INTRODUCTION

Uncertainty is the basic fact of life. Fear of risk can be reduced by taking precautions to avoid risk. Although all of us take all precautions but still accident occurs, so precautions are essential but not sufficient to avoid the effects of uncertainty. It requires more effective technique to deal with the problem of risk in a society. We can hedge the risk in various ways but is one of the best methods. Insurance is a contract between two parties i.e. insurer and insured person where the later transfers the risk of loss due to any contingency or uncertain loss to the former in exchange of a periodical payment called premium. The insured person gets a contract, called insurance policy, which contains the details of conditions and circumstances, under which the insured person will be compensated by the insurer. If the insured person suffers a loss due to any mishappening which is potentially covered by the insurance policy, the insured person submits a claim to the insurer for processing by a claim adjuster. Insurance is a medium of protection from financial loss. It is a type of risk management system which is chiefly used to hedge the risk of any contingency in life or uncertain loss. Insurance is a contract where by the insurer or insurance company promises to provide indemnity to insured person against any future risk of mishappening in life. Thus insurance involves pooling funds from many insured persons called exposures to pay for losses that some may incur.

There was a time when there was a joint family system in India and more than one person used to be earning members in the family so they seemed no use of taking insurance plan for any future risk in exchange of regular payment of premium. Any type of mishappening or accident could be easily funded from the income pooled by many family members. But the present scenario has been totally changed. As the economy grows and develops, resulting more urbanization, high cost of living index, more literacy rate etc., the joint families split into nuclear families and the whole burden of family lies on a single earning member. It makes therefore necessary to take insurance against uncertain risk by paying a small amount of premium. Insurance is also very important for the economic development of an economy. In fact, there is two-way relationship between insurance and economic development i.e. insurance can play a significant role in economic development of an economy while economic development can also boost the insurance sector. The most important benefit of insurance is the identification of unexpected losses. When the uncertainties get reduced an insured person can devote his more time and energy to productive work and can perform with higher efficiency. As far as management is concerned, it is the accumulation of funds for investment in the fields of national priority. A large amount of money is pooled under the disposal of insurer for investment in a more productive way. The rising competition in insurance sector in India is more beneficial for Indian consumers. They will have more choice of insurance scheme. Earlier in India was synonymous to LIC which did most commendable work but now there are so many private payers also in the market to compete with LIC which is indeed the need of time to bring more innovative products and distributive channels to tap this market.

Insurance can be classified broadly in to: (a) life insurance and (b) general or non-life insurance including automobile insurance, property insurance and health insurance. In India there are total 24 life insurance companies including one public sector i.e. LIC and 33 non-life insurance companies. The present study focuses on life insurance sector in India. India has witnessed the growth of life insurance sector in two phases, one from 2001 to 2010 and other from 2010 to onwards. During the period of 2001 to 2010, there was a high growth with compound annual growth rate (CAGR) of approximately 3.1%. Most of the Indian life insurance companies were in good condition due to the introduction of Unit Linked insurance plans. From 2010 onwards, the compound annual growth rate was around 2%. Heavy competition was one of the reasons for the slow growth rate in the year 2012. Table 1 below shows the life insurance companies in India in detail:

Table 1: List of Life Insurance Companies in India (as on 29.11.2018)

