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A Reliance Capital company
Indian Insurance Market
The Korean Re 26thReinsurance Seminar, Seoul
Date : 18thJune, 2007
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Some Facts About India
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Geography of India
Continent : Asia
Area : 3,287,590 sq Km
Land Boundaries : 14,103 Km
Coastline : 7,000 Km
Natural Resources : Coal, Iron Ore, Manganese, mica, Bauxite, Titanium
ore , Chromites, natural gas,diamonds,petroleum,limestone, arable land
Irrigated Land : 590,000 sq Km
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Economy of India (In 2005)
Gross Domestic Product : USD 720.3 bln
GDP (Purchasing power Parity) : USD 3.699 trillion
GDP Real Growth Rate : 7.6 %
GDP Per Capita (PPP) : USD 3,400
GDP Composition by sector :Agriculture : 20.6%
Industry : 28.1%
Services : 51.4%
Inflation Rate (CPI) : 4.6%
Industrial production Growth : 8.2% Current Account Balance : USD- 13.19 bln
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Rank in the world (End of 2005)
GDP (Purchasing Power Parity) : 5th - USD 3,699 bln
GDP Real Growth Rate : 26th - 7.60%
GDP Per Capita(PPP) : 152th - USD 3,400
Electricity Production : 8th - 556.8 bln kwh
Exports : 35th
- USD 76.23 bln Imports : 24th - USD 113.1 bln
Foreign Exchange Reserve : 6th - USD 166.2 bln
Airports : 24th - 334
Railways : 5th - 63,230 Km
Roadways : 3rd - 3.9 mln Km Waterways : 10th - 14,500 Km
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Indian Economy
Gross Domestic Product
21.0022.60
25.40
28.40
32.10
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
2001 - 02 2002 - 03 2003 - 04 2004 - 05 2005 - 06
(
INRT
rillion)
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Indian Economy
43.851.4 52.7
61.4 63.878.1 83.6
111.5102.7
142.4
0
20
4060
80
100
120
140160
2001 - 02 2002 - 03 2003 - 04 2004 - 05 2005 - 06
Foreign Trade
Export Import
Foreign Exchange Reserves
51
71.9
107.4
135.6
159.3
0
20
40
60
80
100
120
140
160
180
2001 - 02 2002 - 03 2003 - 04 2004 - 05 2005 - 06
(USDB
illion)
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Insurance in India
The insurance sector in India has come a full circle frombeing an open competitive market to nationalization and
back to a liberalized market again.
Tracing the developments in the Indian insurance sectorreveals the 360 degree turn witnessed over a period of
almost two centuries.
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A Brief History of the Insurance Sector
Milestones of life insurance business in India:
1818: First company - Oriental Life Insurance Company in Calcutta.
1912: The Indian Life Assurance Companies Act enacted
1928: The Indian Insurance Companies Act enacted to collect statisticalinformation about both life and non-life insurance businesses.
1938: Earlier legislation consolidated and amended to by the Insurance Act
with the objective of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers and provident societies taken over bythe central government and nationalized. LIC formed by an Act of Parliament,viz. LIC Act,1956, with a capital contribution of Rs. 5 crore from theGovernment of India.
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A Brief History of the Insurance Sector Condt.
Milestones of General insurance business in India 1850: First general insurance company
1907: The Indian Mercantile Insurance Ltd. - the first company to transact allclasses of general insurance business.
1957: General Insurance Council frames a code of conduct for ensuring fairconduct and sound business practices.
1968: The Insurance Act amended to regulate investments and set minimumsolvency margins and the Tariff Advisory Committee set up.
1972: The General Insurance Business (Nationalization) Act, 1972nationalized the general insurance business in India.
1973: 107 insurers amalgamated and grouped into four companies with GICincorporated as a holding company.
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Insurance Sector Reforms In 1993, a committee was formed to evaluate the Indian insurance industry
and recommend its future direction with an objective of complementing thereforms initiated in the financial sector
The reforms were aimed at creating a more efficient and competitive
financial system suitable for the requirements of the economy
In 1994, the committee submitted the report
Some of the key recommendations included:
Structure
Competition
Regulatory Body
Investments
Customer Service
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Insurance Regulatory & Development Authority
Reforms in the Insurance sector were initiated with the passage of the IRDABill in Parliament in December 1999 and incorporation as a statutory body
Since being set up as an independent statutory body the IRDA has put in aframework of globally compatible regulations.
