New Delhi: India’s insurance sector business is likely to grow by over 200% and reach a size of Rs2000 billion by 2009-10. Private sector insurance business is expected to achieve a growth rate of 140% as a result of aggressive marketing technique against 35-40% of state owned insurance companies growth rate.
According to an Assocham report, ‘Insurance in next two years’, the last few years have seen the insurance sector grow by CAGR of around 175% and the trend will gain further ground as the insurance sector’s size crosses the estimated Rs500 billion figure.
* There are 24 million rural households of which nearly 20% of all farmers in rural India own Kissan Credit cards
* 25 million credit cards used till date offer a huge data base and opportunity for insurance companies; the agent can play a major role in creating awareness, motivating purchase and rendering insurance services
* On account of intense marketing strategies adopted by private insurance players, the market share of state owned insurance companies like GIS, LIC and others have come down to 70% in last 4-5 years from over 97%
* Private insurance players are still regulated and have been offering rate of return (RoR) to their policy holders, estimated at about 35% as against 20% of domestic insurance companies
* State owned insurance companies like LIC and GIC have limited number of policies to offer to subscribers while in case of private insurance companies, their policy numbers are many more and the premium amount as well as maturity period is far more competitive as against those of government insurance companies
* Private sector insurance players have started exploring rural markets in which until recently, state owned companies had a monopoly
* In rural markets, share of private insurance players would increase substantially as these have been able to generate faith among rural consumers
* Estimating the potential of the Indian insurance market from the perspective of macro-economic variables such as the ratio of premium to GDP, India’s life insurance premium, as a percentage of GDP is 1.8% against 5.2% in the US, 6.5% in the UK or 8% in South Korea.
* In the coming years, corporate segment, as a whole will not be a big growth area for insurance companies since penetration is already satisfactory and companies receive good services; in both volumes and profitability therefore, scope for expansion is modest
* Insurer’s strategy should be to stimulate demand in areas that are currently not served at all
* Insurance companies mostly focus on manufacturing sector, however, services sector is taking a large and growing share of India’s GDP, in turn offering immense opportunity for expansion opportunities
*To understand prospects for insurance companies in rural India, it is very important to understand requirements of India’s villagers, their daily lives, peculiar needs and occupational structures; there are farmers, craftsmen, milkmen, weavers, casual labourers, construction workers and shopkeepers and so on. More often than not, they are into more than one profession.
* Rural market offers tremendous growth opportunities for insurance companies and insurers should develop viable and cost-effective distribution channels; build consumer awareness and confidence
* Package insurance in such a form that it appears as an acceptable investment to rural people