S.No. NAME OF COMPANY HEAD OFFICE 1. Aditya Birla Sun Life Insurance Co. Ltd. Mumbai 2. Life Insurance Co. India Ltd. Gurgaon 3. AEGON Life Insurance Co. Ltd. Mumbai 4. Bajaj Life Insurance Co. Ltd. Pune 5. Bharti Life Insurance Co. Ltd. Mumbai 6. Canara HSBC Oriental Bank of Commerce Life Gurgaon Insurance Co. Ltd. 7. DHFL Paramerica Life Insurance Co. Ltd. Gurgaon 8. Co. Ltd. Bengaluru 9. Edelweiss Tokio Life Insurance Co. Ltd. Mumbai 10. Future Generali India Life Insurance Co. Ltd. Mumbai 11. HDFC Insurance Co. Ltd. Mumbai 12. ICICI Prudential Life Insurance Co. Ltd. Mumbai 13. IDBI Federal Life Insurance Co. Ltd. Mumbai 14. India First Life Insurance Co. Ltd. Mumbai 15. Kotak Mahindra Life Insurance Co. Ltd. Mumbai 16. Life Insurance Corporation of India Mumbai 17. Max Life Insurance Co. Ltd. Gurgaon 18. PNB Metlife India Life Insurance Co. Ltd. Maharashtra 19. Reliance Insurance Co. Ltd. Mumbai 20. SBI Life Insurance Co. Ltd. Mumbai 21. Sahara India Life Insurance Co. Ltd. Lucknow 22. Shriram Life Insurance Co. Ltd. Hyderabad 23. Star Union Dai-ichi Life Insurance Co. Ltd. Mumbai 24. Tata AIA Life Insurance Co. Ltd. Mumbai Source: IRDA Website (www.irda.gov.in)- accessed on 29.11.2018

Life insurance policy is generally considered as a mean of safeguard of one’s family against the unpredictable circumstance of the death of an earning member of the family. There are number of benefits of life insurance policy. Some benefits accrue to the individuals and their families while others promote economic development. Life insurance offers to protect the individuals (a) against the risk of dying early and (b) against the risk of living too long.

Actually, everyone who is supposed to support a family to and is an income earner needs life insurance. Even housewives too need life insurance due to the economic value of their services to the family. Children also require life insurance as their future income potential being at risk. As compared to others, married persons are more likely to buy insurance.

Life Insurance Sector in India

The modern Indian life insurance sector has its roots in England. It came to India from England in 1818. Europeans started Oriental Life Insurance Company in Calcutta as the first life insurance company in India. The first Indian life insurance company was Bombay Mutual Life Assurance Society started in 1870. The Swadeshi Movement of 1905-1907 gave birth to more Indian insurance companies. In 1912, the Life Insurance Companies Act, 1912 made it mandatory that the company had to get its premium rate tables and periodical valuations certified from an actuary. The demand for Nationalization of life insurance industry was made many times in the past but it was much later on the 19th January 1956, that life was nationalized. Life Insurance Corporation came into existence in 1956 when the Parliament of India Insurance of India Act that nationalized the private insurance industry in India. Over 245 insurance companies and provident societies were merged to create the state owned LIC. The Insurance Regulatory and Development Authority (IRDA) was constituted to develop the insurance industry. IRDA was incorporated as a statutory body in April 2000. The IRDA deregulated the insurance sector and permitted the private companies and foreign investment was also allowed. India’s life insurance sector is one of the biggest in the world with about 360 million policies. India is 15th largest insurance market in the world in terms of premium volume. In financial year 2015-16, the life insurance industry recorded new premium income of INR 1.38 trillion ($20.54 billion), a growth rate of 22.5%. Premium income of life insurance segment has increased 14.04% in financial year 2017 to INR 4.18 trillion (US $ 64.92* billion). In August 2017, life insurance industry reported 24% growth in overall annual premium. (* Exchange Rate used: INR 1 = US$ 0.015 as on Jan. 4, 2018) Total number of life insurance offices is 10954 as on 31.03.2017 as compared to 11071 as on 31.03.2016. The majority of life insurance offices (about 44%) are in semi-urban towns with a population between 10,000 and 99,000. (Source: IRDA Website- www.irda.gov.in) As on 31.3.2017, there were 8 Zonal offices in Mumbai, Delhi, Kolkata, Chennai, Hyderabad, Kanpur, Bhopal and Patna; 113 Divisional offices, 2048 Branch offices, 1408 Satellite offices and 1238 Mini offices. Divisional offices monitor and control the operations. Branch offices procure business and responsible for customer interface transactions. Satellite offices are responsible for immediate customer services. Mini offices spread insurance awareness and penetration. As on 31.03.2017, the only public sector insurance company i.e., LIC had its offices in 607 districts out of 640 districts in the country. It covers 94.84% of all districts in India. On the other hand, the private sector insurers had offices in 553 districts covering 86.41% of the total districts in India. Both LIC and private sector insurance companies together covered 95.16% of total districts in India. There are 31 districts where there is no life insurance office in India. Out of these 23 districts belong to the North Eastern states. (Source: IRDA Website- www.irda.gov.in)

