NEW DELHI: "We are expecting 40 percent growth this fiscal with a total inflow of 900 billion in premium as against 730 billion during the 2001-02 fiscal," Sunil B. Mathur, chairman of the Life Insurance Corporation (LIC), told reporters on the sidelines of a consumer awareness conference here Wednesday. In 2001-02, LIC had notched a much higher growth with first premiums alone witnessing a 137 percent jump. With banks and financial institutions lowering interest rates, making many of its schemes unviable, LIC's portfolio has seen much larger turnaround this fiscal with 14 policies being withdrawn or redesigned to reflect softening interest rates. "We are reviewing a number of other big ticket policies which may be phased out," Mathur said. As consumers look for more cost-effective insurance products, Mathur admitted competition has become tough even for LIC -- rated among the global majors in the life insurance segment -- since the opening up of the market to private players two years ago. The level of insurance cover in India is still much below the desired threshold, said Insurance Regulatory and Development Authority (IRDA) chairman N. Rangachary at the conference organised by the Federation of Indian Chambers of Commerce and Industry (FICCI). "It is not an impossibility to double the insurance premium level from 1.6 percent of gross domestic product (GDP) to at least three percent in the next five years," he said. In most of the developed nations, insurance premium constitutes 6.5 percent of GDP. "Unless the level increases, it will not lead to economic prosperity. The non-life premium in particular will have to increase at a higher rate for the real economic benefits to accrue. The growth of the insurance sector will follow the growth in non-life segment of the market, which is currently much lower than the life segment," said Rangachary. In order to raise customer awareness of insurance benefits both for life and property, the IRDA and the consumer affairs department have chalked out campaigns through the national television channel and the radio. A joint study by FICCI and ING Insurance under the Foundation of Research, Training and Education in Insurance has revealed that there is tremendous scope for growth in rural areas, which lies largely untapped. This is the area most of the 12 new players in the insurance market are eyeing to scale higher growth.
Source: IANS