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A

PROJECT REPORT

ON

PROBLEMS AND PROSPECTS OF AGRICULTURE

INSURANCE

IN

ICICI LOMBARD GENERAL INSURANCE, HYDERABAD

Submitted in partial ful fi llment for the award of the Degree of

MASTERS OF BUSINESS ADMINISTRATION

SUBMITTED

BY

C.GOPINANDAN

(HT. NO.11UD1E0007)

Under the esteemed guidance of

Ms. T.KOUSALYA SINGH

DEPARTMENT OF BUSINESS MANAGEMENT

TRINITY COLLEGE OF ENGINEERING & TECHNOLOGY

(Affiliated to Jawaharlal Nehru Technological University, Hyderabad)

PEDDAPALLY KARIMNAGAR-505172

(2011-2013)

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ACKNOWLEDGEMENT

At the outset, I wish to thank the management of ICICI LOMBARD

GENERAL INSURANCE for their kind gesture of allowing me to undertake this

project, and its various employees who lent their helping hand towards the completion

of this study.

I sincerely thank my principal Dr K.RAVINDER REDDY and my HOD

Mr. B. VAMSIKRISHNA and my project guide T.KOUSALYA SINGH for his

support, cooperation and encouragement for timely completion of this project.

I am grateful to P.SRINIVAS (Finance manager) for according permission for

doing this project work at premier institution of ICICI LOMBARD GENERAL

INSURANCE

I am also thankful to the staff of ICICI LOMBARD for their cooperation and

support in completing in this project.

C.GOPINANDAN

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DECLARATION

I, hereby declare that the project report entitled PROBLEMS AND

PROSPECTS OF AGRICULTURE INSURANCE at ICICI LOMBARD

GENERAL INSURANCE, HYDERABAD submitted by me to TRINITY

COLLEGE OF ENGINEERING & TECHNOLOGY, under the principal of

K.RAVINDER REDDY and guidance ofT.KOUSALYA SINGH is my own and has

not been submitted to any other University or Institute for the award of any degree or

diploma.

Place: PEDDAPALLY

Date:

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C.GOPINANDAN

(HT.NO.11UD1E0007)

C O N T E N T S

CHAPTER NO DESCRIPTION PAGE NO

CHAPTER-I INTRODUCTION TO TOPIC

OBJECTIVES

NEED

SCOPE

METHODOLOGY LIMITATION

LITERATURE REVIEW

16

CHAPTER-II

COMPANY PROFILE 723

CHAPTER-III THEORETICAL FRAMEWORK 2453

CHAPTER-IV DATA ANALYSIS & INTERPRETATION 5460

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CHAPTER-V FINDINGS CONCLUSION & SUGGESTIONS 61 - 63

BIBLIOGRAPHY 64

CHAPTER I

INTRODUCTION

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INTRODUCTION:

AGRICULTURE INSURANCE:

Agriculture production and farm incomes in India are frequently affected by

natural disasters such as droughts, floods, cyclones, storms, landslides and

earthquakes. Susceptibility of agriculture to these disasters is compounded by the

outbreak of epidemics and man-made disasters such as fire, sale of spurious seeds,

fertilizers and pesticides, price crashes etc. All these events severely affect farmers

through loss in production and farm income, and they are beyond the control of the

farmers. With the growing commercialization of agriculture, the magnitude of loss

due to unfavorable eventualities is increasing.

The question is how to protect farmers by minimizing such losses. For a

section of farming community, the minimum support prices for certain crops provide

a measure of income stability. But most of the crops and in most of the States MSP is

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not implemented. In recent times, mechanisms like contract farming and futures

trading have been established which are expected to provide some insurance against

price fluctuations directly or indirectly. But, agricultural insurance is considered an

important mechanism to effectively address the risk to output and income resulting

from various natural and manmade events.

Agricultural Insurance is a means of protecting the agriculturist against

financial losses due to uncertainties that may arise agricultural losses arising from

named or all unforeseen perils beyond their control (AIC, 2008).

Unfortunately, agricultural insurance in the country has not made much

headway even though the need to protect Indian farmers from agriculture variability

has been a continuing concern of agriculture policy. According to the National

Agriculture Policy 2000, Despite technological and economic advancements, the

condition of farmers continues to be unstable due to natural calamities and price

fluctuations. In some extreme cases, these unfavorable events become one of the

factors leading to farmers suicides which are now assuming serious proportions

(Raju and Chand, 2007).

Agricultural insurance is one method by which farmers can stabilize farm

income and investment and guard against disastrous effect of losses due to natural

hazards or low market prices. Crop insurance not only stabilizes the farm income but

also helps the farmers to initiate production activity after a bad agricultural year. It

cushions the shock of crop losses by providing farmers with a minimum amount of

protection.

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It spreads the crop losses over space and time and helps farmers make more

investments in agriculture. It forms an important component of safety-net

programmes as is being experienced in many developed countries like USA and

Canada as well as in the European Union. However, one need to keep in mind that

crop insurance should be part of overall risk management strategy. Insurance comes

towards the end of risk management process. Insurance is redistribution of cost of

losses of few among many, and cannot prevent economic loss. There are two major

categories of agricultural insurance: single and multi-peril coverage.

Single peril coverage offers protection from single hazard while multiple 2

peril provides protection from several hazards. In India, multi-peril crop insurance

programme is being implemented, considering the overwhelming impact of nature on

agricultural output and its disastrous consequences on the society, in general, and

farmers, in particular. This present study looks at the genesis of agricultural insurance

in India, examines various agricultural insurance schemes launched in the country

from time to time and the coverage provided by them.

