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August, 2012


Indian insurance sector is one of the premium industry segments to scale growth even in the toughest of financial conditions. India is the fifth largest insurance market among the globally emerging insurance economies, growing at an annual pace of 32 to 34 per cent. Industry experts have revealed that insurance sector's contribution to the Indian gross domestic product (GDP) has increased from about 1.9 per cent to almost 4 per cent.

The US$ 41 billion-insurance industry has 24 life insurers and 27 general insurers. The life insurers handle assets worth about Rs 16 trillion (US$ 288.45 billion) out of which state-owned Life Insurance Corp. of India (LIC) is the largest player with Rs 13 trillion (US$ 234.37 billion) of assets alone. Meanwhile, India's health insurance segment is valued at Rs 13, 000 crore (US$ 2.34 billion) and is anticipated to grow by 30 to 35 per cent.

Presence of so many players in the market infuses intense competition which eventually works for consumer welfare as newer and better products are developed in the process. Moreover, supportive Government policies and positive business environment are certain factors which have been attracting global insurers towards the Indian insurance industry for strategic investments and alliances.

The Indian insurance landscape allows foreign direct investment (FDI) of up to 26 per cent subject to a nod from the sector regulator Insurance Regulatory and Development Authority (IRDA).

Key Statistics

The first year premium of the life insurance companies grew by 1.4 per cent in April-May 2012 wherein the first year premium, combined of the public and private sector insurers, for April-May 2012 stood at Rs 12,428.83 crore (US$ 2.24 billion), up from Rs 12,253.44 crore (US$ 2.21 billion) during the same period a year ago, according to recent data released by IRDA. There were 40,46,777 new enrolments for the policies during April-May, 2012.

The gross premium of non-life insurance companies during April-May 2012 expanded by 18.27 per cent to Rs 11,387.32 crore (US$ 2.13 billion) from Rs 9,627.91 crore (US$ 1.74 billion) during the corresponding period in 2011.

New Developments/ Product Launches

  • Japan's Nippon Life is planning to initiate a trend of post-sale services on the Indian insurance landscape with its strategic partner Reliance Life. The company counts customer service activities as an important element of its insurance business in Japan and intends to replicate the same practices in India. Nippon Life holds 26 per cent stake in Reliance Life Insurance.
  • In order to fuel immense growth in its business in next three years, India's first standalone health insurance provider, Star Health and Allied Insurance, is planning to raise a capital of Rs 100-150 crore (US$ 18.03-27.05 million) to drive its private retail segment. The company's current capital base is Rs 438 crore (US$ 79 million).
  • Future Generali India Insurance Company Ltd, the general insurance joint venture (JV) between Future Group of India and Generali of Italy, has launched Future Sampoorna Suraksha, a comprehensive micro insurance product customised exclusively for the rural, semi-urban and urban poor classes. Aiming to tap the growing rural opportunity, the one-stop policy claims to offer valuable protection to the insured and their business.

    The package policy covers hospital cash benefit, personal accident, building and contents, robbery and burglary, farm produce, agricultural pump set, cart protection and liability, and pedal cycle.
  • Insurance Australia Group (IAG) is planning to strengthen its foothold in Asia, including India, and generate 10 per cent of its business from the region over 2012-16. IAG has an alliance with State Bank of India (SBI), named SBI General Insurance Company Ltd. In which SBI holds 74 per cent of the stake and IAG owns 26 per cent of it.

    SBI General is working on establishing a unique multi-distribution model that would cover bancassurance, agency, broking and retail direct channels. Bancassurance would be the major area of focus for the initial years.
  • Insurance sector regulator IRDA has granted its nod to Mumbai-based Company Liberty Videocon General Insurance to commence its operations in India. The JV between the Videocon Group and the US-based Liberty Mutual Insurance Group will start with an initial capital of Rs 300 crore (US$ 54.1 million).