EMERGING

INSURANCE
MARKET

- A Presentation by
ZTC-BHOPAL
 20TH CENTURY
 1942

 1956
– NATIONALIZATION
– MERGER OF 245 PRIVATE INSURANCE CO s

 LAST 46 YEARS
– LIFE INSURANCE CORPORATION MADE SIGNIFICANT
CONTRIBUTION IN THE DEVELOPMENT OF LIFE
INSURANCE

 1990s
– WHEEL CAME FULL CIRCLE
 THE LAST DECADE
 1994
– MALHOTRA COMMITTEE REPORT
• CHANGE BEGINS

 1999
– IRDA BILL
• LEVEL PLAYING FIELD

 2000
– BOOZ, ALLEN & HAMILTON REPORT
• HIGH-END MARKET
 NEW MILLENNIUM
 ALTERNATE CHANNELS OF
DISTRIBUTION

 CORPORATE AGENCY
 LTD CO s, NGO s, PARTNERSHIP FIRMS

 BANCASSURANCE
 CORPORATION BANK, ETC.

 BROKERS
 MULTIPLE COMPANIES’ PRODUCTS
 INDIAN INSURANCE MARKET
 ONE OF LEAST INSURED IN WORLD

 POPULATION
 104.41 crore
 INSURED
 10 crore
 INSURABLE
 40 crore
 PARETO PRINCIPLE
 80 - 20
UNTAPPED MARKET

• ONLY 25% INSURABLE

POPULATION COVERED

• EVEN 25%, INADEQUATELY

COVERED

• Rs 1,75,000 CRORE MARKET

AVAILABLE
 POTENTIAL
 GROWTH OPORTUNITIES

-LOW INSURANCE PENETRATION

-LOW INSURANCE DENSITY

-HIGH PER CAPITA SAVINGS

-A BURGEONING MIDDLE CLASS

-HIGH CONSUMER AWARENESS

INSURANCE PENETRATION

– Insurance penetration is
measured by premium as a
percentage of GDP.

– The difference in penetration

potential can be appreciated
when compared with world
figures.
 SPEND
• INSURANCE PREMIUM
IN INDIA ACCOUNTS
FOR A MERE 2% OF GDP

• THE WORLD AVERAGE

IS 8%
 PREMIUM TO GDP
% IN 2000 WORLD INDIA

LIFE 4.88 1.77

NON-LIFE 2.96 0.55

INSURANCE 7.84 2.32

% OF PREMIUM TO GDP:’02
INDIA 1.9

US 5.2

UK 6.5

SOUTH KOREA 8

G-7 AVERAGE 9.2

 INSURANCE DENSITY

– The premium per capita is the

measure of insurance density.
– It is about 2.5% of international
standard.
– This provides immense opportunity
to improve insurance density in
India to bring it on par with
international average rating.
PER CAPITA
• INSURANCE DENSITY IS
A MERE USD 8, ONE OF
THE LOWEST IN THE
WORLD