Major issues and problems faced in implementing agricultural insurance in the

country are discussed in detail. Farmers own mechanisms for loss management or

risk diffusion are very expensive in arid and semi-arid regions. The major role played

by insurance programs is the indemnification of risk averse individuals who might be

adversely affected by natural probabilistic phenomenon. The philosophy of insurance

market is based on large numbers where the incidence of risk is distributed over

individual. Insurance, by offering the possibility of shifting risks, enables individuals

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to engage in risky activities which they would not undertake otherwise (Ahsan et al.,

1982).

Individuals cannot influence the nature and occurrence of the risky event. The

insurance agency has fairly good but generalized information about the insurer.

However, this does not hold true in the case of agriculture or crop insurance. Unlike

most other insurance situations, the incidence of crop risk is not independently or

randomly distributed among the insured. Good or bad weather may affect the entire

population in the area. Lack of data on yield levels as well as risk position of the

individual farmer puts the insurance company in tight spot.

As in the case of general insurance, agricultural insurance market also faces

the problem of adverse selection and moral hazard. The higher premium rates

discourage majority participation and only high risk clients participate leading to

adverse selection. Moreover, in crop insurance the individuals do not have control

over the event, but depending on terms of contract, the individuals can affect the

amount of indemnity. The study estimates risk associated with crop production at

national level and at disaggregate level.

The state of Andhra Pradesh was selected to represent disaggregate level.

Similarly, various aspects of crop insurance were studied at national level and by

undertaking a case study in the state of Andhra Pradesh. This state has a diverse set of

crops covered under insurance scheme of government and it is one of the few states

where private sector insurance for agriculture is also operating. Initially, new

Insurance product namely Rainfall Insurance was first started in the country in

Mahboobnagar district of Andhra Pradesh for castor and groundnut by ICICI

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LIMITATIONS OF THE STUDY:

This is a theoretical base study only based on various sources such as news

papers websites, articles, college faculty.

Study is to availability of secondary data

This study is very short term period i.e.45 days only

Data is very lowly available

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LITERATURE REVIEW:

1. Agriculture insurance in A.P. published on 2007 by S.S. Raju and Ramesh

Chand.

2. Sharma H.R. Kamalesh Singh and Kumari 2006, extent source of instability

in food grains production in India journal of Agriculture Economics.

3. M.J. Bhende 2005, Agriculture insurance in India. Problems and prospects

Department of economic analysis and research. National bank for Agriculture

and Rural Development occasional paper.

4. Roberts Raj 2005, insurance of crops in developing countries FAO agriculture

service bulletin.

5. Sinha Sidharth 2004, Agriculture insurance in India scope for participation of

Private insurers economic and Political.

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CHAPTER II

INDUSTRY

&

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COMPANY PROFILE

HISTORY OF INSURANCE IN INDIA

In India, insurance has a deep-rooted history. It finds mention in the writings

of Manu (Manusmrithi), Yagnavalkya( Dharmasastra ) and Kautilya(Arthasastra ).

The writings talk in terms of pooling of resources that could be re-distributed in times

of calamities such as fire, floods, epidemics and famine. This was probably a pre-

cursor to modern day insurance. Ancient Indian history has preserved the earliest

traces of insurance in the form of marine trade loans and carriers contracts. Insurance

in India has evolved over time heavily drawing from other countries, England in

particular.

1818 saw the advent of life insurance business in India with the establishment of

the Oriental Life Insurance Company in Calcutta. This Company however failed in

1834. In 1829, the Madras Equitable had begun transacting life insurance business in

the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in

the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental

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(1874) and Empire of India (1897) were started in the Bombay Residency. This era,

however, was dominated by foreign insurance offices which did good business in

India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe

Insurance and the Indian offices were up for hard competition from the foreign

companies.

In 1914, the Government of India started publishing returns of Insurance

Companies in India. The Indian Life Assurance Companies Act, 1912 was the first

statutory measure to regulate life business.

In 1928, the Indian Insurance Companies Act was enacted to enable the Government

to collect statistical information about both life and non-life business transacted in

India by Indian and foreign insurers including provident insurance societies.

In 1938, with a view to protecting the interest of the Insurance public, the earlier

legislation was consolidated and amended by the Insurance Act, 1938 with

comprehensive provisions for effective control over the activities of insurers. The

Insurance Amendment Act of 1950 abolished Principal Agencies. However, there

were a large number of insurance companies and the level of competition was high.

There were also allegations of unfair trade practices. The Government of India,

therefore, decided to nationalize insurance business.

An Ordinance was issued on 19thJanuary, 1956 nationalizing the Life Insurance

sector and Life Insurance Corporation came into existence in the same year. The LIC

absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies245

Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the

Insurance sector was reopened to the private sector.

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The history of general insurance dates back to the Industrial Revolution in the

west and the consequent growth of sea-faring trade and commerce in the 17 thcentury.

It came to India as a legacy of British occupation. General Insurance in India has its

roots in the establishment of Triton Insurance Company Ltd., in the year 1850 in

Calcutta by the British. In 1907, the Indian Mercantile Insurance Ltd was set up. This

was the first company to transact all classes of general insurance business.

1957 saw the formation of the General Insurance Council, a wing of the

Insurance Association of India. The General Insurance Council framed a code of

conduct for ensuring fair conduct and sound business practices.

