THE INDIAN MARKET SCENARIO OF INSURANCE SECTOR. Badur Raja Mannar* B 19 Nalanda Nagar, Tirupati ABSTRACT

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1 THE INDIAN MARKET SCENARIO OF INSURANCE SECTOR Badur Raja Mannar* B 19 Nalanda Nagar, Tirupati ABSTRACT In the world of Globalization economic model adopted by our India, the Insurance is opening up not only to the Private Insurance providers along with the Public undertaking like Life Insurance Corporation Of India (LIC), also there is increasing participation by foreign investors which shall led to setting up of Insurance Companies by Foreign Institutions having higher capital base and expertise. In view of the above, the Insurance Companies in India will have to administer the system of operations in such a way that the consumer satisfaction shall be kept at utmost importance leading to not only the retaining the customer base but expanding the larger customers which shall lead to keep themselves positioned to the foreign insurance providers competition. The present study shall also keep the consumers aware about the various needs vis-à-vis various Insurance products and services, the awareness about the consumer s rights as assured by the Regulatory Body of Insurance (I.R.D.A) set up under the Insurance Act. The insurance industry in India has come a long way since the time when businesses were tightly regulated and concentrated in the hands of a few public sector insurers. Following the passage of the Insurance Regulatory and Development Authority Act in 1999, India abandoned public sector exclusivity in the insurance industry in favour of market-driven competition. This shift has brought about major changes to the industry. The inauguration of a new era of insurance development has seen the entry of international insurers, the proliferation of innovative products and distribution channels, and the raising of supervisory standards. There are good reasons to expect that the growth momentum can be sustained. In particular, there is huge untapped potential in various segments of the market. While the nation is heavily exposed to natural catastrophes, insurance to mitigate the negative financial consequences of these adverse events is underdeveloped. The same is true for both pension and health insurance, where insurers can play a critical role in bridging demand and supply gaps. Major changes in both national economic policies and insurance regulations will highlight the prospects of these segments going forward. The present study entails the current state of development in India s insurance market and enumerate the opportunities and challenges offered by this exciting market. Key words: Insurance, The Indian Market Scenario Page 88

2 Historical Perspective The history of life insurance in India dates back to 1818 when it was conceived as a means to provide for English Widows. Interestingly in those days a higher premium was charged for Indian lives than the non- Indian lives as Indian lives were considered more riskier for coverage. Insurance regulation formally began in India with the passing of the Life Insurance Companies Act of 1912 and the Provident Fund Act of Several frauds during 20's and 30's sullied insurance business in India. By 1938 there were 176 insurance companies. The first comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict State Control over insurance business. The insurance business grew at a faster pace after independence. Indian companies strengthened their hold on this business but despite the growth that was witnessed, insurance remained an urban phenomenon. The Government of India in 1956, brought together over 240 private life insurers and provident societies under one nationalized monopoly corporation and Life Insurance Corporation (LIC) was born. Nationalization was justified on the grounds that it would create much needed funds for rapid industrialization. This was in conformity with the Government's chosen path of State lead planning and development. The (non-life) insurance business continued to thrive with the private sector till Their operations were restricted to organized trade and industry in large cities. The general insurance industry was nationalized in With this, nearly 107 insurers were amalgamated and grouped into four companies- National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance Company. These were subsidiaries of the General Insurance Company (GIC). Objective of the Study: To represent the Indian Insurance vis-à-vis LIC, reforms in the sector and the road ahead for Insurance Industry applying qualitative research tool. Insurance Reforms Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. The other decision taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the IRDA online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products. Reforms marked 2011 for insurance sector After a long wait and prolonged consultation with stakeholders, the Insurance Regulatory and Development Authority (IRDA) finally came out with guidelines on initial public offers (IPOs) during the year, This development will see private insurers hitting capital market in the coming years. The IPO notification came in December, enabling private sector life insurers, such as HDFC Standard Life, ICICI Prudential and SBI Life, to tap the capital market for funds. According to the guidelines issued by the IRDA, life insurance companies which have been in business for over 10 years would be eligible to come out with IPOs. Besides, the promoters of insurance companies would be permitted to offload their stake in the company. However, the size of the public issue by life insurance companies will be decided by IRDA. The IPO guidelines for the sector had been hanging fire for three years, the first major change in the sector was a complete change in the product composition. We almost saw the death of ULIP products Page 89

