But individual insurance agents still account for the largest piece of the insurance market pie, the figures, from Standard Life’s HDFC Life joint venture show, with this sector still handling 45% of the business in the Indian financial year 2012, down from 64% six years earlier. (See table, below.)
In the presentation, India’s insurance agency channel was described as having shrunk to 2.4 million agents, while bancassurance was said now to contribute "nearly one-third of new business premiums for private life insurers".
This current polarisation of market share in favour of large players with access to existing distribution was identified as one of several key trends expected to play out in the near future.
Two joint venture businesses
Standard Life has two joint venture businesses in India with HDFC. It owns 26% of HDFC Life, an insurance company, and 40% of an asset management business, HDFC AMC.
The Edinburgh-based insurer has long been rumoured to be considering listing the life insurance JV, most recently in an article in the Financial Times on Thursday. A Standard Life spokesperson said: "As we have stated before, we would consider a partial IPO of the Indian Life joint venture, should legislation and market conditions allow."
|
Distribution mix |
||
|
|
Financial Year 2006 |
Financial Year 2012 |
|
Direct business |
8% |
5% |
|
Brokers |
1% |
5% |
|
Corporate agents – Others |
10% |
8% |
|
Corporate agents – |
18% |
37% |
|
Individual insurance agents |
64% |
45% |
Source: Public disclosures of 20 private insurers in India, IRDA annual
report and HDFC Life Analysis
‘High’ penetration
The take-up of insurance by Indians, as measured in premiums as a percentage of GDP, was described by the Standard Life/HDFC Life executives as relatively high compared to most other emerging markets. With the market’s expected increase in per capita income, "life insurance premiums should increase, given the positive disposition of customers," they added, in their presentation.
The predicted increase in average life expectancy among Indians is forecast to fuel the need for pension and health products, while the "emergence of nuclear families has resulted in [a] reduction in average household size", which is foreseen as increasing the need for more protection products.
