Life Insurance And Swot Analysis Commerce Essay

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Security has always been a universal desire, right from the earliest civilizations. This quest for security has been a major motivating force in the progress of mankind. The early societies looked up to their families for providing this security, which resulted in cohesive units. Gradually, as lifestyles changed and as man progressed into a more modern industrialized setup, this cohesive quality of the family started fading. One had to look for other ways of providing economic security and somewhere along the line was born â€-insurance'.

The insurance landscape in India is in the process of tremendous change. Closed to foreign competition due to nationalization in 1956, the Indian insurance industry was run by the government for over 40 years through the life insurance corporation of India' (LIC) and four general insurance companies that spanned the length and breadth of the country.

In the last couple of years there are a few forces acting on the industry that have brought about significant changes in the behaviour of the industry trends. Moreover there have been significant changes in the service outlook with respect to insurance industry. From the opinion that it was an instrument intended to provide monetary support at the time of the death of an individual, life insurance life insurance grew up to be a major financial instrument during the past 50 years in our country. There has also been a change in the consumer outlook with regards to life insurance as very beneficiary financial tool as against the orthodox thinking of unfruitful use of money.

In this highly competitive market where mere survival has become primary objective for companies, customer service holds a major place in business. Every insurance company delivers service as per the terms of contract, however there are very few companies that go beyond the contract and augment the customers. This requires a learned and trained staff i.e. the agents. The following findings throw light on the service perspective bringing out the fundamentals of service marketing and its determinants. The finding of the research widens the consumer understanding aspect and it would be very helpful to imbibe customization. The research studies the changing trends in life insurance and describes the latent potential and also gives a hypothesis on the future of the insurance industry based on the study of insurance sector and the expert opinion.

Origin of Insurance

We live in exciting times with changes and upheavals all around. New technologies, new inventions and changes in the economic and financial scenario, all have thrown up new insurance needs; needs never felt or heard before. This type of evolutionary process, in the last few decades, has given hope to new types of need-based insurance covers; public liability insurance, product liability insurance, indemnity for medical practitioners for negligence, indemnity for chartered accountants and auditors for professional lapses, etc. Further, covers are engineering insurance, erection insurance, loss of profit, cover against atomic radiation and space travel and contracting AIDS.

Around 6000 years ago, Babylonians, whose home in the Tigris - Euphrates valley lay at the crossroads of early world traffic, had developed business practices to a high degree. Babylon had become the clearinghouse of trade as all the important land trade routes converged in that territory. From Armenia in the north, China and India in the east, Egypt in the west, caravans came laden with merchandise. Though Babylon built up a great commercial system, and her people were the first to enjoy the fruits of political economy, their territory was surrounded by huge tracts of desert.

Recorded evidences testify that ancient India was a prominent maritime power. There were busy seaports on the west coast at Broach, at Kaveripumpatnam in the south and Bang in the east. Traders expressed difficulties in realizing money for the goods sent abroad. Loans were advanced to traders at specified rates of interest depending on the risk run and the duration of time for which money was required. Men skilled in sea voyages worked out risk premium rates.

The first Indian insurance company was the Bombay Mutual Assurance Society ltd., formed in 1870. This was followed by the Oriental life Assurance in 1874, the Bharat in 1896 and the Empire of India in 1897. Hindustan Cooperative was formed in Calcutta, the United India in Madras, The Bombay Life in Bombay, The National in Calcutta, The New India in Bombay, The Jupiter in Bombay and the Lakshmi in New Delhi. These were all Indian companies started as a result of the swadeshi movement in the early 1900's. By the year 1956, when the Life insurance business was nationalized and the Life Insurance Corporation of India (LIC) was formed on 1st September 1956, there were 170 companies and 75 provident fund societies transacting life insurance business in India. After the amendment to the relevant laws in 1999, the LIC did not have the exclusive privilege of doing life insurance business in India. By 31st march 2002, eleven new insurance companies had been registered and began to transact life insurance business in India.