In 1968, the Insurance Act was amended to regulate investments and set

minimum solvency margins. The Tariff Advisory Committee was also set up then.

In 1972 with the passing of the General Insurance Business (Nationalization)

Act, general insurance business was nationalized with effect from 1

st

January,

1973. 107 insurers were amalgamated and grouped into four companies, namely

National Insurance Company Ltd., the New India Assurance Company Ltd., the

Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The

General Insurance Corporation of India was incorporated as a company in 1971 and it

commence business on January 1st 1973.

This millennium has seen insurance come a full circle in a journey extending to

nearly 200 years. The process of re-opening of the sector had begun in the early

1990s and the last decade and more has seen it been opened up substantially.

In 1993, the Government set up a committee under the chairmanship of RN

Malhotra, former Governor of RBI, to propose recommendations for reforms in the

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insurance sector. The objective was to complement the reforms initiated in the

financial sector. The committee submitted its report in 1994 wherein, among other

things, it recommended that the private sector be permitted to enter the insurance

industry. They stated that foreign companies are allowed to enter by floating Indian

companies, preferably a joint venture with Indian partners.

Following the recommendations of the Malhotra Committee report, in 1999, the

Insurance Regulatory and Development Authority (IRDA) was constituted as an

autonomous body to regulate and develop the insurance industry. The IRDA was

incorporated as a statutory body in April, 2000.

The key objectives of the IRDA include promotion of competition so as to

enhance customer satisfaction through increased consumer choice and lower

premiums, while ensuring the financial security of the insurance market.

The IRDA opened up the market in August 2000 with the invitation for application

for registrations. Foreign companies were allowed ownership of up to 26%. The

Authority has the power to frame regulations under Section 114A of the Insurance

Act, 1938 and has from 2000 onwards framed various regulations ranging from

registration of companies for carrying on insurance business to protection of

policyholders interests.

In December, 2000, the subsidiaries of the General Insurance Corporation of

India were restructured as independent companies and at the same time GIC was

converted into a national re-insurer. Parliament passed a bill de-linking the four

subsidiaries from GIC in July, 2002. Today there are 14 general insurance companies

including the ECGC and Agriculture Insurance Corporation of India and 14 life

insurance companies operating in the country.

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The insurance sector is a colossal one and is growing at a speedy rate of 15-

20%. Together with banking services, insurance services add about 7% to the

countrys GDP. A well-developed and evolved insurance sector is a boon for

economic development as it provides long- term funds for infrastructure development

at the same time strengthening the risk taking ability of the country.

Vision:To be the leading provider of financial services in India and a major global

bank.

Mission:We will leverage our people, technology, speed and financial capital to:

be the banker of first choice for our customers by delivering high quality,

world-class products and services.

expand the frontiers of our business globally.

play a proactive role in the full realization of Indias potential.

maintain a healthy financial profile and diversify our earnings across

businesses and geographies.

maintain high standards of governance and ethics.

contribute positively to the various countries and markets in which we operate.

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About ICICI Lombard General Insurance Company Ltd:

ICICI Lombard GIC Ltd. is a 74:26 joint venture between ICICI Bank

Limited,Indias second largest bank with consolidated total assets of over USD 100

billion at March 31, 2010 and Fairfax Financial Holdings Limited, a Canada based

USD 30 billion diversified financial services company engaged in general insurance,

reinsurance, insurance claims management and investment management.

ICICI Lombard GIC Ltd. is the largest private sector general insurance

company in India with a Gross Written Premium (GWP) of 36,948 million for the

year ended March 31, 2010. The company issued over 44 Lakh policies and settled

over 62 Lakh claims and has a claim disposal ratio of 96% (percentage of claims

settled against claims reported) as on March 31, 2010. The company has 4,634

employees and 350 branches as on March 31, 2010

The company has been assigned a domestic rating of iAAA by ICRA (an

associate of Moodys Investors Service) for highest claim paying ability and a

fundamentally strong position, for the fourth consecutive year. ICICI Lombard Auto

http://www.icicibank.com/http://www.icicibank.com/http://www.icicibank.com/http://www.fairfax.ca/http://www.fairfax.ca/http://www.icicibank.com/http://www.icicibank.com/

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Insurance has been rated highest in customer satisfaction by J.D. Power Asia Pacific

in India among 11 auto insurance providers. The company has been conferred the

Golden Peacock- Eco Innovation Award of 2009 for weather insurance and the

Customer and Brand Loyalty award in the Insurance Sector - Non-Life at the 3rd

Loyalty awards, 2010.

It was awarded the General Insurance Company of the Year at the 11th Asia

Insurance Industry Awards.

The company also won the NDTV Profit Business Leadership Award 2007

and was adjudged as the most Customer Responsive Company in the Insurance

category at the Economic Times Avaya Global Connect Customer Responsiveness

Award 2006.

It has the Gold Shield for Excellence in Financial Reporting by the ICAI

(Institute of Chartered Accountants of India) for the year ended March 31, 2006.

ICICI Lombard allows instant policy issuance and renewal through its website

www.icicilombard.com for all retail insurance products including Car Insurance,

Health Insurance, Travel Insurance, Two Wheeler Insurance and Home Insurance.

There are multiple payment options available including internet banking, credit card,

debit card and cash card.

