BOMBAY, 3 November 2003 — The face of the Indian insurance has undergone a complete make over with the entry of private players. Yet, after the makeover, the new face which has now emerged looks very similar to the old face. Before the entry of the private players, the Indian insurance sector was dominated by government-owned Life Insurance Corporation (LIC) of India. And now after the private players have set up their shops in India, LIC continues to reign supreme. No doubt it has lost some bit of market share, yet it continues to rule the roost.
In fact a very funny thing has happened in the Indian insurance sector. When the private sector players made an entry, they realized that India’s rural market was immense. To capture this market, they first decided to educate the masses about the significance of insurance. Well, the masses got educated but instead of the private sector players, they preferred to insure themselves with LIC!
This in no way means that the 12 private life insurance players are not doing well. Infact, the market share of 12 private life insurance players has doubled at 10.29 percent during the five-month period of the current financial year. The private life insurance players had a market share of 5.66 percent during FY 2002-03, according to the estimates put forward by the Insurance Regulatory Development Authority (IRDA).
Among the private players, ICICI Prudential Life increased its market share to 3.07 percent after it sold 90,505 policies for a premium income of Rs.1,330 million. ICICI Prudential was followed by Birla Sunlife, HDFC Standard Life and Tata AIG each with over 1.0 percent share. Birla Sunlife mopped up Rs.650 million to maintain a 1.51 percent market share while HDFC Standard Life collected Rs.550 million (1.27 percent) and Tata AIG managed Rs. 480 million (1.11 percent). Other players — Allianz Bajaj, Max New York Life, OM Kotak, SBI Life, Aviva, ING Vysya, Metlife and AMP Sanmar — had less than 1.0 percent market share.
Despite this encouraging news, the bottomline is that the private players failed to make a significant dent into the business of LIC, which still commands over 89 percent of the Rs.43.35 billion premium income mopped up by 13 companies till August 2003.
Another trait of the new face which has come to the fore is that people are now using insurance, more and more an a tax saving tool rather than just a insurance instrument. Life insurance is being seen as a combination of tax planning tool and savings investment.
Along with the savings plan, even the children’s plan commands a lot of interest. Infact almost 10-15 percent of the insurance market is in the children’s segment. LIC, naturally, leads the pack. It has plans like Bal Vidya (provision for education of a child, most suitable for insurance on the life of a parent who has a child aged 3 or more), Children Deferred Plan (taken for children from 0 years), Jeevan Balya Plan (ideal for meeting the educational expenses of children), Jeevan Chhaya Plan (Couples having a less than one year child, not an adopted child, can avail themselves of this plan), Jeevan Kishore Plan (specially made for parents with children between ages 1 to 12 years), Jeevan Sukanya Plan (plan for female child), Jeevan Vishwas Plan (special plan for the benefit of handicapped), Money Back Children Plan (plan to meet child’s educational funds and marriage expenses).
Then in the private sector, there is ICICI Prudential’s Smart Kid Plan, Om Kotak Mahindra’s Child Advantage Plan and SBI Life’s Scholar Plan.
People have also now started to look at various options in retirement and pension plans. And even here, there is a basket of policies available from private players as well as LIC. These plans are bought to generate income during one’s retired life, which is why they are also called pension plans. Annuity premiums and payments are fixed with reference to the duration of human life. Annuities are an investment, which can offer an income you cannot outlive and provide a solution to one of the biggest financial insecurities of old age; namely, of outliving one’s income. LIC has various schemes to offer like Jeevan Suraksha, New Jeevan Akshay and New Jeevan Dhara.
And in the private sector there is ICICI Prudential’s Forever Pension Life, Reassure, LifeLink Pension and Life Time Pension Plans. Tata AIG offers its Assure Golden Years Plan. SBI Life also offers a plan — Sanjeevan.
In the other categories there are also special plans designed to satisfy needs ranging from debt-clearance in the event of the death of the insured to financial aid in the event of a medical mishap. Special plans also provide financial assistance for handicapped dependents as well as emergency surgery required if and when a medical condition arises.
The latest offering has come from LIC which is offering a product called Jeevan Anand. This policy is a whole life-cum-endowment plan, where the sum assured plus bonuses are paid at the end of the premium payment term but life cover continues for the whole life. A sum equivalent to the sum assured is paid to the beneficiary in addition to the earlier payout if death occurs after the endowment period.
However, the bonuses do not accumulate after this period. This policy is best suited for people who wish to limit the premium payment term to their earning period and at the same time provide for their old age.
