Page 16 - Life Insurance Today January-June 2020

investment schemes for the simple reason that it offers though there is strong potential for expansion of insurance
financial protection from risks, something that is missing in into rural areas, growth has so far remained slow.
non-insurance products. Insurance is a unique investment Considering that the bulk of the Indian population still
avenue that delivers sound returns in addition to resides in rural areas, it is imperative that the insurance
protection. Designed to safeguard against losses suffered industry's development should not miss this vast sector of
due to any unforeseen events, insurance provides the the population.
investor with unique sense of security that no other form
of investment provides. Insurance also provides a safeguard India's insurance industry needs an environment of positive
in the case of accidents or a drop in income after 'enablers' in form of increased competition, outreach
retirement. An accident or disability can be devastating; personnel and an easing of regulatory regime to achieve
an insurance policy can lend timely support to the family in greater demographic penetration, said two senior industry
such times. It also comes as a great help when people executives at a panel discussion. The duo were speaking at
retire. the Times Network India Economic Conclave 2019,
discussing the role of insurance industry in helping India
Global scenario in life insurance sector in become a $5 trillion economy. While speaking on the issues
of under penetration, which at less than 4.5% of the GDP
this current era: is low compared to advanced economies, stems from

Globally, the share of life insurance business is 56.2% in problems of outreach rather than a shortage of demand,
total insurance premium. However; the share of life they said. "Demand is not as much an issue. There is a huge
insurance business for India is comparatively high around market. The problem is reach," said Vipin Anand, MD, Life
80 % while the share of non -life insurance business Insurance Corporation (LIC), while sharing a panel with
relatively small at 20%. In life insurance business, India is Vibha Padalkar, MD and CEO, HDFC Life.
ranked 11th among the 88 countries.
"India is a huge country with diverse demographics. If we
The Indian non- life insurance sector witnessed the average can ensure a network of agents that can reach nook and
yearly growth of approximately 4.2 % (inflation adjusted) corner of the country and sell these policies face to face,
during the last decade. The measure of insurance the target of selling Rs.100 billion worth of life insurance
penetration and density reflects the level of development policies can easily be achieved," Mr. Anand added. Both
of insurance sector in a country, while insurance the industry veterans were comparing India's insurance
penetration is measured as the percentage of insurance industry to that of China said that there is much to learn
premium to GDP; insurance density is calculated as the ratio from the neighboring market. "China's penetration to GDP
of premium to population (per capita premium). During the
first decade of insurance sector liberalization, the sector
has reported unswerving increase in insurance penetration
from 2.71 % in 2001 to 5.2 % percent in 2009 when
stabilized after privatizing.

Now the most prominent issue in this life insurance sector
relates to under penetration, which at present is hovering
around 4.5% of the GDP - is undeniably low compared to
advanced countries -it mainly stems from problems of
outreach rather than a shortage of demand - Demand is
not as much an issue as there is a huge market but the
problem is related to reach. Developments with far-
reaching implications, like the proliferation of
bancassurance as an alternative distribution channel. Even

The purpose of our lives is to be happy.

16 January - June 2020 Life Insurance Today