Promoters:

Introduction:

ICICI Lombard is a 74:26 joint venture betweenICICI Bank Limited,Indias second

largest bank with USD 75 billion in assets andFairfax Financial Holdings Limited,a

Canada based USD 27 billion diversified financial services company engaged in

http://www.icicilombard.com/http://www.icicilombard.com/app/ilom-en/PersonalProducts/Motor/Four_wheeler.aspxhttp://www.icicilombard.com/app/ilom-en/PersonalProducts/Health/floater.aspxhttp://www.icicilombard.com/app/ilom-en/PersonalProducts/Travel/Individual_Overseas/Gold_Plan.aspxhttp://www.icicilombard.com/app/ilom-en/PersonalProducts/Motor/Two_wheeler.aspxhttp://www.icicilombard.com/app/ilom-en/PersonalProducts/Home/Silver_plan.aspxhttp://www.icicibank.com/http://www.icicibank.com/http://www.fairfax.ca/http://www.fairfax.ca/http://www.icicibank.com/http://www.icicilombard.com/app/ilom-en/PersonalProducts/Home/Silver_plan.aspxhttp://www.icicilombard.com/app/ilom-en/PersonalProducts/Motor/Two_wheeler.aspxhttp://www.icicilombard.com/app/ilom-en/PersonalProducts/Travel/Individual_Overseas/Gold_Plan.aspxhttp://www.icicilombard.com/app/ilom-en/PersonalProducts/Health/floater.aspxhttp://www.icicilombard.com/app/ilom-en/PersonalProducts/Motor/Four_wheeler.aspxhttp://www.icicilombard.com/

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general insurance, reinsurance, insurance claims management and investment

management.

ICICIBank:

ICICI Bank is India's second-largest bank. ICICI Bank offers a wide range of

banking products and financial services to corporate and retail customers through a

variety of delivery channels and through its specialized subsidiaries and affiliates in

the areas of investment banking, life and non-life insurance, venture capital and asset

management.

The Bank currently has subsidiaries in the United Kingdom, Russia and Canada,

branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and

Dubai International Finance Centre and representative offices in United Arab

Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our

UK subsidiary has established branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and

the National Stock Exchange of India Limited and its American Depositary Receipts

(ADRs) are listed on the New York Stock Exchange (NYSE).

Fairfax:

Lombard Canada Ltd, a group company of Fairfax Financial Holdings Limited,

is one of Canada's oldest property and casualty insurers. It is a leading insurance

management company responsible for providing insurance management services for

all of the Lombard group's commercial, personal, and specialized insurance

companies. Lombard Canada Ltd. has its head office in Toronto, Canada and has

annual sales in excess of $977 million and is a wholly owned subsidiary of Fairfax

Financial Holdings Limited (FFH on Toronto Stock Exchange). It has received an A-

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rating from A.M. Best Company and claims paying ability received an A+ rating from

Duff & Phelps Credit Rating Co.

Genesis:

ICICI Lombard General Insurance Company Limited is a 74:26 joint venture

between ICICI Bank, India's largest private sector bank and Fairfax Financial

Holdings Limited, a Canada based $26 billion diversified financial services company

engaged in general insurance, reinsurance, insurance claims management.

Lombard Canada Limited, a group company of Fairfax Financial Holdings Limited, is

one of Canada's oldest property and casualty insurers.

ICICI Lombard Corporate Highlights:

Strong Parentage:

ICICI Lombard leverages ICICI Bank's strong brand equity, extensive

distribution network and sound technological infrastructure to service customer

needs. Lombard Canada assists on domain knowledge, product innovation, business

processes based on cutting edge technology and international best practices in the

insurance business.

Resourceful Customer Service:

ICICI Lombard services a wider foot-print of customers with its offices

located in 127 cities across India. With a network of 3500 hospitals in 200 cities and

around 1500 garages in 255 cities, ICICI Lombard offers cashless claim settlement to

its customers. We also have an online customer support system which allows

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customers to track their claim status and facilitate quick response to service requests.

Click here

Highest Levels of Security:

Security and privacy for customers remain our highest concern.

Strong Claims paying ability:

We have been assigned the AAA rating, indicating highest claims paying

ability. As of 2005-06, over 14,51,000 policies have been issued across India and

over 2.4 lakh claims settled.

Comprehensive Products: We have over 32 customised and innovative

insurance solutions in the offering.

ICICI Lombard Milestones:

Progressive Growth at ICICI Lombard:

Aug 6, 2001- ICICI Lombard commences Business

2002 - 2003- Becomes one of the first private sector general insurance players

to achieve break-even levels in the first full year of its operations

2003 - 2004- Achieves underwriting breakeven in the second year of

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operations

Sept 7, 2004- Becomes first general insurer to be ISO certified

Nov 2005- Crosses the Rs. 10 billion GWP mark

March 31, 2006- Ranked as the largest private sector General Insurance

Company of India

February 12th, 2009 -General Insurance Company has won a one year contract

to insure 134 of Air Indias aircraft for Rs 122 crore,

February 12th, 2010-ICICI Lombard General Insurance Company, has been

conferred with the Best CFO award in the Financial Services sector by the

Institute of Chartered Accountants (ICAI).

July 26, 2005ICICI Lombard's Strong Disaster Response Mechanism that put

Mumbai back to its feet:

The devastating floods that severely affected Mumbai on July 26, 2005

resulted in the largest insurance loss India has witnessed till date. This unprecedented

catastrophic floods in Mumbai tested ICICI Lombard on five parameters:

Robust Reinsurance Program:

The gross claim impact amounted to Rs.200 crores, of which 90% were

settled due to the robust and conservative reinsurance support.

Responsiveness:

The very next day after the flood, in-house customer service managers from

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growth.

