RURAL AREAS, LOW-INCOME GROUPS TO DRIVE INSURANCE DEMAND

Business from health insurance and pension products are other potential areas private insurance companies can look at to increase their customer base

For smaller players in the life insurance industry, a report by consultancy firm McKinsey and Co. could offer pointers on how to take on behemoth Life Insurance Corp. of India Ltd (LIC), which has 70% of the market.

The McKinsey report, titled India Insurance 2012: Fortune Favours the Bold, says that the sector is still in a nascent stage, with players in different stages of development and market presence.

The report says that their strategies and business models are largely one-size-fits-all, with reliance on low-margin single-premium policies and unit-linked products, as well as fairly indifferentiated distribution ­models.

This is where the smaller insurers and new entrants can hope to stand out. With 65% of the life insurance business coming from the rich urban class, they can look at rural and low-income group as potential demand drivers.

The McKinsey report says that rural penetration is likely to increase from about 25% at present to 35-42% in 2012. Penetration in the low-income segment in urban India would also rise from 30% to 35-40% by that time.

Given the recent rapid increase in disposable incomes, the insurance industry is growing at a fair clip of 40% in India, and going by the report, the industry size is going to double in the next five years.

That Indians rank life insurance higher than other investment options for tax benefits and protection will also help, it notes.

According to McKinsey & Co.’s associate partner Anu Madgavkar, apart from rising incomes, three factors would drive growth in the next five years—the emergence of newly bankable households, a better product mix, and growing demand for long-term savings and investment instruments.

SOURCE:LIVEMINT

General insurance industry grew by 15 per cent in the August led by Anil Ambani group firm Reliance General Insurance, which recorded the highest growth of 161 per cent in gross premium as compared to a year ago.

During the month, market leader New India Assurance's premium collection witnessed a dip of one per cent to Rs 358 crore as compared to Rs 363 crore a year ago.
  
In the private sector, the largest player, ICICI Lombard collected 22 per cent higher premium at Rs 302 crore.

Private players increased their business to Rs 881 crore in August from Rs 662 crore in the same month last year, the data shows.

With a premium collection of Rs 155 crore in August, against Rs 59 crore a year ago, Reliance General Insurance became the the fastest growing insurer.

In percentage terms, while the public sector could increase their premiums by just 5 per cent, eight private sector players clocked premium growth of 33 per cent.

 

Source: Dna Money

 

 

Removal of tariffs will boost health insurance: IRDA chief

Mumbai: Health Insurance is poised to become the second largest business for non-life insurers in the next three years, after motor insurance.

C.S. Rao, Chairman, Insurance Regulatory and Development Authority, said the removal of tariffs would give a boost to health insurance.

With the removal of tariff, the premium from fire insurance is likely to drop while the premium from health will increase. We expect health insurance to become the second largest business in the next three years, he said, speaking at the CII Health Seminar in Mumbai on Friday.

Health Insurance premium has jumped from Rs 675 crore in 2001-02 to Rs 3,200 crore in 2006-07. Fire (property) insurance premium stood at around Rs 4,000 crore in 2006-07.

The health business, which was in the fifth position in 2001-02, moved up to the third spot in 2006-07. Motor and fire insurance currently occupy the first and second places.

Fire, engineering and motor insurance have been following pre-administered rates or tariff. Since January this year insurers were allowed to cut rates-subject to a ceiling. This has meant that insurers are no longer subsidising the health insurance portfolios of corporates to win the more lucrative fire business.

Rao said that the floor rate (of 51 per cent) for discounts on fire and engineering policies would be done away with from November 2007, if the regulator is satisfied with the new rates filed by insurers.

The chairman said that in the past 40 years, public sector companies had focused on their corporate business but were now beginning to actively look at their individual business (personal lines).

IRDA may also advance the deadline for complete free pricing (with changes in wordings of the policies) to January 2008, from April 2008, if satisfied with the report on market wordings submitted by the non-life insurers.

As part of the amendment to the Insurance Act, the IRDA has made recommendations to the Government to define a standalone health insurance company and prescribe separate norms for the capital structure and solvency requirements for such companies.

We have recommended a risk-based capital approach for stand alone health insurance companies which many countries have already moved to for most of their businesses. So, far we have been using the traditional method for solvency, he said.

The regulator expects two or three more players to enter the health sector in the years to come.

Currently, Star Health and Allied Insurance and Apollo DKV are the only two stand-alone health insurance companies.

IRDA has also set up a committee to look into the problems faced by senior citizens regarding health insurance policies. There have been complaints that senior citizens are being charged exorbitant rates or are being refused renewal of their policies, he said.

SOURCE : SIFY FINANCE

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