What are the causes for privatization of insurance sector in in India?

Answer 1

when we critically examine the opportunities which were available before the globalization of Indian market, it can be said that LIC failed to cash it. one of the main reasons for the low insurance penetration in India was the ineffective distribution and marketing strategies adopted by LIC. The company reportedly never had any strategic marketing game plan, and due to its monopolistic nature the need for serious marketing efforts was never felt. The advertising initiatives were limited to some print and electronic media advertisements, which typically talked about LIC's products being great tax saving tool for salaried individuals who came under the income-tax bracket. Despite all this, LIC was synonymous with insurance in India and it had established an enviable brand image for itself, especially in the rural areas and small towns. However, with the entry of new players, the insurance market changed almost overnight. the private insurers seemed all set to make the industry marketing-driven, wherein technical and service excellence would be the key factors of success. The private companies, in a bid to make their presence felt and their brand noticed, initiated a series of aggressive marketing and promotion initiatives, something that buyers of insurance were not accustomed to.lic had made Indian insurance industry a sellers market, where customer had no option other than to buy its (LIC's) product . LIC had also not tried to explore the market but were happy what they were getting effortlessly.