Cars, homes, accidents, illness - Germans often sign up for comprehensive insurance coverage. But things look quite different in India, where the government wants to further open up the insurance market to foreigners.
Cows on the streets, dangerous diseases and floods caused by monsoon rains - life in India is full of risks. But still the number of Indians with insurance coverage in this vast nation of around 1.25 billion people remains negligible.
"The family has so far been the safety net," says Rajrishi Singhal of Gateway House, a Mumbai-based think tank. If at all people sign up for insurance, then they are mostly life insurance policies, which are used as a way to save taxes.
But now the insurance industry in the subcontinent is set to undergo a radical change. The newly-elected government in New Delhi announced plans in its recently presented budget to raise the foreign investment limit in the sector from 26 percent to 49 percent, in an attempt to draw more capital into the country.
India is "hungry for investment," and several areas of the insurance sector should be strengthened, finance minister Arun Jaitley said while presenting his maiden budget.
German hopes for new market
German insurance providers such as Allianz and Ergo are eagerly looking towards the country. "An opening of the Indian market is of strategic importance for them," says Jörg von Fürstenwerth, chief executive of Germany's insurance industry lobby group GDV.
He explains that the companies are facing cut-throat competition in the German market. The firms, however, pin growth hopes on emerging markets, von Fürstenwerth added.
"The changing demographics in Europe are making it difficult for the companies to grow, making a young country like India very attractive for insurers," points out Jürgen Fitschen, co-CEO of Deutsche Bank. The Indian middle class was estimated to be around 300 million people, among which every second person is younger than 25 years old.
A weak industry
A handful of state-owned entities currently dominate the insurance market in the South Asian nation. Even when compared to the markets in other emerging countries, the Indian insurance market comes out as extremely underdeveloped and inefficient.
According to a study by Swiss Re, premium income in India was an equivalent of about 38 euros ($51) per head in 2013. While the corresponding figure in China was 148 euros, in Brazil it was as high as 326 euros. This gives India a world insurance market share of just 1.41 percent, even though the country is home to one seventh of the world's population.
However, the dominance of state-owned enterprises is crumbling. Analysts believe that further liberalization of the sector could become a key driver of growth. "We are expecting the demand for car and health insurance in India to grow strongly," says Ergo's Jens Buchkremer.
Furthermore, there are no broad public pension schemes in the country and Ergo, which currently operates a property insurance joint venture with HDFC bank, is setting up another joint company for life insurance.
Indian media estimates that around half a billion euros could be pumped into the market as a result of the further opening up of the industry. The money could finally be invested in marketing and sales, says analyst Singhal, underlining that insurers have so far limited themselves mostly to urban areas.