The Indian insurance sector was opened to the private sector in 1999 and today there are 15 private life insurance companies. Long-term nature of a business, stringent solvency norms, capital on FDI limit at 26%, expense overruns, new business strain, low agent productivity, high attrition levels of agents, low average premiums, high competition in the market place, capital constraint, and value-conscious nature of Indian retail customers are some of the reasons for underperformance of private insurers in India. Consolidation in the sector is inevitable. By acquiring scale, managing expenses and being selective about the quality of business they write private insurers may be successful.

India's insurance sector is the second largest mobilizer of savings after banks and constitutes 15% of gross domestic savings. Around Rs. 4,00,000 cr of assets are under management of insurance companies which is almost double the size of the mutual fund industry. The insurance sector has invested Rs. 40,000 cr in infrastructural projects. There are 15 lakh agents and 2 lakh employees working in the insurance industry. There are approximately 20 crore policies in force. The share of the retail customers to the total is 92%. The insurance sector is seeing a strong growth in terms of penetration (gross premium to GDP ratio is 2.8%).

According to the Associated Chambers of Commerce and Industry (ASSOCHAM) estimates, India's insurance business is expected to grow sixfold to US$ 60 bn by 2010. In this rural and semi-urban India could contribute $35 bn. As per sigma report of Swiss Re on the world insurance market, world insurance premiums increased by 3.9% in real terms, to $1,974 bn after having grown to 2.9% in 2004. India's life insurance premium in dollar terms is around $20 bn. In the year 2000, this was $7.6 bn as against the world total of $1,521 bn.

Insurance Chronicle Magazine, Indian Insurance Sector, Private Life Insurance Companies, Foreign Direct Investment, FDI, Gross Domestic Products, GDP, Life Insurance Corporation of India, LIC, Foreign Insurance Companies, Insurance Regulatory and Development Authority, IRDA, Foreign Institutional Investors, FIIs, Insurance Atrategies.