Product Innovation Initiatives:

Be it in Travel, Motor, Home or Health, ICICI Lombard is renowned for

introducing continuous product innovations, each considered as unique in its

respective industry.

IT Initiatives:

The approach has constantly been to adopt a customer-centric strategy with greater

speed, higher accuracy and delivering highest value.

Shareholders Joint Venture Partners:

ICICI Lombard General Insurance Company Limited is a 74:26 joint venture

between ICICI Bank Limited and the US-based $ 26 billion Fairfax Financial

Holdings Limited. ICICI Bank is India's second largest bank; while Fairfax Financial

Holdings is a diversified financial corporate engaged in general insurance,

reinsurance, insurance claims management and investment management.

Board Members:

Mr K V Kamath, Chairman

Mr R Athappan, Director

Mr B V Bhargava, Director

Mr Dileep Choksi, Director

Mr James F Dowd, Director

Ms Kalpana Morparia, Director

Mr S Mukherji, Director

Mr Chandran Ratnaswami, Director

Mr H N Sinor, Director

http://www.icicilombard.com/app/ilom-en/Company-Info/CorporateFacts/Initiatives/Product-innovation-initiatives/Health.aspxhttp://www.icicilombard.com/app/ilom-en/Company-Info/CorporateFacts/Initiatives/IT-initiatives.aspxhttp://www.icicilombard.com/app/ilom-en/Company-Info/CorporateFacts/Initiatives/IT-initiatives.aspxhttp://www.icicilombard.com/app/ilom-en/Company-Info/CorporateFacts/Initiatives/Product-innovation-initiatives/Health.aspx

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1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first

life insurance company on Indian Soil. All the insurance companies established

during that period were brought up with the purpose of looking after the needs of

European community and Indian natives were not being insured by these companies.

However, later with the efforts of eminent people like Babu Muttylal Seal, the

foreign life insurance companies started insuring Indian lives. But Indian lives were

being treated as sub-standard lives and heavy extra premiums were being charged on

them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life

insurance company in the year 1870, and covered Indian lives at normal rates.

Starting as Indian enterprise with highly patriotic motives, insurance companies

came into existence to carry the message of insurance and social security through

insurance to various sectors of society. Bharat Insurance Company (1896) was also

one of such companies inspired by nationalism. The Swadeshi movement of 1905-

1907 gave rise to more insurance companies.

The United India in Madras, National Indian and National

Insurance in Calcutta and the Co-operative Assurance at Lahore were established in

1906. In 1907, Hindustan Cooperative Insurance Company took its birth in one of the

rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The

Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were

some of the companies established during the same period. Prior to 1912 India had no

legislation to regulate insurance business. In the year 1912, the Life Insurance

Companies Act, and the Provident Fund Act were passed.

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The Life Insurance Companies Act, 1912 made it necessary that the premium

rate tables and periodical valuations of companies should be certified by an actuary.

But the Act discriminated between foreign and Indian companies on many accounts,

putting the Indian companies at a disadvantage.

The first two decades of the twentieth century saw lot of growth in insurance

business. From 44 companies with total business-in-force as Rs.22.44 crore, it rose to

176 companies with total business-in-force as Rs.298 crore in 1938. During the

mushrooming of insurance companies many financially unsound concerns were also

floated which failed miserably.

The Insurance Act 1938 was the first legislation governing not only life insurance but

also non-life insurance to provide strict state control over insurance business. The

demand for nationalization of life insurance industry was made repeatedly in the past

but it gathered momentum in 1944 when a bill to amend the Life Insurance Act 1938

was introduced in the Legislative Assembly.

However, it was much later on the 19th of January 1956 that life insurance in India

was nationalized. About 154 Indian insurance companies, 16 non-Indian companies

and 75 provident were operating in India at the time of nationalization.

Nationalization was accomplished in two stages; initially the management

of the companies was taken over by means of an Ordinance, and later, the ownership

too by means of a comprehensive bill. The Parliament of India passed the Life

Insurance Corporation Act on the 19th of June 1956, and the Life Insurance

Corporation of India was created on 1st September, 1956, with the objective of

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spreading life insurance much more widely and in particular to the rural areas with a

view to reach all insurable persons in the country, providing them adequate financial

cover at a reasonable cost.

Indian Insurance Industry:

With a large population and untapped market, insurance happens to be a big

opportunity in India. The insurance business is growing at an annual rate of 21.9 per

cent. Together with banking services, it accounts for about 7.1 per cent to the

countrys GDP. However Insurance penetration tends to rise as income increases,

particularly in life insurance.

India with about 200 million middle class households shows a potential for insurance

industry. Saturation of markets in many developed economies has made in the Indian

market even more attractive for global insurance majors. The insurance sector was

opened up for private participation four years ago and the private players are active in

the liberalized environment. The insurance market have witnessed dynamic changes

which includes presence of a fair number of insurers both life and non-life segment.

Most of the private insurance companies have formed joint venture partnering well

with recognized foreign players across the globe. The Indian insurance market

accounts only for 0.59 per cent of USD 2,627 billion global insurance market.

Insurance may be described as a social device to reduce or eliminate risk of

loss to life and property. Insurance is a collective bearing of risk. Insurance spreads

the risks and losses of few people among a large of people as people prefer small

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fixed liability instead of big uncertain and changing liability. Insurance is a scheme of

economic cooperation by which members of the community share the unavoidable

risks. The risks which can be insured against include fire, the perils of sea, death,

accidents, and burglary. The members of the community subscribe to a common pool

or fund which is collected by the insurer to indemnify the losses arising out of risks. It

is a scheme which covers large risks by paying small amount of capital. Insurance is

also a means of savings and investment.

