The insurance industry is one of the fastest growing industries in the country, and is growing at a rate of 26% per annum. The outcome of liberalization over a period of five years has been positive in terms of the premium underwritten and the annual growth rate. Private life insurers have captured 26% of the market share. While bancassurance being in its nascent stage has made little progress in improving penetration of insurance business, the proposed government's move to withdraw the guarantee of the 16 crore policies of LIC of India may prove to be a hurdle for the growth of the insurance business in the coming years. With more than 60% of the rural people uncovered, the role of private insurance players becomes all the more significant.
Insurance industry in India has changed substantially and has responded to a changing
environment on the basis of Malhotra committee 1993 recommendations by allowing
private parties in insurance industry since 2000 onwards. The insurance industry is one of
the fastest growing industries in the country and is growing at 46% each year. Private players
have captured a sizeable chunk of business in these five years. According to Economic Survey,
insurance business in India is worth Rs. 400 bn (US$10 bn), and as insurance and banking
services together contribute 7% of the GDP, the growth of premium income becomes significant.
The funds available with the State-owned LIC for investments are 8% of GDP.1 The overall size
of the market has expanded interms of all acceptable yardsticks with an annual growth rate of
15-20% and the largest policies are in force. The potential of Indian Insurance Industry is huge.
For, Liberalized insurance industry which completed half-decade (2000-05), evaluation of
liberalized insurance business in a span of five years is not too early and it is essential to evaluate
the results of private players as crores of rupees have been invested by the private players as
well as the government. With, three fourth of India’s population with no insurance coverage,
Indian insurance industry needs to make a long journey to complete, before it attains the total
insurance penetration. |