Does one need insurance

The business of insurance is related to protection of the economic values of the assets. Every asset is of some value and is expected to last for a certain period of time during which it will deliver that value. In case the asset is destroyed it ceases to provide the value to the owner thus leading to an unpleasant situation. Insurance is a mechanism to reduce the effect of such unpleasant situation. Human life is considered to be a value generating asset and is also subject to risks. Assets are insured because there if a possibility that perhaps they might get destroyed, through accidental occurrences. Such possible occurrences are called perils. If such perils can cause damage to the asset we say that the asset is exposed to risk. To be more précised Perils are the events and risks are the consequential losses or damages. The risk only means that there is a possibility of a loss or damage, the loss may or may not happen. Insurance is done against the contingency that it might happen. Insurance is relevant only if there are uncertainties. If there is no uncertainty about the occurrence of an event, it cannot be insured against. In case of human beings death is certain; however the time of death is uncertain.

Insurance doesn't protect the asset. It doesn't prevent the loss due to its peril. The perils can sometime be avoided by ensuring better safety and damage control management. Insurance only tries to reduce the impact of the risk on the owner of the asset and those who depend on that asset. Only economic consequences can be insured. If the loss is not financial, insurance may not be possible. Moreover insurance is backed up with many economic benefits which can be enlisted as follows.

Life insurance provides financial security to the family in case of untimely or premature death.

Life insurance is also a potent instrument for saving.

Life insurance provides financial independence in old age.

Organizations or individuals, who are in credit business, can ensure for themselves recovery of loan in case their debtor dies.

A partnership firm can insure partners to the extent of capital invested by each in the business.

Under â€-key man' insurance, an organization can insure the lives of their executives, whose expertise greatly contributes to their profits.

Organizations can purchase group insurance policies as a part of their employee- welfare program.

Life insurance also provides tax benefits to the holder.

Life insurance policies create an estate.

Life insurance policies also create thrift. I.e. a compulsory saving.

A policy of life insurance can be used as a collateral security for procuring loans from the market.

Working of life-Insurance Business There are three primary methods to avoid risk viz.




Insurance deals with transfer of risk from the consumer to the provider. Insurance works on a fundamental principle of pooling of risk. People who are exposed to the same risk come together and agree that, if any one of them suffers a loss, the others will share the loss and make good the person who has suffered the loss. The manner in which the loss is to be shared can be determined beforehand. It may be proportional to the risk that each person is exposed to. This would be indicative of the benefit he would receive if the peril befell him. Insurance companies collect the share in the form of premiums and create a fund from which losses are paid; this fund is known as the life fund. The insurance company pays the losses to the members of that group. The insurance company also invests the funds in governmental and private organizations. Ex. LIC has lent a capital of Rs.215million to NABARD for its rural financing activities.

Life Insurance Marketing Triangle

The above diagram explains the services triangle with its three constituents, namely, the company, the provider and the consumer. Each of them have been explained as follows:-

The Company The Company makes various promises to its customers through external marketing. The way and means of marketing will be covered it the marketing mix.

The Provider The agents and the development officers act as the front-line staff and they are in direct contact with the potential or existing customers. They are the ones who keep or satisfy the promises made by the company. The marketing of insurance basically comes under concept selling. The agents are thus given various incentives, rewards, commissions and all the necessary training required. As regards incentive, they receive PLI (Productivity Linked Incentive), which is based on the increase in premium amount and the sums assured by the agent. They are also given extra commissions in case of policies, which are of high value. There are normal promotions for any good work done on a regular basis. The agents generally work under the training and guidance of their respective development officers.

The Consumers The consumers are the policyholders. Apart from the routine life insurance policies other services like housing finance, mutual funds, pension and group insurance. Thus the range of consumers is far and wide

Life insurance mix

The identification of the seven P's of marketing mix helps a firm to form better marketing strategies and also to serve the customers in a more efficient manner.

