The rapid growth of Indias economy
India ‘s economic system has been turning at a rapid rate during past several decennaries. This growing resulted in the economic liberalisation in early 1990 ‘s, which has facilitated India to work its economic potency and raise state ‘s criterion of life. Insurance has a really of import function in this full procedure. Health insurance is cardinal and of import to safeguard persons against jeopardies of life. Fire and liability insurance is necessary for corporations to maintain investing hazards and substructure under control. Insurance in India was ab initio tightly regulated and it had the monopoly of the province tally insurance companies. The Insurance Regulatory and Development Authority ( IRDA ) Act of 1999 permitted foreign companies to take part with a cap on shareholding at 26 % ( Sinha ) . The debut of the 1999 IRDA Act lead the insurance sector join a set of other economic sectors on the growing March.
The Indian insurance market is holding a dual figure growing since 2005, with both the life and non-life insurance sections playing of import functions. In 2009, The Indian insurance market had entire gross written premiums of $ 63.8 billion in 2009, which represented compound one-year growing rate ( CAGR ) of 26.6 % during the old ages 2005-2009 ( Datamonitor,2010 ) . Harmonizing to the industry studies of Data proctor ( Datamonitor, 2010 ) , the life insurance section of India was really moneymaking in 2009, with entire gross written premiums of $ 56 billion which was tantamount to 87.8 % of the market ‘s overall value ( Datamonitor, 2010 ) . The studies suggests that the public presentation of the market is predicted to decelerate down, with an awaited CAGR of 11.1 % for the 5-year period of 2009-2014, which is expected to drive the market to a value of $ 107.9 billion by the terminal of 2014 ( Datamonitor,2010 ) .
India ‘s top market portion holder insurance companies are ICICI Lombard, New India and united India with 23 % ,24 % and 14 % market portion severally ( “ Insurance industry analysis, ” ) ( Please mention Figure 1 in Appendix A ) . ICICI prudential holds the major part of the market portion in private sector which is about 20.7 % while SBI being a rival to ICICI prudential holds 15 % of the market portions in private sector. ( “ Insurance industry analysis, ” ) ( Please mention Figure 2 in Appendix A ) . For twelvemonth 2001, public participants held most of market portions which was up to 99.8 % and it bit by bit decreased to 74.4 % by the terminal of 2008 ( Please mention Figure 3 in Appendix A ) ( “ Insurance industry analysis, ” ) .In 2004, private participants had 4.7 % of the market portion in the Indian insurance industry whereas by the twelvemonth 2008, the market portion of private participants increased to 25.6 % ( “ Insurance industry analysis, ” ) . New India Assurance has 26.4 % net premium-wise market portion of non-life Insurers. ( Please mention Figure 4 in Appendix A ) .
The industry studies by Data Monitor indicate that the compound one-year growing rate of the market in the period 2005-09 was 26.6 % . The Indian insurance market increased by 22.1 % in 2009 and reached a value of $ 63,825.4 million ( Datamonitor, 2010 ) ( Please refer to Figure 5 in Appendix A ) . The Indian insurance market value has been increasing steadily from 2005 to 2009 ( Please refer to Figure 6 in Appendix. ) . The largest section of the insurance market in India is Life Insurance which accounts for 87.8 % of the entire market value ( Datamonitor, 2010 ) .The staying 12.2 % of the market is accounted by non-life insurance section ( Datamonitor, 2010 ) ( Please refer to Figure 7 and Figure 8 in Appendix ) .India histories for 6.7 % of the full Asia-Pacific insurance market value. India ranks 4th in the list after Japan, China and South Korea ( Please refer to Figure 9 and Figure 10 in Appendix ) .
Size of industry and Geographic distribution:
The Indian insurance industry has the fifth largest life insurance market with US $ 41billion. ( “ Indian insurance industry, ” Jan, 2011 ) . IRDA stated that in 2010, the insurance companies sold a sum of 10.55 million policies, in which LIC sold 8.52 million policies and the private companies selling 2.03 million policies ( “ Indian insurance industry, ” Jan, 2011 ) .
As shown in figure 11 in Appendix A, 74 % of the Indian insurance industry is Life Insurance Sector holding the premium of INR 75406.52 Cr. The insurance market is by and large concentrated in major IT sectors and hubs including metropoliss like Delhi, Mumbai, Karnataka, Hyderabad, Pune, Bangalore and Uttar-Pradesh ( “ Indian insurance industry, ” Jan, 2011 ) .