In the private sector 12 life insurance and 8 general insurance companieshave been registered.
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De-tariffing in General Insurance
Around 70% of the premium collected was under Tariff
On 1st Jan 2007 only the Rates in the Tariff were De Regularized
25% flat deduction in the Fire, Engg, WC Tariff Rates
5% To 15% Deduction in the Motor Own Damage Rates
Increase in the Motor Third Party Rates
35% Discount ON the Good Features of the Risk
From 1st Jan 2008, the terms & conditions of the coverage to be De -Regularized
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Effect of De-tariffiing
Sharp Reduction in property premium
Slight Increase in Non Tariff Products
Increase in the Third Party Motor Premium
Creation of Third Party Premium Pool for Commercial Vehicle
Market will take some time to get use to the Change
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Indian Non Life Insurance Companies
Public Sector National Insurance
New India
Oriental
United India
Private Sector Reliance General Insurance
ICICI Lombard General Insurance
Bajaj Allianz
Tata AIG
IFFCO Tokio Cholamandalam
Royal Sundaram
HDFC Chhub
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Indian Life Insurance Companies
Public Sector Life Insurance Corporation
Private Sector
Reliance Life Insurance
Bajaj Allianz
SBI Life Tata AIG
Hdfc Standard Life
ICICI Prudential
Birla SunLife
Aviva Max New York Life
Metlife
Bharti Axa Life
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Life Insurance Companies
Companies 2007(US $,million) Market Share
ICICI Prudential 260 6.79%
Bajaj Allianz 280 5.66%
SBI Life Insurance 190 3.40%
HDFC Standard 4 2.15%Max New York Life 7 1.22%
Birla Sunlife 5 1.17%
Aviva 3 0.96%
Tata AIG 3 0.85%
Reliance Life 7 1.23%
LIC 269 74.18%
Total Market 371
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Market Share of Life Insurance Companies
Bajaj Allianz
5.79%
ICICI Prudential
7.13%
Reliance Life
1.26%
Tata AIG
0.87%
Birla SunLife
1.20%
Max New York Life
1.25%
HDFC Standard
2.20%
SBI Life
3.48%
Aviva
0.98%
LIC
75.86%
ICICI Prudential Bajaj Allianz SBI Life HDFC Standard Max New York LifeBirla SunLife Aviva Tata AIG Reliance Life LIC
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Non Life Insurance Companies
Companies 2007(US $,million) Market ShareNational 828 14.86%
New India 1092 19.59%
Oriental 857 15.37%
United India 763 13.69%
Bajaj Allianz 392 7.04%
Cholamadlam 68 1.23%
HDFC Chubb 41 0.74%
ICICI Lombard 653 11.71%
Iffco- Tokio 250 4.49%
Reliance General 198 3.56%
Tata AIG 130 2.34%
Royal Sundaram 130 2.89%
Total 5402
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Market Share of Non Life Insurance Companies
United India
14.04%Bajaj Allianz
7.22%
Cholamandlam
1.26%
HDFC Chubb0.76%
ICICI Lombard
12.01%
Iffco Tokio
4.60%
Reliance
3.65%
Royal Sundaram
2.40%
Tata AIG
2.96%
National
15.24%
New India
20.09%
Oriental15.76%
National New India Oriental United IndiaBajaj Allianz Cholamandlam HDFC Chubb ICICI Lombard
Iffco Tokio Reliance Ro al Sundaram Tata AIG
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Major Market Losses for 2006 - 07
Sr. No. Name of the risk /Loss
Date of Loss Gross Loss
(US $ million)
