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Abstract
In the pre-reform era, Life Insurance Corporation of India (L.I.C.I) dominated the Indian Life Insurance market with a market share close to 100 per cent. But the situation drastically changed since the beginning of the year 2000. At the end of the FY 2012-13, there were 24 life insurance companies (inclusive of 1 public sector player, L.I.C.I) presently operating in India. The market share of LICI has also gone down drastically over the years to around 72 per cent at the end of FY 2012-13. The present paper is an attempt to compare the financial performance, solvency and the level of market concentration of the Indian life insurance sector viz-a-viz the four leading life insurers in India namely the LICI, ICICI Prudential Life Insurance Company Limited (ICICI Pru), HDFC Standard Life Insurance Company Limited (HDFC Standard) and SBI Life Insurance Company Limited (SBI Life) respectively, over a span of three successive FYs from 2010-11 to 2012-13. The former is the sole public-sector life insurance player, whereas the latter ones are dominant private-sector life insurance players in India with a market share of 4.72, 3.95 and 3.64 per cent respectively at the end of the FY 2012-13.
Key words: Life Insurance, Solvency, CARAMELS, IRDA, HHI.
1. Introduction
Globalization of the insurance market, as part of the overall process of liberalization in India, enabled the foreign insurance companies to put their foothold into India. The decade of 2000s saw an upswing in the growth of life insurance industry from industrialized countries to the emerging markets such as India. From a single government insurer till the mid 90's, the Indian insurance industry also underwent a drastic change that witnessed the market share of private insurance players to soar up to around 27% at the end of FY 2012-13. Though the existing insurance law allowed a foreign partner to hold 26% equity in an insurance company in India, a proposal to increase this limit from 26% to 49% was pending with the government for approval. Had the proposed law came to fruition, it would have enabled the foreign companies to infuse fresh capital in the Indian insurance sector, thereby fuelling further growth. Liberalization of the life insurance market for private participation, eventually raised issues about ensuring...