Life Insurance India Term Paper

1785 Words4 Pages

Market

For over 50 years, life insurance in India was defined and driven by only one company - the Life Insurance Corporation of India (LIC). With the Insurance Regulatory and Development Authority (IRDA) Bill 1999 paving the way for entry of private companies into both life and general sectors there was bound to be new-found excitement - and new success stories. Today, just three years since their entry, their cumulative share has crossed 13% (Source: IRDA), far exceeding expectations.

Clearly insurance is on a growth path. The percentage of premium income to GDP which was just 2.3% in 2000/01 rose to 3.3% in 2002/03; and life insurance has emerged as the dominant contributor to this growth.

The industry presented a huge opportunity. Life insurance penetration, for instance, was at an abysmal 22% of the insurable population. However, private players have had to rise to many challenges. They were faced with attitudinal barriers towards the category and the perception that insurance was only a tax-saving tool. Insurance per se had lost it basic rationale: protection. It wasn’t surprising then that its potential lay frozen and unexploited. The challenge for private insurance players was to change the established category driver and get customers to evaluate life insurance as an investment-cum-protection tool.

Achievements

Beginning operations in December 2000, ICICI Prudential’s success has been meteoric, becoming the number one private life insurer within months of launch. Today, it has one of the largest distribution networks amongst private life insurers in India, with branches in 54 cities. The total number of policies issued stands at more than 780,000 with a total sum assured in excess of Rs. 160 billion.

ICICI Prudential closed the financial year ended March 31, 2004 with a total received premium income of Rs. 9.9 billion, up 135% from last years total premium income of Rs. 4.20 billion. New business premium income shows a 106% growth at Rs. 7.5 billion, driven mainly by the company’s range of unique unit-linked policies and pension plans. The company’s retail market share amongst private companies stood at 36%, making it a clear leader in the segment.

To add to its achievements, in the year 2003/04 it was adjudged Most Trusted Private Life Insurer (Economic Times ‘Most Trusted Brand Survey’ by ACNielsen ORG-MARG). It was also conferred the ‘Outlook Money – Best Life Insurer’ award for the second year running. The company is also proud to have won Silver at EFFIES 2003 for its ‘Retire from work, not life’ campaign.

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