The Indian insurance market was thrown open to private players in the year 1999. The liberalized Indian insurance market has seen the entry of a number of private non-life insurance players. Private players have been able to capture a significant market share in the non-life insurance market. It is firmly believed that ultimately, most of the non-life insurance market will be taken over by private sector players, and public sector players will have to face a tough time. The leader in non-life insurance in the private sector is ICICI Lombard, which in 2004-05, had underwritten a premium of Rs. 873.87 cr. None of the private sector players, except ICICI Lombard and Bajaj Allianz, has been able to cross a figure of Rs. 500 cr. Prior to liberalization, the contribution of public sector players in the growth of non-life insurance sector was very less. But, after the liberalization of insurance sector, the growth rate per annum has increased gradually. Hence, the declining market share of public sector players should not be taken as an erosion of their business levels. Public sector companies have to leverage upon their strengths to give a tough fight to the private sector players.
The
Indian insurance market was thrown open to private players
in the year 1999 and the Insurance Regulatory and Development
Authority (IRDA) was established to regulate the insurance
market. After it's opening, the insurance sector has seen
the entry of a number of private players.Prior
to its liberalization, the growth of the insurance sector was not anticipated,
despite of the high savings rate. The same may be attributed to `poor reach' and
lack of customer awareness. Despite the monopolistic control over the market by
Life Insurance Corporation and General Insurance Corporation with its four subsidiaries,
market penetration remained low. In the absence of competition, Government agencies
did not bother to develop the market, but were content with the business that
was coming their way (Chandra Shekhar, 2002).
Four
non-life insurance companies that started office in the 1970s saw their premium
income increase from Rs. 185 cr to Rs. 9522 cr in 1999. They were able to issue
only over 3 cr policies till 1999 (Srivastava and Srivastava, 2001). Of all the
global insurance market, worth an astronomical $2,324 bn in 1999, India accounted
for only 0.36 percent. The non-life global market was placed at $911.7 bn in 1999,
of which the Indian market was about $2.3 bn, which was merely 0.25 percent of
the global non-life insurance market. Insurance density, which is per capita spending
on insurance, in 1999 was $8.5 ($6.1 for life and $2.4 for non-life) per year
in India, as against $3908.9 in Japan ($3103.4 for life and $805 for non-life);
$3,244.3 in UK ($2502.8 for life and $741.5 for non-life); and $68.6 in Brazil
($11.8 for life and $56.7 for non-life) (Palande et al, 2003). In case
of the life insurance sector, insurance penetration and density were also very
less as compared to global averages. |