3 and an emergence of traditional products in the life insurance business. Life insurance had to be sold by insurers with assured returns. The Life Insurance Industry is groping to find products which would sell in the market place, The direction of the regulations may not perhaps be substantially arguable but what was certainly hurting is the speed with which the changes were being made. Besides, the regulator allowed health insurance portability, doing away with the third party insurance pool. Health insurance portability is another long-pending reform fructified during the year. If not satisfied with the services of the existing health insurer, you can change the company without losing policy benefits. The policy will also help people shifting from one part of the country to another. For want of such a facility they were put to disadvantage due to lack of their insurers' offices at new locations. Also, in case of change of jobs, policy holders lose health insurance cover as they could not change their insurer. The new facility will also help those policy holders who stick to one insurer throughout life for fear of losing the cover for pre-existing diseases. "Though health insurance portability saw slow take off in 2011, we expect more impact in 2012," "Customer centricity is anticipated to take center stage in This will reflect in services offered by various health insurance players, be it claim servicing, TAT or the overall relationship with the insurer," There was cheer for general insurance companies as IRDA decided to scrap the common pool (Indian Motor Third Party Pool System) used by insurers to settle accident claims, from April 1. The dismantling is being done as part of reforms and the scrapping of the fund pool system will lead to a rise in motor insurance premium. The pool was formed in early 2007 to ensure availability of cover for commercial vehicles that had been refused third-party insurance. Third-party insurance cover protects the vehicle owner from any financial liability in case of damage to life or property in an accident to the third person. Major public and private sector insurance players have been demanding abolition of the third party insurance pool, saying that the arrangement for sharing claims was denting their profits. Another prominent highlight was issuance of norms for bancassurance. The draft guidelines have suggested that banks continue to tie up with one insurance company in the life, non-life and health insurance spaces but only in a specified number of states. Under this, insurance companies will be allowed to partner with different banks and NBFCs in different states for selling their products. However, according to the draft norms, banks and non-banking finance companies (NBFCs) will not be allowed to sell products of competing insurers in a particular state. Insurance reforms: What it means for policyholders After opening up multi-brand retail to foreign direct investment (FDI), the Cabinet approved a Bill seeking to increase in the FDI cap in insurance from 26 to 49%. "The FDI increase to 49% is essential for this capital-intensive industry that requires long-term investments. It will encourage more participation of foreign partners in insurance firms and lead to product development and innovation," The four public sector general insurance companies - National Insurance, New India Assurance, Oriental Insurance and United India Insurance - along with General Insurance Corporation, the reinsurer, will also be permitted to raise capital from the market. However, the government's holding will not fall below 51%. The Bill also proposes to reduce the capital requirement for health insurance companies to ` 50 crore. At present, it is ` 100 crore for general insurance companies that sell health policies. The aim is to lower entry barriers and increase health insurance penetration. Page 90

