The insurance industry in India has changed rapidly in the challenging economic environment throughout the world. In the current scenario, Indian insurance companies have become competitive in nature and are providing appropriate distribution channels to get the maximum benefit and serve customers in manifold ways.

Indian Insurance industry has big opportunity to expand, given the large population and untapped potential.The insurance market in India has witnessed dynamic changes including entry of a number of global insurers. Most of the private insurance companies are joint ventures with recognized foreign institutions across the globe. Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors.

The Insurance Regulatory and Development Authority (IRDA) regulate and develop the insurance sector in India through calibrated policy initiatives.

Overview of Insurance Sector in India

The Indian Insurance Industry has undergone several changes in trends and policies in the year 2010. The US$ 41 billion industry is considered the fifth largest life insurance market, and is growing at a rapid pace of 32-34% annually, according to the Life Insurance Council.

State-owned Life Insurance Corporation (LIC) of India has recorded about 37% growth in its new business premium to US$ 15.1 billion during April to January FY 2010, the data from IRDA stated. Overall, 23 life insurers in the country collectively mopped US$ 21.35 million as new first year premium during the period, a 26% increase from US$ 17 billion during April-January 2009-2010.

Out of this, the 22 private life insurers together accounted for US$ 6.26 billion worth of new business in April-January 2010-11, compared to US$ 5.91 billion in the year ago period, a growth of about 6%. Among the private life insurance players, SBI Life saw its premium collections from new business grew by 9% to US$ 1.1 billion during the period, while ICICI Life's premium collections from new businesses grew to US$ 1.15 billion April-January 2010-11, from US$ 964 million during the same period last year.

Health Insurance

The health insurance business in India has witnessed increased focus and attention from all stakeholders; not only from insurers and IRDA, but also from healthcare providers and other entities associated with the ecosystem. This increasing attention and awareness was due to rising healthcare costs. Recent detariffing of the general insurance business forced the insurance companies to focus on health insurance and other personal lines of business. Rationalization of premium rates in respect of individual mediclaim policies in 2007 which were unrevised for many years and upward revision of rates in all group health policies have also contributed to growth in premiums. Availability of products for senior citizens and children helped in popularizing health insurance.

The Indian Health insurance market has emerged as a new and lucrative growth avenue for both the existing firms and new entrants. Health Insurance premium collections were US$ 1750 million in 2009-10 as compared to US$ 893.76 million in 2008-09, IRDA said in its annual report 2009-10. It should, however, be noted that figures for 2009-10 include policies served by third party administrators (TPAs) as well as those directly served by insurers whereas figures of 2008-09 include policies by TPAs only.

Bancassurance

Bancassurance, is the simplest way of distribution of insurance products through a bank distribution channel by selling insurance products and services by leveraging the vast customer base of a bank and fulfil the insurance needs. It takes the various forms depending upon the demography, economic and legislative climate of the country. For insurance company it acts as a tool for increasing their market penetration and premium turnover and for customer it acts as a bonanza in terms of reduced price, high quality products and delivery to doorsteps.

According to Towers Watson India , Bancassurance Benchmarking Survey 2009-10, released in May 2010, bancassurance will play a crucial role in the overall development of the Indian insurance sector with the channel expected to generate 40% of private insurers' premium income by 2012, compared to 25-28%. In general insurance, presently 17% of premium income comes from bancassurance.

Opportunities in Insurance sector in India

Insurance sector in India holds vast untapped potentials in-

• Life insurance products
  
  
• Life covers
  
  
• Household insurance policies
  
  
• Overseas mediclaim
  
  
• Travel insurance policies
  
  
• Huge pull of skilled professionals to venture of new product through R&D
  
  
• Large branch net work facility by Life Insurance Corporation of India (LIC) & General insurance Corporation of India (GIC)

Foreign Direct Policy in Insurance Sector

FDI up to 26% in the Insurance sector is allowed under the automatic route. This will be subject to the condition that Companies bringing in FDI shall obtain necessary license from the Insurance Regulatory & Development Authority (IRDA) for undertaking insurance activities.

Useful Web links

Insurance Regulatory & Development Authority (IRDA): www.irda.gov.in