CHAPTER III

THEORETICAL FRAME WORK OF STRESS

MANAGEMENT

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Role of Insurance in Economic Growth:

With the growth of a countrys economy, there is an increase in the facilitating role

played by the financial services sector; financial services play a supportive role in the

basic activity of production. Insurance frees industries from, the worries of unforeseen

losses and uncertainties. Insurance helps the process of the countrys growth in

various ways:

1. Insurance covers many economic risks. It protects entrepreneurs against the

risk of damage to or loss of the goods and other assets, which they employ in

manufacturing, marketing, transport and other related activities. This

protection offers a kind of stability to business.

2.

With the cover of insurance on their assets, businessmen and industrialists are

able to take bold decisions in enlarging their field of activity, and take

financial risks which they cannot otherwise take. Hence, insurance plays a

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promotional role in nation-building and also increasing the number of jobs for

the people.

3. Again, there is life insurance, which plays the most useful role in the lives of

individuals. Life insurance offers economic safety at reasonable cost to

millions of families in the country. In a way, this helps the government also as

it lightens the governments burden of providing social welfare to affected

families.

4. Insurance companies collect premium from policy holders and invest this

money in government bonds, corporate securities and other approved channels

of investment. In this way, insurance companies are helpful in providing

capital for new ventures or expansion of old units. Moreover, these funds are

also used for financing the infrastructure projects with long gestation period.

Also, this lending of funds for infrastructure and other development favorably

influences the decision-making process in the government.

Thus insurance aids in the growth of modern economy . By promoting

safety against personal losses it not only improves the individuals quality of life but

also provides smoothness in the working of the affairs of business and industry.

Some of the important milestones in the life insurance business in

India are:

1818:Oriental Life Insurance Company, the first life insurance company on

Indian soil started functioning.

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1870:Bombay Mutual Life Assurance Society, the first Indian life insurance

company started its business.

1912:The Indian Life Assurance Companies Act enacted as the first statute to

regulate the life insurance business.

1928:The Indian Insurance Companies Act enacted to enable the government

to collect statistical information about both life and non-life insurance

businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act

with the objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies are taken over

by the central government and nationalized. LIC formed by an Act of

Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from

the Government of India.

The General insurance business in India, on the other hand, can trace its roots to

the Triton Insurance Company Ltd., the first general insurance company

established in the year 1850 in Calcutta by the British.

Crop insurance:

Is purchased by agricultural producers, including farmers, ranchers, and

others to protect themselves against either the loss of their crops due to natural

disasters,such as hail,drought,and floods,or the loss of revenue due to declines in

the prices of agricultural commodities. The two general categories of crop insurance

are called crop-yield insurance and crop-revenue insurance.

http://en.wikipedia.org/wiki/Farmerhttp://en.wikipedia.org/wiki/Natural_disasterhttp://en.wikipedia.org/wiki/Natural_disasterhttp://en.wikipedia.org/wiki/Hailhttp://en.wikipedia.org/wiki/Droughthttp://en.wikipedia.org/wiki/Floodhttp://en.wikipedia.org/wiki/Floodhttp://en.wikipedia.org/wiki/Droughthttp://en.wikipedia.org/wiki/Hailhttp://en.wikipedia.org/wiki/Natural_disasterhttp://en.wikipedia.org/wiki/Natural_disasterhttp://en.wikipedia.org/wiki/Farmer

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Crop-yield insurance:There are two main classes of crop-yield insurance:

Crop-hail insurance is generally available from private insurers (in countries

with private sectors) because hail is a narrow peril that occurs in a limited

place and its accumulated losses tend not to overwhelm the capital reserves of

private insurers. In early 1820s, crop-hail insurance were available to farmers

in France and Germany. That is among the earliest forms of hail insurance

from an actuarial perspective. It is possible to implement the hail risk into

financial instruments since the risk is isolated.

Multi-peril crop insurance (MPCI): Coverage in this type of insurance is not

limited to just one risk. Usually multi-peril crop insurance offers hail,

excessive rain and drought in a combined package. Sometimes, additional

risks such as insect or bacteria-related diseases are also offered. The problem

with the multi-peril crop insurance is the possibility of a large scale event.

Such an event can cause significant losses beyond the insurer's financial

capacity. To make this class of insurance, the perils are often bundled together

in a single policy, called a multi-peril crop insurance (MPCI) policy. MPCI

coverage is usually offered by a government insurer and premiums are usually

partiallysubsidizedby the government.

U.S. Department of Agriculture is known to implement the earliest

Multi Peril Crop Insurance program in 1938. Federal Crop Insurance

Corporation managed this multi-peril insurance program since then. The Risk

Management Agency (RMA) is active in calculating the premiums based on

individual risk factors since 1996.

Specialty crops:

http://en.wikipedia.org/wiki/Multi-peril_crop_insurancehttp://en.wikipedia.org/wiki/Agricultural_policyhttp://en.wikipedia.org/wiki/Agricultural_policyhttp://en.wikipedia.org/wiki/Multi-peril_crop_insurance

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A farmer or grower may desire to grow a crop associated with a particular

defined attribute that potentially qualifies for a premium over similar

commodity crops, agricultural products, or derivatives thereof. The particular

attribute may be associated with the genetic composition of the crop, certain

management practices of the grower, or both. However, many standard crop

insurance policies do not differentiate between commodity crops and crops

associated with particular attributes. Accordingly, farmers have a need for

crop insurance to cover the risk of growing crops associated with particular

attributes.

