Life Microinsurance in India: Potential and Pitfalls
Financial inclusion has become a buzzword in India. Insurance firms have woken up to the possibility of profitably addressing the needs of the lower income segment of the market. As a result, after the interest in microfinance, we are now seeing a microinsurance wave.
In a new report, Life Microinsurance in India: Potential and Pitfalls, Celent analyzes the progress of the life microinsurance sector in India. In the last two to three years, the industry has made rapid strides, and both public and private sector firms are catering to it.
The number of new policies has risen from 13.2 million in FY2008 to 19.8 million in FY2010. Of this group, insurance forms a large segment, as a many of these policies are sold through cooperatives, non-profit organizations and microfinance institutions to their members. Also, we can see below that the Life Insurance Corporation (LIC), a public sector entity, sells the majority of such policies. Its long established network and wider reach are important factors in this.
“India has a large population below and marginally above the poverty line,” says Anshuman Jaswal, Celent Senior Analyst and author of the report. “Microinsurance can be a crucial medium to provide risk coverage to these people, and innovative channels should ensure that it remains a viable proposition for insurance firms.”
The Indian microinsurance environment presents some interesting challenges. In a country as vast as India, reaching the target consumer is easier said than done. Even technology has its limitations, especially due to low literacy rates in rural areas. With this report, Celent hopes to inform readers about the development of this market, as well as some of the interesting lessons that can be drawn from the Indian experience.
Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].
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Table of Contents
Indian Insurance Landscape
Penetration and Density
Examples of Distribution Models
Pricing and Regulation
Pricing of Microinsurance Schemes
Life Insurance Sector
Appendix A: Micro Individual Life Insurance Products
Life Insurance Corporation of India
Bajaj Allianz Life Insurance
Birla Sun Life
Aviva Life Insurance
Sahara India Life Insurance
Appendix B: Micro Group Life Insurance Products
SBI Life Insurance
Sahara India Life Insurance
Canara HSBC Life Insurance
IDBI Federal Life Insurance
Leveraging Celent’s Expertise
Support for Financial Institutions
Support for Vendors
Related Celent Research