The insurance market in India has grown by leaps and bounds since the beginning of the new millennium. This is primarily because the insurance sector was liberalized on the recommendation of the Malhotra Committee, and private players were allowed to enter the market. Before this phase, LIC and GIC had a monopoly in this sector. The insurance industry has witnessed an excellent annual growth of almost 20% each year in the last decade. The insurance sector still has ample scope for growth in the coming years, especially in a developing country like India. Hence it’s not a surprise that many private players have forayed into this sector.
Life insurance forms a major chunk of the overall premiums collected in the insurance sector. Premiums from this segment grew at an average annual growth rate of 20% over the last decade. The entry of the private players in the sector and their aggressive marketing strategies has made this possible. The share of private sector has grown from a mere 2% in financial year 2003-04 to almost 29% in financial year 2011-12. The total business has grown four-fold in the same time-period. This fact alone speaks volumes about how fast is the industry growing. Rise in disposable incomes coupled with aggressive marketing tactics by insurance players have made individuals secure their family through life covers. This gives a sense of security to the individual, that even after he is gone, his family would be in safe hands at least monetarily. Even post liberalization, LIC still continues to enjoy a lion’s share of 70% of the life insurance segment.
The
non-life insurance segment has also grown four-fold in the last decade. Health
insurance is the fastest growing section of this segment and forms around
22% of the total non-life insurance business. The reason for its speedy growth
is that the target audience has realized that medical expenses generally prove
to be very expensive in nature. Any
medical ailments or even accidents can cause sudden hospitalization and without
an insurance cover these costs can run into lakhs of Rupees. Hence, by choosing
health insurance and paying yearly premiums, one can easily avoid huge monetary
costs and live life with a sense of peace and security. Health cover has the
option of not only covering the individual but also covering the whole family.
Choosing between a health cover and a life cover can get confusing sometimes.
For a young bachelor whose family is well settled, choosing a health cover
makes more sense. It is only post marriage that he should opt for a life cover.
Nowadays
insurance policies can be easily
availed and can even be purchased online. The segment of General Insurance (Car + Travel Insurance + Home Insurance) has
also witnessed considerable growth. The motor insurance segment forms the
largest chunk of the non-life segment. The main reason for this is that having
motor insurance is a mandatory requirement in India. Two of the prominent
reasons for the robust growth of the insurance sector are the setting up of new
distribution channels and the entry of foreign players in this sector.
Distribution of insurance through banks which is termed as bancassurance is an
excellent way to promote insurance growth further.
