Indian life insurance sector on the rise

India is fast becoming a major player on the international finance markets and along with China is seen as a potential economic superpower. The country is certainly not immune to the current financial crisis though and has seen a sharp drop off in a number of sectors. There is one industry however, which is bucking this trend and that is life insurance.

According to financial analysts, who have been following the Indian life insurance sector closely, there is certainly some good news in otherwise dark times.

Insecurity leads to growth
The Indian population is still reeling from the horrendous terrorist atrocity committed in Mumbai at the end of November but according to Rajesh Relan the Managing Director of MetLife Insurance, this will not weaken the sector but may even cause it to grow.

“We have always seen in the times of high insecurity, purchase decisions of prospective customers become faster," he said.

“In the wake of the terror attacks, people will demand up-gradation in existing terror insurance products. As a result, companies will also try to upgrade or develop new products as per the needs of customers," added Milind Joshi from AXA.

This insecurity has led another analyst to estimate that the sector may grow as much as 50% by the year 2010, which makes it one of fastest growing segments of the Indian economy.

“Life insurance business is one of the most promising industries in India today. According to market estimates, the market size is expected to touch $52 billion in 2010, from $35 billion in 2007-08, a jump of nearly 50 per cent." Says Rajan Kalia from Max New York Life Insurance.

Job creation takes off
This growth in revenues is also expected to have a positive impact on job creation. MetLife have announced their intention to create over 3000 managerial and 30,000 sales jobs within their sub-continent life insurance division in the next couple of months. This trend is also being followed by AXA, who have announced an almost 50% increase in jobs, from 5000 to 9500 by Spring next year.

“Sales professionals, which account for almost 80 per cent of the total workforce, are the people who drive growth for insurance companies. As the insurance sector is growing at a fast clip, penetration into new geographies needs augmentation of the sales force," commented Pradipta Sahu from AXA.

In recent years the Life Insurance Corporation of India, which is wholly owned by the state, has seen its market share drop considerably and has led to the rise of more private insurers. This trend looks set to continue after figures showed the LIC had seen a 35% drop in its market share.

“I think even if there is a downturn, the demand for insurance products will continue to remain positive," added Rajan Kalia.