Indian insurance set for big leap

By Our Crrespondent

Chennai

Aug. 15: The Indian insurance industry, which registered a healthy growth in the 2007-08 fiscal, is tipped to grow to Rs 2 lakh crore by 2010.

According to a study by Associated Chamber of Commerce and Industry, the rapid growth of the private sector in both the life and general insurance sector will ensure a phenomenal growth in this industry over the next two years.

The life insurance industry had posted a 23 per cent growth in 2007-08 as the first year's premium collections under various schemes reached Rs 92,989 crore, while the general insurance industry grew at 12.53 per cent in 2007-08 to collect Rs 28,131 crore in premium.

Mr Sajjan Jindal, president, Assocham said that the intense marketing strategies adopted by the private insurers and their entry into the rural markets would ensure a phenomenal growth in this sector over the next few years.

The average penetration of the entire non-life insurance segment, still hovers around 0.55-0.6 per cent of the GDP, which is very low compared to the global standards.

The penetration figures for the life insurance segment, on the other hand, is around 4.8 per cent.

Mr Sujit Das, director and manager, National Insurance Company Ltd, however, pointed out that the increasing awareness in the country about the importance of the non-life products would double the size of the general insurance industry to Rs 56,000 crore within the next five years.

The average public sector general insurance growth had been less than five per cent during 2007-08, while the private players posted a growth of 28 per cent to increase their market share to over 40 per cent.

On similar lines while LIC's premium collection grew by only 5.8 per cent, the private sector players in life insurance grew by 74 per cent to increase their share from 26 per cent to 36 per cent during the year.

The high rate of return to the tune of 35 per cent offered by the private players as against the 20 per cent offered by the public players coupled with aggressive marketing strategies provides them an edge in the market, said Mr Jindal.

Mr Das accepted that the growing competitiveness in the sector caused by detarrification and the aggressive marketing campaigns by private companies had led to the decreasing market share of the public sector.

However, he added that public sector companies had improved the quality of their products to match those offered by the private sector and would have a competitive advantage in the long run due to their better geographical reach.