Selling life insurance in rural India

India’s life insurance market is booming. From a single company a decade ago to 18 active players today, the market has grown at a healthy compound annual growth rate of 24% over the past five years. Most of this growth is coming from the urban areas. However, the increase in competition is forcing insurance providers to look beyond urban centers and take their trade to the more challenging rural hinterlands of the country, where only 3% of the population of more than 720 million people have any form of life insurance coverage. It is expected that the rural market will grow to a potential of INR78bn or US$1.95bn by 2015 from the current INR19.5bn or US$487mn. Here, Ravi Nawal , an analyst with financial services technology research and consultancy firm, Celent, looks at a key aspect of tapping this immense market opportunity: distribution channels. Mr Nawal analyzes the current distribution models and provides a perspective on the models of the future

The life insurance industry in India has come a long way from a single player industry in 2000 to 18 players today. In the past seven years, the life insurance industry has witnessed a CAGR of 24% to reach over US$45bn in annual gross premium in 2007. Life insurance accounts for 86% of the overall insurance market in India, in terms of gross annual premiums. The future is bright for the industry, since only 10% of the total population currently owns a life insurance policy and will witness 30%+ annual growth for the next three to five years.