Product Mix

The best way to get and keep customers is to constantly figure out how to give them more for less. A product mix is the set of all products and items that a particular seller offers for sale. In case of insurance sector, the product mix comprises of Life and Non - life insurance policies that are offered to the customer by the company. A company's product mix has certain width, length, depth and consistency. The length of a product mix refers to the total number of items in the mix. In case of insurance sector, the following is the length of product mix:

Whole Life Policy

Limited Payment Life

Convertible Whole Life Policy

Joint Life Endowment Policy

Double Endowment Policy

Jeevan Saathi

Money Back Policy

Annuity Plans

Group Insurance Policy

Bima Sandesh

With or Without Profit Policy

The depth of a product mix refers to how many variants are offered of each product in the line in the insurance sector, one policy can be made available in different variations. Some of the examples are as follows:


Whole life policy whole life

Limited payment whole life

Single Premium With profit policy

These product mix dimensions permit the company to expand its business. E.g.: It can add new product lines thus widening its product mix.

Product Differentiation

Product differentiation may be referred to as the points or the qualities that a firm has in its product, which makes the product different from its competitors 'product. The product differentiation as far as the insurance sector and LIC in particular is concerned are as follows----

Bonus- insurance companies issue bonus to their policyholders when they make a substantial amount of profit. If a company issues a high amount of bonus, it delights the customer and creates a good image in the eyes of the customer.

Past records- the differentiation can be done on the basis of past records. Customers choose to take policy from that company which has well past records in terms of claim settling periods, premium collection intervals etc.

Market reputation- a company with a good market reputation and goodwill is perceived to deliver the best of the service quality and customer satisfaction.

Technology- technology plays an important part in product differentiation. For e.g.: - LIC was the first company in the insurance sector to introduce use of I.T and Computers. This makes customers feel that the company is not lagging behind the world and is capable of making the full use of technology to satisfy the customers.

Feedback- feedback from customers also is an important tool with which product of the company can be differentiated. If effective steps are been taken on the feedback of the customers, it leaves a long lasting impression on the minds of the customers.

Price- if a particular company charges more for the same product as compared to their competitors, it may lose the customers and vice versa.

Price Mix

Price is one element in the marketing mix that produces revenue; all the other elements produce costs. Prices are easiest marketing mix elements to adjust; product features, channels and even promotion take more time. Price also communicates to the market the company's intended value positioning of its product or brand. In the insurance sector, every company has to deposit an initial fixed capital of about Rest. 100 crore with Insurance Regulatory Development Authority, which is considered as the apex body of Insurance sector. The company gets periodic interest on this amount. With this interest amount, the company pays for the recruitment, training and development of the agents. The price in case of insurance sector refers to the premium charged on the policy. The Tariff advisory committee fixes the price for each policy. Hence all insurance companies have to charge approximately similar premium on similar policies. However, different elements affect the rate of premium to be charged on each policy. The price for the same policy is different for different companies.

The company must set its price in relation to the value delivered and perceived by the customer. If, the price is higher than the value received, the customer will not be willing to pay so high and the company will lose potential profits. If the price is less than the value received then, the company will fail to receive the profit that it deserves for providing a good service.


The blue printing show what the product should look like a details the specification to which it should conform. In contrast to the physical architecture of building, ship, or piece of equipment service process have a largely intangible structure. The process of logistics, industrial engineering, decision theory, and computer system analysis each of which employs blue print techniques to describe processes involving flow, sequences, relationship and dependencies.

Sectorial study

Insurance is suddenly gaining all the attention and what used to be a strange would in it is a household name, thanks to opening up of the industry, while there are several reasons for opening up of insurance sector the foreign investors are eyeing it as a very lucrative prospect. After the opening up, several private insurers have started operating in life insurance, especially in metro areas. New marketing channels like Banc assurance, brokers, etc. are also in the offing.

KEY MARKET INDICATORS.Size of market life &non-life

$16 billion

Total Global insurance premium (as on 2001)

$2408.25 billion(-1.5% as against 2000)

Rate of annual growth 2002-03

Life- 11.27%

Non-life- 23%

Geographical restriction for new players

None. Players can operate all over the country.

Registration restriction

Composite registration not available.

Equity restriction in the new Indian insurance company

Foreign investor can hold up to 26% of the equity.

Number of registered companies.

