Insurance in India

Wealthier, aging Indians will help transform the country’s largely untapped life insurance market into one of the world’s fastest growing over the next five years, a global consultancy says.

Life insurance is already the most popular financial product among Indians because of the tax benefits and income protection it offers in a country where there is no social security.

But with household earnings accelerating in the fast-growing economy, the life insurance income premiums market could double from 40 billion dollars to 80 billion or even 100 billion dollars by 2012,

“All factors are in place for the Indian life insurance industry to blossom into one of the fastest-growing financial services markets in the world,”
“At the size of the market and potential the only one with similar potential is China.The next five years will be very exciting.

Key to insurers’ enthusiasm about India is its increasing affluence, aging population and low penetration of insurance coverage at a time when the market in industrialised countries is relatively saturated.

The potential in the country of 1.1 billion people can be seen from the fact the ratio of life insurance premiums to GDP, a common measure for penetration is 4.1 percent, far lower than developed market levels of 6-9 percent.

“This will change as India sees strongly accelerating household income and a more favourable demographic profile over the next two decades.Demand for pension cover is also seen raising, with 113 million Indians expected to be over 60 by 2016, a figure seen swelling to 179 million by 2026.
Just 10 to 11 percent of India’s working population is covered by formal old-age social security schemes & There are currently close to 30 public and private firms in India’s insurance market with state-owned Life Insurance Corp of India (LIC) still holding a stranglehold of over 70 percent,But private players have moved aggressively, chasing for business after being allowed to compete with LIC in 2000. And overseas insurers have raced into the market despite rules limiting foreign direct investment in domestic insurers to 26 percent
global bank HSBC Holdings signed a deal for an insurance venture with two state-run Indian banks, gaining access to over 40 million customers.HSBC will hold a 26-percent stake,the maximum allowed to overseas insurance partners, while India’s Bangalore-based Canara Bank will take 51 percent.