A Birdseye View of the Indian Digital Consumer Industry – Excerpts from Avendus Capital report


The insurance distribution market is estimated to be around Rs 14,300 Crore ($3,180 million) in 2010, with Rs 11,300 Crore ($2,500 million) coming from life insurance and Rs 3,000 ($670 million) from general insurance. Industry estimates peg the online insurance industry at Rs 750 Crore ($170 million) in 2010. An online term plan is purchased every 18 minutes. Around 3% of the overall insurance sales is through the online medium now. The market is expected to more than double to Rs 36,700 Crore ($8.2 billion) by 2015, with life insurance accounting for Rs 26,000 Crore ($5.8 billion) and general insurance for 10,700 Crore ($2.4 billion).
ŸConsumer-facing Business Models | Online Consumer Services Historically, the insurance market was completely catered to by the nationalized players like LIC and GIC – till the market was opened up for private participation in 2001. Pitted against LIC’s widespread agent network, private players struggled to build their market share in the initial days. And that forced them to try out newer channels. Online medium benefited from that push as almost all private players looked at it as an opportunity to widen their reach.

General insurance, especially motor insurance, was the first to see online traction in India; the nature of the product enabling direct price comparisons. Subsequently, Aegon Religare pioneered online life insurance policies which were much cheaper than the offline ones. The online policies were priced 40-60% cheaper than the offline ones. This was possible as the internet helped in by-passing the costly agent network – and Aegon did not have an existing agent network to appease.

In September 2011, 7 life insurance companies were offering term plans online and they had sold 14,500 policies worth a combined insurance cover of Rs 9,100 Crore ($2.0 billion) during the previous six months. LIC is also planning to launch online term policies. The future for insurance companies is clearly online – and this has opened opportunities for third party players.

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