Business

Insurance companies in India are clearly divided into 2 part (again a British Legacy) – a) The Life Insurance, covering the Life of an individual or group. Any thing that does not fall into this category falls into b) Non-life Insurance. There is also a 3rd group or the so called a gray area, where both Life and Non-life Insurance Companies compete now. It is Health Insurance & Credit Insurance.

Underwriters of Insurance companies have traditionally ruled the market before
liberalization, since it was Seller’s Market. LIC for Life Insurance and 4 sisters from Non Life Companies (All Govt. owned) served the market for over 3 decades. It is amazing to see, how much the Indian Insurance canvas has changed now. In flat 6 years of active liberalization, we now have more than 30 Insurance Companies, competing and working hard over-time to garner, bigger share of growing USD 20.00 billion market. Interesting to see, that the lion share of the market is still with the past leader only i.e.

Life Insurance Corporation of India Ltd. (LIC). However, the private players viz. ICICI Prudential and Bajaj Allianz Life is catching in, with their double digits growth year-on-year in the Life segment. Their aggression in terms of better products & better distribution model (Bancassurance & Web) is giving them the desired results.

In-contract to 100% growth in Life Insurance (reflection of growing disposable income of growing middle-class of 50 million strong), Non-life insurance some how is growing only about a 30% modest run-rate. Pertinent to point-out, however is that new players viz. Bajaj / ICICI & Reliance have out maneuvered 4 sisters – Nation / Oriental / New and United in terms of New Products / Annual Growth and Service Platform.

I am sure you are aware that the Insurance penetration in India is perhaps the least
amongst developed countries and worst, we don’t rank good vis-à-vis developing countries either. One estimate suggests that Pakistan / China and Dubai has better Insurance penetration Per Capita compared to India. There are many reasons for the same. Traditionally Insurance was bought and sold in India for Investment / Tax Saving purposes only. Remember my opening statement – “Death / Illness and Fire comes to thy neighbor and not me”. So, Insurance was never looked as a tool to conserve, preserve or create wealth. It was just an investment tool which was doubling for Tax deduction also.

Thank God, all that are changing fast now. The credit for changing mind-set goes to tireless education by insurance companies coupled with effective campaign by IRDA. Insurance Companies, Brokers and IRDA have taken the challenge of explaining and educating Indian consumers about the benefits of taking adequate Risk Covers, rather than depending upon a “Chance” that nothing will happen.

Ignorance about Insurance, thus leading to “Self-Insurance” has come off Age, due to
brilliant sales and marketing efforts. Innovative & Price sensitive products are coming out every day, addressing genuine insurance needs, hence we have seen a rapid rise in Insurance penetration, in last couple of years, across the length & breath of India, which is indeed a good news. Still, a lot has to be done by underwriters (Insurance companies) to reach the masses and rural India. Market demands innovative and better products in :
a) Motor Insurance
b) Rural Insurance
c) Loss of Job / Income Insurance
d) Credit Insurance
e) Insurance for Old age, including Pre-existing disease
f) Insurance Policies to be printed through Web

In my last segment, I present Indian Insurance from Agents / Brokers perspective. It is going to be tough to remain un-biased as we are selves are Insurance Brokers. Never the less, let me try.