The stock price of HDFC Life Insurance Company Ltd. when I am writing this post is Rs. 6680.70
As per the data given by IBEF life insurance industry in India is expected to grow 12-15% annually over the next three to five years. My belief is, if the entire industry grows at 12-15%, the top players might grow at a faster rate at least during the initial period.
Below are my findings of HDFC Life Insurance Company
HDFC Life is the largest private life insurance company in India
Part of a huge network
Being a part of the Huge network under HDFC group and having a large customer base from HDFC group HDFC life got the advantage of getting millions and millions of data about customers who take the service of the entire HDFC group. This data helps the company is cross-selling their products among the customers who take the service of other companies in the HDFC group itself taking the right decision to find the right customer.
The above-given image is taken from the latest quarterly report of HDFC
Chairman of HDFC Life is Mr. Deepak Parekh
Trust Factor in Life Insurance
When you buy a car When it comes to life insurance, every individual wants 100% assurance that in their absence if they are insured, the insured company should provide lump sum as agreed in their absence without causing any trouble to their family. For that high level of trust, brand name and legacy of the insuring company is of high priority and if you take private companies, then HDFC is the first option anyone would prefer.
Penetration against GDP
If we need to check the insurance penetration in a country, benchmarking the total life insurance coverage against the GDP is the common indicator used all over the world. If we use the same metric, overall insurance penetration in India is 3.69% of GDP. In developing and developed countries is it is 6% of GDP. In UK it is more than 10% of GDP and in US, Hong Kong and Taiwan it is 8%, 18% and 20%. In South Africa, it is 12.89% of GDP. Just by using this metric, it is very clear that the potential of this sector to grow is very high and becuase of this we can say that the earning growth visibility for these companies are very long
Also value migration is in place both for general and life insurance. From public sector, market is moving towards the private sector.
So, low penetration, migration from public to private, better per capita income, GDP growth and better financial literacy all will act as a catalyst to the growth of the insurance sector in general and is a leading player in life insurance, HDFC Life Insurance is well poised for future growth.
Life Expectancy in India
Also, life expectancy is growing which will also put life insurance in more demand than earlier. The more I live, the more I plan for the future and if I expire earlier, it will impact the family and they will live long and hence need for life insurance is more important
Optimum penetration of life insurance
The optimum penetration of life insurance in India is not even .1%. Just look at your financial requirements and see whether you are covered or not. See how others are doing. Many are not covered and among those who are covered, most are not appropriately covered.
Future of pension plans in India
India is the youngest population in the world, but moving forward, aged people will increase to large numbers. Population above 60 also will increase and they demand better pension plan and annuity plan and HDFC life already have one subsidiary on that.
HDFC pension management company is the largest privately-owned pension management company having a market share of more than 30%
Increase in nuclear families
Increase in nuclear families also requires life insurance to protect their family