Role of Insurance Sector in The Economic Development of India

Summer Internship Report
On the study of
“Role of Insurance Sector in

the Economic Development
of India”
Presented by:
Rajat Singh
42010022
1.
INTRODUCTION
02/15/2022 Rajat Singh 2

• Insurance basically is the management of risk in an
effective manner.
• Insurance can be broadly classified into 3 categories:
I. Life Insurance
II. Non-Life Insurance
III. Reinsurance
• Insurance Sector is becoming a larger component or
share of the whole financial sector in practically every
country.
• Descriptive researches by Levin and R.G. King found
that in most cases, insurance is said to have a positive
impact on the economy of a country.
• The insurance sector as a whole also promotes
mobilization of savings, facilitation of trade and
commerce, and allocation of capital.
• In India, insurance is one of the most popular
financial products. In terms of premium volume, the
country is the fifteenth largest insurance market in the
world, with the potential to develop dramatically in
the future years.
• Insurance industry in India is predicted to grow at a
CAGR of 12-15 percent over the next 5 years. Insured
• However, the insurance penetration in India stands at

2.62% as per Statista Research Department report,
Uninsured
2019.
2.
INDUSTRY
PROFILE

The Insurance industry consists of two main players:
Insurance Insurance
Carriers Brokers

Several Policies = One Several Reinsurance Contracts = Several retrocession Contracts =
One policy = One risk Policies Portfolio of Risks Cessions One Portfolio of Risks Retrocessions One Portfolio of Risks
Insurance Re-Insurance Retrocession

Intermediary Intermediary Intermediary
Insured
Insurer
Insured
Reinsurer
Insured
Insurer Retrocessionaire
Insured
Reinsurer
Insured
Insurer
Insured
Risk associated premiums
3.
COMPANY
PROFILE

• Shriram Life Insurance Co. Ltd. Is a joint
venture between Shriram Group and
Sanlam Group, which is a South African
company also operating in the insurance
sector.
• The company offers a range of products
according to the different needs of its
customers depending on the age and
income group of an individual.
• Shriram Life focuses primarily on
customers based in tier 2 & tier 3 cities.

 Claim Settlement Ratio of
91.61%
 529 Branches across India
SHRIRAM  Assets Under Management worth

LIFE ₹ 6,261 Crore
CREDENTIAL
 Solvency ratio of 1.9
S
 Profit After Tax ₹ 106 Crore
4.
PROJECT
PROFILE

Objectives of the study
• To study the insurance sector for a particular period of time.
• To measure the growth in the country during that period, for this
purpose GDP will be used as a measure.
• To compare the growth in the country with the components and

activities of the insurance sector and point out any significant
relations and correlations.

Research Methodology
Gross Life
Insurance
Premium
GDP (%
growth)
Total
Investments by
Life Insurers

Research Methodology
• Type of Study – This is a correlational study looking for relationships
between Insurance and Economy.
• Sample Size - The sample size is all the 24 life insurance companies
in India, their gross premiums and total investments.
• Data Collection Method – Secondary
• Data Collection Tool – Databases (IRDAI annual report 2010-2020)

5.
DATA
ANALYSIS

GDP ( % growth )
9
8.498 8.256
8
7.996
7 7.41 6.533
6.795
6 6.386
5 5.241 5.456
4
4.042
3
0
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Gross Premiums Collected by Life Insurers
₹ 400,000.00
₹ 379,389.60
₹ 350,000.00
₹ 337,505.07
₹ 318,223.21
₹ 300,000.00
₹ 300,487.36
₹ 266,444.21
₹ 250,000.00
₹ 236,942.30 ₹ 239,667.65
₹ 200,000.00
₹ 203,473.40 ₹ 202,889.28 ₹ 208,803.58
₹ 193,520.59
₹ 170,626.96
₹ 150,000.00
₹ 140,586.23
₹ 117,939.25
₹ 100,000.00
₹ 100,499.03
₹ 88,165.24 ₹ 84,182.83 ₹ 88,434.35
₹ 78,398.91 ₹ 77,359.36
₹ 50,000.00
₹ 0.00
LIC Private LIC Private LIC Private LIC Private LIC Private LIC Private LIC Private LIC Private LIC Private LIC Private

