How the insurance market in India is changing? Why is India an attractive market for investment?

Insurance market in India is growing with a very fast pace. Published information projects that Indian Insurance Co. has a potential to grow 125% in next 10 years. It has tremendous scope for both the life and nonlife insurance sector. India is definitely an attractive market for investment. Reason being is that India is the worlds secondfastest growing economy with a compelling demographic advantage and availability of high-quality talent. Comparing with other countries such as China, Malaysia, Brazil etc India`s economy in terms of Financial structure, people and skill availability is far more better than the rest. Even business environment has got a good potential as compared to others. And being a democratic country, it`s economic stability in terms of price, interest rate and consistent economic growth low risk in market unsaturated demand market steady growth rate

makes it a better hotspot for investment.

Analyze the economic environment of India in terms of its foreign business? Economic environment can be described in two fields. 1) Country level Environment o For insurance the target population i.e. middle class people is 300 million which is a high potential market to be focused. Almost 2/3rd of the middle class population is not insuranced. The GDP growth rate is almost 8%. Saving rate is around 30% which puts the attention of Insurance company. Excellent financial Infrastructure, its financial institutes (stock market, regulatory bodies and banking sector) are performing best ,BOP,BOT Large no. of skilled people.

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Economic openness and economic stability in terms of price stability, constant interest rate and consistent economic growth.

2) Business level Environment o o o o Almost 2/3rd of the potential market is untapped. Insurance industry growth predicted for next 10 years is almost 125% which is incomparable with any other nation. Competition in India is limited in Insurance field. The share of life insurance premium to GDP is 1.29 percent in India.

Why did Sun Life Financials enter the Indian market? Sun Life Financial saw the economic stability and growth in India. Any firm entering into the global market looks for the risk factor and high profitability. In case of Indian market, its economic environment at country level and at business level (explained in above question) is supportive enough for the investment. Even there is limited competition in Insurance field and risk involved is low. According to published information, insurance market to grow by 125% in next 10 years. Almost 2/3rd of the population is untapped. Savings is 30% of GDP, which is the main reason for focusing at India for opening an insurance branch in India. Even the success rate is very high. All the 14 insurance firms operating in India are successful, so probability of Sun Life Financials to success is very high as per the prevailing condition of insurance market in India. So there were very few chances for the failure of business.

What was the entry mode in India for Sun financials and why? Sun life adopted the JV approach to enter the Indian market. Reason for this was the government regulation, according to which 100% FDI is not permitted and so Sun life has left with only one option that is JV with a domestic leading company Aditya Birla Group, so that it can establish there.