Competition of Life Insurance

12th July 2021 0 By indiafreenotes

The top 10 competitors in LIC’s competitive set are HDFC Life, SBI Life, ICICI Prudential Life Insurance, IDBI Federal, Bajaj Allianz, Tata AIA, Max Life insurance, PNB MetLife, Exide Life Insurance, Aegon Life. Together they have raised over 1.3B between their estimated 139.2K employees. LIC’s revenue is the ranked 1st among it’s top 10 competitors. The top 10 competitors average 7.8B. LIC has 114,498 employees and is ranked 1st among it’s top 10 competitors. The top 10 competitors average 15,855.

LIC has for a long period of time has enjoyed a dominant market of life insurance and the fact cannot be denied that LIC has a pre accomplished market leadership which makes it difficult for the new players to compete. While the new players struggle to increase their market in India, LIC continue to leverage advantage of its old establishment and government support for maintaining its growth. Life Insurance is the fastest growing sector in India since 2000 as Government allowed Private players and FDI up to 26%. Life Insurance in India was nationalised by incorporating Life Insurance Corporation (LIC) in 1956. All private life insurance companies at that time were taken over by LIC.

LIC enjoys this dominance because it is obvious that investors want a guarantee of their money irrespective of cycles of market. They know that it would be a safe play to invest in LIC as the government guarantee to bail out in case of any mishap. This denies the life insurance market from a level playing field to the competitors. The private players have been in the market for 10 years now but could not bring a big change in market share of life insurance. People ‘s trust is build up with LIC due to such sovereign guarantee. The fact that LIC has not used this benefit of sovereign guarantee but this definitely helps them grow their market size because of the faith people lay in them being a state-owned enterprise.

Investments and Recent Developments

The following are some of the major investments and developments in the Indian insurance sector.

Companies are trying to leverage strategic partnership to offer various services as follows:

  • In FY21 (until March 2021), premium from new business of life insurance companies in India stood at US$ 31.9 billion.
  • In FY21, LIC achieved a record first-year premium income of Rs. 56,406 crore (US$ 7.75 billion) under individual assurance business with a 10.11% growth over last year.
  • In India, gross premiums written of non-life insurers reached US$ 26.52 billion in FY21 (between April 2020 and March 2021), from US$ 26.49 billion in FY20 (between April 2019 and March 2020), driven by strong growth from general insurance companies.
  • In May 2021, Max Life Insurance Co. Ltd. launched ‘Max Life Saral Pension’, a non-linked, individual immediate annuity plan.
  • In March 2021, health insurance companies in the non-life insurance sector increased by 41%, driven by rising demand for health insurance products amid COVID-19 surge.
  • In February 2021, Bharti AXA General Insurance launched its ‘Health AdvantEDGE’ health insurance scheme to provide holistic cover against accelerating costs associated with medical requirements and other healthcare facilities.
  • In February 2021, ICICI Lombard General Insurance, a non-life insurance firm in the private sector, has been authorised by the International Financial Services Centre (IFSC) to establish an IFSC Insurance Office (IIO) in GIFT City in Gandhinagar, Gujarat.

Government Initiatives

The Government of India has taken number of initiatives to boost the insurance industry. Some of them are as follows:

  • Union Budget 2021 increased FDI limit in insurance from 49% to 74%. India’s Insurance Regulatory and Development Authority (IRDAI) has announced the issuance, through Digilocker, of digital insurance policies by insurance firms.
  • Under the Union Budget 2021, Finance Minister Nirmala Sitharaman announced that the initial public offering (IPO) of LIC will be implemented in FY22, as part of the consolidation in the banking and insurance sector.Though no formal market valuation has been undertaken, LIC’s IPO has the potential to raise Rs. 1 lakh crore (US$ 13.62 billion).
  • In February 2021, the Finance Ministry announced to infuse Rs. 3,000 crore (US$ 413.13 million) into state-owned general insurance companies to improve the overall financial health of companies.
  • Under Union Budget 2021, fund of Rs. 16,000 crore (US$ 2.20 billion) has been allocated for crop insurance scheme.