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Analysis Study Research Paper | Economics | India | Volume 13 Issue 1, January 2024
Emerging Trends and Challenges in Life Insurance Industry in India
Abstract: Insurance has a long history in India. Life Insurance in its current form was introduced in 1818 when the Oriental Life Insurance Company began its operations in India. History of Insurance in India can be broadly bifurcated into three eras: a) Pre-Nationalization b) post-Nationalization and c) post-liberalization. Life Insurance was the first to be nationalized in 1956. The rapid expansion of Insurance companies since nationalization has given rise to a number of problems related to the image, operational efficiency, productivity, distribution, and the quality of the portfolio of the system as a whole. Liberalization and privatization of the insurance sector have offered tremendous opportunities and since the onset of reforms, the life insurance corporation has been compelled to review philosophy and method of working, in order to be ready for competition with private sector companies. The present study attempts to evaluate the emerging trends in the growth, performance, and issues, challenges facing by the life Insurance industry in India. The study reveals that the life insurance market has witnessed dynamic changes due to liberalization and privatization of the insurance sector and the industry witnessed significant growth, which is mainly contributed by both private sector and public sector. The study further reveals that the Private Sector life Insurance Companies' results present better efficiency in terms of expenses of management ratio, and they are increasing their market share year by year, and the distribution of offices expanded. Whereas the performance of Public Sector in terms of net earnings, and return on net worth ratio is better than Private Sector and in case of operating expense ratio also better than the private sector, public sector is also playing a major role in contributing the Premium Income in the life insurance industry. The study highlights that private sector insurance companies are suffering from losses when it comes to their core insurance business, but still manage to get net earnings, which is mainly ascribed to the investment income. The study concludes that, undoubtedly, the entry of Private Sector Insurance Companies has contributed to the strengthening of life Insurance business as a whole by creating a competitive atmosphere, but still public sector is plying dominant role in the Indian life insurance industry. But when comes to the issues and challenges, total industry (both private and public sectors) facing challenges like low penetration and density, low rural market share, low satisfaction of customer services, Delayed Break-even for Private Insurance Companies, Money laundering, Distributional Channel problems, Marketing of Products through Online Issues, Regulatory Challenge and so on.
Keywords: life insurance, pre, and post-nationalization, reforms in insurance, trend analysis, issues and challenges
Edition: Volume 13 Issue 1, January 2024,
Pages: 1153 - 1165