FACTORS DETERMINING

THE GROWTH OF
INSURANCE BUSINESS

Presented by,
Sariga.S
M.Com Finance & Systems
Factors determining the growth of
insurance business
1) Managerial effectiveness
Managerial effectiveness is one of the main determinants for the growth of life and
non-life insurance companies . Insurance is an industry ,which entirely human
resource-intensive and not capital-intensive , like manufacturing . Improving
managerial effectiveness must result in planned healthy premium growth , decent
margin of profits with highly motivated staff and satisfied customer populations.

2) Importance of SWOT analysis

SWOT analysis is done for the insurance company annually , as it is a self-learning
process .It is essential to consider the conclusions of the SWOT analysis of the
functional and operational performance of the insurance companies.
3) Insurance products
Innovative and flexibly priced insurance products of our country will integrate into
world’s economy. Normally, the insurance companies offer multiple products with
slight variation in their schemes like housing policy ,automobile policy, health policy
,group insurance etc.
4) Investor’s choice
The choice of investors may depend on safety , risk, high return, tax benefit,
easy transactions, customer care, variety of schemes ,duration , loan facility etc.
Accordingly , the insurance companies should have t a wide range of policies,
suiting every needs of customers .
5) Pricing of products
The pricing of the products will undergo changes and the regulator will have to
monitor it in order to create a healthy competition .In this regard , the provider
and the receiver, both will have to interact very closely to secure a fair deal on
pricing of the policy as the insurance sector will no longer be in a monopolised
position.
6) Customer service
Growth of insurance industry’s market share and profits can be affected by the
quality of customer service, more so in the case of service providing
organisation . Customer satisfaction is dependent on factors like the advantages
the customer perceives as accruing from the policy , the way policy is presented
to the customer and the expectations regarding the services from the
intermediaries who are the contact btw the company and the customer.
7) Market segmentation and Market penetration
Market segmentation and market penetration enable insurance marketers to select the
target market and offer appropriate marketing mix. However, for better
penetration ,identification of the so far untapped areas helps the growth of the insurance
business . Market segmentation is necessary for designing need-based products, choosing
right strategies for sale maximisation and thereby to achieve the goal of the insurance
companies.
8) Generation of income
The main sources of income generation of the insurance companies are premium income,
investment income and miscellaneous income. Miscellaneous income, such as registration
fees, refund of tax, old claim outstanding etc are the other sources of income leading to
the growth of insurance business in India.
9) Role of distribution channels
Distribution channels in insurance business are an important element and have an impact
on the profitability. It has a strong influence on insurance product marketing and the image
of the insurer in the market. However , many companies strive to introduce alternative
distribution channels for selling.
10)Settlement of claims
The payment of claims may be regarded as the primary service of insurance to the public .
The proper settlement of claim requires the sound knowledge of the terms and conditions
of the standardised policies .
11) Economic Environment
This is considered to be the highly influencing factor for the growth of insurance
business . The economic environment includes the factors which affect the
purchasing power and spending pattern of the consumer. Hence, insurance
marketers should know well about major trends in income and change in consumer
spending patterns.
12) Role of technology
Technology plays a strategic role in providing a competitive edge, be it in aiding
design and administering of products or building lifelong customer relationships . In
fact technology will help to enhance services, ensure effective and effiecient
service ,delivery and leads to greater customization of products and greater
transparency.
13) Corporate social responsibility
The insurer has the responsibility to establish identity of the customers properly to
avoid fraud in claim, security threats and to take care of anti-money laundering
guidelines wherever big amounts are paid as premiums.
14) Insurance marketing research
It is essential to conduct market research to enable the insurance executives to
make sound decisions . Insurance companies are establishing a separate marketing
organisations, conducting market research ,setting up sales training programmes and
adopting sales promotion devices to attract customers.
GROWTH OF INSURANCE
 The insurance industry in India has 58 insurance companies ,including 34 non-
life insurers . The insurance industry in India has witnessed growth rate the
last two decades .Private life insurers are expected to grow their retail APE at
a CARG of over 17% and new retail term premiums are expected to double in
5 years . The Private Non-life insurance segment is forecasted to grow at 16%
financial 2022 and 14% in financial year 2023.The total insurance penetration

