For life writers, India looms as another 'jewel'.

When it was part of the British Empire, India, with its splendor and natural riches, was known as the "jewel in the crown."

Today, foreign insurance companies, especially those in the life sector, tend to view India in a similar, if less lyrical, light. With its rapidly expanding economy, burgeoning middle class and overall population of more than a billion, India is seen as a land of promise.

"The prospects for the continued rapid top-line growth in India's insurance markets are as good as anywhere else in the world," said Peter Alexander Smyth, regional general manager of ING Asia Pacific.

The joint venture is the preferred route into the Indian insurance market, not least because of continuing restrictions on outside ownership. Joint ventures offer a means to combine local knowledge and infrastructure with international experience, Smyth said. Despite their global profiles, he added, the multinational insurers should understand that their partners will be far better known among Indian customers. "International experience is helpful but it is not everything," Smyth said.

Outside managers are likely to be unused to very high growth rates in the Indian life sector. Local managers are unfazed by this, Smyth said.

Enemy in India

"The greatest enemy of new life insurance business in India is a developed market mindset, which typically will be too cautious and tentative, and so under-captures the opportunity," he said.

Foreign insurers that have entered the Indian market include ING Group N.V., Axa Group, Aviva plc and Prudential plc. Nitin Chopra, chief executive officer of Bharti Axa Life Insurance Co., said the liberalization of the Indian insurance market in 1999 led to a transformation of the industry, especially in life insurance. India has seen the creation of 16 life joint ventures, Chopra said.

"Liberalization not only led to a growth in the market, but also spurred growth among public-sector insurers," Chopra said.

Private life insurers have gained a market share of about 20% in India, Chopra said. Insurers are stressing the ability of their products to create wealth, he noted, an advance from the earlier pitch that focused on tax savings.

"The year-on-year growth of the [life] industry has exceeded 100%," Chopra said.

Since April 2006, Chopra said, the average annual life premium has increased from 5,000 rupees (about $113.37) to 19,000 rupees. This has been done largely by product innovation and the development of new channels.

ING, which is headquartered in the Netherlands, entered the Indian life market in 2000-2001 with the establishment of ING Vysya Life, a joint venture with the then Vysya Bank Ltd. It was one of the first life joint ventures in the Indian market, Smyth said.

Economic-Growth Drivers

Smyth, who said he believes India and China will drive world economic growth over the next 50 years, said ING "intends to be a major player in life insurance, banking and asset management in India." It is aiming for eventual top-five rankings in all three sectors, he said.

"It's a very large market," Smyth said. "If insurers are going to be major global players in 20 years, they'll need to be big in India"

ING Vysya Life describes itself as the ninth-largest life insurer in India in terms of new business volumes.

Life Market Grows in India

Life Insurance Volume (total premiums)

(Rupees millions) ($1 = about 44 rupees)

2003     662,879
2004     786,294
2005 *   892,359

Note: Table made from bar graph.

Insurance Density 2005

(U.S.$)

                  World Rank   Life Premiums
              Life + Nonlife      Per Capita

Switzerland                1       $3,078.10
Japan                      7        2,956.30
China                     72           30.50
India                     78           18.30
Vietnam                   85            6.10

Insurance Penetration 2005

              World Rank   Life Premiums as
          Life + Nonlife           % of GDP

Taiwan                 1             11.17%
Japan                  6              8.32
India                 43              2.53
China                 50              1.78
Vietnam               67              0.97

* India's financial year ends on March 31, so
2005 stats are for year ending March 31, 2006.

Source: Swiss Re sigma