The liberalization, privatization and globalization policies of the nation along with the revolution in the field of Information Technology and communication have been advantageous for the insurance sector in India. ➢ Entry of private players and foreign collaborations: It was on the recommendation of the Malhotra Committee that private players were allowed to enter into the insurance market. Today there are almost 22 players who have entered the Indian insurance market besides the giant Life Insurance Corporation of India (LIC). Another major development that has taken in the field of general insurance is the de-linking of the 4 subsidiaries of the General Insurance Corporation of India (viz. Oriental Insurance Company Ltd., New India Assurance Company Ltd., National Insurance Company Ltd. and United India Insurance Company Ltd) from the parent company.
➢ Marketing strategies and approaches: The entry of private players and their foreign partners has given domestic players a tough time, because the opening up of the sector has not brought in only foreign players, but also professional techniques and technologies. The present scene in India is such that everyone is trying to put in the best efforts. One can see strategies being more for survival than growth. But the most important gift of privatization is the introduction of customer-oriented services. Utmost care is being taken to maximize customer satisfaction.
Insurance Sector Today: Opportunities and Challenges
As compared to the Western countries, where they have already reached a stage of saturation, India can exploit some golden opportunities in the following fields.
1. Mass Marketing
India is a highly populated country and would continue to be so in the near future. New players may tend to favour the "creamy" layer of the urban population. But, in doing so, they may well miss a large chunk of the insurable population. A strong case in point is the current business composition of the dominant market leader - the Life Insurance Corporation of India. The lion's share of its new business comes from the rural and semi-rural markets. In a country of 1 billion people, mass marketing is always a profitable and cost-effective option for gaining market share. The rural sector is a perfect case for mass marketing. Competition in rural areas tends to be "kinder and gentler" than that in urban areas, which can easily be termed cutthroat. Identifying the right agents to harness the full potential of the vibrant and dynamic rural markets will be imperative. Rural insurance should be looked upon as an opportunity and not an obligation. A smaller bundle of innovative products in sync with rural needs and perceptions, and an efficient delivery system are the two aspects that have to be developed in order to penetrate the rural markets.
2. Job Opportunities
Job opportunities are likely to increase manifold. The liberalization of the insurance sector promises several new job opportunities for those who are equipped with degrees in finance. Finance professionals who had witnessed a slump in the job market would be much relieved. There will be demand for marketing specialists, finance experts and human resource professionals. Apart from this, there will be high demand for professionals in streams like underwriting and claims management, and actuarial sciences.
3. Inflow of Funds
There could be a huge inflow of funds into the country. Given the industry's huge requirement of start-up capital, the initial years after opening up are bound to see a strong inflow of foreign capital. A rise in the equity share of foreign partners to 49 percent will act as a boost to them.
Huge capacity is likely to be created in the area of reinsurance. Apart from pure reinsurance activities, which involves providing...