4 FOR POLICYHOLDERS. The recommendations of the Standing Committee on Finance on the Insurance Laws (Amendment) Bill 2008 that the Cabinet also approved on Thursday will affect policyholders directly. Rejection of Policies: Insurance companies would not be allowed to repudiate any policy on any ground, including misstatement of facts, after three years of the start of the policy. Expansion of Agent Network: Insurance companies will be allowed to appoint agents only if they have the mandated qualifications and pass examinations specified by the regulator. However, to protect customers, the regulator will still be authorised to take action against misconduct. Curtail Mis-selling: To monitor the performance and activities of agents, IRDA will specify the commission structure and 'Code of Conduct' for them. Agents will have to pay stiff penalties for mis-selling, rebating and marketing of products through multilevel marketing schemes. The fines for misconduct by insurance companies and intermediaries will be specified. Better Evaluation of Claims: To improve the functioning of surveyors and bring transparency, the qualification requirements for surveyors will be made more stringent. The amendments seek to do away with the existing statutory prescriptions pertaining to licensing insurance surveyors and loss assessors. THE INDIAN MARKET SCENARIO OF INSURANCE SECTOR 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 is estimated at ` 450 billion (USD10 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. Till date, only 20% of the total insurable population of India is covered under various life insurance schemes, the penetration rates of health and other non-life insurances in India is also well below the international level. These facts indicate immense growth potential of the insurance sector. The year 1999 saw a revolution in the Indian insurance sector, ending of government monopoly and the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership. Though, the existing rule says that a foreign partner can hold 26% equity in an insurance company, a proposal to increase this limit to 49% is pending with the government. Since opening up of the insurance sector in 1999, foreign investments of `. 8.7 billion have poured into the Indian market and 21 private companies have been granted licenses. Innovative products, smart marketing, and aggressive distribution have enabled fledgling private insurance companies to sign up Indian customers faster than anyone expected. Indians, who had always seen life insurance as a tax saving device, are now suddenly turning to the private sector and snapping up the new innovative products on offer. The life insurance industry in India grew by an impressive 36%, with premium income from new business at Rs billion, braving stiff competition from private insurers. LIC, has clocked 21.87% growth in business at Rs billion by selling 2.4 billion new policies in. But this was still not enough to arrest the fall in its market share, as private players grew by 129% to mop up ` billion. Though the total volume of LIC's business increased, its market share came down from to 78.07%. The 14 private insurers increased their market share from about 13% to about 22% in a year's time. The figures also speak of the growing share of the private insurers. The share of LIC for this period has further come down to 75%, while the private players have grabbed over 24%. The rate at which the private share has increased, it clearly shows the potential of this sector. In the globalize market scenario India has big role to play. People in India are brand conscious and show loyalty Page 91

5 to a brand if they believe in it or have known it for quite a long time is one of the features of Indian market which needs to be understood. Indian Insurance Market The insurance industry of India consists of 52 insurance companies of which 24 are in life insurance business and 28 are non-life insurers. Among the life insurers, Life Insurance Corporation (LIC) is the sole public sector company. Apart from that, among the non-life insurers there are six public sector insurers. In addition to these, there is sole national re-insurer, namely, General Insurance Corporation of India. Other stakeholders in Indian Insurance market include Agents (Individual and Corporate), Brokers, Surveyors and Third Party Administrators servicing Health Insurance claims. Out of 28 non-life insurance companies, 5 private sector insurers are registered to underwrite policies exclusively in Health, Personal Accident and Travel insurance segments. They are Star Health and Allied Insurance Company Ltd, Apollo Munich Health Insurance Company Ltd, Max Bupa Health Insurance Company Ltd, Religare Health Insurance Company Ltd and Cigna TTK Health Insurance Company Ltd. There are two more specialised insurers belonging to public sector, namely, Export Credit Guarantee Corporation of India, for Credit, Insurance and Agriculture Insurance Company Ltd for Crop Insurance Insurance penetration of India i.e. Premium collected by Indian insurers is 3.96 % of GDP in FY Per capita premium underwritten i.e. insurance density in India during FY is USD Here are some performance highlights of the Indian insurance industry. Life Insurance Business Performance: Public Private Public Private Premium Underwritten (` in Crores) New Policies Issued (in Lakhs) Number of Offices Benefits Paid (` in Crores) Individual Death Claims (Number of Policies) Individual Death Claims Amount Paid (`in Crores) Group Death Claims (Number of lives) Group Death Claims Amount Paid (` in Crores) Claim Settlement Ratio (%) Page 92

