Its been four years since the liberalization of the insurance sector in India has taken place. Now, there are as many as 26 insurance companies (one reinsurance company) operating and a few more would add to the list. This article makes an attempt to explore the current situation in insurance industry and particularly in rural India. It also tries to establish the role of the insurers, IRDA and the government in such a scenario.
The growth in the insurance sector is higher than
the GDP growth-rate of the country. The insurance
premium income has grown from 1.77% to 2.59% of the
GDP in the last one year. A careful analysis of post
liberalization period suggests that new insurance
players did make a good start while the existing ones
maintained consistent growth levels. This is also
evident from the rise in the penetration levelfrom
2.52% in the year 2000-01 to 3.56% in the year 2002-03.
A
noteworthy observation here is the divergence in the
penetration levels of the urban and rural markets.
This is evident from the fact that there is a significant
difference in the insurance coverage in these two
markets.
Indian insurance market can be divided into urban
and rural markets. These two segments are diverse
in nature and have distinguished characteristics.
The economic growth of the two has not been the same.
A wide disparity exists between the per capita income
and literacy rate, among other things, in these two
sectors. From insurance perspective, statistics show
that rural population has lower reach. The agent per
1000 persons is around 0.25, which is far low in comparison
to that of the urban market. Insurers may use this
knowledge in designing innovative products, need-based
selling of insurance, better penetration, development
of new channels etc. |
