Life Insurance Market in India

The Life Insurance market in India is an underdeveloped one that was tapped by the state-owned LIC until the entry of private players in the market. Insurance products reached only 19 percent of the 400 million of the insurable population. The state owned Life Insurance Corporation sold insurance only as a tax instrument and not as a product that gave protection. Most customers were under-insured with no transparency in the products. With the coming of the private insurers the rules of the game has changed.

The 12 private insurance companies offering life products in India have already grabbed nearly 9 percent of the market in terms of premium income. The new business premium of the 12 private players has tripled over the couple of years. Meanwhile, the state owned Life Insurance Corporation's new premium business has fallen steadily. And in the coming days more private players are to join the market.

Innovative products, smart marketing strategies and aggressive distribution networks have enabled the private insurance providers to attract Indian customers faster than anyone ever expected. Indians, who always looked at life insurance as a tax saving device are more aware about the need for having insurance for life. People are now suddenly turning to the private sector and buying new innovative products on offer.

The growing popularity of the private insurers is overwhelming but the state owned insurance companies still dominate segments like endowments and money back policies. Te private insurers have taken over 33 percent of the market in the annuity or pension products. And in popular unit-linked insurance schemes they have a virtual monopoly, with over 90 percent of the customers.

Private insurers are scoring big in other ways. They are persuading people to take bigger policies. For instance, the average size of a life insurance policy before privatization was around Rs.50,000. That has risen to about Rs.80,000. But private insurance companies are way ahead in this game and the average size of their policies is around Rs.1.1 lac to Rs.1.2 lac, way bigger than the industry average.

By these super success stories, all private insurers are moving to the second phase of their expansion plans. No doubt the aggressive drive of private insurers is already paying rich dividends. But LIC is also not lagging behind, it is trying to fight back and woo new customers by introducing newer products and quality service.
Bijeta has experience in content development for various domains like IT, SAP, Creative and now Insurance!