Competition has intensified in both life and general insurance businesses. Much wider choices are available today. One, however, does not witness any dramatic increase in the volume of insurance, a greater variety of products introduced or a deeper penetration into rural areas.

In the life insurance sector, the progress appears to be much better. From the monolith of the LIC in the government sector, there are 19 new players from the private sector. LIC continues to dominate the business with its widespread activities, large number of agents numbering over a million and the variety of products introduced. Of course together they have been gnawing at the market share. At the end of August 2008, LIC accounted for close to 60 per cent of total premium underwritten: during April-August 2008, total premium underwritten by the life insurance sector amounted to Rs.26,151 crore; the share of LIC in this was Rs.14,360 crore. Among the private players, ICICI Prudential is at the top with premium income of around Rs.2800 crore, followed by Bajaj Alliance with around Rs.1600 crore. Reliance, SBI Life, HSBC Standard, Birla Sunlife and Max New York have been registering handsome growth during this period.

Faster ascent in non-life sector

In the general insurance sector the ascent of the private companies appears to be much faster. One witnesses a more serious erosion of the market share of the public sector insurance companies. In the first five months of the current year, gross premium underwritten amounted to Rs.13,245 crore with the four public sector insurance companies accounting for Rs.7689 crore (58 per cent), and the 11 private sector companies around Rs.5556 crore (42 per cent). The growth of the private insurance companies through the five months at 20.05 per cent is nearly three times that of the public sector insurance companies of 7.53 per cent. ICICI Lombard, with gross premium underwritten of Rs.1654 crore, is leading with Bajaj Alliance following second (Rs.1203 crore). At this rate some of the private general insurance companies appear poised for racing ahead of a couple of public sector insurance companies.

New India Assurance continues to be the leader with gross premium underwritten of Rs.2343 crore accounting for nearly a sixth of the total premium income.

One also notices aggressive growth recorded by the purely health insurance company, Star Health and Allied Insurance: in the first five months of the current year, its premium income has shot up to Rs.231 crore from just Rs.43 crore it earned during April-August 2007. Perhaps the entry of Apollo-DKV as a competitor is providing a great spur to Star Health.

MFs - more redemptions than sales…

The assets under management of mutual funds stood at Rs.394,711 crore as on 31 October 2008. Income-based funds topped the list with Rs.192,104 crore (49 per cent), followed by equity funds of Rs.98,430 crore (25 per cent).

From the data published by the Association of Mutual Funds in India, one notices a decline in investments in mutual funds. There had been impressive growth in sales but redemptions have been much larger: during April-October 2008, sales of all schemes amounted to Rs.3,062,152 crore (Rs.2,250,993 crore for April-October 2007), but redemptions were much higher at Rs.3,106,472 crore (Rs.2,093,571 crore). There had also been considerable decline in the assets under management for August 2008: Rs.431,902 crore against Rs.531,639 crore; of these, private sector accounted for Rs.351,676 crore (81.42 per cent). These trends seem to reflect the tighter liquidity conditions in the market.