1 Balco 18/05/2006 4.39
2 Lanco Kondapalli 20/08/2006 1.09
3 Tata Motors 21/09/2006 3.90
4 RelianceIndustries Ltd.
25/10/2006 2.19
5 BPCL 25/09/2006 1.02
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Catastrophe Losses
Mumbai Floods (26.07.2005)
Gross Market Loss : 580.55 m USD
Surat Floods ( August 2006)
Gross Market Loss : 125.40 m USD
(Includes ONGC 7.67 m USD
Kribhco - 11.63 m USD
IPCL - 9.30 m USD )
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Financial Highlights of Fire Class
2005-2006 (figures in USD , million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 609 273 882
Net Premium Income 414 55 469
Net Claims Incurred 274 29 303
Net Claim Ratio 66.13% 52.72% 64.56%
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Financial Highlights of Fire Class
2004 -2005 (figures in USD,million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 588 200 788
Net Premium Income 428 47 475
Net Claims Incurred 170 18 188
Net Claim Ratio 39.72% 37.92% 39.54%
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Financial Highlights of Fire Class
2003 -2004(figures in USD, million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 599 158 757
Net Premium Income 404 34 438
Net Claims Incurred 124 9 133
Net Claim Ratio 30.60% 27.18% 30.33%
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Financial Highlights of Fire Class
2002 2003(figures in USD,million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 615 96 711
Net Premium Income 419 17 436
Net Claims Incurred 201 4 205
Net Claim Ratio 48.05% 21.50% 47.02%
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Financial Highlights of Fire Class
2001 2002(figures USD,million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 602 30 633
Net Premium Income 435 2 436
Net Claims Incurred 203 1 203
Net Claim Ratio 46.65% 30.90% 46.58%
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Financial Highlights of Marine Class
2005-2006 (figures in USD,million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 232 61 293
Net Premium Income 115 23 139
Net Claims Incurred 78 25 103
Net Claim Ratio 67.67% 107.71% 74.40%
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Financial Highlights of Marine Class
2004-2005(figures in USD, million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 227 53 280
Net Premium Income 114 20 134
Net Claims Incurred 71 18 89
Net Claim Ratio 62.81% 87.81% 66.61%
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Financial Highlights of Marine Class
2003 -2004(figures in USD ,million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 222 34 256
Net Premium Income 114 14 128
Net Claims Incurred 68 11 79
Net Claim Ratio 59.76% 81.88% 62.19%
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Financial Highlights of Marine Class
2002 -2003(figures in USD, million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 257 18 275
Net Premium Income 132 8 140
Net Claims Incurred 88 5 93
Net Claim Ratio 67.02% 66.11% 66.97%
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Financial Highlights of Marine Class
2001 2002(figures in USD, million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 227 4 231
Net Premium Income 132 2 134
Net Claims Incurred 79 1 80
Net Claim Ratio 60.03% 36.55% 59.75%
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Financial Highlights of Misc. Class
2005-2006(figures in USD, million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 2633 831 3464
Net Premium Income 2025 540 2565
Net Claims Incurred 1946 283 2228
Net Claim Ratio 96.08% 52.35% 86.88%
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Financial Highlights of Misc. Class
2004 2005(figures in USD, million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 2435 509 2944
Net Premium Income 1875 320 2195
Net Claims Incurred 1731 163 1894
Net Claim Ratio 92.34% 50.76% 86.27%
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Financial Highlights of Misc. Class
2003 -2004(figures in USD, million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 2381 309 2690
Net Premium Income 1824 184 2007
Net Claims Incurred 1726 97 1824
Net Claim Ratio 94.68% 53.03% 90.87%
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Financial Highlights of Misc. Class
2002 -2003(figures in USD, million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 2149 179 2328
Net Premium Income 1624 97 1721
Net Claims Incurred 1455 54 1509
Net Claim Ratio 89.57% 55.62% 87.65%
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Financial Highlights of Misc. Class
2001 2002(figures in USD, million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 1762 43 1805
Net Premium Income 1334 202 1537
Net Claims Incurred 1433 8 1441
Net Claim Ratio 107.39% 3.96% 93.77%
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Financial Highlights of All Classes
2005-2006(figures in USD, million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 3473 1166 4639
Net Premium Income 2555 618 3173
Net Claims Incurred 2298 337 2634
Net Claim Ratio 89.94% 54.47% 83.03%
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Financial Highlights of All Classes
2004 2005(figures in USD, million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 3250 763 4012
Net Premium Income 2417 387 2804
Net Claims Incurred 1973 198 2171
Net Claim Ratio 81.63% 51.17% 77.42%
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Financial Highlights of All Classes
2003 2004(figures in USD, million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 3202 501 3703
Net Premium Income 2341 232 2573
Net Claims Incurred 1918 118 2036
Net Claim Ratio 81.93% 50.97% 79.14%
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Financial Highlights of All Classes
2002 2003(figures in USD,million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 3021 293 3314
Net Premium Income 2175 122 2297
Net Claims Incurred 1744 63 1807
Net Claim Ratio 80.21% 51.58%78.68
%
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Financial Highlights of All Classes
2001 2002(figures in USD, million)
Public SectorCompanies
Private SectorCompanies Total
Gross Direct Premium 2591 77 2668
Net Premium Income 1901 206 2107
Net Claims Incurred 1715 9 1724
Net Claim Ratio 90.21% 4.46% 81.83%
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A Reliance Capital company
Reliance General Insurance Co. Ltd.
