It is due to globalization, deregulation and also terrorist attacks; that the insurance industry is
undergoing a massive change and the metamorphosis has been noteworthy in the last few
decades.
Clearing basics
Before we begin the analysis of Indian insurance industry, let us clear some basics on insurance.
In the words of a layman, insurance means managing risk. For instance, in life insurance
segment, the insurance company tries to manage mortality (death) rates among the wide
array of clients.
The insurance company works in a manner by collecting premiums from policy holders,
investing the money (usually in low risk investments), and then reimbursing this same
money once the person passes away or the policy matures. The greater the probability for
a person to have a shorter life span than the average mark, the higher premium that
person has to pay. The case is the same for all other types of insurance, including
automobile, health and property.
Ownership of insurance companies is of two types:
Shareholder ownership
Policyholder ownership
Types of Insurance
1. Life Insurance - Insurance guaranteeing a specific sum of money to a designated
beneficiary upon the death of the insured, or to the insured if he or she lives beyond a
certain age.
2. Health Insurance - Insurance against expenses incurred through illness of the insured.
3. Liability Insurance - This insures property such as automobiles, property and
professional/business mishaps.
Threat of New Entrants: The insurance industry has been budding with new entrants every
other day. Therefore the companies should carve out niche areas such that the threat of
new entrants might not be a hindrance. There is also a chance that the big players might
squeeze the small new entrants.
Power of Suppliers: Those who are supplying the capital are not that big a threat. For
instance, if someone as a very talented insurance underwriter is presently working for a
small insurance company, there exists a chance that any big player willing to enter the
insurance industry might entice that person off.
Power of Buyers: No individual is a big threat to the insurance industry and big
corporate houses have a lot more negotiating capability with the insurance companies.
Big corporate clients like airlines and pharmaceutical companies pay millions of dollars
every year in premiums.
Availability of Substitutes: There exist a lot of substitutes in the insurance industry.
Majorly, the large insurance companies provide similar kinds of services – be it auto,
home, commercial, health or life insurance.
How to choose an insurance company?
There are many factors to probe into when an investor chose an insurance company.
The consumers as well as the investors should only focus on the insurer's financial
strength and capability to meet ongoing responsibilities to its policyholders.
The fundamentals of the insurance company should be strong and should not indicate a
poor investment opportunity as this might also deter growth.
Insurance Companies in India
Life Insurance Companies
Aviva Life Insurance
Bajaj Allianz Life Insurance
Birla Sun-Life Insurance
HDFC Standard Life Insurance
ING Vysya Life Insurance
Life Insurance Corporation
Max New York Life Insurance
MetLife Insurance
Om Kotak Mahindra Life Insurance
Reliance Life Insurance
Sahara India Life Insurance
SBI Life Insurance
TATA AIG Life Insurance
General Insurance Companies
Agriculture Insurance
Amsure Insurance
ANZ Insurance
Bajaj Allianz General Insurance
Cholamandalam General Insurance
Employee State Insurance
Export Credit Guarantee Corporation
ICICI Lombard General Insurance
IFFCO-Tokio General Insurance
National Insurance
Oriental Insurance
Peerless Smart Financial
Royal Sundaram Alliance
TATA AIG General Insurance