Insurer Tata AIA life has signed a bancassurance partnership with Citibank, to develop products targeting “the life insurance and wealth management needs of the global Indian community who have a desire for higher coverage through innovative products and an affinity for simple digital delivery.”
Citi cited a McKinsey report identifying a growing base of around 18.4m households across 14 cities in India that has a large protection gap, estimated at over 150 trillion rupees (INR), equivalent to US$2.43trn/£1.6trn.
“The protection gap compares the life insurance cover and savings consumers have to what they should have,” Citi reports. “In India, for every INR100 needed for a family’s income protection, only INR7.4 is currently provided for, leaving a protection gap of 92.6%.”
The Indian partnership aims to address this market opportunity by providing a suite of traditional and unit-linked insurance products that offer wealth management, life protection, saving and retirement solutions. Citi said that the sales process will be enabled through a digital framework to minimise documentation, remove hidden charges and increase transparency in the buying process.
Citi reports that 78% of Indian individuals with an annual income ranging from INR1.5m to INR12.5mhas life cover below INR10m while 63% of those with annual income between INR300,000 to INR1.5m has life cover below INR5m.
Both segments consider themselves under insured, yet consist of long-term investors with an investment horizon of over 15 years and a focus on investing in family protection, tax saving, marriage planning and retirement, making insurance products an ideal option, according to a recent Nielsen survey5.
As per McKinsey, individuals with an annual income of between INR300,000 to INR1.5m constitute 16m households with 37% in India’s top 14 cities, while individuals with an annual income of INR1.5m to INR12.5m constitute 2.4m households in India.
Tata AIA Life is a joint venture company, formed by Tata Sons and AIA Group Ltd, which was set up in 2001.
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