6 Non-Life Insurance Business Performance: Public Private Public Private Premium Underwritten (` in Crores) New Policies Issued (in Lakhs) Number of Offices Incurred Claim Ratio Number of Grievances Grievances Resolved During the Year Grievance Resolved (%) * Specialised and Standalone Health Insurers are not included Non Life Insurance Industry Report Year 2012 saw a fall in the ranking of the Indian insurance industry in the world insurance market by four notches from spot 11 to 15. This has been attributed mainly to the sharp decline in the life insurance business. The non life insurance industry however witnessed robust growth of 23%. Among the issues expected to effect the industry are the stricter regulatory requirement which is paving way for the industry to be more customer centric. The Indian non life insurance industry has been forging ahead at a robust growth rate presently at 18% (Mid- year 2013). The significant change in the motor insurance is that the regulator has disbanded the motor pool effective 01st April 2012 and the motor liability premium has seen a rate increase ranging from 6-40% in the latter half of the year. Reinsurance in the Context of the Indian Market Existing Arrangements: Prior to nationalisation in 1973, there was very little reinsurance prevalent in the local market. The branches of the foreign companies operating in India were protecting their portfolio within their parent company s global programme, overseas. Similarly, most domestic companies did not have to purchase huge reinsurance protections as their portfolios consisted of mainly householders and small to medium commercial and industrial risks. For the purpose of providing reinsurance capacity in a limited way there existed an Indian Insurance Pool whereby the local companies were members. The purpose of the Pool was to share the business underwritten by each company and thus try to stabilise the result of the market as a whole, in a limited way. Apart from the Pool, obligatory cessions were made for 10% each to India Re, a local reinsurance company owned by the Government and Indian Guarantee, a subsidiary of Oriental Fire and Marine Insurance Company Limited. The purpose of forming the above was to retain premiums domestically to the extent possible. Subsequent to nationalisation, the aforesaid companies were merged into the statutory entity, viz. General Insurance Corporation of India (GIC). Post nationalisation, the erstwhile companies were merged into four regional companies, which in turn were made wholly owned subsidiaries of the GIC. Thus, GIC became the parent body to oversee the affairs of the general insurance industry. As such, a common agenda was followed in conducting business including reinsurance. By virtue of the merger of the aforesaid India Re and Indian Guarantee, GIC continued to receive the obligatory cessions for 20%. Apart from receiving these cessions, the role of being the local reinsurer was thrust upon GIC. Thus, the onus of arranging reinsurance protections for the insurance companies, was upon GIC. Keeping in mind Government s agenda to create maximum retention capacity within the local market and thus retain premiums locally, a common integrated reinsurance programme for the whole Page 93

7 market was embarked upon. The composite financial strength assisted in gradually increasing the retention levels of the market as a whole. Coupled with the aforesaid, the tariff structure operating in most classes has assisted in reflecting good underwriting results, thereby strengthening the financial results of all the companies. This in turn has resulted in more and more retentions especially for classes which have achieved a greater degree of homogeneity in the portfolio as well as volumes. At the present time less than 10% of the gross direct premium is ceded as reinsurance premiums. Reinsurance is now primarily purchased for peak and/or non-homogenous/special risks like Air India, Indian Airlines, ONGC etc. or for new classes such as directors and officers liability, errors and omissions cover, liquidated damages cover, kidnap and ransom cover, performance bonds etc. for which there is not sufficient volumes and spread of business. The above explains how pivotal a role the prevalent reinsurance programme had played in the development of the local market in terms of risk retention capacity, developing automatic reinsurance capacity and thereby retaining more premiums, creating investible surplus and strengthening the balance sheets. The existing companies have become strong financial entities to be classified as Financial Institutions and are well geared to face competition in the newly liberalised set up. At the macro level this has boosted investments in industrial and infrastructural sectors assisting in the growth in the economy at large.review of the Existing Reinsurance Programme: The existing reinsurance structure is integrated programmes for the whole market that each company commonly adopts, irrespective of their financial capabilities, profitability etc. in this context, it is insensitive to true net retention of each company. Reviewing the features of the integrated reinsurance programme, comparison has to be made between the levels of the market retention for each class against the reinsurance cessions to examine how much profit is retained and thereby establish whether the current levels of retentions are as profitable as