Posted on Nov 01, 2010 by Sergio Ulloa
The Indian life insurance sector has stabilized, with strong profitability levels forecast for insurance companies. This prospect was highlighted in a recently released study by the Confederation of Indian Industry (CII) and Ernst and Young (EY). Insurance policy renewal to set to stimulate revenue and growth in the overall business.
The life insurance market in India is planning to focus on insurance companies retaining business, with relaxation on the growth of distribution channels across the second most populous country in the world.
According to the Confederation of Indian Industry (CII) and Ernst and Young (EY) research, the Indian life insurance market will see a change in insurers' business activities resulting from improvements in regulatory control and transparency in the industry thus enabling companies to focus on persuading the country's population to invest in financial protection products.
There is enormous scope for insurers in India to increase their coverage in a country which a population which exceeds 1.17 billion people. India represents a new avenue of income for global and domestic insurers as the economic tide changes following the 2007 global financial crisis, with the Indian insurance market emerging as one of the world's largest economies offering great untapped potential for new business.
The life insurance industry in India is expected to grow by around 10 percent in 2010 compared with activity in 2009. The growth in the Indian life insurance industry being partly due to Indian insurers expanding their reach across the country, with distribution channels penetrating small towns and villages.
The opportunity for life and non-life insurance coverage has been driven by the growth in India's population and increase economic prosperity. This has been combined with tight regulation and product development in the insurance industry, which has helped the business to develop and meet the changing needs of the economic landscape.
In October 2010, BNP Paribas announced that it was stepping up operations in India, with the aim of doubling revenue in the country to reach 1 billion Euros (US$1.38 billion) by 2015. BNP Paribas activities in India include financial services and life insurance through a joint venture with the local Indian insurer SBI.
One of India's leading financial institutions - HDFC Standard Life Insurance Company - also stated that it intends to improve its performance in the Indian life insurance market. The joint venture between HDFC of India and British company Standard Life started in 2000 and saw renewal premiums rise 31 percent in the last fiscal year to 37.48 billion rupees (US$842 million). HDFC Standard Life predicts a significant growth as demand for insurance products increase, driven by a rising in personal income.
Reliance Life Insurance also forecast that it will follow the emerging trends in the Indian life insurance sector, with renewal premiums outpacing new business premiums being written.
Global players in the Indian Insurance market include the Max Bupa Health Insurance Company. Max Bupa is a joint venture company between Max India Limited and the United Kingdom based multinational company Bupa. The Prudential Life Insurance Company, Aviva Life Insurance Company and Bajaj Allianz are all present in India providing a range of protection coverage including health, motor, micro insurance and life insurance. For companies like Bupa, the joint venture with Max Bupa has been a source of growth and combats the difficulties being faced as the Bupa Group struggles to maintain profitable businesses in Europe and the US, as the joint venture with Max Bupa in India provides the UK-based insurer an increased line of revenue in an emerging insurance sector.
The Insurance Regulatory and Development Authority (IRDA) is the gatekeeper of the Indian insurance market and will play a pivotal role in the development of the industry in India. The IRDA has introduced a number of regulations which have been important in improving the insurance industry and ensuring consumer protection as the sector develops with changing times.
The future for the Indian economy is extremely positive, with the International Monetary Fund forecasting that it will expand by 9.7 percent in 2010. The Indian insurance sector is benefiting from the significant growth in the overall economy, with international insurance companies and domestic Indian insurers gaining increased market penetration by providing insurance protection products and financial services to meet the emerging demands of a more prosperous and increasingly more financially aware population.
In the fiscal year 2009-10, the IRDA recorded an upswing in premiums of over 25 percent over 2008-09, with total revenue amounting to US$ 19.64 billion. In total there are over 20 major insurance companies operating in the Indian life insurance industry, including: ICICI Prudential Life Insurance, Aviva Life Insurance Company and the Max New York Life Insurance Company Ltd.
Indian life insurance companies are permitted to sell healthcare insurance, which accounted for US$1.4 billion in premiums in 2009 and is expected to increase to US$6.2 billion by 2015. Life insurer Reliance Life confirmed earlier in 2010, that it will enter the Indian health-insurance sector in a bid to capitalize on this growth industry in a bid to generate Rupee1.5bn in premiums over the next 5 years.
As the Indian life insurance market enters a new phase the Life Insurance Council (LIC) have set-up a roadmap for the sector over the next decade. This will be submitted to the Insurance Regulatory and Development Authority (IRDA) in order to take the Indian life insurance market into the next stage of fruition. Over the last decade, private life insurance companies in India have spent large sums of money on building up a network to distribute and initiate products. The LIC is focusing on the industry becoming more profitable for insurers in the Indian life market.
Currently the Indian life industry has 22 insurance companies in the life insurance business and 21 companies involved in the non-life sector.
The boom in the in Indian life-insurance market is fundamentally propelled by the increasing wealth among middle class population. However, Indian life insurance companies are also targeting the low-income individuals and families with Indian microinsurance policies to provide vulnerable groups with protection. Established domestic and international insurance companies have built a sales network and spent years promoting products and services to ensure widespread awareness of their protection policies and with such a board range of insurance products and a vast number of increasingly financially aware people in India, the insurance sector is set for expansion.
Insurance Companies Mentioned:
Reliance Life Insurance
Indian life insurance company, Reliance Life Insurance, is an associate company of Reliance Capital. Reliance Capital is one of India's top 3 financial services companies by net worth. Both Reliance Life Insurance and Reliance Capital are part of the Reliance - Anil Dhirubhai Ambani Group.
Bharti Axa General Insurance
Bharti AXA General Insurance is a joint venture between Bharti Group and AXA Group. Founded in July 2007 in Bangalore, India it now has over 40 branches across India offering a variety of insurance products for retail, commercial and rural customers.
Incorporated in 1988, Max India Limited is a holding company with business interests working in the healthcare and services industries. Their wide range of health related interests include a joint venture life insurance company, Max New York Life, a healthcare services company, Max Healthcare, and a clinical services company, Max Neeman Medical International. The Max India Group reported US$ 860 million in revenues for 2007-2008 and will soon add Max Bupa to their list of businesses.
HDFC Standard Life Insurance Company Ltd
HDFC Standard Life Insurance Company Ltd. is one of India's leading private life insurance companies, which offers a range of individual and group insurance solutions. The company provides a line of protection, retirement, savings and investment, children, health, and group plans. It is a joint venture established in 2000, between Housing Development Finance Corporation Limited (HDFC Ltd.) and The Standard Life Assurance Company, a leading provider of financial services from the United Kingdom.
BNP Paribas Assurance is the property & casualty and life insurance branch of BNP Paribas, its products are marketed inside France through retail branches under the BNP brand name and branded outside of French retail business and internationally as Cardif. mBNP Paribas Assurance is the 4th largest life insurance company in France and has operations in more than 40 other countries. The company had EU18 billion in written premiums in 2007 and has 7,000 employs working around the globe.