Page 231 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Insurance Laws and Practices

Notes 13.3 Insurance Sector Today: Opportunities and Challenges

Following section will assist you in understanding the opportunities and challenges in Indian
insurance sector:

13.3.1 Opportunities

As compared to the Western countries, where they have already reached a stage of saturation,
India can exploit some golden opportunities in the following fields.

Mass Marketing

India is a highly populated country and would continue to be so in the near future. New players
may tend to favour the “creamy” layer of the urban population. But, in doing so, they may well
miss a large chunk of the insurable population. A strong case in point is the current business
composition of the dominant market leader – the Life Insurance Corporation of India. The lion’s
share of its new business comes from the rural and semi-rural markets. In a country of 1 billion
people, mass marketing is always a profitable and cost-effective option for gaining market
share. The rural sector is a perfect case for mass marketing.
Competition in rural areas tends to be “kinder and gentler” than that in urban areas, which can
easily be termed cutthroat. Identifying the right agents to harness the full potential of the
vibrant and dynamic rural markets will be imperative. Rural insurance should be looked upon
as an opportunity and not an obligation.

Did u know? A smaller bundle of innovative products in sync with rural needs and
perceptions, and an efficient delivery system are the two aspects that have to be developed
in order to penetrate the rural markets.

Job Opportunities

You must have observed that job opportunities are likely to increase manifold. The liberalization
of the insurance sector promises several new job opportunities for those who are equipped with
degrees in finance. Finance professionals who had witnessed a slump in the job market would
be much relieved.
There will be demand for marketing specialists, finance experts and human resource professionals.
Apart from this, there will be high demand for professionals in streams like underwriting and
claims management, and actuarial sciences.
Inflow of Funds

There could be a huge inflow of funds into the country. Given the industry’s huge requirement
of start-up capital, the initial years after opening up are bound to see a strong inflow of foreign
capital. A rise in the equity share of foreign partners to 49 per cent will act as a boost to them.

Reinsurance
Huge capacity is likely to be created in the area of reinsurance. Apart from pure reinsurance
activities, which involve providing insurance protection, there will be a revolution in service-
related fields like training, seminars, workshops, know-how transfer regarding risk assessment
and rating, risk inspections, risk management and devising new policy covers, etc.

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