OTHER PRIVATE PLAYERS Aditya Birla Sun Life Insurance Co. Ltd. ABSLI is a subsidiary of Aditya Birla Capital Ltd. (ABCL), is one of the leading private sector life insurance companies in India. It was incorporated on 04 August 2000 and commenced operations on 17 January 2001. ABSLI is a 51:49 joint venture between Aditya Birla Group and Inc., a leading international financial service, organization in Canada. Aviva Life Insurance Co. India Ltd. Aviva Life Insurance Co. India Ltd. Is a 51:49 joint venture between Dabur group of India and Aviva Plc of U.K. Aviva got its name in February 2002. Aviva life insurance has a large distribution network with 195 branches spread across 3000 towns in India. Aegon Life Insurance Co. ALIC (formerly known as Regon Religare Life Insurance Co.) is an Indian life insurance provider founded in 2008 with headquarters in Mumbai a. It is a joint venture between Dutch Aegon N.V and The Times of India. Bajaj Allianz Life Insurance Co. Ltd. Bajaj Allianz Life Insurance Co. Ltd. Is a joint venture between Bajaj Finserv Ltd. Owned by Bajaj Group of India and Allianz SE, a European financial services Co. It began operations on 12 March 2001 and today it has 759 branches with headquarters in Pune. Bharti AXA Life Insurance Co. Ltd. Bharti AXA Life Insurance Co. Ltd. Is a 51:49 joint venture between Bharti enterprises of India and Paris headquartered AXA group. It was established in the year 2006 with an aim to offer a number of innovative products and services that can help to meet specific insurance and wealth management needs of customers. Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd. Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd. was established in 2008 and is jointly owned by Canara Bank (51%), Oriental Bank of Commerce (23%) and HSBC Insurance (Asia Pacific) holdings Ltd. (26%). The company has access to over 115 million customers and a pan-India network of over 10,000 branches of bank partners. DHFL Pramerica Life Insurance Co. Ltd. DHFL Pramerica Life Insurance Co. Ltd. is a joint venture between Dewan Housing Finance Corporation Ltd. and Prudential international Insurance Holdings Ltd. of US. It started its operations in India in 2008. Exide Life Insurance Co. Ltd. Exide Life Insurance Co. Ltd. is a100% Indian owned life insurance company, owned by the Exide Industries. The company has over 15 lakh customers. It has been operating since 2001 and is headquartered in Bengaluru. Edelweiss Tokio Life Insurance Co. Ltd. Edelweiss Tokio Life Insurance Co. Ltd. established in 2011, is a new age life insurance company in India. It is a joint venture between Edelweiss, a diversified financial services (51%) conglomerated in India and (49%), one of the oldest life insurance companies in Japan. It has a PAN India presence with more than 60 branches and 1500 employees. Future Generali India Life Insurance Co. Ltd. Future Generali India Life Insurance Co. Ltd. is a joint venture between three leading groups- A leading retailer in India, Generali Group- A global insurance group that featuring among top 50 smartest companies in the world and Industrial Investment Trust Ltd. (IITL) – A leading investment company. Future Generali India Life Insurance Co. Ltd. operates with 104 branches across India. The company was incorporated in 2007. HDFC Standard Life Insurance Co. Ltd. HDFC Standard Life Insurance Co. Ltd. is a joint venture between HDFC, one of India’s leading housing finance institution and Standard Life Aberdeen PLC, leading well known provider of financial savings and investment services in UK. The company has about 414 branches and was founded in 2000. ICICI Prudential Life Insurance Co. Ltd. ICICI Prudential Life Insurance Co. Ltd. is promoted by ICICI Bank Limited of India and Prudential Corporation Holdings Ltd. of Japan. It began its operations in 2001 and consistently been amongst the top players in the Indian life insurance sector. It is also the