Indian Insurance sector to grow by 200pc: ASSOCHAM

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New Delhi, Dec 24: In order to break the monopoly of the state owned insurance companies, private sector will need to explore rural market with aggressive marketing techniques, as it targets 140 per cent growth in the total sector business of Rs 2000 billion by 2009-10. According to industry body ASSOCHAM, the insurance sector has grown by CAGR of around 175 per cent in the last couple of years and the trend will continue to do better because of the potential growth factor.

''On account of intense marketing strategies adopted by private insurance players, the market share of state owned insurance companies like GIS, LIC and others have come down to 70 per cent in last 4-5 years from over 97 per cent,'' ASSOCHAM president Venugopal N Dhoot said releasing the study, today.

The private insurance players despite the regulations in the sector has been offering rate of return (RoR) to its policy holders which is estimated at about 35 per cent as against 20 per cent of domestic insurance companies. This factor is mainly responsible for hike in private insurance market share which will grow further that is why it is estimated that its growth rate could even exceed 140 per cent.

Secondly, the state owned insurance companies such as LIC and GIC have limited number of policies to offer to their subscribers while in case of private insurance companies, their policy numbers are many more and the premium amount as well as the maturity period is much competitive as against those of government insurance companies.

''Interestingly, the private sector insurance players have started exploring the rural markets in which until recently, the state owned companies had the monopoly,'' Mr Dhoot added.

The Chamber has projected that in rural markets, the share of private insurance players would increase substantially as they have been able to generate a faith among their rural consumers.

The rural market offers tremendous growth opportunities for insurance companies and insurers should develop viable and cost-effective distribution channels, build consumer awareness and confidence.

The study found that there are a total 124 million rural households. Nearly 20 per cent of all farmers in rural India own a Kissan Credit cards. The 25 million credit cards used till date offer a huge data base and opportunity for insurance companies.

Also the insurance products need to be packaged in such a form that they appear as an acceptable investment to the rural population.

The findings further reveal that in the coming years, the corporate segment, as a whole will not be a big growth area for insurance companies. This is because penetration is already good and companies receive good services. In both volumes and profitability therefore, the scope for expansion is modest.

It also suggested that insurer's strategy should be to stimulate demand in areas that are currently not served at all.

Insurance companies mostly focus on manufacturing sector, however, the services sector is taking a large and growing share of India's GDP. This offers immense opportunities for expansion opportunities, added the study.

UNI

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