Factors impacting Life Insurance industry in India:
Presently India is the 2nd most thickly settled state in the universe with population of 189,172,906 ( Central Intelligence Agency, 2011 ) . The population of the state has increased improbably from 1075.47 million to 1166.08 Million between twelvemonth 2004 to 2009 ( Central Intelligence Agency, 2011 ) . Since the state has big population, India has a big potency for insurance market as it will ever hold people to aim. Turning population of India is one of the major factors that influence life insurance market in India.Increase in the population pushes up the demands for goods and services. Increase in population could besides spur the growing of demand. For illustration in instances, where there are excessively many vehicles on route, inordinate crowd in amusement, public countries, there are possibilities that it could take to threats like pollution and stampedes which are required to be covered. But such type of insurance coverage is non sold in India at greater graduated table. So population addition has positive factors which are traveling to spur the demands. Insurance companies can happen possible market in India by covering these facets, which remain undiscovered at this point of time.Age Structure:
As per the demographics,64.9 % of the population lies between the age group of 15-65 twelvemonth, this per centum decreases as the age group additions ( Cardinal Intelligence Agency, 2011 ) ( Please refer to Figure 7 in Appendix ) . Statistics in CIS Factbook suggests that 5.5 % of population prevarications above the age group of 65. The gender ratio in India was recorded as 106.32 in 2009 ( Central Intelligence Agency, 2011 ) . The major subdivision of population lies with the age group 15-65, even though Life insurance is one of the most selling insurance in India. This is chiefly due to civilization and thought in India. In India, Life insurance is considered to be a safety factor and privilege for people as all can non afford life Insurance.
India ‘s cumulative export growing has increased 32 billion from 2009 to 2010. This includes export trade goods such as crude oil merchandises machinery, Fe steel, chemicals. ( Cardinal Intelligence Agency, 2011 ) . ( Please mention Figure 16 in Appendix A ) Indian import market has increased greatly between old ages 2009 to 2010 as compared to export market. India has 18.1 % import partnership with China and United States ; whereas it has 4-5 % of import partnership with other states such as Australia Germany Singapore. As shown in the figure16 in Appendix A, the balance of trade is negative, i.e. the imports of India are more than its exports. Since the imports and exports of India are high, it suggests that the India economic system depends on the planetary economic system. Therefore if the planetary economic system is steady, India economic system would profit in bend being good for the Insurance industry in India.
Communication: Telecom industry of India is one of the premier subscribers to India ‘s GDP. It has 35.77 million users of chief lines where as 670 million users of nomadic cellular phone which makes it 2nd largest state in the universe in telecommunication webs in footings of communicating. ( Cardinal Intelligence Agency, 2011 ) ( Please mention Figure 17 in Appendix in Appendix A ) . India has besides grown quickly in wireless communicating ( cyberspace ) , Harmonizing to the study given by CIS Factbook, it had 61,338 million of cyberspace users by the terminal of 2009 ( Central Intelligence Agency, 2011 ) . However the communicating in India is non unvarying. High velocity cyberspace connexions and telephone lines are available in large metropoliss, IT Hubs, Metro metropoliss, but are non present in rural countries of the state.
Electricity: Electricity ingestion of India has increased from 497 billion KWH in 2003 to 568 billion KWH in 2011. ( Cardinal Intelligence Agency, 2011 ) ( Please mention Figure 18 in Appendix A ) . The electricity is besides unevenly distributed in India, i.e. the large metropoliss have a uninterrupted supply of electricity whereas the rural countries have frequent power cuts. There are many countries in India where electricity is still non available.
Gross domestic products:
Harmonizing to the economic sciences of CIS Factbook, studies, India has 8.3 % of growing rate. Gross Domestic Product rate ( GDP ) of India has increased from $ 553.01 in 2004 to $ 760.37 in 2009. ( Please refer to Figure 12 in Appendix A ) ( India insurance study – Q2 2011 ) . GDP of India gives study of public presentation of Indian economic system. It is calculated by Cost factor or Actual monetary value. ( “ Indian insurance industry, ” Jan, 2011 ) .
Since the GDP of the state is turning, it reflects that the economic system of India is acquiring steady and it is good for the insurance industry. Figure 13 in Appendix A which represents economic Activity of India from 2008 to 2015 clearly illustrates that Indian economic system is on a roar and it creates a batch of possible market for insurance industry.
The incursion towards % of GDP has increased from 4.53 % [ life ( 3.98 ) + non-life ( 0.55 ) ] in 2008 to 5.50 % [ life ( 4.90 ) + non-life ( 0.6 ) ] in 2011. ( India insurance study – Q2 2011 ) A ( Please refer to Figure 14 in Appendix A ) .
Insurance sector in India is one of the flourishing sectors of the economic system and is turning at the rate of 15-20 per cent per annum. It contributes to about 7 per cent to the state ‘s GDP ( “ Indian insurance industry, ” Jan, 2011 ) . Thus insurance has direct relation worth state ‘s GDP. If the GDP of the state increases, the potency for insurance market additions.
Number of participants in Life insurance sector ( private ) has increased from 3 to 21 between twelvemonth 2000 to 2008 ( Please mention Figure 15 Appendix A ) .