India was at3.76% in 2019 and the total insurance density was $78 in 2019-
20 .In terms of the size of insurance industry in India , the share of life
insurance in total premium in India is 7.49%. And the share of non-life
premium is 25.06%.During last year ,life insurers issued 288.47 lakh
individual policies out of which LIC issued 75.9% of policies and the private
life insurers issued 24.1% of policies . Motor insurance accounted for 34.1%.
Health insurance witnessed 13.3% growth in GDP1 in FY21
 GROWING ECONOMY AND INSURANCE
Insurance is an important part in the financial sector that contributes significantly to the
economy of a country. Insurance market contributes to the economic growth as a financial
intermediary and also helps in managing risk more effectively .
 When most people think of insurance, it’s individual auto or homeowner’s policies that first come to
mind. Some might even think about the insurance payments they must make each month to keep their
businesses open.
 It’s not often that people immediately reflect on the important role insurance companies play in
stimulating our economy, but that fact is true. Insurance companies help keep our economy strong,
and more vibrant in various ways.
How, you ask?
 Insurance companies offer financial protection for consumers.
 Consumers have become so accustomed to routine that they often don’t realize the barrage of risk and
uncertainty they face every day. Whether it’s a vehicle accident, an accidental house fire, a flooded
basement from a big storm, or an injury at work, unexpected hardships can come up at any moment.
 Insurance can help manage this uncertainty and potential loss by providing vital financial protection.
When disaster strikes, an insurance plan can provide consumers with the financial assistance they
need. Without it, many individuals in these situations would be financially strained and could even
face bankruptcy. 
Insurance companies help businesses mitigate risk and protect their employees.
 As with consumers, helping businesses mitigate risk can have a lasting, positive impact on
the economy. A stronger Main Street leads to stronger communities and overall improved
economic health of individual states and the country as a whole. Similar to consumers,
businesses also can face financial duress due to disasters and unforeseen challenges. When
disaster does strike, insurance is one of the best financial tools businesses can call upon to
help tackle these challenges.
 Business insurance also helps drive growth. At its core, the protective safety net of insurance
enables businesses to undertake higher-risk, higher-return activities than they would in the
absence of insurance. These actions help businesses run successfully, which translate to more
jobs and an increase in economic activity.
 Additionally, when an employee gets injured on the job, it is business insurance that helps
cover the costs of that employee’s treatment, and any potential wage interruption. 
Insurance companies help keep our farms operating.
 During every planting and harvest season, farmers face a unique set of challenges. Insurance
products for farmers are uniquely tailored to their needs, including coverage for the financial
risks that come with floods, droughts, and equipment failures. Keeping this important
industry operating is another way insurance positively contributes to the economy.
 
Insurance companies help finance economic development projects.
According to the American Insurance Association, property-casualty insurers operating in
the U.S. have more than $1.4 trillion invested in the economy. Insurance companies
typically invest premiums, or dollars, that are not used to pay claims and other operating
expenses. Through stock, corporate and government bonds, and real estate mortgages,
these investments often finance building construction and provide other crucial support to
economic development projects around the nation.
 
Insurance is much more than monthly premium payments consumers and businesses must
make. As a whole, the insurance industry is a vital thread in the fabric of a strong
American economy. Insurance makes our economy possible and dreams like
homeownership, a reality. To learn more about the Iowa Insurance Institute members that
help stimulate the Iowa economy, please visit our Members page.
CONDITIONS FOR SUCCESS OF PRIVATE
INSURERS
The success of private insurers primarily depends on the following conditions:

1) By constantly analysing the challenges and market opportunities to estimate

targets.
2) New products should be simple and economical and is also expected to give
better return campaigns .
3) Should provide more new innovative products with very competitive pricing.
4) Should be focused on aggressive advertising. Unique advantages of
promotional campaigns explain considerable success in private insurance
companies.
5) Proper training facilities should be provide to the intermediaries in order to
enhance their efficiency.
6) Large number of trained and professional agents should be appointed as
intermediaries for development and expansion of insurance market .
7) Better after-sale services should be provided at the time of processing of a
claim, documentation and settlement of claims .
8) A target of zero outstanding claims to be set.
9) Build up a large network of office in order to take insurance close to the
insuring public .
10) Different strategies should be adopted to penetrate the market by
developing distribution models . Should be focused direct selling or using
bank network to sell insurance products .
11) Use innovative technology for design and administering of insurance
companies .
12 )Emphasis on the state of want-satisfying utilities i.e., acid-test of insurance
business success is consumer’s satisfaction.
13) Making their distribution channel more productive and cost effective .
14) Strong control over their distribution channel .