Decisive Impact of Globalization on Insurance Industry in India

The notion of globalization has thoroughly changed the Indian insurance market. Gone are the days when the Indian market used to be under the sway of the government controlled insurance providers. To be very precise, in those days the Indian insurance scenario was an underdeveloped one that was used to be ruled by the state owned LIC. Now the gradual entrance of the private players, as an influence of globalization and pro-market reforms, has changed the concept of decades. It is to be noted that in those days the life insurance products used to be within the 19 percent of the total 400 million of the insurable population. In addition, the majority of the clientele remained under- insured and with no option of any flexibility or transparency with regard to the products. On the contrary, the entrance of the private players has not only enunciated a fresh air but also with their high efficiencies have acquired almost 9 percent of the market in terms of premium income. Only in the recent years, according to the estimates, the new business premium of these companies has crossed the mark of Rs. 1000 crore. This has, as a result, led to the drastic reduction of the preponderance of LIC.

Now the question remains what has been the reason of this exponential success? A range of studies has confirmed that these reasons happen to be the introduction of innovative products, smart marketing and aggressive distribution. The apposite application of these worthwhile strategies has led to the colossal growth of the market unimaginable till then. The best specimen of this success can be gauged from the changing attitude of the Indian customers. When the market was under the LIC, the Indians used to perceive life insurance as tax saving devices. But the same people are, nowadays, turning to the private sector and are trying to exploit the new products on offer.

To the appraisal by the economists, thanks to the initiative of these private insurance companies, the Indian insurance sector has at last entered the stage of maturity. If this trend continues incessantly, it will benefit the Indian economy to a great extent.