Public sector - 01 Private sector - 13

Comparison of similar policy of competition



Min/Max entry age

Minimum Premium

Min sum assured

Liquidity years

Maturity benefits


Money back with Profit


Rs. 3186 yearly

Rs. 50000


40% of sum assured + bonuses

ICICI Prudential



Rs. 6000 yearly

Rs. 75000


50% of sum assured + bonuses

Bajaj Allianz

Cash Gain


Rs. 5000 yearly

Rs. 50000


125% of sum assured + bonuses

Life insurers in India

As an answer to globalization of economy and the increasing pressure of the WTO regulations, the govt. appointed the Malhotra Committee. After considering all aspects, the government ultimately enacted Insurance Regulatory and development authority and vested the authority to formulate regulations for insurance industry. IRDA and the LIC allowed the entry of foreign investors on a condition that they enter in collaboration with a local company.

Public sector

Private sector

Life Insurance Corporation of India(LIC)

1. Allianz Bajaj life insurance Company limited.

2. Birla sun life insurance Company limited.

3. HDFC standard life insurance company limited.

4. ICICI Prudential life insurance Company limited.

5. Reliance life insurance Company limited.

6. ING visa life insurance Company limited.

7. Max New York life insurance Company limited.

8. MetLife insurance company limited.

9. Om Kodak Mahindra life insurance co. ltd.

10. SBI insurance company limited

11. TATA-AIG life insurance Company limited.

12. AMP-Samar Assurance Company limited.

13. Aviva Life insurance company limited

Life Insurance Players in India

1. Yr.: 1947-2000: (From 1947 to 1st April 2000)

First life insurance company (LIC) set by Indian government in 1956. This is public company.

2. Yr.: 2000-2001: (From 2nd April '2000 to 31st December'2001)

Insurance Industry in the year 2000-2001 had 10 new entrants, namely:




Date of Reg.

Name of the Company




HDFC Standard Life Insurance Company Ltd.




Max New York Life Insurance Co. Ltd.




ICICI Prudential Life Insurance Company Ltd.




KodakHYPERLINK ""Mahindra Old Mutual Life Insurance Limited




Birla Sun Life Insurance Company Ltd.




Tata AIG Life Insurance Company Ltd.




SBI Life Insurance Company Limited.




ING HYPERLINK ""Visa Life Insurance Company Private Limited




Bajaj Allianz Life Insurance Company Limited




MetLifeHYPERLINK ""India Insurance Company Pvt. Ltd.

3. Yr: 2001-2002: (From 1st Jan 2001 to Dec. 2002)

Insurance Industry in this year, so far has 5 new entrants; namely




Date of Reg.

Name of the Company




AMP HYPERLINK ""Samar Life Insurance Company Limited.




Aviva Life Insurance Co. India Pvt. Ltd.

4. Yr: 2003-2004: (From 1st Jan 2003 till Date)

Insurance Industry in this year, so far has 1new entrants; namely




Date of Reg.

Name of the Company




Sahara India Insurance Company Ltd.

Performance of the Industry

Post-Privatization, the life insurance industry grows by leaps and bounds. The attitude of people towards life insurance itself is changing. People are becoming more and more aware of the advantages of the Life insurance policies. Generally performance in life is measured in terms of first year premium collection and no. of lives covered. In 2003-04 Life Industry grew by 10.5% in terms of first year premium. It is showing steady growth rate in the current financial year as well. The sector witnessed a growth of over 50% for the month of April 2004, vis-à-vis April 2003. The premium in comparison, LIC underwrote premium of Rs.72, 304.62 lakh i.e., a market share of 82.33%. In terms of policies Underwritten, the market share of the private players was 17.88% as against 82.17% of LIC. The premium underwritten by the private players for individual policies stood at Rs.12, 107.63 lakh, towards 89,918 policies with group premium accounting for Rs.3, 411.30 lakh towards 84 schemes. The number of lives covered under group schemes was 1, 01,392. ICICI Prudential continued to lead amongst the private players with premium at 6.15% and policies at 4.85%. In terms of number of lives covered, OM Kodak led with 21,325 lives viz., 5.83% of the total lives covered. Premium underwritten by LIC under Varishtha Bima Yojana during the month of April, 2004 was Rs.26, 734.25 lakh towards 13899 policies of which 29.60%, in terms of both premium and policies, was underwritten in the rural sector.

