International Trade Risks (Credit Insurance and Opportunity for Non Life Insurance Market in India) There are risks and costs to a program of action, but they are far less than the long-range risks and costs of comfortable inaction - John .F. Kennedy NAME: Manjunath Reddy .M BATCH: Fall Winter 2005-2007 REFERENCE NO: BF05F033. FACULTY GUIDE: Prof. Tareque Laskar - 1 - ACKNOWLEDGEMENT I take this opportunity to thank all those people who helped me to complete the thesis. Firstly, I would like to thank Mr.Jayachandran, Dean, The Indian Institute of Planning and Management, Bangalore, who provided us the opportunity to carry out this project report. I take this opportunity to express my profound gratitude to Professor Mr. Tareque Laskar and Mr. Samuel Jesurathinam, who had initiated me into this project and also guided us from time to time to fulfill the same, I am thankful to them for their continuous help and constructive criticism throughout the project and in bringing out this thesis. I am grateful to my ever encouraging friends and family members, without their support I would not have been able to complete this thesis work. - 2 - THE INDIAN INSTITUTE OF PLANING AND MANAGEMENT BANGALORE CERTIFICATE OF GUIDANCE This is to certify that the project report entitled “Credit Insurance and Non life insurance market in India ” submitted by the following student of Indian Institute of Planning and Management, Bangalore has been carried out under my guidance. The matter presented is their original work and has been submitted to the college as part of partial fulfillment of their MBA degree. Prof. Tareque Laskar Name of the student: Manjunath Reddy .M - 3 - CERTIFICATE I ACKNOWLEDGEMENT II LIST OF TABLES III LIST OF CHARTS IV CHAPTER – 1 ......................................................................................................................................................................... 6 1. INTRODUCTION .............................................................................................................................................................. 6 1.1 CREDIT INSURANCE: ............................................................................................................................................................ 6 1.2 WHAT IS CREDIT INSURANCE? ............................................................................................................................................... 7 1.3 HISTORY: .......................................................................................................................................................................... 8 1.4 STAGES TO THE INTERNATIONALIZATION OF CREDIT INSURANCE: ................................................................................................. 8 1.5 CREDIT RISK MANAGEMENT: ................................................................................................................................................. 9 1.6 COLLECTION: ................................................................................................................................................................... 10 2. TYPES OF TRADE CREDIT INSURANCE: ............................................................................................................... 10 2.1 NEED FOR TRADE CREDIT INSURANCE TO THE COMPANIES: ................................................................................................... 11 2.2 RISKS COVERED FOR TRADE CREDIT INSURANCE: ................................................................................................................ 11 2.3 COST FOR CREDIT INSURANCE ........................................................................................................................................... 12 3. FACILITATION OF CREDIT INSURANCE AS SALES OF FINANCIAL TOOLS ............................................. 12 4. CREDIT INSURANCE MARKETS: .............................................................................................................................. 13 5. WORLDWIDE CREDIT INSURANCE MARKET ..................................................................................................... 13 6. RESEARCH METHODOLOGY: ................................................................................................................................ 14 6.1 INFORMATION SOURCES: .................................................................................................................................................... 15 6.2 MAIN OBJECTIVE OF THE RESEARCH: ................................................................................................................................ 15 7. ABOUT THE COMPANY AND THE GROUP: ........................................................................................................... 15 7. 1 COFACE GROUP: .................................................................................................................................................... 16 7.2 HISTORY: ........................................................................................................................................................................ 16 7.3 CONSOLIDATED TURNOVER (IN € MILLIONS) ......................................................................................................................... 17 7.4 MAJOR INTERNATIONAL PLAYERS IN CREDIT INSURANCE: ..................................................................................................... 17 7.5 MAJOR DOMESTIC PLAYERS IN CREDIT INSURANCE: .............................................................................................................. 17 7.6 COFACE BUSINESS LINES: ............................................................................................................................................. 20 7.7 COFACE INDIA ................................................................................................................................................................ 21 7.8 PRODUCTS AND SERVICES: .................................................................................................................................................. 22 CHAPTER – 2 ....................................................................................................................................................................... 24 8. NON – LIFE INSURANCE MARKET IN INDIA: ....................................................................................................... 24 8.1 KEY INFORMATION: .......................................................................................................................................................... 24 8.2 BUSINESS ENVIRONMENT: .................................................................................................................................................. 25 8.3 INSURANCE ENVIRONMENT: ................................................................................................................................................ 25 8.4 SUMMARY: ...................................................................................................................................................................... 26 8.4.1 Economic growth despite political uncertainty .................................................................................................. 26 8.4.2 Substantial reform progress in non-life .............................................................................................................. 26 8.4.3 Growth projections point towards high growth ................................................................................................... 27 9. LOOKING FORWARD TO THE MARKET IN 2010 ................................................................................................. 29 - 4 - 9.1 POLITICS ........................................................................................................................................................................ 30 9.2 REGULATORY ENVIRONMENT .............................................................................................................................................. 30 9.3 FACTORS AFFECTING INDIA’S GROWTH PROSPECTS .................................................................................................................. 36 9.4 INDIA’S WORKING POPULATION IS PROJECTED TO GROW SIGNIFICANTLY: ..................................................................................... 37 9.5 INDIA IS SET TO HAVE THE WORLD’S LARGEST SURPLUS WORKING POPULATION BY 2020: ........................................................... 37 9.6 INDIA POSSESSES A LARGE POOL OF SCIENTISTS, IT SPECIALISTS, TECHNICIANS AND ENGINEERS: .................................................... 38 9.7 THERE ARE SEVERE INFRASTRUCTURE BOTTLENECKS IN INDIA .................................................................................................. 41 10. THE INDIAN NON-LIFE MARKET 2007: ............................................................................................................................... 45 10.1 Analyzing the Market Today: ................................................................................................................................ 48 10.2 Nationalisation ...................................................................................................................................................... 49 10.3 Detariffication will change the dynamics of the market: