ANALYSIS OF LIFE INSURANCE PROFITABILITY IN INDIA

Abstract

During the course of this project, we aim to understand how the profitability of the life insurance sector varies with different parameters. We try to understand the parameters that can affect the profitability of the life insurance sector. Indian Insurance Industry remains the most attractive destination for foreign players with penetration as low as close to 3.69% and density at USD73. Opening the sector for private players can be traced back to the passage of IRDAI Act 1999 which allowed foreign players to tie up with domestic insurers in setting up their operations. As of now Life Insurance Industry has 24 players which include the Government owned Life Insurance Corporation. In spite of LIC being operational for 44 yrs. i.e. from 1956 to 2000 our penetration remains one of the lowest across the globe. With the advent of private insurance companies we could witness great awareness being created for life insurance products and also product innovation which was missing for quite a long time. At present we have 24 Life Insurance Companies including LIC. As of 31st December 2018 we have a total deployed capital of ~27000 crores with over 11,190 branches and more than ~21 lakh agents. Going slow on expansion, Insurance companies are attempting to take an evaluated risk. Commencing operations without grasping the determinants of profitability is bound to be fragmentary and incomplete. Keeping these things in mind, the project was undertaken and careful analysis was done to measure the impact of paid up capital on profitability.