From the opinion that it was an instrument intended to provide monetary support at the time of the death of an individual, life insurance life insurance grew up to be a major financial instrument during the past 50 years in our country. There has also been a change in the consumer outlook with regards to life insurance as very beneficiary financial tool as against the orthodox thinking of unfruitful use of money. Increasing number of people has been opting for it. The number of policies issued by the LIC of India since 1995-96 is a clear indication of the popularity gained by life insurance.

Competitors on life insurance


No. of policies (total)

No. of policies (rural)







1.10 core

1.23 crore

1.33 crore

1.48 crore

1.70 crore

2.42 crore

52.57 lacs.

60.33 lacs.

68.40 lacs.

81.23 lacs.

97.04 lacs.

45.23 lacs.

Form the above table it is eminent that the importance of life insurance has grown gradually over a period of time not only in metro areas but also in rural areas.

As there has been a dramatic increase in the importance of life insurance, the number of policies issued per annum has also increased, thus leading to a great change in the total premium amount collected. The total amount mobilized by LIC during the past few years'stands witness to the growing importance of insurance.

(Rs. In Cores) Total amount mobilized



Total premium income from investments

Rs.22,805.80 Rs. 13,183.92

Rs.54602.37 Rs.25030.50

Market share of private player

Characteristics of Insurance sector as oligopoly are as follows:

1. Presence of few sellers: After liberalization the no. of sellers increased from 1 to 13 as on date, like LIC, ICICI Prudential, HDFC Standard, Birla Sun life, Om Kodak, SBI Life, ING Visa, and MAX New York Life etc.

2. Regulator: IRDA (Insurance Regulatory Development Authority) regulates the Insurance industry. License to the new comer is granted by it only. All products, premiums, Tariffs require its approval.

3. Price Giver: Price of the policy i.e. premium is calculated by the actuaries of the respective companies depending upon the nature of risks covered, coverage of the policy and many other probability calculations. But premium as well as the product needs to be approved by IRDA.

4. Entry or Exit Barrier: There is no free entry into this sector as already outlined New entrants has to satisfy certain condition before entering into this industry. Exit is even tougher since all the contracts are long term so there are very strict regulations for exit from the industry by IRDA.

5. Product Differentiation: There are no homogenous products. There are wide varieties of products available in the market. Each seller can introduce

Any new policy depending on the efficiency of its product development team within the broad guidelines of IRDA.

6. Advertisement: Sellers spend huge amount of their yearly budget on advertisement to educate the consumers about their products and their company. IRDA ensures that advertisement does not mislead people. The IRDA has made it mandatory that every advertisement carries the line; ―Insurance is matter of solicitationâ€- so that people know that they are reading an advertisement.

7. Investment Policy: Investment of life fund up to 75% in government securities is mandatory as per IRDA. 89% of the total surplus to be distributed to policyholder as bonus every year.

8. Market Share: Still the private sector companies are in nascent stage and major chunk of market pie is still owned by public sector giant (LIC). But private players are also competing very bravely.

The influence of private players has created the following benefits:

Benefits to customers:

Reduction in the price of product under competitive market.

More innovative products to be available in a competitive market.

Improved management of investment portfolio.

Improved quality of service due to use of IT and multi distribution channels.

Benefits to Industry:

New Insurers to earn high profit in the initial stages due to large size of Indian insurance market.

Insurance intermediaries will include agents, Brokers, Independent Financial Consultants etc. The commission paid may exceed Rs.46000 Cores in a period of 10 yrs. annually.

Advertising campaigns may reap benefits as an additional advt. market for Rs.10000 Cores will be opened in 10 yrs. directly related to the insurance sector.

Computer industries will benefit.

Placement services, management institutes & training institutes will also be benefited as the insurance sector after opening up will require many people thus increasing the employment opportunities.

