Rise And Fall Of Ulips In Indian Life Insurance Market

Reforms in the insurance sector were introduced much later in fact almost a decade later with the enactment of the Insurance Regulatory and Development Authority Act 1999, which facilitated the liberalization and opening of the insurance sector. There were two options before the Government of India to privatize insurance sector viz. (a) selling of two public sector insurance companies (LIC and GIC) to private and (b) allowing private sector to enter into insurance market and compete with the LIC and GIC. The Government took the latter route to open the insurance sector in 2000 and LIC and GIC were left untouched. Indian private companies entered the market as joint ventures with some of world’s largest insurance companies. Coexistence of private and public companies heightened competition and Indian insurance sector witnessed several significant changes such as a large number of new innovative products, improved distribution channels and the introduction of world class regulatory and supervisory standards. The most significant product innovation in the life insurance segment is the introduction of unit linked products (ULIPs). Unit linked plans offer long term investment option plus life coverage. In fact ULIPs are combination of both investment and insurance.In this research paper an attempt is made (a) to examine the rise and fall of ULIPs across the private insurers and LIC in the Indian insurance market by analyzing the distribution of first year premium during 2003-14 . The materials in the form of data and information are gathered from the Annual Reports of IRDA and Reports of Economic Survey of India of various years. The data and information collected were processed presented and analyzed using SPSS version 20. Mann Whitney Test Z value (equivalent to Wilcoxon’s rank sum z test) is also used in addition to the calculation of growth rate and percentage contribution of ULIPs to the total premium.