they can be. Thus, optimum retention and not the maximum retention is the primary focus around which the whole programme is structured.empirically, the retention for any one risk should be between 1% to 2% of the shareholders funds (share capital and free reserves). Applying this yard stick will reveal that the composite financial strength of the Insurance companies is capable of retaining at much higher levels than the current Maximum retentions fixed for various classes. The retention levels, amongst other considerations like premium volumes, risk profile, growth portfolio, be viewed from the angle of diminishing utility of retained exposure equating in less and less monetary benefits, beyond the optimum level of retention for a particular portfolio. Under the prevalent programme it may be noted that the current level of retention is lower than what could be retained by the market on a composite basis. Due care has also been exercised though to a lesser degree, to lend sensitivity to financial strengths of each company in isolation, because all the companies do not have identical net worth. Apart from the above aspect, considerations have also been given for additional financial exposure arising out large catastrophe events. In India s fast growing economy most private and public and public entities require various forms of insurance. Thus, GIC and the subsidiaries interact with all levels of the society as being the sole provider of insurance for every single policyholder. This puts GIC and its subsidiaries in a position of not just strength but also vulnerability. Strengths are derived as being a sole provider and vulnerability comes from responsibility to underwrite every single policy, thus the lack of selectivity. The strengths and vulnerabilities increase rapidly as the economy continues to grow. Thus, strategically the retention levels are pegged to address the above issues.lic looks at 9% premium growth in banc assurance Country s largest life insurer, Life Insurance Corporation of India (LIC), is looking at increasing its income from bancassurance channels to 9% in the current fiscal, from the existing 3%. Our premium income through bancassurance channel is currently at ` 1130 crore, which comprises 3% of company s total premium income. However, we are planning to increase it to ` 5,000 crore by the end of the fiscal. In case it happened, then the bancassurance channel s share in our total premium income will increase to 8-9% by the fiscal-end. Currently, LIC has got bancassurance tie-up with nine public sector Page 94

8 banks, three private sector banks and 40 regional rural banks. The corporation is looking at more tie-ups with four to five public sector banks (PSBs), which have not ventured into manufacturing of life insurance products so far, said Sahoo. Similarly, LIC is also looking at 42 other banks for such tie-ups. The market share of LIC among various life insurers in the country in terms of the first years premium income has gone up by 9% to 74%, as against 65% in March. LIC plans to cross ` 54,000 -crore mark in individual premium income by the fiscal-end, as against ` 23,000 crore as of now, said Sahoo. In group health insurance, the company had projected to achieve ` 18,000 crore of premium by fiscal-end. The milestone ` 18,000 crore has already achieved Expectations : Insurance sector this year 2013 had been a year of new regulations and changes for the insurance sector. For one, the Insurance Regulatory and Development Authority (IRDA) ensured distribution reforms were in place before the end of the year. In 2014, general insurance companies are optimistic about touching new targets. However, life insurers expect a slow pace of growth as they move into a new product regime. In 2013, IRDA introduced the crucial reform enabling banks to become insurance brokers. This was to ensure the bank branches across the country would be able to assist in selling insurance, increasing penetration. With the finance ministry also giving a directive to public sector banks to become brokers, this is a change that is expected to set the tone for insurers business growth. Year 2013 was also marked by uncertainty with the new product guidelines for traditional life products being delayed and then implementation postponed to January. According to experts, If there is one word that describes what the life insurance industry has experienced over the past four years, it is uncertainty. It will not be wrong to state many of the changes were generated not from within the industry but forced by regulatory changes (for good reasons) and macroeconomic conditions. Three key factors will determine how the life insurance segment performs in 2014: inflation, revival of the distribution engine and acceptance of new products by consumers. Traditional product guidelines came into force from January 1. These norms have made changes in products structures and surrender benefits and have made the policies more transparent. Companies such as Bajaj Allianz are also increasing their customer services. The firm has introduced features such as mobile apps, self-help portals, automated SMS alerts, service on wheels to provide door-step services. Similarly, Tata