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India has a low life insurance pen-
etration of 1.95%, and is ranked
51st in the world on this parameter. While India boasts a saving
rate of around 25%, barely 5% is directed towards insurance. The
Confederation of Indian Industry's Expert Group on Insurance has projected
the aggregate insurance market in India at Rs.2,00,000 cr ($ 51.2 bn)
by 2009-10. From one state-owned life insurance player in 1999,
today, there are more than 20 players in the market. Life insurance premiums
are estimated at Rs.1,45,000 cr during 2009-10, as against just Rs.21,500
cr in 1998-99. However, it is estimated that only 20% of the insurable
population is insured.
The life insurance business grew by 23.3% to Rs.93,000 cr in
2007-08. The sector employs close to
30 lakh people (including agents and direct employees). If the
proposed hike in the sectoral FDI cap to 49% comes through, it will
further strengthen the sector. This would also increase the penetration level
of insurance in the country. There would also be an increase in the
level of competition, leading to the introduction of
new products offering a diversity of product features,
services and price levels.
The Indian life insurance market can be categorized into three
types, namely, high income segment, middle income segment and low income
segment, on the basis of the income level of the customers. It can be
further grouped into first-time buyers, tax saving buyers, existing policy
holders looking for additional purchase, and investors. With the advent of
private players, life insurance is being viewed more as an investment option. |
