Life Insurance Marketing in India (A): The Changing Advertising and Promotion Norms

ICMR regularly updates the list of free cases. To view more free cases, please visit our site at frequent intervals.

<< Previous

However, during the first year of the entry of new players, while LIC reported a growth of over 250%, private insurers managed to garner only about 0.5% market share, in spite of spending hefty amounts on advertising and promotion. According to reports, LIC's business increased mainly because of the increased public awareness about insurance, which was brought about by the heavy advertisement campaigns of private players. It was reported that customers resorted to LIC after the awareness about insurance increased as a result of the marketing efforts of the new players, because they were attracted by the 'security factor' attached with the state-owned insurer. According to a sample survey conducted by ORG-Marg on the popular life insurance brands in 2001, awareness of LIC policies was a phenomenal 100%, while the private insurers lagged far behind (Refer to Table III). The survey was conducted to collect information about the awareness of the life insurance brands and whether respondents were ready to buy the policies of such companies or not (this tested the success of the communication strategies of the companies concerned).

Table III
Popular Life Insurance Brands in 2001

Company	Awareness Levels (In %)
LIC	100
ICICI Prudential	70
HDFC Standard	52
SBI Life	25
Birla Sun Life	23
OM Kotak Mahindra	20
Tata AIG	17
Allianz Bajaj	12
Max New York Life	6
ING Vysya Life	4
Dabur CGU	4

Source: www.insuremagic.com

Some analysts pointed out that such development was merely an indicator of the difficulties foreign firms could face in India. Most of LIC's sales came from the small and rural sectors, which actually constitute the largest untapped insurance market in India. However, the private insurers failed to tap the rural markets due to their limited reach. They focused their marketing efforts only in limited metropolitan areas. With LIC's brand being very firmly etched in the minds of the Indians, private insurers definitely seemed to have a tough battle ahead. However, it is true that the market share of private players has increased from 0.5% in 2001 to 7% in October 2002, which has reduced LIC's market share to 93%. As marketing and technical superiority were expected to be the decisive factors for success in the Indian insurance sector in the future, the new players stood a good chance. With product-specific advertisement beginning to catch up in mid-2002, private insurers who planned to launch innovative products were hoping for the best.

---