Its war out there, or is it?

Venkatachari Jagannathan
18 October 2001

Chennai: Even after the entry of several private sector life insurance companies in the market, competition in the domestic market still appears to be an emerging phenomenon.

The Life Insurance Corporation (LIC) continues to dominate the market, despite the often-aggressive media hard sell that new private sector entrants are laying out. The lack of a sufficient number of insurance agents for new companies to recruit is partly to blame for their subdued market presence.

New players are also still struggling to find their feet and establish a nationwide presence. It takes days for private companies to even respond to calls made to their call centers. Private insurers, therefore, find that the going is tougher than they expected.

Consequently, private life insurance companies seem to be going the way of personal finance companies. Increased competition has meant that housing finance and credit card companies now have to lure clients from rival companies with the promise of lower interest rates and easier payment options. Instruments like housing loans and life insurance policies are long-term contracts where receipt of premium payment is more or less assured.

Says Mumbai-based Treman Ahluwalia, chief marketing officer, OM Kotak Mahindra Life Insurance: Such strategies, called buyouts, are widely used by US-based insurers. The Indian market seems set to replicate these trends.