Some facts
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About Reliance General Insurance
First Private Sector Non Life Insurance Company to get licensed from theIRDA in October 2000
The only 100% Indian Private Sector Insurance Company
Only profit making Pvt. Insurance Co. from the first year
Fastest Growing Company in Insurance Arena YoY 500%
Profitability Making underwriting profits from the 1st year of inception,consistently for the past 6 years
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About Reliance General Insurance
RGICL offers an exhaustive range of insurance products that covers mostrisks including Property, Marine, Casualty, Liability, Health and Aviation etc.
The Company has over 88 branches Pan India spreading over 19 States.
Permission of opening 115 more branches obtained
Number of employees currently (May 2007) employed with us is over 1200.
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Our Vision & Mission.Vision
To be an Insurer of World Standards and the most preferred Choice forClientele at the domestic and Global Level.
Mission
Our Mission is to keep the customer satisfaction as focal point of all ouroperations, adopt the best international practices in underwriting, claims and
customer service, be the most innovative in product development, establishpresence all over India, ensure sustained value addition to all stake holdersand to uphold Corporate Value & Corporate Governance.
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Our Quality Policy
Delight Customers at all our Touch Points
Continually improve our Processes and Technology
Comply with Statutory Regulations
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Guiding Principles6 Cs
Customer
Customer Care
Corporate Governance
Corporate Values
Creativity
Competitiveness
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Our Underwriting Philosophy
Risk Identification
Risk Management advises like risk retention & transfer to Insurance
Insurance Portfolio analysis
Ongoing risk evaluation & advice
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Gross Written Premium(2006-07)
Fire24%
Marine
4%
Motor
35%
Other
Miscellaneous
37%
(Premium in US $,million)
Fire : 48Marine : 8Motor : 69Other Misc. : 73
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Portfolio Segment wise
Segmentwise Contribution
Retail
55%
Corporate
45%
Retail Corporate
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Growth Story
0
100
200
300
400
500
600
700
800
900
1000
0
20000
40000
60000
80000
100000
120000
140000
160000
Gross Premium (In Rs.
Crores)
77.45 185.67 161.05 161.68 162.33 912
No. of Policies 28,631 56,469 63,900 135,355
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
18.01 43.18 37.45 37.6 37.75 198Million USD
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Highlights
House Hold Brand Reliance
Vast Coverage through the Network Of 88 Branches covering 19 States
Short Term Debt Raised with Highest Rating by ICRA
Ranked currently no. 2, moved up from 8th position
137 products to service all class of client risks along with customizedproduct policies.
Technology support at every stage sourcing, document flow, policyissuance, claims, MIS & renewals
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Highlights
Strong Underwriting skill sets and Reinsurance programs
Decentralised Claims processing
Human Capital has progressed from 150 members in March 2006 to
1200 as on May 2007 vertical concept
We deliver faster & effective documentation which coupled with cuttingedge technology solutions provides effective insurance solutions.
Constantly maintaining solvency ratios well above IRDA guidelines
The average claim settlement time in the year 2006-07 is days
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Thank you
18thJune , 2007