Life Insurance Marketing in India (C) The Changing Product & Pricing Norms

Background Note Contd...

In 1999, the per capita insurance premium in India was only $8, while it was $4,800 in Japan, $1000 in the Republic of Korea, $887 in Singapore, $823 in Hong Kong and $144 in Malaysia. Also, in terms of gross insurance premium, India's share in the global market was only 0.3%, though it ranked second in the world in terms of population. The corresponding figures in 1999 was 31% for Japan, 25% for the European Union, 2.3% for South Africa and 1.7% for Canada. Further, in 2001, while the ratio of insurance premium and the Gross Domestic Product (GDP)³ was 9% for UK and Japan, and 5% for the US, it was only 1.9% for India.

Attracted by the potential of the insurance market in India, many private players entered it after the Insurance Bill was passed in late 2000. A majority of these were collaborations between Indian companies and leading multinational insurance/financial services company (Refer to Table I).

The life insurance market in India was divided into two customer segments: individual and corporate. The segment comprised of individual customers was further divided into four sub-segments – protection, investment, savings and pension.

Protection products offer only protection to the customer from risk. They do not provide any savings facility to the policyholder.

Investment products offer long-term investment growth and insurance cover. Savings products like endowment and money back policies provide protection and investment benefits in combination. Pension policies are products offered to customers as income during their years of retirement. The corporate segment was divided into three sub-segments – protection, statutory savings and pension. Group term insurance products provided low cost life insurance cover as part of employee benefit packages as a motivation to employees or to cover housing/vehicle loan of the employee. The statutory savings segment comprised gratuity products for companies.

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3] GDP is defined as the value, at current market prices, of the total final output produced inside a country during a
given year.

Case Details

Case Code : MKTG028
Themes: Pricing
Case Length : 14 Pages
Period : 2000-2002
Organization : ICICI Prudential, Max New York Life, ETC
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Insurance

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