Given the uncertain lives we all lead in today’s ever-changing world, getting insurance cover is imperative. Immense changes have taken place in the Indian insurance sector. Earlier insurance meant just the Life Insurance Corporation of India(LIC). But the scene has undergone a complete change, with people the option of going for private sector insurance players.
Figures suggest that there has been a tremendous growth in private sector life insurance players during the fiscal ended March 2003. The Insurance Regulatory and Development Authority(IRDA) has pointed out that LIC still rules the roost with a market share of 92 percent share in entire industry, down from 98 percent in the previous fiscal year. The private sector improved its overall market share to eight percent from two percent in the previous fiscal year.
The analysis of the new business figures furnished by the private life insurers reveals that overall business captured by the 12 players rose to Rs.9, 812.4 million during 2002-03, from Rs.2, 966.1 million in the previous year, a growth of 231 percent.
ICICI Prudential topped the private sector business market with a share of 38 percent. Birla Sun Life followed with 15 percent, and HDFC Standard with 14 percent, Max New York with 8 percent, SBI Life with 7 percent, Tata AIG with 6 percent, Allianz Bajaj with 5 percent, Om Kotak with 3 percent, ING Vysya with 2 percent, Met Life and Aviva with 1 percent each. AMP Sanmar registered no market share. In terms of total market, the share of ICICI Prudential stood at nearly three percent, followed by Birla Sun Life and HDFC Standard at 1.21 percent and 1.08 percent of the premium underwritten.
The private sector insurance players have changed the entire dynamics of the industry by managing to change the preferences of people from small policies to bigger policies. The average size of a life insurance policy before privatization was around Rs.50, 000. That has risen to about Rs.80, 000 for LIC. Here the private sector’s average policy size is around Rs.110, 000 to Rs.120, 000 — way bigger than the industry average.
Motivated by the great response that these private players have been getting, many are expanding their reach. Birla Sun Life is planning to expand to 11 new cities this financial year, taking its total tally to 52 cities. Tata-AIG, which will be selling policies in four more cities this year. The company expects to grow by over 100 percent and is drawing up plans to boost its agents sales force from 13, 000 to 20, 000 this year.
In the first quarter of this year, Max New York Life entered five new cities. Om Kotak, which is targeting 40 cities, is already present in 20 and is making a special push in Gujarat and Maharashtra. Aviva hopes to expand its reach from 12 cities to at least 17 by year-end.
The private sector players are going aggressive with their marketing strategies. LIC is unshakable today mainly due to its brand and its sheer reach. The private sector players know that if they have to win this battle, they will have to first reach as far and wide as LIC.
Om Kotak, for instance, has launched a “back to school” campaign under which agents are encouraged to return to their alma maters to sell insurance products.
Max New York Life has appointed representatives in some rural locales who’ve been trained to identify and sell specialized insurance products. ICICI Prudential is using direct marketing as a tool to identify new customers. Birla Sun Life has used its website to bring about leads on potential clients which are passed on to the sale channels for execution. SBI Life is leveraging its own group’s large bank network to sell products. Aviva, which gets 50 percent of its business from the banks, is offering products bundled with those of the bank.
These private sector players are also working overtime to make their services better than LIC’s. Max New York Life has fixed benchmarks on claim processing time, processing of complaints and customer satisfaction. Allianz Bajaj has built an IT system capable of processing an application and issuing a policy within five minutes. And Tata-AIG settles claims within five to seven working days.
The private sector players are confident that by within the next three years they will have cornered more than 24 percent of the insurance market share.