Nandini Goswami

Kolkata: There seems to be a distinct fragmentation in the domestic life insurance industry. While the industry continues to be dominated by the Life Insurance Corporation (LIC), relatively newer players are eating into its market share.

While it were private sector biggies such as ICICI Prudential and Birla Sun Life that took away a lot of the market in the earlier years, the last couple of years has seen players such as SBI Life and Reliance Life notching up major shares.

A recent study by Deutsche Bank tracks what it calls the reducing “concentration index”.

According to the report, “the industry is getting more fragmented as new players are eating away at the market share of larger players. Banks themselves have started entering into alliances with insurance companies to manufacture/underwrite insurance products rather than merely distribute them”.

While it is true that the banks have started their own life insurance ventures, industry observers say they might still take some time to make an impact on market shares.

The newer companies have also drawn out plans to grab market share.

“With the entry of new players, we are likely to see more erosion in top players’ market share. Also, existing smaller players have very aggressive plans for network expansion as foreign partners are keen to tap into the enormous potential of the Indian life insurance market,” observes the Deutsche Bank report.

Nitin Chopra CEO, Bharti Axa Life, says the company targets to be among the top five life insurance companies in India in five years.

U S Roy, managing director & CEO, SBI Life Insurance, said, “We have grown by over 100% and our branch banking has given us tremendous support. Moreover, we have leveraged on the high recall of the brand”.

But LIC is not too worried about the growing competition.

“Yes it is true that we have lost out on market share, but we have grown with the industry. Being the biggest company, our rate of growth on a bigger base will be lower than a new company,which is growing faster. We still have the highest brand recall,” an LIC official said.

According to the Deutsche report,Reliance Life is now India’s fifth largest insurance company, up from the ninth a year ago. ICICI Prudential Life Insurance continues to maintain its leading position in the private sector space.

Source : DNA