Evaluation of financial position and performance of selected life insurers in India through the caramel model

Insurance is primarily a social device adopted by civilized society for mitigating the incidence of loss of income to families by unforeseen contingencies. In India, when life insurance companies started operating in the middle of 20th century the evil play natural to all business had its sway. There was a lot of cut throat competition as well as profiteering. Presently, twenty four life insurance companies are operating in India. Out of which, one is a public sector insurance company and twenty two are private sector insurance companies. In the LIC which holds 72.7% market in the first year premium against, only 27.3% and 28.64% market served by the private players in the total premium and first year premium during the 2012-13 respectively. The cutthroat competition between the insurers, question arises whether the life insurers are capable to repay the losses. Therefore, the study has been undertaken the life insurers soundness and performance through CARAMEL model. The financial soundness and performance of life insurers of LIC, SBI and ICICI Prudential Life are evaluated through CARAMEL model (Total Solvency Ratios, Asset quality ratio, Total Reinsurance and Actuarial Issues Ratios, Total management ratios, Total Earning and profitability Ratios and Total liquid ratios) have been satisfactorily financially sound by and large. The present study also found that the CARAMEL parameters were significantly differing between the selected life insurers in India.