India having the most versatile Insurance industry

India has registered a tremendous economic growth over the last decade and the insurance sector has grown with it.

India boasts one of the most versatile insurance industries in the world going by the number of insurance policies on offer and continues to portray huge potential.

Today, according to market survey, the insurance sector in India together with the banking industry contribute about a sizeable seven percent of the country’s gross domestic product not to mention that the government owned Life Insurance Corporation (LIC) has access to funds equaling eight percent of the country’s GDP.

Valuated at $10 billion, the insurance industry in India received major encouragement when in 1999 the government of India put an end to its monopoly on the sector by passing the Insurance Regulatory and Development Authority (IRDA) Bill which did away with all barriers on the entry of private investors besides allowing for foreign investors to come on board with however some limits on direct ownership.

Foreign investors are allowed up to twenty six percent ownership in any insurance company although there is a bill pending that seeks to have this figure increased to forty nine percent.

This however has not slowed down the amount of foreign investment since government records show that in that decade the sector has benefited from an injection of up to $193 million dollars while witnessing the inception of twenty seven new insurance companies. The economy in India has gained from this.

The sector derives its success from the fact that most Indian citizens view life insurance as a way to pay less tax and with innovative insurance products and aggression from the competing insurance companies the sector continues to register new clients at an impressive rate. It is no wonder that most state banks in India include insurance services among their products.

The insurance sector can largely be divided into two sub sectors namely life insurance and the non life insurance. The LIC continues to dominate the life insurance sector and has been recording average annual growths ranging at about thirty five percent although the non life insurance sector is doing much better with growths of more than a hundred percent in the same breath over the last few years.

The huge potential for the sector is mainly underlined by the fact that only about a fifth of India’s insurable population has life insurance cover which presents huge avenues for growth in the near future.