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The Indian insurance industry is dominated by fourteen life insurance companies and will further witness new entrants. Among all the insurers, it is Life Insurance Corporation of India that holds the major market pie.
Most of the insurance companies in India are in foreign ventures wherein the latter holds a stake of 26% and the Indian companies hold the remaining stake. However, to keep the company boosted, it is necessary to infuse regular capital. But since the stake held by the foreign insurance companies is 26%, the Indian insurers are facing difficulties. The finance minister, P Chidambaram in the last budget promised to increase the FDI limit to 49% but sadly it failed to fulfill it.
For the reasons mentioned above, the government should consider its decision seriously of raising the FDI limit. Insurance holds immense potential to grow but the major hindrance felt at the moment is the FDI limit. The government should understand the gravity of the situation and should take a decision as soon as possible to reach the objective with which it had opened the doors of insurance to private players.
However, one should not overlook the government's effort which is trying hard to make insurance available to all right from urban to rural, businessmen to laymen. Today, the insurance industry is a lot more dynamic in nature and is accepting changes with open arms. Micro, composite insurance are some of the examples. These products specifically cater to the low-income group. Thus following the mantra, 'insurance for all'.
When so many changes are gulped down then why can't there be more acceptances shown with FDI hike? The competition is getting tougher and the line of difference between companies competing in acquiring the coveted number rank is getting thinner. For instance, among private players it was ICICI Prudential that had the largest market share and topped the chart, which was followed by Bajaj Allianz. But according to the industry sources and the latest ratings, ICICI Prudential has slipped to number two rank making place for Bajaj Allianz at the number one position.
India is open to changes, which it proved when it embraced liberalisation. With privatization, the State lost its dominance but today it has witnessed some of the best changes ever. The companies are trying hard to offer the best deal possible to customers, making them the king of the market. And in the years to come, the competition will only get tougher and robust growth will be witnessed in insurance.