Survey on Company and Sector Wise Share (%) of Non-Life Insurers In India

The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta, which failed in 1834. However, the success of Indian life insurance can be traced back roughly to the second decade of the nineteenth century when the Madras Equitable began transacting life insurance business in the Madras Presidency in 1829. After that, it was a rather dull phase with regard to the growth in life insurance enterprises. Till the 70s of the nineteenth century, insurance had found no real place in the scheme of things and only certain European companies operating in parts of India did life insurance business on some scale. But Indian enterprise in this sphere later began to expand and in the last three decades of the nineteenth century the following companies were started in the Bombay Presidency: a) Bombay Mutual Life Assurance Society (1871), b) Oriental Life Assurance Company (1874) and c) Bharat Insurance Company (1896). Few other companies were also set up in other parts of India. However, this period was dominated by foreign insurance offices, which did good business in India, namely – Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance

The history of general Insurance dates back to the Industrial Revolution in the West and the consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a legacy of Britishoccupation. British and other foreign Insurancecompanies through their agencies in India transactedthis business. The General insurance business in India can trace its roots to the Triton Insurance CompanyLtd., the first general insurance company established in the year 1850 in Calcutta by the British.

1956-2000

The nationalization of life insurance is an importantstep in our march towards a socialist society. Itsobjective is to serve the individual as well as the state. The first step towards nationalization of life insurancewas taken on 19 January 1956 by the promulgation ofthe Life Insurance (Emergency Provisions) Ordinance,1956. Out of 145 Indian insurance companies, as manyas 103 had their head offices in the four cities ofBombay, Calcutta, Delhi and Madras. When theCorporation was constituted on 1 September 1956, itintegrated into one organization and controlledbusiness of 245 different units, Indian and foreign,which were engaged in the transaction of life insurance business in India.

After liberalization, there are four public sector and six private sector insurers which have been operating innon-life insurance market. Later on in December 2002,two more private sector insurers

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The performance up to financial year 2010 provides a view of how the non-life industry in India has performed over the years, and contributing to the insurance industry as a whole. It can be seen from the following analysis.

(Rs. In crore) Source: Annual reports of IRDA, IRDA Journals. (From December 2005-March 2010) Website of IRDA (www.irda.org), and Compiled from annual reports of mentioned companies: National Insurance, Oriental, New India, United India, Royal Sundaram, Bajaj Allianz, ICICI Lombard, Reliance, Tata AIG, IFFCO-TOKIO, Cholamandalam and HDFC Chubb. Table 1 highlights the share of non-life insurance sector in total gross direct premium of insurance sector in India from financial year 2005-20010. It is quite visible from the table that the gross direct premium of non-life insurance business is souring every year over the study period from financial year 2005-06 (Rs.12383.41 crore) to 2009-10 (Rs.83511.94 crore). The market share of non-life insurers grows from financial year 2005-06 (44.99%) to 2006-07 (46.26%), but after that there is a decline from financial year 2007-08 (41.63%) to 20082009 (29.80%). In the current financial year the non-life insurance industry advances slightly and reaches to 30.34 percent of the share in the market. Table 2 shows the gross premium of all the non-life insurers in India along with the index of growth from the financial year 2005–10. The level of the gross premium is continuously climbing in the non-life industry. Over the years, the public sector insurers contribute maximum premium value to non-life business than the private sector insurers. But considering the growth level, the private sector insurers have been showing tremendous growth rate year on year. During the financial year 2005-06, the non-life industry had two new entrants in the privatesector, namely, Cholamandalam General Insuranceand HDFC Chubb General Insurance. The public sectorExport Credit and Guarantee Corporation (ECGC) gotitself registered with the IRDA in the year 2005-06. Inthe financial year 2004-05, the growth rate of both thesectors is tremendously high (public-13.59% andprivate- 6904.96%), but in the year 2005-03,6thepremium volume declines with a much higher growthrate in both the sectors (public- 5.57% and private193.43%) as compared to previous year. Thereafter,the growth rate of established insurers is keep onfluctuating up and down whereas the growth rate ofprivate insurers is on the rise every year. In the current financial year the growth rate of privateinsurers (24.05%) is more than three folds of publicinsurers (7.18%). Among established insurers, the NewIndia which ranks at top in premium contribution overthe years shows a huge decline in growth rate year on year in year 2005-06 as compared to previous years,whereas the National insurance which shows decline inpremium contribution and growth rate in financial year2007-08, rises up with accretion of Rs. 141.23 crore,showing growth rate of 4.0 percent against -7.27percent of the previous year. Among all public insurers the United India showshighest growth rate of 12.85 percent followed byOriental Insurance of 12.13 percent. Among newinsurers the Reliance shows marvellous growth rate of365.15 percent which is highest among privateinsurers. On the other side ICICI Lombard contributesmaximum accretion of Rs.1458.34 crores with a growthrate of 91.60 percent. The HDFC Chubb which iscontinuously adding premium volume over the years isshowing with the addition of new insurers who areplaying a significantly more dominant role, in thecurrent fiscal, in terms of expanding premium incomegrowth, it is expected that the non-life insuranceindustry would continue to grow at the current rates.The non-life industry never had it so good, as now, withgrowth rate of 24.05 percent, and high premiumincomes growing so fast.

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Source: Compiled from data of Gross Premium of health portfolio and non-life insurers from annual reports of mentioned companies: National, Oriental, New India, United India, Royal Sundaram, Bajaj Allianz, ICICI Lombard, Reliance, Tata-AIG, IFFCO-TOKIO, Cholamandalam and HDFC Chubb and IRDA Journals (From December 2002- March 2007). Table 3 reveals the company and sector wise market share of all non-life insurers in total non-life business in India, over the study period. It is clear from the table that though the overall non-life market is on the rise, but the shares of both the public and the private sector insurers are differing a lot in their contribution. The market share of new insurers has moved up from 3.76 percent in 2005-06 to 34.26 percent in 2009-10 displaying spectacular performance with an improvement of almost ten percent over the last year. The wide disparity in the quantum premium increases of each player is perhaps indicative of the premium growth strategies of each before detariffing of rates sets in. The hunger for relentless market expansion by all the insurers is something that is a significant and a definite gain of liberalizing the insurance market. It is clearly seen that from financial year 2005-06 to 2009-10, the market share of public sector insurers is keep on falling, whereas the share of private insurers has registered increasing trend over the study period.Among public sector insurers, the New India Assuranceranks at the top with maximum market share over theyears, and among private sector insurers, the ICICILombard is at the top with highest market share overthe period, whereas all other insurers fluctuate up anddowns with their market shares over the years.

The induction of new insurers has changed the marketscenario which is now more vibrant and moredemanding for better customer services. The non-lifepublic sector insurers have been rather slow torespond to the evolving competition. The privateinsurers buoyed up by their success will not allow theestablished insurers any room to manoeuvres. Thegoing is tough as future cannot be a continuation of the past.

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