Investments by Life Insurers (Traditional Products)
2010-11 2019-20
er Investments; ₹
42,159.00 Other Investments; ₹
138,145.00
Approved Invest-
Approved Invest- ments; ₹ 732,023.00
ments; ₹ 304,977.00 Central Govt. Securi-
ties; ₹ 420,952.00 Central Govt. Securi-
ties; ₹ 1,405,754.00
Housing & Infrastruc-

ture; ₹ 275,434.00
Housing & Infrastruc-

ture; ₹ 89,181.00
State Govt. and Other State Govt. and Other
Approved Securities; ₹ Approved Securities; ₹
173,733.00 965,846.00

Investments by Life Insurers (ULIP)
₹ 450,000.00
₹ 369,972.00 ₹ 377,941.00
₹ 340,412.00
₹ 400,000.00 ₹ 331,661.00
₹ 350,000.00
₹ 373,072.00
₹ 399,116.00 ₹ 379,841.00
₹ 300,000.00 ₹ 411,425.00
₹ 362,740.00
₹ 250,000.00
₹ 342,507.00
₹ 200,000.00
₹ 150,000.00
₹ 100,000.00
₹ 50,000.00
₹ 0.00
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Regression Table
Gross Premium of Total Investments of
Life Insurers (in ₹ Life Insurers (in ₹
GDP (% growth) crore) crore)
GDP (% growth) 1.000
Gross Premium of Life
Insurers (in ₹ crore) -.308 1.000
Total Investments of
Life Insurers (in ₹
crore) -.263 .983 1.000
10 sample size
± .632 critical value .05 (two-tail)
± .765 critical value .01 (two-tail)

6.
CONCLUSION &
SUGGESTIONS

Conclusion
• The regression table states an inverse correlation between our
independent variables and GDP.
• The investments by life insurers have increased steadily over time but
GDP has been fluctuating.
• However this does not mean that insurance industries have a negative
impact on the economy. GDP is influenced by a lot of other factors
such as inflation and interest rates.
• Also, the insurance penetration of insurance in India is not big
enough yet to make an impact on the GDP.

Suggestions
To anyone who wishes to carry forward this research or wants to modify
this report the following recommendations are proposed:
• Firstly, an introduction of a control variable in the research model is
required, for example, Inflation or Interest rates, as these factors have a
significant impact on the economy of a country and have been not
considered here.
• Secondly, the main drawback this report remains the low insurance
penetration of the Indian insurance sector, although the reach of insurance
is higher in metropolitan cities as compared to tier 2 and tier 3 cities.
Hence, a study of the impact of insurance in Indian Metropolitan Cities
might give a better understanding of influence of insurance companies in
India.
THANK
YOU
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Summer Internship Report

“Role of Insurance Sector in

02/15/2022 Rajat Singh 2

• However, the insurance penetration in India stands at

02/15/2022 Rajat Singh 5

02/15/2022 Rajat Singh 6

Insurance Re-Insurance Retrocession

02/15/2022 Rajat Singh 8

02/15/2022 Rajat Singh 9

 529 Branches across India

SHRIRAM  Assets Under Management worth

02/15/2022 Rajat Singh 11

• To compare the growth in the country with the components and

02/15/2022 Rajat Singh 12

02/15/2022 Rajat Singh 13

• Data Collection Method – Secondary

• Data Collection Tool – Databases (IRDAI annual report 2010-2020)

02/15/2022 Rajat Singh 14

02/15/2022 Rajat Singh 15

02/15/2022 Rajat Singh 16

02/15/2022 Rajat Singh 17

Housing & Infrastruc-

Housing & Infrastruc-

02/15/2022 Rajat Singh 18

± .632 critical value .05 (two-tail)

± .765 critical value .01 (two-tail)

02/15/2022 Rajat Singh 20

02/15/2022 Rajat Singh 21

02/15/2022 Rajat Singh 22

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