Federal crop insurance:

In theUnited States,a subsidized multi-peril federal insurance program,

administered by theRisk Management Agency,is available to most farmers.

The program is authorized by theFederal Crop Insurance Act (which is

actually title V of theAgricultural Adjustment Act of 1938,P.L. 75-430), as

amended. Federal crop insurance is available for more than 100 different

crops, although not all insurable crops are covered in every county.

With the amendments to the Federal Crop Insurance Act made by the Federal

Crop Insurance Reform Act of 1994 (P.L. 103-354, Title I) and the

Agriculture Risk Protection Act of 2000 (P.L. 106-224), USDA is authorized

to offer basically free catastrophic (CAT) coverage to producers who grow an

insurable crop. For a premium, farmers can buy additional coverage beyond

the CAT level. Crops for which insurance is not available are protected under

theNoninsured Assistance Program (NAP). Federal crop insurance is sold and

serviced through private insurance companies. A portion of the premium, as

well as the administrative and operating expenses of the private companies, is

http://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Risk_Management_Agencyhttp://en.wikipedia.org/w/index.php?title=Federal_Crop_Insurance_Act&action=edit&redlink=1http://en.wikipedia.org/wiki/Agricultural_Adjustment_Act_of_1938http://en.wikipedia.org/wiki/Federal_Crop_Insurance_Reform_Act_of_1994http://en.wikipedia.org/wiki/Federal_Crop_Insurance_Reform_Act_of_1994http://en.wikipedia.org/wiki/Noninsured_Assistance_Programhttp://en.wikipedia.org/wiki/Noninsured_Assistance_Programhttp://en.wikipedia.org/wiki/Federal_Crop_Insurance_Reform_Act_of_1994http://en.wikipedia.org/wiki/Federal_Crop_Insurance_Reform_Act_of_1994http://en.wikipedia.org/wiki/Agricultural_Adjustment_Act_of_1938http://en.wikipedia.org/w/index.php?title=Federal_Crop_Insurance_Act&action=edit&redlink=1http://en.wikipedia.org/wiki/Risk_Management_Agencyhttp://en.wikipedia.org/wiki/United_States

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The methodology which was adopted for regular crop cutting experiments was

followed under this project without any modifications. The district wise number of

units constituted and experiments planned during kharif 2011 is as follows,

SL.NO. DISTRICT CROP SELECTED No.of I.U

No.of

expts

1 Srikakulam Paddy 924 3936

2 Vizianagaram Paddy 675 2928

3 Vishakapatnam Paddy 664 3766

4 East Godavari Paddy 671 2936

5 West Godavari Paddy 632 2528

6 Krishna Paddy 678 2778

7 Guntur Paddy 492 2034

8 Prakasham* Paddy 231 1284

9 Nellore* Paddy 176 1034

10 Mahabubnagar Maize 489 2142

11 Ranga Reddy Maize 175 916

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12 Medak Maize 406 1846

13 Nizamabad Maize 253 1102

14 Adilabad Soyabean 396 1920

15 Karimnagar Paddy 700 2830

16 Warangal Paddy 573 2334

17 Khammam Paddy 634 2638

18 Nalgonda Paddy 548 2312

TOTAL 9,317 41,264

CHAPTER IV

DATA ANALYSIS AND INTERPRETATION

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1) Educational Qualification?

a)

Primary School b) high School c) Graduation d) PG

S. No. Options No. ofRespondents

Percentage (%)

1. Primary School 50 50%

2. High School 25 25%

3. Graduation 15 15%

4. PG 10 10%

Total 100 100

50%

25%

15%

10%

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Interpretation: The above chart showing the educational qualifications of the

farmers.

50% of farmers having the primary education

25% of the farmers having high school education. 15% of the farmers having Graduation

10% of the farmers having PG

And in the survey most of the farmers having the primary education.

2. Annual Income:

a) 20,000 b) 20,000 to 30,000

c) 30,000 to 40,000 d) 40,000 to 50,000

S. No Options No. of

Respondents

Percentage (%)

1. 20000 /- 50 50%

2. 20,000 to 30,000 15 15%

3. 30,000 to 40,000 25 25%

4. 40,000 to 50,000 10 10%

Total 100 100

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Interpretation:

Above chart showing annual income level of the farmers in that

50% of the earnings the annual income of Rs. 20,000

15% of the respondents annual income e between Rs. 20,000 to 30,000.

25% of the farmers having the Rs, 30,000 to Rs. 40,000 annual income

10% of the respondents getting income of above Rs.40,000.

3.) Do you have agriculture income in annual ?

a). Yes b). No

S. No Options No. of

Respondents

Percentage (%)

1. Yes 85 85%

2. No 15 15%

Total 100 100

50%

15%

25%

10%

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Interpretation: The above chart shows proportion of the people having the

annual income below 5% of people having the

5) Are you farming in your own or leased land?

a) Own land b) Leased land c) Both A and B

S. No Options No. ofRespondents Percentage(%)

1. Own land 45 45%

2. Leased land 30 30%

3. Both A and B 25 25%

Total 100 100

5%

15%

30%

50%

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Interpretation:the above chart showing number of farmers the land details.

20 acres of the land for 11% of the famers farming

20-15 acres of the land for 9% of the farmers farming

10-5 acres of the land for 60% pf the farmers farming because of the

money is not available.

