Life Insurance – A brief overview
The premium income of life insurance has touched the highest ever level of Rs. 49,474 crore in 2005-2006 as compared to Rs. 25,316 crore in 2004-2005 and Rs. 17,716 crore in 2003-2004. The growth rate was 95.4 per cent in 2005-2006 and 34.4 per cent in 2004-2005.
The main contribution for this phenomenal growth is because of individual insurance which was Rs. 23,528 crore in 2005-2006 and Rs. 6,332 crore in 2004-2005. Out of these, the non-single premium was Rs. 33,468 crore in 2005-2006 and Rs. 15,034 crore in 2004-2005. The linked policy explained Rs. 29,164 crore premium in 2005-2006 and Rs. 7981 crore in 2004-2005. It reveals the popularity of linked policies.
Link policy concept is expected to be more popular in future as it has the benefits of life-cum- investment cover. People are interested in investment mainly. On the other hand the potential market is waiting for cheap policies to cover risk only. Insurers are trying to develop life policies to cover the risk only.
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Price:
The potential buyers are looking for cheaper product. The risk cover policies are the cheapest. The premium is decided on the basis of mortality, interest and expenses. The mortality is natural factor wherein, the insurers can do nothing in this regard.
The interest should be increased and expenses should be curtailed to minimise the premium rate. With the success of unit-linked insurance, the efficiency of the insurers count a lot in managing premium rate in the era of competition.
Process:
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Product development is outcome of opportunities available in the market. New products are introduced and developed to meet the competitive challenges and changes.
Product development process involves analysis of environment, idea generation, market research, production concepts, process design, testing, product modification and launch. Insurers go through the process and adopt the product development promotion strategies for enhancing the business.
In India, product development increased dramatically from various product lines of whole life, endowment and term insurance.
The market research and environment analysis explore the product mixed to be launched by the insurer. The legal framework, consumer demand and behaviour, competitive stage, economic and political conditions and social needs are the important factors to be considered under product innovation.
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The product development is broadly divided into non-linked policies and linked policies which are further sold under individual business single premium, individual business non-single premium, group new business single premium and group new business non-single premium.
These four tables have revealed that life insurance is being diversified to meet different requirement of society. Health insurance is not becoming popular. The LIC has issued a large number of policies which are different degree mix of endowment and term insurance.
On its anniversary, LIC issues some new policies in September of each year. Many of the policies are brand name starting with Jeevan e.g., Jeevan Suraksha, Jeevan Kishore, Jeevan Sukanya, Jeevan Sneha, Jeevan Nidhi etc. Private sector insurers have been dependent on term insurance as it is the cheapest form of insurance.