The Government of India experimented with a comprehensive crop insurance scheme which
failed. The Government then introduced in 1999-2000, a new scheme titled National
Agricultural Insurance Scheme (NAIS) or Rashtriya Krishi Bima Yojana (RKBY ] NAIS
envisages coverage of all food crops (cereals and pulses), oilseeds, horticultural and commercial
crops. It covers all farmers, both loanees and non-loanees, under the scheme.
The premium rates vary from 1.5 percent to 3.5 percent of sum assured for food crops. In the
case of horticultural and commercial crops, actuarial rates are charged. Small and marginal
farmers are entitled to a subsidy of 50 percent of the premium charged- the subsidy is shared
equally between the Government of India and the States. The subsidy is to be phased out over a
period of 5 years.
NAIS operates on the basis of
1. Area approach- defined areas for each notified crop for widespread calamities.
2. On individual basis- for localized calamities such as hailstorms, landslides, cyclones and
floods.

Under the scheme, each state is required to reach the level Gram Panchayat as the unit of
insurance in a maximum period of 3 [Link] insurance corporation of India is
implementing the scheme.

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