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WHAT IS INSURANCE?

The business of insurance is related to the protection of the economic values of assets. Every asset has a value. The asset would have been created through the efforts of the owner. The asset is valuable to the owner, because he expects to get some benefit from it. The benefit may be an income or some thing else. It is a benefit because it meets some of his needs.

THE BIRTH OF INDIAN INSURERS


The Swadeshi movement of 1905-1907 gave rise to more insurance companies. The United India in Madras, National Indian and National Insurance in Calcutta and the Co-operative Assurance at Lahore were established in 1906.

INSURANCE ACT, 1938


The Insurance Act, 1938, was the first comprehensive legislation governing not only life but also non- life branches of insurance to provide strict state control over insurance business. Feature Provision for policyholders' directors, making it possible for the representatives of Policyholders to be on the Board of directors.

Constitution of a Department of Insurance had Wide powers of supervision and control. Regulation for the compulsory registration of insurance companies and for filing of returns of investment and financial conditions. Provisions for deposit, to prevent insurers of inadequate financial resources of Speculative concerns for commencing business. Periodical valuation of Indian Insurance business of foreign companies and the Business of Indian companies.

PRESENT SCENARIO OF INSURANCE INDUSTRY


Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors. The insurance sector in India has come to a position of very high potential and competitiveness in the market. Indians, have always seen life insurance as a tax saving device, are now suddenly turning to the private sector that are providing them new products and variety for their choice.

FOREIGN DIRECT INVESTMENT (FDI) POLICY IN INSURANCE SECTOR


As per the current (Mar 06) FDI norms, foreign participation in an Indian insurance company is restricted to 26.0% of its equity / ordinary share capital. The limit to foreign investment includes both direct and indirect investment and has been a cause of significant lobbying by foreign insurance companies for a change in regulations to increase the FDI limit to 49% of equity issued.

Positions of LIC
Largest insurance Company in the world in Customer Base (23 crore customers) No.1 insurance company in the world in terms of agency (about 1.1 Million agents) LIC is No.1 insurer in the world in Volume & Sold around 3.75 Cr. Policies in 2007-2008. 2nd Biggest Real Estate Owner next to Indian Railways. LIC is one of the highest income taxes playing Organization. For Financial Year 2007-08, LIC has paid advance Tax Rs.2627. 14 Cr. & Service Tax Rs.1292. 15 Cr. Has Highest insurance Professionals.

Unit-Linked Insurance Plans


In the life insurance segment, various unit linked insurance plans (ULIPs) have been introduced by private players, which helped them to compete against LIC and also create a clientele comprising of individuals who are willing to opt for these plans for purely investment purposes.

Particulars

2005-06

2006-07

2007-08

2008-09

2009-109

Insurer

First year premium

LIC

64.52

74.35

64.02

61.12

65.08

Private Sector

35.48

25.65

35.98

38.88

34.92

Total

100.00

100.00

100.00

100.00

100.00

Single premium
LIC

84.45

87.04

86.99

90.44

92.19

Private Sector

15.55

12.96

13.01

9.56

7.81

Total

100.00

100.00

100.00

100.00

100.00

Renewal premium

LIC

92.82

89.03

83.42

77.24

73.64

Private Sector

7.18

10.97

16.58

22.76

26.36

Total

100.00

100.00

100.00

100.00

100.00

Total premium
LIC

85.75

81.92

74.39

70.92

70.10

Private Sector

14.25

18.08

25.61

29.08

29.90

Total

100.00

100.00

100.00

100.00

100.00

LITERATURE REVIEW
Insurance is a vital economic activity and there is an excellent scope for its growth in the emerging markets. The opening up of the insurance sector has raised high hopes among people both in India and abroad. Abera (2007) indicated, The Government of India liberalized the insurance sector in March 2000, which lifted the entry restrictions for private insurance players, allowing foreign players to enter into the market and start their operations in India. The entry of private players helps in spreading and keeping the operation in the Indian insurance sector which in turn results in Restructuring and revitalizing of public sector companies.

Objectives
To examine the current status, volume of competitions and challenges faced by the Life Insurance Corporation of India. To see the performance of the private life insurance players against LIC. To analyze the life insurance services of LIC as well as private life insurance players. To know the consumer preference for buying life insurance policy for LIC against private life insurance players.

To know the different motive of people behind purchasing life insurance policy. To know various media or promotional tool those are affecting people for buying life insurance policy.

Limitations
Time period is one of the limitations because project need to completed within 60-70 days. Researchers are not going to take response from the every regions or part of the country for collecting the information to analyze data. Being students, Researchers are not masters or experts of research activity hence it becomes limitations. This project report is based on the information given by the respondents. So researchers rely on the information provided by respondents.

RESEARCH METHODOLOGY
RESEARCH DESIGN: EXPLORATORY RESEARCH DESIGN: The exploratory studies are carried out to explore a subject. The main objective is to help in defining research problem and generate a set of hypothesis or research question which could be worked upon at a later stage. Exploratory studies are conducted for three main reasons, to analyze a problem situation, to evaluate alternatives and to discover new ideas.

RESEARCH HYPOTHESIS: A research hypothesis is one that links an independent variable to a dependent variable. It should generally contain one dependent and one independent variable. It is assumed that the entry of the private life insurance players affect the performance of the LIC. It is assumed that the entry of the private life insurance players affect adversely to the LIC.

TYPES OF DATA USED FOR THIS STUDY: Primarily it has used primary data for this research collected through questionnaire. It is necessary to note that researchers also used some secondary data from various sources for this project report. SAMPLE SELECTION AND SAMPLE SIZE: The first step of research is sample selection, for which the respondents were Policy holders of various life insurance companies. The total Respondents covered were 300. The same numbers of questionnaires were distributed, & 300 fully-completed questionnaires were received.

SAMPLING METHOD: The Respondents were selected by the convenience sampling method. Convenience sampling can be used as a part of a preliminary research that forms a basis for conducting the detailed research. QUESTIONNAIRE AS A TOOL OF COLLECTING INFORMATION: A questionnaire is a research instrument consisting of a series of questions and other prompts for the purpose of gathering information from respondents. Although they are often designed for statistical analysis of the responses, this is not always the case.