Insurance business to soar by 500% in 2010

New Delhi, June 21 (UNI) Driven by the increasing awareness in insurance coverage area, the domestic insurance business is expected to grow by 500 per cent to 60 billion dollars by 2010 from the current size of about 10 billion dollars.

Industry chamber Assocham estimated India's life insurance premium as a percentage of GDP at 1.8 per cent against 5.2 per cent in US, 6.5 per cent in UK and about eight per cent in South Korea.

Assocham President Venugopal N Dhoot said that rural and semi-urban India will contribute about 35 billion dollars to the Indian insurance industry by 2010, including 20 billion dollars by way of life insurance and 15 billion dollars through non-life insurance schemes.

''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 25 billion dollars by 2010, life insurance 15 billion dollars and non-life insurance 10 billion dollars, he added.

The chamber revealed 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.

Assocham suggested that insurer's strategy should be to stimulate demand in the 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.

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 chamber indicated.

Assocham pointed out 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. An extensive rural agent network for sale of insurance products could be established. The agent can play a major role in creating awareness, motivating purchase and rendering insurance services.

Assocham suggested that insurance needs to be packaged in such a form that it appears as an acceptable investment to the rural people. In the near future, when we will see more innovations in agriculture in the form of corporatisation or a more professional approach from the farmers' side, insurance will definitely be one option that the rural Indian is going to accept.

The industry body said that insurers should enter into tie-ups or understandings with government agencies to ensure the success of the insurance schemes. The need of the hour is to have innovative policies that have explicit benefits for the people to observe, understand and measure.

UNI