• THE CORRESPONDING
FIGURE IS USD 1338 IN
SOUTH KOREA
 PER CAPITA PREMIUM

COUNTRY USD

INDIA 8

JAPAN 4800

KOREA 1000

SINGAPORE 887

MALAYSIA 144
 GROSS DOMESTIC
SAVINGS
 PREMIUM AS A PERCENTAGE OF GROSS
DOMESTIC SAVINGS

– IN INDIA
 6% IN MID 1990s
 9% IN 1999
 12% IN 2002

INDICATES GROWTH OPORTUNITIES

 PRIVATIZATION
 REGULATOR
 SHARE TO GLOBAL
– INDIA IS THE 23RD LARGEST
INSURANCE MARKET IN THE WORLD

– GLOBAL LIFE INSURANCE MARKET

• 1,500 Billion USD

– INDIA TAKES A MEAGRE 0.41% SHARE

OF THE GLOBAL INSURANCE MARKET
 IRDA
 PAID UP CAPITAL RS 100 CRORE

 SHAREHOLDERS’ FUND INVESTED ONLY

IN INDIA

 EQUITY PARTICIPATION OF 26% BEING

DEBATED UPON

 ISSUED 12 LIFE INSURANCE LICENSES,

13TH UNDER CONSIDERATION
 PRIVATE COMPANIES
 ALLIANZ-BAJAJ LIFE
 AVIVA LIFE
 AMP SANMAR
 BIRLA SUNLIFE
 HDFC STANDARD LIFE
 ICICI- PRUDENTIAL
 ING- VYSYA LIFE
 MAX NEW YORK LIFE
 METLIFE INDIA INSURANCE CO. LTD
 OM KOTAK MAHINDRA LIFE
 SBI LIFE
 TATA-AIG LIFE
 SAHARA INDIA LIFE ?
 STUDY
 SIZE OF MARKET
 NUMBER OF COMPANIES
 VARIETY OF NEW PRODUCTS
 BETTER PACKAGING - FLEXIBILITY
 CUSTOMER SERVICE
 CONSUMER AWARENESS
 DISTIBUTION CHANNELS
 CHANGE IN MINDSET
 HINDRANCES
 HEALTH INSURANCE
 RURAL INSURANCE
 SURVEY
 RESPONDENTS

– LIFE INSURANCE COMPANIES

– NON- LIFE INSURANCE COMPANIES

– INSURANCE CONSULTANTS

– CUSTOMERS

• FICCI
 TRENDS

 EXPANSION SINCE PRIVATIZATION

 POTENTIAL ANNUAL GROWTH RATE

 APPROPRIATE NUMBER OF COMPANIES

 VISUALISATION OF INDUSTRY
 MARKET SIZE
– ‘ HAS THE
INSURANCE MARKET 80%
EXPANDED SINCE
70%
PRIVATIZATION ?’
60%
YES
– YES 50%
78% 40% NO
30%
CAN'T
– NO 20% SAY
9% 10%
0%
– CAN’T SAY RESPONSE
13%
 EXPECTED GROWTH

 EXPECTED GROWTH RATE

IN ONE YEAR’S TIME :
– HIGH INCOME GROUP
• 52% RESPONDENTS - above 10%
– MIDDLE INCOME GROUP
• 57% RESPONDENTS - above 10%
– LOWER INCOME GROUP
• 30% RESPONDENTS - up to 2%
NO. OF COMPANIES
        Size of the market: %
o      30 & above players 35
o      25 to 30 players 13
o      20 to 25 players 17
o      15 to 20 players 2
o      10 to 15 players 4
o      0 to 10 players 0
Can’t say 9
 VISUALIZATION
– THE CUSTOMER WOULD BE LOOKING
AT SERVICE NOT THROUGH A
BRANCH OFFICE BUT AT HIS
DOORSTEP SUCH AS PAYMENT OF
PREMIUM THROUGH THE INTERNET,
CALL CENTRE SERVICE, INTERACTIVE
VOICE MAIL.
– BANCASSURANCE TO EMERGE AS AN
IMPORTANT CHANNEL OF
DISTRIBUTION, THOUGH AGENCY
WOULD STILL BE DOMINANT.
 PRODUCTS
50% OF INSURER-RESPONDENTS
LAUNCHED 5 NEW PRODUCTS LAST YEAR
50% OF INSURER- RESPONDENTS
LAUNCHED 5-10 NEW PRODUCTS LAST YR

67% RESPONDENTS FELT

INTRODUCTION OF THESE PRODUCTS
HAD SIGNIFICANTLY INFLUENCED
CUSTOMERS TO GO IN FOR INSURANCE
33% FELT THEY HAD NO EFFECT
 CHOICE

ALL CUSTOMERS SURVEYED FELT

HAVE WIDER CHOICE OF PRODUCTS

88% OF RESPONDENTS FELT

HAVE GREATER FLEXIBILITY
 RIDERS
 ‘DO YOU PREFER
TO BUY 100%
PRODUCTS WITH 90%
MORE RIDERS 80%
70% YES
-LIKE HEALTH & 60%
ACCIDENT?’ 50% NO
40%
30% Health
 YES 96% 20% Accident
10%
0%
RIDERS
 NO 4%
CUSTOMER SERVICING
 About 84% of the respondents in the
customers’ category have said that there has
been an improvement in the services provided
to them post entry of private players. Out of
these, 56% described the improvement as
significant.

