Vast market but Keep it Simple

Implications: 1.Changing demographics and increase in disposable income are the determining factors in a savings and investment plan. 2.A product that is simple to understand and simple to administrate should mark a marketing strategy.

Analysis:  

Changing demograhics in India has set the pace for exponential growth in the insurance sector. Insurance is the one savings/investment product that is determined by the population age. The key component in this population matrix is the young age group with high disposable income, and a taste for financial and risk planning.

Riding on the back of a huge population of 1.1 billion, rapidly expanding market, a high and sustained economic growth, with changing income patterns, the insurance sector is poised for a rapid growth for some time to come.

The insurance industry in India is made up of :

1.Public sector which consists of state-owned enterprises such as Life Insurance Coproration of India , United India Assurance etc., and

2.Private sector .

With a number of players flooding the private sector such as the banks and multinationals, the market is likely to shrink for the state-owned enterprises. The growth in the private sector can only be drivenand sustained by:

1.Deepening penetration of the market including the rural areas

2.Better quality of advisers and support services.

3.Superior product suite which is simple to understand.

However, there is a caveat. In the next 2-3 years more new players may enter the insurance market. Without proper planning and a strategy they are likely to struggle. Actual profit margins may be hazy and the fees most likely be drilled down by competition.