Is increasing share of Private sector insurance a threat to public sector companies?

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Topic : Changing perception of people towards insurance

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Secure the future - Insurance

	Is increasing share of Private sector insurance a threat to public sector companies? Asked by : Niranjan Meena, Actuary Manager, LIC Industry : Insurance Functional Area : Growth Keywords : insurance life insurance threat public sector market share private sector increasing share Activity: Question posted: 05 22 2009 10:49:44 +0000, 7 answers, 660 views, last activity 07 06 2010 20:18:08 +0000	Answer

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As the recent news says, "The market share of private companies in life insurance business has gone up from 36.4 per cent in 2007\08 to 39.2 per cent in 2008\09. While LIC had to contend with a negative growth of 10.5 per cent , the private sector companies grew marginally by one per cent in 2008\09."

What does this data indicate? Are the private companies posing a threat to the public sector companies? What will be the impact of this increasing market share?

The rise in market share of private companies doesnt show any threat to LIC. Empirical research in marketing suggests that first mover (who had monopoly in a specific product market) will have at most 61 % market share (may go down to 51%) once competition matures. In true sense, LIC and private co.s has reached to that level. Now, if private co. doesnt foray into rural and semi-town level areas, they may not grow further. Baja Allianz, and upto certain extent SBI Life and TATA AIG, are moving/plan to move to rural india and micro-insurance has added another feather in this endevour.Becoz. they have to cover bigger mass, enlarge the market, make the insurance viable to the bigger market (as TATA did by Nano), Becoz. that's the way they can grow and survive in future.

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by Sanjay Thakur, PhD Student in Finance(Portfolio Risk Management), IIT Bombay | 05 23 2009 18:53:46 +0000

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7 Answers for "Is increasing share of Private sector insurance a threat to public sector companies?"

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Answered by Japan Shah, H.O.D, Oxford School of Management | 06 08 2009 14:20:36 +0000

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The private sector consists of more than 20 companies and the composite growth of these companies is the loss of LIC, from this only we can say that even so many companies are trying to beat LIC but are not able to take much share..

Also i believe that this competition has led the public sector to improve in the processes and services offered, which is end of the day good for customers like us...

Answered by DEVRANJAN DASH, Zonal Marketing Manager, ICICI Bank | 05 23 2009 05:19:46 +0000

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My take on the issue is that the entry of Private sector players should be seen as an opportunity for the public sector player to identify it short comings and sincerely work on those aspects to bring about change.

Besides that my contention is that instead of having a feeling of antipathy both the private sector and public sector should make concerted efforts to increase the size of the pie as because the Insurance Penetration in in India is woefully low only after achieving that goal both can compete with each other for marketshare or having a larger pie.

Answered by sujit Kumar, Marketing Manager, Wipro Peripherals | 05 22 2009 17:56:23 +0000

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LIC has a much larger pie than either of its competetors and it will rule due to its efficiency and truthfulness towards granting insurance coverage.

Answered by sujit Kumar, Marketing Manager, Wipro Peripherals | 05 22 2009 17:55:13 +0000

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I think this question is most invalid in present scenario. With many American companies becomg public sector. Its finally the way a company is managed is what matters not public or private sector.

Answered by Aditya Sharma, Insurance Advisor/Analyst, LIC OF INDIA, ICICI LOMBARD | 05 22 2009 15:44:40 +0000

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The Public sector companies should not think that the private companies are eating away from their pie. They should rather take it as a challenge. The public sector has governed the Indian insurance market for a very long time. If there is a good competition among the companies the private and the public sector than who do you think will be the beneficiary the customer. Which will result in customer coming back to the industry with more confidence. which will be good for the growth of the industry. If the industry grows companies will get the benefit. The public and the private sector both. So in the end the coming of the private sector companies is good for the Public sector companies. Because they also want the market to grow. Rather than be stangnat.

Answered by Dushyant Hada, Territory Manager | 05 22 2009 11:32:26 +0000

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