Insurance business to touch $60 billion by 2010

New Delhi, Aug 1: With people developing a larger appetite for wider insurance coverage, the size of domestic insurance business is likely to grow by 500 per cent to billion by 2010, from the current billion.

The projections, issued by industry chamber Assocham here today, are based on feedback received from its various constituents, engaged in the insurance business.

Currently, India's life insurance premium as a percentage of GDP is estimated at 1.8 per cent against 5.2 per cent in the US, 6.5 per cent in the UK and about 8 per cent in South Korea.

Rural and semi-urban India will contribute 35 billion dollars to the Indian insurance industry by 2010, including billion through life insurance and the rest billion through non-life insurance schemes, Assocham President Anil K Agarwal said.

A large part of rural India is still untapped due to poor distribution, large distances and high costs relative to returns.

Urban sector insurance is estimated to reach billion by 2010, life insurance billion and non-life insurance billion, Mr Agarwal said.

The findings further revealed that in the coming years the corporate segment, as a whole, will not be a big growth area for insurance companies on account of the fact that penetration was already good and companies receiveed good services.

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

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 figures found that there was a total of 124 million rural households in India.

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

An extensive rural agent network for sale of insurance products could be established. There should be nothing to stop insurance companies from trying to pursue their own unique policies and target whatever they want to in rural India.

The insurers should enter into tie-ups or understandings with government agencies to ensure the success of the insurance schemes.

UNI