INDUSTRY PROFILE OF INSURANCE COMPANIES IN INDIA
It was in 1818 when the first Life Insurance Company was established in India by private and foreign insurers. In the twentieth century many medium and large sized foreign as well as Indian Insurance companies cropped up with different objectives all across India.
The Government of India issued an Ordinance in 1956 on nationalizing the Life Insurance sector and Life Insurance Corporation (LIC) came into existence in the same year. The Life Insurance Corporation (LIC) absorbed a total of 245 Indian and foreign companies dealing in the business of insurance.
At present LIC is the largest single mobilizer of funds in the form of savings of the public for investment accounting for about 14% of the total financial savings of the Household sector.
Currently India is a US$41 billion industry, wherein only two million people (0.2% of the total population of 1 billion) are covered under Mediclaim. This is a sharp contrast to developed nations like USA where about 75% of the total population are covered under some insurance scheme. With more and more private companies emerging in the sector, the situation may change soon.
According to industry observers, one of the main reasons for the low insurance penetration in India was the ineffective distribution and marketing strategies adopted by LIC. The company reportedly never had any strategic marketing game plan, and due to its monopolistic nature the need for serious marketing efforts was never felt.
The advertising initiatives were limited to some print and electronic media advertisements that typically talked about LIC’s products being great tax saving tool for salaried individuals who came under the income-tax bracket. Despite all this, LIC was synonymous with insurance in India and it had established an enviable brand image for itself, especially in the rural areas and small towns.
However, with the entry of new players, the insurance market...
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