The Life Insurance market in India Is an underdeveloped market that was only tapped by the state owned LIC l the entry of private insurers. The penetration of life insurance products was 19 percentages of the total 400 million of the insurable population. The state owned LIC sold Insurance as a tax instrument, not as a product giving protection. Most customers were under- insured with no flexibility or transparency in the products. With the entry of the private insurers the rules of the game have changed. The 12 private insurers in the life insurance market have already grabbed nearly 9 percentage of the market in terms of premium income. The new business premiums of the 12 private players have tripled to Rest 1000 core in 2002- 03 over last year. Meanwhile, state owned LIC’s new premium business has fallen. Innovative products, smart marketing and aggressive distribution are the triple combination that has enabled 1ledgling private insurance companies to sign up Indian customers faster than anyone ever expected. Indians, who have always seen like insurance as a tax saving device, are now suddenly turning to the private sector and snapping up the new innovative products on offer.
The growing popularity of the private insurers shows in other ways. They are coining money in new niches that they have introduced. The state owned companies still dominate Segments like endowments and money back politics. Duty in the annuity or pension products business, the private insurers have already wrested over 33 percentage of the is And in the popular unit-linked insurance schemes they have a virtual monopoly, with over 90 percentage of the customers. The private insurers also seem to be scoring big in other ways-they are persuading people to take out bigger policies. For instance, the average size of a life insurance policy before privatization was around Rs.50000. That has risen to about Rs.80000. But the private insurers are ahead in this game and the average size of their policies is around Rs.1.1 lakh to Rs.1.2 lakh- way bigger than the industry average. Buoyed by their quicker than expected success, nearly all private insurers are fast- forwarding the second phase of their expansion plans. No doubt the aggressive stance of private insurers is already paying rich dividends. But a rejuvenated LIC is also trying to fight back to woo new customers.