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A Comparative Study of Premium Based Market Share of LIC and Other Private Life Insurance Companies in India



Abstract :

A person is worried about the safety of life, property and business throughout the life and he takes too much care of all these things, but the risk is still there. To get the protection against these risks, man has developed various means. One of such means is Insurance. It can be life insurance for the protection of life and general insurance for the protection of property and business. The presented research work titled “A Comparative Study of Premium Based Market Share of LIC and Other Private Life Insurance Companies in India” is based on comparative study of premium based market share of Life Insurance Corporation and other private life insurance companies in India. Life Insurance Corporations of India (LIC) is the state owned largest player in the insurance market. Besides, LIC there are 24 Private players working in the market. The total insurance market can be judged in terms of 2 parameters- Premium collected & Numbers of policies underwritten. From the analysis, it can be said that market share of more than 70% is with LIC. In this paper researchers have tried to compare the growth of both the sectors and their current market share based on premium collection.

KEY WORDS: Premium, Comparison, LIC, Private Life Insurers, Market Share.

INTRODUCTION:

Insurance is considered to be the back bone of risk management. It provides financial security by offering different products to the business which also helps to minimize risk to the individuals as well as the organization. History of Insurance in India can be better understood with studying four phase like early periods, pre-nationalization period, post-nationalization period and post liberalization period. Life Insurance Corporations of India (LIC) is the state owned largest player in the insurance market which was established on 1st September 1956 with the objective of covering the rural areas to provide them adequate financial cover at reasonable cost. It enjoyed monopoly of life insurance business till 2000, when private players were allowed to enter the market. LIC enjoyed monopoly in such a way that it was difficult for the private players to compete. When the new players struggled to increase the market share, the LIC continued its growth taking advantage of its old establishment and government support. Soon the Insurance Act 1938 was amended and Insurance Regulatory and Development Authority Act of 2000 (IRDA) was passed. It started issuing the licenses to Pvt. Players. Today 24 Private players are working in the market. The total insurance market can be judged in terms of 2 parameters- Premium collected & Numbers of policies underwritten. Based on this we can say that market share of more than 70% is with LIC. In this paper researchers have tried to compare the growth of both the sectors and their current market share based on premium collection.

Review Of Related Literature :

  1. Nena, S. (2013) stated in her paper that LIC of India is one of the most significant public sector players; that plays excellent job in selling its product. The researcher also mentioned that the LIC is facing tremendous competition as many private players have emerged in life insurance market.
  2. Padhi, B. (2013) stated that the LIC enjoyed the monopoly in Indian insurance market for more than four decades. After liberalization the private players have been making waves. They have been penetrating their business more and more from year to year and have been increasing their market share and presence.
  3. Sharma, V. and Chowhan, S.S. (2013) in their paper “A Comparative Study of Public and Private Life Insurance” studied gross direct premium and stated that LIC continues to dominate the sector. Private sector insurance companies also tried to increase their market share.

Objective Of The Study :

  1. To analyze the premium based market share of Life Insurance Companies in India.
  2. To compare the market share of LIC and Private Insurance companies.

Research Methodology :

  • Period of the study: To justify the present research, the researchers have selected period of the study for 5 financial years viz. 2008-09 to 2012-13. The period covers two phases of market situation i.e. recession period and post-recession period that is by chance. There are no other special reasons to select this period of study.
  • Sources of data: To conduct the present research, the researchers have collected the data from the secondary sources like annual reports of IRDA, journals of IRDA and few websites being authentic source to collect the data for Insurance. The data collected for the present research is tabulated as follow:

Table - 1
Premium Based Market Share of Life Insurers (In %) #
From The Year 2008-09 to 2012-13

Particulars

Regular Premium RP

Single Premium SP

First Year Premium FP

Renewal Premium RP

Total Premium TP

YEAR

LIC

Pvt.

LIC

Pvt.

LIC

Pvt.

LIC

Pvt.

LIC

Pvt.

2008-09

38.77

61.23

90.44

9.56

61.12

38.88

77.24

22.76

70.92

29.08

2009-10

43.13

56.87

92.19

7.81

65.08

34.92

73.64

26.36

70.10

29.90

2010-11

56.73

43.27

81.26

18.74

68.85

31.15

70.49

29.51

69.78

30.22

2011-12

64.58

35.42

80.58

19.42

71.85

28.15

69.91

30.09

70.68

29.32

2012-13

58.08

41.92

83.92

16.08

71.36

28.64

73.50

26.50

72.70

27.30

#Source: Compiled from annual reports of IRDA, Journals of IRDA

  • Hypothesis
  1. HO- There is no significant difference in the market share of LIC and Pvt. Sector insurance companies in Regular Premium.
  2. HO- There is no significant difference in the market share of LIC and Pvt. Sector insurance companies in Single Premium.
  3. HO- There is no significant difference in the market share of LIC and Pvt. Sector insurance companies in First Year Premium.
  4. HO- There is no significant difference in the market share of LIC and Pvt. Sector insurance companies in Renewal Premium.
  5. HO- There is no significant difference in the market share of LIC and Pvt. Sector insurance companies in Total Premium.
  • Tools and Techniques :

For the purpose of data analysis, the researchers have performed two-sample t-test, assuming equal variances and unequal variances. The objective behind using this test is to compare performance of two samples viz. LIC and Other Private Life Insurers for their market share with special reference to various types of premium collected by them, during the period of 2008-09 to 2012-13.

