'LIC premiums to double in India by 2012'

Mumbai, Sep 10: Total life insurance premiums market in India is expected to grow from USD 40 billion at present to USD 80-100 billion by 2012, according to a report.

The nearly double growth in the life insurance premium market, implies a higher annual growth of 19 per cent to 23 per cent in new business Annual Premium Equivalent (APE) during 2007-2012, said a study report, ''India Insurance 2012'', by McKinsey&Company.

''Four factors will drive this growth in the next five years,'' said Anu Madgavkar, Associate Partner, McKinsey&Company.

According to her, increasing per capita incomes, increasing penetration in both urban and rural areas, substantial increase in supply-side growth, change in product mix and growing demand for long-term savings and investment products would be drivers of the expected growth in Life Insurance Premiums.

The report said that an impressive growth in the sector for over past six years has been driven by liberalization, with new players significantly enhancing product awareness, promoting consumer education and information, and creating more organised distribution channels. But the study asserted that the sector is yet at a nascent stage.

The report pointed out four key challenges, including significant reliance on single-premium products and potentially volatile unit linked policies, under developed agency channels and, under utilization of alternative channels.

''We see the need for life insurance players to develop bold, new approaches in several key areas as competition intensifies and the consumer base evolves. Doing so is a must if players want to create a winning proposition,'' commented Tilman Ehrbeck, Partner, McKinsey.

UNI