This October it would be three years since the first set of private companies were issued underwriting licences by the Insurance Regulatory and Development Authority.

Since then, the private sector has managed to corner about 8 per cent of the life insurance market and grab over 10 per cent of the premium generated in the general insurance segment.

So, what else has changed for the insurance industry over the last three years?

"The biggest change is in the level of awareness about insurance among the public," the chairman of a state-owned insurance company said.

"Awareness levels will increase as private players try to create a market for themselves," said Rohit Bhasin, executive director, PriceWaterhouseCoopers.

Other than that, not much has changed, say industry observers.

The target of private players has mostly been high networth and A-class city residents. The quality of service has not improved appreciably (though private companies claim otherwise).

The new products promised by private insurers are yet to hit the market. Moreover, claim settlement is not any better than state-owned players.

"While private life insurance companies claim to be innovating by using riders, those in general insurance are offering products similar to those existing in the market," an executive with a consulting major said.

State-owned companies, on their part, have improved their service to take on the competition.

"Whatever was expected had not happened. They are mainly targeting our profitable business segments and their products are a variation of what we have been offering for years," the head of a public sector general insurance company said.

He revealed that a large part of the business that was being underwritten was captive business of the promoters.

Consultants said some of the ills afflicting the insurance business were only getting accentuated. For instance, due to more competition, rebating (passing of commission to policyholders) has increased.

Moreover, cautious private insurers are refusing to underwrite requests or asking for higher premium, especially in the automobiles segment.

"It's difficult to deal with private companies as they are more conscious of the type of business they underwrite. They do not like claims, partly because of the history of fictitious claims in India. So, they are choosy about their business," an insurance broker said.

As a result, greater market penetration, as promised by private players and the government, is still a distant proposition.

In fact, even the mandatory targets for rural sales were not realised by 13 of the 20 companies in the last financial year.

"Private players have begun by targeting upper-middle income populations in metros and other large cities. However, they are fast realising that their revenue ambitions are not going to be met if they keep the aperture narrow," Nikhil Prasad Ojha, Senior Principal of the Monitor Group, said.

So far, private companies have confined their operations to 15-20 cities in the country.

The corporate agencies and the bancassurance models have not helped most private players reach out to the interiors.

Consultants like Ojha pointed out the failure of the bancassurance model in most countries, barring a few European countries like France and the Netherlands.

"In India, the current efforts at bancassurance are limited to using banks as "referral points" for tapping branch managers to get a list of high networth clients and then executing a classic agent/adviser sales process on that prospect," he said.

PWC's Bhasin said for the bancassurance model to succeed, suitable incentives needs to be provided to bank employees. Though the corporate agency model had earned greater rewards, there was scope for improvement, he added.

Part II: 683,000 sign up to sell insurance