FACTORS AFFECTING DEMAND IN INSURANCE SECTOR (Particularly life insurance)

1. 2. 3. 4. 5. Financial pressures- drop in profit margin due to economic downturn Permanent income and disposable income Interest rate by bank and P.F. Natural calamities Insurance regulations a. IPO guidelines for insurance sector 6. Tax incentives in terms of after tax cost of policies 7. Capital gain tax 8. Increase in household incomes leading to higher premiums 9. Degree of openness 10.Anticipate inflation rate and annual inflation rates 11.National brokers v/s independent agencies 12.Economic growth leading to higher premium as percentage of GDP 13.Anticipatory reform in health sector 14.Unemployment rate 15.Level of education and awareness 16.Various demographic factors like age structure, dependency ratio, life expectancy 17.Political interferences

FACTORS AFFECTING SUPPLY OF INSURANCE SECTOR

1. Saturation of international markets leads to greater competition from international insurers 2. Online medium e-business insurance 3. Penetration and density measures by government 4. Insurance regulator -Consumer centricity and drafting open architecture 5. Collaboration between banks and insurers 6. Greater opportunities for small and medium sized companies

7. National brokers focusing on middle market through greater capital

MISMATCH BETWEEN DEMAND AND SUPPLY AND ITS CONSEQUENCES ON THE SECTOR
With the level of growth of the Indian markets and in terms of the industry ie 15-20% and with the saturation caused in the other international markets due to economic downturn supply would definitely be greater than demand Other factors contributing to it are: Entrance of international players Anticipated increase in GDP Increasing competition between national and independent agencies alongwith greater opportunities for the mid sized companies, with the greater advantage to the middle market. Demand would be on lower side so in order to remain profitable companies need to Survive on lower commissions Sell more which includes cross selling or to new customers Provide value added services and fees should be charged unlike earlier where these services were provided free of cost Government regulations in favour of untapped markets specially rural sector provides greater opportunities to expand.