Positioning on the Insurance value chain: An Indian perspective

Abstract

The Life Insurance Industry in India is poised for rapid growth. A changing consumer mindset, increasing per capita income and lower prices due to competition in the market have together created an enormous potential for growth. In line with similar economies around the world, the Life Insurance Industry in India will soon grow in size and volume. The existing private players in the market are just beginning to find their feet. In the last two years, the total premium collected by the public Life Insurance Corporation has been almost equaled by all the private players combined. With insurance being a scale-dependent industry, the private players have everything to gain from the projected rapid growth of the market. The insurance industry can be broken down into a number of separate value chain segments. The capabilities required for each segment differ widely, and every player might not be able to achieve best practices in each segment. However, many of the sub-processes can be outsourced to third party providers or shared along a partnership. The removal of non-core activities can help an insurance company to focus its offering and excel in that portion of the value chain that it is best at. The upcoming models of providing insurance through shared partnerships which are just beginning to emerge include telecassurance and bancassurance. Each model has its respective strength, and needs to be used in a different scenario of the market movement. With proper analysis, an insurance company could decide which sector it wants to target in the near future and thereby decide to adopt one of the possible models suggested here.