04-08-2012, 03:55 PM
COMPARISION BETWEEN HDFC STANDARD LIFE INSURANCE AND MAX NEW YORK LIFE INSURANCE CO. LTD.
A summer training report hdfc.docx (Size: 328.69 KB / Downloads: 53)
INTRODUCTION TO THE INDUSTRY
Insurance mainly deals with covering of risk. The risk can be of any type that is risk related to health, children’s future, accidental risk etc. So it includes each & every aspect of future which if not taken care of now may become a serious problem in future.
The business of insurance is related to the protection of the economic values of assets. Every asset has a value .the asset would have been created through the efforts of the owner. The asset is valuable to the owner, because he expects to get some benefit out of it. The benefit may be an income or in some other form. Every asset comes with a expiry date i.e. it will be lost after a certain period of time & the benefits which we are getting from it will also be lost. The owner is aware of this & so he can manage his affairs that by the end of that period, a substitute is made available. The asset may get lost earlier also by an accident or some other unfortunate event & the planned substitute may not be ready at that time. Then the owner will be depriving of the benefits. Insurance is a mechanism that helps to reduce the effects if such adverse situations. It promises to pay to the owner or beneficiary of the asset, a certain sum if the loss occurs.
History of insurance
Early methods of transferring or distributing risk were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively. Chinese merchants traveling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel's capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and practiced by early Mediterranean sailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen.
Types of insurance
Any risk that can be quantified can potentially be insured. Specific kinds of risk that may give rise to claims are known as "perils". An insurance policy will set out in detail which perils are covered by the policy and which is not. Below are (non-exhaustive) lists of the many different types of insurance that exist. A single policy may cover risks in one or more of the categories set out below. For example, auto insurance would typically cover both property risk (covering the risk of theft or damage to the car) and liability risk (covering legal claims from causing an accident). A homeowner's insurance policy in the U.S. typically includes property insurance covering damage to the home and the owner's belongings, liability insurance covering certain legal claims against the owner, and even a small amount of coverage for medical expenses of guests who are injured on the owner's property.
Global insurance industry
Global insurance premiums grew by 11% in 2007 (or 3.3% in real terms) to reach $4.1 trillion. The macro-economic environment was characterized by slower economic growth in 2007 and rising inflation. Profitability improved in life insurance and fell slightly in the non-life sector during the year. Life insurance premiums grew by 12.6%, accelerating in the advanced economies with the exception of Japan and Continental Europe. Non-life insurance premiums grew by 7.6% during the year. Figures for premium income are not yet available for 2008, but the insurance industry is likely to see a slowdown in new business and falling investment revenue.
Advanced economies account for the bulk of global insurance. With premium income of $1,681bn, Europe was the most important region, followed by North America ($1,330bn) and Asia ($814bn). The top four countries accounted for nearly 60% of premiums in 2007. The US and UK alone accounted for 42% of world insurance, much higher than their 7% share of the global population. Emerging markets accounted for over 85% of the world’s population but generated only around 10% of premiums.
Insurance Industry in India
With an annual growth rate of 15-20% and the largest number of life insurance policies in force, the potential of the Indian insurance industry is huge. Total value of the Indian insurance market (2004-05) is estimated at Rs. 450 billion (US$10 billion). According to government sources, the insurance and banking services' contribution to the country's gross domestic product (GDP) is 7% out of which the gross premium collection forms a significant part. The funds available with the state-owned Life Insurance Corporation (LIC) for investments are 8% of GDP.
Market share of private life insurance companies
According to the latest data released by the Insurance Regulatory and Development Authority (IRDA), the annualized premium equivalent (APE) for the life insurance industry fell (for the third consecutive month) by 19.6% year on year (yoy) in January 2009. The decline in the APE was more pronounced in case of the private players at 22.5% yoy.
Birla Sunlife and Reliance Life posted an increase of 33.2% yoy and 18.2% yoy respectively in their APE. ICICI Prudential lost significant market share YoY from 27.3% to 21.6% [Don't you think this was expected with the brand ICICI taking a reputation knock] Bajaj Allianz has also lost market share YoY from 20.5% to 13.2%.