Life Insurance Corporation v/s Private Players
In today’s scenario of a well-regulated life insurance market under the sharp eye and strong rule of the Indian Insurance Regulatory and Development Authority (IRDAI), customers still have doubts and concerns, especially when it comes to trusting Personal player with his life and investment. Let’s take some time and bust some myths.
Birth of LIC
The Life Insurance Corporation Act was passed by the Indian Parliament on June 19, 1956, in which all private life insurance companies were nationalized as a single state-owned entity. And thus, the Life Insurance Corporation of India was built on September 1, 1956. Till 1999-2000, life insurance corporation (LIC) had full monopoly on the life insurance business till the entry of private players.
Private players entry
In the year 2000-2001, the Government of India removed all entry restrictions from the life insurance market for private sector investors. Foreign investment was also allowed in the life insurance market. Now, there are currently 23 private players in the Indian Life Insurance market who are fighting a fierce battle to take the largest possible slice of the growing life insurance market, as well as maintain their current holdings.
Before we start breaking some of the popular myths, let’s see the last year’s report card of the single public player Life Insurance Corporation against the combined strength of 23 private players:
Market Share – Life Insurance Corporation (LIC) currently has 71.81% of the total life insurance market, compared to 28.19% kept by all 23 private players for the year 2016-2017. In 2015-16, LIC’s share has decreased from the previous holdings of 72.61%, private insurers have gained 0.8%. The premium written in the year 2016-17 is Rs. Last year’s Rs. From 4,18,476.62 million 3,66,943.23 crores, a clear increase of 14.04%.
Customer base: During the year 2016-17, all life insurers of India issued 264.56 lakh new policies. Of these, Life Insurance Corporation (LIC) has released 201.32 lakh policies (76.1%) on the other side alone, all private life insurers have jointly issued 63.24 lakh policies (23.9%). However, private players have registered an increase of 2.13% compared to the previous year, while LIC has declined 2.02%.
Claim Settlement Ratio – Every person who sees one thing before buying a life insurance plan is an insurer’s claim settlement reputation. Claim settlement ratio for 2016-17 is 98.31% for LIC and 93.72% for joint players.
This report card clearly shows that private players are acquiring and gradually people are looking at them to meet their insurance and investment needs. But there is still doubt in the general population on a large scale, so bust the biggest myth about reliance on private players.
Myth – Private players are not trustworthy?
Fact – Life insurance industry is a highly regulated industry with the Insurance Regulatory and Development Authority of India (IRDAI), with the Insurance Act, 1938, which is looking after and monitoring the details of every minute related to this industry.
License of new players – To start the life insurance company, the applicant has to get Rs. Should have an Equity Equity Capital 100 million It ensures that only financially strong and competent players can enter the market and can do this business.
Solvency Ratio – IRDAI monitors both players’ LIC and private players. It checks on how good or bad the financial condition of each insurance company is on the prescribed solvency criteria. By law, each insurer has to maintain a solvency ratio of 150%, which means that the insurers have to maintain their liabilities greater than or equal to 1.5 times in spite of their size and profile. Companies like Bajaj Allianz Life, Solveni Ratios 582%, Canara HSBC OBC Life Insurance Company Limited 401%, IDBI Federal Life Insurance Company Limited 352%, Tata AIA Life Insurance Company Limited – 315%. , 281% with ICICI Prudential Life Insurance Company Limited and for the quarter ending March 2017.
Legally binding contracts – Products offered by all players, such as LIC or Private Players, are studied in depth and have been thoroughly evaluated by the IRDAI before applying its launch to the market for the people. goes. These schemes introduced by all players are legally binding contracts for both parties. The insurer has to provide all the benefits stated in the contract and the customer can not deny it.
Financial Strength – Private players also have good financial status in the market and the customers have shown confidence in them by investing in these companies. And to further boost the inflow of foreign investments, the government has increased the FDI limit in India’s insurance industry.