first insurance company in India to be listed on NSE and BSE. IDBI Federal Life Insurance Co. Ltd. IDBI Federal Life Insurance Co. Ltd. Indian development is a three way joint venture of IDBI Bank, an Indian development and commercial bank, Federal Bank, one of India’s leading private sector banks and , a multinational insurance giant based out of Europe. It began its operations in 2008. In August 2008, the company collected the premium of over Rs.100 cr. within a record time of five months, thus becoming the fastest growing life insurance company in the private sector. India First Life Insurance Co. Ltd. India First Life Insurance Co. Ltd. is a joint venture between two of India’s public sector banks- Bank of Baroda (44%) and Andhra Bank (30%) and UK’s financial and investment company Legal & General (26%). It was incorporated in 2009 having headquarters in Mumbai. It made more than 2 billion in turnover in just four and half months since it’s became operational. It has over 4800 promoter bank branches in India. Kotak Mahindra Life Insurance Co. Ltd. Kotak Mahindra Life Insurance Co. Ltd. is a private life insurance company India. The company was founded in 2001. It caters to 15 million customers with 232 branches in India. Max Life Insurance Co. Ltd. Max Life Insurance Co. Ltd. (formerly known as Max New York Life Insurance Co. Ltd.) is a leading life insurance company in India. The company is a subsidiary of the public listed Max Financial Services Ltd. and is the largest non-bank private sector life insurer in India. It was founded in 2000 after the liberalization of the insurance sector in India and its operations began in 2001. PNB Metlife India life insurance Co. Ltd. PNB Metlife India life insurance Co. Ltd. is one of the leading life insurance companies in India present since 2001. PNB Metlife has its shareholders Metlife International Holdings LLC (MIHL), Punjab National Bank Ltd., Jammu & Kashmir Bank Ltd., M. Palling and company Private Ltd. and other private investors, MIHL and PNB being the majority shareholders. Reliance Nippon Life Insurance Co. Ltd. Reliance Nippon Life Insurance Co. Ltd. is one of the private life insurance companies in India founded in 2000. The firm offers life insurance provides at individuals and groups, catering to four distinct segments: protection, children, retirement and investment plans. It is a part of of the Reliance Anil Dhirubhai Ambani Group. SBI Life Insurance Co. Ltd. SBI Life Insurance Co. Ltd. is a joint venture life insurance company between State Bank of India, the largest state-owned banking and financial services company in India and BNP Paribus, a French multinational bank and financial services company with global headquarters in Paris founded in 2001. Sahara India Life insurance Co. Ltd. Sahara India Life insurance Co. Ltd. has been granted license by the insurance regulator the IRDA on 6th February 2004. With this approval it becomes the first wholly and purely Indian company, without any foreigner collaboration to enter the Indian life insurance market with an initial paid up capital of Rs. 157 cr. Shriram Life Insurance Co. Ltd. Shriram Life Insurance Co. Ltd. is the result of a joint venture between Sanlam Co., South Africa and of Companies in India. The company has 630 offices all over India. Star Union Dai-ichi Life Insurance Co. Ltd. Star Union Dai-ichi Life Insurance Co. Ltd. is a joint venture of Bank of India, Union Bank of India and Dai-ichi Life, a leading insurance company of Japan. The company was granted license in 2008 by the IRDA and operates through Bank of India’s and Union Bank’s 5400 offices. Tata AIA Life Insurance Co. Ltd. Tata AIG Life Insurance Co. Ltd. has been renamed of Tata AIA Life Insurance Co. following the exit of American International Group (AIG) from the Hong-Kong based insurer AIA Group. Tata AIG was set up in 2001 as a joint venture. Tata Sons has 74% stake in JV while the rest 26% held by AIA.