Insurance industry in India is projected to see 200% growth in the next two years, led by private companies which are exploring rural markets to increase their market share.
According to the recent estimations of Assocham, the insurance industry in India will register a tremendous growth of 200% in the coming two years touching the mark of Rs 2,00,000 Crore by FY 2010-11, as reported by The Economic Times.
The segment of private insurance is expected to see a growth rate of 140% as a result of intensive marketing techniques adopted by these companies.
The insurance sector has grown at a compounded annual growth rate of nearly 175% in the past couple of years. Now the trend is anticipated to come out even better.
In India, the entry of private insurance companies is still under constrains. Despite this, the rate of return (RoR) of private companies to their policy holders and subscribers is estimated at around 35% as compared to mere 20% RoR of the domestic companies. This is the biggest factor leading to the substantial rise in the market of private insurance players, which is anticipated to surpass the growth rate of even 140%.
The rural market provides enormous growth potential for the insurance sector. Accordingly, private insurance players have begun exploring rural Indian markets, which were so far under the monopoly of the public sector companies. The Assocham has estimated that the private sector insurance companies would see a substantial growth in their share in rural markets as they are increasingly gaining the faith of rural customers.
However, the corporate sector, as a whole, will not prove to be a lucrative area of growth for the insurance companies in the coming years; the reason being the already high penetration rate as well as the companies receiving good services. Therefore, the scope for both profitability and volume expansion is moderate here.
According to a Research Analyst at RNCOS, “Insurance firms, which are so far concentrating on manufacturing sector, should now turn to the services sector as the sector currently accounts for a huge and growing share in India’s GDP. The insurers should focus on the strategy to spur demand in the areas that are so far deprived of the services. To analyze the growth potential in the rural markets, it is required that the insurance companies should understand the specific needs and occupational structure of the Indian villagers.”
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