Insurance industry in India is witnessing rapid growth. Players are adopting different strategies for the changing environment and growing competition. Evolution of different distribution channels is the focus. This article examines different prospects of distribution channels.
The insurance industry in India has experienced substantial growth in terms of numbers, after the opening up of the industry to the private sector. Insurance penetration has risen to 3.3% of GDP in 2002-03 from 2.32% in 2000-01. The improvement has largely been on account of the growth in life insurance, which rose to 2.59% of GDP from 1.77%. But evidently the full potential of the market has not been tapped. With new insurers in the private sector and more distribution channels, the market will see a phenomenal growth. Building up meaningful competition is expected to encourage insurers to seek out market potential more energetically.
The scope for potential growth in life insurance market is contributed by an underinsured market, changing demographic profile, low level of insurance awareness, growth of the economy and changing socio-cultural behavior of the people. But, why was the market untapped?
There is a general lack of awareness of insurance in India. The shortcomings of the selling methods of agents are looked into: The agent was always driven by the motive of selling a product and not marketing it. The variety of products offered also suffered some marketing orientation, as most of them were bundled ones, with hardly any flexibility. This can be seen from the popularity of the few wide range offers. |