PEST Analysis for Insurance services Political/ Legal

Influences which have an impact on financial services and consumer confidence include the following:

· The Insurance Regulatory and Development Authority (IRDA):

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies. The other decision taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies was the launch of the IRDA's online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products, which are expected to be introduced by early next year. The IRDA since its incorporation as a statutory body has been framing regulations and registering the private sector insurance companies. IRDA being an independent statutory body has put a framework of globally compatible regulations.

Privatization of Insurance sector:

The introduction of private players in the industry has added to the colours in the dull industry. The initiatives taken by the private players are very competitive and have given immense competition to the one time monopoly of the market LIC. Since the advent of the private players in the market the industry has seen new and innovative steps taken by the players in this sector. The new players have improved the service quality of the insurance. As a result LIC down the years have seen the declining phase in its career. The market share was distributed among the private players. Though LIC still holds the 80% of the insurance sector but the upcoming natures of these private players are enough to give more competition to LIC in the near future.

· FDI in insurance sector:

Then, the issue came of amount of FDI to be allowed by a foreign player in the insurance sector. The government had allowed the private players to have foreign equity up to just 26 %. Efforts are going on to raise this to 49 %. After the opening up of the sector, a total of 18 private sector companies have entered the life insurance business and all of them have entered with a foreign partner.

Economic factors are key variables which have an impact on the activity in the financial services sector. The level of consumer activity is governed by income levels and personal wealth. As income levels grow, more discretionary income is available to spend on financial services. Consumer confidence in the economy and in job security also has a major impact; if lean times are foreseen ahead, savings will take priority over loans and other forms of expenditure. Consumers may also seek easy access savings and be willing to tie up their money for longer periods with potentially more attractive investments.

· Indian economy - growth projections:

By 2025 the Indian economy is projected to be about 60 per cent the size of the US economy. The transformation into a tri-polar economy will be complete by 2035, with the Indian economy only a little smaller than the US economy but larger than that of Western Europe. By 2035, India is likely to be a larger growth driver than the six largest countries in the EU, though its impact will be a little over half that of the US. India, which is now the fourth largest economy in terms of purchasing power parity, will overtake Japan and become third major economic power within 10 years.

All these facts or forecasts only drive at one point. India is booming as a market. The global insurance industry has a big eye on India owing to its big opportunity. India is the next big thing in the global insurance industry.



Consumer Grievance Redressed

The Insurers have to face the redressed of the consumers, grievances for deficiency in products and services. The Insurance Regulatory Development Authority (IRDA), the regulatory body has already appointed Ombudsman for looking into the grievances of the policyholders. His judgment will be binding on the insurers. Further under Consumer Protection Act, 1986, the consumer courts are operating at the district, state and national levels. This is a major strength from the consumer point of view as they could easily fight for their rights.

Increasing customer awareness

The gradual growth of the industry and also the increasing number of claims settled has slowly led to the increase in the awareness in the minds of the customers. These aware customers are now potential clients which can be used by the companies and converted into new clients.


Insurance companies are getting savvy. Enhanced marketing thus is crucial. Already, many companies have full operation capabilities over a 12-hour period. Facilities such as customer service centre are already into 24-hour mode. The opening up of the industry has defined new frontiers of distribution of which consumer concern is an indispensable part.


Challenge to new insurers.

The new insurers will have to invest a minimum capital of Rs. 100 Cores. The normal gestation period is of 5 years. The generation of profit normally starts in the sixth year. Hence the new insurers have to lock up their capital for at least 5 years.

Out-dated products

Today, LIC has more than 60. But most of them are outdate, as they are not suitable to the needs of the consumers. Hence old as well as new insurers have to offer innovative products to the consumers and bringing more products would require good amount of capital investment.


Vast country

India is a vast country with more than 5, 76,000 villages having a population of at least 500-600 per village. The companies could recognize the fact that if it takes the whole villa as one, it would consist of a population more than 5000-10000. One villa could give them a good amount of business. The company could have this opportunity and tap it and reap revenues.

Trained manpower.

Since the sector has opened up, many new companies have already started its operation and few are just about to begin. The government has also introduced professional courses like Bcom. (Banking and insurance), identifying the potential growth in the insurance sector.