ANALYSIS OF THE DATA :

Table - 2
A Table Showing Statistical Analysis of Premium Based Market Share of Life Insurers

Premium

Sample Group

N

Mean

Std. Deviation

Std. Error Mean

REGULAR PREMIUM

LIC

5

52.26

10.85

<4.85

OTHER PRIVATE SECTOR

5

47.74

10.85

4.85

SINGLE PREMIUM

LIC

5

85.68

5.33

2.38

OTHER PRIVATE SECTOR

5

14.32

5.33

2.38

FIRST YEAR PREMIUM

LIC

5

67.65

4.53

2.03

OTHER PRIVATE SECTOR

5

32.35

4.53

2.03

RENEWAL PREMIUM

LIC

5

72.96

2.94

1.31

OTHER PRIVATE SECTOR

5

27.04

2.94

1.31

TOTAL PREMIUM

LIC

5

70.84

1.14

0.51

OTHER PRIVATE SECTOR

5

29.16

1.14

0.51

Table - 3
A Table Showing Consolidated Result of t-test
(Two Sample-Assuming Equal Variances and Unequal Variances)

Premium

Equal Variances :

T

DOF

Sig. (2-tailed)

Mean Difference

Std. Error Difference

REGULAR PREMIUM

Assumed

0.66

8

0.53

4.52

6.86

Not Assumed

0.66

8

0.53

4.52

6.86

SINGLE PREMIUM

Assumed

21.16

8

0.00

71.36

3.37

Not Assumed

21.16

8

0.00

71.36

3.37

FIRST YEAR PREMIUM

Assumed

12.32

8

0.00

35.30

2.87

Not Assumed

12.32

8

0.00

35.30

2.87

RENEWAL PREMIUM

Assumed

24.73

8

0.00

45.91

1.86

Not Assumed

24.73

8

0.00

45.91

1.86

TOTAL PREMIUM

Assumed

58.00

8

0.00

41.67

0.72

Not Assumed

58.00

8

0.00

 41.67

0.72

Table - 4
A Table Showing Status of Null Hypothesis (H0)


Particulars

Regular Premium RP

Single Premium SP

First Year Premium FP

Renewal Premium RP

Total Premium TP

LIC Pvt

LIC

 Pvt

LIC

 Pvt

LIC

 Pvt

LIC

 Pvt

t- Statistics

0.66

21.16

12.32

24.73

58.00

t-tabulated Value (two-tail)

2.31

2.31

2.31

2.31

2.31

Significant Value(two-tailed)

0.53

0.00

0.00

0.00

0.00

Status of Null Hypothesis (H0)

ACCEPTED       

REJECTED     

REJECTED

REJECTED

REJECTED

INTERPRETATION AND FINDINGS :

From the statistical analysis of market share in regular premium, single premium, first year premium, renewal premium and total premium, mentioned in above tables, it is clear that the null hypothesis (H0) is accepted only in case of regular premium. So, there is no significant difference found in market share of regular premium in LIC and other private life insurers during the period of study. While in case of single premium, first premium, renewal premium and total premium, the null hypothesis is rejected. The LIC performed better than that of other private life insurers, and grab more market share for single premium, first premium, renewal premium and total premium during the period of study.

REFERENCES :

  1. Neelaveni, V. (2012), “Financial Performance of Life Insurance Companies And Products”, ZENITH International Journal of Business Economics and Management Research, Vol. 2 (3), March, 2012, pp. 233-258
  2. Nena, S. (2013), “Performance Evaluation of LIC of India”, International Journal of Advance Research in Computer Science and Management Studies, Vol. 1 (7), December, 2013, pp. 113-118
  3. Padhi, B. (2013), “Role & Performances of Private Insurance Companies in India, in the Post Liberalization Era”, International Journal of Engineering, Business and Enterprise Applications, Vol. 5 (1), June-August, 2013, pp. 29-35
  4. Sharma, V. and Chowhan, S.S. (2013), “A Comparative Study of Public and Private Life Insurance”, Indian Journal of Applied Research, Vol. 3 (1), January, 2013, pp. 93-94

***************************************************

Madhavi S. Popat
Faculty Member (Ph.D. Research Scholar)
Lt. M.J.Kundaliya English Medium Mahila Commerce and B.B.A. College
Rajkot– 360001.

Dr. Manish B. Raval
Assistant Professor
SDJ International College (Affiliated to VNSGU), Vesu,
Surat
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