Majority of the proportion of respondents (i.e., 60%) are having their own land of

between 5-10 acres so, that we can analyze for less annual income for their people.

7) Are you aware of agriculture insurance?

a) Yes b) No

S. No Options No. of

Respondents

Percentage (%)

1. Yes 75 75%

2. No 25 25%

Total 100 100

11%

9%

20%60%

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Interpretation:the chart showing aware of agriculture insurance

85% of the aware of agriculture insurance and remaining farmers not aware of

insurance .

Majority of the farmers havce the knowledge about the various insurance

benefits related with agriculture. (ie.,) 75% of farmers aware of it).

8).Which insurance component to scheme you have adopted ?

a) ICICI b) AP Government Organization c) NABARD d) Any other

S. No Options No. of

Respondents

Percentage (%)

1. ICICI 65 65%

2. AP governmentorganization

15 15%

3. NABARD 15 15%

75%

25%

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Interpretation:

Above chart shows that majority of farmers are choosing ICICI insurance

policy related with agricultural compare to all other available sources,

9. How customer are gets awareness of agriculture insurance policy?a) Liquidity b) Reduction risk c) Uncertainty d) Consistency

65%

15%

15%

5%

4. Any other 5 5%

Total 100 100

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Interpretation: The chart shows how many farmers prefer for to take the ICICI

Lombard.

28% of the farmers prefer to take about the brand name of the ICICI

48% of the farmers, prefer to take agent advice way because the agents to

explain about the policy and benefits of insurance in ICICI s more to prefer.

11.) Expected compensation of the customers of their agriculture insurance

provided by ICICI

a) Up to 8% b) 10 to 5 % c) 15 to 20 % d) Above 20%

S. No Options No. of

Respondents

Percentage (%)

1. Brand Name 28 28%

2. Friend Name 19 19%

3. Agent advice 43 43%

4. Others 10 10%

Total 100 100

28%

19%

43%

10%

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Interpretation: The chart showing expected compensation of the customers of their

agriculture Insurance

8% of the farmers the chart showing customers compensation of agriculture

insurance above 20% of farmers have more compensations.

12) In which type of the insurance scheme you have invested and duration.

a)

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Interpretation:

65% the chart showing tell about the ICICI insurance schemes and

investment duration.

25% of farmers insured in 1 year scheme and 1-2 years scheme.

65% of farmers insured because in these policy they get more benefits.

13).Please give me your opinion of risk coverage by ICICI agriculture insurance

Respondents (%)

1.

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rate of insurance in ICICI.

a) Excellent b) Good c) Moderate d) Bad

Interpretation: The above chart showing farmers opinion about the ICICI

agriculture insurance

2% of the farmers responds ICICI is excellent risk coverage Bank they tell

63% of the farmers responds ICICI Lombard is good Bank in these insurance

policy is more risk capability.

So the farmers are more respond.

14) Customers risk taking capability ?

S. No Options No. of

Respondents

Percentage (%)

1. Excellent 8 8%

2. Good 63 63%

3. Moderate 32 32%

4. Bad 3 3%

Total 100 100

8%

59%

30%

3%

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a) High Risk b) Moderation c) Low risk

Interpretation:

From the above table showing the risk taking capability of the farmers 69% of

the farmers investing ICICI Lombard General Insurance so they are insurance , theyare having the low-risk capability , remaining 20% and 11 5 of the farmers investing

in other Banks.

S. No Options No. of

Respondents

Percentage

(%)

1. High risk 11 11%

2. Moderation 69 69%

3. Low risk 20 20%

Total 100 100

11%

69%

20%

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CHAPTER V

FINDINGS,

CONCLUSIONS

AND

SUGGESTIONS.

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FINDINGS:

1) Looking at the speed growth of ICICI LOMBARD it is quite clear that ICICI

LOMBARD is heading towards becoming the worlds no 1 General

insurance company.

2)

As the years passing on the investment of ICICI LOMBARD in central

government is increasing compared to other avenues of investment.

3) The net investment in the securities has been increased.

4)

ICICI LOMBARD has decreased giving loans, and the percentage decrease

by 27.3%.

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CONCLUSIONS:

1. The investments in the private sector also raised drastically from the

year 2012-2013, which is 141.17%.

2.

ICICI LOMBARD has increased investments in central government,

Housing, power generation. It has also increased the investment in

Municipal Corporation in year 2013.which is 14 crores.

3. A portion of the premium, as well as the administrative and operating

expenses of the private companies, is subsidized by the federal

government.

4. The Federal Crop Insurance Corporation reinsures the companies by

absorbing some of the losses of the program when indemnities exceed

total premiums. Several revenue insurance products are available on

major crops as a form of additional coverage.

http://en.wikipedia.org/wiki/Federal_Crop_Insurance_Corporationhttp://en.wikipedia.org/wiki/Federal_Crop_Insurance_Corporation

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SUGGESTIONS:

1) ICICI LOMBARD of India is suggested to expand its portfolio to other

sectors.

2) Very good services provide to the agriculture insurance.

3) There is a need of increase it investments in Housing, Power generation etc.

4) More Insurance ICICI LOMBARD i.s., need to be introduced that suit all

classifications of people.

5) Well qualified Investment analyst need to be appointed in order to proper

allocation of portfolio for companys growth.

6)

More plans have to be introduced by ICICI LOMBARD in order to compete

with competitors.

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BIBLIOGRAPHY

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