Life Insurance

17 Pages 4157 Words

which LIC has enjoyed.

However, the competition among the private players, for the remaining market share, is fierce, and the margins dividing them are relatively small. Hence, it is the requirement of each company to constantly try and establish an identity for itself, and to provide to its customers, both existing and prospective, that which its competitors can¡¦t. In other words, to establish one or multiple Points of Differentiation.

Again, the customer for life insurance in India lands up paying a rate of premium which has been determined upon data which is sadly antediluvian. As stated earlier, the insurance premia are calculated by the insurer¡¦s actuaries after taking into account mortality rates, and mortality experience. In India, neither private insurance companies, nor the LIC are permitted to conduct the nation ¡V wide studies required to determine the mortality rates. The information is provided by the government, for a fee, from data taken during the Census. Since this data in itself is old, and mortality rates have significantly decreased in the last 14 years, the customer is actually paying more premium than he should for a life insurance policy.

Life insurance companies are able to pass on this benefit to the consumer, as they can afford to charge low premium rates, and yet keep the customer happy. Hence, the customer does ultimately gain an advantage for the dropping mortality rates.

The Indian people are also highly underinsured, if not uninsured. While significant reason for this lies in the percentage of populace below the poverty line, it is also true that even those people who can afford insurance are underinsured. This is largely due to the lack of knowledge with respect to insurance among the people of India. While insurance companies cannot take it upon them to educate the entire Indian population with respect to the merits of insurance, they do make the job easier for the Government by educ...