 48% & 44% of the customers felt that timely

premium notice & personal touch with the
customers are important
METHODS ADOPTED FOR
CUSTOMER SERVICING
50
45
40
35
30
25
20
15 %
10 METHOD
5 SERVICING
0
PREM.NOT

OTHERS
CallCNTR
TRACK

PERS.TOUCH
CONSUMER AWARENESS

 EXISTING LEVEL LOW

 EVEN FOR EDUCATED CUSTOMERS

 ALL THE RESPONDENTS, IN THE CATEGORY OF

INSURERS, SAID THAT THEY AIM AT CHANGING
THE PERCEPTION OF THE CUSTOMERS

 92% FELT THIS IS VERY IMPORTANT

 8% FELT THIS IS FAIRLY IMPORTANT
MODES OF SPREADING
CONSUMER AWARENESS
 74% - FELT THEY USE ADVERTISING
 43% - FAVOURED PERSONAL SERVICES
 26% - FELT EFFECTIVE TO SPREAD
AWARENESS OF NEW PRODUCTS
 4% - USE DIRECT MARKETING
 17% - USE GROUP MEETS
 PROMOTION MELAS, UNIVERSITIES &
SHOPPING CENTRES
 WEBSITES, INTERNET LINKS &
CALL CENTRES
 EVENT SPONSORSHIPS, ETC.
- NOT MUTUALLY EXCLUSIVE
 DISTRIBUTION
NETWORK
 AGENTS
 55% INSURERS FELT IMPROVEMENT IN AGENT
 45% FELT IMPROVEMENT NOT UPTO MARK

 AGENTS’ EXPERIENCE
 40% RESPONDENTS WANT WORK EXPERIENCE

 AGENTS’ QUALIFICATION
 76% RESPONDENTS WANT MIN. GRADUATES
AGENTS’ RECRUITMENT

METHODS OF RECRUITMENT USED BY

COMPANIES
 48% RESPONDENTS USE
ADVERTISEMENTS

 48% RESPONDENTS USE

 RECOMMENDATIONS / REFERENCES

 22% RESPONDENTS USE

 PLACEMENT CONSULTANTS
 TRAINING

 100% RESPONDENTS ADOPT

 SALES TRAINING
 83% RESPONDENTS ADOPT
 BASIC TRAINING
 50% RESPONDENTS ADOPT
 PERSONALITY DEVELOPMENT
 50% RESPONDENTS ADOPT
 PROFESSIONAL TRAINING
 17% RESPONDENTS ADOPT
 SKILL / PROFILE DEVELOPMENT

 NOT MUTUALLY EXCLUSIVE

ALTERNATE CHANNELS

 CORPORATE AGENCY
 LTD CO s, NGO s, PARTNERSHIP FIRMS
 BANCASSURANCE
 53% RESPONDENTS FELT INDIAN MARKET
SUITABLY DEVELOPED FOR BANCASSURANCE
 47% FELT IT WAS NOT
 83% RESPONDENTS PREFERRED BANKS AS
ALTERNATE CHANNEL OF DISTRIBUTION
 BROKERS
 DEAL IN PRODUCTS OF MULTIPLE INSURERS
 CHANGE IN MINDSET
 INSURANCE SOLD AS INSTRUMENT OF
– TAX &
– SAVINGS
• IN INDIA
– RISK COVER &
– OLD AGE SECURITY
• IN WEST
 75% RESPONDENT-INSURERS FELT
– REMOVAL OF TAX SOPS CAN CHANGE MINDSET
– 25% THOUGHT OTHERWISE
 88% RESPONDENTS SAID
– THEY INSURED FOR SECURITY
– THIS SHOWS CHANGE IN MINDSET
MOTIVATION TO INSURE
88,28,40: NOT MUTUALLY EXCLUSIVE
90
80
70
60
50 SECURITY
40 TAX SOPS
SAVINGS
30
20
10
0
%
 HEALTH INSURANCE
 64% OF THE RESPONDENTS FELT THAT HEALTH,
AS A RIDER TO LIFE INSURANCE WOULD MAKE IT
MORE ATTRACTIVE

