China and India, the world's largely populated countries, are high potential markets for life insurance, which are yet to be explored. With deregulation and opening up of the market for foreign players, what kind of changes have these countries witnessed in the life insurance sector? asks K C Mishra, Director, National Insurance Academy. Since the initial life licenses were awarded by the now famous IRDA to HDFC Standard Life, ICICI Prudential Life and Max New York Life, there has been a steady stream of new entrants. Allianz Bajaj Life, Birla Sun Life, ING Vysya Life, OM Kotak Mahindra, SBI Life and Tata AIG Life commenced selling last year, and at the start of 2002, AMP Sanmar, Dabur CGU and MetLife entered into the market. Each of these new entrants had a foreign partner.
Malhotra Committee appointed by the Government of India for conducting a study on insurance, in its report in 1994, stated that only 22% of the Indian population was insured. The poor reach of insurance in the country and the sheer numbers make India a potential market. The following facts show how underdeveloped the Indian insurance business was, due to the state monopoly and lack of aggressive marketing of insurance policies. The per capita insurance premium in India was a mere US$6, one of the lowest in the world. In South Korea, the corresponding figure was US$1,338, in the US it was $2,250, and in the UK it was $1,589. Insurance premium in India accounted for less than 2% of GDP, compared to the world average of 7.8% and G-7 average of 9.2%. Insurance premium as a percentage of savings was barely 5.95% in India, compared to 52.5% in the UK.
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