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Rise and Fall of Insurance In India

Many in India believe that the insurance sector is a secure sector but the collapse in the premium income of private and public life coverage plans and general insurance companies clears this myth. The statistics came out in the light, concerning the premium income of the insurance industry noticeably represents that Insurance India is not recession proof.

Demise initiated from the life insurance segment of India where the chief and mainly trusted companies have not recorded enormously inspiring premium income. To begin with Life Insurance Corporation of India (LIC) has recorded the expansion rate of 4.45 percent in 2009 collecting total Rs.1.56 trillion as its premium income. The downfall is also seen in the 2009 first quarter as the private life insurance competitor like ICICI Prudential Life has revealed the demise of 49 percent in its expansion, in June quarter. In the meantime SBI Life, the life insurance PSU has also reported the premium income of Rs.1, 072.72 Cr in the same quarter besides the 2008 year’s same quarter premium income of Rs.1, 148.64 Cr.

The insurance sector of India is not only witnessing this downfall in life insurance segment but is also looking south with its general insurance biz. The data represent the deliberate pessimistic expansion of the general insurance sector in India with both public and private firms like LIC – Life insurance corporation of India giving out combined outcomes. In the first quarter of the 2008-2009 financial year, where the public segment general insurance firms, like United India, Oriental Insurance and New India Assurance have reported the expansion of 14 percent, 7 percent and 10 percent correspondingly, one more PSU National Insurance has reported in the pessimistic expansion of 2 percent.

Speaking of private general insurance firms a number of giant competitors like Tata AIG General Insurance and Reliance General Insurance have reported the pessimistic expansion. The additional competitors in the similar group like ICICI Lombard Insurance and Bajaj Allianz General have recorded the southward expansion of 13% and 21% correspondingly in the June quarter. Though there are a number of private firms present which have reported the superior expansion rate against all predictions, this comprises Royal Sundaram, which has developed by 10 percent, whereas Cholamandalam has recorded the positive expansion of 17 percent. Amusingly, HDFC General insurance products provider division, HDFC Ergo has also reported an expansion of 246 percent in its premium segment.

The instability of the insurance segment in India can be calculated in the expansion figures of past five years where the motor insurance business is developed by 16 percent while the health insurance industry has recorded the expansion of 37 percent in the similar period. The negative expansion of Bajaj Allianz General and ICICI Lombard Insurance against HDFC General Insurance and Cholamandalam is seen, by experts, as the outcome of meager reach in the cities whereas the poor show of life insurance is observed as the outcome of shortage of skilled insurance consultants.

Author: Gaurav Khurana is an expert on Insurance. He is the Founder Director of DIALABANK.COM (Call 60011600) and Ex National Sales Head – ING Investment Mgt India and Vice President Citibank N.A