Insurance Sector Likely To Touch Rs 2-Lakh Cr By ’10

NEW DELHI: The country’s insurance sector is likely to touch Rs 2,00,000 crore mark by 2010 as against the current Rs 50,000 crore. Both life and non-life insurance sectors are likely to grow by over 200%, while the private sector insurance business is likely to grow at 140% due to adoption of aggressive marketing techniques, state-owned insurance companies would grow at 35-40% during the same period, according to industry body Assocham.

“On account of intense marketing strategies adopted by private insurance players, the market share of state-owned insurance companies such as GIC, LIC and others have dropped to 70% from over 97% five years ago,” said Assocham president Venugopal Dhoot.

The private insurance companies are offering 35% rate of return (RoR) to its policy holders as against RoR of 20% being offered by state-owned insurance companies. This has increased the share of private sector insurance companies in the total insurance business.

Moreover, while the state-owned insurance companies such as LIC and GIC offer limited number of policies, private companies offer vast number of policies with better premium, Assocham said. India’s life insurance premium is 1.8% as a percentage of GDP while it is 5.2% in the US, 6a.5% in the UK and 8% in South Korea, the Assocham study said.

Interestingly, the private sector insurance players have started exploring rural markets in which so far the state-owned companies had a monopoly. The chamber has projected that the share of private players in the rural markets would increase substantially as they have generated faith among their rural customers.

The rural market offers tremendous growth opportunities to insurance companies and therefore, the chamber has suggested that companies should develop viable and cost-effective distribution channels, build awareness and gather confidence of consumers.