New Delhi: Country’s under penetrated rural market holds tremendous growth opportunities for life insurance companies with revenues expected to grow as much as four times to Rs7,800 crore by 2015, according to international consultancy firm Celent’s report titled, “Selling life insurance in rural India”.
High competition and relatively high market saturation in urban areas have led life insurance sector players to start focusing on rural and semi-urban India. Over 70 crore people reside in the rural hinterland of the country with insurance penetration rate as low as 3%, providing huge opportunity for mainly the private life insurance firms.
“It is estimated that the rural market will grow to a potential of Rs7,800 crore or by 2015 from the current Rs1,950 crore,” the report’s analyst and uthor Ravi Nawal said.
However, life insurance companies can tap the tremendous growth opportunities in the under penetrated rural market only if they can develop a viable and cost-effective distribution channel and create client awareness and confidence in the product, the report said.
Interestingly, most insurance companies have found that addressing the rural opportunity in India would require innovative products and innovative methods.
It suggested that the players in the life insurance sector would have to explore ways of creating a granular reach model to tap the market in over 600,000 villages across the country.