AIA Life Insurance has taken several technology-based initiatives including mobile applications to help increase insurance awareness and ease purchase. At a time when the life insurance industry has a single-digit growth in new premiums, 2013 had been a benign year for general insurance companies. With double-digit growth and better rates in motor insurance, there have been new players entering the industry, too. Road Ahead The future of India's insurance sector looks bright. The country has a favourable demographic, growing awareness, investment friendly government which is constantly working towards framing policies that can attract investment, customer-centric products, and practices that give businesses the best possible environment to grow. India's insurable population is anticipated to touch 75 crore in 2020, with life expectancy reaching 74 years. Furthermore, life insurance is projected to comprise 35 per cent of total savings by the end of this decade, as against 26 % in Page 95

9 Indian life insurance industry: Scope for sustainable growth The Indian insurance industry has undergone transformational changes since 2000 when the industry was liberalised. With a one player market to 24 players in 13 years, the industry has witnessed phases of rapid growth along with extent of growth moderation and intensifying competition. There have also been number of product and operational innovations necessitated by consumer need and increased competition among the players. Changes in the regulatory environment also had path-breaking impact on the development of the industry. While the insurance industry still struggles to move out of the shadows cast by the challenges posed by economic uncertainties of the last few years, the strong fundamentals of the industry augur well for a roadmap to be drawn for sustainable long-term growth. Between , the phase was characterised by a period of high growth (CAGR of 31 percent in new business premium between ) and a flat growth (CAGR of around 2 percent in new business premium between ) (source: KPMG). There was exponential growth in the first decade of insurance industry liberalization the back of innovative products and aggressive expansion of distribution, the life insurance industry grew at jet speed. However, this frenzied growth also brought in its wake issues related to product design, market conduct, complaints management and the necessity to make course correction for the long term health of the industry. Several regulatory changes were introduced during the past two years and life insurance companies adopted many new customer centric practices in this period. Product related changes, first in ULIPs in September 2011 and now in traditional products will have the biggest impact on the industry. Operational efficiency is critical for insurance investmentat the most fundamental level, investors take stakes in companies to gain a return on their investment. In a private equity context, a key part of the investment decision, from our perspective at Leap Frog Investments, is to evaluate and implement performance improvement levers that will translate into sustainable growth and efficiency improvements. Perhaps unsurprisingly, the ability to make operational improvements has increasingly proven to be the key source of value creation, and a vital success factor in delivering top-tier returns in the current market environment. This is a preferred alternative to relying on financial engineering or multiple expansions. For most businesses targeting low-income, emerging consumer segments in developing markets, margins are likely to be low on a unit basis. This pressures cost efficiency across the value chain to service this segment profitably. The sheer size of the emerging consumer segment is the prize that awaits those who succeed. LeapFrog s profit-with-purpose investment strategy makes operational efficiency especially critical in these areas: Affordability LeapFrog helps its portfolio companies to reach down the socioeconomic pyramid. Product pricing must be low and deliver meaningful value to clients; products must remain profitable and sustainable for the provider. Efficient operations are the key that enables companies to offer affordable products in combination with innovative product design and distribution access. Quality Emerging consumers are, by necessity, savvy and aware; in many ways, they are more quality-focused than those in more affluent segments. Products that do not meet quality and value expectations are either not bought or not renewed. Of particular importance are claims payments. Typically, policyholders do not have large financial buffers and claims must be paid quickly. Insurers who fail to deliver on claims promises may face reputational damage. Scalability LeapFrog s ambitious goal to reduce financial exclusion helps investees grow quickly; in 2012, the average growth rate of its investees was 24.6%. As any fast-growing company knows, such growth rates pressure operations in different ways, and isolated or patchwork responses are unlikely to provide a scalable solution. Page 96