Lack of understanding.

Very soon the market will be flooded by a large number of products by a fairly large number of insurers operating in the Indian market. Even with limited range of products offered by LIC, there is chaos as far as the consumers are concerned. Their confusion will further increase in the face of a large number of products in the market. The existing level of awareness of the consumers for insurance products is very low. This is because only 62% of the population of India is literate and only 10% are well educated. Even the educated consumers are ignorant about the various products of insurance. With new companies coming in the market, the products would be comparatively more, which would again create confusion in the minds of the customers so as to which policy best suits the needs.

Future of the Insurance Sector - A hypothesis based on the study.

Wage and salary employment in the insurance industry is projected to increase 8 present between 2002 and 2012, more slowly than the 16 present average for all industries combined. While demand for insurance is expected to rise, downsizing, productivity increases due to new technology, and a trend toward direct mail, telephone, and Internet sales will limit job growth. However, some job growth will result from the industry's expansion into the broader financial services field, and employment in the medical service and health insurance areas is anticipated to grow. Also, thousands of openings are expected to arise in this large industry to replace workers who leave the Many successful insurance companies will recognize the Internet's potential as a powerful marketing tool. Not only might this reduce costs for insurance companies, but it also could enable many clients to turn to the Internet first to get information on their policies, obtain quotes, or submit claims. As insurance companies begin to offer more information and services on the Internet, some occupations, such as insurance sales agent, could experience slower employment growth.

There could be a huge inflow of funds into the country. Given the industry's huge requirement of start-up capital, the initial years after opening up are bound to see a strong inflow of foreign capital. Moreover, given that the break-even, typically, comes much later than in the case of other sectors,

Odds are that the first remittance of dividend will not happen before a good 10-15 years. Sales agents working in the property and casualty market, particularly in auto insurance, will be most affected by increasing reliance on the Internet. Auto policies are relatively straightforward and can be issued more easily without the involvement of a live agent. Also, auto premiums tend to cost more per year than do other types of policies, so people are more likely to shop around for the best price. The Internet makes it easier to compare rates among companies. Insurance companies will continue to face increased competition from banks and securities firms entering the insurance markets. As more of these firms begin to sell insurance policies, increasing numbers of insurance sales agents will be employed in them, rather than in insurance companies. In order to stay competitive, insurance companies have begun to expand their financial service offerings or to establish partnerships with banks or brokerage firms.

Productivity gains caused by the greater use of computer software will continue to limit the growth of certain jobs within the insurance industry. For example, the use of underwriting software that automatically analyses and rates insurance applications will limit the employment growth of underwriters. Also, computers linked directly to the databases of insurance carriers and other organizations have made communications easier among sales agents, adjusters, and insurance carriers, so that all have become much more productive. Furthermore, efforts to contain costs have led to an increasing reliance on customer service representatives to deal with the day-to-day processing of policies and claims. In addition, the Internet has made

Insurance investigators more productive by drastically reducing the amount of time it takes to perform background checks, allowing investigators to handle an increasing number of cases, but limiting their employment growth. Sales agents and adjusters still are needed to meet face-to-face with clients, many of whom prefer to talk directly with an agent, especially regarding complicated policies. Opportunities will be best for sales agents who sell more than one type of insurance or financial service. Adjusters will still be needed to inspect damage and interview witnesses, and although the number of available jobs for actuaries will be limited due to the small size of the occupation, employment opportunities should be good as stringent qualifying requirements resulting from the examination system limit the number of new entrants. Insurers in India should also explore distribution through non-financial organizations. For example, insurance for consumer items such as refrigerators can be offered at the point of sale. This piggybacks on an existing distribution channel and increases the likelihood of insurance sales. Alliances with manufacturers or retailers of consumer goods will be possible. With increasing competition, they are wooing customers with various incentives, of which insurance can be one.

Worldwide interest in E-commerce and India's predominant position in information technology and software development is also likely to be a major factor in the marketing of insurance products in the immediate future. The internet account is increasing in arithmetic progression and the trend has already been set by some of the leading insurers and insurance brokers worldwide.