A robust insurance sector is a boon to a country’s economy. The sector facilitates long-term funds for infrastructure development and simultaneously strengthens the risk-taking ability of the country. India’s rapid economic growth and development over the past decade is considered to be very significant on the global canvas.
Indian insurance sector is poised to mark great progress in the years the come. Over the past few years, many foreign insurance companies have ventured into the Indian landscape in order to harness the immense untapped latent potential of this industry. Moreover, the favourable regulatory environment ensures stability and fair play in the entire market.
Seamless growth in the insurance segment is dependent upon certain factors. Some of these include-
- Effective distribution channels – the efficacy and cost of various distribution channels are significant to ensure success of players in the insurance business, more so for retail businesses.
- Focus on overall financial inclusion – insurance sector in India has increasingly started focussing on enhancing financial inclusion in the country as its long-term objective. The mission of the insurance business should be to provide cover to a larger section of the population and a wider segment of activities.
- Consumer needs and preferences – Indian insurance industry has evolved through product innovation, dynamic distribution channels, and vibrant publicity and promotional campaigns by the insurers. Innovation can be seen not only in the form of benefits attached to the products, but also in the delivery systems (through various marketing tie-ups). All these efforts have brought insurance companies closer to the customer as well as made it more relevant.
Health insurance is also an upcoming segment in this sector. Health insurance accounts for only 10 per cent of overall US$ 30 billion healthcare spends in India. Thus, there lies a lot of scope for development for players in this arena.
Life insurance penetration in India is about 4 per cent of the country’s gross domestic product (GDP) in terms of total premiums underwritten annually, according to the Insurance Regulatory and Development Authority (IRDA). State-owned Life Insurance Corporation (LIC) enjoys a dominant position with almost 71 per cent of the market share. Meanwhile, there are 23 private players in the life insurance sector.
- Indian life insurance sector collected new business premiums worth Rs 11,742.7 crore (US$ 1.92 billion) for April-May 2013, according to data from IRDA. Life insurers collected Rs 1,07,010.7 crore (US$ 17.5 billion) worth of new premiums for the financial year ended March 31, 2013.
- Meanwhile, the general insurance industry grew by 19.6 per cent in April-May period of FY14, wherein the non-life insurers collected premium worth Rs 13,552.46 crore (US$ 2.21 billion).
New Developments/ Product Launches
- United India Insurance (UIICL), the second largest general insurance company, intends to open 530 new offices in 2013 pan-India. As of now, UIICL has 1,340 offices in the country, as per their website. In 2012-13, the company had collected total premium of Rs 9, 266 crore (US$ 1.51 billion) and has set a target of raking-in Rs 11, 000 crore (US$ 1.8 billion) in financial year 2013-14.
- New India Assurance, the state-owned general insurer has inked a memorandum of understanding (MoU) with Institute of Company Secretaries of India (ICSI) to provide an exclusive portal for members, students and employees of the institute. Under the agreement, the insurer would enable access to a portal through a link in the institute’s web site. The portal will provide insurance like personal accident, health insurance, professional indemnity and motor insurance covers. The portal would allow remittance of premium through payment gateway by credit card, debit card or net banking.
New India Assurance is aiming for 20 per cent growth in business at about to Rs 15,000 crore (US$ 2.45 billion) in 2013-14 and is ready to expand its overseas operations in Myanmar, Qatar and Canada.
Meanwhile, it also expects the share of health insurance segment to account for 30 per cent of its total business over 2013-15. Currently, health insurance accounts for about 26 per cent of its total premiums.
- Private sector player Reliance General Insurance is planning to launch a health insurance scheme soon for independent woman and girl child at a discount, as part of its effort to empower women and support their healthcare needs. The scheme – named ‘Reliance Health gain’ would offer pricing benefits of up to 5 per cent on the total family premium in case of the addition of a girl child. Pricing benefits would also be extended to single women and widows, informed Rakesh Jain, CEO, Reliance General Insurance.