 54% AGAINST HEALTH BEING A PART OF LIFE

INSURANCE

 HEALTH PROBLEMS FACING INSURANCE

– 92% RESPONDENTS FELT LACK OF NECESSARY DATA

ON HEALTH

– 75% FELT LACK OF MEDICAL INFRASTRUCTURE

 HINDRANCES

 60% INSURER-RESPONDENTS FELT

LIMITATION OF FOREIGN EQUITY
PARTICIPATION TO 26% AS A MAJOR
HINDRANCE

 LACK OF CONSUMER AWARENESS

 RAPID DECLINE IN TAX INCENTIVES

 RURAL AREAS

 ACCEPTABILITY OF PRIVATE
COMPANIES IN RURAL AREAS

– 48% : YES
– 43% : NO
– 9% : INDECISIVE
 RURAL INSURANCE
 52% COMPANIES SAID THAT LAUNCH
OF PRODUCTS TARGETED SPECIFICALLY
FOR RURAL AREAS MET WITH AN
ENCOURAGING RESPONSE
 39% SAID RESPONSE WAS NOT
ENCOURAGING
 82% RESPONDENTS SAID NOT ENOUGH
HAD BEEN DONE TO TAP POTENTIAL IN
RURAL AREAS
– COMPANIES BASICALLY FULFILLING
REGULATORY REQUIREMENTS
 HINDRANCES: RURAL AREAS
% OF RESPONDENTS
 DISTRIBUTION BY AGENTS-65%
 LACK OF INFRASTRUCTURE-61%
 DEFINITION OF THE RURAL AREA-48%
• IRDA-POPU.5K,DENSITY400 PEOPLE/SQ.KM,75%MEN AGRI.
• CENSUS

 MINDSET IS A PROBLEM- 43%

 TRAINING OF AGENTS- 30%
 CLAIM SETTLEMENT- 17%
 REGULAR COLLECTION OF PREMIUM17%
 HIGH DISTRIBUTION COSTS
 LOW PREMIUM PAYING CAPACITY
 LACK OF AWARENESS

 LACK OF AWARENESS REGARDING

INSURANCE IN RURAL AREAS as per 74%
RESPONDENTS

 17% SAID SUFFICIENT AWARENESS

 9% DID NOT RESPOND

• RESULTS ARE NOT MUTUALLY EXCLUSIVE

 CHANNELS IN RURAL AREAS
– INSURER-RESPONDENTS

 48% USING PUBLIC SECTOR BANKS

– Most effective

 39%- CO-OPERATIVES

 35%- AGENTS, TIE-UPS WITH GOVT AENCIES

 26%- NGOs

 17% - POST OFFICES & PANCHAYATS

• NOT MUTUALLY EXCLUSIVE

 GROWTH OPPORTUNITY
 THE DOMESTIC MARKET EXPECTED
– TO GROW BY OVER 14% P.A. : 2001-05
– SECOND ONLY TO EASTERN EUROPE
– Study by Swiss Re
 AVERAGE INS. PREMIUM GROWTH
– INDIA: 8.2%
– GLOBAL: 3- 4%
– Study by LIC & KPMG
 FIGURES INDICATE ELBOW ROOM
ENJOYED BY INSURANCE SECTOR
 EMERGING TRENDS

 THE INDIAN NSURANCE MARKET

REGISTERED THE HIGHEST
GROWTH IN THE ASIAN REGION

 CII HAS PROJECTED GROWTH

FROM PRESENT Rs 350 BILLION
TO Rs 1400 BILLION
 7 HABITS OF HIGHLY
EFFECTIVE PEOPLE
Dependence to Private Victory
1. BE PROACTIVE : response + ability, ’pause’ button
2. BEGIN WITH THE END IN MIND : mission
3. PUT FIRST THINGS FIRS : important v/s urgent

Independence to Public Victory : interpersonal

4. THINK WIN-WIN : third alternative
5. SEEK FIRST TO UNDERSTAND...
THEN TO BE UNDERSTOOD : active listening
6. SYNERGIZE : value differences

Interdependence : creative co-operation

7, SHARPEN THE SAW : self-renewal
- STEPHEN R. COVEY