10 New product guidelines The new guidelines for both linked and non-linked products will now come into force from the beginning of year 2014, an extension of three months from earlier specified date. This additional period will ensure that life insurers enter the crucial quarter of Jan-Mar with a full bouquet of products and the sellers are well trained in the nuances of all these new products. These product guidelines are in line with the IRDA's regulatory theme of customer orientation and long-term nature of the life insurance business. The guidelines follow two overarching themes of providing Guarantee and enhancing Transparency. The major changes introduced include - Higher Death Benefit, Guaranteed Surrender Value and mandatory Benefit Illustration for all life insurance products. These changes related to death benefit and surrender value may marginally reduce the customers' overall maturity benefit i.e. policy IRR, especially at higher ages but will ensure that life insurance serves the purpose of providing life cover which no other financial instrument offers. All ULIPs are currently sold mandatorily with a personalised Benefit Illustration. This requirement is now being extended to other product forms. The new guidelines have also provided for setting up a 'With Profit Committee' at the board level. While personalized benefit illustration will provide for greater transparency in the pre-sales discussion, the With Profit Committee is likely to lead to greater governance in the administration of Participating policies. Premium paying term linkeddistributors' commission will promote long-term nature of insurance products. Future looks good India continues to be a country of savers though we have witnessed a decline in the household savings rate in the past couple of years. In India, the problem lies in household savings lying idle or getting invested in saving instruments that does not help them achieve their life stage goals. There is a worrying trend of larger portion of household savings getting into non-productive physical assets such as real estate and gold. But even then, the future looks interesting for the life insurance industry with several changes in regulatory framework which will lead to further change in the way industry conducts its business and engages with its customers. World over it has been observed that the life insurance industry does behave in a counter cyclical manner in many cases e.g. in a situation where the economic growth is slowing down, due to other factors such as high current account and fiscal deficits, currency depreciation, high interest rates, savings rate will continue to be high, leading to higher demand for life insurance. Life insurance is a big savings vehicle along with banking in such uncertain economic environment and so we expect the industry to fare reasonably well. Demographic factors such as growing middle class, young insurable population and growing awareness of the need for protection and retirement planning will also support the growth of Indian life insurance. For life insurance, it is time to re-commit itself to customer centric behaviour, product solutions based on consumer needs, ethical market conduct, transparency and governance, the growth will be the natural outcome for now and years to come. CONCLUSIONS The present state of Life Insurance in India is awe-inspiring as far as the awareness of customers is concerned. The customers of today are well aware about the different alternatives that support them the best to fulfill their desires. LIC of India has well managed to take the spirit of competition in a positive way which has helped the corporation to grow further with high strength of mind in contribution to the growth of the country. There are few more areas where contribution of the corporation in the life insurance sector needs to be updated. The present research study thus revealsthose important areas where more contribution on the part of LIC of India is required.the one is to increase in the number of offices both in urban and rural areas which will help the corporation to increase their business and reach among the customers. Page 97

11 LIC of India should also open more Life- Plus offices and authorized collection centers to make its objectives achieved in true way to spread the life insurance business in every nook and corner of the country.lic of India should concentrate on agents training to make them updated as per market requirements and professionalism to tackle the queries of customers and doubts raised in their mind by other life insurance competitors of the market. LIC of India must increase their agent s base to retain its dominating market share because agents are the backbone of the corporation. The increased number will not only help the corporation to facet their visible presence in the market but also in turn help in increasing their business volume too. REFERENCES [1] Annual Reports of LIC of India since to [2] Annual Reports of IRDA since to [3] Related issues of Yogeashema a Journal of LIC of India. [4] Peter Drucker (1999) Innovate or Die, Journal of Economist, 25th Dec [5] T.S. Ramakrishna Rao (2000). The Indian Insurance Industry the Road Ahead, Journal of Insurance Chronicle, Vol. III, Issue I, Jan. 2007, p. 31. [6] [7] Page 98