Insurance quotient: big gains for India
The country’s share of the world’s life insurance business has doubled in the five years since liberalisation - and most of the new premiums have come from the Life Insurance Corporation of India (LIC).
By Mayur Shetty, TNN |
MUMBAI: There can be no better endorsement for insurance reforms than this. The country’s share of the world’s life insurance business has doubled in the five years since liberalisation - and most of the new premiums have come from the Life Insurance Corporation of India (LIC).
This increase has taken India’s global ranking to 17 from 20 in ’00. But India is still away from Asian domination as its performance has been vastly outdone by China. The Chinese insurance industry is slated to be completely liberalised by end-’06 and the country has seen its market share rise from 0.79% in ’00 to 2.01% in ’05.
This has helped it leapfrog in terms of ranking to 8, from 18 five years ago. In the last five years, China has overtaken developed markets such as the Netherlands, Belgium, Spain, Switzerland, South Africa and Australia in life premium volumes.
Given the current growth rates, industry watchers expect India to overtake these markets in the next few years. From 0.5% of the world’s life insurance business in ’00, India today accounts for 1.02% of the world’s premium. There are two reasons for this spectacular growth. One is Japan, which accounts for a fifth of world premium, has seen its life insurance business shrinking.
The largest market, the US, which accounts for 26.2% of the global slice, is growing by a measly 2.9%. According to the latest Sigma report on the world insurance market by Swiss Re, world life insurance premiums increased by 3.9% in real terms to $1,974bn after having grown 2.9% in ’04. India’s total life premium in dollar terms works out to $20bn. In ’00, India’s life premium was $7.6bn as against the world life premium of $1,521bn.
The growing market share of India has been primarily attributed to its remarkable home performance ever since liberalisation paved the way for a host of new investment type unit-linked insurance plans.
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